B-142386, APR. 14, 1960

B-142386, APR. 14, 1960

TO THE HONORABLE SUMNER G. WHITTIER, ADMINISTRATOR, VETERANS ADMINISTRATION:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MARCH 24, 1960, WITH ENCLOSURE, REQUESTING OUR DECISION ON THE APPLICABILITY OF THE CURRENTLY EFFECTIVE FEDERAL SUPPLY SCHEDULE FOR FSC GROUP 74, OFFICE MACHINES OTHER THAN TYPEWRITERS, TO A PROPOSED PROCUREMENT OF SOUND RECORDERS AND SOUND REPRODUCERS SIMILAR TO THOSE LISTED ON PAGES 47 AND 49 OF THE CONTRACT SCHEDULE, INDEX NUMBERS 380, 382, 399 AND 401.

YOUR LETTER ADVISED THAT THE VETERANS ADMINISTRATION HAS A REQUIREMENT FOR SOUND RECORDERS AND SOUND REPRODUCERS WHICH MAY BE MET BY ANY OR ALL OF SEVERAL MANUFACTURERS. HOWEVER, YOUR ADMINISTRATION DOES NOT REQUIRE THE EXCLUSIVE FEATURES OF ANY SPECIFIC MAKE. IT IS THE OPINION OF THE CONTRACTING OFFICER THAT "SINCE OUR REQUIREMENT IS NOT FOR ANY SPECIFIC ITEM ON THE FEDERAL SUPPLY SCHEDULE BUT MAY BE MET BY ANY ONE OF FOUR SUPPLIERS COVERED, THAT THE MULTIPLE AWARD SCHEDULE IS IN FACT NOT APPLICABLE TO THIS REQUIREMENT.' THE CONTRACTING OFFICER, THEREFORE, BELIEVED THAT HE WAS OBLIGATED TO PURCHASE THE REQUIREMENTS UNDER COMPETITIVE BID PROCEDURES. ACCORDINGLY, HE ISSUED INVITATION FOR BIDS NO. M3-189-60 ON FEBRUARY 8, 1960, TO CONTRACTORS UNDER THE SCHEDULE. BIDS WERE OPENED ON MARCH 7, 1960, AND ARE SUMMARIZED BELOW:

TABLE

BIDDER BID FSS PRICE SAVINGS GRAY AUDOGRAPH CORP.

$36,333.11 $48,651.04 $12,317.93 SOUNDSCRIBER CORP. 49,211.58 56,988.62 7,777.04 DICTAPHONE CORP. 58,003.20 58,003.20 THOS. A. EDISON INDUSTRIES

57,583.98 57,583.98 SCRIBE DISTRIBUTORS CO. (**) 28,942.38 28,942.38

(*) CITED FSS ITEM NUMBERS

(**) NOT BIDDING ON SPECIFICATION

IN THAT CONNECTION, REFERENCE IS MADE TO OUR DECISION B-121926, B 122682 DATED FEBRUARY 7, 1956, WHEREIN IT WAS HELD THAT:

"THE USE OF THE SUPPLY SCHEDULE MAY BE MADE MANDATORY UPON ANY OR ALL AGENCIES OF THE EXECUTIVE BRANCH OF THE GOVERNMENT BUT, IF THE SCHEDULE CONTAINS MORE THAN ONE SOURCE FOR A SINGLE CATALOG ITEM, THERE CAN OBVIOUSLY BE NO OBLIGATION TO ANY ONE OF THE SEVERAL SUPPLIERS.'

ALSO, YOU REFER TO A STATEMENT THEREIN THAT:

"SINCE AN IDENTICAL CONTRACT WAS MADE WITH UNDERWOOD CORPORATION UNDER THE SAME GENERAL SPECIFICATIONS FOR ITS LINE OF EQUIPMENT, WE ARE FORCED TO CONCLUDE THAT, AS TO ANY PARTICULAR REQUIREMENT WHICH MIGHT BE MET EQUALLY BY AN UNDERWOOD ITEM OR A REMINGTON-RAND ITEM, EITHER THE GOVERNMENT IS NOT BOUND UNDER EITHER CONTRACT, OR IS BOUND BY BOTH, SO THAT AN ORDER UNDER ONE AUTOMATICALLY CONSTITUTES A BREACH OF THE OTHER.'

