B-187886, MAR 29, 1977

B-187886, MAR 29, 1977

PRECIS - UNAVAILABLE

THIS IS IN REPLY TO YOUR LETTER OF NOVEMBER 19, 1976 AND YOUR SUBSEQUENT SUBMITTALS IN WHICH INTERNATIONAL PRODUCTS COMPANY (INTERNATIONAL) PROTESTS THE AWARD OF A CONTRACT FOR MOBILE SHELVING TO LUNDIA MYERS INDUSTRIES, INC. (LUNDIA) BY THE OFFICE OF ADMINISTRATIVE SERVICES, GENERAL ACCOUNTING OFFICE. INTERNATIONAL CONTENDS THAT ITS PRICE WAS LOWER THAN THAT OF LUNDIA. IT IS ALSO ARGUED THAT THE PROCUREMENT VIOLATED SUBPART 101-26 OF THE FEDERAL PROPERTY MANAGEMENT REGULATIONS (FPMR) BECAUSE LUNDIA'S SHELVING WAS NOT LISTED ON THE FEDERAL SUPPLY SCHEDULE (FSS). IN ADDITION INTERNATIONAL STATES THAT THE QUOTATIONS AND THE CONTRACT HAD BEEN PREDATED AND CHARGED TO THE FUNDS OF THE PREVIOUS FISCAL PERIOD, THEREBY TAINTING THE ENTIRE PROCUREMENT.

IN THE SPRING OF 1976, A REQUIREMENT FOR MOVABLE SHELVING WAS IDENTIFIED. CONTACTS WERE MADE WITH A NUMBER OF SHELVING SUPPLIERS ALONG WHICH WAS A DISTRIBUTOR FOR INTERNATIONAL. AT THE SAME TIME, A STUDY WAS UNDERTAKEN TO DETERMINE THE FEASIBILITY OF CONVERTING THE FILES, FOR WHICH SHELVING WAS REQUIRED, TO MICROFILM OR TO A COMPUTER BASED INDEXING AND RETRIEVAL SYSTEM. THE MOBILE SHELVING OF LUNDIA AND INTERNATIONAL, ALTHOUGH FUNCTIONALLY SIMILAR, WERE ON DIFFERENT MULTIPLE AWARD FEDERAL SUPPLY SCHEDULES. THE FSS CONTRACT OF LUNDIA IS IN FSC GROUP 71, PART V, SECTION C WHICH IS ENTITLED "OFFICE FURNITURE" AND THAT OF INTERNATIONAL IS IN FSC GROUP 70, PART X WHICH IS ENTITLED "DATA PROCESSING STORAGE AND RELATED EQUIPMENT." IN LATE SEPTEMBER 1976, IT WAS CONCLUDED THAT THE FILES IN QUESTION SHOULD NOT THEN BE CONVERTED TO MICROFILM OR TO THE COMPUTER BASED RETRIEVAL SYSTEM AND THAT MOVABLE SHELVING FOR THE FILES IN THEIR PRESENT CONDITION SHOULD BE PURCHASED.

WITH THE CAUTION THAT AWARD WOULD NOT DEPEND SOLELY ON PRICE, LUNDIA AND INTERNATIONAL WERE REQUESTED TO SUBMIT QUOTATIONS FOR A MECHANICAL ASSISTED MOBILE FILE STORAGE SYSTEM IN LINEAL FILING INCH INCREMENTS OF 25,000, 50,000 75,000 AND 100,000.

THE LUNDIA AND INTERNATIONAL QUOTATIONS OFFERED THE FOLLOWING PRICES AND FILING CAPACITIES:

LUNDIA (QUOTATION DATED SEPTEMBER 10, 1976)

LINEAL FILING INCHES PRICE QUOTED COST PER INCH

25,662 $26,429.31 $1.03 48,682 46,919.55 .96 74,676 70,279.16 .94 100,016 90,383.10 .90

INTERNATIONAL (QUOTATION DATED SEPTEMBER 29, 1976)

LINEAL FILING INCHES PRICE CALCULATED COST PER INCH

19,873 $18,734.00 $1.06 39,746

37,739.00 .95 63,126 57,736.00

.91 85,337 77,733.00.91 107,548

97,730.00 .91

AWARD UNDER FSC GROUP 71 WAS MADE TO LUNDIA FOR 74,676 FILING INCHES AT AN INSTALLED PRICE OF $71,239.00 BY PURCHASE ORDER, DATED SEPTEMBER 30, 1976. THE $959.84 INCREASE OVER THE QUOTED PRICE WAS FOR A PLATFORM PERMITTING FUTURE GROWTH TO 100,016 FILING INCHES. THE CONTRACT PRICE ALSO INCLUDED A MECHANICAL-ASSIST DEVICE WHICH, DELIVERED AND INSTALLED, WAS PRICED AT $4,680. AT THE TIME OF AWARD, THIS DEVICE WAS NOT IN LUNDIA'S FSS CONTRACT BUT IT HAS SINCE BEEN INCORPORATED.

