B-172978, JAN 27, 1972, 51 COMP GEN 439

B-172978: Jan 27, 1972

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ETC. - COMPONENT V UNIT PRICE DIFFERENCES A BID THAT OFFERED AN AGGREGATE OF COMPONENT PRICES THAT EXCEEDED UNIT PRICES FOR VEHICULAR LIGHTING KITS SOLICITED UNDER AN INVITATION THAT INCLUDED OPTIONS TO PURCHASE ADDITIONAL KITS AND KIT COMPONENTS "UP TO 100 PERCENT" AND PROVIDED FOR AWARD AT KIT UNIT PRICES IS A NONRESPONSIVE BID. THE DEFECT MAY NOT BE CORRECTED ON THE BASIS OTHER BIDDERS WILL NOT BE DISPLACED SINCE AWARD WILL NOT BE MADE AT COMPONENT PRICES. THE FACT THAT THE DEVIATION IS CONSIDERED MATERIAL DOES NOT MEAN THE SOLICITATION WAS AMBIGUOUS BECAUSE THE COMPONENT OPTION WAS FOR AN INDEFINITE QUANTITY. " AS BIDDERS HAD THE RESPONSIBILITY OF SUBMITTING COMPETITIVE BIDS THAT WOULD ALLOW FOR THE RECOVERY OF COSTS AND A REASONABLE PROFIT REGARDLESS OF THE EXTENT TO WHICH THE OPTION WAS EXERCISED.

B-172978, JAN 27, 1972, 51 COMP GEN 439

BIDS - EVALUATION - AGGREGATE V SEPARABLE ITEMS, PRICES, ETC. - COMPONENT V UNIT PRICE DIFFERENCES A BID THAT OFFERED AN AGGREGATE OF COMPONENT PRICES THAT EXCEEDED UNIT PRICES FOR VEHICULAR LIGHTING KITS SOLICITED UNDER AN INVITATION THAT INCLUDED OPTIONS TO PURCHASE ADDITIONAL KITS AND KIT COMPONENTS "UP TO 100 PERCENT" AND PROVIDED FOR AWARD AT KIT UNIT PRICES IS A NONRESPONSIVE BID, AND THE DEFECT MAY NOT BE CORRECTED ON THE BASIS OTHER BIDDERS WILL NOT BE DISPLACED SINCE AWARD WILL NOT BE MADE AT COMPONENT PRICES, FOR ACCEPTANCE OF THE BID MAY NOT RESULT IN THE LOWEST COST SHOULD THE GOVERNMENT EXERCISE THE OPTION FOR COMPONENT PARTS. THE FACT THAT THE DEVIATION IS CONSIDERED MATERIAL DOES NOT MEAN THE SOLICITATION WAS AMBIGUOUS BECAUSE THE COMPONENT OPTION WAS FOR AN INDEFINITE QUANTITY, "UP TO 100 PERCENT," AS BIDDERS HAD THE RESPONSIBILITY OF SUBMITTING COMPETITIVE BIDS THAT WOULD ALLOW FOR THE RECOVERY OF COSTS AND A REASONABLE PROFIT REGARDLESS OF THE EXTENT TO WHICH THE OPTION WAS EXERCISED. BIDS - DELIVERY PROVISIONS - ABILITY TO MEET - ADMINISTRATIVE DETERMINATION THE QUESTION OF BIDDER RESPONSIBILITY IS PRIMARILY FOR ADMINISTRATIVE DETERMINATION BY A CONTRACTING OFFICER, AND THE DETERMINATION IS CONCLUSIVE UNLESS THERE IS CONVINCING EVIDENCE THAT THE DETERMINATION WAS THE RESULT OF ARBITRARY ACTION OR BAD FAITH, AND THE CONCLUSIVENESS OF THE DETERMINATION INCLUDES A BIDDER'S ABILITY TO MAKE DELIVERY WITHIN A CRITICAL TIME PERIOD, AND, THEREFORE, THERE IS NO BASIS TO CHALLENGE A CONTRACTING OFFICER'S DETERMINATION THAT DELIVERY COULD BE MADE ON A TIME OF VEHICULAR LIGHTING KITS AND KIT COMPONENTS THAT IS BASED ON A PREAWARD SURVEY THAT CONSIDERED THE TOOLING AND ASSEMBLING PLANS AND CAPABILITIES OF THE SUCCESSFUL BIDDER, AND EXAMINED ARRANGEMENTS TO OBTAIN NECESSARY COMPONENTS.

