B-119588, APRIL 9, 1954, 33 COMP. GEN. 441

B-119588: Apr 9, 1954

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A BID QUALIFICATION MAKING DELIVERY SCHEDULE DEPENDENT UPON A SUPPLIER'S DELIVERY SCHEDULE MAY AFFECT THE CONTRACT PRICE AND IS A SUBSTANTIAL DEVIATION FROM THE TERMS OF THE INVITATION WHICH CANNOT BE WAIVED OR WITHDRAWN AFTER BID OPENING. WAS INTENDED TO BE USED ONLY TO MEET ABNORMAL MARKET OR PROCUREMENT CONDITIONS. - INDICATING THAT NEEDED SUPPLIES ARE OBTAINABLE THROUGH NORMAL ADVERTISED PROCUREMENT. - WAS REQUIRED TO BE REJECTED AS QUALIFIED BID SHOULD NOT BE AWARDED CONTRACT UNDER NEGOTIATION AUTHORITY OF ACT AND MATTER SHOULD BE READVERTISED OR PROCEDURES SPECIFIED IN SECTION 2 (C) (15) OF ACT SHOULD BE FOLLOWED. 1954: REFERENCE IS MADE TO LETTER OF APRIL 5. A DECISION IS REQUESTED AS TO THE PROPRIETY OF PERMITTING THE WAYNE PUMP COMPANY.

B-119588, APRIL 9, 1954, 33 COMP. GEN. 441

ADVERTISING - NECESSITY OR NON-NECESSITY - STATUTORY AUTHORITY TO NEGOTIATE - ARMED FORCES PROCUREMENT ACT OF 1947; QUALIFIED BIDS UNDER AN INVITATION TO BID WHICH PROVIDES FOR ASSESSMENT OF LIQUIDATED DAMAGES FOR DELAYS IN DELIVERY, A BID QUALIFICATION MAKING DELIVERY SCHEDULE DEPENDENT UPON A SUPPLIER'S DELIVERY SCHEDULE MAY AFFECT THE CONTRACT PRICE AND IS A SUBSTANTIAL DEVIATION FROM THE TERMS OF THE INVITATION WHICH CANNOT BE WAIVED OR WITHDRAWN AFTER BID OPENING, AND THEREFORE SUCH BID SHOULD BE REJECTED. SECTION 2 (C) (1) OF ARMED SERVICES PROCUREMENT ACT, WHICH PERMITS NEGOTIATION OF CONTRACTS WITHOUT ADVERTISING WHEN ADMINISTRATIVELY DETERMINED TO BE IN THE PUBLIC INTEREST, WAS INTENDED TO BE USED ONLY TO MEET ABNORMAL MARKET OR PROCUREMENT CONDITIONS, AND THEREFORE CONTRACTOR WHOSE LOW BID RECEIVED IN RESPONSE TO ADVERTISED SPECIFICATIONS WITH OTHER UNREASONABLY HIGH BIDS--- INDICATING THAT NEEDED SUPPLIES ARE OBTAINABLE THROUGH NORMAL ADVERTISED PROCUREMENT--- WAS REQUIRED TO BE REJECTED AS QUALIFIED BID SHOULD NOT BE AWARDED CONTRACT UNDER NEGOTIATION AUTHORITY OF ACT AND MATTER SHOULD BE READVERTISED OR PROCEDURES SPECIFIED IN SECTION 2 (C) (15) OF ACT SHOULD BE FOLLOWED.

ACTING COMPTROLLER GENERAL WEITZEL TO THE SECRETARY OF THE ARMY, APRIL 9, 1954:

REFERENCE IS MADE TO LETTER OF APRIL 5, 1954, FROM THE DEPUTY UNDER SECRETARY OF THE ARMY, SUBMITTING A FILE RELATIVE TO BIDS RECEIVED IN RESPONSE TO INVITATION FOR BIDS NO. DA-ENG-11-184-54-B-220, OPENED ON MARCH 15, 1954.

A DECISION IS REQUESTED AS TO THE PROPRIETY OF PERMITTING THE WAYNE PUMP COMPANY, THE LOW BIDDER, TO WITHDRAW A QUALIFICATION CONTAINED IN ITS BID, OR, ALTERNATIVELY, AS TO THE PROPRIETY OF REJECTING ALL BIDS AND MAKING AWARD TO THE WAYNE PUMP COMPANY UNDER THE AUTHORITY OF SECTION 2 (C) (1) OF THE ARMED SERVICES PROCUREMENT ACT OF 1947, 62 STAT. 21.

