B-136356, JUL. 30, 1958

B-136356: Jul 30, 1958

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TO LOWRY AND HUNTER: REFERENCE IS MADE TO YOUR LETTERS AND TELEGRAMS DATED JUNE 4. STATED: "WE ARE BIDDING THIS INVITATION IN STRICT ACCORDANCE WITH THE SPECIFICATIONS WITH ONE EXCEPTION - PARAGRAPH 5. THE CONTRACTING ACTIVITY REJECTED THE BID ON THE BASIS THAT THE EXCEPTION WAS A MATERIAL DEVIATION WHICH COULD NOT BE WAIVED. THIS ACTION WAS CONSISTENT WITH THE DECISIONS OF OUR OFFICE. AN EXCEPTION TAKEN IN A BID TO THE LIQUIDATED DAMAGES PROVISION IN AN INVITATION FOR BIDS IS FATAL TO THE BID. 35 COMP. WE HAVE STATED THAT THE INCLUSION OF THE LIQUIDATED DAMAGE PROVISION IN AN INVITATION FOR BIDS MIGHT AFFECT THE PRICES OFFERED BY PROSPECTIVE BIDDERS. 35 COMP. IT IS AN ESTABLISHED RULE THAT A CONTRACT AWARDED TO A SUCCESSFUL BIDDER MUST BE THE CONTRACT OFFERED TO ALL BIDDERS.

B-136356, JUL. 30, 1958

TO LOWRY AND HUNTER:

REFERENCE IS MADE TO YOUR LETTERS AND TELEGRAMS DATED JUNE 4, AND 11, 1958, PROTESTING THE REJECTION OF THE LOW BID OF YOUR CLIENT, WAUKESHA MOTOR COMPANY, SUBMITTED IN RESPONSE TO INVITATION NO. 8 3426B1.

THE SUBJECT INVITATION STIPULATED THAT LIQUIDATED DAMAGES WOULD BE ASSESSED AT THE RATE OF $75 PER UNIT FOR EACH CALENDAR DAY OF DELAY IN DELIVERY AND FURTHER PROVIDED THAT, FOR THE PURPOSE OF DETERMINING AWARD, IF A BIDDER STATED A LATER DELIVERY PERIOD THAN 180 CALENDAR DAYS AFTER THE EFFECTIVE DATE OF THE NOTICE TO PROCEED, THERE WOULD BE ADDED TO ITS BID THE LIQUIDATED DAMAGE RATE PER UNIT FOR EACH CALENDAR DAY OF THE LATER DELIVERY TIME OFFERED.

WAUKESHA MOTOR COMPANY OFFERED THE GOVERNMENT A BETTER DELIVERY SCHEDULE THAN IT REQUESTED. HOWEVER, IN THE COVER LETTER ACCOMPANYING ITS BID ON STANDARD FORM 33, THE BIDDER, INSOFAR AS PERTINENT, STATED:

"WE ARE BIDDING THIS INVITATION IN STRICT ACCORDANCE WITH THE SPECIFICATIONS WITH ONE EXCEPTION - PARAGRAPH 5, PAGE 7 CONCERNS LIQUIDATION (SIC) DAMAGES OF $75.00 PER DAY. THE WAUKESHA MOTOR COMPANY'S POLICY SETS THE MAXIMUM AMOUNT OF THIS CHARGE ACCEPTABLE TO THE COMPANY AT $25.00 PER DAY. WE MUST, THEREFORE, TAKE EXCEPTION TO THIS ITEM.'

AFTER THE OPENING OF BIDS, THE BIDDER ATTEMPTED TO CANCEL THE EXCEPTION IT HAD TAKEN TO THE LIQUIDATED DAMAGES PROVISION, BUT THE CONTRACTING ACTIVITY REJECTED THE BID ON THE BASIS THAT THE EXCEPTION WAS A MATERIAL DEVIATION WHICH COULD NOT BE WAIVED. THIS ACTION WAS CONSISTENT WITH THE DECISIONS OF OUR OFFICE.

AN EXCEPTION TAKEN IN A BID TO THE LIQUIDATED DAMAGES PROVISION IN AN INVITATION FOR BIDS IS FATAL TO THE BID. 35 COMP. GEN. 484. WE HAVE STATED THAT THE INCLUSION OF THE LIQUIDATED DAMAGE PROVISION IN AN INVITATION FOR BIDS MIGHT AFFECT THE PRICES OFFERED BY PROSPECTIVE BIDDERS. 35 COMP. GEN. 484, 486. AS A GENERAL RULE, IF AN EXCEPTION TO AN INVITATION IN ANY WAY AFFECTS THE PRICE, QUANTITY OR QUALITY OF THE PROCUREMENT IT AFFECTS THE SUBSTANCE OF THE BID AND IT CANNOT BE WAIVED. 30 COMP. GEN. 179; 20 ID. 4; AND 17 ID. 554.

IT IS AN ESTABLISHED RULE THAT A CONTRACT AWARDED TO A SUCCESSFUL BIDDER MUST BE THE CONTRACT OFFERED TO ALL BIDDERS. SEE UNITED STATES V. BROOKRIDGE FARM, 111 F.2D 461. WHEN ONE BIDDER LIMITS THE DEGREE OF THE RESPONSIBILITY FOR BREACH REQUIRED BY THE INVITATION FOR BIDS, IT IS CLEAR THAT A CONTRACT AWARDED UPON THE BASIS OF SUCH A BID WOULD NOT BE THE CONTRACT OFFERED TO ALL BIDDERS.

IN 17 COMP. GEN. 554, 558-9, WE SAID:

"* * * TO PERMIT PUBLIC OFFICERS TO ACCEPT BIDS NOT COMPLYING IN SUBSTANCE WITH THE ADVERTISED SPECIFICATIONS OR TO PERMIT BIDDERS TO VARY THEIR PROPOSALS AFTER THE BIDS ARE OPENED WOULD SOON REDUCE TO A FARCE THE WHOLE PROCEDURE OF LETTING PUBLIC CONTRACTS ON AN OPEN COMPETITIVE BASIS. THE STRICT MAINTENANCE OF SUCH PROCEDURE, REQUIRED BY LAW, IS INFINITELY MORE IN THE PUBLIC INTEREST THAN OBTAINING AN APPARENTLY PECUNIARY ADVANTAGE IN A PARTICULAR CASE BY A VIOLATION OF THE RULES. AS WAS SAID BY THE COURT IN THE CITY OF CHICAGO V. MOHR, 216 ILL. 320; 74 N.E. 1056---

" "* * * WHERE A BID IS PERMITTED TO BE CHANGED (AFTER THE OPENING) IT IS NO LONGER THE SEALED BID SUBMITTED IN THE FIRST INSTANCE, AND, TO SAY THE LEAST, IS FAVORITISM, IF NOT FRAUD--- A DIRECT VIOLATION OF LAW--- AND CANNOT BE TOO STRONGLY CONDEMNED.'"

AND IN 34 COMP. GEN. 82, 84, WE SAID:

"* * * 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.'

ACCORDINGLY, WE WOULD NOT BE WARRANTED IN OBJECTING TO THE REJECTION OF THE BID OF WAUKESHA MOTOR COMPANY.