B-134590, JAN. 15, 1958

B-134590, JAN. 15, 1958

TO THE SECRETARY OF THE AIR FORCE:

REFERENCE IS MADE TO LETTER DATED DECEMBER 4, 1957, FROM THE DEPUTY ASSISTANT SECRETARY, REQUESTING A DECISION RELATIVE TO THE BID SUBMITTED BY MARIE PAPA AND SONS, INC., IN RESPONSE TO INVITATION FOR BIDS NO. IFB 33-602-58-24, ISSUED BY SHELBY AIR FORCE DEPOT, ON SEPTEMBER 27, 1957, AND OPENED ON OCTOBER 15, 1957.

THE INVITATION REQUESTED BIDS FOR FURNISHING 66,704 PAIRS OF MEN'S WORK- TYPE LEATHER GLOVES. UNDER THE TERMS OF THE INVITATION, BIDDERS WERE PERMITTED TO QUOTE ON A MINIMUM OR MAXIMUM QUANTITY FOR ANY PART OR ALL OF THE QUANTITY REQUESTED. THE INVITATION ALSO PROVIDED A SPACE FOR BIDDERS TO QUOTE, IN ADDITION TO ANY CASH DISCOUNT, A PERCENTAGE OF REDUCTION IN PRICE IF AWARDED THE TOTAL QUANTITY BID UPON.

THREE BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION. HOWEVER, ONLY THE BIDS OF STEINBERG BROTHERS, INC., AND MARIO PAPA AND SONS, INC., ARE INVOLVED SINCE THE OTHER BID WOULD NOT BE LOW IN ANY EVENT. STEINBERG BROTHERS' BID DATED OCTOBER 10, 1957, OFFERED TO FURNISH 30,000 PAIRS FOR A PRICE OF $2.38 PER PAIR AND THE BALANCE OF 36,704 FOR THE PRICE OF $2.48 PER PAIR, LESS A CASH DISCOUNT OF 1/10TH OF 1 PERCENT FOR PAYMENT WITHIN 30 CALENDAR DAYS. HOWEVER, BY TELEGRAM RECEIVED PRIOR TO THE OPENING, STEINBERG BROTHERS, INC., REDUCED ITS BID ON THE 36,704 LOT TO $2.38 PER PAIR.

MARIO PAPA AND SONS' PRICES WERE SET FORTH IN AN ACCOMPANYING LETTER AND THE BIDDER OFFERED A CASH DISCOUNT OF 1/2 OF 1 PERCENT FOR PAYMENT WITHIN 30 CALENDAR DAYS AND A 1/2 OF 1 PERCENT REDUCTION IN PRICE IF AWARDED THE TOTAL QUANTITY BID UPON. THE LETTER IS AS FOLLOWS:

"TO FURTHER CLARIFY THE BIDDING ON INVITATION NO. IFB-33-062-58-24, OUR BIDDING IS AS FOLLOWS:

TABLE

36,000 PR. 2.15 77,400.00

OR

45,000 PR. 2.19 98,550.00

OR

50,000 PR. 2.23 111,500.00

OR

55,000 PR. 2.26 124,300.00

OR

60,000 PR. 2.29 137,400.00

OR

64,000 PR. 2.34 149,760.00

OR

66,704 PR. 2.39 159,422.56

"THE INTENTION OF THIS BID IS THAT IF OUR PRICE OF $2.39 IS THE LOW BID PER UNIT AGAINST ANY OTHER BID PER UNIT PAIR, THEN 66,704 PAIR IS THE MINIMUM QUANTITY WE SHOULD ACCEPT.

OR

"IF OUR PRICE OF $2.34 IS THE LOW BID PER UNIT AGAINST ANY OTHER BID PER UNIT PAIR, THEN 64,000 PAIR IS THE MINIMUM.

OR

"IF OUR PRICE OF $2.29 IS THE LOW BID PER UNIT AGAINST ANY OTHER BID PER UNIT PAIR, THEN 60,000 PAIR IS THE MINIMUM.

