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B-125183, APR. 9, 1956

B-125183 Apr 09, 1956
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TO SOCIETY BRAND HAT COMPANY: REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 28. YOU STATED THAT THE CANCELLED INVITATION WAS REPLACED WITHIN A MATTER OF A FEW DAYS BY INVITATION NO. IT WAS DISCOVERED THAT A PATENT ON A FIBREBOARD INSERT USED IN PACKAGING CAPS. THE QUARTERMASTER CORPS DOES NOT HAVE ACCESS TO THE FILES ON PENDING PATENT APPLICATIONS. THE PHILADELPHIA QUARTERMASTER DEPOT COULD NOT HAVE ASCERTAINED THIS FACT PRIOR TO THE OPENING OF BIDS. "5. TO AVOID INVOLVING THE SUCCESSFUL BIDDERS AND THE GOVERNMENT IN POSSIBLE PATENT INFRINGEMENT DIFFICULTIES AND ADDED EXPENSE FOR BIDDERS WHO WERE UNAWARE OF THE PATENT AT THE TIME OF SUBMISSION OF THEIR BIDS. IT WAS ADMINISTRATIVELY DETERMINED TO BE IN THE BEST INTEREST OF THE GOVERNMENT TO REVISE THE SPECIFICATION BY DELETING THE REQUIREMENT THAT A FIBREBOARD INSERT BE USED IN PACKAGING.

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B-125183, APR. 9, 1956

TO SOCIETY BRAND HAT COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 28, 1955, ACKNOWLEDGED JANUARY 25, 1956, PROTESTING AGAINST THE ACTION OF THE DEPARTMENT OF THE ARMY IN CANCELLING INVITATION TO BID NO. QM 36-030-56-102. YOU STATED THAT THE CANCELLED INVITATION WAS REPLACED WITHIN A MATTER OF A FEW DAYS BY INVITATION NO. QM 36-030-56-358 WHICH PROVIDED A VERY MINOR CHANGE IN THE BOXES TO BE USED AND THAT YOU CONSIDER THIS ACTION TO BE CONTRARY TO PROCUREMENT REGULATIONS AND ILLEGAL.

THERE NOW HAS BEEN RECEIVED FROM THE ASSISTANT SECRETARY OF THE ARMY (LOGISTICS) A FULL REPORT IN THE MATTER, PREPARED BY THE QUARTERMASTER GENERAL, WHICH STATES, IN PERTINENT PART, AS FOLLOWS:

"3. IN RESPONSE TO THE INVITATION (NO. QM 36-030-56-102), SOCIETY BRAND HAT COMPANY SUBMITTED A BID DATED 1 NOVEMBER 1955, AS AMENDED BY TELEGRAM OF 3 NOVEMBER 1955, FOR 200,000 CAPS AT A UNIT PRICE OF $3.699 F.O.B. ORIGIN. MIDCITY UNIFORM CAP COMPANY SUBMITTED THE LOWEST UNIT BID PRICE OF $3.6315 FOR THE FIRST 100,000 AND $3.6736 FOR AN ADDITIONAL 100,000; IDEAL UNIFORM CAP COMPANY SUBMITTED THE SECOND LOWEST UNIT BID PRICE OF $3.65 ON 50,000 CAPS.

"4. SUBSEQUENT TO THE OPENING OF BIDS RECEIVED IN RESPONSE TO INVITATION NO. 102, BUT PRIOR TO ANY AWARDS, IT WAS DISCOVERED THAT A PATENT ON A FIBREBOARD INSERT USED IN PACKAGING CAPS, SIMILAR TO THE INSERT REQUIRED BY THE APPLICABLE SPECIFICATION, HAD BEEN GRANTED ON 6 DECEMBER 1955 TO MR. HARRY LEV OF CHICAGO, ILLINOIS. THE QUARTERMASTER CORPS DOES NOT HAVE ACCESS TO THE FILES ON PENDING PATENT APPLICATIONS; CONSEQUENTLY, THE PHILADELPHIA QUARTERMASTER DEPOT COULD NOT HAVE ASCERTAINED THIS FACT PRIOR TO THE OPENING OF BIDS.

