B-149444, SEP. 7, 1962

B-149444: Sep 7, 1962

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

BID OPENING WAS HELD ON APRIL 11. FOUR BIDS WERE RECEIVED AND TABULATED. WAS LOWEST AS TO PRICE. WHICH STATES IN PERTINENT PART AS FOLLOWS: "THESE UNITS WHEN SOLD COMMERCIALLY ARE WARRANTED AGAINST DEFECTIVE MATERIALS AND WORKMANSHIP FOR A PERIOD OF ONE (1) YEAR FROM DATE OF SHIPMENT. COMPONENTS PROVED DEFECTIVE (EXCEPT TUBES) WILL BE REPAIRED OR REPLACED DURING THE WARRANTY PERIOD. THIS WARRANTY WILL BE EXTENDED TO YOUR AGENCY IF WE ARE THE SUCCESSFUL BIDDER. TERMS AND CONDITIONS OF THE BID PROPOSAL ARE ACCEPTED AS DEFINED.'. INCLUDED UNDER TERMS AND CONDITIONS OF THIS INVITATION IS CLAUSE 37 ENTITLED "GUARANTEE" OF THE "ADDITIONAL TERMS AND CONDITIONS AND ADDITIONAL GENERAL PROVISIONS.

B-149444, SEP. 7, 1962

TO LAVOIE LABORATORIES, INC:

WE REFER TO YOUR LETTER OF JULY 13, 1962, WITH ENCLOSURES, CONCERNING THE REJECTION OF YOUR BID UNDER INVITATION FOR BIDS NO. 93 2-1015B1, ISSUED BY THE FEDERAL AVIATION AGENCY ON MARCH 21, 1962.

THE SUBJECT INVITATION CALLED FOR BIDS FOR FURNISHING SPECIFIED QUANTITIES OF WISE-BAND CONVERTIBLE OSCILLOSCOPES, PREAMPLIFIERS AND TEST CARTS. BID OPENING WAS HELD ON APRIL 11, 1962, AND FOUR BIDS WERE RECEIVED AND TABULATED. FOR THE QUANTITIES REQUIRED, LAVOIE LABORATORIES, C., WAS LOWEST AS TO PRICE.

THE LOW BIDDER SUBMITTED ITS BID WITH AN ACCOMPANYING LETTER, DATED APRIL 10, 1962, WHICH STATES IN PERTINENT PART AS FOLLOWS:

"THESE UNITS WHEN SOLD COMMERCIALLY ARE WARRANTED AGAINST DEFECTIVE MATERIALS AND WORKMANSHIP FOR A PERIOD OF ONE (1) YEAR FROM DATE OF SHIPMENT. COMPONENTS PROVED DEFECTIVE (EXCEPT TUBES) WILL BE REPAIRED OR REPLACED DURING THE WARRANTY PERIOD. THIS WARRANTY WILL BE EXTENDED TO YOUR AGENCY IF WE ARE THE SUCCESSFUL BIDDER.

"ALL OF THE SPECIFICATIONS, TERMS AND CONDITIONS OF THE BID PROPOSAL ARE ACCEPTED AS DEFINED.'

INCLUDED UNDER TERMS AND CONDITIONS OF THIS INVITATION IS CLAUSE 37 ENTITLED "GUARANTEE" OF THE "ADDITIONAL TERMS AND CONDITIONS AND ADDITIONAL GENERAL PROVISIONS--- SUPPLY CONTRACTS--- SUPPLEMENTING STANDARD FORM 33 (OCTOBER 1957 EDITION) AND STANDARD FORM 32, GENERAL PROVISIONS (SEPTEMBER 1961 EDITION).' THE CLAUSE CONSISTS OF 5 PARAGRAPHS (A THROUGH E), AND STATES IN PART AS FOLLOWS:

"/A) THE CONTRACTOR GUARANTEES EACH ITEM AGAINST DEFECTS IN MATERIAL OR WORKMANSHIP. THIS GUARANTEE EXTENDS FOR A PERIOD OF ONE (1) YEAR, UNLESS OTHERWISE SPECIFIED, FROM THE DATE OF INSTALLATION OR USE, PROVIDED THAT THIS PERIOD SHALL NOT EXCEED TWO (2) YEARS FROM THE DATE OF DELIVERY.

