Skip to main content

B-168136, JAN. 9, 1970

B-168136 Jan 09, 1970
Jump To:
Skip to Highlights

Highlights

CONCLUDING THAT THREE AWARDS BY DEFENSE SUPPLY AGENCY WERE ERRONEOUS. ALTHOUGH THREE PROTESTED CONTRACTS WERE FOUND TO HAVE BEEN IMPROPERLY EVALUATED SINCE DELIVERY HAD BEEN ACCOMPLISHED PRIOR TO RECEIPT OF THE PROTEST BY GAO. REMEDIAL ACTION WAS NOT POSSIBLE. THE BIDS WERE IMPROPERLY EVALUATED ON BASIS OF INCLUSION OF IMPORT DUTY. INC.: REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 16. RECEIVED FROM THE DEFENSE SUPPLY AGENCY (DSA) ADVISED US THAT ITS REVIEW OF THESE PROCUREMENTS ESTABLISHED THAT ALL OF THE CONTRACTS IN QUESTION WERE AWARDED ERRONEOUSLY. INVITATION FOR BIDS DSA700-69-B-3795 WAS ISSUED PURSUANT TO MILITARY INTERDEPARTMENTAL PURCHASE REQUEST (MIPR) A5820M-9-S0379. THE SUBJECT SOLICITATION WAS ISSUED ON MAY 23.

View Decision

B-168136, JAN. 9, 1970

BID PROTEST--ERRONEOUS PROCEDURES--REMEDIAL ACTION DECISION TO LUTZ SUPERDYNE, INC; CONCLUDING THAT THREE AWARDS BY DEFENSE SUPPLY AGENCY WERE ERRONEOUS. ALTHOUGH THREE PROTESTED CONTRACTS WERE FOUND TO HAVE BEEN IMPROPERLY EVALUATED SINCE DELIVERY HAD BEEN ACCOMPLISHED PRIOR TO RECEIPT OF THE PROTEST BY GAO, REMEDIAL ACTION WAS NOT POSSIBLE. THE BIDS WERE IMPROPERLY EVALUATED ON BASIS OF INCLUSION OF IMPORT DUTY; FOREIGN PRODUCT INSTEAD OF DOMESTIC PRODUCT DETERMINATION AND WITHOUT NONAVAILABILITY DETERMINATION UNDER ASPR 6-103.2 (B) (III). DEFENSE SUPPLY AGENCY REPORTED THAT INDIVIDUAL RESPONSIBLE HAD BEEN REPRIMANDED AND THAT STEPS TO PREVENT RECURRENCE HAS BEEN TAKEN.

TO LUTZ SUPERDYNE, INC.:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 16, 1969, WITH ENCLOSURES, AND SUBSEQUENT CORRESPONDENCE, IN WHICH YOU PROTESTED THE AWARD OF THREE CONTRACTS UNDER INVITATIONS FOR BIDS NOS. DSA700-69-B 3795, DSA700-69-B- 3746, AND DSA700-69-B-3717, ISSUED BY THE DEFENSE SUPPLY AGENCY, COLUMBUS, OHIO.

A REPORT DATED DECEMBER 1, 1969, RECEIVED FROM THE DEFENSE SUPPLY AGENCY (DSA) ADVISED US THAT ITS REVIEW OF THESE PROCUREMENTS ESTABLISHED THAT ALL OF THE CONTRACTS IN QUESTION WERE AWARDED ERRONEOUSLY, THE CIRCUMSTANCES WITH RESPECT TO THE SEVERAL AWARDS HAVING BEEN AS FOLLOWS:

INVITATION FOR BIDS DSA700-69-B-3795; CONTRACT DSA700-69-C-G966. INVITATION FOR BIDS DSA700-69-B-3795 WAS ISSUED PURSUANT TO MILITARY INTERDEPARTMENTAL PURCHASE REQUEST (MIPR) A5820M-9-S0379. THE SUBJECT SOLICITATION WAS ISSUED ON MAY 23, 1969, WITH A CLOSING DATE OF JUNE 10, 1969. THE SOLICITATION REQUESTED BIDS ON 68 EACH MAGNETIC SURVEYOR'S COMPASSES IN ACCORDANCE WITH THE PURCHASE DESCRIPTION CONTAINED THEREIN. FOUR BIDS WERE RECEIVED AT THE DATE OF OPENING, THE LOW BID AT $33.80 EACH AND THE SECOND LOW AT $45.77 EACH. YOUR LOW BID WAS CONTINGENT ON SUPPLYING A FOREIGN END PRODUCT AS DEFINED IN ARMED SERVICES PROCUREMENT REGULATION (ASPR) 6-101 (A) (C), WHICH SECTION IMPLEMENTS THE REQUIREMENTS OF THE BUY AMERICAN ACT (41 U.S.C. 10A-D (1964) ). THE IMPORT DUTY APPLICABLE TO THE ITEM OFFERED WAS INDICATED AS $8.11 PER UNIT.

DESPITE THE FACT THAT ASPR 6-104.4 (B) CLEARLY PROVIDES THAT DUTY IS TO BE EXCLUDED FROM BIDS AND PROPOSALS FOR USE WITH THE FIFTY PERCENT EVALUATION FACTOR PRESCRIBED BY THE SECRETARY OF DEFENSE WHEN EVALUATING BIDS AND PROPOSALS TO DETERMINE THE APPLICABILITY OF ASPR 6 103.3, IT IS CLEAR THAT THE CONTRACTING OFFICER FAILED TO EXCLUDE THE DUTY IN HIS EVALUATION AND INSTEAD APPLIED THE FIFTY PERCENT EVALUATION FACTOR TO THE BID INCLUSIVE OF DUTY. THIS RESULTED IN AN EVALUATED PRICE OF $50.70, AND AWARD WAS THEREFORE MADE ON JUNE 18 ON THE DOMESTIC BID OF $45.77.

INVITATION FOR BIDS DSA700-69-B-3746; CONTRACT DSA700-70-C-0239. INVITATION FOR BIDS DSA700-69-B-3746 WAS ISSUED ON MAY 21, 1969 PURSUANT TO A PURCHASE REQUEST GENERATED AT DEFENSE CONSTRUCTION SUPPLY CENTER. ITEMS 1 THROUGH 5 OF THE SOLICITATION REQUESTED BIDS ON 3,367 EACH DRAFTING TRIANGLES IN ACCORDANCE WITH FEDERAL SPECIFICATION GG-T-671D DATED MAY 5, 1966. THE PROCUREMENT WAS FORMALLY SYNOPSIZED AS REQUIRED BY ASPR 1-1003.1 (A) AND THIRTY FIRMS WERE DIRECTLY SOLICITED.

AT THE DATE OF OPENING, JUNE 11, 1969, SEVEN BIDS WERE RECEIVED RANGING FROM A LOW BID OF $0.61 EACH FOR THE FIRST FIVE ITEMS ON THE SOLICITATION TO A HIGH BID OF $1.18 EACH. YOUR BID OF $0.64 WAS SECOND LOW ON THE FIRST FIVE ITEMS, AND IT CLEARLY INDICATED THAT THE ITEMS IT PROPOSED TO SUPPLY WERE DOMESTIC END PRODUCTS. NONETHELESS, YOUR BID WAS ABSTRACTED AS PROPOSING TO SUPPLY A FOREIGN END PRODUCT, AND THE LOW BID OF $0.61 ON ITEMS 1 THROUGH 5 OF THE SUBJECT SOLICITATION, SUBMITTED BY CHARVOZ-CARSEN CORPORATION ON A FOREIGN END PRODUCT, WAS ACCEPTED ON JULY 3, 1969.

