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B-146235, NOV. 2, 1961

B-146235 Nov 02, 1961
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GOVERNMENT OF THE DISTRICT OF COLUMBIA: REFERENCE IS MADE TO A LETTER DATED AUGUST 22. THE RECORD SHOWS THAT BIDS WERE INVITED ON 69 ITEMS OF DRUGS AND IT WAS PROPOSED TO ENTER INTO ONE OR MORE REQUIREMENTS-TYPE CONTRACTS COVERING SUCH ITEMS. WAS STATED TO BE THE TIME FOR COMMENCEMENT OF THE CONTRACT TERM. REQUIRED DELIVERY TIME WAS SPECIFIED IN THE INVITATION FOR BIDS. PARAGRAPH 12 OF THE PRINTED FORM ATTACHED TO THE INVITATION AND ENTITLED "INSTRUCTIONS TO BIDDERS" PROVIDED THAT THE CONTRACT WILL BE AWARDED THE LOWEST RESPONSIBLE BIDDER COMPLYING WITH ALL THE PROVISIONS OF THE INVITATION. PROVIDED THE PRICE IS REASONABLE AND IT IS TO THE INTEREST OF THE DISTRICT TO ACCEPT IT. THERE WAS INCLUDED AMONG THE SPECIAL CONDITIONS AT PAGE 13 OF THE INVITATION THE FOLLOWING CLAUSE: "BASIS FOR AWARD: PRICE WILL BE THE PRIME CONSIDERATION IN AWARDING EACH ITEM OR AGGREGATE GROUP OF ITEMS.

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B-146235, NOV. 2, 1961

TO MR. REXFORD G. WESSELLS, PROCUREMENT OFFICER, GOVERNMENT OF THE DISTRICT OF COLUMBIA:

REFERENCE IS MADE TO A LETTER DATED AUGUST 22, 1961, FURNISHING THE REPORT REQUESTED IN OUR LETTER TO YOU OF JUNE 28, 1961, ON THE PROTEST OF MADISON-LEWIS, INC., SOUTH HACKENSACK, NEW JERSEY, AGAINST THE REJECTION OF ITS BID ON ITEM NO. 28 OF INVITATION FOR BIDS NO. T-61410 RJ, ISSUED BY YOUR OFFICE ON OCTOBER 25, 1960.

THE RECORD SHOWS THAT BIDS WERE INVITED ON 69 ITEMS OF DRUGS AND IT WAS PROPOSED TO ENTER INTO ONE OR MORE REQUIREMENTS-TYPE CONTRACTS COVERING SUCH ITEMS, WITH THE PERIOD OF THE CONTRACT OR CONTRACTS WITH RESPECT TO REQUIRED DELIVERIES ON ITEMS NOS. 55, 57, AND 58 FOR WHICH APRIL 1, 1961, WAS STATED TO BE THE TIME FOR COMMENCEMENT OF THE CONTRACT TERM. REQUIRED DELIVERY TIME WAS SPECIFIED IN THE INVITATION FOR BIDS. PARAGRAPH 12 OF THE PRINTED FORM ATTACHED TO THE INVITATION AND ENTITLED "INSTRUCTIONS TO BIDDERS" PROVIDED THAT THE CONTRACT WILL BE AWARDED THE LOWEST RESPONSIBLE BIDDER COMPLYING WITH ALL THE PROVISIONS OF THE INVITATION, PROVIDED THE PRICE IS REASONABLE AND IT IS TO THE INTEREST OF THE DISTRICT TO ACCEPT IT. ALSO, THERE WAS INCLUDED AMONG THE SPECIAL CONDITIONS AT PAGE 13 OF THE INVITATION THE FOLLOWING CLAUSE:

"BASIS FOR AWARD: PRICE WILL BE THE PRIME CONSIDERATION IN AWARDING EACH ITEM OR AGGREGATE GROUP OF ITEMS. HOWEVER, PRICE WILL NOT BE THE SOLE CONSIDERATION. QUALITY, ACCEPTABILITY, AND PALATABILITY OF PRODUCTS OFFERED, AS DETERMINED BY THE DISTRICT AGENCIES INVOLVED AND THEIR MEDICAL STAFFS AND PHARMACISTS AND BIDDER'S POLICY ON EXCHANGING OVERAGE DRUGS, WILL BE FACTORS IN AWARDING CONTRACTS HEREUNDER.'

