B-177391, MAR 14, 1973

B-177391: Mar 14, 1973

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WHERE ALTERNATIVE PROMPT PAYMENT DISCOUNTS OFFERED ARE INTENDED TO BE MUTUALLY EXCLUSIVE. ONLY THE BEST OF THESE OFFERED DISCOUNTS WILL BE CONSIDERED IN DETERMINING THE TOTAL SINGLE DISCOUNT IN THE EVALUATION OF A BID. OLSEN AND WILLIAMS: REFERENCE IS MADE TO YOUR TELEGRAM OF NOVEMBER 6. HOURLY AND WEEKLY RENTAL RATES UPON WHICH THE BIDDER WAS INVITED TO OFFER A "SINGLE DISCOUNT.". THE MANNER IN WHICH BIDS WERE TO BE EVALUATED. WERE ESTABLISHED BY SPECIAL PROVISION 15 AND AMENDED ARTICLE 9(A). STATED THAT: AWARDS WILL BE MADE ON THE BASIS OF THE BEST SINGLE DISCOUNT OFFERED FOR EACH SERVICE AREA FOR ALL RENTAL PERIODS SPECIFIED. ANY "SPECIAL OR TRADE DISCOUNTS" WHICH EVOLVE AS A RESULT OF THE AMENDED ARTICLE 9(A) OF STANDARD FORM 33A WILL BE ADDED TO THE SINGLE DISCOUNT ENTERED IN THE OFFEROR'S SINGLE DISCOUNT COLUMN SHOWN IN THE OFFER SCHEDULE.

B-177391, MAR 14, 1973

BID PROTEST - PROMPT PAYMENT DISCOUNTS - TOTAL SINGLE DISCOUNT EVALUATION DECISION DENYING THE PROTEST OF AIRWAYS RENT-A-CAR OF SEATTLE AGAINST THE AWARD OF A CONTRACT TO ANY OTHER FIRM UNDER AN IFB ISSUED BY THE GENERAL SERVICES ADMINISTRATION FOR RENTAL CAR SERVICES. WHERE ALTERNATIVE PROMPT PAYMENT DISCOUNTS OFFERED ARE INTENDED TO BE MUTUALLY EXCLUSIVE, ONLY THE BEST OF THESE OFFERED DISCOUNTS WILL BE CONSIDERED IN DETERMINING THE TOTAL SINGLE DISCOUNT IN THE EVALUATION OF A BID. ALSO, FPR 1-2.407-3(B) PROVIDES THAT A BID OFFERING A LONGER DISCOUNT PERIOD THAN THE MINIMUM PERIOD SPECIFIED IN THE IFB SHALL NOT BE CONSIDERED MORE ADVANTAGEOUS TO THE GOVERNMENT.

TO PERKINS, COIE, STONE, OLSEN AND WILLIAMS:

REFERENCE IS MADE TO YOUR TELEGRAM OF NOVEMBER 6, 1972, AND LETTERS OF NOVEMBER 11, 1972, JANUARY 12, 17 AND 29, 1973, ON BEHALF OF YOUR CLIENT, AIRWAYS RENT-A-CAR OF SEATTLE, PROTESTING THE AWARD OF A CONTRACT TO ANY OTHER FIRM UNDER INVITATION FOR BIDS (IFB) NO. 10PN-PCS 2872, ISSUED OCTOBER 11, 1972, BY THE GENERAL SERVICES ADMINISTRATION, FEDERAL SUPPLY SERVICE, REGION 10.

