B-174873(1), MAR 28, 1972

B-174873(1): Mar 28, 1972

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ABSENT ANY INDICATION THAT THE GOVERNMENT'S ESTIMATED MAXIMUM NUMBER OF ITEMS WAS INACCURATE. MUST AGREE WITH THE CONTRACTING OFFICER THAT OFFERORS WERE REQUIRED TO BASE THEIR PROPOSALS ONLY ON THE ESTIMATED MAXIMUM. IT APPEARS THAT THE INTENT OF THE GOVERNMENT TO REQUEST OFFERORS TO PRICE ONLY THE QUANTITIES EXPRESSED WITHIN THE MINIMUM AND MAXIMUM PARAMETERS FOR EACH FOLLOW-ON QUANTITY WAS CLEARLY INDICATED. ALTHOUGH THE CONTRACTING OFFICER MAY HAVE UNDERESTIMATED THESE QUANTITIES. INC.: REFERENCE IS MADE TO YOUR TELEGRAM OF JANUARY 3 AND SUBSEQUENT CORRESPONDENCE. WHICH WERE SET FORTH ON PAGE 15 OF THE RFP AS FOLLOWS: "SECTION E - SUPPLIES/SERVICES & PRICES: ITEM NO. 0001 FSN 4G 5820-981-1598 RF & POWER AMPLIFIER 0001AB INITIAL ORDER QUANTITY 943 0001AC FOLLOW ON QUANTITY (ESTIMATED) INDEFINITE 300 THRU 400 401 THRU 500 501 THRU 600 601 THRU 700 701 THRU 800 801 THRU 957 ESTIMATED MAXIMUM QUANTITY TOTAL ITEM 0001 1900 NOTE: THE ' *** INITIAL ORDER QUANTITY' AND EACH INCREMENT OF THE FOLLOW ON QUANTITY SHOULD BE PRICED.".

B-174873(1), MAR 28, 1972

BID PROTEST - METHOD OF EVALUATION - REQUEST FOR EXPLANATION DECISION DENYING THE PROTEST OF LEHIGH ELECTRONICS, INC., AGAINST AWARD OF A CONTRACT TO CANADIAN COMMERCIAL CORPORATION UNDER AN RFP ISSUED BY THE NAVY ELECTRONICS SUPPLY OFFICE. ABSENT ANY INDICATION THAT THE GOVERNMENT'S ESTIMATED MAXIMUM NUMBER OF ITEMS WAS INACCURATE, THE COMP. GEN. MUST AGREE WITH THE CONTRACTING OFFICER THAT OFFERORS WERE REQUIRED TO BASE THEIR PROPOSALS ONLY ON THE ESTIMATED MAXIMUM, RATHER THAN ON QUANTITIES CONSIDERABLY IN EXCESS OF THAT TOTAL. FURTHER, IT APPEARS THAT THE INTENT OF THE GOVERNMENT TO REQUEST OFFERORS TO PRICE ONLY THE QUANTITIES EXPRESSED WITHIN THE MINIMUM AND MAXIMUM PARAMETERS FOR EACH FOLLOW-ON QUANTITY WAS CLEARLY INDICATED. ALTHOUGH THE CONTRACTING OFFICER MAY HAVE UNDERESTIMATED THESE QUANTITIES, SUCH ERROR DID NOT AFFECT THE RELATIVE STANDING OF THE BIDDERS AND CANNOT BE CONSIDERED SIGNIFICANT. FINALLY, IT SHOULD BE NOTED THAT UNDER THE TERMS OF THE RFP, REQUESTS FOR EXPLANATIONS MUST BE SUBMITTED IN WRITING BEFORE THE SUBMISSION OF OFFERS. FOR THE FOREGOING REASONS, THE PROTEST MUST BE DENIED.

TO LEHIGH ELECTRONICS, INC.:

REFERENCE IS MADE TO YOUR TELEGRAM OF JANUARY 3 AND SUBSEQUENT CORRESPONDENCE, CONCERNING YOUR PROTEST UNDER REQUEST FOR PROPOSAL (RFP) N00126-72-R-1XM231, ISSUED BY THE NAVY ELECTRONICS SUPPLY OFFICE, GREAT LAKES, ILLINOIS, ON OCTOBER 27, 1971, FOR ESTIMATED QUANTITIES OF RF AND POWER AMPLIFIERS, FSN 4G 5820-981-1598, WHICH WERE SET FORTH ON PAGE 15 OF THE RFP AS FOLLOWS:

"SECTION E - SUPPLIES/SERVICES & PRICES:

ITEM NO.

