B-172963, AUG 5, 1971

B-172963: Aug 5, 1971

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IS NOT AN OPERATING COMPANY AND IS NONRESPONSIBLE. UMC ALSO CONTENDS THAT THE BIDS WERE IMPROPERLY EVALUATED. THE DETERMINATION AS TO FIRM'S RESPONSIBILITY IS FOR THE CONTRACTING OFFICER TO MAKE. THERE IS NO RECORD THAT SUCH A DETERMINATION HAS BEEN MADE AS YET. UMC'S PROTEST IS THEREFORE PREMATURE AS TO THIS POINT. THE FACTORS STRESSED BY PROTESTANT WERE NOT CONTAINED IN THE IFB AND CONSEQUENTLY CANNOT BE USED IN EVALUATING THE BIDS. TO UMC ELECTRONICS CO.: REFERENCE IS MADE TO YOUR LETTER OF JULY 7. BIDDERS WERE ADVISED TO BID ON BOTH THIS INITIAL ORDER QUANTITY AND EACH INCREMENT OF THE INDEFINITE QUANTITY IDENTIFIED IN THE SCHEDULE AS A FOLLOW-ON QUANTITY. IT WAS ESTIMATED THAT 160 SETS WOULD BE ORDERED OVER THE LIFE OF THE CONTRACT.

B-172963, AUG 5, 1971

BID PROTEST - NONRESPONSIBLE BIDDER - EVALUATION OF BIDS DENIAL OF PROTEST BY UMC ELECTRONICS CO. AGAINST THE AWARD OF A CONTRACT TO ANY OTHER FIRM UNDER AN IFB ISSUED BY THE SAN ANTONIO AIR MATERIEL AREA FOR AN INDEFINITE QUANTITY CONTRACT FOR ELECTRICAL TEST SETS. PROTESTANT CONTENDS THAT THE LOW BIDDER, NATIONAL AVIATION ELECTRONICS, INC., IS NOT AN OPERATING COMPANY AND IS NONRESPONSIBLE. UMC ALSO CONTENDS THAT THE BIDS WERE IMPROPERLY EVALUATED. THE DETERMINATION AS TO FIRM'S RESPONSIBILITY IS FOR THE CONTRACTING OFFICER TO MAKE, AND THERE IS NO RECORD THAT SUCH A DETERMINATION HAS BEEN MADE AS YET. UMC'S PROTEST IS THEREFORE PREMATURE AS TO THIS POINT. ORDER FOR FACTORS TO BE CONSIDERED FOR EVALUATION PURPOSES, THEY MUST BE LISTED IN THE IFB. THE FACTORS STRESSED BY PROTESTANT WERE NOT CONTAINED IN THE IFB AND CONSEQUENTLY CANNOT BE USED IN EVALUATING THE BIDS.

TO UMC ELECTRONICS CO.:

REFERENCE IS MADE TO YOUR LETTER OF JULY 7, 1971, AND PRIOR CORRESPONDENCE, PROTESTING AGAINST THE AWARD OF A CONTRACT TO ANY OTHER FIRM UNDER INVITATION FOR BIDS (IFB) NO. F41608-71-B-0522, ISSUED BY THE SAN ANTONIO AIR MATERIEL AREA, KELLY AIR FORCE BASE, TEXAS.

THE IFB, WHICH PROVIDED FOR A 100-PERCENT SMALL BUSINESS SET-ASIDE, CONTEMPLATED AN AWARD OF AN INDEFINITE QUANTITY CONTRACT FOR ELECTRICAL TEST SETS WITH A FIRM INITIAL ORDER OF 69 SETS. BIDDERS WERE ADVISED TO BID ON BOTH THIS INITIAL ORDER QUANTITY AND EACH INCREMENT OF THE INDEFINITE QUANTITY IDENTIFIED IN THE SCHEDULE AS A FOLLOW-ON QUANTITY. IT WAS ESTIMATED THAT 160 SETS WOULD BE ORDERED OVER THE LIFE OF THE CONTRACT. AFTER BIDS WERE OPENED AND EVALUATED THE THREE LOWEST BIDDERS WERE NATIONAL AVIATION ELECTRONICS, INC. (NATIONAL), WITH A BID OF $1,247,494.20; ESSEX ELECTRO ENGINEERS, INC. (ESSEX), WITH A BID OF $1,289,688.40; AND UMC ELECTRONICS CO. (UMC) WITH A BID OF $1,300,426.20.

