B-160783, MAR. 24, 1967

B-160783, MAR. 24, 1967

TO DYNATION CORPORATION:

REFERENCE IS MADE TO YOUR LETTER OF JANUARY 26, 1967, AND SUBSEQUENT CORRESPONDENCE, PROTESTING THE RECENT AWARD OF A CONTRACT UNDER INVITATION FOR BIDS F41608-67-B-0777 TO DRIAIRE, INCORPORATED, FOR ITEMS IDENTICAL TO THOSE COVERED BY INDEFINITE QUANTITY CONTRACT AF41/608/-41886 AWARDED TO YOUR COMPANY BY THE AIR FORCE ON JUNE 18, 1966.

INVITATION FOR BIDS F41608-67-B-0777 WAS ISSUED ON OCTOBER 17, 1966, FOR 26,751 PACKAGES OF HUMIDITY INDICATOR PLUGS. DRIAIRE SUBMITTED THE LOWEST BID IN THE AMOUNT OF $69,953.87, REPRESENTING A PRICE OF $2.615 PER PACKAGE AND WAS AWARDED THE CONTRACT ON JANUARY 23, 1967.

THE CONTRACT WITH YOUR COMPANY PROVIDES THAT THE AIR FORCE MAY ORDER BETWEEN 7,000 AND 48,000 PACKAGES OF HUMIDITY INDICATOR PLUGS, PACKED 20 TO A PACKAGE, DURING A ONE-YEAR PERIOD. IN THIS REGARD, THE CONTRACT PROVIDES:

"/A) MINIMUM QUANTITY: THE GOVERNMENT SHALL ORDER A MINIMUM QUANTITY OF THE SUPPLIES OR SERVICES TO BE PROCURED HEREUNDER TO THE EXTENT OF THE SUM OF $2,500.00.

"/B) MAXIMUM QUANTITY: THE ESTIMATED "MAXIMUM QUANTITY" OF THE SUPPLIES AND SERVICES TO BE FURNISHED BY THE CONTRACTOR SHALL NOT EXCEED THE TOTAL MONETARY VALUE OF $102,807.54. SAID ,MAXIMUM QUANTITY" SHALL BE INSERTED AT TIME OF AWARD AND SHALL BE BASED ON THE "AGGREGATE PRICE" WHICH WAS THE BASIS OF AWARD, EXCEPT THAT COSTS OF TRANSPORTATION WILL NOT BE CONSIDERED. FOR PLANNING PURPOSES, THE GOVERNMENT'S ESTIMATE OF SAID "MAXIMUM QUANTITY" AT TIME OF BID SOLICITATION WAS $112,563.00.

"/C) IT IS AGREED AND UNDERSTOOD THAT THE GOVERNMENT IS UNDER NO OBLIGATION TO ORDER ANY SUPPLIES OR SERVICES IN EXCESS OF THE "MINIMUM QUANTITY" SPECIFIED IN PARAGRAPH (A) ABOVE, AND FURTHER, THAT THE SUM SPECIFIED IN PARAGRAPH (B) ABOVE SHALL NOT BE CONSTRUED AS OBLIGATING THE GOVERNMENT TO ANY EXPENDITURE IN EXCESS OF THE "MINIMUM QUANTITY.'"

THE CONTRACT STATES FURTHER:

"/A) THIS IS AN INDEFINITE QUANTITY CONTRACT FOR THE SUPPLIES OR SERVICES SPECIFIED IN THE SCHEDULE AND FOR THE PERIOD SET FORTH THEREIN. DELIVERY OR PERFORMANCE SHALL BE MADE ONLY AS AUTHORIZED BY ORDERS ISSUED IN ACCORDANCE WITH THE "ORDERING" CLAUSE OF THIS CONTRACT. THE QUANTITIES OF SUPPLIES OR SERVICES SPECIFIED HEREIN ARE ESTIMATES ONLY AND ARE NOT PURCHASED HEREBY.

