B-160567, FEB. 8, 1967

B-160567: Feb 8, 1967

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FRANK AND KAMPELMAN: REFERENCE IS MADE TO YOUR LETTERS OF DECEMBER 26 AND 27. THESE SIX FOREIGN BIDS WERE EITHER FOUND TO BE HIGHER WHEN EVALUATED IN ACCORDANCE WITH SECTION 6-104.4 OF THE ARMED SERVICES PROCUREMENT REGULATION OR WERE REJECTED AS NONRESPONSIVE AND/OR LACKING RESPONSIBILITY. ENCLOSING AMENDMENT NO. 6 WHICH WAS WRITTEN UPON COMPANY LETTERHEAD STATIONERY CONTAINING THE FOLLOWING PRINTED PROVISION ACROSS THE BOTTOM: "ALL AGREEMENTS ARE CONTINGENT UPON STRIKES. ACKNOWLEDGING AMENDMENT NO. 7 WAS SIMILARLY TYPED UPON STATIONERY CONTAINING THE SAME PRINTED LIMITATION OF LIABILITY. AS WAS WERTHAN'S LETTER OF OCTOBER 27. AWARD FOR THE QUANTITIES IN EXCESS OF THOSE BID UPON BY WERTHAN WAS MADE ON DECEMBER 21.

B-160567, FEB. 8, 1967

TO STRASSER, SPIEGELBERG, FRIED, FRANK AND KAMPELMAN:

REFERENCE IS MADE TO YOUR LETTERS OF DECEMBER 26 AND 27, 1966,PROTESTING THE REJECTION OF THE BID OF WERTHAN BAG CORPORATION AS BEING CONDITIONED BY CERTAIN LANGUAGE PRINTED ON THE FIRM'S STATIONERY INCLUDED WITH ITS BID AND THEREFORE AS BEING NONRESPONSIVE TO INVITATION FOR BIDS NO. DSA-400-67 -B-1202 ISSUED AUGUST 19, 1966, BY THE DIRECTORATE OF PROCUREMENT AND PRODUCTION, DEFENSE GENERAL SUPPLY CENTER, DEFENSE SUPPLY AGENCY, RICHMOND, VIRGINIA, TO PROCURE 200,000 PACKAGES OF 100 SAND BAGS EACH.

DURING THE COURSE OF THIS PROCUREMENT DSA ISSUED SEVEN AMENDMENTS TO THE INVITATION CHANGING THE SPECIFICATIONS, REQUIRING EQUAL EMPLOYMENT COMPLIANCE REVIEWS, CLARIFYING AMBIGUITIES, MODIFYING DELIVERY PREPARATION INSTRUCTIONS, ESTABLISHING A NEW DELIVERY SCHEDULE, AND POSTPONING BID OPENING. ON OCTOBER 28, 1966, THE AMENDED BID OPENING DATE, 33 BIDS HAD BEEN RECEIVED, WITH WERTHAN'S BID ON 50,000 HUNDRED BAGS LOW AMONG DOMESTIC PRODUCERS, BUT WITH THE BIDS OF SIX FOREIGN BIDDERS APPARENTLY LOWER. HOWEVER, THESE SIX FOREIGN BIDS WERE EITHER FOUND TO BE HIGHER WHEN EVALUATED IN ACCORDANCE WITH SECTION 6-104.4 OF THE ARMED SERVICES PROCUREMENT REGULATION OR WERE REJECTED AS NONRESPONSIVE AND/OR LACKING RESPONSIBILITY. THIS LEFT WERTHAN'S BID FOR CONSIDERATION.

EXAMINATION OF WERTHAN'S BID BY THE CONTRACTING AGENCY REVEALED A LETTER FROM WERTHAN DATED OCTOBER 14, 1966, ENCLOSING AMENDMENT NO. 6 WHICH WAS WRITTEN UPON COMPANY LETTERHEAD STATIONERY CONTAINING THE FOLLOWING PRINTED PROVISION ACROSS THE BOTTOM:

"ALL AGREEMENTS ARE CONTINGENT UPON STRIKES, FIRE, LOSS OF GOODS AT SEAS OR ACCIDENTS, AND ANY OTHER DELAYS BEYOND OUR CONTROL. QUOTATIONS SUBJECT TO CHANGE WITHOUT NOTICE TO MARKET FLUCTUATIONS AND TO GOODS BEING UNSOLD.'

