B-151731, JULY 3, 1963

B-151731, JULY 3, 1963

TO THE SECRETARY OF THE AIR FORCE:

REFERENCE IS MADE TO LETTER DATED JUNE 25, 1963, FROM THE CHIEF, PROCUREMENT OPERATIONS DIVISION, DIRECTORATE, PROCUREMENT POLICY, DEPARTMENT OF THE AIR FORCE (YOUR REFERENCE AFSPPCA), IN RESPONSE TO OUR REQUEST FOR A REPORT ON THE PROTEST OF DEMPSTER BROTHERS, INC.,KNOXVILLE, TENNESSEE, AGAINST THE AWARD OF A CONTRACT TO LODAL, INC., NORWAY, MICHIGAN.

AS STATED IN THIS LETTER, AN AWARD WAS MADE ON MAY 29, 1963, UNDER INVITATION FOR BIDS (IFB NO. 02-604-63-92) ISSUED ON APRIL 29, 1963, BY THE BASE PROCUREMENT OFFICE, LUKE AIR FORCE BASE, ARIZONA. THE IFB REQUESTED BIDS FOR FURNISHING CERTAIN QUANTITIES OF REFUSE CONTAINERS OF SPECIFIED DESCRIPTIONS LISTED UNDER THREE SEPARATE ITEMS. THE "TERMS AND CONDITIONS OF THE INVITATION FOR BIDS" CONTAIN STANDARD PROVISIONS RELATING TO THE AWARD OF CONTRACTS THEREUNDER AS FOLLOWS:

"8. AWARD OF CONTRACT.--- (A) THE CONTRACT WILL BE AWARDED TO THAT RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED.

"/B) THE GOVERNMENT RESERVES THE RIGHT TO REJECT ANY OR ALL BIDS AND TO WAIVE INFORMALITIES AND MINOR IRREGULARITIES IN THE BIDS RECEIVED.

"/C) THE GOVERNMENT MAY ACCEPT ANY ITEM OR GROUP OF ITEMS OF ANY BID, UNLESS THE BIDDER QUALIFIES HIS BID BY SPECIFIC LIMITATIONS. UNLESS OTHERWISE PROVIDED IN THE SCHEDULE, BIDS MAY BE SUBMITTED FOR ANY QUANTITIES LESS THAN THOSE SPECIFIED; AND THE GOVERNMENT RESERVES THE RIGHT TO MAKE AN AWARD ON ANY ITEM FOR A QUANTITY LESS THAN THE QUANTITY BID UPON AT THE UNIT PRICES OFFERED UNLESS THE BIDDER SPECIFIES OTHERWISE IN HIS BID.

"/D) A WRITTEN AWARD MAILED (OR OTHERWISE FURNISHED) TO THE SUCCESSFUL BIDDER WITHIN THE TIME FOR ACCEPTANCE SPECIFIED IN THE BID SHALL BE DEEMED TO RESULT IN A BINDING CONTRACT WITHOUT FURTHER ACTION BY EITHER PARTY.'

THE FOLLOWING PARAGRAPH OF THE "ADDITIONAL TERMS AND CONDITIONS OF THE INVITATION FOR BIDS" ALSO RELATING TO AWARDS, WAS INCORPORATED IN THE IFB:

"26. MULTIPLE AWARDS.

"NOTICE TO BIDDERS. BIDS WILL BE EVALUATED ON THE BASIS OF ADVANTAGES OR DISADVANTAGES TO THE GOVERNMENT THAT MIGHT RESULT FROM MAKING MULTIPLE AWARDS. FOR THIS PURPOSE, THE COST OF ISSUING AN ADVERTISED CONTRACT IS ESTIMATED TO BE $50. ACCORDINGLY, WHERE SEVERAL ITEMS ARE INCLUDED IN AN INVITATION FOR BID AND, AFTER OPENING BIDS, IT IS ASCERTAINED THAT NO ONE RESPONSIBLE BIDDER SUBMITTED THE LOWEST PRICE ON EACH OF THE ITEMS, THE $50 FACTOR OF WHETHER IT WILL BE TO THE BEST INTEREST OF THE GOVERNMENT TO MAKE MULTIPLE AWARDS WILL BE CONSIDERED, OTHER FACTORS BEING EQUAL. MAY 57.'

