B-158126, MAR. 10, 1966

B-158126: Mar 10, 1966

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FOUR BIDS WERE RECEIVED ON THE SUBJECT IFB AND OPENED ON JUNE 4. THE RECORD INDICATES THAT A CONTRACT WAS AWARDED TO LEBLOND ON JUNE 30. BIDS ON A MACHINE DIFFERING IN MINOR DETAILS FROM THE MACHINE PRESCRIBED BY THE SPECIFICATION WILL BE CONSIDERED PROVIDED THE REQUIREMENTS UNDER "RANGE AND CAPACITIES" ARE MET. "NOTE: DEVIATIONS DETERMINED BY THE GOVERNMENT TO BE MINOR IN NATURE WILL NOT BE A BASIS FOR REJECTING A BID. (STATE NONE): " THE REQUIREMENTS SPECIFIED IN THE IFB AND THE DEVIATIONS PROPOSED BY LEBLOND ARE SHOWN BELOW: CHART SPECIFIED PROPOSED PARA. 3.2.11 - TAILSTOCK UNIT CAST TAILSTOCK PROPOSED IS CLAMPED OF ALLOY IRON SHALL BE PROVIDED. THIS DESIGN WITHOUT SHALL BE PROVIDED FOR HAND MOVEMENT PAWL AND RACK IS SATISFACTORY ALONG THE BED.

B-158126, MAR. 10, 1966

TO HARRINGTON-WILSON-DAUM CORPORATION:

IN YOUR LETTER OF NOVEMBER 30, 1965, YOU PROTEST ON BEHALF OF THE AMERICAN TOOL WORKS COMPANY AGAINST THE AWARD OF AN ARMY CONTRACT BY WATERVLIET ARSENAL TO THE R. K. LEBLOND MACHINE TOOL COMPANY, PURSUANT TO INVITATION FOR BIDS (IFB) AMC/W/-30-144-65-297, FOR FOUR HEAVY DUTY ENGINE LATHES.

FOUR BIDS WERE RECEIVED ON THE SUBJECT IFB AND OPENED ON JUNE 4, 1965. LEBLOND SUBMITTED A LOW BID OF $24,796 EACH, AND YOU SUBMITTED THE SECOND LOW BID OF $26,692 EACH. THE RECORD INDICATES THAT A CONTRACT WAS AWARDED TO LEBLOND ON JUNE 30, 1965, PRIOR TO THE SUBMISSION OF YOUR PROTEST TO THE CONTRACTING OFFICER ON JULY 14, 1965.

THE INVITATION PROVIDED THAT BIDS WOULD BE SUBMITTED IN ACCORDANCE WITH WATERVLIET ARSENAL MFG/EQUIP. SPECIFICATION NO. 9-65-3416, DATED NOVEMBER 20, 1964. HOWEVER, IT ALSO PROVIDED AS FOLLOWS:

"VARIATION FROM SPECIFICATION: EACH BIDDER SHALL SUBMIT ONE BID ON HIS MACHINE WHICH MOST NEARLY MEETS ALL THE REQUIREMENTS OF THE SPECIFICATION.

BIDS ON A MACHINE DIFFERING IN MINOR DETAILS FROM THE MACHINE PRESCRIBED BY THE SPECIFICATION WILL BE CONSIDERED PROVIDED THE REQUIREMENTS UNDER "RANGE AND CAPACITIES" ARE MET. BIDDER BIDDING ON A MACHINE VARYING IN ANY PART FROM THE SPECIFICATION MUST LIST BELOW IN DETAIL THE DEVIATIONS WHICH EXIST IN HIS BID. EACH DEVIATION MUST BE IDENTIFIED WITH THE APPLICABLE PARAGRAPH NUMBER IN THE SPECIFICATION.

BIDS NOT COMPLETE WITH THIS INFORMATION MAY BE SUBJECT TO REJECTION AS NON-RESPONSIVE.

"NOTE: DEVIATIONS DETERMINED BY THE GOVERNMENT TO BE MINOR IN NATURE WILL NOT BE A BASIS FOR REJECTING A BID.

