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B-167643, JAN. 20, 1970

B-167643 Jan 20, 1970
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WHERE OFFERORS WERE ORALLY INSTRUCTED BY CONTRACTING PERSONNEL THAT A MINIMUM GUARANTEE PROVISION WAS BEING ADDED TO THE SOLICITATION BUT NO WRITTEN CONFIRMATION WAS ISSUED. A DELETION FROM THE ULTIMATE CONTRACT OF THE MINIMUM GUARANTEE PROVISION IS NOT SUBJECT TO OBJECTION SINCE NEITHER CONTRACT TO BE AWARDED NOR OFFERS SUBMITTED WERE ALTERED. SINCE GOVERNMENT RECEIVED BENEFITS OF COMPETITION AND NO OFFEROR WAS PREJUDICED BY THE DELETION CANCELLATION WOULD NOT BE IN BEST INTERESTS OF GOVERNMENT. YOUR REQUEST FOR RECONSIDERATION IS PREMISED UPON THREE PRINCIPAL BASES. YOU AGAIN CONTEND THAT DISCUSSIONS WERE ACTUALLY CONDUCTED WITH SOUTHWEST POTASH AS EVIDENCED BY THE AGREEMENT TO DELETE FROM THE CONTRACT THE PREVIOUS ORAL MODIFICATION GUARANTEEING MINIMUM PURCHASE OF 6.

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B-167643, JAN. 20, 1970

BID PROTEST--NEGOTIATED--ORAL MODIFICATION DECISION TO HERCULES, INC; REAFFIRMING DECISION OF NOVEMBER 14, 1969, DENYING PROTEST AGAINST AWARD OF NEGOTIATED CONTRACT TO SOUTHWEST POTASH CORP. FOR NITROGEN TETROXIDE USED IN MISSILES. WHERE OFFERORS WERE ORALLY INSTRUCTED BY CONTRACTING PERSONNEL THAT A MINIMUM GUARANTEE PROVISION WAS BEING ADDED TO THE SOLICITATION BUT NO WRITTEN CONFIRMATION WAS ISSUED, A DELETION FROM THE ULTIMATE CONTRACT OF THE MINIMUM GUARANTEE PROVISION IS NOT SUBJECT TO OBJECTION SINCE NEITHER CONTRACT TO BE AWARDED NOR OFFERS SUBMITTED WERE ALTERED. SINCE GOVERNMENT RECEIVED BENEFITS OF COMPETITION AND NO OFFEROR WAS PREJUDICED BY THE DELETION CANCELLATION WOULD NOT BE IN BEST INTERESTS OF GOVERNMENT.

TO HERCULES, INCORPORATED:

THIS RESPONDS TO YOUR LETTERS OF DECEMBER 2 AND 29, 1969, REQUESTING RECONSIDERATION OF OUR DECISION, B-167643, DATED NOVEMBER 14, 1969.

OUR PRIOR DECISION DENIED YOUR PROTEST AGAINST THE AWARD OF CONTRACT NO. F41608-69-D-3834 TO SOUTHWEST POTASH CORPORATION UNDER A NEGOTIATED PROCUREMENT BY THE AIR FORCE FOR NITROGEN TETROXIDE TO BE USED IN LIQUID PROPELLED MISSILES. YOUR REQUEST FOR RECONSIDERATION IS PREMISED UPON THREE PRINCIPAL BASES.

