B-166594, DEC. 19, 1969 - CON.

B-166594: Dec 19, 1969

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211 HIGHER PER LOCOMOTIVE THAN PROTESTANT'S IS DENIED. SINCE IT IS ACKNOWLEDGED PURCHASING RAILWAY IS NOT GOVT.-OWNED. ALTHOUGH FORMAL BID PROCEDURES ARE USUALLY USED IN PROCUREMENTS BY FOREIGN GOVERNMENTS UNDER PROGRAM LOANS. THEY ARE OPTIONAL RESPECTING PURCHASES BY PRIVATE SECTOR. PROTESTANT WAS ON NOTICE NEGOTIATING PROCEDURES WERE APPLICABLE EVEN THOUGH SOLICITATION DID NOT SPECIFICALLY SO STATE. NOW THAT PROTESTANT IS LOW BIDDER. GAO IS NOT IN POSITION TO CHALLENGE ADMINISTRATIVE JUDGMENT IN THIS CASE SINCE NEGOTIATING PROCEDURES ARE APPLICABLE. GREATER WEIGHT WAS BELIEVED ADVANTAGEOUS IN THIS CASE. THE AWARD IS PROPOSED TO BE MADE TO GENERAL ELECTRIC COMPANY (GE). THE RECORD SHOWS THAT THE SUBJECT PROCUREMENT WAS AUTHORIZED UNDER TWO PROGRAM ASSISTANCE LOAN AGREEMENTS SIGNED WITH THE GOVERNMENT OF THE DEMOCRATIC REPUBLIC OF THE CONGO IN 1967 AND 1968.

B-166594, DEC. 19, 1969 - CON.

BIDS--COMPETITIVE SYSTEM--FOREIGN-AID, LOANS, ETC; PROGRAMS LOW BIDDER'S PROTEST TO NEGOTIATED PROCUREMENT OF 170 LOCOMOTIVES UNDER LOAN AGREEMENTS WITH CONGO GOVERNMENT AT PRICE $2,211 HIGHER PER LOCOMOTIVE THAN PROTESTANT'S IS DENIED. NOTWITHSTANDING PROTESTANT'S ALLEGATION OF CONGO GOVT.'S EXTERNAL FINANCING OF ITS RAILWAYS, SINCE IT IS ACKNOWLEDGED PURCHASING RAILWAY IS NOT GOVT.-OWNED, AID MAY NOT BE CRITICIZED FOR REGARDING IT AS PRIVATE ENTITY FOR PROCUREMENT PURPOSES. ALTHOUGH FORMAL BID PROCEDURES ARE USUALLY USED IN PROCUREMENTS BY FOREIGN GOVERNMENTS UNDER PROGRAM LOANS, THEY ARE OPTIONAL RESPECTING PURCHASES BY PRIVATE SECTOR. IT APPEARS RAILWAY HERE DID NOT ELECT TO UTILIZE FORMAL BID PROCEDURES FOR THIS PROCUREMENT. PROTESTANT WAS ON NOTICE NEGOTIATING PROCEDURES WERE APPLICABLE EVEN THOUGH SOLICITATION DID NOT SPECIFICALLY SO STATE. FOREIGN-AID PROGRAMS--BID EVALUATION LOW BIDDER PROTESTS AWARD OF 170 LOCOMOTIVES FOR CONGO RAILWAY UTILIZING AGENCY FOR INTERNATIONAL DEVELOPMENT (AID) FUNDS ON BASIS OF PROTESTANT'S LOWER PRICE ($2,211 PER LOCOMOTIVE) AND ITS LOCOMOTIVES' LIGHTER WEIGHT UNDER SPECIFICATION REQUIRING "15 METRIC TONS, LESS WOULD BE EVEN BETTER." PROTESTANT ALSO ALLEGES, IN PAST, WHEN BORROWER COUNTRIES WANTED TO PURCHASE PROTESTANT'S LOCOMOTIVES, AID INSISTED PROCUREMENT BE MADE FROM LOW BIDDER, BUT NOW THAT PROTESTANT IS LOW BIDDER, AID DEVIATES FROM USUAL PRACTICE. GAO IS NOT IN POSITION TO CHALLENGE ADMINISTRATIVE JUDGMENT IN THIS CASE SINCE NEGOTIATING PROCEDURES ARE APPLICABLE, AND TECHNICAL EVALUATION INDICATED ACCEPTED ITEM OFFERED TECHNICAL AND PERFORMANCE FEATURES OUTWEIGHING PRICE ADVANTAGE; MOREOVER, GREATER WEIGHT WAS BELIEVED ADVANTAGEOUS IN THIS CASE.

