B-151635, AUG. 5, 1963

B-151635: Aug 5, 1963

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TO MARYLAND SHIPBUILDING AND DRYDOCK COMPANY: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF MAY 24. IT APPEARS THAT YOUR PRIMARY OBJECTION IN THE MATTER IS CENTERED UPON THE FAILURE OF THE DEPARTMENT OF THE NAVY TO ACCEPT YOUR BID. THE SPECIFICATIONS FOR THE CRANE WERE CHANGED AND THE NEW SPECIFICATION PROVIDED AS FOLLOWS: "CRANE - ONE LARGE SCIENTIFIC EQUIPMENT AND STORES HANDLING CRANE SHALL BE PROVIDED ABOUT AS SHOWN ON PLAN. FOUR BIDS ARE REPORTED TO HAVE BEEN RECEIVED. OF WHICH YOURS WAS THE LOWEST. IT WAS CONSIDERED NON-RESPONSIVE AND THEREFORE WAS REJECTED. WHILE IT IS YOUR CONTENTION THAT THE DEPARTMENT DISREGARDED THE EXPRESS LANGUAGE OF THE INVITATION WHICH STATES THAT AN EXCEPTION MAY RESULT IN REJECTION.

B-151635, AUG. 5, 1963

TO MARYLAND SHIPBUILDING AND DRYDOCK COMPANY:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF MAY 24, 1963, AND FOLLOW-UP LETTER OF THE SAME DATE, PROTESTING THE AWARD OF A CONTRACT TO ANY OTHER BIDDER UNDER INVITATION FOR BIDS NO. 600-495-63-S, ISSUED BY THE BUREAU OF SHIPS, DEPARTMENT OF THE NAVY, FOR THE CONSTRUCTION OF ONE SURVEYING SHIP. SPECIFICALLY, IT APPEARS THAT YOUR PRIMARY OBJECTION IN THE MATTER IS CENTERED UPON THE FAILURE OF THE DEPARTMENT OF THE NAVY TO ACCEPT YOUR BID, NOTWITHSTANDING THE EXCEPTION IN YOUR BID CONCERNING THE CRANE TO BE INSTALLED UPON THE VESSEL.

BY AMENDMENT NO. 2 TO THE INVITATION, THE SPECIFICATIONS FOR THE CRANE WERE CHANGED AND THE NEW SPECIFICATION PROVIDED AS FOLLOWS:

"CRANE - ONE LARGE SCIENTIFIC EQUIPMENT AND STORES HANDLING CRANE SHALL BE PROVIDED ABOUT AS SHOWN ON PLAN, BUSHIPS NO. AGS26-800 2120781. THE CRANE SHALL BE A HYDRAULICALLY ACTUATED, ARTICULATED BOOM TYPE SIMILAR TO BUCYRUS ERIE H-5 HYDROHOE OR EQUAL MODIFIED TO PROVIDE THE FOLLOWING:

2500 POUND CAPACITY AT A 57 FOOT OUTREACH ON A SINGLE LINE

6 SHORT TONS CAPACITY AT A 21 FOOT OUTREACH ON A 2-PART PURCHASE

12 SHORT TONS CAPACITY AT A 19 FOOT OUTREACH ON A 4-PART PURCHASE

ANGLE OF ROTATION SHALL BE THE MAXIMUM PRACTICABLE AT A MINIMUM RATE

OF 3 RPM

A BRAKE SHALL BE PROVIDED ON THE SLEWING DRIVE

AN ELECTRIC MOTOR DRIVE AND A STEP DOWN STARTER, BOTH TO OPERATE ON

440 VOLTS, 3 PHASE, 60 CYCLE A.C.'

FOUR BIDS ARE REPORTED TO HAVE BEEN RECEIVED, OF WHICH YOURS WAS THE LOWEST. HOWEVER, SINCE YOUR BID CONTAINED AN APPARENT QUALIFYING STATEMENT, IT WAS CONSIDERED NON-RESPONSIVE AND THEREFORE WAS REJECTED. THE STATEMENT READS AS FOLLOWS:

"OUR PROPOSAL PRICE INCLUDES FURNISHING AND INSTALLING THE PROPRIETARY H- 5 HYDROHOE CRANE (SPECIFICATION SECTION 9200-3 "CRANE" PAGE 74, LINE 20; AS CHANGED BY PAGE 37 OF MOD. 1), AS PRESENTLY DESIGNED AND MANUFACTURED BY BUCYRUS-ERIE COMPANY.

