B-176325, DEC 21, 1972

B-176325, DEC 21, 1972

BID PROTEST - RENEWAL OPTIONS - RESPONSIBILITY CRITERIA DECISION DENYING A PROTEST ON BEHALF OF SERVICE DISTRIBUTORS, INC., AGAINST THE AWARD OF A CONTRACT TO ANY OTHER CONCERN UNDER AN IFB ISSUED BY THE ARMY, FORT ORD, CAL., FOR THE FURNISHING, INSTALLATION, AND MAINTENANCE OF WASHERS AND DRYERS. A CONTRACT FOR ONE YEAR REQUIREMENTS WITH ANNUAL RENEWAL OPTIONS IS NOT VIEWED AS A MULTI-YEAR CONTRACT WITHIN THE PURVIEW OF ASPR 1 322.5. THUS, THE LOW BIDDER FOR THE CURRENT REQUIREMENTS PLUS THE RENEWAL OPTION WILL BE AWARDED THE CONTRACT OVER THE LOW BIDDER FOR THE CURRENT REQUIREMENTS ONLY. ALSO, THE SUCCESSFUL BIDDER'S FAILURE TO BE LISTED WITH DUN & BRADSTREET OR ITS ALLEGED UNFAMILIARITY WITH THE PERFORMANCE LOCALE, DOES NOT AFFECT THE BIDDER'S RESPONSIBILITY. ACCORDINGLY, THE PROTEST IS DENIED.

TO WAHL AND WAHL:

REFERENCE IS MADE TO YOUR LETTERS OF JUNE 22, 1972, AND AUGUST 14, 1972, ON BEHALF OF SERVICE DISTRIBUTORS, INCORPORATED, PROTESTING AGAINST THE AWARD OF A CONTRACT TO ANOTHER CONCERN UNDER INVITATION FOR BIDS NO. DABF07-72-B-0113, ISSUED ON MAY 4, 1972, BY THE DEPARTMENT OF THE ARMY, FORT ORD, CALIFORNIA.

THE SOLICITATION IS FOR THE RENTAL AND MAINTENANCE OF WASHERS AND DRYERS AT FORT ORD. ITEMS 0001 AND 0002 ARE FOR FURNISHING, INSTALLING AND REMOVING A STATED QUANTITY OF WASHERS AND DRYERS. ITEMS 0003 AND 0004 ARE FOR MAINTENANCE AND RENTAL OF THIS EQUIPMENT FOR A STATED NUMBER OF SERVICE MONTHS. DIRECTLY BELOW ITEM 0004 APPEARS THE FOLLOWING STATEMENT:

"THE FOLLOWING ARE APPLICABLE ONLY IF THIS CONTRACT IS EXTENDED PURSUANT TO J-1."

NEXT FOLLOWS ITEMS 0005 THROUGH 0008 WHICH ARE FOR ESTIMATED QUANTITIES EXPRESSED IN TERMS OF SERVICE MONTHS FOR MAINTENANCE AND RENTAL OF WASHERS AND DRYERS FOR FISCAL YEARS 1974 AND 1975. SECTION J 1 PROVIDES:

"THIS CONTRACT IS RENEWABLE, AT THE OPTION OF THE GOVERNMENT, BY THE CONTRACTING OFFICER GIVING WRITTEN NOTICE OF RENEWAL TO THE CONTRACTOR NOT LATER THAN THIRTY (30) CALENDAR DAYS PRIOR TO THE CONTRACT COMPLETION DATE IN THE SCHEDULE; PROVIDED, THAT THE CONTRACTING OFFICER SHALL HAVE GIVEN PRELIMINARY NOTICE OF THE GOVERNMENT'S INTENTION TO RENEW AT LEAST SIXTY (60) DAYS BEFORE THIS CONTRACT IS TO EXPIRE. (SUCH A PRELIMINARY NOTICE WILL NOT BE DEEMED TO COMMIT THE GOVERNMENT TO RENEWALS.) IF THE GOVERNMENT EXERCISES THIS OPTION FOR RENEWAL, THE CONTRACT AS RENEWED SHALL BE DEEMED TO INCLUDE THIS OPTION PROVISION. HOWEVER, THE TOTAL DURATION OF THIS CONTRACT, INCLUDING THE EXERCISE OF ANY OPTIONS UNDER THIS CLAUSE, SHALL NOT EXCEED 3 YEARS."

