B-154347, OCT. 19, 1964

B-154347, OCT. 19, 1964

TO INTERDONATO, LOMBARD AND REILLY:

REFERENCE IS MADE TO YOUR PROTEST ON BEHALF OF NORTHEASTERN PETROLEUM, INCORPORATED, AGAINST THE ACTIONS TAKEN BY THE GENERAL SERVICES ADMINISTRATION IN THE PROCUREMENT OF NO. 6 FUEL OIL REQUIREMENTS FOR THE WASHINGTON, D.C. AREA FOR THE PERIOD COMMENCING SEPTEMBER 1, 1964.

BY INVITATION NO. WA-FB-R-E0412 ISSUED ON JANUARY 30, 1964, BIDS WERE REQUESTED FOR FURNISHING AN ESTIMATED 1,500,000 BARRELS OF NO. 6 FUEL OIL. THE INVITATION CONTAINED NO PROVISION AS TO IMPORT QUOTAS AND IT WAS CONTEMPLATED THE CONTRACTOR, OR CONTRACTORS, WOULD USE THEIR OWN QUOTAS WITH RESPECT TO THE IMPORTATION OF ANY OIL. IN THIS CONNECTION, THE RECORD SHOWS THAT THE GENERAL SERVICES ADMINISTRATION HAD BEEN REQUESTING THE DEPARTMENT OF INTERIOR TO GRANT IT AN IMPORT ALLOCATION QUOTA FOR SEVERAL YEARS WITHOUT SUCCESS.

THE INVITATION CONSISTED OF THREE PROPOSALS UNDER WHICH BIDS COULD BE SUBMITTED:

(A) PROPOSAL NO. 1 (PAGES 9-15) COVERED STORAGE FACILITIES, HANDLING AND DELIVERY SERVICES OF OIL TO THE POINTS INDICATED ON PAGES 23 THROUGH 46 OF THE INVITATION. THE PRIMARY STORAGE FACILITIES WERE REQUIRED TO BE SUITABLE TO BERTH AND UNLOAD OCEAN TANKERS. BIDDERS WERE ALSO REQUESTED TO QUOTE "RENEWAL PRICES" GIVING THE GOVERNMENT THE OPTION TO RENEW PROPOSAL NO. 1 FOR FOUR CONSECUTIVE YEARLY PERIODS.

(B) PROPOSAL NO. 2 (PAGES 15-17) COVERED THE FURNISHING OF THE FUEL OIL TO BE STORED AND DELIVERED UNDER PROPOSAL NO. 1. THE OIL WAS TO BE DELIVERED BY TANKER TO ANY POINT ON DEEP WATER DESIGNATED BY THE GOVERNMENT IN THE PORT AREAS OF NORFOLK, VIRGINIA; PINEY POINT, MARYLAND; OR BALTIMORE, MARYLAND.

(C) PROPOSAL NO. 3 (PAGES 18-22) COVERED THE FURNISHING, STORAGE AND DELIVERY OF THE FUEL OIL TO ANY ONE OR ALL OF THE SIX GROUPS OF DESTINATIONS SHOWN ON PAGES 23 THROUGH 46 OF THE INVITATION.

PARAGRAPH 8 OF PROPOSAL NO. 3 PROVIDED AS FOLLOWS:

"8.BASIS OF AWARD. THIS PARAGRAPH SUPPLEMENTS THE METHOD OF AWARD PARAGRAPH ON PAGE 4 INSOFAR AS IT PERTAINS TO PROPOSAL NO. 3. AT THE OPTION OF THE BIDDER, PRICES MAY BE QUOTED UNDER THIS PROPOSAL ON EITHER PART "A" (POINT-TO-POINT) OR PART "B" (GROUP BASIS). EXPERIENCE HAS INDICATED A SAVINGS ON THE "GROUP BASIS" SINCE BILLING METHODS ARE SIMPLIFIED.'

THE METHOD OF AWARD PARAGRAPH ON PAGE 4 OF THE INVITATION REFERRED TO ABOVE PROVIDED AS OLLOWS:

"2. METHOD OF AWARD: BIDS RECEIVED IN RESPONSE TO THIS INVITATION FOR BID WILL BE EVALUATED ON THE FOLLOWING BASIS:

"THE COST OF PROPOSAL NO. 1 (STORAGE AND DELIVERY PROPOSAL) WILL BE ADDED TO THE COST OF PROPOSAL NO. 2 (FUEL OIL NO. 6) AND COMPARED WITH THE COST OF PROPOSAL NO. 3 (FURNISH AND DELIVER FUEL OIL NO. 6 PROPOSAL). AWARD WILL BE MADE ON PROPOSAL NO. 1 AND 2 OR PROPOSAL NO. 3, EITHER PART A OR PART B TO THAT RESPONSIBLE BIDDER/S WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. BIDDERS, HOWEVER, ARE NOT REQUIRED TO BID BOTH PROPOSAL NO. 1 AND 2 TO BE CONSIDERED FOR AWARD. THE GOVERNMENT RESERVES THE RIGHT TO REJECT ANY OR ALL BIDS AND TO WAIVE INFORMALITIES AND MINOR IRREGULARITIES IN BIDS RECEIVED.'

