B-154565, JUN. 17, 1965

B-154565, JUN. 17, 1965

TO LANZANI JOINT VENTURE, SENORITA ELENA LANZANI:

FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE AWARD OF A CONTRACT BY THE DEPARTMENT OF THE NAVY, BUREAU OF YARDS AND DOCKS, TO LA VALENCIANA FOR THE FURNISHING OF BUS TRANSPORTATION SERVICES AT THE NAVAL STATION, ROTA, SPAIN, FOR THE FISCAL YEAR 1965. THE SUPPLEMENTAL REPORT REFERRED TO IN OUR LETTER OF APRIL 16, 1965, HAS BEEN RECEIVED.

THE BASES FOR YOUR PROTEST, AS SET FORTH IN YOUR LETTER OF JULY 24, 1964, TO THE DIRECTOR OF THE EUROPEAN MID-EAST DIVISION, BUREAU OF YARDS AND DOCKS, ARE (1) THAT INFORMATION FURNISHED TO SENORITA ELENA LANZANI BY A REPRESENTATIVE OF THE PROCURING ACTIVITY (HEREAFTER REFERRED TO) IN A TELEPHONE CONVERSATION HELD ON JUNE 17, 1964, LED REPRESENTATIVES OF THE JOINT VENTURE TO BELIEVE THAT THE CONFERENCE THEY WERE REQUESTED TO ATTEND IN THE OFFICE OF THE OFFICE IN CHARGE OF CONSTRUCTION THE FOLLOWING AFTERNOON WAS TO BE FOR THE PURPOSE OF "QUALIFYING" THE JOINT VENTURE, INSTEAD OF THE "MEETING FOR NEGOTIATION," AS IT TURNED OUT TO BE; (2) THAT LANZANI WAS ERRONEOUSLY ADVISED BY A MEMBER OF THE NEGOTIATION BOARD AT THE "MEETING FOR NEGOTIATION" THAT IT SHOULD HAVE USED A MILEAGE FIGURE OF 511,601 IN COMPUTING THE LUMP-SUM PRICES QUOTED IN ITS PROPOSAL FOR FURNISHING HOME-TO-WORK BUS TRANSPORTATION FOR U.S. NAVY EMPLOYEES, INSTEAD OF THE 419,375 FIGURE WHICH HAD BEEN USED, IN VIEW OF WHICH LANZANI RECALCULATED ITS LUMP-SUM PRICE ON SUCH BASIS WITH THE RESULT THAT IT BECAME SECOND LOW BIDDER INSTEAD OF THE LOWEST AS IT WAS ON THE ORIGINAL QUOTATIONS; AND (3) THAT LANZANI'S EXPERIENCE IN BIDDING ON THIS CONTRACT WAS JUST ANOTHER ILLUSTRATION OF THE UNFAIR TREATMENT IT HAD RECEIVED IN ITS ATTEMPTS TO BE PLACED IN LINE FOR BIDDING FOR SIMILAR SERVICES AT NAVAL STATION ROTA DURING PREVIOUS YEARS.

IT APPEARS THAT BY LETTER OF MAY 26, 1964, YOU FURNISHED TO THE RESIDENT OFFICER IN CHARGE OF CONSTRUCTION, CADIZ, SPAIN, CERTAIN DETAILS AND DATA RELATING TO THE LEGAL STATUS, ASSETS AND OPERATIONS OF THE LANZANI JOINT VENTURE (ON FORMS WHICH PREVIOUSLY HAD BEEN SUPPLIED TO YOU BY THAT OFFICIAL) IN ORDER THAT THE REPRESENTATIVES OF THE BUREAU OF YARDS AND DOCKS CHARGED WITH THE RESPONSIBILITY OF NEGOTIATING THE CONTRACT INVOLVED MIGHT MAKE A DETERMINATION AS TO YOUR ELIGIBILITY TO COMPETE FOR THE PROCUREMENT. IN THE ABSENCE OF A REPLY TO YOUR LETTER, YOU CALLED MR. ARTHUR J. MATTHEWS (WHO HAD FIRST CONTACTED YOU AS A POTENTIAL BIDDER) AT THE OFFICE OF THE RESIDENT OFFICER IN CHARGE OF CONSTRUCTION EARLY IN JUNE 1964 IN REGARD TO WHAT YOU REFERRED TO AS YOUR "REQUEST TO PARTICIPATE IN THE NEGOTIATIONS" AND WERE INFORMED THAT YOUR "REQUEST" HAD NOT AS YET BEEN APPROVED BY THE "NEGOTIATION BOARD.' MR. MATTHEWS IS STATED TO HAVE ADVISED THAT HE WOULD CALL THE OFFICER IN CHARGE OF CONSTRUCTION IN MADRID AND AUTHORIZE THE DELIVERY TO YOU OF THE SPECIFICATIONS AND BIDDING DATA, BUT THAT THE RECEIPT OF THIS MATERIAL WAS NOT TO BE TAKEN AS AN AUTHORIZATION TO SUBMIT A PROPOSAL IN ADVANCE OF APPROVAL BY THE BOARD. THE PAPERS REFERRED TO WERE RECEIVED WITHIN A MATTER OF HOURS.

AMONG THE PAPERS FURNISHED YOU BY THE OFFICER IN CHARGE OF CONSTRUCTION WAS AN UNDATED FORM LETTER ISSUED BY HIS OFFICE AND ADDRESSED TO YOU, WHICH IS SHOWN TO HAVE BEEN SIGNED BY CAPTAIN E. J. QUINN, CEC, USN, AS "CHAIRMAN NEGOTIATION BOARD," AND WHICH WILL BE REFERRED TO HEREAFTER AS THE RFP. THE RFP STATES THAT DURING "THE WEEK OF 27 APRIL" THE ADDRESSEE HAD BEEN CONTACTED BY UNITED STATES NAVY REPRESENTATIVES CONCERNING BUS SERVICES FOR THE NAVAL STATION ROTA, WHEN IT HAD EXPRESSED AN INTEREST IN PROVIDING THE SERVICES; THAT IT WAS THEREBY INFORMED THAT IT HAD BEEN SELECTED AS ONE OF THE FIRMS TO SUBMIT A PRELIMINARY PROPOSAL; AND THAT THE DOCUMENTS ATTACHED TO THE RFP "LIST THE CONDITIONS AND SERVICES WHICH WILL BE A BASIS FOR FURTHER NEGOTIATING A CONTRACT," THE CONTRACT TO COMMENCE ON JULY 1, 1964, AND TERMINATE ON JUNE 30, 1965. THE RFP FURTHER STATES IT TO BE ESSENTIAL THAT NEGOTIATIONS BE CONCLUDED DURING THE WEEK COMMENCING JUNE 15, 1964. TO THAT END, THE ADDRESSEE WAS REQUESTED TO REVIEW "THE ATTACHED REQUIREMENTS AND COMPLETE THE FORM AND STATE YOUR PRELIMINARY PRICE PROPOSALS," AND ADVISED THAT THE FORM WAS REQUIRED TO BE DELIVERED TO THE OFFICE OF THE RESIDENT OFFICER IN CHARGE OF CONSTRUCTION NO LATER THAN "1200 HOURS" ON JUNE 17, 1964. THE RFP CONCLUDES:

"THESE PRELIMINARY PRICE PROPOSALS WILL BE REVIEWED AND WILL BE THE BASIS FOR SELECTING THE FIRM OR FIRMS FOR FINAL NEGOTIATIONS OF A CONTRACT. THESE FINAL NEGOTIATIONS ARE PLANNED TO BE HELD ON THE 18 AND 19 JUNE 1964. IF, AFTER REVIEW OF PRELIMINARY PROPOSALS, IT IS DETERMINED THAT YOUR FIRM IS IN A COMPETITIVE POSITION YOU WILL BE CONTACTED.

"YOUR INTEREST IN PROVIDING THIS SERVICE IS APPRECIATED. IF YOU HAVE ANY QUESTIONS CONCERNING THE ATTACHED CONDITIONS AND SERVICES, YOU MAY CONTACT MR. A. J. MATTHEWS OR MR. H. L. BROUGHTON AT THE OFFICE OF THE OFFICER IN CHARGE OF CONSTRUCTION, EDIFICO ESPAFIA, TELEPHONE 2 489 700, EXTENSION 26, ON 16 JUNE FROM 0930 TO 1700 HOURS AND ON 17 JUNE FROM 0900 TO 1130 HOURS.'

