B-152470, OCTOBER 11, 1963, 43 COMP. GEN. 382

B-152470, OCTOBER 11, 1963, 43 COMP. GEN. 382

CONTRACTS - SPECIFICATIONS - DEVIATIONS - INFORMAL V. SUBSTANTIVE UNDER AN INVITATION FOR BIDS ON A GENERATOR REQUIRING ALIGNMENT OF THE GENERATOR WITH A TURBINE, PROCURED UNDER AN EARLIER INVITATION AND CONTRACT, WITHIN THE CONTINENTAL UNITED STATES OR CANADA, THE LOW BID ON THE GENERATOR OFFERING TO PERFORM THE ALIGNMENT OPERATION IN JAPAN, WHERE BOTH GENERATOR AND TURBINE WERE TO BE MANUFACTURED, WAS NONRESPONSIVE AND SHOULD BE REJECTED, THE DEVIATION FROM THE SPECIFICATION REQUIREMENT GOING TO THE PRICE OF THE BID, WHICH WAS CONDITIONED ON PERFORMING THE FUNCTION IN JAPAN, IS A SUBSTANTIVE DEVIATION, THE LOW BIDDER HAVING A COMPETITIVE ADVANTAGE OVER BIDDERS COMPLYING WITH THE INVITATION, AND IN VIEW OF THE SIGNIFICANT DOLLAR DIFFERENCES BETWEEN THE LOW BID AND THE NEXT LOW BIDS, AND THE APPARENT UNDESIRABILITY OF THE ALIGNMENT REQUIREMENT, THERE IS NO OBJECTION TO READVERTISING THE PROCUREMENT TO REFLECT THE NEEDS OF THE GOVERNMENT.

TO THE SECRETARY OF THE INTERIOR, OCTOBER 11, 1963:

BY LETTER OF SEPTEMBER 11, 1963, WITH ENCLOSURES, YOU HAVE REQUESTED A DECISION AS TO THE RESPONSIVENESS OF THE LOW BID SUBMITTED UNDER BUREAU OF RECLAMATION INVITATION NO. DS-5981, ISSUED JUNE 19, 1963, FOR FURNISHING, INSTALLING AND TESTING ONE 11,111 KVA GENERATOR FOR THE FONTENELLE POWERPLANT, SEEDSKADEE PROJECT, WYOMING.

A TURBINE TO BE USED WITH THE GENERATOR IS BEING PROCURED UNDER AN EARLIER INVITATION AND CONTRACT. TO INSURE THAT THE TURBINE AND GENERATOR SHAFTS ARE PROPERLY ALINED, THE SPECIFICATIONS FOR THE INSTANT PROCUREMENT PROVIDE AT PARAGRAPH D-9 IN PART, AS FOLLOWS:

B. ALINEMENT OF COMBINED TURBINE AND GENERATOR SHAFT.--- TO INSURE THE ACCURATE ALINEMENT OF THE TURBINE AND GENERATOR SHAFTS, THE SHAFTS SHALL BE FITTED TOGETHER IN THE SHOP BY THE GENERATOR CONTRACTOR AND CHECKED CAREFULLY FOR ALINEMENT OF THE ASSEMBLY WHILE THE SHAFTS ARE ROTATING. THE A LINING OPERATIONS SHALL BE PERFORMED IN A SHOP LOCATED WITHIN THE CONTINENTAL LIMITS OF THE UNITED STATES OR CANADA. THE CONTRACTOR SHALL, WITHIN NINETY (90) CALENDAR DAYS AFTER DATE OF RECEIPT OF NOTICE OF AWARD OF CONTRACT, SUBMIT TO THE CONTRACTING OFFICER THE NAME AND LOCATION OF THE SHOP IN WHICH HE PROPOSES TO PERFORM THE A LINING OPERATIONS. THE SHOP SELECTED FOR THE A LINING OPERATION SHALL BE SUBJECT TO THE APPROVAL OF THE CONTRACTING OFFICER. THE TURBINE SHAFT WILL BE SHIPPED TO THE GENERATOR CONTRACTOR WITH THE BOLTHOLES IN THE COUPLING FLANGE DRILLED UNDERSIZE, AND THE GENERATOR CONTRACTOR SHALL BE RESPONSIBLE FOR THE A LINING OPERATIONS SPECIFIED IN SUBPARAGRAPH C. BELOW. THE TURBINE SHAFT WILL BE LOADED ON CARS IN THE UNITED STATES, READY FOR MOVEMENT TO THE ALINEMENT SHOP DESIGNATED BY THE GENERATOR CONTRACTOR, WITHIN ONE HUNDRED AND FIFTY (150) CALENDAR DAYS AFTER DATE OF RECEIPT BY THE GENERATOR CONTRACTOR OF NOTICE OF AWARD OF CONTRACT. THE GENERATOR CONTRACTOR SHALL BE RESPONSIBLE FOR STORING AND PROTECTING THE TURBINE AND GENERATOR SHAFTS DURING ALINEMENT, SHIPMENT AND INSTALLATION.

