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delivery schedule in excess of the delivery date, DLA increases the quoted price by the PLT dollar value for each day in excess of the requested delivery date. If a vendor quotes a delivery schedule shorter than the RFQ delivery period, then DLA decreases the quoted price by the PLT dollar value for each day the quoted delivery betters the requested RFQ delivery period. If the quoted delivery is the same as that requested by the RFQ, the quoted price remains unchanged. DLA evaluates the adjusted quotation values and awards a purchase order to the vendor with the lowest adjusted value. Under this evaluation plan, the vendor quoting the lowest price and shortest delivery will always receive the purchase order. In all other cases, the evaluation plan weighs price against delivery to determine the best value. In all four procurements protested here, DLA determined that General Metals's quotations did not represent the best value, primarily for the reason that General Metals's low priced quotes offered longer delivery times than offered by the awardees. General Metals asserts that the evaluation factors or significant subfactors actually used by DLA were not adequately disclosed in the RFQs because the RFQs did not allow for or suggest that the PLT dollar value adjustments would be made in determining the awardees. General Metals also complains that the pertinent PLT dollar values were not disclosed in the RFQs. The Competition in Contracting Act of 1984 (CICA) requires simplified procedures for small purchases of property and services in order to promote efficiency and economy in contracting, and to avoid unnecessary burdens for agencies and contractors. 10 U.S.C. $ 2304(g)(1) (1988); FAR subpart 13.1. Consistent with this requirement, small purchases are expressly exempted from the requirement that solicitations issued by the Department of Defense include a statement of all significant evaluation factors and subfactors which the agency reasonably expects to consider, including cost or price, cost- or price-related factors, and noncost- or nonprice-related factors. 10 U.S.C. $ 2305(a)(2)(A) (Supp. III 1991). Nevertheless, all procurements, including small purchases, must be conducted consistent with the concern for a fair and equitable competition that is inherent in any procurement. Vocational Resources, Inc., B-242396, Apr. 29, 1991, 91-1 CPD | 414; Ann Riley & Assocs., Ltd., B-241309.2, Feb. 8, 1991, 91-1 CPD || 142. In this regard, an agency must evaluate quotations on the basis set forth in the RFQ. Ronald S. Yacisin, B-245803, Nov. 20, 1991, 91-2 CPD | 486. The RFQs clearly stated that quotations would be evaluated on the basis of price and delivery, and further instructed vendors that the earliest quoted delivery could be the basis for award. DLA weighed the value to the government of a quoted price against the value to the government of the quoted delivery schedule in order to determine the total value to the government of each vendor's quote. DLA then compared the total value to the government of all the quotes to determine which quote would provide the best value. Just as a lower price represents a better value to the government when singly considered as an evaluation factor, so too is a shorter delivery schedule a better value when considered individually.4 Thus, an evaluation method, whereby quoted delivery times are quantified into dollars and then added to the quoted prices, is not inconsistent with the RFQs' evaluation schemes. Under the circumstances, the procurements were conducted with adequate concern for fair and equitable competition. See Ronald S. Yacisin, supra; Sterling Inst., B-223729, Oct. 3, 1986, 86-2 CPD 1 390; cf., Le Prix Elec. Distribs., Ltd., B-207106, Sept. 21, 1982, 82-2 CPD | 249 (agency need not consider expedited delivery as an evaluation factor under a RFQ where it was not stated to be one). While it may be that DLA could have more fully disclosed in the RFQs how delivery would be evaluated, 5 we do not find the vendors were misled, given the RFQs' clearly announced preferences for "earliest possible delivery.” See Brennan Assocs., Inc., B-231554, Sept. 1, 1988, 88-2 CPD 1 203. Furthermore, DLA advised all vendors on its solicitation mailing list when it began implementing its best value buying approach that vendors should submit their best prices and best delivery schedules. 6 General Metals asserts that DLA was required to disclose in the RFQs the specific PLT dollar values that would be used in the delivery evaluation. For basically the same reasons as stated above, we find that DLA need not provide such details on procurements conducted under small purchase procedures. See 10 U.S.C. § 2305(a)(2)(A) (Supp. III 1991). In addition, DLA apparently has good reasons for not disclosing the PLT dollar figures in RFQs, since the figures reportedly tend to fluctuate depending on shifting government needs. In this regard, DLA reports that the PLT dollar value can fluctuate weekly due to the updating of forecasts, and DLA has instructed its procurement officials to check the weekly forecast updates and use only current PLT dollar values for evaluating quotations. Since the PLT dollar values actually used for evaluation could change from figures announced in the RFQs when issued, any resulting amendment of the RFQs to provide precise PLT dollar values, and the resultant possible resubmission of quotes, may unduly burden, and possibly inject delay, that would be inconsistent with the purpose of the simplified small purchase process. General Metals also challenges the reasonableness of the PLT dollar values actually used in the evaluations because, in at least one case, the dollar value is significantly higher than a reasonable rate of return on investments as calculated by General Metals. However, the PLT dollar values do not represent the possible rate of return of money otherwise committed to a purchase order. Rather, the PLT dollar value considers and quantifies the cost of waste that DLA incurs with longer delivery schedules due to the lesser accuracy in forecasting supply requirements as the forecasting period increases. Since a forecast is a projection

4 The RFQs here requested delivery "within” the specified time and indicated that "earliest possible delivery” was desired. Absent a stated minimum delivery schedule, it is reasonable to conclude that the shorter the delivery schedule, the better. 5 We note that if this procurement had been conducted under sealed bid or negotiated procedures, DLA would likely have been obligated to more fully disclose the method it used in quantifying delivery into dollars and applying to offered prices. See 31 Comp. Gen. 378 (1956); HJ Group Ventures, Inc., B-246139, Feb. 19, 1992, 92-1 CPD | 203. 6 General Metals does not deny being so notified.