WERTHAN'S LETTER OF OCTOBER 22, 1966, ACKNOWLEDGING AMENDMENT NO. 7 WAS SIMILARLY TYPED UPON STATIONERY CONTAINING THE SAME PRINTED LIMITATION OF LIABILITY, AS WAS WERTHAN'S LETTER OF OCTOBER 27, 1966, WHICH CONFIRMED A TELEGRAPHIC MODIFICATION OF THE SAME DATE LOWERING WERTHAN'S BID PRICE AND CHANGING OTHER DATA.

ON THE BASIS OF THE PRINTED PROVISION ON THE SUBJECT LETTERS, THE CONTRACTING OFFICER REJECTED WERTHAN'S BID AS NONRESPONSIVE. AWARD FOR THE QUANTITIES IN EXCESS OF THOSE BID UPON BY WERTHAN WAS MADE ON DECEMBER 21, 1966, AND THE RIGHT HAS BEEN RESERVED TO MAKE A FURTHER AWARD TO PIONEER BAG COMPANY, THE NEXT LOW BIDDER AFTER AWARD OF THE OTHER QUANTITIES, OF THE REMAINING 50,000 HUNDRED SAND BAGS.

YOUR LETTER OF DECEMBER 26, 1966, CONTENDS THAT THE REJECTION OF WERTHAN'S BID AS BEING CONDITIONED BY THE PRINTED PROVISION AND THEREFORE AS NONRESPONSIVE WAS IMPROPER BECAUSE WERTHAN DID NOT INTEND ITS BID TO BE QUALIFIED, BECAUSE THE LEGEND WAS INOPERATIVE AS A MATTER OF LAW, BECAUSE THE PROVISION WAS INOPERATIVE UNDER THE FACTS OF THE CASE, BECAUSE EVEN IF IT IS LEGALLY AND FACTUALLY OPERATIVE IT SHOULD BE CURED AS A CLERICAL ERROR UNDER THE PERTINENT REGULATION, AND BECAUSE AWARD TO WERTHAN AT ITS MORE FAVORABLE PRICE WOULD BEST SERVE THE INTERESTS OF THE GOVERNMENT.

TREATING YOUR CONTENTIONS IN THE ORDER PRESENTED, WE DO NOT THINK THE UNDISCLOSED INTENTION OF WERTHAN NOT TO INCLUDE AS PART OF ITS BID THE PROVISION IN QUESTION CAN VARY OR NULLIFY THE CLEAR MEANING OF THE LANGUAGE ITSELF.

RESPONSIVENESS OF BIDS IS DETERMINED ON THE BASIS OF THE INFORMATION AVAILABLE TO THE GOVERNMENT AT THE TIME OF BID OPENING, SO THAT MATERIAL SUBMITTED AFTER OPENING MAY NOT ENTER INTO SAID DETERMINATION. THEREFORE, ANY INTENTION OF WERTHAN-S, WHICH WAS NOT COMMUNICATED BY THE BID AND ITS ACCOMPANYING PAPERS, IS NOT FOR CONSIDERATION.

FOR THIS REASON, THE PRINTED LEGEND HERE IN QUESTION MUST BE VIEWED AS EXPRESSING THE CONDITION AND LIMITATIONS THE WORDS THEMSELVES CONVEY, RATHER THAN WHATEVER UNDISCLOSED MOTIVATIONS LAY BEHIND THEIR USE. ACCORDINGLY, WERTHAN'S BID IS NONRESPONSIVE REGARDLESS OF WERTHAN'S PRIVATE INTENTIONS REGARDING THE PROVISION.

