B-181261, JUN 9, 1975, 54 COMP GEN 1021

B-181261, JUN 9, 1975, 54 COMP GEN 1021

CONTRACTS - SPECIFICATIONS - RESTRICTIVE - PARTICULAR MAKE - "OR EQUAL" PRODUCT REJECTED - DETERMINATION ARBITRARY AND CAPRICIOUS IN BRAND NAME OR EQUAL SOLICITATION WHERE AGENCY HAD NO REASONABLE BASIS TO DETERMINE THAT OFFERED ITEM WAS NOT "EQUAL," DETERMINATION TO REJECT BID MUST BE FOUND TO BE ARBITRARY AND CAPRICIOUS. ACCORDINGLY, BIDDER IS ENTITLED TO BID PREPARATION COSTS. CONTRACTS - PROTESTS - PREPARATION - COSTS - NONCOMPENSABLE EXPENSES INCURRED BY BIDDER - CLAIMANT SUBSEQUENT TO BID OPENING TO ENLIGHTEN CONTRACTING OFFICER OF TRUE FACTS AND/OR TO PURSUE PROTEST ARE NOT EXPENSES INCURRED IN UNDERTAKING BIDDING PROCESS BUT ARE NONCOMPENSABLE PROTEST COSTS. BIDS - PREPARATION - COSTS - RECOVERY EXPENSES INCURRED BY BIDDER - CLAIMANT IN RESEARCHING SPECIFICATIONS, REVIEWING BID FORMS, EXAMINING COST FACTOR AND PREPARING DRAFT AND ACTUAL BID ARE COMPENSABLE BID PREPARATION EXPENSES.

IN THE MATTER OF THE T&H COMPANY, JUNE 9, 1975:

THIS DECISION INVOLVES THE CLAIM OF T&H COMPANY FOR BID PREPARATION COSTS IN THE AMOUNT OF $507.50. FOR THE REASONS SET FORTH BELOW, WE FIND THAT THE CLAIMANT IS ENTITLED TO RECOVER AN AMOUNT NOT IN EXCESS OF $260 AS COMPENSABLE BID PREPARATION EXPENSES. OUR CONCLUSION AS TO T&H'S ENTITLEMENT TO BID PREPARATION COSTS IS THE FIRST GAO DECISION ALLOWING RECOVERY AND IT IS IMPORTANT TO OBSERVE THAT IT IS BASED ON THE PARTICULAR FACTS OF T&H'S CLAIM. THE DECISION ALSO REFLECTS OUR RECOGNITION OF EVOLVING JUDICIAL STANDARDS IN THIS AREA FROM THE SOLE STANDARD OF SUBJECTIVE BAD FAITH STATED IN HEYER PRODUCTS COMPANY, INC. V. UNITED STATES, 140 F.SUPP. 409, 135 CT. CL. 63 (1956), TO THE STANDARDS OF ARBITRARY AND CAPRICIOUS ACTION SET OUT IN KECO INDUSTRIES, INC. V. UNITED STATES, 492 F.2D 1200 (CT. CL. 1974) (HEREINAFTER KECO II).

IT SHOULD BE NOTED AT THE OUTSET THAT THE ACTIONS OF THE ARMY UNDER THE SOLICITATION IN QUESTION (INVITATION FOR BIDS (IFB) DAFA03-74-B 0069) WERE THE SUBJECT OF OUR DECISION IN T&H COMPANY, B-181261, SEPTEMBER 5, 1974.

ITEM 1 OF THE IFB CALLED FOR THE FURNISHING OF 53 UNIT HEATERS WITH A "VERTICAL THROW OF 200,000 BTU/HR (MIN) 250,000 BTU/HR (MAX) *** YOUNG MOD. V-260L, OR EQUAL." BID OPENING OCCURRED ON MARCH 5, 1974. T&H, THE LOW BIDDER, OFFERED TO SUPPLY A MODINE MODEL V-870L AT $232 PER UNIT. AFTER BID OPENING THE CONTRACTING OFFICER REQUESTED THE FACILITIES ENGINEER TO DETERMINE IF THE UNIT BID BY T&H MET THE SPECIFICATION.

ON MARCH 19, THE FACILITIES ENGINEER STATED IN A MEMORANDUM TO THE CONTRACTING OFFICER THAT: "THE MODINE UNIT HEATER DOES NOT MEET OUR REQUIREMENTS. IT IS UNDERSIZED COMPARED TO WHAT WAS SPECIFIED."

