B-166865, JUN. 20, 1969, 48 COMP. GEN. 790

B-166865, JUN. 20, 1969, 48 COMP. GEN. 790

BIDS--DELIVERY PROVISIONS--FAILURE TO MEET A TELEGRAPHIC BID ON ADDITIONAL GALLONS OF TURBINE FUEL, AVIATION JP 4, TO BE SHIPPED ON AN F.O.B. ORIGIN BASIS THAT DID NOT SPECIFY THE POINT OF ORIGIN, INFORMATION THAT ALSO WAS NOT FURNISHED IN A CONFIRMING LETTER, PROPERLY WAS REJECTED AS NONRESPONSIVE WHERE THE F.O.B. SHIPPING POINT COULD NOT BE ASCERTAINED BY A READING OF THE BID AS A WHOLE. ALTHOUGH THE SMALL BUSINESS BIDDER HAS ONLY ONE REFINERY AND IT WAS IDENTIFIED IN BOTH THE TELEGRAM AND CONFIRMING LETTER, THE FUEL BEING OBTAINABLE FROM A WIDE NUMBER OF SOURCES, AND THE BIDDER HAVING LISTED IN ITS BASIC BID THREE DIFFERENT ORIGIN POINTS FOR FOUR SEPARATE INCREMENTS OF JP-4 GRADE FUEL, THE GOVERNMENT COULD NEITHER DETERMINE TRANSPORTATION COSTS FOR EVALUATION PURPOSES, NOR IF IT ACCEPTED THE BID, LEGALLY BIND THE BIDDER TO DELIVER AT ITS REFINERY.

TO KORTH AND KORTH, JUNE 20, 1969:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MAY 5, 1969, PROTESTING ON BEHALF OF THE OKMULGEE REFINING CO; INC; AGAINST THE REJECTION OF ITS BID UNDER TELEGRAPHIC INVITATION FOR BIDS NO. DSA600-69-B-0161 0003, ISSUED BY THE DEFENSE FUEL SUPPLY CENTER, ALEXANDRIA, VIRGINIA.

THE TELEGRAPHIC INVITATION FOR BIDS, WHICH WAS ISSUED ON MARCH 24, 1969, REQUESTED LETTER BIDS OR WIRE BIDS CONFIRMED BY LETTER FOR DELIVERY OF ALL OR ANY PART OF 4,500,000 ADDITIONAL GALLONS OF TURBINE FUEL, AVIATION GRADE JP-4, ON AN F.O.B. ORIGIN OR F.O.B. DESTINATION BASIS, TINKER AIR FORCE BASE, OKLAHOMA, DURING THE PERIOD APRIL 1, 1969, OR DATE OF AWARD, THROUGH JUNE 30, 1969. PROSPECTIVE BIDDERS WERE ADVISED THAT THE SOLICITATION WAS ISSUED SUBJECT TO ALL TERMS, CONDITIONS, AND SPECIFICATIONS OF THE BASIC INVITATION FOR BIDS NO. DSA600-69-B-0161, AS AMENDED, EXCEPT AS MODIFIED BY THE TELEGRAPHIC INVITATION FOR BIDS ITSELF. OF THE 4,500,000 GALLONS REQUESTED, 3,825,000 GALLONS WERE SET ASIDE FOR SMALL BUSINESS FIRMS.

ONE OF THE FIVE TELEGRAPHIC BIDS RECEIVED BY BID OPENING, WHICH WAS HELD AT 3:45 P.M; APRIL 7, 1969, WAS A TELEGRAPHIC BID FROM THE OKMULGEE REFINING CO; INC; STATING:

REFERENCE DSA600-69-B-0161-0003 ATTN CODE DSFC-PS. OKMULGEE BID .0985 ORIGIN. TERMS NET. WE ARE INTERESTED AND QUALIFY FOR SMALL BUSINESS SET ASIDE. WE HAVE READ AND AGREE TO CONDITIONS FIXED IN SOLICITATION WIRE OF MARCH 24, 1969 KA-325. CONFIRMING LETTER TO FOLLOW.

IN A CONFIRMING LETTER DATED APRIL 2, 1969, OKMULGEE STATED: REFERENCE: DSA600-69-B-0161-1003, ATTENTION CODE DFSC-PS.

OKMULGEE BID .0985 ORIGIN.

TERMS NET.

WE ARE INTERESTED AND QUALIFY FOR SMALL BUSINESS SET-ASIDE.

WE HAVE READ AND AGREE TO CONDITIONS FIXED IN SOLICITATION WIRE OF MARCH 24, 1969 KA-325.

BID BY WIRE--- APRIL 2, 1969.

