B-149284, JUL. 16, 1962

B-149284: Jul 16, 1962

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BIDDERS ARE REQUESTED TO SET FORTH BELOW THE UNIT PRICE FOR THE OPTION QUANTITY AS AN INDUCEMENT TO THE GOVERNMENT TO EXERCISE THE OPTION. BIDDERS ARE ADVISED THAT THE OPTION QUANTITY AND PRICE WILL NOT BE A CONSIDERATION IN THE EVALUATION OF THE BID.'. THE HOLLINGSHEAD CORPORATION BID CONTAINED A STATEMENT AS FOLLOWS: "ANY OPTION THAT IS EXERCISED MUST BE EXERCISED AT TIME OF ORIGINAL AWARD. OPTION PRICES WILL BE THE SAME AS QUOTED PRICES.'. IT CONTENDED THAT THE BID SHOULD NOT HAVE BEEN REJECTED SINCE IT DID NOT PREVENT THE OPTION FROM BEING EXERCISED. THE PROTEST WAS REVIEWED BY HEADQUARTERS. THAT OPINION IS GROUNDED UPON TWO STATEMENTS IN THE INVITATION: FIRST. THE STATEMENT IN THE "INCREASE OPTION" CLAUSE THAT "BIDDERS ARE ADVISED THAT THE OPTION QUANTITY AND PRICE WILL NOT BE A CONSIDERATION IN THE EVALUATION OF THE BID.

B-149284, JUL. 16, 1962

TO THE SECRETARY OF THE ARMY:

IN LETTER OF JUNE 22, 1962, THE CHIEF, CONTRACTS DIVISION, OFFICE OF THE DEPUTY CHIEF OF STAFF FOR LOGISTICS, REQUESTED A DECISION AS TO WHETHER THE LOW BID OF THE HOLLINGSHEAD CORPORATION, REJECTED AS NONRESPONSIVE TO IFB CML-04-205-62-61, COULD BE CONSIDERED AS RESPONSIVE.

THE INVITATION SOLICITED BIDS FOR SUPPLYING SOLVENT CLEANING COMPOUND IN VARIOUS SIZE CONTAINERS DURING THE PERIOD COMMENCING JUNE 30 AND ENDING AUGUST 31, 1962. PARAGRAPH 5 OF THE INVITATION SCHEDULE PROVIDED:

"INCREASE OPTION: THE GOVERNMENT RESERVES THE RIGHT TO EXERCISE AN OPTION TO PURCHASE AN ADDITIONAL QUANTITY OF THE ITEM WHICH QUANTITY MAY BE UP TO BUT NOT EXCEEDING TWENTY-FIVE PERCENT (25 PERCENT) OF THE QUANTITY AWARDED FOR THE ITEM. NOTICE OF THE EXERCISE OF SUCH OPTION SHALL BE MADE TO THE CONTRACTOR IN WRITING ON OR BEFORE FIVE (5) DAYS PRIOR TO COMPLETION OF CONTRACT. THE UNIT PRICE FOR ANY QUANTITY PURCHASED UNDER THIS OPTION PROVISION SHALL BE THE SAME UNIT PRICE ACCEPTED UNDER THIS INVITATION FOR BIDS, AS THE SAME MAY BE ADJUSTED PURSUANT TO GENERAL PROVISION NO. 2,"CHANGES," BY SUPPLEMENTAL AGREEMENT TO THIS CONTRACT. DELIVERY OF ANY OPTION QUANTITY PURSUANT TO THE TERMS OF THIS CLAUSE SHALL BE MADE NO LATER THAN THIRTY (30) DAYS AFTER THE FINAL DELIVERY DATE FOR THE DEFINITIVE QUANTITY CALLED FOR HEREIN.

"INASMUCH AS THE UNIT PRICE FOR THE BASIC QUANTITY MAY CONTAIN STARTING LOAD, TOOLING, OR OTHER COSTS NOT APPLICABLE TO THE OPTION QUANTITY, BIDDERS ARE REQUESTED TO SET FORTH BELOW THE UNIT PRICE FOR THE OPTION QUANTITY AS AN INDUCEMENT TO THE GOVERNMENT TO EXERCISE THE OPTION.