YOUR LETTER NEXT TURNS TO THE LEGAL INTERPRETATION ACCORDED SIMILAR PRINTED PROVISION IN THE LIGHT OF SUCH CIRCUMSTANCES AS THE SIZE OF TYPE USED AND ITS PLACEMENT ON THE PAPER, THE LOGICAL RELATIONSHIP OF THE PRINTED LEGEND TO THE SURROUNDING MATERIAL, THE PRESENCE OR ABSENCE OF REFERENCES TO THE PRINTED MATERIAL, AND THE HARMONIZING OF THE PRINTED MATERIAL WITH THE OTHER MATERIAL. ON THE BASIS OF A DISCUSSION OF THESE AND OTHER GUIDES TO CONTRACT INTERPRETATION, YOU CONCLUDE:

"IN ANY EVENT, WERTHAN SUBMITS THAT 36 COMP. GEN. 535 AND THE ABOVE CITED UNPUBLISHED COMPTROLLER GENERAL DECISIONS WHICH HOLD THAT A BID IS NONRESPONSIVE IF ACCOMPANIED BY A PRINTED LEGEND ARE INCONSISTENT WITH THE GENERAL RULE ON THE CONTRACTUAL EFFECT OF PRINTED LEGENDS AS SET FORTH ABOVE. IT, THEREFORE, WOULD APPEAR THAT THESE DECISIONS DO NOT REFLECT THE MORE ENLIGHTENED RULE AND SHOULD NOT BE DETERMINATIVE OF THE INSTANT PROTEST.'

EVEN IF WE WERE TO CONCEDE THE CORRECTNESS OF YOUR POSITION TO THE EXTENT THAT, IF A CONTRACT WERE ENTERED INTO UNDER THE CIRCUMSTANCES HERE AND IF A COURT OF LAW WERE THEN CALLED UPON TO DETERMINE THE EFFECT OF THE PRINTED PROVISION UPON THE CONTRACT, IT WOULD FIND THE PROVISION INOPERATIVE, IT DOES NOT FOLLOW THAT WARTHAN'S BID IS RESPONSIVE.

THE GENERAL LAW OF CONTRACT INTERPRETATION IS NOT NECESSARILY APPLICABLE TO BIDS ON GOVERNMENT PROCUREMENT AND THIS OFFICE'S POSITION, AS SET OUT IN 36 COMP. GEN. 535, B-146114 OF AUGUST 21, 1961; B-147461 OF DECEMBER 14, 1961; AND B-147877 OF JANUARY 31, 1962, INVOLVES CONSIDERATIONS OTHER THAN THOSE FACTORS APPROPRIATE FOR INTERPRETING AN EXISTING CONTRACT.

ONE OBVIOUS FACTUAL DISTINCTION IS THE DIFFERENCE BETWEEN ESTABLISHING AFTER THE FACT IN A COURT OF LAW WHETHER UNDER ALL THE CIRCUMSTANCES THE PRINTED CONDITIONS OPERATED TO GIVE SUCH NOTICE TO THE PARTIES THAT IT IS REASONABLE TO ASSUME THE CONDITIONS WERE SEEN, ACCEPTED AND INCORPORATED INTO THE CONTRACT; AND THE CASE AT HAND WHERE THE GOVERNMENT ADMITTEDLY HAS ACTUAL KNOWLEDGE OF THE PRINTED CONDITIONS CONTAINED IN WARTHAN'S BID.

FOR THESE REASONS, DISCUSSION OF SUCH FACTORS AS TYPE SIZE, PLACEMENT OF THE LEGEND ON THE PAPER AND THE RELATIONSHIP OF THE PRINTED LEGEND TO SURROUNDING TEXT, WHICH MAY BE IMPORTANT CONSIDERATIONS IN CASES INVOLVING DISPUTES OVER WHETHER A PARTICULAR PRINTED CONDITION SHOULD BE VIEWED AS GIVING NOTICE TO THE PARTIES, IS NOT RELEVANT.

WE ARE HERE FACED WITH A SITUATION OF ACTUAL KNOWLEDGE OF THE PRINTED CONDITIONS. THE EFFECT OF ACTUAL NOTICE IS CLEARLY INDICATED IN THE PARAGRAPH QUOTED ON PAGES 9 AND 10 OF YOUR LETTER, 3 CORBIN, CONTRACTS SECTION 548 (1960), WHERE IT SAYS:

"THERE ARE OTHER DOCUMENTS (NOT FORMALLY LABELED AS CONTRACTS), HOWEVER, LESS FORMAL IN LOOKS, THAT DO NOT SPEAK SO OBVIOUSLY OF THEIR CHARACTER AND CONTENTS. THE TERMS OF AN AGREEMENT MAY BE PUT ON A PRINTED BILLHEAD OR LETTERHEAD OF ONE OF THE PARTIES, AT THE TOP OF BOTTOM OF WHICH IS PRINTED A STATEMENT THAT "ALL CONTRACTS ARE SUBJECT TO STRIKES, FIRES, AND OTHER CONTINGENCIES NOT WITHIN THE CONTROL" OF THE CONTRACTOR . . . PROVISIONS SUCH AS THESE ARE A PART OF THE CONTRACT IF, AND ONLY IF, THEY ARE SO CALLED TO THE ATTENTION OF THE ONE WHO SIGNS THE INSTRUMENT THAT HE KNOWS OR HAS REASON TO KNOW OF THEIR EXISTENCE.'