C. A LINING OPERATIONS.--- THE GENERATOR CONTRACTOR WILL BE RESPONSIBLE FOR THE FOLLOWING:

(1) FURNISHING THE TURBINE CONTRACTOR A TEMPLATE OR OTHER ADEQUATE INFORMATION FOR DRILLING UNDERSIZE COUPLING BOLTHOLES.

(2) FITTING THE TURBINE SHAFT TO THE GENERATOR SHAFT, AND REAMING THE BOLTHOLES IN THE COUPLING FLANGES OF BOTH SHAFTS.

(3) FURNISHING AND FITTING ALL COUPLING BOLTS, NUTS, AND NUT GUARDS FOR THE COUPLING BETWEEN THE TWO SHAFTS.

(4) FURNISHING A BOLT JACK FOR INSERTING AND REMOVING THE COUPLING BOLTS.

(5) A LINING THE TURBINE AND GENERATOR SHAFT, AND CHECKING THE ALINEMENT OF THE COUPLED ASSEMBLY WHILE ROTATING.

(6) MATCH MARKING THE ALINED SHAFTS BY PERMANENT STAMPS.

(7) STORING AND PROTECTING THE TURBINE SHAFT FROM THE TIME IT IS RECEIVED FROM THE TURBINE CONTRACTOR UNTIL ITS DELIVERY AT DESTINATION.

UPON BID OPENING ON JULY 30, 1963, THE LOW BID WAS FOUND TO BE THAT SUBMITTED BY MITSUI AND COMPANY LTD. OF SAN FRANSCISCO, OFFERING A GENERATOR TO BE MANUFACTURED AT YOKOHAMA, JAPAN, FOR $263,300. EXCEPT FOR THE QUESTION SUBMITTED IT IS OUR UNDERSTANDING THAT THE LOW BID HAS BEEN FOUND RESPONSIVE AND THE BIDDER RESPONSIBLE. IN ITS BID MITSUI TOOK COGNIZANCE OF THE FACT THAT THE TURBINE--- THE CONTRACT FOR WHICH HAD ALREADY BEEN AWARDED--- WAS TO BE MANUFACTURED IN JAPAN, AND PROPOSED TO PERFORM THE A LINING OPERATION IN ITS OWN SHOPS. THE LANGUAGE OF THE BID WITH RESPECT TO THE MATTER IS AS FOLLOWS:

3. SHAFT ALIGNMENT

TO INSURE THE ACCURATE ALIGNMENT OF THE COMBINED TURBINE AND GENERATOR SHAFTS, THE SHAFTS WILL BE FITTED TOGETHER IN OUR SHOP AND CHECKED CAREFULLY FOR ALIGNMENT OF THE ASSEMBLY WHILE THE SHAFTS ARE ROTATING. THE ALIGNING OPERATIONS WILL BE PERFORMED IN OUR SHOP, SINCE THE TURBINE IS MANUFACTURING IN JAPAN. THE TURBINE SHAFT WILL BE SHIPPED TO OUR GENERATOR SHOP WITH THE BOLTHOLES IN THE COUPLINGS FLANGE DRILLED UNDERSIZE, AND TOSHIBA WILL TAKE RESPONSIBLE FOR THE A LINING OPERATIONS SPECIFIED IN YOUR SPECIFICATION D-9C.

THE THIRD LOW BIDDER, THE GENERAL ELECTRIC COMPANY, CONTENDS THAT THE MITSUI BID SHOULD BE REJECTED AS NONRESPONSIVE. HOWEVER, IN A MEMORANDUM OF SEPTEMBER 6, 1963, FROM THE CHIEF ENGINEER, IT IS RECOMMENDED THAT THE SPECIFICATION REQUIREMENT WITH RESPECT TO THE SITE OF ALINEMENT BE WAIVED AS IN THE BEST INTEREST OF THE GOVERNMENT AND AWARD MADE TO THE LOW BIDDER.

CLEARLY, THE QUOTED STATEMENT OF THE LOW BID REPRESENTS A QUALIFICATION OF THAT PROVISION OF THE SPECIFICATIONS PROVIDING FOR THE PERFORMANCE OF THE A LINING OPERATION IN CONTINENTAL UNITED STATES OR CANADA. WHETHER, UNDER SUCH CIRCUMSTANCES, THE BID MAY BE ACCEPTED DEPENDS UPON WHETHER THE QUALIFICATION GOES TO THE PRICE, QUANTITY, OR QUALITY OF PERFORMANCE. COMP. GEN. 179. IF THE DEVIATION FROM THE SPECIFICATIONS AFFECTS ANY ONE OF THE THREE NAMED FACTORS, IT MUST BE REGARDED AS A MATERIAL QUALIFICATION REQUIRING THE REJECTION OF THE BID.