THE SUBJECT IFB SOLICITED BIDS FOR THE SUPPLY OF RENTAL CAR SERVICES TO GOVERNMENT PERSONNEL AT VARIOUS DESIGNATED AREAS IN ALASKA, IDAHO, MONTANA, OREGON AND WASHINGTON FOR THE PERIOD COVERING MARCH 1, 1973, OR DATE OF AWARD IF LATER, THROUGH FEBRUARY 28, 1974. THE IFB SET FORTH PREDETERMINED DAILY, HOURLY AND WEEKLY RENTAL RATES UPON WHICH THE BIDDER WAS INVITED TO OFFER A "SINGLE DISCOUNT." IN ADDITION, A BIDDER COULD OFFER PROMPT PAYMENT DISCOUNTS FOR PERIODS OF 10, 20, 30 OR MORE CALENDAR DAYS. IN THIS REGARD, ARTICLE 9(A) OF STANDARD FORM (SF)-33A, INCLUDED IN THE INVITATION, STATED THAT PROMPT PAYMENT DISCOUNTS OFFERED FOR LESS THAN TWENTY CALENDAR DAYS WOULD NOT BE CONSIDERED IN THE EVALUATION OF OFFERS UNLESS OTHERWISE SPECIFIED IN THE INVITATION. THE INVITATION DID NOT SPECIFY OTHERWISE.

THE MANNER IN WHICH BIDS WERE TO BE EVALUATED, AND THE METHOD OF AWARD, WERE ESTABLISHED BY SPECIAL PROVISION 15 AND AMENDED ARTICLE 9(A).

SPECIAL PROVISION 15, METHOD OF AWARD, STATED THAT:

AWARDS WILL BE MADE ON THE BASIS OF THE BEST SINGLE DISCOUNT OFFERED FOR EACH SERVICE AREA FOR ALL RENTAL PERIODS SPECIFIED, I.E., DAILY, HOURLY, WEEKLY AND MILEAGE FOR ALL TYPES OF VEHICLES. ANY "SPECIAL OR TRADE DISCOUNTS" WHICH EVOLVE AS A RESULT OF THE AMENDED ARTICLE 9(A) OF STANDARD FORM 33A WILL BE ADDED TO THE SINGLE DISCOUNT ENTERED IN THE OFFEROR'S SINGLE DISCOUNT COLUMN SHOWN IN THE OFFER SCHEDULE. THE RESULTANT DISCOUNT WILL THEN BECOME THE TOTAL SINGLE DISCOUNT OFFERED.

AMENDED ARTICLE 9(A) STIPULATED THAT:

ANY PROMPT PAYMENT DISCOUNT OFFERED WHICH EXCEEDS 5 PERCENT WILL BE CONSIDERED BY THE GOVERNMENT ONLY AS A PROMPT PAYMENT DISCOUNT OF 5 PERCENT AND ANY PERCENTAGE IN EXCESS OF 5 PERCENT WILL BE CONSIDERED AS A SPECIAL OR TRADE DISCOUNT TO WHICH THE OFFEROR AGREES THAT THE GOVERNMENT WILL BE ENTITLED REGARDLESS OF WHEN PAYMENT IS MADE.

EXAMPLE

OFFER RECEIVED - TRADE DISCOUNT FROM

PREDETERMINED PRICE LIST.... 30%

PROMPT PAYMENT DISCOUNT..... 30%-20 DAYS

CONVERSION OF OFFERED DISCOUNTS TO CONFORM TO ABOVE PARAGRAPH:

PROMPT PAYMENT DISCOUNT..... 5%-20 DAYS

TRADE DISCOUNT FROM PREDETERMINED

PRICE LIST.................. 55%

WITH REGARD TO BIDS FOR THE SEATTLE INTERNATIONAL AIRPORT, THE LOW BIDDER WAS DETERMINED TO BE BUDGET RENT-A-CAR OF WASHINGTON-OREGON, INC., ON THE BASIS OF ITS SINGLE DISCOUNT OF 52.02 PERCENT AND ADDITIONAL PROMPT PAYMENT DISCOUNT OF 5 PERCENT-20 DAYS, FOR A "TOTAL SINGLE DISCOUNT" OF 54.419 PERCENT. AIRWAYS BID A SINGLE DISCOUNT OF 52.00 PERCENT AND PROMPT PAYMENT DISCOUNTS OF 5 PERCENT-20 DAYS, 3 PERCENT-30 DAYS, AND 1 PERCENT- 45 DAYS WHICH, WHEN EVALUATED ON THE BASIS OF AIRWAYS' BEST PROMPT PAYMENT DISCOUNT OF 5 PERCENT, RESULTED IN A "TOTAL SINGLE DISCOUNT" OF 54.40 PERCENT.

