B-158357, APR. 14, 1966

B-158357: Apr 14, 1966

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INC.: REFERENCE IS MADE TO YOUR PROTEST BY LETTER DATED JANUARY 13. NO PROVISION WAS MADE FOR SUBMISSION OF ALTERNATE BIDS. INCLUDED IN THE ADDITIONAL PROVISIONS OF THE IFB WAS A VALUE ENGINEERING INCENTIVE CLAUSE PROVIDING FOR CONSIDERATION OF COST REDUCTION PROPOSALS BY THE CONTRACTOR (I.E. BIDS WERE OPENED AT 1:00 P.M. WAS LOW. WAS SECOND LOW. WAS THIRD. STATED THAT YOU WERE SENDING ALONG WITH YOUR BID YOUR PROPOSAL COVERING VALUE ENGINEERING INCENTIVE ON THE PROCUREMENT ITEM. INASMUCH AS ONLY ONE UNIT PRICE WAS STATED IN YOUR BID. THE PROCURING ACTIVITY WAS UNABLE TO DETERMINE AT THE TIME OF BID OPENING WHETHER SUCH PRICE WAS INTENDED AS THE PRICE FOR FURNISHING THE ITEM IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE IFB OR THE PRICE FOR FURNISHING THE ITEM IN ACCORDANCE WITH YOUR VALUE ENGINEERING PROPOSAL.

B-158357, APR. 14, 1966

TO JOANELL LABORATORIES, INC.:

REFERENCE IS MADE TO YOUR PROTEST BY LETTER DATED JANUARY 13, 1966, ADDRESSED TO THE DEPARTMENT OF THE ARMY, UNITED STATES ARMY TANK AUTOMOTIVE CENTER, WARREN, MICHIGAN, AGAINST THE REJECTION OF A BID SUBMITTED BY YOU UNDER INVITATION FOR BIDS (IFB) NO. AMC-20-113-66-0091 (T), ISSUED AUGUST 13, 1965, BY THE PROCUREMENT AND PRODUCTION DIRECTORATE, ARMY TANK-AUTOMOTIVE CENTER.

THE IFB REQUESTED BIDS, ON AN F.O.B. ORIGIN BASIS, TO FURNISH 128 GUNFIRE TANK SIMULATORS IN ACCORDANCE WITH ENGINEERING EVALUATION REPORT NO. 10932151-2, DATED JUNE 15, 1965, AND TECHNICAL DATE CONTAINED IN ATAC ENGINEERING ORDER NO. FOM-A8280, DATED MAY 21, 1964. NO PROVISION WAS MADE FOR SUBMISSION OF ALTERNATE BIDS. HOWEVER, INCLUDED IN THE ADDITIONAL PROVISIONS OF THE IFB WAS A VALUE ENGINEERING INCENTIVE CLAUSE PROVIDING FOR CONSIDERATION OF COST REDUCTION PROPOSALS BY THE CONTRACTOR (I.E., THE SUCCESSFUL BIDDER) AND EQUITABLE ADJUSTMENT OF THE CONTRACT PRICE UPON ACCEPTANCE THEREOF.

ON AUGUST 27, 1965, BIDS WERE OPENED AT 1:00 P.M., EASTERN STANDARD TIME, AS SCHEDULED. OF THE THREE BIDS RECEIVED, YOUR BID QUOTING A UNIT PRICE OF $884.75 ($882.50 PLUS AN EVALUATION FACTOR OF $2.25), WAS LOW., SPERRY UTAH COMPANY DIVISION OF SPERRY RAND, QUOTING A UNIT PRICE OF $1,195, WAS SECOND LOW., AND FMC CORPORATION, QUOTING A UNIT PRICE OF $1,284.06 ($1,275 PLUS AN EVALUATION FACTOR OF $9.06), WAS THIRD.

