B-161991, SEP. 15, 1967

B-161991: Sep 15, 1967

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AN AWARD TO A SECOND LOW BIDDER BECAUSE THE CONTRACTING OFFICER IMPROPERLY REJECTED THE LOW BID IN RELIANCE UPON INFORMATION FROM A PROPER SOURCE THAT THE PARTICULAR PLANT OF THE LOW BIDDER WAS NOT APPROVED FOR THE QUALIFIED PRODUCT BEING PROCURED DOES NOT MAKE SUCH CONTRACT VOID AB INITIO BUT RATHER VOIDABLE AT THE OPTION OF THE GOVERNMENT AND IN SUCH CASE CANCELLATION SHOULD ONLY BE DIRECTED IF IN BEST INTERESTS OF GOVERNMENT. THE CONTRACT WILL NOT BE DISTURBED. THE BID OF THE WEATHERHEAD COMPANY OF $0.535 PER UNIT WAS LOW. 1961" AND ON PAGE 6 OF ITS BID STATED THAT THE PROPOSED PLACE OF MANUFACTURE WAS THE FIRM'S PLANT IN SYRACUSE. WAS NOT LISTED. IT WAS DETERMINED THAT REGARDLESS OF THE QUALIFICATION OF ITS OTHER FACILITIES.

B-161991, SEP. 15, 1967

BID - QUALIFIED PRODUCTS DECISION TO THE WEATHERHEAD CO. CONCERNING IMPROPER REJECTION OF LOW BID FOR HOSE ADAPTERS BY DEFENSE CONSTRUCTION SUPPLY CENTER, COLUMBUS, OHIO. AN AWARD TO A SECOND LOW BIDDER BECAUSE THE CONTRACTING OFFICER IMPROPERLY REJECTED THE LOW BID IN RELIANCE UPON INFORMATION FROM A PROPER SOURCE THAT THE PARTICULAR PLANT OF THE LOW BIDDER WAS NOT APPROVED FOR THE QUALIFIED PRODUCT BEING PROCURED DOES NOT MAKE SUCH CONTRACT VOID AB INITIO BUT RATHER VOIDABLE AT THE OPTION OF THE GOVERNMENT AND IN SUCH CASE CANCELLATION SHOULD ONLY BE DIRECTED IF IN BEST INTERESTS OF GOVERNMENT. INASMUCH AS BOTH CONTRACTOR AND PROCURING ACTIVITY ACTED HONESTLY AND REASONABLE AND BECAUSE TERMINATION COSTS WOULD BE EXCESSIVE AT THIS DATE, THE CONTRACT WILL NOT BE DISTURBED.

TO THE WEATHERHEAD COMPANY:

WE REFER TO YOUR LETTER OF JULY 7, 1967, PROTESTING THE REJECTION OF YOUR LOW BID UNDER INVITATION FOR BIDS NO. DSA-700-67-B-4591 ISSUED MARCH 24, 1967, BY THE DEFENSE CONSTRUCTION SUPPLY CENTER, DIRECTORATE OF PROCUREMENT AND PRODUCTION, COLUMBUS, OHIO, TO PRODUCE 31,000 ALUMINUM HOSE ADAPTERS ON THE BASIS THE PLANT YOU INTENDED TO UTILIZE TO MANUFACTURE THESE ADAPTERS DOES NOT APPEAR ON THE APPLICABLE QUALIFIED PRODUCTS LIST AS REQUIRED BY THE INVITATION AND THE REGULATION.

AT BID OPENING, APRIL 14, 1967, THE BID OF THE WEATHERHEAD COMPANY OF $0.535 PER UNIT WAS LOW, WITH THAT OF STRATOFLEX, INCORPORATED, SECOND LOW, AT $0.57 PER UNIT.