"ITEM OPTION PRICE

"IN THE EVENT THAT THE BIDDER DOES NOT OFFER A LESSER PRICE FOR THE OPTION QUANTITY, THE UNIT PRICE FOR ANY QUANTITY PURCHASED UNDER THIS OPTION SHALL BE THE SAME PRICE ACCEPTED UNDER THIS INVITATION FOR BIDS. UPON EXERCISE OF THE OPTION, THE PRICE FOR THE OPTION QUANTITY SHALL BE ADJUSTED FOR ANY MODIFICATIONS ISSUED PURSUANT TO GENERAL PROVISIONS NO. 2,"CHANGES," FROM THE DATE AWARDED. BIDDERS ARE ADVISED THAT THE OPTION QUANTITY AND PRICE WILL NOT BE A CONSIDERATION IN THE EVALUATION OF THE BID.'

THE HOLLINGSHEAD CORPORATION BID CONTAINED A STATEMENT AS FOLLOWS:

"ANY OPTION THAT IS EXERCISED MUST BE EXERCISED AT TIME OF ORIGINAL AWARD. OPTION PRICES WILL BE THE SAME AS QUOTED PRICES.'

AS THE "INCREASE OPTION" CLAUSE RESERVED TO THE GOVERNMENT THE RIGHT TO EXERCISE ITS OPTION TO PURCHASE ADDITIONAL QUANTITIES AT ANY TIME PRIOR TO FIVE DAYS BEFORE COMPLETION OF THE CONTRACT, THE CONTRACTING OFFICER DETERMINED THAT THE QUALIFICATION IN THE HOLLINGSHEAD BID HAD CHANGED AN ESSENTIAL REQUIREMENT OF THE CONTRACT AND THEREFORE REJECTED THE BID AS NONRESPONSIVE TO THE INVITATION.

IN LETTER OF MAY 21, 1962, THE BIDDER PROTESTED TO THE CONTRACTING OFFICER. IT CONTENDED THAT THE BID SHOULD NOT HAVE BEEN REJECTED SINCE IT DID NOT PREVENT THE OPTION FROM BEING EXERCISED, BUT MERELY REQUIRED THAT THE ELECTION BE MADE AT THE TIME OF AWARD. FURTHER, IT STATED THAT IT HAD BID SIMILARLY IN RESPONSE TO A NUMBER OF OTHER GOVERNMENT INVITATIONS AND HAD RECEIVED AWARDS ON THEM.

THE PROTEST WAS REVIEWED BY HEADQUARTERS, U.S. ARMY CHEMICAL CENTER AND CHEMICAL CORPS MATERIEL COMMAND, WHICH RECOMMENDED THAT THE HOLLINGSHEAD BID BE CONSIDERED RESPONSIVE ON THE BASIS THAT THE QUALIFICATION OF THE OPTION CLAUSE DID NOT AFFECT THE RESPONSIVENESS OF THE BID. THAT OPINION IS GROUNDED UPON TWO STATEMENTS IN THE INVITATION: FIRST, THE STATEMENT IN THE "INCREASE OPTION" CLAUSE THAT "BIDDERS ARE ADVISED THAT THE OPTION QUANTITY AND PRICE WILL NOT BE A CONSIDERATION IN THE EVALUATION OF THE BID; " AND SECOND, THE STATEMENT IN PARAGRAPH 8 OF THE TERMS AND CONDITIONS OF THE INVITATION FOR BIDS THAT "UNLESS OTHERWISE PROVIDED IN THE SCHEDULE, BIDS MAY BE SUBMITTED FOR ANY QUANTITIES LESS THAN THOSE SPECIFIED.'