A LETTER DATED AUGUST 25, WHICH ACCOMPANIED YOUR BID, STATED THAT YOU WERE SENDING ALONG WITH YOUR BID YOUR PROPOSAL COVERING VALUE ENGINEERING INCENTIVE ON THE PROCUREMENT ITEM. IN THE PROPOSAL, YOU ESTIMATED THAT ITS ACCEPTANCE AND USE WOULD RESULT IN A SAVING OF $200 PER UNIT. HOWEVER, INASMUCH AS ONLY ONE UNIT PRICE WAS STATED IN YOUR BID, THE PROCURING ACTIVITY WAS UNABLE TO DETERMINE AT THE TIME OF BID OPENING WHETHER SUCH PRICE WAS INTENDED AS THE PRICE FOR FURNISHING THE ITEM IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE IFB OR THE PRICE FOR FURNISHING THE ITEM IN ACCORDANCE WITH YOUR VALUE ENGINEERING PROPOSAL. BY LETTERS DATED SEPTEMBER 3 AND 7, ADDRESSED TO THE PROCURING ACTIVITY AND TO THE NEW YORK PROCUREMENT DISTRICT, RESPECTIVELY, YOU STATED THAT YOU WERE CONFIRMING YOUR PRICE OF $1,082.50 PER UNIT AS PER THE IFB AS WELL AS YOUR BASIC UNIT PRICE OF $882.50 FOR AN ITEM IN CONFORMANCE WITH YOUR PROPOSAL.

BY LETTER DATED OCTOBER 26, THE PROCURING ACTIVITY REQUESTED THAT YOU VERIFY YOUR BID DUE TO THE POSSIBILITY OF ERROR. THE LETTER READS, IN PERTINENT PART, AS FOLLOWS:

"YOU ARE HEREBY REQUESTED TO VERIFY YOUR PRICE AS BID IN ACCORDANCE WITH THE ENGINEERING REQUIREMENTS AND SPECIFICATION IS REQUIRED FOR THE FOLLOWING REASONS:

"A. THE CONSIDERABLE PRICE DIFFERENTIAL, BETWEEN YOUR BID PRICE AS SHOWN ABOVE AND THAT OF THE SECOND LOW BIDDER, WHICH INDICATES A POSSIBILITY OF ERROR.

"B. THERE IS NO INDICATION IN YOUR BID, AS TO THE BASIS OF THE $2.25 PER UNIT EVALUATION FACTOR OR WHAT THIS CHARGE REPRESENTS.

"C. THERE IS NO INDICATION IN YOUR BID OF THE $1,082.50 UNIT PRICE FIGURE REFERENCED IN YOUR LETTERS OF 7 SEPTEMBER 1965 TO NEW YORK PROCUREMENT DISTRICT AND 3 SEPTEMBER 1965 TO THIS CENTER.

"KINDLY RESPOND BY LETTER, AS SOON AS POSSIBLE, CLARIFYING YOUR POSITION IN THE ABOVE AREAS. ANY REQUEST FOR RELIEF SHOULD BE FORWARDED AT THE SAME TIME TOGETHER WITH DOCUMENTATION IN SUPPORT THEREOF.'

YOUR LETTER OF OCTOBER 29, IN REPLY TO THE PROCURING ACTIVITY, INCLUDES THE FOLLOWING STATEMENTS:

"IN RESPONSE TO YOUR LETTER DATED 26 OCTOBER 1965 REFERENCE THE ABOVE I.F.B. WE ARE CONFIRMING OUR BID AS FOLLOWS:

"A. OUR VALUE ENGINEERING PROPOSAL PRICE IS $882.50 EA PLUS $2.25 EA FOR EVALUATION FACTOR. OUR EVALUATION FACTOR COST REPRESENTS ANY CHANGES THAT MAY BE REQUIRED IN THE PRESENT DRAWINGS TO REFLECT THE VALUE ENGINEERING PROPOSAL UNIT.

