B-154390, AUG. 5, 1964

B-154390, AUG. 5, 1964

TO READE MANUFACTURING COMPANY, INC.:

WE REFER TO YOUR LETTER DATED JULY 3, 1964, REQUESTING RECONSIDERATION OF OUR DECISION B-154390, DATED JUNE 26, 1964. IN ESSENCE, YOUR LETTER STATES THAT UNLESS OUR OFFICE DECLARES ATOMIC ENERGY COMMISSION INVITATION FOR BIDS NO. 401-64-38C INVALID, YOUR FIRM, A QUALIFIED SMALL BUSINESS CONCERN, WILL HAVE BEEN EFFECTIVELY PRECLUDED FROM BIDDING ON THIS PROCUREMENT.

AT THE OUTSET IT SHOULD BE NOTED THAT MANY OF THE POINTS RAISED IN YOUR LETTER RELATE TO INDIVIDUAL AGENCY POLICY GENERALLY NOT REVIEWABLE BY OUR OFFICE UNLESS CONTRARY TO EXPRESSED GOVERNMENTAL POLICY OR ESTABLISHED LAW OR REGULATION. FOR INSTANCE, THE QUESTION WHETHER IT WOULD HAVE BEEN MORE DESIRABLE FOR AEC TO ISSUE TWO SEPARATE AND DISTINCT INVITATIONS FOR THE MAGNESIUM REQUIREMENT IS A MATTER PRIMARILY FOR CONSIDERATION BY THAT AGENCY.

YOU ALSO CRITICIZE THE ATOMIC ENERGY COMMISSION FOR ESTABLISHING A PARTIAL LABOR SURPLUS SET-ASIDE EVEN THOUGH ONLY ONE COMPANY WAS QUALIFIED AS A LABOR SURPLUS AREA CONCERN. SPECIFICALLY YOUR LETTER STATES:

"CHAS. PFIZER AND CO., INC. BEING THE ONLY LABOR SURPLUS AREA PRODUCING COMPANY IS BEING GIVEN THE FIRST OPPORTUNITY TO TAKE THE SET ASIDE QUANTITY BEFORE OUR COMPANY AS WE APPARENTLY ARE ONLY CLASSIFIED AS A SMALL BUSINESS CONCERN.' WHILE WE UNDERSTAND AND APPRECIATE YOUR POSITION THIS DECISION IS IN FULL ACCORD WITH ESTABLISHED REGULATIONS AS WE INDICATED IN OUR PRIOR DECISION.

THE PROCEDURE FOR MAKING A LABOR SURPLUS AREA SET-ASIDE IS SET FORTH IN PARAGRAPH 1-804-1 OF THE FEDERAL PROCUREMENT REGULATIONS. IN SUBSTANCE IT STATES THAT IN ACCORDANCE WITH THE POLICIES SET FORTH IN PARAGRAPH 1- 1.802, A PORTION OF EACH PROCUREMENT IN EXCESS OF $10,000 SHALL BE SET ASIDE FOR LABOR SURPLUS AREA CONCERNS IF:

"/1) THE PROCUREMENT IS SEVERABLE INTO TWO OR MORE ECONOMIC PRODUCTION RUNS OR REASONABLE OTS; AND

"/2) ONE OR MORE LABOR SURPLUS AREA CONCERNS, HAVING THE TECHNICAL COMPETENCY AND PRODUCTIVE CAPACITY TO FURNISH A SEVERABLE PORTION OF THE PROCUREMENT AT A REASONABLE PRICE, IS EXPECTED TO SUBMIT BIDS OR OFFERS.'

HOWEVER, IN ORDER TO INSURE THAT A FAIR PROPORTION OF THE TOTAL PURCHASES AND CONTRACTS ARE PLACED WITH SMALL BUSINESS CONCERNS, PARAGRAPH 1-1.804-A FURTHER PROVIDES THAT EACH LABOR SURPLUS AREA SET ASIDE SHALL ALSO PROVIDE FOR ELIGIBILITY BY SMALL BUSINESS CONCERNS NOT OTHERWISE PERFORMING IN SUCH SURPLUS AREAS. AS YOU ARE NO DOUBT AWARE, AFTER ALL AWARDS HAVE BEEN MADE ON THE NON-SET-ASIDE PORTION, NEGOTIATIONS ARE CONDUCTED WITH RESPONSIBLE LABOR SURPLUS AREA CONCERNS (AND SMALL BUSINESS CONCERNS TO THE EXTENT INDICATED) WHICH HAVE SUBMITTED RESPONSIVE BIDS OR PROPOSALS ON THE NON-SET-ASIDE PORTION AT A UNIT PRICE NO GREATER THAN 120 PERCENT OF THE HIGHEST AWARD MADE ON THE NON-SET-ASIDE PORTION. UNDER THE FACTS OF THIS CASE WE FIND NO VIOLATION OF ANY OF THE ABOVE REGULATIONS.

