B-156667, JUL. 15, 1965

B-156667: Jul 15, 1965

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THE IFB WAS MAILED TO ONLY THOSE CONCERNS WHO. WERE ON THE LATEST QUALIFIED PRODUCTS LIST OR IN THE PROCESS OF QUALIFYING ON THE DATE THE IFB WAS ISSUED. THERE WAS MAILED DESC FORM EPR 40 SETTING FORTH ALL PERTINENT INFORMATION CONCERNING THE PROCUREMENT TO GIVE IT THE WIDEST POSSIBLE PUBLICITY WHILE REDUCING THE NUMBER OF IFB SETS FURNISHED TO SOURCES WHICH WERE NOT CAPABLE OF FULFILLING THE PROCUREMENT NEED OR HAD NO INTENTION TO BID. THE AMENDMENT CARRIED A NOTICE TO THE EFFECT THAT ACKNOWLEDGMENT OF ITS RECEIPT PRIOR TO BID OPENING WAS REQUIRED. THERE WAS PREPARED A SECOND DESC FORM EPR 40. CARRYING A NOTATION THAT IT WAS A REVISED REQUEST. THE PROCURING ACTIVITY STATES THAT ITS INTENT WAS TO MAIL THE AMENDMENT TO THE FIRMS TO WHICH THE IFB HAD BEEN SENT AND TO SEND THE REVISED DESC FORM EPR 40 TO THE OTHER FIRMS WHICH HAD RECEIVED THE ORIGINAL DESC FORM EPR 40.

B-156667, JUL. 15, 1965

TO MARSHALL ELECTRONICS COMPANY:

YOUR LETTER OF MAY 13, 1965, PROTESTS EITHER THE CANCELLATION OF ITEM 2 UNDER INVITATION FOR BIDS NO. DSA-9-65-1174, ISSUED MARCH 17, 1965, BY THE DEFENSE ELECTRONICS SUPPLY CENTER, DAYTON, OHIO, OR AWARD OF THE ITEM TO ANY BIDDER OTHER THAN YOU.

THE IFB INVITED BIDS TO SUPPLY TWO QUALIFIED PRODUCTS, ELECTRON TUBES, TO BE MANUFACTURED IN ACCORDANCE WITH CITED SPECIFICATIONS. ITEM 1 CALLED FOR 3,038 TO 10,000 UNITS OF ONE TYPE TUBE, FOR DELIVERY IN INCREMENTS OF 1,014 PER MONTH. ITEM 2 CALLED FOR 4,666 TO 10,000 UNITS OF THE OTHER TYPE TUBE, FOR DELIVERY IN INCREMENTS OF 1,556 PER MONTH.

THE IFB WAS MAILED TO ONLY THOSE CONCERNS WHO, LIKE YOUR CONCERN, WERE ON THE LATEST QUALIFIED PRODUCTS LIST OR IN THE PROCESS OF QUALIFYING ON THE DATE THE IFB WAS ISSUED. TO NONQUALIFIED CONCERNS WHO MIGHT BE INTERESTED IN THE PROCUREMENT, THERE WAS MAILED DESC FORM EPR 40 SETTING FORTH ALL PERTINENT INFORMATION CONCERNING THE PROCUREMENT TO GIVE IT THE WIDEST POSSIBLE PUBLICITY WHILE REDUCING THE NUMBER OF IFB SETS FURNISHED TO SOURCES WHICH WERE NOT CAPABLE OF FULFILLING THE PROCUREMENT NEED OR HAD NO INTENTION TO BID.

