TITLE: CAMS Inc., B-292546, October 14, 2003
BNUMBER: B-292546
DATE: October 14, 2003
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CAMS Inc., B-292546, October 14, 2003
Decision
Matter of: CAMS Inc.
File: B-292546
Date: October 14, 2003
Timothy W. Knudsen for the protester.
Edward C. Hintz, Esq., and Richard Ferguson, Esq., Defense Logistics
Agency, 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
Agency improperly placed an order based on a request for quotations that
provided that final inspection and acceptance must be at the actual
manufacturing facility based upon a quotation that provides for inspection
and acceptance at facility where the supplies are to be packaged.
DECISION
CAMS Inc. protests the issuance of a purchase order to The Flinchbaugh
Co., Inc. under request for quotations (RFQ) No. SP0760-03-Q-E828, a small
business set‑aside, issued by the Defense Supply Center Columbus
(DSCC), for cable support plates. CAMS asserts that Flinchbaugh*s quote
is unacceptable because it failed to comply with the solicitation*s
inspection and acceptance requirements.
We sustain the protest.
DSCC issued the RFQ on April 14, 2003, to acquire 297 cable support plates
with an option for an additional 297 plates. The RFQ provided for a *best
value* award of a fixed-priced order based on a comparative assessment of
*offeror*s prices, quoted deliveries, and past performance.* RFQ S: M.
By amendment, the base quantity amount was increased to 675 plates and the
option quantity was increased to 675 plates. In the *Item Description,*
section B of the RFQ, it was stated:
FINAL INSPECTION AND ACCEPTANCE OF MATERIAL SHALL BE AT THE ACTUAL
MANUFACTURING FACILITY. TECHNICAL INSPECTION IS REQUIRED. THE CONTRACTOR
SHALL MAKE DRAWINGS AND TECHNICAL INFORMATION AVAILABLE TO VERIFY THAT
MATERIAL MEETS ALL TECHNCAL REQUIREMENTS. COUNT, KIND, AND CONDITION
INSPECTIONS ARE NOT ACCEPTABLE. THIS NOTE TAKES PRECEDENCE OVER MASTER
SOLICITATION PART ONE PROVISIONS, NOTE 6, QUOTATIONS BY NON-MANUFACTURERS.
Section B also specified the requirements for preparation of delivery,
including packaging. The cable support plates were identified in the RFQ
as a *critical* item involving aircraft launch and recovery equipment and
section B required that any major or minor waiver/deviation from the
specifications be approved by the agency.
Section E of the RFQ included other clauses concerning inspection and
acceptance. Specifically, the standard clause at Federal Acquisition
Regulation S: 52.246-2, Inspection of Supplies-Fixed Price was
incorporated by reference. RFQ S: E02. In section E03, the RFQ advised
that *[i]nspection for compliance with contract requirements will be
performed at origin by an authorized Government inspector* and that *[for
contract line item numbers] described by a Military or Federal
specification or purchase description contractor must present evidence
showing compliance with all contract and specification requirements
including preparation for delivery.* Section E03 also provided space for
the quoter to list inspection points for supplies and for packaging.
Section E04 provided that *[a]cceptance will be performed by an authorized
Government Representative at origin* and that *[t]he point of acceptance
will be the point of last inspection before shipment unless otherwise
indicated by the offeror.*
DSCC received 26 quotations in response to the RFQ on May 12, 2003.
Flinchbaugh submitted the lowest-priced quotation at $23,215.50 and CAMS
submitted the next lowest at $24,286.50. Flinchbaugh, which is located in
York, Pennsylvania, proposed in its quotation to manufacture the supplies
at its York facility. Also in its quotation, Flinchbaugh designated as
its *Packaging--Inspection and Acceptance Address* a firm located
elsewhere in Pennsylvania.[1] In section E03 of the quotation,
Flinchbaugh identified as inspection points the vendor*s facility under
*supplies* and the aforementioned packaging facility for *packaging.* The
record evidences that DSCC selected Flinchbaugh*s quotation as the *best
value* on June 12 because it was the lowest-priced, technically acceptable
quotation. After DSCC denied CAMS agency-level protest, this protest
followed.
CAMS contends that Flinchbaugh*s quotation failed to satisfy the
requirement in section B that final inspection and acceptance occur at the
actual manufacturing facility for the materials because it listed a
separate facility for this purpose. CAMS argues that as a result
Flinchbaugh has been afforded an unfair competitive advantage because CAMS
was required to include in its price the cost of meeting the inspection
and acceptance terms in section B, and it asserts that had it known that
the inspection and acceptance requirement in section B was not important
CAMS also could have outsourced the packaging and adjusted its price
accordingly. Protester*s Agency-level Protest (June 16, 2003) at 2.