TO GENERAL MOTORS OVERSEAS OPERATIONS:

WE REFER TO YOUR LETTERS OF OCTOBER 24 AND SEPTEMBER 22, 1969, PROTESTING THE CONTEMPLATED AWARD OF A QUANTITY OF LOCOMOTIVES FOR THE BAS-CONGO KATANGA RAILWAY UTILIZING AID FUNDS. THE AWARD IS PROPOSED TO BE MADE TO GENERAL ELECTRIC COMPANY (GE). AS THE LOW BIDDER, YOU CONTEND THAT THE AWARD SHOULD BE MADE TO YOUR FIRM (GM).

THE RECORD SHOWS THAT THE SUBJECT PROCUREMENT WAS AUTHORIZED UNDER TWO PROGRAM ASSISTANCE LOAN AGREEMENTS SIGNED WITH THE GOVERNMENT OF THE DEMOCRATIC REPUBLIC OF THE CONGO IN 1967 AND 1968. THESE LOAN AGREEMENTS SPECIFY THAT PROCUREMENT OF COMMODITIES COVERED UNDER THE AGREEMENT "SHALL BE ON A COMPETITIVE BASIS IN ACCORDANCE WITH SECTION 201.23 OF AID REGULATION I EXCEPT AS A.I.D. MAY OTHERWISE SPECIFY IN WRITING.' SECTION 201.23 OF AID REGULATION I, PUBLISHED AT 22 CFR 201.23, PROVIDES FOR THE USE OF OTHER THAN FORMAL COMPETITIVE BID PROCEDURES, AND STATES THAT PROCUREMENTS NOT SUBJECT TO SECTION 201.22 (FORMAL COMPETITIVE BID PROCEDURES) "SHALL BE MADE IN ACCORDANCE WITH GOOD COMMERCIAL PRACTICE.'

BID PRICES WERE EVALUATED AS FOLLOWS:

GE GM

PER UNIT PER UNIT

BASE BIDS, CIF DILOLO $237,598 $229,991

ADDITIONAL ITEMS INCLUDED

IN SPECIFICATION

ANTI-REVERSING WHILE MOVING PLUS 70 PLUS 728

CORROSION RESISTOR - COOLING PLUS 220 PLUS 408

OMIT RADIATOR SHUTTERS - 400 NOT INCLUDED

AUTOMATIC SLACK ADJUSTERS INCLUDED PLUS4,150

TOTAL $237,488 $235,277

(DIFFERENCE OF $2,211 PER LOCOMOTIVE)

IN ADDITION, THE FOLLOWING MONETARY FACTORS WERE CONSIDERED ALTHOUGH NOT MENTIONED IN THE SPECIFICATIONS:

