B-134997, FEB. 19, 1958

B-134997: Feb 19, 1958

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INC.: FURTHER REFERENCE IS MADE TO YOUR LETTER OF JANUARY 21. BIDS WERE REQUESTED. WERE REJECTED AS NOT BEING RESPONSIVE AND IT NOW IS PROPOSED BY THE CONTRACTING AGENCY TO AWARD THE CONTRACT TO THE THIRD LOW BIDDER. WE ARE ADVISED THAT THE AIR FORCE HAS REVOKED A TENTATIVE DECISION TO PROCURE THE LESSER AMOUNT OF 931 UNITS AND NOW PROPOSES TO CONTRACT FOR THE ENTIRE 1. 079 KEYERS ON WHICH BIDS WERE INVITED. YOU CONTEND THAT YOU ARE ENTITLED TO THE AWARD BECAUSE IT WAS THE INTENT OF THE CONDITION SET FORTH IN YOUR LETTER OF OCTOBER 28. THAT NO REVIEW OR REVISION OF UNIT PRICES WOULD BE CONSIDERED UNLESS THE REDUCTION IN THE QUANTITY OF KEYERS WAS UNREASONABLY REDUCED IN QUANTITY FROM THE 1.

B-134997, FEB. 19, 1958

TO A. B. F. PRODUCTS, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JANUARY 21, 1958, WITH ENCLOSURE, PROTESTING THE REJECTION OF YOUR BID SUBMITTED IN CONNECTION WITH INVITATION NO. 33-600-57-318, ISSUED BY HEADQUARTERS, AIR MATERIEL COMMAND, DEPARTMENT OF THE AIR FORCE.

BY THE REFERRED-TO INVITATION, AS AMENDED, BIDS WERE REQUESTED--- TO BE OPENED OCTOBER 30, 1957--- FOR FURNISHING SPECIFIED QUANTITIES OF KEYERS, CONTROL PANELS, AND MOUNTING ASSEMBLIES IN ACCORDANCE WITH DESIGNATED SPECIFICATIONS. PARAGRAPH 8 OF THE TERMS AND CONDITIONS OF THE INVITATION FOR BIDS STATES IN PERTINENT PART THAT THE GOVERNMENT RESERVES THE RIGHT TO ACCEPT ANY ITEM OR GROUP OF ITEMS, AND TO MAKE AN AWARD ON ANY ITEM FOR A QUANTITY LESS THAN THE QUANTITY BID UPON, AT THE UNIT PRICES OFFERED, UNLESS THE BIDDER SPECIFIES OTHERWISE IN HIS BID.

IN A LETTER DATED OCTOBER 28, 1957, WHICH TRANSMITTED AND BECAME A PART OF YOUR BID, YOU TATED:

"WE RESPECTFULLY RESERVE THE RIGHT TO REVIEW AND IF NECESSARY, REVISE THE UNIT PRICES OF OUR BID IN THE EVENT THE GOVERNMENT MAKES US AN AWARD ON THESE ITEMS FOR A QUANTITY LESS THAN THE QUANTITY BID UPON, OR FOR ONLY A PORTION OF THE ITEMS COVERED BY THE SUBJECT BID.'

THE RECORD SHOWS THAT, FOLLOWING THE OPENING OF BIDS, THE PROCURING AGENCY DETERMINED THAT IT NO LONGER HAD A NEED FOR THE CONTROL PANELS, MOUNTING ASSEMBLIES AND RELATED EQUIPMENT AND DATA. UPON THE DETERMINATION TO MAKE AN AWARD ONLY FOR THE KEYERS AND RELATED DATA, YOUR BID AND THAT OF THE GRAY MANUFACTURING COMPANY, THE NEXT LOWEST BIDDER, WERE REJECTED AS NOT BEING RESPONSIVE AND IT NOW IS PROPOSED BY THE CONTRACTING AGENCY TO AWARD THE CONTRACT TO THE THIRD LOW BIDDER, THE ELECTRONICS DIVISION, FORMERLY TRANSITRON, INCORPORATED. IN THIS REGARD, WE ARE ADVISED THAT THE AIR FORCE HAS REVOKED A TENTATIVE DECISION TO PROCURE THE LESSER AMOUNT OF 931 UNITS AND NOW PROPOSES TO CONTRACT FOR THE ENTIRE 1,079 KEYERS ON WHICH BIDS WERE INVITED.

