B-140236, OCTOBER 6, 1959, 39 COMP. GEN. 259

B-140236, OCTOBER 6, 1959, 39 COMP. GEN. 259

BIDS - QUALIFIED - BIDDERS QUOTATION FORM CONTRARY TO STANDARD FORM A LOW BID WHICH LIMITS THE CONTRACTOR'S LIABILITY FOR EXCESS COSTS FOR FAILURE TO PERFORM WHEN SUCH FAILURE IS BOTH BEYOND THE CONTROL OF THE CONTRACTOR AND WITHOUT HIS FAULT OR NEGLIGENCE AND OMITS THE STANDARD PROVISION CONCERNING DEFAULT OF SUBCONTRACTORS, WHEN THE DEFAULT IS DUE TO CAUSES BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF BOTH THE CONTRACTOR AND SUBCONTRACTOR, IS A BID CONTAINING QUALIFICATIONS WHICH AFFECT THE SUBSTANCE OF THE BID AND MAKE IT NONRESPONSIVE TO THE INVITATION.

TO J. M. THOMSON, JR., OCTOBER 6, 1959:

SUBSEQUENT TO THE DATE OF YOUR TELEGRAM OF JULY 17, 1959, PROTESTING THE AWARD OF A CONTRACT TO FRIDEN, INC., UNDER VETERANS ADMINISTRATION INVITATION FOR BIDS NO. MS-21-60, WE RECEIVED TWO LETTERS, WITH ENCLOSURES, DATED JULY 21 AND JULY 27, 1959, FROM MR. HERBERT W. BERTINE, VICE PRESIDENT AND SECRETARY OF THE UNDERWOOD CORPORATION. IN THOSE LETTERS MR. BERTINE PRESENTED THE VIEWS OF THE UNDERWOOD CORPORATION IN REGARD TO REJECTION OF THE UNDERWOOD BID BY THE VETERANS ADMINISTRATION.

THIS PROCUREMENT IS FOR AUTOMATIC TAPE PRODUCING TYPEWRITERS TO BE USED IN CONJUNCTION WITH THE NEW DATA PROCESSING CENTER NOW BEING ESTABLISHED AT HINES, ILLINOIS. THE INVITATION FOR BIDS, DATED JUNE 5, 1959, CALLED FOR THE BIDS TO BE OPENED TWO WEEKS LATER ON JUNE 19, 1959. MOREOVER, IN REGARD TO THE PREAWARD SAMPLE, THE INVITATIONS REQUESTED THE "SUCCESSFUL BIDDER" TO DEMONSTRATE HIS TYPEWRITER "NOT MORE THAN" 20 DAYS AFTER OPENING. ONLY TWO BIDS WERE RECEIVED, ONE FROM UNDERWOOD CORPORATION, THE OTHER FROM FRIDEN, INC. UNDERWOOD CORPORATION SUBMITTED THE LOWER BID. SEVEN DAYS AFTER A DEMONSTRATION OF BOTH UNDERWOOD AND FRIDEN EQUIPMENT ON JULY 9, 1959, YOU RECEIVED A LETTER SETTING FORTH PARTICULARS IN WHICH THE UNDERWOOD TYPEWRITER FAILED TO MEET SPECIFICATIONS. THE FRIDEN BID WAS ACCEPTED ON JULY 20, 1959, AND THE VETERANS ADMINISTRATION FORMALLY ADVISED THE UNDERWOOD CORPORATION OF THE REJECTION OF ITS BID ON JULY 24, 1959.

