B-154254, JUL. 13, 1964

B-154254: Jul 13, 1964

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HUNT: REFERENCE IS MADE TO YOUR LETTER OF MAY 19. CLAUSE 24 OF THE FORM IS THE STANDARD "FEDERAL. BIDS WERE OPENED ON APRIL 30. THE BID OF MACHINE DYNAMICS WAS LOWEST. INCLUDED IN THE BID WAS A LETTER CONTAINING THE FOLLOWING STATEMENT: "THE PRESENTED SALES PRICE IS F.O.B. IS SUBJECT TO APPLICABLE TAXES AND IS A STANDARD PRICE WHICH IS AS LOW AS WOULD BE OFFERED TO OUR MOST FAVORED CUSTOMER AND/OR OTHER GOVERNMENT AGENCIES.'. WHICH IS INSERTED IN ALL COMMERCIAL BIDS. APPLIES TO SALES TAXES WHICH ARE NOT APPLICABLE TO THE GOVERNMENT. THE GENERAL MANAGER REQUESTED THAT THE WORDS "IS SUBJECT TO APPLICABLE TAXES" BE REMOVED FROM THE BID. IT IS THE POSITION OF THE CONTRACTING OFFICER THAT THE BID SHOULD BE REJECTED AS NONRESPONSIVE DUE TO INDEFINITENESS OF FINAL PRICE AND THE EXCEPTION TAKEN TO THE TAX CLAUSE.

B-154254, JUL. 13, 1964

TO MR. CARROLL E. HUNT:

REFERENCE IS MADE TO YOUR LETTER OF MAY 19, 1964, PROTESTING THE PROPOSED REJECTION OF THE BID OF MACHINE DYNAMICS, INCORPORATED, SUBMITTED UNDER INVITATION FOR BIDS NO. 197-344-64, ISSUED APRIL 16, 1964, BY THE NAVAL ORDNANCE PLANT, LOUISVILLE, KENTUCKY.

THE INVITATION, WHICH SOLICITED BIDS TO FURNISH AN ELECTROHYDRAULIC VIBRATION SYSTEM, INCORPORATED IN ITS TERMS AND CONDITIONS, BY REFERENCE, THE GENERAL PROVISIONS OF NAVY S. AND A. FORM 111 (REVISION 10-62). CLAUSE 24 OF THE FORM IS THE STANDARD "FEDERAL, STATE AND LOCAL TAXES" CLAUSE PRESCRIBED BY ARMED SERVICES PROCUREMENT REGULATION 11-401.1 FOR USE IN ADVERTISED CONTRACTS AND READS, IN PART, AS FOLLOWS:

"/THE FOLLOWING CLAUSE SHALL APPLY TO (I) ALL FORMALLY ADVERTISED CONTRACTS, AND (II) UNLESS OTHERWISE STATED IN THE SCHEDULE, TO NEGOTIATED CONTRACTS IN EXCESS OF $10,000.)

"/A) EXCEPT AS MAY BE OTHERWISE PROVIDED IN THIS CONTRACT, THE CONTRACT PRICE INCLUDES ALL APPLICABLE FEDERAL, STATE, AND LOCAL TAXES AND DUTIES.'

BIDS WERE OPENED ON APRIL 30, 1964, AND THE BID OF MACHINE DYNAMICS WAS LOWEST. INCLUDED IN THE BID WAS A LETTER CONTAINING THE FOLLOWING STATEMENT:

"THE PRESENTED SALES PRICE IS F.O.B. THE U.S. NAVAL ORDNANCE PLANT, LOUISVILLE, KENTUCKY, IS SUBJECT TO APPLICABLE TAXES AND IS A STANDARD PRICE WHICH IS AS LOW AS WOULD BE OFFERED TO OUR MOST FAVORED CUSTOMER AND/OR OTHER GOVERNMENT AGENCIES.'

THE GENERAL MANAGER OF MACHINE DYNAMICS, UPON REQUEST FOR AN EXPLANATION, ADVISED THE CONTRACTING OFFICER BY TELEPHONE THAT THE STATEMENT, WHICH IS INSERTED IN ALL COMMERCIAL BIDS, APPLIES TO SALES TAXES WHICH ARE NOT APPLICABLE TO THE GOVERNMENT. SUBSEQUENTLY, IN A CONFIRMING TELEGRAM TO THE CONTRACTING OFFICER, THE GENERAL MANAGER REQUESTED THAT THE WORDS "IS SUBJECT TO APPLICABLE TAXES" BE REMOVED FROM THE BID.