YOU CONTEND THAT YOU ARE ENTITLED TO THE AWARD BECAUSE IT WAS THE INTENT OF THE CONDITION SET FORTH IN YOUR LETTER OF OCTOBER 28, 1957, QUOTED ABOVE, THAT NO REVIEW OR REVISION OF UNIT PRICES WOULD BE CONSIDERED UNLESS THE REDUCTION IN THE QUANTITY OF KEYERS WAS UNREASONABLY REDUCED IN QUANTITY FROM THE 1,079 UNITS SPECIFIED IN THE INVITATION AND THAT YOUR REPRESENTATIVE ADVISED THE CONTRACTING OFFICER THAT THE CONTEMPLATED REDUCTION FROM 1,079 TO 931 WAS NOT SO UNREASONABLE AS TO WARRANT YOUR COMPANY TO EXERCISE THE RIGHT RESERVED TO REVIEW AND REVISE THE QUOTED UNIT PRICE. FURTHER, YOU CONTEND THAT THE CONSTRUCTION PLACED BY THE CONTRACTING AGENCY UPON THE DISPUTED STATEMENT IN YOUR LETTER SHOULD BE OVERCOME EITHER IN FAVOR OF THE PRIVILEGE RESERVED TO THE CONTRACTING OFFICER TO WAIVE INFORMALITIES AND MINOR IRREGULARITIES IN BIDS RECEIVED OR IN FAVOR OF SECTION 2-203 (A) (1) OF AIR FORCE PROCUREMENT INSTRUCTIONS WHICH PROVIDES, IN PART, AS FOLLOWS:

"* * * NOTWITHSTANDING THIS RULE AND SUB-PARAGRAPH (2) BELOW, A LATE MODIFICATION OF A LOW BID WHICH RESULTS IN A DECREASE OF THE CONTRACT PRICE WHICH THE GOVERNMENT MUST PAY FOR THE SUPPLIES OR SERVICES BEING PROCURED MAY BE CONSIDERED SINCE SUCH A MODIFICATION WOULD BE IN WAY PREJUDICIAL TO THE OTHER BIDDERS.'

REFERRING TO THE STATEMENT IN THE LETTER WHICH ACCOMPANIED YOUR BID THE CONTRACTING AGENCY STATES:

"SUBJECT QUALIFICATION DOES NOT RENDER THE BID NONRESPONSIVE SINCE CLAUSE 8 (C) OF THE TERMS AND CONDITIONS OF THE INFORMATION (SIC) FOR BID SPECIFICALLY GIVES THE BIDDER THE RIGHT TO SPECIFY THAT HIS BID PRICE IS BASED ON AWARD OF THE TOTAL QUANTITY REQUESTED BY THE GOVERNMENT IN THE IFB. THE BIDDER HAS, IN EFFECT, STATED IN HIS QUALIFICATION THAT HIS PRICE REMAINS FIRM ONLY IF THE GOVERNMENT AWARDS THE TOTAL QUANTITY ON WHICH BIDS WERE REQUESTED IN THE IFB. IF THE GOVERNMENT REDUCES OR ELIMINATES ANY ITEM FROM THE INVITATION, THE BIDDER HAS RESERVED THE RIGHT TO REVISE HIS UNIT PRICES. FORMAL ADVERTISING CONTEMPLATES THE RECEIPT OF FIRM OFFERS WHICH CAN BE ACCEPTED BY UNILATERAL ACTION BY THE GOVERNMENT. THE RESERVATION IMPOSES A CONDITION WHICH THE GOVERNMENT CANNOT ACCEPT, AND PREVENTS THE GOVERNMENT FROM ACCEPTING HIS BID FOR THE REDUCED QUANTITY JUST AS EFFECTIVELY AS IF THE BIDDER HAD STATED THAT HE REFUSED TO CONSIDER ANY AWARD FOR LESS THAN THE QUANTITY STATED IN THE INVITATION. * * *"