ON PAGE 3 OF YOUR LETTER YOU ASK THAT THIS INVITATION BE DECLARED "NULL AND VOID" SINCE NO SPACE WAS PROVIDED FOR THE INSERTION OF A PRICE ON SCHEDULE "D" AND THE INVITATION WAS THEREFORE INCOMPLETE AND MISLEADING. WE AGREE THAT A SPACE SHOULD HAVE BEEN PROVIDED; HOWEVER, SINCE NO BIDDER WAS PREJUDICED BY THE OMISSION, WE DO NOT BELIEVE CANCELLATION OF THE INVITATION WOULD BE WARRANTED. ASSUMING THAT DOW CHEMICAL, THE ONLY BIDDER AFFECTED BY THE OMISSION, HAD SUBMITTED A RESPONSIVE BID, THE PRICES BID BY PFIZER ON SCHEDULES A AND B WERE STILL LOWER BY MORE THAN ELEVEN THOUSAND DOLLARS THAN THE BID PRICES SUBMITTED BY DOW.

INSOFAR AS THE USE OF "CRUSHED CROWNS" IS CONCERNED, WE HAVE BEEN INFORMED THAT THE ATOMIC ENERGY COMMISSION ANTICIPATES A SUBSTANTIAL SAVING SINCE THE "CROWN PROCESS" SAVES THE COSTS OF MELTING AND POURING INGOTS. AEC ALSO MAINTAINS THAT SATISFACTORY GROUND MAGNESIUM CAN BE PRODUCED FROM USING SO-CALLED "CROWN" MAGNESIUM METAL AS A STARTING POINT AND THAT THIS WAS PROVEN AT THE GOVERNMENT-OWNED PLANT IN CANAAN, CONNECTICUT. TESTING OF MAGNESIUM OBTAINED FROM THIS PROCESS WAS CARRIED OUT PRIOR TO THE ISSUANCE OF THE SUBJECT INVITATION BY THE NATIONAL LEAD COMPANY AT THE FERNALD, OHIO PLANT AND BY MALINCKRODT CHEMICAL WORKS AT WELDON SPRING.

THE GRINDING RATES USED ON SCHEDULES "C" AND "D" ARE RATES ON EXISTING GRINDING CONTRACTS EFFECTIVE THROUGH SEPTEMBER 30, 1964. AFTER THAT DATE, AEC ADMITS THAT READVERTISING WILL BE NECESSARY AND THAT IT IS POSSIBLE THAT THESE RATES MAY CHANGE. HOWEVER, SINCE THESE RATES WERE THE MOST ACCURATE FIGURES THEN AVAILABLE, WE FIND NO BASIS FOR CRITICIZING AEC IN THIS REGARD.

BY LETTER ADDRESSED TO OUR OFFICE DATED JUNE 19, 1964, MR. S. R. SAPIRIE, MANAGER OF THE OAK RIDGE OPERATIONS, ACKNOWLEDGED THE EXISTENCE OF AN ERROR IN THEIR CALCULATIONS IN COMPUTING FREIGHT RATES. EVEN AFTER CORRECTION, HOWEVER, THE OVER-ALL COST UNDER DOW'S BID WAS STILL GREATER THAN UNDER PFIZER-S.

SINCE OUR DECISION OF JUNE 26, 1964, SUFFICIENTLY EXPLAINS OUR POSITION REGARDING THE EFFECT OF ERRONEOUS INFORMATION SUPPLIED YOUR FIRM BY THE CONTRACTING OFFICER, WE FIND IT UNNECESSARY TO FURTHER DISCUSS THIS ASPECT OF THE CASE.

AFTER THOROUGH REVIEW, WE FIND NO LEGAL BASIS FOR CONCLUDING THAT THE SUBJECT INVITATION IS INVALID. OUR DECISION OF JUNE 26, 1964 IS THEREFORE AFFIRMED.