"/B) THE CONTRACTOR SHALL FURNISH TO THE GOVERNMENT, WHEN AND IF ORDERED, THE SUPPLIES OR SERVICES SET FORTH IN THE SCHEDULE UP TO AND INCLUDING THE QUANTITY DESIGNATED IN THE SCHEDULE AS THE "MAXIMUM.' THE GOVERNMENT SHALL ORDER THE QUANTITY OF SUPPLIES OR SERVICES DESIGNATED IN THE SCHEDULE AS THE "MINIMUM.'"

UNDER THE CONTRACT, 14,107 PACKAGES AT $2.74 EACH, TOTALING $38,653.18, HAVE BEEN PURCHASED FROM YOU. IT IS YOUR CONTENTION THAT SINCE THE MAXIMUM QUANTITY PROVIDED IN YOUR CONTRACT HAS NOT BEEN MET, THE ADDITIONAL QUANTITY OF 26,751 PACKAGES AWARDED TO DRIAIRE SHOULD HAVE BEEN PURCHASED FROM YOU UNDER YOUR CONTRACT, SINCE BEFORE THE AWARD TO DRIAIRE, YOU OFFERED TO REDUCE THE CONTRACT PRICE TO $2.52 A PACKAGE. THE OFFER TO REDUCE THE PRICE TO $2.52 WAS RECEIVED 7 DAYS AFTER THE DISCLOSURE OF THE PRICES RECEIVED UNDER THE NEW INVITATION.

WHETHER THE QUANTITIES AWARDED TO DRIAIRE SHOULD HAVE BEEN ORDERED FROM YOUR COMPANY, BECAUSE OF THE TENDERED REDUCTION IN PRICE, IS NOT DISPOSITIVE OF THIS CASE. THE LEGAL QUESTION GOES TO WHETHER THE TERMS OF YOUR CONTRACT REQUIRED THE ADDITIONAL QUANTITIES TO BE ORDERED FROM YOUR COMPANY.

UNDER THE TERMS OF THE CONTRACT, THE GOVERNMENT WAS LEGALLY OBLIGATED TO ORDER NO MORE THAN A MINIMUM QUANTITY OF THE SUPPLIES OR SERVICES TO THE EXTENT OF THE SUM OF $2,500. IN THAT REGARD, THE CONTRACT IS SPECIFIC THAT "THE GOVERNMENT IS UNDER NO OBLIGATION TO ORDER ANY SUPPLIES OR SERVICES IN EXCESS OF THE "MINIMUM QUANTITY" SPECIFIED" AND THAT THE REFERENCE TO $102,807.54 ,SHALL NOT BE CONSTRUED AS OBLIGATING THE GOVERNMENT TO ANY EXPENDITURE IN EXCESS OF THE "MINIMUM QUANTITY.'" MOREOVER, THE CONTRACT DOES NOT CONTAIN ANY "REQUIREMENTS" CLAUSE OBLIGATING THE GOVERNMENT TO ORDER ALL OF ITS NEEDS UP TO THE MAXIMUM TOTAL MONETARY VALUE OF $102,807.54 FROM YOUR COMPANY. THE GOVERNMENT HAD THE OPTION UNDER YOUR CONTRACT TO ORDER MORE THAN THE MINIMUM AMOUNT BUT IT WAS NOT LEGALLY OBLIGATED TO DO SO.

ACCORDINGLY, SINCE FROM THE FOREGOING IT DOES NOT APPEAR THAT YOUR COMPANY HAD A REQUIREMENTS CONTRACT WITH THE GOVERNMENT IT WAS NOT LEGALLY IMPROPER FOR THE AIR FORCE TO PROCURE THE ADDITIONAL QUANTITIES UNDER COMPETITIVE BIDDING PROCEDURES. UNDER THE CIRCUMSTANCES, YOUR PROTEST IS DENIED.