B-172154, APR 23, 1971

B-172154: Apr 23, 1971

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000 MEALS WERE ORDERED MAKING IT THE APPARENT LOW BID BY $39 WHEN COMPARED WITH THE ONLY OTHER BID. THIS DETERMINATION IS NOT CONCLUSIVE IN A REQUIREMENTS TYPE CONTRACT SINCE IT IS IMPOSSIBLE TO ASCERTAIN THE EXACT EXTENT OF THE SERVICES EVENTUALLY TO BE ORDERED. THE BID WAS PROPERLY REJECTED AS BEING SPECULATIVE. INC.: REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 8. WHICH WERE AS FOLLOWS: UNIT TOTAL "BIDDER PRICE AMOUNT DISCOUNT EXPRESS FOOD. YOUR BID WAS LOW BY $39. 000 MEALS WERE ORDERED. IT IS REPORTED THAT THE BOARD OF AWARDS CONVENED ON JULY 24. THE RESULTS OF THE INSPECTION REVEALED THAT THE SANITARY STANDARDS AND FOOD HANDLING PRACTICES BY YOUR FIRM WERE DEFICIENT IN SOME 15 AREAS OF PERFORMANCE.

B-172154, APR 23, 1971

BID PROTEST - LOW BIDDER - REQUIREMENTS CONTRACT DENIAL OF PROTEST BY DYNETERIA, INC., AGAINST AWARD OF CONTRACT TO EXPRESS FOOD SERVICE UNDER AN IFB ISSUED BY PROCUREMENT DIVISION FOR AN ESTIMATED 39,000 NOON DAY MEALS FOR REGISTRANT AT ARMED FORCES EXAMINING AND ENTRANCE STATION, COLUMBUS, OHIO, FOR PERIOD OF JULY 9, 1970, THROUGH JUNE 30, 1971. WHERE PROTESTANT'S BID CONSISTED OF UNIT PRICE OF $1.53 PER MEAL WITH OFFER OF 40% DISCOUNT ON ALL MEALS ORDERED OVER FIRST 19,500 AND ASSUMING ALL 39,000 MEALS WERE ORDERED MAKING IT THE APPARENT LOW BID BY $39 WHEN COMPARED WITH THE ONLY OTHER BID, THIS DETERMINATION IS NOT CONCLUSIVE IN A REQUIREMENTS TYPE CONTRACT SINCE IT IS IMPOSSIBLE TO ASCERTAIN THE EXACT EXTENT OF THE SERVICES EVENTUALLY TO BE ORDERED; THEREFORE, THE BID WAS PROPERLY REJECTED AS BEING SPECULATIVE, AND NOT GUARANTEEING THAT GOVERNMENT WOULD PAY THE LOWEST PRICE.

TO DYNETERIA, INC.:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 8, 1970, PROTESTING AN AWARD OF A CONTRACT TO EXPRESS FOOD SERVICE (EXPRESS) UNDER IFB NO. DABB03-70-B- 0343 ISSUED ON JUNE 18, 1970, BY THE PROCUREMENT DIVISION, FORT KNOX, KENTUCKY.

THE INSTANT IFB SOLICITED BIDS FOR A REQUIREMENTS TYPE CONTRACT FOR AN ESTIMATED 39,000 NOON MEALS FOR APPLICANTS FOR ENLISTMENT AND SELECTIVE SERVICE REGISTRANTS AT THE ARMED FORCES EXAMINING AND ENTRANCE STATION, FORT HAYES, COLUMBUS, OHIO, FOR THE PERIOD JULY 9, 1970, THROUGH JUNE 30, 1971.

OF THE 13 FIRMS SOLICITED, ONLY YOUR FIRM AND EXPRESS SUBMITTED BIDS BY THE OPENING DATE OF JULY 7, 1970, WHICH WERE AS FOLLOWS:

UNIT TOTAL

"BIDDER PRICE AMOUNT DISCOUNT

EXPRESS FOOD, SVC. $1.25 $48,750.00 2%, 30 DAYS

2608 CLEVELAND AVE.

COLUMBUS, OHIO

DYNETERIA, INC. $1.53 $59,670.00 FIRST 19,500

P.O. BOX 1008 MEALS - NET

DUNN, N. CAROLINA ALL MEALS IN

EXCESS OF 19,500 -

40%, 30 DAYS"