"/C) THIS GUARANTEE SHALL EXCLUDE ELECTRON TUBES, BATTERIES, NATURAL RUBBER AND MATERIAL NORMALLY CONSUMED IN OPERATION UNLESS EXCEPTED ITEMS FAIL AS A RESULT OF IMPROPER APPLICATION BY THE CONTRACTOR, IN WHICH CASE THE GUARANTEE SHALL BE EQUALLY APPLICABLE TO THESE ITEMS; PROVIDED THAT THE CONTRACTOR SHALL GUARANTEE EXCEPTED ITEMS TO THE EXTENT OF THE GUARANTEE RECEIVED BY THE CONTRACTOR FROM HIS SUPPLIER.'

THE AGENCY CONCLUDED THAT THE LAVOIE WARRANTY OF ONE YEAR FROM DATE OF SHIPMENT IS LESS FAVORABLE THAN THE GUARANTEE REQUIRED UNDER CLAUSE 37 (A) OF THE INVITATION, AND THAT IT WAS OFFERED IN SUBSTITUTION OF THE GUARANTEE CONTAINED IN CLAUSE 37. ACCORDINGLY, THE AGENCY DETERMINED THAT THE LAVOIE BID WAS NONRESPONSIVE BECAUSE OF ITS SUBSTITUTE GUARANTEE PROVISION, AND THE BID WAS REJECTED. THE SECOND LOW BID WAS REJECTED FOR OTHER REASONS, AND ON JUNE 11, 1962, AN AWARD WAS MADE TO THE THIRD LOW BIDDER, TEKTRONICS, INCORPORATED, AT A TOTAL PRICE OF $125,507.30.

YOU STATE THAT YOUR WARRANTY PARAGRAPH IS MERELY A STATEMENT OF THE WARRANTY GENERALLY ACCORDED ON THE COMMERCIAL SALE OF ANY ITEM IN THE TEST EQUIPMENT CATEGORY AND WAS NOT INTENDED AS TAKING EXCEPTION TO ANY OF THE TERMS OR CONDITIONS OF THE BID PROPOSAL. IT IS YOUR CONTENTION THAT A BIDDER WHO ACCEPTS ALL THE TERMS AND CONDITIONS OF THE INVITATION, AS YOU STATE YOU DID IN THE LETTER WITH YOUR BID, MAY NOT BE FOUND BY OTHER LANGUAGE TO HAVE SUBMITTED A QUALIFIED BID. YOU URGE THAT THE AWARD TO THE THIRD LOW BIDDER SHOULD BE SUSPENDED, AND THAT IT SHOULD BE MADE TO YOUR FIRM AT AN APPROXIMATE SAVING TO THE GOVERNMENT OF $30,000.

IT IS A FUNDAMENTAL RULE IN COMPETITIVE BIDDING THAT A CONTRACT MAY BE AWARDED ONLY ON A BID WHICH IS RESPONSIVE TO THE TERMS OF THE INVITATION. THE AWARD MUST BE MADE UPON THE TERMS ADVERTISED, AND NO BINDING CONTRACT RESULTS WHEN THE SUBMITTED BID IS MATERIALLY AT VARIANCE WITH THE TERMS OF THE INVITATION. SEE 39 COMP. GEN. 832. WE HAVE RECOGNIZED THAT THE TERMS OF A WARRANTY MAY BE MATERIAL AND QUALIFICATION OF SUCH WARRANTY TERMS AS ARE CONTAINED IN THE INVITATION WILL REQUIRE REJECTION OF THE NONCONFORMING BID. SEEB-138307, MAY 15, 1959.