"WE COULD NOT OBTAIN FROM ANY SOURCE, INCLUDING BUCYRUS-ERIE COMPANY, A QUOTATION FOR THE H-5 HYDROHOE CRANE, OR ITS EQUAL, MODIFIED IN ACCORDANCE WITH THE SPECIFICATIONS, AND THEREFORE WE COULD NOT INCLUDE THIS REQUIREMENT IN OUR PROPOSAL.'

YOU ADVISE THE DEPARTMENT OF THE NAVY HAS TAKEN THE POSITION THAT SUCH A NOTATION IN YOUR BID CONSTITUTES AN EXCEPTION WITHIN THE MEANING OF SECTION 2 (C) OF THE INVITATION AND MUST RESULT IN THE BID BEING REJECTED; WHILE IT IS YOUR CONTENTION THAT THE DEPARTMENT DISREGARDED THE EXPRESS LANGUAGE OF THE INVITATION WHICH STATES THAT AN EXCEPTION MAY RESULT IN REJECTION. YOUR APPARENT CONSTRUCTION OF SUCH SECTION IS THAT IT VESTS IN THE DEPARTMENT THE RIGHT TO USE ITS DISCRETION IN ACCEPTING OR REJECTING A BID WHICH CONTAINS AN EXCEPTION; AND, SUCH BEING THE CASE, YOU CONTEND THAT THE DEPARTMENT HAD THE RIGHT, IF NOT THE DUTY, TO CONSIDER ALL OF THE RELEVANT FACTS IN DETERMINING WHETHER ACCEPTANCE OR REJECTION WOULD BEST SERVE THE INTERESTS OF THE UNITED STATES. THIS YOU BELIEVE IT HAS NOT DONE, SINCE THE ACTION TAKEN WILL RESULT IN A LOSS TO THE GOVERNMENT OF AT LEAST $400,000.

WE CONSISTENTLY HAVE HELD THAT IT IS THE PROVINCE OF ADMINISTRATIVE OFFICERS TO DRAFT PROPER SPECIFICATIONS TO SUBMIT FOR FAIR COMPETITIVE BIDING PROPOSED CONTRACTS TO SUPPLY GOVERNMENT NEEDS, AND TO DETERMINE FACTUALLY WHETHER ARTICLES OFFERED MEET THOSE SPECIFICATIONS. 17 COMP. GEN. 554. AND IT ALSO HAS BEEN OUR VIEW THAT TO INSURE TO THE GOVERNMENT THE BENEFITS OF SUCH COMPETITION IT IS ESSENTIAL THAT AWARDS OF CONTRACTS BE FAIRLY MADE UPON THE BASIS OF THE ESSENTIAL REQUIREMENTS OF THE SPECIFICATIONS SUBMITTED FOR COMPETITION. 30 COMP. GEN. 179.

IT IS ADMINISTRATIVELY REPORTED THAT IN THE INSTANT CASE THE MAJOR DIFFERENCE BETWEEN THE BUCYRUS H-5 HYDROHOE MODEL OFFERED IN YOUR BID AND THE MODIFIED BUCYRUS CRANE REQUIRED BY THE INVITATION WAS THAT THE LATTER REQUIRED A LIFTING CAPACITY OF 12 TONS AT AN OUTREACH POSITION OF 19 FEET, WHEREAS THE CAPACITY OF THE FORMER IS ONLY 6 TONS. IT IS STATED THAT THE REQUIREMENT FOR THE GREATER CAPACITY WAS BASED UPON THE BEST JUDGMENT OF BUREAU DESIGN ENGINEERS AND THE NAVY OCEANOGRAPHIC OFFICE AS TO THE CRANE REQUIREMENTS ON THE AGS-26. THE DEPARTMENT REPORTED URTHER:

"NONE OF THE OTHER BIDDERS TOOK EXCEPTION TO THE CRANE SPECIFICATION REQUIREMENT AND INQUIRY MADE OF THE AMERICAN SHIPBUILDING COMPANY SATISFIED THE BUREAU THAT THAT COMPANY WAS AWARE OF THE CRANE SPECIFICATIONS. AMERICAN SHIP ASSURED THE BUREAU THAT IT WOULD ENGINEER AND BUILD THE CRANE WITH MAXIMUM USE OF PURCHASE PARTS ALL IN ACCORDANCE WITH THE REQUIREMENTS SPECIFIED OR PURCHASE THE CRANE IF AVAILABLE COMMERCIALLY, IN TIME TO COMPLETE THE VESSEL AS SPECIFIED. THE STATEMENTS GIVEN BY AMERICAN SHIP CONFIRMED THE BUREAU'S OPINION THAT THE DESIGN AND CONSTRUCTION OF A CRANE OF THE TYPE REQUIRED SHOULD NOT BE BEYOND THE CAPABILITY OF A QUALIFIED SHIPBUILDER.'

