B-171023, DEC. 10, 1970

B-171023, DEC. 10, 1970

BID PROTEST - METHOD OF PRICE EVALUATION DENIAL OF PROTEST AGAINST AWARD OF CONTRACT FOR GREASE GUNS, ISSUED BY THE DEFENSE CONSTRUCTION SUPPLY CENTER TO PARKER-HANNIFIN CORPORATION, TPH DIVISION. WHERE SOLICITATION ADVISED THAT FINAL PRICE WOULD BE COMPUTED BY MULTIPLYING THE BEST ESTIMATE TOTAL QUANTITY TIMES THE AVERAGE OF THE UNIT PRICES OFFERED FOR ALL ORDERING RANGES FOR THAT ITEM IT WOULD BE A STRAINED CONSTRUCTION OF THE LANGUAGE TO ACCEPT PROTESTANT'S INTERPRETATION THAT SOME "UNSPECIFIED WEIGHTED AVERAGED WAS INTENDED TO BE USED." FURTHER WHERE THERE WAS NO QUESTION RAISED AS TO THE METHOD OF EVALUATION PRIOR TO THE SUBMISSION OF PROPOSALS, THE PROTEST MUST BE DENIED.

TO SUPERIOR MANUFACTURING COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 12, 1970, PROTESTING THE AWARD OF A CONTRACT TO ANOTHER FIRM UNDER SOLICITATION NO. DSA-700-71- B-0442, ISSUED BY THE DEFENSE CONSTRUCTION SUPPLY CENTER (DCSC), COLUMBUS, OHIO.

THE SUBJECT SOLICITATION WAS ISSUED ON SEPTEMBER 2, 1970, FOR BIDS ON A REQUIREMENTS-TYPE CONTRACT FOR GREASE GUNS TO BE DELIVERED ON AN F.O.B. DESTINATION BASIS TO COLUMBUS, OHIO, UNDER ITEM 1, AND TO OGDEN, UTAH, UNDER ITEM 2. BIDS WERE REQUIRED IN THREE DIFFERENT QUANTITY RANGES UNDER BOTH ITEM 1 AND ITEM 2. IN ADDITION, THE SOLICITATION STATED THAT THE BEST ESTIMATED TOTAL QUANTITY THE GOVERNMENT EXPECTED TO ORDER UNDER EACH ITEM WAS 30,000 AND PROVIDED THAT--

"FOR PURPOSES OF EVALUATING EACH LINE ITEM, THE PRICE OFFERED FOR EACH ORDERING RANGE WILL BE COMPUTED BY MULTIPLYING THE BEST ESTIMATED TOTAL QUANTITY (BEQ) TIMES THE AVERAGE OF THE UNIT PRICES OFFERED FOR ALL ORDERING RANGES FOR THAT ITEM."

FIVE BIDS WERE RECEIVED AND OPENED ON SEPTEMBER 25, 1970. YOU SUBMITTED THE LOW BID OF $2.39 EACH ON THE LOWEST QUANTITY RANGE OF ITEM 1, AND THE LOW BID OF $2.41 EACH ON THE LOWEST QUANTITY RANGE OF ITEM 2. YOUR BID PRICES ON THE TWO HIGHER QUANTITY RANGES UNDER EACH ITEM WERE THE SAME AS YOUR BID UNDER THE LOWEST QUANTITY RANGE. TPH DIVISION OF PARKER-HANNIFIN CORPORATION SUBMITTED THE LOW BID OF $2.36 EACH ON THE TWO HIGHEST QUANTITY RANGES OF BOTH ITEMS 1 AND 2. ALTHOUGH TPH'S BID PRICES FOR THE LOWER QUANTITY RANGES UNDER ITEMS 1 AND 2 WERE HIGHER, ITS BID WAS EVALUATED THE LOWEST FOR ALL THREE QUANTITY RANGES OF BOTH ITEMS BY TOTALING THE UNIT PRICES BID UNDER EACH QUANTITY RANGE OF THE RESPECTIVE ITEMS AND DIVIDING THE SUM BY THREE. THEREFORE, A CONTRACT FOR ITEMS 1 AND 2 WAS AWARDED TO TPH ON OCTOBER 8, 1970.

