B-152341, JAN. 10, 1964

B-152341, JAN. 10, 1964

TO S. AND H. COMPANY OF BREVARD COUNTY:

WE HAVE RECEIVED YOUR LETTER OF NOVEMBER 11, 1963, REQUESTING THAT WE RECONSIDER OUR DECISION DATED OCTOBER 28, 1963, WHICH REJECTED YOUR PROTEST OF SEPTEMBER 18, 1963, AGAINST THE AWARD OF CONTRACT NAS 10 800, ISSUED UNDER INVITATION FOR BIDS CC-292-3, ALONG WITH OUR INITIAL CONSIDERATION OF YOUR CONCURRENT PROTEST OF SEPTEMBER 18, 1963, AGAINST THE AWARD OF CONTRACT NAS 10-786, ISSUED UNDER INVITATION FOR BIDS CC 293- 3. BOTH CONTRACTS WERE FOR THE LEASING OF SPECIFIED VEHICLES, AND WERE AWARDED ON JULY 5, 1963, TO MANAGEMENT SERVICES INCORPORATED OF TENNESSEE (MSI) BY THE RESPONSIBLE PROCUREMENT PERSONNEL AT JOHN F. KENNEDY SPACE CENTER, NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA), COCOA BEACH, FLORIDA.

YOU ALLEGE THAT THE DELIVERY SCHEDULES WERE NOT REASONABLE IN CALLING FOR CERTAIN DELIVERIES ON AUGUST 1, ESPECIALLY IN REGARD TO INVITATION FOR BIDS CC-293-3, WHICH CALLED FOR SPECIALLY BUILT, EQUIPPED AND PAINTED VEHICLES. THE PROCURING ACTIVITY REPORTS THAT THE DELIVERY SCHEDULES WERE TIGHT BUT REASONABLE UNDER THE CIRCUMSTANCES, AND THAT THE VEHICLES CONTEMPLATED BY INVITATION FOR BIDS CC-293-3 WERE ESSENTIALLY THE STANDARD COMMERCIAL PRODUCT OF SEVERAL MANUFACTURERS. IN THE ABSENCE OF CONVINCING EVIDENCE TO THE CONTRARY, THIS OFFICE ACCEPTS THE FACTS AS REPORTED BY THE ADMINISTRATIVE AGENCY. WE ARE IN NO POSITION TO ASSUME WITHOUT SUCH EVIDENCE THAT AN AGENCY HAS ARBITRARILY IMPOSED UPON ITSELF AN UNNECESSARY DELIVERY PROVISION WHICH WOULD TEND TO REDUCE COMPETITION.

YOU PRESENT NO EVIDENCE WHICH WE CAN REGARD AS CONVINCING. INSTEAD, YOU SAY IT WOULD BE APPROPRIATE FOR THE GOVERNMENT TO ASCERTAIN (1) THE DATES THAT THE SUCCESSFUL BIDDER ORDERED VEHICLES FROM DEALERS AND (2) THE DATES THAT THE DEALERS ORDERED VEHICLES FROM FACTORIES. IN SHORT, YOU PROPOSE THAT THE GOVERNMENT SOLICIT INFORMATION TO WHICH IT HAS NO STATUTORY RIGHT FROM PRIVATE PARTIES WITH WHOM IT HAS NO CONTRACTUAL RELATIONSHIP, IN ORDER TO OBTAIN EVIDENCE WHICH YOU SAY WILL CONTRADICT AN ADMINISTRATIVE DETERMINATION, THE REASONABLENESS OF WHICH WE PRESENTLY HAVE NO BASIS TO QUESTION. WE CANNOT AGREE WITH YOUR VIEW OF THE APPROPRIATENESS OF THIS APPROACH.

MOREOVER, THE PROCURING ACTIVITY WAS NOT ALLOTTED FUNDS FOR THE PROCUREMENT UNTIL JULY 1, 1963, AND IT WOULD NOT HAVE BEEN FEASIBLE TO ISSUE THE SUBJECT INVITATIONS FOR BIDS MUCH EARLIER THAN THIS DATE. NONETHELESS, AUGUST 1 DELIVERIES WERE REQUIRED BECAUSE EXISTING CONTRACTS FOR LEASED VEHICLES WERE TO EXPIRE AUGUST 31, SEPTEMBER 30 AND OCTOBER 15, 1963, AND TIME WAS NEEDED TO INSPECT NEW VEHICLES; TRANSFER 2-WAY RADIOS, CANOPIES AND BODY ACCESSORIES; REMOVE OLD AND PLACE NEW DECALS AND MARKINGS; AND RESTORE USED VEHICLES TO THEIR CONDITION AT TIME OF RECEIPT, EXCLUDING NORMAL WEAR AND TEAR. IN VIEW OF THE NEED FOR A TIGHT DELIVERY SCHEDULE, WE COULD NOT CONSIDER THE POSSIBILITY THAT SOME BIDDERS MAY HAVE HAD TO ORDER VEHICLES PRIOR TO KNOWLEDGE OF AWARD AS FATAL TO THE VALIDITY OF SUCH AWARD, UNLESS BAD FAITH OR THE ABSENCE OF COMPETITIVE PRICES WERE CLEARLY SHOWN.