PARAGRAPH 25 OF THE ADDITIONAL TERMS AND CONDITIONS RELATING TO "DELIVERY AND PERFORMANCE" PROVIDED IN MATERIAL PART, AS FOLLOWS:

"/B) DELIVERY IS TO BE MADE TO: BUILDING S-325, LUKE AIR FORCE BASE, ARIZONA, RAILHEAD: WEBB, ARIZONA.

"/C) THE GOVERNMENT DESIRES DELIVERY OF THE ARTICLES LISTED HEREIN AS FOLLOWS: 60 DAYS AFTER RECEIPT OF WRITTEN NOTICE OF AWARD. IF THE BIDDER IS UNABLE TO MEET THE ABOVE DELIVERY SCHEDULE, HE MAY, WITHOUT PREJUDICE TO EVALUATION OF HIS BID, SET FORTH THE DELIVERY SCHEDULE HE IS PREPARED TO MEET PROVIDED IN NO EVENT SHALL THE BIDDER'S DELIVERY SCHEDULE EXTEND BEYOND 120 DAYS AFTER RECEIPT OF WRITTEN NOTICE OF AWARD, AS BIDS PROPOSING DELIVERY AFTER THAT PERIOD WILL BE CONSIDERED NON-RESPONSIVE TO THE INVITATION AND WILL BE REJECTED. IF BIDDER DOES NOT STATE A DIFFERENT DELIVERY SCHEDULE, THE GOVERNMENT'S DESIRED DELIVERY SCHEDULE STATED ABOVE WILL APPLY.

"BIDDER'S PROPOSED DELIVERY SCHEDULE ----- DAYS AFTER RECEIPT OF WRITTEN NOTICE OF AWARD.'

TWO BIDS WERE RECEIVED UNDER THE IFB AS FOLLOWS:

CHART

ITEM 1 ITEM 2 ITEM 3

BIDDER 120 UNITS 30 UNITS 10 UNITS TOTAL LODAL, INC. $159.00 $192.00 $240.00 $27,240.00 DEMPSTER BROTHERS $127.61 $250.70 $284.36 $25,677.80

LODAL OFFERED A DISCOUNT OF 1/2 PERCENT FOR PAYMENT WITHIN 20 DAYS AND BOTH BIDDERS SPECIFIED DELIVERY WITHIN 90 DAYS AFTER RECEIPT OF AWARD. THE BID OF DEMPSTER BROTHERS CONTAINED THE FOLLOWING STIPULATION:

"NOTE: OUR QUOTATION IS OFFERED ON AN "ALL OR NONE" BASIS. PRICES HAVE BEEN QUOTED USING CARLOAD FREIGHT RATES. SHOULD A LESSER QUANTITY THAN THAT QUOTED BE DESIRED, WE REQUEST THE OPPORTUNITY OF RE SUBMITTING OUR QUOTATION.'

BY TELEGRAM DATED MAY 31, 1963, LODAL ADVISED THE BASE PROCUREMENT OFFICE IN MATERIAL PART, AS FOLLOWS:

"WE HAVE BEEN NOTIFIED OF ITEM PRICES SUBMITTED ON IFB NUMBER 02 604-63- 92 BY OUR COMPANY AND DEMPSTER BROTHERS WE HAVE BEEN ADVISED THAT THE BID SUBMITTED BY DEMPSTER BROTHERS WAS ON AN ALL OR NONE BASIS AND THAT THEY REQUESTED THE OPPORTUNITY TO RESUBMIT THEIR QUOTATION IF A LESSER QUANTITY WERE TO BE AWARDED. THIS IS CONTRARY TO PROVISIONS OUTLINED IN PARAGRAPH 26 MULTIPLE AWARDS IN IFB AND ADDS A CONDITION TO THEIR BID NOT PROVIDED IN IFB. WE BELIEVE THAT THESE STIPULATIONS MADE BY DEMPSTER MAKE THEIR BID LEGALLY NON RESPONSIVE * * *.'

