B-161722, JAN. 11, 1968

B-161722: Jan 11, 1968

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ACTION OF A CONTRACTING AGENCY IN REJECTING A LOW BID BECAUSE OF FAILURE TO FURNISH ESTIMATED PRICES FOR CERTAIN ITEMS OF DATA WHEN INTENDED PRICES ON OTHER ITEMS EQUALLED INTENDED TOTAL PRICE WHICH WAS ALSO SHOWN IN BID COVER LETTER WAS NOT PROPER. WHICH IS FACTUAL. THE DETERMINATION THAT THE LOW BID WAS NONRESPONSIVE INVOLVES AN INTERPRETATION OF THE INVITATION AND BID AND THE APPLICATION OF PERTINENT PROVISIONS OF ASPR AND IS A LEGAL QUESTION WHICH IS SUBJECT TO FINAL REVIEW BY COMPTROLLER GENERAL. SECRETARY: REFERENCE IS MADE TO A LETTER OF NOVEMBER 1. PAGE 7 OF THE INVITATION ADVISED BIDDERS THAT "FUNDS ARE NOT PRESENTLY AVAILABLE FOR ITEM 11 OF THIS PROCUREMENT. " AND THAT THE GOVERNMENT'S OBLIGATION IS CONTINGENT UPON THE AVAILABILITY OF APPROPRIATED FUNDS.

B-161722, JAN. 11, 1968

BIDS - AWARD CANCELLATION DECISION TO SECY. OF THE AIR FORCE CONCERNING PROTESTS OF DAYTON ELECTRONIC PRODUCTS CO. AND TRIDEA ELECTRONICS UNDER ADVERTISED PROCUREMENT FOR RADAR INDICATORS. ACTION OF A CONTRACTING AGENCY IN REJECTING A LOW BID BECAUSE OF FAILURE TO FURNISH ESTIMATED PRICES FOR CERTAIN ITEMS OF DATA WHEN INTENDED PRICES ON OTHER ITEMS EQUALLED INTENDED TOTAL PRICE WHICH WAS ALSO SHOWN IN BID COVER LETTER WAS NOT PROPER. UNLIKE A DETERMINATION OF RESPONSIBILITY, WHICH IS FACTUAL, AND AS TO WHICH CONTRACTING OFFICER HAS WIDE DISCRETION, THE DETERMINATION THAT THE LOW BID WAS NONRESPONSIVE INVOLVES AN INTERPRETATION OF THE INVITATION AND BID AND THE APPLICATION OF PERTINENT PROVISIONS OF ASPR AND IS A LEGAL QUESTION WHICH IS SUBJECT TO FINAL REVIEW BY COMPTROLLER GENERAL.

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER OF NOVEMBER 1, 1967, WITH ATTACHMENT, FROM THE CHIEF, PROCUREMENT OPERATIONS DIVISIONS, DIR/PROCUREMENT POLICY, DCS/S -AND-L, REPORTING ON THE PROTESTS OF DAYTON ELECTRONIC PRODUCTS CO. (DEPCO) AND TRIDEA ELECTRONICS IN CONNECTION WITH INVITATION FOR BIDS F34601-67-B-0343, ISSUED AT TINKER AIR FORCE BASE, OKLAHOMA.