WITH RESPECT TO THE REASONABLENESS OF THE AUGUST 1 DELIVERY DATES, YOU QUESTION THE RELEVANCE OF THE FACT THAT NO OTHER BIDDER OBJECTED TO THESE DATES, ESPECIALLY SINCE COMPLAINTS ALLEGEDLY COULD BE EXPECTED ONLY FROM THOSE WHOSE BIDS WERE SUFFICIENTLY LOW TO BE IN CONTENTION FOR THE AWARD. THE TIME FOR QUESTIONING DELIVERY REQUIREMENTS IS, OF COURSE, BEFORE RATHER THAN AFTER BIDS ARE OPENED, WHEN ONE'S COMPETITIVE STANDING IS STILL UNKNOWN. PAGE 7 OF BOTH INVITATIONS FOR BIDS CC-292-3 AND CC-293-3 SOLICITED QUESTIONS CONCERNING PROVISIONS CONTAINED THEREIN, AND PROMISED PROPER CONSIDERATION OF SUGGESTED CHANGES. AS FAR AS WE CAN DETERMINE FROM THE RECORD, NEITHER YOU NOR ANY OTHER BIDDER COMPLAINED BEFORE BIDS WERE OPENED THAT THE DELIVERY REQUIREMENTS WERE TOO STRICT. SHORTLY BEFORE AWARD OF A CONTRACT PURSUANT TO INVITATION FOR BIDS CC-293-3, YOU ARGUED THAT YOUR LOW BID WAS RESPONSIVE NOTWITHSTANDING ITS RESTRICTED ACCEPTANCE PERIOD. ALTHOUGH YOU SUBSEQUENTLY ATTEMPTED TO EXTEND THE TIME DURING WHICH YOUR BID COULD BE ACCEPTED, APPARENTLY YOU DID NOT, NOR DID ANY OTHER BIDDER, THEN OBJECT TO THE DELIVERY SCHEDULE. INDEED, YOU DID NOT OBJECT UNTIL OVER TWO WEEKS AFTER THE EXPIRATION OF THE AUGUST 1 DELIVERY DATE WHICH YOU NOW SAY IS UNREASONABLE. BY THAT TIME. ALL DELIVERIES HAD BEEN COMPLETED UNDER CONTRACT NAS 10-800 (INVITATION FOR BIDS CC-292-3). IN REGARD TO CONTRACT NAS 10-786 (INVITATION FOR BIDS CC- 293-3), THE CONTRACTOR SUPPLIED 48 OF 65 VEHICLES IN ACCORDANCE WITH THE AUGUST 1 DELIVERY REQUIREMENT. WE THINK THAT THE ABSENCE OF OTHER PROTESTS AGAINST AN UNDERSTANDABLY TIGHT DELIVERY SCHEDULE, AND FOR THAT MATTER THE DELAY IN SUBMITTING YOUR OWN PROTEST ON THIS ISSUE, TENDS TO PROVE THAT BIDDERS DID NOT REGARD THE DELIVERY DEMANDS AS UNNECESSARY OR UNREASONABLE. SEE B-143134, DATED AUGUST 1, 1960, COPY ENCLOSED. ALSO, SEE B-145363, DATED MAY 24, 1961, WHERE WE STATED:

