B-163931, JUL. 26, 1968

B-163931, JUL. 26, 1968

TO MCCLURE AND TROTTER:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF APRIL 2, 1968, SUBMITTED TO OUR OFFICE, AND YOUR SUPPLEMENTAL LETTER OF APRIL 11, 1968, PROTESTING ON BEHALF OF GENERAL STEEL TANK COMPANY (GENERAL STEEL) AGAINST THE FAILURE OF THE CONTRACTING OFFICER TO MAKE AWARD OF A CONTRACT TO IT AS THE LOW RESPONSIVE AND RESPONSIBLE BIDDER UNDER INVITATION FOR BIDS NO. DSA-700-68 -B-1483, ISSUED ON DECEMBER 11, 1967, BY THE DEFENSE SUPPLY AGENCY, DEFENSE CONSTRUCTION SUPPLY CENTER (DCSC), COLUMBUS, OHIO.

THE SUBJECT INVITATION SOUGHT THE MANUFACTURE AND DELIVERY OF 33 FILTER/SEPARATORS ON AN F.O.B. ORIGIN BASIS, WITH ALL TRANSPORTATION CHARGES PREPAID BY THE CONTRACTOR FOR THE SHIPMENT OF FOUR EACH TO THE DEFENSE CONSTRUCTION SUPPLY CENTER (DCSC), COLUMBUS, OHIO, AND 29 EACH TO SIERRA ARMY DEPOT, HERLONG, CALIFORNIA.

BY AMENDMENT NO. 1 DATED DECEMBER 29, 1967, THE DESTINATION FOR THE 29 FILTER/SEPARATORS DESTINED FOR HERLONG, CALIFORNIA, WAS CHANGED TO DCSC, COLUMBUS, OHIO. THIS AMENDMENT MADE NO CHANGE IN THE OPENING DATE WHICH WAS SET FOR JANUARY 10, 1968. THROUGH ADMINISTRATIVE ERROR, WHICH DOES NOT APPEAR TO HAVE BEEN DISCOVERED UNTIL THE BIDS WERE OPENED, THIS AMENDMENT WAS NOT MAILED UNTIL JANUARY 4, 1968.

THE BIDS WERE OPENED AS SCHEDULED ON JANUARY 10, 1968, AND FOUR BIDS WERE RECEIVED, AS FOLLOWS:

FRAM GENERAL BOWSER FILTERS,

CORPORATION STEEL INC.

TANK CO. PRICE PER FILTER/SEPARATORS $2,528 $1,935 $2,290 $2,633

FOR DELIVERY

TO DCSC

$2,535.55

FOR DELIVERY

TO HERLONG,

CALIFORNIA. PRICE FOR TECH MANUALS

NO CHARGE NO CHARGE $300 NO CHARGE

THE LOW BID SUBMITTED BY GENERAL STEEL IN THE SUM OF $1,935 ALSO OFFERED TO REDUCE ITS PRICE TO $1,900 IN THE EVENT THE PREPRODUCTION SAMPLE REQUIREMENT WAS WAIVED.

NONE OF THE BIDS INCLUDED ACKNOWLEDGMENT OF RECEIPT OF AMENDMENT NO. 1 CHANGING THE DESTINATION FOR THE MAJORITY OF THE FILTER/SEPARATORS. ALTHOUGH ONE BIDDER APPEARS TO HAVE QUOTED A UNIT PRICE FOR DELIVERY TO DCSC, PRESUMABLY TO COVER THE FOUR UNITS ORIGINALLY CALLED FOR AT THAT DESTINATION, THE CONTRACTING OFFICER DETERMINED THAT ALL BIDS WERE NONRESPONSIVE TO THE TERMS OF THE INVITATION AS AMENDED AND CANCELLED THE INVITATION ON JANUARY 16, 1968. CITING THE AUTHORITY OF 10 U.S.C. 2304 (A) (10), THE CONTRACTING OFFICER PREPARED HIS DETERMINATION AND FINDINGS UNDER 10 U.S.C. 2310 (B) TO NEGOTIATE THE PROCUREMENT.

AFTER RECEIVING APPROVAL FROM HIGHER AUTHORITY, AS REQUIRED BY ASPR 3-501 (C), THE CONTRACTING OFFICER ON JANUARY 17, 1968, CONTACTED BY TELEPHONE ALL BIDDERS RESPONDING TO THE INITIAL INVITATION AND ADVISED THEM THAT ALL BIDS WERE CONSIDERED NONRESPONSIVE AND THAT THE PROCUREMENT WAS BEING NEGOTIATED. HE REQUESTED OFFERS TO BE SUBMITTED, SUBJECT TO ALL OF THE TERMS OF THE ORIGINAL AMENDED INVITATION, ON OR BEFORE JANUARY 22, 1968.