"B. IF YOUR COMMAND REJECTS OUR VALUE ENGINEERING PROPOSAL, THAN (SIC) OUR FIRM UNIT COST OF $1,082.50 WILL PREVAIL AND THE SIMULATOR, GUNFIRE TANK (128 EA) WILL BE FABRICATED IN ACCORDANCE WITH THE ENGINEERING REQUIREMENTS AND SPECIFICATIONS SET FORTH IN YOUR I.F.B. AMC-20-113-55-009 (T). THIS PRICE REPRESENTS OUR $882.50 VALUE ENGINEERING PROPOSAL PLUS $200.00 SPELLED OUT IN OUR COST SAVINGS SECTION OF OUR VALUE ENGINEERING PROPOSAL. THE EVALUATION FACTOR COST NOT BEING REQUIRED IN THIS INSTANCE.

"IN SUMMATION, OUR POSITION IS CLEAR. IF ATAC ACCEPTS OUR VALUE ENGINEERING PROPOSAL, OUR PRICE IS $882.50 PLUS AN EVALUATION FACTOR OF $2.25 EA FOR A TOTAL OF $884.75. IF ATAC ACCEPTS FABRICATION PER ENGINEERING REQUIREMENTS AND SPECIFICATIONS SET FORTH IN REFERENCED I.F.B. THAN OUR UNIT COST IS FIRM AT $1,082.50 EA.'

NO DOCUMENTATION WAS FURNISHED BY YOU WITH ANY OF YOUR LETTERS TO EVIDENCE YOUR INTENDED BID PRICE, NOR DID YOU REQUEST ANY RELIEF DUE TO A MISTAKE IN BID.

BY LETTER DATED JANUARY 11, 1966, THE PROCURING ACTIVITY NOTIFIED THAT YOUR BID HAD BEEN REJECTED. THE LETTER READS, IN PERTINENT PART, AS FOLLOWS:

"THE ONLY FIRM PRICE IN YOUR BID WAS $882.50 AND AFTER BID OPENING YOU ADVISED BY LETTER THAT THE ABOVE PRICE WAS FOR FURNISHING THE ITEM IN ACCORDANCE WITH YOUR VALUE ENGINEERING PROPOSAL. AS PROVIDED FOR UNDER ASPR 2-406 YOU WERE REQUESTED TO CLARIFY YOUR BID DUE TO THE POSSIBILITY OF ERROR. IN YOUR OCTOBER REPLY YOU MERELY RESTATED THE POSITION TAKEN IN YOUR SEPTEMBER LETTER. UNDER EXISTING REGULATIONS THE GOVERNMENT CANNOT ALLOW ANY BIDDER TO MAKE AN UPWARD ADJUSTMENT IN HIS BID PRICE WITHOUT FURNISHING EVIDENCE OF MISTAKE AND EVIDENCE TO SUPPORT THE BID INTENDED AT THE TIME OF SUBMISSION.

"THIS CENTER IN APPRECIATIVE OF ANY VALUE ENGINEERING PROPOSALS WHICH WILL RESULT IN COST SAVINGS TO BOTH THE GOVERNMENT AND A CONTRACTOR, HOWEVER, THE PROBLEM HERE WAS THAT THE GOVERNMENT WAS UNABLE TO DETERMINE FROM YOUR BID AT THE TIME OF OPENING THAT YOUR FIRM INTENDED A $882.50 PRICE FOR YOUR VALUE ENGINEERING PROPOSAL AND A PRICE OF $1,082.50 FOR FURNISHING THE ITEM IN ACCORDANCE WITH THE SPECIFICATIONS. THE COMBINING OF A FIRM PRICE OF $882.50 WITH AN ESTIMATED $200 COSTS SAVINGS DOES NOT CONSTITUTE A FIRM PRICE OF $1,082.50. AS THE REQUIRED CLARIFICATION AND DOCUMENTATION IN SUPPORT THEREOF OF YOUR AFTER-BID OPENING LETTER POSITION WAS REQUESTED BUT NOT RECEIVED, THE GOVERNMENT HAD NO ALTERNATIVE BUT TO REJECT YOUR BID.'

