B-143153, SEPTEMBER 9, 1960, 40 COMP. GEN. 160

B-143153, SEPTEMBER 9, 1960, 40 COMP. GEN. 160

BIDS - DEFECTIVE INVITATION - DELIVERY COSTS - SHIPPING WEIGHT INFORMATION FURNISHED AFTER BID OPENING AN INVITATION WHICH DID NOT REQUIRE BIDDERS TO STATE THE GUARANTEED SHIPPING WEIGHTS FOR AN ITEM FURNISHED ON AN F.O.B. BASIS, SHIPMENT UNDER A GOVERNMENT BILL OF LADING, NOR ESTABLISH LIABILITY FOR ADDITIONAL TRANSPORTATION COSTS IN CASE OF VARIATION BETWEEN THE GUARANTEED AND ACTUAL WEIGHTS, DOES NOT PROVIDE A BASIS FOR EQUITABLE BID EVALUATION AND ENABLES A HIGHER BIDDER TO OBTAIN AN ADVANTAGE OVER THE OTHERWISE LOW BIDDER BY BEING PERMITTED TO VARY ITS PROPOSAL AFTER BID OPENING AND, THEREFORE, THE INVITATION IS LEGALLY DEFECTIVE. ALTHOUGH AN AWARD TO A BIDDER WHO, AFTER SUBMISSION OF A HIGH BID TO FURNISH AN ITEM ON AN F.O.B. BASIS, SHIPMENT UNDER GOVERNMENT BILL OF LADING, WAS PERMITTED TO BECOME THE LOW BIDDER ON THE BASIS OF SHIPPING WEIGHT ADVICE CALCULATED TO MAKE HIS BID, WHEN ADJUSTED TO REFLECT THE COST OF TRANSPORTATION, THE LOW BID, PRICE AND OTHER FACTORS CONSIDERED, WAS IMPROPER SINCE THE CONTRACTOR HAS COMPLETED FOR DELIVERY SOME OF THE UNITS, THE INTERESTS OF THE CONTRACTOR AND GOVERNMENT REQUIRE ACCEPTANCE OF THOSE UNITS AND CANCELLATION OF THE CONTRACT FOR THE REMAINING UNITS.

TO THE SECRETARY OF THE ARMY, SEPTEMBER 9, 1960:

BY LETTER DATED AUGUST 26, 1960, THE CHIEF, CONTRACTS BRANCH, PROCUREMENT DIVISION, OFFICE OF THE DEPUTY CHIEF OF STAFF FOR LOGISTICS, FURNISHED A REPORT CONCERNING THE PROTEST OF PAR SALES COMPANY AGAINST THE AWARD OF A CONTRACT TO THE LEE ENGINEERING COMPANY UNDER INVITATION FOR BIDS NO. ORD- 33-079-60-127, ISSUED BY ROSSFORD ORDNANCE DEPOT ON MAY 6, 1960.

THE INVITATION REQUESTED BIDS TO BE OPENED ON JUNE 6, 1960, FOR FURNISHING 851 PNEUMATIC TIRE DEMOUNTERS ON AN F.O.B. BASIS, SHIPMENT TO BE ACCOMPLISHED BY GOVERNMENT BILL OF LADING TO DESTINATION. PAR SALES SUBMITTED A RESPONSIVE BID IN THE AMOUNT OF $110 EACH AND LEE ENGINEERING SUBMITTED A RESPONSIVE BID IN THE AMOUNT OF $113.33 EACH. PURSUANT TO PARAGRAPH 22 OF THE INVITATION, THE BIDS OF BOTH COMPANIES WERE EVALUATED ON THE BASIS OF THEIR UNIT PRICES PLUS TRANSPORTATION COSTS TO THE GOVERNMENT FROM POINT OF ORIGIN TO DESTINATION. HOWEVER, CONTRARY TO THE NORMAL PRACTICE, THE INVITATION DID NOT REQUIRE THAT BIDDERS STATE THEIR GUARANTEED SHIPPING WEIGHTS OF THE ITEM NOR PROVIDE THAT THE CONTRACTOR WOULD BE LIABLE FOR ANY ADDITIONAL TRANSPORTATION COSTS TO THE GOVERNMENT BY REASON OF VARIATION BETWEEN GUARANTEED AND ACTUAL SHIPPING WEIGHTS. SUBSEQUENT TO THE OPENING OF BIDS, LEE ENGINEERING ADVISED BY TELEGRAM DATED JUNE 8, 1960, THAT ITS GROSS SHIPPING WEIGHT PER UNIT WAS 160 POUNDS. BY TELEGRAM OF JUNE 8, 1960, PAR SALES ADVISED THAT THE APPROXIMATE WEIGHT OF ITS ITEM WAS 147 POUNDS. ON JUNE 16, 1960, ROSSFORD ORDNANCE DEPOT ADVISED THE BOSTON ORDNANCE DISTRICT THAT LEE ENGINEERING'S PREPRODUCTION MODEL--- APPARENTLY THE SAME ITEM AS HERE INVOLVED--- UNDER A PRIOR CONTRACT HAD BEEN INSPECTED AND ACCEPTED. AS TO THIS MODEL, 4 SHORT SHOES HAD BEEN ELIMINATED THEREBY REDUCING THE WEIGHT OF THE UNIT. BASED UPON THIS ACCEPTANCE, LEE ENGINEERING ADVISED BY LETTER OF JUNE 17, 1960, THAT THEIR EARLIER QUOTED GROSS WEIGHT OF 160 POUNDS WAS IN ERROR AND THAT THE CORRECT GROSS SHIPPING WEIGHT OF THE IT SHOULD BE 129 POUNDS. IT IS TO BE NOTED THAT NEITHER BIDDER GUARANTEED THEIR SHIPPING WEIGHTS NOR OBLIGATED THEMSELVES TO REIMBURSE THE GOVERNMENT FOR ANY EXCESS TRANSPORTATION COSTS.

