B-182039, MAR 5, 1975

B-182039: Mar 5, 1975

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CONTRACTING OFFICER'S CONSIDERATION OF BID WHICH WAS HAND DELIVERED TO PROCUREMENT OFFICIALS IN AN OPEN ENVELOPE APPROXIMATELY TEN MINUTES PRIOR TO OPENING OF BIDS. WAS PROPER WHERE CIRCUMSTANCES SURROUNDING SUBMISSION OF BID DEMONSTRATES THAT OTHER BIDDERS WERE NOT PREJUDICED. 2. PROTESTER'S ALLEGATION THAT SUCCESSFUL BIDDER'S PROPOSED RATES ARE NONRESPONSIVE ON BASIS THAT RATES ARE BELOW COST FOR PERFORMING REQUIRED SERVICES IS WITHOUT MERIT WHERE BIDDER VERIFIED APPARENTLY UNBALANCED RATES. IN ABSENCE OF EVIDENCE OF IRREGULARITY OR SUBSTANTIAL DOUBT THAT AWARD WILL IN FACT RESULT IN LOWEST COST TO GOVERNMENT. 3. PROTESTER'S CONTENTION THAT AWARDEE LACKS SUFFICIENT EXPERIENCE TO SUCCESSFULLY PERFORM THE CONTRACT IS NOT FOR CONSIDERATION WHERE CONTRACTING OFFICER HAS DETERMINED AWARDEE TO BE RESPONSIBLE.

B-182039, MAR 5, 1975

1. CONTRACTING OFFICER'S CONSIDERATION OF BID WHICH WAS HAND DELIVERED TO PROCUREMENT OFFICIALS IN AN OPEN ENVELOPE APPROXIMATELY TEN MINUTES PRIOR TO OPENING OF BIDS, RATHER THAN IN SEALED ENVELOPE AS REQUIRED BY THE TERMS OF SOLICITATION, WAS PROPER WHERE CIRCUMSTANCES SURROUNDING SUBMISSION OF BID DEMONSTRATES THAT OTHER BIDDERS WERE NOT PREJUDICED. 2. PROTESTER'S ALLEGATION THAT SUCCESSFUL BIDDER'S PROPOSED RATES ARE NONRESPONSIVE ON BASIS THAT RATES ARE BELOW COST FOR PERFORMING REQUIRED SERVICES IS WITHOUT MERIT WHERE BIDDER VERIFIED APPARENTLY UNBALANCED RATES, AS FACT THAT BID MAY BE UNBALANCED DOES NOT RENDER IT NONRESPONSIVE NOR OF ITSELF INVALIDATE AWARD OF CONTRACT TO LOW RESPONSIVE, RESPONSIBLE BIDDER, IN ABSENCE OF EVIDENCE OF IRREGULARITY OR SUBSTANTIAL DOUBT THAT AWARD WILL IN FACT RESULT IN LOWEST COST TO GOVERNMENT. 3. PROTESTER'S CONTENTION THAT AWARDEE LACKS SUFFICIENT EXPERIENCE TO SUCCESSFULLY PERFORM THE CONTRACT IS NOT FOR CONSIDERATION WHERE CONTRACTING OFFICER HAS DETERMINED AWARDEE TO BE RESPONSIBLE, SINCE OUR OFFICE HAS DISCONTINUED ITS PRIOR PRACTICE OF REVIEWING PROTESTS OF CONTRACTING OFFICER'S AFFIRMATIVE RESPONSIBILITY DETERMINATIONS EXCEPT FOR ACTION BY PROCURING OFFICIALS WHICH ARE TANTAMOUNT TO FRAUD. 4. AGENCY DETERMINATION TO AWARD CONTRACT UNDER IFB DURING PENDENCY OF PROTEST RATHER THAN EXTEND EXISTING CONTRACT IS JUSTIFIED WHERE PROCUREMENT INVOLVES SERVICES OF A CONTINUING NATURE AND TERMINATION FOR CONVENIENCE WOULD BE A FEASIBLE REMEDY IN THE EVENT THE PROTEST HAD BEEN UPHELD.

