B-144114, OCT. 4, 1960

B-144114: Oct 4, 1960

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WHEN BIDS WERE OPENED. IT WAS FOUND THAT ALLIS-CHALMERS HAD SUBMITTED A PRICE OF $109. THE ALLIS-CHALMERS BID ON THE ITEM WAS LOW AND ACCEPTABLE EXCEPT THAT ABOVE THE BID PRICE HAD BEEN INSERTED THE FOLLOWING: "PRICE POLICY CLAUSE THE PRICE IS FIRM FOR ONE YEAR" INQUIRY OF THE FIRM'S REPRESENTATIVE DISCLOSED THAT THE INTENT OF THE INSERTION WAS THAT THE PRICE SHOULD REMAIN FIRM FOR DELIVERY WITHIN ONE YEAR FROM DATE OF BID OPENING. THE QUESTION PRESENTED IS WHETHER THE INSERTION RENDERS THE LOW BID NONRESPONSIVE. WHILE THE TELEGRAM IS SILENT AS TO THE CLAUSES EMPLOYED IN THE INVITATION. IF THE BID WERE AWARDED TO ALLIS-CHALMERS. THE BID WOULD HAVE BEEN FOR EVALUATION OF THE BASIS OF THE MAXIMUM POSSIBLE PRICE.

B-144114, OCT. 4, 1960

TO MR. W. J. FOSTER, CONTRACTING OFFICER, SOUTHWESTERN POWER ADMINISTRATION:

OUR ADVICE HAS BEEN REQUESTED BY TELEGRAM OF SEPTEMBER 28, 1960, AS TO THE ACCEPTABILITY OF THE LOW BID SUBMITTED BY THE ALLIS-CHALMERS MANUFACTURING COMPANY IN RESPONSE TO ITEM 1 OF INVITATION NO. SPA-314, ISSUED BY THE SOUTHWESTERN POWER ADMINISTRATION FOR THE PROCUREMENT OF A 3 -PHASE POWER TRANSFORMER.

WHEN BIDS WERE OPENED, AS SCHEDULED, ON AUGUST 26, 1960, IT WAS FOUND THAT ALLIS-CHALMERS HAD SUBMITTED A PRICE OF $109,000 FOR ITEM 1, WITH DELIVERY OFFERED WITHIN 270 CALENDAR DAYS AFTER RECEIPT OF WRITTEN NOTICE OF AWARD IN COMPLIANCE WITH THE DESIRED SCHEDULE SET OUT IN THE INVITATION. THE ALLIS-CHALMERS BID ON THE ITEM WAS LOW AND ACCEPTABLE EXCEPT THAT ABOVE THE BID PRICE HAD BEEN INSERTED THE FOLLOWING:

"PRICE POLICY CLAUSE THE PRICE IS FIRM FOR ONE YEAR"

INQUIRY OF THE FIRM'S REPRESENTATIVE DISCLOSED THAT THE INTENT OF THE INSERTION WAS THAT THE PRICE SHOULD REMAIN FIRM FOR DELIVERY WITHIN ONE YEAR FROM DATE OF BID OPENING. THE QUESTION PRESENTED IS WHETHER THE INSERTION RENDERS THE LOW BID NONRESPONSIVE.

WHILE THE TELEGRAM IS SILENT AS TO THE CLAUSES EMPLOYED IN THE INVITATION, WE ASSUME IT INCLUDES A PROVISION TO THE EFFECT THAT THE CONTRACTOR MAY BE GRANTED AN EXTENSION OF TIME FOR DELAYS INCURRED WITHOUT HIS FAULT OR NEGLIGENCE, OR THAT OF HIS SUBCONTRACTORS. WE CONSIDER IT WELL WITHIN THE REALM OF POSSIBILITY THAT CIRCUMSTANCES MAY OCCUR PRIOR TO DELIVERY OF THE ARTICLE CAUSING SUCH DELAY AS TO RESULT IN AN EXTENSION OF THE DELIVERY SCHEDULE BEYOND THE PERIOD THAT THE PRICE UNDER THE ALLIS- CHALMERS BID WOULD REMAIN FIRM. IN SUCH CASE, IF THE BID WERE AWARDED TO ALLIS-CHALMERS, THE PRICE TO BE PAID BY THE GOVERNMENT WOULD BE A REASONABLE PRICE, DEPENDING ON THE CIRCUMSTANCES EXISTING AT THE TIME OF DELIVERY. HAD THE ALLIS CHALMERS BID PROVIDED A MAXIMUM POSSIBLE ESCALATION, THE BID WOULD HAVE BEEN FOR EVALUATION OF THE BASIS OF THE MAXIMUM POSSIBLE PRICE. SEE 35 COMP. GEN. 684. HOWEVER, WHERE, AS HERE, NO MAXIMUM IS STATED FOR THE PERIOD IN WHICH THERE EXISTS A REAL POSSIBILITY THAT DELIVERY WILL BE MADE, THERE IS NO BASIS UPON WHICH THE BID MAY BE EVALUATED. ACCORDINGLY, UNDER THE FACTS PRESENTED, THE ALLIS- CHALMERS BID MAY NOT BE CONSIDERED FOR AWARD.