THE EXCHANGE OF LETTERS REGARDING THIS PROVISION HAS BUILT A RECORD DEMONSTRATING THE GOVERNMENT'S ACTUAL KNOWLEDGE OF THE PRINTED CONDITIONS SUBMITTED WITH WERTHAN'S BID. FOR THIS REASON, THE GOVERNMENT COULD NOT DENY THAT THE CONDITIONS WERE "SO CALLED TO THE ATTENTION" OF THE CONTRACTING OFFICER "THAT HE KNOWS * * * OF THEIR EXISTENCE.'

WE THEREFORE CONCLUDE THAT, ON THE BASIS OF THE LAW YOU SUGGEST AS CONTROLLING, ACCEPTANCE OF WERTHAN'S BID COULD BIND THE GOVERNMENT TO THE PRINTED CONDITIONS.

GOVERNMENT PROCURING ACTIVITIES MUST REJECT AS NONRESPONSIVE ALL BIDS CONTAINING CONDITIONS WHICH SUBSTANTIALLY VARY THE TERMS OF THE INVITATIONS, WITHOUT REGARD TO WHETHER THESE CONDITIONS ARE PRINTED, TYPED, OR HANDWRITTEN. SINCE WERTHAN'S BID CONTAINED A PROVISION LIMITING ITS LIABILITY AND PERMITTING PRICE VARIATION, THE CONTRACTING OFFICER'S DETERMINATION THAT WERTHAN'S BID SHOULD BE REJECTED AS NON RESPONSIVE IS PROPER.

YOU FURTHER CONTEND THAT THE PROCEEDING PROHIBITION AGAINST ACCEPTING BIDS CONDITIONED BY LANGUAGE IN A LETTER ACCOMPANYING THE INITIAL BID DOES NOT EXTEND TO PROHIBITING BIDS CONDITIONED BY LANGUAGE IN A LETTER ACCOMPANYING AMENDMENTS TO THE SAME BID.

WE DO NOT AGREE, FOR THE RESPONSIVENESS OF BID AMENDMENTS IS DETERMINED BY THE SAME CONDITIONS WHICH GOVERN THE RESPONSIVENESS OF BIDS, AND WE ARE AWARE OF NO BODY OF LAW OR LINE OF DECISIONS DRAWING A DISTINCTION BETWEEN THE LEGAL EFFECT OF BIDS AND THE LEGAL EFFECT OF BID AMENDMENTS. THEREFORE MUST CONCLUDE THAT THIS CONTENTION IS PREMISED UPON A FACTUAL DISTINCTION WHICH CREATES NO LEGAL DIFFERENCE.

YOU NEXT CONTEND THAT WERTHAN'S LETTER OF OCTOBER 14, 1966, BEARING THE PRINTED CONDITIONS, WHICH ACCOMPANIED AMENDMENT NO. 6, WAS "SUPERSEDED AND THUS NULLIFIED AND MADE INOPERATIVE" BY THE RECEIPT OF THE LETTER OF OCTOBER 22, 1966, WHICH ACCOMPANIED AMENDMENT NO. 7. THIS LATER LETTER BORE THE SAME PRINTED PROVISIONS, BUT YOU CONTEND IT IN TURN "WAS SUBSEQUENTLY SUPERSEDED AND THUS NULLIFIED AND MADE INOPERATIVE" BY THE TELEGRAPHIC MODIFICATION OF OCTOBER 27, 1966. SINCE THE LETTER OF OCTOBER 27, 1966, BEARING THE PRINTED CONDITIONS, CONFIRMED THE TELEGRAPHIC MODIFICATIONS, YOU CONTEND THAT THIS LETTER WAS EITHER LATE AND NOT FOR CONSIDERATION OR WAS MERE CONFIRMATION AND NOT A PART OF THE BID.