OR

"IF OUR PRICE OF $2.26 IS THE LOW BID PER UNIT AGAINST ANY OTHER BID PER UNIT PAIR, THEN 55,000 PAIR IS THE MINIMUM.

OR

"IF OUR PRICE OF $2.23 IS THE LOW BID PER UNIT AGAINST ANY OTHER BID PER UNIT PAIR, THEN 50,000 PAIR IS THE MINIMUM.

OR

"IF OUR PRICE OF $2.19 IS THE LOW BID PER UNIT AGAINST ANY OTHER BID PER UNIT PAIR, THEN 45,000 PAIR IS THE MINIMUM.

OR

"IF OUR PRICE OF $2.15 IS THE LOW BID PER UNIT AGAINST ANY OTHER BID PER UNIT PAIR, THEN 36,000 PAIR IS THE MINIMUM.

"TO FURTHER CLARIFY THE BID, FOR EXAMPLE--- IF A COMPETITOR SHOULD BID $2.35 PER PAIR, THEN OUR $2.34 PRICE WOULD PREVAIL WITH A MINIMUM QUANTITY OF 64,000 PAIR.'

PAPA'S BID OF $2.39 FOR THE ENTIRE QUANTITY WHEN PROPERLY DISCOUNTED, AMOUNTS TO $157,832.32, WHICH IS LOWER THAN STEINBERG'S BID OF $2.38, WHICH TOTALS $158,596.76. MAXIMUM TRANSPORTATION COSTS TO THE GOVERNMENT ON THE ENTIRE QUANTITY, AS REPORTED BY THE CONTRACTING OFFICER, WOULD BE $451.33 IF SHIPPED BY PAPA AND $634.13 IF SHIPPED BY STEINBERG. IT IS POINTED OUT THAT A CONSIDERABLE SAVING TO THE GOVERNMENT COULD BE OBTAINED BY AWARDING 36,000 PAIRS IN PAPA AT $2.15 EACH, LESS PROMPT PAYMENT DISCOUNT, AND THE BALANCE OF 30,704 PAIRS TO STEINBERG AT $2.38, LESS PROMPT PAYMENT DISCOUNT, AND THE BALANCE OF 30,704 PAIRS TO STEINBERG AT $2.38, LESS PROMPT PAYMENT DISCOUNT. IT IS THE OPINION OF YOUR DEPARTMENT THAT THIS CANNOT BE DONE SINCE PAPA'S BID ON THE ENTIRE QUANTITY OF $2.39, WITH APPLICABLE DISCOUNT, IS LOWER THAN ANY OTHER UNIT BID AND, UNDER YOUR INTERPRETATION OF THE LANGUAGE QUOTED ABOVE, THE LOWER PRICES ON SMALLER QUANTITIES ARE NOT AVAILABLE UNLESS THERE IS A LOWER BID THAN PAPA'S FOR THE NEXT HIGHER QUANTITY.

BY LETTER DATED OCTOBER 18, 1957, STEINBERG PROTESTED ANY CONSIDERATION OF PAPA'S BID. THE LETTER IS, IN PART, AS FOLLOWS:

"1. THE BID DOES NOT QUALIFY IN FORM AS A COMPETITIVE BID, IN THAT IT IS NOT SPECIFIC, AND IS A FORM OF HEDGING. THE BIDDER (PAPA) EXPLAINS THAT THE INTENTION OF HIS BID IS TO HAVE CERTAIN PRICES TAKE EFFECT ONLY IN RELATION TO WHAT HIS COMPETITION OFFERS. FOR EXAMPLE, CITING ONE INSTANCE, HE BIDS $2.34 FOR 64,000 PAIRS, BUT SAYS THAT IF A COMPETITOR BIDS LESS THAN $2.34 AND MORE THAN $2.99, HIS BID OF $2.99 FOR 60,000 PAIRS TAKES PRECEDENCE OVER HIS COMPETITOR'S BID. HENCE, NONE OF HIS BIDDING IS FIRM AND INDEPENDENT.

