B-149172, AUGUST 8, 1962, 42 COMP. GEN. 96

B-149172, AUGUST 8, 1962, 42 COMP. GEN. 96

BIDS - QUALIFIED - OFFER OF COMPLIANCE A LOW BIDDER WHO, NOTWITHSTANDING GENERAL STATEMENTS IN A LETTER ACCOMPANYING THE BID TO THE EFFECT THAT HE WILL NOT TAKE EXCEPTION TO THE SPECIFICATIONS, RESERVES THE RIGHT TO NEGOTIATE THE TERMS OF THE WARRANTY AFTER BID OPENING HAS SUBMITTED A BID WITH MATERIAL QUALIFICATIONS WHICH MUST BE REJECTED AS NON-RESPONSIVE TO THE TERMS OF THE INVITATION. 88231, DECEMBER 15, 1949, UNPUBLISHED DECISION, OVERRULED.

TO THE SECRETARY OF THE NAVY, AUGUST 8, 1962:

WE HAVE A LETTER OF JULY 13, 1962, WITH ENCLOSURES, YOUR REFERENCE EC- 131C/CT:AML NBY-40418, IN RESPONSE TO OUR REQUEST FOR A REPORT ON THE AWARD OF CONTRACT NBY-40418 FOR THE PROCUREMENT OF AN AIR COMPRESSOR UNIT.

INVITATION FOR BIDS NO. 40418/62, FOR THE PROCUREMENT, WAS ISSUED MAY 4, 1962, INCORPORATING NAVDOCKS SPECIFICATION NO. 40418/62. BIDS WERE OPENED AS SCHEDULED ON MAY 22, 1962. THE LOW BID IN THE AMOUNT OF $83,300 WAS SUBMITTED BY THE INGERSOLL-RAND COMPANY. THE SECOND LOW BIDDER, AT $89,626, WAS THE JOY MANUFACTURING COMPANY. IN ADDITION, THREE HIGHER BIDS WERE RECEIVED.

IN A LETTER DATED MAY 21, 1962, SPECIFICALLY MADE A PART OF ITS BID, INGERSOLL-RAND COMMENTED ON THE SPECIFICATION PROVISIONS AS TO NOISE LEVEL, LIQUIDATED DAMAGES FOR DELAY, AND SELLER'S WARRANTY, STATING WITH RESPECT TO THE LAST,"BECAUSE OF INDEFINITE POSITION CONTRACTOR RESERVES THE RIGHT TO REVIEW AND NEGOTIATE PRIOR TO ANY AWARD.' HOWEVER, BOTH THE BEGINNING AND END OF THE LETTER CONTAINED POSITIVE STATEMENTS TO THE EFFECT THAT THE BIDDER WAS TAKING NO EXCEPTION TO THE SPECIFICATIONS.

FAVORABLE CONSIDERATION OF THE LOW BID WAS PROTESTED BY JOY ON THE GROUNDS THAT THE CITED LETTER MATERIALLY QUALIFIED THE BID AND RENDERED IT NONRESPONSIVE. AFTER CONSIDERING THE MATTER, THE CONTRACTING OFFICER DETERMINED, IN VIEW OF THE TWO SPECIFIC STATEMENTS IN THE LETTER THAT NO EXCEPTION TO THE SPECIFICATION WAS TAKEN, THAT THE LOW BID WAS RESPONSIVE. IN ARRIVING AT THIS CONCLUSION THE CONTRACTING OFFICER RELIED ON OUR DECISION B-88231, DECEMBER 15, 1949. THE CONTRACT FOR THE PROCUREMENT WAS AWARDED TO INGERSOLL-RAND ON JUNE 8, 1962.

UNDER WELL-RECOGNIZED PRINCIPLES OF COMPETITIVE BIDDING, A CONTRACT MAY BE AWARDED ONLY ON A BID WHICH IS FULLY RESPONSIVE TO THE TERMS OF THE INVITATION. A BID, IN GENERAL CONTRACT LAW, IS AN OFFER WHICH UPON ACCEPTANCE BY AWARD RIPENS INTO A CONTRACT BINDING THE PARTIES. HOWEVER, AN AWARD PURSUANT TO COMPETITIVE BIDDING MAY BE MADE ONLY UPON THE TERMS ADVERTISED TO THE PUBLIC, AND NO BINDING CONTRACT RESULTS WHEN THE BID OR OFFER IS MATERIALLY INCONSISTENT WITH THE TERMS OF THE INVITATION. SEE 40 COMP. GEN. 477, 448.

