B-181926, JAN 2, 1975

B-181926: Jan 2, 1975

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PROTEST AGAINST AWARD ON GROUND THAT CONTRACTING OFFICER MADE NO ATTEMPT TO APPLY SERVICE CONTRACT ACT REQUIREMENTS TO RFP IS UNTIMELY UNDER BID PROTEST PROCEDURES AND STANDARDS. SINCE IT WAS NOT FILED PRIOR TO DATE FOR RECEIPT OF PROPOSALS. 2. PROTEST THAT THERE WAS NO BASIS FOR CONTRACT TO BE NEGOTIATED IS UNTIMELY UNDER BID PROTEST PROCEDURES AND STANDARDS. SINCE IT WAS FILED AFTER DATE FOR RECEIPT OF PROPOSALS. 4. EVEN IF TRANSPORTATION COST FOR EVALUATION OF LOW OFFER SHOULD HAVE BEEN $50. SPREAD IN OFFERS BEFORE APPLICATION OF TRANSPORTATION COST IS SO GREAT THAT LOW OFFEROR WOULD REMAIN LOW AND ALLEGED "BUY-IN" DOES NOT AFFORD BASIS TO QUESTION LEGALITY OF AWARD TO LOW OFFEROR. EXHIBIT "A" IS A 23-PAGE LIST COVERING COMPONENT PARTS (AIRFRAME) OF VARIOUS AIRCRAFT.

B-181926, JAN 2, 1975

1. PROTEST AGAINST AWARD ON GROUND THAT CONTRACTING OFFICER MADE NO ATTEMPT TO APPLY SERVICE CONTRACT ACT REQUIREMENTS TO RFP IS UNTIMELY UNDER BID PROTEST PROCEDURES AND STANDARDS, SINCE IT WAS NOT FILED PRIOR TO DATE FOR RECEIPT OF PROPOSALS. 2. UNTIMELY PROTEST AGAINST ABSENCE OF SERVICE CONTRACT ACT PROVISIONS IN RFP DOES NOT PRESENT "SIGNIFICANT ISSUE" FOR CONSIDERATION UNDER BID PROTEST PROCEDURES AND STANDARDS, SINCE ISSUE HAS BEEN TREATED ON MERITS PREVIOUSLY. 3. PROTEST THAT THERE WAS NO BASIS FOR CONTRACT TO BE NEGOTIATED IS UNTIMELY UNDER BID PROTEST PROCEDURES AND STANDARDS, SINCE IT WAS FILED AFTER DATE FOR RECEIPT OF PROPOSALS. 4. EVEN IF TRANSPORTATION COST FOR EVALUATION OF LOW OFFER SHOULD HAVE BEEN $50,000 TO $100,000 AS PROTESTER CONTENDS, SPREAD IN OFFERS BEFORE APPLICATION OF TRANSPORTATION COST IS SO GREAT THAT LOW OFFEROR WOULD REMAIN LOW AND ALLEGED "BUY-IN" DOES NOT AFFORD BASIS TO QUESTION LEGALITY OF AWARD TO LOW OFFEROR.

A.C.E.S., INC.:

THE SUBJECT PROTEST CONCERNS REQUEST FOR PROPOSALS (RFP) F41608-74-R 7130 ISSUED BY KELLY AIR FORCE BASE, SAN ANTONIO, TEXAS. ON APRIL 26, 1974, THE RFP SOUGHT OFFERS ON "*** ALL PLANT, LABOR AND EQUIPMENT NECESSARY TO PERFORM OVERHAUL AND MODIFICATION SERVICES DESCRIBED IN CONNECTION WITH THE ITEMS LISTED ON EXHIBIT 'A' ***." EXHIBIT "A" IS A 23-PAGE LIST COVERING COMPONENT PARTS (AIRFRAME) OF VARIOUS AIRCRAFT. ALL OFFERORS WERE ADVISED TO SUBMIT THEIR BEST AND FINAL OFFERS PRIOR TO 4:45 P.M. ON JUNE 21, 1974. THEREAFTER, FOLLOWING COMPLETION OF A PREAWARD SURVEY DATED JULY 15, 1974, A DETERMINATION WAS MADE TO AWARD THE CONTRACT TO MARIANNA AUTOMOTIVE CORPORATION (MARIANNA).

