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B-162881, JAN. 9, 1968

B-162881 Jan 09, 1968
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WISHES TO REDUCE HIS BID PRICE TO REFLECT A DECREASE IN THE APPLICABLE FREIGHT RATE WHICH WOULD HAVE DISPLACED LOW BIDDER ON F.O.B. DESTINATION BASIS MAY NOT HAVE BID MODIFIED TO REFLECT AN AFTER-THE-FACT CHANGE IN FREIGHT RATES. BIDDER'S CONTENTION THAT BID SHOULD HAVE BEEN EVALUATED IN ACCORDANCE WITH LOWER FREIGHT RATE TO BECOME EFFECTIVE PRIOR TO DELIVERY MAY NOT BE UPHELD SINCE ASPR 1-1313.1 PRECLUDES CONSIDERATION OF FREIGHT RATES WHICH ARE NOT PUBLISHED AT TIME OF BID OPENING AND PARTICULAR FREIGHT RATE WILL NOT BE PUBLISHED UNTIL JAN. 1968. TO BEEKMAN AND BOGUE: REFERENCE IS MADE TO YOUR MEMORANDUM OF DECEMBER 11 AND LETTER OF DECEMBER 27. " WHICH WERE OPENED ON JULY 6. THE INVITATION ADVISED PROSPECTIVE BIDDERS THAT PRICES WERE TO BE OFFERED ON THE BASIS OF DELIVERY F.O.B.

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B-162881, JAN. 9, 1968

BIDS - EVALUATION - TRANSPORTATION CHARGES DECISION DENYING PROTEST OF CESCO CONTAINER MFG. CORP. AGAINST REJECTION OF BID FOR PLYWOOD TRUNK LOCKERS FOR DEFENSE SUPPLY AGENCY. A SECOND LOW BIDDER, WHO, AFTER OPENING, WISHES TO REDUCE HIS BID PRICE TO REFLECT A DECREASE IN THE APPLICABLE FREIGHT RATE WHICH WOULD HAVE DISPLACED LOW BIDDER ON F.O.B. DESTINATION BASIS MAY NOT HAVE BID MODIFIED TO REFLECT AN AFTER-THE-FACT CHANGE IN FREIGHT RATES. BIDDER'S CONTENTION THAT BID SHOULD HAVE BEEN EVALUATED IN ACCORDANCE WITH LOWER FREIGHT RATE TO BECOME EFFECTIVE PRIOR TO DELIVERY MAY NOT BE UPHELD SINCE ASPR 1-1313.1 PRECLUDES CONSIDERATION OF FREIGHT RATES WHICH ARE NOT PUBLISHED AT TIME OF BID OPENING AND PARTICULAR FREIGHT RATE WILL NOT BE PUBLISHED UNTIL JAN. 1968. THE RECORD DOES NOT ESTABLISH THAT THE CLASS RATE HAS BEEN RENDERED INAPPLICABLE TO OVERCOME ASPR PROHIBITION AGAINST CONSIDERATION OF UNPUBLISHED RATES.

TO BEEKMAN AND BOGUE:

REFERENCE IS MADE TO YOUR MEMORANDUM OF DECEMBER 11 AND LETTER OF DECEMBER 27, 1967, PROTESTING, ON BEHALF OF THE CESCO CONTAINER MFG. CORP. (CESCO), AGAINST THE METHOD OF EVALUATION OF THAT COMPANY'S BID SUBMITTED IN RESPONSE TO INVITATION FOR BIDS NO. DSA100-67-B-2224. THE INVITATION, ISSUED JUNE 14, 1967, AS AMENDED, SOLICITED BIDS ON A UNIT PRICE BASIS FOR THE MANUFACTURE AND DELIVERY OF A TOTAL OF 332,306 EACH "TRUNK LOCKER, PLYWOOD, WITH TRAY AND DLOCK," WHICH WERE OPENED ON JULY 6, 1967. THE INVITATION ADVISED PROSPECTIVE BIDDERS THAT PRICES WERE TO BE OFFERED ON THE BASIS OF DELIVERY F.O.B. ORIGIN AND F.O.B. ORIGIN-FREIGHT PREPAID TO FOUR DESTINATIONS IN THE QUANTITIES INDICATED BELOW:

ITEM NO. DESTINATION UNIT

1 DEFENSE DEPOT, MECHANICSBURG 87,000

2 ATLANTA ARMY DEPOT 54,000

3 DEFENSE DEPOT, MEMPHIS 36,000

4 DEFENSE DEPOT, OGDEN 155,306

WE HAVE BEEN ADVISED THAT THE OUTCOME OF THE PRESENT PROTEST WILL HAVE NO EFFECT UPON ITEMS NOS. 2, 3 AND 4 OF THE INVITATION SINCE THOSE ITEMS WERE AWARDED ON DECEMBER 8, 1967, TO THOSE BIDDERS WHO SUBMITTED THE LOWEST RESPONSIVE BIDS FOR SUCH ITEMS. HENCE, THE ONLY ITEM FOR CONSIDERATION HERE IS ITEM NO. 1 AS TO WHICH AWARD IS PENDING.

SINCE THE COST OF TRANSPORTATION FROM THE PROSPECTIVE CONTRACTOR'S PLANT IS TO BE BORNE BY THE GOVERNMENT IF THE CONTRACT IS AWARDED ON THE BASIS OF AN F.O.B. ORIGIN BID, SUCH COST IS REQUIRED TO BE ADDED TO THE BIDS RECEIVED IN RESPONSE TO THE INVITATION BEFORE IT MAY PROPERLY BE DETERMINED WHICH BID IS THE LOWEST EVALUATED BID. SEE, IN THIS REGARD, PARAGRAPH 1-1313.1 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) WHEREIN THE PROCEDURE FOR EVALUATING TRANSPORTATION RATES AND RELATED COSTS IS SET OUT AS FOLLOWS:

"1-1313.1 EVALUATION. TO AFFORD PROPER ANALYSIS AND CONSIDERATION OF TRANSPORTATION FACTORS, THE CONTRACTING OFFICER SHALL CONSIDER TRANSPORTATION RATES AND RELATED COSTS IN THE EVALUATION OF F.O.B. ORIGIN BIDS AND PROPOSALS. THE BEST AVAILABLE TRANSPORTATION RATES AND RELATED COSTS IN EFFECT OR TO BECOME EFFECTIVE PRIOR TO THE EXPECTED DATE OF INITIAL SHIPMENT AND ON FILE OR PUBLISHED AT THE DATE OF THE BID OPENING, SHALL BE USED IN THE EVALUATION. HOWEVER, TRANSPORTATION RATES AND RELATED COSTS FILED OR PUBLISHED AFTER THE BID OPENING, OR THE DATE PROPOSALS ARE DUE, SHALL NOT BE USED IN THE EVALUATION UNLESS THEY COVER TRAFFIC FOR WHICH NO APPLICABLE TRANSPORTATION RATE OR RELATED COST WAS IN EXISTENCE ON THE BID OPENING OR THE DATE PROPOSALS WERE DUE.'

THE RECORD INDICATES THAT BERN KANE PRODUCTS, INC. (BERN KANE), OFFERED TO MANUFACTURE AND DELIVER ITEM NO. 1 OF THE INVITATION AT A COST OF $8.775 (NET) PER UNIT, ON AN F.O.B. ORIGIN-FREIGHT PREPAID BASIS (HEREINAFTER REFERRED TO AS F.O.B. DESTINATION), AND FOR $8.568 (NET) PER UNIT ON AN F.O.B. ORIGIN BASIS. CESCO OFFERED TO SUPPLY ITEM NO. 1 FOR $8.953 (NET) PER UNIT F.O.B. DESTINATION, AND $8.439 (NET) PER UNIT F.O.B. ORIGIN.