GENERAL STEEL RESPONDED TO THE TELEPHONE REQUEST BY TELEGRAM AND LETTER DATED JANUARY 17, 1968, KEEPING ITS OFFER AT THE JANUARY 10 BID PRICE.

AT THE REQUEST OF THE FRAM CORPORATION, A SECOND AMENDMENT WAS ISSUED ON FEBRUARY 2, 1968, CLARIFYING THE FIRST ARTICLE APPROVAL TESTS AND EXTENDED THE CLOSING DATE FOR OFFERS TO FEBRUARY 12, 1968. THE BIDDERS WERE ALSO RENOTIFIED IN WRITING BY THIS AMENDMENT THAT THE PROCUREMENT WAS BEING NEGOTIATED.

BY LETTER OF FEBRUARY 6, 1968, GENERAL STEEL AGAIN QUOTED A PRICE OF $1,935 EACH FOR THE FILTER/SEPARATORS INCLUDING THE COST OF DATA, AND INDICATED THE PRICE OF $1,913 WOULD APPLY IF THE FIRST ARTICLE TESTING REQUIREMENTS WERE WAIVED. THE FRAM CORPORATION WAS THE LOW OFFEROR AT A PRICE OF $1,872 EACH INCLUDING THE DATA AND INDICATED THE SAME PRICE WOULD APPLY IF FIRST ARTICLE TESTING WAS WAIVED. THE CONTRACT WAS AWARDED TO SAID FIRM ON MARCH 4, 1968, AND OTHER OFFERORS WERE NOTIFIED OF THE AWARD UNDER DATE OF MARCH 21.

YOUR LETTER OF APRIL 11, 1968, IN SUPPORT OF THE PROTEST OF GENERAL STEEL ADVANCES THE FOLLOWING ARGUMENTS:

I. NO BIDDER RECEIVED TIMELY NOTICE OF AMENDMENT CHANGING DESTINATION OF 29 OF 33 FILTER/SEPARATORS.

AS EARLIER INDICATED IN THE RECITAL OF THE FACTS REPORTED TO US, AMENDMENT NO. 1 WAS DATED DECEMBER 29, 1967, AND SHOULD HAVE BEEN MAILED ON THAT DATE, BUT DUE TO ADMINISTRATIVE ERROR, SAID AMENDMENT WAS NOT MAILED UNTIL JANUARY 4, 1968. THIS ERROR APPARENTLY WAS NOT DISCOVERED UNTIL THE DATE SET FOR THE OPENING OF BIDS. WHILE WE AGREE THAT SIX DAYS MAY HAVE BEEN INSUFFICIENT TIME, AS CONTEMPLATED BY ASPR 2-208, TO PERMIT ALL BIDDERS TO CONSIDER THE AMENDEMNT AND MODIFY THEIR BIDS AND TO ACKNOWLEDGE SAME, CONSIDERING ALL FACTORS PRESENT AT BID OPENING WE CANNOT SAY THAT THE ACTION OF THE PROCURING AGENCY WAS AN UNJUSTIFIED EXERCISE OF ITS DISCRETION, ESPECIALLY SINCE ARTICLE 5B OF THE SOLICITATION INSTRUCTIONS AND CONDITIONS (STANDARD FORM 33A) SPECIFICALLY AUTHORIZED THE AMENDMENT OF OFFERS BY TELEGRAPHIC NOTICE. CONTRARY TO YOUR ASSERTIONS THAT NO BIDDER RECEIVED THIS AMENDMENT PRIOR TO BID OPENING, IT IS REPORTED THAT BOWSER-BRIGGS, BY LETTER POSTMARKED CROOKVILLE, TENNESSEE, BEARING DATE JANUARY 9, 1968, FORWARDED AN ACKNOWLEDGMENT OF RECEIPT OF THE AMENDMENT. WHILE THIS DID NOT ARRIVE AT THE CENTER IN TIME FOR IT TO BE CONSIDERED AS A PART OF THAT FIRM'S BID, THE REPORTED FACTS INDICATE THAT IT WAS RECEIVED BY AT LEAST ONE OTHER BIDDER IN TIME TO PERMIT OF TIMELY ACKNOWLEDGMENT BY TELEGRAM.