THE ABOVE-QUOTED SPECIFIC PARAGRAPHS AS TO THE METHOD OF AWARD SUPERSEDED THE GENERAL PROVISIONS OF PARAGRAPH 8 (C) OF THE "TERMS AND CONDITIONS OF THE INVITATION FOR BIDS," STANDARD FORM 33 (OCTOBER 1957 EDITION) WHICH PROVIDED AS FOLLOWS:

"THE GOVERNMENT MAY ACCEPT ANY ITEM OR GROUP OF ITEMS OF ANY BID, UNLESS THE BIDDER QUALIFIES HIS BID BY SPECIFIC LIMITATIONS. UNLESS OTHERWISE PROVIDED IN THE SCHEDULE, BIDS MAY BE SUBMITTED FOR ANY QUANTITIES LESS THAN THOSE SPECIFIED; AND THE GOVERNMENT RESERVES THE RIGHT TO MAKE AN AWARD ON ANY ITEM FOR A QUANTITY LESS THAN THE QUANTITY BID UPON AT THE UNIT PRICES OFFERED UNLESS THE BIDDER SPECIFIES OTHERWISE IN HIS BID.'

THE DELIVERY POINTS REFERRED TO UNDER PROPOSALS NOS. 1 AND 3 AS SET OUT ON PAGES 23 THROUGH 46 COVER THE ENTIRE WASHINGTON, D.C. AREA AND FOR PURPOSES OF PROPOSAL NO. 3 ARE BROKEN DOWN INTO SIX GROUPS COVERING SPECIFIC GEOGRAPHICAL AREAS RANGING FROM 9 TO 49 DELIVERY LOCATIONS WITHIN THE TOTAL AREA. OF THE SIX GROUPS, GROUPS I AND VI ARE THE MOST DESIRABLE FROM A COST STANDPOINT DUE TO: (A) FEWER STOPS, (B) LARGER STORAGE FACILITIES, (C) LESS TANK WAGON DELIVERY REQUIREMENTS, AND (D) HIGHER PERCENTAGE OF THE OIL THAT CAN BE DELIVERED UNRESTRICTED AS TO TIME. GROUPS II, III, IV, AND V ARE LESS DESIRABLE BECAUSE OF THE REVERSE OF THE ABOVE REASONS.

THE BIDS RECEIVED IN RESPONSE TO INVITATION WA-FB-R-E0412 WERE OPENED ON APRIL 10, 1964. STEUART PETROLEUM COMPANY WAS THE ONLY BIDDER ON PROPOSAL NO. 1 AND QUOTED A PRICE OF $0.462 PER BARREL. THE COMPANY ALSO QUOTED THE SAME PRICE FOR THE FOUR ANNUAL RENEWAL OPTION PERIODS. ON PROPOSAL NO. 2, PARAGON OIL COMPANY, DIVISION OF TEXACO, INCORPORATED, SUBMITTED THE ONLY BID OF $0.2525 PER BARREL TO BE ADDED TO THE POSTED PRICE OF $2.05 PER BARREL, WHICH PRICE IS ADJUSTABLE WITH THE FLUCTUATIONS IN THE POSTED PRICE DURING THE CONTRACT PERIOD. THE SAME PRICE WAS QUOTED FOR DELIVERY TO ANY ONE OF THE THREE DESTINATIONS- - NORFOLK, VIRGINIA, PINEY POINT, MARYLAND, OR BALTIMORE, MARYLAND. ON PROPOSAL NO. 3, BIDS WERE RECEIVED FROM NORTHEASTERN PETROLEUM, INCORPORATED, ON GROUPS I AND III; AND FROM SHIPLEY-HUMBLE DIVISION OF YORK-SHIPLEY, INCORPORATED, ON GROUP VI. NO BIDS WERE RECEIVED ON GROUPS II, IV, AND V.

BEFORE A DECISION WAS MADE AS TO WHAT AWARDS, IF ANY, SHOULD BE MADE ON THE BIDS RECEIVED UNDER THE INVITATION, THE SECRETARY OF THE INTERIOR, BY LETTER DATED MAY 7, 1964, GRANTED THE GENERAL SERVICES ADMINISTRATION AN IMPORT ALLOCATION FOR 1,000,000 BARRELS OF FUEL OIL. IT IS REPORTED THAT THE GENERAL SERVICES ADMINISTRATION HAD NO ADVANCE KNOWLEDGE THAT THE IMPORT ALLOCATION WOULD BE GRANTED, AND IN FACT, AS HERETOFORE STATED, THEY HAD BEEN UNSUCCESSFULLY REQUESTING SUCH AN ALLOCATION FOR THE PRECEDING SEVERAL YEARS. THE GENERAL SERVICES ADMINISTRATION CONSIDERED THAT THE RECEIPT OF THE IMPORT ALLOCATION CHANGED THE CONDITIONS ENTIRELY, SINCE IT WAS UNDERSTOOD THAT A PRICE DIFFERENTIAL OF $0.40 TO $0.50 A BARREL EXISTED BETWEEN OIL TO BE PROCURED WHERE THE BUYER SUPPLIES THE IMPORT ALLOCATION, AND WHERE THE SELLER USES ITS OWN IMPORT ALLOCATION. FURTHERMORE, IT WAS BELIEVED THAT WITH THE BUYER SUPPLYING AN IMPORT ALLOCATION FOR TWO-THIRDS OF THE OIL NEEDED, A BIDDER MIGHT BE WILLING TO OFFER A BETTER PRICE ON THE OTHER THIRD. IN VIEW THEREOF, THE GENERAL SERVICES ADMINISTRATION DECIDED THAT IT WOULD BE IN THE BEST INTERESTS OF THE GOVERNMENT TO REJECT ALL BIDS AND TO READVERTISE ITS NEEDS FOR FUEL OIL UNDER THE CIRCUMSTANCES THEN EXISTING.