UNDER THE PROVISIONS OF THE RFP, AS SET FORTH IN THE SEVERAL ATTACHMENTS THERETO, FIRMS WERE REQUESTED TO SUBMIT (1) A LUMP-SUM PRICE IN PESETAS FOR FURNISHING HOME-TO-WORK BUS TRANSPORTATION AND TRANSPORTATION FOR SCHOOL CHILDREN--- BASED UPON THE TRIPS (RUNS) MARKED "G" ON EXHIBIT A, ATTACHED TO THE RFP--- FOR U.S. NAVY EMPLOYEES STATIONED AT NAVAL STATION ROTA DURING THE PERIOD REFERRED TO ABOVE; (2) ONE-WAY AND ROUND-TRIP TICKET PRICES IN PESETAS FOR OTHER AUTHORIZED PASSENGERS ON ALL BUSES ON A SPACE AVAILABLE BASIS (MAINTAINING THE PRIORITY RIGHTS OF U.S. NAVY EMPLOYEES) TO EIGHT SPECIFIED LOCATIONS; AND (E) PRICES IN PESETAS PER KILOMETER FOR CHARTER TRIPS OF (A) LESS THAN A 100 KILOMETER PAY DAY, (B) MORE THAN A 100 KILOMETER PER DAY BUT LESS THAN 200, (C) MORE THAN 200 KILOMETERS PER DAY BUT LESS THAN 300, AND (D) MORE THAN 300 KILOMETERS PER DAY. THE FORM SUPPLIED WITH THE RFP FOR SUBMITTING PROPOSED PRICES STATES:

"D. CONTRACTOR WILL AGREE TO GIVE ANY OFFICIAL, SEMI-OFFICIAL OR QUASI- OFFICIAL AGENCY OR BODY SUCH AS OFFICER'S CLUB, CHIEF'S CLUB, COMMISSARY, POST EXCHANGE, ETC., A 10 PERCENT DISCOUNT ON THE ABOVE RATES FOR THE HOME -TO-WORK TRANSPORTATION OF THEIR EMPLOYEES.'

SHEET NO. 1 OF EXHIBIT A, UNDER THE HEAD "CONTRACT BUS REQUIREMENTS FY- 1965 (HOME-TO-WORK AND SCHOOL-MONDAY THRU FRIDAY)," SETS FORTH A TOTAL OF 73 "RUNS" NUMBERED CONSECUTIVELY, SHOWING THE ,TRIP MILES," "TRIPS YEAR," "YEAR MILES" AND "PAY LOAD" APPLICABLE TO EACH. MOST OF THE "RUNS" ARE DESIGNATED "G" RUNS, BUT SOME ARE DESIGNATED "P" RUNS, AND OTHERS "NA" RUNS. SHEET NO. 2 OF THE EXHIBIT, UNDER THE HEAD "CONTRACT BUS REQUIREMENTS FY 1965 (HOME-TO-WORK AND SHUTTLE, SATURDAYS, SUNDAYS AND SPANISH HOLIDAYS)," SETS FORTH A TOTAL OF 44 "RUNS" NUMBERED CONSECUTIVELY, SHOWING THE TRIP MILES, TRIPS PER YEAR, YEARLY MILEAGE FIGURES AND PAY LOAD APPLICABLE THERETO. IN THIS CASE, ALSO, MOST OF THE RUNS ARE DESIGNATED "G" RUNS, BUT SOME ARE DESIGNATED "P" RUNS, AND OTHERS "NA" RUNS. THE FOLLOWING INFORMATION WITH REGARD TO THE TOTAL MILEAGE INVOLVED IN MAKING ALL OF THE TRIPS REFERRED TO APPEARS ON SHEET NO. 2 OF THE EXHIBIT:

TABLE

"TOTAL MILES PER YEAR (HOME-TO-WORK AND SCHOOL MONDAY

THRU FRIDAY .................................. 431,888

"TOTAL MILES PER YEAR (HOME-TO-WORK AND SHUTTLE

SATURDAYS, SUNDAYS AND SPANISH HOLIDAYS) ..... 76,053

GRAND TOTAL 507,941"

IN EXHIBIT B, ATTACHED TO THE RFP, FIRMS SUBMITTING PROPOSALS WERE ADVISED THAT, CONSISTENT WITH THE PRINCIPLE THAT THE OFFICIAL TRANSPORTATION ASPECTS OF THE CONTRACT TO BE AWARDED WERE ALWAYS TO TAKE PRECEDENCE OVER ANY PRIVATE TRANSPORTATION, THE CONTRACTOR COULD ESTABLISH SUCH ADDITIONAL PUBLIC TRANSPORTATION (THE TERM "AUTHORIZED PUBLIC TRANSPORTATION " BEING DEFINED THEREIN) ROUTES AS MIGHT BE APPROVED BY THE OFFICER IN CHARGE OF THE CONTRACT (OFFICER IN CHARGE OF CONSTRUCTION), AND THE CONTRACTOR COULD ALSO OFFER SPECIAL TOURS AND CHARTERS UNDER SUCH TERMS AND CONDITIONS AS MIGHT BE APPROVED BY THAT OFFICIAL.

IT APPEARS THAT YOUR MRS. E. CURTIS VISITED THE OFFICE OF THE OFFICER IN CHARGE OF CONSTRUCTION ON JUNE 16, 1964, FOR THE PURPOSE OF OBTAINING INFORMATION ON MATTERS RELATING TO THE RFP, AND IT APPEARS FROM THE RECORD OF THE CONFERENCE HELD WITH MR. A. J. MATTHEWS AND MR. H. L. BROUGHTON ON THAT OCCASION, AS SET FORTH IN YOUR LETTER OF JULY 24, 1964 (WHICH IS STATED TO HAVE BEEN TRANSCRIBED FROM THE SHORTHAND RECORD TAKEN DOWN BY MRS. CURTIS DURING THE COURSE OF THE CONFERENCE), THAT MRS. CURTIS ASKED, AMONG OTHER THINGS, WHAT "FIGURE ON TOTAL" THE REPRESENTATIVES OF THE GOVERNMENT CONCERNED "HAVE FOR ALL TRIPS MARKED "G" ON EXHIBIT SHEETS "A" NO. 1 AND NO. 2.' MR. MATTHEWS ADVISED THAT NO TOTALS HAD BEEN "FIGURED" EXCEPT THOSE SHOWN ON EXHIBIT A. MRS. CURTIS RECEIVED AN AFFIRMATIVE ANSWER TO HER QUESTION (QUESTION NO. 13) WHETHER THE "YEAR MILES" OF 2440 SHOWN FOR "P" RUN NO. 57 ON SHEET NO. 1 OF EXHIBIT A SHOULD NOT BE 6100; AND THE FOLLOWING QUESTIONS WERE ASKED AND REPLIED TO AS INDICATED:

TABLE

"QUESTION 14. - ARE NOT THE FOLLOWING TOTALS CORRECT?

TRIPS MARKED "G" BOTH SHEETS 418,975 MILES

TRIPS MARKED "P" BOTH SHEETS 68,430 MILES

TRIPS MARKED "NA" BOTH SHEETS 24,236 MILES

TOTAL 511,641 MILES

"ANSWER: MR. BROUGHTON. - HAVE NOT RUN TOTALS. THIS SCHEDULE SHOULD BE CORRECT IF ADDED CORRECTLY WITH CORRECTION UNDER 13 ABOVE.

"QUESTION 15. - IS TOTAL LUMP SUM FIGURE TO BE IN PESETAS OR DOLLARS?

"ANSWER: IN PESETAS. INFORMATION IS DESIRED ON TOTAL PRICE FOR ENTIRE YEAR. DO NOT SHOW KILOMETERS ON THIS LINE OR MILES. LUMP SUM FOR OPERATION ONLY BASED ON KILOMETERS. ITEM "C" IS SELF EXPLANATORY.'

ADDITIONALLY, MRS. CURTIS WAS INFORMED THAT THE DESIGNATION "G" IN EXHIBIT A MEANT ,GOVERNMENT-HOME-TO-WORK" RUNS (FOR U.S. NAVY EMPLOYEES); THAT "P" MEANT "PUBLIC: DOMESTIC HELP, GARDENERS, SALESMEN, U.S. MILITARY, ETC.; AND THAT "NA" MEANT "NONAPPROPRIATED - REFERS TO "D" IN THE LETTER - THOSE ENTITLED TO 10 PERCENT DISCOUNT.' IN OTHER WORDS, THE "NA" REFERRED TO RUNS REQUIRED TO BE MADE FOR THE BENEFIT OF PERSONNEL IN THE CATEGORY OF THOSE MENTIONED IN PARAGRAPH ,D" OF THE FORM SUPPLIED WITH THE RFP FOR SUBMITTING PROPOSED PRICES, SUPRA. THE COST OF PROVIDING SERVICES FOR PERSONNEL IN THIS CATEGORY WOULD NOT BE PAID FOR FROM FUNDS APPROPRIATED FOR CARRYING ON THE ACTIVITIES OF THE U.S. GOVERNMENT. SHE WAS FURTHER ADVISED THAT 14 COMPANIES WERE BIDDING, AND THE CONTRACT WOULD BE GIVEN ON A NEGOTIATED BASIS, BASED ON BACKGROUND AND THEN ON PRICES SHOWN; THAT "BIDS" WERE REQUIRED TO BE IN BY 12 O-CLOCK NOON ON WEDNESDAY (JUNE 17); AND THAT, IF ANSWERS TO OTHER QUESTIONS WERE DESIRED, LANZANI SHOULD "TELEPHONE BEFORE 5 P.M. TODAY OR TOMORROW MORNING.'

