B-148889, AUG. 8, 1962

B-148889, AUG. 8, 1962

TO ROYAL MCBEE CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MAY 9, 1962, AND SUBSEQUENT CORRESPONDENCE, PROTESTING THE ADMINISTRATIVE ACTIONS OF THE GENERAL SERVICES ADMINISTRATION AND THE DEFENSE SUPPLY SERVICE, DEPARTMENT OF THE ARMY, IN CONNECTION WITH THE SALE OF USED TYPEWRITERS UNDER SALES INVITATION NO. DSS-49-083-62-49/S), DATED MARCH 15, 1962, AND THE PROCUREMENT OF NEW ELECTRIC TYPEWRITERS FROM THE UNDERWOOD CORPORATION UNDER ITS FEDERAL SUPPLY SCHEDULE CONTRACT NO. GS-00S 34338.

THE RECORD SHOWS THAT THE CITED UNDERWOOD CONTRACT IS ONE OF THE MULTIPLE AWARD CONTRACTS, WHICH INCLUDE YOUR CONTRACT NO. GS-OOS-34334, NEGOTIATED BY THE GENERAL SERVICES ADMINISTRATION UNDER AUTHORITY OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1946, 63 STAT. 377, AS AMENDED, TO COVER THE GOVERNMENT'S REQUIREMENTS FOR TYPEWRITERS FOR THE 12 -MONTH PERIOD ENDING JUNE 30, 1962. FEDERAL SUPPLY SCHEDULE FSC GROUP 74, PART 1, LISTS THE FIRMS AWARDED CONTRACTS FOR TYPEWRITERS AND SETS FORTH THE PERTINENT TERMS AND CONDITIONS GOVERNING PERFORMANCE THEREUNDER. WITH CERTAIN EXCEPTIONS NOT HERE MATERIAL, ALL DEPARTMENTS AND AGENCIES IN THE EXECUTIVE BRANCH OF THE GOVERNMENT MUST PROCURE THEIR REQUIREMENTS FOR TYPEWRITERS FROM ONE OF THE CONTRACTORS COVERED BY THE SCHEDULE. IT IS FURTHER PROVIDED IN THE SCHEDULE THAT IN ANY INSTANCE IN WHICH THE REQUIREMENT FOR TYPEWRITERS MAY BE MET BY MORE THAN ONE CONTRACTOR, THE PROCUREMENT MUST BE MADE UNDER THAT MULTIPLE AWARD CONTRACT OFFERING THE LOWEST PRICE. THE PRICES OFFERED BY THE CONTRACTORS ARE FILED WITH GENERAL SERVICES ADMINISTRATION AND PRICE LISTS, IN CONFORMITY THEREWITH, ARE DISTRIBUTED BY THE CONTRACTORS TO THE AGENCIES OF THE GOVERNMENT FOR USE IN PLACING THEIR ORDERS FOR TYPEWRITERS. PARAGRAPH 8 OF THE SCHEDULE PROVIDES, IN PART, AS FOLLOWS:

"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 * * *, EQUIVALENT PRICE REDUCTIONS BASED ON SIMILAR QUANTITIES * * * 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 RECORD SHOWS THAT AMENDMENTS TO THE SCHEDULE, REFLECTING CONTRACTOR'S PRICE REDUCTIONS AND THE EFFECTIVE DATES THEREOF, ARE PERIODICALLY TRANSMITTED BY GENERAL SERVICES ADMINISTRATION TO GOVERNMENT AGENCIES FOR THEIR USE IN PLACING FUTURE ORDERS OR IN OBTAINING APPROPRIATE ADJUSTMENT ON ORDERS PREVIOUSLY PLACED.