IT IS YOUR PRIMARY CONTENTION THAT THE METHOD OF EVALUATION WAS NOT STATED IN CLEAR, EXACT AND PRECISE TERMS AND, THEREFORE, THE SOLICITATION WAS DEFECTIVE AND SHOULD BE CANCELED. YOU STATE THAT ALTHOUGH THE EVALUATION OF OFFERS PROVISION APPEARS TO CALL FOR THE METHOD OF EVALUATION ACTUALLY USED IN EVALUATING THE BIDS, YOU BELIEVE "SOME UNSPECIFIED WEIGHTED AVERAGE WAS INTENDED TO BE USED TO DETERMINE THE EFFECTIVE LINE ITEM PRICE." IN SUPPORT OF THIS CONTENTION, YOU MAKE THE FOLLOWING ARGUMENT:

"THE TERM 'AVERAGE' IS NOWHERE DEFINED IN THE SOLICITATION. ATTACHMENT 'C' CONSISTS OF REPRODUCTIONS OF PAGES 84 AND 85 OF 'ELEMENTS OF MODERN STATISTICS' (NELSON, B. L.; APPLETON-CENTURY CROFTS; 1961), FROM WHICH PAGES I QUOTE IN PART:

' ... THE WORD "AVERAGE" IS A GENERAL TERM WHICH CAN MEAN ONE OF AT LEAST FIVE SPECIFIC AVERAGES, EACH HAVING ITS OWN PARTICULAR DEFINITION AND CHARACTERISTICS ... THE TERM "AVERAGE" SHOULD NEVER BE USED WITHOUT MAKING CLEAR WHAT PARTICULAR TYPE OF AVERAGE IS MEANT ... '

"ALSO, THE 'EVALUATION OF OFFERS' PARAGRAPH STATES THAT 'THE PRICE FOR EACH ORDERING RANGE WILL BE COMPUTED ... '. SINCE BIDDERS WERE REQUIRED TO STATE A PRICE FOR EACH ORDERING RANGE, NO COMPUTATION IS NECESSARY TO DETERMINE ANY ORDERING RANGE PRICE. IT IS THE USE OF THE VERB 'COMPUTE' IN THIS CONTEXT, COUPLED WITH THE ABSENCE OF A DEFINITION OF 'AVERAGE' AND THE LACK OF AN EXAMPLE OF HOW THIS AVERAGE WOULD BE COMPUTED, WHICH SUGGESTS THAT UTILIZATION OF SOME WEIGHTED AVERAGE WAS INTENDED." ADDITION, YOU POINT OUT THAT THE PREVIOUS SOLICITATION FOR THE SAME GREASE GUNS INCLUDED A WEIGHTING SCHEME FOR DETERMINING THE LINE ITEM PRICES. FURTHER, YOU STATE THAT THE SOLICITATION DID NOT CLEARLY INDICATE WHETHER EACH LINE ITEM WAS TO BE EVALUATED AND AWARDED SEPARATELY, OR WHETHER AWARD OF BOTH ITEMS TO A SINGLE BIDDER WAS CONTEMPLATED.

THE DEFENSE SUPPLY AGENCY (DSA) STATES THAT IT WAS INTENDED THAT BIDS WOULD BE EVALUATED BY AVERAGING THE UNIT PRICE FOR EACH QUANTITY RANGE WITHIN EACH ITEM AS WAS DONE IN DETERMINING TPH THE LOW BIDDER. THE QUANTITY RANGES WERE NOT WEIGHTED OR INTENDED TO BE WEIGHTED FOR THE PURPOSE OF AVOIDING UNBALANCED BIDDING BECAUSE IT HAS BEEN FOUND THAT ESTABLISHING VALID CRITERIA FOR WEIGHTING IS DIFFICULT, THE EVALUATION PROCESS IS THEREBY UNDULY COMPLICATED, AND THERE HAS BEEN LITTLE EVIDENCE OF UNBALANCING IN THE PAST. FURTHERMORE, DSA POINTS OUT THAT HAD AN AWARD OF BOTH ITEMS TO A SINGLE BIDDER BEEN INTENDED CLAUSE C08 ON PAGE 5 OF THE SOLICITATION WOULD HAVE BEEN CHECKED.

