B-158169, FEB. 17, 1966

B-158169: Feb 17, 1966

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THE CONTRACTING OFFICER DETERMINED THAT PROGRESS PAYMENTS WOULD NOT BE NEEDED AS "IT WAS NOT BELIEVED THAT THERE WOULD BE ANY SUBSTANTIAL PRE-DELIVERY COSTS AND THE PERIOD BETWEEN THE BEGINNING OF THE WORK AND THE REQUIRED FIRST PRODUCTION DELIVERY DOES NOT EXCEED SIX (6) MONTHS.'. WHICH DIRECTS THAT BIDDERS BE WARNED THAT BIDS CONDITIONED ON PROGRESS PAYMENTS WILL REJECTED AS NONRESPONSIVE. WAS FOUND TO BE LOW AND RESPONSIVE IN EVERY RESPECT SAVE THE INCLUSION OF THE PHRASE "PROGRESS PAYMENTS (E-510.1) REQUESTED" TYPED ON PAGE 25 OF THE BID. THE CONTRACT WAS AWARDED TO DORSETT ELECTRONICS. YOU MAINTAIN THAT "IT WAS THE INTENT OF OKLAHOMA AEROTRONICS THAT PROGRESS PAYMENTS IF AVAILABLE WOULD BE REQUESTED.

B-158169, FEB. 17, 1966

TO OKLAHOMA AEROTRONICS, INCORPORATED:

IN YOUR LETTER OF DECEMBER 13, 1965, YOU PROTESTED THE REJECTION OF YOUR LOW BID, WHICH CONTAINED A REQUEST FOR PROGRESS PAYMENTS, AS NONRESPONSIVE, AND THE SUBSEQUENT AWARD OF THE CONTRACT FOR MANUFACTURING SUBCARRIER OSCILLATORS TO THE SECOND LOWEST BIDDER, DORSETT ELECTRONICS, INCORPORATED, PURSUANT TO INVITATION FOR BIDS NO. N0016366 B0058, A 100 PERCENT SMALL BUSINESS SET-ASIDE ISSUED BY THE UNITED STATES NAVAL AVIONICS FACILITY, INDIANAPOLIS, INDIANA. BEFORE ISSUING THE INVITATION ON NOVEMBER 18, 1965, THE CONTRACTING OFFICER DETERMINED THAT PROGRESS PAYMENTS WOULD NOT BE NEEDED AS "IT WAS NOT BELIEVED THAT THERE WOULD BE ANY SUBSTANTIAL PRE-DELIVERY COSTS AND THE PERIOD BETWEEN THE BEGINNING OF THE WORK AND THE REQUIRED FIRST PRODUCTION DELIVERY DOES NOT EXCEED SIX (6) MONTHS.' ON THIS BASIS, PARAGRAPHS E-503 AND E-504 OF APPENDIX E OF THE ARMED SERVICES PROCUREMENT REGULATION PROHIBITED THE CONTRACTING OFFICER FROM INCLUDING A PROGRESS PAYMENTS CLAUSE IN THE INVITATION, WITH THE EXCEPTION OF SPECIAL CIRCUMSTANCES OUTLINED IN E-505, NOT PRESENT HERE. ACCORDINGLY, THE CONTRACTING OFFICER MADE NO PROVISION FOR PROGRESS PAYMENTS IN THE SUBJECT INVITATION, ALTHOUGH HE DID NOT SPECIFICALLY EXCLUDE THE POSSIBILITY OF SUCH PAYMENTS, DESPITE PARAGRAPH E-504.6 OF ASPR, WHICH DIRECTS THAT BIDDERS BE WARNED THAT BIDS CONDITIONED ON PROGRESS PAYMENTS WILL REJECTED AS NONRESPONSIVE.

