BNUMBER: B-277684; B-277685
DATE: November 4, 1997
TITLE: Marvin J. Perry & Associates, B-277684; B-277685, November 4,
1997
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Matter of:Marvin J. Perry & Associates
File: B-277684; B-277685
Date:November 4, 1997
Malcolm D. Wilson for the protester.
Georgia Vlahos, Esq., and Kenneth J. Densmore, Esq., Department of the
Navy, for the agency.
Charles W. Morrow, Esq., and James A. Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Modifications of orders under General Services Administration Federal
Supply Schedule for red oak sleeping room furniture to allow a change
in the type of wood to ash, which is less expensive than red oak,
materially changed the nature of the orders from those originally
issued and thereby prejudiced the protester, a competing vendor.
DECISION
Marvin J. Perry & Associates protests the modifications of delivery
order No. GS-27-F-028B and purchase order No. N00210-96-M-0566, issued
by the Department of the Navy, Naval Training Center, Great Lakes,
Illinois, to DCI for red oak sleeping room furniture. Perry
essentially contends that the modifications were beyond the scope of
these orders.
We sustain the protest.
This procurement was for 563 10-piece sets of red oak sleeping room
furniture to furnish a bachelor enlisted quarters (BEQ) that was under
construction. Prior to the procurement, the Navy contracted with an
architectural firm to design the interior space for the project. The
firm recommended Perry as the vendor holding a General Services
Administration (GSA) Federal Supply Schedule (FSS) contract offering
the lowest-priced red oak furniture that met the functional needs of
the agency with respect to aesthetics and quality.[1] In order to
ensure that Perry's products represented the best value, the Navy
decided to solicit quotes from those vendors with similar products on
the FSS.
Only 9 of the 10 pieces of each set could be obtained from the FSS,
and on April 1, 1996, the Navy solicited quotes for these 9 pieces of
red oak furniture under request for quotations (RFQ) No.
N00210-96-Q-1496. On that same date, quotes were solicited for the
remaining piece--the red oak footboard to the bed--under RFQ No.
N00210-96-Q-1497.[2]
The Navy received eight quotes for the nine pieces of furniture and
six quotes for the footboard by the May 30 closing dates. DCI
submitted the lowest quote of $557,127.91 for the nine items; Perry
was next low with a quote of $572,709. Perry submitted the lowest
quote of $18,016 for the footboard; DCI submitted the next lowest
quote of $19,789.45. Since DCI's quotes reflected the lowest total
price, the Navy issued the delivery order from the FSS for the nine
pieces to DCI on June 11 and the purchase order for the footboard to
DCI on June 18. The original delivery date for the furniture was
scheduled for September 30, but several construction delays resulted
in the delivery date being pushed back to June 9, 1997.
In May 1997, DCI advised the Navy that its supplier had mistakenly
delivered ash instead of red oak. Because of this, DCI proposed that
the Navy either accept furniture made with ash at the same price or
postpone the delivery date. In support of accepting ash furniture,
DCI provided the Navy with samples of ash stained to match the color
of red oak. After comparing the samples with the red oak furniture
already in the BEQ, the Navy determined that the ash furniture was an
acceptable substitute. The parties agreed to the substitution on May
19. The Navy accepted delivery of the ash furniture in June.
In late June, Perry learned that the Navy had permitted DCI to
substitute ash furniture for red oak furniture. Perry initially
sought an explanation from the agency by letter dated June 30, in
which it complained that changing the wood from red oak to ash would
be unfair to those quoters who based their quotes on providing
furniture made from red oak, because ash is a lower grade and lower
priced wood, and that if "there was no authorization" to change the
wood, the Navy should reject DCI's furniture and make award to the
next low quoter--Perry. The Navy responded by letter dated July 21
(received by the protester on July 25) asserting that the change was
insignificant. On August 4, Perry protested the Navy's actions to our
Office.
The Navy initially argues that the August 4 protest is untimely
because it was filed more than 10 working days after late June when
the protester knew of the basis of protest. We disagree. Although
the protester's June 30 letter to the agency was not expressly
characterized as a protest, we will treat it as an agency-level
protest because it clearly conveyed an expression of dissatisfaction
and a request for corrective action. See Dynamac Corp., B-252800,
July 19, 1993, 93-2 CPD para. 37 at 3; American Material Handling, Inc.,
B-250936, Mar. 1, 1993, 93-1 CPD para. 183 at 2-3. Since the August 4
protest was filed by Perry within 10 days of its receipt of the
agency's response to its June 30 letter, we consider the protest to be
timely filed with our Office. 4 C.F.R. sec. 21.2(a)(3) (1997).
The agency next argues that the protest involves a matter of contract
administration which is beyond the purview of our bid protest
jurisdiction. See 4 C.F.R. sec. 21.5(a). While this is generally true,
we will consider a protest that a modification to an existing contract
is beyond the scope of that contract, changing the nature of the
contract originally awarded. See Indian and Native Am. Employment and
Training Coalition, 64 Comp. Gen. 460 (1985), 85-1 CPD para. 432; Dynamac
Corp., supra, at 4.[3] In determining whether a modification to a
contract is within the scope of the contract, we look to whether there
is a material difference between the contract, as modified, and the
original contract, considering such factors as the extent of any
changes in the type of work, performance period, and costs between the
modification and the original contract, as well as whether the
original solicitation adequately advised offerors of the potential for
the change or whether the change was the type that reasonably would
have been anticipated, and whether the modification materially changed
the field of competition for the requirement. Avtron Mfg., Inc., 67
Comp. Gen. 404, 406-407 (1988), 88-1 CPD para. 458 at 4; Dynamac Corp.,
supra, at 4.
