B-151043, JUN. 21, 1963

B-151043, JUN. 21, 1963

TO MR. PAUL R. MINICH, JR.:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF MARCH 12, AND TO YOUR LETTER OF MARCH 15, 1963, WITH ENCLOSURES, WHEREIN YOU PROTESTED THE PROCUREMENT ACTION OF THE DEFENSE GENERAL SUPPLY CENTER, RICHMOND, VIRGINIA, IN CANCELLING INVITATION FOR BIDS NO. DSA-4-63-1065, ISSUED UNDER DATE OF NOVEMBER 9, 1962, AND OPENED DECEMBER 17, 1962.

DURING A VISIT TO OUR OFFICE ON MAY 21, 1963, YOU PARTICULARLY STRESSED THE FACT THAT THE DELIVERY SCHEDULE SET FORTH IN THE INVITATION FOR BIDS WAS BASED ON THE ASSUMPTION THAT THE GOVERNMENT WOULD MAKE AN AWARD BY JANUARY 10, 1963, AND THAT THE BID OF THE MOTO TRUC COMPANY WAS MADE IN THE LIGHT OF THE "ASSUMED" AWARD DATE. IN YOUR LETTER OF MARCH 15, 1963, YOUR FIRST PROTEST WAS DIRECTED TO THE CANCELLATION OF THE INVITATION FOR BIDS; YOUR SECOND PROTEST WAS DIRECTED TO THE NEGOTIATIONS AFTER THE REJECTION OF THE BID; AND YOUR FINAL PROTEST RELATED TO THE ALLEGED CHANGING OF PRICE OR DELIVERY AFTER THE CLOSE OF NEGOTIATIONS.

AS A BASIS FOR YOUR PROTEST YOU TOOK THE POSITION THAT THE MOTO TRUC COMPANY SHOULD HAVE BEEN AWARDED A CONTRACT ON THE BASIS OF THE BID SUBMITTED IN RESPONSE TO THE INVITATION FOR BIDS, AND YOU STATED, IN EFFECT, THAT THE DEFENSE GENERAL SUPPLY CENTER SHOULD NOT BE ALLOWED TO CANCEL AN INVITATION FOR BIDS FOR REASONS OF DELIVERY URGENCY AND THEN NEGOTIATE A CONTRACT CALLING FOR A LONGER DELIVERY. FOR THE REASONS SET FORTH IN YOUR LETTER YOU EXPRESSED THE VIEW THAT THE PROCEDURE FOLLOWED BY THE DEFENSE GENERAL SUPPLY CENTER IS CONTRARY TO THE APPLICABLE REGULATIONS AND, ACCORDINGLY, YOU REQUESTED THAT THE AGENCY BE INSTRUCTED TO ISSUE A SUSPEND WORK ORDER UNTIL OUR OFFICE HAS AN OPPORTUNITY TO INVESTIGATE THIS PROCUREMENT, OR BE INSTRUCTED TO AWARD THE CONTRACT TO THE MOTO TRUC COMPANY.

THE CITED INVITATION FOR BIDS CALLED FOR THE FURNISHING OF 35 TRUCKS IN ACCORDANCE WITH CERTAIN STATED SPECIFICATIONS, DELIVERY TO BE MADE TO VARIOUS DESTINATIONS ON OR BEFORE CERTAIN SPECIFIED DATES. TWO BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION, AND OPENED ON DECEMBER 17, 1962, ONE BY THE CLARK EQUIPMENT COMPANY, WHICH WAS DETERMINED TO BE NONRESPONSIVE BECAUSE OF EXCEPTIONS TAKEN TO THE SPECIFICATIONS, AND THE OTHER BY THE MOTO TRUC COMPANY.

