B-157359, OCT. 26, 1965

B-157359, OCT. 26, 1965

TO ELECTRO-MECHANICAL RESEARCH, INCORPORATED:

WE HAVE RECEIVED FROM THE DEPARTMENT OF THE NAVY A COPY OF TELEGRAM OF AUGUST 13, 1965, PROTESTING THE CANCELLATION OF A CONTRACT AWARDED TO YOUR FIRM ON JULY 20, 1965, PURSUANT TO INVITATION FOR BIDS NO. 156 566-65, ISSUED ON MAY 26, 1965, BY THE NAVAL AIR ENGINEERING CENTER, PHILADELPHIA, PENNSYLVANIA. THE TELEGRAM INDICATES THAT AN INFORMATION COPY WAS SENT TO OUR OFFICE. WHILE WE HAVE NO RECORD OF THE RECEIPT OF SUCH COPY FROM YOU, WE ARE RESPONDING TO YOUR PROTEST ON THE ASSUMPTION THAT YOU INTENDED TO BRING THE MATTER TO OUR ATTENTION.

PURSUANT TO THE INVITATION FOR THE FURNISHING AND INSTALLATION OF 9 PHASE LOCKED DISCRIMINATORS, 1 TAPE ERROR COMPENSATION SYSTEM AND 1 AUTOMATIC CALIBRATOR, ELECTRO-MECHANICAL RESEARCH, INCORPORATED (EMR), SUBMITTED A BID ATTACHED TO A QUOTATION FROM LISTING BY MODEL NUMBERS THE EQUIPMENT IT OFFERED TO SUPPLY. THIS WAS THE LOW BID AND SUBSEQUENTLY AN "AWARD (SUPPLY CONTRACT)" DATED JULY 20, 1965, WAS EXECUTED BY THE CONTRACTING OFFICER AND MAILED TO EMR. FOLLOWING ISSUANCE OF THE AWARD, VECTOR DIVISION, UNITED AIRCRAFT CORPORATION, THE SECOND LOW BIDDER, QUESTIONED THE PROPRIETY OF THE AWARD, ASSERTING THAT THE EMR EQUIPMENT LISTED IN THE QUOTATION FORM DID NOT IN FACT MEET THE IFB SPECIFICATIONS. AFTER REVIEWING THE FILE, THE CONTRACTING OFFICER DETERMINED THAT THE AWARD HAD BEEN ISSUED IN ERROR SINCE BY ITS TERMS THE AWARD REQUIRED THE CONTRACTOR TO FURNISH PARTICULAR PART NUMBERS RATHER THAN EQUIPMENT MEETING THE SPECIFICATIONS SET FORTH IN THE IFB. IN VIEW OF THIS DETERMINATION, THE CONTRACTING OFFICER BY TELEGRAM DATED JULY 27, 1965, ADVISED EMR THAT THE AWARD WAS NOT VALID AND WAS WITHDRAWN. BECAUSE THE CONTRACTING OFFICER FELT THAT EMR MIGHT HAVE MADE AN ERROR IN ITS BID AND SHOULD ACCORDINGLY BE GIVEN AN OPPORTUNITY TO REVIEW IT PRIOR TO THE ISSUANCE OF A PROPOSED REVISED AWARD, THE TELEGRAM ALSO REQUESTED EMR TO CONFIRM THAT ITS BID WAS AN OFFER TO FURNISH MATERIAL MEETING THE IFB SPECIFICATIONS. THE PERTINENT PARAGRAPH IN THE IFB IS B.1.N, PAGE 5, WHICH READS:

"EACH DISCRIMINATOR SHALL BE OF THE PHASE LOCK TYPE AND SHALL BE COMPLETELY TRANSISTORIZED. IT SHALL NOT REQUIRE ANY EXTERNAL POWER REGULATION. IT SHALL OPERATE FROM A 100-VOLT 60 CYCLE POWER SOURCE.'