IT IS ADMINISTRATIVELY REPORTED BY THE DEFENSE SUPPLY SERVICE THAT ON MARCH 8, 1962, IT RECEIVED A PURCHASE REQUEST FROM ITS REQUIREMENTS BRANCH FOR THE PROCUREMENT OF A QUANTITY OF STANDARD (13 INCH) AND LONG (16 INCH) CARRIAGE ELECTRIC TYPEWRITERS AND FOR THE TRADE-IN, FOR APPLICATION AGAINST THE PURCHASE PRICE, OF USED MANUAL AND ELECTRIC TYPEWRITERS ON HAND WHICH HAD BEEN CERTIFIED AS ELIGIBLE FOR REPLACEMENT UNDER STANDARDS ESTABLISHED BY THE DEPARTMENT OF DEFENSE AND GENERAL SERVICES ADMINISTRATION. IT IS ALSO REPORTED THAT, TO ASSURE THE RECEIPT OF THE BEST PRICES ON THE DISPOSAL OF THE USED MACHINES, SALES INVITATION NO. DSS -49-083-62-49/S), AS AMENDED, REQUESTED BIDS, FOR OPENING APRIL 12, 1962, ON A CASH OR TRADE-IN BASIS ON EACH OF 285 USED TYPEWRITERS AS LISTED THEREIN. WITH RESPECT TO THE BASIS FOR AWARD, THE INVITATION PROVIDED THAT "BASED ON REQUIREMENTS OF THE GOVERNMENT AT THE TIME AWARD IS MADE, AWARD WILL BE MADE ON A CASH OR TRADE BASIS OR ON A COMBINATION OF BOTH WHICHEVER IS IN THE BEST INTERESTS OF THE GOVERNMENT.' IT IS FURTHER REPORTED BY DEFENSE SUPPLY SERVICE THAT PRIOR TO THE OPENING OF BIDS IT RECEIVED A CARBON COPY OF A LETTER, DATED APRIL 11, 1962, FROM UNDERWOOD CORPORATION TO GENERAL SERVICES ADMINISTRATION, OFFERING A QUANTITY DISCOUNT ON THE PRICES OF ITS 13 INCH, 16 INCH AND 21 INCH ELECTRIC TYPEWRITERS ON SINGLE ORDERS FOR 200 TO 249 MACHINES AND AN ADDITIONAL REDUCTION IN PRICE THEREON ON A SINGLE ORDER OF 250 OR MORE MACHINES. THE ABSTRACT OF BIDS ON THE SALES INVITATION SHOWS THAT 17 BIDS WERE RECEIVED ON A CASH OR TRADE-IN BASIS, OR BOTH. IT IS ADMINISTRATIVELY REPORTED THAT AN ANALYSIS OF THE BIDS RECEIVED AND OF THE PRICES FOR REQUIRED NEW MACHINES, CONSISTING OF 159 STANDARD AND 100 LONG CARRIAGE TYPEWRITERS, UNDER THE FEDERAL SUPPLY SCHEDULE, RESULTED IN THE DETERMINATION THAT THE INTEREST OF THE GOVERNMENT WOULD BE BEST SERVED BY ACCEPTING THE DISCOUNT OFFER OF UNDERWOOD UNDER ITS FEDERAL SUPPLY SCHEDULE CONTRACT ON THE PURCHASE OF 250 OR MORE NEW MACHINES COMBINED WITH ITS TRADE-IN OFFER ON SOME OF THE USED MACHINES AND THE CASH SALE TO OTHERS OF THE BALANCE OF THE USED MACHINES. ACCORDINGLY, AWARDS WERE SO MADE ON MAY 1, 1962.