ON MAY 22, 1964, THE GENERAL SERVICES ADMINISTRATION ISSUED A REVISED INVITATION FOR BIDS. THIS SECOND INVITATION IS SIMILAR TO THE FIRST INVITATION IN MOST RESPECTS. THIS INVITATION ALSO CONSISTED OF THREE PROPOSALS (1) PROPOSAL NO. 1, FOR STORAGE AND DELIVERY ONLY OF FUEL OIL; (2) PROPOSAL NO. 2, FOR FURNISHING ONLY OF FUEL OIL; AND (3) PROPOSAL NO. 3, FOR FURNISHING, STORAGE AND DELIVERY OF FUEL OIL. ADDITIONALLY, ON PROPOSAL NO. 2, BIDS WERE PERMITTED FOR OIL WITH AN IMPORT ALLOCATION (1,000,000 BARRELS), OR OIL WITHOUT IMPORT ALLOCATION (500,000 BARRELS), OR ON A COMBINATION BASIS WITH IMPORT ALLOCATION FOR TWO-THIRDS OF THE OIL (1,500,000 BARRELS). ON PROPOSAL NO. 3 BIDDERS WERE SPECIFICALLY PERMITTED TO BID ON ONE OR ALL OF THE SIX DELIVERY GROUPS, WITHOUT IMPORT ALLOCATION OR WITH A TWO-THIRDS ALLOCATION.

IN THE SECOND INVITATION THE SPECIFIC PARAGRAPH COVERING THE BASIS OF AWARD WAS MODIFIED TO READ AS FOLLOWS:

"2. METHOD OF AWARD--- BIDS RECEIVED IN RESPONSE TO THIS INVITATION FOR BIDS WILL BE EVALUATED ON THE FOLLOWING BASIS: THE COST OF PROPOSAL NO. 2 (FUEL OIL NO. 6) AND COMPARE WITH THE COST OF PROPOSAL NO. 3) FURNISHED AND DELIVERED FUEL OIL NO. 6). AWARD WILL BE MADE ON PROPOSAL NOS. 1 AND 2 OR PROPOSAL NO. 3, OR ANY COMBINATION OF PROPOSALS NO. 1, NO. 2 AND NO. 3 WHICH PROVIDES COMPLETE COVERAGE OF ANNUAL OIL REQUIREMENTS TO THAT RESPONSIBLE BIDDER/S) WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE DELIVERED TO POINT OF USE AND OTHER FACTORS CONSIDERED. BIDDERS, HOWEVER, ARE NOT REQUIRED TO BID BOTH PROPOSAL NOS. 1 AND 2 TO BE CONSIDERED FOR AWARD. ON PROPOSAL NO. 2, BIDS WILL BE CONSIDERED ON OIL WITH ALLOCATION (COLUMN X) OR WITHOUT ALLOCATION (COLUMN Y), OR A COMBINATION OF THE TWO ON A 2/3-1/3 BASIS (COLUMN Z). ON PROPOSAL NO. 3, BIDS WILL BE CONSIDERED SEPARATELY FOR EACH DELIVERY ZONE WITHOUT ALLOCATION (COLUMN A) AND WITH 2/3 ALLOCATION (COLUMN B). THE GOVERNMENT RESERVES THE RIGHT TO REJECT ANY OR ALL BIDS AND TO WAIVE INFORMALITIES AND MINOR IRREGULARITIES IN BIDS RECEIVED.'

THE APPARENT PURPOSE OF THE ABOVE CHANGE WAS TO PERMIT AN AWARD UNDER PROPOSAL NO. 1 ON A PARTIAL BASIS, RATHER THAN ON "ALL OR NONE" BASIS AS WAS PROVIDED IN THE FIRST INVITATION.

THE BIDS RECEIVED IN RESPONSE TO THE SECOND INVITATION WERE OPENED ON JUNE 22, 1964. STEUART PETROLEUM COMPANY AGAIN WAS THE ONLY BIDDER ON PROPOSAL NO. 1 AND QUOTED THE SAME PRICE OF $0.462 PER BARREL, AS WAS QUOTED UNDER THE FIRST INVITATION, AND ALSO QUOTED THE SAME PRICE FOR THE FOUR ANNUAL RENEWAL OPTION PERIODS. BIDS WERE RECEIVED FROM SEVERAL OIL COMPANIES UNDER PROPOSAL NO. 2.