ON JUNE 17, 1964, YOU SUBMITTED A PROPOSAL TO THE OFFICER IN CHARGE OF CONSTRUCTION, DATED JUNE 16, 1964, IN WHICH YOU OFFERED TO FURNISH THE SERVICES REFERRED TO UNDER CATEGORY (1), ABOVE, FOR THE LUMP-SUM PRICE OF 7,017,644 PESETAS, WITH THE PROVISION THAT IF YOU WERE GIVEN THE EXCLUSIVE RIGHT TO PROVIDE HOME-TO-WORK TRANSPORTATION, THE EXCLUSIVE RIGHT TO PROVIDE FOR SUCH OTHER PUBLIC TRANSPORTATION REQUIREMENTS AS MIGHT EXIST OR OCCUR AT THE NAVAL STATION, AS WELL AS SUCH CHARTER AND/OR TRANSPORTATION SERVICE, TRIPS, ETC., AS MIGHT ARISE IN THE FUTURE, SUCH PRICE WOULD BE REDUCED TO 6,660,013 PESETAS. AT PAGE 2, UNDER THE HEAD "ADDITIONAL INFORMATION," THE PROPOSAL STATED:

"WHILE NOT A REQUIRED PART OF THE FORM (THE FORM FURNISHED FIRMS FOR SUBMITTING PROPOSED PRICES) CITED, SUBMITTED HEREWITH AS A MATTER OF INFORMATION IS THE FORMULA USED IN ARRIVING AT THE LUMP SUM FIGURE QUOTED IN PARAGRAPH (A) OF PART ONE ABOVE.

TABLE

419,3751.609 10.40 7,017,644

---------------- TIMES ----- -----EQUAL ------ --

TOTAL MILES "G" 1.609 PESETAS LUMP SUM"

PARAGRAPH (A), PART ONE, OF YOUR PROPOSAL, WHEREIN THE LUMP-SUM PRICE FOR PERFORMING THE SERVICES REFERRED TO UNDER CATEGORY (1) WAS SET FORTH, CONTAINED THE INSTRUCTION: "SEE PART TWO FOR REDUCTION OF LUMP SUM ............ PESETAS 7,017,644.'

AT PAGE 3, PART TWO, OF THE PROPOSAL, THE REDUCED PRICE QUOTED FOR THE EXCLUSIVE RIGHTS PRIVILEGE REFERRED TO ABOVE WAS SHOWN TO HAVE BEEN COMPUTED AS FOLLOWS:

"419,375 1.609 9.87 6,660,013 ---------------- TIMES ----- TIMES ---- EQUAL ---------

TOTAL MILES "G" 1,609 TIMES PESETAS LUMP SUM"

THE RESPECTIVE LUMP-SUM PRICES QUOTED FOR THE SERVICES REFERRED TO UNDER CATEGORY (1) WERE THUS SHOWN TO HAVE BEEN COMPUTED BY CONVERTING THE TOTAL MILEAGE INVOLVED IN MAKING THE RUNS MARKED "G" ON SHEETS 1 AND 2 OF EXHIBIT A (1 MILE EQUALS 1.609 KILOMETERS) TO KILOMETERS, AND MULTIPLYING THE TOTAL KILOMETERS INVOLVED BY THE UNIT PRICE FACTORS OF 10.40 AND 9.87 PESETAS, RESPECTIVELY.

YOU ALSO SET FORTH IN YOUR PROPOSAL THE PRICES PROPOSED TO BE CHARGED FOR THE BUS SERVICES REFERRED TO UNDER CATEGORIES (2) AND (3), SUPRA. RELATIVE TO THE PRICES QUOTED FOR PERFORMING THE SERVICES IN CATEGORIES (1) AND (3), THE PROPOSAL STATED:

"FURTHER REDUCTION AND BENEFIT:

"THE LANZANI JOINT VENTURE PROPOSES TO FURTHER REDUCE THE EXPENDITURE OF FUNDS IN CONNECTION WITH THE HOME-TO-WORK TRANSPORTATION OF THE NAVSTA ROTA EMPLOYEES. WHILE THE LUMP SUM SET FORTH IN THE FOREGOING PARAGRAPH IS BASED ON A CALCULATED NUMBER OF KILOMETERS, PER RUN, PER YEAR, TC., IT IS UNDERSTOOD THAT REQUIREMENTS MIGHT VARY DURING THE PERIOD 1964 TO 1965 WHICH MIGHT RESULT IN AN INCREASED AMOUNT OF KILOMETERS BEING REQUIRED BY THE NAVAL STATION ROTA.

"WITH THIS IN MIND AND KEEPING WITH OUR POLICY OF PROVIDING THE U.S. GOVERNMENT AND THE NAVAL STATION ROTA WITH THE MOST REASONABLE PRICE, SUBMITS AND PROPOSES TO FOLLOW THE ESCALATION SCALE SET FORTH BELOW FOR ANY ADDITIONAL REQUIREMENTS THAT MIGHT BE NEEDED. ATTENTION IS INVITED TO THE FACT THAT FOR GOVERNMENT REQUIREMENTS ALL KILOMETERS ACCRUED,"G," "P," AND THOSE "NA" ARE APPLIED TO THE ESCALATION PRODUCING A DECREASE IN PRICE PER KILOMETER TO THE U.S. NAVY.

TABLE

PRICE SCALE

1. OVER 400.000 MILES BUT UNDER 500.000 MILES .... PTAS. PER KM. 9.87

2. OVER 500.000 MILES BUT UNDER 525.000 MILES .... PTAS. PER KM. 9.80

3. OVER 525.000 MILES BUT UNDER 550.000 MILES .... PTAS. PER KM. 9.70

4. OVER 550.000 MILES BUT UNDER 575.000 MILES .... PTAS. PER KM. 9.60

5. OVER 575.000 MILES BUT UNDER 600.000 MILES .... PTAS. PER KM. 9.50

6. OVER 600.000 MILES BUT UNDER 625.000 MILES .... PTAS. PER KM. 9.40

7. OVER 625.000 MILES BUT UNDER 650.000 MILES .... PTAS. PER KM. 9.30

8. OVER 650.000 MILES BUT UNDER 675.000 MILES .... PTAS. PER KM. 9.10

9. OVER 675.000 MILES BUT UNDER 700.000 MILES .... PTAS. PER KM. 9.00

10. OVER 700.000 MILES BUT UNDER 725.000 MILES .... PTAS. PER KM. 8.90

11. OVER 725.000 MILES BUT UNDER 750.000 MILES .... PTAS. PER KM. 8.90

12. OVER 750.000 MILES BUT UNDER 775.000 MILES .... PTAS. PER KM. 8.80

"IT SHOULD BE NOTED THAT THE FOREGOING IS NOT IN ITSELF A COMPLETE CHART. SELECTIONS HAVE BEEN TAKEN TO REFLECT A DECREASE IN PRICE AS TOTAL KILOMETERS ACCUMULATE.

"CHARTER PRICE:

"THE LANZANI JOINT VENTURE PROPOSES THAT THAT THE CHARTER PRICE TO THE U.S. GOVERNMENT SHALL BE THAT FIXED FOR THE LUMP SUM RATE UNTIL SUCH TIME AS THE PRICE IS FURTHER REDUCED IN ACCORDANCE WITH THE ESTABLISHED PRICE DECREASE SCALE.

"ATTENTION IS INVITED TO THE FACT THAT THE CHARTER RATES SET FORTH IN PART ONE APPLY TO VISITING UNITS AT NAVSTA ROTA. THE 10 PERCENT DISCOUNT IS APPLIED TO THOSE ACTIVITIES AS SET FORTH WHICH ARE ACTUALLY BASED AT ROTA.

"THUS FOR THE FIRST 826.799 KILOMETERS THE CHARTER RATE WOULD BE SET AT 9.87 PESETAS PER KILOMETER.