SECTION D STATES THAT BIDS WILL BE EVALUATED ON THE PRICES BID FOR ALL ITEMS ON THE SCHEDULE INCLUDING THE OPTION ITEMS BUT THAT EVALUATION OF THE OPTIONS DOES NOT OBLIGATE THE GOVERNMENT TO EXERCISE ANY OPTIONS. BIDDERS ARE WARNED THAT A BID WHICH IS MATERIALLY UNBALANCED AS TO PRICES FOR BASIC AND OPTION QUANTITIES MAY BE REJECTED AS NONRESPONSIVE.

BIDS WERE OPENED ON JUNE 2, 1972, AND THE ONLY TWO BIDDERS WERE SERVICE DISTRIBUTORS, INCORPORATED, AND ALLIANCE PROPERTIES, INCORPORATED.

A COMPARISON OF THE TWO BIDS FOLLOWS:

BIDDER CURRENT REQUIREMENTS OPTION GRAND

ITEMS 1 THROUGH 4 FISCAL YEAR 1974 TOTAL

(TOTAL BID) AND 1975 REQUIREMENTS

ITEMS 5 THROUGH 8

(TOTAL BID)

SERVICE

DISTRIBUTORS $168,428.08 $302,914.56 $471,342.64

ALLIANCE

PROPERTIES 203,996.00 255,740.00 459,740.00

THE PROCURING ACTIVITY PURPOSES TO MAKE AN AWARD TO ALLIANCE PROPERTIES AS THE LOW BIDDER FOR THE CURRENT AND OPTION QUANTITIES. YOU HAVE PROTESTED AGAINST THIS PROPOSED AWARD.

YOUR FIRST SERIES OF CONTENTIONS ARE BASED UPON THE ASSUMPTION THAT THIS IS A MULTI-YEAR PROCUREMENT. THE PROVISIONS RELATING TO MULTI YEAR PROCUREMENTS IN THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) AND TITLE 32, CODE OF FEDERAL REGULATIONS (CFR) ARE IDENTICAL. OUR REFERENCES WILL BE TO ASPR. YOU URGE THAT THE SOLICITATION DID NOT PERMIT A SINGLE-YEAR BID AND, THEREFORE, THE AWARD MADE WAS PRECLUDED BY ASPR 1-322.3(B)(II) WHICH REQUIRES A RESOLICITATION IN A MULTI-YEAR PROCUREMENT WHERE AWARD IS TO BE ON A SINGLE-YEAR BASIS BUT THE SOLICITATION DOES NOT PERMIT THE SOLICITATION OF PRICES ON A SINGLE YEAR BASIS. YOU THEN ARGUE THAT EVEN ASSUMING A SINGLE-YEAR AWARD COULD BE MADE THE AWARD SHOULD BE TO SERVICE DISTRIBUTORS AS THE LOW BIDDER ON THAT BASIS. YOU ALSO ALLEGE THAT THE MULTI-YEAR TYPE OF PROCEDURE IN THIS CASE VIOLATES ASPR 1-322.6(C)(I), SINCE FISCAL YEAR FUNDS ARE INVOLVED.

THE ADMINISTRATIVE POSITION, WITH WHICH WE AGREE, IS THAT YOUR REFERENCE TO THE PROVISIONS RELATIVE TO MULTI-YEAR PROCUREMENTS DOES NOT APPLY SINCE THIS PROCUREMENT IS FOR A SINGLE YEAR REQUIREMENT WITH OPTIONS FOR TWO SUCCEEDING YEARS. THE INSTANT SOLICITATION DOES NOT CONTAIN THE CLAUSES REQUIRED BY ASPR 1-322.5 TO BE INCLUDED IN MULTI YEAR SOLICITATIONS. FURTHERMORE, VARIOUS PROVISIONS OF THE SOLICITATION MADE IT CLEAR THAT ALTHOUGH BIDS WILL BE EVALUATED FOR ALL ITEMS, INCLUDING THE OPTION QUANTITIES, THE AWARD OBLIGATES THE GOVERNMENT FOR ONLY FISCAL YEAR 1973.