A.C.E.S., INC., SUBSEQUENTLY PROTESTED TO OUR OFFICE AGAINST THE AWARD ON THREE GROUNDS:

1. THE CONTRACTING OFFICER MADE NO ATTEMPT TO APPLY THE REQUIREMENTS OF THE SERVICE CONTRACT ACT, AS AMENDED, 41 U.S.C. SEC. 351, ET SEQ. (SUPP. III, 1973), TO THE RFP;

2. UNDER THE APPLICABLE LAW, THE SOLICITATION SHOULD HAVE BEEN FORMALLY ADVERTISED RATHER THAN NEGOTIATED UNDER 10 U.S.C. SEC. 2304 (1970); AND

3. THE CONTRACTING OFFICER IMPROPERLY EVALUATED MARIANNA'S TRANSPORTATION COST.

OUR INTERIM BID PROTEST PROCEDURES AND STANDARDS, 4 C.F.R. SEC. 20.1, ET SEQ. (1974), STATE AT SEC. 20.2(A):

"*** PROTESTS BASED UPON ALLEGED IMPROPRIETIES IN ANY TYPE OF SOLICITATION WHICH ARE APPARENT PRIOR TO BID OPENING OR THE CLOSING DATE SET FOR RECEIPT OF PROPOSALS SHALL BE FILED PRIOR TO BID OPENING OR THE CLOSING DATE FOR RECEIPT OF PROPOSALS. ***"

IN 53 COMP. GEN. 412 (1973), IT WAS HELD THAT A PROTEST BASED ON THE FAILURE TO INCLUDE SERVICE CONTRACT ACT PROVISIONS IN THE SOLICITATION SHOULD BE PROTESTED PRIOR TO BID OPENING OR THE CLOSING DATE FOR RECEIPT OF PROPOSALS. SEE, ALSO, MATTER OF HAYES INTERNATIONAL CORPORATION, B- 179842, MARCH 22, 1974. SINCE THIS WAS NOT DONE HERE, THE PROTEST IS UNTIMELY.

4 C.F.R. SEC. 20.2(B) (1974) DOES STATE, HOWEVER, THAT:

"THE COMPTROLLER GENERAL, *** WHERE HE DETERMINES THAT A PROTEST RAISES ISSUES SIGNIFICANT TO PROCUREMENT PRACTICES OR PROCEDURES, MAY CONSIDER ANY PROTEST WHICH IS NOT FILED TIMELY."

THE PROTESTER CONTENDS THAT THE OMISSION OF THE SERVICE CONTRACT ACT PROVISION SHOULD BE CONSIDERED A SIGNIFICANT ISSUE, WHICH HAS BEEN DEFINED AS THE PRESENCE OF A PRINCIPLE OF WIDESPREAD INTEREST. 52 COMP. GEN. 20 (1972). HOWEVER, SINCE THE ISSUE OF THE ABSENCE OF A SERVICE CONTRACT ACT PROVISION HAD BEEN TREATED ON ITS MERTIS PREVIOUSLY, I.E., IN 53 COMP. GEN., SUPRA, WE DO NOT SEE A NEED TO AGAIN TREAT THE ISSUE AS SIGNIFICANT UNDER THE UNTIMELINESS EXCEPTION. MATTER OF HAYES INTERNATIONAL CORPORATION, SUPRA.