ON BID OPENING, DECEMBER 9, 1965, THE BID OF OKLAHOMA AEROTRONICS, INCORPORATED, WAS FOUND TO BE LOW AND RESPONSIVE IN EVERY RESPECT SAVE THE INCLUSION OF THE PHRASE "PROGRESS PAYMENTS (E-510.1) REQUESTED" TYPED ON PAGE 25 OF THE BID, WHICH REFERRED TO A STANDARD ASPR PROGRESS PAYMENTS CLAUSE. AS THE CONTRACTING OFFICER FOUND THAT THE REQUEST DISQUALIFIED OKLAHOMA AEROTRONICS, INCORPORATED, THE CONTRACT WAS AWARDED TO DORSETT ELECTRONICS, INCORPORATED, ON DECEMBER 21, 1965, FOLLOWING A DETERMINATION OF URGENCY FOR THE PROCUREMENT.

IN YOUR LETTER OF PROTEST, YOU MAINTAIN THAT "IT WAS THE INTENT OF OKLAHOMA AEROTRONICS THAT PROGRESS PAYMENTS IF AVAILABLE WOULD BE REQUESTED, NOT THAT THE BID BE MADE CONTINGENT ON PROGRESS PAYMENTS BEING PROVIDED.' THIS CONTENTION WAS SPECIFICALLY TREATED IN B-154755 OF SEPTEMBER 23, 1964, COPY OF WHICH IS ENCLOSED, WHEN WE FOUND THAT SUCH A REQUEST SHOULD BE CONSTRUED AS QUALIFYING A BID. IT IS A LONG STANDING PRINCIPLE OF GOVERNMENT CONTRACT LAW THAT TO PERMIT AN AWARD ON A BID WHICH QUALIFIES AN INVITATION PAYMENT CLAUSE WOULD CONSTITUTE A CONTRACT WHICH WAS NOT OFFERED TO ALL THE BIDDERS ON A COMPETITIVE BASIS, AND THE QUALIFICATION SHOULD BE REGARDED AS A MATERIAL DEVIATION WHICH RENDERS THE BID NONRESPONSIVE. SEE 38 COMP. GEN. 131 AND 36 COMP. GEN. 535.

THE FACT YOU USED THE WORD "REQUESTED" DOES NOT ALTER OUR CONCLUSION, FOR DESPITE YOUR STATEMENT EXPLAINING THE PRECATORY IMPLICATIONS OF THE WORD, SUBMITTED AFTER BID OPENING, THE ENTIRE PHRASE REASONABLY COULD HAVE BEEN INTERPRETED AS PLACING THE CONTRACTING OFFICER ON NOTICE THAT PROGRESS PAYMENTS WERE NECESSARY FOR YOUR FIRM TO SUCCESSFULLY COMPLETE THE CONTRACT. IN THE LIGHT OF SUCH NOTICE, AND WITHOUT YOUR LATER EXPLANATION, AN ATTEMPT BY THE GOVERNMENT TO FORCE YOUR FIRM TO ACCEPT THE IFB TERMS WOULD HAVE HAD SMALL CHANCE OF SUCCESS IN A COURT OF LAW. THIS WOULD RESULT IN YOUR FIRM HAVING THE CHOICE OF EITHER WAIVING YOUR REQUEST AND ACCEPTING THE AWARD WITHOUT PROGRESS PAYMENTS, OR INSISTING ON THEM AND THEREBY RENDERING YOURSELF NONRESPONSIVE. THE ABILITY TO RECONSIDER YOUR BID AFTER COMPARISON WITH COMPETITIVE BIDDERS WOULD GIVE YOU AN ADVANTAGE OVER THOSE BIDDERS WHO DID NOT FASHION THEIR BIDS IN THE SAME MANNER, WHICH ADVANTAGE WOULD TEND TO SUBVERT THE PURPOSES OF THE STATUTES GOVERNING PROCUREMENT UNDER COMPETITIVE PROCEDURES. SEE 38 COMP. GEN. 532.

ACCORDINGLY, WE REAFFIRM THE ADMINISTRATIVE DETERMINATION THAT YOUR BID WAS QUALIFIED AND SHOULD BE REJECTED AS NONRESPONSIVE AND THAT AWARD BE GIVEN TO THE NEXT LOWEST BIDDER.