B-174605, FEB 1, 1972, 51 COMP GEN 467

B-174605, FEB 1, 1972, 51 COMP GEN 467

BIDS - EVALUATION - DELIVERY PROVISIONS - ACCELERATED DELIVERY - EFFECT ON OPTION AND GOVERNMENT EQUIPMENT RENTAL UNDER AN INVITATION FOR BIDS TO FURNISH BOMB BODIES THAT INCLUDED AN OPTION FOR ADDITIONAL QUANTITIES; THAT PERMITTED ACCELERATED DELIVERY IF SCHEDULED REQUIREMENTS WERE MET; AND THAT PROVIDED FOR FIRST ARTICLE APPROVAL WAIVER, AND CONSIDERATION OF TRANSPORTATION COSTS AND THE VALUE OF THE USE OF RENT-FREE GOVERNMENT-OWNED EQUIPMENT AND TOOLING, AN AWARD ON THE BASIS OF ACCELERATED DELIVERY TO THE LOW BIDDER ON THE INITIAL QUANTITY PROPERLY DID NOT CONSIDER THE FACT THAT THE OPTION PRICE WAS HIGHER, SINCE THE EXERCISE OF THE OPTION SIMULTANEOUSLY WITH THE AWARD WAS NOT CONTEMPLATED AND THE MARKET WOULD BE TESTED BEFORE THE OPTION WAS EXERCISED AND, MOREOVER, THE BID IS NOT CONSIDERED TO HAVE BEEN NONRESPONSIVE BECAUSE THE OPTION DELIVERY RATE WAS BASED ON THE ACCELERATED RATE, AND THE RENTAL FACTOR HAD BEEN COMPUTED AT THE ACCELERATED DELIVERY RATE WITHOUT REGARD TO THE EXTENDED USE OF THE GOVERNMENT PROPERTY UNDER A PRIOR CONTRACT.

TO ROBERT SHERIFFS MOSS & ASSOCIATES, FEBRUARY 1, 1972:

WE REFER TO YOUR TELEGRAM OF NOVEMBER 24, 1971, AND SUBSEQUENT CORRESPONDENCE, PROTESTING ON BEHALF OF AMF INCORPORATED AGAINST THE PROPOSED AWARD OF A CONTRACT TO THE MARATHON LETOURNEAU COMPANY UNDER INVITATION FOR BIDS NO. DAAA09-72-B-0060, ISSUED BY THE UNITED STATES ARMY AMMUNITION PROCUREMENT SUPPLY AGENCY (APSA), JOLIET, ILLINOIS.

THE SUBJECT INVITATION COVERS A REQUIREMENT FOR 20,000 750-POUND BOMB BODIES, DESIGNATED M11783, MPTS, AND INCLUDES AN OPTION FOR ADDITIONAL QUANTITIES UP TO 300 PERCENT OF THE BASIC QUANTITY. WITH RESPECT TO DELIVERY OF THE BASIC QUANTITY, THE REQUIRED SCHEDULE CALLS FOR DELIVERY IN FOUR MONTHLY INCREMENTS OF 5,000 EACH COMMENCING ON OR BEFORE MARCH 31, 1972, AND ENDING ON OR BEFORE JUNE 30, 1972. (THIS SCHEDULE WAS PREMISED ON AWARD OF A CONTRACT BY DECEMBER 25, 1971, AND IS SUBJECT TO EXTENSION BY THE NUMBER OF CALENDAR DAYS BEYOND DECEMBER 25 IT TAKES TO MAKE THE AWARD.) IN ADDITION, THE INVITATION CONTAINS THE FOLLOWING PROVISION, WHICH IN PERTINENT PART AUTHORIZES EARLY DELIVERY SUBJECT TO CERTAIN CONDITIONS:

