B-168289, JAN. 8, 1970

B-168289, JAN. 8, 1970

BID PROTEST--AGGREGATE BID--DISCOUNT DECISION TO R. E. DARLING COMPANY, INCORPORATED, DENYING PROTEST AGAINST REJECTION OF BID FOR FURNISHING HOSE ASSEMBLIES UNDER INVITATION ISSUED BY AVIATION SUPPLY OFFICE ON BASIS THAT ITEM SHOULD NOT HAVE BEEN CANCELED FROM INVITATION. A CONTRACTING AGENCY'S DETERMINATION TO AMEND AN INVITATION TO DELETE ONE ITEM OF A THREE ITEM INVITATION BECAUSE THE INVITATION DID NOT SPECIFY DELIVERY, PACKAGING, ETC; REQUIREMENTS FOR THE ITEM IS NOT SO ARBITRARY OR ERRONEOUS AS TO CONSTITUTE AN ABUSE OF THE CONTRACTING OFFICER'S DISCRETION, EVEN THOUGH BY SUCH DETERMINATION THE BIDDER WHO WAS LOW ON THE BASIS OF AN AGGREGATE OF ALL ITEMS WAS DISPLACED. THEREFORE AWARD TO LOW BIDDER ON TWO ITEMS IS NOT SUBJECT TO OBJECTION. WITH RESPECT TO ALLEGATION THAT ALTERNATE BID FOR TWO ITEMS WOULD HAVE BEEN LOW IF LETTER HAD BEEN INTERPRETED AS OFFERING ADDITIONAL DISCOUNT, SUCH INTERPRETATION WOULD AMOUNT TO LETTING BIDDER EXPLAIN OPTION AFTER BID OPENING. HENCE PROTEST IS DENIED.

TO R. E. DARLING COMPANY, INCORPORATED:

THIS LETTER CONCERNS YOUR PROTEST RESPECTING THE AWARD OF ITEM 1 TO OXYTRONICS, INCORPORATED, UNDER INVITATION FOR BIDS NO. N00383-69-B 0629 ISSUED BY THE AVIATION SUPPLY OFFICE, PHILADELPHIA, PENNSYLVANIA.

THIS INVITATION FOR BIDS WAS ISSUED ON JANUARY 31, 1969, FOR TWO ITEMS OF HOSE ASSEMBLY. ITEM 1 REQUESTED BIDS FOR ALTERNATE OR "STEPLADDER" QUANTITIES (SUB-ITEMS 1AA, 1AB AND 1AC) OF A HOSE ASSEMBLY, PART NUMBER ACEL 33C1178-1. ITEM 2 WAS FOR ALTERNATE OR "STEPLADDER" QUANTITIES (SUB- ITEMS 2AA, 2AB AND 2AC) OF A HOSE ASSEMBLY, PART NUMBER ACEL 33C1196-2. THE INVITATION FOR BIDS SUBSEQUENTLY WAS AMENDED FOUR TIMES. AMENDMENT 0001, DATED FEBRUARY 4, 1969, ADDED TO THE INVITATION ITEM 3 FOR A QUANTITY OF 63 HOSE ASSEMBLIES, PART NUMBER ACEL 33C1196-2. AMENDMENT 0002, DATED FEBRUARY 19, 1969, CORRECTED AN ERROR IN THE INVITATION BY DELETING CLAUSE 423, PLACE OF DELIVERY: DESTINATION; CHANGED THE QUANTITIES IN ITEM 1; DELETED A PARTIAL SMALL BUSINESS SET-ASIDE ON ITEM 2 AND EXTENDED THE BID OPENING TO MARCH 3, 1969. AMENDMENT 0003, DATED FEBRUARY 26, 1969, EXTENDED THE DATE FOR BID OPENING INDEFINITELY. AMENDMENT 0004, DATED APRIL 11, 1969, ESTABLISHED THE DATE FOR BID OPENING AS JUNE 4, 1969.

THREE BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION. THE TWO LOW BIDS WERE SUBMITTED BY DARLING AND OXYTRONICS. IN ADDITION TO ITS ITEM BID PRICES, DARLING SUBMITTED AN ALTERNATE BID BY OFFERING AN ADDITIONAL DISCOUNT IF GIVEN AN AWARD FOR ALL ITEMS. THIS OFFER BY DARLING WAS MADE BY LETTER DATED FEBRUARY 27, 1969, WHICH ACKNOWLEDGED AMENDMENT 0002 TO THE INVITATION FOR BIDS. THAT LETTER STATED:

"AMENDMENT 0002 IS ACKNOWLEDGED AND QUOTATION AND AMENDMENT 0001 REMAINS FIRM, EXCEPT AN ADDITIONAL DISCOUNT OF THREE (3) PERCENT IS OFFERED IF AWARDED ALL THREE ITEMS, ANY COMBINATION OF QUANTITIES."

