B-170930, NOV. 30, 1970

B-170930, NOV. 30, 1970

BID PROTEST - BIDDER RESPONSIVENESS - QUANTITY LIMITATION PROHIBITION DENIAL OF PROTEST OF GIBRALTAR FABRICS, INC., AGAINST THE FINDING THAT GIBRALTAR WAS A NON-RESPONSIVE BIDDER AND AWARD OF CONTRACT FOR 431,616 WET WEATHER PONCHOS UNDER AN INVITATION ISSUED BY THE DEFENSE PERSONNEL SUPPORT CENTER TO KENNETH M. WILSON COMPANY INC. WHERE AN INVITATION FOR BIDS SPECIFIED THAT EACH OFFEROR MAY SUBMIT ONE QUANTITY ONLY, AT ONE PRICE AND MAY STIPULATE MINIMUM/MAXIMUM QUANTITY ACCEPTABLE FOR EACH ITEM THEN GIBRALTAR'S BID STATING A UNIT PRICE OF $7.00 WITH A MINIMUM OF 215,000 WITH THE STIPULATION THAT IF AWARDED 100,000 OR MORE, REDUCE PRICE BY $0.65, IF AWARDED 200,000 OR MORE REDUCE PRICE, ETC., WAS JUSTLY JUDGED NON-RESPONSIVE. PROTESTANT'S CLAIM THAT PARAGRAPH 10 WHICH STATES "OFFERS MAY BE SUBMITTED FOR ANY QUANTITIES" CONTRIDICTS THE QUANTITY LIMITATION PROHIBITION CLAUSE, RENDING THE LATTER OPAQUE, CANNOT STAND SINCE THE QUOTE OFFERED, WHEN READ IN CONTEXT, IS PRECEDED BY "UNLESS OTHERWISE PROVIDED IN THE SCHEDULE." PROTESTANT'S CLAIM THAT QUANTITY LIMITATION PROHIBITION CLAUSE IS INCONSISTENT WITH 48 COMP. GEN. 372 AND DOES NOT PROTECT BIDDER BY ALLOWING HIM TO QUOTE HIGHER PRICES FOR SMALLER QUANTITIES IS ALSO NOT JUSTIFIED. THE DECISION QUOTED PROVIDES, BUT DOES NOT REQUIRE, THAT PROCUREMENTS MIGHT PERMIT SEPARATE PRICES ON QUANTITY INCREMENTS. THE BIDDER IS PROTECTED FROM GOVERNMENT'S AWARDING LESS THAN THE MAXIMUM BY SPECIFYING A MINIMUM IN THE BID.

TO STASSEN, KEPHART, SARKIS & KOSTOS:

WE REFER TO YOUR LETTER OF SEPTEMBER 28, 1970, AND SUBSEQUENT CORRESPONDENCE, RELATING TO YOUR PROTEST ON BEHALF OF GIBRALTAR FABRICS, INC., AGAINST AWARD TO ANY OTHER COMPANY UNDER IFB DSA100-71-B 0146.

THE INVITATION WAS ISSUED ON AUGUST 18, 1970, BY THE DEFENSE PERSONNEL SUPPORT CENTER, PHILADELPHIA, PENNSYLVANIA, AND CONTAINED ONLY ONE ITEM WHICH CALLED FOR THE MANUFACTURE AND DELIVERY OF 431,616 EACH PONCHO, WET WEATHER. CLAUSE NO. C12.81 OF THE INVITATION PROVIDED:

"C12.81 QUANTITY LIMITATION PROHIBITION (DPSC 1969 MAY)

EACH OFFEROR MAY SUBMIT ONE QUANTITY ONLY, AT ONE PRICE FOR EACH ITEM. HOWEVER, IF SOLICITATION SO AUTHORIZED, THIS ONE QUANTITY MAY BE OFFERED ON AN FOB ORIGIN AND/OR FOB DESTINATION BASIS.