PROPOSALS OFFERING DELIVERY OF EACH QUANTITY WITHIN THE APPLICABLE DELIVERY PERIOD SPECIFIED ABOVE WILL BE EVALUATED EQUALLY AS REGARDS TIME OF DELIVERY. PROPOSALS OFFERING DELIVERY OF A QUANTITY UNDER SUCH TERMS OR CONDITIONS THAT DELIVERY WILL NOT CLEARLY FALL WITHIN THE APPLICABLE DELIVERY PERIOD SPECIFIED ABOVE WILL BE CONSIDERED NONRESPONSIVE AND WILL BE REJECTED. WHERE AN OFFEROR OFFERS AN EARLIER DELIVERY SCHEDULE THAN THAT CALLED FOR ABOVE, THE GOVERNMENT RESERVES THE RIGHT TO AWARD EITHER IN ACCORDANCE WITH THE REQUIRED SCHEDULE OR IN ACCORDANCE WITH THE SCHEDULE OFFERED BY THE OFFEROR. IF THE OFFEROR OFFERS NO OTHER DELIVERY SCHEDULE, THE DELIVERY SCHEDULE STATED ABOVE SHALL APPLY. EARLIER DELIVERY IS ACCEPTABLE PROVIDED THAT ACCUMULATED DELIVERY IS EQUAL TO OR AHEAD OF THE REQUIRED SCHEDULE AT ALL TIMES.

NOTE: IN THE EVENT AWARD IS MADE FOR A QUANTITY LESS THAN THE TOTAL QUANTITY, THE DELIVERY SCHEDULE WILL BE ADJUSTED PROPORTIONATELY, SO THAT IT WILL BE IN THE SAME RATIO AS THE REDUCED QUANTITY BEARS TO THE TOTAL QUANTITY PROCURED.

INSOFAR AS THE OPTION TO INCREASE THE QUANTITY IS CONCERNED, SECTION "J" OF THE INVITATION PROVIDES AS FOLLOWS:

THE GOVERNMENT RESERVES THE RIGHT TO INCREASE THE QUANTITY OF ITEM 0001 BY A QUANTITY OF UP TO AND INCLUDING, BUT NOT EXCEEDING 300% AND AT THE PRICE QUOTED BELOW UNLESS A LOWER UNIT PRICE IS NEGOTIATED IN CONSIDERATION OF THE INCREASED QUANTITIES. THE CONTRACTING OFFICER MAY EXERCISE THIS OPTION AT ANY TIME PRIOR TO THE DELIVERY OF 10,000 UNITS BY GIVING WRITTEN NOTICE TO THE CONTRACTOR. DELIVERY OF THE ITEMS ADDED BY EXERCISE OF THIS OPTION SHALL CONTINUE IMMEDIATELY AFTER, AND AT THE SAME RATE AS THE DELIVERY OF LIKE ITEMS CALLED FOR UNDER THE CONTRACT UNLESS THE PARTIES AGREE OTHERWISE. SUBJECT TO THE LIMITATIONS CONTAINED IN THIS PARAGRAPH, THE GOVERNMENT MAY EXERCISE THIS OPTION ON ONE OR MORE OCCASIONS.

THE SECTION ALSO MADE THE FOLLOWING PROVISION FOR INSERTING THE UNIT PRICE AND EXTENDED AMOUNT FOR THE OPTION QUANTITIES, EITHER ON AN F.O.B. ORIGIN OR DESTINATION BASIS:

OFFERED UNIT PRICE FOR THE OPTION

QUANTITIES ARE:

UNIT PRICE AMOUNT

F.O.B. ORIGIN: $ $

F.O.B. DESTINATION: $ $

WITH RESPECT TO THE EVALUATION OF THE OPTION FOR PURPOSES OF AWARD, BIDDERS WERE ADVISED THAT:

IF THE GOVERNMENT ELECTS TO EXERCISE AN OPTION SIMULTANEOUSLY WITH AWARD, BIDS OR PROPOSALS WILL BE EVALUATED FOR PURPOSES OF AWARD ON THE BASIS OF THE TOTAL PRICE FOR THE BASIC QUANTITY AND THE OPTION QUANTITY EXERCISED WITH AWARD.

ONLY AMF AND LETOURNEAU RESPONDED BY THE BID OPENING DATE, NOVEMBER 19, 1971. BOTH BID ON AN F.O.B. ORGIN BASIS; AMF SUBMITTED A BID OF $76.99 PER UNIT FOR BOTH THE BASIC QUANTITY AND THE OPTION, WHILE LETOURNEAU BID $74.03 PER UNIT FOR THE BASIC QUANTITY AND $80 PER UNIT FOR THE OPTION QUANTITY.