"DEVIATIONS. (IF ANY/--- IF NONE. (STATE NONE): "

THE REQUIREMENTS SPECIFIED IN THE IFB AND THE DEVIATIONS PROPOSED BY LEBLOND ARE SHOWN BELOW:

CHART

SPECIFIED PROPOSED PARA. 3.2.11 - TAILSTOCK UNIT CAST

TAILSTOCK PROPOSED IS CLAMPED OF ALLOY IRON SHALL BE PROVIDED, TO THE BED WITH FOUR (4) HEAVY EQUIPPED WITH A CLAMPING DEVICE FOR BOLTS TO BED CLAMPS. BIDDER SECURING IN ANY POSITION ALONG THE BED. STATES THAT FOR THIS SIZE A CRANK AND PINION ARRANGEMENT WITH RACK MACHINE, THIS DESIGN WITHOUT SHALL BE PROVIDED FOR HAND MOVEMENT PAWL AND RACK IS SATISFACTORY ALONG THE BED. A COUPLING DEVICE TO RESIST END THRUST. TO THE CARRIAGE SHALL BE PROVIDED FOR POWER MOVEMENT. A PAWL TO ENGAGE A RACK FOR RESISTING END THRUST WHEN TURNING A HEAVY WORKPIECE, SHALL BE PROVIDED. PARA. 3.2.12 - ONE (1) EACH, STEADY BIDDER PROPOSES THEIR STANDARD REST, EXTRA HEAVY DUTY, ROLLER TYPE, REST, CAPACITY 3/4 INCHES TO WITH ANTI- FRICTION, TAPERED ROLLER 8-1/2 INCHES. BEARINGS, CAPACITY 1/2 INCHES TO 6 INCHES OR MORE. ONE (1) EACH, STEADY REST, EXTRA BIDDER PROPOSES THEIR STANDARD HEAVY DUTY, ROLLER TYPE WITH ANTI- REST, CAPACITY 8-1/4 INCH TO FRICTION BEARINGS, CAPACITY 5-1/2 13 INCHES WITH 1-5/16 INCHES TO 10 INCHES OR MORE. WIDE ROLLERS. THE DESIGN OF THE STEADY REST SHALL BIDDER PROPOSES THEIR STANDARD PROVIDE FOR THE UPPER HINGED MEMBER REST. IT DOES NOT PIVOT TO PIVOT HORIZONTALLY, RATHER THAN HORIZONTALLY. VERTICALLY, IN BOTH A RIGHT AND LEFT DIRECTION AND IT SHALL CLEAR THE WORKPIECE. ONE (1) EACH, HEAVY DUTY TOLL HOLDER, BIDDER PROPOSES A MCCROSKY FOUR-WAY, 90 DEG. INDEXING, SQUARE E5-1/2 TURRET TOLL HOLDER WITH TYPE, CAPABLE OF SETTING A 1-1/2 INCH A CAPACITY OF 1-1/4 INCH BY X 1 1/2 INCH SQUARE TOOL BIT HOLDER TO 1-1/4 INCH. MACHINE CENTERLINE HEIGHT. PARA. 3.2.13.8 - ONE (1) TACHOMETER BIDDER DOES NOT PROPOSE A TO COVER FULL RANGE OF SPINDLE TACHOMETER AS A LIGHTED DIAL SPEEDS AND LOCATED FOR EASE OF READING AND CALCULATOR, ON THE WHILE SETTING SPINDLE RPM. HEADSTOCK, SHOWS SELECTED RPM

OF THE SPINDLE.

THE RECORD ALSO INDICATES THAT YOUR BID TOOK THE FOLLOWING TWO EXCEPTIONS TO THE PECIFICATIONS:

"WE WISH TO CLARIFY AS FOLLOWS:

3.2.11

WHILE YOUR SPECIFICATIONS STATE THAT A PAWL TO ENGAGE A RACK FOR RESISTING END THRUST SHALL BE PROVIDED, WE WISH TO ADVISE THAT OUR AMERICAN MACHINE TAILSTOCK IS EQUIPPED WITH FOUR (4) EXTRA HEAVY HOLDDOWN BOLTS. THIS ARRANGEMENT IS CAPABLE OF WITHSTANDING ANY PRESSURES THAT CAN BE EXERTED ON THIS MACHINE.