TO THE SECRETARY OF THE ARMY, JANUARY 27, 1972:

REFERENCE IS MADE TO THE LETTER OF AUGUST 4, 1971, FROM THE DEPUTY GENERAL COUNSEL, UNITED STATES ARMY MATERIEL COMMAND, AND SUBSEQUENT CORRESPONDENCE, CONCERNING PROTESTS FILED BY DC ELECTRONICS, INCORPORATED, ANIXTER WIRING SYSTEMS, INCORPORATED, AND SWISS CONTROLS AND RESEARCH DIVISION OF MERIDIAN INDUSTRIES, INCORPORATED, UNDER INVITATION FOR BIDS NO. DAAE07-71-B-0033, ISSUED BY THE UNITED STATES ARMY TANK-AUTOMOTIVE COMMAND ON MARCH 29, 1971.

THE SOLICITATION WAS FOR QUANTITIES OF 17 DIFFERENT VEHICULAR LIGHTING KITS, AND INCLUDED A SMALL BUSINESS SET-ASIDE FOR SPECIFIC QUANTITIES OF THREE OF THE KITS. PARAGRAPH E-2 OF THE INVITATION, UNDER THE HEADING "COMPONENT PRICING, APPENDIX 'A'," STATED THAT:

ALTHOUGH AWARDS) WILL BE MADE ON THE BASES OF KIT UNIT PRICES SPECIFIED IN THIS SECTION "E", THOSE PRICES MUST EQUAL THE AGGREGATE OF THE COMPONENT AND PACKAGING PRICES*** LISTED UNDER THE RESPECTIVE "KIT CONTENTS" ITEM NUMBER.

APPENDIX A LISTED THE COMPONENTS TO BE INCLUDED IN EACH TYPE OF KIT AND REQUIRED BIDDERS TO ENTER COMPONENT UNIT SELLING PRICES, AMENDMENT NO. 1, ISSUED ON APRIL 12, 1971, ADDED THE FOLLOWING:

APPENDIX A. FAILURE TO COMPLETE THIS APPENDIX WILL RESULT IN BIDS BEING DECLARED NONRESPONSIVE.

PARAGRAPH J-1 OF THE INVITATION FOR BIDS GAVE THE GOVERNMENT AN OPTION TO PURCHASE ADDITIONAL KITS UP TO 100 PERCENT OF THE BASIC CONTRACT QUANTITY, AND BY AMENDMENT NO. 2 DATED APRIL 26, 1971, THIS SAME OPTION WAS EXTENDED TO THE KIT COMPONENTS AS WELL.

SEVENTEEN BIDS WERE RECEIVED AND OPENED ON MAY 4, 1971. EVALUATION OF THE BIDS INDICATED THAT THE FOLLOWING FIRMS WERE THE APPARENT LOW BIDDERS:

QUANTITY BID PRICE

ITEMS 1, 9, 12 AND 13

FOURDEE, INCORPORATED 67,487 EACH $1,566,286.58

ITEMS 2, 8, 10 AND 15

DC ELECTRONICS, INC. 27,412 EACH 582,336.01

ITEMS 3, 4, 6, 7, 11, 14, 16 AND 17 5,457 EACH 178,707.12

ITEM 5

MECHTRON INTERNATIONAL 93 EACH 2,586.96

THESE BIDS WERE REVIEWED AND IT WAS FOUND THAT THE AGGREGATE OF APPENDIX A PRICES FURNISHED BY FOURDEE, INCORPORATED, EXCEEDED THE KIT UNIT PRICES. FOURDEE WAS QUESTIONED AND STATED THAT THE APPENDIX A PRICES WERE ERRONEOUS AND SUBSEQUENTLY, ON MAY 7, 1971, SUBMITTED A REVISED APPENDIX A WHEREIN THE AGGREGATE OF THE COMPONENT PRICES EQUALED THE UNIT PRICES.

DC ELECTRONICS PROTESTED AGAINST A POSSIBLE AWARD TO FOURDEE, ALLEGING THAT FOURDEE'S FAILURE TO SUBMIT EQUAL KIT PRICES AND AGGREGATE COMPONENT PRICES IN ACCORDANCE WITH PARAGRAPH E-2 RENDERED ITS BID NONRESPONSIVE. SUBSEQUENTLY, THE CONTRACTING OFFICER DETERMINED THAT THE HIGHER AGGREGATE UNIT PRICES CONTAINED IN APPENDIX "A" WOULD ENABLE FOURDEE TO CLAIM MISTAKE IN BID AND DECLARED FOURDEE'S BID TO BE NONRESPONSIVE.