UNDER DATE OF DECEMBER 27, 1962, THE CONTRACTING OFFICER REQUESTED THE INDUSTRIAL MOBILIZATION OFFICE, DEFENSE GENERAL SUPPLY CENTER, RICHMOND, VIRGINIA, TO FURNISH A REPORT CONCERNING THE CAPACITY OF THEMOTO TRUC COMPANY TO MAKE DELIVERY WITHIN THE SPECIFIED DATES. IN A REPORT DATED JANUARY 2, 1963, THE INDUSTRIAL MOBILIZATION OFFICE RECOMMENDED COMPLETE AWARD TO THE MOTO TRUC COMPANY BASED UPON A PRIOR PHYSICAL SURVEY OF THE PLANT ON AUGUST 8, 1962, AND A TELEPHONE CONVERSATION ON JANUARY 2, 1963, WITH MR. R. C. HEISER, SALES MANAGER. HOWEVER, ON JANUARY 21, 1963, THE CONTRACTING OFFICER CONTACTED MR. PAUL SCHRECK, VICE PRESIDENT OF THE MOTO TRUC COMPANY, TO DISCUSS ANOTHER CONTRACT WITH THAT CONCERN, AND DURING THE CONVERSATION MR. SCHRECK ADVISED THAT IT WOULD BE IMPOSSIBLE FOR HIS COMPANY TO MEET THE DELIVERY SCHEDULE. THE RECORD INDICATES THAT ON THE SAME DAY YOU CALLED THE CONTRACTING OFFICER TO ADVISE THAT PRIOR TO THE SUBMISSION OF THE BID YOU HAD DISCUSSED THE SAME WITH MR. I. P. SCHRECK, PRESIDENT OF THE MOTO TRUC COMPANY. THE NEXT DAY, JANUARY 22, 1963, MR. PAUL SCHRECK CALLED THE CONTRACTING OFFICER AND STATED THAT, NOTWITHSTANDING THE ADVICE GIVEN BY YOU ON JANUARY 21, 1963, HE HAD JUST DISCUSSED THE DELIVERY SCHEDULE WITH HIS FATHER, MR. I. P. SCHRECK, AND THEY BOTH AGREED THAT THEIR COMPANY COULD NOT DELIVER THE TRUCKS AS REQUIRED BY THE SCHEDULE.

UPON THE BASIS OF THE RECORD THEN BEFORE HIM, THE CONTRACTING OFFICER AGAIN REQUESTED THE INDUSTRIAL MOBILIZATION OFFICER TO CONDUCT A PLANT SURVEY OF THE COMPANY TO DETERMINE ITS CAPABILITIES IN MEETING THE DELIVERY REQUIREMENTS OF THE CITED INVITATION FOR BIDS. A PHYSICAL PLANT SURVEY WAS CONDUCTED AND THE INDUSTRIAL SPECIALIST MADE A RECOMMENDATION OF NO AWARD BECAUSE OF THE COMPANY'S INABILITY TO MEET THE DELIVERY REQUIREMENTS SINCE THE PRODUCTION CAPACITY OF THE PLANT WAS TAKEN UP THROUGH JULY 1963.

SINCE THE MOTO TRUC COMPANY IS A SMALL BUSINESS CONCERN, THE CONTRACTING OFFICER CONTACTED THE SMALL BUSINESS ADMINISTRATION FOR A CERTIFICATE OF COMPETENCY IN ACCORDANCE WITH ASPR 1-705.6, AND UNDER DATE OF JANUARY 31, 1963, THE CONTRACTING OFFICER WAS ADVISED BY SBA THAT THE COMPANY HAD DECIDED NOT TO FILE FOR A CERTIFICATE OF COMPETENCY. THEREFORE, IN ACCORDANCE WITH THE PROVISIONS OF ASPR 1 904.1, THE MOTO TRUC COMPANY WAS DETERMINED TO BE NONRESPONSIBLE, AND BY LETTER DATED FEBRUARY 1, 1963, ADDRESSED TO COOPER AND MINICH, INC., THE COMPANY WAS ADVISED THAT INVITATION FOR BIDS NO. DSA-4-63-1065 HAD BEEN CANCELLED. IT APPEARS FROM THE RECORD THAT THERE FOLLOWED CONSIDERABLE CORRESPONDENCE BETWEEN YOU AND THE CONTRACTING OFFICER. BY LETTER DATED FEBRUARY 11, 1963, THE COMPANY WAS ADVISED THAT THE REJECTION OF ITS BID WAS BASED UPON ITS NONRESPONSIBILITY DUE TO ITS LACK OF CAPACITY TO MEET THE DELIVERY REQUIREMENTS OF THE INVITATION FOR BIDS.