IT IS YOUR CONTENTION, IN SUBSTANCE, THAT, THE AWARD TO UNDERWOOD WAS IMPROPER SINCE, ON APRIL 12, 1962, THE DATE OF BID OPENING ON THE SALES INVITATION, YOUR BID ON THE INVITATION COMBINED WITH YOUR PRICES IN EFFECT UNDER YOUR FEDERAL SUPPLY SCHEDULE CONTRACT REPRESENTED THE BEST PRICE TO THE GOVERNMENT. IN SUPPORT OF YOUR CONTENTION, YOU ALLEGE THAT, IN RESPONSE TO YOUR PERIODIC INQUIRIES TO GENERAL SERVICES ADMINISTRATION WHETHER ANY OTHER FIRM HAD OFFERED TO AMEND ITS SCHEDULE PRICE FOR TYPEWRITERS, YOU WERE ADVISED THAT NO AMENDMENTS HAD BEEN OFFERED OR APPROVED; THAT UNDERWOOD'S LETTER OF APRIL 11, 1962, BEARS AN ERASURE IN THE DATE, WHICH EVIDENCES THAT THE DATE SHOWN MAY HAVE BEEN CHANGED; THAT, SINCE UNDERWOOD'S OFFERED PRICE REDUCTION WAS NOT ACCEPTED BY GENERAL SERVICES ADMINISTRATION UNTIL MAY 3, 1962, THE OFFER WAS NOT PROPERLY FOR CONSIDERATION IN MAKING THE AWARD; AND THAT, BY REASON OF THE NEGOTIATIONS CONDUCTED WITH UNDERWOOD, YOU WERE PREJUDICED BY THE IMPROPER ADMINISTRATIVE REFUSAL TO CONSIDER, IN THE EVALUATION OF BIDS UNDER THE SALES INVITATION, YOUR OFFER, AFTER AWARD TO UNDERWOOD, OF A PRICE REDUCTION IN YOUR SCHEDULE PRICE FOR NEW TYPEWRITERS.

THE AWARDS UNDER THIS SALES INVITATION, AS IN CASE OF ALL FORMALLY ADVERTISED PROCUREMENTS OR SALES, WERE REQUIRED TO BE MADE, IN CONFORMITY WITH STATUTORY REQUIREMENTS, TO THAT RESPONSIBLE BIDDER OR BIDDERS WHOSE TIMELY OFFER WAS MOST ADVANTAGEOUS TO THE UNITED STATES. SEE 35 COMP. GEN. 167 AND 36 ID. 94, AND THE DECISIONS OF THE COURTS AND OF THIS OFFICE REFERRED TO THEREIN.

THE ADMINISTRATIVE REPORT OF THE GENERAL SERVICES ADMINISTRATION CONFIRMS THE FACT AS REPORTED BY THE DEFENSE SUPPLY SERVICE THAT UNDERWOOD'S LETTER, BEARING DATE OF APRIL 11, 1962, WAS RECEIVED PRIOR TO THE OPENING OF BIDS UNDER THE SALES INVITATION. WHILE THE ADMINISTRATIVE REPORTS OF BOTH AGENCIES STATE THAT THE FIGURE "11" IN THE DATE APPEARS TO HAVE BEEN TYPED OVER AN ERASURE, THE DATE OF RECEIPT OF AN OFFER, AND NOT THE DATE SHOWN ON THE COVERING LETTER, IS THE CONTROLLING FACTOR IN DETERMINING THE TIMELINESS OF BIDS. ACCORDINGLY, REGARDLESS OF THE CAUSE THEREOF, THE ERASURE IN THE DATE OF THE LETTER IS NOT MATERIAL AND DOES NOT AFFECT THE PROPRIETY OF CONSIDERING THE REDUCTION CONTAINED THEREIN IN UNDERWOOD'S SCHEDULE PRICE FOR NEW TYPEWRITERS. BASED ON THAT OFFER, THE RECORD SHOWS THAT AT THE TIME OF BID OPENING UNDERWOOD'S SCHEDULE PRICE ON THE REQUIRED NEW TYPEWRITERS WAS $13,014.33 LESS THAN THE PRICE THEN IN EFFECT UNDER YOUR SCHEDULE CONTRACT. WHILE THE RECORD ALSO SHOWS THAT YOUR TRADE-IN OFFER ON THE SALES INVITATION EXCEEDED UNDERWOOD'S TRADE-IN OFFER, IT IS ADMINISTRATIVELY REPORTED THAT AN EVALUATION OF BIDS SHOWS THAT, AFTER CONSIDERING THESE OFFERS AND THE CASH OFFERS OF OTHER BIDDERS, THE NET COST OF 259 UNDERWOOD TYPEWRITERS WAS OVER $9,000 LESS THAN THE NET COST OF A LIKE TYPE AND QUANTITY OF ROYAL TYPEWRITERS.