UMC'S PROTEST RAISES TWO CONTENTIONS. FIRST, THERE IS THE CONTENTION THAT NATIONAL IS NOT AN OPERATING COMPANY AND THEREFORE CANNOT BE CONSIDERED RESPONSIBLE UNDER THE APPLICABLE PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATION. SECONDLY, THERE IS THE CONTENTION THAT BIDS WERE IMPROPERLY EVALUATED SINCE CERTAIN MATTERS WHICH UMC FEELS ARE IMPORTANT WERE NOT TAKEN INTO CONSIDERATION IN EVALUATING THE BIDS.

WITH RESPECT TO THE FIRST OF THE FOREGOING CONTENTIONS, WHETHER A FIRM IS OR IS NOT RESPONSIBLE IS FOR THE DETERMINATION OF THE CONTRACTING OFFICER IN THE FIRST INSTANCE. MOREOVER, SUCH A DETERMINATION WILL NOT BE DISTURBED BY OUR OFFICE ABSENT A SHOWING THAT THE CONTRACTING OFFICER ACTED UNREASONABLY OR IN BAD FAITH. SINCE, TO THE BEST OF OUR KNOWLEDGE, THE CONTRACTING OFFICER HAS NOT AS YET MADE A DETERMINATION AS TO NATIONAL'S RESPONSIBILITY, THE FIRST POINT OF PROTEST IS PREMATURE INSOFAR AS OUR OFFICE IS CONCERNED. FURTHER, EVEN SHOULD NATIONAL BE FOUND NONRESPONSIBLE, THE ESSEX BID WOULD THEN BE IN LINE FOR CONSIDERATION BEFORE THE UMC BID.

RESOLUTION OF THE SECOND CONTENTION REQUIRES CONSIDERATION OF THE FOLLOWING IFB PROVISIONS:

"C-10. AWARD OF CONTRACT. (A) THE CONTRACT WILL BE AWARDED TO THAT RESPONSIBLE OFFEROR WHOSE OFFER CONFORMING TO THE SOLICITATION WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED.

"D-5. EVALUATION OF OFFERS:

"OFFERS SHALL BE EVALUATED IN ACCORDANCE WITH PARAGRAPH C-10 HEREOF AND THE FOLLOWING: THE MOST ADVANTAGEOUS OFFER SHALL BE CONSIDERED TO BE THE LOWEST EVALUATED TOTAL PRICE. THE TERM 'LOWEST EVALUATED TOTAL PRICE' MEANS THE LOWEST PRICES ADJUSTED BY DEDUCTION OF ANY ALLOWABLE DISCOUNTS, AND COMPUTED IN THE FOLLOWING MANNER:

"(A) STEP 1. THE INITIAL ORDER QUANTITY SHALL BE MULTIPLIED BY THE OFFERED UNIT PRICE FOR THAT QUANTITY.

"(B) STEP 2. THE QUANTITY OF ITEMS REPRESENTED IN EACH INCREMENT OF THE FOLLOW-ON PORTION OF THIS SOLICITATION SHALL BE MULTIPLIED BY THE UNIT PRICE OFFERED FOR THE INCREMENT.

"(C) STEP 3. THE PRODUCTS DERIVED IN STEP 1 SHALL BE ADDED TO THE PRODUCTS ARRIVED AT IN STEP 2. IF THE SOLICITATION SPECIFIES F.O.B. DESTINATION, THIS SHALL BE THE EVALUATED TOTAL PRICE. (BUT, SEE STEP 5 BELOW)

"(D) STEP 4. IF THE SOLICITATION SPECIFIES F.O.B. ORIGIN, THE EVALUATED TOTAL PRICE SHALL BE DERIVED BY ADDING TRANSPORTATION COSTS FOR THE BEQ TO THE RESULT OBTAINED IN STEP 3. TRANSPORTATION COSTS SHALL BE ASSESSED IN ACCORDANCE WITH THE PROVISION HEREOF ENTITLED 'EVALUATION - F.O.B. ORIGIN'. (BUT, SEE STEP 5 BELOW)

"(E) STEP 5. IN THE EVENT A PROVISION IS INCLUDED IN SCHEDULE SECTION E OF THIS SOLICITATION REQUESTING PRICE DIFFERENTIALS FOR MILITARY ASSISTANCE AND FOREIGN MILITARY SALES PROGRAMS, THE UNIT PRICE DIFFERENTIALS OFFERED SHALL BE MULTIPLIED BY THE ESTIMATED QUANTITY THAT MAY BE ORDERED FOR EACH OF THESE PROGRAMS. THE SUM OF THESE PRODUCTS SHALL BE ADDED TO THE RESULTS OBTAINED IN STEP 3 OR 4 ABOVE (AS APPLICABLE), AND THIS SUM SHALL BE THE EVALUATED TOTAL PRICE.