THE "INCREASE OPTION" CLAUSE, IN OUR OPINION, DOES NOT AFFORD ANY BASIS FOR A CONCLUSION THAT A DEVIATION FROM THE TERMS THEREOF WOULD BE IMMATERIAL. WHILE THE CLAUSE INDICATES THAT OPTION QUANTITIES AND PRICES WILL NOT BE CONSIDERED IN ASCERTAINING THE AMOUNT OF THE BID, IT DOES NOT PRECLUDE THE CLAUSE FROM BEING MATERIAL FROM THE STANDPOINT OF RESPONSIVENESS. DECISIONS OF THIS OFFICE HAVE HELD THAT DEVIATIONS FROM THE PROVISIONS OF AN INVITATION THAT AFFECT THE BID PRICE OF THE ITEM TO BE PROCURED AFFECT THE SUBSTANCE OF THE BID SO AS TO REQUIRE IT TO BE REJECTED FOR NONRESPONSIVENESS. SEE 31 COMP. GEN. 179 AND CASES CITING IT.

ORDINARILY, BIDDERS IN THE PREPARATION OF THEIR BIDS TAKE INTO CONSIDERATION ALL CONTINGENCIES PROVIDED IN THE INVITATION. AS THE OPTION CLAUSE INDICATED THAT AMOUNTS UP TO 25 PERCENT OF THE ORIGINAL REQUIREMENT COULD BE ORDERED BY THE GOVERNMENT AT THE ORIGINAL BID PRICE, IF A LOWER PRICE WAS NOT STIPULATED BY THE BIDDER, UP UNTIL FIVE DAYS BEFORE THE CONTRACT WAS COMPLETED, BIDDERS WOULD HAVE TO ESTIMATE MARKET CONDITIONS AND PRODUCTION FACTORS AND INCLUDE IN THEIR BID PRICE AN AMOUNT TO COVER THESE CONTINGENCIES. THE BIDDER HERE INVOLVED, IN LIMITING THE ELECTION OF ADDITIONAL QUANTITIES TO THE TIME OF AWARD, DID NOT HAVE TO PROVIDE FOR THE SAME CONTINGENCIES WHICH THE OTHER BIDDERS HAD TO TAKE INTO ACCOUNT AND IT MAY BE THAT THE DIFFERENCE IN ITS PRICE IS A REFLECTION OF THAT CIRCUMSTANCE. WE BELIEVE, THEREFORE, THAT THE DEVIATION IN THE IMMEDIATE BID WAS ONE THAT COULD AFFECT PRICE.

FURTHER, WE DO NOT BELIEVE THAT THE LANGUAGE QUOTED FROM PARAGRAPH 8 HAS ANY APPLICATION TO THE MATTER. THE BIDDER WAS NOT SUBMITTING A BID FOR A QUANTITY LESS THAN THAT CONTAINED IN THE OPTION CLAUSE. IT AGREED TO FURNISH THE ENTIRE QUANTITY CALLED FOR BY THE OPTION CLAUSE. THE DEVIATION WAS NOT AS TO QUANTITY BUT AS TO THE TIME WHEN THE ELECTION FOR THE QUANTITY HAD TO BE MADE. AS DEMONSTRATED ABOVE, THAT DEVIATION COULD AFFECT THE PRICE OF THE ITEMS INVOLVED AND HAVE MATERIAL CONSEQUENCES.

THE FACT THAT THE BIDDER MAY HAVE USED SIMILAR QUALIFICATIONS IN BIDS SUBMITTED UNDER OTHER INVITATIONS AND MAY HAVE BEEN AWARDED CONTRACTS THEREUNDER HAS NO BEARING ON THE QUESTION. AS STATED IN 36 COMP. GEN. 535, 540,"AN IMPROPER AWARD IN ONE OR MORE CASES WOULD NOT JUSTIFY A REPETITION OF THE SAME ERROR.'

ACCORDINGLY, WE MUST CONCLUDE THAT THE BID OF THE HOLLINGSHEAD CORPORATION WAS PROPERLY REJECTED AS NONRESPONSIVE.