B-136043, JULY 28, 1958, 38 COMP. GEN. 71

B-136043: Jul 28, 1958

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REJECTION SOLELY ON THE BASIS OF A STATEMENT IN THE ADVERTISING LITERATURE DISTRIBUTED BY THE LOW BIDDER TO THE PUBLIC WHICH STATEMENT WAS GIVEN CONTROLLING WEIGHT OVER THE CERTIFICATION THAT THE ITEM OFFERED WAS IN COMPLIANCE WITH EVERY REQUIREMENT OF THE SPECIFICATIONS. WAS IMPROPER AND AN AWARD TO OTHER THAN THE LOW BIDDER IS CONTRARY TO THE PROCUREMENT STATUTES AND IS THEREFORE A NULLITY. THE INVITATION WAS ISSUED BY THE ORDNANCE TANK AUTOMOTIVE COMMAND ON FEBRUARY 27. ITEM NO. 4 OF THE INVITATION IS COMPOSED OF A REQUIREMENT FOR A TOTAL OF 20 TRUCKS DESCRIBED AS " MULTISTOP-1DELIVERY. THIS ITEM IS THE ONLY ONE AT ISSUE. THIS DEFINITION IS SUBSTANTIALLY IN ACCORD WITH THAT OF THE SOCIETY OF AUTOMOTIVE ENGINEERS QUOTED IN THE ENCYCLOPEDIA BRITANNICA (1952 EDITION) AT VOLUME 15.

B-136043, JULY 28, 1958, 38 COMP. GEN. 71

CONTRACTS - SPECIFICATIONS - CONFORMABILITY OF EQUIPMENT, ETC., OFFERED BASIS FOR DETERMINATION IN THE ABSENCE OF A SHOWING THAT THE ITEM OFFERED BY THE LOW BIDDER FAILED TO CONFORM IN SOME SPECIFIC, DEMONSTRABLE RESPECT TO THE SPECIFICATIONS, REJECTION SOLELY ON THE BASIS OF A STATEMENT IN THE ADVERTISING LITERATURE DISTRIBUTED BY THE LOW BIDDER TO THE PUBLIC WHICH STATEMENT WAS GIVEN CONTROLLING WEIGHT OVER THE CERTIFICATION THAT THE ITEM OFFERED WAS IN COMPLIANCE WITH EVERY REQUIREMENT OF THE SPECIFICATIONS, WAS IMPROPER AND AN AWARD TO OTHER THAN THE LOW BIDDER IS CONTRARY TO THE PROCUREMENT STATUTES AND IS THEREFORE A NULLITY.

TO THE SECRETARY OF THE ARMY, JULY 28, 1958:

WE REFER TO A LETTER OF MAY 29, 1958, SIGNED BY THE ASSISTANT SECRETARY OF THE ARMY ( LOGISTICS) AND A LETTER OF JUNE 27, 1958, SIGNED BY THE DEPUTY ASSISTANT SECRETARY OF THE ARMY ( LOGISTICS), BOTH FORWARDING ADMINISTRATIVE REPORTS IN RESPONSE TO OUR REQUEST OF MAY 5, 1958, IN CONNECTION WITH THE PROTEST FILED BY THE INTERNATIONAL HARVESTER COMPANY AGAINST AWARD OF A CONTRACT TO ANOTHER BIDDER PURSUANT TO ITEM 4 OF INVITATION NO. ORD 20-113-58-395.

THE INVITATION WAS ISSUED BY THE ORDNANCE TANK AUTOMOTIVE COMMAND ON FEBRUARY 27, 1958, FOR THE PROCUREMENT OF CERTAIN TRUCKS. ITEM NO. 4 OF THE INVITATION IS COMPOSED OF A REQUIREMENT FOR A TOTAL OF 20 TRUCKS DESCRIBED AS " MULTISTOP-1DELIVERY, POLICE VAN, 7,000 GVW, 1 TON 4 X 2.' THIS ITEM IS THE ONLY ONE AT ISSUE, THE OTHERS HAVING BEEN WITHDRAWN FROM THE PROCUREMENT.

