B-150206, DEC. 12, 1962

B-150206: Dec 12, 1962

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UNDER THE TERMS OF THE INVITATION BIDDERS WERE REQUIRED TO SUBMIT A BID DEPOSIT IN THE AMOUNT OF 20 PERCENT OF THE TOTAL CONTRACT PRICE. BIDDERS WERE ADVISED THAT THIS DEPOSIT MUST ACCOMPANY THE BID AND MUST BE FURNISHED IN CASH. BID BONDS WERE NOT SHOWN AS AN ACCEPTABLE FORM OF BID SECURITY. BECAUSE THE INSTRUCTIONS FOR USE OF STANDARD FORM 151 (DEPOSIT BOND - ANNUAL - SALE OF GOVERNMENT PERSONAL PROPERTY) SPECIFICALLY PROVIDE THAT THESE BONDS ARE NOT SUITABLE FOR USE IN TERM SALES. THE SECOND HIGH BID IN THE AMOUNT OF ?04669 WAS SUBMITTED BY ALLOYS AND CHEMICALS CORPORATION. BOTH THESE BIDS WERE REJECTED AS NONRESPONSIVE TO THE TERMS OF THE INVITATION AND THE AWARD WAS MADE TO THE GEORGE SALLMETALS CO.

B-150206, DEC. 12, 1962

TO METROPOLITAN METALS, INC.:

IN YOUR LETTER OF SEPTEMBER 25, 1962, YOU PROTEST THE REJECTION OF YOUR BID ON INVITATION FOR BIDS NO. 14-S-63-13, ISSUED BY DEFENSE SURPLUS SALES OFFICE, FORT DIX, NEW JERSEY, FOR THE PURCHASE OF AN ESTIMATED QUANTITY OF 1,500,000 POUNDS OF SCRAP ALUMINUM TURNINGS TO BE GENERATED AT FRANKFORD ARSENAL DURING THE PERIOD AUGUST 13, 1962, TO DECEMBER 31, 1962.

UNDER THE TERMS OF THE INVITATION BIDDERS WERE REQUIRED TO SUBMIT A BID DEPOSIT IN THE AMOUNT OF 20 PERCENT OF THE TOTAL CONTRACT PRICE. BIDDERS WERE ADVISED THAT THIS DEPOSIT MUST ACCOMPANY THE BID AND MUST BE FURNISHED IN CASH, BY POSTAL OR EXPRESS MONEY ORDER, BY CASHIER'S CERTIFIED OR TRAVELER'S CHECK, OR A COMBINATION THEREOF, MADE PAYABLE TO THE AGENCY CONDUCTING THE SALE. BID BONDS WERE NOT SHOWN AS AN ACCEPTABLE FORM OF BID SECURITY, BECAUSE THE INSTRUCTIONS FOR USE OF STANDARD FORM 151 (DEPOSIT BOND - ANNUAL - SALE OF GOVERNMENT PERSONAL PROPERTY) SPECIFICALLY PROVIDE THAT THESE BONDS ARE NOT SUITABLE FOR USE IN TERM SALES, AND BECAUSE THE GENERAL SERVICES ADMINISTRATION HAS NOT YET AUTHORIZED ANY OTHER BID BOND FORM.

YOU SUBMITTED A HIGH BID OF ?06198 PER POUND, BUT INSTEAD OF SUBMITTING AN APPROPRIATE SECURITY AS A BID DEPOSIT, YOU REFERENCED AN ANNUAL BID BOND. THE SECOND HIGH BID IN THE AMOUNT OF ?04669 WAS SUBMITTED BY ALLOYS AND CHEMICALS CORPORATION, WHICH ALSO REFERENCED AN ANNUAL BID BOND. BOTH THESE BIDS WERE REJECTED AS NONRESPONSIVE TO THE TERMS OF THE INVITATION AND THE AWARD WAS MADE TO THE GEORGE SALLMETALS CO., INC., WHO SUBMITTED THE THIRD HIGH BID OF ?04388,ACCOMPANIED BY A CERTIFIED CHECK IN THE AMOUNT OF $15,000.

