B-130504, MAR. 21, 1957

B-130504, MAR. 21, 1957

TO MCCOY POLE AND PILING COMPANY:

YOUR TELEGRAM OF MARCH 1 AND YOUR LETTER OF MARCH 4, 1957, PROTEST THE AWARD OF A CONTRACT TO THE CASCADE PILING COMPANY, TACOMA, WASHINGTON, FOR ALL ITEMS UNDER INVITATION TO BID NO. 6367 ON THE GROUND THAT THE AWARD OF ITEMS 1, 2, 3 AND 5 TO YOU AND THE REMAINDER TO CASCADE WOULD RESULT IN A SAVING TO THE GOVERNMENT OF $1,081.50.

CONTRACT NO. NOY-79345, A COST-PLUS-A-FIXED-FEE CONTRACT FOR CONSTRUCTION OF CERTAIN FACILITIES IN THE PHILIPPINE ISLANDS, WAS NEGOTIATED BY THE DEPARTMENT OF THE NAVY WITH A JOINT VENTURE COMPOSED OF J. N. POMEROY AND COMPANY, INC., HAWAIIAN DREDGING CO., LIMITED, AND BECHTEL CORPORATION, UNDER THE TRADE NAME OF POMEROY-HAWAIIAN DREDGING-BECHTEL ON SEPTEMBER 30, 1954. ARTICLE 8 (A) OF THE CONTRACT PROVIDES "EXCEPT WHERE PROVISION IS OTHERWISE MADE BY THE OFFICER IN CHARGE, ALL MATERIALS, ARTICLES, SUPPLIES, AND EQUIPMENT REQUIRED FOR THE ACCOMPLISHMENT OF THE WORK UNDER THIS CONTRACT SHALL BE FURNISHED BY THE CONTRACTOR.' ARTICLE 8 (D) PROVIDES "NO SUBCONTRACT SHALL BE ENTERED INTO BY THE CONTRACTOR WITHOUT PRIOR WRITTEN APPROVAL OF THE OFFICER IN CHARGE.'

PURSUANT TO THE PROVISIONS OF ARTICLE 8 OF THE CONTRACT QUOTED ABOVE, THE PRIME CONTRACTOR ISSUED AN INVITATION ON FEBRUARY 7, 1957, FOR THE PROCUREMENT OF DESIGNATED ITEMS OF LUMBER. THERE WERE 7 ITEMS IN THE INVITATION. CASCADE'S TOTAL BID PRICE WAS $93,365.75 AND THEIR BID OFFERED DELIVERY OF ONE-THIRD BY MARCH 31, AN ADDITIONAL THIRD BY APRIL 30, AND THE TOTAL AMOUNT BY MAY 31, 1957. CASCADE'S BID WAS FURTHER CONDITIONED BY THE FOLLOWING PROVISION:

"IF ORDER IS PLACED FOR ONLY THE PORTION WE HAVE INDICATED FOR MARCH SHIPMENT, ADD 20 CENTS LIN. FT. IF ORDER IS PLACED FOR ONLY THE MARCH AND APRIL PORTIONS INDICATED, ADD 10 CENTS LINEAL FOOT.'

YOUR TOTAL BID PRICE WAS $94,508.50. YOUR BID WAS CONDITIONED BY THE FOLLOWING STATEMENT:

"OUR OFFER APPLIES ONLY IN THE EVENT WE ARE AWARDED ORDER FOR AT LEAST ITEMS 1 TO 3, CLUSIVE.'

YOUR BID WAS LOWER THAN CASCADE'S ON ITEMS 1, 2 AND 5. THE REPORT RECEIVED FROM THE SECRETARY OF THE NAVY INDICATES THAT:

"ON THE ADVICE OF THE OICC, THE CONTRACTOR AND THE ROICC CONSIDERED THE LOWEST PRICE TO THE GOVERNMENT AS THE PRIME FACTOR IN MAKING AWARD. AWARD TO MCCOY POLE AND PILING COMPANY ON ITEMS 1, 2, AND 5 AND TO CASCADE PILING COMPANY OB ITEMS 3, 4, 6, AND 7--- THAT IS, TO EACH COMPANY ON ONLY THOSE ITEMS FOR WHICH EACH WAS LOWEST--- WOULD HAVE BEEN MOST ECONOMICAL AT A TOTAL PRICE OF $92,122.25 AS COMPARED WITH A TOTAL PRICE OF $93,365.75 FOR AWARD TO CASCADE PILING COMPANY ON ITS LOWEST OVER-ALL PRICE. HOWEVER, MCCOY POLE AND PILING COMPANY HAD CONDITIONED THEIR BID UPON BEING AWARDED AT LEAST ITEMS 1, 2, AND 3. THE CONTRACTOR, WITH THE ROICC PRESENT, TELEPHONED EACH OF THE LOW BIDDERS TO DETERMINE WHETHER THEY WOULD ACCEPT AWARD ON THE LOWEST ITEM BASIS. MCCOY POLE AND PILING COMPANY WOULD NOT REMOVE THEIR QUALIFICATION AND INSISTED THAT ITEM 3 BE AWARDED TO THEM, ALTHOUGH THEY WERE NOT LOW ON THIS ITEM. CASCADE PILING COMPANY AGREED TO ACCEPT AWARD ON ANY ITEM BUT WOULD NOT ACCEPT AWARD ON ANY ITEM IF THEY WERE NOT AWARDED THE ITEMS ON WHICH THEY WERE LOW BIDDER. ACCORDINGLY, AWARD ON AN ITEM BY ITEM BASIS WAS NOT POSSIBLE.'