FIRST, YOU AGAIN CONTEND THAT DISCUSSIONS WERE ACTUALLY CONDUCTED WITH SOUTHWEST POTASH AS EVIDENCED BY THE AGREEMENT TO DELETE FROM THE CONTRACT THE PREVIOUS ORAL MODIFICATION GUARANTEEING MINIMUM PURCHASE OF 6,000,000 POUNDS OF NITROGEN TETROXIDE FROM THE SUCCESSFUL OFFEROR. FURTHER, YOU POINT OUT THAT HERCULES WAS COMPETING ON THE BASIS OF A CONTRACT THE GOVERNMENT DID NOT INTEND TO MAKE, SINCE HERCULES WAS NOT ADVISED OF THE INTENT TO DELETE THE GUARANTEED MINIMUM. WE NOTE IN THIS CONNECTION THAT THE PROPOSAL SUBMITTED BY HERCULES GIVES NO INDICATION THAT THE GUARANTEED MINIMUM PURCHASE WAS TAKEN INTO CONSIDERATION IN ITS PREPARATION. IN THE CIRCUMSTANCES, WE FAIL TO SEE HOW THE DELETION OF THE GUARANTEE COULD HAVE PREJUDICED YOUR COMPANY. HOWEVER, AS OUR PRIOR DECISION STATED, A CHANGE IN THE SPECIFICATIONS SHOULD BE MADE IN WRITING AND THIS APPLIES TO MODIFICATIONS WHICH DELETE PROVISIONS AS WELL AS THOSE WHICH MAKE ADDITIONS. SIMILARLY, OFFERORS SHOULD BE AFFORDED AN OPPORTUNITY TO REVISE THEIR PROPOSALS IN LIGHT OF SUCH MODIFICATIONS, AND NORMALLY A FAILURE TO CONDUCT DISCUSSIONS WITH ALL OFFERORS WOULD PROMPT OUR OFFICE TO CANCEL ANY CONTRACT AWARDED AND TO DIRECT FURTHER NEGOTIATIONS. SEE B- 167386, DECEMBER 22, 1969. NEVERTHELESS, WE FEEL SUCH HARSH ACTION IS NOT WARRANTED IN THIS INSTANCE FOR THE REASONS SET OUT BELOW.

THE AIR FORCE REPORTED THAT THE MINIMUM GUARANTEE PROVISION WAS DELETED FROM THE CONTRACT THROUGH AGREEMENT SECURED FROM SOUTHWEST POTASH. HOWEVER, WHILE SOUTHWEST POTASH MAY HAVE AGREED TO THIS DELETION, SUCH AN AGREEMENT WAS NOT REQUIRED, AND WOULD NOT AND DID NOT JUSTIFY ANY REVISION IN THE INITIAL PROPOSAL SUBMITTED BY SOUTHWEST POTASH. PARAGRAPH 3 OF STANDARD FORM 33A, SOLICITATION INSTRUCTIONS AND CONDITIONS, OF THE REQUEST FOR PROPOSALS (RFP) STATES IN PART:

"3. EXPLANATION TO OFFERORS

* * * ORAL EXPLANATIONS OR INSTRUCTIONS GIVEN BEFORE AWARD OF THE CONTRACT WILL NOT BE BINDING. * * *" OFFERORS WERE ORALLY ADVISED ON APRIL 7, 1969, THAT THE MINIMUM GUARANTEE PROVISION WAS BEING ADDED TO THE SOLICITATION. THIS ORAL ADVICE WAS NEVER CONFIRMED IN WRITING. THEREFORE, BY THE VERY TERMS OF THE SOLICITATION SUCH INSTRUCTIONS WERE NOT BINDING AND WOULD HAVE NO EFFECT ON THE CONTRACT AWARDED. CONFIRMATION IN WRITING OF ORAL INSTRUCTIONS IS FUNDAMENTAL TO THE COMPETITIVE SYSTEM IN ORDER TO CLEARLY ASCERTAIN THE CONTRACT OFFERORS ARE COMPETING FOR. CF. B-167185, SEPTEMBER 3, 1969, 49 COMP. GEN..