THE APPLICABLE SPECIFICATION, INTERIM FEDERAL SPECIFICATION KKK-T 00730 ( ORD) DATED OCTOBER 24, 1957, AS AMENDED, DEFINES GVW (GROSS VEHICLE WEIGHT) AT PARAGRAPH 3.4 AS:

GROSS WEIGHT.--- GROSS VEHICLE WEIGHT SHALL INCLUDE WEIGHT OF COMPLETE CHASSIS AND CAB WITH ALL ATTACHMENTS, ACCESSORIES AND EQUIPMENT, AND BODY OR FIFTH WHEEL, AND WITH RATED LOAD, FULL COMPLEMENT OF FUEL, LUBRICANTS, COOLANT, AND OPERATOR. DRY CHASSIS WEIGHT SHALL INCLUDE WEIGHT OF CHASSIS COMPLETE WITH COWL, BUT NOT INCLUDING WEIGHT OF CAB, FIFTH WHEEL, SPARE WHEEL OR RIM, AND TIRE ASSEMBLY WITH CARRIER, FUEL, LUBRICANTS, COOLANT, TOOLS, PAYLOAD, AND OPERATOR.

THIS DEFINITION IS SUBSTANTIALLY IN ACCORD WITH THAT OF THE SOCIETY OF AUTOMOTIVE ENGINEERS QUOTED IN THE ENCYCLOPEDIA BRITANNICA (1952 EDITION) AT VOLUME 15, PAGE 924.

INTERNATIONAL HARVESTER COMPANY, THE LOW BIDDER, PROPOSED TO FURNISH ITS MODEL AM 122 WITH HEAVIER TIRES AND REAR SPRINGS THAN USUALLY SUPPLIED AND PROVIDED WITH ITS BID A SWORN AFFIDAVIT THAT THE MODEL AM 122 WHEN MODIFIED IN ACCORDANCE WITH ITS BID COULD BE RATED AT 7,000 POUNDS GVW. THE CONTRACTING AGENCY, HOWEVER, NOTING THAT THE AM 122 WAS ADVERTISED AND SOLD TO THE GENERAL PUBLIC AS HAVING A GVW RATING OF 6,600 POUNDS, DETERMINED THAT THE AM 122 DID NOT IN FACT QUALIFY AS A 7,000 POUND GVW VEHICLE EVEN AS MODIFIED IN ACCORDANCE WITH THE BID. FOR THAT REASON, THE INTERNATIONAL BID WAS REJECTED AND AWARD WAS MADE FOR THE 20 VEHICLES ON APRIL 24, 1958, TO THE CHRYSLER MOTORS CORPORATION, THE SECOND LOW BIDDER, WHOSE BID WAS DETERMINED TO BE IN CONFORMITY WITH THE INVITATION.

THE INTERNATIONAL HARVESTER COMPANY PROTESTED THE AWARD BY TELEGRAM DATED MAY 5, 1958. THE ADMINISTRATIVE REPORT FORWARDED WITH THE LETTER OF MAY 29, 1958, NOTED THAT THE AM 122 WAS ADVERTISED BY INTERNATIONAL AS HAVING A GROSS VEHICLE WEIGHT OF 6,600 POUNDS. IT WAS ALSO NOTED THAT INTERNATIONAL MANUFACTURES A MODEL AM 130 WHICH IS ADVERTISED HAVING A GVW RATING OF 7,000 POUNDS. THE ADMINISTRATIVE REPORT FURTHER STATES:

D. TO THE AMERICAN PUBLIC, INTERNATIONAL HARVESTER COMPANY OFFERS THEIR MODEL AM 130 TRUCK AS THE UNIT DESIGNED TO SATISFACTORILY PERFORM AS A 7,000 LB. GVW UNIT. TO REQUIRE THE GOVERNMENT TO ACCEPT IHC'S TRUCK DESIGNED AS A 6,600 LB. GVW UNIT AND MODIFIED ONLY BY THE SUBSTITUTION OF HEAVIER DUTY TIRES AND SPRINGS, WOULD PLACE THE GOVERNMENT IN THE POSITION OF A "LESS FAVORED" CUSTOMER WITH A SUBSTANDARD VEHICLE IN WHICH REDUCED SERVICE LIFE ON THE TRANSMISSION, REAR AXLE AND OTHER VEHICLE ELEMENTS COULD BE ANTICIPATED.

