B-157626, MAR. 16, 1966, 45 COMP. GEN. 572

B-157626: Mar 16, 1966

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ETC. - USE AUTHORIZATION ALTHOUGH A BIDDER SUBSEQUENT TO BID OPENING IS GRANTED PERMISSION FOR THE RENT-FREE USE OF GOVERNMENT-OWNED PROPERTY IN ITS POSSESSION. THE REQUIREMENT FOR A PREEXISTING WRITTEN AUTHORIZATION IS JUSTIFIED AND IS REASONABLE. 1966: REFERENCE IS MADE TO LETTER SANDA 642Z OF FEBRUARY 9. FORWARDING A CONTRACTING OFFICER'S STATEMENT RECOMMENDING THAT THERE BE DENIED THE PROTEST OF CHESAPEAKE INSTRUMENT CORPORATION THAT THE BID SUBMITTED BY THE BENDIX CORPORATION UNDER IFB600-51-66 IS NONRESPONSIVE FOR A NUMBER OF REASONS. BIDDERS ARE ADVISED THAT. WILL EITHER ADD TO THE BID A RENTAL EQUIVALENT OR WILL CHARGE A RENT FOR SUCH USE IN ORDER TO ELIMINATE ANY COMPETITIVE ADVANTAGE.

B-157626, MAR. 16, 1966, 45 COMP. GEN. 572

BIDS - EVALUATION - GOVERNMENT EQUIPMENT, ETC. - USE AUTHORIZATION ALTHOUGH A BIDDER SUBSEQUENT TO BID OPENING IS GRANTED PERMISSION FOR THE RENT-FREE USE OF GOVERNMENT-OWNED PROPERTY IN ITS POSSESSION, A RENTAL EQUIVALENT OR RENT CHARGE TO BE CONSIDERED IN BID EVALUATION, FAILURE TO COMPLY WITH THE INVITATION REQUIREMENT FOR THE SUBMISSION PRIOR TO BID OPENING OF WRITTEN AUTHORIZATION FOR THE USE OF THE PROPERTY FROM THE CONTRACTING OFFICER HAVING COGNIZANCE OF THE PROPERTY MAY NOT BE WAIVED AS A MINOR DEVIATION UNDER THE AUTHORITY OF PARAGRAPH 2-405 OF THE ARMED SERVICES PROCUREMENT REGULATION, THE USE OF GOVERNMENT-OWNED PROPERTY IN THE PERFORMANCE OF A CONTRACT MATERIALLY AFFECTING THE CONTRACT PRICE, AND THE BIDDER UNABLE TO FURNISH EXACT DATA ON THE PROPERTY PROPOSED TO BE USED HAS SUBMITTED A NONRESPONSIVE BIDE THAT SHOULD BE REJECTED, AND THE PRIOR WRITTEN USE APPROVAL AFFORDING SOME SAFEGUARD AGAINST POSSIBLE ABUSES BY BIDDERS HAVING GOVERNMENT PROPERTY, THE REQUIREMENT FOR A PREEXISTING WRITTEN AUTHORIZATION IS JUSTIFIED AND IS REASONABLE.

TO THE SECRETARY OF THE NAVY, MARCH 16, 1966:

REFERENCE IS MADE TO LETTER SANDA 642Z OF FEBRUARY 9, 1966, FROM THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, FORWARDING A CONTRACTING OFFICER'S STATEMENT RECOMMENDING THAT THERE BE DENIED THE PROTEST OF CHESAPEAKE INSTRUMENT CORPORATION THAT THE BID SUBMITTED BY THE BENDIX CORPORATION UNDER IFB600-51-66 IS NONRESPONSIVE FOR A NUMBER OF REASONS.

