B-154291, OCT. 6, 1964

B-154291, OCT. 6, 1964

TO AMERICAN MACHINE AND FOUNDRY COMPANY:

BY LETTER OF SEPTEMBER 1, 1964, YOU REQUEST RECONSIDERATION OF OUR DECISION B-154291, AUGUST 27, 1964, THAT AWARD TO EMTEX DIVISION, MISSILE SYSTEMS CORPORATION OF TEXAS, BY THE UNITED STATES NAVY PURCHASING OFFICE UNDER INVITATION NO. 600-775-64, WOULD BE PROPER.

THE INVITATION REQUESTED BIDS ON QUANTITIES OF AIR FRAMES, F.O.B. ORIGIN, AND BIDDERS WERE ASKED TO FURNISH GUARANTEED TRANSPORTATION DATA. THE SPECIFICATION DRAWING APPLICABLE TO PACKING NOTED THAT THE WEIGHT OF THE AIR FRAME PACKAGE WAS 202 POUNDS (CONTAINER, 115 LBS; COMPONENT 87 LBS). ONE OF THE BIDDERS (EMTEX) SPECIFIED A GUARANTEED SHIPPING WEIGHT OF 150 POUNDS, EIGHT BIDDERS SPECIFIED WEIGHTS RANGING FROM 202 TO 230 POUNDS, AND ONE BIDDER DID NOT FURNISH ANY TRANSPORTATION DATA. NAVY PROPOSES TO EVALUATE EMTEX'S TRANSPORTATION COSTS ON THE BASIS OF 150 POUND SHIPMENTS, AND IN OUR PRIOR DECISION WE CONCLUDED THAT, CONSISTENT WITH OUR DECISION AT 38 COMP. GEN. 819, SUCH PROPOSED EVALUATION WAS PROPER.

IN 38 COMP. GEN. 819 WE CONCLUDED THAT A BIDDER MAY PROPERLY GUARANTEE A SHIPPING WEIGHT WHICH IS LESS THAN ACTUAL RATHER THAN REDUCE THE PRICE FOR THE ITEM ITSELF. YOU DISTINGUISH THIS CASE BY THE FACT THAT BIDDERS WERE PROVIDED WITH A SHIPPING WEIGHT OF 202 POUNDS IN THE SPECIFICATION DRAWING. YOU CONTEND THAT BIDDERS EITHER WERE REQUIRED TO SPECIFY A SHIPPING WEIGHT WHICH WAS AT LEAST CLOSE TO THE "ACCURATE" SHIPPING WEIGHT PROVIDED (YOU SPECIFIED A WEIGHT OF 202 POUNDS), OF THAT THEY WERE MISLED BY THE INVITATION INTO BELIEVING THAT AN APPROXIMATE WEIGHT OF 202 POUNDS SHOULD BE SPECIFIED. IT IS YOUR BELIEF THAT UNDER OUR DECISION OF AUGUST 27, 1964, A BIDDER WOULD BE ENCOURAGED TO DELIBERATELY UNDERSTATE HIS GUARANTEED SHIPPING WEIGHT. FOR, IF, UPON BID OPENING, HIS BID IS LOW ENOUGH, HE COULD EASILY CLAIM ERROR AND SEEK TO CORRECT HIS UNDERSTATED GUARANTEED WEIGHT TO THE ACTUAL WEIGHT INDICATED BY THE INVITATION.

IN PROVIDING THE GOVERNMENT WITH GUARANTEED SHIPPING WEIGHTS (OR DIMENSIONS), A BIDDER ASSUMES THE OBLIGATION TO REIMBURSE THE GOVERNMENT FOR TRANSPORTATION COSTS INCURRED ON SHIPMENTS IN EXCESS OF THE GUARANTEED WEIGHTS. IN EFFECT, THE RESULTING CONTRACT IS "FOB ORIGIN" FOR TRANSPORTATION COSTS COVERED UNDER THE GUARANTEE AND "FOB DESTINATION" FOR TRANSPORTATION COSTS EXCEEDING THE GUARANTEE. UNDER SUCH A GUARANTEE, THE GOVERNMENT REMOVES UNCERTAINTY AS TO THE TRANSPORTATION COSTS IT MUST BEAR, AND IS THUS ABLE TO ACCURATELY EVALUATE THE COSTS OF TRANSPORTATION FOR PURPOSE OF AWARD. ON THIS PROCUREMENT, FOR EXAMPLE, EMTEX CHOSE TO GUARANTEE A SHIPPING WEIGHT OF 150 POUNDS ON THE ITEM, WHEREAS YOUR FIRM ASSUMED THAT IT WAS REQUIRED TO GUARANTEE THE INDICATED WEIGHT OF 202 POUNDS. HOWEVER, YOUR FIRM WAS NOT PREJUDICED IN THE BID EVALUATION. FOR WHILE EMTEX'S TRANSPORTATION COST WAS EVALUATED ON A POSSIBLY UNDERSTATED WEIGHT OF 52 POUNDS (202 POUNDS LESS 150 POUNDS), EMTEX HAD TO ABSORB TRANSPORTATION COSTS ON THE 52 POUNDS IN COMPUTING ITS PRICE ON THE ITEM. THE END RESULT WAS THAT ALL BIDDERS WERE BIDDING ON THE SAME BASIS. OUR CONCLUSION THAT A BIDDER MAY GUARANTEE A LOWER WEIGHT THAN ACTUAL AS A MEANS TO REDUCE HIS PRICE SIMPLY RECOGNIZES THAT THE BIDDER'S GUARANTEE OF SHIPPING WEIGHT CONSTITUTES A PART OF HIS BID PRICE. IT MAY BE NOTED, ALSO, THAT EMTEX'S BID ON 610 UNITS WOULD BE LOW EVEN IF TRANSPORTATION COSTS WERE TO BE COMPUTED ON THE BASIS OF A 202 POUND WEIGHT FOR EACH UNIT. THIS IS DUE TO THE FACT THAT SHIPMENTS MUST BE MADE EACH MONTH TO EACH COAST AND THE FACT THAT A SECTION 22 RATE OF $4.58 PER CWT. IS AVAILABLE FROM CARROLLTON, TEXAS, TO SEAL BEACH, CALIFORNIA.

EMTEX, OF COURSE, HAS NOT CLAIMED ERROR IN ITS STATED GUARANTEED WEIGHT. IN FACT IT HAS AFFIRMED ITS BID. IN THE SITUATION YOU CITE, WHERE ERROR IS ALLEGED AND CORRECTION IS SOUGHT, WE ARE NOT PERSUADED THAT A BIDDER CAN ESTABLISH HIS INTENDED GUARANTEED WEIGHT MERELY BY POINTING TO A WEIGHT INDICATED BY THE INVITATION AND OBTAIN CORRECTION THEREOF.