GE GM

EVALUATED PRICE $237,488 $235,277

EMERGENCY FUEL SHUT-OFF INCLUDED PLUS 323

INERTIAL AIR FILTER - 1,520 CANNOT

BE INSTALLED

AUTOMATIC CONTROL OF MARKER

LIGHTS PLUS 405 PLUS 405

REVISED TOTAL $236,373 $236,005

THUS THE COST COMPARISON DRAWN UP FOR AID BY ITS CONSULTING ENGINEER SHOWS A DIFFERENCE OF $2,211 PER LOCOMOTIVE WHEN ONLY ITEMS CALLED FOR IN THE ORIGINAL SPECIFICATIONS ARE CONSIDERED, AND A DIFFERENCE IN FAVOR OF GM OF ONLY $368 PER LOCOMOTIVE WHEN ADDITIONAL RECOMMENDED ITEMS ARE CONSIDERED. FURTHER, THE CONSULTANT'S REPORT CITES SEVERAL PERFORMANCE FACTORS IN FAVOR OF GE'S OFFER, AMONG THEM ARE: (1) GE'S LOCOMOTIVE IS HEAVIER AND CAN EXERT MORE FORCE, (2) GE HAS A MUCH LARGER FUEL TANK, AND (3) GE HAS A MORE EFFICIENT FOUR-CYCLE ENGINE AS COMPARED TO THE TWO-CYCLE ENGINE PROVIDED BY GM.

YOU CONTEND THAT WHILE GE HAS THE LARGER CAPACITY FUEL TANK, THE GM LOCOMOTIVE WILL MEET THE REQUIRED 700KM RANGE WITHOUT FUEL RELOADING. CONCERNING THE LIGHER GM LOCOMOTIVE, YOU POINT OUT THAT THE SPECIFICATION STATED: "MAXIMUM ALLOWABLE LOAD PER AXLE: 15 METRIC TONS, LESS WOULD BE EVEN BETTER". THEREFORE, YOU QUESTION HOW GM COULD BE "PENALIZED" IN THE EVALUATION FOR OFFERING THE LIGHTER LOCOMOTIVE. FINALLY, YOU STATE THAT IN THE PAST VARIOUS BORROWER COUNTRIES WANTED TO PURCHASE GM LOCOMOTIVES BUT AID INSISTED THAT THEY PURCHASE FROM THE LOW BIDDER INSTEAD; THAT THESE ORDERS TOTALED 170 LOCOMOTIVES AT A VALUE IN EXCESS OF $30 MILLION; BUT THAT NOW, WITH GM ACKNOWLEDGED TO BE THE LOW BIDDER, AID PROPOSES TO DEVIATE FROM ITS USUAL PRACTICE. YOU REQUEST AN EXPLANATION.

AID REPORTS THAT THE PRIOR LOCOMOTIVE PROCUREMENTS CITED IN YOUR LETTER WERE ALL BY GOVERNMENT-OWNED RAILWAYS, WHEREAS IN THE INSTANT CASE THE PURCHASER IS A PRIVATELY-OWNED RAILWAY (BCK). THIS MAKES A DIFFERENCE WITH REGARD TO THE METHOD OF PROCUREMENT WHICH IS USED BECAUSE, AS EXPLAINED ON PAGE 5 OF THE PAMPHLET,"COMMERCIAL EXPORTS UNDER A.I.D. PROGRAMS" , FORMAL BID PROCEDURES ARE USUALLY USED IN PROCUREMENTS BY FOREIGN GOVERNMENTS, WHILE SUCH PROCEDURES ARE OPTIONAL WITH RESPECT TO PURCHASES BY THE PRIVATE SECTOR UNDER PROGRAM LOANS. IT APPEARS THAT BCK DID NOT ELECT TO UTILIZE FORMAL BID PROCEDURES FOR THIS PROCUREMENT. THEREFORE, UNLIKE THE PRIOR LOCOMOTIVE PROCUREMENTS, THIS SOLICITATION DID NOT INCLUDE THE USUAL STATEMENTS INDICATING THAT FORMAL BID PROCEDURES WERE IN EFFECT, SUCH AS THAT BIDS WOULD BE PUBLICLY OPENED AT A GIVEN TIME AND PLACE AND THAT THE AWARD WOULD BE MADE TO THE LOWEST RESPONSIVE AND RESPONSIBLE BIDDER.

