B-169209, JUN. 11, 1970

B-169209, JUN. 11, 1970

BIDS--DELIVERY PROVISIONS--"CALL PROCUREMENT ARRANGEMENTS"--STATUS BASIC ORDERING AGREEMENTS (BOA) CONTRACTOR WHO PROTESTED INVITATIONS FOR BIDS TO SUPPLY LOX/LIN TO GOVERNMENT INSTALLATIONS AND AWARD OF CALL PROCUREMENT ARRANGEMENTS (CPA) WITHOUT UTILIZING BOA IS DENIED. WHILE BOA IS INTENDED TO PROVIDE READY MEANS OF SECURING ADDITIONAL PRODUCT TO MEET PEAK REQUIREMENTS, BOA LANGUAGE DOES NOT OF ITSELF GIVE RISE TO CONTRACTUAL COMMITMENT AND, UNTIL DELIVERY ORDER IS ISSUED, NONE OF CLAUSES OF BOA BECOME OPERATIVE. SINCE GOVERNMENT IS NOT OBLIGATED TO SATISFY ANY PORTION OF ITS REQUIREMENTS OUT OF BOA, NO BASIS IS FOUND FOR SUSTAINING PROTEST.

TO UNION CARBIDE CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM DATED MARCH 2, 1970, IN WHICH YOU PROTEST THE ACTION TAKEN BY THE AIR FORCE TO SUPPLY LIQUID OXYGEN (LOX) AND LIQUID NITROGEN (LIN) TO THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA) AT MARSHALL SPACE FLIGHT CENTER (MSFC), HUNTSVILLE, ALABAMA, WITHOUT UTILIZING BASIC ORDERING AGREEMENT (BOA), F41608-69-A- 2703, AWARDED TO YOUR LINDE DIVISION.

THE AIR FORCE ISSUED THREE BASIC INVITATIONS FOR BIDS TO SUPPLY LOX/LIN TO INSTALLATIONS THROUGHOUT THE UNITED STATES. FIVE CALL PROCUREMENT ARRANGEMENTS (CPA) WERE AWARDED PURSUANT TO IFB F41608-70-B 4373, OPENED FEBRUARY 4, 1970. THE IFB SOLICITED BIDS FOB DESTINATION MISSISSIPPI TEST FACILITY (MTF), HANCOCK COUNTY, MISSISSIPPI AND NASA LEASED STORAGE TANKS, EAST NEW ORLEANS, LOUISIANA. BIDS WERE ALSO SOLICITED FOB ORIGIN. IFB F41608-70-B-4363, A SIMILAR TYPE OF SOLICITATION, CALLS FOR BIDS FOB DESTINATION NASA MSFC. NO AWARDS HAVE YET BEEN MADE UNDER THIS PROCUREMENT. IFB F41608-69-B-4775, OPENED FEBRUARY 20, 1970, SOLICITED BIDS FOB DESTINATION ONLY. NASA MSFC WAS NOT A DESIGNATED DESTINATION UNDER THIS BASIC INVITATION, BUT WAS INCLUDED BY AMENDMENT IN THE BOA'S AWARDED THEREUNDER. UNDER THE BOA'S YOUR PRICE FOR LIN FOB DESTINATION TO NASA MSFC IS LOW.

IN YOUR TELEGRAM YOU PROTEST THE CONTRACTING OFFICER'S ISSUANCE OF AN FOB ORIGIN ORDER UNDER A CPA AWARDED PURSUANT TO IFB F41608-70-B-4373 TO SATISFY LIN REQUIREMENTS AT NASA MSFC. IT IS YOUR CONTENTION THAT THE ONLY PROCUREMENT AVAILABLE TO SATISFY NEEDS AT NASA MSFC IS THE BOA AWARDED TO YOU. YOU FURTHER ALLEGE THAT THE GOVERNMENT CAN UTILIZE THE CPA'S ONLY TO SUPPORT THE MISSISSIPPI TEST FACILITY. IN ADDITION, YOU MAINTAIN THAT IF THE AIR FORCE WISHES TO SUPPLY NASA MSFC ON A FOB ORIGIN BASIS, IT SHOULD DO SO UNDER THE CPA AWARDS WHICH PRESUMABLY WILL BE MADE PURSUANT TO IFB F41608-70-B-4363. FINALLY, YOU ALLEGE THAT THE MEANS RESORTED TO BY THE AIR FORCE IN SATISFYING THE LOX/LIN REQUIREMENTS APPEAR TO BE OUTSIDE THE FAIR DEALING CONCEPT OF THE COMPETITIVE BIDDING SYSTEM.

LOX/LIN PLANTS PRODUCE A FIXED QUANTITY OF PRODUCT ON A DAILY BASIS AND NORMALLY OPERATE AT FULL CAPACITY IF AT ALL POSSIBLE. THE PLANTS IN USE GENERALLY RUN FROM 100 TO 300 TONS PER DAY PRODUCT CAPACITY. SUBSTANTIAL PERCENTAGE OF THIS CAPACITY IS COMMITTED ON LONG TERM COMMERCIAL CONTRACTS AND ONLY THE EXCESS IS AVAILABLE TO THE GOVERNMENT. THE SPORADIC NATURE OF THE GOVERNMENT'S RESEARCH AND DEVELOPMENT PROGRAMS MEANS A PEAKING OF REQUIREMENTS WHEN CRITICAL TESTS ARE TO TAKE PLACE. THESE PEAK REQUIREMENTS MAY NOT BE CAPABLE OF FULFILLMENT BY THE CONTRACTOR NORMALLY SUPPORTING A SPECIFIC USE POINT. THE BOA IS INTENDED TO PROVIDE A READY MEANS OF SECURING ADDITIONAL PRODUCT TO MEET THESE PEAK REQUIREMENTS.