"IT IS AS IF HE WERE TO SAY,"I WILL BID X DOLLARS, BUT IF MY COMPETITOR BIDS X-1 DOLLAR, THEN MY BID IS TO BE CHANGED TO X-2 DOLLARS.' UNDER SUCH A FORM OF BIDDING THERE CANNOT BE ANY COMPETITION.

"2. THE EXPLANATION OF THE BID AS CONTAINED ON THE SUPPLEMENT, CLEARLY INDICATES THAT THE BID OF $2.39 LESS 1/2 PERCENT 30 DAYS FOR THE ENTIRE QUANTITY OF 66,704 PAIRS IS MADE ON A CONDITIONAL BASIS. THE CONDITION IS THAT IF IT IS LOW AS COMPARED WITH THE BIDS OF OTHERS, THE GOVERNMENT IS BOUND TO PAY THE HIGHEST PRICE CONTAINED IN THIS BID, AND CANNOT TAKE ADVANTAGE OF ANY OF THE LOWER PRICES QUOTED FOR SMALLER QUANTITIES. HENCE, THE LOWER PRICES FOR SMALLER QUANTITIES ARE NOT FIRM PRICES.

"WE SUBMIT THAT A BID MADE IN THIS MANNER VIOLATES THE INTENT OF COMPETITIVE BIDDING, AND DOES NOT GIVE THE GOVERNMENT MAXIMUM BENEFITS INTENDED TO BE ACCOMPLISHED THROUGH COMPETITIVE BIDDING.

"FOR EXAMPLE, THE CONTRACTING OFFICER IS NOT FREE TO AWARD 45,000 PAIRS AT $2.19 TO PAPA AT A TOTAL COST OF $98,052.25, AND THE BALANCE OF 21,704 PAIRS AT $2.38 TO STEINBERG AT A TOTAL COST OF $51,603.86, MAKING THE TOTAL OF 66,704 PAIRS AT A COST TO THE GOVERNMENT OF $149,656.11. OBLIGATES THE CONTRACTING OFFICER TO PAY $2.39 FOR EACH OF THE 66,704 PAIRS AT A TOTAL COST OF $157,832.32, WHICH IS $8,176.21 MORE THAN THE COST WOULD HAVE BEEN IF PAPA'S BID WERE NOT TIED TO THE OTHER BIDDERS BY HIS CONDITIONS.

"3. WE SUBMIT THAT THE BID AS MADE IS AN "ALTERNATIVE BID" IN VIOLATION OF PARAGRAPH 1 (D) OF THE TERMS AND CONDITIONS OF THE INVITATION FOR BIDS IN THAT PRICES ARE QUOTED FOR SMALLER QUANTITIES WHICH ARE NOT INTENDED TO BE FIRM AND EFFECTIVE UNLESS THE PRICE BID FOR THE TOTAL QUANTITY IS NOT THE LOW BID THEREFOR, AND IF THE PRICE QUOTED FOR THE ENTIRE QUANTITY IS THE LOW BID AS COMPARED TO ALL BIDS OF OTHER FIRMS, THEN THE LOWER PRICES FOR SMALLER QUANTITIES ARE NOT AVAILABLE TO THE GOVERNMENT.

"BY REASON OF THE FOREGOING, WE SUBMIT THAT THE BID OF MARIO PAPA AND SONS, INC. BE COMPLETELY DISQUALIFIED.'

