B-154340, JUN. 22, 1964

B-154340: Jun 22, 1964

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INCLUDED AMONG THE FOUR SPECIES WERE TWO TYPES OF PINE. FOR WHICH THE MINIMUM ACCEPTABLE UNIT PRICES WERE $19.35 AND $17.15 FOR SOUND AND $3.00 FOR UNSOUND TIMBER. VARIED THE TERMS OF ITS OFFER FROM THOSE STATED IN THE IFB BY PROVIDING THAT THE PRICES FIXED FOR UNSOUND TIMBER WERE TO BE CONSIDERED AS ITS BID FOR TIMBER WITH BLUE-STAINED SAPWOOD. WE ARE INFORMALLY ADVISED. IS CAUSED BY INSECTS. WHICH WAS CLEARLY CONTRARY TO THE TERMS ON WHICH THE TIMBER WAS OFFERED. SOME OF THE SOUND PINE TIMBER MAY HAVE BLUE-STAINED SAPWOOD. EXECUTION OF A CONTRACT WITH SEQUOIA ON ITS BID TERMS WOULD HAVE RESULTED IN THAT COMPANY'S PAYING FOR SOUND PINE TIMBER AT PRICES SUBSTANTIALLY LOWER THAN THE MINIMUM PRICES REQUIRED BY THE TERMS OF THE IFB.

B-154340, JUN. 22, 1964

TO MR. CHARLES A. CONNAUGHTON:

IN YOUR LETTER OF MAY 28, 1964, YOU REQUEST OUR DECISION ON WHETHER THE FACTS OF RECORD WOULD SUPPORT AN AWARD OF A CONTRACT AT VARIANCE WITH THE TERMS OF AN INVITATION FOR BIDS (IFB) ON THE SALE OF TIMBER TO BE CUT BY THE CONTRACTOR FROM DESCRIBED LANDS IN SEQUOIA NATIONAL FOREST.

THE IFB ASKED FOR UNIT PRICES ON ESTIMATED QUANTITIES OF FOUR SPECIES OF SOUND TIMBER. IT ALSO LISTED UNESTIMATED QUANTITIES OF UNSOUND TIMBER OF THE SAME SPECIES, AND ESTABLISHED FIXED PRICES FOR EACH 1,000 BOARD FEET THEREOF. INCLUDED AMONG THE FOUR SPECIES WERE TWO TYPES OF PINE, FOR WHICH THE MINIMUM ACCEPTABLE UNIT PRICES WERE $19.35 AND $17.15 FOR SOUND AND $3.00 FOR UNSOUND TIMBER.

THE APPARENT HIGH BIDDER, SEQUOIA FOREST INDUSTRIES, INC., VARIED THE TERMS OF ITS OFFER FROM THOSE STATED IN THE IFB BY PROVIDING THAT THE PRICES FIXED FOR UNSOUND TIMBER WERE TO BE CONSIDERED AS ITS BID FOR TIMBER WITH BLUE-STAINED SAPWOOD, A CONDITION WHICH, WE ARE INFORMALLY ADVISED, IS CAUSED BY INSECTS, AFFECTS THE APPEARANCE BUT NOT OTHER QUANTITIES OF THE WOOD, AND MAY BE DISCOVERED ONLY BY REMOVING PART OF THE BARK. IN EFFECT, THE BID PROPOSED THAT BLUE STAINED SOUND TIMBER BE CLASSIFIED AND PAID FOR AS UNSOUND TIMBER, WHICH WAS CLEARLY CONTRARY TO THE TERMS ON WHICH THE TIMBER WAS OFFERED. YOU REPORT THAT BECAUSE OF CONSIDERABLE INSECT ACTIVITY IN THE SALE AREA, SOME OF THE SOUND PINE TIMBER MAY HAVE BLUE-STAINED SAPWOOD. CONSEQUENTLY, EXECUTION OF A CONTRACT WITH SEQUOIA ON ITS BID TERMS WOULD HAVE RESULTED IN THAT COMPANY'S PAYING FOR SOUND PINE TIMBER AT PRICES SUBSTANTIALLY LOWER THAN THE MINIMUM PRICES REQUIRED BY THE TERMS OF THE IFB.

THE DEVIATION OF SEQUOIA'S BID FROM THE IFB WAS NOT DETECTED UNTIL, AFTER RECEIPT OF WRITTEN NOTICE OF AWARD, SEQUOIA WROTE TO THE DISTRICT RANGER AND ASKED HIM NOT TO NEGLECT TO INSERT INTO THE CONTRACT "THE PROPER PRICES FOR BLUE-STAINED TIMBER WHICH WERE BID AT THE SAME RATES AS UNSOUND SAPWOOD TIMBER.' IN RESPONSE TO THIS LETTER, THE PROCURING ACTIVITY ADVISED SEQUOIA THAT THE NOTICE WAS RESCINDED BECAUSE SEQUOIA'S BID WAS NOT RESPONSIVE. SUBSEQUENTLY, SEQUOIA OFFER TO STRIKE THE VARIANCE FROM ITS OFFER, AND REQUESTED THAT THE AWARD BE REINSTATED.

