B-165852, JULY 24, 1969, 49 COMP. GEN. 48

B-165852, JULY 24, 1969, 49 COMP. GEN. 48

BIDS -- AGGREGATE V SEPARABLE ITEMS, PRICES, ETC. -- BIDDING UNIT MEASUREMENTS AMBIGOUS UNDER AN INVITATION SOLICITING BIDS ON INSECTICIDES REQUIREMENTS OVER A 1 -YEAR PERIOD, AWARD TO BE MADE IN THE AGGREGATE FOR EACH OF THE 13 GROUPS SOLICITED, THE CORRECTION OF A BID BY REDUCING THE STATED UNIT PRICES BY ONE TWENTY-FOURTH--THE BID HAVING BEEN COMPUTED ON A 24-CAN CARTON BASIS INSTEAD OF ON A PER CAN BASIS--NOT ONLY DISPLACED A LOWER ACCEPTABLE BID ON SEVERAL GROUPS CONTRARY TO SECTION 2.406-3(A)(2) OF THE FEDERAL PROCUREMENT REGULATIONS, WHICH PRESCRIBES CORRECTION ONLY WHEN THE EXISTENCE OF THE MISTAKE AND THE BID ACTUALLY INTENDED ARE ASCERTAINABLE FROM THE INVITATION, BUT WAS TANTAMOUNT TO LETTING THE BIDDER SUBMIT A SECOND BID. THE AWARD SHOULD BE CANCELED AND THE UNFILLED REQUIREMENTS REAWARDED, AND FUTURE PROCUREMENTS SHOULD MORE SPECIFICALLY STATE BIDDING UNIT MEASUREMENTS.

TO THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION, JULY 24, 1969:

REFERENCE IS MADE TO THE ADMINISTRATIVE REPORT DATED APRIL 16, 1969, FROM YOUR DEPARTMENT RELATIVE TO THE PROTEST BY TRIO CHEMICAL WORKS, INC. (TRIO), AGAINST THE AWARD OF A CONTRACT TO THE AIROSOL COMPANY, INC. (AIROSOL), FOR GROUPS 6, 12 AND 13 UNDER INVITATION FPNGC-A 70283.

THE SUBJECT INVITATION REQUESTED BIDS FOR THE NORMAL SUPPLY REQUIREMENTS OF THE GENERAL SERVICES ADMINISTRATION SUPPLY DEPOTS FOR INSECT REPELLENTS AND INSECTICIDES, FSC 6840, FOR THE PERIOD JANUARY 1, 1969, THROUGH DECEMBER 31, 1969. THE SUPPLIES WERE CLASSIFIED IN 13 GROUPS, AND AWARDS WERE TO BE MADE IN THE AGGREGATE BY GROUP, ON THE BASIS OF THE GOVERNMENT'S ESTIMATED PEAK MONTHLY REQUIREMENTS, TO THE LOW RESPONSIVE OFFERORS UP TO THEIR STATED MONTHLY SUPPLY POTENTIALS. THE LOW AGGREGATE OFFEROR WAS TO BE DETERMINED BY MULTIPLYING THE UNIT PRICE ON EACH ITEM BY THE ESTIMATED QUANTITY SPECIFIED AND ADDING THE RESULTANT EXTENSIONS.

TRIO'S PROTEST RELATES TO THE AWARD OF A CONTRACT TO AIROSOL FOR GROUP 6, INSECTICIDE, REPELLENT, AND GROUPS 12 AND 13, INSECTICIDE, PYRETHRIN, ON THE BASIS THAT ITS BIDS WERE IMPROPERLY CORRECTED TO DISPLACE TRIO'S LOW RESPONSIVE BIDS. THESE ITEMS WERE TO BE SUPPLIED IN 12 OUNCE CANS PACKED 24 TO A CARTON, HOWEVER BIDS WERE TO BE SUBMITTED ON THE BASIS OF A PER CAN UNIT PRICE.

THE BIDS RECEIVED FOR THESE THREE GROUPS WERE AS FOLLOWS:

GROUP 6 GROUP 12 GROUP 13

BID PRICE BID PRICE BID PRICE AIROSOL CO., INC.