"WHILE THIS PROCUREMENT APPEARS TO INVOLVE A PURCHASE OF STOCK ITEMS AS TO WHICH TIME, NORMALLY, WOULD NOT BE A MATERIAL FACTOR, THE RECORD SHOWS THAT BECAUSE OF THE EXISTING INVENTORY, AND THE CURRENT DEMAND FOR THE REFRIGERATORS FOR USE WITH FIELD HOSPITAL TYPE ASSEMBLAGES, DELIVERY THEREOF WAS REQUIRED NOT LATER THAN JUNE 1961. IN VIEW THEREOF, AND SINCE THE DELIVERY REQUIREMENTS WERE NOT CONSIDERED UNDULY RESTRICTIVE BY THE FIVE SMALL BUSINESS CONCERNS WHICH RESPONDED TO THE INVITATION, WE DO NOT FEEL DISPOSED TO RAISE ANY QUESTION WITH RESPECT TO THOSE TERMS. SUCH MATTERS ARE FOR DETERMINATION BY THE PROCURING AGENCY INVOLVED AND, IN THE ABSENCE OF CONVINCING EVIDENCE OF BAD FAITH, THIS OFFICE WOULD NOT BE JUSTIFIED IN OBJECTING TO THE PERFORMANCE PERIOD STIPULATED. THERE IS NO INDICATION OF FAVORITISM OR PERSONAL PREJUDICE IN THE TRANSACTION, AND THEREFORE THE EXERCISE OF SUCH DISCRETION IS NOT SUBJECT TO MODIFICATION BY US.'

ACCORDINGLY, WE MUST SUSTAIN OUR DECISION OF OCTOBER 28, 1963.

IN YOUR LETTER OF NOVEMBER 11, 1963, YOU REFER TO A NEW YORK TIMES ARTICLE OF OCTOBER 16, 1963, CONCERNING AN INVESTIGATION OF A SALE BY MSI TO CERTAIN PROCUREMENT PERSONNEL OF USED VEHICLES IT HAD RENTED TO NASA DURING FISCAL YEAR 1963 AT THE SPACE CENTER. SINCE THE SAME PERSONNEL MAY HAVE BEEN INVOLVED IN THE AWARD OF THE INSTANT PROTESTED CONTRACTS, THERE MAY BE A QUESTION OF WHETHER THERE EXISTED ANY FAVORITISM OR PERSONAL PREJUDICE IN AWARDING NAS 10-786 TO OTHER THAN THE LOW BIDDER. HOWEVER, APART FROM WHETHER THE NASA INVESTIGATION WILL DISCLOSE IMPROPRIETIES IN THIS PRIVATE SALE, IT IS REPORTED TO US THAT THE PROCUREMENT PERSONNEL INVOLVED IN THE AWARD OF CONTRACT NAS 10-786 WERE IN FACT PREPARED TO MAKE AWARD TO YOUR COMPANY OF THE ITEMS ON WHICH YOU WERE LOW BIDDER. HOWEVER, UPON ADVICE OF LEGAL COUNSEL AT THE ACTIVITY, YOUR BID WAS REJECTED AS NONRESPONSIVE.

IN THE LIGHT OF EVENTS WHICH TRANSPIRED SUBSEQUENTLY, AS OUTLINED IN THE NEW YORK TIMES, AN INQUIRY WAS CONDUCTED BY THE CHIEF COUNSEL OF THE SPACE CENTER TO ASCERTAIN WHETHER THE ATTORNEY WHO RENDERED THE FOREGOING ADVICE WAS CONNECTED IN ANY WAY, OR MIGHT HAVE BEEN INFLUENCED BY PERSONNEL OF MSI. THE RESULT WAS THAT NO CONNECTION, DEALINGS, INFLUENCE, OR OTHER BENEFIT WHATSOEVER, OR FORMAL OR INFORMAL CONTACT WITH MSI WAS ATTRIBUTED TO THIS ATTORNEY.

YOUR LOW BID IN RESPONSE TO ITEMS 1, 2 AND 4 ON INVITATION FOR BIDS CC- 293-3 WAS DECLARED NONRESPONSIVE BECAUSE OF THE FOLLOWING STATEMENT IN A LETTER ATTACHED TO YOUR BID:

"EARLIEST DELIVERY OF UNITS WHICH CAN BE MADE UNDER ANY AWARD WOULD BE 30 DAYS FROM NOTIFICATION OF AWARD, I.E. TO MEET AUGUST 1 DELIVERY, AWARD BY JULY 1.'

ON PAGE 1 OF THE INVITATION FOR BIDS YOU INSERTED THE WORDS "SEE COVER LETTER" IN THE SPACE PROVIDED FOR INDICATION OF BID ACCEPTANCE TIME (IF OTHER THAN 60 DAYS). THE "TIME OF DELIVERY" PROVISION SET FORTH ON PAGE 3 OF INVITATION FOR BIDS CC-293-3 REQUIRES DELIVERY OF 36 UNITS OF ITEM 1, 10 UNITS OF ITEM 2 AND 8 UNITS OF ITEM 4 BY AUGUST 1, 1963.