OFFERORS MAY STIPULATE THE MINIMUM/MAXIMUM QUANTITY ACCEPTABLE FOR EACH ITEM. IN ADDITION, OFFERORS MAY STIPULATE AN OVERALL ACCEPTABLE MINIMUM/MAXIMUM QUANTITY IF THE SOLICITATION REQUESTS OFFERS ON TWO OR MORE ITEMS.

ANY OFFER OF MORE THAN ONE QUANTITY FOR EACH ITEM OR ANY OFFER FOR A QUANTITY AT MORE THAN ONE PRICE, EXCEPT AS PERMITTED ABOVE, WILL RENDER THE OFFERS NONRESPONSIVE.

ON PAGE 6 OF THE INVITATION, IN THE PORTION TO BE COMPLETED BY OFFEROR, WAS ONE COLUMN DESIGNATED "MAXIMUM QUANTITY BID UPON" AND TWO SECTIONS DESIGNATED "FOB ORIGIN" AND "FOB DESTINATION." UNDER EACH OF THE LATTER WERE SUB-HEADINGS FOR UNIT PRICE, TOTAL AMOUNT AND MINIMUM QUANTITY BID UPON.

PARAGRAPH 10(C) OF THE SOLICITATION TERMS AND CONDITIONS PROVIDED:

"(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 OTHER-WISE IN HIS OFFER."

NINE BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION AND WERE OPENED ON SEPTEMBER 22, 1970. GIBRALTAR ENTERED ITS BID ONLY UNDER THE HEADING OF FOB ORIGIN, STATING A UNIT PRICE OF $7.00, A TOTAL AMOUNT OF $3,021,312.00 AND A MINIMUM QUANTITY BID UPON OF 215,000. BY A TELEGRAPHIC MODIFICATION DATED SEPTEMBER 21, 1970, GIBRALTAR REDUCED ITS BID AS FOLLOWS:

"IF AWARDED 100,000 OR MORE REDUCE QUOTED PRICE BY SIXTY FIVE CENTS EACH

IF AWARDED 200,000 OR MORE REDUCE QUOTED PRICE BY SEVENTY FIVE CENTS EACH

IF AWARDED TOTAL QUANTITY REDUCE QUOTED PRICE BY ONE DOLLAR TEN CENTS EACH.

KENNETH M. WILSON COMPANY, INC., ENTERED ITS BID IN ALL THE COLUMNS TO BE COMPLETED BY THE OFFEROR, STATING A MAXIMUM QUANTITY BID UPON OF 431,616, A UNIT PRICE OF $6.33, A TOTAL AMOUNT OF $2,732,129.28 AND A MINIMUM QUANTITY BID UPON OF 431,616 UNDER FOB ORIGIN AND A UNIT PRICE OF $6.36, A TOTAL AMOUNT OF $2,745,077.76 AND A MINIMUM QUANTITY BID UPON OF 300,000 UNDER FOB DESTINATION. BY A TELEGRAPHIC MODIFICATION RECEIVED PRIOR TO BID OPENING, WILSON REDUCED ITS PRICE BY $0.55 EACH FOR BOTH ORIGIN AND DESTINATION, WITH ALL OTHER TERMS TO REMAIN AS STATED.

THE CONTRACTING OFFICER DETERMINED THAT GIBRALTAR'S BID SHOULD BE REJECTED AS NONRESPONSIVE IN THAT IT VIOLATED THE QUANTITY LIMITATION PROHIBITION CLAUSE WHICH REQUIRED EACH OFFEROR TO SUBMIT ONE QUANTITY ONLY, AT ONE PRICE FOR EACH ITEM. SINCE THE INVITATION CONTAINED ONLY ONE ITEM, THE CONTRACTING OFFICER CONCLUDED THAT GIBRALTAR WAS PROHIBITED BY THE TERMS OF THE INVITATION FROM SUBMITTING THREE ALTERNATE QUANTITIES AT THREE DIFFERENT PRICES FOR THIS ONE ITEM.