0001 FSN 4G 5820-981-1598

RF & POWER AMPLIFIER

0001AB INITIAL ORDER QUANTITY 943

0001AC FOLLOW ON QUANTITY (ESTIMATED)

INDEFINITE

300 THRU 400

401 THRU 500

501 THRU 600

601 THRU 700

701 THRU 800

801 THRU 957

ESTIMATED MAXIMUM QUANTITY

TOTAL ITEM 0001 1900

NOTE: THE ' *** INITIAL ORDER QUANTITY' AND EACH INCREMENT OF THE FOLLOW ON QUANTITY SHOULD BE PRICED."

ADDITIONALLY, THE SCHEDULE CONTAINED THE FOLLOWING PERTINENT PROVISIONS:

"EVALUATION OF OFFERS:

STEP 1. THE 'INITIAL ORDER QUANTITY' ITEM SHALL BE MULTIPLIED BY THE OFFERED UNIT PRICE FOR THAT QUANTITY.

STEP 2. THE QUANTITY OF ITEM REPRESENTED IN EACH INCREMENT OF THE FOLLOW ON PORTION OF THIS SOLICITATION SHALL BE MULTIPLIED BY THE UNIT PRICE OFFERED FOR THE INCREMENT.

STEP 3. THE SUM OF THE PRODUCTS DERIVED IN STEP 1 AND STEP 2 SHALL BE THE EVALUATED TOTAL PRICE.

"MAXIMUM AND MINIMUM QUANTITY

THE MAXIMUM QUANTITY UNDER THE INDEFINITE QUANTITY ITEMS IS THE TOTAL ESTIMATED QUANTITY SET FORTH FOR EACH SUCH CONTRACT ITEM. THE MINIMUM QUANTITY UNDER THE INDEFINITE QUANTITY ITEM, IS AS FOLLOWS:

ITEM QUANTITY

0001 943 EACH

"INDEFINITE QUANTITY (AUG. 1965)

"(B) THE CONTRACTOR SHALL FURNISH TO THE GOVERNMENT, WHEN AND IF ORDERED, THE SUPPLIES OR SERVICES SET FORTH IN THE SCHEDULE UP TO AND INCLUDING THE QUANTITY DESIGNATED IN THE SCHEDULE AS THE 'MAXIMUM'. THE GOVERNMENT SHALL ORDER THE QUANTITY OF SUPPLIES OR SERVICES DESIGNATED IN THE SCHEDULE AS THE 'MINIMUM'."

SIX PROPOSALS, INCLUDING OFFERS SUBMITTED BY YOUR CONCERN AND THE CANADIAN COMMERCIAL CORPORATION (CCC) WERE RECEIVED BY THE CLOSING DATE FOR THE PROCUREMENT ON NOVEMBER 26, 1971. THE PROCURING ACTIVITY REPORTS THAT CCC SUBMITTED THE LOWEST TOTAL PRICE FOR THE REQUIREMENT EVALUATED AS FOLLOWS:

"CANADIAN COMMERCIAL CORPORATION

943 UNITS X $374.00 $352,682.00

* * * * * "ESTIMATED

OFFERED

FOLLOW-ON QUANTITY INCREMENT MULTIPLIED BY UNIT PRICE TOTAL PRICE

1. 300 THRU 400 100 $374.00 $37,400.00

2. 401 THRU 500 99 374.00 37,026.00

3. 501 THRU 600 99 374.00 37,026.00

4. 601 THRU 700 99 374.00 37,026.00

5. 701 THRU 800 99 374.00 37,026.00

6. 801 THRU 957 156 374.00 58,344.00

TOTAL $243,848.00

* * ** * "CANADIAN COMMERCIAL

CORPORATION

TOTAL AMOUNT DERIVED FROM STEP 1 $352,682.00

TOTAL AMOUNT DERIVED FROM STEP 2 $243,848.00

TOTAL AMOUNT DERIVED FROM STEP 3 $596,530.00 - LOW OFFER

(EVALUATED TOTAL PRICE)"

USING THE SAME METHOD OF COMPUTATION, THE PROCURING ACTIVITY EVALUATED YOUR PRICE AT $638,116.00 AS FOLLOWS:

"LEHIGH ELECTRONICS, INC.

943 UNITS X $440.00 $414,920.00

** * * * "ESTIMATED

OFFERED

FOLLOW-ON QUANTITY INCREMENT MULTIPLIED BY UNIT PRICE TOTAL PRICE

1. 300 THRU 400 100 $368.00 $36,800.00

2. 401 THRU 500 99 364.00 36,036.00

3. 501 THRU 600 99 345.95 34,249.00

4. 601 THRU 700 99 334.45 33,111.00

5. 701 THRU 800 99 328.00 32,472.00

6. 801 THRU 957 156 323.90 50,528.00

TOTAL $223,196.00

* * * * * "LEHIGH ELECTRONICS,

INC.