IN EVALUATING THE F.O.B. ORIGIN BIDS, YOU STATE THAT A FREIGHT COST OF $0.51 PER UNIT FROM THE LOCATION OF CESCO'S PLANT IN NORTHAMPTON, MASSACHUSETTS, TO THE MECHANICSBURG DEFENSE DEPOT, WAS ADDED TO ITS BID WHICH RESULTED IN AN EVALUATED PRICE OF $8.949 PER UNIT. IN EVALUATING BERN KANE'S BID, YOU ADVISE THAT A FREIGHT COST OF $0.23 PER UNIT FROM ITS NEW YORK CITY PLANT TO THE MECHANICSBURG DEFENSE DEPOT WAS ADDED, WHICH RESULTED IN AN EVALUATED PRICE OF $8.798 PER UNIT. HOWEVER, IT HAS BEEN DETERMINED THAT BERN KANE'S F.O.B. DESTINATION BID OF $8.775 (NET) PER UNIT WAS THE LOWEST EVALUATED BID RECEIVED IN RESPONSE TO ITEM NO. 1 OF THE INVITATION.

BY LETTER DATED OCTOBER 20, 1967, CESCO INFORMED THE CONTRACTING OFFICER THAT IT WISHED TO REDUCE ITS ORIGINAL BID PRICE UNDER ITEM NO. 1 BY $0.24 PER UNIT TO REFLECT A DECREASE IN THE APPLICABLE FREIGHT RATE. THE ALLOWANCE OF THIS REQUEST WOULD HAVE DISPLACED BERN KANE AS THE LOW BIDDER ON THE F.O.B. DESTINATION BID BASIS.

WITH REGARD TO THE REQUEST OF YOUR CLIENT TO LOWER ITS F.O.B. DESTINATION BID, OUR OFFICE HAS HELD ON NUMEROUS OCCASIONS THAT SUBSEQUENT TO BID OPENING A BIDDER MAY NOT MODIFY OR AMEND ITS BID PRICE IN ANY MANNER WHICH WOULD AFFECT HIS RELATIVE STANDING WITH RESPECT TO THE OTHER BIDDERS. COMP. GEN. 774; 42 ID. 723. SINCE NO MISTAKE IN BID HAS BEEN ALLEGED OR PROVEN BY CESCO, WE ARE OF THE OPINION THEREFORE THAT THE BID SUBMITTED BY CESCO ON AN F.O.B. DESTINATION BASIS IN RESPONSE TO ITEM NO. 1 OF THE SUBJECT INVITATION MAY NOT BE MODIFIED TO REFLECT AN AFTER-THE-FACT CHANGE IN FREIGHT RATES.

YOUR PROTEST IS PREDICATED, IN PART, UPON THE ARGUMENT THAT THE CONTRACTING OFFICER IMPROPERLY EVALUATED CESCO'S BID SUBMITTED ON AN F.O.B. ORIGIN BASIS IN RESPONSE TO ITEM NO. 1 OF THE INVITATION, AND THAT CESCO'S BID IS, IN FACT, THE MOST ADVANTAGEOUS TO THE GOVERNMENT. SPECIFICALLY, YOU CONTEND THAT THE CONTRACTING OFFICER SHOULD HAVE EVALUATED CESCO'S BID IN ACCORDANCE WITH THE LOWER FREIGHT RATE THAT CESCO HAD APPLIED FOR, AND WHICH WILL BECOME EFFECTIVE PRIOR TO THE DATE DELIVERY IS REQUIRED UNDER THE TERMS OF THE RESULTING CONTRACT. IN THIS REGARD, WE ARE ADVISED THAT, IN THE ABSENCE OF AFFIRMATIVE ACTION BY THE INTERSTATE COMMERCE COMMISSION, CESCO WILL HAVE, BY JANUARY 5, 1968, PER SUPPLEMENT 244 TO FREIGHT TARIFF 3003, A COMMODITY RATE FROM ITS PLANT TO THE MECHANICSBURG DEFENSE DEPOT WHICH WOULD PERMIT IT TO SUPPLY THE UNITS TO THE GOVERNMENT AT A TOTAL EVALUATED COST LOWER THAN THE BERN KANE F.O.B. DESTINATION BID.