YOUR PROTEST IS PREDICATED UPON THE TREATMENT WHICH YOU CONTEND AIRWAYS' PROMPT PAYMENT DISCOUNTS OF "3%-30 DAYS" AND "1%-45 DAYS" SHOULD HAVE BEEN ACCORDED IN COMPUTING THE TOTAL SINGLE DISCOUNT. YOU CONTEND THAT UNDER THE CONVERSION FORMULA SET OUT IN THE IFB, AIRWAYS' PROMPT PAYMENT DISCOUNTS OF 3 PERCENT AND 1 PERCENT SHOULD HAVE BEEN CONSIDERED IN ADDITION TO ITS PROMPT PAYMENT DISCOUNT OF PERCENT, INASMUCH AS PROMPT PAYMENT DISCOUNTS IN EXCESS OF 5 PERCENT MUST BE CONSIDERED AS SPECIAL OR TRADE DISCOUNTS TO BE ADDED TO THE SINGLE DISCOUNT SET OUT IN THE BID. THAT HAD BEEN DONE, YOUR CLIENT'S TOTAL SINGLE DISCOUNT (PRESUMABLY PRIOR TO THE APPLICATION OF THE 5 PERCENT PROMPT PAYMENT DISCOUNT) WOULD HAVE BEEN ELEVATED FROM 52.00 PERCENT TO 56.00 PERCENT.

YOU BASE THIS ALLEGATION UPON ARTICLE 9(A) OF SF-33A, REFERENCED ABOVE, AND LANGUAGE IN OUR DECISION OF JUNE 1, 1972, B-175140, INTERPRETING THAT CLAUSE (BY NEGATIVE INFERENCE) TO MEAN THAT PROMPT PAYMENT DISCOUNTS FOR PERIODS OF LONGER THAN 20 DAYS WILL BE CONSIDERED UNLESS THE INVITATION SPECIFICALLY PROVIDES OTHERWISE. CONSEQUENTIALLY, YOU CONCLUDE THAT NOT ONLY MUST AIRWAYS' 20-DAY PROMPT PAYMENT DISCOUNT BE EVALUATED IN ARRIVING AT A TOTAL SINGLE DISCOUNT, BUT THAT ALL PROMPT PAYMENT DISCOUNTS LONGER THAN 20 DAYS MUST ALSO BE EVALUATED UNDER THE FORMULA SET OUT IN THE INSTANT IFB.

ALTERNATIVELY, YOU SUBMIT THAT EVEN IF AIRWAYS' PROMPT PAYMENT DISCOUNTS OF 3 PERCENT AND 1 PERCENT ARE NOT TO BE TREATED AS PERCENTAGES IN EXCESS OF 5 PERCENT UNDER THE CONVERSION FORMULA, YOUR CLIENT'S BID IS NEVERTHELESS THAT OFFER MOST ADVANTAGEOUS TO THE GOVERNMENT BY VIRTUE OF THE FACT THAT BUDGET HAS NOT OFFERED PROMPT PAYMENT DISCOUNTS IN EXCESS OF 20 DAYS, AS HAS YOUR CLIENT.

IN THIS REGARD, YOU ALLEGE THAT IT HAS BEEN YOUR CLIENT'S EXPERIENCE THAT MANY GOVERNMENT AGENCIES ARE UNABLE TO MAKE PAYMENT WITHIN 20 DAYS, AND THAT THE ADDITIONAL 30 AND 45 DAY PROMPT PAYMENT DISCOUNTS OFFERED BY YOUR CLIENT THEREFORE MAY RESULT IN SAVINGS TO THE GOVERNMENT SUBSTANTIALLY IN EXCESS OF THE 0.02 PERCENT DIFFERENCE BETWEEN THE RESPECTIVE SINGLE DISCOUNTS OFFERED. IN SUPPORT OF THIS CONTENTION, YOU HAVE SUBMITTED AN AFFIDAVIT FROM AIRWAYS' PRESIDENT STATING THAT IN THE MONTH OF OCTOBER 1972 ONLY 72.94 PERCENT OF HIS CAR RENTAL TRANSACTIONS WITH THE FEDERAL GOVERNMENT WERE PAID WITHIN 20 DAYS.