ASPR 1-1504(D)(II) PROVIDES THAT THE OPTION QUANTITY MAY BE INCLUDED IN THE EVALUATION IF IT HAS BEEN DETERMINED AT A LEVEL HIGHER THAN THE CONTRACTING OFFICER THAT REALISTIC COMPETITION OF THE OPTION QUANTITY IS IMPRACTICABLE ONCE THE INITIAL CONTRACT IS AWARDED AND IT IS IN THE BEST INTEREST OF THE GOVERNMENT TO EVALUATE THE OPTION IN ORDER TO PREVENT A "BUY IN." THE REGULATION PROVIDES THAT THIS DETERMINATION SHALL BE BASED UPON FACTORS, SUCH AS, BUT NOT LIMITED TO, SUBSTANTIAL STARTUP OR PHASE-IN COSTS, SUPERIOR TECHNICAL ABILITY RESULTING FROM PERFORMANCE OF THE INITIAL CONTRACT, AND LONG PREPRODUCTION LEAD TIME FOR A NEW PRODUCER. HAVE NO OBJECTION TO EVALUATION OF OPTIONS IN ACCORDANCE WITH THIS PROVISION. 49 COMP. GEN. 787 (1970).

THE REASON GIVEN FOR INCLUDING THE OPTION QUANTITIES IN THE EVALUATION IS THAT THE PROCURING ACTIVITY ASSUMED THAT THE TOTAL CAPITAL EXPENDITURE WOULD BE INCLUDED IN THE FIRST YEAR OF THE CONTRACT SINCE THERE IS VIRTUALLY NO MARKET FOR USED WASHERS AND DRYERS EVEN THOUGH WASHERS AND DRYERS IN PUBLIC PLACES HAVE AN EXPECTED USEFUL LIFE OF THREE YEARS. WAS FELT THAT ONCE A BIDDER HAD RECOUPED ITS CAPITAL EXPENDITURES, IT COULD AFFORD TO BID LOWER THAN ITS COMPETITORS FOR THE SECOND AND THIRD YEAR CONTRACTS AND STILL BID HIGH ENOUGH TO MAKE A PROFIT. IN THE CIRCUMSTANCES, THE PROCURING ACTIVITY CONCLUDED THAT THE CRITERIA FOR INCLUDING THE OPTIONS IN THE EVALUATION HAD BEEN MET. WE FIND WE MUST AGREE. ALLIANCE PROPERTIES' BID EVALUATED ON THIS BASIS WOULD, THEREFORE, BE THE LOW BID.

WITH RESPECT TO YOUR CONTENTION ON THE FUNDING ASPECTS, WE ARE ADVISED THAT THE VERY REASON FOR DECIDING AGAINST USING THE MULTI-YEAR PROCEDURE WAS TO AVOID VIOLATING ASPR 1-322.6(C)(I) SINCE FISCAL YEAR FUNDS ARE INVOLVED.

YOU HAVE CITED ASPR 1-322.7(J) AND URGE THAT THE SOLICITATION WAS DEFECTIVE SINCE THE OPTIONS COVERED A LONGER PERIOD THAN THE BASIC PERIOD OF THE CONTRACT. THE PROVISION CITED RELATES TO OPTIONS FOR INCREASING QUANTITIES OR RENEWING THE CONTRACT IN ADDITION TO MULTI YEAR REQUIREMENTS, AND THE REGULATION PROVIDES THAT SUCH OPTIONS SHALL NOT EXCEED A PERIOD EQUAL TO THE BASIC CONTRACT PERIOD OR THREE YEARS, WHICHEVER IS LESS. SINCE AS INDICATED ABOVE THIS PROCUREMENT IS A ONE YEAR CONTRACT WITH OPTIONS, THE CITED PROVISION DOES NOT APPLY.

YOUR NEXT CONTENTION IS THAT THE PROCURING ACTIVITY DID NOT REPLY TO SERVICE DISTRIBUTORS' REQUEST FOR CERTAIN INTERPRETATIONS FORWARDED TO THE PROCURING ACTIVITY ON MAY 19, 1972, PRIOR TO BID OPENING. PROCURING OFFICIALS REPORTEDLY MET WITH YOUR CLIENT ON MAY 18, 1972, AND DISCUSSED THE QUESTIONS WHICH ARE THE SUBSTANCE OF THAT LETTER. IT WAS BELIEVED THAT ALL OF THE QUESTIONS EXCEPT POINTS 1 AND 3 HAD BEEN ANSWERED. WITH REGARD TO QUESTIONS 1 AND 3 THEY WERE COVERED BY AMENDMENT NO. 0001 TO THE INVITATION. EVEN THOUGH SERVICE DISTRIBUTORS WAS NOT GIVEN A FORMAL RESPONSE TO ITS LETTER OF MAY 19, IT DOES NOT APPEAR THAT ANY MISLEADING INFORMATION WAS GIVEN TO IT OR THAT ANY MATERIAL INFORMATION WAS DELIBERATELY WITHHELD.