ON PROPOSAL NO. 3, THREE BIDS WERE RECEIVED. STEUART PETROLEUM COMPANY QUOTED ONE PRICE (WITH TWO-THIRDS ALLOCATION) FOR ALL SIX GROUP DESTINATIONS "ALL OR NONE.' NORTHEASTERN PETROLEUM, INCORPORATED, QUOTED ON GROUPS NO. I AND III ON THE BASIS OF TWO THIRDS ALLOCATION AND WITHOUT ALLOCATION. SHIPLEY-HUMBLE QUOTED ON GROUP VI ON THE BASIS OF TWO-THIRDS ALLOCATION AND ALSO WITHOUT ALLOCATION. NO BIDS WERE RECEIVED ON GROUPS II, IV, AND V INDIVIDUALLY. ON THE BASIS OF SPLITTING AN AWARD UNDER PROPOSAL NO. 1, AS APPARENTLY AUTHORIZED BY THE METHOD OF AWARD PARAGRAPH QUOTED ABOVE, AN INITIAL EVALUATION INDICATED THAT THE LOWEST COST COULD BE OBTAINED FROM A COMBINATION OF BIDS AS FOLLOWS: ON PROPOSAL NO. 1, AN AWARD TO STEUART PETROLEUM COMPANY FOR STORAGE AND DELIVERY TO GROUPS II, III, IV, AND V; ON PROPOSAL NO. 2, AN AWARD TO HESS OIL AND CHEMICAL CORPORATION FOR FURNISHING 1,000,000 BARRELS OF OIL WITH IMPORT ALLOCATION; AND ON PROPOSAL NO. 3, WITHOUT IMPORT ALLOCATION, AWARDS TO NORTHEASTERN PETROLEUM, INCORPORATED, FOR FURNISHING, STORAGE AND DELIVERY TO GROUP I DESTINATIONS, AND TO SHIPLEY-HUMBLE FOR FURNISHING, STORAGE AND DELIVERY TO GROUP VI DESTINATIONS. IT WAS FIGURED THAT SUCH SPLIT AWARDS, ON THE BASIS OF THE ESTIMATED QUANTITY, WOULD HAVE AMOUNTED TO $3,533,646, OR APPROXIMATELY $7,500 LESS THAN AN AWARD TO STEUART PETROLEUM COMPANY UNDER PROPOSAL NO. 3 FOR ALL SIX GROUP DESTINATIONS.

UPON LEARNING THAT THE GENERAL SERVICES ADMINISTRATION WAS CONSIDERING THE POSSIBILITY OF SPLIT AWARDS, STEUART PETROLEUM COMPANY ADVISED GENERAL SERVICES ADMINISTRATION BY LETTER DATED JULY 1, 1964, IN PART AS FOLLOWS:

"WE WERE SURPRISED TO LEARN, SHORTLY AFTER THE OPENING OF THE ABOVE SUBJECT INVITATION FOR BIDS, FROM REPRESENTATIVES OF REGION 3 AS WELL AS FROM YOUR OFFICE, THAT OUR BID ON PROPOSAL NO. 1 IS BEING INTERPRETED AS A BID TO STORE AND DELIVER BARRELS OF NO. 6 FUEL OIL LESS THAN MAY BE REQUIRED FOR ALL LOCATIONS IN GROUPS I THROUGH VI AS SET FORTH ON PAGES 22 THROUGH 44 OF THE INVITATION.

"OUR BID OF .462 PER BARREL FOR THE PERIOD OF SEPTEMBER 1, 1964 AND ENDING JUNE 30, 1965, AS WELL AS THE FOUR (4) OPTION ANNUAL RENEWAL PERIODS EXTENDING THROUGH JUNE 30, 1969, WAS BASED UPON STORING AND DELIVERY OF THE REQUIREMENTS OF GENERAL SERVICES ADMINISTRATION UP TO 1,500,000 BARRELS, WITH A 25 PERCENT OVERAGE, FOR THE ENTIRE SIX (6) GROUP LOCATIONS SET FORTH ON PAGES 22 THROUGH 44.

"OUR BID WAS NOT DIVIDED AS TO DELIVERY SERVICES FOR THE SEPARATE GROUPS OR THE SEPARATE INDIVIDUAL LOCATIONS THEREOF, NOR DOES PROPOSAL NO. 1 LEND ITSELF TO SUCH A METHOD OF BIDDING. THERE IS AN OBVIOUS COST DIFFERENTIAL IN DELIVERY SERVICE TO THE SEPARATE GROUPS AND EVEN AS TO THE SEPARATE LOCATIONS WITHIN EACH GROUP. ONLY IF ALL GROUPS ARE AWARDED IS A SINGLE PRICE ECONOMICALLY FEASIBLE.