THE AVIATION SUPPLY OFFICE DECIDED TO MAKE AWARD FOR SUB-ITEM 1AA UNDER ITEM 1 AND FOR SUB-ITEM 2AA UNDER ITEM 2. OXYTRONICS WAS THE LOW BIDDER FOR SUB-ITEM 1AA AND DARLING WAS THE LOW BIDDER FOR SUB ITEM 2AA. HOWEVER, WHEN COMBINED WITH ITEM 3, DARLING'S ALTERNATE BID AS A RESULT OF THE ADDITIONAL 3 PERCENT DISCOUNT, WAS LOWER FOR ALL THREE ITEMS THAN ANY OTHER COMBINATION OF BIDS. DURING THE EVALUATION OF BIDS, THE AVIATION SUPPLY OFFICE DISCOVERED THAT WHILE AMENDMENT 0001, WHICH ADDED ITEM 3 TO THE INVITATION, APPLIED THE TERMS OF THE INVITATION FOR BIDS TO THAT ITEM, THE INVITATION FOR BIDS FAILED TO PROVIDE A PLACE OF DELIVERY, EITHER ORIGIN OR DESTINATION, FOR ITEM 3. SECTION 4.0, DELIVERIES, OF THE INVITATION CONTAINED TWO SUBSECTIONS, 421 AND 422, WHICH HAD BEEN MARKED TO APPLY ONLY TO ITEM 2 AND ITEM 1, RESPECTIVELY. A THIRD SUBSECTION, 423, HAD BEEN DELETED BY AMENDMENT 0002. BECAUSE OF THIS FAILURE TO SPECIFY A PLACE OF DELIVERY FOR ITEM 3, THE AVIATION SUPPLY OFFICE CONSIDERED THAT PORTION OF THE INVITATION FOR BIDS RELATING TO ITEM 3 TO BE DEFECTIVE AND, THEREFORE, TOOK ACTION TO CANCEL THAT PORTION OF THE INVITATION. AS A RESULT OF THE CANCELATION, THE PROCURING ACTIVITY DETERMINED THE ALTERNATE BID BY DARLING, OFFERING THE ADDITIONAL 3 PERCENT DISCOUNT IF AWARD WAS MADE FOR ALL ITEMS, COULD NOT BE ACCEPTED. ACCORDINGLY, BIDS WERE EVALUATED ON AN ITEM-BY-ITEM BASIS AND AWARD WAS MADE ON AUGUST 8, 1969, TO OXYTRONICS FOR SUB-ITEM 1AA AT $117,459.80 AND TO DARLING FOR SUB-ITEM 2AA AT $19,839.60, LESS PROMPT PAYMENT DISCOUNTS IN BOTH CASES. DARLING PROTESTED ON THE BASIS THAT ITEM 3 SHOULD NOT HAVE BEEN CANCELED AND THAT IN ANY EVENT ITEMS 1 AND 2 SHOULD HAVE BEEN AWARDED TO DARLING UNDER THEIR ALTERNATE BID OFFERING THE ADDITIONAL 3 PERCENT DISCOUNT.

THE ISSUE AS TO WHETHER ITEM 3 OF THE INVITATION WAS PROPERLY CANCELED HAS BEEN CLOUDED BY A FACTUAL DISPUTE REGARDING THE SUBSTANCE OF SEVERAL TELEPHONE CONVERSATIONS BETWEEN DARLING AND THE AVIATION SUPPLY OFFICE. DARLING HAS ALLEGED THAT AT VARIOUS TIMES THEY WERE INFORMED BY PROCUREMENT OFFICIALS THAT ITEM 3 WAS BEING CANCELED BECAUSE THE HOSE ASSEMBLIES NO LONGER WERE NEEDED; THAT ITEM 3 WOULD NOT BE CANCELED, AND THAT ITEM 3 WAS BEING CANCELED BECAUSE THE INVITATION WAS DETERMINED DEFECTIVE AS A RESULT OF A HIGH LEVEL CONFERENCE. THE AVIATION SUPPLY OFFICE, ON THE OTHER HAND, TO VARYING DEGREES, HAS DENIED OR PROFESSED LACK OF KNOWLEDGE OF THESE REPRESENTATIONS. THIS OFFICE DOES NOT HAVE THE FACILITIES TO RESOLVE SUCH FACTUAL DISPUTES NOR DO WE CONSIDER IT NECESSARY TO SO DO IN THIS INSTANCE.