AWARD WAS MADE TO LUNDIA BECAUSE IT WAS BELIEVED THAT ITS SYSTEM FIT INTO THE AVAILABLE SPACE MORE EFFICIENTLY, THAT ITS SYSTEM WAS MADE OF WOOD COVERED WITH A LAMINATE PANEL FINISH WHICH COULD ALSO BE APPLIED TO THE SURROUNDING COLUMNS GIVING A MORE COHESIVE APPEARANCE AND THAT THE LUNDIA SYSTEM NEEDED NO UPRIGHT DIVIDERS AS DID THE INTERNATIONAL SYSTEM. THESE CONSIDERATIONS WERE BELIEVED TO OUTWEIGH WHAT ERRONEOUSLY WAS THOUGHT TO BE A SMALL PRICE ADVANTAGE IN THE INTERNATIONAL SYSTEM.

SINCE THE FILING OF THIS PROTEST, A REEVALUATION ON A COST PER FILING INCH BASIS ESTABLISHES THAT THE AWARD TO LUNDIA, ACTUALLY IS LESS EXPENSIVE THAN INTERNATIONAL'S SYSTEM. IN ADDITION TO THE $57,736 BID PRICE OF INTERNATIONAL WE HAVE ADDED THE AMOUNT OF $4,847.85 FOR 3780 FILE SUPPORTS (AT $1.35 EACH LESS 5 PERCENT DISCOUNT) AND SUBTRACTED $720, FOR CARPETING, WHICH WAS INCLUDED IN THE BID BUT IS NOT NEEDED. THIS RESULTS IN AN EVALUATED PRICE OF $61,863.85 FOR 63,126 FILING INCHES, OR $ .98 PER FILING INCH, AS CONTRASTED WITH LUNDIA'S PRICE OF $ .94 PER INCH.

INTERNATIONAL CHALLENGES THE ADEQUACY OF THE ORIGINAL ERRONEOUS JUSTIFICATION FOR ACCEPTING WHAT WAS THOUGHT TO BE A MORE EXPENSIVE SYSTEM. INTERNATIONAL FURTHER CHALLENGES THE PROPRIETY OF USING PRICE PER FILING INCH AS AN EVALUATION FACTOR IN THE SUBSEQUENT JUSTIFICATION PREPARED IN CONNECTION WITH THIS PROTEST.

WHILE WE BELIEVE THAT THE JUSTIFICATION FOR SELECTING LUNDIA SHOULD HAVE BEEN PREPARED PRIOR TO THE AWARD OF THE CONTRACT, THE FAILURE TO DO SO DOES NOT ISELF INVALIDATE THE PROCUREMENT AND IS A MATTER OF FORM RATHER THAN SUBSTANCE. WHILE THE INITIAL JUSTIFICATION DID NOT CALCULATE EITHER THE VALUE OF LUNDIA'S MORE EFFICIENT USE OF SPACE OR THE PRICE OF THE UPRIGHT DIVIDERS NEEDED FOR THE INTERNATIONAL SYSTEM, IT DID MAKE REFERENCE TO THESE CONSIDERATIONS AND THE SUBSEQUENT CALCULATIONS INDICATED THAT THE TOTAL PRICE OF THE UPRIGHT DIVIDERS BROUGHT THE PRICE PER FILING INCH ABOVE THAT OF THE LUNDIA SYSTEM. WITH REGARD TO THE PROPRIETY OF USING PRICE PER FILING INCH AS AN EVALUATION FACTOR, WE NOTE THAT INTERNATIONAL DID NOT OBJECT WHEN REQUESTED TO QUOTE IN INCREMENTS OF 25,000, 50,000, 75,000 AND 100,000 LINEAL FILING INCHES AND THAT ITS FSS CONTRACT (GS-00S-07233) RECOGNIZES THE SIGNIFICANCE OF STORAGE CAPACITY BY LISTING PRICES AND FILING INCHES FOR ITEMS ON SEVERAL OF ITS PAGES. FURTHER, INTERNATIONAL'S QUOTATION WAS ACCOMPANIED BY A DRAWING SHOWING THE LINEAL FILING INCHES FROM WHICH, WITH THE PRICES, THE PRICE PER FILING INCH COULD BE CALCULATED. IN ANY EVENT, WE BELIEVE THAT THE PRICE PER FILING INCH BEARS A REASONABLE RELATION TO THE REQUIREMENT AND, THEREFORE, IS A REASONABLE EVALUATION FACTOR FOR DETERMINING WHICH STORAGE SYSTEM REPRESENTS THE BEST VALUE TO THE GOVERNMENT.