BY RETURN TELEGRAM EMR CONFIRMED ITS BID AND STATED THAT IT WOULD ACCEPT A REVISED AWARD CALLING FOR MATERIAL IN ACCORDANCE WITH THE DESCRIPTION IN THE IFB. HOWEVER, BY LETTER TWO DAYS LATER, EMR ADVISED THAT ITS BID PRICE WAS BASED UPON FURNISHING EQUIPMENT UNDER WHICH UP TO SIX DISCRIMINATORS WOULD RECEIVE THEIR POWER FROM A SINGLE POWER SUPPLY AND THAT IF THE IFB WAS INTENDED TO REQUIRE A SELF CONTAINED POWER SUPPLY FOR EACH OF THE NINE DISCRIMINATORS, THE BIDDER WOULD BE REQUIRED TO INCREASE ITS PRICE BY $5,614. EVEN WITH THIS INCREASE, EMR WOULD REMAIN LOW BIDDER.

IT IS EMR'S CONTENTION THAT THE SPECIFICATIONS DO NOT CLEARLY REQUIRE A SELF-CONTAINED POWER SUPPLY FOR EACH OF THE DISCRIMINATORS; THAT IF AWARD IS NOT MADE TO EMR THE INVITATION SHOULD BE CANCELLED AND READVERTISED WITH CLEARER SPECIFICATIONS. VECTOR'S POSITION IS THAT A NEW AWARD TO EMR WOULD BE IN CONTRAVENTION OF THE PRINCIPLES OF ADVERTISED PROCUREMENT IN THAT AWARD MUST BE MADE TO THE LOWEST RESPONSIVE BIDDER; THAT SINCE THE EQUIPMENT IDENTIFIED BY EMR'S MODEL NUMBERS IS NOT IN FACT THE EQUIPMENT THAT THE NAVY ADVERTISED, THE BID IS NONRESPONSIVE AND, THEREFORE, SHOULD BE DISREGARDED.

ASPR 2-301 REQUIRES THAT A BID "COMPLY IN ALL MATERIAL RESPECTS WITH THE INVITATION FOR BIDS" IN ORDER TO BE CONSIDERED FOR AWARD. SIMILARLY, THE SECTION ON REJECTION OF BIDS, ASPR 2-404.2 (A), STATES: "ANY BID WHICH FAILS TO CONFORM TO THE ESSENTIAL REQUIREMENTS OF THE INVITATION FOR BIDS SHALL BE REJECTED.' THE TERM "ESSENTIAL REQUIREMENTS" HAS BEEN DEFINED BY THE COMPTROLLER GENERAL TO MEAN THOSE THINGS WHICH "AFFECT EITHER THE PRICE, QUANTITY, OR QUALITY OF THE ARTICLES OFFERED AND THEREFORE IS PREJUDICIAL TO THE RIGHTS OF OTHER BIDDERS * * *.' 30 C.G. 179, 181. HERE, BY EMR'S OWN ADMISSION, ITS BID PRICE WILL BE INCREASED BY $5,614 IF EMR MEETS THE SPECIFICATIONS AS INTERPRETED BY THE GOVERNMENT. OBVIOUSLY, TOO, THE QUANTITY OF THE ITEMS OFFERED ARE DIFFERENT FROM THOSE DESIRED, TO WIT: EMR'S ORIGINALLY OFFERED EQUIPMENT DOES NOT CONFORM TO THE ESSENTIAL REQUIREMENT THAT EACH DISCRIMINATOR MUST HAVE ITS OWN POWER SUPPLY. IN THIS REGARD, TO ANSWER EMR'S CONTENTION THAT THE SPECIFICATIONS ARE NOT CLEAR, THE CONTRACTING OFFICER REQUESTED THAT THE NAVAL AIR TEST FACILITY, LAKEHURST, NEW JERSEY, THE ACTIVITY WHICH PREPARED THE SPECIFICATION, PROVIDE A PROPER INTERPRETATION OF THE DISPUTED PARAGRAPH. THE REPLY WAS AS FOLLOWS: "A. EACH DISCRIMINATOR MUST HAVE ITS OWN POWER SUPPLY AND, B. A SINGLE EXTERNAL POWER SUPPLY IS NOT ACCEPTABLE.' IN VIEW OF THIS INTERPRETATION, AND THE FACT THAT THE OTHER TWO BIDDERS APPARENTLY INTERPRETED THE SPECIFICATION PROPERLY, IT IS OUR OPINION THAT EMR'S BID DID NOT CONFORM TO THE ESSENTIAL REQUIREMENTS OF THE IFB AND, THEREFORE, MUST BE REJECTED. A CONTRACTING OFFICER HAS NO AUTHORITY TO AWARD A CONTRACT TO A BIDDER WHOSE BID DOES NOT CONFORM TO THE IFB AND A PURPORTED AWARD ON SUCH BASIS IS INVALID. PRESTEX, INC. V. U.S., 320 F.2D 367. THE COURT OF CLAIMS STATED IN THAT CASE (P. 371):