ITEM NO. 28 OF THE INVITATION CALLED FOR THE FURNISHINGS AS REQUIRED NEOMYCIN SULPHATE U.S.P., TABLETS 0.5 GM. (ORAL), ETC., IN BOTTLES OF 1,000, AND IT WAS ESTIMATED THAT THE QUANTITY TO BE ORDERED FROM THE SUCCESSFUL BIDDER DURING THE TERM OF ITS CONTRACT WOULD BE 60 BOTTLES. MADISON-LEWIS, INC., QUOTED A LOW PRICE OF $67.45 PER BOTTLE, AS COMPARED WITH A PRICE OF $11.50 PER BOTTLE OF 100 TABLETS QUOTED BY E. R. SQUIBB AND SONS, NEW YORK, NEW YORK. THE AWARD WAS MADE TO E. R. SQUIBB AND SONS ALTHOUGH SIX OTHER BIDDERS, INCLUDING MADISON-LEWIS, INC., HAD QUOTED LOWER PRICES ON ITEM NO. 28. E. R. SQUIBB AND SONS, HOWEVER, OFFERED TO MAKE DELIVERIES WITHIN SUCH TIME AS THE DISTRICT MIGHT REQUEST IN THE DELIVERY ORDERS WHEREAS THE ABSTRACT OF BIDS SHOWS THAT MADISON-LEWIS, INC., OFFERED DELIVERY WITHIN 30 DAYS AFTER RECEIPT OF ORDER AND THAT THE OTHER LOW BIDDERS ON ITEM NO. 28 EITHER FAILED TO STATE THEIR PROPOSED DELIVERY TIME OR OFFERED DELIVERY WITHIN 10 DAYS.

IN THE LETTER OF AUGUST 22, 1961, IT IS STATED THAT ITEM NO. 28 OF THE INVITATION WAS AWARDED TO E. R. SQUIBB AND SONS AS THE RESULT OF A RECOMMENDATION SUBMITTED BY THE DEPUTY DIRECTOR OF PUBLIC HEALTH WHICH WAS BASED ON THE RECOMMENDATION OF THE D.C. GENERAL HOSPITAL FORMULARY COMMITTEE. THE COMMITTEE, WHICH IS COMPOSED OF THE FIVE CHIEF MEDICAL OFFICERS, THE DIRECTOR OF NURSING, AND THE CHIEF PHARMACIST, FELT THAT, ALTHOUGH THE PRODUCT OF MADISON-LEWIS, INC., MIGHT EQUAL THE END USE NEED, THE COMMITTEE HAD NO ASSURANCE THAT IT WOULD DO SO AND DID NOT WISH TO RISK USING A PRODUCT WHICH WAS UNKNOWN TO THE HEALTH DEPARTMENT. THE BIDS OF THE FIVE OTHER LOWEST BIDDERS ON ITEM NO. 28 REPORTEDLY WERE REJECTED FOR THE SAME REASON AND IT APPEARS THAT THE BID OF MADISON-LEWIS, INC., WAS REJECTED FOR THE ADDITIONAL REASON THAT ITS OFFERED DELIVERY TIME WAS NOT ACCEPTABLE. IT IS POINTED OUT IN THE LETTER THAT MOST DRUG MANUFACTURERS WILL MAKE DELIVERIES WITHIN ONE TO THREE DAYS AND THAT, WITH THE DISTRICT'S LIMITED STORAGE FACILITIES AND WITH FREQUENT CHANGES IN THE APPLICATION AND USES OF VARIOUS DRUGS, IT WOULD NOT BE PRACTICABLE TO STOCK A QUANTITY OF ANY DRUG TO PERMIT A DELAY OF 30 DAYS FOR REPLENISHMENT.

IT IS ALLEGED BY MADISON-LEWIS, INC., THAT THE DECISION TO REJECT ITS BID BECAUSE ITS PRODUCT WAS UNKNOWN TO AND UNUSED BY THE STAFF DOCTORS OF THE DEPARTMENT OF HEALTH, DISTRICT OF COLUMBIA, WAS ARBITRARY AND UNJUST, ESPECIALLY SINCE THE PRODUCT WOULD HAVE TO BE MANUFACTURED IN STRICT ACCORDANCE WITH THE REQUIREMENTS AND STANDARDS OUTLINED IN THE UNITED STATES PHARMACOPOEIA AND, FURTHERMORE, IF IT IS NOT GIVEN AN OPPORTUNITY TO HAVE ITS PRODUCT KNOWN, IT WILL NEVER STAND A CHANCE TO SUPPLY IT.