CONCERNING THE CONTENTION THAT UNDERWOOD'S OFFER OF A PRICE REDUCTION, NOT HAVING BEEN ACCEPTED BY GENERAL SERVICES ADMINISTRATION UNTIL MAY 3, 1962, WAS NOT PROPERLY FOR CONSIDERATION BY DEFENSE SUPPLY SERVICE ON MAY 1, 1962, THE DATE OF THE AWARDS, IT IS REPORTED BY GENERAL SERVICES ADMINISTRATION THAT "UNLESS OTHERWISE SPECIFIED BY THE CONTRACTOR, OR UNLESS THE OFFER REQUIRES SOME CONCESSION ON THE PART OF THE GOVERNMENT * * * GSA HAS ALWAYS TREATED PRICE REDUCTION OFFERS IN SUCH SCHEDULE CONTRACTS AS BEING EFFECTIVE AS OF THE DATE OF THEIR RECEIPT.'

THE RECORD SHOWS THAT THE UNDERWOOD PRICE REDUCTION OFFER WAS ACCEPTED MAY 3, 1962, EFFECTIVE APRIL 11, 1962. NOT ONLY IS THE STATED EFFECTIVE DATE CONSISTENT WITH THE REPORTED POLICY OF GENERAL SERVICES ADMINISTRATION, BUT ALSO WE PERCEIVE NO LEGAL BASIS FOR ANY CONTRARY ACTION. SINCE REPRESENTATIVES OF THE GOVERNMENT HAVE NO ALTERNATIVE BUT TO ACCEPT AN UNCONDITIONAL VOLUNTARY OFFER OF A PRICE REDUCTION IN AN EXISTING CONTRACT, THE ACCEPTANCE ACTION BY GENERAL SERVICES ADMINISTRATION WAS A MERE FORMALITY AND IN NOWISE AFFECTED THE EFFECTIVE DATE OF THE PRICE REDUCTION. MOREOVER, SEPARATE AND APART FROM THE ACCEPTANCE ACTION OF GENERAL SERVICES ADMINISTRATION, SINCE UNDERWOOD'S OFFERED PRICE REDUCTION WAS COMMUNICATED TO DEFENSE SUPPLY SERVICE PRIOR TO BID OPENING, THE PRICE REDUCTION, AS CONTEMPLATED BY THE ABOVE-QUOTED PROVISIONS OF PARAGRAPH 8 OF THE SCHEDULE, WAS REQUIRED TO BE CONSIDERED BY THAT AGENCY IN MAKING AWARDS UNDER THE SALES INVITATION.

AS TO THE ALLEGED MISINFORMATION FURNISHED BY REPRESENTATIVES OF THE GENERAL SERVICES ADMINISTRATION AS TO WHETHER ANY FIRM HAD OFFERED A REDUCTION IN THE SCHEDULE PRICE OF TYPEWRITERS, IT IS REPORTED BY GENERAL SERVICES ADMINISTRATION THAT IT HAS BEEN ITS CONSISTENT POLICY FOR A NUMBER OF YEARS NOT TO DIVULGE ANY INFORMATION TO FEDERAL SUPPLY SCHEDULE CONTRACTORS AS TO ANY CHANGES IN PRICES, TERMS OR CONDITIONS OFFERED BY ANY OF THE CONTRACTORS UNTIL AFTER WRITTEN NOTICE OF THE ACCEPTANCE OF THE OFFER HAS BEEN ISSUED. WE DO NOT BELIEVE THAT THIS STATED POLICY VIOLATES ACCEPTED ETHICS OF EITHER PRIVATE OR GOVERNMENTAL PROCUREMENT PROCEDURES.