ANIXTER'S PROTEST AGAINST AWARD TO EITHER FOURDEE OR DC ELECTRONICS IS BASED ON THE CLAIM THAT NEITHER IS CAPABLE OF MEETING THE REQUIRED DELIVERY SCHEDULE AND THAT BOTH HAVE INCORRECTLY REPRESENTED THAT THEY ARE MANUFACTURERS OF THE REQUIRED ITEMS.

THE PROTEST OF SWISS CONTROLS AND RESEARCH REFLECTS CONCERN THAT AWARDS MAY BE MADE TO COMPANIES THAT ARE NOT TOOLED AND ARE NOT QUOTING WITH PRICES OBTAINED FROM TOOLED SOURCES. NO AWARD HAS BEEN MADE UNDER THIS IFB.

FOURDEE'S UNIT PRICE BIDS IN SECTION E FOR MILITARY PACK AND PACKAGING LEVEL "A.A." ON THE ITEMS ON WHICH IT WAS LOW WERE:

ITEMS 1 9 12 13

$13.52 $27.24 $28.75 $30.37

ITS AGGREGATE PRICES IN APPENDIX A ON THE SAME ITEMS WERE:

ITEMS 1 9 12 13

$17.68 $31.75 $30.53 $36.06

DC ELECTRONICS, THE NEXT LOW BIDDER ON THESE ITEMS, SUBMITTED THESE BIDS:

ITEMS 1 9 12 13

$14.935 $36.981 $29.401 $34.846

COUNSEL FOR FOURDEE CONTENDS THAT THE NONCOMPLIANCE WITH THE REQUIREMENT THAT THE KIT PRICES EQUAL THE AGGREGATE OF THE COMPONENT PRICES IS NOT A MATERIAL DEFECT IN THE BID AND THEREFORE CAN BE WAIVED. HE FURTHER CONTENDS THAT FOURDEE'S CORRECTED BID CAN BE ACCEPTED BECAUSE IT DOES NOT DISPLACE OTHER BIDDERS SINCE THE CORRECTIONS ARE LIMITED TO APPENDIX A, WHICH IS NOT A BASIS FOR THE AWARD.

IN 44 COMP. GEN. 581 (1965), WE CONSIDERED A CASE SIMILAR IN MANY RESPECTS TO THE PRESENT SITUATION. IN THAT CASE BIDDERS WERE ALSO REQUIRED BY THE INVITATION TO QUOTE OPTION PRICES NOT TO EXCEED THEIR BASIC UNIT PRICES, AND THE BID EVALUATION WAS TO BE MADE ON THE BASIS OF BASIC PRICES ONLY. THERE ALSO THE LOW BIDDER ON THE BASIC QUANTITY QUOTED HIGHER OPTION PRICES, CONTRARY TO THE INVITATION INSTRUCTION. HOWEVER, IN THAT CASE THE PRICES QUOTED BY THE LOW BIDDER FOR THE OPTION QUANTITIES WERE STILL LOWER THAN THOSE OF ANY OTHER BIDDER, SO THAT EVEN CONSIDERING THE OPTION PRICES THE LOW BIDDER STILL REMAINED LOW. UNDER SUCH CIRCUMSTANCES WE HAD NO OBJECTION TO PERMITTING THE LOW BIDDER TO REDUCE ITS OPTION PRICES TO COINCIDE WITH ITS BASIC PRICES FOR PURPOSE OF AWARD, SINCE THE OTHER BIDDERS WERE NOT UNFAIRLY PREJUDICED THEREBY.

IN THAT DECISION WE POINTED OUT THAT THE PURPOSE OF LIMITING THE OPTION PRICE TO THE BASIC UNIT PRICES WAS TO INSURE MINIMUM COSTS TO THE GOVERNMENT SHOULD THE OPTION BE EXERCISED IN WHOLE OR IN PART. THERE, AWARD TO THE LOW BIDDER WOULD OBVIOUSLY ACHIEVE THE LOWEST COST TO THE GOVERNMENT WHETHER OR NOT THE OPTION WAS EXERCISED. WE NOTED ALSO THAT BECAUSE THE LOW BID AS SUBMITTED OFFERED THE LOWEST COST TO THE GOVERNMENT IN ANY CASE, ACCEPTANCE OF THAT BID COULD NOT BE REGARDED AS PREJUDICIAL TO THE OTHER BIDDERS.

