B-155847, MAR. 25, 1965, 44 COMP. GEN. 581

B-155847: Mar 25, 1965

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WHICH WERE NOT TO BE CONSIDERED IN THE BID EVALUATION. 1965: REFERENCE IS MADE TO YOUR TELEGRAM OF DECEMBER 28. " SPECIFY THAT THE EVALUATION OF BIDS WILL BE MADE ON THE BASIS OF BASIC PRICES QUOTED AND EXCLUSIVE OF OPTION PRICES QUOTED. THE PRICES BID BY ADMIRAL ON THE OPTION QUANTITIES ARE CONTRARY TO THE INVITATION IN THAT THEY ARE HIGHER THAN THE BASIC UNIT PRICES. THE PRICES FOR THE OPTION QUANTITIES ARE LOWER THAN THOSE OF ANY OTHER BIDDER. ADMIRAL IS THE LOW BIDDER. ADMIRAL HAS STATED THAT ITS BID WAS SUBMITTED WITH FULL KNOWLEDGE THAT THE OPTION PRICE WAS HIGHER THAN THE BASIC UNIT PRICE. YOU HAVE CONTENDED THAT THE LOW BID SUBMITTED BY ADMIRAL IS NONRESPONSIVE BECAUSE IT IS CONTRARY TO THE OPTION PRICING PROVISIONS OF THE INVITATION.

B-155847, MAR. 25, 1965, 44 COMP. GEN. 581

CONTRACTS - SPECIFICATIONS - DEVIATIONS - INFORMAL V. SUBSTANTIVE A BIDDER WHO SUBMITS THE LOWEST UNIT PRICES ON THE BASIC BID, AS WELL AS ON THE OPTION QUANTITIES, WHICH WERE NOT TO BE CONSIDERED IN THE BID EVALUATION, AND WHO, AFTER BID OPENING, OFFERS TO REDUCE THE PRICES BID ON THE OPTION QUANTITIES BECAUSE THE INVITATION REQUIRED THAT THE OPTION PRICES NOT EXCEED THE BASIC UNIT PRICES HAS NOT SUBMITTED A BID THAT WOULD MAKE ACCEPTANCE PREJUDICIAL TO OTHER BIDDERS BY THE HIGHER PRICE BID ON THE OPTION QUANTITIES AND, THEREFORE, THE DEVIATION MAY BE REGARDED AS IMMATERIAL AND AWARD MADE ON THE BASIS OF THE SAME PRICE FOR THE OPTION QUANTITIES AS FOR THE BASIC BID.

TO ITT FEDERAL LABORATORIES, MARCH 25, 1965:

REFERENCE IS MADE TO YOUR TELEGRAM OF DECEMBER 28, 1964, AND TO YOUR LETTERS OF DECEMBER 30, 1964, AND FEBRUARY 25, 1965, PROTESTING AGAINST AN AWARD OF A CONTRACT TO EITHER THE ADMIRAL CORPORATION OR THE OTIS ELEVATOR COMPANY UNDER ARMY ELECTRONICS COMMAND INVITATION FOR BIDS AMC/E/-28-043- 65-500.

THE EVALUATION PARAGRAPHS IN THE INVITATION FOR BIDS PROVISIONS K/1) (A) AND K (1) (B), EACH ENTITLED "OPTION FOR INCREASED QUANTITY," SPECIFY THAT THE EVALUATION OF BIDS WILL BE MADE ON THE BASIS OF BASIC PRICES QUOTED AND EXCLUSIVE OF OPTION PRICES QUOTED. THE PRICING PARAGRAPHS IN THE SAME PROVISIONS STATE THAT OPTION PRICES SHALL NOT EXCEED THE BASIC UNIT PRICES.

THE ADMIRAL CORPORATION SUBMITTED THE LOWEST BID ON THE BASIS OF THE METHOD OF EVALUATION SPECIFIED IN THE INVITATION. THE PRICES BID BY ADMIRAL ON THE OPTION QUANTITIES ARE CONTRARY TO THE INVITATION IN THAT THEY ARE HIGHER THAN THE BASIC UNIT PRICES. HOWEVER, THE PRICES FOR THE OPTION QUANTITIES ARE LOWER THAN THOSE OF ANY OTHER BIDDER, SO THAT EVEN CONSIDERING THE BID PRICES FOR THE OPTION QUANTITIES, ADMIRAL IS THE LOW BIDDER. ADMIRAL HAS STATED THAT ITS BID WAS SUBMITTED WITH FULL KNOWLEDGE THAT THE OPTION PRICE WAS HIGHER THAN THE BASIC UNIT PRICE, BUT IT HAS OFFERED TO REDUCE ITS OPTION PRICE TO COINCIDE WITH THE PRICE QUOTED FOR THE BASIC QUANTITIES.