THE INVITATION FOR BIDS INCORPORATED BY REFERENCE GSA STANDARD FORM 32, 1957 EDITION, PARAGRAPH 11 (C) OF WHICH PROVIDES AS FOLLOWS:

(C) EXCEPT WITH RESPECT TO DEFAULTS OF SUBCONTRACTORS, THE CONTRACTOR SHALL NOT BE LIABLE FOR ANY EXCESS COSTS IF THE FAILURE TO PERFORM THE CONTRACT ARISES OUT OF CAUSES BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR. SUCH CAUSES MAY INCLUDE, BUT ARE NOT RESTRICTED TO, ACTS OF GOD OR OF THE PUBLIC ENEMY, ACTS OF THE GOVERNMENT IN EITHER ITS SOVEREIGN OR CONTRACTUAL CAPACITY, FIRES, FLOODS, EPIDEMICS, QUARANTINE RESTRICTIONS, STRIKES, FREIGHT EMBARGOES, AND UNUSUALLY SEVERE WEATHER; BUT IN EVERY CASE THE FAILURE TO PERFORM MUST BE BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR. IF THE FAILURE TO PERFORM IS CAUSED BY THE DEFAULT OF A SUBCONTRACTOR, AND IF SUCH DEFAULT ARISES OUT OF CAUSES BEYOND THE CONTROL OF BOTH THE CONTRACTOR AND SUBCONTRACTOR, AND WITHOUT THE FAULT OR NEGLIGENCE OF EITHER OF THEM, THE CONTRACTOR SHALL NOT BE LIABLE FOR ANY EXCESS COSTS FOR FAILURE TO PERFORM, UNLESS THE SUPPLIES OR SERVICES TO BE FURNISHED BY THE SUBCONTRACTOR WERE OBTAINABLE FROM OTHER SOURCES IN SUFFICIENT TIME TO PERMIT THE CONTRACTOR TO MEET THE REQUIRED DELIVERY SCHEDULE.

IN THE BID SUBMITTED BY THE UNDERWOOD CORPORATION THERE APPEARS THE FOLLOWING PARAGRAPH:

FAILURE OF UNDERWOOD TO MAKE (OR DELAY BY UNDERWOOD IN MAKING) DELIVERY HEREUNDER, IN WHOLE OR IN PART, IF OCCASIONED BY ACT OF GOD OR THE PUBLIC ENEMY, FIRE, EXPLOSION, FLOOD, WAR, RIOT, SABOTAGE, ACCIDENT, EMBARGO, OR ANY CIRCUMSTANCE OF LIKE OR DIFFERENT CHARACTER BEYOND UNDERWOOD'S REASONABLE CONTROL, OR BY INTERRUPTION OF OR DELAY IN TRANSPORTATION, INADEQUACY OR SHORTAGE OR FAILURE OF SUPPLY OF MATERIALS, OR EQUIPMENT, BREAKDOWN, LABOR TROUBLE, COMPLIANCE WITH ANY ORDER, DIRECTION, ACTION OR REQUEST OF ANY GOVERNMENTAL OFFICER, DEPARTMENT OR AGENCY SHALL NOT SUBJECT UNDERWOOD TO ANY LIABILITY TO THE VETERANS ADMINISTRATION, AND IN SUCH EVENT THE PERIOD FOR PERFORMANCE BY UNDERWOOD HEREUNDER WILL BE EXTENDED TO THE EXTENT OF THE DELAY OCCASIONED BY ANY SUCH CIRCUMSTANCES.

THE VETERANS ADMINISTRATION CONTENDS--- AND WE AGREE--- THAT THE PARAGRAPH JUST QUOTED QUALIFIED THE DELIVERY SCHEDULE SPECIFIED IN THE INVITATION, AND THUS PRECLUDED AWARD OF THE CONTRACT TO THE UNDERWOOD CORPORATION.

IN AT LEAST THE FOLLOWING RESPECTS CLAUSE 11 (C) OF STANDARD FORM 32 WAS QUALIFIED:

(1) THE UNDERWOOD PARAGRAPH OMITS THE REQUIREMENT THAT, TO ESCAPE LIABILITY FOR EXCESS COSTS, THE FAILURE TO PERFORM MUST BE BOTH BEYOND THE CONTROL OF THE CONTRACTOR AND WITHOUT HIS FAULT OR NEGLIGENCE;

(2) IT, LIKEWISE, OMITS THE PROVISION THAT TO ESCAPE LIABILITY FOR FAILURE TO PERFORM STEMMING FROM THE DEFAULT OF A SUBCONTRACTOR, SUCH DEFAULT MUST ARISE OUT OF CAUSES BEYOND THE CONTROL OF BOTH THE CONTRACTOR AND THE SUBCONTRACTOR AND WITHOUT THE FAULT OR NEGLIGENCE OF EITHER OF THEM.