WE DO NOT FEEL THAT STEINBERG'S CONTENTIONS ARE SOUND. THE INVITATION EXPRESSLY STATED THAT BIDS ON PARTIAL QUANTITIES WOULD BE RECEIVED, AND WE THEREFORE FIND NO SOUND REASON WHY A SINGLE BIDDER SHOULD NOT SUBMIT BIDS ON SEVERAL PARTIAL QUANTITIES AT DIFFERENT UNIT PRICES. THE ANNEXED STIPULATION OR CONDITION THAT THE BIDDER WOULD NOT ACCEPT AN AWARD FOR ANY QUANTITY LESS THAN THE PARTIAL QUANTITY ON WHICH ITS PRICE WAS THE LOWEST CANNOT BE REGARDED AS IMPROPER IN VIEW OF THE FOLLOWING LANGUAGE OF ARTICLE 8 (C) OF THE TERMS AND CONDITIONS OF THE INVITATION:

"UNLESS OTHERWISE PROVIDED IN THE SCHEDULE, BIDS MAY BE SUBMITTED FOR ANY QUANTITIES LESS THAN THOSE SPECIFIED; AND THE GOVERNMENT RESERVES THE RIGHT TO MAKE AN AWARD ON ANY ITEM FOR A QUANTITY LESS THAN THE QUANTITY BID UPON AT THE UNIT PRICES OFFERED UNLESS THE BIDDER SPECIFIES OTHERWISE IN HIS BID.'

THE LAST CLAUSE APPEARS TO AUTHORIZE JUST SUCH A CONDITION AS WAS STATED IN THE PAPA BID. IN EFFECT, THE BIDDER WAS SAYING THAT THE GOVERNMENT MAY MAKE AN AWARD FOR LESS THAN THE MAXIMUM QUANTITY, BUT ONLY ONLY AT THE UNIT PRICE QUOTED FOR THE SMALLER QUANTITY (WHICH, BEING LOWER, WOULD BE IN THE GOVERNMENT'S INTEREST) AND ONLY IF THE UNIT PRICE BID ON THE LARGER QUANTITY WAS NOT THE LOW BID FOR THAT QUANTITY.

IN ANY EVENT, HOWEVER, PAPA'S BID ON THE ENTIRE QUANTITY IS DEFINITE AND FIRM, AND CANNOT PROPERLY BE REJECTED BECAUSE IT IS, IN EFFECT, AN ALL OR NOTHING BID, SINCE NOTHING IN THE INVITATION PROHIBITED SUCH QUALIFICATION.

IT IS TRUE, AS STATED BY STEINBERG, THAT THE GOVERNMENT COULD SAVE A SUBSTANTIAL AMOUNT IF IT WERE FREE TO AWARD 45,000 PAIRS TO PAPA AND THE BALANCE OF 21,704 PAIRS TO STEINBERG. HOWEVER, ASIDE FROM THE FACT THAT THIS COULD NOT BE DONE UNDER THE CONDITIONS OF PAPA'S BID, IT ALSO COULD NOT BE DONE DUE TO THE RESTRICTION OF 30,000 MINIMUM WHICH STEINBERG MADE IN HIS OWN BID. STEINBERG'S BID IS HIGHER THAN ANY OF THE PRICES QUOTED BY PAPA, AND THE ONLY WAY THAT STEINBERG WOULD BE ELIGIBLE FOR AWARD IS TO MAKE A PARTIAL AWARD TO PAPA AND THE BALANCE TO STEINBERG, OR TO DISREGARD PAPA'S BID ENTIRELY. THEREFORE, EVEN IF PAPA'S BID PRICES RANGING FROM $2.15 THROUGH $2.34 WERE TO BE HELD INVALID BIDS, HIS BID ON THE ENTIRE QUANTITY, WHICH IS FIRM AND IS NOT CONTINGENT UPON THE PRICES QUOTED BY OTHERS, IS STILL THE LOWEST BID RECEIVED. THUS, WE PERCEIVE NO VALID BASIS IN STEINBERG'S PROTEST AGAINST THE CONSIDERATION OF PAPA'S BID ON THE ENTIRE QUANTITY.

ACCORDINGLY, YOU ARE ADVISED THAT, IF OTHERWISE PROPER, AN AWARD MAY BE MADE TO PAPA FOR THE ENTIRE QUANTITY.