ALTHOUGH THE SOLICITATION DID NOT STATE THAT THIS WAS TO BE A NEGOTIATED PROCUREMENT, WE DO NOT BELIEVE THAT YOUR FIRM COULD HAVE REASONABLY CONCLUDED OTHERWISE. AS STATED ABOVE, THE SOLICITATION DID NOT SPECIFY ANY OF THE BIDDING CONDITIONS ASSOCIATED WITH FORMAL COMPETITIVE PROCEDURES, AND, IN ADDITION, NEGOTIATIONS WERE CONDUCTED WITH YOUR FIRM AFTER THE DATE YOUR ORIGINAL PROPOSAL OF MARCH 20, 1969, WAS SUBMITTED. WE MUST THEREFORE CONCLUDE THAT YOUR FIRM WAS ON NOTICE THAT NEGOTIATING PROCEDURES WERE APPLICABLE IN THIS SITUATION. WE ARE RECOMMENDING TO AID, HOWEVER, THAT AID REGULATION I SHOULD BE AMENDED TO REQUIRE THE INCLUSION OF A STATEMENT IN A SOLICITATION FOR QUOTATIONS OR PROPOSALS STATING THAT NEGOTIATING PROCEDURES ARE IN EFFECT FOR THE PARTICULAR PROCUREMENT.

WITH REGARD TO THE TECHNICAL EVALUATION, THE RECORD SHOWS THAT IN THE JUDGMENT OF THE BCK RAILWAY AND OF THE AID CONSULTANT, THE GE LOCOMOTIVE OFFERS CERTAIN TECHNICAL AND PERFORMANCE FEATURES WHICH OUTWEIGH THE PRICE ADVANTAGE OFFERED BY YOUR LOCOMOTIVE. WE THINK THERE IS MERIT IN YOUR CONTENTION REGARDING THE WEIGHT OF THE LOCOMOTIVE. HOWEVER, THE CONSULTANT BELIEVES THAT IN THIS CASE THE GREATER WEIGHT OF THE GE LOCOMOTIVE IS ADVANTAGEOUS AND, IN ANY CASE, THE GE LOCOMOTIVE IS PREFERRED FOR OTHER REASONS AS WELL. SINCE NEGOTIATING PROCEDURES ARE APPLICABLE FOR THIS PROCUREMENT, TECHNICAL FEATURES MAY BE CONSIDERED IN THE AWARD EVALUATION IN ADDITION TO THE PRICES OFFERED. WE ARE NOT IN A POSITION TO CHALLENGE THE ADMINISTRATIVE JUDGMENT IN THIS CASE.

FINALLY, YOU HAVE BROUGHT TO OUR ATTENTION CERTAIN INFORMATION RELATIVE TO RAILWAYS IN THE CONGO. YOU REPORT THAT THE GOVERNMENT OF THE CONGO IS INVOLVED IN ALL MANNER OF EXTERNAL FINANCING OF THESE RAILWAYS TO THE EXTENT THAT IN ONE CASE THE GOVERNMENT "FORCED THE RAILWAYS (NOT BCK) TO BUY FROM JAPAN WHICH CONFIRMS (GOVERNMENT) INVOLVEMENT IN THESE TRANSACTIONS.' YOU THEREFORE QUESTION WHETHER BCK MAY BE REGARDED AS A PRIVATELY-OWNED RAILWAY.

SINCE IT IS ACKNOWLEDGED THAT THE BCK RAILWAY IS NOT OWNED BY THE CONGO GOVERNMENT, WE DO NOT THINK AID MAY BE CRITICIZED FOR REGARDING THE BCK RAILWAY AS A PRIVATE ENTITY FOR PROCUREMENT PURPOSES.

FOR THE REASONS STATED, WE MUST DENY YOUR PROTEST AGAINST THE PROPOSED AWARD TO GE UNDER THE PROCUREMENT IN QUESTION.

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