IN A COVER LETTER ACCOMPANYING ITS BID DATED NOVEMBER 18, 1971, LETOURNEAU ALSO PROPOSED THE FOLLOWING ACCELERATED DELIVERY SCHEDULE FOR THE BASIC QUANTITY: MARCH 1972, 6,500; APRIL 1972, 12,000; MAY 1972, 1,500. RESPONDING TO THE OPTION PRICING PROVISION QUOTED ABOVE, LETOURNEAU ENTERED A UNIT PRICE OF $80 AND AN AMOUNT OF $4,800,000 IN THE APPROPRIATE SPACES ADJACENT TO THE PRINTED TERM "F.O.B. ORIGIN"; IN ADDITION, IT MADE THE FOLLOWING ENTRY ADJACENT TO THE PRINTED TERM "F.O.B. DESTINATION": "12,000/MONTH RATE."

IN HIS STATEMENT OF FACTS DATED DECEMBER 7, 1971, THE CONTRACTING OFFICER STATES THAT SINCE "NO OTHER REQUIREMENTS EXIST AT THIS TIME," NO EXERCISE OF AN OPTION SIMULTANEOUSLY WITH AWARD IS CONTEMPLATED. ACCORDINGLY, BOTH BIDS WERE EVALUATED SOLELY ON THE BASIS OF THE BASIC QUANTITY. TAKING INTO CONSIDERATION WAIVER OF FIRST ARTICLE APPROVAL, TRANSPORTATION AND THE RENT-FREE USE OF GOVERNMENT-OWNED PRODUCTION EQUIPMENT AND TOOLING, LETOURNEAU'S EVALUATED BID WAS DETERMINED TO BE $83.5856 PER UNIT. APPLYING THE SAME FACTORS TO AMF'S BID, ITS EVALUATED PRICE PER UNIT WAS DETERMINED TO BE $83.95252. WHEN THE UNIT PRICES ARE EXTENDED TO REFLECT THE BASIC QUANTITY OF 20,000 BOMB BODIES, LETOURNEAU'S BID IS APPROXIMATELY $8,400 LOWER. SINCE LETOURNEAU'S PROPOSED ACCELERATED DELIVERY SCHEDULE WAS DETERMINED TO BE ACCEPTABLE, THE CONTRACTING OFFICER PROPOSES TO AWARD THE CONTRACT ON THE BASIS OF THAT SCHEDULE.

THE BASIC CONTENTION ADVANCED IN YOUR LETTER OF DECEMBER 3, 1971, IS THAT LETOURNEAU'S BID IS NONRESPONSIVE BY VIRTUE OF ITS RESPONSE TO THE OPTION PROVISIONS OF THE INVITATION. BASICALLY, IT IS YOUR POSITION THAT BY ENTERING A "12,000/MONTH RATE" IN RESPONSE TO THE OPTION PRICING PROVISION, LETOURNEAU LIMITED THE GOVERNMENT'S RIGHT UNDER THE OPTION PROVISION TO REQUIRE DELIVERY OF ANY OPTION QUANTITIES "IMMEDIATELY AFTER, AND AT THE SAME RATE AS THE DELIVERY OF LIKE ITEMS CALLED FOR UNDER THE CONTRACT UNLESS THE PARTIES AGREE OTHERWISE." FOLLOWING THIS LINE OF ARGUMENT, WE MIGHT ADD, ALSO LEADS TO THE SUGGESTION THAT THE OPTION PRICE QUOTED IS CONDITIONED ON A "12,000/MONTH RATE" OF DELIVERY. THE CONTRACTING OFFICER'S REPLY IS THAT THE INVITATION ALLOWS FOR EARLIER DELIVERY OF THE BASIC QUANTITY AND, THEREFORE, THE OPTION QUANTITY OF "12,000/MONTH RATE" IS CONSISTENT WITH THE ACCELERATED DELIVERY SCHEDULE OFFERED BY LETOURNEAU. ON THIS LATTER POINT, IT IS APSA'S POSITION THAT SINCE THE LAST FULL MONTH'S DELIVERY RATE UNDER LETOURNEAU'S ACCELERATED DELIVERY SCHEDULE IS 12,000 IN APRIL, THE ESTABLISHMENT OF A SAME RATE FOR THE DELIVERY OF THE OPTION QUANTITY IS CONSISTENT WITH THE PROVISION THAT DELIVERY SHALL BE AT THE SAME RATE.

