B-132738, SEPTEMBER 17, 1957, 37 COMP. GEN. 190

B-132738, SEPTEMBER 17, 1957, 37 COMP. GEN. 190

SALES - BIDS - DEVIATIONS - MINOR V. SUBSTANTIVE - CANCELLATION OF IMPROPER AWARD A HIGH BID FOR THE PURCHASE OF SURPLUS SCRAP ON A GROSS TON RATHER THAN POUND UNIT BASIS AS SPECIFICALLY REQUIRED BY THE INVITATION DOES NOT CONTAIN A DEVIATION WHICH AFFECTS THE PRICE OR SUBSTANCE OF THE BID OR DOES AN INJUSTICE TO OTHER BIDDERS, AND, THEREFORE, THE TECHNICAL DEVIATION SHOULD HAVE BEEN WAIVED AND THE CONTRACT AWARDED TO THE HIGH BIDDER. THE AWARD AND PERFORMANCE ON THE PART OF THE SECOND HIGH BIDDER OF A CONTRACT FOR THE PURCHASE OF SURPLUS SCRAP DOES NOT WARRANT VOIDING THE PART PERFORMED ON A DETERMINATION THAT THE CONTRACT SHOULD HAVE BEEN AWARDED TO THE HIGH BIDDER WHOSE BID WAS IMPROPERLY REJECTED FOR A TECHNICAL DEVIATION IN QUOTING THE PRICE ON A TON RATHER THAN POUND BASIS; HOWEVER, IF SOME OF THE MATERIAL HAS NOT BEEN REMOVED AND THE HIGH BIDDER WANTS THE MATERIAL UNDER THE TERMS OF THE ORIGINAL BID AND AT A PRICE NOT LESS THAN THAT OFFERED ON A POUND BASIS THERE WOULD BE NO OBJECTION TO SUCH SALE, OTHERWISE THE MATERIAL SHOULD BE READVERTISED FOR SALE.

TO D. F. TRAUTWEIN, AIR FORCE FINANCE CENTER, SEPTEMBER 17, 1957:

BY LETTER DATED JULY 18, 1957, THE COMMANDER, HEADQUARTERS AIR FORCE FINANCE CENTER, UNITED STATES AIR FORCE, DENVER, COLORADO, FORWARDED YOUR LETTER TO JUNE 24, 1957, IN WHICH YOU REQUEST AN ADVANCE DECISION AS TO WHETHER, IN VIEW OF THE NATURE OF THE TERMINATION OF CONTRACT NO. AF 101/601/S-1997, THE ENCLOSED REFUND VOUCHER IN THE AMOUNT OF $1,513.23 MAY BE PAID TO THE CONTRACTOR, THE STATE METALS AND STEEL CO., INC., CANTON, OHIO. YOU ALSO RAISE THE QUESTIONS WHETHER THERE WAS PROPER OBSERVANCE OF LAW IN RESPECT TO ACCEPTANCE OF OTHER THAN THE HIGH BID AND WHETHER THE ACCEPTANCE CREATED A VALID CONTRACT OF SALE.

INVITATION NO. 101-601-S-57-28 ISSUED MARCH 29, 1957, BY DIRECTORATE PROCUREMENT AND PRODUCTION, BROOKLEY AIR FORCE BASE, ALABAMA, SOLICITED BIDS--- TO BE OPENED APRIL 24, 1957--- FOR THE PURCHASE FROM THE GOVERNMENT OF A NUMBER OF ITEMS OF SURPLUS AND SCRAP PROPERTY LISTED THEREIN, TO BE ACCUMULATED AND AVAILABLE AT BROOKLEY AIR FORCE BASE BETWEEN MAY 1 AND JULY 31, 1957. INCLUDED THEREIN WAS ITEM NO. 16 COVERING APPROXIMATELY 56,000 POUNDS OF " STAINLESS STEEL SCRAP, CONSISTING OF MISC. NICKEL CHROME ALLOYS, CLIPPING, ENGINE PARTS, ETC. UNPREPARED. CODE E1A.' PARAGRAPH 3 OF THE GENERAL SALE TERMS AND CONDITIONS ON PAGE 2 OF THE INVITATION REQUIRED THAT, UNLESS OTHERWISE SPECIFIED, BIDS MUST BE SUBMITTED ON THE BASIS OF THE UNIT SPECIFIED FOR THE ITEM IN THE INVITATION. ITEM NO. 16 SPECIFICALLY CALLED FOR QUOTATIONS ON A POUND BASIS. PARAGRAPH 3 FURTHER PROVIDED THAT THE GOVERNMENT RESERVED THE RIGHT TO REJECT ANY AND ALL BIDS OR TO WAIVE TECHNICAL DEFECTS IN BIDS WHEN IN ITS BEST INTEREST.