TOTAL AMOUNT DERIVED FROM STEP 1 $414,920.00

TOTAL AMOUNT DERIVED FROM STEP 2 $223,196.00

TOTAL AMOUNT DERIVED FROM STEP 3 $638,116.00

(EVALUATED TOTAL PRICE)

SINCE THE PROCURING ACTIVITY CONSIDERED THAT ADEQUATE PRICE COMPETITION EXISTED, IT MADE AN AWARD TO CCC ON DECEMBER 28, 1971.

YOU MAINTAIN THE CONTRACTING OFFICER ERRONEOUSLY DETERMINED THAT CCC WAS THE LOWEST OFFEROR; THAT STEP 2 OF THE SCHEDULE REQUIRED MULTIPLICATION OF UNIT PRICES FOR SUB-ITEM 0001AC BY THE CORRESPONDING SUMS OF THE QUANTITIES REPRESENTING THE MINIMUM AND MAXIMUM PARAMETERS OF THE SIX FOLLOW ON QUANTITIES, RATHER THAN THE INCREMENTAL DIFFERENCES BETWEEN THESE QUANTITIES WHICH WERE USED BY THE CONTRACTING OFFICER; THAT OFFERORS WERE PERMITTED TO QUOTE PRICES ON THE BASIS OF QUANTITIES CONSIDERABLY IN EXCESS OF THE ESTIMATED MAXIMUM OF 1900 UNITS; THAT YOU ATTEMPTED TO OBTAIN CLARIFICATION OF THE EVALUATION PROCEDURES PRIOR TO AWARD; THAT YOUR CONCERN SHOULD BE CONSIDERED THE LOWEST OFFEROR UNDER A PROPER EVALUATION; AND THAT THE AWARD TO CCC SHOULD BE CANCELLED.

THE CONTRACTING OFFICER STATES THAT YOUR INTERPRETATION OF THE AWARD PROCEDURE PRESUPPOSES A MAXIMUM ORDER QUANTITY OF 7,262 UNITS RATHER THAN THE 1900 UNITS ESTIMATED MAXIMUM QUANTITY SET FORTH IN THE IFB; THAT THE FORMER QUANTITY HAS NO RELATION TO ANY OTHER PROVISION OF THE IFB; AND THAT THE USE OF SUCH EVALUATION PROCEDURE COULD HAVE RESULTED IN THE AWARD OF A CONTRACT TO THE HIGHEST OFFEROR RATHER THAN THE LOWEST OFFEROR FOR THE ESTIMATED MAXIMUM OF 1900 UNITS. ADDITIONALLY, THE CONTRACTING OFFICER STATES THAT THERE IS NO EVIDENCE THAT ANY OTHER OFFEROR INTERPRETED THE EVALUATION PROCEDURE AS YOU DID. THE CONTRACTING OFFICER THEREFORE STATES THAT YOUR INTERPRETATION OF THE AWARD PROCEDURE IS NOT REASONABLE AND MUST BE REJECTED.

WITH RESPECT TO YOUR CONTENTION THAT THE SOLICITATION DOES NOT LIMIT THE MAXIMUM QUANTITY OF UNITS ORDERED UNDER THE CONTRACT TO THE ESTIMATED MAXIMUM OF 1900 UNITS, AND THAT YOU WERE, THEREFORE, ENTITLED TO COMPUTE YOUR BID ON THE BASIS OF QUANTITIES IN EXCESS OF THAT TOTAL, WE NOTE THAT SECTION (B) OF THE INDEFINITE QUANTITY PROVISION OF THE RFP, QUOTED ABOVE, CLEARLY ADVISED OFFERORS THAT THE SUCCESSFUL CONTRACTOR WOULD BE OBLIGATED TO FURNISH SUPPLIES UP TO AND INCLUDING THE QUANTITY DESIGNATED IN THE SCHEDULE AS THE "MAXIMUM." IN VIEW THEREOF, AND INASMUCH AS THERE IS NO INDICATION THAT THE GOVERNMENT'S ESTIMATED MAXIMUM OF 1900 UNITS WAS INACCURATE, WE BELIEVE THAT OFFERORS WERE REQUIRED TO BASE THEIR OFFERS ON THE ESTIMATED MAXIMUM OF 1900 UNITS, AND NOT ON QUANTITIES CONSIDERABLY IN EXCESS OF THAT TOTAL AS YOU CONTEND.