"5. TO AVOID INVOLVING THE SUCCESSFUL BIDDERS AND THE GOVERNMENT IN POSSIBLE PATENT INFRINGEMENT DIFFICULTIES AND ADDED EXPENSE FOR BIDDERS WHO WERE UNAWARE OF THE PATENT AT THE TIME OF SUBMISSION OF THEIR BIDS, IT WAS ADMINISTRATIVELY DETERMINED TO BE IN THE BEST INTEREST OF THE GOVERNMENT TO REVISE THE SPECIFICATION BY DELETING THE REQUIREMENT THAT A FIBREBOARD INSERT BE USED IN PACKAGING. INASMUCH AS NO AWARDS HAD YET BEEN MADE AND SINCE SECTION 2-403 OF ARMY PROCUREMENT PROCEDURE SPECIFICALLY PROVIDES FOR THE REJECTION OF ALL BIDS IN THE INTEREST OF THE GOVERNMENT WHERE IT APPEARS THAT THE SPECIFICATION SHOULD BE REVISED, INVITATION NO. 102 WAS CANCELLED ON 14 DECEMBER 1955 AND ALL BIDDERS WERE NOTIFIED ACCORDINGLY.

"6. THE PHILADELPHIA QUARTERMASTER DEPOT READVERTISED THIS PROCUREMENT UNDER INVITATION FOR BIDS NO. QM 36-030-56-358, ISSUED ON 20 DECEMBER 1955. INVITATION NO. 358 REQUESTED BIDS ON THE TOTAL REQUIREMENT OF 600,012 UNITS; THE SPECIFICATION WAS CHANGED BY DELETING THE REQUIREMENT FOR USE OF THE FIBREBOARD INSERT IN THE PACKAGING OF THE CAPS AND SUBSTITUTING THEREFOR A LOOSE LINING OF TISSUE CUSHIONING; AND BIDS WERE SOLICITED ON AN F.O.B. DESTINATION BASIS ONLY. OF THE 66 FIRMS SOLICITED, BIDS WERE RECEIVED FROM THE SAME 12 FIRMS WHICH HAD RESPONDED TO INVITATION NO. 102; UNIT BID PRICES RANGED FROM $3.463 TO $5.85 F.O.B. DESTINATION.

"8. SOCIETY BRAND HAT COMPANY HAS ALWAYS BEEN ACCORDED THE SAME CONSIDERATION GIVEN TO ALL OTHER BIDDERS. MOREOVER, SINCE SOCIETY BRAND HAT COMPANY HAS RECEIVED AN AWARD UNDER INVITATION NO. 358, IT WOULD APPEAR THAT THE FIRM WILL RECEIVE THE BENEFIT OF THE EXPENDITURES REFERRED TO IN ITS PROTEST. IT SHOULD ALSO BE NOTED THAT THE COST OF PROCUREMENT UNDER INVITATION NO. 358 APPEARS TO BE SOMEWHAT LESS THAN IT WOULD HAVE BEEN UNDER INVITATION NO. 102.'

SECTION 3 OF THE ARMED SERVICES PROCUREMENT ACT OF 1947, 62 STAT. 21, 23, PROVIDES AS FOLLOWS:

"/B) ALL BIDS SHALL BE PUBLICLY OPENED AT THE TIME AND PLACE STATED IN THE ADVERTISEMENT. AWARDS SHALL BE MADE WITH REASONABLE PROMPTNESS BY WRITTEN NOTICE TO THAT RESPONSIBLE BIDDER WHOSE BID, CONFIRMING TO THE INVITATION FOR BIDS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED: PROVIDED, THAT ALL BIDS MAY BE REJECTED WHEN THE AGENCY HEAD DETERMINES THAT IT IS IN THE PUBLIC INTEREST SO TO DO.'

THUS, THE DECISION AS TO WHEN ALL BIDS SHOULD BE REJECTED IS LEFT TO THE DETERMINATION OF THE AGENCY HEAD. OF COURSE, SUCH A COURSE OF ACTION SHOULD NOT BE CHOSEN WITHOUT CAREFUL CONSIDERATION OF MANY FACTORS, INCLUDING THOSE REFERRED TO IN YOUR LETTER. HOWEVER, IN VIEW OF THE ABOVE -QUOTED REPORT OF THE QUARTERMASTER GENERAL, THE APPLICABLE PROVISION OF LAW CITED ABOVE, AND THE ADMINISTRATIVE DISCRETION NECESSARILY INVOLVED IN MAKING SUCH DECISIONS, THERE IS NO PROPER BASIS UPON WHICH WE CAN OBJECT TO THE ADMINISTRATIVE ACTION TAKEN IN THIS INSTANCE.

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