B-161909 L/M, JUL 12, 1967

B-161909 L/M, JUL 12, 1967

PRECIS-UNAVAILABLE

SECRETARY OF THE INTERIOR:

REFERENCE IS MADE TO LETTER DATED JUNE 27, 1967, FROM THE DEPUTY ASSISTANT SECRETARY FOR ADMINISTRATION, REQUESTING OUR DECISION ON A PROTEST BY ALLIS-CHALMERS MANUFACTURING COMPANY (ALLIS-CHALMERS) AGAINST THE AWARD OF CONTRACT NO. 14-03-73767, DATED MAY 19, 1967, TO I T-E CIRCUIT BREAKER COMPANY (I-T-E) UNDER INVITATION FOR BIDS (IFB) NO. 727, ISSUED MARCH 21, 1967, BY THE BONNEVILLE POWER ADMINISTRATION (BPA).

THE IFB SOLICITED BIDS ON TWO TYPES OF 500 KV GROUP-OPERATED DISCONNECTING SWITCHES UNDER NINE ITEMS. ITEMS 1 THROUGH 5 WERE PLACED IN GROUP I, AND ITEMS 6 THROUGH 9 WERE PLACED IN GROUP II. THE GROUP II SWITCHES WERE SIMILAR TO THE GROUP I SWITCHES WITH THE ADDED FEATURE OF GROUNDING BLADES ON THE CONTACT END. PROVISION WAS MADE FOR AWARD BY ITEM, BY GROUP, OR AS A WHOLE.

THE IFB TECHNICAL PROVISIONS REQUIRED VARIOUS DESIGN TESTS, FOR WHICH CERTIFIED DATA WAS TO BE SUBMITTED, EXCEPT THAT BIDDERS WHO HAD PREVIOUSLY SUBMITTED CERTIFIED DATA ON ACCEPTABLE TESTS PERFORMED UNDER A BPA CONTRACT FOR THE SAME EQUIPMENT WERE PERMITTED TO CITE THE CONTRACT IN LIEU OF FURNISHING THE DATA. ONE OF THE DESIGN TESTS REQUIRED ON THE GROUP II SWITCHES WAS A 1050 KV SWITCHING SURGE WITHSTAND TEST. DURING THE BIDDING PERIOD, HOWEVER, ALLIS-CHALMERS REQUESTED PERMISSION FROM BPA TO SUBSTITUTE FOR THE 1050 KV SURGE TEST A 60-CYCLE TEST WHICH BPA HAD ACCEPTED ON THE SAME TYPE SWITCH UNDER A PRIOR CONTRACT WITH ALLIS- CHALMERS. IN THIS CONNECTION, ALLIS-CHALMERS POINTED OUT THAT THE 1050 KV SURGE TEST WAS A NEW TEST; THAT SINCE THE HIGH VOLTAGE LABORATORY FACILITIES REQUIRED FOR SUCH TEST WERE NOT READILY AVAILABLE, IT WAS QUESTIONABLE WHETHER ANY BIDDER COULD PERFORM THE TEST AND MEET THE IFB DELIVERY SCHEDULE; AND THAT THE COST OF THE TEST, APPROXIMATELY $5,000 TO $6,000, WOULD BE REFLECTED IN THE BID PRICES. ACCORDINGLY, BPA RECONSIDERED THE REQUIREMENT AND NOTWITHSTANDING THAT NO ONE OF THREE OTHER PROSPECTIVE BIDDERS, INCLUDING I-T-E AND H. K. PORTER, INC. (PORTER), FROM WHOM BPA SOLICITED COMMENTS ON THE SURGE TEST, REGISTERED ANY COMPLAINT, ADDENDUM NO. 2 WAS ISSUED TO THE IFB PROVIDING, IN PERTINENT PART, AS FOLLOWS:

"THE OPEN GAP BETWEEN THE END OF THE GROUND BLADE AND THE NEAREST ENERGIZED PART DURING ANY PORTION OF THE BLADE TRAVEL SHALL WITHSTAND EITHER THE SWITCHING SURGE VOLTAGE SPECIFIED IN THE SPECIFIC TECHNICAL REQUIREMENTS OR A 60 HZ TEST VOLTAGE OF 760 KV."

ON APRIL 24, 1967, BIDS WERE OPENED. THREE BIDS WERE RECEIVED, ONE FROM PORTER QUOTING ON ALL BUT FOUR OF THE ITEMS, AND ONE EACH FROM ALLIS- CHALMERS AND I-T-E QUOTING ON ALL NINE ITEMS. THE ALLIS-CHALMERS TOTAL PRICE WAS $223,900, AND THE I-T-E TOTAL PRICE WAS $235,167. IN ADDITION, PORTER'S BID TOTALLING $98,244 FOR ITEMS 1, 4, 5 AND 5A AND ALLIS- CHALMERS' BID TOTALLING $124,300 FOR ITEMS 2, 3, 6, 7, 8, 9 AND 9A, COMPRISED THE LOWEST COMBINATION OF BIDS AT $222,554. HOWEVER, I-T E ALSO QUOTED A LUMP-SUM PRICE OF $223,756 FOR AWARD OF ALL ITEMS, BUT SUBJECT TO REDUCTION TO $221,756 UNDER THE FOLLOWING PROVISION:

"NOTE: DEDUCT $2,000.00 FROM THIS LUMP SUM PRICE IF 60-CYCLE TEST PERFORMED ON CONTRACT 14-03-65958 IS ACCEPTED IN LIEU OF PERFORMING 1050 KV. SWITCHING SURGE WITHSTAND TEST SPECIFIED FOR GROUNDING BLADE UNDER PARAGRAPH 321.A.4(B) OF GENERAL TECHNICAL SPECIFICATIONS."