PARAGRAPH (A) OF THE "GOVERNMENT PROPERTY--- PRODUCTION AND RESEARCH PROPERTY" CLAUSE PROVIDES A PLACE WHERE A BIDDER MAY INDICATE IF IT PLANS TO USE IN THE PERFORMANCE OF THE CONTRACT RESULTING FROM THE INVITATION FOR BIDS ANY ITEMS OF GOVERNMENT PRODUCTION AND RESEARCH PROPERTY IN ITS POSSESSION UNDER A FACILITIES CONTRACT OR OTHER INSTRUMENT. BIDDERS ARE ADVISED THAT, IF THEY INDICATE SUCH USE, THEY SHOULD NOT INCLUDE IN THE BID PRICE ANY AMOUNT FOR THE USE OF SUCH PROPERTY AND THAT THE GOVERNMENT, FOR THE PURPOSE OF EVALUATION OF BIDS, WILL EITHER ADD TO THE BID A RENTAL EQUIVALENT OR WILL CHARGE A RENT FOR SUCH USE IN ORDER TO ELIMINATE ANY COMPETITIVE ADVANTAGE. PARAGRAPH (B) OF THE CLAUSE STATES THAT ALL BIDDERS SHALL SUBMIT WITH THEIR BIDS IDENTIFICATION OF THE FACILITIES CONTRACT OR OTHER INSTRUMENT UNDER WHICH THE PROPERTY IS HELD AND "* * * THE WRITTEN PERMISSION OF THE CONTRACTING OFFICER HAVING COGNIZANCE OF THE PROPERTY FOR USE OF THAT PROPERTY WITHOUT CHARGE.'

BENDIX INDICATED IN ITS BID THAT IT PLANNED TO USE GOVERNMENT PROPERTY IN ITS POSSESSION. HOWEVER, IT FAILED TO FURNISH ANY WRITTEN PERMISSION FOR SUCH USE FROM THE CONTRACTING OFFICER HAVING COGNIZANCE OF THE PROPERTY. INSTEAD, IN A LETTER ACCOMPANYING THE BID, IT IDENTIFIED THE CONTRACTS UNDER WHICH THE PROPERTY IS BEING USED AND REQUESTED APPROVAL OF RENT-FREE USE OF THE PROPERTY FOR THE IMMEDIATE CONTRACT.

THE CONTRACTING OFFICER HAS INDICATED THAT SUBSEQUENT TO THE OPENING OF BIDS PERMISSION FOR RENT-FREE USE WAS GRANTED TO BENDIX. HE THEREFORE PROPOSES TO WAIVE THE FAILURE TO FURNISH WRITTEN PERMISSION WITH THE BID AS A MINOR DEVIATION. HOWEVER, OUR OFFICE HAS HELD IN A LONG LINE OF DECISIONS THAT THE FAILURE OF A BIDDER TO HAVE WRITTEN AUTHORIZATION TO USE GOVERNMENT-FURNISHED PROPERTY PRIOR TO THE OPENING OF BIDS AS REQUIRED BY THE INVITATION FOR BIDS IS A MATERIAL DEVIATION WHICH RENDERS THE BID NONRESPONSIVE AND THAT NEITHER THE REGULATIONS PERMITTING WAIVER OF INFORMALITIES IS FOR APPLICATION NOR IS THE SITUATION REMEDIED BY A SUBSEQUENTLY ISSUED WRITTEN AUTHORIZATION. B 155943, APRIL 30, 1965; B- 155853, APRIL 15, 1965; B-155770, MARCH 25, 1965; B-154598, NOVEMBER 16, 1964; B-154759, NOVEMBER 16, 1964, AND DECEMBER 21, 1964; B-154685, NOVEMBER 4, 1964; AND B-154188, JUNE 26, 1964.

PARTICULAR ATTENTION IS INVITED TO B-154598, CITED ABOVE, WHEREIN WE CONSIDERED A CASE SUBSTANTIALLY SIMILAR TO THE INSTANT ONE AND WHICH SUMMARIZES OUR POSITION WITH RESPECT TO THIS TYPE OF CASE. IN THAT DECISION WE STATED:

THE APPLICABLE PROCUREMENT STATUTE, 10 U.S.C. 2305, REQUIRES THAT BIDS CONFORM TO THE TERMS OF THE ADVERTISED INVITATION. 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 FOR BIDS, HAVING NO EFFECT, OR MERELY A TRIVIAL OR NEGLIGIBLE EFFECT, ON THE 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.