IN OUR DECISION 38 COMP. GEN. 532 WE HELD THAT BIDS WHICH ARE NOT ACCOMPANIED BY A VALID BID BOND IN THE AMOUNT REQUIRED ARE NONRESPONSIVE AND MAY NOT BE CONSIDERED FOR AWARD. THE RATIONALE OF THAT DECISION IS APPLICABLE TO BID DEPOSITS REQUIRED FOR A SALES CONTRACT. SEE B-141226, DATED DECEMBER 31, 1959. THE INVITATION IN THE INSTANT CASE LISTED SPECIFIC TYPES OF SECURITIES WHICH WOULD BE ACCEPTABLE AS A VALID BID DEPOSIT. ANNUAL BID BONDS WERE NOT INCLUDED IN THIS LIST. FURTHERMORE, YOU WERE EXPLICITLY PUT ON NOTICE BY THE INSTRUCTIONS TO YOUR ANNUAL DEPOSIT BOND THAT SUCH BOND COULD NOT BE USED AS SECURITY IN A TERM CONTRACT. UNDER THESE CIRCUMSTANCES WE MUST CONCLUDE THAT YOUR BID WAS PROPERLY REJECTED AS NONRESPONSIVE.

IT IS TRUE THAT AFTER YOUR PROTEST THE DEFENSE LOGISTICS SERVICES CENTER DISCOVERED THAT SOME SALES OFFICES, INCLUDING THE ONE AT FORT DIX, HAD IN SOME CASES PREVIOUSLY ACCEPTED BID BONDS ON TERM SALES. IN VIEW OF THIS HISTORY, AND SINCE 3 OF THE 4 BIDDERS ON THIS SALE HAS REFERENCED AN ANNUAL BID BOND, IT MAY WELL BE THAT THE SELLING ACTIVITY SHOULD HAVE CONSIDERED CANCELING ALL BIDS AND READVERTISING, ON THE GROUNDS THAT THE INVITATION WAS AMBIGUOUS. HOWEVER, WE NEED NOT DECIDE THIS QUESTION BECAUSE SUBSEQUENT EVENTS INDICATE THAT A DECISION THEREON WOULD HAVE NO PRACTICAL LEGAL EFFECT.

IN VIEW OF THE SITUATION DESCRIBED ABOVE, AND THE RELATIVELY LOW PRICES RECEIVED, THE SELLING ACTIVITY DETERMINED THAT THE BEST INTERESTS OF THE GOVERNMENT WOULD BE SERVED BY TERMINATING THE CONTRACT WITH THE GEORGE SALL METALS CO., INC., UNDER THE 30-DAY OPTION AVAILABLE TO THE GOVERNMENT. THE CONTRACTING OFFICER ON SEPTEMBER 10, 1962, TERMINATED THE CONTRACT, EFFECTIVE OCTOBER 11, 1962. YOU WERE ADVISED OF THIS ACTION ON SEPTEMBER 14, 1962. THE PROPERTY WAS REOFFERED UNDER INVITATION FOR BIDS NO. 14-S-63-32, ISSUED SEPTEMBER 14, 1962, OPENING OCTOBER 9, 1962, FOR AN ESTIMATED QUANTITY OF 1,000,000 POUNDS OF SCRAP ALUMINUM TURNINGS TO BE GENERATED DURING THE PERIOD OCTOBER 12, 1962, TO DECEMBER 31, 1962. THIS INVITATION CONTAINED A SPECIFIC PROVISION THAT BID BONDS WOULD NOT BE ACCEPTED, AND IN ADDITION CONTAINED A CAUTION NOTE TO THE SAME EFFECT. YOU SUBMITTED THE HIGH BID ONCE AGAIN, THIS TIME IN THE AMOUNT OF ?04898 PER POUND. HOWEVER, YOU AGAIN REFERENCED AN ANNUAL BID BOND, AND CONSEQUENTLY, YOUR BID WAS REJECTED AS NONRESPONSIVE. AWARD WAS MADE TO THE SECOND HIGH BIDDER, THE GEORGE SALL METALS CO., INC., AT ITS BID PRICE OF ?04788 PER POUND.

THUS IT APPEARS THAT THE CONTRACT AWARDED AS A RESULT OF THE INVITATION UNDER WHICH YOU HAVE SUBMITTED YOUR PROTEST HAS ALREADY BEEN TERMINATED, AND THAT THE SALE HAS BEEN READVERTISED UNDER TERMS WHICH WOULD CLARIFY ANY MISUNDERSTANDING AS TO THE ACCEPTABILITY OF BID BONDS.

FOR THE FOREGOING REASONS, THERE APPEARS TO BE NO LEGAL BASIS UPON WHICH YOUR PROTEST MAY BE SUSTAINED.