SPECIAL PROVISION NO. 2 OF THE CURRENT SCHEDULE CONTRACT IN FSC GROUP 74 PROVIDES, IN PART, AS FOLLOWS:

"2. MULTIPLE AWARDS.--- MULTIPLE AWARDS WERE MADE TO TAKE INTO ACCOUNT THE MULTIPLICITY AND COMPLEXITY OF EQUIPMENT OF VARIOUS MANUFACTURERS AND THE DIFFERENCES IN PERFORMANCE REQUIRED TO ACCOMPLISH OR PRODUCE REQUIRED END RESULTS. ORDERING AGENCIES ARE ADVISED THAT WHERE ORDERS IN EXCESS OF THE APPLICABLE OPEN MARKET LIMITATIONS ARE PLACED AT OTHER THAN THE LOWEST PRICE AVAILABLE FOR THE TYPE OF ARTICLE OR SERVICE REQUIRED, THE ORDERING AGENCY SHOULD BE IN A POSITION TO JUSTIFY SUCH ORDERS. SUCH JUSTIFICATION MAY, WHERE APPROPRIATE, BE BASED ON SUCH CONSIDERATIONS AS, BUT NOT CONFINED TO, TIME OF DELIVERY, SERVICE, DIFFERENCES IN PERFORMANCE CHARACTERISTICS, COMPATIBILITY WITH EXISTING EQUIPMENT OR SYSTEMS AND ADMINISTRATIVE EXPENSE.'

PARAGRAPH 12 OF THE SPECIAL PROVISIONS PROVIDES:

"PRICE REDUCTIONS TO A FEDERAL AGENCY. IF, DURING THE LIFE OF THE CONTRACT, THE CONTRACTOR SELLS TO ANY FEDERAL AGENCY UNDER HIS FEDERAL SUPPLY SCHEDULE CONTRACT AT REDUCED PRICE ANY ARTICLE OR SERVICE COVERED BY THE CONTRACT AND THE QUANTITY INVOLVED FALLS WITHIN THE APPLICABLE MAXIMUM ORDER LIMITATION SET FORTH IN THE CONTRACT, EQUIVALENT PRICE REDUCTIONS BASED ON SIMILAR QUANTITIES AND/OR CONSIDERATIONS SHALL APPLY TO HIS FEDERAL SUPPLY SCHEDULE CONTRACT. SUCH PRICE REDUCTIONS SHALL BE EFFECTIVE AT THE SAME TIME THE SALE AT REDUCED PRICE IS MADE TO ANY FEDERAL AGENCY. THE CONTRACTOR SHALL THEREAFTER FOR THE DURATION OF THE CONTRACT PERIOD INVOICE ALL ORDERING OFFICES AT SUCH REDUCED PRICE, INDICATING ON THE INVOICE THAT THE REDUCTION IS PURSUANT TO THIS CLAUSE IN HIS FEDERAL SUPPLY SCHEDULE CONTRACT. IN ADDITION, THE CONTRACTOR SHALL WITHIN TEN DAYS NOTIFY THE GENERAL SERVICES ADMINISTRATION'S CONTRACTING OFFICER OF SUCH REDUCTION, BY LETTER IN TRIPLICATE, AND REQUEST THAT HIS CONTRACT BE AMENDED ACCORDINGLY. FAILURE TO DO SO MAY REQUIRE TERMINATION OF THE CONTRACT AS PROVIDED IN ARTICLE 21, DEFAULT, OF THE GENERAL PROVISIONS (GSA FORM 281C).'

IT IS ALSO PROVIDED UNDER THE HEADING "MANDATORY USE" THAT:

"ALL DEPARTMENTS AND INDEPENDENT ESTABLISHMENTS INCLUDING WHOLLY OWNED GOVERNMENT CORPORATIONS, IN THE EXECUTIVE BRANCH OF THE FEDERAL GOVERNMENT (EXCEPT THE DEPARTMENT OF DEFENSE FOR INSTRUMENTATION TAPE AND REELS THEREFOR), INCLUDING THE GOVERNMENT OF THE DISTRICT OF COLUMBIA, ARE OBLIGATED TO USE THIS SCHEDULE FOR PROCURING PROPERTY OR SERVICES LISTED HEREIN FOR DELIVERY WITHIN THE FORTY-EIGHT CONTIGUOUS STATES (EXCLUDES ALASKA), AND THE DISTRICT OF COLUMBIA, * * *.'

THE SCHEDULE CONTAINS A FURTHER PROVISION REQUIRING THE GOVERNMENT TO ORDER FROM THE CONTRACTOR SUCH OF THE PRODUCTS OF THE PARTICULAR MAKE, MODEL, OR BRAND AS MAY BE REQUIRED DURING THE CONTRACT PERIODS.