SINCE THE USE OF GOVERNMENT-OWNED PROPERTY IN THE PERFORMANCE OF A CONTRACT MAY MATERIALLY AFFECT THE CONTRACT PRICE, THE PREEXISTING WRITTEN AUTHORIZATION REQUIREMENT CANNOT BE SAID TO BE WITHOUT REASONABLE JUSTIFICATION, AND WE COULD NOT OBJECT TO THE REFUSAL OF THE CONTRACTING OFFICER TO WAIVE IT. WE HAVE, IN FACT, HELD IN RECENT CASES INVOLVING SIMILAR REQUIREMENTS THAT THE PRIOR WRITTEN APPROVAL AFFORDS SOME SAFEGUARD AGAINST POSSIBLE ABUSES BY BIDDERS HAVING GOVERNMENT PROPERTY.

SEE, ALSO, B-154685, SUPRA, WHERE IT WAS STATED THAT:

THE REQUIREMENT FOR PRIOR APPROVAL AFFORDS A SAFEGUARD AGAINST POSSIBLE ABUSES BY INDIVIDUAL BIDDERS POSSESSING GOVERNMENT PROPERTY. THE BIDDER WHO SUBMITS HIS BID WITHOUT PRIOR APPROVAL CANNOT FURNISH EXACT DATA PRIOR TO BID OPENING SINCE HE CANNOT BE ASSURED THAT HE WILL BE GRANTED THE RIGHT TO USE ANY OR ALL OF THE PROPERTY LISTED. IF A BIDDER IS NOT REQUIRED TO OBTAIN THIS INFORMATION BEFORE BID OPENING, ANY SUBSEQUENT REFUSAL OR QUALIFICATION ON THE USE OF FACILITIES IN HIS POSSESSION WILL BY NECESSITY AFFECT THE PRIOR EVALUATION.

IN A CLOSELY ANALOGOUS CASE, B-154188, DATED JUNE 26, 1964, WE STATED:

UNDER THE PROVISIONS OF 10 U.S.C. 2305, WHICH IS A BASIC AUTHORITY FOR AGENTS OF THE GOVERNMENT TO ENTER INTO CONTRACTS, BIDS ARE REQUIRED TO CONFORM TO THE TERMS AND ESSENTIAL REQUIREMENTS OF THE ADVERTISED INVITATION TO BE ELIGIBLE FOR AWARD. WHILE THE INVITATION PROVIDED FOR THE SUBMISSION OF BIDS BASED ON USE OF GOVERNMENT PROPERTY IN THE BIDDERS' POSSESSION UNDER SEPARATE FACILITIES CONTRACTS, IN RECOGNITION OF THE UNUSUAL PROVISIONS OF SUCH CONTRACTS VESTING IN THE CONTRACTING OFFICER THE AUTHORITY TO APPROVE OR DISAPPROVE THEIR USE ON OTHER CONTRACTS AND TO PRESCRIBE THE TERMS OF SUCH USE, THE INVITATION PROPERLY REQUIRED THE APPROVALS TO HAVE BEEN IN FACT GRANTED AT TIME OF BID OPENING IN ORDER FOR SUCH BIDS TO BE CONSIDERED RESPONSIVE. THE GOVERNMENT FACILITIES WHICH YOU PLANNED TO USE AS LISTED IN YOUR BID WERE A MATERIAL FACTOR IN DETERMINING YOUR BID PRICE FOR EVALUATION PURPOSES, HENCE, THE NECESSARY PRIOR AUTHORIZATION FOR USE OF THE FACILITIES, WHICH WAS A MATTER OF ADMINISTRATIVE DISCRETION WITH THE FACILITIES CONTRACTING OFFICER, CONSTITUTED AN ESSENTIAL REQUIREMENT OF THE INVITATION NECESSARY FOR THE EVALUATION OF A BID THEREON, AND MAY NOT REASONABLY BE VIEWED AS A MERE INFORMALITY WHICH MAY BE WAIVED.

ACCORDINGLY, WITHOUT CONSIDERING THE OTHER BASES FOR REJECTION ADVANCED BY THE PROTESTANT, WE CONCLUDE THAT THE BENDIX BID SHOULD BE REJECTED.

THE ATTACHMENTS TO THE CONTRACTING OFFICER'S STATEMENT ARE RETURNED AS REQUESTED.