INVITATION FOR BIDS DSA700-69-B-3717; CONTRACT DSA700-70-C-0434. INVITATION FOR BIDS DSA700-69-B-3717 WAS ISSUED ON MAY 20, 1969 PURSUANT TO A PURCHASE REQUEST GENERATED AT DEFENSE CONSTRUCTION SUPPLY CENTER. THE SUBJECT SOLICITATION WAS SYNOPSIZED AS REQUIRED BY ASPR 1-1003.1 (A), AND THIRTY FIRMS WERE DIRECTLY SOLICITED. THE SOLICITATION REQUESTED BIDS ON 1,585 EACH DRAFTING INSTRUMENT SETS IN ACCORDANCE WITH FEDERAL SPECIFICATION GG-D-600B AND AMENDMENT NO. 3 THERETO DATED MAY 28, 1968. AT THE DATE OF OPENING JUNE 5, 1969, TWO BIDS WERE RECEIVED, THE LOW AT $6.48 EACH AND THE HIGH AT $6.49 EACH. BOTH BIDS OFFERED A TWO PERCENT, THIRTY DAY DISCOUNT.

YOUR LOW BID OF $6.48 WAS PREDICATED ON FURNISHING A FOREIGN END PRODUCT, WITH THE DUTY STATED AT $0.48 PER UNIT. IT APPARENTLY, DID CONTEMPLATE, HOWEVER, THAT THIRTY-FOUR PERCENT OF THE COST OF THE ITEMS, PRESUMABLY REPRESENTING PACKAGING, PACKING AND SHIPPING COSTS, WOULD BE INCURRED IN THE UNITED STATES. THE SECOND LOW BID OF CHARVOZ CARSEN CORPORATION WAS ALSO PREDICATED ON FURNISHING A FOREIGN END PRODUCT WITH DUTY STATED TO BE $0.54. APPARENTLY THAT DUTY WAS HIGHER THAN THE DUTY INCLUDED IN YOUR BID BECAUSE CHARVOZ-CARSEN CONTEMPLATED THAT ONE HUNDRED PERCENT OF ITS COSTS WOULD BE INCURRED IN WEST GERMANY.

DESPITE THE FACT THAT ASPR 6-103.2 (B) (III) REQUIRES THE PRINCIPAL STAFF OFFICER RESPONSIBLE FOR PROCUREMENT TO MAKE A SPECIFIC DETERMINATION OF NONAVAILABILITY WHEN A FOREIGN ITEM IS PROPOSED TO BE PROCURED AND ITS COST IS NOT UNREASONABLE OR ITS ACQUISITION IS NOT INCONSISTENT WITH THE PUBLIC INTEREST, THE CONTRACT FILE FOR THE SUBJECT SOLICITATION FAILS TO REVEAL THAT SUCH DETERMINATION WAS MADE.

THE CONTRACTING OFFICER CHOSE TO MAKE AWARD TO CHARVOZ-CARSEN CORPORATION ON A DUTY-FREE ENTRY BASIS AS AUTHORIZED BY ASPR 6-602, AND BECAUSE AWARD WAS PROPOSED ON THAT BASIS, THE BIDS WERE EVALUATED LESS THE DUTY STATED. THIS RESULTED IN CHARVOZ-CARSEN CORPORATION'S BID BEING EVALUATED AT $5.95 EACH AND YOURS AT $6.00 EACH. IT IS NOTED THAT THE SOLICITATION DID NOT SPECIFY THAT DUTY WOULD BE A FACTOR IN EVALUATION OF BIDS NOR THAT BIDS WOULD BE EVALUATED LESS ANY APPLICABLE DUTY. NONETHELESS, AWARD OF CONTRACT DSA700-70-C-0434 WAS MADE TO CHARVOZ-CARSEN CORPORATION ON JULY 2, 1969.

DESPITE THE CLEARLY ERRONEOUS AWARDS, HOWEVER, WE ARE ADVISED THAT ALL OF THE SUPPLIES TO BE DELIVERED UNDER THESE CONTRACTS HAD BEEN DELIVERED BEFORE THE DATE OF YOUR PROTEST TO THIS OFFICE. IN THESE CIRCUMSTANCES NO EFFECTIVE REMEDIAL ACTION APPEARS TO BE NOW AVAILABLE (SEE B-166779 (2), AUGUST 1, 1969; B-166555 (1), JUNE 4, 1969), BECAUSE CANCELLATION OF THE CONTRACTS AT THIS LATE DATE WOULD NOT BE PRACTICABLE OR IN THE BEST INTERESTS OF THE GOVERNMENT. SEE B-167399, SEPTEMBER 22, 1969; 41 COMP. GEN. 599 (1962); 41 COMP. GEN. 620 (1962).