3.2.12

OUR FOLLOW REST CAPACITY IS 1/2 INCHES TO 4 INCHES. CERTAINLY ANY SHAFT OVER 4 INCHES IN DIAMETER WILL NOT REQUIRE A FOLLOW REST. WE DO GO SMALLER THAN THE 1 INCH MINIMUM REQUIREMENT WHICH IS IN KEEPING WITH ACTUAL USE NEEDS FOR THIS ITEM.'

IN ADDITION, THE LETTER WHICH ACCOMPANIED YOUR BID OFFERED THE FOLLOWING WARRANTY PROVISION:

"THIS MACHINE IS GUARANTEED FOR A PERIOD OF TWO (2) YEARS FROM DATE OF SHIPMENT WHEN OWNED BY THE ORIGINAL PURCHASER AND OPERATED UNDER NORMAL CONDITIONS. THIS WARRANTY COVERS ANY PARTS PROVEN TO BE DEFECTIVE DUE TO MATERIAL AND/OR WORKMANSHIP. ANY PART OR PARTS OF SUCH EQUIPMENT FOUND UPON OUR MANUFACTURER'S EXAMINATION TO BE DEFECTIVE, WILL BE FURNISHED FREE OF CHARGE, F.O.B. POINT OF MANUFACTURE.'

IT WOULD APPEAR THAT THIS WARRANTY WAS OFFERED IN LIEU OF THE "WATERVLIET ARSENAL SUPPLY WARRANTY" WHICH WAS CONTAINED ON PAGE 11 OF THE IFB, AND DIFFERED FROM THE LATTER IN AT LEAST TWO RESPECTS, I.E., ANY QUESTION AS TO WHETHER A DEFECT WAS DUE TO MATERIALS OR WORKMANSHIP WAS TO BE DECIDED BY THE MANUFACTURER RATHER THAN PURSUANT TO THE DISPUTES CLAUSE, AND TRANSPORTATION CHARGES INVOLVED IN REPLACING A DEFECTIVE PART WOULD BE BORNE BY THE GOVERNMENT RATHER THAN BY THE MANUFACTURER.

THE CONTRACTING OFFICER, UPON THE ADVICE OF THE CHIEF, INDUSTRIAL ENGINEERING SECTION OF THE ARSENAL, FOUND THAT LEBLOND'S BID TOOK NO EXCEPTIONS TO THE REQUIREMENTS LISTED UNDER "RANGE AND CAPACITIES," THAT ITS PROPOSED DEVIATIONS WERE "MINOR," AND THAT THE PRODUCT IT OFFERED WOULD SATISFY THE GOVERNMENT'S NEEDS. AFTER THE CONTRACTING OFFICER RECEIVED YOUR PROTEST, WHICH ALLEGED THAT LEBLOND'S DEVIATIONS WERE NOT MINOR, AND THAT YOUR COMPLIANCE WITH THE PORTIONS OF THE SPECIFICATION FROM WHICH LEBLOND HAD DEVIATED RESULTED IN YOUR BID BEING $3,108 HIGHER THAN IT OTHERWISE WOULD HAVE BEEN, HE REFERRED THE MATTER TO THE ARSENAL'S TECHNICAL REVIEW PANEL. ONE OF THE PANEL'S CONCLUSIONS WAS THAT:

"* * * THE DEVIATION BY LEBLOND IN FURNISHING STANDARD STEADY RESTS IN LIEU OF THE REQUIRED SPECIAL DESIGN SPECIFIED IN PARA. 3.2.12 IS A MAJOR CONSIDERATION BOTH TECHNICALLY AND FINANCIALLY. THE LANGUAGE OF THE SPECIFICATION IS VERY STRONG AND DEFINITIVE THAT THE DESIGN OF THE RESTS "MUST CONFORM" TO THE DETAILED DESCRIPTION WHICH ENCOMPASSES ONE-HALF PAGE OF THE SPECIFICATION. THE DESIGN REQUIRED IS SPECIAL TO ANY LATHE MANUFACTURER AND NECESSITATES SPECIAL ENGINEERING, TOOLING AND MACHINING BY A SUPPLIER, THEREBY INCURRING COSTS HIGHER THAN COSTS TO SUPPLY A STANDARD ITEM. TECHNICALLY, THE PANEL IS AWARE OF THE BASIS FOR WATERVLIET REQUIRING THIS DESIGN. IT HAS BEEN SPECIFIED TO OVERCOME THE SAFETY HAZARD TO OPERATOR IN THE LIFTING AND THE RETURNING OF HEAVY, UNBALANCED VERTICAL-OPENING, UPPER-HINGED STEADY REST MEMBERS WHEN LOADING OR UNLOADING CYLINDRICAL COMPONENTS IN STANDARD-DESIGNED RESTS. THE REQUIREMENT IN THE SPEC. IS CONSIDERED BY THE PANEL TO BE MANDATORY AND DEVIATION TO THIS REQUIREMENT BY LEBLOND IS BASIS FOR REJECTION OF BID.'

