B-171105, B-171303, MAR 25, 1971

B-171105, B-171303, MAR 25, 1971

BID PROTEST - LOW BIDDER - COMPUTATION REAFFIRMING PRIOR DECISION DENYING PROTEST OF GOULD, IN., AND C&D BATTERIES DIVISION, ELTRA CORP., AGAINST THE AWARD OF AN ADVERTISED CONTRACT ISSUED BY THE NAVY PURCHASING OFFICE FOR INDUSTRIAL STORAGE BATTERIES TO EXIDE. THE MULTIPLICITY OF DESTINATIONS MADE EVALUATION OF TRANSPORTATION COSTS QUITE COMPLEX BUT THE POSSIBILITY OF A SPLIT AWARD TO OBTAIN LOWEST COST WAS ELIMINATED BY EXIDE'S LOW BID. THE CALCULATING ERRORS DISCOVERED BY PROTESTANTS IN THE EXAMINATION OF GAO CALCULATIONS, WHILE IN AND OF THEMSELVES WOULD MAKE THEIR SPLIT AWARDS LOW BY $12 ARE OFF SET BY OTHER ERRORS SUBSEQUENTLY DISCOVERED KEEPING EXIDE'S BID LOW.

TO SELLERS, CONNER & CUNEO:

REFERENCE IS MADE TO YOUR LETTERS DATED MARCH 1, 1971, AND MARCH 4, 1971, REQUESTING, ON BEHALF OF GOULD, INCORPORATED, AND C & D BATTERIES DIVISION, ELTRA CORPORATION, RECONSIDERATION OF OUR DECISION OF FEBRUARY 23, 1971, B-171105 AND B-171303, TO THE SECRETARY OF THE NAVY.

THE FACTS AND CIRCUMSTANCES OF THE MATTER WERE SET FORTH FULLY IN OUR PRIOR DECISION. IN BRIEF, THE NAVY PURCHASING OFFICE ISSUED INVITATION FOR BIDS (IFB) NO. N00600-71-B-0022 ON AUGUST 14, 1970, FOR THE PROCUREMENT ON AN F.O.B. ORIGIN BASIS OF A QUANTITY OF INDUSTRIAL STORAGE BATTERIES. DELIVERIES WERE TO BE MADE TO 55 DESTINATIONS OVER A 15-MONTH PERIOD. THIS MULTIPLICITY OF DESTINATIONS MADE THE EVALUATION OF TRANSPORTATION COSTS QUITE COMPLEX. THE NAVY EVALUATED THESE COSTS WITH CARE AND IN GOOD FAITH, AND, AS A RESULT, SPLIT THE AWARDS AMONG GOULD, C & D, AND EXIDE. EXIDE CONTENDED THAT THE EVALUATION OF TRANSPORTATION WAS NOT CORRECT. THE MATTER WAS CONSIDERED BY EXPERIENCED AND COMPETENT PERSONNEL IN OUR TRANSPORTATION DIVISION WHO, AFTER DUE CONSIDERATION, CONCLUDED THAT THE LOWEST COST TO THE GOVERNMENT WOULD BE OBTAINED IF THE ENTIRE PROCUREMENT HAD BEEN AWARDED TO EXIDE, WHICH HAD OFFERED A QUANTITY DISCOUNT FOR AWARD OF THE ENTIRE PROCUREMENT. IN B-171105, B-171303, FEBRUARY 23, 1971, WE HELD THAT THE AWARDS TO C & D AND GOULD WERE UNAUTHORIZED AND SHOULD BE TERMINATED.

YOUR LETTERS OFFER TWO BASES UPON WHICH YOU CONSIDER OUR DECISION SHOULD BE REVERSED:

1. THE GENERAL ACCOUNTING OFFICE CALCULATION OF TRANSPORTATION COSTS IS ERRONEOUS. THE CONTRACTS WERE ACTUALLY AWARDED (ORIGINALLY) TO THE LOWEST BIDDERS AND THE ORIGINAL AWARDS MUST STAND.

2. REGARDLESS OF POSSIBLE ERRORS IN CALCULATING TRANSPORTATION COSTS, THE CONTRACTING OFFICER'S ORIGINAL AWARDS MUST STAND.