YOU HAVE CONTENDED THAT THE LOW BID SUBMITTED BY ADMIRAL IS NONRESPONSIVE BECAUSE IT IS CONTRARY TO THE OPTION PRICING PROVISIONS OF THE INVITATION. YOU POINT OUT THAT PARAGRAPH 1-1503 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) PROVIDES THAT WHEN OPTIONS ARE TO BE INCLUDED IN CONTRACTS THE OPTION CLAUSE MAY REQUIRE THAT OPTION QUANTITIES BE OFFERED AT PRICES NO HIGHER THAN THOSE FOR THE INITIAL QUANTITIES OR THEY MAY ALLOW OPTION QUANTITIES TO BE OFFERED WITHOUT LIMITATION. IT IS YOUR POSITION THAT ONCE AN ELECTION IS MADE TO USE ONE OF THE ALTERNATIVE REQUIREMENTS, IT BECOMES A MANDATORY REQUIREMENT SINCE ASPR 1-1504 STATES THAT WHEN A CONTRACT IS TO CONTAIN AN OPTION THE SOLICITATION "MUST" CONTAIN AN APPROPRIATE OPTION PROVISION AND THE G. L. CHRISTIAN DECISION, 312 F.2D 418, HAS INDICATED THAT ASPR HAS THE FORCE AND EFFECT OF LAW. MOREOVER, IT IS YOUR POSITION THAT TO PERMIT ADMIRAL TO MODIFY THE REQUIREMENTS OF THE INVITATION THROUGH ERROR OR DESIGN IS CONTRARY TO COMPETITIVE BID PROCEDURES. IN ADDITION, YOU POINT OUT THAT THE OPTION QUANTITIES IN THE INVITATION EXCEED 50 PERCENT OF THE BASIC QUANTITIES AND YOU SUGGEST THAT THE INVITATION MAY BE DEFECTIVE FOR THAT REASON.

WHILE ASPR 1-1504 PROVIDES THAT THE OPTION QUANTITIES SHALL NOT EXCEED 50 PERCENT OF THE INITIAL QUANTITY, THAT SECTION ALSO PROVIDES THAT THE HEAD OF THE PROCURING ACTIVITY MAY APPROVE A GREATER PERCENTAGE WHEN UNUSUAL CIRCUMSTANCES EXIST. SINCE IT IS REPORTED THAT THE AUTHORITY DESIGNATED BY THE HEAD OF THE PROCURING ACTIVITY REVIEWED THE OPTION QUANTITY PERCENTAGE AND APPROVED AN OPTION IN EXCESS OF 50 PERCENT OF THE INITIAL QUANTITY, THE PROVISION IN THE INVITATION FOR OPTION QUANTITIES IN EXCESS OF 50 PERCENT OF THE BASIC QUANTITIES DOES NOT APPEAR TO HAVE BEEN IMPROPER.

EVEN IF UNDER THE CHRISTIAN DOCTRINE THE LIMITATION ON THE PRICING OF THE OPTION QUANTITY COULD BE CONSIDERED AS A MANDATORY REQUIREMENT BECAUSE OF THE PROVISION IN ASPR AUTHORIZING IT, THAT WOULD NOT PRECLUDE THE RELAXATION OF SUCH A REQUIREMENT AFTER THE OPENING OF BIDS IF IT WAS DETERMINED TO BE AN IMMATERIAL REQUIREMENT. B-155077, JANUARY 5, 1965. IN THAT CONNECTION, ASPR 2-405 PROVIDES THAT IMMATERIAL DEVIATIONS MAY BE CURED AFTER THE OPENING OF BIDS. IF ASPR 1-1504 HAS THE FORCE AND EFFECT OF LAW, ASPR 2-405 WOULD HAVE THE SAME FORCE AND EFFECT.

ASPR 2-405 IS SUBSTANTIALLY A STATEMENT OF THE VIEW THAT HAS BEEN EXPRESSED BY OUR OFFICE OVER THE YEARS THAT A BIDDER SHOULD NOT BE ALLOWED TO CHANGE OR MODIFY ITS BID AFTER THE OPENING OF BIDS UNLESS THE CHANGE WILL NOT AFFECT THE PRICE, QUANTITY OR QUALITY OF THE ARTICLES BEING PROCURED AND WILL NOT BE PREJUDICIAL TO OTHER BIDDERS.