"ADDITIONAL INFORMATION:

"IN AS MUCH AS THIS PROPOSAL IS TO BE USED AS A BASIS FOR SELECTION OF THOSE COMPANIES WHO ARE IN A COMPETITIVE POSITION FOR FINAL NEGOTIATION AND OF MOST SIGNIFICANT IMPORTANCE AT THE MOMENT IS THE RANGE OF PRICE, FURTHER IDEAS AND THE PRESENTATION OF ADDITIONAL DATA WILL BE WITHHELD UNTIL SELECTION AS ONE OF THE FIRMS TO NEGOTIATE.'

ON JUNE 17, 1964, FOLLOWING THE SUBMISSION OF YOUR PROPOSAL TO THE OFFICER IN CHARGE OF CONSTRUCTION, IT APPEARS THAT SENORITA ELENA LANZANI, WHO SIGNED THE LANZANI JOINT VENTURE PROPOSAL AS VICE PRESIDENT AND MANAGING DIRECTOR, CALLED MR. A. J. MATTHEWS AT HIS APARTMENT IN THE "HOTEL PLAZA, EDIFICIO ESPANE," AS A RESULT OF A MESSAGE FROM HIM REQUESTING THAT SHE DO SO. ACCORDING TO THE RECORD OF THE TELEPHONE CONVERSATION, AS SET FORTH IN YOUR LETTER OF JULY 24, 1964 (WHICH IS STATED TO HAVE BEEN TRANSCRIBED FROM THE SHORTHAND RECORD OF MRS. E. CURTIS AS TRANSCRIBED FROM "TAPE" TAKEN THEREOF), MR. MATTHEWS ASKED SENORITA LANZANI IF IT WOULD BE CONVENIENT FOR HER TO COME TO THE OFFICE OF THE OFFICER IN CHARGE OF CONSTRUCTION THE FOLLOWING AFTERNOON AT 3:30 FOR THE PURPOSE OF DISCUSSING LANZANI'S PROPOSAL. UPON RECEIVING AN AFFIRMATIVE RESPONSE, MR. MATTHEWS STATED IN MATERIAL PART:

"AND WE WOULD LIKE TO ALSO HAVE YOU BRING WHATEVER REPRESENTATIVE YOU REQUIRE TO SPEAK FOR YOUR FIRM OR TO DO ANY DEALING IN THE SENSE OF POSSIBLE--- I DON-T SAY NEGOTIATION, I SAY POSSIBLE NEGOTIATIONS OR POSSIBLE CHANGES TO THE TRANSIT CONDITIONS OR ANYTHING OF THIS NATURE.'

IT APPEARS THAT ALL MEMBERS OF THE LANZANI JOINT VENTURE, NAMELY, SENORITA ELENA LANZANI, SENOR DON ANGEL FERRANDEZ PICON, SENOR DON LUCIANO PEREZ PAREDES, SENOR DON PEDRO VERA AND SENOR DON SANCHEZ RIOS, TOGETHER WITH ITS "INSURANCE REPRESENTATIVE," MET WITH THE NAVAL STATION ROTA NEGOTIATION BOARD ON JUNE 18, 1964. THE MEMBERS OF THE BOARD ARE STATED TO HAVE QUESTIONED THE MEMBERS OF LANZANI JOINT VENTURE FOR ALMOST AN HOUR ON SUCH MATTERS AS FINANCIAL RESPONSIBILITY, PREVIOUS EXPERIENCE, ORGANIZATION, PREVIOUS JOINT VENTURE OPERATIONS, EQUIPMENT, TYPE OF OPERATIONS, CONTROL METHODS, JOINT VENTURE CONTRACT AND NUMBER OF BUSES. YOUR JULY 24, 1964, LETTER STATES THAT MOST OF THE QUESTIONS WERE ASKED BY MR. A. J. MATTHEWS, WHO, TOWARD THE END OF THE MEETING, INFORMED THE MEMBERS OF LANZANI JOINT VENTURE THAT THEY HAD MADE A MISTAKE IN THEIR PROPOSAL IN THAT "THE TOTAL "G" MILES WHICH WERE TO BE INCLUDED IN THE CONTRACT WERE 511,601 INSTEAD OF THE AMOUNT 419.375 AS SET FORTH BY THE "LANZANI" MEMBERS.' THE LETTER STATES THAT MR. MATTHEWS STATED THAT HE HAD INFORMED MRS. CURTIS OF "THE CHANGES" AND THEREFORE HAD NOT SENT ANY FORMAL NOTIFICATION OR CALLED. THE LETTER GOES ON TO STATE THAT THE MEMBERS OF LANZANI JOINT VENTURE HAD NOT BROUGHT THEIR WORK SHEETS TO THE MEETING, ON THE ASSUMPTION THAT THE MEETING WAS FOR THE PURPOSE OF "QUALIFYING" THE VENTURE, AND THEREFORE "TOOK HIS WORD THAT THERE HAD BEEN ADDITIONAL CHANGES WHICH THEY KNEW NOTHING ABOUT.' ACCORDINGLY, YOU RECALCULATED YOUR LUMP-SUM FIGURES FOR THE SERVICES IN CATEGORY (1) ON THE BASIS OF THE 511,601-MILE FIGURE GIVEN BY MR. MATTHEWS, USING THE SAME PRICING FACTORS SHOWN IN THE FORMULA APPEARING IN YOUR PROPOSAL, AND INSERTED IN THE ORIGINAL PROPOSAL THE LUMP-SUM FIGURES OF 8,560,926.40 AND 8,124,648.42 PESETAS, RESPECTIVELY, RUNNING A LINE THROUGH THE OLD FIGURES OF 7,017,644 AND 6,660,013, REFERRED TO ABOVE.

IN YOUR LETTER OF JULY 24, 1964, YOU STATE THAT THE MEMBERS OF LANZANI JOINT VENTURE, ON RETURNING TO THEIR HOTEL, RECHECKED THE NOTES OF MRS. E. CURTIS AS TO WHAT TRANSPIRED DURING HER CONFERENCE WITH MESSRS. MATTHEWS AND BROUGHTON ON JUNE 16, 1964, AND, FINDING NO MENTION OF ANY ,CHANGE" OF THE NATURE "QUOTED BY MR. MATTHEWS," THE FOLLOWING MORNING (JUNE 19) REQUESTED A CONFERENCE WITH THE AIRMAN OF THE NAVAL STATION NEGOTIATION BOARD "IN ORDER TO DETERMINE; THE STATUS OF THE "LANZANI" VENTURE; REQUEST A COPY OF THE CHANGES ON WHICH MR. MATTHEWS BASED HIS NEW FIGURES OF THE PREVIOUS AFTERNOON; AND TO REQUEST INFORMATION AS TO WHEN WOULD BE NEGOTIATION.' AT A CONFERENCE OBTAINED WITH THE CHAIRMAN OF THE BOARD THAT AFTERNOON (AT WHICH MRS. CURTIS WAS PRESENT), CAPTAIN QUINN IS STATED TO HAVE INFORMED THE MEMBERS OF LANZANI JOINT VENTURE THAT THE MEETING WHICH HAD BEEN HELD WITH THEM THE PRECEDING AFTERNOON WAS THE "MEETING FOR NEGOTIATION; " THAT THE STATUS OF LANZANI JOINT VENTURE WAS THAT OF A HIGH BIDDER, AND, AS SUCH, IT WOULD NOT BE AWARDED THE CONTRACT "AS ANOTHER COMPANY WAS MUCH LOWER; " THAT THERE "WERE NO OTHER CHANGES OF ANY NATURE; " AND THAT "ALL NEGOTIATIONS WERE CONCLUDED AND THE MATTER FINISHED.' RELATIVE TO YOUR EXPRESSED REACTION AT THE CONFERENCE TO THE FOREGOING INFORMATION, YOU STATE:

" "LANZANI" PROTESTED IN AN ATTEMPT TO DEMONSTRATE THAT NO NEGOTIATION HAD TAKEN PLACE WITH THE "LANZANI JOINT VENTURE" AND THAT THE MEETING WAS FOR THE PURPOSE OF QUALIFYING THE VENTURE AND THAT PRICE REVISIONS OR LIKE NEGOTIATION MATTERS WERE NOT EVEN DISCUSSED. ADDITIONALLY, AN EFFORT WAS MADE TO REFLECT THAT THIS YEARS ACTION WAS ENDING SIMILAR TO PREVIOUS YEARS. NO OPPORTUNITY WAS PERMITTED TO DISCUSS AN EXPLANATION OF MR. MATHEWS REQUIRED CHANGES IN MILEAGES AND PRICES.'

