B-166499, MAY 29, 1969

B-166499, MAY 29, 1969

TO SPEAR SERVICE, INC.:

FURTHER REFERENCE IS MADE TO LETTERS DATED MARCH 21, APRIL 1, APRIL 24, AND APRIL 29, 1969, PROTESTING AGAINST THE AWARD OF ANY CONTRACT TO SOUTHERN GULF, INC., ENTERPRISE, ALABAMA, UNDER INVITATION FOR BIDS NO. DABC01-69-B-0048, FOR REFUELING AND DEFUELING SERVICES TO MILITARY AIRCRAFT AT FORT RUCKER, ALABAMA.

YOUR REQUEST FOR A COPY OF THE ADMINISTRATIVE REPORT FURNISHED TO OUR OFFICE BY THE DEPARTMENT OF THE ARMY FOR THE PURPOSE OF PREPARING A MEMORANDUM OF LAW AND FOR USE IN THE PRESENTATION OF ORAL ARGUMENT MAY NOT BE COMPLIED WITH SINCE THE REPORT HAS BEEN RESTRICTED BY THE DEPARTMENT OF THE ARMY TO DISSEMINATION WITHIN THE GOVERNMENT. THE REPORT CONSISTS PRINCIPALLY OF INFORMATION AND DOCUMENTS OF AN INTERNAL NATURE RELATING TO THE BUSINESS COMPETENCY OF SOUTHERN GULF. MUCH OF THIS INFORMATION AND DATA IS INCLUDED IN THE PREAWARD SURVEY FILE AND MAY NOT BE DISCLOSED OUTSIDE OF THE GOVERNMENT. SEE PARAGRAPHS 1-907 AND 1-329.3 (C) (5) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR). IN VIEW OF THESE REGULATORY RESTRICTIONS AND THE FACT THAT AWARD MUST BE ACCOMPLISHED ON OR BEFORE JUNE 1, 1969, OUR CONSIDERATION OF YOUR PROTEST IS LIMITED TO AN APPLICATION OF THE PRINCIPLES INVOLVED IN THE LIGHT OF THE ENTIRE RECORD BEFORE US.

TWO BIDS WERE RECEIVED AND OPENED ON MARCH 14, 1969, AS FOLLOWS:

GALLONS PER MONTH SPEAR PRICE PER GALLON SOUTHERN PRICE PER GALLON

0 TO 1,000,000 $0.025 $0.03 1,000,001 TO 2,000,000 0.025

0.02 2,000,001 TO 2,500,000 0.025 0.01 2,500,001 TO 3,000,000 0.025 0.01 3,000,001 TO 3,500,000 0.009 0.002 3,500,001 TO 4,000,000 0.002 0.001

OVER 4,000,000 0.040 0.0005 BASED ON ANTICIPATED GALLONAGES TO BE HANDLED, SOUTHERN GULF'S BID HAS BEEN EVALUATED BY THE PROCUREMENT OFFICE AS THE LOWEST BID SUBMITTED.

YOU PROTEST THE AWARD OF A CONTRACT TO THE LOW BIDDER, SOUTHERN GULF, AND YOU CONTEND THAT IT IS NOT THE LOW RESPONSIBLE BIDDER UNDER STANDARDS IMPOSED BY ASPR 1-902, 1-903.1 (I), 1-903.1 (III), AND 1 903.4. YOU PROTEST FURTHER THAT SOUTHERN GULF HAS DEMONSTRATED ITS NONRESPONSIBILITY BY THE WIDE FLUCTUATION IN ITS (AND ITS PREDECESSOR, P-AND-B SERVICES) BID PRICES OFFERED FOR THE REQUIRED SERVICES WITHOUT ANY APPARENT REASONABLE EXPLANATION FOR THE WIDE VARIATION; THAT SOUTHERN GULF HAS DEMONSTRATED ITS NONRESPONSIBILITY FURTHER BY PROPOSING TO USE OLD, OUTDATED, ANTIQUATED AND UNSAFE EQUIPMENT WHICH WILL RESULT IN BREAKDOWNS, LOSS OF TIME, INEFFICIENCY, AND IMPAIRMENT OF THE MISSION OF THE PROCURING AUTHORITY; AND THAT SOUTHERN GULF CANNOT PROVIDE THE SERVICE UNDER THE STANDARDS REQUIRED THROUGH THE OPTION PERIODS PROVIDED FOR IN THE INVITATION AT THE PRICES QUOTED. YOU ALSO CONTEND THAT THE GOVERNMENT'S FAILURE TO EXERCISE THE TWO 1 YEAR OPTION PERIODS OF THE PRESENT CONTRACT, DEEMED TO BE INCLUDED BY THE PROCURING AUTHORITY IN GOOD FAITH, WOULD BE GROSSLY UNFAIR INASMUCH AS YOU PROPOSED TO FULFILL THE PRESENT CONTRACT WITH THE PURCHASE OF ALL NEW EQUIPMENT MEETING THE HIGHEST STANDARDS, APPARENTLY IN RELIANCE ON THE RENEWAL OPTIONS BEING EXERCISED. YOU CITE THE "OTHER FACTORS" MENTIONED IN THE EXERCISE OF OPTIONS PROVISIONS OF ASPR 1-1505 (C) (III) AND (E) AS BEING IGNORED WITH REGARD TO THE PRESENT CONTRACT.