FINALLY, YOU CONTEND THAT, IN THE EVENT WE DISAGREE WITH YOUR INTERPRETATION OF THE IFB, WE SHOULD, AT THE VERY LEAST, DETERMINE THAT THE IFB WAS SO AMBIGUOUS AS TO PRECLUDE ANY VALID AWARD THEREUNDER.

WITH REGARD TO YOUR CONTENTION THAT THE ADDITIONAL PROMPT PAYMENT DISCOUNTS OF 3 PERCENT AND 1 PERCENT ARE TO BE TREATED AS PERCENTAGES IN EXCESS OF 5 PERCENT, NECESSITATING THE ADDITION OF 4 PERCENT TO AIRWAYS' SINGLE DISCOUNT OF 52.00 PERCENT, PAGE ONE OF THE SUBJECT IFB CLEARLY INVITED THE SUBMISSION OF PROMPT PAYMENT DISCOUNT PERCENTAGES FOR ALTERNATE PERIODS. ACCORDINGLY, YOUR CLIENT SPECIFIED A DISCOUNT OF 5 PERCENT IF PAYMENT WAS MADE WITHIN 20 DAYS; 3 PERCENT IF PAYMENT WAS MADE WITHIN 30 DAYS, BUT MORE THAN 20 DAYS; AND 1 PERCENT IF PAYMENT WERE MADE WITHIN 45 DAYS, BUT MORE THAN 30 DAYS.

WE BELIEVE AIRWAYS' BID CLEARLY REFLECTED AN INTENT TO BID THE VARIOUS PROMPT PAYMENT DISCOUNT PERCENTAGES IN THE ALTERNATIVE ON THE BASIS OF DIFFERENT TIME PERIODS AND, AS SUCH, THE VARIOUS PERCENTAGES WERE CLEARLY INTENDED TO BE MUTUALLY EXCLUSIVE, RATHER THAN CUMULATIVE. THE UNEQUIVOCAL INTENT OF THE BID WAS TO SUBSTITUTE THE 3 PERCENT DISCOUNT FOR THE 5 PERCENT DISCOUNT IF PAYMENT WAS MADE IN MORE THAN 20 DAYS BUT LESS THAN 30. NOWHERE DOES THE BID INDICATE ANY INTENT TO CUMULATE THE VARIOUS DISCOUNTS, OR SUPPORT A CONCLUSION THAT A DISCOUNT OF 9 PERCENT WOULD BE PERMITTED FOR PAYMENT WITHIN 20 DAYS. IN THIS REGARD, WE HAVE HELD THAT THE INTENT OF A BIDDER IN THE OFFERING OF PROMPT PAYMENT DISCOUNTS IS TO BE DERIVED SOLELY FROM THE WRITTEN RESPONSE TO THE INVITATION. B-171396, MARCH 26, 1971. IN VIEW THEREOF, WE ARE UNABLE TO CONCUR WITH YOUR CONTENTION THAT AIRWAYS OFFERED ANY PROMPT PAYMENT DISCOUNT IN EXCESS OF 5 PERCENT WHICH COULD BE CONSIDERED AS A SPECIAL OR TRADE DISCOUNT UNDER AMENDED ARTICLE 9(A).