THE BASE STAFF JUDGE ADVOCATE WAS OF THE VIEW THAT THE ABOVE-QUOTED "NOTE" IN THE DEMPSTER BID CONSTITUTED A RESERVATION WITHIN THE MEANING OF 34 COMP. GEN. 82; THAT IS, DEMPSTER'S BID WAS AN EXAMPLE OF THE "SECOND GUESS THEORY" FOUND TO BE OBJECTIONABLE IN THAT DECISION, AND THAT IT WAS NOT A BID ON AN "ALL OR NONE" BASIS. HE, THEREFORE, CONSIDERED THE BID TO BE NONRESPONSIVE AND RECOMMENDED THAT IT BE REJECTED. THE CONTRACTING OFFICER ACCORDINGLY REJECTED THE BID AND AWARDED THE CONTRACT FOR THE THREE ITEMS TO LODAL IN THE AMOUNT OF $27,240.

WE CONCUR WITH YOUR VIEW THAT THIS ACTION WAS IN ERROR AS THE FACTS IN THE INSTANT CASE ARE DISSIMILAR FROM THOSE CONSIDERED IN 34 COMP. GEN. 82. IN THAT CASE, BIDS WERE INVITED FOR THE CONSTRUCTION OF 85 MILES OF TRANSMISSION LINES DIVIDED INTO TWO SCHEDULES, IV AND V, UNDER AN IFB WHICH CONTAINED A PROVISION THAT "AWARD WILL BE MADE BY SCHEDULE, COMBINATION OF SCHEDULES, OR AS A WHOLE TO ONE BIDDER.' THREE BIDS WERE RECEIVED AS FOLLOWS:

CHART

BIDDER SCHEDULE IV SCHEDULE V TOTALW. L. RIDGE $485,489.97

-- -- PARKER-SCHRAM $523,701.60 $561,496 $1,085,197.60 MIDLAND $523,217.25 $566,502 $1,089,719.25

PARKER-SCHRAM'S BID CONTAINED A STIPULATION "WE RESERVE THE RIGHT TO REFUSE TO ACCEPT THE AWARD OF ANY LESS THAN BOTH SCHEDULES IV AND V.'

AFTER THE BID OPENING, PARKER-SCHRAM ADVISED THE CONTRACTING OFFICER OF ITS INTENTION NOT TO EXERCISE ANY RIGHTS RESERVED UNDER ITS BID AND OF ITS WILLINGNESS TO ACCEPT AN AWARD FOR SCHEDULE V ONLY. THEREAFTER, AN AWARD WAS MADE TO RIDGE FOR SCHEDULE IV AND TO PARKER SCHRAM FOR SCHEDULE V, OR A TOTAL OF $1,046,985.97 FOR THE TWO SCHEDULES COMBINED. AN AWARD ON THIS BASIS APPARENTLY WAS CONSIDERED TO BE ADVANTAGEOUS TO THE GOVERNMENT AS IT WOULD BE LOWER THAN EITHER OF THE TOTAL BIDS FOR THE TWO SCHEDULES COMBINED SUBMITTED BY PARKER SCHRAM AND MIDLAND. MIDLAND PROTESTED THE AWARD. IT WAS HELD THAT SINCE PARKER-SCHRAM HAD MADE NO BID ON EITHER OF THE SCHEDULES SEPARATELY WHICH THE CONTRACTING OFFICER COULD HAVE CONVERTED INTO A CONTRACT BY ACCEPTANCE, THE WAIVER OF THE QUALIFICATION IN THE BID AFTER OPENING WAS IN EFFECT THE SUBMISSION OF A NEW BID ON SCHEDULE V AND, ACCORDINGLY, THAT THE AWARD OF SCHEDULE V TO PARKER-SCHRAM WAS INVALID AND COULD NOT BE RECOGNIZED AS BINDING ON THE GOVERNMENT. AN AWARD HAD BEEN MADE TO PARKER-SCHRAM FOR BOTH SCHEDULES COMBINED, THE AWARD WOULD HAVE BEEN PROPER AS THIS WOULD HAVE BEEN AN ACCEPTANCE OF PARKER-SCHRAM'S LOW AGGREGATE BID FOR BOTH SCHEDULES WHICH WAS, IN FACT, A BID ON AN "ALL OR NONE" BASIS.