IT LONG HAS BEEN HELD BY THE ACCOUNTING OFFICERS OF THE GOVERNMENT THAT ARTICLES OR SUPPLIES CONTRACTED FOR UNDER THE GENERAL SCHEDULE OF SUPPLIES (NOW THE FEDERAL SUPPLY SCHEDULE) MUST BE PROCURED UNDER SUCH CONTRACTS EXCEPT IN THE SITUATIONS NOT HERE INVOLVED. 16 COMP. GEN. 225; 26 ID. 366. THAT SUCH CONTRACTS, INCLUDING THE MANDATORY PURCHASE REQUIREMENTS, ARE AUTHORIZED BY LAW (40 U.S.C. 481) IS NOT SUBJECT TO SERIOUS QUESTION. WE DO NOT AGREE THAT BECAUSE THE SCHEDULE CONTRACT CONTAINS MORE THAN ONE SOURCE FOR A SINGLE CATALOG ITEM, NO OBLIGATION EXISTS ON THE PART OF THE GOVERNMENT TO PURCHASE FROM ANY ONE OF THE SEVERAL SUPPLIERS. IN THE FEBRUARY 7, 1956, DECISION, WE MADE IT QUITE CLEAR THAT THE CONTRARY WOULD BE TRUE PROVIDED THE CONTRACTS ARE DRAFTED TO IMPOSE AN OBLIGATION ON THE GOVERNMENT TO PURCHASE UNDER THE CONTRACTS SUCH OF THE PRODUCTS OF THE PARTICULAR MAKE AS MAY BE REQUIRED DURING THE TERM OF THE CONTRACT. ALSO CAUTIONED THAT:

"IT SHOULD ALSO BE MADE CLEAR BOTH TO THE CONTRACTORS AND TO THE PURCHASING AGENCIES THAT THE CHOICE BETWEEN SIMILAR ITEMS OF THE SEVERAL LINES WOULD BE MADE BY THE GOVERNMENT ON THE BASIS OF ADMINISTRATIVE DETERMINATION AS TO THE ONE BEST SUITED TO THE PARTICULAR NEEDS OF THE AGENCY. THE AGENCIES SHOULD BE PUT ON NOTICE BY APPROPRIATE PROVISION IN EACH SCHEDULE THAT WHERE THE REQUIREMENTS IN ANY INSTANCE COULD BE SUBSTANTIALLY MET BY MORE THAN ONE MAKE OF EQUIPMENT THE CHOICE SHOULD BE GOVERNED BY PRICE, AND THAT THEY SHOULD BE PREPARED TO FURNISH PROPER JUSTIFICATION FOR ANY PURCHASES MADE OF SUCH EQUIPMENT AT OTHER THAN THE LOWEST PRICES AVAILABLE. ALSO WE FEEL THAT, FOR THE PURPOSE OF OBTAINING FULL AND FREE COMPETITION FOR THE GOVERNMENT AS REQUIRED, BIDDERS WOULD BE ADVISED OF THIS INSTRUCTION IN CONNECTION WITH EACH INVITATION.'

THE CURRENT SCHEDULE CONTRACT, AS IS SHOWN ABOVE, IS IN ACCORDANCE WITH THAT DECISION.

THERE IS NO DOUBT THAT YOUR ADMINISTRATION HAS A BONA FIDE REQUIREMENT FOR SOUND RECORDERS AND REPRODUCERS INCLUDED WITHIN THE MULTIPLE AWARD CURRENT CONTRACT SCHEDULE, AND THAT SUCH REQUIREMENT MAY BE MET BY ANY ONE OF THE SEVERAL CONTRACTORS COVERED BY THE CONTRACT SCHEDULE. THAT BEING THE CASE, SUCH REQUIREMENT MUST BE SATISFIED WITHIN THE FRAMEWORK OF THE CURRENT CONTRACT SCHEDULE AT THE LOWEST CONTRACT PRICE AVAILABLE FOR SUCH EQUIPMENT. ACCORDINGLY, AND SINCE THE SEVERAL CONTRACTORS UNDER THE SCHEDULE ARE ALREADY LEGALLY BOUND TO FURNISH THE GOVERNMENT WITH ITS REQUIREMENTS FOR EQUIPMENT, YOU ARE ADVISED THAT AWARD MAY NOT BE LEGALLY MADE TO THE GRAY AUDOGRAPH CORPORATION UNDER THE INVITATION FOR BIDS. SEE THE ANNOTATIONS COLLECTED IN 26 ALR2D 1099.

IT IS NOTED, HOWEVER, THAT THE GRAY AUDOGRAPH CORPORATION NOT ONLY IS THE LOWEST BIDDER UNDER THE INVITATION BUT ALSO IS THE LOWEST PRICED CONTRACTOR ON THE CONTRACT SCHEDULE. MOREOVER, GRAY IS LEGALLY ENTITLED TO ANY ORDERS UNDER THE SCHEDULE CONTRACT IF PRICE IS THE ONLY CONSIDERATION. THAT BEING THE CASE, WE CAN SEE NO LEGAL OBJECTION TO THE PURCHASE OF THE ADMINISTRATION'S REQUIREMENTS FROM THAT CONTRACTOR AT ITS CURRENT CONTRACT PRICE, OR, FOR THAT MATTER, AT ITS BID PRICE PROVIDED THE CONTRACTOR AGREES THAT SUCH LOWER PRICE CONSTITUTES A PRICE REDUCTION WITHIN THE MEANING OF PARAGRAPH 12 OF THE SPECIAL PROVISIONS OF THE SCHEDULE.

A COPY OF THIS DECISION IS BEING FURNISHED TO THE ADMINISTRATOR OF GENERAL SERVICES FOR HIS INFORMATION.