THE ABOVE IFB REQUESTED BIDS ON RADAR INDICATORS, AN/GPA-118, SPARE PARTS, AEROSPACE GROUND EQUIPMENT (AGE), AND DATA. ITEMS 1, 2 AND 11 CALL FOR 20, 30 AND 31 "INDICATOR GROUPS" RESPECTIVELY, BUT PAGE 7 OF THE INVITATION ADVISED BIDDERS THAT "FUNDS ARE NOT PRESENTLY AVAILABLE FOR ITEM 11 OF THIS PROCUREMENT," AND THAT THE GOVERNMENT'S OBLIGATION IS CONTINGENT UPON THE AVAILABILITY OF APPROPRIATED FUNDS. BIDS WERE ORIGINALLY SCHEDULED FOR OPENING FEBRUARY 16, 1967, BUT AMENDMENTS TO THE IFB EXTENDED THE BID OPENING DATE TO MARCH 21, 1967. THE CONTRACTING OFFICER INITIALLY REJECTED DEPCO'S BID AS NONRESPONSIVE AND AWARDED THE CONTRACT TO TRIDEA ON JUNE 2, 1967. THIS AWARD IS STATED TO BE FOR ITEMS 1 THROUGH 15, BUT THE DOLLAR AMOUNT IS SHOWN AS $1,170,930, WHICH IS THE AMOUNT OF TRIDEA'S BID WITH ITEM 11 OMITTED. DEPCO PROTESTED THE AWARD TO TRIDEA BY WIRE OF JUNE 5 AND LETTER OF JUNE 10 ON THE GROUNDS THAT ITS BID WAS FULLY RESPONSIVE TO THE INVITATION AND THAT IT WAS THE LOW RESPONSIBLE BIDDER. TRIDEA WAS DIRECTED BY THE CONTRACTING OFFICER'S WIRE OF JUNE 12 TO SUSPEND ALL WORK UNDER THE CONTRACT PENDING RESOLUTION OF THE PROTEST. UPON REVIEW OF THE MATTER, IT WAS DECIDED BY HEADQUARTERS, USAF, THAT THE AWARD TO TRIDEA SHOULD BE CANCELLED AS IMPROPER, AND THAT AWARD SHOULD BE MADE TO DEPCO AS THE LOW RESPONSIVE AND RESPONSIBLE BIDDER. TRIDEA WAS NOTIFIED OF THE CANCELLATION OF ITS CONTRACT BY WIRE OF AUGUST 7 FROM THE CONTRACTING OFFICER, AND HAS PROTESTED THIS ACTION ON THE GROUNDS THAT DEPCO'S BID WAS INCOMPLETE AND AMBIGUOUS, AND THEREFORE NONRESPONSIVE. YOU ADVISE THAT FURTHER ACTION HAS BEEN SUSPENDED PENDING OUR DECISION IN THE MATTER.

THE CONTRACTING OFFICER'S DETERMINATION THAT DEPCO'S BID WAS NONRESPONSIVE WAS BASED ON HIS CONCLUSION THAT THE METHOD OF QUOTING ON DATA ITEMS 3AA, 4AA AND 12AA WAS AMBIGUOUS, AND ON THE FACT THAT PRICES WERE NOT SHOWN FOR FOUR LINE ITEMS OF DATA CALLED FOR IN ITEMS 25 AND 26 OF DD FORM 1423, CONTRACT DATA REQUIREMENTS LIST. THE THIRD AMENDMENT TO THE IFB, DATED FEBRUARY 28, 1967, EXTENDED THE OPENING DATE TO MARCH 21 AND SUBSTITUTED CERTAIN SUB-ITEMS, INCLUDING 3AA, 4AA AND 12AA. THIS AMENDMENT STATED THAT "ONE TOTAL PRICE SHALL BE SUBMITTED FOR THOSE EXHIBIT -A- DATA LINE ITEMS SPECIFIED FOR ITEMS 3AA, 4AA AND 12AA.' EXECUTING DD FORM 1260, AMENDMENT NO. 3, DEPCO SHOWED A PRICE OF $53,200 FOR ITEM 3AA, $53,200 FOR ITEM 4AA AND NO PRICE FOR 12AA. HOWEVER, IN ITS COVER LETTER OF MARCH 17, 1967, SUBMITTING FINAL PRICES AND MAKING SPECIFIC REFERENCE TO AMENDMENT NO. 3, DEPCO STATES THAT "THE TOTAL PRICE IS SUBMITTED FOR THOSE EXHIBIT A- DATA LINE ITEMS SPECIFIED FOR ITEMS 3AA, 4AA, AND 12AA OF $53,200.00.' THIS LANGUAGE IS AN EXACT RESPONSE TO THE REQUIREMENT IN AMENDMENT NO. 3 THAT ONE TOTAL PRICE BE SUBMITTED FOR THE INVOLVED ITEMS, THE PRICE OF WHICH HAD BEEN SUBJECT TO NEGOTIATION PRIOR TO ISSUANCE OF THE AMENDMENT, AND WE AGREE WITH HEADQUARTERS, DEPARTMENT OF THE AIR FORCE, THAT THIS REPRESENTS A CLEAR STATEMENT OF INTENT TO FURNISH THESE DATA ITEMS FOR A LOT PRICE OF $53,200, AND THAT ACCEPTANCE OF THE BID AS SUBMITTED WOULD OBLIGATE DEPCO TO SO PERFORM.

