B-155891, SEP. 30, 1965

B-155891, SEP. 30, 1965

TO CAPTAIN C. D. PREETORIUS, FINANCE AND ACCOUNTING OFFICER, DEPARTMENT OF THE ARMY:

THIS REFERS TO YOUR LETTER, WITH ENCLOSURES, RECEIVED HERE ON SEPTEMBER 7, 1965, REQUESTING AN ADVANCE DECISION INVOLVING THE PAYMENT OF A VOUCHER FOR A REFUND TO THE MARTIN COMPANY, BALTIMORE, MARYLAND, OF $8,000 DEPOSIT FOR TWO TECHNICAL DATA PACKAGES IN CONNECTION WITH TWO-STEP INVITATION FOR BIDS NO. AMC/W/-11-199-65-7, ISSUED ON OCTOBER 9, 1964, BY THE UNITED STATES ARMY WEAPONS COMMAND, ROCK ISLAND ARSENAL, ROCK ISLAND, ILLINOIS.

THE PROCUREMENT COVERED THE M-109 AND XM-551 VEHICLES. PARAGRAPH 7 OF THE REQUEST FOR TECHNICAL PROPOSALS PROVIDED THAT TECHNICAL DATA PACKAGES ON BOTH VEHICLES WOULD BE FURNISHED TO BIDDERS UPON RECEIPT OF A DEPOSIT OF $8,000; AND THAT THE DEPOSIT WOULD BE REFUNDED ONLY TO THOSE CONCERNS WHO SUBMITTED TIMELY TECHNICAL PROPOSALS AND WITHIN 60 DAYS OF RECEIPT OF DISPOSITION INSTRUCTIONS CERTIFIED TO THE CONTRACTING OFFICER IN WRITING OF COMPLIANCE THEREWITH. THE PARAGRAPH FURTHER PROVIDED THAT THE TECHNICAL DATA PACKAGES WOULD REMAIN THE PROPERTY OF THE GOVERNMENT EVEN IF THE CONCERN FORFEITED ITS DEPOSIT BY FAILURE TO SUBMIT A TECHNICAL PROPOSAL.

A BIDDERS' CONFERENCE WAS HELD ON OCTOBER 8 AND 9, 1964, TO DISCUSS THE CONTEMPLATED PROCUREMENT, AND AT THAT TIME STEP 1 AND PROPOSED STEP 2 OF THE IFB (EXHIBIT C TO STEP 1) WERE DISTRIBUTED TO THE INTERESTED FIRMS, WHICH INCLUDED THE MARTIN COMPANY. STEP 1 PROVIDED THAT BIDDERS WOULD BE ALLOWED TO USE THE CLEVELAND ARMY TANK AUTOMOTIVE PLANT (CATAP) OR PRIVATE PLANTS TO MANUFACTURE THE VEHICLES. PROPOSED STEP 2 PROVIDED THAT AN EVALUATION FACTOR WOULD BE ADDED TO ANY BID OR COMBINATION OF BIDS, THE ACCEPTANCE OF WHICH WOULD RESULT IN THE PRODUCTION OF NEITHER VEHICLE IN CATAP. A FORMULA WAS SET FORTH FOR COMPUTING THIS EVALUATION FACTOR WHICH WOULD HAVE RESULTED IN THE AMOUNT OF $3,867,383.24 BEING ADDED TO THE BID OF A BIDDER WHO CHOSE TO MANUFACTURE OUTSIDE CATAP AND CHOSE NOT TO UTILIZE ANY OF THE M-109 GOVERNMENT TOOLING OFFERED FOR USE. ON OCTOBER 21, 1964, THE MARTIN COMPANY SUBMITTED AN $8,000 DEPOSIT AND ACCORDINGLY WAS SENT THE TECHNICAL DATA PACKAGES FOR THE M-109 AND XM-551 VEHICLES. THE DATE FOR THE SUBMISSION OF TECHNICAL PROPOSALS WAS SET AT JANUARY 15, 1965.