ASSUMING THE CORRECTNESS OF YOUR POSITION, LETOURNEAU'S BID MAY, NEVERTHELESS, PROPERLY BE CONSIDERED. YOU RECOGNIZE BY CITING OUR DECISION B-150393, MARCH 21, 1963, THAT WHERE, AS HERE, A DETERMINATION NOT TO EXERCISE THE OPTION SIMULTANEOUSLY WITH AWARD (WHICH DETERMINATION IS BASED ON THE UNDISPUTED ABSENCE OF KNOWN REQUIREMENTS IN ADDITION TO THE BASIC QUANTITY), THE FAILURE OF A BIDDER TO COMPLY WITH THE TERMS OF AN OPTION PROVISION MAY NOT RENDER HIS BID NONRESPONSIVE. IN THE CITED CASE, WE CONSIDERED TO BE ACADEMIC THE QUESTION WHETHER A BIDDER'S REDUCTION OF THE ADVERTISED TIME IN WHICH THE GOVERNMENT COULD EXERCISE AN OPTION RENDERED ITS BID NONRESPONSIVE BECAUSE THE OPTION WAS NOT TO BE CONSIDERED IN EVALUATION AND THE BIDDERS WERE NOT REQUIRED TO QUOTE PRICES FOR THE OPTION ITEM IN QUESTION. THEY WERE, HOWEVER, WARNED THAT IF THE OPTION WAS EXERCISED WITH AWARD, AWARD COULD NOT BE MADE TO A BIDDER WHO FAILED TO PRICE THE OPTION.

AS A POINT OF DISTINCTION YOU URGE THAT A BID ON THE OPTION QUANTITY WAS MANDATORY AND, THEREFORE, THE QUALIFICATION OF THE DELIVERY RATE RENDERS THE BID NONRESPONSIVE. WE HAVE, HOWEVER, FOUND NOTHING IN THE SOLICITATION WHICH WOULD IMPOSE SUCH AN OBLIGATION AND YOU HAVE DRAWN ATTENTION TO NONE. THE INVITATION PLACES NO LIMIT ON THE PRICE THAT MAY BE QUOTED FOR THE OPTION, NOR DOES IT PROHIBIT OFFERING AN ACCELERATED OPTION DELIVERY SCHEDULE. UNDER THESE CIRCUMSTANCES, WE BELIEVE THAT OUR DECISION B-166138, APRIL 11, 1969, IS DISPOSITIVE. IN THAT CASE, THE INVITATION PROVIDED THAT OPTION QUANTITIES WOULD BE EVALUATED FOR PURPOSES OF AWARD ONLY IF THE GOVERNMENT ELECTED TO EXERCISE THE OPTION AT TIME OF AWARD. THERE, AS HERE, THE INVITATION CONTAINED NO LIMIT ON THE PRICE TO BE QUOTED AND THE OPTION QUANTITY WAS NOT TO BE CONSIDERED FOR PURPOSES OF AWARD. WE CONCLUDED THAT A BIDDER'S FAILURE TO SUBMIT OPTION PRICES WAS IMMATERIAL SINCE THE OPTION QUANTITIES WERE NOT TO BE EVALUATED, AND BIDDERS WERE NOT REQUIRED TO SUBMIT THE SAME OPTION PRICES AS THE BASIC PRICES BID, BUT WERE FREE TO QUOTE UNREALISTICALLY HIGH PRICES, CITING B- 165799, FEBRUARY 27, 1969.

WHILE IN THIS CASE LETOURNEAU HAS SUBMITTED AN OPTION PRICE, THE SAME LATITUDE OF RESPONSE AFFORDED THE BIDDER BY THE INVITATION UNDER CONSIDERATION IN B-166138, SUPRA, IS PRESENT HERE. INDEED, ITS OPTION PRICE, AS YOU URGE, MAY BE EXCESSIVE, BUT PERMISSIBLY SO. MOREOVER, IN VIEW OF THE LATITUDE AFFORDED BIDDERS, WE SEE NO BASIS FOR GIVING ANY EFFECT TO THE FACT THAT LETOURNEAU PROPOSED A DIFFERENT DELIVERY SCHEDULE FOR THE OPTION.