PRIOR TO APRIL 16, THE DATE SPECIFIED IN THE IFB FOR BID OPENING, THE QUANTITY REQUIREMENT FOR ITEM 2 INCREASED GREATLY. ACCORDINGLY, ON APRIL 12, THE PROCURING AGENCY ISSUED AN AMENDMENT TO THE IFB CHANGING THE MINIMUM QUANTITY FOR ITEM 2 FROM 4,666 UNITS TO 17,441 UNITS AND THE MAXIMUM QUANTITY FROM 10,000 UNITS TO 35,000 UNITS; INCREASING THE DELIVERY RATE OF THE ITEM FROM 1,556 PER MONTH TO 5,805 PER MONTH; AND EXTENDING THE DATE OF BID OPENING TO APRIL 19. THE AMENDMENT CARRIED A NOTICE TO THE EFFECT THAT ACKNOWLEDGMENT OF ITS RECEIPT PRIOR TO BID OPENING WAS REQUIRED. CONTEMPORANEOUSLY, THERE WAS PREPARED A SECOND DESC FORM EPR 40, CARRYING A NOTATION THAT IT WAS A REVISED REQUEST, WHICH REFLECTED THE CHANGES IN QUANTITIES AND BID OPENING DATE BUT DID NOT INCLUDE INFORMATION REGARDING THE INCREASED MONTHLY DELIVERY REQUIREMENT. IN THIS CONNECTION, THE PROCURING ACTIVITY STATES THAT ITS INTENT WAS TO MAIL THE AMENDMENT TO THE FIRMS TO WHICH THE IFB HAD BEEN SENT AND TO SEND THE REVISED DESC FORM EPR 40 TO THE OTHER FIRMS WHICH HAD RECEIVED THE ORIGINAL DESC FORM EPR 40.

THE RECORD SHOWS THAT ON APRIL 15, FOUR DAYS PRIOR TO THE EXTENDED DATE OF BID OPENING, YOUR REPRESENTATIVE DISCLOSED TO THE PROCURING ACTIVITY, IN A TELEPHONE CONVERSATION, THAT WHILE YOU HAD NO COPY OF THE AMENDMENT, YOU HAD RECEIVED THE REVISED DESC FORM EPR 40, AND YOUR REPRESENTATIVE INQUIRED WHETHER YOUR BID COULD BE MODIFIED BY TELEGRAPHIC AMENDMENT. WAS ADVISED THAT ANY MODIFICATION RECEIVED PRIOR TO BID OPENING WOULD BE ACCEPTABLE.

SIX BIDS WERE SUBMITTED TO THE PROCURING ACTIVITY AND OPENED ON APRIL 19, AS SCHEDULED IN THE AMENDMENT. TWO BIDS COVERED ONLY ITEM 1, ON WHICH AWARD WAS SUBSEQUENTLY MADE. THE FOUR REMAINING BIDS, OF WHICH YOURS WAS LOWEST, COVERED ONLY ITEM 2, BUT ONLY ONE OF SUCH BIDS, THE THIRD LOW BID FROM RAYTHEON COMPANY, ACKNOWLEDGED RECEIPT OF THE AMENDMENT. INVESTIGATION BY THE CONTRACTING OFFICER REVEALED THAT NONE OF THE ITEM 2 BIDDERS APPEARED TO HAVE RECEIVED THE AMENDMENT IN THE MAIL, RAYTHEON HAVING OBTAINED ITS COPY AT THE PROCURING ACTIVITY IMMEDIATELY PRIOR TO BID OPENING. IT WAS ALSO REVEALED THAT, AS IN YOUR CASE, ONE OF THE OTHER ITEM 2 BIDDERS HAD RECEIVED A REVISED DESC FORM EPR 40 BY MAIL.

ON APRIL 20, ONE DAY AFTER BID OPENING, YOU SENT TO THE CONTRACTING OFFICER A TELEGRAM READING AS FOLLOWS:

"REFERENCE IFB DSA9-65-1174 CONFIRMING OUR TELECON OF TODAY'S DATE WE DID NOT RECEIVE AMENDMENT 1 OF THE REFERENCED BID OUR PRICE ON ITEM 2 IS FIRM AND MAY BE APPLIED TO THE INCREASED QUANTITY (17411 TO 35,000 PIECES) THE INCREASE DELIVERY SCHEDULE (5800 PIECES 30 DAYS ARO) IS ALSO ACCEPTABLE.'

ON THE BASIS THAT THE IFB AMENDMENT WAS SUBSTANTIVE BECAUSE IT INCREASED THE PROCUREMENT QUANTITY AND DELIVERY REQUIREMENTS FOR ITEM 2, THE PROCURING ACTIVITY REJECTED YOUR BID AND TWO OF THE OTHER ITEM 2 BIDS AS NONRESPONSIVE FOR FAILURE TO ACKNOWLEDGE, PRIOR TO BID OPENING, THE RECEIPT OF THE AMENDMENT. AT THE SAME TIME, THE CONTRACTING OFFICER COMPARED RAYTHEON'S BID WITH YOUR BID AND THE SECOND LOW BID, GIVING SPECIFIC CONSIDERATION TO THE FACT THAT THE UNIT PRICE DIFFERENCE OF ?45 BETWEEN RAYTHEON'S BID OF $1.834 AND YOUR BID OF $1.38 WOULD AMOUNT TO $8,000 ON THE TOTAL QUANTITY OF ITEM 2. ACCORDINGLY, IT WAS FURTHER DETERMINED THAT RAYTHEON'S PRICE WAS UNREASONABLE WITHIN THE CONTEMPLATION OF ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2-404.1 (B) (VI), THEREBY CONSTITUTING A BASIS FOR CANCELLATION OF THE ITEM.