THE WARRANTY YOU OFFER COMMERCIALLY, AS STATED IN YOUR BID, IS FOR A PERIOD OF ONE YEAR FROM DATE OF SHIPMENT OF THE UNITS. CLAUSE 37 (A) IMPOSES A GUARANTY ON THE CONTRACTOR FOR ONE YEAR FROM THE DATE OF INSTALLATION OR USE, BUT NOT TO EXCEED TWO YEARS FROM THE DATE OF DELIVERY. IN ADDITION, CLAUSE 37 IMPOSES OTHER REQUIREMENTS AS TO THE CONTRACTOR'S GUARANTEE WHICH DO NOT APPEAR AS A PART OF THE WARRANTY YOU OFFER COMMERCIALLY. CONSIDERING THE PERIODS OF COVERAGE, THERE IS A SUBSTANTIAL DIFFERENCE BETWEEN YOUR COMMERCIAL WARRANTY AND THE GUARANTEE REQUIRED OF CONTRACTORS BY CLAUSE 37. THE INVITATION CLAUSE OFFERS THE GOVERNMENT A GUARANTEE FOR A LONGER PERIOD. IT IS OBVIOUS THAT A BIDDER WOULD HAVE AN ADVANTAGE IF HE OFFERED YOUR COMMERCIAL WARRANTY IN PLACE OF THE GUARANTEE REQUIRED BY THE INVITATION. SUCH A BID WOULD HAVE TO BE REJECTED.

YOU SAY THAT YOU DID NOT INTEND TO DEVIATE FROM ANY OF THE TERMS AND CONDITIONS OF THE BID PROPOSAL, AS INDICATED BY THE STATEMENT CONTAINED IN YOUR BID LETTER THAT "ALL OF THE SPECIFICATIONS, TERMS AND CONDITIONS OF THE BID PROPOSAL ARE ACCEPTED AS DEFINED.' YOU CONTEND THAT THIS FORECLOSES THE POSSIBILITY OF SUBMITTING A QUALIFIED BID. WE MUST DISAGREE WITH THIS CONTENTION.

THIS OFFICE RECENTLY HAD OCCASION TO CONSIDER THE RESPONSIVENESS OF A BID CONTAINING TWO POSITIVE STATEMENTS; ONE STATING THAT THE BIDDER TOOK NO EXCEPTION TO THE SPECIFICATIONS; THE OTHER MAKING, IN EFFECT, A MATERIAL QUALIFICATION TO THE INVITATION WARRANTY REQUIREMENT. WE CONCLUDED THAT THE BIDDER'S GENERAL OFFER OF COMPLIANCE WITH THE TERMS AND CONDITIONS OF THE INVITATION MUST BE DISREGARDED IN THE FACE OF HIS SPECIFIC QUALIFICATION, AND THAT THE BID MUST BE REGARDED AS NONRESPONSIVE. 149172, AUGUST 8, 1962.

THE CLEAR IMPORT OF YOUR LETTER OF APRIL 10, WHICH WAS A PART OF YOUR BID, IS THAT YOU ARE OFFERING, WITH REGARD TO YOUR EQUIPMENT, THE WARRANTY STATED IN THE LETTER IN LIEU OF THE CLAUSE 37 GUARANTEE. YOUR GENERAL STATEMENT OF COMPLIANCE WITH THE TERMS AND CONDITIONS OF THE INVITATION WAS QUALIFIED BY YOUR OTHER STATEMENT. PERHAPS, AS YOU SAY, YOU HAD NO INTENTION TO DEPART FROM THE STRICTER GUARANTEE TERMS STATED IN THE INVITATION; HOWEVER, THAT IS NOT WHAT YOU HAVE EXPRESSED IN YOUR BID. THE EXTENSION OF YOUR COMMERCIAL WARRANTY TO THE GOVERNMENT EVIDENCES AN INTENT TO PRECLUDE THE GUARANTEE CONTAINED IN THE INVITATION. CONSEQUENTLY YOUR BID ..END :