IN VIEW OF THE CLEAR LANGUAGE OF YOUR RESERVATION, AND SINCE IT HAS BEEN DETERMINED TO MAKE AN AWARD "FOR ONLY A PORTION OF THE ITEMS COVERED BY THE SUBJECT BID," WE ARE IN AGREEMENT WITH THE POSITION TAKEN BY THE CONTRACTING AGENCY THAT YOUR BID MUST BE TREATED AS BEING IN EFFECT, AN ,ALL OR NONE" QUOTATION. AND WE CANNOT AGREE THAT THE CONDITION IS TO CONTROL ONLY IN SITUATIONS WHERE AN UNREASONABLE REDUCTION HAS TAKEN PLACE. AN ACCEPTANCE BY THE GOVERNMENT OF YOUR BID PRICES FOR ANYTHING OTHER THAN THE ENTIRE QUANTITY OF ALL ITEMS WOULD NOT, IN THE FACE OF THE STATED CONDITION, CREATE A CONTRACT WHICH COULD LEGALLY BE ENFORCED AGAINST YOU WITHOUT YOUR CONSENT. OBVIOUSLY, THE CONDITION GIVES YOUR COMPANY THE RIGHT TO DECIDE IF A REVISION IN PRICE IS NECESSARY, AND IT IS MERE SPECULATION WHETHER YOU WOULD OR WOULD NOT EXERCISE THE OPTION TO REVISE THE QUOTED PRICE. SINCE AWARD IS NOT TO BE MADE ON ALL THE ITEMS COVERED BY THE INVITATION, THE CONCLUSION WOULD BE THE SAME REGARDLESS OF WHETHER 931 OR 1,079 KEYERS ARE PROCURED. SEE AFPI 2-404 (C) WHICH PROVIDES THAT, WHILE A BID IS NOT RENDERED NONRESPONSIVE BY THE FACT THAT THE BIDDER SPECIFIES THAT AWARD WILL BE ACCEPTED ONLY ON ALL, OR A SPECIFIED GROUP, OF THE ITEMS INCLUDED IN THE INVITATION FOR BIDS, SUCH ALL-OR NONE QUALIFICATIONS GO TO THE SUBSTANCE OF THE BID AND BIDDERS SUBMITTING BIDS CONTAINING ALL-OR-NONE QUALIFICATIONS WILL NOT BE PERMITTED TO WITHDRAW OR MODIFY THOSE QUALIFICATIONS AFTER THE OPENING OF BIDS.

IN THE LIGHT OF THE FOREGOING, WE CONCLUDE THAT IN NO EVENT IS SECTION 2- 203 (A) (1) OF AFPI, QUOTED ABOVE, APPLICABLE TO THE SITUATION HERE INVOLVED. THE PROVISIONS OF THAT SECTION ARE INTENDED TO APPLY ONLY TO THOSE CASES WHERE A LOW RESPONSIVE BID, UNQUALIFIEDLY BINDING UPON ACCEPTANCE, HAS BEEN SUBMITTED AND THE BIDDER HAS VOLUNTEERED TO REDUCE HIS PRICE. SEE 36 COMP. GEN. 535, 540.

CONTRARY TO YOUR CONTENTION, THE STATEMENT CONTAINED IN THE LETTER WHICH ACCOMPANIED YOUR BID CONSTITUTED A MAJOR QUALIFICATION OF YOUR BID UPON THE REDUCTION OF THE NUMBER OF ITEMS LISTED IN THE INVITATION AND, THEREFORE, COULD NOT BE TREATED AS AN INFORMALITY OR MINOR IRREGULARITY WHICH COULD BE WAIVED BY THE CONTRACTING OFFICER SINCE IT AFFECTED THE PRICE. 30 COMP. GEN. 179. ALSO, SEE 34 COMP. GEN. 82 WHEREIN IT WAS HELD THAT A BIDDER WHO BID ON AN ALL-OR-NONE BASIS MAY NOT WAIVE THE QUALIFICATION AFTER THE BIDS WERE OPENED AND WHERE REFERENCE WAS MADE TO 17 COMP. GEN. 554, WHEREIN IT WAS STATED THAT "* * * THE STRICT MAINTENANCE OF THE COMPETITIVE BIDDING PROCEDURES REQUIRED BY LAW IS INFINITELY MORE IN THE PUBLIC INTEREST THAN OBTAINING A PECUNIARY ADVANTAGE IN INDIVIDUAL CASES BY PERMITTING PRACTICES WHICH DO VIOLENCE TO THE SPIRIT AND PURPOSE OF THE LAW. CONDITIONS OR RESERVATIONS WHICH GIVE A BIDDER A CHANCE TO SECOND-GUESS HIS COMPETITORS AFTER BID-OPENING MUST BE REGARDED AS FATAL TO THE BID.'

THE CONTRACTING AGENCY HAS CONCLUDED, AS SHOWN ABOVE, THAT, UPON THE DETERMINATION TO MAKE AN AWARD FOR THE KEYERS ONLY, YOUR BID, IN VIEW OF THE AFOREMENTIONED QUALIFICATION, WAS NO LONGER A FIRM RESPONSIVE OFFER WHICH WOULD BIND YOU UPON ITS ACCEPTANCE BY THE DEPARTMENT OF THE AIR FORCE. THE EXPLANATION FOR SUCH ADMINISTRATIVE ACTION APPEARING TO BE REASONABLE, OUR OFFICE WOULD NOT BE JUSTIFIED IN HOLDING THAT THE PROPOSED AWARD TO THE ELECTRONICS DIVISION, FORMERLY TRANSITRON, INCORPORATED, WOULD BE ILLEGAL.