"UNDER PARAGRAPH 3 OF PROPOSAL NO. 1, IT IS PROVIDED THE BIDDER SHALL PROVIDE STORAGE FACILITIES, HANDLING AND DELIVERY SERVICE TO THE POINTS ON PAGES 22 THROUGH 44. THIS PART OF THE BID INVITATION DOES NOT PERMIT NOR DOES IT IMPLY A DIVISIBILITY OF THESE LOCATION GROUPS FOR DELIVERY PURPOSES. SUCH A DIVISION IS ONLY PERMITTED OR INDICATED UNDER PROPOSAL 3 WHICH PROVIDES FOR SEPARATE BIDS FOR THE SUPPLY OF OIL AND DELIVERY SERVICES TO THE SIX (6) SEPARATE GROUPS OF LOCATIONS, WHICH CAN BE BID SEPARATELY FOR ONE OR MORE GROUPS, OR ON AN "ALL OR NONE" BASIS, AND WE SO BID ON PROPOSAL NO. 3. "ALSO, UNDER PARAGRAPH 3 OF PROPOSAL NO. 1, THE BIDDER IS REQUIRED TO PROVIDE PRIMARY STORAGE AND TERMINALLING SERVICES AT A DEEP WATER TERMINAL FOR 9,000,000 GALLONS. THIS AGAIN DOES NOT PROVIDE DIVISIBILITY NOR INDICATE THE SAME.

"UNDER PARAGRAPH 4 OF PROPOSAL NO. 1, THE BIDDER IS REQUIRED TO HAVE THE SERVICE EQUIPMENT TO RECEIVE AND UNLOAD OCEAN TANKERS, STORE AND DELIVER THE GOVERNMENT OWNED OIL (PURCHASED UNDER PROPOSAL NO. 2) TO THE LOCATIONS FOR THE SIX (6) GROUPS SHOWN ON PAGES 22 THROUGH 44 OF THE INVITATION. AGAIN, THIS DOES NOT INDICATE DIVISIBILITY.

"UNDER PARAGRAPH 5 OF PROPOSAL NO. 1, THERE IS SET FORTH THE MONTHLY ESTIMATE OF DELIVERIES. AGAIN, THESE ESTIMATES ARE NOT DIVISIBLE AS TO THE SEPARATE GROUP LOCATIONS.

"UNDER PARAGRAPH 12 OF PROPOSAL NO. 1, IT IS STATED THAT THE BIDDER IS OBLIGATED TO STORE AND DELIVER UP TO 125 PERCENT OF THE ESTIMATED 1,500,000 BARRELAGE CALLED FOR ON THE BIDS. AGAIN, THIS DOES NOT STATE THAT THE 125 PERCENT COVERS A DIVISIBLE PART THEREOF.

"AS YOU WELL KNOW, WE HAVE FURNISHED STORAGE FACILITIES AND DELIVERY SERVICES OF NO. 6 FUEL OIL FOR THE GENERAL SERVICES ADMINISTRATION, TO HEAT GOVERNMENT BUILDINGS IN THE WASHINGTON METROPOLITAN AREA, FOR BETTER THAN TWENTY YEARS, AND SINCE 1950, EXCEPT FOR A TWO-YEAR PERIOD, YOU HAVE UTILIZED OUR DEEP WATER TERMINAL AT PINEY POINT, MARYLAND, TO STORE AND TERMINAL TANKER CARGO LOTS FOR YOUR ENTIRE NO. 6 FUEL OIL REQUIREMENTS, AND WE HAVE FURNISHED THE DELIVERY SERVICES FOR THESE ENTIRE REQUIREMENTS TO ALL OF THE LOCATIONS. * * *

"IN ALL THE YEARS OF BIDDING FOR THE STORAGE AND DELIVERY OF NO. 6 FUEL OIL FOR THE GENERAL SERVICES ADMINISTRATION, WE HAVE BID IN THE SAME MANNER FOR THE ENTIRE REQUIREMENTS, AND HAVE NEVER BEEN REQUIRED TO INDICATE THIS SINGLE BID AS AN "ALL OR NONE" BASIS, SIMPLY BECAUSE THIS WAS NOT REQUIRED UNDER THE BID PROPOSALS INASMUCH AS THE AWARD HAD TO BE FOR A SEPARATE CONTRACT TO SUPPLY THE OIL AND A SEPARATE CONTRACT TO STORE AND DELIVER THE OIL, OR IN THE ALTERNATIVE FOR A SINGLE CONTRACT COMBINING SUPPLY AND DELIVERY.

"PROPOSAL NO. 1 FOR THE STORAGE AND DELIVERY SERVICES SIMPLY DOES NOT LEND ITSELF TO DIVISIBILITY, BUT IS IMPLIEDLY AN "ALL OR NONE" BID BASIS, WHICH IS APPARENT FROM EXAMINING THE ENTIRE CONTENTS OF THE ABOVE BID INVITATION. THIS HAS LIKEWISE BEEN TRUE IN THE PRIOR INVITATIONS, INCLUDING THOSE ON WHICH WE HAVE BEEN THE SUCCESSFUL BIDDER. IN ORDER TO MAKE SUCH A DIVISIBLE BID ON PROPOSAL NO. 1 THE BIDDER WOULD BE REQUIRED TO ADD ADDENDUM SHEETS FOR EACH GROUP OF LOCATIONS. TO OTHERWISE INTERPRET THIS BID PROPOSAL, WOULD ENABLE GSA TO FORCE THE BIDDER TO STORE AND DELIVER 100,000 BARRELS OR LESS TO ONLY ONE GROUP OF LOCATIONS OR EVEN TO CERTAIN LOCATIONS WITHIN A GROUP. IN VIEW OF THE OBVIOUS WIDE DISCREPANCY IN COSTS OF DELIVERY SERVICES TO THE VARIOUS LOCATIONS, IT WOULD APPEAR CLEAR THAT OUR SINGLE BID WAS FOR THE ENTIRE REQUIREMENT AT ALL LOCATIONS AND NOT DIVISIBLE FOR ANY PART THEREOF AS MAY BE SELECTED BY GSA. WE CERTAINLY DID NOT INTEND THAT GSA WOULD BE ENABLED TO PICK AND CHOOSE THE GROUP LOCATIONS FOR WHICH WE WOULD STORE AND DELIVER.