FAILURE TO COMPLETE DD FORM 1423 BY INSERTING ESTIMATED PRICES FOR EACH ITEM DID NOT AFFECT DEPCO'S OBLIGATION TO FURNISH ALL OF THE INVOLVED DATA ITEMS FOR THE LOT PRICE AND SHOULD HAVE BEEN WAIVED AS A MINOR INFORMALITY OR IRREGULARITY. SECTION 2-405 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) PROVIDES, IN PERTINENT PART, AS FOLLOWS:

"2-405 MINOR INFORMALITIES OR IRREGULARITIES IN BIDS. A MINOR INFORMALITY OR IRREGULARITY IS ONE WHICH IS MERELY A MATTER OF FORM OR IS SOME IMMATERIAL VARIATION FROM THE EXACT REQUIREMENTS OF THE INVITATION FOR BIDS, HAVING NO EFFECT OR MERELY A TRIVIAL OR NEGLIGIBLE EFFECT ON 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. THE CONTRACTING OFFICER SHALL EITHER GIVE TO THE BIDDER AN OPPORTUNITY TO CURE ANY DEFICIENCY RESULTING FROM A MINOR INFORMALITY OR IRREGULARITY IN A BID, OR, WAIVE ANY SUCH DEFICIENCY WHERE IT IS TO THE ADVANTAGE OF THE GOVERNMENT. EXAMPLES OF MINOR INFORMALITIES OR IRREGULARITIES INCLUDE:

(VI) FAILURE TO COMPLETE ITEMS 25 AND 26 ON DD FORM 1423, CONTRACT DATA REQUIREMENTS LIST (SEE 16-815).' ASPR 16-815 (A) STATES THAT "DD FORM 1423 PROVIDES IN ONE PLACE IN THE CONTRACT A LIST OF ALL DATA REQUIRED TO BE DELIVERED UNDER THE CONTRACT, AND OBTAINS FROM THE CONTRACTOR (AND FROM ALL BIDDERS AND OFFERORS) AN ESTIMATE OF WHAT PORTION OF THE TOTAL PRICE IS ATTRIBUTABLE TO THE PRODUCTION OR DEVELOPMENT OF THE LISTED DATA (NOT TO THE SALE OF RIGHTS IN THE DATA).' IT FURTHER POINTS OUT THAT USE OF DD FORM 1423 HELPS ACHIEVE CERTAIN LISTED OBJECTIVES OF THE DEPARTMENT OF DEFENSE WITH RESPECT TO THE ACQUISITION OF DASA, AND ASPR 16-815 (B) CLOSES WITH THE STATEMENT THAT "THE REVERSE SIDE OF THE FORM CONTAINS INSTRUCTIONS FOR THE BIDDERS OR OFFERORS TO FOLLOW IN ENTERING ON THE FORM THE PRICE GROUP AND ESTIMATED PRICE FOR EACH ITEM OF DATA.' SINCE ASPR PROVIDES THAT THE PRICES TO BE ENTERED ON FORM 1423 ARE ESTIMATES AND NOT FIXED PRICES, AND THE FORM ITSELF LISTS ITEM 25 AS "PRICE GROUP" AND ITEM 26 AS "ESTIMATED TOTAL PRICE," THEIR OMISSION COULD NOT AFFECT EITHER THE BIDDER'S OBLIGATION TO FURNISH ALL THE DATA CALLED FOR OR THE PRICE TO BE PAID THEREFOR, AND COULD NOT REASONABLY BE CONSIDERED A MATERIAL DEVIATION. THE FACT THAT THIS OMISSION WAS NOT LISTED IN ASPR AS AN EXAMPLE OF SUCH MINOR IRREGULARITY UNTIL APRIL 3, 1967, BY REVISION 22, WAS NOT INDICATIVE OF A CHANGE OF POLICY, BUT, AS CONCLUDED BY THE AIR FORCE, WAS MERELY TO ARTICULATE THE POLICY THERETOFORE EXISTING.

THE INSTRUCTIONS FOR COMPLETING DD FORM 1423 READ IN PERTINENT PART AS FOLLOWS: "OMISSIONS FROM DD FORM 1423. FAILURE OF THE GOVERNMENT TO LIST ON THIS FORM ANY ITEM OF DATA WHICH IS REQUIRED TO BE DELIVERED, OR WHOSE DELIVERY THE GOVERNMENT HAS THE RIGHT TO REQUIRE, UNDER ANY CLAUSE INCLUDED IN THIS CONTRACT SHALL NOT RELIEVE THE CONTRACTOR OF HIS OBLIGATION UNDER SUCH CLAUSE. "2. THE CONTRACTOR AGREES THAT, REGARDLESS OF WHETHER HE HAS MADE ANY ENTRIES IN ITEMS 25 AND 26, AND REGARDLESS OF WHAT THOSE ENTRIES ARE, HE IS OBLIGATED TO DELIVER ALL THE DATA LISTED HEREON, AND THE PRICE HE IS TO BE PAID THEREFOR IS INCLUDED IN THE TOTAL PRICE SPECIFIED IN THIS CONTRACT. "3. THE ESTIMATED PRICES FILLED IN IN ITEM 26 WILL NOT BE SEPARATELY USED IN EVALUATION OF BIDS OR OFFERS.' WHILE UNDER THE QUOTED PROVISIONS THE FIGURES INSERTED BY DEPCO DO NOT GOVERN IN ARRIVING AT THE TOTAL BID PRICE, NO REASON APPEARS WHY THEY MAY NOT BE REFERRED TO AS PART OF THE BID PACKAGE IN DETERMINING THE BIDDER'S INTENTION. SINCE THE FORM COVERS ALL DATA FOR ITEMS 1, 2 AND 11, AND THE AMOUNTS ENTERED BY DEPCO FOR ITEMS OTHER THAN THE FOUR LEFT BLANK TOTAL $53,200, THE INTENTION TO QUOTE ONE TOTAL PRICE OF $53,200, AS CLEARLY STATED IN THE COVER LETTER WITH THE BID, APPEARS TO BE FULLY CONFIRMED.