TWO OF THE FOUR OTHER BIDDERS QUOTED F.O.B. ORIGIN PRICES OF $0.096 AND $0.104 PER GALLON AND THE TWO OTHER BIDDERS QUOTED F.O.B. DESTINATION PRICES OF $0.1043 AND $0.1095 PER GALLON. THE CONTRACTING OFFICER REPORTS THAT SINCE OKMULGEE DID NOT SPECIFY THE POINT OF ORIGIN IN ITS BID, HE DETERMINED THAT SUCH BID WAS NONRESPONSIVE TO THE INVITATION AND, THEREFORE, SHOULD BE REJECTED ON APRIL 11, 1969, AN AWARD OF 2,000,000 GALLONS WAS MADE TO THE BELL OIL & GAS COMPANY UNDER CONTRACT NO. DSA600- 69-D-1876, AND AN AWARD OF 2,500,000 GALLONS WAS MADE TO THE TONKAWA REFINING COMPANY UNDER CONTRACT NO.--- 1877.

YOU CONTEND THAT OKMULGEE'S LETTER CONFIRMING ITS WIRE BID WHEN READ ALONE SHOWS THE POINT OF ORIGIN OF THE FUEL; THAT THE PHRASE "OKMULGEE BID .0985 ORIGIN" CLEARLY INDICATES THE ORIGIN TO BE OKMULGEE, OKLAHOMA; AND THAT YOUR POSITION IS FURTHER ENHANCED BY THE FACT THAT OKMULGEE IS A SMALL BUSINESS FIRM WITH ONLY ONE REFINERY, WHICH SITUATION, YOU STATE, IS CLEARLY ANALOGOUS TO THE SITUATION PRESENT IN THE SARATOGA CASE REPORTED IN DECISION B-155429, NOVEMBER 23, 1964.

IN THE SARATOGA CASE B-155429, MENTIONED ABOVE, WE HELD THAT IF A BIDDER SUBMITTING A "LETTER BID" FAILS TO EXPLICITLY DESIGNATE AN F.O.B. POINT OF ORIGIN, THE F.O.B. POINT MAY, IN THE PROPER CIRCUMSTANCES, BE ASCERTAINED BY A READING OF THE BID AS A WHOLE. IN THAT CASE OUR OFFICE CONSIDERED THE RESPONSIVENESS OF SUCH A BID SUBMITTED BY A SMALL BUSINESS CONCERN OFFERING TO FURNISH THE ADVERTISED SUPPLIES AT A PRICE LOWER THAN OTHER BIDDERS. WE HELD IN THAT CASE, IN PERTINENT PART, THAT:

THE COMPETITIVE BIDDING STATUTE CODIFIED AT 10 U.S.C. 2305 REQUIRES THAT AWARD OF A CONTRACT BE MADE TO THAT RESPONSIBLE BIDDER SUBMITTING THE LOWEST RESPONSIVE BID. 37 COMP. GEN. 550. WHERE BIDS ARE SUBMITTED ON AN F.O.B. ORIGIN BASIS, ONE OF THE FACTORS FOR CONSIDERATION IS THE GOVERNMENT'S COST OF TRANSPORTATION. SEE GENERALLY 42 COMP. GEN. 434. ESSENTIALLY YOU APPEAR TO TAKE THE POSITION THAT SINCE SARATOGA DID NOT EXPLICITLY DESIGNATE ITS INTENDED F.O.B. POINT OF ORIGIN, ITS BID CANNOT BE EVALUATED FAIRLY SINCE THE GOVERNMENT CANNOT COMPUTE THE COST OF TRANSPORTATION. THE CONTRACTING OFFICER ON THE OTHER HAND HAS TAKEN THE POSITION THAT SINCE SARATOGA HAS ONLY ONE PLANT, WHICH IS LOCATED AT SARATOGA SPRINGS, NEW YORK, IT IS ONLY FAIR TO ASSUME THAT SARATOGA INTENDED TO DESIGNATE SARATOGA SPRINGS AS THE F.O.B. POINT OF ORIGIN FOR PURPOSES OF BID EVALUATION. IT COULD WELL BE ARGUED THAT SARATOGA'S LETTER BID ITSELF INDICATES SARATOGA SPRINGS, NEW YORK, AS ITS INTENDED F.O.B. ORIGIN POINT, SINCE THAT LETTER SHOWS SARATOGA SPRINGS AS THE COMPANY LOCATION, NO OTHER LOCATION IS MENTIONED IN THE LETTER, AND THE LETTER STATES THE COMPANY IS A SMALL BUSINESS INCORPORATED IN THE STATE OF NEW YORK. FURTHER, IN VIEW OF THE FACT THAT SARATOGA'S BID IS APPROXIMATELY $150,000 LESS THAN THE NEXT LOWEST BID (BY RODALE ELECTRONICS), IT IS APPARENT THAT THE COST OF TRANSPORTATION FROM ANY POINT OF ORIGIN (TOTAL WEIGHT IS UNDER 30,000 POUNDS) COULD NOT CHANGE SARATOGA'S STANDING AS LOW BIDDER. * * *

