B-149059, AUG. 9, 1962

B-149059: Aug 9, 1962

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YOUR AGENCY SUBMITTED A REPORT RECOMMENDING THAT WE DISMISS THE PROTEST ON THE GROUNDS THAT THE BID SUBMITTED BY DUNHAM WAS NONRESPONSIVE IN THAT THE WARRANTY IT PROPOSED TO OFFER FOR THE 70 REFRIGERATION UNITS BEING PROCURED WAS MATERIALLY DIFFERENT FROM THE ONE REQUIRED BY THE WARRANTY CLAUSE IN THE INVITATION. THE WARRANTY CLAUSE MENTIONED ABOVE READS AS FOLLOWS: "THE CONTRACTOR WILL INSERT IN A WATERPROOF CONTAINER A COPY OF THE FOLLOWING WARRANTY CLAUSE WHICH WILL BE ATTACHED TO EACH END ITEM. WILL INSERT THE PROPER DATE INTO THE SPACE IN THE SECOND SENTENCE. THE DATE INSERTED WILL BE ONE (1) CALENDAR YEAR FROM THE DATE OF THE DELIVERY TO THE GOVERNMENT OF EACH UNIT. THIS WARRANTY IS EFFECTIVE FOR ONE (1) YEAR AFTER DELIVERY AND EXPIRES ON .

B-149059, AUG. 9, 1962

TO DIRECTOR, DEFENSE SUPPLY AGENCY:

ON JUNE 1, 1962, WE RECEIVED A LETTER FROM DUNHAM-BUSH, INC., HEREINAFTER REFERRED TO AS DUNHAM, PROTESTING THE PROPOSED AWARD OF A CONTRACT UNDER INVITATION FOR BIDS QM/MGS/44-193-62-1411 BY THE MILITARY GENERAL SUPPLY AGENCY, RICHMOND QUARTERMASTER DEPOT, RICHMOND, VIRGINIA. ON JULY 3, 1962, YOUR AGENCY SUBMITTED A REPORT RECOMMENDING THAT WE DISMISS THE PROTEST ON THE GROUNDS THAT THE BID SUBMITTED BY DUNHAM WAS NONRESPONSIVE IN THAT THE WARRANTY IT PROPOSED TO OFFER FOR THE 70 REFRIGERATION UNITS BEING PROCURED WAS MATERIALLY DIFFERENT FROM THE ONE REQUIRED BY THE WARRANTY CLAUSE IN THE INVITATION.

THE WARRANTY CLAUSE MENTIONED ABOVE READS AS FOLLOWS:

"THE CONTRACTOR WILL INSERT IN A WATERPROOF CONTAINER A COPY OF THE FOLLOWING WARRANTY CLAUSE WHICH WILL BE ATTACHED TO EACH END ITEM, AND WILL INSERT THE PROPER DATE INTO THE SPACE IN THE SECOND SENTENCE. THE DATE INSERTED WILL BE ONE (1) CALENDAR YEAR FROM THE DATE OF THE DELIVERY TO THE GOVERNMENT OF EACH UNIT.

"THE MANUFACTURER WARRANTS THIS EQUIPMENT TO BE FREE OF ALL DEFECTS IN MATERIAL AND WORKMANSHIP AT TIME OF DELIVERY. THIS WARRANTY IS EFFECTIVE FOR ONE (1) YEAR AFTER DELIVERY AND EXPIRES ON -------------- -----------, (TO BE COMPLETED BY CONTRACTOR). ANY DEFECTS IN MATERIAL OR WORKMANSHIP SHOULD BE REPORTED WITHOUT DELAY USING D.A. FORM 468 (UNSATISFACTORY EQUIPMENT REPORT) SO THAT RECOVERY FROM THE CONTRACTOR CAN BE MADE WITHIN THE WARRANTY PERIOD. EXPENSES INCIDENT TO NORMAL MAINTENANCE OR TO FAIR WEAR AND TEAR SHOULD NOT BE REPORTED AS DEFECTS UNDER THE WARRANTY CLAUSE.'