WITH RESPECT TO THE INTERPRETATION OF THE EVALUATION PROVISION OF THE RFP WE NOTE THAT STEP 2 OF THE "EVALUATION OF OFFERS" STIPULATION ADVISED OFFERORS THAT THE QUANTITY OF ITEM REPRESENTED IN EACH INCREMENT OF THE FOLLOW ON PORTION WOULD BE MULTIPLIED BY THE UNIT PRICE FOR THAT INCREMENT. THE "NOTE" FOLLOWING ITEM 0001AC ON THE SCHEDULE ALSO REFERRED TO EACH "INCREMENT" OF THE FOLLOW ON QUANTITY, AND THE ACCEPTED MEANING OF "INCREMENT" IS AN INCREASE OR GAIN IN AN ALREADY ESTABLISHED QUANTITY OR AMOUNT. SEE WEBSTER'S NEW INTERNATIONAL DICTIONARY, SECOND EDITION. THIS CONTEXT, WE BELIEVE THE LISTING OF MINIMUM AND MAXIMUM PARAMETERS FOR EACH FOLLOW ON QUANTITY INDICATED THE GOVERNMENT'S INTENT TO REQUEST OFFERORS TO PRICE ONLY THE QUANTITIES EXPRESSED WITHIN THE PARAMETERS, AND THAT THE DIRECTIONS IN STEP 2 OF THE EVALUATION OF OFFERS STIPULATION CLEARLY CONVEYED SUCH INTENT. ALTHOUGH WE BELIEVE THE CONTRACTING OFFICER UNDERSTATED THESE QUANTITIES BY A TOTAL OF SIX UNITS BY MERELY SUBTRACTING THE MINIMUM FROM THE MAXIMUM PARAMETERS WITHOUT ALSO INCLUDING THE UNITS REPRESENTED BY THE PARAMETERS, SUCH ERROR DOES NOT AFFECT THE RELATIVE STANDING OF THE OFFERORS. SINCE THIS ERROR COULD BE SIGNIFICANT IN OTHER SITUATIONS, WE ARE, HOWEVER, ADVISING THE SECRETARY OF THE NAVY THAT REMEDIAL ACTION SHOULD BE TAKEN TO PREVENT A REPETITION OF THIS CIRCUMSTANCE. ACCORDINGLY, WE MUST CONCUR WITH THE ABOVE ANALYSIS OF THE CONTRACTING OFFICER, AND HIS CONCLUSION THAT YOUR INTERPRETATION OF THE EVALUATION PROCEDURE IS NOT REASONABLE.

WITH RESPECT TO YOUR ALLEGATION THAT YOU ATTEMPTED TO OBTAIN CLARIFICATION OF THE EVALUATION PROCEDURE FROM A REPRESENTATIVE OF THE CONTRACTING OFFICER AFTER THE CLOSING DATE FOR RECEIPT OF PROPOSALS, BUT PRIOR TO THE SUBJECT AWARD, YOUR ATTENTION IS DIRECTED TO PARAGRAPH 3, EXPLANATION TO OFFERORS, STANDARD FORM 33A, OF THE SUBJECT RFP WHICH PROVIDES THAT ANY EXPLANATION OF THE MEANING OF AN RFP MUST BE REQUESTED IN WRITING BEFORE THE SUBMISSION OF OFFERS. IN VIEW THEREOF, IT IS APPARENT THAT IT WOULD HAVE BEEN DISCRETIONARY ON THE PART OF THE CONTRACTING OFFICER AS TO WHETHER YOU SHOULD BE FURNISHED AN EXPLANATION AFTER THE CLOSING DATE FOR RECEIPT OF PROPOSALS. FURTHER, IF YOU HAD BEEN FURNISHED SUCH EXPLANATION IT WOULD HAVE BEEN DISCRETIONARY WITH THE CONTRACTING OFFICER AS TO WHETHER NEGOTIATIONS WOULD HAVE BEEN OPENED FOR THE PURPOSE OF PERMITTING YOU TO SUBMIT A REVISED PROPOSAL FOLLOWING RECEIPT OF SUCH EXPLANATION. ACCORDINGLY, WE ARE UNABLE TO AGREE WITH YOUR CONTENTIONS THAT THE CONTRACTING OFFICER WAS OBLIGATED TO RESPOND TO YOUR REQUEST FOR AN EXPLANATION, OR THAT HIS FAILURE TO DO SO DEPRIVED YOU OF AN OPPORTUNITY TO SUBMIT A PROPOSAL BASED UPON HIS INTERPRETATION OF HOW OFFERS SHOULD BE EVALUATED.

FOR THE REASONS SET FORTH ABOVE YOUR PROTEST MUST BE DENIED.