THE BASIS FOR THIS REJECTION STEMMED FROM YOUR RELATING THE QUALIFIED ACCEPTANCE PERIOD TO THE DELIVERY SCHEDULE. IN THE VIEW OF AN ATTORNEY AT THE PROCURING ACTIVITY, YOU HAD ATTEMPTED TO QUALIFY THE DELIVERY SCHEDULE IN SUCH A MANNER THAT YOUR PROPOSED DELIVERY WOULD NOT COMPLY WITH SUCH SCHEDULE IF YOU RECEIVED AWARD AFTER JULY 1, 1963. AFTER YOU PROTESTED THE AWARD, NASA OFFICIALS REVIEWED THE ATTORNEY'S OPINION AND DETERMINED, WE THINK CORRECTLY, THAT YOUR ORIGINAL BID MERELY RESTRICTED THE PERIOD DURING WHICH YOU WOULD ACCEPT AN AWARD, THE LATEST DATE BEING JULY 1, 1963, AND DID NOT ATTEMPT TO MODIFY THE DELIVERY SCHEDULE. SEE B-142893, DATED JULY 25, 1960. ACCORDINGLY, YOUR OFFER OF JULY 1 TO EXTEND THE ACCEPTANCE PERIOD WAS NOT AN ATTEMPT TO VALIDATE A NONRESPONSIVE BID AND SHOULD HAVE BEEN CONSIDERED. HAD IT BEEN CONSIDERED, IT APPEARS THAT YOU WOULD HAVE RECEIVED THE AWARD.

WHILE NASA ACKNOWLEDGES THAT AWARD OF CONTRACT NAS 10-786 WAS ERRONEOUSLY MADE TO MSI, IT GIVES THE FOLLOWING SEVERAL REASONS WHY THE EXISTING CONTRACT SHOULD NOT BE CANCELED:

"1. LARGE AMOUNT OF MONEY EXPENDED BY THE CONTRACTOR IN GOOD FAITH THAT HE HAD A VALID CONTRACT. THE CONTRACTOR ADVISED THAT HIS DIRECT COST FOR THE VEHICLES FOR ITEMS 1, 2 AND 4 (AUGUST AND SEPTEMBER DELIVERY) WAS $162,523.

"2. ACTUAL DEPRECIATION ON THE VEHICLES FOR THE FIRST FOUR MONTHS IS SUBSTANTIALLY IN EXCESS OF THE AMOUNT RECOVERED BY THE CONTRACTOR DURING THIS PERIOD. THE RESULTANT LOSS BY CANCELLATION MIGHT BANKRUPT THE CONTRACTOR, A SMALL BUSINESS CONCERN.

"3. NASA WOULD EXPERIENCE SUBSTANTIAL COSTS IN THE REMOVAL OF CANOPIES AND BODY ACCESSORIES, DECALS, MARKINGS AND, IN A FEW INSTANCES, TWO-WAY RADIOS.

"4. DISRUPTION OF SERVICE FROM THE TIME CONTRACT WAS CANCELED UNTIL VEHICLES WERE DELIVERED UNDER A NEW CONTRACT.

"5. EXCESS COST ACCRUING FROM SHORT TERM LEASES. SOME OF THE VEHICLES HAVE BEEN LOANED UNDER COST REIMBURSEMENT CONTRACTS AS GOVERNMENT FURNISHED EQUIPMENT. THESE CONTRACTORS ARE AUTHORIZED TO LEASE VEHICLES IN THE EVENT THEY ARE NOT FURNISHED BY THE GOVERNMENT. THE CURRENT SHORT TERM LEASE RATE IS IN EXCESS OF TWICE THAT PAID UNDER CONTRACT NAS 10- 786.'

FOR THE REASONS STATED ABOVE, WE FEEL THAT WE HAVE NO ALTERNATIVE BUT TO AGREE THAT IT WOULD NOT BE IN THE BEST INTERESTS OF THE GOVERNMENT TO CANCEL CONTRACT NAS 10-786. ACCORDINGLY, WE PROPOSE TO TAKE NO FURTHER ACTION IN REGARD TO EITHER OF THE SUBJECT CONTRACTS. WE ENCLOSE PER YOUR REQUEST COPIES OF OUR DECISIONS 35 COMP. GEN. 383 AND 42 COMP. GEN. - , B- 150527.