"(F) DESTINATION UNKNOWN (1968 JUNE)

FOR THE PURPOSE OF EVALUATING OFFERS, AND FOR NO OTHER PURPOSE, THE FINAL DESTINATION FOR THE SUPPLIES WILL BE CONSIDERED TO BE KELLY AIR FORCE BASE, TEXAS."

UMC CONTENDS THAT THE TERM "OTHER FACTORS CONSIDERED" REQUIRES THE CONTRACTING OFFICER TO CONSIDER, IN ADDITION TO THE BID PRICE, OTHER MATTERS WHICH WOULD MAKE AN AWARD TO UMC MORE ADVANTAGEOUS TO THE GOVERNMENT. IN THIS CONNECTION, UMC POINTS OUT THE FOLLOWING: FIRST, THAT THERE IS NO GUARANTEE THAT ANY FOLLOW-ON QUANTITIES WILL BE ORDERED AND UMC'S PRICE ON THE INITIAL REQUIRED QUANTITY IS SOME $64,000 LESS THAN THE NEXT LOW BIDDER ON THE SAME QUANTITY; SECOND, THAT THE INTEREST SAVED ON THAT $64,000 AMOUNTS TO AN ADDITIONAL $4,000 SAVINGS TO THE GOVERNMENT; THIRD, THAT UMC CAN DELIVER THE ITEMS 30 DAYS SOONER THAN THE TWO LOWER BIDDERS; FOURTH, THAT AWARD OF THE CONTRACT TO UMC WOULD RESULT IN STANDARDIZATION WITH UMC UNITS ALREADY IN INVENTORY, PARTS INTERCHANGEABILITY, SPARE PARTS AVAILABILITY, AND THE POSSIBLE SAVINGS OF AMOUNTS ALLOCATED TO SPARE PARTS PROVISIONING; FIFTH, UMC CONTENDS THAT ITS LOCATION IN A SUBSTANTIAL LABOR SURPLUS AREA SHOULD BE CONSIDERED; AND, AS A SIXTH AND FINAL MATTER, UMC HAS INFORMALLY URGED THE POSITION THAT THE FAILURE OF THE CONTRACTING OFFICER TO CONSIDER SHIPPING THE SUPPLIES AT LEAST PART WAY BY SHIP PLACED IT AT A COMPETITIVE DISADVANTAGE BECAUSE OF THE DISTANCE BETWEEN ITS PLANT AND THE DESTINATION NAMED IN THE IFB.

WE MAY DISPOSE OF THIS LATTER POINT BY REFERENCE TO THE TERMS OF THE IFB WHICH CONTEMPLATE DELIVERY ON AN F.O.B. ORIGIN BASIS (PARAGRAPH H 4), UTILIZATION OF "LAND MODES OF TRANSPORTATION" AS THE "NORMAL MODES OF TRANSPORTATION" WITHIN THE UNITED STATES (PARAGRAPH D-2), AND THAT THE DESTINATION FOR THE SUPPLIES FOR EVALUATION PURPOSES WAS KELLY AIR FORCE BASE, TEXAS (PARAGRAPH D-5(F), SUPRA).

AS TO THE OTHER MATTERS RAISED BY UMC, THE PURCHASING ACTIVITY ADMITS THAT UMC WAS LOW IN PRICE FOR THE INITIAL QUANTITY OF ITEMS REQUIRED BUT THAT IT WAS NOT LOW WHEN EVALUATED PURSUANT TO PARAGRAPH D-5. WITH RESPECT TO THE ORDERING OF FOLLOW-ON ITEMS, IT IS POINTED OUT THAT THE INITIAL AND FOLLOW-ON QUANTITIES ARE THE AMOUNTS WHICH CAN REASONABLY BE EXPECTED TO BE ORDERED DURING THE TERM OF THE CONTRACT. THE PURCHASING ACTIVITY FURTHER ADVISES THAT ALL BIDDERS COMPLIED WITH THE GOVERNMENT'S REQUIRED DELIVERY SCHEDULE; THAT AN INTEREST FACTOR WAS NOT INCLUDED IN THE SOLICITATION AS AN EVALUATION FACTOR; AND THAT STANDARDIZATION OF EQUIPMENT WAS NOT A CONTEMPLATED OBJECTIVE OF THE PROCUREMENT. WITH RESPECT TO ANY PREFERENCE UMC MAY HAVE BECAUSE OF ITS LOCATION IN LABOR SURPLUS AREA, THE PURCHASING ACTIVITY NOTES THAT THE IFB DOES NOT PROVIDE FOR A LABOR SURPLUS SET-ASIDE.