THESE QUALIFICATIONS OF LIABILITY ARE NOT MINOR TECHNICALITIES OR INFORMALITIES WHICH CAN BE WAIVED IN THE INTEREST OF THE GOVERNMENT. COMP. GEN. 179. WITHOUT QUESTION THE CONDITIONS AFFECTED THE SUBSTANCE OF THE BID AND RENDERED IT NOT RESPONSIVE. SEE B-139315, JUNE 22, 1959; 36 COMP. GEN. 535; 37 ID. 110.

IN THE CIRCUMSTANCES WE FIND NO LEGAL OBJECTION TO THE REJECTION OF THE UNDERWOOD CORPORATION BID ON THE GROUNDS STATED BY THE VETERANS ADMINISTRATION.

THERE ARE, HOWEVER, OTHER ISSUES RAISED IN SUBSEQUENT LETTERS. ON JULY 30, 1959, MR. BERTINE DIRECTED OUR ATTENTION TO CERTAIN MATTERS WHICH WERE SUPPLEMENTED BY A LETTER OF AUGUST 3, 1959, FROM YOU. IN ESSENCE THOSE TWO LETTERS ALLEGE THAT THE VETERANS ADMINISTRATION WITH FRIDEN SEVERAL MONTHS BEFORE REQUIREMENTS WERE MADE KNOWN TO THE DATA PROCESSING EQUIPMENT INDUSTRY AT LARGE. AS A RESULT OF THAT RELATIONSHIP IT IS ALLEGED THAT THE EQUIPMENT SPECIFICATIONS WERE DEVISED AROUND THE FRIDEN EQUIPMENT IN A MANNER TO RESTRICT COMPETITION. FURTHERMORE, IT IS STATED IN THOSE TWO LETTERS THAT THE SHORT INTERVAL BETWEEN THE TIME WHEN INVITATIONS WERE ISSUED AND THE DATE WHEN SAMPLES HAD TO BE SUBMITTED WORKED TO THE DISADVANTAGE OF ALL BIDDERS EXCEPT FRIDEN.

AS YOU KNOW, SENATOR PRESCOTT BUSH AS WELL AS CERTAIN STAFF MEMBERS FROM THE GENERAL GOVERNMENT ACTIVITIES SUBCOMMITTEE AND THE MILITARY OPERATIONS SUBCOMMITTEE OF THE HOUSE GOVERNMENT OPERATIONS COMMITTEE ARE INTERESTED IN THIS PROCUREMENT. MR. FRANCIS J. MCNAMARA, VICE PRESIDENT AND GENERAL COUNSEL, REMINGTON RAND, TRANSMITTED TO THE CHAIRMAN OF THE GOVERNMENT ACTIVITIES SUBCOMMITTEE A COPY OF THE REMINGTON RAND CORRESPONDENCE FILE RELATIVE TO THIS PROCUREMENT. COPIES WERE ALSO MADE AVAILABLE TO THIS OFFICE. IT APPEARS FROM THE CORRESPONDENCE FILE THAT REMINGTON RAMD ALSO COMPLAINED TO THE VETERANS ADMINISTRATION THAT THE PURCHASE DESCRIPTION WAS UNDULY RESTRICTIVE.

IN VIEW OF THOSE ALLEGATIONS, WE ARE UNDERTAKING AN INVESTIGATION OF THE PROCUREMENT IN QUESTION. SINCE THE UNDERWOOD BID WAS NOT PROPERLY FOR ACCEPTANCE FOR THE REASONS RELATED ABOVE, THE OUTCOME OF OUR INVESTIGATION WILL NOT ALTER THE STATUS OF THAT BID. HOWEVER, YOU WILL BE ADVISED OF THE RESULTS UPON COMPLETION OF THE INVESTIGATION.