B-157805, FEB. 18, 1966

B-157805, FEB. 18, 1966

TO THE HONORABLE LAWSON B. KNOTT, JR., ADMINISTRATOR, GENERAL SERVICES, ADMINISTRATION:

FURTHER REFERENCE IS MADE TO THE QUESTIONS RAISED BY ALFA AUTO RENTAL, INC., OVER THE METHOD OF COMPUTING CHARGES FOR THE RENTAL OF AUTOMOBILES UNDER CONTRACT NO. GS-09S-17121, WHICH WAS THE SUBJECT OF A REPORT DATED NOVEMBER 9, 1965, FROM YOUR GENERAL COUNSEL.

THE INVITATION PURSUANT TO WHICH THIS CONTRACT WAS AWARDED CALLED FOR BIDS UNDER SCHEDULES A, B AND C, FOR FURNISHING THREE TYPES OF VEHICLES IN CALIFORNIA, NEVADA AND HAWAII, DURING THE PERIOD AUGUST 1, 1965, THROUGH JULY 31, 1966. EACH SCHEDULE CALLED FOR A SEPARATE BID ON THE RENTAL COST AND RATE PER MILE FOR SIX DIFFERENT PERIODS OF TIME. FOR EXAMPLE, THE ALFA BID, EXCLUDING THE BID ON THE RATE PER MILE, FOR SCHEDULE A WAS AS FOLLOWS:

TABLE

"ITEM NO. SEDANS, STANDARD SIZE RENTAL COST

1. A. PER HOUR $ 5.00

B. PER 12-HOUR DAY$ 8.00

C. PER 24-HOUR DAY $ 9.00

D. PER 5-DAY WEEK $19.00

E. PER 7-DAY WEEK $21.00

F. PER 30-DAY MONTH $80.00"

WITH RESPECT TO AWARD AND EVALUATION OF BIDS, THE INVITATION PROVIDED THE FOLLOWING:

"AWARDS: AWARDS WILL BE MADE ON THE BASIS OF THE COMPOSITE LOWEST BID AT EACH LOCATION FOR ALL RENTAL PERIODS SPECIFIED, I.E., HOURLY, 12-HOUR, 24- HOUR, 5-DAY WEEK, 7-DAY WEEK AND MONTHLY. MULTIPLE AWARDS WILL NOT BE MADE AT ANY LOCATION FOR ANY ONE RENTAL PERIOD, EVEN THOUGH THE BID FOR ONE SPECIFIC RENTAL PERIOD MAY BE LOWER THAN THE SAME PERIOD RATE AS SPECIFIED BY ANOTHER BIDDER.

"FOR THE PURPOSE OF EVALUATING BIDS, AVERAGE USE OF 50 MILES SHALL BE CONSIDERED AS MINIMUM FOR EACH 12 HOUR PERIOD. COMPOSITE BID CALCULATIONS SHALL BE MADE ON THE AGGREGATE OF 100 RENTAL TRANSACTIONS AS FOLLOWS:

TABLE

2 1 HOUR PERIODS

5 12 HOUR PERIODS

50 24 HOUR PERIODS

16 5 DAY PERIODS

25 7 DAY PERIODS

2 1 MONTH PERIODS.'

THE DISPUTE IN THIS CASE WAS PRECIPITATED WHEN CERTAIN OF THE CONTRACTOR'S INVOICES FOR RENTALS WERE RETURNED FOR CORRECTION TO THE CONTRACTOR BY THE REGIONAL OFFICE IN SAN FRANCISCO, AFTER PAYMENT ON THE BASIS INVOICED WAS QUESTIONED BY GENERAL SERVICES ADMINISTRATION (GSA) AUDITORS. IT WAS STATED IN THE LETTER OF SEPTEMBER 27, 1965, RETURNING THE INVOICES THAT,

"CHARGES TO THE GOVERNMENT SHOULD BE BASED ON THE COMBINATION OF RATES RESULTING IN THE LEAST COST TO THE GOVERNMENT. FOR EXAMPLE, IF FOUR 24- HOUR DAYS USE OF A VEHICLE COMPUTED ON THE 24-HOUR DAY SCHEDULE IS GREATER THAN YOUR BID FOR A FIVE-DAY WEEK, THE CHARGES TO THE GOVERNMENT SHOULD BE BASED ON THE FIVE-DAY WEEK.'

THE ABOVE QUOTED INTERPRETATION OF THE METHOD OF COMPUTATION APPEARS TO BE BASED ON A MEMORANDUM DATED AUGUST 2, 1965, FROM THE REGIONAL COUNSEL TO THE REGIONAL DIRECTOR WHICH IS PREMISED ON THE FOLLOWING LANGUAGE SAID TO BE A PART OF THE CONTRACT:

"NOTE: FOR EACH SUB-ITEM CONTRACTOR SHALL COMPUTE CHARGES FOR SERVICE AT THE LOWEST POSSIBLE COMBINATION OF RATES.'