YOU CONTEND THAT YOU DID NOT MAKE AN UPWARD ADJUSTMENT IN YOUR BID OR COMMIT AN ERROR IN BID. THEREFORE, AND ON THE BASIS THAT YOU HAVE CONFIRMED YOUR BID PRICE THREE TIMES, IT IS YOUR POSITION THAT ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2-404.2, WHICH REQUIRES REJECTION OF ANY BID WHICH FAILS TO CONFORM TO THE ESSENTIAL REQUIREMENTS OF THE INVITATION FOR BIDS, IS NOT APPLICABLE TO YOUR BID.

THE PROCURING ACTIVITY POINTS TO THE ABSENCE OF DOCUMENTARY EVIDENCE REQUIRED BY ASPR 2-406, IN THE CASE OF AN ALLEGED OR SUSPECTED MISTAKE IN BID, OF YOUR INTENT TO BID A UNIT PRICE OF $1,082.50 FOR THE PROCUREMENT ITEM IN ACCORDANCE WITH THE IFB SPECIFICATIONS AND TO THE FACT THAT THE GOVERNMENT IS ON NOTICE THAT THE UNIT PRICE OF $884.75 QUOTED IN YOUR BID WAS INTENDED TO APPLY TO AN ITEM WHICH DOES NOT CONFORM TO THE ENGINEERING REQUIREMENTS OF THE IFB. THEREFORE, IT IS THE POSITION OF THE PROCURING ACTIVITY THAT THERE WAS NO ALTERNATIVE TO REJECTION OF YOUR BID. FURTHER, THE PRICE OF THE SECOND LOW BIDDER BEING CONSIDERED REASONABLE AND THE BID ACCEPTABLE, A CONTRACT WAS AWARDED TO THE SECOND LOW BIDDER ON DECEMBER 30, 1965.

THE GOVERNING PROCUREMENT STATUTE, 10 U.S.C. 2305 (C), REQUIRES THAT AWARDS UNDER FORMALLY ADVERTISED PROCUREMENTS BE MADE TO THE RESPONSIBLE BIDDER WHOSE BID CONFORMS TO THE INVITATION FOR BIDS AND WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED, AND ASPR 2-404.2 IS CONSISTENT THEREWITH.

ASPR 2-406.3 (E) (2) READS AS FOLLOWS:

"WHERE THE BIDDER FAILS OR REFUSES TO FURNISH EVIDENCE IN SUPPORT OF A SUSPECTED OR ALLEGED MISTAKE, THE CONTRACTING OFFICER SHALL CONSIDER THE BID AS SUBMITTED UNLESS THE AMOUNT OF THE BID IS SO FAR OUT OF LINE WITH THE AMOUNTS OF OTHER BIDS RECEIVED OR WITH THE AMOUNT ESTIMATED BY THE AGENCY OR DETERMINED BY THE CONTRACTING OFFICER TO BE REASONABLE, OR THERE ARE OTHER INDICATIONS OF ERROR SO CLEAR, AS REASONABLY TO JUSTIFY THE CONCLUSION THAT ACCEPTANCE OF THE BID WOULD BE UNFAIR TO THE BIDDER OR TO OTHER BONA FIDE BIDDERS. * * * "