IT IS THE POSITION OF THE CONTRACTING OFFICER THAT THE BID SHOULD BE REJECTED AS NONRESPONSIVE DUE TO INDEFINITENESS OF FINAL PRICE AND THE EXCEPTION TAKEN TO THE TAX CLAUSE.

IT IS YOUR POSITION THAT THE QUALIFYING STATEMENT WAS INCLUDED IN THE BID BY ACCIDENT OR INADVERTENCE, THAT IT REASONABLY SHOULD BE INTERPRETED AS A WARNING OF VENDEE TYPE TAXES AND THAT IT IS MEANINGLESS AS APPLIED TO THE BID PRICE OR TOTAL EXPENSE TO THE GOVERNMENT BECAUSE THE GOVERNMENT IS NOT SUBJECT TO TAXATION WITHOUT ITS CONSENT. YOU FURTHER CONTEND THAT IT IS A MINOR IRREGULARITY OR INFORMALITY WHICH MAY BE CORRECTED UNDER ASPR 1- 2.405 (2-405) AND IS ALSO SIMILAR TO THE ERROR WHICH MAY BE CORRECTED UNDER SECTION 2-405, NAVY PROCUREMENT DIRECTIVES (NPD), WHICH READS AS FOLLOWS:

"2-405 MINOR INFORMALITIES OR IRREGULARITIES IN BIDS. AN ILLUSTRATIVE EXAMPLE OF MINOR INFORMALITIES OR IRREGULARITIES, IN ADDITION TO THOSE IN ASPR 2-405, IS THE FOLLOWING: SUPPLIERS FREQUENTLY SUBMIT WITH THEIR BIDS ADDITIONAL INFORMATION ON LETTERHEADS OR OTHER FORMS WHICH INCORPORATE PRINTED TERMS AND CONDITIONS USED BY THE SUPPLIER IN HIS COMMERCIAL BUSINESS. THESE PRINTED TERMS AND CONDITIONS ARE VERY OFTEN IN CONFLICT WITH THE PROVISIONS OF THE INVITATION FOR BIDS OR MAY CONTAIN LANGUAGE AFFECTING BID PRICES. IF THE PRINTED TERMS AND CONDITIONS RENDER THE BID NON-CONFORMING TO THE ESSENTIAL REQUIREMENTS OF THE INVITATION FOR BIDS AND IT AFFIRMATIVELY APPEARS FROM THE NONPRINTED LANGUAGE USED THE ACCOMPANYING LETTER OR OTHER PAPERS THAT SUCH PRINTED TERMS AND CONDITIONS ARE INTENDED AS A PART OF THE BID, THE BID SHALL BE REJECTED. HOWEVER, IF THE BIDDER ALLEGES THAT SUCH TERMS AND CONDITIONS WERE INCLUDED IN THE BID BY MISTAKE, THE CASE SHALL BE PROCESSED IN ACCORDANCE WITH ASPR 2-406. IT DOES NOT AFFIRMATIVELY APPEAR THAT THE PRINTED TERMS AND CONDITIONS ARE INTENDED AS A PART OF THE BID, THE BIDDER MAY BE GIVEN AN OPPORTUNITY TO STATE WHETHER OR NOT THEY ARE SO INTENDED; AND IF THE BIDDER SUBMITS A WRITTEN STATEMENT THAT SUCH TERMS AND CONDITIONS WERE NOT INTENDED TO FORM A PART OF THE BID, THEY MAY BE DISREGARDED IN CONSIDERING THE BID. IF THE BIDDER, ON REQUEST, FAILS TO STATE WHETHER OR NOT THEY WERE SO INTENDED AS A PART OF THE BID, THE MATTER SHALL BE REFERRED TO COUNSEL FOR ADVICE. DOUBTFUL CASES, COUNSEL SHALL ALSO BE CONSULTED AS TO WHETHER OR NOT THE PRINTED TERMS AND CONDITIONS SHOULD BE TREATED AS BEING A PART OF THE BID.'

IN SUPPORT OF YOUR POSITION, YOU CITE OUR DECISION OF FEBRUARY 6, 1962, B -147073.