UNDER THE TERMS OF THE TURBINE CONTRACT, THE CONTRACTOR IS RESPONSIBLE FOR DELIVERY OF THE TURBINE SHAFT TO THE UNITED STATES. WE HAVE BEEN ADVISED THAT THE PURPOSE OF THE SPECIFICATION PROVISION ON THE SITE OF THE ALINEMENT OPERATION WAS TO PRECLUDE AN ADDITIONAL SHIPPING COST TO THE GOVERNMENT IF THE SUCCESSFUL BIDDER UNDER THE GENERATOR CONTRACT PROPOSED TO PERFORM THE ALINEMENT IN EUROPE. THE ALINEMENT PROVISION WAS WRITTEN OVERLOOKING THE POSSIBILITY THAT BOTH THE TURBINE AND GENERATOR MIGHT BE MANUFACTURED IN THE SAME AREA AND OUTSIDE THE CONTINENTAL UNITED STATES OR CANADA.

WHATEVER THE REASONS FOR ITS INCLUSION, THERE IS NO QUESTION THAT THE TERMS CLEARLY STATED IN THE INVITATION REQUIRE THAT THE ALINEMENT FUNCTION BE PERFORMED IN CONTINENTAL UNITED STATES OR CANADA. THERE IS ALSO NO QUESTION THAT THE LOW BID HAS BEEN CONDITIONED ON PERFORMING THE FUNCTION IN JAPAN. WHILE NO FIGURES HAVE BEEN PROVIDED, REASON DICTATES THE CONCLUSION THAT THE CHANGE IN LOCATION WOULD RESULT IN A REDUCTION IN COST, AND THEREFORE A COMPETITIVE ADVANTAGE, TO THE LOW BIDDER--- AN ADVANTAGE NOT AVAILABLE TO THOSE FOLLOWING THE EXPRESS LANGUAGE OF THE INVITATION. IN THIS CONNECTION IT SHOULD BE NOTED THAT THE NEXT LOW BIDDER, WHO ALSO PROPOSES TO FURNISH A PRODUCT MANUFACTURED IN JAPAN, OFFERED AS AN ALTERNATIVE TO REDUCE HIS BID PRICE BY $4,770 IF HE COULD PERFORM THE A LINING OPERATION IN JAPAN. WE MUST CONCLUDE, THEREFORE, THAT THE DEVIATION IN THE LOW BID WOULD GIVE THAT BIDDER A MATERIAL ADVANTAGE OVER OTHERS CONFORMING TO THE TERMS OF THE INVITATION. STATED IN OUR DECISION 30 COMP. GEN. 179, 181:

THE QUESTION AS TO WHETHER DEVIATIONS FROM THE REQUIREMENTS OF ADVERTISED SPECIFICATIONS MIGHT BE WAIVED AFTER THE OPENING DATE HAS BEEN BEFORE THIS OFFICE MANY TIMES; AND IT HAS BEEN CONSISTENTLY HELD THAT SUCH DEVIATIONS MAY BE WAIVED PROVIDED THEY DO NOT GO TO THE SUBSTANCE OF THE BID OR WORK AN INJUSTICE TO OTHER BIDDERS. IN OTHER WORDS, THE PRIMARY QUESTION FOR DETERMINATION IN THIS AND SIMILAR CASES IS WHETHER THE DEVIATION PROPOSED TO BE WAIVED GOES TO THE SUBSTANCE OF THE BID SO AS TO AFFECT EITHER THE PRICE, QUANTITY, OR QUALITY OF THE ARTICLES OFFERED AND THEREFORE IS PREJUDICIAL TO THE RIGHTS OF OTHER BIDDERS OR IS MERELY A MATTER OF FORM OR SOME IMMATERIAL VARIATION FROM THE EXACT REQUIREMENTS OF THE SPECIFICATIONS SUCH AS WOULD NOT AFFECT EITHER THE PRICE, QUALITY, OR QUANTITY OF THE ARTICLES OFFERED.

ACCORDINGLY, THE LOW BID SHOULD BE REJECTED AS NOT RESPONSIVE TO THE TERMS OF THE INVITATION. WE NOTE, HOWEVER, THAT THE LOW BID OF MITSUI AND COMPANY, LTD. IS $263,300, AND THE BIDS OF HITACHI ARE $337,640 WITH ALINEMENT IN ACCORDANCE WITH THE TERMS OF THE INVITATION AND $332,870 WITH ALINEMENT PERFORMED IN JAPAN--- ALL THREE OF THESE PRICES WITHOUT CONSIDERATION OF THE BUY AMERICAN DIFFERENTIAL--- AND THE LOW DOMESTIC BID, RECEIVED FROM THE GENERAL ELECTRIC COMPANY IS $355,613. IN VIEW OF THE SIGNIFICANT DOLLAR DIFFERENCES BETWEEN THE LOW BID AND THE NEXT LOW BIDS AND THE APPARENT UNDESIRABILITY OF THE ALINEMENT REQUIREMENT AS APPLIED TO A GENERATOR TO BE MANUFACTURED IN JAPAN, WE WOULD NOT OBJECT TO THE REJECTION OF THE LOW BID AND THE READVERTISEMENT OF THE PROCUREMENT WITH AN ALINEMENT PROVISION MODIFIED TO REFLECT THE GOVERNMENT'S ACTUAL NEEDS.

THE ENCLOSURES TO THE LETTER OF SEPTEMBER 11, 1963, ARE RETURNED AS REQUESTED.