UNDER DATE OF FEBRUARY 11, 1963, PURSUANT TO THE AUTHORITY CONTAINED IN 10 U.S.C. 2304 (A) (10), THE CONTRACTING OFFICER PREPARED A DETERMINATION AND FINDINGS TO AUTHORIZE NEGOTIATION FOR THE REQUIREMENTS COVERED BY INVITATION FOR BIDS NO. DSA-4-63-1065, THIS DETERMINATION BEING BASED UPON THE FAILURE TO RECEIVE ANY RESPONSIVE BIDS BY A RESPONSIBLE BIDDER, ONE OF THE CIRCUMSTANCES LISTED IN ASPR 3-210.2 AS JUSTIFYING THE USE OF THAT AUTHORITY. THEREAFTER, THREE FIRMS, NAMELY, CLARK EQUIPMENT COMPANY, MOTO TRUC COMPANY, AND AUTOMATIC, A DIVISION OF YALE AND TOWNE, WERE REQUESTED TO SUBMIT QUOTATIONS FOR THE ITEMS AND TO STATE THE DELIVERY TIME IN THEIR OFFERS. THE INITIAL OFFER BY THE MOTO TRUC COMPANY QUOTED THE SAME PRICES AS HAD BEEN OFFERED ON THE CITED INVITATION FOR BIDS WITH DELIVERY OF 10 UNITS IN AUGUST, 12 UNITS IN SEPTEMBER, AND 13 UNITS IN OCTOBER PROVIDED AN AWARD WAS MADE BY MARCH 1, 1963. THIS OFFER, HOWEVER, WAS CONDITIONED UPON A WAIVER OF THE ENDURANCE TEST REQUIRED BY PARAGRAPH 4.3.3.2.1, AND IF THE TEST WAS NOT WAIVED, THE UNIT PRICE WOULD BE INCREASED BY $30 AND THE DELIVERY TIME EXTENDED BY ONE MONTH. ENDURANCE TESTING WAS, HOWEVER, REQUIRED BY THE TERMS OF THE NEGOTIATED PROCUREMENT. IT WAS POINTED OUT BY THE DEFENSE SUPPLY AGENCY THAT EVEN WITH THE OFFER OF REDUCTION FOR WAIVER OF ENDURANCE TESTING, THE PRICE SUBMITTED BY THE MOTO TRUC COMPANY WOULD HAVE BEEN HIGHER THAN THE BID SUBMITTED BY THE CLARK COMPANY. THUS APPEARS THAT THE DELIVERY OFFERED BY THE MOTO TRUC COMPANY WOULD BE 10 UNITS IN SEPTEMBER, 12 UNITS IN OCTOBER, AND 13 UNITS IN NOVEMBER.

AS PREVIOUSLY STATED, THE INITIAL BID OF THE CLARK COMPANY WAS HELD TO BE NONRESPONSIVE BECAUSE OF DEVIATIONS TO THE SPECIFICATIONS. AFTER PRELIMINARY NEGOTIATIONS, THE CLARK COMPANY, BY A TELEPHONE CONVERSATION ON MARCH 7, OFFERED TO SUPPLY THE ITEMS IN STRICT ACCORDANCE WITH THE SPECIFICATIONS WITH FINAL DELIVERY TO BE MADE ON OR BEFORE AUGUST 31, 1963. HOWEVER, BY A CONFIRMING TELEGRAM DATED MARCH 8, 1963, THE CLARK COMPANY OFFERED DELIVERY BY OCTOBER 15, 1963, BASED UPON AN AWARD BY MARCH 15. PREVIOUSLY, ON MARCH 6, 1963, THE CONTRACTING OFFICER CONTACTED THE MOTO TRUC COMPANY THROUGH MESSRS. COOPER AND MINICH, AND WAS ADVISED BY THE SECRETARY THAT, BASED UPON ADVICE GIVEN HER BY MR. TIEBOUT, THE SCHEDULE OF DELIVERY OFFERED IN LETTER OF FEBRUARY 20, 1963, WOULD STILL BE APPLICABLE IF AN AWARD COULD BE MADE BY MARCH 12. THE CONTRACTING OFFICER CONTACTED MR. TIEBOUT THE NEXT DAY AND ADVISED HIM TO SUBMIT HIS FINAL OFFER FOR THE MOTO TRUC COMPANY BY NOON ON MARCH 8, THAT BEING THE FINAL ROUND OF NEGOTIATIONS. BY TELEGRAM DATED MARCH 8, 1963, MESSRS. COOPER AND MINICH, ON BEHALF OF THE MOTO TRUC COMPANY, OFFERED TO DELIVER THE ITEMS AT THE SAME PRICE AS THE BID PRICE, WITH A $20 REDUCTION PER UNIT FOR WAIVER OF ENDURANCE TEST REQUIREMENTS, 10 UNITS TO BE DELIVERED IN AUGUST, 12 UNITS IN SEPTEMBER, AND 13 UNITS IN OCTOBER, PROVIDED AN AWARD WAS MADE BY THE CLOSE OF BUSINESS ON MARCH 11, 1963, AFTER WHICH THE ENTIRE OFFER WAS CANCELLED. SINCE THE QUOTATION BY THE CLARK COMPANY WAS THE LOWEST FINAL OFFER RECEIVED, A CONTRACT WAS AWARDED THAT CONCERN ON MARCH 12, 1963.

