B-177811, APR 9, 1973

B-177811: Apr 9, 1973

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BID PROTEST - CASH DISCOUNT FOR PROMPT PAYMENT ALLOWED IN EVALUATION OF BIDS DECISION DENYING PROTEST BECAUSE PROVISION FOR THE EVALUATION OF PROMPT PAYMENT DISCOUNTS WAS CONTAINED IN THE SOLICITATION. INCORPORATED: REFERENCE IS MADE TO YOUR LETTER DATED JANUARY 10. THE EXHAUST HOODS ARE TO BE FABRICATED AT THE SUCCESSFUL BIDDER'S WORKSHOP AND INSTALLED AS COMPLETED PIECES OF EQUIPMENT. IT IS ADMINISTRATIVELY REPORTED THAT R. SUBMITTED THE LOWEST BID WHEN ITS PROMPT PAYMENT DISCOUNT WAS TAKEN INTO CONSIDERATION. YOU CONTEND THAT THE SUBJECT CONTRACT TO BE AWARDED IS A CONSTRUCTION CONTRACT. FOR THIS REASON NO CASH DISCOUNT FOR PROMPT PAYMENT SHOULD HAVE BEEN ALLOWED IN THE EVALUATION OF BIDS.

B-177811, APR 9, 1973

BID PROTEST - CASH DISCOUNT FOR PROMPT PAYMENT ALLOWED IN EVALUATION OF BIDS DECISION DENYING PROTEST BECAUSE PROVISION FOR THE EVALUATION OF PROMPT PAYMENT DISCOUNTS WAS CONTAINED IN THE SOLICITATION.

TO RUSSELL HEATING AND AIR CONDITIONING COMPANY, INCORPORATED:

REFERENCE IS MADE TO YOUR LETTER DATED JANUARY 10, 1973, AND PRIOR CORRESPONDENCE, PROTESTING AGAINST AWARD TO ANOTHER FIRM UNDER INVITATION FOR BIDS (IFB) NO. 42-9716 ISSUED BY THE FEDERAL CORRECTIONAL INSTITUTION, LOMPOC, CALIFORNIA.

THE SUBJECT SOLICITATION REQUIRED BIDS ON THE FURNISHING AND INSTALLATION OF STAINLESS STEEL EXHAUST HOODS OVER FOOD SERVICE STEAM TABLES. THE EXHAUST HOODS ARE TO BE FABRICATED AT THE SUCCESSFUL BIDDER'S WORKSHOP AND INSTALLED AS COMPLETED PIECES OF EQUIPMENT. THE SOLICITATION INCLUDED STANDARD FORM 33A, PARAGRAPH 9 OF WHICH PROVIDES FOR THE EVALUATION OF PROMPT PAYMENT DISCOUNTS OFFERED BY A BIDDER FOR PAYMENT WITHIN A CERTAIN TIME PERIOD.

IT IS ADMINISTRATIVELY REPORTED THAT R. P. RICHARDS, INCORPORATED (RICHARDS), SUBMITTED THE LOWEST BID WHEN ITS PROMPT PAYMENT DISCOUNT WAS TAKEN INTO CONSIDERATION. YOUR FIRM SUBMITTED THE NEXT LOW BID. HOWEVER, YOU CONTEND THAT THE SUBJECT CONTRACT TO BE AWARDED IS A CONSTRUCTION CONTRACT, NOT A SUPPLY CONTRACT, AND FOR THIS REASON NO CASH DISCOUNT FOR PROMPT PAYMENT SHOULD HAVE BEEN ALLOWED IN THE EVALUATION OF BIDS. YOU ALLEGE THAT YOUR BID IS THE LOWEST, AND YOU SHOULD RECEIVE THE CONTRACT AWARD.

THE ADMINISTRATIVE RESPONSE TO YOUR ALLEGATION IS THAT THE IFB AND RELATED CONTRACT IS FOR THE SUPPLY OF EQUIPMENT AND NOT FOR CONSTRUCTION. IN THIS REGARD, IT IS ESTIMATED BY THE AGENCY THAT LESS THAN 10 PERCENT OF THE CONTRACT PRICE IS FOR ACTUAL INSTALLATION OF THE EXHAUST HOODS.

WE HAVE NO BASIS TO DISAGREE WITH THE ADMINISTRATIVE DESCRIPTION OF THE CONTRACT. SEE 51 COMP. GEN. 822 (1972), WHERE WE HELD THAT A CONTRACT INVOLVING PREDOMINANTLY THE FURNISHING OF SUPPLIES (75 PERCENT) WAS PROPERLY CATEGORIZED AS A SUPPLY CONTRACT.

IN ANY EVENT, THE TERMS OF THE SOLICITATION PROVIDE FOR THE EVALUATION OF PROMPT PAYMENT DISCOUNTS, AND WE HAVE HELD THAT IT IS PROPER TO CONSIDER A PROMPT PAYMENT DISCOUNT IN A CONSTRUCTION BID WHERE THE SOLICITATION INCLUDES A DISCOUNT PROVISION. SEE B-167993(1), OCTOBER 28, 1969 (COPY ENCLOSED).

ACCORDINGLY, YOUR PROTEST MUST BE DENIED.