THE CONTRACTING OFFICER CONTENDS THAT OUR DECISION IN THE SARATOGA CASE DOES NOT APPLY TO THE SITUATION IN THE PRESENT CASE BECAUSE THERE ARE CERTAIN FACTS PRESENT IN THIS CASE WHICH WERE NOT PRESENT IN THE SARATOGA CASE. HE ADMITS THAT MANY FACTS IN THE SARATOGA CASE ARE SIMILAR TO THOSE AT HAND, SUCH AS A SMALL BUSINESS FIRM, ONE PLANT ONLY IN EXISTENCE, AND A LETTER BID CONTAINING THE LOCATION OF THE SOLE PLANT IN THE LETTERHEAD (OR IN THE SIGNATORY PORTION OF THE TELEGRAM). HE STATES, HOWEVER, THERE THE ANALOGY CEASES. HE POINTS OUT THAT IN THE SARATOGA CASE, THE END ITEMS BEING PROCURED WERE COMPONENTS FOR AN "AN/ASA-16 INDICATOR GROUP, TOGETHER WITH CHANGE PAGES TO TECHNICAL MANUALS, REVISION DRAWINGS, DESIGN DATA, AND PROVISIONING DATA." IT IS HIS OPINION THAT IT WAS SAFE TO BELIEVE THAT SARATOGA WOULD BE PRODUCING AND DELIVERING THE END ITEMS FROM ITS OWN PLANT SINCE SUCH END ITEMS AND DOCUMENTS COULD NOT EASILY BE OBTAINED ELSEWHERE. THE CONTRACTING OFFICER ALSO CONTENDS THAT THE FACTS HERE INVOLVED ARE MATERIALLY DIFFERENT FROM THOSE PRESENT IN THE SARATOGA CASE IN THAT THE PRODUCT (GRADE JP-4 TURBINE FUEL) IS EASILY OBTAINABLE FROM A WIDE NUMBER OF SOURCES; THAT THERE ARE NUMEROUS POSSIBLE SOURCES FOR THE PRODUCT WITHIN A REASONABLE AREA OF THE STATED DESTINATION; THAT OKMULGEE HAS RECENTLY BID FROM THREE POINTS OF ORIGIN INCLUDING TWO IN THE AREA HERE INVOLVED; AND THAT IT IS COMMON PRACTICE IN THE INDUSTRY TO BID FROM ANOTHER'S REFINERY. IT IS THE OPINION OF THE CONTRACTING OFFICER THAT THE DEFENSE FUEL SUPPLY CENTER WOULD NOT LEGALLY BIND OKMULGEE TO DELIVER AT OKMULGEE, OKLAHOMA, IF IT HAD ACCEPTED ITS BID AS SUBMITTED.

WE DO NOT AGREE WITH YOUR CONTENTION THAT THE PHRASE "OKMULGEE BID .0985 ORIGIN" APPEARING IN OKMULGEE'S TELEGRAM AND LETTER INDICATES THE POINT OF ORIGIN TO BE OKMULGEE, OKLAHOMA. IN OUR VIEW, THE WORD "OKMULGEE" OBVIOUSLY WAS INTENDED TO IDENTIFY THE BIDDER. FURTHER, WE CONCUR IN THE VIEW OF THE CONTRACTING OFFICER THAT THE RATIONALE OF THE SARATOGA CASE MAY NOT BE APPLIED TO THE PRESENT CASE BECAUSE OKMULGEE'S ORIGIN OF OKMULGEE, OKLAHOMA, CANNOT BE SUPPORTED UPON A HISTORICAL BASIS. THE RECORD INDICATES THAT IN A BID SUBMITTED IN RESPONSE TO BASIC INVITATION FOR BIDS NO. DSA-600-69-B-0161, OKMULGEE LISTED THREE DIFFERENT ORIGIN POINTS FOR FOUR SEPARATE QUANTITY INCREMENTS OF GRADE JP-4 AVIATION TURBINE FUEL. WE THEREFORE ARE OF THE OPINION THAT THE GOVERNMENT COULD NOT LEGALLY BIND OKMULGEE TO DELIVER AT OKMULGEE, OKLAHOMA, IF IT HAD ACCEPTED THE BID AS SUBMITTED.