WITH RESPECT TO LETOURNEAU'S OPTION PRICES, WE NOTE THAT A MEMORANDUM DATED DECEMBER 1, 1971, FROM THE CONTRACT PRICE ANALYST STATES THAT THE PROPOSED OPTION PRICE OFFERED BY LETOURNEAU IS NOT CONSIDERED REASONABLE IN VIEW OF A COMPARISON OF THE PROPOSED OPTION PRICE TO THE RECOMMENDED AWARD PRICE AND THE LAST CONTRACT AWARDED. IN THIS REGARD, WE HAVE BEEN ADVISED THAT APSA WILL TEST THE MARKET PRIOR TO ANY EXERCISE OF THE OPTION. UNDER THE PRESENT CIRCUMSTANCES, WE ASSUME THAT TEST OF THE MARKET WILL DEMONSTRATE THE DESIRABILITY OF COMPETITION FOR ANY ADDITIONAL QUANTITIES REQUIRED.

IN RESPONSE TO THE ADMINISTRATIVE REPORT FURNISHED OUR OFFICE BY LETTER DATED DECEMBER 17, 1971, WITH ENCLOSURES, FROM THE DEPUTY GENERAL COUNSEL, HEADQUARTERS, UNITED STATES ARMY MATERIAL COMMAND, YOUR LETTER OF JANUARY 5, 1972, RAISED AN ADDITIONAL ISSUE. YOU URGE, AS AMPLIFIED IN YOUR LETTER OF JANUARY 13, 1972, THAT LETOURNEAU'S BID IS NOT IN FACT THE LOWEST EVALUATED BID BECAUSE THE GOVERNMENT'S COMPUTATION OF THE EVALUATION FACTOR FOR RENT-FREE USE OF GOVERNMENT PROPERTY IS IN ERROR AND THAT, IN ANY EVENT, LETOURNEAU'S BID IS NONRESPONSIVE SINCE IT FAILED TO PROVIDE SUFFICIENT INFORMATION TO PERMIT AN EVALUATION OF THE RENTAL FACTOR.

LETOURNEAU COMPUTED A RENTAL EVALUATION FACTOR OF $4.52 PER UNIT, WHILE AMF'S RENTAL EVALUATION FACTOR WAS $1.35727 PER UNIT. THE CONTRACTING OFFICER REPORTS THAT THE EVALUATED UNIT PRICES, INCLUSIVE OF TRANSPORTATION, ARE $83.85252 FOR AMF AND $83.5856 FOR LETOURNEAU. THIS YIELDS, HE ADVISES, AN $8,479.20 EVALUATED COST DIFFERENCE IN FAVOR OF LETOURNEAU BUT, IN TERMS OF "OUT-OF-POCKET" COSTS, LETOURNEAU'S BID IS $71,333.80 LOWER. WE ALSO UNDERSTAND THAT AMF AND LETOURNEAU ARE THE ONLY CURRENT PRODUCERS OF THE UNITS CALLED FOR UNDER THE INVITATION; THAT SUBSTANTIALLY ALL OF THE FACILITIES IN BOTH PLANTS ARE GOVERNMENT-OWNED; AND THAT IN TERMS OF MONTHLY RENTAL ($42,984.43 FOR LETOURNEAU AND $43,432.82 FOR AMF) BOTH PROPOSE TO USE EQUIVALENT FACILITIES.

AS YOU POINT OUT, LETOURNEAU STATED IN THE NOVEMBER 18, 1971, COVER LETTER TO ITS BID THAT IT COMPUTED THE RENTAL EVALUATION FACTOR ON THE BASIS OF THE 3-MONTH PRODUCTION PERIOD REFLECTED IN ITS PROPOSED ACCELERATED DELIVERY SCHEDULE RATHER THAN ON THE PRODUCTION PERIOD SET FORTH IN THE PROVISION ENTITLED "EVALUATION PROCEDURE TO ELIMINATE COMPETITIVE ADVANTAGE FROM RENT-FREE USE OF GOVERNMENT PRODUCTION AND RESEARCH PROPERTY." PARAGRAPH "B" THEREOF PROVIDES THAT: "FOR PURPOSES OF EVALUATION ONLY, THE PROPOSED PRODUCTION PERIOD SHALL BE CONSIDERED TO BE 4 MONTHS, COMMENCING WITH THE MONTH OF JANUARY 1972 AND ENDING WITH THE MONTH OF APRIL 1972."