NEVERTHELESS, THE CONTRACTING OFFICER'S DETERMINATION THAT THE LATHES OFFERED BY LEBLOND WILL SATISFY THE GOVERNMENT'S NEEDS HAS BEEN ACCEPTED BY THE ARMY WEAPONS COMMAND.

THE CONTRACTING OFFICER DECIDED TO ACCEPT THE FINDINGS OF THE CHIEF OF HIS INDUSTRIAL ENGINEERING SECTION, AND ON OCTOBER 12, 1965, DENIED YOUR PROTEST. ON OCTOBER 18, YOU APPEALED TO THE CONTRACTING OFFICER TO REVERSE HIS DECISION, AND ON NOVEMBER 9 YOUR APPEAL WAS DENIED.

BOTH THE UNITED STATES ARMY MATERIEL COMMAND AND THE WEAPONS COMMAND, ROCK ISLAND ARSENAL, HAVE DETERMINED THAT CERTAIN OF THE DEVIATIONS PROPOSED BY LEBLOND INVOLVE PRICING CONSIDERATIONS, AND THEREFORE COULD NOT BE CONSIDERED TO BE OF A MINOR NATURE. THEY CONCLUDE THAT THE CONTRACT SHOULD NOT HAVE BEEN AWARDED TO LEBLOND. HOWEVER, SINCE THIS CONTRACT IS ESTIMATED TO BE 70 PERCENT COMPLETE, INDICATING THAT COSTS IN THE AMOUNT OF APPROXIMATELY $70,000 HAVE BEEN INCURRED, THE ARMY MATERIEL COMMAND RECOMMENDS THAT THE AWARD BE ALLOWED TO STAND AND THE CONTRACTOR BE PERMITTED TO COMPLETE THE CONTRACT.

IN OUR VIEW, THE PROCEDURE EMPLOYED IN AWARDING THIS CONTRACT SUFFERS FROM TWO DEFECTS. AS THE ADMINISTRATIVE REPORT POINTS OUT, THE CONTRACT WAS AWARDED TO A BIDDER WHO TOOK MATERIAL DEVIATIONS FROM THE SPECIFICATION. SEE 30 COMP. GEN. 179. MORE IMPORTANT, WE BELIEVE, IS THE FACT THAT BY ASKING FOR BIDS "MOST NEARLY" MEETING THE SPECIFICATION, THE IFB INVITED DEVIATIONS FROM THE SPECIFICATION, BUT DID NOT INFORM BIDDERS OF THE BASIS UPON WHICH THEIR POINTS OF NONCOMPLIANCE WOULD BE EVALUATED AS EITHER MATERIAL OR MINOR DEVIATIONS, OR WHETHER PARTICULAR DEVIATIONS FROM SPECIFICATION REQUIREMENTS WOULD RESULT IN THE REJECTION OF BIDS AS NONRESPONSIVE. SEE 43 COMP. GEN. 544.