E. COMMERCIAL VEHICLE SUPPLIERS ARE FAMILIAR WITH THE CHARACTERISTICS AND PRICES OF THEIR COMPETITORS-S' VEHICLES. ALL BIDDERS EXCEPT INTERNATIONAL HARVESTER COMPANY OFFERED THEIR STANDARD COMMERCIAL VEHICLES DESIGNED AND SOLD AS VEHICLES WITH A 7,000 LB. OR BETTER GROSS VEHICLE WEIGHT RATING. TO RECOGNIZE THE PRINCIPLE THAT BIDDERS CAN "BEEF UP" ONE OF THEIR LESSER MODELS SOLELY FOR SALE TO THE GOVERNMENT WILL CAUSE THIS PRACTICE TO BECOME UNIFORM IN GOVERNMENT COMMERCIAL VEHICLE PROCUREMENTS. GOOD ENGINEERING DESIGN WOULD THEN GIVE WAY TO MAKESHIFT IMPROVISATIONS BY BIDDERS IN THEIR ATTEMPT TO BE LOW PRICE BIDDER.

WE CANNOT REGARD THE MANUFACTURE OF THE AM 130 AT 7,000 LBS. GVW AS TENDING TO ESTABLISH THE NONCONFORMABILITY OF THE AM 122 TO THE SPECIFICATIONS SINCE IT DOES NOT APPEAR TO BE UNCOMMON PRACTICE IN THE INDUSTRY FOR A MANUFACTURER TO OFFER FOR SALE TWO MODELS OF THE SAME CONFORMATION AT THE SAME GVW. INDEED, AS WILL BE SHOWN LATER, THIS PRACTICE IS FOLLOWED BY THE SUCCESSFUL BIDDER.

THE ADMINISTRATIVE REPORT INCLUDES A MEMO FOR RECORD DATED MAY 6, 1958, CONTAINING AN ENGINEERING DETERMINATION IN EVALUATION OF THE INTERNATIONAL BID. THAT MEMO STATES, IN EFFECT, THAT GOOD TRUCK DESIGN INVOLVES A BALANCE BETWEEN LOAD-CARRYING AND POWER/TRAIN ELEMENTS. IT FURTHER NOTES THAT A TRUCK WITH A LARGER GVW RATING HAS LARGER FRAME, SPRINGS, TRANSMISSION, BRAKES, TIRES AND REAR AXLE. THE MEMO STATES, WITHOUT CITING ANY FACTS IN SUPPORT THEREOF, THAT THE CERTIFICATION BY INTERNATIONAL OF THEIR AM 122 VEHICLE EQUIPPED WITH THE HEAVIER TIRES AND SPRINGS AT A RATING OF 7,000 POUNDS GVW "NEGLECTS THE EFFECT OF INCREASED LOADING ON THE OTHER STRESSED AREAS OF THE VEHICLE.' IT IS FURTHER STATED THAT ALTHOUGH TIRE AND SPRING LIFE MAY BE ADEQUATE,"PREMATURE FAILURE AND/OR REDUCED SERVICE LIFE ON TRANSMISSION, REAR AXLE AND OTHER VEHICLE ELEMENTS ARE ANTICIPATED.' THE MEMO ALSO STATES:

4. THE TERM "GROSS VEHICLE WEIGHT" AS USED IN AUTOMOTIVE ENGINEERING CIRCLES IS NOT SO MUCH AN EXPRESSION OF WEIGHT MEASUREMENT AS IT IS OF DESIGN CONCEPT. IT IS NOT AN ASCERTAINABLE VALUE PROCEEDING INEVITABLY FROM THE APPLICATION OF A MATHEMATICAL FORMULA. IT IS, PERHAPS, THE ULTIMATE STATEMENT ABOUT ITS PRODUCTS THAT THE TRUCK BUILDER MAKES. TERMS WHICH ARE FULLY UNDERSTOOD BY HIS CUSTOMERS AND COMPETITION ALIKE, HE IS STATING THAT WITHIN THE LOAD LIMITS INDICATED BY THE GVW VALUE ASSIGNED, HIS PRODUCT HAS BEEN DESIGNED TO GIVE SATISFACTORY SERVICE UNDER NORMAL OPERATING CONDITIONS. THIS REPRESENTATION DOES NOT MERELY APPLY TO TIRES AND SPRINGS. IT COVERS THE ENTIRE VEHICLE AND ALL ITS COMPONENTS.