IN ADDITION TO THIS ASSERTEDLY ERRONEOUS COMPUTATION, YOU ALSO CONTEND THAT LETOURNEAU ERRED BY INCLUDING IN THE QUANTITY TO BE PRODUCED MORE UNITS THAN THE BASIC QUANTITY OF 20,000 UNITS COVERED BY THE INSTANT INVITATION.

THE EFFECT OF CORRECTION OF THESE ASSERTED ERRORS ON THE RENTAL EVALUATION FACTOR ADDED TO LETOURNEAU'S BID IS STATED IN YOUR LETTER OF JANUARY 5, 1972:

*** WE HAVE MADE A COMPUTATION FROM THE LETOURNEAU BID, A COPY OF WHICH IS APPENDED TO THE ADMINISTRATIVE REPORT. THAT COMPUTATION, TAKEN FROM THE LISTING OF AND THE ACQUISITION COST OF THE GOVERNMENT OWNED PROPERTY HELD BY LETOURNEAU, AS SUBMITTED WITH THE BID, IS AS FOLLOWS:

TOTAL ACQUISITION COST OF GOVERNMENT-OWNED FACILITIES,

OVER 3 TO 6 YEARS OF AGE $2,583,546.47

SOLICITATION INSTRUCTION RATE AT 1.5% 38,753.20

TOTAL ACQUISITION COST OF GOVERNMENT-OWNED FACILITIES

OVER 10 YEARS OLD 820,250.06 SOLICITATION INSTRUCTION RATE AT .75%6,151.88

TOTAL ACQUISITION COST OF GOVERNMENT-OWNED SPECIAL

TOOLING 200,386.00

SOLICITATION INSTRUCTION RATE AT 1% 2,003.86

TOTAL ACQUISITION COST OF GOVERNMENT-OWNED ELECTRONIC

TEST EQUIPMENT 7,293.00

SOLICITATION INSTRUCTION RATE AT 2% 145.86

THE TOTAL RENT, (T X R), EQUALS $47,054.80. THE EVALUATION FACTOR IS, THEREFORE, AS FOLLOWS: $47,054.80X4 (PRODUCTION PERIOD)

20,000 (QUANTITY TO BE

PRODUCED) $9.41

AT THIS POINT, WE MUST OBSERVE THAT YOUR COMPUTATION DEMONSTRATES THAT THE RENTAL FACTOR TO BE APPLIED TO LETOURNEAU'S BID CAN, WITH THE EXCEPTION OF THE QUANTITY TO BE PRODUCED UNDER OTHER CONTRACTS DURING THE PERIOD, BE DETERMINED SOLELY FROM LETOURNEAU'S BID ITSELF. AS YOU ARE AWARE, THE TOTAL QUANTITY OF ITEMS TO BE PRODUCED DURING PERIOD OF PRODUCTION TAKES INTO CONSIDERATION THE EXTENT OF PRODUCTION UNDER OTHER CONTRACTS - A MATTER THAT CAN BE DETERMINED WITHOUT RECOURSE TO THE BIDDER. THUS, YOUR CONTENTION THAT LETOURNEAU IS NONRESPONSIVE FOR FAILURE TO FURNISH INFORMATION SUFFICIENT TO PERMIT EVALUATION OF THE RENTAL FACTOR IS FOUNDED NOT ON THE LACK OF ANY ESSENTIAL DATA BUT ON AN ASSERTEDLY ERRONEOUS COMPUTATION OF $4.52 PER UNIT ON THE BASIS OF THAT DATA. THIS COMPUTATION MAY BE CORRECTED. ACCORDINGLY, THE CONTENTION IS WITHOUT MERIT. B-170591, SEPTEMBER 28, 1970; B-162071, SEPTEMBER 25, 1967.