IT IS STATED THAT, PRIOR TO THE CONCLUSION OF THE CONFERENCE, YOU GAVE VERBAL NOTICE THAT A PROTEST IN WRITING WOULD BE SUBMITTED, AND THAT "WITHIN THE HOUR" YOU SUBMITTED TO CAPTAIN QUINN YOUR LETTER OF PROTEST DATED JUNE 19, 1964, ADDRESSED TO THE OFFICER IN CHARGE OF CONSTRUCTION. THIS LETTER STATES THAT THE PROTEST WAS BEING MADE PURSUANT TO PARAGRAPHS 2-407.9 AND 3-508 OF THE ARMED SERVICES PROCUREMENT REGULATION; THAT THE PROTEST WAS BASED ON THE FACT THAT THE INFORMATION FURNISHED TO SENORITA ELENA LANZANI BY MR. MATTHEWS IN THE TELEPHONE CONVERSATION OF JUNE 17, 1964, SUPRA, LED LANZANI TO BELIEVE THAT THE CONFERENCE HELD ON JUNE 18 WAS TO BE "FOR THE PURPOSE OF QUALIFYING OUR COMPANY TO ENTER INTO NEGOTIATION AND NOT TO NEGOTIATE," WHICH RESULTED IN ITS NOT BEING AFFORDED AN OPPORTUNITY TO ENTER INTO NEGOTIATION AS INTENDED, OR IN ACCORDANCE WITH STANDARD PRACTICES; AND THAT A DETAILED REPORT WOULD BE SUBMITTED "AT THE TIME AND DATE REQUESTED BY YOURSELF IN ORDER TO SUBSTANTIATE THE FOREGOING.'

IN A LETTER DATED JUNE 20, 1964, ADDRESSED TO THE DIRECTOR OF THE EUROPEAN MID-EAST DIVISION AND OTHERS, INCLUDING THIS OFFICE, YOU SET FORTH AS THE BASES FOR YOUR PROTEST, AMONG OTHER THINGS, THAT YOU WERE FURNISHED FALSE "QUOTATIONS" AND REQUIRED TO ENTER THE SAME ON YOUR PRELIMINARY PROPOSAL. THE LETTER REQUESTED "INSTRUCTIONS FROM ADDRESSEES FOR SUBMISSION OF DETAILED PROTEST AND REPORT.'

IN A LETTER DATED JUNE 23, 1964, CAPTAIN QUINN, AS "CHAIRMAN OF NEGOTIATION BOARD," ADVISED YOU WITH REFERENCE TO THE ABOVE LETTER THAT NO ACTUAL AWARD OF THE CONTRACT FOR BUS SERVICES HAD BEEN MADE; THAT THE BOARD DID NOT HAVE AUTHORITY TO AWARD A CONTRACT, BUT ONLY TO RECOMMEND AWARD; THAT AUTHORITY TO AWARD THE CONTRACT WAS RESERVED TO AND DIRECTOR OF THE EUROPEAN MID-EAST DIVISION OF THE BUREAU OF YARDS AND DOCKS, LONDON, TO WHOM YOUR LETTER WAS BEING FORWARDED FOR ANY NECESSARY "CONTINUING ACTION," AND TO WHOM YOU SHOULD FURNISH ANY FURTHER INFORMATION YOU DESIRED TO SUPPLY IN SUPPORT OF YOUR PROTEST; AND THAT THE BOARD'S NOTIFICATION TO YOU REGARDING ITS RECOMMENDATION IN THE PRESENT INSTANCE WAS BEING MADE A MATTER OF SEPARATE CORRESPONDENCE. BY LETTER OF JUNE 30, 1964, CAPTAIN QUINN, AS "SENIOR MEMBER, CONTRACT AWARD AND REVIEW BOARD FOR BUS SERVICES AT NAVAL STATION ROTA, FY "65," " ADVISED YOU THAT THE BOARD RECOMMENDED TO THE DIRECTOR OF THE EUROPEAN MID-EAST DIVISION THAT THE CONTRACT INVOLVED BE AWARDED TO LA VALENCIANI, S.A.; THAT THE BOARD HAD REVIEWED "YOUR STATEMENTS AND/OR OFFER AFTER OUR NEGOTIATION MEETING WITH YOUR REPRESENTATIVES ON 18 JUNE 1964 AND FOUND THAT LA VALENCIANI S.A. HAD THE OFFER CONSIDERED MOST ADVANTAGEOUS TO THE U.S. GOVERNMENT; " BUT THE RECOMMENDATION OF THE BOARD DID NOT IMPLY THAT THE LANZANI JOINT VENTURE WAS NOT QUALIFIED; AND THAT THE FIRM WOULD BE GIVEN FURTHER CONSIDERATION IN ANY TRANSPORTATION CONTRACT WHICH MIGHT EXIST IN THE FUTURE.

BY MESSAGE OF JUNE 29, 1964, THE DIRECTOR OF THE EUROPEAN MID-EAST DIVISION ADVISED YOU THAT THE BUS SERVICE CONTRACT HAD BEEN AWARDED ON THAT DATE TO LA VALENCIANA,"AS LOWEST OFFEROR," SINCE THE NEED FOR UNINTERRUPTED SERVICE DID NOT ALLOW WITHHOLDING OF THE AWARD BECAUSE OF YOUR LETTER OF JUNE 20, 1964, REFERRED TO ABOVE. HOWEVER, YOU WERE FURTHER ADVISED IN THE MESSAGE THAT YOUR JUNE 20, 1964, LETTER "IS OF CONCERN," AND YOU WERE THEREFORE REQUESTED TO SUBMIT TO THE DIRECTOR OF THE EUROPEAN MID-EAST DIVISION A DETAILED STATEMENT IN SUPPORT OF YOUR PROTEST. YOU DID SO BY YOUR LETTER OF JULY 24, 1964, REFERRED TO FIRST ABOVE. A COPY OF THAT LETTER, TOGETHER WITH A ,COMPILATION OF MESSAGES," ETC., REFERRED TO COLLECTIVELY THEREIN AS ATTACHMENT (2), WAS FURNISHED TO OUR OFFICE IN SUPPORT OF YOUR PROTEST BY YOUR LETTER OF JULY 29, 1964.

SINCE FIRMS DESIRING TO SUBMIT "PRELIMINARY PRICE PROPOSAL" WERE ADVISED IN THE RFP THAT "FINAL NEGOTIATIONS ARE PLANNED TO BE HELD ON THE 18 AND 19 JUNE 1964," AND SENORITA LANZANI WAS ADVISED BY MR. MATTHEWS IN THE TELEPHONE CONVERSATION OF JUNE 17, 1964, THAT SHE SHOULD BRING TO THE MEETING TO BE HELD AT 3:30 THE FOLLOWING AFTERNOON WHATEVER REPRESENTATIVES WERE REQUITED TO ,SPEAK FOR YOUR FIRM," ETC., SUPRA, WE FEEL THAT YOU WERE AMPLY FOREWARNED THAT THE MEETING SCHEDULED FOR 3:30 P.M., ON JUNE 18, 1964, WOULD BE THE "MEETING FOR NEGOTIATION," AND THAT YOUR FIRST BASIS OF PROTEST IS WITHOUT MERIT. HOWEVER, OUR INVESTIGATION CONFIRMS THAT YOU WERE INDEED ADVISED BY THE NEGOTIATION BOARD AT THAT MEETING THAT YOU SHOULD HAVE USED THE MILEAGE FIGURE OF 511,601 IN COMPUTING THE LUMP-SUM PRICES QUOTED IN YOUR PROPOSAL FOR FURNISHING HOME- TO-WORK BUS TRANSPORTATION FOR U.S. NAVY EMPLOYEES, INSTEAD OF THE 419,375 FIGURE WHICH HAD BEEN USED. THE LUMP-SUM PRICES WHICH YOU SUBSEQUENTLY INSERTED IN YOUR PROPOSAL AS A RESULT OF RECALCULATION THEREOF IN ACCORDANCE WITH SUCH ADVICE RESULTED IN LANZANI'S BECOMING IN THE SECOND LOW BIDDER. IN RESPONDING TO OUR REQUEST TO BE ADVISED, AMONG OTHER THINGS, AS TO THE REASONS WHY YOU WERE GIVEN THE ABOVE ADVICE, THE CHIEF OF THE BUREAU OF YARDS AND DOCKS HAS FURNISHED US WITH A COPY OF A MEMORANDUM OF MAY 6, 1965, ADDRESSED TO HIM BY CAPTAIN E. J. QUINN, AS OFFICER IN CHARGE OF CONSTRUCTION/RESIDENT OFFICER IN CHARGE OF CONSTRUCTION, AREA IV, BUREAU OF YARDS AND DOCKS, ROTA, SPAIN, WHICH SETS FORTH THE QUESTIONS WE POSED ON THIS PHASE OF YOUR PROTEST AND CAPTAIN QUINN'S ANSWERS THERETO AS FOLLOWS:

"QUESTION 1. WHY WAS THE LANZANI POINT VENTURE INDUCED AT THE NEGOTIATING MEETING OF JUNE 18, 1964, BY A DEFINITE STATEMENT OF THE NEGOTIATING BOARD THAT THE CORRECT MILEAGE TO BE INCLUDED IN THE LUMP SUM PRICE FOR PROPOSAL ITEM "A" WAS 511, 601, TO INCREASE ITS LUMP SUM BID PRICE?