WE NOTE PARENTHETICALLY THAT IN 53 COMP. GEN., SUPRA, WE STATED:

"ALTHOUGH WE CANNOT AGREE WITH DOL THAT THE PROTEST SHOULD BE UPHELD, WE SHARE ITS OBVIOUS CONCERN WITH RESPECT TO AFFORDING SERVICE CONTRACT WORKERS THE PROTECTION ENVISIONED BY THE SERVICE CONTRACT ACT. WE NOTE THAT 29 CFR 4.5(C) PROVIDES THAT IF A CONTRACTING AGENCY DOES NOT NOTIFY DOL OF ITS INTENT TO MAKE A SERVICE CONTRACT WITHIN THE TIME PRESCRIBED BY 29 CFR 4.4, 'THE CONTRACTING AGENCY SHALL EXERCISE ANY AND ALL OF ITS POWER THAT MAY BE NEEDED (INCLUDING *** ITS POWER TO NEGOTIATE, ITS POWER TO PAY ANY NECESSARY ADDITIONAL COSTS, AND ITS POWER UNDER ANY PROVISION OF THE CONTRACT AUTHORIZING CHANGES) TO INCLUDE IN THE CONTRACT ANY WAGE DETERMINATIONS COMMUNICATED TO IT WITHIN 30 DAYS OF THE FILING OF SUCH NOTICE OR OF THE DISCOVERY BY THE EMPLOYMENT STANDARDS ADMINISTRATION, U.S. DEPARTMENT OF LABOR, OF SUCH OMISSION.' WE THINK A SIMILAR PROVISION, SPECIFICALLY PERTAINING TO THE SITUATION IN WHICH DOL, SUBSEQUENT TO CONTRACT AWARD, DISAGREES WITH A DETERMINATION BY A CONTRACTING AGENCY THAT THE SERVICE CONTRACT ACT AND THEREFORE THE NOTICE REQUIREMENTS OF 29 CFR 4.4 WERE NOT APPLICABLE TO THE PROCUREMENT, WOULD PROTECT THE WORKERS CONCERNED AND WOULD PROVIDE FOR THE ORDERLY RESOLUTION OF THE TYPE OF DISPUTE INVOLVED HEREIN WITHOUT THE POTENTIAL DISRUPTION OF THE PROCUREMENT PROCESS. ***"

IN THAT REGARD, THE INSTANT RFP CONTAINED A CLAUSE AS FOLLOWS:

"POTENTIAL APPLICATION OF THE SERVICE CONTRACT ACT (FIXED PRICE):

"1. (A) THE CONTRACTOR WARRANTS THAT THE PRICES SET FORTH IN THIS CONTRACT DO NOT INCLUDE ANY ALLOWANCE FOR ANY CONTINGENCY TO COVER INCREASED COSTS FOR WHICH ADJUSTMENT IS PROVIDED UNDER THIS CLAUSE.

"(B) IN THE EVENT THAT DURING THE PERFORMANCE OF THIS CONTRACT IT IS DETERMINED BY APPROPRIATE AUTHORITY THAT THE PROVISIONS OF THE SERVICE CONTRACT ACT ARE APPLICABLE TO ANY OF THE WORK COVERED BY THIS CONTRACT, THE CONTRACTING OFFICER MAY DIRECT THE PAYMENT OF THE APPROPRIATE WAGE AND FRINGE BENEFIT SCALE, AND THE CONTRACTOR AGREES TO COMPLY WITH SUCH DIRECTION. IN THE EVENT THAT COMPLIANCE WITH THE CONTRACTING OFFICER'S DIRECTION RESULTS IN ANY INCREASE OR DECREASE IN THE LABOR RATES PAID UNDER THIS CONTRACT, THE CONTRACTOR AGREES TO PROMPTLY ENTER INTO NEGOTIATIONS TO REFLECT SUCH INCREASE OR DECREASE. SUCH CONTRACT ADJUSTMENT SHALL BE LIMITED TO INCREASES OR DECREASES IN WAGES OR FRINGE BENEFITS AFFECTED BY THE ABOVE DETERMINATION, AND THE CONCOMITANT INCREASES OR DECREASES IN SOCIAL SECURITY AND UNEMPLOYEMENT TAXES AND WORKMEN'S COMPENSATION INSURANCE, BUT SHALL NOT OTHERWISE INCLUDE ANY AMOUNT FOR GENERAL AND ADMINISTRATIVE COSTS, OVERHEAD, OR PROFITS.