IN A LETTER DATED MAY 5, ALLIS-CHALMERS SOLICITED COMMENTS FROM BPA ON THE SIGNIFICANCE OF THE I-T-E BID PRICE REDUCTION PROVISION. THE LETTER READS, IN PERTINENT PART, AS FOLLOWS:

"IN THE BID, AN ADDENDUM #2 WAS ISSUED WHICH STATED IT WAS UNNECESSARY TO PERFORM A SWITCHING SURGE TEST FOR THE GROUNDING BLADES IF THE MANUFACTURER HAD PERFORMED 60 CYCLE TESTS SATISFACTORILY ON A PREVIOUS CONTRACT. THEREFORE, THE NOTE ON THE BID IN EFFECT GIVES THE BIDDER AN OPTION OF EITHER DEDUCTING THE $2000 OR NOT AS IT SUITS THE IMMEDIATE PURPOSE. IT WOULD SEEM THIS IS INEQUITABLE, SINCE ADDENDUM #2 WOULD REMOVE THE NECESSITY FOR THE TEST, AND SO ANY BID INCLUDING ADDENDUM #2 WOULD INHERENTLY HAVE THE ADJUSTMENT INCLUDED IN THE LUMP SUM PRICE."

IN A LETTER DATED MAY 12, I-T-E SOUGHT TO CLARIFY ITS BID FOR BPA WITH AN EXPLANATION TO THE EFFECT THAT THE AMOUNT OF $2,000 HAD BEEN INCLUDED IN ITS BID PRICE TO COVER THE COST OF THE SURGE TEST; THAT THE PRICE REDUCTION PROVISION HAD BEEN INCORPORATED IN THE BID BEFORE ADDENDUM NO. 2 WAS ISSUED OR RECEIVED BY I-T-E; AND THAT WITH THE ISSUANCE OF ADDENDUM NO. 2, WHICH I-T-E VIEWED AS ELIMINATING THE NEED FOR THE SURGE TEST, I-T- E INTENDED AND BELIEVED THAT THE $2,000 DEDUCTION FROM ITS LUMP-SUM PRICE WOULD BE AUTOMATIC.

REVIEW OF THE THREE BIDS DISCLOSED THAT ALL WERE TECHNICALLY RESPONSIVE. FURTHER, EXAMINATION OF THE PROCUREMENT HISTORY OF THE SWITCHES REVEALED THAT EACH OF THE BIDDERS HAD PREVIOUSLY PERFORMED AN ACCEPTABLE 60 HZ 795 KV TEST UNDER PRIOR BPA CONTRACTS AND THEREFORE COULD SATISFY THE LESSER ALTERNATE REQUIREMENT IN THE AMENDED IFB FOR A 60 HZ 760 KV TEST. ACCORDINGLY, BPA DETERMINED THAT I-T-E'S BID PRICE REDUCTION OFFER WAS PROPERLY FOR CONSIDERATION IN EVALUATING ITS BID, AND ALLIS-CHALMERS WAS SO NOTIFIED BY BPA IN A LETTER DATED MAY 17. IN A LETTER DATED MAY 19, BPA NOTIFIED I-T-E THAT IT WAS AWARDED THE CONTRACT FOR ALL ITEMS AT ITS REDUCED LUMP-SUM PRICE.

BY LETTER DATED MAY 24, ALLIS-CHALMERS PROTESTED THE AWARD AND REQUESTED THAT BPA OBTAIN A RULING FROM OUR OFFICE. THE SUBSTANCE OF THE PROTEST IS CONTAINED IN THE FOLLOWING PARAGRAPH IN THE LETTER:

"THE BID PRICE OFFERED WAS TO APPLY TO EITHER METHOD OF TESTING. WHEN I.T.E. OFFERED AN ALTERNATE PRICE DEPENDING ON WHAT TESTS WERE TO BE PERFORMED, IT WAS CLEARLY NON-RESPONSIVE TO THE BID. SINCE THE FAILURE TO BE RESPONSIVE GOES TO THE SUBSTANCE OF THE BID, I.E. PRICE, IT SHOULD NOT BE CONSIDERED FOR AWARD OF THE CONTRACT."