RYAN-WALSH STEVEDORING COMPANY, INC.:

INVITATION FOR BIDS (IFB) DAHC21-74-B-1369, ISSUED BY THE EASTERN AREA, MILITARY TRAFFIC MANAGEMENT COMMAND (MTMC), SOLICITED BIDS FOR STEVEDORING AND RELATED TERMINAL SERVICES AT THE MILITARY OCEAN TERMINAL, SUNNY POINT, SOUTHPORT, NORTH CAROLINA, FOR THE PERIOD AUGUST 24, 1974, THROUGH AUGUST 23, 1976. IN RESPONSE TO THE SUBJECT IFB, FOUR BIDS WERE RECEIVED AND OPENED AUGUST 5, 1974, AS SCHEDULED, WITH PRICES AS FOLLOWS:

BIDDER CONTRACT PRICE

UNITED TERMINALS, INC. (UNITED) $7,724,227.20

INTERNATIONAL TERMINAL OPERATING 7,830,958.00

COMPANY (ITO)

RYAN-WALSH STEVEDORING COMPANY, 8,480,306.90

INC. (RYAN-WALSH)

NEW ORLEANS STEVEDORING COMPANY 9,150,531.36

THE GOVERNMENT'S ESTIMATE FOR THE PROCUREMENT WAS $7,907,080.66. AUGUST 6, 1974, A TELEFAX WAS RECEIVED BY THE CONTRACTING OFFICER FROM RYAN-WALSH PROTESTING AGAINST AWARD TO EITHER UNITED OR ITO. THE SUBJECT PROTEST WAS SUBSEQUENTLY FILED WITH OUR OFFICE. FOR REASONS DISCUSSED BELOW THE PROTEST IS DENIED.

THE RECORD INDICATES THAT THE FOUR BIDS WERE REVIEWED AND EVALUATED BY THE MTMC'S OFFICE OF PRICE ANALYSIS (OPA). THE OPA DETERMINED, BASED ON THE ESTIMATED CONTRACT REQUIREMENTS AND THE RESULTS OF A COMPARATIVE PRICE ANALYSIS, THAT UNITED'S BID WAS TOO LOW AND UNREALISTIC AND ADVISED THAT THE CONTRACTOR BE QUERIED REGARDING ITS INTENTIONS TO PERFORM THE CONTRACT AND AS TO THE VALIDITY OF THE PRICES BID. IN RESPONSE TO A SUBSEQUENT REQUEST FOR VERIFICATION OF ITS BID, UNITED, ON AUGUST 13, 1974, INDICATED TO THE ACTIVITY THAT ITS BID CONTAINED A PRICING MISTAKE IN THE AREAS OF LOADING AND DISCHARGING. BY LETTER OF THE FOLLOWING DAY, UNITED REQUESTED OF THE CONTRACTING OFFICER THAT ITS BID BE WITHDRAWN FROM FURTHER CONSIDERATION AND FURNISHED EVIDENCE INDICATING UNDERPRICING OF ITS BID IN THE AMOUNT OF $726,000. THE CONTRACTING OFFICER DETERMINED THAT A MISTAKE IN BID HAD IN FACT BEEN MADE, AND ACCORDINGLY, UNITED'S REQUEST THAT ITS BID BE WITHDRAWN WAS ACCEPTED.

PRICE ANALYSIS PERSONNEL EVALUATED THE SECOND LOW BID SUBMITTED BY ITO AND DETERMINED THAT THE BID WAS FAIR AND REASONABLE AND THAT IT APPEARED OVERALL TO BE WELL BALANCED AND IN THE BEST INTERESTS OF THE GOVERNMENT. ON AUGUST 14, 1974, ITO VERIFIED THAT ITS PROPOSED PRICES WERE CORRECT. THAT SAME DAY, THE ACTIVITY'S BOARD OF AWARDS CONVENED AND ACCEPTED THE RECOMMENDATION OF THE DIRECTORATE OF PROCUREMENT THAT THE SUBJECT CONTRACT BE AWARDED TO ITO. ON SEPTEMBER 20, 1974, OUR OFFICE WAS ADVISED THAT, NOTWITHSTANDING THE PENDENCY OF THE PROTEST, AWARD WAS BEING MADE TO ITO BASED UPON A DETERMINATION PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) SEC. 2-407.8(B)(3)(III) (1974 ED.) THAT IMMEDIATE AWARD WILL BE ADVANTAGEOUS TO THE GOVERNMENT.