IT IS OUR CONVICTION THAT EITHER OF THESE TWO DEFECTS DISCUSSED ABOVE MAY REASONABLY BE SAID TO VIOLATE LOGICAL COROLLARIES OF STATUTES REQUIRING (1) THAT SPECIFICATIONS AND INVITATIONS PERMIT SUCH FULL AND FREE COMPETITION AS IS CONSISTENT WITH THE PROCUREMENT OF TYPES OF PROPERTY AND SERVICES NECESSARY TO MEET REQUIREMENTS, (2) THAT CONTRACTS BE AWARDED TO THE LOW RESPONSIBLE BIDDER WHOSE BID CONFORMS TO THE INVITATION (10 U.S.C. 2305/A) AND (C), AND 41 U.S.C. 253/A) AND (B) (, AND (3) WITH RESPECT TO MILITARY PROCUREMENT SUCH AS IS HERE INVOLVED, THAT NO AWARD BE MADE IF THE SPECIFICATIONS ARE NOT SUFFICIENTLY DESCRIPTIVE IN LANGUAGE AND ATTACHMENTS TO PERMIT FULL AND FREE COMPETITION (10 U.S.C. 2305/B) ). SEE 40 COMP. GEN. 447. HOWEVER, THE ACTIONS OF THE CONTRACTING OFFICER IN THE INSTANT CASE DID NOT CONTRAVENE ANY EXPLICIT MANDATE OF 10 U.S.C. 2305, OR REGULATIONS ISSUED PURSUANT THERETO, AND WHILE WE FIRMLY BELIEVE THAT OUR CONCLUSIONS WITH RESPECT TO THE DEFECTS IN THIS PROCUREMENT ARE RATIONALLY DERIVED FROM THE STATUTES, WE CANNOT SAY THAT THE CONTRACTING OFFICER'S CONTRARY CONCLUSIONS WERE MADE IN BAD FAITH, OR WERE NECESSARILY UNREASONABLE UNDER APPLICABLE LAW AND REGULATIONS. IN THIS CONNECTION, IT MUST BE NOTED THAT THE COURT OF CLAIMS HAS RECENTLY CONCLUDED THAT APPLICABLE PROCUREMENT STATUTES AND REGULATIONS CONFER BROAD DISCRETION ON THE CONTRACTING OFFICER; THAT THE AWARD OF A CONTRACT SHOULD BE UPHELD IF THE CONTRACTING OFFICER HAS ACTED IN GOOD FAITH AND IF SUCH ACTION IS REASONABLE UNDER THE LAW AND REGULATIONS; AND THAT A CONTRACT SHOULD BE CANCELLED AS VOID AB INITIO ONLY IF ITS ILLEGALITY IS CLEAR OR PALPABLE. SEE JOHN REINER AND COMPANY V. UNITED STATES, 163 CT.CL. 381, 325 F.2D 438 (1963), CERT. DENIED, 377 U.S. 931 (1964); BROWN AND SON ELECTRICAL COMPANY V. UNITED STATES, 163 CT.CL. 465, 325 F.2D 466 (1963); COSTAL CARGO COMPANY, INC. V. UNITED STATES, CT.CL. NO. 467-59 (OCT. 15, 1965); AND WARREN BROTHERS ROADS COMPANY V. UNITED STATES, CT.CL. NO. 302-61 (DEC. 17, 1965). THE RECORD SHOWS NO EVIDENCE OF BAD FAITH ON THE PART OF THE CONTRACTOR, AND THE BIDS APPEAR TO HAVE BEEN SUBMITTED AND EVALUATED IN STRICT ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE INVITATION. VIEW THEREOF, WE CANNOT CONCLUDE THAT THE ILLEGALITY RESULTING FROM THE ABOVE DEFECTS IS PALPABLE, OR THAT THE SUBJECT CONTRACT CAN BE CONSIDERED VOID AB INITIO.

IN ADDITION, IT APPEARS THAT YOUR BID IS NONRESPONSIVE IN ANY EVENT, BECAUSE IT TOOK EXCEPTION TO MATERIAL ELEMENTS OF THE WARRANTY PROVISION IN THE IFB (SEE B-150764, DATED FEBRUARY 21 AND MAY 23, 1963). WHILE WE THEREFORE ARE CONSTRAINED FROM TAKING ANY CORRECTIVE ACTION IN THIS MATTER, WE ARE TODAY ADVISING THE SECRETARY OF THE ARMY TO SEE THAT NECESSARY STEPS ARE TAKEN SO THAT, IN FUTURE PROCUREMENTS, CONTRACTING OFFICERS AT THE ARSENAL WILL REVIEW PROPOSED DEVIATIONS IN THE LIGHT OF ASPR 2-405 AND THE SIMILAR STANDARDS ESTABLISHED BY OUR PREVIOUS DECISIONS DEALING WITH THE MATERIALITY OF SUCH DEVIATIONS. WE ARE ALSO RECOMMENDING THAT FUTURE IFBS BE MODIFIED SO AS TO DELINEATE ESSENTIAL NEEDS AND OTHERWISE PROVIDE A PROPER BASIS OF EVALUATION.