AWARD FOR ALL ITEMS UNDER THE INVITATION WAS MADE BY THE CONTRACTOR WITH THE APPROVAL OF THE CONTRACTING OFFICER TO CASCADE ON FEBRUARY 28, 1957. YOU CONTEND THAT THE BEST INTERESTS OF THE GOVERNMENT REQUIRE THAT AWARD FOR ITEMS 1, 2 AND 3 SHOULD HAVE BEEN MADE TO YOUR COMPANY.

IN YOUR LETTER, YOU ALSO STATE:

"WE HAD SOME DISCUSSION AND CORRESPONDENCE WITH THE U.S. NAVY CONCERNING THE TIME OF DELIVERY BEING A FACTOR OF AWARD, WHICH WE UNDERSTOOD FROM NUMEROUS TELEPHONE CONVERSATIONS PRIOR TO BID OPENING WOULD BE A FACTOR OF AWARD.

"WE HAVE ALSO HAD SOME DISCUSSION AND CORRESPONDENCE CONCERNING THE AMBIGUITY OF THE LANGUAGE OF CASCADE POLE CO. CONCERNING THEIR ADDITIONS FOR ONLY BEING AWARDED A PART OF ANY ONE ITEM. THESE DISCUSSIONS AND CORRESPONDENCE DO NOT CONSTITUTE ANY PART OF OUR PROTEST, AS THEY ARE EXTRANEOUS TO THE ISSUE OF OUR PROTEST.'

IN OUR DECISION, B-118129, MARCH 18, 1954, INVOLVING THE PROTESTED AWARD OF A SUBCONTRACT BY A PRIME CONTRACTOR UNDER A COST-REIMBURSEMENT TYPE CONTRACT, WE STATED:

"* * * ALTHOUGH IN AWARDING A SUBCONTRACT UNDER THIS TYPE OF PRIME CONTRACT IT IS THE DUTY OF THE PRIME CONTRACTOR TO PROTECT THE INTEREST OF THE UNITED STATES BY MAKING EVERY REASONABLE EFFORT TO OBTAIN A CONTRACT ON TERMS MOST FAVORABLE TO HIM INASMUCH AS THE COST IS TO BE REIMBURSED BY THE GOVERNMENT, SUCH AN AWARD IS NOT SUBJECT TO THE LIMITATIONS IMPOSED UPON GOVERNMENT CONTRACTING OFFICIALS BY THE PUBLIC ADVERTISING STATUTES.'

SEE ALSO 36 COMP. GEN. 311, 313 AND 20 COMP. GEN. 341.

YOUR BID, AS WE STATED ABOVE, WAS CONDITIONED IN SUCH MANNER AS TO PROHIBIT ACCEPTANCE OF ANY PART WHICH DID NOT INCLUDE ITEMS 1, 2 AND 3. ITEMS 1, 2 AND 3 ACCOUNTED FOR 31,350 LINEAR FEET, APPROXIMATELY ONE-THIRD OF THE TOTAL REQUIREMENT OF 91,225 FEET. WHILE THE CONDITION IN CASCADE'S BID, WHICH IS QUOTED ABOVE, DID NOT INDICATE WHICH OF THE ITEMS, OR WHICH PART THEREOF, WOULD BE CONTAINED IN EACH MONTHLY SHIPMENT, IT IS REASONABLE TO ASSUME THAT CASCADE RESERVED THE RIGHT TO INCLUDE ANY COMBINATION OF ITEMS TOTALING ONE-THIRD IN EACH OF THE SHIPMENTS. SINCE ITEMS 1, 2 AND 3 ACCOUNT FOR APPROXIMATELY ONE-THIRD OF THE TOTAL PROCUREMENT UNDER THE INVITATION, WE ASSUME THAT PURSUANT TO CASCADE'S BID, ITS PRICE, IF AWARDED ONLY ITEM 4 THROUGH 7, WOULD BE INCREASED BY 10 CENTS PER LINEAR FOOT. HAD A CONTRACT FOR ITEMS 1 THROUGH 3 BEEN AWARDED TO YOU AND THE REMAINING ITEMS AWARDED TO CASCADE, THE TOTAL PRICE, INCREASING CASCADE'S PRICES BY 10 CENTS PER FOOT, WOULD HAVE BEEN $98,541.75 WHICH IS CONSIDERABLY IN EXCESS OF THE COST OF THE PROCUREMENT IN ACCORDANCE WITH THE AWARD ACTUALLY MADE.

IT APPEARS, THEREFORE, THAT THE PRIME CONTRACTOR WITH THE CONTRACTING OFFICER'S APPROVAL, ACCEPTED THE LOWEST BID AND EVEN IF, AS ALLEGED BY YOU, THE SPLITTING OF THE AWARD BETWEEN YOUR COMPANY AND CASCADE WOULD HAVE RESULTED IN A SOMEWHAT LOWER COST TO THE GOVERNMENT FOR THE PROCUREMENT, THAT FACT WOULD NOT RENDER THE CONTRACT WITH CASCADE ILLEGAL IN THE SENSE THAT IT CONTRAVENED STATUTORY ADVERTISING REQUIREMENTS WHICH, AS WE STATED ABOVE, ARE INAPPLICABLE TO THE SUBJECT SUBCONTRACT. IN THE ABSENCE OF SUCH ILLEGALITY, THERE IS NO LEGAL BASIS UPON WHICH OUR OFFICE MAY DIRECT THE CANCELLATION OF THE SUBCONTRACT AWARDED TO CASCADE.