RYAN-WALSH FIRST CONTENDS THAT ITO'S BID SHOULD NOT HAVE BEEN CONSIDERED FOR AWARD BECAUSE THE BID WAS NOT A SEALED OFFER. IN THIS REGARD, THE RECORD INDICATES THAT TEN MINUTES PRIOR TO THE 10:00 A.M. OPENING OF BIDS, A REPRESENTATIVE OF ITO HAND DELIVERED THE FIRM'S BID TO THE SECRETARY OF THE DIRECTOR OF PROCUREMENT WHO TOOK THE ENVELOPE TO THE BID DEPOSITARY TO BE RECORDED. HOWEVER AT 9:54 A.M., IT WAS DISCOVERED THAT THE BID WAS UNSEALED. IT APPEARS THAT THE DIRECTOR INSTRUCTED THE ITO REPRESENTATIVE TO SIGN THE ENVELOPE AND INDICATE THEREON THAT THE BID WAS HAND CARRIED IN AN UNSEALED ENVELOPE. THE BID WAS SUBSEQUENTLY EXAMINED AT THE SCHEDULED OPENING TIME AND ON ITS FACE WAS FOUND TO BE VOID OF ANY CHANGES, ERASURES, APPARENT ADDITIONS OR ANY OTHER IRREGULARITIES. THE CONTRACTING OFFICER THEN ACCEPTED ITO'S BID AND CONSIDERED IT ALONG WITH ALL THE OTHER BIDS SUBMITTED.

THE INVITATION CONTAINED STANDARD FORM 33 (NOVEMBER 1969), ENTITLED "SOLICITATION, OFFER AND AWARD". ITEM 9 OF THE "SOLICITATION" PORTION OF THAT FORM PROVIDES IN PERTINENT PART AS FOLLOWS:

"SEALED OFFERS *** WILL BE RECEIVED IN THE PLACE SPECIFIED *** OR IF HAND CARRIED IN THE DEPOSITARY ***."

IT IS THE ADMINISTRATIVE POSITION THAT WHILE THE BIDDER DID NOT COMPLY WITH THE LITERAL TERMS OF THE SOLICITATION REQUIRING THAT BIDS BE SEALED WHEN PLACED WITH THE BID DEPOSITARY, THE INTENT OF THE PROVISION WAS FULFILLED.

THE REQUIREMENT THAT BIDS BE SUBMITTED IN SEALED ENVELOPES IS INTENDED TO MAINTAIN AND PROTECT THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM. HOWEVER, OUR OFFICE HAS HELD THAT THE FAILURE TO ENCLOSE A BID IN A SEALED ENVELOPE AS PROVIDED BY THE TERMS OF THE SOLICITATION IS NOT AN AUTOMATIC GROUND FOR REJECTION, BUT MAY BE WAIVED, WHERE UNDER THE PARTICULAR CIRCUMSTANCES OF THE PROCUREMENT IT CAN BE DEMONSTRATED THAT THE OTHER BIDDERS WERE NOT PREJUDICED AND THEIR INTERESTS WERE NOT COMPROMISED BY THE DEVIATION IN THE MANNER OF SUBMISSION OF THE BID IN QUESTION. COMP. GEN. 37 (1957). CONSIDERING THE CIRCUMSTANCES SURROUNDING THE SUBMISSION OF ITO'S UNSEALED BID, INCLUDING THE FACT THAT THE BID WAS HAND DELIVERED TO THE DEPOSITARY, AND THAT THE BID WAS IN THE GOVERNMENT'S POSSESSION ONLY APPROXIMATELY TEN MINUTES PRIOR TO THE OPENING OF BIDS, WE MUST CONCLUDE THAT THE OTHER BIDDERS WERE NOT PREJUDICED AND EACH HAD AN EQUAL OPPORTUNITY TO COMPETE FOR THE CONTRACT IN QUESTION. ACCORDINGLY, THE CONTRACTING OFFICER'S ACCEPTANCE OF THE ITO BID FOR AWARD CONSIDERATION, ALTHOUGH NOT SUBMITTED IN A SEALED ENVELOPE, WAS PROPER.