WITH REGARD TO THE ERRONEOUS PROCEDURES DISCLOSED BY THE INVESTIGATION OF YOUR PROTEST, DSA HAS NOTIFIED US THAT THE INDIVIDUAL INVOLVED IN THESE TRANSACTIONS HAS RECEIVED A FORMAL REPRIMAND, AND THAT DSA WILL ATTEMPT TO PREVENT THEIR RECURRENCE.

INSOFAR AS YOUR CLAIM FOR BID PREPARATION COSTS IS CONCERNED, THE RULE IS THAT THE GOVERNMENT IS UNDER NO OBLIGATION TO COMPENSATE AN UNSUCCESSFUL BIDDER FOR THE EXPENSES OF PREPARING HIS BID. SEE JAMES V. MARTIN V. UNITED STATES, 61 CT. CL. 430 (1926). UNDER THE PRINCIPLES ENUNCIATED IN HEYER PRODUCTS CO. V. UNITED STATES, 135 CT. CL. 63 (1956) AND 147 CT. CL. 256 (1959), AN EXCEPTION MAY BE RECOGNIZED WHEN THE CONTRACTING OFFICER SOLICITED BIDS WITH THE DELIBERATE INTENTION TO LET THE CONTRACT TO A PREDETERMINED CONTRACTOR, WITHOUT BONA FIDE CONSIDERATION OF BIDS SUBMITTED BY ANYONE ELSE. UNLESS THE UNSUCCESSFUL BIDDER PROVES THAT THE REJECTION OF ITS BID WAS PURSUANT TO SUCH A FRAUDULENT DESIGN OR WAS SIMILARLY ARBITRARY, CAPRICIOUS OR IN BAD FAITH, RECOVERY IS DENIED FOR BID PREPARATION COSTS. SEE KECO INDUSTRIES, INC. V. UNITED STATES, 149 CT. CL. 837 (1960); MARTIN ISCOW V. UNITED STATES, 161 CT. CL. 875 (1963); GREEN MANOR CONSTRUCTION CO; INC. V. UNITED STATES, 169 CT. CL. 413 (1965); ROBERT F. SIMMONS & ASSOCIATES V. UNITED STATES, 360 F 2 962 (1966). ALTHOUGH THE EVALUATION OF YOUR BIDS APPEARS TO HAVE BEEN CONDUCTED WITH EXTREME CARELESSNESS AND WANTON DISREGARD FOR PROPER PROCUREMENT PROCEDURES, WE FIND NO EVIDENCE OF DELIBERATE FRAUD OR BAD FAITH ON THE PART OF THE CONTRACTING OFFICER, AND NONE WAS ALLEGED BY YOU.

WITH REGARD TO YOUR CLAIM FOR LOSS OF ANTICIPATED PROFITS, THE COURT OF CLAIMS IN HEYER PRODUCTS, SUPRA, STATED ON PAGE 70:

"THE CASES WE CITED IN THE BEGINNING OF THIS OPINION HOLD THAT ACTS REQUIRING ADVERTISING AND LETTING TO THE LOWEST RESPONSIBLE BIDDER CONFER NO RIGHT ON THE BIDDER TO SECURE THE CONTRACT, WHETHER OR NOT HE IS THE LOWEST RESPONSIBLE BIDDER AND HENCE, HEMAY NOT RECOVER HIS LOSS OF ANTICIPATED PROFITS. * * *" SEE ALSO TRANS INTERNATIONAL AIRLINES, INC. V. UNITED STATES, 351 F 2 1001 (1965).