$217,149.50 $4,814,038.00 $2,617,945.00 DALLAS LABORATORIES 12,660.00 272,001.20 VIRGINIA CHEMICALS, INC. 12,617.00 232,979.00 125,790.00 TRIO CHEMICAL WORKS, INC. 12,332.15 209,298.95 111,496.45

YOUR DEPARTMENT'S REPORT TO THIS OFFICE STATES THAT UPON EXAMINATION OF THE BIDS RECEIVED THE CONTRACTING OFFICER OBSERVED THAT AIROSOL'S BIDS ON THESE THREE GROUPS WERE 18 TO 24 TIMES GREATER THAN THE OTHER BIDS. SINCE EACH GROUP CONSISTED OF 12-OUNCE CANS PACKED 24 TO A BOX OR SHIPPING CONTAINER, HE CONCLUDED THAT AIROSOL HAD ERRONEOUSLY BID ON UNITS OF 24- CAN BOXES INSTEAD OF SINGLE CANS, AND THAT ITS UNIT PRICES PER CAN WERE THEREFORE ONE TWENTY-FOURTH OF THE UNIT PRICES STATED, ON WHICH BASIS AIROSOL'S BIDS ON THE THREE GROUPS WERE THE LOWEST RECEIVED. AIROSOL VERIFIED THIS CONCLUSION AND ALSO PROVIDED ITS FILES AND WORKING PAPERS SHOWING THAT ITS BID WAS COMPUTED ON A 24-CAN BASIS. ON THE BASIS OF SECTION 2.406-3(A)(2) OF THE FEDERAL PROCUREMENT REGULATIONS (FPR)--WHICH PERMITS CORRECTION OF A BID RESULTING IN THE DISPLACEMENT OF A LOWER ACCEPTABLE BID ONLY IF THE EXISTENCE OF THE MISTAKE AND THE BID ACTUALLY INTENDED ARE ASCERTAINABLE SUBSTANTIALLY FROM THE INVITATION AND BID ITSELF--THE ADMINISTRATION TAKES THE POSITION THAT SINCE A MISTAKE IS OBVIOUS AND THE CONTRACTING OFFICER ASCERTAINED AIROSOL'S INTENDED "PER UNIT" PRICE SUBSTANTIALLY FROM THE BID ITSELF BY DIVIDING BY 24, THE CORRECTION WAS PROPER.

WHILE THE ATTORNEYS FOR TRIO HAVE PRESENTED SEVERAL REASONS FOR OBJECTING TO THE ACTION TAKEN BY THE CONTRACTING OFFICER, WE BELIEVE ONE POINT IS DETERMINATIVE OF THIS MATTER AND WE WILL THEREFORE LIMIT OUR CONSIDERATION TO THE POINT DISCUSSED BELOW.

THE ATTORNEYS FOR TRIO HAVE TAKEN THE POSITION THAT IF IN COMPUTING ITS BID, AIROSOL MISTOOK THE GOVERNMENT'S ESTIMATED REQUIREMENTS AS BEING STATED IN CASES OF 24 CANS EACH, RATHER THAN INDIVIDUAL CANS, ITS BID PRICE MUST NECESSARILY HAVE BEEN COMPUTED ON ESTIMATED REQUIREMENTS 24 TIMES GREATER THAN THE GOVERNMENT'S TRUE ESTIMATE. TRIO THEREFORE CONTENDS THAT AIROSOL'S MISCONCEPTION OF THE GOVERNMENT'S ESTIMATED REQUIREMENTS MAY HAVE INFLUENCED ITS BID PRICES SINCE IT IS INVARIABLY MORE ECONOMICAL TO PRODUCE AN ITEM IN QUANTITY, AND IT WAS THEREFORE IMPROPER FOR THE CONTRACTING OFFICER TO ASSUME THAT AIROSOL WOULD HAVE COMPUTED ITS BID ON THE TOTAL ESTIMATED QUANTITY OF 591,750 CANS AT THE SAME PER CAN PRICE IT USED IN COMPUTING ITS BID ON 591,750 CARTONS, OR APPROXIMATELY 14,000,000 CANS.