INTERNATIONAL CONTENDS THAT "IF AN AGENCY ENTERS INTO AN AGREEMENT TO UTILIZE GSA SCHEDULE," IT IS OBLIGATED TO ACT UNDER ITS RULES AND THAT ANY GOVERNMENT AGENCY SECURING FSS PRICES MUST BUY FROM THE FSS CONTRACT. WHILE CLEARLY FALLING WITHIN THE DEFINITION OF A FEDERAL AGENCY, THIS OFFICE IS PART OF THE LEGISLATIVE BRANCH OF GOVERNMENT AND IS NOT AN EXECUTIVE AGENCY WITHIN THE MEANING OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED (40 U.S.C. 471 ET SEQ.) AND THE REGULATIONS ISSUED THEREUNDER. MOREOVER, FPMR PART 101 26.401- 4(D) SPECIFICALLY PROVIDES THAT NO FSS WILL INCLUDE AS SUBJECT TO ITS MANDATORY USE PROVISIONS, ANY AGENCY IN THE LEGISLATIVE BRANCH OF THE FEDERAL GOVERNMENT EXCEPT AS MAY BE PROVIDED BY LAW OR BY AUTHORIZED AGREEMENT WITH RESPONSIBLE OFFICIALS OF SUCH AGENCY. THERE IS NO SUCH LAW OR AUTHORIZED AGREEMENT MAKING GAO'S USE OF THE FSS CONTRACTS MANDATORY. ALTHOUGH IT IS CLEAR THAT ONCE A NONMANDATORY USER BUYS FROM AN FSS CONTRACT, IT SUBJECTS ITSELF TO THE TERMS OF SUCH CONTRACT (FPMR PART 101- 26.401-5), IT IS EQUALLY CLEAR THAT WITH REGARD TO NONMANDATORY USERS, THE THRUST OF THE REGULATIONS IS PERMISSIVE AS TO WHETHER THEY WILL OR WILL NOT BUY.

AS THE SHELVING ULTIMATELY WAS PROCURED FOR GENERAL OFFICE USE WITH NO CONNECTION TO DATA PROCESSING AND RELATED EQUIPMENT, THE USE FOR WHICH INTERNATIONAL'S PRODUCT WAS LISTED, THE QUESTION IS NOT AS IS CONTENDED BY INTERNATIONAL, WHETHER LUNDIA SHOULD HAVE BEEN PERMITTED TO PARTICIPATE IN THE COMPETITION, BUT WHETHER INTERNATIONAL SHOULD HAVE BEEN PERMITTED TO COMPETE ONCE THE DECISION WAS MADE TO ABANDON THE MICROFILM AND COMPUTER BASED RETRIEVAL APPROACHES. HOWEVER, IT IS UNNECESSARY TO RESOLVE THIS ISSUE BECAUSE SHELVING WAS PURCHASED FROM THE APPROPRIATE OFFICE FURNITURE SCHEDULE AND, IN FACT, AT AN EVALUATED PRICE BELOW THAT OFFERED BY INTERNATIONAL. WE ARE AWARE OF NO SUPPORT IN THE FPMR FOR INTERNATIONAL'S POSITION THAT ONCE A NONMANDATORY USER SECURES PRICES FROM AN FSS CONTRACTOR, IT MUST THEN BUY FROM THAT SCHEDULE.

FURTHERMORE, THE APPLICABLE REGULATIONS DO NOT PREVENT A NONMANDATORY USER FROM BUYING ITEMS LISTED ON AN FSS SCHEDULE AND ALSO BUYING FROM THE SAME CONTRACTOR, ITEMS NOT SO LISTED, SUCH AS THE $4,680 MECHANICAL ASSIST DEVICE OFFERED BY LUNDIA.

INTERNATIONAL ALSO CONTENDS THAT ITS DEALER AND DISTRIBUTOR WERE TOLD THAT INTERNATIONAL WOULD GET THE ORDER, BUT THEREAFTER THIS DECISION WAS REVERSED. IN OUR OPINION, HOWEVER, INTERNATIONAL'S ALLEGATION, ALTHOUGH DENIED BY THE BUYER, WOULD NOT CONSTITUTE A CONTRACTUAL COMMITMENT TO AWARD THE CONTRACT TO INTERNATIONAL.

FINALLY, INTERNATIONAL STATES THAT ALTHOUGH ITS PROPOSAL WAS PREDATED TO SEPTEMBER 29, 1976, AT THE REQUEST OF THE PROCURING OFFICE, IT WAS ACTUALLY SUBMITTED ON OCTOBER 4 OR 5, 1976. AS CONFIRMED IN THE CONTRACTING OFFICER'S LETTER TO YOU OF NOVEMBER 15, 1976, THE CONTRACT DATED SEPTEMBER 30, 1976 TO LUNDIA WAS ERRONEOUSLY CHARGED TO FUNDS AVAILABLE ONLY THROUGH SEPTEMBER 30, 1976. THIS MATTER HAS BEEN CORRECTED AND THE CONTRACT PROPERLY IS BEING CHARGED TO FISCAL YEAR 1977 FUNDS. OUR OPINION, THIS REFLECTS AN INTERNAL MANAGEMENT DEFICIENCY AND DOES NOT TAINT THE SELECTION MADE IN THIS CASE.

ACCORDINGLY, THE PROTEST IS DENIED.