IN ADDITION, THE CONTRACTING OFFICER MADE A FINDING, IN VIEW OF THE FACT THAT NONE OF THE FOUR ITEM 2 BIDDERS HAD RECEIVED THE AMENDMENT IN THE MAIL AND, THEREFORE, HAD NOT BID ON THE CHANGED REQUIREMENTS, THAT EFFECTIVE COMPETITION DID NOT EXIST. IN THIS RESPECT, THERE WAS CONSIDERED THE POSSIBILITY THAT EVEN RAYTHEON MIGHT WELL HAVE REDUCED ITS PRICE ON THE INCREASED QUANTITY OF ITEM 2 BUT FOR THE FACT THAT THERE WAS NO OPPORTUNITY FOR RECOMPUTATION OF ITS BID IN THE BRIEF INTERVAL BETWEEN RECEIPT OF THE AMENDMENT BY RAYTHEON'S REPRESENTATIVE AND THE TIME OF BID OPENING. THEREFORE, THE CONTRACTING OFFICER RECOMMENDED THAT ALL BIDS BE REJECTED AND THE PROCUREMENT NEEDS FOR ITEM 2 BE READVERTISED.

IT IS YOUR POSITION THAT AWARD OF ITEM 2 SHOULD BE MADE TO YOU AT YOUR BID PRICE SINCE (1) YOUR PRICE REPRESENTS A SUBSTANTIAL SAVING TO THE GOVERNMENT; (2) YOU ARE A SMALL BUSINESS CONCERN LOCATED IN A LABOR SURPLUS AREA; (3) NONRECEIPT OF THE AMENDMENT CANNOT BE ATTRIBUTED TO YOU; (4) EXPOSURE OF YOUR BID PRICE ELIMINATES THE POSSIBILITY OF YOUR SUCCESS ON READVERTISEMENT; (5) YOUR PAST PERFORMANCE HAS EFFECTED LARGE SAVINGS TO THE GOVERNMENT; AND (6) YOU ARE DEPENDENT ON THE AWARD TO MAINTAIN ACTIVE PERSONNEL AND SOLVENCY OF YOUR FIRM. YOU CITE OUR DECISION PUBLISHED AT 41 COMP. GEN. 631 (B-148239, MARCH 30, 1962) IN SUPPORT OF YOUR POSITION.

IT IS THE POSITION OF THE PROCURING AGENCY THAT IN ACCORDANCE WITH OUR DECISION PUBLISHED AT 40 COMP. GEN. 126, YOUR BID IS FOR REJECTION ALONG WITH TWO OF THE OTHER BIDS ON ITEM 2 FOR FAILURE TO TIMELY ACKNOWLEDGE THE AMENDMENT, BUT THAT AWARD SHOULD NOT BE MADE TO RAYTHEON, THE ONLY RESPONSIVE BIDDER ON ITEM 2, IN VIEW OF ITS UNREASONABLE PRICE. THEREFORE, THE AGENCY CONCURS WITH THE CONTRACTING OFFICER'S RECOMMENDATIONS THAT ITEM 2 SHOULD BE CANCELLED; THAT ALL ITEM 2 BIDS SHOULD BE REJECTED; AND THAT THE PROCUREMENT OF THE ITEM SHOULD BE READVERTISED.

IT IS THE GENERAL RULE THAT IF AN ADDENDUM TO AN INVITATION AFFECTS THE PRICE, QUANTITY, OR QUALITY OF A PROCUREMENT, THE FAILURE OF A BIDDER TO ACKNOWLEDGE ITS RECEIPT IN THE MANNER REQUIRED BY THE INVITATION RENDERS THE BID NONRESPONSIVE. 37 COMP. GEN. 785; 40 ID. 48, 50. FURTHERMORE, THE FACT THAT THE GOVERNMENT IN A PARTICULAR CASE, MIGHT HAVE FAILED TO SEE THAT AN INTERESTED BIDDER HAS RECEIVED COPIES OF AN INVITATION FOR BIDS AND ALL RELATED AMENDMENTS DOES NOT WARRANT THE ACCEPTANCE OF THE BID OF A MODIFICATION THEREOF SUBMITTED AFTER THE TIME FIXED FOR BID OPENING. 40 COMP. GEN. 126.