FINALLY, THE RECORD BEFORE THIS OFFICE DOES NOT SUPPORT YOUR ALLEGATION THAT ANY NEGOTIATIONS WERE CONDUCTED WITH UNDERWOOD OR THAT IT OTHERWISE WAS ACCORDED ANY SPECIAL PRIVILEGE. RATHER, ITS TIMELY OFFER OF A REDUCTION IN ITS SCHEDULE CONTRACT PRICE FOR TYPEWRITERS REPRESENTED PROPER COMPETITIVE EFFORTS, OPEN TO EACH OF THE OTHER SCHEDULE CONTRACTORS, IN VYING FOR AWARDS UNDER THE ADVERTISED TERMS OF THE SALES INVITATION. NOR DO WE PERCEIVE ANY PROPER LEGAL BASIS TO QUESTION THE ACTION OF DEFENSE SUPPLY SERVICE IN REFUSING TO CONSIDER YOUR OFFER, AFTER THE DATE OF AWARD TO UNDERWOOD, TO REDUCE YOUR SCHEDULE PRICE FOR TYPEWRITERS. IT IS A FUNDAMENTAL RULE, ESTABLISHED BY THE DECISIONS OF THIS OFFICE AND OF THE COURTS, THAT BIDDERS MAY NOT VARY THEIR PROPOSALS AFTER BIDS IN RESPONSE TO FORMALLY ADVERTISED PROCUREMENTS OR SALES ARE OPENED. TO HOLD OTHERWISE WOULD SOON REDUCE TO A FARCE THE WHOLE PROCEDURE OF AWARDING PUBLIC CONTRACTS ON AN OPEN COMPETITIVE BASIS. WAS SAID BY THE COURT IN CITY OF CHICAGO V. MOHR, 216 ILL. 320; 74 N.E. 1056---

"* * * IT IS OBVIOUS THAT TO ALLOW THE CHANGE OF A BID IN ANY MATERIAL RESPECT AFTER THE BIDS ARE OPEN IS A CLEAR VIOLATION OF THE PURPOSE, INTENT, AND SPIRIT OF THE LAW, * * * AND, TO SAY THE LEAST, IS FAVORITISM, IF NOT A FRAUD--- A DIRECT VIOLATION OF THE LAW--- AND CANNOT BE TOO STRONGLY CONDEMNED.'

WHILE, FOR THE REASONS STATED, YOUR PRICE REDUCTION OFFER COULD NOT LEGALLY BE CONSIDERED IN MAKING AWARDS UNDER THE SALES INVITATION, IT IS ADMINISTRATIVELY REPORTED AND CONFIRMED BY THE FACTS OF RECORD THAT, EVEN IF TIMELY SUBMITTED, THIS OFFER WOULD HAVE MADE NO DIFFERENCE IN THE AWARDS MADE. THE RECORD SHOWS THAT BY LETTER OF MAY 1, 1962, YOU OFFERED A PRICE REDUCTION OF $31.15 ON YOUR STANDARD ELECTRIC TYPEWRITER ON A SINGLE ORDER OF 250 OR MORE MACHINES. BASED ON THE PURCHASE MADE OF 259 TYPEWRITERS, OF WHICH ONLY 159 WERE STANDARD TYPEWRITERS, YOUR TOTAL PRICE WOULD HAVE BEEN REDUCED $4,952.85, RESULTING IN THE NET COST TO THE GOVERNMENT OF UNDERWOOD TYPEWRITERS STILL BEING OVER $4,000 LESS THAN THE NET COST OF ROYAL TYPEWRITERS.

SINCE THE REPORTED FACTS DO NOT SUBSTANTIATE YOUR ALLEGATION OF IRREGULARITIES IN THE AWARD MADE TO UNDERWOOD, YOUR PROTEST MUST BE AND IS DENIED.