TRIDEA CONTENDS THAT THREE SEPARATE LOTS OF DATA ARE REQUIRED AND THAT THE AIR FORCE REPORT IS ERRONEOUS IN CONCLUDING THAT ONLY ONE LOT OF DATA WAS REQUIRED AND THAT ONLY ONE PRICE WAS TO BE SUBMITTED. REGARDLESS OF THE AMOUNT OF DATA, AMENDMENT NO. 3 MAKES IT QUITE CLEAR THAT "ONE TOTAL PRICE" IS TO BE SUBMITTED FOR ITEMS 3AA, 4AA AND 12AA,AND TRIDEA RECOGNIZES THIS BY QUOTING $45,000 FOR ITEM 3AA AND SHOWING THAT 4AA AND 12AA ARE INCLUDED IN THE PRICE OF 3AA. WITH REFERENCE TO TRIDEA'S CONTENTION THAT DEPCO'S COVER LETTER SHOULD NOT BE USED TO COMPLETE THE BID, IT IS WELL ESTABLISHED THAT CONSIDERATION MUST BE GIVEN TO THE ENTIRE BID PACKAGE IN DETERMINING THE BIDDER'S INTENTION. IN 44 COMP. GEN. 193, WHERE THE RECORD REVEALED THAT ACCEPTANCE OF THE BID WAS MADE ON THE BASIS OF THE BID FORM ALONE RATHER THAN ON THE BASIS OF THE BID FORM AS QUALIFIED BY AN ACCOMPANYING LETTER, WE CONCLUDED THAT THERE WAS NO MEETING OF THE MINDS AND THAT NO VALID CONTRACT RESULTED.

IN 44 COMP. GEN. 221 WE REFERRED TO OUR AUTHORITY UNDER THE BUDGET AND ACCOUNTING ACT, 1921, 31 U.S.C. 1, ET. SEQ., TO DISALLOW CREDIT IN THE ACCOUNTS OF THE GOVERNMENT'S FISCAL OFFICERS FOR ANY PAYMENTS OUT OF APPROPRIATED FUNDS MADE PURSUANT TO AN ILLEGAL CONTRACT, AND SAID THAT "WE WILL ADVISE THE CONTRACTING AGENCY AND ITS FISCAL OFFICERS THAT CREDIT WILL NOT BE ALLOWED ONLY WHEN WE ARE CONVINCED THAT THE AGENCY HAS AWARDED A CONTRACT UNDER PROCUREMENT STANDARDS WHICH A COURT WOULD FIND SO INCOMPATIBLE WITH GOVERNING STATUTES AND REGULATIONS AS TO RENDER SUCH CONTRACT A NULLITY.' EVEN APPLYING THIS STRICT RULE, WHICH LIMITS CANCELLATIONS TO ONLY THE CLEAREST CASES, WE ARE CONSTRAINED TO THE VIEW THAT THE AWARD TO TRIDEA CANNOT BE PERMITTED TO STAND.