IT IS THE GENERAL RULE THAT IF AN ADDENDUM TO AN INVITATION AFFECTS THE PRICE, QUANTITY, OR QUALITY OF A PROCUREMENT, THE FAILURE OF A BIDDER TO ACKNOWLEDGE ITS RECEIPT IN THE MANNER REQUIRED BY THE INVITATION RENDERS THE BID NONRESPONSIVE. 37 COMP. GEN. 785; 40 ID. 48, 50. FURTHERMORE, THE FACT THAT THE GOVERNMENT IN A PARTICULAR CASE MIGHT HAVE FAILED TO SEE THAT AN INTERESTED BIDDER HAS RECEIVED COPIES OF AN INVITATION FOR BIDS AND ALL RELATED AMENDMENTS DOES NOT WARRANT THE ACCEPTANCE OF THE BID OR A MODIFICATION THEREOF SUBMITTED AFTER THE TIME FIXED FOR BID OPENING. COMP. GEN. 126. CONSISTENT WITH THE GENERAL RULE AS ENUNCIATED IN OUR DECISIONS, ASPR 2-404.2 (A) REQUIRES REJECTION OF BIDS WHICH FAIL TO CONFORM TO THE ESSENTIAL REQUIREMENTS OF THE INVITATION.

WE HAVE HELD THAT THE CANCELLATION OF AN INVITATION AFTER BID OPENING IS TO BE AVOIDED WHERE POSSIBLE, BECAUSE OF THE OBVIOUS PREJUDICIAL EFFECT OF THE DISCLOSURE OF ALL BIDS, AS CLEARLY ILLUSTRATED BY THE RECORD IN THIS CASE. IN THE CIRCUMSTANCES HERE PRESENT WE BELIEVE THAT IN THE EXERCISE OF REASONABLE DILIGENCE THE CONTRACTING OFFICER OR BID OPENING OFFICER SHOULD HAVE DISCOVERED BEFORE BID OPENING THAT THE AMENDMENT HAD NOT BEEN TIMELY MAILED, AND EXTENDED THE TIME FOR OPENING. SEE ASPR 2-208 (B).

HOWEVER, WHILE THE FAILURE TO ALLOW ADEQUATE TIME FOR BIDDERS TO RECEIVE THE AMENDMENT IS REGRETTABLE, WE CANNOT CONSIDER THE ACTION TAKEN BY THE CONTRACTING OFFICER AFTER THE BIDS WERE OPENED TO HAVE BEEN SO UNREASONABLE AS TO VITIATE THE ULTIMATE CONTRACT AWARD, ESPECIALLY IN VIEW OF THE LACK OF ANY PROTEST BY GENERAL STEEL TANK UNTIL AFTER THE AWARD HAD BEEN MADE.

II. EVEN IF THE CHANGE IN DESTINATION AMENDMENT WAS VALID, GENERAL STEEL TANK'S BID ONLY VARIED SLIGHTLY AND THE GOVERNMENT SHOULD PERMIT GENERAL STEEL TO CURE ITS BID AS TO TRANSPORTATION TO A DIFFERENT DESTINATION.

YOUR ARGUMENT UNDER THIS HEADING IS THAT THE AMENDMENT CHANGING THE POINT OF DESTINATION ,MERELY AFFECTS THE BID PRICE AND IN NO WAY AFFECTS THE BIDDER'S DELIVERY PERFORMANCE" , BECAUSE UNDER THE DELIVERY TERMS OF THE INVITATION-- F.O.B. ORIGIN WITH FREIGHT PREPAID BY THE CONTRACTOR-- THE BIDDER PROMISES TO PAY THE TRANSPORTATION COSTS AND NOT TO DELIVER THE PROPERTY TO DESTINATION, THE RISK OF LOSS AND POWER OF CONTROL BEING IN THE GOVERNMENT.

