B-132468, AUG. 20, 1957

B-132468: Aug 20, 1957

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TO BMF MANUFACTURING CORPORATION: FURTHER REFERENCE IS MADE TO YOUR LETTER. THE LOW BID AT $629 PER UNIT LESS PROMPT PAYMENT DISCOUNT OF 2 PERCENT FOR 10 DAYS AND 1 PERCENT FOR 20 DAYS WAS SUBMITTED BY THE TEMPERATURE ENGINEERING CORPORATION. WHICH WAS SUBMITTED BY RHF. YOU PROTEST THE MAKING OF SUCH AWARD ON FOUR GROUNDS WHICH ARE CONSIDERED INDIVIDUALLY BELOW. THE FIRST GROUND IS THAT THE DIFFERENCE BETWEEN YOUR PRICE AND THE PRICE SUBMITTED BY THE LOWER BIDDER IS "FICTITIOUS AND NOT REAL.'. PRESUMABLY YOU HAVE REFERENCE TO THE FACT THAT THE DESCRIPTIVE LITERATURE SUBMITTED WITH THE LOW BID DESCRIBES A PRODUCT OMITTING CERTAIN REFINEMENTS CONTAINED IN YOUR OVENS. THE DESCRIPTIVE LITERATURE IS REQUIRED BY A PROVISION BEARING THAT TITLE WHICH APPEARS ON PAGE 3 OF THE INVITATION FOR BIDS.

B-132468, AUG. 20, 1957

TO BMF MANUFACTURING CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR LETTER, WITH ENCLOSURES, AND TELEGRAM OF JULY 8, 1957, PROTESTING THE PROCEDURES ATTENDING INVITATION FOR BIDS NO. 28-609-57-132 AND THE AWARD OF A CONTRACT THEREUNDER TO ANY OTHER BIDDER.

THE INVITATION ISSUED BY THE PROCUREMENT OFFICE AT MCGUIRE AIR FORCE BASE, NEW JERSEY, ON MAY 17, 1957, COVERS THE PROCUREMENT OF 222 AIRCRAFT FOOD-WARMING OVENS. THE LOW BID AT $629 PER UNIT LESS PROMPT PAYMENT DISCOUNT OF 2 PERCENT FOR 10 DAYS AND 1 PERCENT FOR 20 DAYS WAS SUBMITTED BY THE TEMPERATURE ENGINEERING CORPORATION. THE ONLY OTHER BID, WHICH WAS SUBMITTED BY RHF, CONTAINED A PRICE OF $650 PER UNIT LESS PROMPT PAYMENT DISCOUNT OF 1 PERCENT FOR PAYMENT WITHIN 20 DAYS. THE PROCUREMENT OFFICE PROPOSES TO MAKE AWARD TO THE LOW BIDDER. YOU PROTEST THE MAKING OF SUCH AWARD ON FOUR GROUNDS WHICH ARE CONSIDERED INDIVIDUALLY BELOW.

THE FIRST GROUND IS THAT THE DIFFERENCE BETWEEN YOUR PRICE AND THE PRICE SUBMITTED BY THE LOWER BIDDER IS "FICTITIOUS AND NOT REAL.' PRESUMABLY YOU HAVE REFERENCE TO THE FACT THAT THE DESCRIPTIVE LITERATURE SUBMITTED WITH THE LOW BID DESCRIBES A PRODUCT OMITTING CERTAIN REFINEMENTS CONTAINED IN YOUR OVENS. THE DESCRIPTIVE LITERATURE IS REQUIRED BY A PROVISION BEARING THAT TITLE WHICH APPEARS ON PAGE 3 OF THE INVITATION FOR BIDS. APPARENTLY THE LITERATURE SUBMITTED WITH THE LOW BID DOES NOT INDICATE A PRODUCT CONTAINING THE DESIRABLE FEATURES INCLUDED IN THE PRODUCT YOU PROPOSE TO FURNISH; AND IT MAY ALSO BE THAT THE LOW BIDDER'S DESCRIPTIVE LITERATURE DESCRIBES A PRODUCT WHICH DOES NOT MEET THE SPECIFICATIONS IN ALL RESPECTS. THE LOW BIDDER, HOWEVER, STATED IN HIS BID THAT THE OVEN PROPOSED WOULD BE FURNISHED "IN COMPLETE ACCORDANCE WITH YOUR PURCHASE DESCRIPTION AND FIG. 1-2-3.' THUS THE LOW BIDDER CLEARLY HAS INDICATED AN INTENTION TO CONFORM TO THE SPECIFICATIONS NOTWITHSTANDING ANY DISCREPANCY BETWEEN THOSE SPECIFICATIONS AND THE DESCRIPTIVE LITERATURE SUPPLIED WITH THE LOW BID. WE HAVE HELD THAT SUCH AN OFFER TO COMPLY WITH THE SPECIFICATIONS, NOTWITHSTANDING MATERIAL VARIATIONS IN THE DATA ACCOMPANYING THE BID, CURES SUCH VARIATIONS IN THE DATA AND RENDERS THE BID RESPONSIVE IF OTHERWISE CORRECT. 10 COMP. GEN. 160; A-68974, FEBRUARY 17, 1936. THIS PRINCIPLE HAS RECENTLY BEEN AFFIRMED BY DECISIONS PUBLISHED AT 36 COMP. GEN. 376; ID. 429. THUS, THE FAILURE OF THE DESCRIPTIVE DATA TO CONFORM TO THE SPECIFICATIONS DOES NOT RENDER THE BID NONRESPONSIVE IN VIEW OF THE OVERALL OFFER TO COMPLY.