THE BIDS OF LEE ENGINEERING AND PAR SALES WERE EVALUATED TO DETERMINE THE OVER-ALL COST TO THE GOVERNMENT ON THE BASIS OF THE SHIPPING WEIGHTS OF 129 POUNDS AND 147 POUNDS, RESPECTIVELY. UPON APPLICATION OF THE GOVERNMENT TRANSPORTATION COSTS TO THE ORIGIN BIDS, IT WAS DETERMINED THAT THE BID OF LEE ENGINEERING SHOULD BE INCREASED BY $2.4381 PER UNIT AND THAT OF PAR SALES SHOULD BE INCREASE OF $5.9976 PER UNIT. SINCE THE BID OF LEE ENGINEERING AS EVALUATED TO REFLECT THE COST OF GOVERNMENT TRANSPORTATION OF THE ITEM RESULTED IN A NET UNIT BID PRICE OF $115.7681 AS COMPARED TO THE EVALUATED NET UNIT PRICE BID OF PAR SALES OF $115.9976, THE CONTRACT WAS AWARDED TO LEE ENGINEERING AS THE LOWEST RESPONSIBLE BIDDER ON JUNE 24, 1960.

THE PROTEST OF PAR SALES IS DIRECTED LARGELY AGAINST THE EVALUATION OF BIDS ON THE BASIS OF PUBLISHED TARIFF RATES WITHOUT REGARD TO A SPECIAL CONTRACT SHIPPING ARRANGEMENT IT HAD OBTAINED FROM INTERSTATE EXPRESS FOR THIS PARTICULAR PROCUREMENT. IN OUR VIEW, HOWEVER, THE MORE IMPORTANT QUESTION FOR CONSIDERATION IS WHETHER THE AWARD AS MADE TO LEE ENGINEERING WAS LEGALLY DEFECTIVE IN THE LIGHT OF THE FACT THAT IT BECAME NECESSARY FOR A PROPER EVALUATION OF THE BIDS TO REQUIRE THE SUBMISSION OF SHIPPING WEIGHT INFORMATION BY THE RESPONSIVE BIDDERS SUBSEQUENT TO BID OPENING, AND OF THE FURTHER FACT THAT LEE ENGINEERING WAS PERMITTED TO CORRECT DOWNWARD THE SHIPPING WEIGHT IT HAD PREVIOUSLY FURNISHED SUBSEQUENT TO BID OPENING.

THE COMPETITIVE BIDDING STATUTE CODIFIED AT 10 U.S.C. 2305 REQUIRES THAT THE AWARD OF A CONTRACT BE MADE TO THAT RESPONSIBLE BIDDER SUBMITTING THE LOWEST RESPONSIVE BID,"OTHER FACTORS CONSIDERED.' 37 COMP. GEN. 550. ONE OF THE FACTORS FOR CONSIDERATION IN THE SELECTION OF A LOW BID SUBMITTED ON AN F.O.B. ORIGIN BASIS IS THE COST TO THE GOVERNMENT OF TRANSPORTATION TO DESTINATION. IN SUCH CIRCUMSTANCES, A GUARANTEED SHIPPING WEIGHT OF THE ITEM TO BE PROCURED IS AN ESSENTIAL ELEMENT IN EVALUATING THE GOVERNMENT'S TRANSPORTATION COSTS APPLICABLE TO EACH RESPONSIVE BIDDER'S OFFER. THE PURPOSE OF SUCH EVALUATION IS TO FIX THE EXACT COST OF THE ITEM TO THE GOVERNMENT.