PURSUANT TO ARMED SERVICES REGULATION (ASPR) 3-410.2, THE LANGUAGE OF THE BOA F41608-69-A-2703, AS AMENDED, UNDER PART II - ORDERS, STATES THAT:

"ORDERS WILL BE ISSUED UNDER THIS AGREEMENT IN THE FORM AND MANNER SET FORTH IN THE SCHEDULE, PROVIDED IT IS UNDERSTOOD AND AGREED THAT THIS IS NOT A REQUIREMENTS CONTRACT, AND THAT THE GOVERNMENT HAS NO OBLIGATION UNDER THE TERMS OF THIS AGREEMENT TO ISSUE SUCH ORDERS."

PART V OF THE BOA, ENTITLED "OFFERS", WHICH COVERS THE METHOD USED TO SUBMIT OFFERS TO THE GOVERNMENT, STATES AT ARTICLE A THAT, "THE GOVERNMENT SHALL EVALUATE ALL RESPONSIVE OFFERS RECEIVED AND, IF A REQUIREMENT ARISES, SHALL ISSUE DELIVERY ORDERS TO THE OFFERORS SUBMITTING THE BEST POSSIBLE PRICES ... " ARTICLE C OF THE PART STATES:

"ISSUANCE OF A DELIVERY ORDER FOR THE MINIMUM QUANTITY OR MORE SET FORTH IN ANY OFFER SHALL CONSTITUTE ACCEPTANCE BY THE GOVERNMENT OF THE OFFER AND A CONTRACT SHALL EXIST BETWEEN THE PARTIES FOR THE TERM OF THE OFFER WHICH CONTRACT SHALL INCLUDE THE PROVISIONS OF THIS BOA THE SAME AS IF INCORPORATED THEREIN. THE ACCEPTANCE OF AN OFFER BY THE GOVERNMENT SHALL BE INDICATED BY THE PCO'S SIGNATURE ON THE INITIAL DELIVERY ORDER FOR THAT OFFER. AT ITS OPTION, THE GOVERNMENT THEN MAY ISSUE ONE OR MORE DELIVERY ORDERS WHICH IN THE AGGREGATE DO NOT EXCEED THE MAXIMUM QUANTITY OFFERED."

THE QUOTED LANGUAGE MAKES CLEAR THAT THE BOA DOES NOT BY ITSELF GIVE RISE TO ANY CONTRACTUAL COMMITMENT. UNTIL A DELIVERY ORDER IS ISSUED, NONE OF THE CLAUSES OF THE BOA BECOMES OPERATIVE.

WE ARE AWARE THAT PART II - SPECIAL INSTRUCTIONS OF IFB F41608-70-B 4373 PROVIDES AT PARAGRAPH A THAT THE SOLICITATION IS FOR THE LOX/LIN REQUIREMENTS AT MTF AND THE NASA LEASED STORAGE TANKS AT EAST NEW ORLEANS, LOUISIANA. NEVERTHELESS, THE CPA'S ISSUED UNDER THAT SOLICITATION, ONE OF WHICH WAS AWARDED TO YOUR COMPANY, SPECIFICALLY RESERVE TO THE GOVERNMENT UNDER PARAGRAPH II D4 THE RIGHT TO ISSUE ORDERS FOB ORIGIN WHEN IT IS DETERMINED THAT SUCH SHIPMENTS ARE MORE ECONOMICAL TO THE GOVERNMENT. MAY BE ARGUED THAT THE FOB ORIGIN ORDERS UNDER THE CPA TO SATISFY REQUIREMENTS AT NASA MSFC GO BEYOND THE EXPRESSED INTENT OF THE STATED PURPOSE OF THE CPA. HOWEVER, NO SPECIAL USE SEEMS TO BE CONTEMPLATED WITH RESPECT TO THE NASA LEASED FACILITIES AT EAST NEW ORLEANS AND THERE COULD BE NO OBJECTION TO RELEASE OF SUPPLIES FROM THAT STORAGE FACILITY TO NASA MSFC OR FOR ANY OTHER GOVERNMENT PURPOSE. IF THE GOVERNMENT COULD SUPPLY MSFC INDIRECTLY UNDER THE CPA WE SEE NO REASON WHY IT COULD NOT BE DONE DIRECTLY AT A SUBSTANTIAL SAVINGS TO THE GOVERNMENT. THEREFORE, AND SINCE THE GOVERNMENT IS NOT OBLIGATED TO SATISFY ANY PORTION OF ITS REQUIREMENTS OUT OF THE BOA, WE FIND NO BASIS FOR SUSTAINING YOUR PROTEST.