A quote that fails to conform to material terms and conditions of the
solicitation should be considered unacceptable and may not form the basis
for an award. United Coatings, B-291978.2, July 7, 2003, 2003 CPD P: __;
see Rel-Tek Sys., & Design, Inc., B‑280463.3, Nov. 25, 1998, 99-1
CPD P: 2 at 3. The terms in a solicitation governing inspection and
acceptance are material requirements that must be met without
qualification--regardless of whether the solicitation sets them out as
minimum requirements--because they affect the government*s rights under
the resulting contract. See Rel-Tek Sys., & Design, Inc., supra.
As indicated above, Flinchbaugh*s quotation specified a facility other
than the actual manufacturing facility as the location for inspection and
acceptance of the items it would furnish under the contract. However,
section B of the solicitation expressly required final acceptance and
inspection of the material to be done at the actual manufacturing
facility. Thus, Flinchbaugh*s quotation did not meet this material term
of the RFQ relating to inspection and acceptance and cannot form the basis
for issuance of an order.
DSCC essentially argues that Flinchbaugh*s quotation is acceptable because
section B only specifies that the final inspection and acceptance of
material be done at the manufacturing facility and does not require that
packaging and inspection be done exclusively at the manufacturing
facility. DSCC argues that because section E of the RFQ provides for
multiple inspection points, both at the manufacturing facility and at the
packaging facility, it is not required that packaging be done at the
manufacturing facility and thus Flinchbaugh*s quotation was acceptable.
DSCC*s argument does not address the problem with Flinchbaugh*s
quotation. To be reasonable, and therefore valid, an interpretation must
be consistent with the solicitation when read as a whole and in a
reasonable manner. Fox Dev. Corp., B‑287118.2, Aug. 3, 2001, 2001
CPD P: 140 at 2. Here, although it is true that the RFQ did not expressly
preclude the possibility of subcontracting the packaging, Flinchbaugh*s
quotation provided for both the inspection and acceptance at the packaging
facility, instead of at the actual manufacturing facility as required by
the provisions in section B. The fact that the solicitation allows
multiple inspection points does not mean that acceptance can be anywhere
but at the manufacturing facility, as required by the RFQ. There is only
one *final acceptance* under a contract for supplies. That is, acceptance
is acknowledgment by the agency that the supplies conform with applicable
contract quality and quantity requirements, and title to supplies passes
to the government upon formal acceptance, regardless of when or where the
government takes physical possession; this is the point where the
government obtains title to the supplies and assumes the risk of loss.
See FAR S:S: 46.501, 46.505. Accordingly, compliance with the requirement
that acceptance be at the manufacturing facility was a material term,
which Flinchbaugh*s quotation did not satisfy; thus, an order could not be
issued based on Flinchbaugh*s quotation.[2] See Rel-Tek Sys., & Design,
Inc., supra; Scientific-Atlanta, Inc., B-255343.2, B‑255343.4, Mar.
14, 1994, 94-1 CPD P: 325 at 9.
We recommend that DSCC determine whether the requirement in section B that
inspection and acceptance can only be performed at the manufacturing
facility adequately described the agency*s needs. If the solicitation
terms do not express the agency*s actual requirements, then the agency
should amend the solicitation, obtain revised quotations, and make a new
vendor selection. If a firm other than Flinchbaugh is selected, we
recommend that DSCC terminate Flinchbaugh*s purchase order, and issue an
order to the successful vendor. If the solicitation terms are
appropriate, we recommend that the agency terminate Flinchbaugh*s order
and select a vendor based on the quotation representing the *best value*
under the RFQ*s evaluation scheme.[3] We also recommend that the agency
reimburse CAMS the reasonable costs of filing and pursuing the protest,
including attorney*s fees. 4 C.F.R. S: 21.8(d)(1) (2003). CAMS*s
certified claim for costs, detailing the time spent and the costs
incurred, must be submitted to the agency within 60 days of receiving this
decision. 4 C.F.R. S: 21.8(f)(1).
The protest is sustained.
Anthony H. Gamboa
General Counsel
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[1] The record reflects that the agency permitted Flinchbaugh to designate
another Pennsylvania location for *Packaging-Inspection and Acceptance,*
prior to placing the order.
[2] Given the closeness of the proposed prices, we have no basis to
disagree with, and the agency has not rebutted, the protester*s assertions
that it was prejudiced because it had to account in its price for the
requirement that inspection and acceptance be done at the manufacturing
facility and that it could have reduced its price if inspection and
acceptance been permitted to be done at a packaging facility.
[3] The record does not indicate that the agency made a qualitative
evaluation of the delivery and past performance evaluation factors, but
evidences that price was the only factor considered in making award.
Agencies are required to evaluate quotations based on the evaluation
factors set forth in the solicitation. FAR S: 13.106‑2(b);
Forestry, Surveys & Data, B-276802.3, Aug. 13, 1997, 97-2 CPD P: 46 at 2.
If the agency intends to consider only price in the evaluation, it should
amend the RFQ to so provide; otherwise, the agency is required to evaluate
quotations in accordance with the RFQ*s evaluation scheme in making the
vendor selection.