ON DECEMBER 9, 1964, EXHIBIT C (PROPOSED STEP 2) OF STEP 1 WAS AMENDED TO DELETE ENTIRELY ANY EVALUATION FACTOR FOR THE USE OR NON USE OF CATAP OR THE M-109 TOOLING. (THE TIME FOR SUBMISSION OF TECHNICAL PROPOSALS WAS EXTENDED TO JANUARY 29, 1965.) BY LETTER OF JANUARY 5, 1965, MARTIN COMPANY ADVISED THE CONTRACTING OFFICE THAT IT DECIDED NOT TO BID AS A PRIME BUT RATHER TO SUBMIT PROPOSALS TO THE PRIME BIDDERS ON CERTAIN SELECTED SUB-ASSEMBLIES. ON FEBRUARY 8, 1965, MARTIN COMPANY WROTE REQUESTING A RETURN OF ITS $8,000 DEPOSIT EVEN THOUGH IT HAD NOT BID. THE COMPANY EXPLAINED THAT IT HAD BEEN INTERESTED IN THE COMPETITION AND HAD REQUESTED DATA PACKAGES BECAUSE THE ORIGINAL GROUND RULES LIMITING PRODUCTION TO CATAP (THIS HAD BEEN THE ORIGINAL INTENTION PRIOR TO THE TIME STEP 1 WAS ISSUED) AND EVEN THE SUBSEQUENT CHANGE PENALIZING THOSE WHO DID NOT USE THAT FACILITY, MADE THE PROCUREMENT LOOK ATTRACTIVE; BUT THAT THE COMPANY WOULD NOT HAVE BID, NOR HAVE SUBMITTED A DEPOSIT, IF THE PROCUREMENT HAD BEEN SYNOPSIZED WITH THE FINAL GROUND RULES REGARDING EVALUATION.

YOU REPORT THAT THE MARTIN COMPANY HAS COMPLIED WITH THE CONTRACTING OFFICER'S INSTRUCTIONS FOR DISPOSING OF THE DATA PACKAGES. YOU ASK WHETHER THE $8,000 DEPOSIT MAY BE RETURNED TO THE COMPANY ALTHOUGH IT DID NOT SUBMIT ANY TECHNICAL PROPOSALS.

WE UNDERSTAND THAT THE COST OF PRINTING AND PREPARING THE M-109 AND XM- 551 VEHICLE DATA PACKAGES WAS CONSIDERABLE, AND THAT THE FORFEITURE PROVISION WAS DESIGNED TO DISCOURAGE FIRMS WHO HAD NO REAL INTEREST IN THE PROCUREMENT FROM REQUESTING DATA PACKAGES. THUS A DEPOSIT WAS REQUIRED FOR THE DATA PACKAGE AND THE REFUND WAS MADE CONTINGENT UPON THE SUBMISSION OF A TIMELY TECHNICAL PROPOSAL. THE FORFEITURE WAS BY WAY OF COMPENSATION TO THE GOVERNMENT WHEN A FIRM FAILED TO SUBMIT A PROPOSAL.

WE DO NOT INTERPRET PARAGRAPH 7 TO MEAN THAT A FIRM WAS BOUND TO THE FORFEITURE PROVISION EVEN WHEN THE GOVERNMENT CHANGED THE PROPOSED PLAN OF EVALUATING THE BIDS. WE THINK THAT A FIRM HAD THE RIGHT TO WITHDRAW FROM THE COMPETITION WITHOUT FORFEITING ITS DEPOSIT WHERE THE GOVERNMENT MATERIALLY CHANGED THE TERMS OF THE COMPETITION.

TURNING TO THE FACTS AT HAND, THERE IS NO DOUBT THAT THE DECEMBER 9 CHANGE IN THE PROPOSED EVALUATION REGARDING THE USE OF THE CATAP FACILITY SIGNIFICANTLY AFFECTED THE COMPETITIVE ASPECTS OF THE PROCUREMENT. APPROVED OF THIS CHANGE IN OUR DECISION OF MARCH 22, 1965, B-155891. MARTIN COMPANY STATED ITS INTENTION TO WITHDRAW AS A PRIME BIDDER SOON AFTER THE CHANGE WAS MADE, IN ITS LETTER OF JANUARY 5, 1965. ACTUALLY, THE COMPANY DID NOT CITE THE DECEMBER 9 CHANGE AS THE REASON FOR ITS WITHDRAWAL UNTIL FEBRUARY 8, 1965, AFTER THE TIME FOR SUBMISSION OF PROPOSALS. NEVERTHELESS, THE GOVERNMENT WAS TIMELY ADVISED OF THE COMPANY'S INTENTION TO WITHDRAW. ACCORDINGLY, SINCE THE GOVERNMENT CHANGED THE PROCUREMENT PLAN AFTER MARTIN COMPANY HAD SUBMITTED ITS DEPOSIT AND SINCE THE COMPANY PROMPTLY THEREAFTER NOTIFIED THE GOVERNMENT OF ITS INTENTION TO WITHDRAW, THE DISPOSAL INSTRUCTIONS HAVING BEEN MET, WE HAVE NO LEGAL OBJECTION TO RETURNING THE $8,000 DEPOSIT.