THE BASIS FOR THE GENERAL RULE IS THE PRINCIPLE THAT THE ACCEPTANCE OF A BID WHICH DISREGARDS A MATERIAL PROVISION OF AN INVITATION, AS AMENDED, WOULD NOT OBLIGATE THE BIDDER TO PERFORM IN ACCORDANCE WITH THE AMENDMENT, WHICH WOULD BE PREJUDICIAL TO OTHER BIDDERS. FURTHER CLASSIFICATION OF THE BID AFTER OPENING MAY NOT BE PERMITTED BECAUSE THE BIDDER IN SUCH CIRCUMSTANCES WOULD HAVE THE OPTION TO DECIDE WHETHER TO BECOME ELIGIBLE FOR AWARD BY FURNISHING EXTRANEOUS EVIDENCE THAT THE AMENDMENT HAD BEEN CONSIDERED, OR TO AVOID AWARD BY REMAINING SILENT. 41 COMP. GEN. 550.

CONSISTENT WITH THE GENERAL RULE AS ENUNCIATED IN OUR DECISIONS, 10 U.S.C. 2305 (THE APPLICABLE PROCUREMENT STATUTE) REQUIRES THAT BIDS CONFORM TO THE TERMS OF THE ADVERTISED INVITATION. ALSO, ASPR 2-404.2 (A) REQUIRES REJECTION OF BIDS WHICH FAIL TO CONFORM TO THE ESSENTIAL REQUIREMENTS OF THE INVITATION.

WHILE ASPR 2-405 PERMITS WAIVER OF MINOR INFORMALITIES OR IRREGULARITIES IN BID, SUCH DEVIATIONS ARE LIMITED TO THOSE OF FORM OR SOME IMMATERIAL VARIATION FROM THE EXACT REQUIREMENTS OF THE INVITATION, HAVING NO EFFECT, OR MERELY A TRIVIAL OR NEGLIGIBLE EFFECT, ON PRICE, AND NO EFFECT ON QUALITY, QUANTITY OR DELIVERY OF THE SUPPLIES OR PERFORMANCE OF THE SERVICES BEING PROCURED AND THE CORRECTION OR WAIVER OF WHICH WOULD NOT AFFECT THE RELATIVE STANDING OF, OR BE OTHERWISE PREJUDICIAL TO, BIDDERS.

IT IS OUR VIEW THAT OUR DECISION AT 41 COMP. GEN. 631 (B-148239, MARCH 30, 1962), WHICH YOU CITE AS SUPPORT FOR YOUR POSITION, DOES NOT APPLY IN THE CIRCUMSTANCES OF THIS CASE. THE ORIGINAL IFB CONSIDERED IN THAT DECISION CALLED FOR BIDS TO FURNISH 739 UNITS OF AN ITEM AND STIPULATED THAT A BIDDER COULD GRANT THE GOVERNMENT AN OPTION TO PURCHASE AN ADDITIONAL QUANTITY RANGING UP TO 50 PERCENT AT THE SAME PRICE. AMENDMENT TO THE IFB INCREASED THE PROCUREMENT QUANTITY TO 840 UNITS BUT LEFT THE OPTION PROVISION UNCHANGED. IN SUCH CIRCUMSTANCES, WE HELD THAT A LOW BID SUBMITTED UNDER THE ORIGINAL IFB OFFERING 739 UNITS PLUS AN OPTION TO PURCHASE AN ADDITIONAL QUANTITY OF 50 PERCENT WAS AN OFFER TO FURNISH 1,108 UNITS AT THE LOW BID PRICE, AND, THEREFORE, WAS RESPONSIVE TO THE REQUIREMENTS OF THE AMENDED IFB FOR 840 UNITS, THE GRANT OF THE OPTION UNDER BOTH THE ORIGINAL AND AMENDED IFB NOT BEING MANDATORY ON THE BIDDER. THE INSTANT CASE IS DISTINGUISHABLE. THE ONLY BID SUBMITTED BY YOU PRIOR TO BID OPENING COVERS MERELY THE QUANTITIES SET FORTH IN THE ORIGINAL IFB, THERE BEING NO OFFER ON YOUR PART TO FURNISH ANY ADDITIONAL QUANTITY (AS WAS THE CASE IN 41 COMP. GEN. 631) AT THE SAME BID PRICE. YOUR BID, THEREFORE, IS NOT RESPONSIVE TO THE REQUIREMENTS OF THE AMENDED IFB, AND TO PERMIT YOU TO MAKE THE BID RESPONSIVE BY ACCEPTANCE OF THE OFFER WHICH YOU MADE SUBSEQUENT TO BID OPENING TO MEET THE REQUIREMENTS OF THE AMENDMENT WOULD VIOLATE THE RULES OF COMPETITIVE BIDDING. WHILE YOUR FAILURE TO RECEIVE THE AMENDMENT IS REGRETTABLE, IT IS OUR OPINION THAT THE PRINCIPLES SET FORTH IN 37 COMP. GEN. 785 AND 40 ID. 48 AND 126 REQUIRE THE REJECTION OF YOUR BID AS NONRESPONSIVE.