BY LETTER OF SEPTEMBER 24, 1970, TO THE CONTRACTING OFFICER, GIBRALTAR EXPRESSED ITS VIEW THAT THE QUANTITY LIMITATION PROHIBITION CLAUSE IS BOTH OPAQUE AND CONTRADICTORY AND SHOULD BE INTERPRETED ONLY TO PREVENT AN OFFER DIVIDED INTO SEGMENTS, EACH AT A DIFFERENT PRICE, AND NOT TO PREVENT THE METHOD USED BY GIBRALTAR. THE LETTER ASSUMED A CONTRADICTION BETWEEN THE PROHIBITION IN PARAGRAPH C12.81 AND PARAGRAPH 10 BY QUOTING THE PORTION OF THE LATTER PARAGRAPH WHICH SAYS "OFFERS MAY BE SUBMITTED FOR ANY QUANTITIES." GIBRALTAR'S LETTER OF SEPTEMBER 25, 1970, TO THE CONTRACTING OFFICER ADVANCED THE ARGUMENT THAT WILSON'S BID OF A SEPARATE PRICE FOR ORIGIN AND DESTINATION WITH A DIFFERENT MINIMUM FOR EACH HAS THE SAME EFFECT AS GIBRALTAR'S OFFER OF THREE ALTERNATIVE MINIMUM QUANTITIES UNDER FOB ORIGIN.

YOUR LETTER OF NOVEMBER 3, 1970, CONTENDS THAT THE QUANTITY LIMITATION PROHIBITION CLAUSE IS RESTRICTIVE OF COMPETITION IN THAT A BIDDER IS FORECLOSED FROM BIDDING A LOWER PRICE FOR A QUANTITY IT CAN EFFICIENTLY HANDLE, TOGETHER WITH HIGHER PRICES FOR OTHER QUANTITIES FOR WHICH ECONOMIC REASONS REQUIRE A PRICE DIFFERENTIAL. ADDITIONALLY, YOU CONTEND THAT THE CONTRACTING AGENCY HAS NOT COMPLIED WITH A STATEMENT IN OUR DECISION B-165271, NOVEMBER 29, 1968, THAT FUTURE INVITATIONS FOR CLOTHING OR TEXTILES MIGHT REASONABLY PERMIT QUOTATION OF SEPARATE PRICES ON QUANTITY INCREMENTS SPECIFIED UNDER SEPARATE ITEMS. FINALLY, YOU ARGUE THAT THE QUANTITY LIMITATION PROHIBITION CLAUSE IS UNFAIR TO BIDDERS SINCE A GOVERNMENT SURVEY MAY DETERMINE A BIDDER LACKS THE CAPACITY TO PRODUCE THE FULL AMOUNT OF AN ITEM AND, THEREFORE, A BIDDER SHOULD BE ALLOWED TO QUOTE HIGHER PRICES FOR SMALLER QUANTITIES IN ORDER TO PROTECT HIMSELF IN THE EVENT OF AN AWARD OF LESS THAN THE FULL AMOUNT OF THE REQUIREMENT. GIBRALTAR'S LETTERS OF NOVEMBER 3 AND 4, 1970, TO OUR OFFICE REPEATED THE ARGUMENTS IN YOUR LETTER OF NOVEMBER 3, 1970, AND IN ITS LETTERS OF SEPTEMBER 14 AND 25, 1970, TO THE CONTRACTING OFFICER.