FOR THE FOREGOING REASONS, YOUR CLAIM FOR BID PREPARATION COSTS AND FOR LOSS OF ANTICIPATED PROFITS MUST BE DENIED.

TO GENERAL HEDLUND:

ENCLOSED IS A COPY OF OUR DECISION OF TODAY CONCERNING THE PROTEST OF LUTZ SUPERDYNE, INC; AGAINST THE AWARD OF THREE CONTRACTS UNDER INVITATION FOR BIDS NOS. DSA700-69-B-3795, DSA700-69-B-3746 AND DSA700 69-B-3717, WHICH WAS THE SUBJECT OF A REPORT (YOUR REFERENCE DSAH-G) DATED DECEMBER 1, 1969, FROM WILLARD J. HURLEY, ASSISTANT COUNSEL.

IN THE LIGHT OF THE REPORT OF DECEMBER 1, WE CONCUR WITH THE ADMINISTRATIVE CONCLUSION THAT THE RECORD REVEALS EXTREME CARELESSNESS AND WANTON DISREGARD FOR PROPER PROCUREMENT PROCEDURES. HOWEVER, SINCE WE ARE ADVISED THAT ALL THE SUPPLIES TO BE DELIVERED UNDER THE SUBJECT CONTRACTS HAD BEEN RECEIVED PRIOR TO RECEIPT OF THE PROTEST BY OUR OFFICE, IT DOES NOT APPEAR TO BE IN THE INTEREST OF THE GOVERNMENT TO REQUIRE TERMINATION THEREOF.

SINCE THE CONTRACT PRICE PAID UNDER CONTRACT NO. DSA700-70-C-0239 WAS LESS THAN THE AMOUNT OF THE LOW DOMESTIC BID WHICH SHOULD PROPERLY HAVE BEEN ACCEPTED, THERE APPEARS TO BE NO BASIS FOR ANY REDUCTION OF PRICE OR RECOVERY BACK OF ANY PART OF THE PAYMENT MADE.

IN VIEW OF THE FACT THAT DELIVERY HAS ALREADY BEEN MADE UNDER CONTRACT NO. DSA700-70-C-0434 AND PAYMENT OF THE BALANCE OF $4,165 DUE ON THE CONTRACT PRICE WOULD NOT RESULT IN COSTS IN EXCESS OF THE BID PRICE OF LUTZ SUPERDYNE, INC; WE HAVE NO OBJECTION TO THE ADMINISTRATIVE RECOMMENDATION THAT THE CHARVOZ-CARSEN CORPORATION BE PAID ACCORDING TO ITS CONTRACT PRICE, IF OTHERWISE CORRECT. SEE B 162535, OCTOBER 13, 1967.

WITH REGARD TO THE CLAIM OF WILLIAM AINSWORTH, INC; UNDER CONTRACT NO. DSA700-69-C-G966, WHERE ALL THE ITEMS LIKEWISE HAVE BEEN DELIVERED, WE NOTE THAT THE IMPROPER EVALUATION UNDER THE BUY AMERICAN ACT CLAUSE PRESCRIBED BY ARMED SERVICES PROCUREMENT REGULATION 6-104.4 (B) RESULTED IN AN AWARD TO THE SECOND LOW BIDDER AT A COST ADMINISTRATIVELY DETERMINED TO BE $813.96 IN EXCESS OF THE LOW BID PRICE. HOWEVER, SINCE THE SECOND LOW BID OFFERED A DOMESTIC PRODUCT WHILE THE LOW BID WAS ON A FOREIGN PRODUCT, WE CONCUR WITH THE ADMINISTRATIVE VIEW THAT THE PRICE OFFERED BY WILLIAM AINSWORTH APPEARS TO BE THE BEST OBTAINABLE BID FOR AN ITEM OF DOMESTIC ORIGIN, AND CONCLUDE THAT IT WOULD BE INEQUITABLE IN THE CIRCUMSTANCES HERE PRESENT TO LIMIT PAYMENT TO THE AMOUNT OF THE LOW FOREIGN BID.

GAO Contacts

Office of Public Affairs