HERE, HOWEVER, THE SITUATION IS DIFFERENT IN THAT THE SUM OF FOURDEE'S BASIC BID PRICES FOR THE FOUR LINE ITEMS IN DISPUTE PLUS THE HIGHER OPTION PRICES QUOTED BY THE BIDDER EXCEED THE SUM QUOTED BY NEXT LOW BIDDER ON THESE ITEMS. IF THE GOVERNMENT SHOULD EXERCISE THE OPTION FOR COMPONENT PARTS, IT MIGHT INCUR GREATER COSTS PURCHASING THE KIT AND COMPONENT PARTS ON THE BASIS OF THE BID SUBMITTED BY FOURDEE RATHER THAN ON THE BID OF DC ELECTRONICS. IN THIS REGARD, WHILE WE NOTE THAT FOURDEE'S PRICE FOR ITEM 9 IS LOWER THAN DC ELECTRONICS' BID FOR THAT ITEM EVEN CONSIDERING FOURDEE'S AGGREGATE PRICES ENTERED IN APPENDIX A, DC'S SIX PERCENT DISCOUNT IF AWARDED ALL ITEMS MAKES IT MORE ADVANTAGEOUS TO THE GOVERNMENT TO AWARD ALL ITEMS TO DC AND MAKES DC'S DISCOUNTED PRICE LOWER THAN FOURDEE'S.

APPLYING THE STANDARDS IN 44 COMP. GEN. 581, SUPRA, WE MUST CONCLUDE THAT ACCEPTANCE OF FOURDEE'S BID AS SUBMITTED MAY NOT RESULT IN THE LOWEST COST TO THE GOVERNMENT, DEPENDING UPON THE EXERCISE OF THE OPTION. AWARD ON THE BASIS OF THE FOURDEE BID MAY, THEREFORE, BE REGARDED AS PREJUDICIAL TO THE OTHER BIDDERS WHO, AS SUGGESTED IN THE ADMINISTRATIVE REPORT, MAY WELL HAVE BID HIGHER ON THE BASIC QUANTITIES BECAUSE OF THE IFB LIMITATION ON THE OPTION PRICES.

ALTHOUGH FOURDEE HAS EXPLAINED THAT THE HIGHER OPTION PRICES RESULTED FROM ERRORS IN SUBITEM COMPUTATIONS, THE EVIDENCE OF RECORD DOES NOT PERMIT CORRECTION OF THESE ERRONEOUS PRICES. SEE 49 COMP. GEN. 107 (1969). THEREFORE, WE MUST CONCLUDE THAT THE DEVIATION IN FOURDEE'S BID MAY NOT BE WAIVED AS IMMATERIAL, AND THAT THE CONTRACTING OFFICER ACTED PROPERLY IN DEEMING FOURDEE'S BID NONRESPONSIVE.

THE CASES CITED BY FOURDEE, 40 COMP. GEN. 321 (1960); 37 COMP. GEN. 529 (1958), ARE INAPPOSITE HERE, AS THE NONCOMPLIANCE WITH THE TERMS OF THE SOLICITATION IN EACH DID NOT GIVE RISE TO AN AMBIGUITY CONCERNING THE PRICE AT WHICH THE LOW BIDDER COULD BE BOUND.

FOURDEE FURTHER CONTENDS THAT IF ITS DEVIATION IS CONSIDERED MATERIAL, THEN THE ENTIRE SOLICITATION WAS AMBIGUOUS, DID NOT PROVIDE AN EQUAL BASIS UPON WHICH BIDDERS COULD SUBMIT THEIR BIDS, AND SHOULD BE CANCELLED. THE ALLEGED AMBIGUITY IS BASED UPON THE GOVERNMENT'S OPTION TO PURCHASE AN UNSPECIFIED QUANTITY OF COMPONENTS UP TO 100 PERCENT OF THE BASIC CONTRACT QUANTITY. FOURDEE CONTENDS THAT THE DIFFERENT BIDDERS, PRICING THEIR BIDS ON THE BASIS OF THE OPTION QUANTITY, MAY HAVE BASED THEIR BIDS ON AN ANTICIPATED EXERCISE OF THE ENTIRE OPTION OR ONLY A PART OF IT, SO THAT THE BIDDERS WERE NOT BIDDING ON THE SAME QUANTITY OF ITEMS.

WE DO NOT AGREE THAT THIS SOLICITATION WAS AMBIGUOUS. IT VERY CLEARLY REQUIRED THE AGGREGATE PRICES OF APPENDIX A TO EQUAL THE PRICES ENTERED IN SECTION E. IT WAS FOR THE BIDDERS TO DETERMINE HOW TO SATISFY THIS REQUIREMENT AND STILL SUBMIT COMPETITIVE BIDS THAT WOULD ALLOW FOR RECOVERY OF COSTS AND THE MAKING OF A REASONABLE PROFIT REGARDLESS OF THE EXTENT TO WHICH THE OPTION MIGHT BE EXERCISED. THE FACT THAT FOURDEE CHOSE TO COMPUTE ITS BID PRICES ON A DIFFERENT BASIS THAN THAT USED BY THE OTHER BIDDERS DOES NOT MAKE THE INVITATION AMBIGUOUS.