AS A RESULT OF THIS STATEMENT, ON APRIL 4, 1974, A CONTRACT WAS AWARDED TO THE SECOND LOW BIDDER, AMFAC SUPPLY, WHICH HAD BID ON THE BASIS OF THE BRAND NAME ITEM. BY LETTER OF APRIL 10, 1974, TO THE PROCURING ACTIVITY, T&H PROTESTED THE AWARD. THE CONTRACTING OFFICER THEREAFTER SOUGHT MORE DEFINITIVE COMMENTS FROM THE FACILITIES ENGINEER AS TO WHY THE MODINE UNIT, WHICH HAD A THROW OF 210,000 BTU/HOUR, WAS TECHNICALLY UNACCEPTABLE.

THE ENGINEERS RESPONDED THAT CONTRARY TO THE INTERPRETATION GIVEN THE SPECIFICATION BY THE PROTESTER, THEY HAD INTERPRETED THE SPECIFICATION TO MEAN THAT THE HEATER MUST BE CAPABLE OF PROVIDING A RANGE FROM 200,000 TO 250,000 BTU/HOUR. THEREFORE, SINCE THE MODINE UNIT PROVIDED ONLY A FIXED RATE OF 210,000 BTU/HOUR, THE ENGINEERS AT THE TIME THE QUESTION OF SIZE AROSE FELT THAT THE UNIT WAS UNDERSIZED.

AFTER REVIEWING THIS CONFLICT IN INTERPRETATION, THE STAFF JUDGE ADVOCATE (SJA) STATED THAT THE SPECIFICATION WAS OBVIOUSLY AMBIGUOUS. IN RESPONSE THE FACILITIES ENGINEER STATED ON APRIL 26, 1974, THAT:

THIS IS NOT AN "AMBIGUOUS SPECIFICATION"; IT IS THE NORMAL CLASSICAL WORDING FOR SPECIFYING HEAT OUTPUT OF UNIT HEATERS.

AND THAT:

THE MINIMUM ACCEPTABLE HEAT OUTPUT IS 200,000 BTU/HOUR ***. THERE IS NO REQUIREMENT THAT THE UNIT HEATERS PROVIDE A RANGE OF OUTPUT (I.E., VARY HEAT OUTPUT).

THEREAFTER, THE SJA, AFTER A REVIEW OF THE ABOVE-NOTED MEMORANDUM, DETERMINED THAT TERMINATION FOR THE CONVENIENCE OF THE GOVERNMENT WAS IN ORDER AND THAT AWARD SHOULD BE MADE TO T&H.

ON APRIL 30, 1974, STEPS WERE TAKEN WITH THE CONTRACTOR TO ATTEMPT TO TERMINATE THE CONTRACT FOR THE CONVENIENCE OF THE GOVERNMENT ON A NO COST SETTLEMENT AGREEMENT BASIS.

HOWEVER, AFTER DISCUSSING THE STATUS OF PERFORMANCE AND ESTIMATED TERMINATION COSTS WITH THE SUPPLY OFFICER AND THE CONTRACTOR, THE CONTRACTING OFFICER DETERMINED, WITH SJA CONCURRENCE, THAT ALTHOUGH T&H'S HEATER DID, IN FACT, MEET THE SPECIFICATIONS AND THAT A MISUNDERSTANDING OF THE SPECIFICATION HAD OCCURRED, IT WAS IN THE BEST INTERESTS OF THE GOVERNMENT "TO LET THE AWARD STAND." T&H WAS SO NOTIFIED ON MAY 6, 1974.

IN OUR DECISION OF SEPTEMBER 5, 1974, WE NOTED THAT:

*** FROM OUR REVIEW, THE CONTRACT WAS NOT SUBSTANTIALLY PERFORMED ON APRIL 30, 1974. THE USING AGENCY HAD NOT RECEIVED ANY OF THE HEATERS AT THAT TIME, AND ALTHOUGH THE MANUFACTURER MAY HAVE SENT THE HEATERS TO THE CONTRACTOR ON APRIL 29, 1974, THE FIRST SHIPMENT OF 10 HEATERS WAS NOT RECEIVED BY THE GOVERNMENT UNTIL JUNE 12, 1974. ANOTHER 10 WERE DELIVERED IN JULY AND, ACCORDING TO INFORMAL ADVICE, THE BALANCE WAS TO BE SHIPPED AUGUST 26. BASED ON THESE FACTS, IT MAY HAVE BEEN IN THE GOVERNMENT'S INTERESTS TO HAVE TERMINATED THE CONTRACT FOR THE CONVENIENCE OF THE GOVERNMENT ***.