OUR OFFICE HAS HELD THAT THE PROVISIONS OF ASPR 1-1313.1, QUOTED ABOVE, EFFECTIVELY PRECLUDE THE CONSIDERATION OF FREIGHT RATES WHICH ARE NOT PUBLISHED AT THE TIME OF BID OPENING. IN B-146494 DATED FEBRUARY 12, 1962, WE HELD:

"UNDER THIS REGULATION (ASPR 1-1313.1) A REDUCED TARIFF OR SPECIAL RATE CANNOT BE CONSIDERED IN THE EVALUATION OF BIDS OR PROPOSALS UNLESS IT WAS FILED WITH THE GOVERNMENT OR OTHERWISE PUBLISHED PRIOR TO THE DATE OF BID OPENING OR PROPOSAL DUE DATE. THE REQUIREMENT FOR FILING OR PUBLICATION OF TARIFFS OR RATES AS A PREREQUISITE FOR THEIR CONSIDERATION AS EVALUATION FACTORS IS APPARENTLY BASED UPON THE FACT THAT A CARRIER HAS NO OBLIGATION TO TRANSPORT, AND THE GOVERNMENT HAS NO RIGHT TO EXPECT TRANSPORTATION FROM A CARRIER, AT RATES OTHER THAN THOSE FILED OR PUBLISHED. IN RECOGNITION OF THESE CIRCUMSTANCES THIS OFFICE HAS PREVIOUSLY (35 COMP. GEN. 603) UPHELD AN ADMINISTRATIVE DETERMINATION TO MAKE AN AWARD TO THE LOW BIDDER ON THE BASIS OF FREIGHT RATES IN EFFECT AT THE TIME OF EVALUATION, RATHER THAN TO DEFER THE AWARD AT THE REQUEST OF THE NEXT LOW BIDDER WHOSE BID WOULD HAVE BEEN LOW IN THE EVENT CERTAIN PROPOSED REDUCED FREIGHT RATES WERE ADOPTED. SEE ALSO 39 COMP. GEN. 774, WHICH RECOGNIZES THE REQUIREMENT THAT BIDS ARE GENERALLY TO BE EVALUATED AS OF THE TIME OF BID OPENING, AND STATES THAT WHILE TRANSPORTATION COSTS MAY BE CALCULATED ON THE BASIS OF RATES TO BE EFFECTIVE AT THE TIME OF SHIPMENT, SUCH RATES MUST HAVE BEEN ACTUALLY FILED OR PUBLISHED AT THE TIME OF EVALUATION.'

IN THE PRESENT CASE, IT IS OUR UNDERSTANDING THAT THE REDUCED FREIGHT RATE WILL NOT BE PUBLISHED UNTIL JANUARY 5, 1968; THEREFORE, SUCH RATE COULD AT THE DATE OF BID OPENING BE ACCORDED NO GREATER STATUS THAN A PROPOSED REVISION OF THE EXISTING RATE. SINCE BIDS ARE REQUIRED TO BE EVALUATED AS OF THE TIME OF OPENING, THE REDUCED RATE, IN THIS INSTANCE, WAS PROPERLY NOT CONSIDERED BY THE CONTRACTING OFFICER IN EVALUATING CESCO'S BID.

IN AN ATTEMPT TO OVERCOME THE ASPR PROHIBITION AGAINST THE CONSIDERATION OF FREIGHT RATES WHICH ARE NOT PUBLISHED AT THE TIME OF BID OPENING, YOU HAVE POINTED OUT THAT THE REGULATION PERMITS THE USE OF FREIGHT RATES THAT HAVE NOT BEEN PUBLISHED, IF THERE ARE NO APPLICABLE FREIGHT RATES IN EXISTENCE AT THE TIME OF BID OPENING. IN THIS REGARD, YOU ALLEGED THAT THE FREIGHT RATE APPLIED BY THE CONTRACTING OFFICER IN EVALUATING CESCO'S BID WAS FIRST DRAFTED IN 1949 WITH REFERENCE TO SPECIFICATIONS OF AN ITEM SUBSTANTIALLY DIFFERENT FROM THE ITEM BEING PROCURED HERE, AND IT WAS, THEREFORE, IMPROPER FOR THE CONTRACTING OFFICER TO HAVE CONSIDERED THE EXISTING FREIGHT RATE IN EVALUATING CESCO'S BID. HENCE, YOU CONTEND THAT CESCO'S REDUCED FREIGHT RATE, TO COME INTO EFFECT ON JANUARY 5, 1968, IS THE PROPER FREIGHT EVALUATION FACTOR.