THE ONLY QUESTIONS THAT WOULD SEEM TO BE PERTINENT TO THE PRESENT CASE ARE WHETHER THE PRICE OF THE PROCUREMENT WAS MATERIALLY AFFECTED BY ADMIRAL'S DEVIATION AND WHETHER ANY OF THE OTHER BIDDERS WERE PREJUDICED BY THE DEVIATION.

ASPR 1-1503 INDICATES THAT THE LIMITATION ON THE PRICE OF THE OPTION QUANTITIES IS INTENDED TO TAKE THE PLACE OF NEGOTIATING A PRICE WITH THE CONTRACTOR AT A TIME WHEN IT MAY BE THE ONLY PRACTICAL SOURCE. THUS, THE OBVIOUS PURPOSE OF THIS SECTION IS TO HELP THE GOVERNMENT KEEP COSTS AT A MINIMUM BY PREVENTING THE SUCCESSFUL CONTRACTOR FROM TAKING ADVANTAGE OF ITS POSITION BY VIRTUE OF BEING THE CONTRACTOR IN PRODUCTION. WITH THAT PURPOSE IN MIND IT WOULD NOT SEEM PRACTICAL OR PRUDENT TO DISQUALIFY A BIDDER WHICH HAS OBVIOUSLY FURNISHED THE BEST PRICES OBTAINABLE THROUGH COMPETITION AND TO MAKE AN AWARD TO SOME OTHER BIDDER WHICH IS WILLING TO CHARGE THE SAME PRICE FOR BASIC AND OPTION QUANTITIES ALTHOUGH AT A HIGHER PRICE. FURTHERMORE, ADMIRAL DOES NOT SEEM TO HAVE GAINED ANY MATERIAL ADVANTAGE IN PRICE, SINCE CONSIDERING ITS BASIC PRICE ALONE OR TOTALED TOGETHER WITH THE OPTION PRICES IT IS STILL THE LOW BIDDER AND IT IS NOT CONCEIVABLE IN THESE CIRCUMSTANCES THAT ANY BIDDER WAS PREJUDICED BY ADMIRAL'S MANNER OF BIDDING. THEREFORE, THE FAILURE OF ADMIRAL TO CONFORM TO THE OPTION PRICE CEILING IN ITS BID DOES NOT APPEAR TO HAVE BEEN A MATERIAL DEVIATION, SINCE BY THE LIMITATION THE GOVERNMENT WAS SEEKING TO OBTAIN THE BEST POSSIBLE OPTION PRICES AND WHILE ADMIRAL EXCEEDED THE LIMITATION IT DID NOT PREJUDICE ANY OTHER BIDDER. IN THESE CIRCUMSTANCES, WE BELIEVE THAT THE GOVERNMENT COULD PROPERLY WAIVE THE LIMITATION.

MOREOVER, THE EVALUATION METHOD SPECIFIED IN THE INVITATION FOR BIDS PROVIDED FOR EVALUATION ON THE BASIS OF BASIC UNIT PRICES ALONE. FURTHER, THERE IS NO INTENTION TO EXERCISE THE OPTIONS AT THE TIME OF AWARD. THE OPTION PRICES, WHILE A COMMITMENT UPON THE CONTRACTOR, DO NOT COMMIT THE GOVERNMENT TO EXERCISE THE OPTIONS. WHETHER THE OPTIONS ARE EVER EXERCISED WILL DEPEND UPON WHETHER IT IS DETERMINED IN ACCORDANCE WITH ASPR 1-1505 THAT THE OPTION PRICES ARE IN THE BEST INTERESTS OF THE GOVERNMENT.

IN VIEW OF THE FOREGOING, ADMIRAL'S OFFER AFTER THE OPENING OF BIDS TO PROVIDE OPTION QUANTITIES AT BASIC UNIT PRICES IS NOT CONSIDERED OBJECTIONABLE BY OUR OFFICE AND AN AWARD TO ADMIRAL OF A CONTRACT SPECIFYING THAT THE GOVERNMENT MAY EXERCISE THE OPTIONS AT PRICES THE SAME AS THE BASIC UNIT PRICES SEEMS PROPER IN THE CIRCUMSTANCES.

AS A RESULT OF THIS CONCLUSION, IT IS NOT NECESSARY TO CONSIDER WHETHER THE BID OF OTIS ELEVATOR COMPANY WOULD BE ELIGIBLE FOR AWARD.