"IT IS WELL RECOGNIZED PRINCIPLE OF PROCUREMENT LAW THAT THE CONTRACTING OFFICER, AS AGENT OF THE EXECUTIVE DEPARTMENT, HAS ONLY THAT AUTHORITY ACTUALLY CONFERRED UPON HIM BY STATUTE OR REGULATION. IF, BY IGNORING STATUTORY AND REGULATORY REQUIREMENTS, HE EXCEEDS HIS ACTUAL AUTHORITY, THE GOVERNMENT IS NOT ESTOPPED TO DENY THE LIMITATIONS ON HIS AUTHORITY, EVEN THOUGH THE PRIVATE CONTRACTOR MAY HAVE RELIED ON THE CONTRACTING OFFICER'S APPARENT AUTHORITY TO HIS DETRIMENT, FOR THE CONTRACTOR IS CHARGED WITH NOTICE OF ALL STATUTORY AND REGULATORY LIMITATIONS.'

IT FOLLOWS THAT AN AWARD MADE BY A CONTRACTING OFFICER WHICH IS IN EXCESS OF HIS ACTUAL AUTHORITY, AS IS THE CASE HERE, IS NOT A VALID AWARD AND HAS NO BINDING EFFECT ON THE GOVERNMENT. FURTHERMORE, TO PERMIT EMR TO MAKE A REVISED BID AFTER ITS PRIMARY BID HAS BEEN REJECTED, WOULD BE CONTRARY TO ESTABLISHED POLICY FOR PROCUREMENT BY FORMAL ADVERTISING AS STATED IN 28 COMP. GEN. 532, 534:

"THE PURPOSE OF STATUTES REQUIRING THE AWARD OF CONTRACTS TO THE LOWEST RESPONSIBLE BIDDER AFTER ADVERTISING IS TO GIVE ALL PERSONS EQUAL RIGHT TO COMPETE FOR GOVERNMENT CONTRACTS, TO PREVENT UNJUST FAVORITISM, COLLUSION, OR FRAUD IN AWARDING GOVERNMENT CONTRACTS, AND TO SECURE FOR THE GOVERNMENT THE BENEFITS WHICH FLOW FROM FREE AND UNRESTRICTED COMPETITION.'

IT APPEARS THAT THE GOVERNMENT HAS TWO ALTERNATE COURSES OF ACTION WHICH IT MAY FOLLOW IN THIS SITUATION. ALTHOUGH THE CONTRACTING OFFICER MAY REJECT ALL BIDS AND CANCEL THE INVITATION, THIS IS AN EXTRAORDINARY MEASURE, THE EXCEPTION RATHER THAN THE RULE, AND SHOULD BE UTILIZED ONLY ,WHERE THERE IS A COMPELLING REASON" (SEE ASPR 2 404.1). SEVERAL OF THESE COMPELLING REASONS ARE EXPRESSLY SET OUT IN ASPR 2-404.1 (B). WE FIND NO COMPELLING REASON HERE INASMUCH AS EMR APPEARS TO BE THE ONLY BIDDER WHO MISINTERPRETED THE SPECIFICATIONS, AND THE GOVERNMENT CAN ACQUIRE THE EQUIPMENT AT A REASONABLE PRICE FROM THE SECOND LOWEST BIDDER.

THE OTHER COURSE OF ACTION OPEN TO THE CONTRACTING OFFICER IS TO REJECT EMR'S BID AS BEING NONRESPONSIVE, AND AWARD THE CONTRACT TO VECTOR, AS IT WOULD THEN BE THE LOWEST RESPONSIBLE BIDDER.

ACCORDINGLY, OUR OFFICE HAS NO OBJECTION TO THE RECOMMENDATION OF THE CONTRACTING OFFICER THAT THE BID AND PROTEST OF EMR BE DISREGARDED, AND AWARD TO MADE TO VECTOR DIVISION, UNITED AIRCRAFT CORPORATION.