RYAN-WALSH NEXT CONTENDS THAT THE RATES SUBMITTED BY ITO FOR FILLING AND EMPTYING MILVANS REPRESENT FIFTY PERCENT OF OUT-OF-POCKET-COSTS INCURRED TO PERFORM THE REQUIRED SERVICES AND THAT THE SERVICES COULD NOT BE PERFORMED AT SUCH PRICES. THUS, IT IS ALLEGED THAT THE BID FOR THESE ITEMS WAS MATERIALLY UNBALANCED AND THEREFORE NONRESPONSIVE TO THE IFB.

THE MTMC, AS A PART OF THE ADMINISTRATIVE REPORT, FURNISHED OUR OFFICE A SUMMARY OF THE COMPARATIVE PRICE ANALYSIS PERFORMED BY THE OPA WHICH REVEALED THE FOLLOWING COMPARISON OF PRICES PROPOSED BY RYAN WALSH AND ITO FOR THE SERVICES IN QUESTION AND THEIR COMPARATIVE POSITION IN REGARD TO THE GOVERNMENT ESTIMATE.

SCHEDULE 1B - MISCELLANEOUS COMMODITY ACTIVITIES

PRICE

DIFFERENCE

3. FILLING & BETWEEN

EMPTYING ESTIMATED RYAN- ITO AND TOTAL

MILVANS QUANTITY ITO BID WALSH BID RYAN-WALSH DIFFERENCE

A) ONE HIGH 12,000 M/T $7.39 $13.05 $5.66 $ 67,920.00

B) TWO HIGH 36,000 M/T $4.11 $13.05 $8.94 $321,840.00

TOTAL $389,760.00

THE UNIT PRICE ESTIMATED BY THE GOVERNMENT WAS $10.57 PER M/T FOR BOTH THE ONE AND TWO HIGH MILVANS. THE ANALYSIS REVEALED THAT ITO BID $270,720 BELOW THE GOVERNMENT ESTIMATE FOR FILLING AND EMPTYING MILVANS, WHILE RYAN -WALSH'S PROPOSED RATES EXCEEDED THE GOVERNMENT ESTIMATE FOR THE SAME SERVICES BY $119,040. THE RECORD INDICATES THAT WHILE THE OPA DETERMINED THAT ITO'S BID, WHEN CONSIDERED AS A WHOLE, APPEARED WELL BALANCED, THE PRICE ANALYSIS PERSONNEL STATED IN REGARD TO THE COMPARATIVELY LOW RATES PROPOSED FOR THE SERVICES IN QUESTION, THAT THE "CONTRACTOR MAY BE (1) PRESUMING THAT ESTIMATED QUANTITIES IN 3A AND 3B WILL NOT MATERIALIZE, OR (2) FORECASTING MAXIMUM EFFICIENCY."

AS A GENERAL RULE, THE FACT THAT A BID MAY BE UNBALANCED DOES NOT RENDER IT NONRESPONSIVE, NOR DOES SUCH FACTOR INVALIDATE AN AWARD OF A CONTRACT TO SUCH A BIDDER. MATTER OF R & R INVENTORY SERVICE, INC., 54 COMP. GEN. , B-181264, SEPTEMBER 12, 1974. OUR OFFICE HAS RECENTLY RECOGNIZED THE TWO-FOLD ASPECTS OF UNBALANCING. SEE MATTER OF MOBILEASE CORP., 54 COMP. GEN. , B-181050, SEPTEMBER 27, 1974; MATTER OF OSWALD BROTHERS ENTERPRISES, INC., B-180676, MAY 9, 1974. THE POSITION THAT OUR OFFICE HAS TAKEN IN REGARD TO THIS MATTER IS AS FOLLOWS:

"THE FIRST IS A MATHEMATICAL EVALUATION OF THE BID TO DETERMINE WHETHER IT IS UNBALANCED. AS NOTED IN ARMANIACO V. BOROUGH OF CRESSKILL, 163 A. 2D 379 (1960), AND FRANK STAMATO & CO. V. CITY OF NEW BRUNSWICK, 90 A. 2D 34, 36 (1952), THE MATHEMATICAL ASPECTS OF IDENTIFYING AN UNBALANCED BID FOCUS ON WHETHER EACH BID ITEM CARRIES ITS SHARE OF THE COST OF THE WORK AND THE CONTRACTOR'S PROFIT OR WHETHER THE BID IS BASED ON NOMINAL PRICES FOR SOME WORK AND ENHANCED PRICES FOR OTHER WORK. THE SECOND ASPECT INVOLVES AN ASSESSMENT OF THE COST IMPACT OF A BID FOUND TO BE MATHEMATICALLY UNBALANCED. UNLESS THERE IS REASONABLE DOUBT THAT BY MAKING AWARD TO A PARTY SUBMITTING A MATHEMATICALLY UNBALANCED BID, AWARD WILL NOT RESULT IN THE LOWEST ULTIMATE COST TO THE GOVERNMENT, THE BID SHOULD NOT BE CONSIDERED MATERIALLY UNBALANCED. SEE B-180676, SUPRA.; B- 172789, JULY 19, 1971; 49 COMP. GEN., SUPRA; MATTER OF GLOBAL GRAPHICS, INCORPORATED, B 180996, AUGUST 2, 1974, 54 COMP. GEN. ." MATTER OF MOBILEASE CORP., SUPRA.