IN OUR DECISION REPORTED AT 41 COMP. GEN. 289, 292, WE MADE THE FOLLOWING OBSERVATIONS:

"UNDER THE PROVISIONS OF SECTION 303 OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, 41 U.S.C. 253, BIDS ARE REQUIRED TO CONFORM WITH THE TERMS OF THE ADVERTISED INVITATION TO BE ELIGIBLE FOR AWARD. PURSUANT THERETO * * * SUBPART 1-2.404-2 (B) (5) REQUIRES THE REJECTION OF ANY BID CONTAINING A CONDITION LIMITING THE RIGHTS OF THE GOVERNMENT UNDER ANY CONTRACT CLAUSE UNLESS SUCH CONDITIONS DO NOT GO TO THE PRICE, QUALITY, OR DELIVERY OF THE ITEMS OFFERED. IN EFFECT, THESE REGULATIONS RESTATE THE PRINCIPLES, SET OUT IN VARIOUS DECISIONS OF THIS OFFICE, THAT THE CONTRACT OFFERED TO ONE BIDDER MUST BE THE SAME CONTRACT OFFERED ALL BIDDERS, THAT ALL BIDDERS ARE ENTITLED TO COMPETE ON THE SAME BASIS, THAT ALL BIDS MUST BE EVALUATED ON AN EQUAL BASIS, AND THAT ANY BID WHICH IS SO CONDITIONED AS TO GIVE THE BIDDER A COMPETITIVE ADVANTAGE AND PRECLUDE ITS EVALUATION ON AN EQUAL BASIS WITH OTHER BIDS SUBMITTED IN ACCORDANCE WITH THE TERMS OF THE INVITATION MUST BE REJECTED AS NONRESPONSIVE.'

THE APPARENTLY LOW BID THAT CASE HAD BEEN SUBMITTED ON A BASIS WHICH WAS CONTRARY TO AN IFB REQUIREMENT THAT ANY UNIDENTIFIED BUT APPLICABLE TAXES BE INCLUDED IN THE CONTRACT PRICE. ACCORDINGLY, WE CONSIDERED THE BID TO BE NONRESPONSIVE SINCE IT COULD NOT, AS A PRACTICAL MATTER, BE EVALUATED ON AN EQUAL BASIS WITH OTHER BIDS. THE RECORD INDICATED THE GOVERNMENT NEITHER KNEW NOR COULD REASONABLY BE EXPECTED TO DETERMINE THE AMOUNT OF ADDITIONAL COST TO THE GOVERNMENT WHICH MIGHT RESULT IF IT WERE REQUIRED TO ASSUME THE RESPONSIBILITY FOR PAYING UNDETERMINED TAXES. MOREOVER, WE FELT THAT IT WAS INAPPROPRIATE TO IMPOSE ON THE CONTRACTING AGENCY THE DUTY OF EXAMINING THE TAX SITUATION OF EACH BIDDER WHO SUBMITTED A BID ON AN UNSOLICITED TAX-EXCLUDED BASIS, IN ORDER TO DETERMINE THE EXACT AMOUNT OF SUCH TAXES. WE THEREFORE HELD THAT SINCE THE APPARENTLY LOW BID COULD NOT BE EVALUATED ON A COMMON BASIS, IT COULD NOT BE CONSIDERED FOR AWARD, EVEN THOUGH IN THAT CASE THE PRICE DIFFERENCE BETWEEN THAT BID AND THE NEXT LOW BID WAS LIKELY TO BE MORE THAN SUFFICIENT TO COVER ANY COSTS ATTRIBUTABLE TO EXCLUDED TAXES.

IN THE INSTANT CASE, IT WOULD BE EQUALLY DIFFICULT TO DETERMINE THE ACTUAL AMOUNT OF THE PROCEEDS OF SALE RECEIVABLE BY THE GOVERNMENT UNDER THE SEQUOIA FIRM'S BID. EVEN IF THE RELATIVE PROPORTION OF STAINED AND UNSTAINED SOUND TIMBER WERE KNOWN WITH SUCH CERTAINTY AS TO PERMIT A DETERMINATION THAT THE RETURN TO THE GOVERNMENT UNDER THE SEQUOIA BID WOULD BE GREATER THAN THAT OFFERED BY THE OTHER BIDDER, SUCH EVALUATION WOULD NOT BE ON THE BASIS STATED IN THE INVITATION AND WOULD NOT SUPPORT AN AWARD ON THE DEVIATING OR ALTERNATE BID.

A CONTRACT REQUIRED TO BE LET PURSUANT TO COMPETITIVE BID PROCEDURES WHICH IS AWARDED ON A NONRESPONSIVE BID CONTAINING A MATERIAL VARIANCE FROM THE INVITATION IS VOID AB INITIO. SEE 40 COMP. GEN. 447, AND CASES CITED THEREIN. FURTHERMORE, A BID WHICH IS NOT RESPONSIVE BECAUSE OF A MATERIAL VARIANCE FROM THE TERMS OF AN INVITATION MAY NOT BE MODIFIED AFTER BID OPENING IN ORDER TO MAKE IT RESPONSIVE. SEE 38 COMP. GEN. 819. ACCORDINGLY, YOUR CANCELLATION OF THE NOTICE OF AWARD TO SEQUOIA WAS PROPER, AND THAT AWARD MAY NOT BE REINSTATED ON THE BASIS OF SEQUOIA'S OFFER TO NOW MODIFY ITS BID SO AS TO ELIMINATE THE MATERIAL VARIANCE FROM THE IFB.