THE LOWEST THREE OF THE SIX BIDS RECEIVED WERE AS FOLLOWS:

CHART

1. DUNHAM-BUSH, INC. $1,812.00 EACH

2. RECONY DIVISION, VINCO CORP. $1,996.59 EACH

3. THERMO-KING CORP. $2,385.45 EACH

WHEN THESE BIDS WERE OPENED ON FEBRUARY 5, 1962, IT WAS DISCOVERED THAT DUNHAM HAD TYPED ,JANUARY 1, 1964," INTO THE BLANK SPACE PROVIDED FOR THE TERMINATION DATE OF THE WARRANTY, ALTHOUGH THE TERMS OF THE INVITATION IMPLIED THAT THIS SPACE WAS TO BE FILLED IN ONLY WHEN THE ACTUAL WARRANTY WAS LATER ATTACHED TO THE END ITEM READY FOR DELIVERY. THIRTY-FIVE OF THE SEVENTY UNITS WERE REQUIRED TO BE DELIVERED WITHIN 315 DAYS AFTER AWARD, AND THE REMAINING UNITS ONE MONTH LATER. ON MARCH 1, 1962, THE BIDDER ALLEGED THAT THE INSERTION WAS AN ERROR AND REQUESTED THAT IT BE DELETED FROM THE BID. THE REPORT OF YOUR AGENCY CONTENDS THAT THE INSERTION OF A DEFINITE DATE IN THE SAMPLE OF THE WARRANTY CREATED A VARIATION FROM THE ACTUAL WARRANTY REQUIREMENT, SINCE EXPIRATION OF SUCH WARRANTY ON JANUARY 1, 1964, WOULD BE A LESSER PERIOD THAN ,ONE (1) CALENDAR YEAR FROM THE DATE OF THE DELIVERY.' THE REPORT CONCLUDES THAT THE ALLEGED ERROR COULD NOT BE CORRECTED BECAUSE THE EXCEPTION TO THE REQUIRED WARRANTY PERIOD MADE THE BID NONRESPONSIVE TO THE INVITATION,

AND OUR DECISION 38 COMP. GEN. 819 PRECLUDES CORRECTION OF ERRORS EXCEPT IN CASES WHERE THE BID IS RESPONSIVE.

IT IS CLEAR THAT THE "WARRANTY CLAUSE" WAS INCLUDED IN THE INVITATION FOR BIDS ONLY FOR THE PURPOSE OF APPRISING PROSPECTIVE BIDDERS OF THE TYPE OF CLAUSE THE SUCCESSFUL BIDDER WOULD BE REQUIRED TO EXECUTE AND ATTACH TO EACH END ITEM DELIVERED UNDER THE CONTRACT. SINCE THE CLAUSE WAS ONLY A SAMPLE THERE WAS, OF COURSE, NO REQUIREMENT THAT THE BIDDERS FILL IN THE BLANK SPACE APPEARING IN THE CLAUSE. IN FACT, THE CLAUSE CONTAINS A PARENTHETICAL STATEMENT THAT THE BLANK SPACE IS "TO BE COMPLETED BY CONTRACTOR," WHO,OF COURSE, WOULD BE THE SUCCESSFUL BIDDER.

HAVING REGARD FOR THE PURPOSE OF THE SAMPLE WARRANTY, AND THE FACT THAT ONLY THE "CONTRACTOR," NOT THE BIDDER, WAS TO COMPLETE THE BLANK SPACE, IT IS OUR VIEW THAT THE BIDDER DID NOT SUCCEED IN MODIFYING THE ONE-YEAR WARRANTY REQUIREMENT. REGARDLESS OF WHETHER DUNHAM DID OR DID NOT INTEND TO MODIFY THE WARRANTY, WE THINK THAT IT COULD NOT AND DID NOT DO SO BY MERELY INSERTING IN A SAMPLE OF THE WARRANTY CLAUSE A DATE WHICH WAS DIRECTLY IN CONFLICT WITH THE WARRANTY PERIOD REQUIRED BY THE TERMS OF THE INVITATION AND THE SAMPLE WARRANTY. ACCORDINGLY, THE BID OF DUNHAM WOULD APPEAR TO BE RESPONSIVE TO THE INVITATION AND MAY BE CONSIDERED IN MAKING AN AWARD OF A CONTRACT.