INSOFAR AS THE CANCELLATION OF THE INVITATION FOR BIDS IS CONCERNED, WE WISH TO POINT OUT THAT SUCH ACTION WAS NECESSARY SINCE THERE WERE NO RESPONSIBLE BIDS RECEIVED FROM RESPONSIBLE BIDDERS. THAT THE MOTO TRUC COMPANY WOULD BE UNABLE TO MAKE DELIVERY ARE REQUIRED WAS CONCEDED BY BOTH MESSRS. PAUL SCHRECK AND I. P. SCHRECK. ALSO, AS PREVIOUSLY POINTED OUT, A PHYSICAL PLANT SURVEY WAS CONDUCTED AND AS A RESULT THE INDUSTRIAL SPECIALIST MADE A RECOMMENDATION OF NO AWARD BECAUSE OF THE COMPANY'S INABILITY TO MEET THE DELIVERY REQUIREMENTS. IT IS OUR VIEW THAT UNDER THE EXISTING FACTS, THE CONTRACTING OFFICER TOOK APPROPRIATE ACTION IN REJECTING THE BID OF THE MOTO TRUC COMPANY. ACCORDINGLY, YOUR PROTEST ON THE BASIS OF AN ALLEGED IMPROPER CANCELLATION IS HEREBY DENIED.

YOU ALSO PROTESTED THE NEGOTIATION OF THE CONTRACT FOLLOWING THE REJECTION OF THE MOTO TRUC COMPANY BID. ON PAGE TWO OF YOUR LETTER OF MARCH 15, 1963, YOU STATED THAT PRIOR TO FEBRUARY 1, 1963, YOU WERE ADVISED BY CERTAIN COMPETITORS THAT THE DEFENSE GENERAL SUPPLY CENTER WAS REQUESTING PRICES AND DELIVERY OF THE MATERIAL COVERED BY THE INVITATION FOR BIDS. THE CONTRACTING OFFICER DENIES THE CORRECTNESS OF THAT STATEMENT, STATING THAT HE DID NOT COMMENCE NEGOTIATIONS UNTIL AFTER CANCELLATION OF THE INVITATION FOR BIDS ON FEBRUARY 1, 1963. IT APPEARS FROM YOUR LETTER THAT YOU PLACED CONSIDERABLE WEIGHT UPON THE FACT THAT IN NEGOTIATING A CONTRACT THE CONTRACTING OFFICER REQUESTED FROM THE VARIOUS FIRMS THE BEST DELIVERY POSSIBLE AND THE BEST POSSIBLE PRICES, IT BEING STATED BY YOU THAT IF THE MOTO TRUC COMPANY HAD BEEN ADVISED THAT THE DELIVERIES WERE NOT OF THE UTMOST IMPORTANCE AND THAT OCTOBER DELIVERY WAS SATISFACTORY, THEN THE PRICES QUOTED BY THAT CONCERN COULD HAVE BEEN REDUCED DUE TO THE ELIMINATION OF EXPEDITING MATERIAL AND MANUFACTURE.