IN THIS CASE WHILE, AS PREVIOUSLY NOTED, THE LOW BID CONTAINS TWO POSITIVE AFFIRMATIONS THAT NO EXCEPTION TO THE SPECIFICATIONS WAS INTENDED, IT ALSO RESERVES THE RIGHT TO NEGOTIATE FURTHER ON THE TERMS OF THE SELLER'S WARRANTY PRIOR TO AWARD. THE TERMS OF A WARRANTY MAY UNQUESTIONABLY BE MATERIAL AND QUALIFICATION OF SUCH TERMS REQUIRES REJECTION OF A BID AS NONRESPONSIVE. B-138307, MAY 15, 1959. THE RESERVATION IN A BID OF A RIGHT TO NEGOTIATE AFTER OPENING ON A MATERIAL PROVISION OF AN INVITATION PRIOR TO AWARD IS INCONSISTENT WITH THE PRINCIPLES OF COMPETITIVE BIDDING AND RENDERS THE BID NONRESPONSIVE. 134223, NOVEMBER 20, 1957. IN THIS CASE THE RESERVATION OF THE RIGHT TO NEGOTIATE THE TERMS OF THE WARRANTY IS IN DIRECT CONFLICT WITH GENERAL STATEMENTS OF NONEXCEPTION TO THE SPECIFICATIONS. IN CASES OF SUCH CONFLICTS, THE MATTER IS RESOLVED BY ADOPTING THE MEANING OF THE MORE SPECIFIC PROVISION. SEE 4 WILLISTON ON CONTRACTS, 3D EDITION, SECTION 619 (PAGE 743). ACCORDINGLY, THE LOW BID, NOTWITHSTANDING THE GENERAL EXPRESSIONS OF COMPLIANCE, SHOULD HAVE BEEN REGARDED AS NONRESPONSIVE. SEE, ALSO, COMP. GEN. 393, 397, WHERE WE STATE:

* * * IN CIRCUMSTANCES WHERE EACH OF TWO POSSIBLE MEANINGS CAN BE REACHED FROM THE TERMS OF A BID, THE BIDDER SHOULD NOT BE ALLOWED TO EXPLAIN HIS MEANING WHEN HE IS IN A POSITION THEREBY TO PREJUDICE OTHER BIDDERS OR TO AFFECT THE RESPONSIVENESS OF HIS BID. SUCH ACTION WOULD SERVE TO UNDERMINE THE INTEGRITY OF THE BIDDING SYSTEM AND CAUSE OVERALL HARM TO THE SYSTEM OF COMPETITIVE BIDDING DESPITE THE IMMEDIATE ADVANTAGE GAINED BY A LOWER PRICE IN THE PARTICULAR PROCUREMENT.

AS INDICATED ABOVE, THE CONTRACTING OFFICER IN ACCEPTING THE LOW BID RELIED ON OUR DECISION B-88231, DECEMBER 15, 1949, IN WHICH WE CRITICIZED THE CONTRACTING AGENCY FOR HAVING REJECTED THE LOW BID UNDER WHAT WE CONCLUDE, FROM A THOROUGH REVIEW OF THE DECISION AND SUPPORTING FILE, TO BE ANALOGOUS CIRCUMSTANCES. SINCE THE PARTIES IN THIS INSTANCE APPEAR TO HAVE ACTED IN GOOD FAITH IN RELIANCE ON A DECISION OF OUR OFFICE, WE DEEM IT INAPPROPRIATE TO REQUIRE CANCELLATION OF THE CONTRACT. HOWEVER, B- 88231, DECEMBER 15, 1949, SHOULD NO LONGER BE FOLLOWED AND IS HEREBY OVERRULED.