B-129005, B-126327, AUGUST 29, 1956, 36 COMP. GEN. 181

B-126327,B-129005: Aug 29, 1956

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WHICH IS REGARDED AS HAVING MADE TIME OF DELIVERY "OF THE ESSENCE. " IS IMPROPER IN THE ABSENCE OF A STATEMENT IN THE INVITATION OF A BASIS FOR THE EVALUATION OF BIDS OFFERING LONGER PERIODS OF DELIVERY. FROM THE ASSISTANT SECRETARY OF THE ARMY ( LOGISTICS) REQUESTS OUR DECISION AS TO WHETHER THE AWARD OF A CONTRACT UNDER THE CIRCUMSTANCES SET OUT BELOW WAS PROPER. THE CONTRACT WAS AWARDED TO THE CLARKE CAN COMPANY. UPON A DETERMINATION THAT TIME WAS NOT TO BE AN IMPORTANT FACTOR TO BE CONSIDERED IN MAKING THE AWARD. THE DETERMINATION WAS APPARENTLY BASED ON ORDNANCE PROCUREMENT INSTRUCTION 2-201.2 WHICH PROVIDES AT SECTION B THAT. - WHERE COMPLIANCE WITH A DELIVERY SCHEDULE WILL BE AN IMPORTANT ELEMENT IN MAKING AN AWARD.

B-129005, B-126327, AUGUST 29, 1956, 36 COMP. GEN. 181

BIDS - ACCEPTANCE OR REJECTION - DELIVERY REQUIREMENTS - DEVIATIONS FROM SPECIFICATIONS THE ACCEPTANCE OF A LOW BID OFFERING DELIVERY LATER THAN THE TIME SPECIFIED IN THE INVITATION, WHICH IS REGARDED AS HAVING MADE TIME OF DELIVERY "OF THE ESSENCE," IS IMPROPER IN THE ABSENCE OF A STATEMENT IN THE INVITATION OF A BASIS FOR THE EVALUATION OF BIDS OFFERING LONGER PERIODS OF DELIVERY.

TO THE SECRETARY OF THE ARMY, AUGUST 29, 1956:

A LETTER OF AUGUST 16, 1956, FROM THE ASSISTANT SECRETARY OF THE ARMY ( LOGISTICS) REQUESTS OUR DECISION AS TO WHETHER THE AWARD OF A CONTRACT UNDER THE CIRCUMSTANCES SET OUT BELOW WAS PROPER.

THE INVITATION PROVIDED AT PAGE 2 UNDER THE HEADING " DELIVERY SCHEDULE" THAT: "ENTIRE QUANTITY TO BE SHIPPED PRIOR TO THE EXPIRATION OF 120 CALENDAR DAYS AFTER DATE OF CONTRACT AWARD.' THE BID OF CLARKE CAN COMPANY INDICATED DELIVERY AS FOLLOWS: "PILOT LOT 110 DAYS AFTER AWARD OF CONTRACT. ENTIRE QUANTITY 160 DAYS AFTER AWARD OF CONTRACT.' THE CONTRACT WAS AWARDED TO THE CLARKE CAN COMPANY, THE LOW BIDDER, NOTWITHSTANDING THE QUALIFICATIONS AS TO DELIVERY, UPON A DETERMINATION THAT TIME WAS NOT TO BE AN IMPORTANT FACTOR TO BE CONSIDERED IN MAKING THE AWARD. THE DETERMINATION WAS APPARENTLY BASED ON ORDNANCE PROCUREMENT INSTRUCTION 2-201.2 WHICH PROVIDES AT SECTION B THAT---

WHERE COMPLIANCE WITH A DELIVERY SCHEDULE WILL BE AN IMPORTANT ELEMENT IN MAKING AN AWARD, IT WILL BE SO STATED IN THE INVITATION FOR BIDS. WHERE BIDS ARE TO BE REJECTED AS NONRESPONSIVE WHEN AT VARIANCE WITH THE DELIVERY SCHEDULE SET FORTH IN IFB, A STATEMENT TO THAT EFFECT WILL BE INCLUDED ON THE IFB. (SEE ALSO APP 2-403D.)

ARMY PROCUREMENT PROCEDURE 2-403D PROVIDES IN PART THAT:

A BID WILL NOT BE REJECTED FOR FAILURE TO CONFORM TO THE DELIVERY REQUIREMENTS OF THE INVITATION FOR BIDS UNLESS (I) THE INVITATION STATES THAT TIME OF DELIVERY IS AN IMPORTANT FACTOR AND WILL BE CONSIDERED IN MAKING THE AWARD. * * *.

THE AWARD WAS FORMALLY PROTESTED BY THE MELVINA CAN COMPANY, THE SECOND LOW BIDDER, ON THE GROUND THAT THE BID OF THE CLARKE CAN COMPANY WAS NOT RESPONSIVE TO THE INVITATION.

WE HAVE CONSISTENTLY HELD THAT WHERE AN INVITATION ON ITS FACE REQUIRES DELIVERY WITHIN A STATED PERIOD, TIME MUST BE REGARDED AS "OF THE ESSENCE" OF THE CONTRACT TO BE ENTERED INTO NOTWITHSTANDING THE INVITATION DOES NOT EXPRESSLY SO STATE. THE ACCEPTANCE OF A LOW BID OFFERING DELIVERY LATER THAN SPECIFIED IN THE INVITATION HAS BEEN HELD TO BE CONTRARY TO THE SPIRIT AND PURPOSE OF THE LAW GOVERNING PROCUREMENTS MADE PURSUANT TO ADVERTISING. B-120582, SEPTEMBER 13, 1954; B-116131, SEPTEMBER 16, 1953. IN THE LATTER DECISION, WE STATED:

THERE IS NOTHING IN THE INVITATION TO PUT BIDDERS ON NOTICE THAT TIME OF DELIVERY WAS "NOT OF THE ESSENCE.' IN FACT, THE REASONABLE INTERPRETATION OF THE DELIVERY PROVISION IS EXACTLY THE OPPOSITE. IF THE POST OFFICE DEPARTMENT DID NOT ACTUALLY REQUIRE THE TRUCKS WITHIN THE PERIOD SPECIFIED --- TO THE EXTENT THAT IT WAS PREPARED TO PAY A HIGHER PRICE FOR EARLY DELIVERY--- THEN EITHER THE REQUIREMENT SHOULD NOT HAVE BEEN INCLUDED AT ALL OR SOME ALTERNATIVE SHOULD HAVE BEEN LEFT TO THE BIDDERS TO OFFER LONGER DELIVERY PERIODS AT LOWER PRICES. IN THE LATTER EVENT, SOME METHOD OF EVALUATING THE PERIOD ACCORDING TO PRICE AND DELIVERY DATE WOULD ALSO HAVE TO BE STATED.

WHETHER DELIVERY TIME IS "OF THE ESSENCE" SHOULD BE BASED ON THE REASONABLE INTERPRETATION OF THE PROVISIONS OF THE INVITATION RATHER THAN ON ADMINISTRATIVE REGULATIONS. NO REASON IS APPARENT AS TO WHY THIS INVITATION SHOULD NOT BE REGARDED AS HAVING MADE TIME OF DELIVERY "OF THE ESSENCE" OF THE CONTRACT. THE ADMINISTRATIVE REGULATIONS CITED SHOULD THEREFORE BE MODIFIED TO PROVIDE IN EFFECT THAT THE TIME OF DELIVERY STATED IN THE INVITATION SHALL BE CONSIDERED A MATERIAL REQUIREMENT OF THE PROCUREMENT UNLESS OTHERWISE SPECIFIED, IN WHICH EVENT, AS INDICATED IN OUR PRIOR DECISIONS, A BASIS FOR EVALUATING BIDS OFFERING LONGER PERIODS OF DELIVERY SHOULD BE STATED IN THE INVITATION.

THE CONTRACT AWARDED TO THE SUCCESSFUL BIDDER MUST BE THE SAME OFFERED IN THE INVITATION. 34 COMP. GEN. 119. WHILE THE CONTRACTING OFFICER MAY WAIVE INFORMALITIES IN BIDS, THIS AUTHORITY DOES NOT EXTEND TO THE WAIVER OF MATERIAL VARIATIONS TO THE TERMS AND CONDITIONS OF THE INVITATION. AWARD A CONTRACT TO A LOW BIDDER WITHOUT REGARD TO THE TERMS AND CONDITIONS OF DELIVERY ADVERTISED WOULD DISCRIMINATE AGAINST OTHER BIDDERS WHO MAY WELL HAVE INCLUDED OVERTIME PAY AND OTHER ADDITIONAL COSTS IN ORDER TO MEET THE DEADLINE. A PROVISION OF AN INVITATION WHICH ON ITS FACE ESTABLISHES A DEFINITE REQUIREMENT AS TO TIME OF DELIVERY IS MATERIAL. CF. B-104418, AUGUST 23, 1951. THE ACCEPTANCE OF A BID NOT COMPLYING WITH SUCH MATERIAL PROVISION IS UNAUTHORIZED AND DOES NOT BIND THE GOVERNMENT. 17 COMP. GEN. 554, 559. ACCORDINGLY, THE AWARD IN THIS CASE WAS IMPROPERLY MADE TO THE CLARKE CAN COMPANY. IN VIEW OF THE COMPARATIVELY LONG PERIOD OF TIME WHICH HAS ELAPSED SINCE THE DATE OF THE ERRONEOUS AWARD, HOWEVER ( JUNE 9, 1956), AND THE PRESENT POSITION OF THE CONTRACTOR WITH REGARD TO THE PERFORMANCE, AS INDICATED BY THE RECORD SUBMITTED HERE, WE WOULD NOT FEEL JUSTIFIED IN DIRECTING CANCELLATION OF THE CONTRACT IN THIS PARTICULAR INSTANCE.

AS WE HAVE BEEN ADVISED IN A LETTER DATED AUGUST 20, 1956, FROM THE OFFICE OF THE UNDER SECRETARY OF THE ARMY, THE LAST PARAGRAPH OF THE ASSISTANT SECRETARY'S LETTER INDICATES THAT YOUR DEPARTMENT IS NOW REVIEWING ITS PROCUREMENT PROCEDURES RELATING TO THE PREPARATION OF INVITATIONS FOR BIDS, THE EVALUATION OF BIDS AND THE AWARD OF FORMALLY ADVERTISED CONTRACTS. IT IS INDICATED THAT ONE OF THE PRINCIPAL OBJECTIVES OF THIS REVIEW IS TO DETERMINE WHAT REVISIONS ARE NECESSARY TO CLARIFY DELIVERY REQUIREMENTS AND THE EVALUATION OF BIDS HAVING ALTERNATE DELIVERY SCHEDULES. THIS INFORMATION IS PARTICULARLY GRATIFYING TO OUR OFFICE. NEEDLESS TO SAY, WE ARE FULLY IN ACCORD WITH THE PURPOSE OF YOUR REVIEW. WE HAVE ALREADY PROVIDED MEMBERS OF YOUR STAFF WITH PERTINENT DECISIONS OF OUR OFFICE RELATIVE TO PROVISIONS FOR TIME OF DELIVERY. PLEASE FEEL FREE TO CALL UPON US IF THERE IS ANY FURTHER ASSISTANCE WE CAN OFFER IN THESE MATTERS.