PARAGRAPH 2.105, PAGE 3 OF THE INVITATION, INDICATED THAT ONLY THOSE END PRODUCTS WHICH HAD BEEN TESTED, APPROVED AND APPROVED FOR INCLUSION ON QUALIFIED PRODUCTS LIST 5070-12 DATED MAY 27, 1965, ISSUED BY MOBILE AIR MATERIEL AREA (MONE), BROOKLEY AIR FORCE BASE, ALABAMA, WOULD BE CONSIDERED FOR AWARD. THE WEATHERHEAD COMPANY INDICATED THAT ITS PRODUCT HAD BEEN APPROVED BY CITING "MONEM LETTER NOVEMBER 7, 1961" AND ON PAGE 6 OF ITS BID STATED THAT THE PROPOSED PLACE OF MANUFACTURE WAS THE FIRM'S PLANT IN SYRACUSE, INDIANA.

IN EVALUATING THE BIDS THE CONTRACTING OFFICER DISCOVERED THAT THE WEATHERHEAD COMPANY'S PLANTS IN CLEVELAND, OHIO, ANTWERP, OHIO, AND GLENDALE, CALIFORNIA, APPEARED ON THE CURRENT QUALIFIED PRODUCTS LIST, BUT THAT THE FIRM'S PLANT IN SYRACUSE, INDIANA, WAS NOT LISTED. SINCE PARAGRAPH 4-108 OF CHAPTER IV OF DEFENSE STANDARDIZATION MANUAL 200B RESTRICTS PRODUCT QUALIFICATION TO ARTICLES PRODUCED IN THE PARTICULAR PLANT WHICH MANUFACTURED THE TESTED AND APPROVED SAMPLES, IT WAS DETERMINED THAT REGARDLESS OF THE QUALIFICATION OF ITS OTHER FACILITIES, SINCE THE WEATHERHEAD COMPANY'S SYRACUSE, INDIANA, PLANT WAS NOT LISTED AS AN APPROVED PRODUCTION FACILITY, ITS OFFER HAD TO BE REJECTED. ACCORDINGLY, THE NEXT LOW OFFER WAS CONSIDERED AND ON MAY 10, 1967, A CONTRACT TO PRODUCE 31,000 ADAPTERS WAS AWARDED TO STRATOFLEX, INCORPORATED.

ON OR ABOUT MAY 19, 1967, THE WEATHERHEAD COMPANY WAS TELEPHONICALLY ADVISED OF THE REJECTION OF ITS BID AND THE REASON THEREFOR. THE LACK OF APPROVAL OF THE SYRACUSE PLANT WAS IMMEDIATELY DENIED, AND AN ATTEMPT WAS MADE TO SHOW THAT THE FACILITY WAS QUALIFIED ON THE BASIS OF THE NOVEMBER 7, 1961, LETTER FROM THE QUALIFYING ACTIVITY AT BROOKLEY AIR FORCE BASE, ALABAMA. HOWEVER, WHEN THE CONTRACTING OFFICER ATTEMPTED TO VERIFY THIS CONTENTION BY A TELEPHONE CALL TO BROOKLEY AIR FORCE BASE, HE WAS INFORMED THAT THE WEATHERHEAD COMPANY'S SYRACUSE, INDIANA, PLANT WAS NOT AN APPROVED FACILITY FOR PRODUCTION OF THE SUBJECT ADAPTERS. SOMETIME SHORTLY THEREAFTER, OFFICIALS OF THE WEATHERHEAD COMPANY OBTAINED WRITTEN VERIFICATION DATED MAY 23, 1967, OF THE QUALIFICATION OF THE SYRACUSE, INDIANA, FACILITY, FROM THE QUALIFYING ACTIVITY AT BROOKLEY AIR FORCE BASE, AND FORWARDED COPIES OF THIS VERIFICATION TO THE PROCURING ACTIVITY BY LETTER DATED MAY 31, 1967.

THE WEATHERHEAD COMPANY WAS FINALLY FORMALLY ADVISED OF THE REJECTION OF ITS BID BY A POSTCARD DATED JUNE 9, 1967, AND THE CONTRACT AWARDED TO STRATOFLEX, INCORPORATED, ON MAY 10, 1967, REMAINS IN EFFECT.