OUR DECISION DID NOT, HOWEVER, RECOMMEND TERMINATION OF THE AMFAC CONTRACT FOR THE CONVENIENCE OF THE GOVERNMENT AND AWARD TO T&H SINCE WE DID NOT FEEL THAT, AS OF SEPTEMBER 5, 1974, THIS ACTION WOULD HAVE BEEN IN THE BEST INTEREST OF THE GOVERNMENT. THE BASIS FOR THIS BELIEF WAS THAT T&H WOULD NOT HAVE HAD SUFFICIENT TIME TO PROVIDE THE ITEMS WHEN NEEDED.

THE COURT OF CLAIMS STATED IN THE MCCARTY CORPORATION V. UNITED STATES, 499 F.2D 633, 637 (1974):

*** IT IS AN IMPLIED CONDITION OF EVERY INVITATION FOR BIDS ISSUED BY THE GOVERNMENT THAT EACH BID SUBMITTED PURSUANT TO THE INVITATION WILL BE FAIRLY AND HONESTLY CONSIDERED (HEYER PRODUCTS CO. V. UNITED STATES, 140 F.SUPP. 409, 412, 135 CT. CL. 63, 69 (1956)), AND IF AN UNSUCCESSFUL BIDDER IS ABLE TO PROVE THAT SUCH OBLIGATION WAS BREACHED AND HE WAS PUT TO NEEDLESS EXPENSE IN PREPARING HIS BID, HE IS ENTITLED TO HIS BID PREPARATION COSTS ***. KECO INDUSTRIES, INC. V. UNITED STATES, 428 F.2D 1233, 1240; 192 CT. CL. 733 (1970) (HEREINAFTER KECO I).

HOWEVER, AT THE OUTSET, WE ALSO NOTE THAT:

*** IF ONE THING IS PLAIN (IN THE AREA OF BID PREPARATION COST CLAIMS) IT IS THAT NOT EVERY IRREGULARITY, NO MATTER HOW SMALL OR IMMATERIAL, GIVES RISE TO THE RIGHT TO BE COMPENSATED FOR THE EXPENSE OF UNDERTAKING THE BIDDING PROCESS. KECO II, AT 1203.

IN KECO II, THE COURT OF CLAIMS OUTLINES THE STANDARDS FOR RECOVERY. THE ULTIMATE STANDARD IS WHETHER THE PROCUREMENT AGENCY'S ACTIONS WERE ARBITRARY AND CAPRICIOUS TOWARD THE BIDDER-CLAIMANT. THE MCCARTY CORPORATION V. UNITED STATES, SUPRA; KECO I V. UNITED STATES, SUPRA. SEE EXCAVATION CONSTRUCTION, INC. V. UNITED STATES, 494 F.2D 1289, 1290 (1974); CONTINENTAL BUSINESS ENTERPRISES, INC. V. UNITED STATES, 452 F.2D 1016, 1021; 196 CT. CL. 627 (1971).

HOWEVER, AS SET OUT IN KECO II, THERE ARE FOUR SUBSIDIARY CRITERIA; NAMELY:

1. SUBJECTIVE BAD FAITH ON THE PART OF THE CONTRACTING OFFICIALS - DEPRIVING THE BIDDER OF FAIR AND HONEST CONSIDERATION OF HIS PROPOSAL. HEYER PRODUCTS COMPANY, INC. V. UNITED STATES, SUPRA. THE COURT DID NOTE THAT WHOLLY UNREASONABLE ACTION IS OFTEN EQUATED WITH SUBJECTIVE BAD FAITH. KECO II, SUPRA, AT 1204; CF. RUDOLPH F. MATZER & ASSOCIATES, INC. V. WARNER, 348 F.SUPP. 991, 995 (M.D. FLA. 1972);

2. THAT THERE WAS NO REASONABLE BASIS FOR THE AGENCY'S DECISION. EXCAVATION CONSTRUCTION, INC. V. UNITED STATES, SUPRA; CONTINENTAL BUSINESS ENTERPRISES, INC. V. UNITED STATES, SUPRA;