FOLLOWING THE ISSUANCE OF OUR PRIOR DECISION, YOU REQUESTED AND WERE GRANTED LEAVE FOR GOULD AND C & D TRANSPORTATION PEOPLE TO EXAMINE OUR TRANSPORTATION DIVISION WORK PAPERS AND SUMMARY SHEETS. THE SAME ACCESS WAS GRANTED TO REPRESENTATIVES OF EXIDE POWER SYSTEM DIVISION, ESB INCORPORATED. AFTER EXAMINING THE DOCUMENTATION, YOU POINTED OUT AN ERROR IN THE TRANSFER OF TRANSPORTATION COSTS IN THE FINAL SUMMARY TABLE FOR LOTS III AND IV, WHICH, WHEN CORRECTED, REDUCED THE SPLIT AWARD EVALUATED PRICE SUMMARY BY A NET SUM OF $289. YOU ALSO ALLEGED THAT THE GENERAL ACCOUNTING OFFICE CALCULATIONS WERE IN ERROR IN NOT USING THE "LOWEST AVAILABLE TARIFF" IN COMPUTING COSTS FOR NINE SHIPMENTS IN LOTS X AND XI. IN THIS REGARD, YOU STATE THAT USE OF "M. B. MORGAN'S FREIGHT TARIFF NO. 7" FOR MOTOR FREIGHT TARIFF OF COMMODITY RATES BETWEEN TRENTON, NEW JERSEY AND NEW CUMBERLAND, PENNSYLVANIA FOR GOULD SHIPMENTS WOULD RESULT IN AN ADDITIONAL REDUCTION OF $249 IN FAVOR OF A SPLIT AWARD. YOU TOTAL THE SUM OF THE ALLEGED ERRORS AS A REDUCTION OF $538 WHICH OVERCOMES THE EXIDE LOW EVALUATION (SINGLE AWARD) BY $12. IN OTHER WORDS, YOU CONTEND THAT A SPLIT AWARD (TO GOULD, C & D AND EXIDE) IS LOWER THAN A SINGLE AWARD TO EXIDE BY $12.

CONCEDING, ONLY FOR THE PURPOSES OF THIS DECISION, THAT THE "MORGAN RATES" ARE APPLICABLE, THE SAME RATES FOR SHIPMENTS TO NEW CUMBERLAND BY EXIDE WOULD BE APPROPRIATE. HOWEVER, IN THE REEXAMINATION OF OUR SUMMARY SHEETS, WHEREIN YOUR RATE SPECIALISTS UNCOVERED ERRORS IN TRANSFERRING FIGURES INTO A SUMMARY, ANOTHER TRANSFER ERROR WAS UNCOVERED AS TO LOT II. THIS TRANSFER ERROR OCCURRED IN USING THE TOTAL $10,131 INSTEAD OF THE TOTAL $10,248. THE LATTER FIGURE IS THE CORRECT "GAO VALUATION OF C & D EXCEPTIONS" TO THE NAVY EVALUATION. THIS DIFFERENCE OF $117 ADDED TO THE SPLIT AWARD SUMMARY OFFSETS THE $12 AMOUNT MENTIONED ABOVE AND WOULD MAKE THE SINGLE AWARD TO EXIDE LOW BY $105. IT MAY BE NOTED THAT THE $12 FIGURE WAS COMPUTED BY YOUR TRANSPORTATION SPECIALISTS, NOT OURS. THE ABOVE RESULT OCCURRED FOLLOWING A THOROUGH EXAMINATION OF THE SUMMARY SHEETS AFTER YOUR DISCLOSURE OF THE TWO TRANSFER ERRORS. THE "MORGAN" TARIFF RATES WERE USED IN THE PREPARATION OF THE REVISED SUMMARIES; IT IS AGAIN NOTED THAT APPLICABILITY OF THE "MORGAN" (HEAVY HAULER) RATES IS NOT CONCEDED.

IT ALSO SHOULD BE NOTED, AT THIS POINT, RELATIVE TO THE ALLEGATION THAT A SPLIT AWARD IS $12 LOWER THAN A SINGLE AWARD TO EXIDE, THAT SECTION D, "EVALUATION AND AWARD FACTORS," ON PAGE 19 OF THE SUBJECT INVITATION FOR BIDS NO. N00600-71-B-0022, PROVIDES:

"EVALUATION OF BIDS FOR MULTIPLE AWARDS (1969 OCT)

"IN ADDITION TO OTHER FACTORS, BIDS WILL BE EVALUATED ON THE BASIS OF ADVANTAGES OR DISADVANTAGES TO THE GOVERNMENT THAT MIGHT RESULT FROM MAKING MORE THAN ONE AWARD (MULTIPLE AWARDS). FOR THE PURPOSE OF MAKING THIS EVALUATION, IT WILL BE ASSUMED THAT THE SUM OF $50 WOULD BE THE ADMINISTRATIVE COST TO THE GOVERNMENT FOR ISSUING AND ADMINISTERING EACH CONTRACT AWARDED UNDER THIS INVITATION, AND INDIVIDUAL AWARDS WILL BE FOR THE ITEMS AND COMBINATIONS OF ITEMS WHICH RESULT IN THE LOWEST AGGREGATE PRICE TO THE GOVERNMENT, INCLUDING SUCH ADMINISTRATIVE COSTS."