SINCE IN THIS PROCUREMENT NEITHER THE CONTRACT TO BE AWARDED NOR THE OFFERS SUBMITTED WERE ALTERED IN FACT, WE DO NOT BELIEVE THE AGREEMENT REACHED WITH SOUTHWEST POTASH PREJUDICED OTHER OFFERORS IN A MANNER SO AS TO WARRANT FURTHER NEGOTIATIONS. IT SHOULD BE NOTED IN THIS REGARD THAT THE COMPETITIVE SYSTEM, OF WHICH NEGOTIATION IS A PART, HAS BEEN HELD TO BE FOR THE BENEFIT OF THE GOVERNMENT. PERKINS V. LUKENS STEEL COMPANY, 310 U.S. 113 (1940), AND AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75 (1922). HERE THE GOVERNMENT RECEIVED THE BENEFITS OF COMPETITION AND NO OFFEROR WAS PREJUDICED BY THE DELETION OF THE MINIMUM GUARANTEE PROVISION. ACCORDINGLY, THE BEST INTERESTS OF THE GOVERNMENT WOULD NOT BE SERVED BY NOW CANCELLING THE CONTRACT AWARDED SOUTHWEST POTASH.

YOU ALSO REQUESTED RECONSIDERATION OF OUR POSITION THAT THE MODIFICATION TO YOUR PROPOSAL OF JULY 17, 1969, WAS PROPERLY CONSIDERED LATE BY THE CONTRACTING OFFICER. IN PARTICULAR, YOU CONTEND WE HAVE MISINTERPRETED PARAGRAPH 8(A), SOLICITATION INSTRUCTIONS AND CONDITIONS, OF THE RFP. THAT PARAGRAPH STATES IN PART:

"(A) OFFERS AND MODIFICATIONS OF OFFERS (OR WITHDRAWALS THEREOF, IF THIS SOLICITATION IS ADVERTISED) RECEIVED AT THE OFFICE DESIGNATED IN THE SOLICITATION AFTER THE EXACT HOUR AND DATE SPECIFIED FOR RECEIPT WILL NOT BE CONSIDERED * * *." YOU CORRECTLY STATE THAT THIS OFFICE UNDERSTANDS THE UNDERSCORED LANGUAGE TO MEAN "AFTER DATE SPECIFIED FOR RECEIPT OF OFFERS," WHILE YOU BELIEVE THAT THE UNDERSCORED LANGUAGE SHOULD BE READ IN CONTEXT TO MEAN "AFTER DATE SPECIFIED FOR RECEIPT OF OFFERS OR MODIFICATIONS AS THE CASE MAY BE."

WHEN PARAGRAPH 7(B) OF STANDARD FORM 33A, WHICH WAS A PART OF THE RFP, IS READ IN CONJUNCTION WITH THE SUBSTITUTE PARAGRAPH 8 INCLUDED IN THE RFP, THERE IS LITTLE DOUBT THAT WITH RESPECT TO DEPARTMENT OF DEFENSE NEGOTIATED PROCUREMENTS (AS OPPOSED TO CIVILIAN AGENCY PROCUREMENTS) THE RULES FOR CONSIDERATION OF LATE PROPOSALS OR MODIFICATIONS ARE THOSE OTHERWISE APPLICABLE TO FORMAL ADVERTISING. THE RULES FOR CONSIDERATION OF LATE BIDS UNDER FORMAL ADVERTISING, WHICH ARE LONG-ESTABLISHED AND WELL KNOWN, ARE ESSENTIALLY TO THE EFFECT THAT WITH CERTAIN LIMITED EXCEPTIONS (NOT APPLICABLE TO THIS CASE) A BID OR BID MODIFICATION MUST BE SUBMITTED ON OR BEFORE THE TIME SET FOR THE SUBMISSION OF BIDS. THE SAME RULE IS FOR APPLICATION HERE. WE RECOGNIZE THAT WHEN FURTHER NEGOTIATIONS ARE HELD ON NON ADVERTISED PROCUREMENTS, A SECOND DEADLINE FOR SUBMISSION OF MODIFICATIONS MAY BE SET. HOWEVER, NO SUCH ADDITIONAL DEADLINE WAS SET IN THIS CASE, AND THE FIRST AND ONLY DEADLINE APPLIES BOTH TO PROPOSALS AND MODIFICATIONS. THE LANGUAGE OF THE RFP WHICH IS WIDELY USED HAS CONSISTENTLY BEEN SO ADMINISTRATIVELY INTERPRETED.