IN CONNECTION WITH YOUR CONTENTION THAT YOUR STATUS AS A SMALL BUSINESS CONCERN ENTITLES YOU TO AWARD, YOU ARE ADVISED THAT SINCE THE PROCUREMENT WAS NOT RESTRICTED TO SMALL BUSINESS, THERE IS NO REQUIREMENT THAT AWARD BE MADE TO A SMALL BUSINESS CONCERN. MOREOVER, THE RULES OF COMPETITIVE BIDDING, AS WELL AS ASPR 1-706 AND REGULATIONS ISSUED BY THE SMALL BUSINESS ADMINISTRATION, ARE ALSO FOR APPLICATION TO SMALL BUSINESS SET- ASIDE PROCUREMENTS.

AS TO THE SAVING WHICH YOU CLAIM COULD BE REALIZED BY AWARD TO YOU, WE HAVE HELD THAT THE STRICT MAINTENANCE OF THE COMPETITIVE BIDDING SYSTEM, REQUIRED BY LAW, IS INFINITELY MORE IN THE PUBLIC INTEREST THAN ANY PECUNIARY ADVANTAGE WHICH MIGHT BE OBTAINED IN A PARTICULAR CASE BY A VIOLATION OF THE RULES OF COMPETITIVE BIDDING. 17 COMP. GEN. 554, 558. ACCORDINGLY, THE FACT THAT YOUR BID WAS LOWEST DOES NOT JUSTIFY ITS ACCEPTANCE IN CONTRAVENTION OF THE PROCUREMENT STATUTE AND REGULATIONS.

REGARDING THE PROPRIETY OF THE PROPOSED CANCELLATION OF ITEM 2 AND READVERTISEMENT OF THE PROCUREMENT NEED, 10 U.S.C. 2305 (B) PROVIDES FOR THE REJECTION OF ALL BIDS WHEN SUCH ACTION IS DETERMINED TO BE IN THE GOVERNMENT'S INTEREST. ASPR 2-404.1 (B), ISSUED IN IMPLEMENTATION OF THE STATUTE, SETS FORTH CERTAIN CIRCUMSTANCES IN WHICH AN INVITATION FOR BIDS MAY BE CANCELLED AFTER BID OPENING BUT PRIOR TO AWARD UPON DETERMINATION IN WRITING BY THE CONTRACTING OFFICER, INCLUDING SITUATION IN WHICH IT IS SO DETERMINED THAT ALL OTHERWISE ACCEPTABLE BIDS RECEIVED ARE AT UNREASONABLE PRICES OR A CASE IN WHICH, FOR OTHER REASONS, CANCELLATION IS CLEARLY IN THE BEST INTEREST OF THE GOVERNMENT. SINCE THE EVIDENCE OF RECORD SUPPORTS THE CONTRACTING OFFICER'S WRITTEN DETERMINATION THAT THE ONE RESPONSIVE BID IS UNREASONABLE AS TO PRICE, WE MUST CONCUR WITH THE VIEW OF THE PROCURING ACTIVITY THAT FOR THAT REASON ALONE THE CANCELLATION OF THE ITEM, THE REJECTION OF ALL BIDS, AND READVERTISEMENT OF THE PROCUREMENT NEED ARE JUSTIFIED IN THE PUBLIC INTEREST.