THE INVITATION COVERS THE FURNISHING OF 328 SPECIAL PURPOSE HYDRAULIC ELEVATORS IN ACCORDANCE WITH MONTHLY DELIVERY SCHEDULES, AND PROVIDES FOR THE ASSESSMENT OF LIQUIDATED DAMAGES FOR DELAY AT THE RATE OF $25 PER UNIT PER DAY. IN ITS BID THE WAYNE PUMP COMPANY OFFERED TO MEET THE DELIVERY SCHEDULES SPECIFIED " PROVIDING SUPPLIERS OF MATERIAL MEET THE WAYNE PUMP COMPANY'S SPECIFIED DELIVERY * * *.' IN OTHER WORDS, WAYNE OFFERED TO MEET THE GOVERNMENT DELIVERY SCHEDULE ONLY IF ITS OWN SUPPLIERS MADE TIMELY DELIVERY OF MATERIALS TO IT. IT IS CLEAR IN VIEW OF THE " DEFAULT" CLAUSE OF THE CONTRACT, WHICH INCLUDES A PROVISION FOR THE ASSESSMENT OF LIQUIDATED DAMAGES FOR DELAYS IN DELIVERY, THAT THIS QUALIFICATION IN THE BID SUBMITTED BY WAYNE MIGHT WELL AFFECT THE PRICE TO BE PAID BY THE GOVERNMENT UNDER THE CONTRACT. IT IS THEREFORE A SUBSTANTIAL DEVIATION FROM THE TERMS OF THE INVITATION WHICH CANNOT BE WAIVED OR WITHDRAWN AFTER BID OPENING. SEE 30 COMP. GEN. 179. YOU ARE ADVISED THAT THE BID OF THE WAYNE PUMP COMPANY IS NOT A RESPONSIVE BID AND SHOULD BE REJECTED.

THE LETTER OF APRIL 5, 1954, STATES FURTHER THAT ALL OTHER BIDS RECEIVED ARE CONSIDERED TO BE UNREASONABLY HIGH, AND REQUESTS A DECISION AS TO THE PROPRIETY OF REJECTING ALL BIDS AND MAKING AWARD TO THE WAYNE PUMP COMPANY UNDER AUTHORITY OF SECTION 2 (C) (1) OF THE ARMED SERVICES PROCUREMENT ACT OF 1947.

SECTION 2 (C) (1) OF THE ARMED SERVICES PROCUREMENT ACT PERMITS THE NEGOTIATION OF CONTRACTS WITHOUT ADVERTISING DURING A NATIONAL EMERGENCY IF SUCH ACTION IS DETERMINED BY THE AGENCY HEAD TO BE NECESSARY IN THE PUBLIC INTEREST. THE SECRETARY OF THE ARMY DETERMINED IN DECEMBER 1950 THAT IT WAS NECESSARY IN THE PUBLIC INTEREST TO NEGOTIATE CONTRACTS DURING THE PERIOD OF THE NATIONAL EMERGENCY THEN AND STILL EXISTING. SUCH DETERMINATION HAS NOT YET BEEN MODIFIED OR REVOKED. WHILE THIS PROCUREMENT ORIGINALLY WAS INTENDED TO BE MADE AS A RESULT OF COMPETITIVE BIDDING, FROM A PURELY LEGAL STANDPOINT AWARD COULD BE MADE TO THE WAYNE PUMP COMPANY UNDER THE AUTHORITY OF SECTION 2 (C) (1) SHOULD YOU NOW DETERMINE, UNDER THE CIRCUMSTANCES, THAT IT IS IN THE PUBLIC INTEREST TO DO SO.

I FEEL OBLIGED TO STATE, HOWEVER, THAT I DO NOT BELIEVE THE AUTHORITY GRANTED UNDER SECTION 2 (C) (1) WAS INTENDED TO BE USED UNDER THE CIRCUMSTANCES OF THE PRESENT CASE. IT IS MY VIEW, BASED UPON THE LEGISLATIVE BACKGROUND OF THAT SECTION, THAT IT WAS INTENDED TO BE USED ONLY TO MEET ABNORMAL MARKET OR PROCUREMENT CONDITIONS RESULTING FROM THE OUTBREAK OF WAR OR OTHER SUDDEN NATIONAL EMERGENCY. THE HOUSE REPORT ON THE BILL WHICH BECAME THE ARMED SERVICES PROCUREMENT ACT ( H.R. NO. 109, 80TH CONGRESS, P. 6) SHOWS THAT ADVERTISING WAS EXPECTED TO BE USED WHEN DEFINITE SPECIFICATIONS COULD BE OFFERED TO A NUMBER OF ADEQUATELY EQUIPPED POTENTIAL SUPPLIERS WHO WOULD COMPETE FOR THE BUSINESS, AND THAT RESORT TO NEGOTIATION WOULD BE HAD ONLY WHEN ONE OR MORE OF THESE CONDITIONS WAS MISSING. THE INVITATION ISSUED IN THE PRESENT CASE AND THE RESPONSES THERETO DEMONSTRATE THAT THE SUPPLIES NEEDED CAN BE OBTAINED THROUGH NORMAL ADVERTISED PROCUREMENT PROCEDURES. IF, AS IS STATED IN THE LETTER OF APRIL 5, 1954, THE PRICES OF BIDDERS OTHER THAN THE WAYNE PUMP COMPANY ARE CONSIDERED TO BE UNREASONABLE, THEN IN VIEW OF THE FACT THAT THE WAYNE BID MUST BE REJECTED ON OTHER GROUNDS, THE SITUATION APPEARS TO BE ONE SPECIFICALLY WITHIN THE PURVIEW OF SECTION 2 (C) (15) OF THE ARMED SERVICES PROCUREMENT ACT, 62 STAT. 22. IN VIEW OF THE DIFFERENCE IN THE AMOUNTS OF THE BIDS RECEIVED IT WOULD SEEM THAT THE MATTER SHOULD BE READVERTISED OR THAT THE PROCEDURES SPECIFIED IN SECTION 2 (C) (15) MORE PROPERLY SHOULD BE FOLLOWED.