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B-154390, JUN. 26, 1964

B-154390 Jun 26, 1964
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A PORTION OF THE PROCUREMENT WAS SET ASIDE FOR AWARD TO ONE OR MORE LABOR SURPLUS AREA CONCERNS. PARAGRAPH 20 (B) (2) (II) OF THE ADDITIONAL TERMS AND CONDITIONS OF THE INVITATION DEFINES A LABOR SURPLUS AREA CONCERN AS A CONCERN THAT WILL INCUR. BIDS WERE OPENED ON MAY 25. YOUR PRICES WERE WITHIN 120 PERCENT OF THE LOWEST PRICES OFFERED ON THESE SCHEDULES. IT APPEARS THAT YOU ARE NOT A PRODUCER OF MAGNESIUM. THE CONTRACTING OFFICE ADVISED YOU THAT YOUR FIRM WOULD QUALIFY AS A LABOR SURPLUS AREA CONCERN IF IT WERE LOCATED IN A LABOR SURPLUS AREA (PRESUMABLY. YOU SAY THAT YOUR BID WAS BASED ON THIS INTERPRETATION. (PFIZER IS REPORTED INFORMALLY BY AEC TO BE THE ONLY FIRM NOW PRODUCING ACCEPTABLE MAGNESIUM FOR GRINDING IN A LABOR SURPLUS AREA.).

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B-154390, JUN. 26, 1964

TO READE MANUFACTURING COMPANY, INC:

THIS REFERS TO YOUR TELEGRAM OF JUNE 15, 1964, PROTESTING AGAINST AN AWARD UNDER INVITATION FOR BIDS NO. 401-64-38C-REVISED, ISSUED BY THE ATOMIC ENERGY COMMISSION, OAK RIDGE, TENNESSEE, ON MARCH 31, 1964.

THE INVITATION COVERS AEC'S REQUIREMENTS FOR GROUND MAGNESIUM (SCHEDULES AN AND B) OR, AS AN ALTERNATE, MAGNESIUM BAR INGOT (SCHEDULES C AND D), AT ITS PLANTS LOCATED AT WELDON SPRING, MISSOURI AND FERNALD, OHIO, FOR THE FISCAL YEAR ENDING JUNE 30, 1965. A PORTION OF THE PROCUREMENT WAS SET ASIDE FOR AWARD TO ONE OR MORE LABOR SURPLUS AREA CONCERNS. PARAGRAPH 20 (B) (2) (II) OF THE ADDITIONAL TERMS AND CONDITIONS OF THE INVITATION DEFINES A LABOR SURPLUS AREA CONCERN AS A CONCERN THAT WILL INCUR, ON ACCOUNT OF MANUFACTURING OR PRODUCTION, BY ITSELF OR ITS FIRST-TIER SUBCONTRACTORS, COST OF MORE THAN 50 PERCENT OF THE CONTRACT PRICE IN LABOR SURPLUS AREAS. BIDDERS SUBMITTING BIDS WITHIN 120 PERCENT OF THE HIGHEST AWARD MADE ON THE NON-SET-ASIDE PORTION MAY QUALIFY FOR NEGOTIATION ON THE SET-ASIDE PORTION.

BIDS WERE OPENED ON MAY 25, 1964, AND YOU SUBMITTED BIDS ON SCHEDULES A AND B, THE GROUND MAGNESIUM REQUIREMENT. YOUR PRICES WERE WITHIN 120 PERCENT OF THE LOWEST PRICES OFFERED ON THESE SCHEDULES.

IT APPEARS THAT YOU ARE NOT A PRODUCER OF MAGNESIUM, BUT WOULD PURCHASE THE MATERIAL ELSEWHERE AND GRIND AND PACKAGE TO SPECIFICATIONS. FURTHER APPEARS THAT MOST OF THE COST OF PRODUCING THE GROUND MAGNESIUM WOULD BE INCURRED BY THE PRODUCER OF THE MATERIAL TO BE GROUND. THE RECORD SHOWS THAT BY LETTER OF APRIL 10, 1964, THE CONTRACTING OFFICE ADVISED YOU THAT YOUR FIRM WOULD QUALIFY AS A LABOR SURPLUS AREA CONCERN IF IT WERE LOCATED IN A LABOR SURPLUS AREA (PRESUMABLY, REGARDLESS OF THE SOURCE OF THE GROUND MAGNESIUM). YOU SAY THAT YOUR BID WAS BASED ON THIS INTERPRETATION, AND YOU CONTEND THAT A CHANGE AT THIS TIME IN THE INTERPRETATION OF WHAT CONSTITUTES A LABOR SURPLUS AREA CONCERN WOULD BE UNFAIR TO YOUR FIRM AND WOULD RESULT IN A TOTAL AWARD TO CHARLES A. PFIZER AND COMPANY, INCORPORATED. (PFIZER IS REPORTED INFORMALLY BY AEC TO BE THE ONLY FIRM NOW PRODUCING ACCEPTABLE MAGNESIUM FOR GRINDING IN A LABOR SURPLUS AREA.) YOU ASK THAT THE INVITATION BE CANCELLED AND READVERTISED.

FEDERAL PROCUREMENT REGULATIONS 1-1.801-1 INDICATES THAT THE PLACE AT WHICH THE CONTRACTOR WILL ITSELF PERFORM MAY BE WHOLLY IMMATERIAL IF MORE THAN 50 PERCENT OF THE TOTAL COST OF PERFORMANCE WILL BE INCURRED ON ACCOUNT OF MANUFACTURING OR PRODUCTION BY FIRST-TIER SUBCONTRACTORS. SEE ALSO 41 COMP. GEN. 160, 164. THIS PROVISION OF THE FPR WAS INCORPORATED AS PARAGRAPH 20 (B) (2) OF THE INVITATION. IT IS REGRETTABLE THAT THE CONTRACTING OFFICE MISINTERPRETED THIS REQUIREMENT PRIOR TO THE BID OPENING. HOWEVER, THE REGULATION AND THE INVITATION PROVISION ON THE MATTER MUST BE FOLLOWED. WE DO NOT SEE ANY POINT TO A READVERTISEMENT, AS YOU APPARENTLY WOULD STILL BE REQUIRED TO PURCHASE YOUR GROUND MAGNESIUM FOR PFIZER, THE ONLY QUALIFIED PRODUCER PRESENTLY LOCATED IN A LABOR SURPLUS AREA, IN ORDER TO QUALIFY AS A LABOR SURPLUS AREA CONCERN.

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