PARENTHETICALLY, WE MUST NOTE THAT WHILE WE HAVE ACCEPTED YOUR COMPUTATION OF THE TOTAL RENT CHARGE (TXR) FOR THE PURPOSE OF DEMONSTRATING THAT LITERAL APPLICATION OF THE EVALUATION PROCEDURE SET FORTH IN THE INVITATION RESULTS IN A DECREASE IN THE RENTAL EVALUATION FACTOR TO BE APPLIED TO LETOURNEAU, IT IS CLEAR THAT THE TOTAL RENT OF $47,054.80 IS OVERSTATED. SPECIFICALLY, YOUR COMPUTATION FAILS TO RECOGNIZE THAT A LARGE PORTION OF THE PROPERTY LISTED IN LETOURNEAU'S BID IS CLASSIFIED AS EITHER "AUTOMOTIVE EQUIPMENT" OR "OTHER PRODUCTION EQUIPMENT" AND, THEREFORE, SUBJECT TO DIFFERENT RENTAL RATES. THE CONTRACTING OFFICER'S SUPPLEMENTAL REPORT INDICATES THAT A CORRECT CATEGORIZATION AND RESULTANT COMPUTATION YIELDS A TOTAL RENT OF $42,984.43 PER MONTH. (APPLYING THE FORMULA ON THE BASIS OF THIS RENTAL CHARGE AND TAKING INTO CONSIDERATION LETOURNEAU'S PROPOSED 3 MONTH DELIVERY SCHEDULE RESULTS IN AN EVALUATION FACTOR OF $4.52 PER UNIT - THE AMOUNT STATED BY LETOURNEAU IN ITS BID.)

WITH RESPECT TO LETOURNEAU'S OTHER CONTRACTUAL PRODUCTION, WE WERE INFORMALLY ADVISED ON JANUARY 13, 1972, BY THE CONTRACTING OFFICER'S COUNSEL THAT UNDER AN EXISTING CONTRACT LETOURNEAU MUST DELIVER THE FOLLOWING QUANTITIES IN THE MONTHS INDICATED: JANUARY, 12,000; FEBRUARY, 12,000; MARCH, 8,500. THE TOTAL QUANTITY TO BE DELIVERED HAS BEEN CONFIRMED IN THE CONTRACTING OFFICER'S SUPPLEMENTAL REPORT OF JANUARY 25, 1972.

YOU CONTEND THAT THESE ITEMS SHOULD NOT BE INCLUDED IN THE FORMULA BECAUSE THE CONTRACT UNDER WHICH THEY ARE BEING PRODUCED SHOULD HAVE EXPIRED IN DECEMBER OF 1971 AND THEREFORE THESE ITEMS COULD NOT BE INCLUDED IN THE FORMULA BUT FOR THE 3-MONTH TIME EXTENSION OF THE CONTRACT. FOCUSING ON THE REQUIREMENT OF THE FORMULA THAT THE "SUM OF THE PREVIOUSLY AUTHORIZED USE OF THE PROPERTY BY THE CONTRACTOR BE CONSIDERED," YOU MAINTAIN THAT THE AUTHORIZATION UNDER THE CONTRACT WAS ONLY FOR THE PERIOD ENDING DECEMBER 31, 1971. WE CANNOT AGREE. PARAGRAPH 13-502.3(B) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), AS WELL AS THE INVITATION FORMULA, SPEAKS IN TERMS OF "ONE OR MORE EXISTING CONTRACTS FOR WHICH USE HAS BEEN AUTHORIZED." THIS LANGUAGE SUGGESTS TO US THAT THE BASIC QUESTION IS WHETHER THERE IS AN EXISTING CONTRACT. THIS REGARD, YOU HAVE NOT QUESTIONED THE LEGAL EFFICACY OF THE CONTRACT MODIFICATION RESULTING IN THE TIME EXTENSION AND THE CONTRACTING OFFICER'S SUPPLEMENTAL REPORT OF JANUARY 25, 1972, INDICATES THAT AS CONSIDERATION FOR THE EXTENSION, THE GOVERNMENT BECAME ENTITLED TO A 90-DAY EXTENDED PERIOD OF FREE MAINTENANCE OF THE FACILITIES BY LETOURNEAU. GIVEN THEN THE EXISTENCE OF THE CONTRACT AND THE UNQUESTIONED INITIAL AUTHORIZATION FOR USE OF THE FACILITIES, YOUR ARGUMENT WOULD SUGGEST THE NECESSITY OF OBTAINING A SPECIFIC AUTHORIZATION APART FROM THE AUTHORIZATION IMPLICIT IN THE MODIFICATION EXTENDING THE CONTRACT. THIS REFINEMENT IS NOT, HOWEVER, CONTEMPLATED BY THE ASPR. WE UNDERSTAND THAT LETOURNEAU'S CONSOLIDATED FACILITIES CONTRACT CONTAINS THE CLAUSE, ENTITLED "USE AND CHARGES (1971 APR)," PRESCRIBED BY ASPR 7-702.12. PARAGRAPH (A)(I) THEREOF PROVIDES THAT THE CONTRACTOR MAY USE THE FACILITIES WITHOUT CHARGE IN THE PERFORMANCE OF "PRIME CONTRACTS WITH THE GOVERNMENT WHICH SPECIFICALLY AUTHORIZE USE WITHOUT CHARGE." MOREOVER, WE ARE ADVISED THAT THE EXISTING CONTRACT SPECIFICALLY PROVIDES THAT USE OF THE FACILITIES IS AUTHORIZED FOR THE EXTENDED PERIOD.

