B-147865, FEB. 19, 1962

B-147865, FEB. 19, 1962

TO PRODUCERS DAIRY DELIVERY CO., INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 29, 1961, PROTESTING AGAINST AN AMENDMENT TO A CONTRACT WHICH WAS AWARDED TO FOREMOST DAIRIES, INC., OAKLAND, CALIFORNIA, UNDER REQUEST FOR PROPOSAL NO. 228-32099, ISSUED NOVEMBER 6, 1961, BY THE NAVAL SUPPLY CENTER, OAKLAND, CALIFORNIA.

THE REQUEST FOR PROPOSALS COVERED ESTIMATED QUANTITIES OF DAIRY PRODUCTS WHICH WOULD BE REQUIRED BY CERTAIN NAVAL INSTALLATIONS DURING THE PERIOD JANUARY 1 TO MARCH 31, 1962. TWENTY-SIX ITEMS, NUMBERED 111 THROUGH 136, SPECIFIED THE TYPES OF PRODUCTS AND THE WEIGHTS, MEASUREMENTS, PACKAGING OR CONTAINER REQUIREMENTS FOR MAKING DELIVERIES. IN MOST INSTANCES THE ITEMS LISTED ESTIMATED QUANTITIES FOR DELIVERY TO TWO OR MORE NAVAL INSTALLATIONS AND ALLOWED BIDDERS TO QUOTE A DELIVERED PRICE FOR EACH DESTINATION.

AMONG THE CONTRACTS WHICH WERE AWARDED ON THE BASIS OF LOWEST QUOTED PRICES WERE TWO CONTRACTS AWARDED ON DECEMBER 20, 1961, ONE TO YOUR FIRM AND THE OTHER TO FOREMOST DAIRIES, INC. THE CONTRACT WITH YOUR COMPANY COVERED AN AWARD OF THAT PART OF ITEM NO. 111 WHICH LISTED AN ESTIMATED QUANTITY OF 4,800 GALLONS OF BUTTERMILK FOR DELIVERY IN 5-GALLON RETURNABLE CONTAINERS TO THE U.S. NAVAL AIR STATION, LEMOORE, CALIFORNIA; AND AN AWARD ON ONE OF THE 14 SPECIFIED REQUIREMENTS OF ITEM NO. 129, WHICH LISTED AN ESTIMATED QUANTITY OF 20,000 GALLONS OF MILK FOR DELIVERY TO THE SAME INSTALLATION IN "5 GALLON RETURNABLE NORRIS TYPE" DISPENSER CANS.

AFTER AWARD OF THE TWO CONTRACTS QUOTATIONS WERE SOLICITED BY TELEPHONE FROM EACH OF YOU AND THE CARNATION COMPANY FOR DELIVERY OF MILK IN PLASTIC 3-GALLON OR 6-GALLON "SCHOLLE PAK" CONTAINERS TO THE U.S. NAVAL AIR STATION, LEMOORE, CALIFORNIA. YOUR COMPANY AND THE CARNATION COMPANY REPORTEDLY DECLINED TO BID BUT FOREMOST DAIRIES, INC., QUOTED A PRICE OF $0.561 PER GALLON. SUBSEQUENTLY, THE CONTRACT WITH THAT FIRM WAS AMENDED TO PROVIDE FOR DELIVERIES OF MILK IN 3 GALLON OR 6-GALLON CONTAINERS "TO MEET THE NEEDS OF THE NAVAL AIR STATION, LEMOORE, CALIFORNIA.'

YOU CONSIDER THIS ACTION TO BE UNFAIR INASMUCH AS A CONTRACT HAD ALREADY BEEN AWARDED TO YOU TO MEET THE REQUIREMENTS OF THE NAVAL AIR STATION FOR BULK DELIVERIES OF MILK DURING THE PERIOD JANUARY 1 TO MARCH 31, 1962.

ALTHOUGH IT IS REPORTED THAT ALL REQUIREMENTS OF THE LEMOORE AREA FOR ITEMS 111 AND 129 WILL BE ORDERED FROM YOUR COMPANY, THE RECORD INDICATES THAT THE QUANTITY EXPECTED TO BE ORDERED WILL BE NEGLIGIBLE BECAUSE THE OFFICIALS OF THE NAVAL AIR STATION HAVE INDICATED A NEED FOR DELIVERY OF BULK QUANTITIES OF MILK IN PLASTIC CONTAINERS INSTEAD OF IN RETURNABLE 5- GALLON CANS. THIS REQUIREMENT IS ATTRIBUTABLE TO THE FACT THAT MILK DELIVERED IN PLASTIC CONTAINERS "SAVES MANPOWER, STORAGE SPACE AND IS EASIER TO HANDLE.'

THE CONTRACTING OFFICER HAS REFERRED TO THE "ESTIMATED QUANTITIES" CLAUSE AT PAGE 2 OF THE SCHEDULE ATTACHED TO THE NOVEMBER 6, 1961, REQUEST FOR PROPOSALS AND HAS CONTENDED THAT THE CONTRACT WITH YOU NEITHER OBLIGATES THE GOVERNMENT TO ORDER ANY QUANTITY ABOVE THE AGGREGATE VALUE OF $1 OF QUARTERLY BULLETIN ITEM NO. 129, NOR VESTS IN YOUR FIRM ANY RIGHT TO REQUIRE ACCEPTANCE BY THE GOVERNMENT OF DELIVERIES IN EXCESS OF THE QUANTITIES ORDERED.

IT APPEARS FROM THE CITED CLAUSE OF THE REQUEST FOR PROPOSALS THAT THE GOVERNMENT MAY HAVE INTENDED TO ENTER INTO ORDINARY REQUIREMENT TYPE CONTRACTS AND THAT SUCH CONTRACTS SHOULD OBLIGATE THE GOVERNMENT TO FULFILL ALL OF ITS REQUIREMENTS FOR PARTICULAR SUPPLIES DURING A 3 MONTH PERIOD THROUGH THE ISSUANCE OF ORDERS TO THE CONTRACTOR WHO WAS AWARDED THE CONTRACT FOR MAKING DELIVERIES OF SUCH SUPPLIES. HOWEVER, INASMUCH AS THERE IS NO FIRM UNDERTAKING BY THE GOVERNMENT TO ORDER ANY QUANTITY ABOVE THE VALUE OF $1 THERE IS CONSIDERABLE DOUBT THAT VALID, REQUIREMENTS CONTRACTS EXIST. ASSUMING, HOWEVER, THERE IS A VALID CONTRACT WITH YOUR COMPANY, THEN THE GOVERNMENT WOULD BE OBLIGATED TO PURCHASE ALL ITS NEEDS FOR MILK IN 5-GALLON RETURNABLE CONTAINERS FROM YOU AND THIS, IT IS ADMINISTRATIVELY REPORTED, WILL BE DONE.

IT HAS ALSO BEEN REPORTED THAT THE NAVAL AIR STATION AT LEMOORE HAS AN ADDITIONAL REQUIREMENT FOR MILK IN PLASTIC CONTAINERS. INASMUCH AS YOUR CONTRACT WITH THE GOVERNMENT DOES NOT PROVIDE FOR FURNISHING MILK IN PLASTIC CONTAINERS AND SINCE YOU DECLINED TO SUBMIT A PROPOSAL FOR SUCH REQUIREMENT, WE FIND NOTHING TO INDICATE THAT THE CONTRACTING OFFICE ACTED IMPROPERLY IN THE NEGOTIATION OF THE AMENDMENT TO THE CONTRACT WITH FOREMOST DAIRIES, INC. ..END :