of requirements and is not an actual requirement, the value of DLA's forecasts only quantifies a potential waste resulting from procuring supplies that are never actually needed; the actual value of this waste from current forecasts will only become known in the future. Although the PLT dollar value may not be the only possible method of evaluating the value of waste resulting from inaccurate forecasts, we cannot find it unreasonable because it is reflective of the forecast and the actual dollar value of the forecasted supply. Accordingly, DLA's calculation and use of the PLT dollar value provides an objective evaluation of each vendor's delivery schedule which we cannot say is unreasonable. General Metals finally asserts that the vendors receiving purchase orders under these procurements are not regular dealers under the Walsh-Healey Act. We have no jurisdiction to consider this issue. Under our Bid Protest Regulations, 4 C.F.R. $ 21.3(m)(9) (1992), our Office does not consider the legal status of a firm as a regular dealer or manufacturer under the Walsh-Healey Act. By law this matter is to be decided by the contracting agency, in the first instance, subject to review by the Small Business Administration, where a small business is involved, and the Secretary of Labor. The Pratt & Whitney Co., Inc.; Onsrud Mach. Corp., B-232190; B-232190.2, Dec. 13, 1988, 88-2 CPD 1 588. The protests are denied in part and dismissed in part.

December 1992

B-242974.8, December 11, 1992
Appropriations/Financial Management
Obligation

Expenditure recording I Revolving accounts The Corps of Engineers is required under 31 U.S.C. $ 1501 to recognize and record obligations of its Civil Works Revolving Fund when it awards contracts to be financed by the Fund. The Corps also is prohibited by the Antideficiency Act (31 U.S.C. § 1341(a)(1)(A)) from overobligating the Fund's available budget authority. These provisions are generally applicable to revolving funds, and no law has exempted the Fund from them.

Matter of: U.S. Army, Corps of Engineers Civil Works Revolving Fund

During our audit of the U.S. Army fiscal year 1991 financial statements, we discovered that the U.S. Army, Corps of Engineers did not recognize obligations when it awarded equipment purchase contracts to be financed by the Corps's Civil Works Revolving Fund. See FINANCIAL AUDIT: Examination of the Army's Financial Statements for Fiscal Year 1991 (GAO/AFMD-92-83). The Corps's policy put at issue whether the Fund is subject to the general requirement under 31 U.S.C. $ 1501 to recognize and record obligations as they are incurred, and the prohibition in the Antideficiency Act (31 U.S.C. § 1341(a)(1)(A)) against incurring obligations in excess of available budget authority. For the reasons discussed below, we conclude that the Fund is subject to these general provisions. The Corps's proposed change in its policy and practice, if properly implemented, will bring the Fund into compliance with section 1501 and the Antideficiency Act.

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Section 576 of title 33, United States Code, establishes the Corps of Engineers Civil Works Revolving Fund. The Fund is available without fiscal year limitation, for expenses necessary for the maintenance and operation of the plant and equipment of the Corps of Engineers used in Civil Works functions .... The purpose of the Fund is to finance and acquire equipment that will be used on two or more different civil works projects. The Fund provides this equipment for work on particular civil works projects, and receives reimbursements for the use of the equipment "at rates which shall include charges for overhead and

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related expenses, depreciation of plant and equipment, and accrued leave ...." Id. The Corps manages the purchase of plant and equipment for the Fund through its Plant Replacement and Improvement Program (PRIP). Under this program, the Corps's district offices annually submit requests for authorization to purchase PRIP equipment. The Corps's headquarters office then reviews the requests and authorizes each district office to purchase an approved level of equipment. The district offices then award contracts to acquire the equipment. During our audit of the U.S. Army's fiscal year 1991 financial statements, we discovered that the Corps was not recording obligations for PRIP contracts when they were awarded. In response to our request for the Corps's views on whether 31 U.S.C. § 1501 requires that these PRIP contracts be recognized and recorded as obligations when awarded, the Corps advised that the Fund has a legislative mandate to “operate within its own resources.” The Corps interprets this mandate to mean that the Fund must raise sufficient revenue to pay its outlays, and that the Fund should generally operate without receiving direct appropriations. The Corps argues that it is acting within this mandate, and therefore within its authority, so long as the Fund has a cash balance sufficient to pay its disbursements. The Corps also asserts that the Fund's legislative mandate allows the Corps to award contracts financed by the Fund without regard to the Fund's available budget authority. Thus, the Corps believes its policy and practice of not recording the Fund's PRIP contracts as obligations when the contracts are awarded is legally supportable. 1 The Corps's response to our inquiry raised the additional issue of whether the Civil Works Revolving Fund is subject to the Antideficiency Act's prohibition against incurring obligations in excess of available budget authority.

Discussion

As an initial matter, we agree with the Corps's view that the Fund should “operate within its own resources" and that the Fund must have enough cash available to make its disbursements. Revolving funds in general collect and retain revenues to finance continuing cycles of business-like operations. Office of Management and Budget Circular A-34, Aug. 26, 1985, II-5. The Antideficiency Act prohibits the making or authorizing of expenditures "exceeding an amount available in an appropriation or fund.” 31 U.S.C. § 1341(a)(1)(A). In this regard, the Fund is no different than other revolving funds that are required to operate within their own resources and have the cash needed to pay their obligations when they come due. However, notwithstanding our agreement on the above matters, the Corps's policy presents two questions: first, whether, under 31 U.S.C. $ 1501, the Corps must recognize and record an obligation when it awards a contract that is financed by the Fund, and second, whether the Anti

i The Corps's views are reflected in its regulatory statement that the Fund need not maintain the budgetary accounts that are required for appropriated funds. See Corps of Engineers Regulation 37-2-10, 12-23b.

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