IT IS FUNDAMENTAL THAT THE RULES OF COMPETITIVE ADVERTISED BIDDING REQUIRE THAT BIDS BE EVALUATED UPON A COMMON BASIS WHICH IS PRESCRIBED IN THE INVITATION. 10 COMP. GEN. 261; 38 ID. 550. INSEPARABLE FROM THIS RULE IS THE REQUIREMENT THAT BIDS GENERALLY ARE TO BE EVALUATED AS OF THE TIME OF OPENING.

WE BELIEVE THAT THE EVALUATION OF BIDS ON THE BASIS OF SHIPPING WEIGHT INFORMATION SOLICITED AND FURNISHED AFTER BID PRICES ARE REVEALED IS CONTRARY TO THE ESTABLISHED PRINCIPLES GOVERNING COMPETITIVE PROCUREMENT IN THAT THE RELATIVE STANDING OF BIDDERS IS DIRECTLY AFFECTED. WE FEEL THAT THIS IS SO BECAUSE A BIDDER WHO HAS SUBMITTED A HIGH BID HAS THE OPPORTUNITY TO BECOME LOW ON THE BASIS OF SHIPPING WEIGHT ADVICE CALCULATED TO MAKE HIS BID, WHEN ADJUSTED TO REFLECT THE COST OF TRANSPORTATION, THE LOW BID, PRICE AND "OTHER FACTORS CONSIDERED.' PERMIT BIDDERS TO FURNISH SUCH INFORMATION, WHICH IS VITAL IN DETERMINING THE OVER-ALL COST TO THE GOVERNMENT, AFTER BID OPENING IS INIMICAL TO THE COMPETITIVE CHARACTER OF THE PROCUREMENT AND RESULTS IN A NEGOTIATION PROCESS NOT AUTHORIZED BY LAW. SUCH A PROCEDURE MAKES IT POSSIBLE FOR A BIDDER, AFTER BID OPENING, TO CONTROL THE RELATIVE POSITION OF HIS BID. THIS WOULD GIVE THE BIDDER TWO CHANCES AND WOULD BE ANALOGOUS TO AN UNAUTHORIZED BID MODIFICATION WHICH WE HAVE CONSISTENTLY HELD TO BE CONTRARY TO THE ESTABLISHED PRINCIPLE THAT BIDDERS MAY NOT VARY THEIR PROPOSALS AFTER BID OPENING SINCE TO DO SO WOULD NULLIFY THE VERY PURPOSE OF THE COMPETITIVE BIDDING STATUTE. 17 COMP. GEN. 554.

WE, THEREFORE, ARE OF THE VIEW THAT THE INVITATION HERE INVOLVED WAS LEGALLY DEFECTIVE IN THAT IT FAILED TO PROVIDE FOR A BASIS OF EQUITABLE BID EVALUATION RESPECTING TRANSPORTATION COSTS TO THE GOVERNMENT AND THAT IT ENABLED A HIGHER BIDDER TO OBTAIN AN ADVANTAGE OVER THE OTHERWISE LOW BIDDER BY BEING PERMITTED TO VARY ITS PROPOSAL AFTER OPENING. IN THAT CONNECTION, WE NOTE THAT PARAGRAPH 1-1305.1 OF THE ARMED SERVICES PROCUREMENT REGULATION (1960 EDITION) NOW PROVIDES THAT INVITATIONS FOR BIDS SHOULD REQUIRE PROSPECTIVE BIDDERS TO FURNISH GUARANTEED SHIPPING WEIGHTS WHEN APPROPRIATE.

ACCORDINGLY, WE CONCLUDE THAT THE AWARD MADE TO THE LEE ENGINEERING COMPANY WAS IMPROPER. SINCE IT IS UNDERSTOOD THAT THE CONTRACTOR HAS COMPLETED FOR DELIVERY SOME OF THE UNITS, WE THINK IT EQUITABLE TO THE CONTRACTOR AND IN THE INTERESTS OF THE GOVERNMENT TO ACCEPT THOSE UNITS. THE CONTRACT FOR THE REMAINING UNITS SHOULD BE CANCELED.