THIS ARGUMENT OVERLOOKS THE FACT THAT THE INVITATION INCLUDED BY REFERENCE CLAUSE 4.102A OF THE DCSC CONTRACT CLAUSE BOOK, WHICH PROVIDES IN SUBPARAGRAPH 2 THEREOF:

"RESPONSIBILITY FOR SUPPLIES:

"NOTWITHSTANDING ANY OTHER PROVISION OF THIS CONTRACT, THE CONTRACTOR ASSUMES ALL RESPONSIBILITY AND RISK OF LOSS FOR SUPPLIES WHICH ARE NOT RECEIVED AT THE POINT TO WHICH THE CONTRACTOR HAS PREPAID THE TRANSPORTATION COSTS OR ARE DAMAGED IN TRANSIT TO SUCH POINT, AND THE CONTRACTOR WILL REPLACE, REPAIR OR CORRECT SUCH SUPPLIES PROMPTLY AT ITS EXPENSE, INCLUDING ANY ADDITIONAL TRANSPORTATION CHARGES, PROVIDED THAT THE CONTRACTING OFFICER MAILS OR OTHERWISE FURNISHES WRITTEN NOTICE OF LOSS OR DAMAGE WITHIN 90 DAYS AFTER ACCEPTANCE OF THE SUPPLIES AT THE POINT OF ORIGIN.'

YOU ARGUE THAT THE CHANGE IN DESTINATION HAD NO EFFECT OR MERELY A TRIVIAL OR NEGLIGIBLE EFFECT ON PRICE (MERELY LOWERING GENERAL STEEL'S FREIGHT COST BY LESS THAN $1,800) AND THEREFORE THE CONTRACTING OFFICER, UNDER THE PROVISION OF ASPR 2-405, SHOULD HAVE WAIVED YOUR FAILURE TO ACKNOWLEDGE RECEIPT OF THE AMENDMENT AS A MINOR INFORMALITY OR IRREGULARITY. IN THAT CONNECTION PARAGRAPH 2-405 OF ASPR, READS IN PART AS FOLLOWS:

"* * * EXAMPLES OF MINOR INFORMALITIES OR IRREGULARITIES INCLUDE:

"/IV) FAILURE OF A BIDDER TO ACKNOWLEDGE RECEIPT OF AN AMENDMENT TO AN INVITATION FOR BIDS, BUT ONLY IF--

"/B) THE AMENDMENT CLEARLY WOULD HAVE NO EFFECT OR MERELY A TRIVIAL OR NEGLIGIBLE EFFECT ON PRICE, AND NO EFFECT ON QUALITY, QUANTITY, DELIVERY, OR THE RELATIVE STANDING OF BIDDERS, SUCH AS AN AMENDMENT CORRECTING A TYPOGRAPHICAL MISTAKE IN THE NAME OF THE GOVERNMENT PURCHASING ACTIVITY; *

SINCE THE CHANGES MADE BY THE FIRST AMENDMENT NOT ONLY HAD AN EFFECT UPON THE COST OF THE PROCUREMENT, BUT ALSO MATERIALLY AFFECTED THE DELIVERY REQUIREMENTS OF THE SOLICITATION, WE CANNOT HOLD THAT THE CONTRACTING OFFICER'S REFUSAL TO WAIVE THE DEVIATION WAS UNREASONABLE, IN THE LIGHT OF THE QUOTED REGULATION.

III. GOVERNMENT NEGOTIATION WITH BIDDERS NOT PROPER IN THIS CASE SINCE THE EXISTENCE OF FOUR BIDDERS INDICATES COMPETITION IS PRACTICABLE.

WE STILL AGREE WITH THE RATIONALE OF OUR DECISION IN 37 COMP. GEN. 72, 75, CITED BY YOU IN SUPPORT OF THIS THIRD ARGUMENT, WHEREIN WE STATED:

"THE SITUATIONS LISTED IN PARAGRAPH 3-210.2 OF ASPR ARE APPARENTLY INTENDED TO BE MERELY ILLUSTRATIVE, AND WE DO NOT INTERPRET THE PARAGRAPH AS REQUIRING INVOCATION OF NEGOTIATING AUTHORITY IN ALL SIMILAR SITUATIONS, BUT ONLY THOSE WHERE THE UNDERLYING REASON FOR THE EXCEPTION EXISTS.'

HOWEVER, SINCE THE RENDERING OF SAID DECISION (AUGUST 1, 1957) 10 U.S.C. 2310 (B) WAS AMENDED (SEPTEMBER 10, 1962, PUB. L. 87-653; 76 STAT. 529) SO AS TO MAKE FINAL THE WRITTEN FINDINGS MADE BY THE CONTRACTING OFFICER TO NEGOTIATE UNDER 10 U.S.C. 2304 (A) (10), AND THUS THEY CANNOT BE LEGALLY QUESTIONED BY OUR OFFICE.