IN THE INSTANT PROCUREMENT, WE DO NOT BELIEVE THAT SUCH DOUBT EXISTS SINCE THE PROCURING ACTIVITY HAS DETERMINED THAT THE BID SUBMITTED BY ITO IS "MOST FAIR AND REASONABLE AND IN THE BEST INTERESTS OF THE GOVERNMENT ON THE BASIS OF PRICE AND ABILITY BEING THE DETERMINING FACTORS TO WHOMEVER WILL RECEIVE THE AWARD."

ALSO, THE PROTESTER CONTENDS THAT ITO LACKS SUFFICIENT EXPERIENCE TO PERFORM THE REQUIRED SERVICES, SPECIFICALLY, THE FILLING OF MILVANS WITH EXPLOSIVES. IN THIS CONNECTION, HOWEVER, OUR OFFICE HAS DISCONTINUED ITS PRIOR PRACTICE OF REVIEWING PROTESTS OF CONTRACTING OFFICERS' AFFIRMATIVE RESPONSIBILITY DETERMINATIONS EXCEPT FOR ACTIONS BY PROCURING OFFICIALS WHICH ARE TANTAMOUNT TO FRAUD. SEE MATTER OF UNITED COMPUTING CORPORATION, B-181736, JANUARY 16, 1975. SINCE NO FRAUD HAS BEEN ALLEGED OR DEMONSTRATED, WE MUST DECLINE TO FURTHER CONSIDER THE MATTER.

FINALLY, RYAN-WALSH QUESTIONS THE AGENCY'S DETERMINATION TO AWARD THE CONTRACT TO ITO PRIOR TO THE RESOLUTION OF ITS PROTEST BY OUR OFFICE. SINCE RYAN-WALSH'S EXTENTION OF ITS CURRENT CONTRACT WAS TO EXPIRE SEPTEMBER 20, 1974, MTMC DETERMINED TO MAKE AN IMMEDIATE AWARD TO ITO. ALTHOUGH THE AGENCY NOTED THAT A SMALL MONETARY SAVINGS WOULD RESULT IN THE EVENT OF AN IMMEDIATE AWARD TO ITO, THE RECORD INDICATES THAT THE PRIMARY REASON FOR THE AWARD WAS THAT THE AGENCY DETERMINED THAT A FURTHER EXTENSION OF THE EXISTING CONTRACT WAS NOT JUSTIFIED. WE NOTE THAT IN 53 COMP. GEN. 496, A CONTRACTING AGENCY WAS FACED WITH THE CHOICE OF EITHER EXTENDING A EXISTING CONTRACT FOR SERVICES OF CONTINUING NATURE OR MAKING AWARD DURING THE PENDENCY OF A PROTEST. IN THAT CASE, THE AGENCY CHOSE THE LATTER ACTION BECAUSE IT WAS PREPARED TO TERMINATE THE CONTRACT FOR THE CONVENIENCE OF THE GOVERNMENT IF THE PROTEST WAS UPHELD. SINCE TERMINATION WOULD BE A FEASIBLE REMEDY IN THIS CASE ALSO, WE BELIEVE THAT THE AWARD TO ITO DURING THE PENDENCY OF RYAN-WALSH'S PROTEST WAS PROPER UNDER THE CIRCUMSTANCES.

ACCORDINGLY, THERE IS NO LEGAL BASIS TO QUESTION THE PROPRIETY OF THE AWARD TO ITO AND THE PROTEST OF RYAN-WALSH IS THEREFORE DENIED.