CONCERNING THE EVALUATION OF THE THREE ALTERNATIVE PROMPT PAYMENT DISCOUNT PERCENTAGES IN RELATION TO THE EVALUATION CRITERIA SET OUT IN THE IFB, SINCE WE HAVE CONCLUDED THAT THE RESPECTIVE PROMPT PAYMENT DISCOUNTS WERE INTENDED TO BE MUTUALLY EXCLUSIVE, IT IS APPARENT THAT AIRWAYS' BEST TOTAL SINGLE DISCOUNT OFFERED IS THE COMPOSITE OF ITS SINGLE 52.00 PERCENT DISCOUNT AND ITS 5 PERCENT PROMPT PAYMENT DISCOUNT. WITH REGARD TO YOUR QUOTATION OF THE FIRST SENTENCE OF FEDERAL PROCUREMENT REGULATIONS 1-2.407 -3(B), INSTRUCTING THAT ANY DISCOUNT BE DEDUCTED FROM THE BID PRICE ON THE ASSUMPTION THAT IT WILL BE TAKEN, IT IS APPARENT THAT YOUR CLIENT'S QUOTATION OF ALTERNATE DISCOUNT PERIODS, AND PERCENTAGES, PRECLUDED CONSIDERATION OF THE ADDITIONAL 3 PERCENT AND 1 PERCENT DISCOUNTS.

WITH REGARD TO YOUR INTERPRETATION OF THE REFERENCED LANGUAGE OF OUR DECISION OF JUNE 1, 1972, B-175140, IT APPEARS THAT YOU MAY NOT HAVE CONSIDERED THE LANGUAGE WITHIN THE CIRCUMSTANTIAL CONTEXT OF THAT DECISION. IN THAT PROTEST, WHICH OUR OFFICE DENIED, IT WAS CONTENDED THAT THE PROCURING ACTIVITY ERRED IN CONSIDERING A PROMPT PAYMENT DISCOUNT OFFERED BY A COMPETITOR IN COMPUTING THE "BEST SINGLE DISCOUNT OFFERED" IN A REQUIREMENTS CONTRACT FOR MOTOR VEHICLE RENTALS CONTAINING A SCHEDULE SIMILAR TO THAT OF THE INSTANT CASE. THAT CASE INVOLVED THE QUOTATION OF A SINGLE PROMPT PAYMENT DISCOUNT PERCENTAGE FOR A SINGLE PERIOD OF TIME, AND THE IMPORT OF THAT DECISION WAS THAT THE COMPUTATION OF THE BEST SINGLE DISCOUNT MUST INCLUDE THE PROMPT PAYMENT DISCOUNT SO OFFERED. DO NOT FIND THE EVALUATION IN THE INSTANT CASE TO BE INCONSISTENT WITH THAT DECISION, SINCE THE BEST OF YOUR CLIENT'S PROMPT PAYMENT DISCOUNTS WAS APPLIED IN COMPUTING ITS TOTAL SINGLE DISCOUNT.

YOUR ALTERNATIVE ARGUMENT THAT AIRWAYS' OFFER OF ADDITIONAL DISCOUNTS CONSTITUTED THE OFFER MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED, AS SPECIFIED BY ARTICLE 10(A) OF SF-33A, APPEARS TO BE IN CONFLICT WITH THAT PORTION OF FPR 1-2.407-3(B) WHICH PROVIDES THAT A BID OFFERING A LONGER DISCOUNT PERIOD THAN THE MINIMUM PERIOD SPECIFIED IN THE INVITATION SHALL NOT BE CONSIDERED MORE ADVANTAGEOUS TO THE GOVERNMENT. WHERE, AS IN THE INSTANT CASE, A BID SUCH AS AIRWAYS' HAS ALREADY BEEN EVALUATED ON THE ASSUMPTION THAT PAYMENT WILL BE MADE WITHIN 20 DAYS, WE DO NOT BELIEVE IT WOULD BE APPROPRIATE TO FURTHER EVALUATE THE SAME BID ON THE ASSUMPTION THAT PAYMENT MIGHT BE MADE IN 30 OR 45 DAYS.

WITH REGARD TO YOUR ALLEGATION THAT THE SPECIFICATIONS WERE SO AMBIGUOUS AS TO PRECLUDE A VALID AWARD, WE HAVE CAREFULLY REVIEWED THE EVALUATION CRITERIA OF THE SUBJECT IFB, AND WE ARE UNABLE TO CONCLUDE THAT THEY ARE NOT SUFFICIENTLY DEFINITE AND OBJECTIVE TO PERMIT FULL AND FREE COMPETITION.

ACCORDINGLY, YOUR PROTEST MUST BE DENIED.