"ANSWER 1. THE NEGOTIATION BOARD SAW IN THE LANZANI PROPOSAL BASED ON 419,375 MILES EVIDENCE OF SOME MISUNDERSTANDING OF THE UNDERTAKING ON THE PART OF THE PROPOSER AND A DISTINCT POSSIBILITY OF LATER LEGAL DIFFICULTIES AND CLAIMS IF SUCH MISUNDERSTANDING WERE NOT CLARIFIED AND A CONTRACT AWARDED ON SUCH BASIS. FIRST OF ALL, IT WAS FELT ABSOLUTELY NECESSARY TO MAKE THE PROPOSER AWARE THAT HE WOULD BE EXPECTED TO MAKE ALL "RUNS" SET FORTH ON EXHIBIT "A" TO THE INVITATION FOR PROPOSALS EVEN THOUGH THE LUMP SUM PAYMENT TO BE MADE BY THE GOVERNMENT WOULD BE CONSIDERATION FOR THE "RUNS" DESIGNATED "G" ON THE EXHIBIT. SECONDLY, THE NEGOTIATION BOARD WANTED THE PROPOSER TO UNDERSTAND THAT THE MAKING OF ALL "G" RUNS WOULD, BY ITSELF, INVOLVE CONSIDERABLY MORE THAN 419,375 MILES BECAUSE OF THE OBVIOUS NECESSITY OF RUNNING EACH BUS CONSIDERABLE ADDITIONAL DISTANCES IN GETTING THEM INTO POSITION AND CONDITION TO MAKE THE SPECIFIED RUNS. MORE SPECIFICALLY, MILEAGE ALLOWANCES IN ADDITION TO THOSE SHOWN ON THE EXHIBIT MUST ALSO BE MADE FOR MOBILIZING, REFUELING, REPAIRING, WASHING, GARAGING, ETC. OF EACH BUS. THIRDLY, AND MORE IMPORTANTLY, THE NEGOTIATION BOARD DID NOT SPECIFY THAT THE CORRECT MILEAGE FIGURE TO USE WAS 511,601. SUCH FIGURE WAS MERELY SUGGESTED BY THE BOARD AS A REASONABLE MILEAGE FIGURE THAT COULD BE USED IN DETERMINING A FAIR AND REASONABLE LUMP SUM FIGURE. IT IS STILL FELT THAT SUCH FIGURE IS A REASONABLE ONE, SUPPORT OF WHICH IS SEEN IN THE CURRENT CONTRACT OPERATIONS BY LA VALENCIANA, S. A. WHICH SHOWS THAT FOR THE FIRST 10 MONTHS OF CURRENT YEAR OPERATIONS A TOTAL IN EXCESS OF 475,415 MILES HAVE BEEN RECORDED IN THE PERFORMANCE OF THE ROTA BUS SERVICES CONTRACT. PROJECTED OVER THE ENTIRE 12 MONTHS AT AN ESTIMATED USAGE FOR THE LAST TWO MONTHS OF THE OPERATION THE MILEAGE FIGURE IS EXPECTED TO BE IN EXCESS OF 500,000 MILES IN PERFORMANCE OF THE LUMP SUM ("G" RUN) PORTION OF THE CURRENT CONTRACT. IN CONNECTION WITH THIS QUESTION, NOTE SHOULD ALSO BE TAKEN OF ENCLOSURE (1).

"QUESTION 2. WERE OTHER BIDDERS ADVISED TO, AND DID THEY IN FACT, COMPUTE THEIR LUMP-SUM PRICES ON THE BASIS OF 511,601 MILES?

"ANSWER 2. ALL BIDDERS, WITH THE EXCEPTION OF THE LANZANI JOINT VENTURE, ARE UNDERSTOOD TO HAVE COMPUTED THEIR LUMP-SUM BID PRICES ON THE BASIS OF 511,601 MILES OR MORE, DEPENDING UPON THEIR ESTIMATED MILEAGE FOR MOBILIZING, POSITIONING AND CONDITIONING BUSSES PREPARATORY TO MAKING THE SPECIFIED "RUNS.' CLEAR EVIDENCE THAT SUCH WAS THE CASE IS SEEN IN SEVERAL OF THE CONTRACTORS' PROPOSALS NOW HELD BY THE GAO. NOTE, FOR EXAMPLE, THAT THE PROPOSAL SUBMITTED BY EMPRESA R. SALAMANCA SHOWS ON ITS FACE THAT HE USED THE FIGURE OF 977,000 KMS (607,209 MILES) IN COMPUTING HIS LUMP SUM PROPOSAL; LA VELOZ S.A. USED THE FIGURE OF 1,000,000 KMS (621,504 MILES) IN COMPUTING HIS LUMP SUM PROPOSAL; AUTOCARES SAMAR USED THE FIGURE OF 976,950 KMS (607,178 MILES); AND AUTOBUSES DEL EBRO USED THE FIGURE OF 823,166 KMS (511,600 MILES). IN ADDITION, THE NEGOTIATION BOARD WAS INFORMED BY AUTOCARES JULIA S.A. DURING NEGOTIATIONS THAT ITS LUMP SUM PROPOSAL WAS BASED ON A MINIMUM OF 511,601 MILES, AND VALENCIANA S.A. DID LIKEWISE. FROM THESE FACTS, IT SEEMS OBVIOUS THAT ONLY LANZANI FAILED TO TAKE INTO CONSIDERATION THE ADDITIONAL MILEAGE THAT WOULD HAVE TO BE RUN IN PERFORMING THE LUM SUM PORTION OF THE CONTRACT, HENCE ITS USE OF THE 419,375 MILEAGE FIGURE. THIS OVERSIGHT MAY HAVE BEEN IN LARGE PART DUE TO THE INEXPERIENCE OF THAT JOINT VENTURE IN BUS OPERATIONS.

"4. AS A POINT OF POSSIBLE INTEREST TO THE GAO, THIS OFFICE HAS TAKEN INTO CONSIDERATION THE NUMBER OF MILES WHICH LA VALENCIANA HAS RUN OR IS EXPECTED TO RUN IN PERFORMANCE OF THE LUMP SUM PORTION ("G" RUNS) OF THE CURRENT CONTRACT. AS STATED ABOVE, A TOTAL OF APPROXIMATELY 500,000 MILES ARE EXPECTED TO BE RUN BY LA VALENCIANA THIS CURRENT FISCAL YEAR. USING THE RATE SCHEDULE SUBMITTED BY LANZANI IN ITS ORIGINAL PROPOSAL, WE SEE THE FOLLOWING COSTS THAT WOULD RESULT:

TABLE

FIRST 419,375 MILES 6,660,019 PESETAS

ADDITIONAL 90,625 MILES

(145,000 KMS AT 9.87 PTAS PER KM) 1,431,150 PESETAS

8,091,169 PESETAS

"THE CONTRACT AWARDED TO LA VALENCIANA PROVIDED FOR A TOTAL LUMP SUM PAYMENT OF 6,973,000 PESETAS. IT IS CONCLUDED THEREFROM THAT IF A CONTRACT HAD BEEN AWARDED TO LANZANI ON THE BASIS OF ITS ORIGINAL PROPOSAL, THE COST TO THE GOVERNMENT WOULD HAVE BEEN IN THE NEIGHBORHOOD OF 1,431,150 PESETAS ($23,900) MORE THAN THE COST INCURRED UNDER THE CONTRACT AWARDED TO LA VALENCIANA.'