THE CONTRACTING OFFICER ON MARCH 14, 1969, INITIATED A PREAWARD SURVEY OF SOUTHERN GULF TO DETERMINE ITS CAPABILITY TO PERFORM THE CONTEMPLATED CONTRACT. THIS PREAWARD SURVEY, CONDUCTED PURSUANT TO ASPR 1-905.4 AND THE PROCEDURES OUTLINED IN ASPR APPENDIX "K," FOUND THAT SOUTHERN GULF HAD SUFFICIENT TECHNICAL CAPABILITY, PLANT FACILITIES AND EQUIPMENT, AND LABOR RESOURCES TO MEET REQUIRED CONTRACT REQUIREMENTS. IT WAS ALSO FOUND THAT SUCH BIDDER MET THE EQUIPMENT SAFETY REQUIREMENTS, THAT IT HAD A SATISFACTORY RECORD OF PERFORMANCE, AND THAT IT HAD THE ABILITY TO PROPERLY PERFORM THE CONTEMPLATED CONTRACT. FOLLOWING RECEIPT OF AFFIDAVITS SUBMITTED BY YOUR ATTORNEY, ATTESTING TO THE CONDITION OF THE EQUIPMENT OF SOUTHERN GULF, THE PURCHASING AND CONTRACTING OFFICER REQUESTED A REEVALUATION OF THE EQUIPMENT. THE DEFENSE CONTRACT ADMINISTRATION SERVICES DISTRICT, BIRMINGHAM, REEVALUATED SOUTHERN GULF'S EQUIPMENT AND CAPABILITIES AND SUBMITTED AN ADDENDUM TO THE PREAWARD SURVEY REPORT. THE ADDENDUM CONCLUDES THAT ,THE BIDDER HAS THE NECESSARY EQUIPMENT AND FACILITIES AND HAS DEMONSTRATED SATISFACTORY CAPABILITY TO PERFORM THE PROPOSED CONTRACT.'

A REVIEW OF THE RECORD REVEALS THAT THE APPLICABLE POLICIES AND PROCEDURES PRESCRIBED BY ASPR 1-900, ET SEQ. WERE FOLLOWED IN ALL MATERIAL RESPECTS DURING THE PREAWARD SURVEY AND THE REEVALUATION REQUESTED BY YOU. ON THE BASIS OF THESE AFFIRMATIVE FINDINGS, IT IS PROPOSED TO AWARD A CONTRACT TO SOUTHERN GULF AS THE LOWEST RESPONSIBLE, RESPONSIVE BIDDER. ON THE RECORD BEFORE US, WE FIND NO FACTUAL OR LEGAL BASIS TO QUESTION SUCH PROPOSED ACTION.

THE DETERMINATION OF A PROSPECTIVE CONTRACTOR'S QUALIFICATIONS IS PRIMARILY THE FUNCTION OF THE CONTRACTING AGENCY, INVOLVING THE EXERCISE OF A CONSIDERABLE RANGE OF DISCRETION AND, IN THE ABSENCE OF BAD FAITH OR LACK OF SUBSTANTIAL GROUNDS FOR THE ADMINISTRATIVE DETERMINATION, AS HERE, THERE IS NO BASIS FOR LEGAL OBJECTION. SEE 37 COMP. GEN. 430, 435; 46 ID. 371, 372; AND 47 ID. 373, 376.