3. THAT THE DEGREE OF PROOF OF ERROR NECESSARY FOR RECOVERY IS ORDINARILY RELATED TO THE AMOUNT OF DISCRETION ENTRUSTED TO THE PROCUREMENT OFFICIALS BY APPLICABLE REGULATIONS. CONTINENTAL BUSINESS ENTERPRISES, INC. V. UNITED STATES, SUPRA; KECO I, SUPRA; AND

4. VIOLATION OF STATUTE CAN, BUT NEED NOT, BE A GROUND FOR RECOVERY. CF. KECO I, SUPRA.

APPLICATION OF THESE CRITERIA DEPENDS ON THE TYPE OF ERROR OR DERELICTION COMMITTED BY THE PROCUREMENT OFFICIALS AND WHETHER THAT ACTION WAS DIRECTED TOWARD THE CLAIMANT'S OWN BID OR THAT OF A COMPETITOR.

AS THE COURT NOTES IN KECO II, SUPRA, WITH REGARD TO SITUATIONS INVOLVING ERRORS OR DERELICTION WITH RESPECT TO THE CLAIMANT'S BID, THE PRINCIPLE ESPOUSED IN M. STEINTHAL & CO., INC. V. SEAMANS, 455 F.2D 1289 (D.C. CIR. 1971); CONTINENTAL BUSINESS ENTERPRISES, INC., SUPRA - (ALSO EXCAVATION CONSTRUCTION, INC., SUPRA, I.E., THE NO-REASONABLE BASIS TEST - IS NOT FAR REMOVED FROM THE BAD FAITH TEST OUTLINED IN HEYER PRODUCTS COMPANY, INC., SUPRA. THUS, IT APPEARS THAT A NO REASONABLE-BASIS TEST SHOULD BE APPLIED AT LEAST TO SITUATIONS, SUCH AS HERE, INVOLVING THE ERRONEOUS CONSIDERATION OF THE CLAIMANT'S OWN BID. IN DOING SO, OUR OFFICE WILL, AND DOES, TAKE DUE NOTE AND CONSIDERATION OF THE COURT OF CLAIMS' DESIGNATED CRITERIA 3 AND 4, SUPRA.

THE ARMY ARGUES THAT THE CASE AT HAND IS ANALOGOUS TO KECO II, SUPRA, AND THUS THE RESULT REACHED BY OUR OFFICE SHOULD BE THE SAME AS THE KECO II COURT - I.E., WE SHOULD DENY THE CLAIM.

KECO I AND KECO II INVOLVED THE SAME TWO-STEP ADVERTISED PROCUREMENT. THERE, TWO COMPANIES WERE FOUND TECHNICALLY ACCEPTABLE (KECO INDUSTRIES AND ACME INDUSTRIES). HOWEVER, ACME'S PROPOSAL REQUESTED TWO DEPARTURES FROM THE SPECIFICATIONS. IN RESPONSE TO THE ACME REQUEST, THE GOVERNMENT AMENDED THE FINAL SPECIFICATION TO PERMIT THE ACME DEPARTURES AS AUTHORIZED ALTERNATIVES. ACME RECEIVED THE AWARD.

WHEN, DURING THE COURSE OF CONTRACT PERFORMANCE, ACME ENCOUNTERED DIFFICULTIES IN IMPLEMENTING THE TWO SPECIFICATION DEVIATIONS WHICH IT HAD REQUESTED, AND THE GOVERNMENT ISSUED FORMAL CHANGE ORDERS WHICH INCREASED THE CONTRACT PRICE, KECO FIRST FILED A PROTEST WITH OUR OFFICE RELATIVE TO WHO SHOULD BEAR THE COST OF THE MODIFICATIONS CONTAINED IN THE CHANGE ORDER AND LATER BROUGHT SUIT IN THE COURT OF CLAIMS FOR ITS BID PREPARATION EXPENSES (AND ANTICIPATED PROFIT). KECO ARGUED THAT THE GOVERNMENT HAD ACTED ARBITRARILY AND CAPRICIOUSLY AND HAD BREACHED ITS IMPLIED PROMISE TO FAIRLY AND HONESTLY CONSIDER THE KECO BID. SEE HEYER PRODUCTS COMPANY, INC., SUPRA.