5. GVW RATINGS PERMIT COMPARATIVE ANALYSIS OF COMPETITIVE PRODUCTS WITHIN A FRAME OF REFERENCE ESTABLISHED BY THE MANUFACTURERS THEMSELVES. THEY ARE "PROVEN" IN OPERATIONS BY CUSTOMERS, WHOSE EXPERIENCE IS CONTINUOUSLY FED BACK TO THE DESIGN ENGINEERS. OVER A PERIOD OF TIME, IT IS EVIDENT THAT EXTRAVAGANT GVW CLAIMS WOULD BE DISCOUNTED BY THE CUSTOMERS. ACCORDINGLY, THE GVW RATING SYSTEM IS POLICED BY COMPETITION, AND THE PUBLICIZED GVW RATINGS ISSUED BY TRUCK MANUFACTURERS ARE A VERY IMPORTANT FACTOR IN BID EVALUATION.

AT THIS POINT IT SHOULD BE NOTED THAT SCHEDULE A OF THE INVITATION PROVIDES IN PART THAT IF THE BIDDER DOES NOT PROPOSE TO MEET SPECIFICATIONS, HE MUST INDICATE SPECIFICALLY, IN HIS ANSWER TO 27B OF THE QUESTIONNAIRE REQUIRED TO BE SUBMITTED WITH HIS BID, WHEREIN THE VEHICLES HE PROPOSES TO FURNISH DO NOT COMPLY. IT IS FURTHER STATED THAT WHERE NO STATEMENT OF EXCEPTIONS IS RNISHED,"THE SUCCESSFUL BIDDER WILL BE REQUIRED TO MEET EVERY REQUIREMENT OF THE SPECIFICATION.' THE INTERNATIONAL HARVESTER BID, IN ADDITION TO THE AFFIDAVIT REFERRED TO ABOVE, LISTED ITS VEHICLE AS HAVING A GVW RATING OF 7,000 POUNDS, STATED NO EXCEPTIONS TO THE SPECIFICATIONS, AND AGREED TO THE WARRANTY SET OUT THEREIN. THEREFORE, IN ACCORDANCE WITH THE REFERENCED TERMS OF SCHEDULE A, HAD INTERNATIONAL HARVESTER BEEN AWARDED THE CONTRACT, IT WOULD HAVE BEEN OBLIGATED TO FURNISH TRUCKS CONFORMING IN ALL RESPECTS TO THE SPECIFICATIONS, NOTWITHSTANDING THE GVW RATING OF ITS COMMERCIAL MODEL.

THE ADMINISTRATIVE REPORT ALSO CONTAINED REGULAR ADVERTISING MATERIALS DISTRIBUTED BY THE BIDDERS WHICH INDICATE THAT THE MODEL TRUCK OFFERED BY THE SUCCESSFUL BIDDER MAY HAVE A GVW RATING OF FROM 6,000 TO 9,000 POUNDS AND THAT A HEAVIER MODEL NOT OFFERED IN ITS BID MAY BE RATED AT FROM 7,500 TO 15,000 POUNDS, THUS PROVIDING AN OVERLAP IN THE GVW RATING OF THE TWO VEHICLES. THE INTERNATIONAL MODEL AM 122 IS ADVERTISED AT A GVW RATING OF 6,600 POUNDS. NO RANGE IS STATED. ALTHOUGH IT IS NOT MENTIONED IN THE ADMINISTRATIVE REPORT, IT APPEARS TO US THAT SOME SIGNIFICANCE MIGHT BE ATTACHED TO THE FACT THAT THE DESCRIPTIVE LITERATURE REFERRED TO SHOWS ALSO THAT THE DODGE TRUCK OFFERED BY THE CHRYSLER CORPORATION IS RATED AT ONLY 6,000 POUNDS GVW WHEN EQUIPPED WITH THE SAME SIZE TIRES AS THOSE SPECIFIED ON THE IHC AM 122 FOR ITS RATING OF 6,600 POUNDS.