IT IS FUNDAMENTAL, AS PROVIDED IN 10 U.S.C. 2305 (C), THAT AWARD BE MADE TO THE RESPONSIBLE BIDDER WHOSE BID CONFORMS TO THE INVITATION AND WILL BE THE MOST ADVANTAGEOUS TO THE UNITED STATES, PRICE AND OTHER FACTORS CONSIDERED. IT IS NOT ENOUGH, HOWEVER, THAT THE AWARD BE MADE IN GOOD FAITH. CONTRACTORS ARE CHARGED WITH NOTICE OF ALL STATUTORY AND REGULATORY LIMITATIONS ON THE CONTRACTING OFFICER'S ACTUAL AUTHORITY AND THE GOVERNMENT IS NOT ESTOPPED TO ASSERT SUCH LIMITATIONS EVEN WHERE A PRIVATE CONTRACTOR HAS RELIED ON THE CONTRACTING OFFICER'S APPARENT AUTHORITY TO HIS DETRIMENT. SEE PRESTEX, INC. V. THE UNITED STATES, 162 CT. CL. 620, 320 F.2D. 367; 44 COMP. GEN. 221, SUPRA. UNLIKE A DETERMINATION OF RESPONSIBILITY, WHICH IS FACTUAL AND AS TO WHICH THE CONTRACTING OFFICER HAS WIDE DISCRETION, THE DETERMINATION BY THE CONTRACTING OFFICER THAT DEPCO'S BID WAS NONRESPONSIVE INVOLVES INTERPRETATION OF THE INVITATION AND BID AND THE APPLICATION OF PERTINENT PROVISIONS OF ASPR, AND IS A LEGAL QUESTION WHICH IS SUBJECT TO FINAL REVIEW BY THIS OFFICE. IN ADDITION IT IS POINTED OUT BY THE AIR FORCE, THAT THE NEXT LOWER BID THAN DEPCO S, EVALUATED ON THE ITEMS FOR WHICH AWARD COULD BE MADE, WAS SUBMITTED BY OTIS ELEVATOR COMPANY, WHICH SHOULD THEREFORE HAVE RECEIVED THE AWARD AHEAD OF TRIDEA. NO EXPLANATION OF THIS APPARENT OVERSIGHT HAS BEEN FURNISHED, AND WE CAN ONLY SPECULATE THAT THE CONTRACTING OFFICER FAILED TO NOTE THAT THE OMISSION OF ITEM 11, FOR WHICH FUNDS WERE NOT AVAILABLE, CHANGED THE RELATIVE STANDING OF THE BIDDERS. THE STATEMENT BY TRIDEA THAT OTIS WOULD HAVE PROTESTED IF IT BELIEVED THAT IT WAS LOWER, CLEARLY HAS NO BEARING ON WHETHER OTIS WAS IN FACT LOWER, AS APPEARS TO BE THE CASE. OTIS WAS UNDOUBTEDLY AWARE THAT ITS BID WAS NOT THE LOWEST, AND SO FAR AS APPEARS IN THE RECORD BEFORE US MAY NEVER HAVE LEARNED THAT AWARD WAS NOT MADE TO A LOWER BIDDER.

FOR THE REASONS STATED ABOVE, WE BELIEVE THAT DEPCO'S BID WAS FULLY RESPONSIVE TO THE INVITATION; THAT EVEN IF IT WAS NOT THE CONTRACTING OFFICER'S AWARD TO TRIDEA DESPITE THE LOWER BID OF OTIS WAS OBVIOUSLY IN CONTRAVENTION OF 10 U.S.C. 2305 (C), AND THAT SAID AWARD WAS THEREFORE PLAINLY ILLEGAL.

WITH RESPECT TO YOUR QUESTION AS TO PROPER DISPOSITION OF A POSSIBLE CLAIM BY TRIDEA, IN CERTAIN LIMITED FACT SITUATIONS THE COURTS WILL GRANT RELIEF OF A QUASI-CONTRACTUAL NATURE WHEN THE GOVERNMENT ELECTS TO RESCIND AN INVALID CONTRACT. HOWEVER, AS STATED IN PRESTEX, INC. V. UNITED STATES, INFRA,"THE BASIC FACT OF LEGAL SIGNIFICANCE CHARGING THE GOVERNMENT WITH LIABILITY IN THESE SITUATIONS IS ITS RETENTION OF BENEFITS IN THE FORM OF GOODS OR SERVICES," WHEREAS, IN THE PRESENT CASE A STOP WORK ORDER WAS ISSUED 10 DAYS AFTER THE AWARD AND NO BENEFITS HAVE ACCRUED TO THE GOVERNMENT. ACCORDINGLY, WE BELIEVE THAT ANY CLAIM PRESENTED BY TRIDEA ELECTRONICS BY REASON OF THE CANCELLATION SHOULD BE REJECTED. SEE B-158902, APRIL 18, 1966.

YOUR RECOMMENDATION THAT THE TRIDEA PROTEST BE DENIED AND AWARD BE MADE TO DAYTON ELECTRONIC PRODUCTS COMPANY, INC., IS ACCORDINGLY APPROVED. THE FILES FORWARDED WITH THE AIR FORCE LETTER OF NOVEMBER 1, 1967, ARE RETURNED.