BY OUR LETTER OF TODAY WE ARE ADVISING THE SECRETARY OF THE NAVY THAT WE CANNOT ACCEPT CAPTAIN QUINN'S STATEMENT THAT "THE NEGOTIATION BOARD DID NOT SPECIFY THAT THE CORRECT MILEAGE FIGURE TO USE WAS 511,601" AS BEING CORRECT IN VIEW OF THE INFORMATION CONTAINED IN THE BOARD'S OFFICIAL RECORD OF THE "MEETING FOR NEGOTIATION," WHICH SHOWS THAT YOU WERE IN FACT ADVISED THAT 511,601 WAS THE CORRECT FIGURE TO USE IN COMPUTING THE LUMP- SUM PRICES QUOTED IN YOUR PROPOSAL FOR FURNISHING HOME-TO-WORK BUS TRANSPORTATION FOR U.S. NAVY EMPLOYEES. ALSO, THE SECRETARY IS BEING ADVISED THAT WE CONSIDER SUCH ADVICE TO HAVE BEEN INCONSISTENT WITH THE TERMS OF THE RFP. HOWEVER, SINCE THE ADVICE GIVEN APPEARS TO HAVE REPRESENTED THE ACTUAL UNDERSTANDING AND BELIEF OF THE GOVERNMENT'S REPRESENTATIVES, AND SINCE IT FURTHER APPEARS THAT OTHER BIDDERS BASED THEIR LUMP-SUM PRICES ON MILEAGES OF AT LEAST 511,000, WE ARE UNABLE TO CONCLUDE THAT THE BOARD'S REPRESENTATION PREJUDICED YOU BY INFLUENCING YOU TO BID UPON A BASIS MATERIALLY DIFFERENT FROM OTHER BIDDERS.

IN REGARD TO THE INQUIRY IN YOUR LETTER OF JULY 29, 1964, AS TO WHETHER THERE IS "A PROCEDURE WHEREBY THIS ORGANIZATION MAY SUBMIT ITS CLAIM FOR FUNDS EXPENDED AND/OR LOSSES SUSTAINED" AS A RESULT OF THE ERRONEOUS ADVICE GIVEN TO YOU BY THE BUREAU OF YARDS AND DOCKS WHICH RESULTED IN LANZANI'S NOT BEING AWARDED THE CONTRACT, THE CONTRACT INVOLVED WAS NEGOTIATED IN ACCORDANCE WITH STATUTORY AND ADMINISTRATIVE REGULATIONS WHICH IMPOSE UPON THE CONTRACTING OFFICER CONCERNED THE DUTY TO SELECT THE CONTRACT MOST ADVANTAGEOUS TO THE GOVERNMENT. HOWEVER, THE SUPREME COURT OF THE UNITED STATES HAS HELD THAT THE CONTRACTING PROCEDURES OF OFFICERS OF THE FEDERAL GOVERNMENT ARE ENACTED SOLELY FOR THE BENEFIT OF THE GOVERNMENT AND CONFER NO ENFORCEABLE RIGHTS UPON PERSONS DEALING WITH IT. SEE PERKINS V. LUKENS STEEL CO. (1940), 310 U.S. 113, 126, 60 S.CT. 869, 84 L.3D. 1108; ALSO, SEE FRIEND V. LEE (U.S. COURT OF APPEALS, DISTRICT OF COLUMBIA CIRCUIT, 1955), 221 F.2D 96; UNITED STATES V. STEWART (U.S. DISTRICT COURT, DISTRICT OF COLUMBIA, 1964), 234 F.SUPP. 94, AFFIRMED BY U.S. COURT OF APPEALS, DISTRICT OF COLUMBIA CIRCUIT, 339 F.2D 753. UNDER THE CIRCUMSTANCES IN THE INSTANT CASE WE ARE THEREFORE OF THE OPINION THAT THERE IS NO LIABILITY ON THE PART OF THE GOVERNMENT TO PAY FUNDS YOU MAY HAVE EXPENDED OR LOSSES YOU MAY HAVE SUSTAINED.

WHILE YOU HAVE GONE BACK TO THE CIRCUMSTANCES UNDER WHICH YOU WERE ELIMINATED AS A SUCCESSFUL BIDDER FOR A CONTRACT FOR SERVICES SIMILAR TO THOSE HERE INVOLVED FOR THE FISCAL YEAR 1960 IN AN EFFORT TO SHOW THAT ANOTHER CONCERN HAS RECEIVED PREFERENTIAL CONSIDERATION IN THE MATTER OF AWARD OF THESE CONTRACTS DURING THE PAST FIVE YEARS, WE FOUND NO EVIDENCE IN THE RECORD WHICH MIGHT BE CONSIDERED AS LENDING SUPPORT TO THIS CONTENTION WITH THE POSSIBLE EXCEPTION OF THE FISCAL YEAR 1963. RELATIVE TO THAT YEAR, HOWEVER, YOU FURNISHED WITH YOUR LETTER OF JULY 24, 1964, A PHOTOSTAT OF A LETTER DATED MARCH 26, 1963, FROM THE OFFICER IN CHARGE OF CONSTRUCTION, RESIDENT OFFICER IN CHARGE OF CONSTRUCTION, BUREAU OF YARDS AND DOCKS CONTRACTS, NAVAL BASE, CADIZ, TO "LANZANI.' IN THE LETTER, YOU WERE THANKED FOR YOUR "EXPRESSED INTEREST IN SUBMITTING PROPOSALS FOR BUS TRANSPORTATION SERVICES FOR THE U.S. NAVAL STATION, ROTA, SPAIN," AND ADVISED TO FILL OUR A QUESTIONNAIRE WHICH WAS ENCLOSED AND RETURN THE SAME TO "THIS OFFICE" BY APRIL 4, 1963, IN ORDER THAT YOU MIGHT BE CONSIDERED IN THE MATTER OF THE PROCUREMENT. YOU ALSO SUBMITTED A PHOTOSTAT OF YOUR LETTER IN REPLY DATED APRIL 2, 1963, FURNISHING THE COMPLETED QUESTIONAIRE TO THE OFFICE INVOLVED. YOUR FOLLOW-UP OF THE MATTER IS SET FORTH IN A LETTER DATED JUNE 12, 1963, TO THE COMMANDING OFFICER, U.S. NAVAL STATION, ROTA, SPAIN, WHICH READS AS FOLLOWS:

"ON 16 MAY 1963 I SENT THE FOLLOWING TELEGRAM TO YOUR STATION:

" "REQUEST THIS COMPANY BE CONFIRMED AS BEING ENTERED ON BIDDING LIST FOR PROPOSED TRANSPORTATION SERVICES YOUR BASE. REQUIRED DATA FORWARDED PUBLIC WORKS DEPARTMENT AS DIRECTED. CONFIRMATION, BIDDING INFORMATION, REQUIRED NUMBER OF BUSES, FORMS, ETC. HAVE NOT BEEN RECEIVED TO DATE. PLEASE ADVISE SOONEST. VIAJES LANZANI, BOX 12260, MADRID.'

"AS OF THIS WRITING NO INFORMATION, NOR REPLY HAS BEEN RECEIVED CONCERNING THE FOREGOING. IT IS REQUESTED THAT THIS COMPANY BE FURNISHED ANY INFORMATION RELATIVE TO PROPOSED BUS SERVICE CONTRACT TO BE AWARDED IN THE FUTURE.'

IN A LETTER DATED JUNE 24, 1963, THE PUBLIC CONTRACTS OFFICER, U.S. NAVAL STATION, NAVY NO. 537, C/O FLEET POST OFFICE, NEW YORK, N.Y., INFORMED YOU THAT YOUR ABOVE TELEGRAM AND LETTER HAD BEEN RECEIVED AND FORWARDED TO THE OFFICER IN CHARGE, BUREAU OF YARDS AND DOCKS, FOR AN ANSWER, AND THAT OFFICER HAD ADVISED THAT YOU WERE ONE OF THE FIRMS BEING CONSIDERED FOR THE ,TRANSPORTATION SERVICE CONTRACT.' BY LETTER OF JULY 9, 1963, THE OFFICER IN CHARGE OF CONSTRUCTION, RESIDENT OFFICER IN CHARGE OF CONSTRUCTION, BUREAU OF YARDS AND DOCKS CONTRACTS, NAVAL BASE, CADIZ, ADVISED YOU AS FOLLOWS:

"WE ARE IN RECEIPT OF YOUR TELEGRAM AND LETTER, SENT TO US BY NAVAL STATION ROTA, DATED 12 JUNE 1963. YOUR QUESTIONNAIRE WAS RECEIVED BY THIS OFFICE PRIOR TO 4 APRIL 1963. YOUR QUESTIONNAIRE, AS WELL AS NUMEROUS OTHERS, WAS REVIEWED WITH THE ASSISTANCE OF THE OICC SPAIN.

"A FULL REPORT WAS SUBMITTED TO THE NEGOTIATION BOARD ON THE FINDINGS OF THE QUESTIONNAIRES' REVIEW. THE BOARD USED THIS REPORT TO HELP DETERMINE THE BEST QUALIFIED FIRM TO PERFORM THE BUS SERVICES.