BY LETTER OF JUNE 12, 1958, INTERNATIONAL STATES THAT ITS MODEL AM 122 AS MODIFIED IN ITS BID JUSTIFIES A 7,000 GVW RATING AND SPECIFICALLY STATES THAT, AS MODIFIED, ALL COMPONENTS OF THE VEHICLE HAVE THE NECESSARY CAPACITY TO WARRANT SUCH RATING. IT FURTHER STATES THAT THE RANGE OF GVW RATING OFFERED BY THE SUCCESSFUL CONTRACTOR IS ALSO ACHIEVED BY THE USE OF DIFFERENT TIRES AND SPRINGS. IT IS ALSO NOTED, WITH REFERENCE TO THE COMMENT IN THE ADMINISTRATIVE ENGINEERING ANALYSIS CONCERNING THE POSSIBILITY OF PREMATURE FAILURE OR REDUCED SERVICE LIFE OF TRANSMISSION, ETC., THAT THE TRANSMISSION OFFERED BY INTERNATIONAL HARVESTER IS THE SAME AS THAT USED IN TRUCKS RATED TO 12,500 POUNDS.

THE ADDITIONAL ADMINISTRATIVE REPORT FORWARDED WITH THE LETTER OF JUNE 27, 1958, STATES THAT THE INTERNATIONAL HARVESTER AM 120 SERIES IS RATED FROM 5,400 TO 6,600 POUNDS GVW AND THAT 6,600 POUND GVW IS THE MAXIMUM. THE REFERENCE TO THE AM 120 SERIES APPARENTLY INCLUDES THE AM 120 MODEL RATED IN ADVERTISING LITERATURE AT 5,400 LBS., AND THE AM 122 MODEL WHICH, AS HAS BEEN STATED, IS RATED IN ADVERTISING LITERATURE AT 6,600 POUNDS. THE ADMINISTRATIVE REPORT FURTHER STATES:

* * * ACCEPTANCE OF THE IHC BID WOULD ESTABLISH A PRECEDENT WHICH WOULD EFFECTIVELY BAR THE SOUND EVALUATION OF BIDS IN FUTURE PROCUREMENTS. WOULD REQUIRE THE ACCEPTANCE AT FACE VALUE OF A CERTIFICATION BY ANY BIDDER AS TO THE GVW RATING OF HIS OFFERED VEHICLE ON ANY SPECIFIC PROCUREMENT. THAT IS NOT AN ACCEPTABLE SUBSTITUTE FOR THE PRESENT SYSTEM OF EVALUATION OF BIDS BASED ON THE BIDDER'S TECHNICAL AND SALES LITERATURE DISTRIBUTED TO THE PUBLIC. THE LATTER SYSTEM OF EVALUATION OF BIDS HAS BEEN UNIFORMLY FOLLOWED BY OTAC FOR MANY YEARS. ( ITALICS SUPPLIED.)

THE DRAFTING OF PROPER SPECIFICATIONS REFLECTING THE NEEDS OF THE GOVERNMENT AND THE DETERMINATION, FACTUALLY, AS TO WHETHER ARTICLES OFFERED BY BIDDERS MEET SUCH SPECIFICATIONS ARE PRIMARILY WITHIN THE PROVINCE OF THE CONTRACTING AGENCY. 36 COMP. GEN. 251 AND 17 COMP. GEN. 554. THUS, WHERE IT IS REASONABLY SHOWN THAT AN ARTICLE OFFERED BY A BIDDER FAILS TO MEET THE SPECIFICATION IN SOME SPECIFIC RESPECT, A DETERMINATION THAT SUCH BID SHOULD BE REJECTED WOULD NOT BE QUESTIONED BY OUR OFFICE. IN THIS INSTANCE, HOWEVER, WHILE IT HAS BEEN SUGGESTED THAT THE INTERNATIONAL PRODUCT MAY BE DEFICIENT AS TO ITS TRANSMISSION, REAR AXLE OR OTHER COMPONENT, NO SUCH DETERMINATION HAS ACTUALLY BEEN INCLUDED IN THE ADMINISTRATIVE REPORT. IT APPEARS, RATHER, THAT THE LOW BID WAS REJECTED SOLELY ON THE BASIS OF THE ADVERTISED GVW RATING OF THE AM 122, WHICH WAS GIVEN CONTROLLING WEIGHT OVER THE CERTIFICATION OFFERED BY THE MANUFACTURER TO THE GOVERNMENT ON THIS SPECIFIC BID. IT IS AXIOMATIC THAT ANY DETERMINATION AS TO WHETHER AN OFFERED PRODUCT MEETS THE ADVERTISED SPECIFICATION SHOULD BE BASED UPON AN EXAMINATION OF THE PRODUCT ITSELF IN RELATION TO THE SPECIFICATION, AND NOT A COMPARISON OF THE SPECIFICATION WITH THE ADVERTISING LITERATURE DISTRIBUTED BY THE MANUFACTURER. SEE 16 COMP. GEN. 190, 192.