As indicated above, Perry advises that ash is materially different
from red oak in terms of cost and quality. For example, Perry asserts
that its supplier could have obtained ash wood in its raw form for a
cost at least 40 percent cheaper than red oak.[4] Perry also asserts
that it would have been able to reduce its bid price by $47,885 (which
would have made its quote lower than DCI's), if it had known that ash
was an acceptable alternative. In addition, Perry advises that while
ash may appear similar in terms of radial grain patterns and cell
growth elongation, the difference between the two woods is in hardness
and density, and that red oak is superior to ash for purposes of
joinery, thereby resulting in more structurally sound pieces of
furniture and a greater long-term value to the user.
The Navy does not dispute that ash is inferior in quality to oak and
can be obtained at a lower cost than red oak. The Navy does assert
that it contacted two local lumberyards, who indicated that there
would be only a small price differential (approximately 1 to 5
percent) between the cost of ash and red oak because ash, although
cheaper, is not as readily available as red oak in the quantities
needed to fill large orders. However, the Navy has presented no basis
for us to question Perry's documented contention that it and other FSS
vendors in the furniture business could have obtained ash at a
substantial savings over red oak, and that this savings would be
translated into lower prices. Further, there is no basis to regard
the change as one that could reasonably have been anticipated by Perry
or the other FSS vendors that submitted quotes for red oak furniture.
In sum, we think that the original purpose of the orders was so
substantially changed by the modification that the original orders and
the modified orders are essentially different. Even though the record
does not show that the total cost savings of the modifications to the
originally placed orders would be massive, the record does evidence
that if quotes had been obtained from the FSS vendors on the basis of
ash rather than red oak furniture, prices may have been significantly
lower than the award prices, and that a different vendor may well have
been selected. See Avtron Mfg., Inc., supra, at 5.
The Navy, nevertheless, argues that it was not prohibited from
modifying the order, irrespective of the nature of the change, or
required to solicit the other FSS vendors, because the procurement was
conducted under the FSS program. In this regard, FAR sec. 8.404(a)
provides in pertinent part:
When placing orders under a [FSS], ordering activities need not
seek further competition, synopsize the requirement, make a
separate determination of fair and reasonable pricing, or
consider small business set-asides . . . .
The Navy further asserts that, unlike an invitation for bids or
request for proposals, a delivery order need not conform to every
detail of the RFQ, which is issued primarily for informational
purposes. The Navy argues that the RFQ was issued only to identify
the FSS vendor meeting its needs at the lowest cost and that having
done so, the agency was not prohibited from changing the requirement
in issuing its final delivery order since it could have simply placed
the order with the selected vendor without issuing RFQs. We disagree.
Although the Navy conducted this procurement under the FSS program, it
elected to solicit competitive quotes from vendors on the FSS and it
made award to DCI, the vendor with the lowest quote. Having elected
to hold a competition in order to ensure that it received the
lowest-priced items, the Navy was obligated to ensure that the
competition was conducted fairly; the fact that a requirement is
fulfilled through the FSS does not exempt an agency from treating
vendors consistent with the concern for a fair and equitable
competition that is inherent in any procurement. See Haworth, Inc.;
Knoll N. Am., Inc., 73 Comp. Gen. 283, 286-287 (1994), 94-2 CPD para. 98
at 5-6; SMS Sys. Maintenance Servs., Inc., B-270816, Apr. 29, 1996,
96-1 CPD para. 212 at 4-5; Dictaphone Corp., B-254920.2, Feb. 7, 1994,
94-1 CPD para. 75 at 3. Here, in order to fulfill its obligation to allow
vendors to compete on a fair and equal basis as well as to satisfy
itself that it received the best value (in this case lowest price), we
think that the Navy was required to give the competing vendors an
opportunity to submit quotes for supplying furniture made from ash
instead of simply modifying DCI's orders in a manner that exceeded the
scope of the contracts and the original competition.[5]
Because the furniture under the orders have already been delivered,
corrective action is not practicable. We recommend that the protester
be reimbursed its costs of filing and pursuing the protest, including
reasonable attorneys' fees. 4 C.F.R. sec. 21.8(d)(1). The protester
should submit its certified claim for such costs, detailing the time
expended and costs incurred, directly to the contracting agency within
60 days of receiving this decision. 4 C.F.R. sec. 21.8(f)(1).
The protest is sustained.
Comptroller General
of the United States
1. The FSS program managed by GSA provides agencies with a simplified
process for obtaining commonly used supplies and services at prices
associated with volume buying. Federal Acquisition Regulation sec.
8.401(a).
2. Because the footboard was required to match the headboard, the RFQ
for the footboard was distributed only to those FSS vendors solicited
for the other furniture pieces.
3. While the cases cited here arose in the context of contracts rather
than FSS orders, we believe, as explained below, that the principle
they stand for holds for competed FSS orders as well.
4. To bolster its claim, the protester offers a copy of the Weekly
Hardwood Review that reflects that at the time the orders were awarded
ash sold for $525 per thousand board feet (MBF), while red oak sold
for $855 MBF.
5. By not issuing revised RFQs or checking other vendors' FSS prices
for ash furniture, the agency did not ensure that it received the best
price for the ash furniture, which was the stated purpose for issuing
the RFQs in the first place.