OUR OFFICE HAS CONSIDERED AND SUSTAINED THE USE OF QUANTITY LIMITATION PROHIBITION CLAUSES IN OUR DECISIONS B-165271, NOVEMBER 29, 1968, PUBLISHED AT 48 COMP. GEN. 372, AND B-170013, JULY 22, 1970, PUBLISHED AT 50 COMP. GEN. . THE LATTER CASE INVOLVED A SITUATION ALMOST IDENTICAL WITH THE PRESENT CASE. DESPITE A QUANTITY LIMITATION PROHIBITION EXACTLY THE SAME AS THAT USED IN THE PRESENT CASE, A BIDDER BID SIX DIFFERENT MINIMUM QUANTITIES AT SIX DIFFERENT PRICES ON ONE ITEM. WE HELD THAT BID WAS PROPERLY REJECTED AS NONRESPONSIVE, STATING THAT THE METHOD OF BIDDING USED WAS EXACTLY WHAT THE CLAUSE WAS DESIGNED TO PREVENT. WE ALSO CONSIDERED AND REJECTED AN ALLEGATION THAT USE OF THE CLAUSE CAUSED AN AMBIGUITY IN THE SOLICITATION. WHILE GIGRALTAR ALLEGES A CONTRADICTION EXISTS BETWEEN THE QUANTITY LIMITATION PROHIBITION CLAUSE AND THE TERMS OF PARAGRAPH 10, IT SUPPORTS ITS POSITION BY QUOTING ONLY THAT PORTION OF PARAGRAPH 10 WHICH STATES "OFFERS MAY BE SUBMITTED FOR ANY QUANTITIES." HOWEVER, WE FIND NO CONTRADICTION WHEN THE IMMEDIATELY PRECEEDING PHRASE, "UNLESS OTHERWISE PROVIDED IN THE SCHEDULE," IS INCLUDED IN THE QUOTATION.

IN THE PRESENT CASE, THE FACT THAT GIBRALTAR OFFERED ONLY THREE ALTERNATE QUANTITIES AT THREE DIFFERENT PRICES IS NOT SUFFICIENT TO DISTINGUISH IT FROM THE CASE IN WHICH SIX ALTERNATIVE QUANTITIES AND PRICES WERE OFFERED. THE CLAUSE IN QUESTION STATES THAT A BIDDER MAY BID ON ONLY ONE QUANTITY, AT ONE PRICE, FOR EACH ITEM. THE TEST IS NOT WHETHER ACCEPTANCE BY THE GOVERNMENT OF ANY ONE OF THE ALTERNATIVE BIDS WOULD RESULT IN ONE QUANTITY AT ONE PRICE, BUT WHETHER THE BIDDER SUBMITS BIDS ON MORE THAN ONE QUANTITY, OR SUBMITS MORE THAN ONE PRICE FOR ONE ITEM. IF HE DOES EITHER THE BID IS RENDERED NONRESPONSIVE.

THE ONLY EXCEPTION TO THIS REQUIREMENT IN THE INVITATION IS THAT "THIS ONE QUANTITY MAY BE OFFERED ON AN FOB ORIGIN AND/OR FOB DESTINATION BASIS." IN WILSON'S BID, THE MAXIMUM QUANTITY BID UPON IS THE SAME ON EITHER AN ORIGIN OR A DESTINATION BASIS. THE SUBMISSION OF A DIFFERENT MINIMUM QUANTITY FOR EACH BASIS, IN THE COLUMNS PROVIDED IN THE BID FORM, TOGETHER WITH ONE PRICE FOR EACH, CONFORMS TO THE BID REQUIREMENT OF ONE QUANTITY ONLY, AT ONE PRICE FOR ORIGIN, AND ONE QUANTITY ONLY, AT ONE PRICE FOR DESTINATION.

WITH REGARD TO YOUR CONTENTION THAT THE QUANTITY LIMITATION PROHIBITION CLAUSE IS RESTRICTIVE OF COMPETITION, THE RECORD IN THIS CASE WOULD APPEAR TO INDICATE THE CONTRARY. NINE BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION AND THE EIGHT BIDDERS OTHER THAN GIBRALTAR WERE ABLE TO STATE PRICES FOR QUANTITIES WITHIN THEIR CAPABILITIES, AND TO PROTECT THEMSELVES BY SPECIFYING APPROPRIATE MINIMUMS AND MAXIMUMS, WITHOUT ATTEMPTING TO CIRCUMVENT THE QUANTITY LIMITATION PROHIBITION. IT IS NOT READILY APPARENT THAT ALLOWING A BIDDER TO SUBMIT A VARIETY OF HIGHER PRICES FOR SMALL INCREMENTS WOULD RESULT IN ANY ADVANTAGE TO THE GOVERNMENT.