IN A MEMORANDUM DATED JUNE 15, THE CONTRACTING OFFICER STATES THAT SINCE ADDENDUM NO. 2 MADE EITHER THE 1050 KV SURGE TEST OR THE 60 HZ 760 KV TEST ACCEPTABLE ALTERNATES FOR BIDDING PURPOSES, THE 60 HZ 795 KV TEST OFFERED BY I-T-E WAS ACCEPTABLE AS IT EXCEEDS THE SPECIFICATIONS. ACCORDINGLY, IT IS THE POSITION OF THE CONTRACTING OFFICER THAT THE I-T-E REDUCED BID PRICE BASED ON THE 60 HZ 795 KV TEST WAS CLEARLY ESTABLISHED AND THAT THE GOVERNMENT WAS BOUND TO ACCEPT SUCH PRICE AS THE LOWEST PRICE OFFERED (I-T -E BEING FOUND RESPONSIBLE AND OTHERWISE RESPONSIVE). THE CONTRACTING OFFICER FURTHER STATES THAT PENDING OUR DECISION, I-T-E, WHICH IS ON NOTICE OF THE ALLIS-CHALMERS PROTEST, IS CONTINUING WITH PERFORMANCE OF THE CONTRACT.

AN "ALTERNATE" BID, FROM THE GOVERNMENT'S VIEWPOINT, IS A BID WHICH OFFERS A PERFORMANCE NOT IN ACCORDANCE WITH THE BASIC SPECIFICATIONS. THUS A BID WHICH OFFERS TO MEET THE SPECIFICATIONS IS NOT AN ALTERNATIVE THERETO. ACCORDINGLY, WHERE THE GOVERNMENT'S NEEDS AS SET FORTH IN ADVERTISED SPECIFICATIONS CAN BE MET BY MORE THAN ONE TYPE OF ITEM OR PRODUCT OR IN MORE THAN ONE WAY, THE RULES OF COMPETITIVE BIDDING WHICH REQUIRE THAT ALL BIDDERS HAVE AN EQUAL OPPORTUNITY TO COMPETE ON A COMMON BASIS DO NOT PRECLUDE CONSIDERATION OF THE LOWEST OFFER MEETING THE SPECIFICATIONS FROM A BIDDER WHO SUBMITS MORE THAN ONE SUCH OFFER. COMP. GEN. 499; B-13373, NOVEMBER 30, 1940.

UNDER THE IFB AS AMENDED, THE GOVERNMENT'S REQUIREMENTS COULD BE MET BY A BID OFFERING EITHER OF THE TWO TESTS, NO PREFERENCE BEING STATED BY BPA FOR EITHER TEST. ACCORDINGLY, A BID WHICH OFFERED THE SURGE TEST WAS RESPONSIVE AS WAS A BID WHICH OFFERED A PREVIOUSLY APPROVED 60 CYCLE TEST AT 760 KV OR HIGHER VOLTAGE. THE EFFECT, THEREFORE, OF THE LUMP-SUM BID PRICE REDUCTION PROVISION IN I-T-E'S BID WAS TO EXTEND TO THE GOVERNMENT A RESPONSIVE OFFER TO PERFORM AT A PRICE OF $221,756 BASED ON ACCEPTANCE OF I-T-E'S PREVIOUSLY APPROVED 60-CYCLE TEST AT 795 KV, WHICH OFFER WAS IN ADDITION TO THE RESPONSIVE OFFER TO PERFORM AT A PRICE OF $223,756 BASED ON COMPLIANCE WITH THE SURGE TEST REQUIREMENT, BOTH OFFERS BEING PREMISED ON AWARD OF ALL ITEMS AS PERMITTED BY THE IFB. FURTHER, SINCE THE DECISION AS TO WHICH OFFER WOULD BE SELECTED WAS TO BE MADE BY THE GOVERNMENT, IT IS APPARENT THAT NO OPTION IN THIS RESPECT WAS RETAINED BY I-T-E AS URGED BY ALLIS-CHALMERS. IN THE CIRCUMSTANCES, IT IS OUR VIEW THAT THE AWARD TO I-T-E OF A CONTRACT FOR ALL ITEMS AT ITS REDUCED LUMP- SUM BID PRICE OF $223,756, BASED ON ACCEPTANCE BY BPA OF THE PREVIOUSLY APPROVED 60-CYCLE TEST, WAS PROPER AND IN ACCORD WITH THE REQUIREMENT IN 40 U.S.C. 253(B) THAT AWARD UNDER AN ADVERTISED PROCUREMENT BE THE MOST ADVANTAGEOUS TO THE GOVERNMENT.

IT IS SUGGESTED, HOWEVER, THAT SINCE THE GOVERNMENT'S MINIMUM NEEDS CAN BE MET BY THE 60-CYCLE TEST, WHICH APPEARS TO BE LESS COSTLY THAN THE 1050 KV SURGE TEST, CONSIDERATION SHOULD BE GIVEN TO USING ONLY THE 60-CYCLE TEST IN FUTURE PROCUREMENTS.

THE FILE FORWARDED WITH THE DEPUTY ASSISTANT SECRETARY'S LETTER IS RETURNED.