FINALLY, YOU QUESTION WHETHER THIS OFFICE HAS ASCERTAINED IF THE CONTRACTING OFFICER FULLY EVALUATED ALL THE SHIPPING COSTS IN DETERMINING THE LOW PROPOSAL. IN PARTICULAR, YOU QUESTION WHETHER THE COST OF TRANSFERRING RAIL SHIPMENTS TO TRUCK AT EDWARDS AIR FORCE BASE FOR FURTHER SHIPMENT TO VANDENBERG AIR FORCE BASE, THE DESTINATION, WAS CONSIDERED BY THE CONTRACTING OFFICER.

THE CONTRACTING OFFICER FULLY CONSIDERED THIS COST OF TRANSFERRING CARGO WHERE REQUIRED, AND EVALUATED THAT COST TOGETHER WITH THE ACTUAL ESTABLISHED FREIGHT RATES, BOTH TRUCK AND RAIL, TO ALL OF THE LOCATIONS SET OUT IN THE SOLICITATION. AFTER THE ADDITION OF THESE FREIGHT EVALUATION FACTORS FOR DESTINATIONS IN CALIFORNIA, NEW MEXICO, NEVADA, OHIO, ARIZONA, TEXAS, COLORADO, KANSAS, AND FLORIDA, SOUTHWEST POTASH WAS STILL THE LOW OFFEROR BY APPROXIMATELY $73,000.

IN ADDITION TO THE BASES WHICH YOU URGED AS WARRANTING REVERSAL OF OUR PRIOR DECISION, YOU ALSO BELIEVED THAT OUR PRIOR DECISION CONTAINED AN IMPLICATION THAT SINCE HERCULES WAS NOT THE LOW OFFEROR THE VALIDITY OF OUR CONCLUSIONS WAS IRRELEVANT.

ON PAGE 5 AT THE THIRD COMPLETE SENTENCE OF OUR DECISION, B-167643, DATED NOVEMBER 14, 1969, WE STATED:

"IT SHOULD BE NOTED THAT YOUR PRICES WOULD NOT HAVE BEEN LOW EVEN IF THE LATE MODIFICATION HAD BEEN CONSIDERED." THAT SENTENCE, TAKEN IN CONTEXT WITH THE LANGUAGE WHICH PRECEDED IT, WAS INTENDED TO, AND SEEMS TO US DOES, CONVEY THAT THE CONTRACTING OFFICER WAS JUSTIFIED IN HIS CONCLUSION THAT THE LATE MODIFICATION, EVEN IF IT HAD BEEN TIMELY, DID NOT REQUIRE CONDUCTING FURTHER NEGOTIATIONS.

YOU ALSO POINTED OUT THREE "MINOR IRREGULARITIES" IN THIS PROCUREMENT WHICH YOU BELIEVE SHOW THAT THE PROCUREMENT WAS BADLY MISHANDLED. YOU NOTE THE DETERMINATION TO NEGOTIATE THE CONTRACT BECAUSE COMPETITION WAS NOT EXTANT, WHILE LATER IT WAS DECIDED TO AWARD A CONTRACT ON THE BASIS OF INITIAL PROPOSALS ON THE DETERMINATION OF ADEQUATE COMPETITION. WE AGREE THAT ON THEIR FACE THESE TWO DETERMINATIONS ARE SOMEWHAT INCONSISTENT. HOWEVER, THE DECISION TO NEGOTIATE FOR LACK OF COMPETITION WAS A FORECAST PRECEDING THE ISSUANCE OF THE RFP WHEREAS THE DECISION THAT ADEQUATE COMPETITION WAS ACHIEVED WAS MADE IN LIGHT OF EVENTS WHICH ACTUALLY OCCURRED. THE OTHER "MINOR IRREGULARITIES" YOU HAVE RAISED HAVE BEEN PREVIOUSLY ANSWERED INSOFAR AS THIS OFFICE HAS THE FACILITIES SO TO DO.

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