IN THIS CONNECTION, THE ATTORNEYS FOR EXIDE CONTEND THAT:

"THE APPLICATION OF THIS MANDATORY PROVISION IS QUITE CLEAR. FOR PURPOSES OF EVALUATING THE SPLIT AWARDS TO GOULD, INC., C & D BATTERIES AND EXIDE, AN 'ADMINISTRATIVE COST' FACTOR OF $50 MUST BE INCLUDED FOR EACH OF THE THREE AWARDS - IN THIS CASE, A TOTAL OF $150. IF, ON THE OTHER HAND, A TOTAL AWARD WERE TO BE MADE TO EXIDE, AS INDICATED IN THE GAO DECISION OF FEBRUARY 23, 1971, THE ADMINISTRATIVE COST FACTOR TO BE USED FOR PURPOSES OF EVALUATION WOULD BE ONLY $50, SINCE THERE WOULD BE ONLY ONE CONTRACT FOR THE GOVERNMENT TO ADMINISTER. THEREFORE, IN THESE PARTICULAR CIRCUMSTANCES, THERE IS A DIFFERENTIAL OF $100 DEPENDING ON WHETHER THE SUBJECT IFB IS AWARDED ON A SPLIT BASIS AMONG THREE CONTRACTORS, OR IS AWARDED IN ITS ENTIRETY TO EXIDE."

IN VIEW OF THE RESULT OF THE CORRECTED SUMMARY, WE DO NOT CONSIDER IT NECESSARY TO DECIDE THIS ASPECT OF THE MATTER.

YOUR SECOND CONTENTION RELATES TO ACCEPTANCE OF THE ORIGINAL AND INITIAL EVALUATION OF BIDS AND FREIGHT CHARGES IN FAVOR OF A SPLIT AWARD. IT IS YOUR POSITION THAT CONTRACT AWARDS MADE IN GOOD FAITH BY A CONTRACTING OFFICER BASED ON CALCULATIONS WHICH HE DEEMED CORRECT SHOULD NOT BE DISTURBED ON THE BASIS OF SUBSEQUENT DETERMINATIONS THAT THE CALCULATION OF TRANSPORTATION COSTS WAS "MILDLY" ERRONEOUS. IN OUR DECISION OF FEBRUARY 23, 1971, WE CONCLUDED THAT "THE INTEGRITY OF THE FORMAL ADVERTISING PROCUREMENT SYSTEM REQUIRES THE MAKING OF AWARDS IN STRICT CONFORMANCE WITH THE SOLICITATION DOCUMENTS AND THE USE OF ACCURATE FACTUAL DATA IN THE EVALUATION OF BIDS." NOTWITHSTANDING THE MERITS OF YOUR PROPOSITION IN THIS REGARD, WE DO NOT BELIEVE THAT SUCH A POSITION CAN PROPERLY BE CONSIDERED WITH RESPECT TO THE PRESENT PROCUREMENT SINCE CONCLUSIVE ACTIONS THEREON HAVE ALREADY BEEN TAKEN BY THE NAVY PURSUANT TO OUR DECISION OF FEBRUARY 23. FURTHER, WE BELIEVE THAT OUR EARLIER CASES CITED BY YOU IN SUPPORT OF THE PROPOSITION ARE READILY DISTINGUISHABLE.

IN B-167544, JANUARY 2, 1970, CITED BY YOU, A CASE INVOLVING FREIGHT RATES, THE BASIC QUESTION WAS WHETHER A CERTAIN RATE WAS APPLICABLE TO THE SHIPMENT INVOLVED, A MATTER OF JUDGMENT, AND WE STATED "WE FIND NO GROUND TO DOUBT THAT HONEST JUDGMENT WAS EXERCISED IN THE EVALUATION OF OFFERS." HERE, THE RESULT IS BASED ON FACTUAL ACCURACY; THE JUDGMENT ISSUES ARE CONCEDED. IN B-158025, AUGUST 10, 1966, ALSO CITED, A SITUATION STRIKINGLY SIMILAR TO THE CIRCUMSTANCES OBTAINING HERE EXISTED. HOWEVER, THAT CASE INVOLVED A HIGH PRIORITY PROCUREMENT OF ITEMS URGENTLY NEEDED IN SOUTHEAST ASIA AND WE CONCLUDED THAT IT WOULD NOT BE IN THE BEST INTERESTS OF THE GOVERNMENT TO CANCEL THE VOIDABLE CONTRACT AND MAKE A NEW AWARD TO THE ACTUAL LOW BIDDER WITH THE CONSEQUENT DELAY IN ULTIMATE DELIVERY OF THE ITEMS.

THE PRESENT PROCUREMENT IS NOT A HIGH PRIORITY PROCUREMENT OF URGENTLY NEEDED MATERIALS. FURTHERMORE, WE DO NOT BELIEVE THAT IN THE PRESENT POSTURE OF THE CASE, THE TIMELINESS OF DELIVERIES WILL VARY SIGNIFICANTLY ON THE BASIS OF THE OUTCOME. ALL COMPANIES ARE IN A POSITION TO BEGIN OR RESUME PRODUCTION AND TO MAKE TIMELY DELIVERY (AS ADJUSTED FOR DELAYS OCCASIONED BY THE PROTESTS). HENCE, OUR PRESENT SITUATION IS QUITE DISTINGUISHABLE FROM THE CITED CASE.

ACCORDINGLY, WE MUST ADHERE TO OUR EARLIER DECISION FOR THE REASON STATED IN THE FINAL PARAGRAPH THEREOF.