THE ADMINISTRATIVE REPORT SUBMITTED WITH THE LETTER OF JUNE 27, AT PARAGRAPH 2, PAGE 2, STATES:

* * * THE FACT THAT A COMPANY IS PERHAPS CONSERVATIVE IN ITS GVW RATING OF TRUCKS MAY BE OF IMPORTANCE IN COMMERCIAL SALES, BUT CANNOT BE CONSIDERED IN THE AWARD OF AN ADVERTISED BID TO PERMIT UP-GRADING A PRODUCT, AS THIS IS A VERY INTANGIBLE ELEMENT WHICH CANNOT BE RELATED IN TERMS OF A BID SPECIFICATIONS OR CONTRACT ARTICLE. * * * ( ITALICS SUPPLIED.)

IF, AS INDICATED, WHETHER A GVW RATING IS CONSERVATIVE MUST BE CHARACTERIZED AS A "VERY INTANGIBLE ELEMENT," IT FOLLOWS THAT THE GVW RATING ITSELF CANNOT BE SUBJECT TO PRECISE MEASUREMENT. A DETERMINATION THAT AN ARTICLE DOES NOT MEET SPECIFICATIONS MUST BE SUPPORTED BY A SHOWING OF FACTS ESTABLISHING ACTUAL DEFICIENCIES OF THE EQUIPMENT CONCERNED. SEE 16 COMP. GEN. 190, 192. WE CANNOT FIND THAT THE DETERMINATION OF THE DEFICIENCY HAS BEEN SO SUSTAINED IN THIS CASE. INDEED, THE FACTS ARE THAT THE LOW BIDDER HAS SPECIFICALLY OFFERED TO COMPLY WITH THE SPECIFICATIONS AND IT HAS NOT BEEN SHOWN THAT THE PRODUCT OFFERED IN FACT FAILS TO MEET THE SPECIFICATION IN ANY CONCRETE, MEASURABLE RESPECT, NOR HAS IT BEEN SHOWN WHEREIN THE ITEM OFFERED BY THE LOW BIDDER IS IN ANY MATERIAL RESPECT INFERIOR TO THAT FOR WHICH AWARD WAS ATTEMPTED TO BE MADE TO A HIGHER BIDDER. THE BASIS FOR THE EXCEPTION APPEARS TO BE FOUND SOLELY IN THE BIDDER'S ADVERTISING LITERATURE, AND EVEN THE BASIS THERE FOUND IS CONCEDEDLY "A VERY INTANGIBLE ELEMENT.' SEE 36 COMP. GEN. 376 AND 10 COMP GEN. 160. IN THE ABSENCE OF A PROPER SHOWING THAT THE PRODUCTS OFFERED BY THE LOW BIDDER FAILED TO CONFORM IN SOME DEMONSTRABLE RESPECT TO THE SPECIFICATIONS, WE MUST CONCLUDE THAT THE AWARD IN THIS INSTANCE WAS MADE, CONTRARY TO THE STATUTES GOVERNING PUBLIC PROCUREMENT, TO OTHER THAN THE LOW RESPONSIVE BIDDER AND FOR THAT REASON SHOULD BE REGARDED AS A NULLITY. UNLESS IT CAN BE ESTABLISHED THAT THE INTERNATIONAL PRODUCT OFFERED FAILS TO CONFORM TO THE SPECIFICATIONS IN SOME SPECIFIC, MATERIAL RESPECT, THE AWARD SHOULD BE CANCELED.