BY LETTER OF JUNE 13, 1969, OUR OFFICE ADVISED AIROSOL OF THE EXISTENCE AND NATURE OF TRIO'S PROTEST AND AFFORDED AN OPPORTUNITY TO THE COMPANY TO SUBMIT ADDITIONAL EVIDENCE OR ARGUMENTS FOR OUR CONSIDERATION. THE COMPANY RESPONDED BY LETTER OF JULY 1, 1969, WHEREIN IT HAS TAKEN THE POSITION, BUT WITHOUT SUPPORTING DOCUMENTATION, THAT NO SIGNIFICANT ECONOMIES OF SCALE ARE REALIZED WITH GREATER QUANTITIES OF THE ITEMS INVOLVED. IT IS STATED THAT THE CANS COVER CAPS, VALVES, INSECTICIDE AND PROPELLANT ARE SOLD WITH NO QUANTITY PRICE BREAKS AND THAT THE SAVINGS ON BOXES ARE SO SLIGHT THAT THE BID PRICE IS NOT AFFECTED. IN ADDITION, AIROSOL HAS STATED THAT THERE ARE NO SIGNIFICANT SAVINGS IN PRODUCTION COSTS AS QUANTITY INCREASES, THAT SINCE THE BID WAS CALCULATED BY USING THE LABOR COSTS FOR A FULL SHIFT'S PRODUCTION THE NECESSITY FOR ADDITIONAL SHIFTS DOES NOT LOWER THE LABOR COST PER CAN; AND THAT THE QUANTITY ESTIMATES OFFERED IN THE SOLICITATION WERE NOT CONSIDERED TO BE A FACTOR IN CALCULATING THE BID PRICE.

ON THE OTHER HAND, TRIO HAS SUBMITTED DOCUMENTATION IN THE FORM OF SUPPLIER QUOTATIONS WHICH INDICATES THAT DISCOUNTS OF 6 PERCENT AND 8 PERCENT ARE OFFERED IF CHEMICALS AND PACKING CARTONS ARE PURCHASED IN THE LARGER QUANTITIES ON WHICH AIROSOL'S BID WAS BASED.

IN OUR OPINION, THERE IS A REASONABLE BASIS FOR CONCLUDING IN THE PRESENT CASE THAT THE COMPUTATION OF A BID PRICE ON ESTIMATED REQUIREMENTS 24 TIMES THE GOVERNMENT'S TRUE ESTIMATE MAY HAVE INFLUENCED THE BID THE COMPANY WOULD OTHERWISE HAVE MADE, AND WE FEEL THIS FACTOR SHOULD HAVE PRECLUDED THE GOVERNMENT FROM CORRECTING AIROSOL'S BID AND AWARDING A CONTRACT TO AIROSOL. THE GOVERNMENT'S ACTION IN PERMITTING AIROSOL, AFTER OPENING, TO APPLY ITS BID TO THE GOVERNMENT'S TRUE ESTIMATED REQUIREMENTS IS, WE BELIEVE, TANTAMOUNT TO LETTING THE COMPANY SUBMIT A SECOND BID. IS AXIOMATIC THAT THE INTEREST OF THE GOVERNMENT IN PRESERVING AND MAINTAINING THE COMPETITIVE BIDDING SYSTEM REQUIRES THAT BIDDERS NOT BE GIVEN A SECOND CHANCE TO BID BY MAKING THEIR BID RESPONSIVE AFTER OPENING EXCEPT WHERE ITS ORIGINAL BID IS RESPONSIVE AND THE INTENDED BID CAN BE ASCERTAINED SUBSTANTIALLY FROM THE INVITATION AND THE BID ITSELF. COMP. GEN. 819 (1959); 37 ID. 210 (1957); AND 40 ID. 432 (1961).

FOR THE REASONS STATED THE PURPORTED CONTRACT AWARDED TO AIROSOL SHOULD BE TERMINATED AND AN AWARD MADE TO TRIO AS THE LOW RESPONSIVE BIDDER FOR THE REMAINDER OF THE PERIOD, THROUGH DECEMBER 31, 1969, IT BEING OUR CONCLUSION THAT IT WOULD NOT BE IN THE INTEREST OF THE GOVERNMENT TO UNDERTAKE ANY ACTION AS TO ORDERS HERETOFORE FILLED OR PLACED UNDER THE ERRONEOUS CONTRACT.

WE ALSO WISH TO POINT OUT THAT THE ERRORS IN THIS CASE APPEAR TO HAVE RESULTED PRIMARILY FROM THE LACK OF CLARITY IN THE INVITATION, IN DEFINING THE BIDDING UNIT FOR GROUPS 12 AND 13 ONLY AS "EA" (EACH) WITHOUT SPECIFIC REFERENCE TO THE BIDDING UNIT'S MEASUREMENT, WHEREAS IN OTHER GROUPS THE BIDDING UNITS WERE MORE SPECIFICALLY STATED AS CANS, BOXES, OR DRUMS. RECOMMEND APPROPRIATE ACTION TO PRECLUDE RECURRENCE OF SUCH AMBIGUITIES IN FUTURE PROCUREMENTS.

BOTH TRIO AND AIROSOL ARE BEING FURNISHED A COPY OF THIS DECISION.

THE FILE FORWARDED WITH THE REPORT IS RETURNED.