ON MARCH 2, 1962, DUNHAM REQUESTED CORRECTION OF ANOTHER ALLEGED MISTAKE IN ITS BID. IT CLAIMED THAT IN DETERMINING THE BID PRICE NO CONSIDERATION WAS GIVEN TO THE 8 PERCENT FEDERAL EXCISE TAX IMPOSED BY 26 U.S.C. 4061 (B). WHILE PARAGRAPH 22 (B) OF THE ADDITIONAL GENERAL PROVISIONS TO THE INVITATION REQUIRED THAT ALL FEDERAL TAXES BE INCLUDED IN THE CONTRACT PRICE, THE COMPANY SAYS IT WAS UNAWARE OF THIS PARTICULAR TAX, WHICH ALLEGEDLY HAD NOT BEEN INVOLVED IN PREVIOUS SALES. THE ALLEGATION OF ERROR WAS PROVEN TO YOUR SATISFACTION BY THE SUBMISSION OF COPIES OF THE COMPANY'S WORKSHEET, WHICH SHOWED THAT NO TAX HAD BEEN INCLUDED THEREIN. EVEN WITH THE INCLUSION OF THE AMOUNT REPRESENTING THE ALLEGED OMISSION FROM THIS "TAX INCLUSIVE" BID, DUNHAM WOULD REMAIN THE LOW BIDDER AT THE INCREASED UNIT PRICE OF $1,956.96 EACH. YOU PROPOSE TO REJECT THE BID, EVEN IF DUNHAM'S BID IS CONSIDERED RESPONSIVE, ON THE BASIS THAT IT HAS PROVEN ERROR BUT HAS NOT PROVEN THE AMOUNT OF THE ERROR.

ON MAY 1, 1962, DUNHAM WITHDREW ITS REQUEST FOR AN INCREASE IN THE BID PRICE, SUSPECTING THAT PROOF OF THE ALLEGED MISTAKE MIGHT ALLOW IT TO WITHDRAW THE BID, BUT PRECLUDE ITS BEING CONSIDERED FOR AWARD AT EITHER THE ORIGINAL OR CORRECTED BID PRICE. HOWEVER, THE BIDDER REASSERTED ITS CLAIM THAT CORRECTION SHOULD HAVE BEEN ALLOWED, BUT ARGUED FURTHER THAT IF CORRECTION HAS BEEN PROPERLY DISALLOWED, DUNHAM SHOULD HAVE BEEN CONSIDERED FOR AWARD AT ITS ORIGINAL BID PRICE OF $1,812.

THE EVIDENCE FURNISHED DOES NOT ESTABLISH WHAT THE AMOUNT OF THE BID WOULD HAVE BEEN BUT FOR THE ERROR. WE HAVE TAKEN THE POSITION THAT A BIDDER MAY NOT FOREGO AN ERROR IN BID IN ORDER TO REMAIN THE LOW BIDDER. SEE 37 COMP. GEN. 579, ALSO, B-124066, JUNE 7, 1955. HOWEVER, THAT IS NOT THE SITUATION HERE SINCE, EVEN CONSIDERING THE ALLEGED ERROR, DUNHAM WOULD STILL BE LOW AS TO PRICE. IN THESE CIRCUMSTANCES WE HAVE PERMITTED THE CONSIDERATION OF A BID AT THE ORIGINAL BID PRICE. SEE B-149003, JUNE 15, 1962. ACCORDINGLY, THE BID OF DUNHAM MAY BE CONSIDERED FOR AWARD OF THE CONTRACT AT THE ORIGINAL BID PRICE OF $1,812.