WE HAVE CAREFULLY REVIEWED THE VOLUMINOUS RECORD IN THIS CASE, TOGETHER WITH ALL THE STATEMENTS AND INFORMATION SUBMITTED BY YOU, AND MUST CONCLUDE THAT THE RECORD CONTAINS SUBSTANTIAL GROUNDS FOR THE DETERMINATION OF RESPONSIBILITY AS AFFIRMED BY THE REQUESTED REEVALUATION. THERE IS NO INDICATION IN THE RECORD THAT AN AWARD TO THE LOW BIDDER IN THIS INSTANCE WOULD RESULT IN THE RECEIPT OF INFERIOR SERVICE BY THE GOVERNMENT.

REGARDING THE EXERCISE OF THE GOVERNMENT'S OPTION TO RENEW THE PRESENT CONTRACT, YOU WERE ADVISED AND WERE AWARE THAT THE EXERCISE OF THE OPTION WAS CONTINGENT UPON A TESTING OF THE MARKET. HAVING ELECTED TO ADVERTISE ITS NEEDS FOR FISCAL YEAR 1970, A LOW BID IS REQUIRED TO BE CONSIDERED BY THE PROCUREMENT AGENCY FOR AWARD IF OTHERWISE IN THE BEST INTEREST OF THE GOVERNMENT. SEE 36 COMP. GEN. 62, 63-64, WHERE WE HELD:

"WITH RESPECT TO YOUR FIRST CONTENTION CONCERNING THE FAILURE OF THE CONTRACTING AGENCY TO EXERCISE ITS OPTIONS UNDER THE EXISTING CONTRACTS WITH YOUR COMPANY, IT WOULD APPEAR SUFFICIENT MERELY TO POINT OUT THAT SINCE SUCH OPTIONS WERE PURELY FOR THE INTEREST AND BENEFIT OF THE GOVERNMENT, ANY DETERMINATION THAT THE EXERCISE OF SUCH OPTION WOULD BE CONTRARY TO THE GOVERNMENT'S INTERESTS MANIFESTLY MAY NOT BE SUBJECT TO LEGAL OBJECTION -- EITHER BY THIS OFFICE OR THE COURTS. IN THIS CONNECTION, ATTENTION IS INVITED TO THE CASE OF WESTERN UNION TELEGRAPH COMPANY V BROWN, EXECUTOR OF LANGE, ET AL., 253 U.S. 101, WHEREIN THE SUPREME COURT OF THE UNITED STATES, IN TREATING OF THIS SUBJECT, EXPLAINED AS FOLLOWS:

" -AN OPTION IS A PRIVILEGE GIVEN BY THE OWNER OF PROPERTY TO ANOTHER TO BUY THE PROPERTY AT HIS ELECTION. IT SECURES THE PRIVILEGE TO BUY AND IS NOT OF ITSELF A PURCHASE. THE OWNER DOES NOT SELL HIS PROPERTY; HE GIVES TO ANOTHER THE RIGHT TO BUY AT HIS ELECTION. AND THIS IS WHOLLY APART FROM THE QUESTION OF WHETHER THE EXERCISE OF AN OPTION SUFFICIENT TO MEET THE NEEDS OF A PROCUREMENT OF THIS MAGNITUDE WOULD NOT HAVE RESULTED IN THE MAKING OF A NEW CONTRACT REQUIRED BY LAW TO BE ENTERED INTO AFTER FORMAL ADVERTISING.'

WITH REGARD TO YOUR VIEW THAT THE LOW BID IS NOT REALISTIC, WE BELIEVE THAT THE AFFIRMATIVE DETERMINATION OF RESPONSIBILITY AS SUPPORTED BY THE PREAWARD SURVEYS RESOLVED ANY QUESTION, IF SUCH EXISTED, AS TO WHETHER THE BID WAS REALISTIC AND AS INTENDED.

ACCORDINGLY, AND SINCE WE FIND NO FACTUAL OR LEGAL BASIS TO QUESTION THE ADMINISTRATIVE ACTIONS TAKEN, YOUR PROTEST IS DENIED.