YOUR FINAL POINT QUESTIONS WHETHER ALLIANCE PROPERTIES WAS A RESPONSIBLE BIDDER. YOU ALLEGE THAT THIS BIDDER IS NOT KNOWN TO LAUNDRY CONCESSIONAIRES IN THE NORTHERN CALIFORNIA AREA; THAT AN INSPECTION OF ITS FACILITIES DID NOT REVEAL ANY EVIDENCE THAT IT WAS MAINTAINING A SERVICE DEPARTMENT; THAT ALLIANCE PROPERTIES IS NOT LISTED IN DUN & BRADSTREET; AND THAT WITHIN MINUTES FOLLOWING THE BID OPENING ALLIANCE PROPERTIES OFFERED TO SUBCONTRACT ALL OF THE WORK TO YOUR CONCERN. YOU ADVISE THAT THE SOLICITATION DID NOT REQUIRE EVIDENCE OF ADEQUATE FINANCIAL RESOURCES OR THE POSTING OF A PERFORMANCE BOND DESPITE THE FACT THAT PERFORMANCE BONDS ARE COMMONPLACE IN THIS TYPE OF PROCUREMENT.

THE DEFENSE CONTRACT ADMINISTRATIVE SERVICES REGION (DCASR), SAN FRANCISCO, HAS RECOMMENDED COMPLETE AWARD TO ALLIANCE PROPERTIES. DCASR'S REPORT GAVE ALLIANCE PROPERTIES A SATISFACTORY RATING IN ALL CATEGORIES. THE FOLLOWING ARE SOME EXAMPLES:

(1) TECHNICAL CAPABILITY: THE CONTRACTOR WAS FOUND TO HAVE ADEQUATELY PLANNED HIS PURCHASING AND VERIFIED AVAILABILITY OF PERSONNEL AND EQUIPMENT;

(2) PRODUCTION CAPABILITY: CONTRACTOR HAS PERSONNEL STANDING BY WAITING TO PERFORM, LEASE TRUCKS ARE AVAILABLE FOR IMMEDIATE DELIVERY, TOOLING AND SUPPLIES REQUIRED FOR MAINTENANCE ARE STANDARD OFF-THE SHELF ITEMS FROM HARDWARE STORES;

(3) PLANT FACILITIES AND EQUIPMENT:THESE ARE LEASED, RENTED, OR FURNISHED NEAR THE AREA OF CONTRACTOR'S PERFORMANCE;

(4) LABOR RESOURCES: BIDDER HAS EXPERIENCED MEN READY TO PERFORM;

(5) ABILITY TO MEET DESIRED SCHEDULE: PERFORMANCE ON THIS CONTRACT WOULD BE A ROUTINE OPERATION. BIDDER HAS PERFORMED ON OVER 250 BUILDING MAINTENANCE BASE PROCUREMENT TYPE CONTRACTS IN THE PAST 14 YEARS. DURING THIS PERIOD BIDDER HAS MAINTAINED OVER 5,000 WASHERS AND DRYERS, HEAT PUMPS, AIR CONDITIONERS, GAS AND ELECTRIC RANGES, HEATERS AND GARBAGE DISPOSALS.

THE DCASR REPORT INDICATES A DUN AND BRADSTREET REPORT ON ALLIANCE PROPERTIES IS PRESENTLY IN THE PROCESS OF PREPARATION.

PURSUANT TO OUR REVIEW WE FIND THAT THE RECORD ADEQUATELY DOCUMENTS AND SUPPORTS THE CONTRACTING OFFICER'S FINDING THAT ALLIANCE PROPERTIES IS A RESPONSIBLE PROSPECTIVE CONTRACTOR; THEREFORE, THIS DETERMINATION MAY NOT BE QUESTIONED BY OUR OFFICE. 46 COMP. GEN. 371 (1966).

THE CONTRACTING OFFICER HAS DETERMINED THAT PAYMENT AND PERFORMANCE BONDS WERE NOT NECESSARY TO ASSURE PERFORMANCE OF THE CONTRACT IN THIS CASE. FIND NO BASIS FOR QUESTIONING THIS DETERMINATION.

ACCORDINGLY, YOUR PROTEST IS DENIED.