IN THE FIRST INSTANCE, WE WISH TO SAY THAT THE FACT THAT THE NEGOTIATED DELIVERY DATES WERE LATER THAN THOSE SPECIFIED IN THE INVITATION FOR BIDS IS NOT A BASIS FOR PROTEST SINCE THE NEGOTIATIONS WERE CONDUCTED ON THE BASIS OF NEW DELIVERY DATES, ETC. THE RECORD SHOWS THAT THE FIRST OFFER BY THE MOTO TRUC COMPANY PURSUANT TO THE NEGOTIATIONS WAS SUBMITTED ON FEBRUARY 20, 1963, IT BEING STATED THEREIN THAT DELIVERY COULD BE MADE OF 10 UNITS IN AUGUST, 12 UNITS IN SEPTEMBER, AND 13 UNITS IN OCTOBER PROVIDED THAT AN AWARD WAS MADE BY MARCH 1, 1963. THIS DELIVERY SCHEDULE WAS, HOWEVER, BASED UPON A WAIVER OF ENDURANCE TESTING, IT BEING STATED IN THE LETTER OF FEBRUARY 20, 1963, IN EFFECT, THAT IF THE ENDURANCE TESTING WAS REQUIRED, THE DELIVERY DATES WOULD BE 10 UNITS IN SEPTEMBER, 12 UNITS IN OCTOBER, AND 13 UNITS IN NOVEMBER 1963. THE TELEGRAM OF MARCH 7, 1963, BY THE MOTO TRUC COMPANY, OFFERED THE SAME DELIVERY SCHEDULE.

IT WILL BE SEEN THAT UNDER THE FOREGOING DELIVERY SCHEDULE 10 UNITS WOULD BE DELIVERED ON 15 DAYS PRIOR TO THE DELIVERY SCHEDULE FOR ALL OF THE 35 UNITS COVERED BY THE CONTRACT WITH THE CLARK COMPANY. TWELVE UNITS WOULD BE DELIVERED BY OCTOBER 31, OR 15 DAYS AFTER DELIVERY OF ALL UNITS BY THE CLARK COMPANY, AND 13 UNITS WOULD BE DELIVERED BY NOVEMBER 30, OR 45 DAYS AFTER DELIVERY OF ALL UNITS BY CLARK. THE CONTRACTING OFFICER TAKES THE POSITION THAT THE MOTO TRUC COMPANY WAS NOT PREJUDICED IN ANY WAY DURING THE NEGOTIATIONS IN BEING LED TO BELIEVE THAT EARLIER DELIVERY WOULD BE USED IN THE EVALUATION OF THE BIDS, IT BEING STATED THAT AT NO TIME DID HE INDICATE THAT EVALUATION OF THE QUOTED PRICES WOULD BE BASED TO ANY EXTENT UPON THE EARLIER DELIVERY OFFERED AND THAT AT NO TIME DURING THE NEGOTIATIONS DID THE MOTO TRUC COMPANY INDICATE THAT ITS PRICES WOULD BE DIFFERENT IF DELIVERIES WERE EXTENDED BEYOND SEPTEMBER, OCTOBER, AND NOVEMBER. THE CONTRACTING OFFICER MAKES THE POSITIVE STATEMENT THAT THE EVALUATION WAS STRICTLY UPON THE BASIS OF THE TOTAL COST TO THE GOVERNMENT OF THE ITEMS REQUIRED. WE FIND NO BASIS FOR QUESTIONING THE PROCEDURE FOLLOWED BY THE CONTRACTING OFFICER IN THE NEGOTIATION OF THE CONTRACT WITH THE CLARK COMPANY.

IN THE CONCLUDING PARAGRAPH OF YOUR LETTER YOU EXPRESSED THE BELIEF THAT THE ARMED SERVICES PROCUREMENT REGULATION DOES NOT PERMIT CHANGING OF PRICES OR DELIVERIES AFTER THE CLOSE OF NEGOTIATIONS. ON THE CONTRARY, THE RECORD CLEARLY INDICATES THAT THE CONTRACTING OFFICER DEALT OPENLY WITH THE BIDDERS UP TO THE FINAL ROUND OF NEGOTIATIONS, AND MADE THE AWARD TO THE CLARK COMPANY AS THE LOW OFFEROR. FOR THE REASONS SET FORTH ABOVE WE CONCLUDE THAT YOUR PROTEST IS WITHOUT MERIT.