YOUR CONTENTION THAT THE CONTRACTING AGENCY HAS NOT COMPLIED WITH A STATEMENT IN OUR DECISION B-165271, NOVEMBER 29, 1968, MUST BE CONSIDERED IN THE CONTEXT OF THE ENTIRE STATEMENT OF WHICH YOU QUOTED ONLY A PART. THE COMPLETE STATEMENT WAS:

"AS YOU AND YOUR CLIENT WERE ADVISED DURING THE CONFERENCE ON NOVEMBER 5, 1968, THERE HAS BEEN DISCUSSED WITH A REPRESENTATIVE OF THE DEFENSE SUPPLY AGENCY THE POSSIBILITY THAT, IN FUTURE PROCUREMENTS OF TEXTILES OR CLOTHING, THE INVITATIONS MIGHT REASONABLY PERMIT THE QUOTATION OF SEPARATE PRICES ON QUANTITIES OFFERED WITHIN THE RANGES OF QUANTITY INCREMENTS SPECIFIED BY THE GOVERNMENT UNDER SEPARATE ITEMS OF THE BIDDING SCHEDULES." DESPITE THE EXISTENCE OF THE POSSIBILITY AT THAT TIME THAT FUTURE PROCUREMENTS MIGHT REASONABLY PERMIT SEPARATE PRICES ON QUANTITY INCREMENTS SPECIFIED UNDER SEPARATE ITEMS, IN THE PRESENT CASE, THE INVITATION DID NOT SPECIFY SUCH INCREMENTS UNDER SEPARATE ITEMS. ALSO, SUBSEQUENT TO THAT DECISION, OUR DECISION B 170013, JULY 22, 1970, APPROVED THE USE OF A QUANTITY LIMITATION PROHIBITION CLAUSE IN THE EXACT FORM USED HERE. IN OUR OPINION, USE OF THE CLAUSE IN THIS CASE IS IN ACCORD WITH OUR PREVIOUS DECISIONS IN THIS AREA.

WITH RESPECT TO YOUR FINAL ARGUMENT THAT THE CLAUSE IS UNFAIR TO BIDDERS IN THAT A GOVERNMENT SURVEY MAY REVEAL THAT A BIDDER LACKS THE CAPACITY TO PRODUCE THE FULL QUANTITY OF AN ITEM AND BIDDERS SHOULD THEREFORE BE ALLOWED TO QUOTE HIGHER PRICES FOR SMALLER INCREMENTS TO PROTECT THEMSELVES AGAINST AWARD OF A SMALLER QUANTITY, IT IS OUR VIEW THAT THE CLAUSE PROVIDES ADEQUATE PROTECTION FOR BIDDERS IN THIS REGARD BY ALLOWING THEM TO SPECIFY A MAXIMUM AND MINIMUM QUANTITY IN THEIR BIDS. A BIDDER MAY STATE A MAXIMUM WITHIN HIS CAPABILITIES AND A MINIMUM HIGH ENOUGH TO PROTECT HIS BID PRICE. THE RESPONSIBILITY RESTS WITH THE BIDDER TO DETERMINE HIS CAPACITY TO PRODUCE PRIOR TO SUBMITTING HIS BID, AND ANY GOVERNMENT SURVEY THEREAFTER SHOULD ONLY REVIEW INFORMATION THAT IS ALREADY IN POSSESSION OF THE BIDDER.

ON THE RECORD BEFORE US, WE FIND NO REASON TO QUESTION THE USE OF THE QUANTITY LIMITATION PROHIBITION CLAUSE, OR TO QUESTION THE CONTRACTING OFFICER'S DETERMINATION THAT THE BID OF GIBRALTAR WAS NONRESPONSIVE AND THAT THE BID OF WILSON WAS PROPERLY RESPONSIVE TO THE INVITATION. ACCORDINGLY, YOUR PROTEST ON BEHALF OF GIBRALTAR MUST BE DENIED.