IN RESPONSE TO THE INVITATION, KOPELOVE IRON AND METAL COMPANY, DAYTON, OHIO, SUBMITTED A BID ON ITEM NO. 16 AT A UNIT PRICE OF "$361.00 GT" WITH AN EXTENSION TOTAL OF $9,025. THEIR BID WAS REJECTED BY THE CONTRACTING OFFICER AS BEING NONRESPONSIVE TO THE INVITATION DUE TO ITS HAVING BEEN SUBMITTED IN THE UNIT OF GROSS TONS INSTEAD OF POUNDS AS REQUIRED BY THE INVITATION. THEIR BID DEPOSIT WAS RETURNED TO THEM ON MAY 2, 1957, WITH A NOTICE THAT " NO AWARD WAS MADE TO YOU.'

A BID WAS ALSO RECEIVED FROM THE STATE METALS AND STEEL CO., INC., OF CANTON, OHIO, ON ITEM NO. 16 AT A UNIT PRICE OF $0.13511 PER POUND, OR FOR A TOTAL AMOUNT OF $7,566.16. THIS BID WAS CONSIDERED BY THE CONTRACTING OFFICER TO BE THE HIGHEST RESPONSIVE BID ON ITEM NO. 16 AND WAS ACCEPTED, AND CONTRACT NO. AF 101/601/S-1997 WAS AWARDED UNDER DATE OF MAY 1, 1957, IN THE TOTAL AMOUNT OF $7,566.16 TO THE STATE METALS AND STEEL CO., INC. THEIR BID SHOWS THAT A BID DEPOSIT OF $1,525 WAS FORWARDED THEREWITH, AND THE RECORD INDICATES THAT THERE IS NOW BEING RETAINED BY THE GOVERNMENT ONLY $1,513.23 OF THAT AMOUNT OR 20 PERCENT OF THE AMOUNT OF THE ACCEPTED BID.

SUBSEQUENT TO THE AWARD OF THE CONTRACT TO THE STATE METALS AND STEEL CO., BY LETTER DATED MAY 7, 1957, TO THE CONTRACTING OFFICER, KOPELOVE IRON AND METAL COMPANY QUESTIONED THE REJECTION OF THEIR BID ON ITEM NO. 16, CLAIMING THAT THEIR BID WAS THE HIGHEST BID ON THAT ITEM WHEN THEIR UNIT PRICE OF $361 GT ("1GT" MEANING A LONG TON OF 2,240 POUNDS) WAS REDUCED TO ITS EQUIVALENT OF $0.16116 PER POUND. THEY REQUESTED THAT THE AWARD ON THIS ITEM BE RECONSIDERED AND THAT AWARD BE MADE TO THEM AS HIGH BIDDER.

IN RESPONSE TO A REQUEST BY THE SERVICE CONTRACT AND SALES BRANCH, PROCUREMENT DIVISION, ON MAY 16, 1957, FOR AN OPINION CONCERNING THE REJECTION OF THE BID OF KOPELOVE IRON AND METAL COMPANY AND THE BIDDER'S RIGHT TO APPEAL, THE STAFF JUDGE ADVOCATE UNDER DATE OF JUNE 6, 1957, ADVISED THAT, IN VIEW OF THE EXTENSION TOTAL OF $9,025 IN THE BID OF THE KOPELOVE IRON AND METAL COMPANY AND THE QUANTITY AND PAYMENT ADJUSTMENT CLAUSES IN THE SALE TERMS AND CONDITIONS OF THE INVITATION, THE BID OF KOPELOVE IRON AND METAL COMPANY WAS NOT DEEMED PROPERLY SUBJECT TO REJECTION AS NONRESPONSIVE ON THE BASIS OF MATERIAL DEVIATION PREJUDICIAL TO OTHER BIDDERS, OR OTHERWISE SUBJECT TO REJECTION, CITING 20 COMP. GEN. 316 AND 26 COMP. GEN. 49, 50. IT WAS CONCLUDED THAT THE PROTEST BY THE HIGH BIDDER SHOULD BE SUBMITTED TO OUR OFFICE FOR CONSIDERATION.

