B-161057, JUN. 19, 1967

B-161057: Jun 19, 1967

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INC.: REFERENCE IS MADE TO YOUR LETTER OF MAY 11. THE PRIMARY BASIS FOR YOUR REQUEST FOR RECONSIDERATION IS THE CONTENTION THAT. IS ONLY FIVE PERCENT LOWER THAN YOUR BID. THAT UNDER SUCH COMPUTATION WHEELING'S BID IS 68 PERCENT BELOW YOUR BID AND 90 PERCENT BELOW THE AVERAGE OF THE OTHER BIDDERS. THE ONLY POSSIBLE WAY WHEELING CAN BID SUCH PRICES IS THROUGH THE STRATAGEM OF THE PARENT (WHEELING STEEL COMPANY) SELLING TO WHEELING AT A LOWER PRICE THAN IT HAS BEEN CHARGING YOU. YOUR CONTENTION THAT WHEELING WAS BIDDING AT 3 PERCENT ABOVE THE COST OF ITS PURCHASED PARTS WAS CONSIDERED IN OUR DECISION OF MAY 5. WE ARE AWARE OF NO REGULATION WHICH WOULD PRECLUDE A CONTRACTING AGENCY FROM AWARDING A CONTRACT AT AN UNPROFITABLE BID PRICE.

B-161057, JUN. 19, 1967

TO YOUNG METAL PRODUCTS, INC.:

REFERENCE IS MADE TO YOUR LETTER OF MAY 11, 1967, REQUESTING RECONSIDERATION OF OUR DECISION OF MAY 5, 1967, DENYING YOUR PROTEST AGAINST THE AWARD OF A CONTRACT TO WHEELING CORRUGATING COMPANY (WHEELING), UNDER INVITATION NO. DSA-700-67-B-3384, ISSUED BY THE DEFENSE SUPPLY AGENCY.

THE PRIMARY BASIS FOR YOUR REQUEST FOR RECONSIDERATION IS THE CONTENTION THAT, ALTHOUGH WHEELING'S BID, INCLUDING ALL ITEMS, IS ONLY FIVE PERCENT LOWER THAN YOUR BID, AS A PRACTICAL MATTER THE DIFFERENCE SHOULD BE COMPUTED ON THE AMOUNTS BY WHICH THE BID PRICES EXCEED THE PRICES OF PARTS PURCHASED UNDER THE ADMINISTRATIVE PRICING SCHEDULE, AND THAT UNDER SUCH COMPUTATION WHEELING'S BID IS 68 PERCENT BELOW YOUR BID AND 90 PERCENT BELOW THE AVERAGE OF THE OTHER BIDDERS. YOU FURTHER CONTEND THAT WHEELING CANNOT FABRICATE THESE ITEMS AT ANYWHERE NEAR THE AMOUNT BY WHICH ITS BID PRICE EXCEEDS THE COST OF PARTS, AND THE ONLY POSSIBLE WAY WHEELING CAN BID SUCH PRICES IS THROUGH THE STRATAGEM OF THE PARENT (WHEELING STEEL COMPANY) SELLING TO WHEELING AT A LOWER PRICE THAN IT HAS BEEN CHARGING YOU, AND/OR ABSORBING WHEELING'S YEAR END LOSS.

WHILE YOUR CONTENTIONS MAY BE TRUE, WE SEE NO BASIS UPON WHICH A CONTRACTING AGENCY CAN BE REQUIRED OR EXPECTED TO EVALUATE DIFFERENCES IN BID PRICES UNDER THE METHOD YOU ADVANCE. YOUR CONTENTION THAT WHEELING WAS BIDDING AT 3 PERCENT ABOVE THE COST OF ITS PURCHASED PARTS WAS CONSIDERED IN OUR DECISION OF MAY 5. AS INDICATED THEREIN, WE ARE AWARE OF NO REGULATION WHICH WOULD PRECLUDE A CONTRACTING AGENCY FROM AWARDING A CONTRACT AT AN UNPROFITABLE BID PRICE, AND WE ARE AWARE OF NO LEGAL PRINCIPLE ON THE BASIS OF WHICH THIS OFFICE MAY PRECLUDE OR DISTURB AN AWARD TO A LOW BIDDER WHO SUBMITTED AN UNPROFITABLE PRICE.

UNDER THE CIRCUMSTANCES WE FIND NO SUCH ERROR OF FACT OR LAW ALLEGED IN YOUR LETTER OF MAY 11 AS WOULD REQUIRE A REVERSAL OF OUR DECISION OF MAY 5, AND THE CONCLUSIONS SET OUT IN THAT DECISION MUST THEREFORE BE AFFIRMED.