WHILE IT WOULD APPEAR THAT EXCEPT FOR THE GOVERNMENT ERROR THERE WOULD HAVE BEEN ADEQUATE COMPETITION, ANOTHER EXCEPTION (10 U.S.C. 2304 (A) (2/- -PUBLIC EXIGENCY) TO THE REQUIREMENT FOR PROCUREMENT BY ADVERTISING FOR SEALED BIDS WAS ALSO AVAILABLE TO THE PROCURING ACTIVITY, FOR IT WAS ADMINISTRATIVELY REPORTED:

"THE SUBSEQUENT NEGOTIATION OF THIS PROCUREMENT UNDER 10 U.S.C. 2304 (A) (10) AND ASPR 3-210.2 (III) WAS PROPER INASMUCH AS THIS AUTHORITY MAY BE INVOKED WHEN NO RESPONSIVE BIDS ARE RECEIVED TO FORMALLY ADVERTISED SOLICITATION. IT IS RECOGNIZED THAT THE CONTRACTING OFFICER COULD HAVE READVERTISED THE REQUIREMENT, BUT THE NEGOTIATION AUTHORITY WAS UTILIZED WITH A VIEW OF FINALIZING THE PROCUREMENT WITH A MINIMUM OF DELAY DUE TO THE CRITICAL STOCK POSITION. IN RETROSPECT, THE FACTS AVAILABLE AT THE TIME THE ADVERTISED SOLICITATION WAS CANCELLED WERE SUCH THAT THE PROCUREMENT COULD HAVE BEEN NEGOTIATED UNDER 10 U.S.C. 2304 (A) (2). THE DELIVERY DATE REQUIRED BY THE REQUIRING ACTIVITY FOR THE ENTIRE QUANTITY WAS 31 DECEMBER 1967. AS OF THE DATE THAT THE FORMALLY ADVERTISED SOLICITATION WAS CANCELLED, NAMELY 16 JANUARY 1968, THERE WAS NO STOCK ON HAND AND REQUISITIONS FOR 21 EACH WERE ON HAND TO BE SHIPPED. THEREFORE, THE STOCK POSITION WAS AND STILL IS CRITICAL FOR THIS ITEM. THE FILTER SEPARATOR IS AN END ITEM WHICH FORMS A PART OF A FUEL POINT SUPPLY SYSTEM IN PREPARING FUELS FOR HELICOPTERS AND JET AIRCRAFT. ITS PRIMARY PURPOSE IS TO REMOVE WATER FROM FUEL INASMUCH AS FUEL WHEN IN STORAGE FOR A PERIOD OF TIME COLLECTS WATER THROUGH THE CONDENSATION PROCESS.' CONSEQUENTLY, OUR DECISION IN 46 COMP. GEN. 360, 363, IS FOR APPLICATION WHERE WE SAID:

"* * * WHERE IT APPEARS THAT NEGOTIATION IS JUSTIFIED UNDER MORE THAN ONE OF THE NUMBERED EXCEPTIONS IN 2304 (A), THIS OFFICE WILL NOT ORDINARILY SUBSTITUTE ITS JUDGMENT FOR THAT OF THE CONTRACTING AGENCY. * * *.'

IT IS REGRETTABLE THAT ALL BIDDERS WERE AWARE OF THE AMOUNTS ORIGINALLY QUOTED BY THEIR COMPETITORS, BUT THEY ALSO WERE BETTER ADVISED AS TO WHAT PRICE RANGE WAS CONSIDERED REASONABLE BY THE GOVERNMENT'S REPRESENTATIVES, AND ALL BIDDERS HAD AN EQUAL OPPORTUNITY TO SUBMIT SUCH NEW PROPOSALS AS THEY WISHED. IN VIEW OF THE FACT THAT GENERAL STEEL COULD HAVE PROTESTED THE ACTION TAKEN AS EARLY AS JANUARY 17, 1968, AFTER BEING INFORMED THAT ALL BIDS WERE CONSIDERED NONRESPONSIVE AND THE PROCUREMENT WAS BEING NEGOTIATED, BUT RAISED NO OBJECTION UNTIL AFTER THE AWARD WAS MADE TO THE LOW OFFEROR, WE WOULD BE MOST RELUCTANT TO DISTURB THE ACTION TAKEN EXCEPT FOR COMPELLING REASONS. SINCE WE DO NOT FIND SUCH REASONS IN THE PRESENT RECORD, THE PROTEST OF GENERAL STEEL IS DENIED.