FOLLOWING THE ADVICE OF THE STAFF JUDGE ADVOCATE, THE CONTRACTING OFFICER BY LETTER OF JUNE 11, 1957, NOTIFIED THE STATE METALS AND STEEL CO. THAT PURSUANT TO ADDITIONAL GENERAL SALE TERM AND CONDITION NO. 20 OF THE CONTRACT THEIR RIGHT TO PROCEED UNDER THE CONTRACT WAS TERMINATED EFFECTIVE JULY 11, 1957, IN THE BEST INTEREST OF THE GOVERNMENT.

PARAGRAPH 20 OF THE ADDITIONAL GENERAL SALE TERMS AND CONDITIONS OF THE CONTRACT PROVIDED THAT THE CONTRACT WOULD EXTEND FROM MAY 1 THROUGH JULY 31, 1957, AND SHOULD REMAIN IN EFFECT UNTIL DATE OF EXPIRATION UNLESS TERMINATED AT AN EARLIER DATE AT THE CONVENIENCE OF THE GOVERNMENT UPON 30 DAYS' NOTICE IN WRITING BY THE CONTRACTING OFFICER.

THE RECORD SHOWS THAT AS OF MAY 16, 1957, THE STATE METALS AND STEEL CO., INC., HAD REMOVED APPROXIMATELY 30,000 POUNDS OF THE MATERIAL FROM THE BASE UNDER ITS CONTRACT. THE RECORD FURTHER SHOWS THAT THE STATE METALS AND STEEL CO., INC., MADE PAYMENT TO THE CONTRACTING OFFICER ON JUNE 10, 1957, IN THE AMOUNT OF $2,264.44 FOR 16,760 POUNDS OF THE STAINLESS STEEL SCRAP UNDER ITEM NO. 16 ON BILLING DATED JUNE 5, 1957, FOR THE MONTH OF MAY 1957. THE RECORD DOES NOT SHOW WHETHER PAYMENT HAS BEEN RECEIVED FROM THE CONTRACTOR FOR THE BALANCE OF THE MATERIAL REMOVED--- APPROXIMATELY 13,240 POUNDS--- OR WHETHER ANY ADDITIONAL AMOUNT OVER THE 30,000 POUNDS HAD BEEN REMOVED PRIOR TO THE NOTICE OF CANCELLATION OF THE CONTRACT.

THE QUESTION FIRST FOR CONSIDERATION IS WHETHER THE BID OF THE KOPELOVE IRON AND METAL COMPANY, WHICH WAS SUBMITTED ON A GROSS TON UNIT BASIS RATHER THAN ON A POUND UNIT BASIS AS SPECIFICALLY REQUIRED BY THE INVITATION, WAS PROPERLY REJECTED BY THE CONTRACTING OFFICER.

WHILE CONTRACTING OFFICERS NECESSARILY ARE VESTED WITH A CERTAIN AMOUNT OF DISCRETION IN THE EVALUATION AND ACCEPTANCE OF BIDS, IT HAS BEEN CONSISTENTLY HELD THAT DEFICIENCIES OR DEVIATIONS IN BIDS MAY BE WAIVED, IN THE INTEREST OF THE GOVERNMENT, ONLY IF THEY DO NOT GO TO THE SUBSTANCE OF THE BID OR WORK AN INJUSTICE TO OTHER BIDDERS. IN OTHER WORDS, THE PRIMARY QUESTION FOR DETERMINATION IN SUCH CASES IS WHETHER THE DEFICIENCY OR DEVIATION GOES TO THE SUBSTANCE OF THE BID SO AS TO AFFECT EITHER THE PRICE, QUANTITY OR QUALITY OF THE ARTICLES OFFERED AND THEREFORE IS PREJUDICIAL TO THE RIGHTS OF OTHER BIDDERS OR IS MERELY A MATTER OF FORM OR SOME IMMATERIAL VARIATION FROM THE EXACT REQUIREMENTS OF THE SPECIFICATIONS SUCH AS WOULD NOT AFFECT EITHER THE PRICE, QUALITY, OR QUANTITY OF THE ARTICLES OFFERED. WAIVER OF SUCH A DEFICIENCY OR DEVIATION IS, OF COURSE, DEPENDENT UPON THE PARTICULAR FACTS AND CIRCUMSTANCES PRESENT IN THE INDIVIDUAL CASE. SEE 35 COMP. GEN. 98; 26 ID. 49, 50; 21 ID. 316.