YOUR ARGUMENT CONCERNING THE APPLICABILITY OF PRODUCTION DURING THE EXTENSION PERIOD UNDER THE PRIOR CONTRACT RELATES MORE TO THE EFFECT OF THE EXTENSION ON THE PRIOR AWARD THAN TO AWARD UNDER THE INSTANT INVITATION. IF AT THE TIME OF AWARD OF THE PRIOR CONTRACT THE TRUE PERIOD OF PRODUCTION (AS EXTENDED) HAD BEEN KNOWN, THE EVALUATION FACTOR AT THAT TIME WOULD HAVE BEEN GREATER THAN THE FACTOR ACTUALLY USED. THUS, IT MIGHT WELL BE THAT LETOURNEAU'S BID ON THE PRIOR CONTRACT WOULD NOT HAVE BEEN THE LOW EVALUATED BID. ON THE OTHER HAND, DESPITE AN INCREASE IN THE EVALUATION FACTOR, LETOURNEAU MIGHT HAVE REMAINED THE LOW EVALUATED BIDDER. WE DO NOT THINK IT MATTERS WHICH WOULD HAVE OCCURRED, BECAUSE IT IS OUR OPINION THAT THE POSSIBLE EVALUATION EFFECT OF STRETCHING OUT THE PRIOR PROCUREMENT SHOULD HAVE NO BEARING UPON EVALUATION OF BIDS IN LIGHT OF EXISTING FACTS UNDER THE CURRENT PROCUREMENT. IT IS A FACT THAT LETOURNEAU IS AUTHORIZED TO USE GOVERNMENT FACILITIES TO PRODUCE IN THE MONTHS OF JANUARY, FEBRUARY AND MARCH OF 1972. SUCH PRODUCTION FITS PRECISELY THE TERMS OF THE PRORATION FORMULA PROVIDED IN THE INVITATION. WE SEE NO BASIS FOR REFRAINING FROM USE OF SUCH PRODUCTION IN THE FORMULA COMPUTATIONS REQUIRED UNDER THE INVITATION.

EVALUATION OF THE BIDS RECEIVED ON THE PRECISE BASIS OF THE PROVISIONS SET OUT IN THE INVITATION ESTABLISHES LETOURNEAU AS THE LOW BIDDER. STATED ABOVE, WE ARE NOT PERSUADED BY YOUR READING OF THE INVITATION PROVISIONS SO FAR AS THEY CONCERN THE EFFECT OF THE EXTENSION OF LETOURNEAU'S PRIOR CONTRACT. HOWEVER, IT IS OUR OPINION THAT ANY DOUBT IN THE MATTER IS OVERWHELMINGLY OVERCOME BY THE FACT THAT WITH VIRTUALLY IDENTICAL AMOUNTS OF GOVERNMENT FACILITIES BEING USED BY BOTH AMF AND LETOURNEAU, THERE IS NO RELATIVE COMPETITIVE ADVANTAGE REQUIRING ADJUSTMENT.

ACCORDINGLY, AWARD SHOULD BE MADE TO LETOURNEAU.