"WE HAVE, HOWEVER, NOW BEEN ADVISED BY REPRESENTATIVES OF GSA THAT, DUE TO A CHANGE IN WORDING, AS CONTAINED IN PARAGRAPH 2, PAGE 4, OF THE BID INVITATION UNDER METHOD OF AWARD, FROM THE PRIOR INVITATIONS AND EVEN FROM THE MOST RECENT INVITATION NO. WA-FB-R-E0412-4-10-64, APRIL 10, 1964, COVERING THE 1964-1965 YEAR, WHICH WAS WITHDRAWN, TO THE EFFECT THAT THE AWARD WOULD BE MADE ON PROPOSALS NO. 1 AND 2 OR PROPOSAL NO. 3 (I.E., THE WORDING OF THE PRIOR BID INVITATIONS), OR ANY COMBINATION OF PROPOSALS 1, 2 AND 3 (THIS LATTER BEING NEWLY ADDED), GSA ASSERTS THAT IT CAN NOW INTERPRET OUR BID ON PROPOSAL NO. 1 AS DIVISIBLE AND CAN REQUIRE OUR COMPANY TO STORE AND TERMINAL LESS THAN YOUR TOTAL REQUIREMENTS FOR ALL DELIVERY LOCATIONS AND SELECT THE QUANTITY TO BE STORED AS WELL AS THE PARTICULAR GROUP LOCATIONS FOR DELIVERY SERVICE. YOUR REPRESENTATIVES ALSO POINT TO CLAUSE 8 (C) OF THE TERMS AND CONDITIONS OF THE INVITATION APPEARING ON THE REVERSE SIDE OF FORM 33, AS ANOTHER BASIS FOR THIS INTERPRETATION.

"THIS LATTER CLAUSE, OF COURSE, HAS BEEN CONTAINED IN THE PRIOR BID INVITATIONS, BUT HAS NEVER BEEN APPLICABLE BECAUSE THE STORAGE AND DELIVERY PROPOSAL ALWAYS HAD TO BE COMBINED WITH THE SUPPLY PROPOSAL IN ORDER TO BE WORKABLE.

"WE ARE OF THE OPINION THAT THE CHANGE IN WORDING WITH RESPECT TO THE METHOD OF AWARD STILL DOES NOT PERMIT OUR BID ON PROPOSAL NO. 1 TO BE INTERPRETED TO BE FOR STORAGE AND DELIVERY OF LESS THAN GSA'S ENTIRE REQUIREMENTS FOR ALL LOCATIONS.

"FRANKLY, HOWEVER, WE DID NOT NOTICE THIS CHANGE IN WORDING, AND CONSEQUENTLY, IF GSA'S INTERPRETATION OF OUR BID ON PROPOSAL NO. 1 IS TO THE EFFECT THAT IT IS DIVISIBLE AND FOR LESS THAN THE ENTIRE STORAGE AND DELIVERY REQUIREMENTS FOR ALL LOCATIONS AS SPECIFIED IN GROUPS I THROUGH VI ON PAGES 22 THROUGH 44 OF THE BID INVITATION, WE SUBMIT THAT OUR BID ON PROPOSAL NO. 1 IS A MISTAKE, AS WE DID NOT INTEND TO BID FOR STORAGE AND DELIVERY SERVICES FOR LESS THAN GSA'S REQUIREMENTS FOR THE ENTIRE SIX (6) GROUPS OF LOCATIONS.

"AS STATED ABOVE, OUR COMPANY HAD NO INTENTION WHATSOEVER OF BIDDING ON PROPOSAL NO. 1 FOR LESS THAN YOUR ENTIRE REQUIREMENTS, AND OUR BID DOES NOT CARRY ANY INDICATION OF SUCH A DIVISIBLE BID. HOWEVER, UNDER PROPOSAL NO. 3 FOR SUPPLY AND DELIVERY SERVICES, WHICH SPECIFICALLY LENDS ITSELF TO DIVISIBILITY, WE DID SPECIFY AN "ALL OR NONE" BASIS, AS WOULD BE REQUIRED IF WE DID NOT WANT A PARTIAL AWARD. THIS MISTAKE ON OUR PART IN OVERLOOKING THE CHANGE IN WORDING IN THE ABOVE BID INVITATION WAS COMMUNICATED PROMPTLY TO REGION 3 REPRESENTATIVES AS SOON AS THEY CALLED OUR ATTENTION, SHORTLY AFTER THE OPENING OF THE BIDS ON JUNE 22, 1964, TO THEIR INTERPRETATION OF OUR BID IN PROPOSAL NO. 1 BY REASON OF THE CHANGE IN WORDING. WE LIKEWISE REITERATED THIS OVERSIGHT TO YOU AT OUR CONFERENCE OF JUNE 29, 1964.

