B-163477, APR. 12, 1968

B-163477, APR. 12, 1968

TO JACOBS AND SPEILLER:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MARCH 12, 1968, PROTESTING ON BEHALF OF GAR-LET MANUFACTURING CO., INC. (GAR-LET), THAT INVITATION FOR BIDS NO. 62-250-8-0319-SS ISSUED BY THE DISTRICT OF COLUMBIA IS RESTRICTIVE OF COMPETITION.

THE SUBJECT INVITATION WAS ISSUED ON JANUARY 12, 1968, REQUESTING BIDS FOR FURNISHING LAMP POSTS OF VARIOUS LENGTHS AND RELATED EQUIPMENT DESIGNATED AS ITEMS 1A, 1B, 2A, 2B AND 3. A LUMP-SUM DISCOUNT FOR AWARD OF ITEMS 1A THROUGH 2B IN THE AGGREGATE WAS PERMITTED TO BE OFFERED IN THE INTEREST OF OBTAINING THE LOWEST OVERALL COST TO THE DISTRICT. YOU PROTESTED TO THE DISTRICT THAT, WHILE UNION METAL MANUFACTURING COMPANY MADE ALL THE ITEMS, GAR-LET COULD MANUFACTURE ONLY THE 15-FOOT TRAFFIC SIGNAL POSTS DESIGNATED AS ITEM 1B AND, THEREFORE, THE INCLUSION OF THIS ITEM IN THE DISCOUNTED LUMP-SUM BID PRICE EFFECTIVELY ELIMINATED GAR-LET FROM COMPETITION. IN RESPONSE TO YOUR PROTEST THE DISTRICT ISSUED ADDENDUM NO. 3 TO THE INVITATION TO REQUIRE INDIVIDUAL BIDS ON ITEM 1B AND TO PERMIT THE OFFERING OF A LUMP-SUM DISCOUNT FOR AWARD OF ITEMS 1A, 2A, 2B AND 3 IN THE AGGREGATE. EIGHT BIDS WERE OPENED ON MARCH 1, 1968, AND BIDS WITH A LUMP-SUM DISCOUNT OFFERED FOR AWARD IN THE AGGREGATE WERE RECEIVED FROM ALL BIDDERS EXCEPT GAR-LET WHICH QUOTED ON ITEM 1B ONLY AND SPRING CITY FOUNDRY COMPANY WHICH QUOTED ONLY ON ITEM 3.

IN YOUR LETTER OF MARCH 12 YOU STATE THAT, NOTWITHSTANDING THE FACT THAT THE DISTRICT ATTEMPTED TO CREATE OPEN COMPETITION BY THE ISSUANCE OF ADDENDUM NO. 3, THE BIDS SUBMITTED STILL ELIMINATED GAR-LET FROM COMPETITION BECAUSE OF UNPRECEDENTED PRICE CUTTING ON ITEM 1B, THE ITEM GAR-LET IS CAPABLE OF MANUFACTURING. YOU STATE THAT FIVE OF THE BIDDERS SELLING UNION METAL'S PRODUCTS HAVE OFFERED TO SELL ITEM 1B IN THE $45.50 TO $50.62 PER POST PRICE RANGE, OR $25.29 TO $38.65 PER POST LESS THAN THEIR PRICES LAST YEAR. YOU ALSO STATE THAT THESE PRICES ARE BELOW GAR- LET'S COSTS OF MANUFACTURING AND WOULD APPEAR TO BE BELOW THE COSTS OF UNION METAL AND ITS DISTRIBUTORS. IT IS YOUR CONTENTION, THEREFORE, THAT CERTAIN OF THE BIDDERS HAVE VIOLATED THE FEDERAL ANTITRUST LAWS AND LAWS CONCERNING UNFAIR TRADE PRACTICES AND COLLUSIVE BIDDING TO THE DETRIMENT OF GAR-LET AND THE DISTRICT OF COLUMBIA. YOU ASK THAT WE INSTRUCT THE DISTRICT TO SUSPEND ALL BIDDERS SUSPECTED OF VIOLATING THE ANTITRUST LAW AND DIRECT THAT 1B BE READVERTISED BY ITSELF.

THE DISTRICT HAS ADVISED US THAT ITS RECORDS SUPPORT YOUR CONTENTION THAT FIVE BIDDERS OFFERING UNION METAL MATERIALS DECREASED THE PRICE OF ITEM 1B FROM A NET COST OF $71.28 ON A PREVIOUS INVITATION TO AN AVERAGE NET COST OF ABOUT $45.56 ON THE PRESENT INVITATION WHILE THE PRICES ON ALL OTHER ITEMS EXCEPT ITEM 3 INCREASED IN PRICE SINCE THE DISTRICT'S LAST PURCHASE.

THE QUESTION AS TO WHETHER THE SUBMISSION OF BIDS ON ITEM 1B AT A SUBSTANTIALLY REDUCED PRICE CONSTITUTES EVIDENCE OF VIOLATION OF THE ANTITRUST LAWS, RELATING TO CONSPIRACIES, MONOPOLIES AND MONOPOLISTIC PRACTICES JUSTIFYING RESORT TO JUDICIAL PROCEEDINGS, IS ONE FOR THE DETERMINATION OF THE FEDERAL TRADE COMMISSION AND/OR THE DEPARTMENT OF JUSTICE. THE DISTRICT GOVERNMENT HAS ADVISED US THAT THE MATTER HAS BEEN REPORTED TO THE ANTITRUST DIVISION OF THE DEPARTMENT OF JUSTICE. HENCE, NO ACTION IN THAT REGARD IS REQUIRED BY OUR OFFICE. INSOFAR AS YOUR REQUEST IS CONCERNED THAT WE DIRECT THE DISTRICT GOVERNMENT TO SUSPEND THE BIDDERS INVOLVED, THAT IS A MATTER FOR CONSIDERATION OF THE DISTRICT. HAVE NO JURISDICTION TO DEBAR SUCH BIDDERS. ALSO, IN THE ABSENCE OF A CONVICTION UNDER THE FEDERAL ANTITRUST STATUTES WE WOULD NOT BE JUSTIFIED IN DIRECTING THE READVERTISEMENT OF ITEM 1B BY ITSELF.