THE SECOND REASON PUT FORWARD FOR THE REJECTION OF THE LOW BID IS THAT:

"* * * RHF IS PROPRIETARY OWNER OF DESIGN AND ENGINEERING OF THE EQUIPMENT COVERED BY THE PURCHASE DESCRIPTION ATTACHED TO THE ABOVE IFB AND THAT SUCH PURCHASE DESCRIPTION INCLUDES ITEMS FOR WHICH PATENT APPLICATIONS WERE FILED PRIOR TO PREPARATION BY RHF OF THE PURCHASE DESCRIPTION INTENDED ONLY TO DESCRIBE OUR PRODUCT; SUBMISSION BY RHF OF THE PURCHASE DESCRIPTION DOES NOT MAKE THAT PROPERTY PUBLIC DOMAIN.'

THE REPORT RECEIVED FROM THE DEPARTMENT OF THE AIR FORCE INDICATES THAT THE PURCHASE DESCRIPTION USED IN THE INVITATION WAS WRITTEN "AROUND" THE RHF OVEN. IT IS ALSO STATED THAT THE PRESIDENT, VICE PRESIDENT AND SALES MANAGER OF YOUR FIRM WERE ADVISED THAT THE RHF OVEN PROVIDED THE BASIS FOR THE PURCHASE DESCRIPTION WHICH WOULD BE USED ON COMPETITIVE BIDS AND THAT NEITHER THE PRESIDENT NOR THE SALES MANAGER OF THE FIRM OBJECTED TO SUCH USE. ACCORDINGLY, THERE APPEARS TO BE NO BREACH OF CONFIDENCE OR ETHICS INVOLVED IN MAKING DETAILS OF THE DESIGN AVAILABLE FOR COMPETITIVE PROCUREMENT.

THE THIRD REASON, WHICH IS QUITE SIMILAR TO THE SECOND, IS THAT:

"* * * THE PURCHASE DESCRIPTION AS USED BY THE GOVERNMENT IN THE ABOVE IFB CONSTITUTES UNWARRANTED APPROPRIATION OF PRIVATE PROPERTY; RHF HASNOT RELINQUISHED ANY RIGHTS IN ANY DESIGN ESPECIALLY THOSE WHICH HERETOFORE HAVE NOT BEEN INCLUDED IN UNITS PREVIOUSLY DELIVERED BY RHF AND WERE DISCLOSED ONLY AS DESCRIPTIVE OF A PRODUCT IMPROVED OVER THAT WHICH HAD PREVIOUSLY BEEN SOLD AND DELIVERED TO THE GOVERNMENT.'