THE DEVIATION IN THE KOPELOVE IRON AND STEEL COMPANY BID ON ITEM NO. 16 FROM THE REQUIREMENT OF THE INVITATION WITH RESPECT TO THE UNIT OF MEASURE BASIS DID NOT AFFECT THEIR PRICE QUOTATION OR OTHERWISE GO TO THE SUBSTANCE OF THE BID OR DO INJUSTICE TO OTHER BIDDERS. IN THE INTEREST OF THE GOVERNMENT, THEREFORE, THE CONTRACTING OFFICER SHOULD HAVE WAIVED THE TECHNICAL DEFECT AND AWARDED THE CONTRACT TO KOPELOVE IRON AND STEEL COMPANY, THE HIGHEST BIDDER. IN THE CIRCUMSTANCES, IT MUST BE HELD THAT THE AWARD OF THE CONTRACT TO THE STATE METALS AND STEEL CO., INC., WAS IMPROPER. SEE DECISION OF THE COMPTROLLER GENERAL DATED OCTOBER 6, 1953, B-117169.

HOWEVER, SINCE THE CONTRACT WITH THE STATE METALS AND STEEL CO., INC., WHOSE BID WAS THE HIGHEST IN STRICT COMPLIANCE WITH THE REQUIREMENTS OF THE INVITATION, APPEARS TO HAVE BEEN ENTERED INTO IN GOOD FAITH BY THE CONTRACTING OFFICER AND THE COMPANY AND HAS BEEN PERFORMED IN SUBSTANTIAL PART, WE DO NOT FEEL THAT THE CONTRACT SHOULD NOW BE VOIDED AS TO THE PART PERFORMED. SEE LEVINSON V. UNITED STATES, ET AL., 258 U.S. 198, 201; AND 35 COMP. GEN. 98 AND 36 COMP. GEN. 259; AND B-118031, MARCH 8 AND JULY 6, 1954.

THE ENCLOSED VOUCHER IN THE AMOUNT OF $1,513.23 MAY BE PAID, PROVIDED FULL PAYMENT HAS BEEN RECEIVED FROM THE STATE METALS AND STEEL CO., INC., FOR THE TOTAL AMOUNT OF MATERIAL REMOVED BY THEM FROM THE BASE UNDER CONTRACT NO. AF 101/601/S-1997. IN THE EVENT THAT PAYMENT HAS NOT BEEN RECEIVED IN FULL, THE SUM OF $1,513.23, OR SO MUCH THEREOF AS IS NECESSARY, SHOULD BE APPLIED AS PAYMENT AGAINST THE UNPAID BALANCE DUE FOR MATERIAL REMOVED UNDER THE CONTRACT.

WITH REFERENCE TO THE DISPOSITION OF ANY MATERIAL IN ITEM NO. 16, WHICH HAS NOT ALREADY BEEN REMOVED BY THE STATE METALS AND STEEL CO., INC., UNDER THEIR CONTRACT, THERE WOULD BE NO LEGAL BASIS FOR OBJECTION TO THE SALE OF THE MATERIAL TO THE KOPELOVE IRON AND STEEL COMPANY, SHOULD THEY NOW WANT IT, UNDER THE TERMS OF THEIR ORIGINAL BID ON ITEM NO. 16 AND AT A PRICE NOT LESS THAN THAT OFFERED IN THEIR BID PER POUND. OTHERWISE, THE MATERIAL SHOULD BE READVERTISED FOR SALE.

A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE VOUCHER COVERING ANY REFUND THAT MAY BE MADE TO THE STATE METALS AND STEEL CO., INC.

THE PAPERS, WITH THE EXCEPTION OF THE REPORTS OF CAPTAIN LLOYD E. SCHWEIGER OF MAY 16, 1957, AND OF MAJOR LAWRENCE A. FOWLER OF JUNE 11, 1957, AND COPY OF THE OPINION OF THE STAFF JUDGE ADVOCATE DATED JUNE 6, 1957, ARE RETURNED.