THE ARMY HERE ARGUES THAT:

*** IN KECO II IT WAS HELD THAT EVEN THOUGH THE DECISION TO AWARD WAS ERRONEOUS, IT COULD NOT BE SAID THAT THERE WAS NO REASONABLE BASIS FOR THE OFFICIAL ACTION. ADMITTEDLY, THE DECISION IN T&H WAS ERRONEOUS, HOWEVER, FOLLOWING KECO II, THAT DOES NOT PRECLUDE A FINDING THAT THERE WAS A REASONABLE BASIS FOR THE ACTION. WE SUBMIT THAT IN T&H THERE WAS A REASONABLE BASIS FOR THE ACTION TAKEN, NAMELY THE CONTRACTING OFFICER'S SUBMISSION OF THE QUESTION TO THE COGNIZANT TECHNICAL PERSONNEL AND HIS BEING INFORMED BY THEM THAT THE T&H BID WAS NONRESPONSIVE. ***

THE ARMY NOW ALSO CONTENDS THAT THERE WAS AN APPARENT AMBIGUITY IN THE SPECIFICATION WHICH WAS NOT RECOGNIZED BY T&H, THE CONTRACTING OFFICER OR OUR OFFICE IN OUR EARLIER DECISION.

WE AGREE WITH THE ARMY ON THE FOLLOWING STATEMENT FROM KECO II:

THE MERE FAILURE TO EXERCISE DUE DILIGENCE IN THE APRAISAL OF THE ADVANTAGEOUSNESS OF A COMPETITOR'S BID, WHEN THAT OMISSION AMOUNTS TO SIMPLE NEGLIGENCE, IS NOT A SUFFICIENT SHOWING OF ARBITRARY OR CAPRICIOUS CONDUCT TO WARRANT RECOVERY OF BID PREPARATION EXPENSES. ***

HOWEVER, AS NOTED BY THE COURT, AN AGENCY'S DUTY TOWARD THE HANDLING OF THE CLAIMANT'S BID MAY BE SOMETHING ELSE. PRECISELY:

THE GOVERNMENT'S DUTY TO EXERCISE CARE IN EVALUATING THE "PRICE AND OTHER FACTORS" OF A BID RUNS FIRST TO THE PROPONENT OF THAT BID AND TO THE PUBLIC AND ITS REPRESENTATIVES, AND ONLY THEN TO ANOTHER BIDDER. KECO II AT 1207.

WHILE THE ARMY CONCEDES THAT THE DECISION TO AWARD TO AMFAC WAS ERRONEOUS, WE BELIEVE THAT THE APRIL 26, 1974, STATEMENT OF THE FACILITIES ENGINEER, QUOTED ABOVE, CLEARLY SHOWS THAT THE AGENCY'S DETERMINATION THAT THE HEATER BID BY T&H WAS NOT "EQUAL" TO THE BRAND NAME WAS NOT MERELY ERRONEOUS BUT WAS IN FACT WITHOUT A REASONABLE BASIS. SINCE IT IS ADMITTED THAT (1) THE SPECIFICATIONS WERE NOT AMBIGUOUS, AND (2) THAT THE PHRASEOLOGY USED IN THE IFB WAS THE NORMAL WAY TO SPECIFY HEAT OUTPUT AND SINCE IT IS AGREED THAT THE T&H HEATER EXCEEDED THE MINIMUM BTU OUTPUT REQUIRED, THE DETERMINATION TO REJECT T&H'S BID MUST BE FOUND TO HAVE BEEN ARBITRARY AND CAPRICIOUS.