"THE BUS TRANSPORTATION CONTRACT HAS BEEN NEGOTIATED AND AWARDED TO THE FIRM OF LA VALENCIANA, S.A.

"WE APPRECIATE YOUR INTEREST IN OUR CONTRACTS AND ASSURE YOU THAT YOUR FIRM WAS GIVEN EVERY CONSIDERATION POSSIBLE IN THE BOARD'S DETERMINATION.'

IN RESPONDING TO YOUR LETTER OF SEPTEMBER 17, 1963, REQUESTING ADVICE AS TO PRECISELY WHAT PROCEDURES WERE USED IN AWARDING CONTRACTS FOR THE BUS SERVICES INVOLVED, THE RESIDENT OFFICER IN CHARGE OF CONSTRUCTION, BY LETTER DATED SEPTEMBER 25, 1963, ADVISED YOU AS FOLLOWS:

"THERE IS A PROCEDURE ESTABLISHED BY THE DEPARTMENT OF THE NAVY BY WHICH SUCH NEGOTIATIONS ARE HANDLED. A BRIEF SUMMARY OF THESE PROCEDURES WHICH WERE USED IN THE NEGOTIATION OF THE BUS SERVICE CONTRACT ARE STATED HEREIN FOR YOUR INFORMATION, AS REQUESTED.

"A PANEL WAS ESTABLISHED BY THE DIRECTOR, EUROPEAN-MID EAST DIVISION, BUREAU OF YARDS AND DOCKS, TO STUDY AND RECOMMEND QUALIFICATIONS OF PROSPECTIVE CONTRACTORS FOR THE BUS SERVICE CONTRACT. THIS PANEL FORMALIZED AND SUBMITTED THE QUESTIONNAIRES TO ALL FIRMS THAT HAD SHOWN INTEREST IN THIS TYPE OF CONTRACT. THESE COMPLETED QUESTIONNAIRES WERE THE BASIS FOR THE PANEL'S INVESTIGATION OF EACH FIRM'S QUALIFICATIONS. UPON COMPLETION OF THE PANEL'S INVESTIGATION, A COMPLETE REPORT ON THE PANEL'S FINDINGS WAS SUBMITTED TO THE BOARD OF CONTRACT REVIEW TO ASSIST THE BOARD IN DETERMINING THE MOST QUALIFIED AND CAPABLE FIRM TO PROVIDE THIS SERVICE.

"AS YOU KNOW, BY OUR PREVIOUS LETTER OF 9 JULY 1963, THE FIRM OF LA VALENCIANA WAS DETERMINED AS BEING THE MOST QUALIFIED AND CAPABLE, AND THEREFORE THIS CONTRACT WAS NEGOTIATED WITH THEM.'

SINCE YOU WERE THUS GIVEN NO EXPLANATION AS TO WHY LA VALENCIANA HAD BEEN DETERMINED TO BE BETTER QUALIFIED THAN YOU TO PERFORM THE CONTRACT, WHICH INDICATED THE POSSIBILITY OF FAVORITISM, WE REQUESTED THE CHIEF OF THE BUREAU OF YARDS AND DOCKS, AMONG OTHER THINGS, TO ADVISE US AS TO THE REASONS WHY LA VALENCIANA WAS DETERMINED TO BE THE MOST QUALIFIED AND CAPABLE FIRM TO PERFORM THE CONTRACT. IN RESPONSE TO OUR REQUEST, WE HAVE BEEN FURNISHED WITH A PHOTOSTAT OF A MEMORANDUM OF APRIL 15, 1963, FROM THE "SENIOR MEMBER, PANEL FOR STUDY AND RECOMMENDATION FOR QUALIFICATIONS OF CONTRACTORS FOR BUS SERVICE CONTRACT," TO THE DIRECTOR OF THE EUROPEAN MID-EAST DIVISION, BUREAU OF YARDS AND DOCKS, SUBJECT: "BUS SERVICES FY - 64, PANEL REPORT ON FINDINGS," WHICH IS, IN PERTINENT PART, AS FOLLOWS: "1. THE PANEL ESTABLISHED BY REFERENCE (A) REVIEWED THE INFORMATION QUESTIONNAIRES RECEIVED FROM FIRMS INTERESTED IN FURNISHING BUS TRANSPORATION SERVICES FOR THE NAVAL STATION, ROTA. THE INFORMATION QUESTIONNAIRES WERE FORWARDED TO TEN (10) DIFFERENT INTERESTED FIRMS. THE FOLLOWING ARE THE FINDINGS MADE UPON REVIEW OF THE INFORMATION RECEIVED, ENCLOSURE (1), FROM THE SIX (6) FIRMS WHO COMPLETED THE QUESTIONNAIRE. THIS INFORMATION WAS COMPILED WITH THE ASSISTANCE OF COUNSEL TO OICC SPAIN.

* * * * * * * "B. LANZANI

THE PANEL FOUND THAT THIS CORPORATION IS A TRAVEL AGENCY AND ITS MAJOR FUNCTION IS BOOKINGS. THE DECLARED BUSINESS ASSETS OF THIS FIRM ARE 2,000,000 PESETAS, APPROXIMATELY $32,000. THIS CORPORATION STATES IT OWNS 21 BUSES AND HAS BEEN IN EXISTENCE FOUR YEARS. THE PANEL FINDS THAT THE DECLARED ASSETS DO NOT COME WITHIN RANGE OF THE ESTIMATED CONTRACT PRICE WHICH DOES NOT OFFER SUFFICIENT GUARANTEE. FURTHERMORE, THE PANEL FINDS THAT IN VIEW OF THE EXISTING BUS CONTRACTS AT NORES AND THE PROVINCE OF MUROIA, SUFFICIENT BUSES OWNED BY THE COMPANY ARE NOT AVAILABLE TO PERFORM BOTH CONTRACTS. THE PANEL CONSIDERS THAT THE EXPERIENCE OF LANZANI IN THIS FIELD IS NOT SUCH AS COULD OFFER THE NECESSARY GUARANTEED SERVICE.

"D. LA VALENCIANA, S.A.

THE PANEL FOUND THAT THIS FIRM HAS BEEN FURNISHING BUS TRANSPORTATION SERVICES IN A SATISFACTORY MANNER TO THE NAVAL STATION FOR THE PAST 2 1/2 YEARS. THIS COMPANY HAS DECLARED ASSETS OF 18,000,000 PESETAS, APPROXIMATELY $300,000. THE FIRM OWNS 38 BUSES AND HAS BEEN IN THE BUS TRANSPORTATION BUSINESS FOR 32 YEARS. THE PANEL FINDS THAT THE DECLARED ASSETS ARE BEYOND THE VALUE OF THE CONTRACT AND REPRESENT ADEQUATE GUARANTEE. LA VALENCIANA OWNS AND CAN ALLOT TO THIS CONTRACT SUFFICIENT BUSSES TO PERFORM THE CONTRACT. FURTHERMORE, THE COMPANY'S PERFORMANCE RECORD WITH THE NAVAL STATION AND ITS EXPERIENCE OF 32 YEARS OFFER SUFFICIENT GUARANTEE FOR CONSIDERATION.

"2. IN VIEW OF THE FOREGOING AND CONCLUSIVE TO THE FINDINGS, THE PANEL DETERMINES THAT LA VALENCIANA, S.A. IS THE FIRM WHICH IS MOST QUALIFIED TO PERFORM THE BUS SERVICES REQUIRED BY THE NAVAL STATION.

"3. THE PANEL RECOMMENDS THAT THE FY-64 BUS SERVICES CONTRACT FOR NAVSTA ROTA BE NEGOTIATED WITH LA VALENCIANA, S.A.'

IN VIEW OF THE INFORMATION CONTAINED IN THE ABOVE-QUOTED MEMORANDUM, WE FIND NO BASIS FOR QUESTIONING THE ACTION OF THE BUREAU OF YARDS AND DOCKS IN AWARDING THE CONTRACT FOR BUS SERVICES FOR THE FISCAL YEAR 1964 TO LA VALENCIANA.

IN HIS LETTER OF MAY 17, 1965, FURNISHING US A SUPPLEMENTAL REPORT IN THIS MATTER, THE CHIEF OF THE BUREAU OF YARDS AND DOCKS HAS ADVISED US THAT THE CONTRACT FOR BUS SERVICES AT ROTA FOR THE FISCAL YEAR 1966 IS TO BE AWARDED ON THE BASIS OF FORMAL COMPETITIVE BIDDING "PURSUANT TO INVITATION FOR BIDS PLANNED FOR ISSUE THIS MONTH.' YOU NO DOUBT WILL BE, IF YOU HAVE NOT ALREADY BEEN, SUPPLIED WITH A COPY OF THE INVITATION.