"IF YOU DO NOT AGREE WITH OUR INTERPRETATION OF OUR BID ON PROPOSAL NO. 1 TO THE EFFECT THAT IT IS NOT DIVISIBLE AND IS IN FACT FOR YOUR ENTIRE STORAGE AND DELIVERY REQUIREMENTS FOR GROUPS I THROUGH VI ON AN "ALL OR NONE" BASIS, WE RESPECTFULLY ADVISE, THEREFORE, THAT OUR BID ON PROPOSAL NO. 1 OF SUBJECT BID INVITATION IS HEREBY WITHDRAWN DUE TO AN HONEST MISTAKE IN OVERLOOKING THE CHANGE IN WORDING ON SAID INVITATION FROM PRIOR INVITATIONS FOR SIMILAR PROPOSALS AND IN MISINTERPRETING THAT PORTION OF THE BID INVITATION.'

ALSO IN LETTERS DATED JULY 21 AND 23, 1964, STEUART PETROLEUM COMPANY REITERATED ITS CONTENTIONS THAT PROPOSAL NO. 1 WAS NOT SUSCEPTIBLE TO DIVISION AND THAT, IF THE GENERAL SERVICES ADMINISTRATION CONSIDERED PROPOSAL NO. 1 WAS DIVISIBLE, A MISTAKE HAD BEEN MADE IN ITS BID AND WITHDRAWAL OF THE BID WAS REQUESTED.

THE GENERAL SERVICES ADMINISTRATION CONSIDERED THE REQUEST ON A MISTAKE- IN-BID BASIS AND, PURSUANT TO THE PROVISIONS OF PARAGRAPH 1 2.406-3 OF THE FEDERAL PROCUREMENT REGULATIONS, DETERMINED THAT STEUART PETROLEUM COMPANY HAD IN FACT MADE A "HONEST MISTAKE" AND WAS ENTITLED TO WITHDRAW ITS BID UNDER PROPOSAL NO. 1. IN VIEW THEREOF, STEUART PETROLEUM COMPANY'S BID UNDER PROPOSAL NO. 3, BECAME LOW AND, IN FACT, WAS THEN THE ONLY BID, OR COMBINATION OF BIDS, UNDER WHICH COMPLETE COVERAGE COULD BE OBTAINED. THE AWARD WAS MADE TO STEUART PETROLEUM COMPANY ON ITS BID UNDER PROPOSAL NO. 3.

YOU FIRST PROTEST THE REJECTION OF ALL BIDS UNDER THE FIRST INVITATION. IT IS CONTENDED THAT THE RIGHTS OF THE ORIGINAL BIDDERS WERE PREJUDICED BY THE PUBLIC DISCLOSURE OF THEIR BID PRICES. IT IS URGED THAT THE GENERAL SERVICES ADMINISTRATION SHOULD HAVE AT LEAST MADE AWARDS TO THE ORIGINAL LOW BIDDERS FOR THE 500,000 BARRELS OF OIL NOT COVERED BY THE IMPORT ALLOCATION.

WHILE A FINAL DECISION APPARENTLY WAS NOT MADE BY THE GENERAL SERVICES ADMINISTRATION AS TO WHAT AWARDS, IF ANY, SHOULD BE MADE IN CONNECTION WITH THE BIDS RECEIVED UNDER THE FIRST INVITATION, IT IS TO BE NOTED THAT THERE COULD HAVE BEEN NO ASSURANCE THAT NORTHEASTERN PETROLEUM, INCORPORATED, THE ONLY BIDDER ON GROUPS I AND III UNDER PROPOSAL NO. 3, AND SHIPLEY-HUMBLE, DIVISION OF YORK-SHIPLEY, INCORPORATED, THE ONLY BIDDER ON GROUP VI UNDER PROPOSAL NO. 3, WOULD HAVE RECEIVED AWARDS EVEN IF THE INVITATION HAD NOT BEEN CANCELED. BEFORE AWARDS COULD HAVE BEEN MADE TO EITHER OF THESE TWO FIRMS, SINCE NO BIDS WERE RECEIVED ON GROUPS II, IV, AND V UNDER PROPOSAL NO. 3, THE GENERAL SERVICES ADMINISTRATION WOULD HAVE HAD TO DETERMINE WHETHER IT WAS IN THE BEST INTEREST OF THE GOVERNMENT TO MAKE AWARDS TO STEUART PETROLEUM COMPANY AND PARAGON OIL COMPANY UNDER PROPOSALS NOS. 1 AND 2 FOR THE GOVERNMENT'S ENTIRE NEEDS, OR TO MAKE AWARDS FOR ONLY A PART OF ITS NEEDS (APPROXIMATELY ONE-HALF) AND READVERTISE OR NEGOTIATE FOR THE BALANCE. IT IS ALSO TO BE NOTED THAT SUCH PARTIAL AWARDS WOULD HAVE INCLUDED THE MORE DESIRABLE GROUP DESTINATIONS AND LEFT FOR READVERTISING ONLY THE LESS DESIRABLE GROUP DESTINATIONS.