BY SUBTRACTING THE TOTAL DISCOUNTS OFFERED FROM THE UNIT PRICES, YOUR BID WAS LOW BY $39, ASSUMING ALL 39,000 MEALS WERE ORDERED. IT IS REPORTED THAT THE BOARD OF AWARDS CONVENED ON JULY 24, 1970, TO REVIEW AND CONSIDER THE BIDS AND MAKE RECOMMENDATIONS RELATIVE TO AWARD. BASED UPON THE COMMANDING OFFICER'S RECOMMENDATION, THE MEMBERS OF THE BOARD REQUESTED THE CONTRACTING OFFICER AND A SANITARY INSPECTOR FROM FORT KNOX TO MAKE AN ON-SITE INSPECTION OF DYNETERIA'S FACILITIES. THE RESULTS OF THE INSPECTION REVEALED THAT THE SANITARY STANDARDS AND FOOD HANDLING PRACTICES BY YOUR FIRM WERE DEFICIENT IN SOME 15 AREAS OF PERFORMANCE. THE CONTRACTING OFFICER THEREFORE RECOMMENDED TO THE BOARD THAT THEY REJECT THE BID OF DYNETERIA FOR ITS FAILURE TO PASS THE SANITARY INSPECTION AND FOR PERFORMING MARGINAL SERVICE UNDER A PREVIOUS CONTRACT. THE BOARD CONCURRED WITH THIS RECOMMENDATION ON JULY 29, 1970, AND AWARD WAS MADE TO EXPRESS ON THAT DATE, WITH SERVICE TO BEGIN AUGUST 1, 1970.

YOU CONTEND THAT ALL OF THE LISTED DEFICIENCIES WERE MINOR IN NATURE AND COULD HAVE BEEN CLEARED UP OR CORRECTED WITHIN A FEW HOURS, AND YOU THEREFORE QUESTION THE JUSTIFICATION FOR REJECTING YOUR BID.

WE FIND IT UNNECESSARY TO CONSIDER OR DECIDE THIS QUESTION, SINCE WE ARE OF THE OPINION THAT YOUR BID COULD NOT PROPERLY BE EVALUATED AS THE LOW BID. THE CONTRACT HERE INVOLVED IS A REQUIREMENTS CONTRACT AND THE FAILURE OF YOUR BID TO OFFER ANY DISCOUNT ON THE FIRST 19,500 MEALS, WHILE OFFERING A DISCOUNT OF 40 PERCENT, 30 DAYS ON ALL MEALS IN EXCESS OF 19,500, OPERATES TO MAKE YOUR BID AN UNBALANCED BID.

WHILE WE HAVE HELD THAT THE MERE FACT THAT A BIDDER HAS SUBMITTED AN UNBALANCED BID DOES NOT AUTOMATICALLY OPERATE TO INVALIDATE AN AWARD OF THE CONTRACT TO SUCH BIDDER (B-161928, AUGUST 8, 1967), WE HAVE ALSO RECOGNIZED THAT AN INVITATION WHICH PERMITS UNBALANCING OF BIDS BASED UPON SPECULATION AS TO PROBABLE REQUIREMENTS DOES NOT AFFORD FREE AND OPEN COMPETITION IN SUPPLYING THE GOVERNMENT ITS NEEDS. SUCH AN INVITATION IS A MERE GAMBLE WHICH UNDOUBTEDLY WOULD RESULT IN UNFAIRNESS TO THE GOVERNMENT OR BIDDER. B-151910, SEPTEMBER 17, 1963. IMPLICIT IN THIS REASONING, WE THINK, IS THE CONCLUSION THAT IN A REQUIREMENT TYPE CONTRACT, WHERE IT IS IMPOSSIBLE TO ASCERTAIN THE EXACT EXTENT OF THE SUPPLIES OR SERVICES WHICH WILL EVENTUALLY BE ORDERED BY THE GOVERNMENT, ANY BID EVALUATION BASIS MUST BE DESIGNED SO AS TO ASSURE THAT AN AWARD TO THE LOWEST EVALUATED BIDDER WILL IN FACT RESULT IN THE LOWEST COST TO THE GOVERNMENT IN ACTUAL PERFORMANCE.

IN THE INSTANT CASE THE NUMBER OF DRAFTEES, AND HENCE THE NUMBER OF MEALS, IS MOST DIFFICULT TO ACCURATELY ESTIMATE. IN THIS REGARD IT IS REPORTED THAT 36,736 MEALS WERE SERVED IN FISCAL YEAR 1970. IN VIEW THEREOF, AND SINCE IT IS OUR OPINION THAT ANY EVALUATION OF YOUR BID, BASED UPON CONSIDERATION OF THE 40 PERCENT DISCOUNT RATE OFFERED THEREIN, WOULD HAVE TO BE BASED UPON SPECULATION AS TO THE NUMBER OF MEALS THE GOVERNMENT MIGHT ORDER, AND COULD WELL RESULT IN THE GOVERNMENT EVENTUALLY PAYING HIGHER PRICES FOR THE NUMBER OF MEALS ACTUALLY ORDERED, ANY CONSIDERATION OF YOUR OFFERED DISCOUNT IN EVALUATING YOUR BID WOULD BE IMPROPER.

IN VIEW OF THE FOREGOING, YOUR PROTEST MUST BE DENIED.