B-167462, AUG. 15, 1969

B-167462, AUG. 15, 1969

BID PROTEST - EVALUATION - DISCOUNTS DECISION TO IRA GELBER FOOD SERVICES, INC., DENYING PROTEST AGAINST CONSIDERATION OF DISCOUNTS IN EVALUATION OF BIDS FOR JANITORIAL SERVICES FOR BARRACKS AT NAVAL AIR STATION, KEY WEST, FLORIDA. DISCOUNTS HAVE BEEN HELD TO BE PROPER FOR CONSIDERATION EVEN THOUGH THE INVITATION DOES NOT SPECIFICALLY PROVIDE FOR THE CONSIDERATION. TO PERMIT BIDDER TO INCLUDE DISCOUNT AFTER OPENING WOULD BE TANTAMOUNT TO PERMITTING HIM TO REDUCE A BID THAT WAS NOT LOW AND MAY NOT BE SANCTIONED.

TO IRA GELBER FOOD SERVICES, INCORPORATED:

REFERENCE IS MADE TO THE LETTER OF JULY 7, 1969, QUESTIONING WHETHER DISCOUNTS MAY BE CONSIDERED IN EVALUATING BIDS UNDER AN INVITATION FOR BIDS FOR JANITORIAL SERVICES FOR THE BARRACKS AT THE NAVAL AIR STATION AND THE NAVAL AIR STATION ANNEX AT KEY WEST, FLORIDA.

IT IS YOUR POSITION THAT DISCOUNTS SHOULD NOT HAVE BEEN CONSIDERED IN EVALUATING BIDS SINCE THERE WAS NOTHING IN THE INVITATION WHICH INDICATED THAT DISCOUNTS WOULD BE CONSIDERED. YOU ADVISE THAT YOU HAVE PROTESTED THIS MATTER TO THE PROCURING ACTIVITY BUT THAT YOUR PROTEST WAS DENIED ON THE BASIS OF OUR DECISION AT 40 COMP. GEN. 518.

YOUR LETTER REFERS TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2 407.3 WHICH WAS QUOTED IN OUR DECISION AT 40 COMP. GEN. 518. THIS SECTION OF ASPR HAS BEEN REVISED AND IT NOW STATES IN PART AS FOLLOWS: "* * * PRIOR TO ISSUING AN INVITATION FOR BIDS (EXCEPT FOR CONSTRUCTION), A DETERMINATION SHALL BE MADE AS TO WHETHER THE 20 CALENDAR DAY MINIMUM PERIOD FOR PROMPT PAYMENT DISCOUNTS IS APPROPRIATE. IF A MINIMUM PERIOD MORE OR LESS THAN 20 CALENDAR DAYS IS DETERMINED TO BE DESIRABLE, SUCH MINIMUM PERIOD SHALL BE STATED IN THE INVITATION FOR BIDS BY INCLUDING IN THE SOLICITATION THE FOLLOWING CLAUSE * * *.'

YOUR LETTER ALSO REFERS TO ASPR 2-201 WHICH PROVIDES IN PART AS FOLLOWS:

"/A) FOR SUPPLY AND SERVICE CONTRACTS, INCLUDING CONSTRUCTION, INVITATION FOR BIDS SHALL CONTAIN THE FOLLOWING INFORMATION IF APPLICABLE TO THE PROCUREMENT INVOLVED.

"/XX) A STATEMENT OF THE EXACT BASIS UPON WHICH BIDS WILL BE EVALUATED AND AWARD MADE, TO INCLUDE ANY GOVERNMENT COSTS OR EXPENDITURES (OTHER THAN BID PRICES) TO BE ADDED OR DEDUCTED, OR ANY PROVISION FOR ESCALATION AS FACTORS FOR EVALUATION * * *.'

OUR DECISION AT 40 COMP. GEN. 518, HAS BEEN CITED RECENTLY WITH APPROVAL IN 48 COMP. GEN. 256, WHICH ALSO CONCERNED A SITUATION WHERE A DISCOUNT WAS CONSIDERED IN EVALUATING BIDS EVEN THOUGH THE INVITATION DID NOT PROVIDE FOR PROMPT PAYMENT DISCOUNTS. IT WAS STATED AS FOLLOWS IN THE LATTER DECISION:

"SINCE THERE IS NO EVIDENCE TO SHOW THAT THE CONSIDERATION OF THE DISCOUNT OFFER WAS CONTRARY TO BID INSTRUCTIONS, A FAILURE TO CONSIDER FOR BID EVALUATION AND AWARD PURPOSES A QUANTITY DISCOUNT OFFER, WHETHER OR NOT SOLICITED IN AN INVITATION FOR BIDS, WOULD APPEAR TO BE CONTRARY TO ADVERTISING STATUTES, UNLESS THE CONTRACTING AGENCY DETERMINES THAT THE TERMS OF THE DISCOUNT OFFER CANNOT REASONABLY BE COMPLIED WITH. IN THIS CONNECTION, WE HAVE HELD THAT BIDDERS SHOULD BE APPRISED AS TO THE BASIS ON WHICH THEIR BIDS WILL BE EVALUATED WHEN THERE ARE SPECIAL FACTORS WHICH THE GOVERNMENT INTENDS TO CONSIDER IN MAKING BID EVALUATIONS, 39 COMP. GEN. 282. HOWEVER, WE DO NOT BELIEVE THAT, AS A GENERAL RULE, THE GOVERNMENT'S FAILURE TO MAKE SPECIFIC PROVISION FOR EVERY POSSIBLE METHOD OF PRICE QUOTATION SHOULD DEPRIVE IT OF THE RIGHT TO TAKE ADVANTAGE OF A CLEARLY OFFERED BENEFIT WHICH DID NOT CONTRAVENE ANY STATED REQUIREMENT OR PROHIBITION.

"UNDER THE GOVERNMENT'S COMPETITIVE BIDDING SYSTEM, WE THINK THAT A BIDDER MAY PROPERLY QUOTE ITS BEST TERMS, INCLUDING PROVISIONS, IF THEY SO DESIRE, FOR ALLOWANCE OF DISCOUNTS AND OTHER PRICE REDUCTIONS WHICH MIGHT BE BASED ON THE AMOUNT OF WORK OR SUPPLIES INCLUDED IN AWARDS. IT HAS LONG BEEN AN ESTABLISHED POLICY OF THE GOVERNMENT TO CONSIDER DISCOUNT OFFERS IN EVALUATING BIDS ON CONTRACTS TO BE AWARDED UNDER FORMAL ADVERTISEMENTS, AND IN OUR OPINION THE CONSIDERATION OF DISCOUNT OFFERS IS A PROPER METHOD OF EVALUATING THE PRICE WHICH THE GOVERNMENT WILL HAVE TO PAY, IF IT REASONABLY APPEARS THAT THE CONDITION ON WHICH THE DISCOUNT IS BASED WILL BE COMPLIED WITH. SEE 40 COMP. GEN. 518.'

THE CONCLUSION IN EACH OF THE ABOVE DECISIONS THAT DISCOUNTS MAY BE CONSIDERED EVEN THOUGH THE INVITATION DOES NOT SPECIFICALLY PROVIDE FOR THE CONSIDERATION OF DISCOUNTS IS NOT INCONSISTENT WITH THE ASPR PROVISIONS CITED BY YOU. THERE IS NOTHING IN ASPR 2-407.3 WHICH PROHIBITS SUCH CONSIDERATION. WITH RESPECT TO ASPR 2-201 (A) (XX), OUR COMMENT AS INDICATED IN 48 COMP. GEN. 256, IS THAT IT IS NOT A GENERAL RULE THAT THE GOVERNMENT'S FAILURE TO MAKE SPECIFIC PROVISION FOR EVERY POSSIBLE METHOD OF EVALUATION SHOULD DEPRIVE IT OF THE RIGHT TO TAKE ADVANTAGE OF A CLEARLY OFFERED BENEFIT WHICH DOES NOT CONTRAVENE ANY STATED REQUIREMENT OR PROHIBITION.

TO PERMIT YOU TO INCLUDE A DISCOUNT IN YOUR BID AT THIS TIME AS YOU SUGGEST WOULD BE TANTAMOUNT TO PERMITTING YOU TO REDUCE THE PRICE OF YOUR BID AFTER BID OPENING IN A SITUATION WHERE APPARENTLY YOUR BID AS SUBMITTED WAS NOT LOW. THIS, IN EFFECT, WOULD GIVE YOU THE OPPORTUNITY AFTER BID OPENING OF DISPLACING ANOTHER BID WHICH WOULD OTHERWISE BE THE LOW BID. IF SUCH A PROCEDURE WERE SANCTIONED IT WOULD DESTROY THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM. CF. 44 COMP. GEN. 137 AND 17 COMP. GEN. 554.