WE BELIEVE THAT THIS VIEW IS ENTIRELY CONSISTENT WITH THE TWO COURT CASES WHICH HAVE ALLOWED BID PREPARATION COSTS. ARMSTRONG & ARMSTRONG, INC. V. UNITED STATES, 356 F.SUPP. 514 (E.D. WASH. 1973), AFFIRMED UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT, NO. 73-1983, APRIL 10, 1975; THE MCCARTY CORPORATION V. UNITED STATES, SUPRA. IN EACH OF THESE CASES, IT WAS CONCLUDED THAT THE GOVERNMENT'S ACTIONS IN CORRECTING THE BIDDER'S TOTAL PRICE TO EQUAL THE ARITHMETIC SUM OF COMPONENT BID PRICES WAS ARBITRARY AND CAPRICIOUS AND IN VIOLATION OF PROCUREMENT REGULATIONS. THE REGULATIONS THERE IN QUESTION REQUIRE THAT, AS A PREREQUISITE TO ALLOWING ANY CORRECTION WHICH WOULD DISPLACE ANOTHER BIDDER, THE INTENDED BID MUST BE CLEARLY AND CONVINCINGLY EVIDENT ON THE FACE OF THE BID ITSELF. AS SET OUT BY THE NINTH CIRCUIT IN ARMSTRONG: "THE GOVERNMENT COULD NOT KNOW FROM THE FACE OF THE BID WHETHER THE ERROR LAY IN ONE OF THE COMPONENT ITEMS OR IN THE SUMMATION." THEREFORE, THE COURT CONCLUDED THAT CORRECTION OF THE BID TO THE SUM OF THE COMPONENT BID ITEMS WAS A VIOLATION OF THE REGULATIONS.

WITH REGARD TO THE INSTANT CLAIM, WE NOTE THAT ARMED SERVICES PROCUREMENT REGULATION (ASPR) SEC. 2-407.1 (1973 ED.) PROVIDES THAT: UNLESS ALL BIDS ARE REJECTED, AWARD SHALL BE MADE BY THE CONTRACTING OFFICER, WITHIN THE TIME FOR ACCEPTANCE SPECIFIED IN THE BID OR EXTENSION THEREOF, TO THAT RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. ***

THIS REGULATION IS A DIRECT IMPLEMENTATION OF 10 U.S.C. SEC. 2305(C) (1970).

CONSISTENT WITH THE STATUTE AND THE REGULATION, OUR OFFICE HAS HELD THAT A CONTRACTING OFFICER HAS NO AUTHORITY TO AWARD A CONTRACT TO OTHER THAN THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER AND THAT AN AWARD TO ANOTHER PARTY IS ILLEGAL, ALTHOUGH NOT NECESSARILY PALPABLY ILLEGAL. MATTER OF FINK SANITARY SERVICE, 53 COMP. GEN. 502, 507 (1974), 74-1 CPD PARA. 36, SEE 38 COMP. GEN. 368 (1958); B-162535, OCTOBER 13, 1967; B-149466, JULY 27, 1962. CF. SCHOENBROD V. UNITED STATES, 410 F.2D 400, 404; 187 CT. CL. 627 (1969).

IN THE INSTANT CLAIM, SINCE THE REJECTION OF THE LOWEST BID WAS ARBITRARY AND CAPRICIOUS WE MUST CONCLUDE THAT THE AWARD MADE TO AMFAC WAS CLEARLY IN VIOLATION OF THE ABOVE-NOTED STATUTE AND REGULATION. MOREOVER, WE BELIEVE THAT THE AGENCY ERRED IN PERMITTING THIS AWARD TO STAND WHEN CORRECTIVE ACTION COULD HAVE BEEN TAKEN.

THE AGENCY NOW ARGUES THAT, IN RETROSPECT, THE SPECIFICATIONS WERE OBVIOUSLY AMBIGUOUS, ALTHOUGH IT NOTES THAT THE AMBIGUITY WAS NOT RECOGNIZED BY THE CONTRACTING OFFICER, OUR OFFICE OR T&H. HOWEVER, ON THE BASIS OF OUR REVIEW OF THE RECORD WE DO NOT AGREE WITH THIS ARGUMENT.

COMPENSATION

COUNSEL FOR T&H STATES THAT AS A RESULT OF THE ARMY'S ACTIONS T&H "*** HAS SUFFERED A DIRECT LOSS IN BID PREPARATION COSTS AND NECESSARY FOLLOW- UP ACTION IN THE SUM OF $507.50." THE CLAIM, SUPPORTED BY AFFIDAVIT, HAS THREE SEPARATE ELEMENTS:

I. THE EXPENSES ($260) ALLEGEDLY INCURRED BY T&H IN:

A. RESEARCHING THE SPECIFICATIONS

B. REVIEWING AND ANALYZING THE BID FORMS

C. SEARCHING CATALOGS AND OTHER SOURCES OF MATERIAL FOR COST FACTORS

D. PREPARING BID FORM IN DRAFT, REVIEW AND PREPARING ACTUAL BID FORM

E. MAILING COSTS

II. THE EXPENSES ($97.50 ALLEGEDLY INCURRED SUBSEQUENT TO MAY 6, 1974, RELATIVE TO A COMPARATIVE SEARCH, FURNISHED TO CONTRACTING OFFICER, REGARDING A COMPARISON OF THE PRODUCT PROPOSED IN THE T&H BID AND THE REQUIREMENTS OF THE IFB; AND

III. THE EXPENSES ($150), INCLUDING ADDITIONAL TIME AND ATTORNEYS' FEES, ALLEGEDLY INCURRED "*** AS A RESULT OF THE REFUSAL OF THE CONTRACTING OFFICER TO ACKNOWLEDGE HIS ERRORS AND MISTAKE ***."