THE REGIONAL COUNSEL'S MEMORANDUM REFERRED TO ABOVE CONCERNED REVIEW OF THREE CONTRACTS, AND IT ASSUMED THAT ALL THREE CONTRACTS CONTAINED THE "NOTE" RELATIVE TO THE COMPUTATION OF CHARGES WHICH IS QUOTED ABOVE. HOWEVER, OUR EXAMINATION OF THE SUBJECT CONTRACT FAILS TO DISCLOSE ANY SUCH PROVISION IN CONTRACT NO. GS-09S-17121.

ALFA CONTENDS THAT ITS INVOICES REFLECT CHARGES COMPUTED IN ACCORDANCE WITH ITS BID; THAT THE RATES BID FOR EACH UNIT OF TIME WERE BASED ON THE ASSUMPTION THAT THE 100 RENTAL TRANSACTIONS LISTED IN THE INVITATION FOR PURPOSES OF EVALUATION HAD SOME RELATION TO THE ANTICIPATED ACTUAL RENTALS; THAT THE CHARGES COMPUTED THE SAME AS UNDER A PREVIOUS CONTRACT WOULD BE PAID; THAT ITS BID CLEARLY INDICATED, AND IT WAS FULLY INTENDED, THAT THE RATE FOR EACH UNIT OF TIME WAS FOR THE ACTUAL TIME THE VEHICLES WERE USED; AND THAT THE BID WAS ACCEPTED ON THIS BASIS.

IN HIS REPORT OF NOVEMBER 9, 1965, YOUR GENERAL COUNSEL HAS CONCLUDED THAT PAYMENT SHOULD BE MADE UNDER THE SUBJECT CONTRACT AT THE INVOICE PRICES. IT IS HIS OPINION THAT ALTHOUGH THE CONTRACT DID NOT EXPRESS THE TRUE INTENTION OF THE GOVERNMENT WITH REGARD TO THE METHOD OF COMPUTING CHARGES, BECAUSE THE "NOTE" QUOTED ABOVE WAS INADVERTENTLY OMITTED, A "LITERAL" READING OF THE CONTRACT REQUIRES PAYMENT OF THE RENTAL FOR THE ACTUAL USAGE AT THE RATES SPECIFIED. WE AGREE WITH THIS CONCLUSION. IS OUR OPINION THAT THE CONTRACT CONSUMMATED BY ACCEPTANCE OF ALFA'S BID DOES NOT SUPPORT THE METHOD OF COMPUTATION OF CHARGES WHICH IS ILLUSTRATED IN THE LETTER OF SEPTEMBER 27, 1965, TO ALFA, HERETOFORE QUOTED. THERE IS NOTHING IN THE INVITATION INDICATING THAT CHARGES WILL BE COMPUTED ON A RATE LOWER THAN THE RATE SPECIFIED FOR THE PERIOD OF TIME THE AUTOMOBILE IS ACTUALLY USED. BIDS WERE REQUESTED ON THE RATES FOR THE SPECIFIED TIME PERIODS WITH THE EXPLICIT STATEMENT THAT "AWARDS WILL BE MADE ON THE BASIS OF THE COMPOSITE LOWEST BID ... FOR ALL RENTAL PERIODS ..., " WITHOUT ANY REQUIREMENT THAT THE CONTRACTOR COMPUTE CHARGES AT THE LOWEST POSSIBLE COMBINATION OF RATES. EVALUATION AND ACCEPTANCE OF THE ALFA BID AS THE LOWEST RESPONSIVE BID, THEREFORE, ENTITLES IT TO BE PAID AT THE RATE SPECIFIED FOR THE TIME THE VEHICLE IS USED, AND APPROPRIATE ACTION SHOULD THEREFORE BE TAKEN TO ACCOMPLISH PAYMENTS AT SUCH RATES.

WITH RESPECT TO THE ADDITIONAL QUESTION RAISED BY YOUR GENERAL COUNSEL'S REPORT DATED NOVEMBER 9, 1965, RELATIVE TO THE PROPER RATES OF PAYMENT UNDER CONTRACT NO. GS-09S-13845 WITH ALFA, IT WOULD APPEAR THAT THE PERTINENT PROVISIONS OF THAT CONTRACT ARE IDENTICAL WITH THE PROVISIONS OF THE CONTRACTS INVOLVED IN THE PROTEST OF JACK BARRETT TRUCK AND AUTO LEASING, INC., (B-157999) AND THAT SUCH SIMILARITY WAS RECOGNIZED IN YOUR GENERAL COUNSEL'S REPORTS OF NOVEMBER 18 AND DECEMBER 28, 1965, TO THIS OFFICE ON THAT PROTEST. IN VIEW THEREOF, OUR DECISION IN THAT CASE WILL ALSO ..END :