YOU ALSO POINT OUT THAT THERE IS A CONFLICT BETWEEN THE REQUIREMENT THAT BIDDERS QUOTE ON AN F.O.B. BASIS TO THE TWO SPECIFIED DESTINATIONS AND THE PROVISIONS ON PAGES 11 AND 12 WHICH PROVIDE FOR DELIVERY TO MULTIPLE DESTINATIONS AND THAT SUPPLIES MAY BE ORDERED BY ALL ACTIVITIES OF THE DEPARTMENT OF DEFENSE, RESPECTIVELY. DSA CONCEDES THIS INCONSISTENCY, BUT POINTS OUT THAT SINCE THE GREASE GUNS COVERED BY THIS PROCUREMENT ARE CENTRALLY MANAGED BY DCSC THERE IS LITTLE LIKELIHOOD THAT ANY ORDERS WILL BE FORTHCOMING FROM ANY OTHER ACTIVITY. IN ADDITION, IT STATES THAT IF THIS DOES OCCUR, THE CONTRACTOR WOULD BE ENTITLED TO AN EQUITABLE ADJUSTMENT UNDER ARTICLE 2 OF THE GENERAL PROVISIONS.

FINALLY, YOU CONTEND THAT AT LEAST A PART OF THE REQUIREMENTS SHOULD HAVE BEEN SET ASIDE FOR EXCLUSIVE SMALL BUSINESS PARTICIPATION. IT IS REPORTED THAT THE PROCUREMENT WAS NOT CONSIDERED APPROPRIATE FOR A SMALL BUSINESS SET-ASIDE BECAUSE UNDER THE PREVIOUS PROCUREMENT YOU WERE THE ONLY SMALL BUSINESS FIRM THAT SUBMITTED A BID.

AS YOU STATE, OUR OFFICE HAS HELD THAT THE BASIS OF EVALUATION MUST BE STATED IN ADVANCE WITH SUFFICIENT CLARITY AND EXACTNESS THAT ALL QUALIFIED OFFERORS ARE GIVEN AN EQUAL OPPORTUNITY TO SUBMIT OFFERS WHICH ARE BASED UPON THE SAME SPECIFICATIONS AND TO HAVE SUCH OFFERS EVALUATED ON AN EQUAL BASIS. 47 COMP. GEN. 272 (1967). IT IS OUR OPINION THAT THE EVALUATION OF OFFERORS PROVISION IN THE SUBJECT SOLICITATION MEETS THIS TEST. FIND NO BASIS FOR CONCLUDING THAT THE INTENDED METHOD OF EVALUATION WAS OTHER THAN AS STATED AND APPLIED. TO ACCEPT YOUR INTERPRETATION OF THE PROVISION WOULD, IN OUR OPINION, REQUIRE A STRAINED CONSTRUCTION OF THE LANGUAGE USED. FURTHERMORE, WE BELIEVE IT IS SIGNIFICANT TO NOTE THAT NEITHER YOUR FIRM NOR ANY OTHER POTENTIAL OFFEROR RAISED ANY QUESTION AS TO THE METHOD OF EVALUATION PRIOR TO THE SUBMISSION OF PROPOSALS.

IN THESE CIRCUMSTANCES, WE SEE NO BASIS FOR OUR OFFICE TO CONCLUDE THAT THE SOLICITATION WAS FATALLY DEFECTIVE OR THAT THE METHOD OF EVALUATION WAS PREJUDICIAL TO ANY OFFEROR. THEREFORE, YOUR PROTEST IS DENIED.