IN THE INSTANT CASE, THE BID OF DEMPSTER BROTHERS OBVIOUSLY IS THE LOW AGGREGATE BID FOR THE THREE ITEMS REQUIRED AND THE STIPULATION "OUR QUOTATION IS OFFERED ON AN "ALL OR NONE" BASIS" IS CLEAR AND DEFINITE. "ALL OR NONE" BIDS INVOLVING DEFINITE QUANTITIES HAVE BEEN UNIFORMLY CONSIDERED RESPONSIVE BIDS UNLESS SPECIFICALLY PROHIBITED BY THE INVITATION. SEE 37 COMP. GEN. 814. SEE ALSO ASPR 2-404.5 RELATING TO "ALL OR NONE QUALIFICATIONS" WHICH PROVIDES THAT "UNLESS THE INVITATION FOR BIDS SO PROVIDES, A BID IS NOT RENDERED NONRESPONSIVE BY THE FACT THAT THE BIDDER SPECIFIES THAT AWARD WILL BE ACCEPTED ONLY ON ALL, OR A SPECIFIED GROUP, OF THE ITEMS INCLUDED IN THE INVITATION FOR BIDS.' SUCH PROHIBITION WAS INCLUDED IN THIS INVITATION AND THE "ALL OR NONE" BID PRECLUDED THE CONSIDERATION OF MULTIPLE AWARDS UNDER PARAGRAPH 26 OF THE TERMS AND CONDITIONS, THERE BEING ONLY TWO BIDDERS.

THE BALANCE OF DEMPSTER'S STIPULATION INFORMED THE PROCURING AGENCY THAT "CARLOAD FREIGHT ATES" HAD BEEN USED IN COMPUTING ITS QUOTED PRICE AND REQUEST AN OPPORTUNITY OF RESUBMITTING A QUOTATION IF A LESSER QUANTITY THAN THAT QUOTED ON WAS DESIRED. IN THIS CONNECTION, PARAGRAPH 25 OF THE TERMS AND CONDITIONS SET OUT ABOVE LEFT NO DOUBT THAT DELIVERY OF THE ENTIRE QUANTITY WAS DESIRED WITHIN 60 DAYS AFTER NOTICE OF AWARD, AND SHIPMENT IN CARLOAD LOTS PERMITTING A SAVINGS OF FREIGHT COSTS WOULD RESULT IN A LOWER PRICE. HENCE, IT SEEMS REASONABLY CLEAR FROM THE FACTS AND CIRCUMSTANCES INVOLVED THAT AN AWARD TO DEMPSTER WHO SUBMITTED THE LOWEST PRICE FOR ALL THE ITEMS SPECIFIED "WOULD BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED.' THIS IS CONSISTENT WITH OUR DECISION TO YOU DATED JANUARY 12, 1962,41 COMP. GEN. 455, WHERE MATERIALLY THE SAME TERMS AND CONDITIONS AND SIMILAR CIRCUMSTANCES WERE CONSIDERED, AND IT WAS HELD THAT AN AWARD TO THE BIDDER SUBMITTING THE LOWEST AGGREGATE BID WAS REQUIRED.

WE ACCORDINGLY AGREE THAT THE AWARD TO LODAL SHOULD BE CANCELED AND AN AWARD SHOULD BE MADE TO DEMPSTER BROTHERS, INC., FOR THE TOTAL PRICE OF $25,677.80. A COPY OF OUR LETTER SO ADVISING THE PROTESTING BIDDER IS ENCLOSED.