YOU WERE ADVISED BY THE DEPUTY DIRECTOR OF PUBLIC HEALTH THAT THE FORMULARY COMMITTEE DOES NO CHEMICAL ANALYSIS AND THAT THE COMMITTEE DOES NOT HAVE THE FACILITIES NOR IS IT SET UP TO DO ADEQUATE DRUG TESTING FOR CHEMICAL CONTENT, POTENCY, PURITY AND STABILITY. CONSEQUENTLY, ONLY PRODUCTS PROVEN BY EXTENSIVE PATIENT TESTING IN THE PAST, MANUFACTURED BY WELL-KNOWN PHARMACEUTICAL COMPANIES WITH ADEQUATE CONTROL TESTING OF FINAL PREPARATIONS, ARE CONSIDERED BY THE COMMITTEE. THE QUESTION, THEREFORE, ARISES AS TO WHETHER AWARDS MADE TO HIGHER BIDDERS ON THE BASIS OF EXPERIENCE IN THE USE OF DRUGS MANUFACTURED BY WELL-KNOWN PHARMACEUTICAL COMPANIES WITH ESTABLISHED REPUTATIONS WOULD MEET THE REQUIREMENTS FOR THE LETTING OF CONTRACTS UNDER FORMAL ADVERTISING PROCEDURES. IT IS OUR VIEW THAT AWARDS MADE IN THIS MANNER DO NOT COMPLY WITH THE FORMAL ADVERTISING PROCEDURES. THAT METHOD OF PROCUREMENT CONTEMPLATES THAT PROPOSALS AND SPECIFICATIONS BE FRAMED SO AS TO PERMIT FREE AND FULL COMPETITION AND THAT A BIDDER'S RESPONSIBILITY MUST BE DETERMINED UPON THE BASIS OF A COMPLETE AND HONEST INVESTIGATION OF THE BIDDER'S QUALIFICATIONS. EVIDENTLY THE HEALTH DEPARTMENT OF THE DISTRICT OF COLUMBIA IS NOT IN A POSITION TO DETERMINE THE RESPONSIBILITY OF A CONSIDERABLE NUMBER OF PHARMACEUTICAL CONCERNS WHICH NORMALLY COULD BE EXPECTED TO SUBMIT BIDS ON AN ADVERTISED PROCUREMENT SPECIFYING THAT THE SUPPLIES MEET U.S.P. STANDARDS. IT WOULD APPEAR THAT SUCH CONCERNS SHOULD NOT BE REQUESTED TO SUBMIT BIDS IF THEY HAVE PRACTICALLY NO CHANCE OF BEING RECOGNIZED AS PROSPECTIVE CONTRACTORS. IF PRODUCTS OF A PARTICULAR MANUFACTURER ARE REQUIRED WE BELIEVE THAT THEY SHOULD BE PROCURED BY NEGOTIATION RATHER THAN BY FORMAL ADVERTISING OR THROUGH A QUALIFIED PRODUCTS LIST.

FURTHERMORE, WE DO NOT BELIEVE THAT IT WAS PROPER TO REJECT THE BID OF MADISON-LEWIS, INC., ON THE GROUND THAT ITS OFFERED DELIVERY TIME WAS UNSATISFACTORY. INASMUCH AS THE INVITATION FOR BIDS WAS SILENT AS TO TIME OF DELIVERY BIDDERS MIGHT WELL HAVE ASSUMED THAT AN OFFER TO DELIVER WITHIN 30 DAYS AFTER RECEIPT OF ORDER WOULD BE ACCEPTABLE AND THAT, IF AN URGENCY DEVELOPED, THE DISTRICT WOULD TAKE ACTION IN ACCORDANCE WITH THE FIRST OF THE NUMBERED EXCEPTIONS TO ITS PROPOSED COMMITMENT TO ANY BIDDER AS SET FORTH AT PAGE 1 OF THE BIDDING SCHEDULE. IF THE DISTRICT INTENDED TO RESTRICT AWARDS TO ONLY THOSE CONCERNS WHICH OFFERED DELIVERY WITHIN A PERIOD OF NOT TO EXCEED THREE DAYS AFTER RECEIPT OF ORDER, THAT FACT SHOULD HAVE BEEN MADE KNOWN IN THE INVITATION SO THAT ALL INTERESTED CONCERNS WOULD HAVE HAD AN OPPORTUNITY TO COMPETE ON A COMMON BASIS INSOFAR AS THE DISTRICT'S SPECIAL REQUIREMENT AS TO TIME OF DELIVERY WAS CONCERNED.

HOWEVER, SINCE THE TERM OF THE VARIOUS CONTRACTS AWARDED UNDER INVITATION FOR BIDS NO. T-61410-RJ EXPIRED ON OCTOBER 31, 1961, AND SINCE THERE IS NO EVIDENCE TO SHOW THAT THE CONTRACT AWARDS WERE NOT MADE IN ENTIRE GOOD FAITH, WE ARE NOT REQUIRED TO TAKE FURTHER ACTION WITH RESPECT TO THE PROTEST HERE INVOLVED.

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