THE PROVISIONS OF THE APPLICABLE STATUTE, 10 U.S.C. 2305 (C), AND OF THE ASPR, AS WELL AS CLAUSE 8 OF THE TERMS AND CONDITIONS OF THE INVITATION, REQUIRE AWARD OF THE CONTRACT TO THE RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. IN ADDITION, ASPR 2-404.2 REQUIRES THE REJECTION OF ANY BID WHICH FAILS TO CONFORM TO THE ESSENTIAL REQUIREMENTS OF THE INVITATION FOR BIDS, INCLUDING ANY BID WHICH IMPOSES CONDITIONS MODIFYING THE REQUIREMENTS OF THE INVITATION OR LIMITING THE BIDDER'S LIABILITY TO THE GOVERNMENT.

WE HAVE HELD THAT UNDER AN INVITATION WHICH CONTAINS THE STANDARD TAX CLAUSE HERE INVOLVED AND WHICH MAKES NO PROVISION FOR EVALUATION OF TAX- EXCLUDED BID PRICES AND AWARD OF A CONTRACT ON SUCH BASIS, A BID SUBMITTED ON A TAX-EXCLUDED BASIS, WITHOUT SPECIFICALLY IDENTIFYING THE CLASSES AND AMOUNTS OF TAXES EXCLUDED, MUST BE REGARDED AS NON-RESPONSIVE TO THE INVITATION. 41 COMP. GEN. 289. IN CONFORMITY WITH THAT DECISION, WE HELD IN B-147073, FEBRUARY 6, 1962, THAT A BID WHICH IDENTIFIED SALES TAXES EXCLUDED FROM THE BID PRICE, WHICH WERE NOT APPLICABLE TO THE CONTRACT, WAS RESPONSIVE SINCE IT WAS CAPABLE OF EVALUATION ON THE SAME BASIS AS THE COMPETING BIDS, AND ITS CONSIDERATION, THEREFORE, WAS NOT PREJUDICIAL TO THE RIGHTS OF OTHER BIDDERS.

SINCE THE MACHINE DYNAMICS BID, UNLIKE THE BID CONSIDERED IN B 147073, SUPRA, DID NOT IDENTIFY THE TAXES EXCLUDED BY THE QUALIFYING STATEMENT, OR IN ANY WAY INDICATE THAT THEY WOULD NOT BE APPLICABLE, OR SPECIFY THE AMOUNT OF SUCH TAXES, THE AMOUNT OF THE BID IS UNCERTAIN AND IT CANNOT BE EVALUATED ON THE SAME BASIS AS THE OTHER TAX-INCLUDED BIDS SUBMITTED UNDER THE INVITATION. THEREFORE, UNDER THE RULE SET FORTH IN 41 COMP. GEN. 289, THE MACHINE DYNAMICS BID MUST BE CONSIDERED AS NONRESPONSIVE.

FURTHERMORE, THE INCLUSION OF THE QUALIFYING STATEMENT, INADVERTENT THOUGH IT MAY BE, AFFECTS THE BID PRICE, AND, THEREFORE, IT CANNOT BE WAIVED UNDER ASPR 2-405 AS A MINOR IRREGULARITY OR INFORMALITY, SINCE IT GOES TO THE SUBSTANCE OF THE BID, AND A WAIVER WOULD THEREFORE BE PREJUDICIAL TO THE RIGHTS OF OTHER BIDDERS WHOSE BIDS HAVE BEEN SUBMITTED IN CONFORMANCE WITH THE INVITATION. 17 COMP. GEN. 554; 30 ID. 179. NOR MAY CORRECTION BE PERMITTED UNDER NPD 2-405, SINCE THE LANGUAGE OF THAT REGULATION CLEARLY APPLIES ONLY TO PRINTED TERMS ON THE LETTERHEADS OR BID FORMS OF A BIDDER, AND HERE THE QUALIFYING STATEMENT WAS CONTAINED IN THE TEXT OF A TYPEWRITTEN LETTER INCLUDED IN THE BID.

FOR THE REASONS STATED, WE CONCLUDE THAT THE PROPOSED REJECTION OF THE MACHINE DYNAMICS BID AND THE DENIAL OF THE BIDDER'S REQUEST FOR PERMISSION TO CORRECT THE BID ARE PROPER ADMINISTRATIVE ACTIONS. THEREFORE, YOUR PROTEST IS DENIED.