THE CONTRACTING OFFICER IS NOW FULLY AWARE OF THE FACT THAT THE WEATHERHEAD COMPANY'S PLANT AT SYRACUSE, INDIANA, IS AN APPROVED PRODUCER UNDER QUALIFIED PRODUCTS LIST 5070-12, DATED MAY 27, 1965, AND, IN FACT, A CONTRACT HAD BEEN AWARDED TO THE WEATHERHEAD COMPANY ON THIS BASIS UNDER A SUBSEQUENT INVITATION. THE REPORT OF THE CONTRACTING OFFICER ALSO INDICATES THAT HAD HE BEEN IN POSSESSION OF THE INFORMATION NOW AVAILABLE TO HIM, AWARD WOULD HAVE BEEN MADE TO THE LOW BIDDER, THE WEATHERHEAD COMPANY, UNDER THE PROTESTED INVITATION. HOWEVER, BECAUSE THE QUALIFYING ACTIVITY PERSONNEL MISINFORMED THE CONTRACTING OFFICER ABOUT THE STATUS OF THE SYRACUSE,INDIANA, PLANT, AN IMPROPER AWARD WAS MADE. THUS IT APPEARS THAT THE STATEMENT OF FACTS IN YOUR LETTER OF JULY 7, 1967, SUBSTANTIALLY AGREES WITH T8E CONTRACTING OFFICER'S REPORT OF AUGUST 23, 1967. WE MAY THEREFORE CONCLUDE THE WEATHERHEAD COMPANY THROUGH NO FAULT OF ITS OWN WAS IMPROPERLY DENIED AWARD UNDER THE SUBJECT INVITATION, DESPITE THE FACT THE FIRM TOOK TIMELY AND REASONABLE STEPS TO PROTECT ITS INTEREST. THERE REMAINS FOR RESOLUTION ONLY THE QUESTION OF THE WEATHERHEAD COMPANY'S RIGHT TO AN EFFECTIVE REMEDY, WHICH WOULD NECESSARILY ENTAIL A CANCELLATION OF THE PRESENT CONTRACT AWARDED TO STRATOFLEX, INCORPORATED.

WE DO NOT BELIEVE THE CIRCUMSTANCES HERE WARRANT SUCH ACTION, FOR IT APPEARS THAT STRATOFLEX, INCORPORATED, DID NOT HAVE KNOWLEDGE OF THE ERROR AT THE TIME OF AWARD. FURTHER, THE RECORD INDICATES THE CONTRACTING OFFICER MADE THE AWARD WITHOUT NEGLIGENCE, HAVING RELIED UPON INFORMATION SUPPLIED BY THE PERSONNEL OF THE QUALIFYING ACTIVITY ON WHOM HE HAD A RIGHT TO RELY ON MATTERS OF THIS SORT. IT IS OUR OPINION THAT DESPITE THE ERROR IN AWARD, THE CONTRACT IS NOT VOID AB INITIO BUT RATHER VOIDABLE AT THE OPTION OF THE GOVERNMENT, AND THAT CANCELLATION SHOULD ONLY BE DIRECTED IF DETERMINED TO BE IN THE BEST INTERESTS OF THE GOVERNMENT. COMP. GEN. 123, 132.

WE RECOGNIZE THE CONCERN OF THE WEATHERHEAD COMPANY OVER THE ERRONEOUS REJECTION OF ITS LOW BID, AND WE REGARD AS UNFORTUNATE THE CIRCUMSTANCES WHICH LED TO SUCH AN AWARD. HOWEVER, BECAUSE BOTH THE PRESENT CONTRACTOR, STRATOFLEX, INCORPORATED, AND THE PROCURING ACTIVITY APPEAR TO HAVE ACTED HONESTLY AND REASONABLY AND BECAUSE WE ARE ADVISED TERMINATION COSTS WOULD BE EXCESSIVE AT THIS DATE, WE DO NOT THINK THE PRESENT CONTRACT SHOULD BE DISTURBED.

ALTHOUGH WE HAVE NOT BEEN ADVISED JUST WHY THE QUALIFYING ACTIVITY WAS NOT ABLE TO FURNISH THE CONTRACTING OFFICER CORRECT INFORMATION IN THE FIRST INSTANCE, WE ARE RECOMMENDING THAT THE DEFENSE SUPPLY AGENCY TAKE WHATEVER STEPS ARE NECESSARY TO AVOID A RECURRENCE OF THE PROBLEM.