IN ANY EVENT, HOWEVER, THE RECEIPT OF THE IMPORT ALLOCATION WAS CONSIDERED BY THE GENERAL SERVICES ADMINISTRATION TO AFFECT THE ENTIRE PROCUREMENT TO SUCH AN EXTENT AS TO REQUIRE, IN THE INTEREST OF THE GOVERNMENT, THE REJECTION OF ALL BIDS AND READVERTISING UNDER THE CHANGED CONDITIONS. THERE IS NO BASIS UPON WHICH WE COULD QUESTION THIS DETERMINATION. THE CORRECTNESS OF THE ADMINISTRATIVE DETERMINATION MADE IS SUPPORTED BY THE FACT THAT THERE IS A NET PROJECTED OVERALL SAVINGS OF APPROXIMATELY $500,000 UNDER THE PRESENT CONTRACT AS COMPARED WITH LAST YEAR-S.

YOU ALSO PROTEST THE ACTION TAKEN BY THE GENERAL SERVICES ADMINISTRATION IN PERMITTING STEUART PETROLEUM COMPANY TO WITHDRAW ITS BID UNDER PROPOSAL NO. 1 UNDER THE SECOND INVITATION ON ACCOUNT OF MISTAKE. IN THE MEMORANDUM IN SUPPORT OF NORTHEASTERN PETROLEUM, INC.'S CONTENTIONS, SUBMITTED WITH YOUR LETTER OF SEPTEMBER 2, IT IS STATED AS FOLLOWS:

"OUR ENTITLEMENT TO THE AWARD, BY VIRTUE OF OUR BID (IN COMBINATION WITH OTHER BIDDERS) IS BASED ON THE FOLLOWING CONTENTIONS:

"/1) THE LANGUAGE CONTAINED IN THE "THE BID" IS CONTROLLING.

"/2) PROPOSAL NO. 1 WAS DIVISIBLE AND INTENDED TO BE SUCH UNDER THE PROVISIONS OF THE "THE .'

"/3) JUSTICE AND EQUITY NECESSITATE THE VACATING OF THIS AWARD AND GRANTING "THE BID" TO A COMBINATION OF BIDDERS, AMONG WHOM IS NORTHEASTERN PETROLEUM, INC.'

AT THE OUTSET IT IS TO BE NOTED THAT THE RESULT IS THE SAME WHETHER THE GENERAL SERVICES ADMINISTRATION DETERMINED THAT PROPOSAL NO. 1 WAS NOT, IN FACT, DIVISIBLE OR WHETHER STEUART PETROLEUM COMPANY ERRED IN OVERLOOKING THE FACT THAT PROPOSAL NO. 1 WAS DIVISIBLE AND FAILED TO INSERT IN ITS BID AN "ALL OR NONE" QUALIFICATION. FURTHERMORE, STEUART PETROLEUM COMPANY HAS CONSISTENTLY MAINTAINED THAT PROPOSAL NO. 1 OF THE SECOND INVITATION IS NOT, IN FACT, SUSCEPTIBLE TO DIVISION DESPITE THE LANGUAGE OF THE METHOD OF AWARDS PARAGRAPH.

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

IT MAY BE THAT STEUART PETROLEUM COMPANY SHOULD HAVE NOTED THE CHANGE IN THE LANGUAGE OF THE METHOD OF AWARD PARAGRAPH IN THE SECOND INVITATION FROM THAT OF THE FIRST AND PRIOR INVITATIONS AND INSERTED AN "ALL OR NONE" QUALIFICATION IN ITS BID ON PROPOSAL NO. 1, THE SAME AS IT DID ON PROPOSAL NO. 3 WHICH WAS CLEARLY DIVISIBLE. HOWEVER, SINCE STEUART PETROLEUM COMPANY ADVISED THE GENERAL SERVICES ADMINISTRATION OF ITS INTERPRETATION OF PROPOSAL NO. 1, AND ALLEGED MISTAKE IF SUCH INTERPRETATION WAS WRONG, PRIOR TO ACCEPTANCE OF ITS BID, IT IS OUR OPINION, IN VIEW OF THE PROVISIONS AND FORMAT OF PROPOSAL NO. 1, THAT ACCEPTANCE OF THE BID ON A DIVISIBLE BASIS WOULD NOT HAVE RESULTED IN A VALID AND BINDING CONTRACT.

FOR THE REASONS HERETOFORE STATED, WE BELIEVE THAT THE FACTS AND EVIDENCE OF RECORD CLEARLY ESTABLISH THAT STEUART PETROLEUM COMPANY'S BID WAS, IN FACT, INTENDED TO BE ON AN "ALL OR NONE" BASIS, AS ALLEGED, AND THAT THE COMPANY WAS PROPERLY PERMITTED TO WITHDRAW ITS BID ON PROPOSAL NO. 1. SEE 36 COMP. GEN. 441 AND CASES CITED THEREIN. ACCORDINGLY, YOUR PROTESTS MUST BE DENIED.