IN VIEW OF THE FACT THAT YOUR BID WAS CONDITIONED ON FURNISHING AN ITEM OF EQUIPMENT NOT CONFORMING TO THE REQUIREMENTS OF THE INVITATION AND NOT MEETING THE GOVERNMENT'S STATED NEEDS, ACCEPTANCE THEREOF WOULD BE CLEARLY PREJUDICIAL TO ALL OF THE BIDDERS WHO OFFERED TO COMPLY WITH THE SPECIFICATIONS, AND WHO MIGHT OTHERWISE HAVE SUBMITTED SUBSTANTIALLY LOWER BIDS. WE CANNOT THEREFORE AGREE WITH YOUR CONTENTION THAT YOUR "EXCEPTION DID NOT PUT YOUR COMPETITORS AT A DISADVANTAGE.' AGAIN REFERRING TO 30 COMP. GEN. 179, CITED ABOVE, WE HELD ALSO IN THAT CASE THAT WHILE THE GOVERNMENT RESERVED THE RIGHT IN THE INVITATION FOR BIDS TO WAIVE ANY INFORMALITY IN BIDS RECEIVED, THE INFORMALITIES WHICH MAY BE WAIVED ARE THOSE OF FORM AND NOT OF SUBSTANCE, OR SOME IMMATERIAL AND INCONSEQUENTIAL DEFECT IN OR VARIATION OF A BID FROM THE EXACT REQUIREMENTS OF THE ADVERTISED INVITATION AND SPECIFICATIONS. IN 17 COMP.GEN. 554, WE ALSO POINTED OUT AS FOLLOWS:

"* * * TO PERMIT PUBLIC OFFICERS TO ACCEPT BIDS NOT COMPLYING IN SUBSTANCE WITH THE ADVERTISED SPECIFICATIONS OR TO PERMIT BIDDERS TO VARY THEIR PROPOSALS AFTER THE BIDS ARE OPENED WOULD SOON REDUCE TO A FARCE THE WHOLE PROCEDURE OF LETTING PUBLIC CONTRACTS ON AN OPEN COMPETITIVE BASIS. THE STRICT MAINTENANCE OF SUCH PROCEDURE, REQUIRED BY LAW, IS INFINITELY MORE IN THE PUBLIC INTEREST THAN OBTAINING AN APPARENTLY PECUNIARY ADVANTAGE IN A PARTICULAR CASE BY A VIOLATION OF THE RULES.'

WITH RESPECT TO YOUR APPARENT CONCERN REGARDING THE SO-CALLED WIDE PATENT COVERAGE HELD BY BUCYRUS ERIE ON THE HYDRAULICALLY ACTUATED, ARTICULATED BOOM TYPE OF CRANE, THE DEPARTMENT REPORTS AS FOLLOWS:

"* * * IMPLEMENTING 28 U.S.C. 1498, WHICH RESTRICTS A PATENT OWNER'S REMEDY FOR INFRINGEMENT TO AN ACTION AGAINST THE UNITED STATES IN THE COURT OF CLAIMS, THE INVITATION CONTAINED THE AUTHORIZATION AND CONSENT CLAUSE, ASPR 9-102.1 (JAN. 1955) AND DID NOT INCLUDE ANY PATENT INDEMNITY PROVISION. MARYLAND, THEREFORE, WAS NOT PRECLUDED FROM USING ANY NECESSARY PATENTS, WITHOUT THE PATENT OWNER'S CONSENT, IN CONSTRUCTING THE CRANE. FURTHERMORE, OUR PATENT SEARCH INDICATES THAT THE BUCYRUS-ERIE PATENTS GO TO THE SHOVEL PORTION OF THE CRANE WHICH WILL NOT BE USED IN THE CONSTRUCTION OF THE CRANE REQUIRED BY THE SPECIFICATIONS, AND THAT NO PATENT INFRINGEMENT APPEARS TO BE INVOLVED.'

IN THE LIGHT OF THE FOREGOING, THEREFORE, WE MUST CONCLUDE THAT THE BID SUBMITTED BY YOUR COMPANY WAS NOT RESPONSIVE TO THE INVITATION, AND SINCE THE CHANGE PROPOSED BY YOU WAS, IN OUR OPINION, MATERIAL, IT IS NOT SUCH A MINOR DEVIATION AS MAY PROPERLY BE WAIVED.