B-159713, JANUARY 11, 1967, 46 COMP. GEN. 612

B-159713, JANUARY 11, 1967, 46 COMP. GEN. 612

CONTRACTS - TIME AND MATERIALS - PROCEDURE THE AWARD OF A COST-PLUS-A-PERCENTAGE-OF-COST TIME AND MATERIALS PURCHASE ORDER--- A CONTRACTING BASIS VIOLATING 41 U.S.C. 254 (B/--- AFTER DISCLOSURE OF A COMPETITOR'S QUOTATION--- PROCEDURE CONTRARY TO SECTION 1- 3.805-1 (B) OF THE FEDERAL PROCUREMENT REGULATIONS--- AND PERMITTING A REVISION DOWNWARD OF PRICE BY THE BIDDER, SHOULD BE CANCELED AND THE PROCUREMENT MADE IN ACCORDANCE WITH SECTION 1-3.406-1 OF THE REGULATIONS, PROVIDING THE METHODS TO BE EMPLOYED IN PROCUREMENTS TO BE MADE ON A TIME AND MATERIALS BASIS.

TO THE SECRETARY OF AGRICULTURE, JANUARY 11, 1967:

REFERENCE IS MADE TO REPORTS DATED OCTOBER 21 AND DECEMBER 1, 1966, FROM THE DIRECTOR, RESEARCH AND OPERATIONS DIVISION, REPORTING ON THE PROTEST OF MANWILL PLUMBING, INC., WITH RESPECT TO THE HANDLING OF QUOTATIONS UNDER A REQUEST FOR QUOTATIONS FOR FURNISHING OF LABOR AND MATERIALS TO ACCOMPLISH PLUMBING REPAIRS AS NEEDED AT THE WESTERN AERIAL LABORATORY FROM JULY 1, 1966 THROUGH JUNE 30, 1967.

THE REPORTS INDICATE THAT MANWILL PLUMBING AND ERICSON PLUMBING AND HEATING CO. WERE THE ONLY CONCERNS FURNISHING QUOTATIONS AND THAT WHILE MR. ERICSON WAS IN THE LABORATORY DISCUSSING OTHER PLUMBING WORK HE INQUIRED ABOUT THE QUOTATIONS AND HOW HIS LABOR QUOTATION COMPARED. WAS TOLD THAT IT WAS A LITTLE HIGH WHEREUPON HE ASKED WHETHER HE COULD REVISE IT AND WAS PERMITTED TO DO SO. THE REVISED QUOTATION OFFERED THE SAME LABOR RATE OFFERED BY MANWILL. IT IS INDICATED FURTHER THAT, SINCE ERICSON PROVIDED THAT IT WOULD FIGURE ITS COST FOR MATERIAL AT OUT OF STOCK COST PLUS 15 PERCENT FOR OVERHEAD AND 10 PERCENT FOR PROFIT, WHEREAS MANWILL INDICATED IT WOULD FIGURE THE COST FOR MATERIAL AT COST PLUS 15 PERCENT AS PER TRADE BOOK, IT WAS DECIDED THAT ERICSON HAD OFFERED THE MORE ADVANTAGEOUS QUOTATION AND A PURCHASE ORDER WAS ISSUED TO IT. THE REASON ERICSON'S QUOTATION WAS CONSIDERED MORE ADVANTAGEOUS WAS THAT THE MATERIAL WAS TO BE FIGURED AT 25 PERCENT OF COST WHEREAS THE MANWILL COST WOULD HAVE BEEN THE TRADE BOOK COST WHICH IS SUPPOSED TO INCLUDE A 33-1/2- PERCENT MARKUP OVER THE 15 PERCENT STATED IN THE QUOTATION OR A TOTAL OF 48 1/2 PERCENT ABOVE THE COST TO THE COMPANY.

WE BELIEVE THE LABORATORY ERRED IN ADVISING MR. ERICSON THAT HIS QUOTATION WAS HIGHER THAN MANWILL'S QUOTATION. THE FEDERAL PROCUREMENT REGULATIONS (FPR) DEALING WITH PRICE NEGOTIATION POLICIES AND TECHNIQUES ARE SPECIFIC THAT INFORMATION AS TO PRICES AND RELATIVE STANDING OF QUOTATIONS IS NOT TO BE DIVULGED TO THE PARTICIPANTS. FPR SECTION 1-3.805 -1 (B). WE BELIEVE THAT APPROPRIATE ACTION SHOULD BE TAKEN TO ASSURE THAT THE FPR REQUIREMENTS ARE FOLLOWED IN THE FUTURE.

ADDITIONALLY, IT IS NOT APPARENT THAT FPR SECTION 1-3.406-1 PROVIDING THE METHODS TO BE EMPLOYED IN PROCUREMENTS TO BE MADE ON A TIME AND MATERIALS BASIS HAS BEEN FOLLOWED. IT APPEARS THAT THE PURCHASE ORDER ISSUED CONTEMPLATES CONTRACTING ON A COST-PLUS-A PERCENTAGE-OF-COST BASIS WHICH VIOLATES 41 U.S.C. 254 (B). THEREFORE, THE PURCHASE ORDER SHOULD BE CANCELED AND THE PROCUREMENT MADE BY OTHER THAN A COST-PLUS-A-PERCENTAGE- OF-COST SYSTEM OF CONTRACTING.

IT IS OUR UNDERSTANDING THAT IN THE LAST FISCAL YEAR WORK FOR THE LABORATORY IN THE AMOUNT OF ABOUT $600 WAS PERFORMED AND THAT FOR THE CURRENT FISCAL YEAR $1,500 IS ESTIMATED FOR THE PLUMBING REPAIR WORK. VIEW OF THE SMALL AMOUNT OF THE WORK CONTEMPLATED AND THE APPARENT GOOD FAITH JUDGMENT WHICH LED TO THE ISSUANCE OF THE PURCHASE ORDER, OUR OFFICE WILL NOT OBJECT TO THE PAYMENT FOR ANY WORK HERETOFORE PERFORMED AT THE RATES PRESCRIBED IN THE PURCHASE ORDER.