THE COURT OF CLAIMS IN KECO I STATED THAT IF THE CLAIMANT'S BID WAS NOT FAIRLY AND HONESTLY CONSIDERED, THEN THE CLAIMANT SHOULD BE ALLOWED TO RECOVER ONLY THOSE COSTS INCURRED IN PREPARING ITS BID. KECO I, SUPRA, AT 1245; THE MCCARTY CORPORATION V. UNITED STATES, SUPRA, AT 637. MORE SUCCINCTLY, IF THE OBLIGATION TO FAIRLY AND HONESTLY CONSIDER IS BREACHED AND THE CLAIMANT "*** IS PUT TO NEEDLESS EXPENSE IN PREPARING ITS BID, IT IS ENTITLED TO RECOVER SUCH EXPENSES." HEYER PRODUCTS COMPANY, INC. V. UNITED STATES, SUPRA, AT 413, 414.

WHILE KECO II DOES SPEAK AT 1203 OF "*** THE RIGHT TO BE COMPENSATED FOR THE EXPENSE OF UNDERTAKING THE BIDDING PROCESS," WE DO NOT BELIEVE THAT THE SECOND AND THIRD PORTIONS OF T&H'S CLAIM ARE COMPENSABLE AS BID PREPARATION EXPENSES, SINCE THEY WERE INCURRED LONG AFTER THE PREPARATION OF THE BID, THE BID OPENING AND THE INITIAL ERRONEOUS ACTIONS OF THE AGENCY. EXPENSES INCURRED SUBSEQUENT TO BID OPENING TO ENLIGHTEN THE AGENCY OF THE TRUE FACTS OR A MORE PROPER INTERPRETATION OF AN IFB AND/OR TO PURSUE A PROTEST ARE NOT EXPENSES INCURRED IN UNDERTAKING THE BIDDING PROCESS, BUT ARE ESSENTIALLY PROTEST COSTS. SEE DESCOMP, INC. V. SAMPSON, 377 F.SUPP. 254 (D. DEL. 1974); MATTER OF FREQUENCY ELECTRONICS, INC., B- 178164, JULY 5, 1974. IN DESCOMP, SUPRA, AT 367, THE COURT, WELL AWARE OF KECO II, HELD THAT SINCE THE CLAIMANT "*** HAS POINTED TO NO STATUTE OR COURT-MADE EXCEPTION AUTHORIZING THE AWARD OF THE PROTEST COSTS AND ATTORNEY FEES, THEY WILL NOT BE ALLOWED."

HOWEVER, WE DO FEEL THAT THE EXPENSES INCURRED BY T&H IN THE ACTIVITIES LISTED IN PART I OF ITS CLAIM (I.E., RESEARCHING SPECIFICATIONS' REVIEWING BID FORMS; EXAMINING COST FACTORS; AND PREPARING DRAFT AND ACTUAL BID) ARE COMPENSABLE AS BID PREPARATION EXPENSES. T&H STATES THAT THE TIME SPENT IN PREPARING THE BID (8 HOURS), TO WHICH THE TOTAL COSTS PER HOUR (INCLUDING OVERHEAD - $32.50) ARE APPLIED, TOTALS TO AN EXPENSE OF $260.

THE DOLLAR AMOUNTS CLAIMED BY T&H HAVE NOT BEEN CHALLENGED BY THE AGENCY. THEREFORE, IN THESE CIRCUMSTANCES, SINCE WE FIND THE ABOVE AMOUNT TO BE REASONABLE, WE HAVE DIRECTED OUR TRANSPORTATION AND CLAIMS DIVISION TO ISSUE A CERTIFICATE OF SETTLEMENT IN FAVOR TO T&H IN THE AMOUNT OF $260.