YOUR ALLEGATION, HOWEVER, IS NOT SUPPORTED BY THE RECORD. WE ARE ADVISED THAT ITEM 92270, AT PAGE 779 OF UNIFORM FREIGHT CLASSIFICATION NO. 8, IS A GENERAL PUBLISHED FREIGHT TARIFF DESCRIBED AS "TRUNK LOCKERS, ARMY OR MILITARY EQUIPMENT CHESTS * * *," WHICH, AS STATED BY THE PROCUREMENT AGENCY,"IS A PERFECT DESCRIPTION AND COMPLETELY FITS THE FOOTLOCKER NOW BEING FURNISHED TO THE GOVERNMENT UNDER THE SUBJECT SOLICITATION.' IN THE PRESENT CASE, WE ARE NOT CONVINCED THAT THE ESTABLISHED CLASS RATE HAS BEEN RENDERED CLEARLY INAPPLICABLE MERELY BECAUSE OF POSSIBLE DIFFERENCES BETWEEN THE PROCUREMENT ITEM AND THE ITEM AROUND WHICH YOU ALLEGE THE CLASSIFICATION WAS DRAFTED.

IN ADDITION TO THE FOREGOING, YOU PROTESTED AGAINST THE METHOD OF EVALUATION OF THE F.O.B. ORIGIN BID SUBMITTED UNDER ITEM NO. 1 BY BERN KANE ON THE GROUNDS THAT THE APPLICABLE PUBLISHED SECTION 22 RATE GAVE TO BERN KANE AN UNFAIR ADVANTAGE WHICH WAS IN VIOLATION OF THE REQUIREMENT FOR FULL AND FREE COMPETITION SET FORTH AT 41 U.S.C. 253 (A). SINCE THE PROVISIONS OF TITLE 41 OF THE U.S.C. HAVE NO BEARING OR EFFECT UPON PROCUREMENT ACTIONS OF THE MILITARY ESTABLISHMENT, WE ASSUME THAT YOU ARE MAKING REFERENCE TO THE PROVISIONS OF 10 U.S.C. 2305 (A) WHICH GOVERN FORMALLY ADVERTISED PROCUREMENTS BY THE DEFENSE SUPPLY AGENCY.

IN THIS RESPECT, YOUR ATTENTION IS AGAIN INVITED TO THE PROVISIONS OF ASPR 1-1313.1, SUPRA, WHICH REQUIRE THAT BIDS SUBMITTED ON AN F.O.B. ORIGIN BASIS MUST BE EVALUATED IN THE LIGHT OF THE BEST TRANSPORTATION RATES AVAILABLE TO THE GOVERNMENT WHICH ARE IN EFFECT ON THE DATE OF BID OPENING. ASPR 1-1313.2 REQUIRES CONTRACTING OFFICERS TO OBTAIN FROM TRANSPORTATION OFFICERS, OR THE AGENCY DESIGNATED BY DEPARTMENTAL PROCEDURE, INFORMATION RELATIVE TO THE BEST AVAILABLE TRANSPORTATION RATES, WHICH ARE REQUIRED BY ASPR 1-1313.1 TO BE USED IN THE EVALUATION OF F.O.B. ORIGIN BIDS. IN THIS REGARD WE HELD AT 46 COMP. GEN. 77 AS FOLLOWS:

"* * * WHEN PREFERENTIAL RATES ARE OFFERED TO THE GOVERNMENT BY CARRIERS PURSUANT TO SECTION 22 (1) OF THE INTERSTATE COMMERCE ACT, 49 U.S.C. 22, SUCH RATES, WHEN AVAILABLE, SHOULD BE USED IN THE EVALUATION OF F.O.B. ORIGIN BIDS. 19 COMP. GEN. 233; 39 ID. 774.'

FOR THE FOREGOING REASONS, WE FIND NO BASIS TO OBJECT TO THE CONSIDERATION OF THE LOW EVALUATED BID OF BERN KANE PRODUCTS, INC., FOR POSSIBLE AWARD UNDER THE INVITATION. ACCORDINGLY, YOUR PROTEST IS DENIED.

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