"(C) WITHIN SIXTY DAYS OF RECEIPT OF THE APPLICABLE WAGE AND FRINGE BENEFIT SCALE, THE CONTRACTOR WILL SUBMIT A PROPOSAL FOR ANY CONTRACT PRICE CHANGE TO THE CONTRACTING OFFICER. WITH THE SUBMISSION OF HIS PROPOSAL FOR ADJUSTMENT, THE CONTRACTOR SHALL ALSO SUBMIT, IF REQUESTED BY THE GOVERNMENT, ALL NECESSARY AND PERTINENT DATA USED BY HIM IN PREPARING THE PROPOSAL UPON WHICH HE RECEIVED THE ORIGINAL AWARD OF THIS CONTRACT. THE CONTRACTING OFFICER OR HIS AUTHORIZED REPRESENTATIVE SHALL, UNTIL THE EXPIRATION OF THREE (3) YEARS AFTER FINAL PAYMENT UNDER THIS CONTRACT, HAVE ACCESS TO AND THE RIGHT TO EXAMINE ANY DIRECTLY PERTINENT BOOKS, DOCUMENTS, PAPERS AND RECORDS OF THE CONTRACTOR.

"(D) THIS CLAUSE SHALL BE DEEMED TO CONSTITUTE THE EXCLUSIVE CONTRACTUAL REMEDY OF THE CONTRACTOR FOR ADJUSTMENT ARISING OUT OF THE DECISION TO APPLY THE SERVICE CONTRACT ACT TO THE WORK COVERED BY THIS CONTRACT."

THE PROTESTER'S SECOND CONTENTION THAT THERE WAS NO BASIS FOR THE CONTRACT TO BE NEGOTIATED ALSO IS UNTIMELY, HAVING BEEN RAISED AFTER THE DATE FOR RECEIPT OF PROPOSALS. MATTER OF HAYES INTERNATIONAL CORPORATION, SUPRA.

THE PROTESTER'S THIRD CONTENTION IS THAT THE TRANSPORTATION COST TO BE ADDED TO MARIANNA'S OFFER FOR EVALUATION PURPOSES MUST HAVE BEEN INCORRECT, SINCE IT ESTIMATES THE COST TO BE ABOUT $50,000 TO $100,000 AND CONTENDS THAT IF MARIANNA'S PRICE REMAINS LOW AFTER THAT EVALUATION, ITS OFFER IS A "BUY-IN."

THE TRANSPORTATION EVALUATION FACTOR HAS BEEN REEXAMINED BY THE PROCURING ACTIVITY. IT HAS INDICATED THAT THE COST WAS CORRECTLY EVALUATED AT LESS THAN $50,000. HOWEVER, EVEN IF THE COST WAS EVALUATED AT $100,000, THE SPREAD BETWEEN THE OFFERS IS SO GREAT THAT MARIANNA WOULD REMAIN THE LOW OFFEROR.

IN THAT REGARD, "BUYING-IN" IS DEFINED IN ASPR SEC. 1-311 (1974 ED.) "*** THE PRACTICE OF ATTEMPTING TO OBTAIN A CONTRACT AWARD BY KNOWINGLY OFFERING A PRICE *** LESS THAN ANTICIPATED COSTS WITH THE EXPECTATION OF EITHER (I) INCREASING THE CONTRACT PRICE *** THROUGH CHANGE ORDERS OR OTHER MEANS, OR (II) RECEIVING 'FOLLOW-ON' CONTRACTS AT PRICES HIGH ENOUGH TO RECOVER ANY LOSSES ***." ASPR SEC. 1-311 DOES NOT PROHIBIT "BUY-IN" BIDS. RATHER, IT PROVIDES CERTAIN STEPS TO BE TAKEN TO AVOID ANY RECOUPMENT OF COSTS THROUGH CHANGE ORDERS OR FOLLOW ON PROCUREMENTS. ANY EVENT, AN ALLEGED "BUY-IN" DOES NOT AFFORD A BASIS TO QUESTION THE LEGALITY OF AN AWARD. MATTER OF WEXLER PAPER PRODUCTS, B-179231, JANUARY 22, 1974.

FOR THE ABOVE-NOTED REASONS, THE PROTEST IS DENIED.