YOUR BID, AS ORIGINALLY SUBMITTED, QUOTES ONLY ONE BID PRICE FOR THE PROCUREMENT ITEM--- A UNIT PRICE OF $884.75, COMPRISED OF A BASIC PRICE OF $882.50 PLUS AN EVALUATION FACTOR OF $2.25, OR A TOTAL PRICE OF $113,248 FOR THE 128 UNITS REQUIRED. HOWEVER, THE VALUE ENGINEERING PROPOSAL SUBMITTED WITH YOUR BID STATES, IN EFFECT, THAT AN ESTIMATED SAVING OF $200 PER UNIT MAY BE REALIZED BY MANUFACTURING THE PROCUREMENT ITEM IN ACCORDANCE WITH YOUR PROPOSAL WITHOUT INDICATING THE BASIC UNIT PRICE FROM WHICH THE $200 IS TO BE DEDUCTED. IN THE CIRCUMSTANCES, AND IN VIEW OF THE DIFFERENTIAL OF MORE THAN $300 BETWEEN YOUR BID OF $884.75 AND THE SECOND LOW BID OF $1,195, AS OPPOSED TO THE DIFFERENTIAL OF LESS THAN $100 BETWEEN THE SECOND LOW BID AND THE THIRD BID OF $1,284.06, IT ISOUR OPINION THAT THE PROCURING ACTIVITY WAS REQUIRED UNDER ASPR 2-406 TO REQUEST VERIFICATION OF YOUR BID.

YOU HAVE EXPLAINED THAT THE UNIT PRICE OF $884.75 QUOTED IN YOUR BID APPLIES TO A SIMULATOR CONSTRUCTED IN ACCORDANCE WITH YOUR VALUE ENGINEERING PROPOSAL, AN ITEM WHICH THE PROCURING ACTIVITY HAS DETERMINED WILL NOT MEET THE ENGINEERING REQUIREMENTS SET FORTHIN THE IFB. CLEARLY, THEREFORE, ACCEPTANCE OF YOUR BID WITH KNOWLEDGE THAT THE $884.75 UNIT PRICE QUOTED WAS APPLICABLE TO AN ITEM NOT IN CONFORMANCE WITH THE IFB SPECIFICATIONS, AND WOULD BE IN VIOLATION OF THE PROCUREMENT STATUTE AND REGULATIONS. ACCORDINGLY, AWARD ON THE BASIS OF YOUR $884.75 BID PRICE WOULD HAVE BEEN IMPROPER.

TURNING NOT TO THE PROPRIETY OF ACCEPTANCE OF YOUR OFFER TO SUPPLY AN ITEM IN COMPLIANCE WITH THE IFB SPECIFICATIONS AT A UNIT PRICE OF $1,082.50, IT IS CLEAR THAT SUCH PRICE IS NOT REFLECTED IN YOUR BID OR IN THE ACCOMPANYING PAPERS. NOR IS IT POSSIBLE TO DEDUCE FROM THE INFORMATION CONTAINED IN THE VALUE ENGINEERING PROPOSAL SUBMITTED WITH YOUR BID THAT THE $200 SAVING PER UNIT MENTIONED THEREIN, AN ESTIMATED FIGURE, WAS TO BE ADDED TO THE BASIC UNIT PRICE OF $882.50 SHOWN IN YOUR BID. THEREFORE, NOTWITHSTANDING YOUR CONTENTION THAT YOU HAVE MADE NO ERROR IN YOUR BID, THE ONLY POSSIBLE BASIS ON WHICH SUCH OFFER COULD BE CONSIDERED WOULD BE ON THE BASIS OF A MISTAKE OF BID WHICH WOULD BE PROPERLY FOR CORRECTION UNDER ASPR 2-406. IN THIS CONNECTION, HOWEVER, YOU HAVE FAILED TO FURNISH THE DOCUMENTARY EVIDENCE REQUIRED BY THE REGULATION AS TO YOUR INTENDED BID PRICE. IT IS OUR VIEW, THEREFORE, THAT THE REJECTION OF YOUR BID, AND THE AWARD TO THE SECOND LOW BIDDER AFTER A LAPSE OF FIVE WEEKS FROM THE DATE (OCTOBER 26) THE PROCURING ACTIVITY MADE ITS SECOND REQUEST THAT YOU VERIFY YOUR BID AND SUBMIT EVIDENCE OF YOUR INTENDED PRICE, WERE PROPER ACTIONS.