PARAGRAPH 10 OF THE SOLICITATION INSTRUCTIONS AND CONDITIONS, ON PAGE 4 OF THE INVITATION FOR BIDS PROVIDES IN PART:

"(C) THE GOVERNMENT MAY ACCEPT ANY ITEM OR GROUP OF ITEMS OF ANY OFFER, UNLESS THE OFFEROR QUALIFIES HIS OFFER BY SPECIFIC LIMITATIONS. UNLESS OTHERWISE PROVIDED IN THE SCHEDULE, OFFERS MAY BE SUBMITTED FOR ANY QUANTITIES LESS THAN THOSE SPECIFIED; AND THE GOVERNMENT RESERVES THE RIGHT TO MAKE AN AWARD ON ANY ITEM FOR A QUANTITY LESS THAN THE QUANTITY OFFERED AT THE UNIT PRICES OFFERED UNLESS THE OFFEROR SPECIFIES OTHERWISE IN HIS OFFER." THIS OFFICE HAS CONSISTENTLY CONSTRUED THAT LANGUAGE, WHEN COMBINED WITH THE RIGHT TO REJECT ANY AND ALL OFFERS WHICH IS SET OUT IN SUBPARAGRAPH (B) OF THE SAME PARAGRAPH, TO AUTHORIZE THE CONTRACTING OFFICER TO MAKE AWARD FOR LESS THAN ALL THE ITEMS FOR WHICH BIDS WERE SOLICITED WHEN IN HIS DISCRETION SUCH A PARTIAL AWARD IS IN THE BEST INTEREST OF THE GOVERNMENT. SEE B-164527, AUGUST 16, 1968; B-161958, OCTOBER 30, 1967, AND B-153158, FEBRUARY 3, 1964. AS WE CLEARLY STATED IN THE LAST DECISION, WE DO NOT BELIEVE THIS RIGHT OF THE GOVERNMENT IS LOST SIMPLY BECAUSE SUCH ACTION PRECLUDES CONSIDERATION OF A LOW AGGREGATE BID CONDITIONED ON AWARD OF ALL ITEMS. WE EXPRESS NO OPINION AS TO THE PROCURING ACTIVITY'S VIEW THAT AN AWARD COULD NOT BE MADE FOR ITEM 3 BECAUSE THE INVITATION FAILED TO SET OUT THE NECESSARY DELIVERY, PACKAGING AND FIRST ARTICLE TESTING REQUIREMENTS. NEVERTHELESS, WE DO NOT BELIEVE THAT THIS DETERMINATION WAS SO ARBITRARY OR ERRONEOUS AS TO CONSTITUTE AN ABUSE OF THE CONTRACTING OFFICER'S DISCRETION. THEREFORE, WE FIND NO BASIS UPON WHICH THIS OFFICE MAY OBJECT TO THE DETERMINATION TO MAKE AWARD FOR ONLY ITEMS 1 AND 2 OF THE INVITATION FOR BIDS.

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

WE CANNOT ACCEPT DARLING'S INTERPRETATION. IF DARLING HAD INTENDED THIS INTERPRETATION SUCH AN OFFER COULD HAVE BEEN MADE BY SIMPLY STATING:

"AN ADDITIONAL 3 PERCENT DISCOUNT IS OFFERED IF ALL ITEMS ACTUALLY CONTRACTED FOR ARE AWARDED TO DARLING." ON THE OTHER HAND, IF AS DARLING STATES, IT IS LUDICROUS TO ASSUME THIS ADDITIONAL DISCOUNT WAS PREMISED ON THE AWARD OF ITEM 3, IT IS EQUALLY UNTENABLE TO ASSUME THAT THE ADDITIONAL DISCOUNT WAS INTENDED IF ONLY ITEM 3, BUT NOT ITEMS 1 AND 2, ACTUALLY WAS CONTRACTED FOR BY THE AVIATION SUPPLY OFFICE. WE BELIEVE THIS LANGUAGE IS CLEAR ON ITS FACE AND MEANS SIMPLY IF AWARDED ALL THREE ITEMS (REGARDLESS OF WHICH ALTERNATE SUB ITEM QUANTITIES ARE SELECTED UNDER ITEMS 1 AND 2), THEN AN ADDITIONAL 3 PERCENT DISCOUNT IS OFFERED. CF. B-160173, OCTOBER 20, 1966. IN ANY EVENT EVEN IF THE LANGUAGE IS SUBJECT TO MORE THAN ONE INTERPRETATION, TO ALLOW DARLING AFTER BID OPENING TO EXPLAIN THAT LANGUAGE, WOULD ALLOW DARLING AN OPTION NOT GIVEN OTHER BIDDERS TO ACCEPT OR REJECT THE CONTRACT BY EXPLAINING THEIR BID. WE HAVE CONSISTENTLY HELD THAT THE LAW AND REGULATIONS AFFECTING GOVERNMENT PROCUREMENT PRECLUDE SUCH ACTION. SEE 38 COMP. GEN. 532 (1961) AND 38 ID. 819 (1959).

ACCORDINGLY, WE CONCLUDE THE ALTERNATE BID BY DARLING WAS PROPERLY REJECTED AND, THEREFORE, YOUR PROTEST MUST BE DENIED.