IN REGARD TO THIS CONTENTION, THE ADMINISTRATIVE REPORT STATES:

"* * * WE WOULD ALSO NOTE THAT THE PURCHASE DESCRIPTION IS FUNCTIONAL IN NATURE AND DESCRIPTIVE IN ONLY RATHER GENERAL TERMS OF THE CONFIGURATION OF THE OVENS. PARAGRAPH 6.2 OF THE PURCHASE DESCRIPTION STATES THAT THE ILLUSTRATIONS FURNISHED WITH THE BID SET WERE DESCRIPTIVE AND NOT RESTRICTIVE. THESE DRAWINGS WERE ADOPTED FROM RHF CATALOGS PUBLICLY AVAILABLE TO THE TRADE. RHF'S PROTEST APPEARS TO BE BASED ON AN ASSUMPTION THAT WHOEVER FIRST PRODUCES AN ARTICLE, EVEN IF UNPATENTED AND NOT THE SUBJECT OF A VALID "TRADE SECRET" OBTAINED BY CONTRACTUAL OR OTHER MEANS, HAS THE RIGHT TO EXCLUDE OTHERS FROM MAKING PRODUCTS OF GENERAL SIMILARITY TO IT, AN ASSUMPTION WHICH, WE BELIEVE, IS DEMONSTRABLY INVALID. YOU WILL NOTE THAT, IN ANY EVENT, A "PATENT INDEMNITY" CLAUSE IS SPECIFIED BY THE IFB, WHICH SHOULD HAVE THE EFFECT OF ALLOWING US TO CONSIDER ALL BIDS ON AN EQUAL FOOTING, EVEN IF THERE SHOULD BE OUTSTANDING PATENTS.'

IT SHOULD BE NOTED THAT THERE IS SOME DISPUTE AS TO WHETHER PRODUCTION OF AN OVEN IN ACCORDANCE WITH THE SPECIFICATIONS WOULD OF NECESSITY REQUIRE THE VIOLATION OF YOUR PATENT RIGHTS. THE PATENT INDEMNITY CLAUSE REFERRED TO IN THE QUOTATION ABOVE PROVIDES FOR THE INDEMNIFICATION OF THE GOVERNMENT AND ITS AGENTS BY THE CONTRACTOR FOR ANY LIABILITY ARISING OUT OF THE MANUFACTURE OF SUPPLIES FOR INFRINGEMENT OF ANY PATENT. UNDER SUCH CIRCUMSTANCES, IT HAS BEEN THE CONSISTENT HOLDING OF OUR OFFICE THAT A LOW BID MAY NOT PROPERLY BE DISREGARDED MERELY BECAUSE IT IS ASSERTED BY A PATENT OWNER THAT ITS PATENT WILL BE INFRINGED AND THAT THE LOW BIDDER IS WITHOUT LEGAL RIGHT TO MANUFACTURE THEREUNDER. 13 COMP. GEN. 173, 176; B- 88592, DECEMBER 16, 1949; AND B-38237, DECEMBER 30, 1943.

FINALLY, IT IS ALLEGED THAT DELIVERY IN ACCORDANCE WITH THE INVITATION IS "UTTERLY IMPOSSIBLE" UNLESS THE CONTRACTOR HAS PREVIOUSLY MANUFACTURED AN OVEN CONFORMING TO THE SPECIFICATIONS. WITH REGARD TO THIS CONTENTION, THE ADMINISTRATIVE REPORT INDICATES THAT A COMPLETE INVESTIGATION HAS BEEN MADE OF THE LOW BIDDER'S FACILITIES AND IT HAS BEEN DETERMINED THAT THE LOW BIDDER HAS THE NECESSARY EQUIPMENT AND CAPABILITY TO SATISFACTORILY PERFORM THE CONTRACT WITHIN THE REQUIRED TIME. THE ABILITY OF A BIDDER TO PERFORM SATISFACTORILY IS A MATTER PRIMARILY FOR DETERMINATION BY THE CONTRACTING AGENCY, AND WE SEE NO BASIS FOR QUESTIONING SUCH DETERMINATION IN THIS CASE.

THE PUBLIC INTEREST REQUIRES THAT THE AWARD OF A GOVERNMENT CONTRACT AFTER ADVERTISING BE MADE ONLY TO THE LOWEST RESPONSIBLE BIDDER. 30 COMP. GEN. 235. TEMPERATURE ENGINEERING CORPORATION IS UNQUESTIONABLY THE LOW BIDDER. FURTHER, IT HAS BEEN DETERMINED BY THE CONTRACTING AGENCY THAT IT IS QUALIFIED TO PERFORM, AND SINCE THE POSSIBILITY OF PATENT INFRINGEMENT WOULD NOT, UNDER THE CIRCUMSTANCES HERE PRESENT, JUSTIFY REJECTION OF THE LOW BID, WE MUST CONCLUDE THAT THERE IS NO LEGAL BASIS UPON WHICH WE COULD OBJECT TO AWARD OF A CONTRACT TO THE LOW BIDDER.