ANIXTER'S PROTEST GOES TO THE RESPONSIBILITY OF FOURDEE AND DC ELECTRONICS. SINCE WE HAVE DETERMINED THAT FOURDEE IS NOT ELIGIBLE FOR AN AWARD, WE WILL CONSIDER THIS PROTEST ONLY AS IT RELATES TO DC ELECTRONICS. ANIXTER CLAIMS THAT DC CANNOT MEET THE REQUIRED DELIVERY SCHEDULE AND IMPROPERLY REPRESENTED ITSELF AS A MANUFACTURER. THE ADMINISTRATIVE REPORT STATES THAT WHILE THE INITIAL PREAWARD SURVEY REPORT WAS FAVORABLE, A SECOND REPORT RECOMMENDED NO AWARD SOLELY ON THE GROUND THAT DC COULD NOT MEET THE DELIVERY SCHEDULE. THE CONTRACTING OFFICER STATED THAT HE "DOES NOT CONSIDER THIS IMPORTANT AT THIS TIME," SINCE THE BASIS FOR THE UNFAVORABLE RECOMMENDATION, A LENGTHY FUNGUS TEST, WAS EXPECTED TO BE COMPLETED BY OCTOBER 15, 1971. WE ARE ADVISED THAT THE TEST WAS IN FACT SUCCESSFULLY COMPLETED ON SEPTEMBER 22, 1971. IT IS ALSO REPORTED THAT WHETHER DC "MAKES OR BUYS THE LIGHT ASSEMBLY IS IMMATERIAL." FURTHER, THE FILE CONTAINS COPIES OF TOOLING AND PRODUCTION ORDERS FROM DC ELECTRONICS WHICH SUPPORT THE CONTRACTING OFFICER'S DETERMINATION THAT DC CAN MEET THE DELIVERY REQUIREMENTS.

WE HAVE REPEATEDLY STATED THAT THE QUESTION OF BIDDER RESPONSIBILITY IS PRIMARILY FOR ADMINISTRATIVE DETERMINATION BY A CONTRACTING OFFICER, AND WE WILL REGARD THAT DETERMINATION AS CONCLUSIVE UNLESS THERE IS CONVINCING EVIDENCE THAT IT WAS THE RESULT OF ARBITRARY ACTION OR BAD FAITH. COMP. GEN. 228 (1963). THE CONCLUSIVENESS OF THAT DETERMINATION INCLUDES A BIDDER'S ABILITY TO MAKE DELIVERY WITHIN A CRITICAL TIME PERIOD. 158420, AUGUST 1, 1966. THERE IS NOTHING IN THE RECORD BEFORE US TO SHOW THAT THE CONTRACTING OFFICER'S FINDING OF RESPONSIBILITY IN THIS CASE WAS NOT PROPER.

THE PROTEST OF SWISS CONTROLS BASICALLY RAISES A QUESTION OF BIDDER RESPONSIBILITY ALSO. ITS CONCERN IS THAT BIDDERS WHO ARE NOT TOOLED OR WHO BID WITHOUT FIRM QUOTES FROM TOOLED SOURCES CANNOT BE EXPECTED TO MEET REQUIRED DELIVERY DATES.

THE PREAWARD SURVEY CONDUCTED ON DC ELECTRONICS SPECIFICALLY CONSIDERED THE TOOLING AND ASSEMBLING PLANS AND CAPABILITIES OF THAT FIRM, AND ALSO EXAMINED ARRANGEMENTS MADE TO OBTAIN NECESSARY COMPONENTS. BASED ON THE SURVEY, THE CONTRACTING OFFICER DETERMINED THAT DELIVERY COULD BE MADE ON TIME AND MADE HIS DETERMINATION OF RESPONSIBILITY. THE PROTEST LETTER FROM SWISS CONTROLS AFFORDS NO BASIS TO CHALLENGE THAT DETERMINATION.

ACCORDINGLY, THE PROTESTS OF ANIXTER AND SWISS CONTROLS ARE DENIED AND THE DECISION OF THE CONTRACTING OFFICER THAT FOURDEE, INCORPORATED, WAS NONRESPONSIVE IS AFFIRMED.