WERTHAN'S TELEGRAM OF OCTOBER 27, 1966, REVISING ITS BID PRICE AND INFORMATION ON WEIGHT AND DIMENSIONS, SPECIFICALLY STATES:"ALL OTHER CONDITIONS REMAIN AS SET OUT IN OUR ORIGINAL BID SUBMITTED 5 OCTOBER 1966 AND AMENDMENTS ONE THROUGH SEVEN INCLUSIVE ALL IN YOUR POSSESSION.' ARE NOT AWARE OF THE MANNER IN WHICH A TELEGRAM CONTAINING THE QUOTED SENTENCE EXPRESSLY RETAINING ALL OTHER CONDITIONS PURPORTS TO NULLIFY AND MAKE INOPERATIVE THE PRINTED CONDITIONS IN QUESTION HERE. EVEN ABSENT THE QUOTED SENTENCE, WE ARE NOT AWARE OF ANY LEGAL PRINCIPLES WHICH WOULD SUPPORT YOUR POSITION.

YOU NEXT SUGGEST THAT THE PRINTED PROVISION SHOULD BE CONSIDERED A CLERICAL ERROR AND CORRECTED BY THE CONTRACTING OFFICER IN ACCORDANCE WITH SECTION 2-406.2 OF THE ARMED SERVICES PROCUREMENT REGULATION. THE PARAGRAPH ON WHICH YOU RELY DOES PERMIT CORRECTION OF OBVIOUS ERROR BY THE CONTRACTING OFFICER UNDER CERTAIN CIRCUMSTANCES. HOWEVER, THE STRIKING OUT OF A PROVISION WHICH WOULD LIMIT THE BIDDER'S LIABILITY UNDER A CONTRACT IS NOT THE TYPE OF CORRECTION CONTEMPLATED BY THE DRAFTERS OF ASPR, AS IS INDICATED BY THE EXAMPLES INCLUDED IN THE PARAGRAPH. ALL OF THESE EXAMPLES INVOLVE REVERSING MISPLACED FIGURES, SUCH AS THE PRICE F.O.B. FACTORY WITH THE PRICE F.O.B. DESTINATION, OR MOVING MISPLACED DECIMALS, RATHER THAN THE COMPLETE ELIMINATION OF ANY TERMS OF THE OFFER.

THEREFORE, WE ARE OF THE OPINION THAT YOUR BID CANNOT BE RENDERED RESPONSIVE BY DELETING THE PRINTED PROVISION AS AN OBVIOUS CLERICAL ERROR UNDER ASPR 2-406.2.

YOU FINALLY CONTEND THAT BECAUSE AWARD TO WERTHAN WOULD RESULT IN A COST SAVINGS TO THE GOVERNMENT, AWARD TO WERTHAN WOULD BE IN THE BEST INTEREST OF THE GOVERNMENT.

BY THIS SAME REASONING, AWARD TO ONE OF THE FOREIGN BIDDERS WHO BID LOWER THAN WERTHAN BUT WHO WERE EITHER EVALUATED HIGHER PURSUANT TO ASPR'S PROCEDURE FAVORING DOMESTIC CONCERNS OR WERE REJECTED AS NONRESPONSIVE WOULD BE EVEN MORE IN THE GOVERNMENT'S INTEREST.

HOWEVER, IT IS OUR OPINION THAT THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM IS A PRIMARY CONSIDERATION, AND IF WERTHAN OR ANY OTHER BIDDER WERE TO BE GRANTED AN EXCEPTION TO THE GENERAL PROHIBITION AGAINST ACCEPTING CONDITIONAL BIDS, THE DOLLAR GAIN COULD NOT OFFSET THE LOSS TO THE COMPETITIVE SYSTEM. THEREFORE, WE CANNOT AGREE THAT A PRESENT SAVINGS IS AN ADEQUATE JUSTIFICATION FOR DISREGARDING THE OVERALL BENEFIT TO THE GOVERNMENT OBTAINED BY ADHERING TO PROCUREMENT REGULATIONS AND POLICIES WHICH INSURE FAIR AND IMPARTIAL CONSIDERATION OF ALL BIDS.