WE HAVE HELD THAT EVALUATION FACTORS SHOULD BE AS CLEAR, PRECISE AND EXACT AS POSSIBLE AND SHOULD BE MADE KNOWN TO BIDDERS SO THAT THEY CAN INTELLIGENTLY PREPARE THEIR BIDS. 36 COMP. GEN. 380, 385 (1956); B 171023, DECEMBER 10, 1970. IT FOLLOWS THEN THAT A FACTOR WHICH IS UNCERTAIN OR SPECULATIVE CANNOT BE USED FOR THE EVALUATION OF BIDS. SEE 43 COMP. GEN. 60 (1963). THE SAME IS TRUE OF FACTORS NOT STATED IN THE SOLICITATION. THEREFORE, EVALUATION FACTORS FOR STANDARDIZATION, TRANSPORTATION BY SHIP, AND INTEREST COSTS WHICH ARE NOT INCLUDED IN A SOLICITATION PROVIDE NO BASIS TO DETERMINE THE MOST ADVANTAGEOUS BID, PRICE AND OTHER FACTORS CONSIDERED. MOREOVER, AS TO INTEREST COSTS, WE HAVE HELD THAT SUCH SAVINGS ARE TOO SPECULATIVE TO BE CONSIDERED AS AN EVALUATION FACTOR. 35 COMP. GEN. 282 (1955); 43 ID., SUPRA.

NOR DOES IT APPEAR, UNDER THE CIRCUMSTANCES OF THIS PROCUREMENT, THAT OUR OFFICE MAY QUESTION THE FAILURE OF THE CONTRACTING OFFICER TO INCLUDE A FACTOR FOR TRANSPORTATION BY SHIP, OR FOR STANDARDIZATION, EVEN ASSUMING SUCH FACTORS COULD BE ARGUED TO BE PROPERLY FOR CONSIDERATION. OUR POSITION IN THIS REGARD IS SET OUT SUCCINCTLY IN THE FOLLOWING LANGUAGE FROM OUR DECISION B-167785, DECEMBER 19, 1969:

"IT IS NOT WITHIN THE PROVINCE OF OUR OFFICE TO FORMULATE THE BASES UPON WHICH BID PRICES PROPERLY WILL BE CONSIDERED AND EVALUATED UNDER GIVEN INVITATIONS. THIS MATTER FALLS SQUARELY WITHIN THE FUNCTIONS OF THE DEPARTMENTS AND AGENCIES CONCERNED, AND WHEN AN INVITATION LENDS ITSELF TO OPEN COMPETITION AND IT IS SHOWN, WHEN CONSIDERING ALL OF THE FACTS, THAT THE GOVERNMENT'S INTEREST IS FULLY PROTECTED, OUR OFFICE WILL NOT INTERVENE. *** "

YOU ARE CORRECT IN YOUR OBSERVATION THAT THERE EXISTS A GOVERNMENT POLICY TO AID CONCERNS LOCATED IN LABOR SURPLUS AREAS. HOWEVER, THE DECISION TO SET ASIDE A PART OF A PROCUREMENT FOR LABOR SURPLUS AREA CONCERNS IS WITHIN THE PROVINCE OF THE ADMINISTRATIVE AGENCY INVOLVED PURSUANT TO THE APPLICABLE PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATION. SEE, IN THIS REGARD, B-170285, NOVEMBER 10, 1970, WHERE WE HELD THAT THE APPLICABLE PROVISIONS OF THE REGULATION DO NOT MAKE IT MANDATORY TO SET ASIDE A PORTION OF A PROCUREMENT FOR AWARD TO A LABOR SURPLUS AREA CONCERN. SINCE NO PORTION OF THE PRESENT PROCUREMENT WAS SO SET ASIDE, THE FACT THAT YOUR FIRM IS IN A LABOR SURPLUS AREA IS NOT FOR CONSIDERATION IN EVALUATING YOUR BID.

THE PHRASE "AND OTHER FACTORS CONSIDERED" FOUND IN PARAGRAPH C-10(A) MUST BE READ IN CONJUNCTION WITH PARAGRAPH D-5 SINCE THE LATTER PROVISION EXPRESSLY REFERS TO THE FORMER. THE "OTHER FACTORS" MENTIONED, THEREFORE, ARE ONLY THOSE APPEARING IN THE IFB. 36 COMP. GEN., SUPRA. SINCE THERE IS NOTHING IN THE RECORD BEFORE US TO INDICATE THAT THE QUANTITY ESTIMATES OF THE IFB WERE OTHER THAN THE PURCHASING ACTIVITY'S BEST ESTIMATES OR THAT YOUR BID WAS EVALUATED IN A MANNER OTHER THAN AS DIRECTED BY THE IFB, NO BASIS IS EVIDENT UPON WHICH WE MAY SUSTAIN YOUR PROTEST. ACCORDINGLY, IT IS DENIED.