B-162614, NOV. 27, 1967

B-162614: Nov 27, 1967

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THE WAIVER OF AN ACKNOWLEDGEMENT OF AN ADDENDUM THAT GAVE BIDDERS AN OPTION TO PACK A DIFFERENT NUMBER OF ITEMS IN A CONTAINER IS A WAIVER OF AN ITEM OF FORM AND NOT OF SUBSTANCE AND SINCE THE WAIVER DID NOT PREJUDICE OTHER BIDDERS. INC.: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF OCTOBER 3. PROVIDED THAT BIDS WERE TO BE EVALUATED ON THE BASIS OF THE OVERALL COST TO THE GOVERNMENT. WHICH WAS TO BE DETERMINED BY ADDING THE TRANSPORTATION COSTS FROM THE PORT OF EXPORT TO THE ULTIMATE DESTINATION. BIDDERS WERE NOTIFIED THAT THEY WOULD BE ALLOWED TO PACK EITHER SIX OR EIGHT AIR CONDITIONERS TO EACH PALLET. ALSO PROVIDED THAT FAILURE TO COMPLY WITH THE REQUIREMENT "WILL BE CAUSE FOR REJECTION OF BID.'.

B-162614, NOV. 27, 1967

BIDS - AMENDMENT, ETC., ACKNOWLEDGMENT DECISION TO TRADERS DISTRIBUTING CO., INC., DENYING PROTEST AGAINST WAIVER OF A BID ADDENDUM ACKNOWLEDGMENT IN FAVOR OF FEDDERS CORP. FOR FURNISHING AIR CONDITIONERS TO GSA FOR SHIPMENT TO SAIGON, VIETNAM. THE WAIVER OF AN ACKNOWLEDGEMENT OF AN ADDENDUM THAT GAVE BIDDERS AN OPTION TO PACK A DIFFERENT NUMBER OF ITEMS IN A CONTAINER IS A WAIVER OF AN ITEM OF FORM AND NOT OF SUBSTANCE AND SINCE THE WAIVER DID NOT PREJUDICE OTHER BIDDERS, OR GIVE THE LOW BIDDER AN OPTION FOR REFUSAL TO PERFORM OR TO WITHDRAW THE BID, THE WAIVER MUST BE REGARDED AS PROPER.

TO TRADERS DISTRIBUTING COMPANY, INC.:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF OCTOBER 3, 1967, AND SUPPLEMENTAL LETTER DATED OCTOBER 4, 1967, PROTESTING ANY AWARD TO FEDDERS CORPORATION OF EDISON, NEW JERSEY, UNDER INVITATION FOR BIDS NO. SFF-AID- A1013-A-68, ISSUED BY GENERAL SERVICES ADMINISTRATION REGION 9, SAN FRANCISCO, CALIFORNIA.

THE INVITATION, DATED AUGUST 15, 1967, SOLICITED BIDS FOR 1,725 AIR CONDITIONERS TO BE DELIVERED TO SAIGON, VIETNAM, AND PROVIDED THAT BIDS WERE TO BE EVALUATED ON THE BASIS OF THE OVERALL COST TO THE GOVERNMENT, WHICH WAS TO BE DETERMINED BY ADDING THE TRANSPORTATION COSTS FROM THE PORT OF EXPORT TO THE ULTIMATE DESTINATION. THE INVITATION ALSO PROVIDED (PARAGRAPH 20, PAGE 8) THAT THE AIR CONDITIONERS WOULD BE PACKED EIGHT TO EACH PALLET.

BY SPECIAL NOTICE NO. 1, DATED SEPTEMBER 12, 1967, BIDDERS WERE NOTIFIED THAT THEY WOULD BE ALLOWED TO PACK EITHER SIX OR EIGHT AIR CONDITIONERS TO EACH PALLET. THIS NOTICE INSTRUCTED BIDDERS TO ACKNOWLEDGE ACCEPTANCE OF THE CHANGES SPECIFIED IN THE NOTICE BY NOTATION ON THE BID, WRITTEN OR TELEGRAPHIC COMMUNICATION, OR BY EXECUTING AND RETURNING THE NOTICE. ALSO PROVIDED THAT FAILURE TO COMPLY WITH THE REQUIREMENT "WILL BE CAUSE FOR REJECTION OF BID.'

THE FEDDERS' BID WHICH IS THE APPARENT LOW RESPONSIVE BID, CONTAINS NO NOTATION INDICATING ACCEPTANCE OF THE CHANGES SPECIFIED BY THE SPECIAL NOTICE AND FEDDERS DID NOT COMPLY WITH THE OTHER INSTRUCTIONS REGARDING ACKNOWLEDGMENT. HOWEVER, THE CONTRACTING OFFICER HAS WAIVED THE FAILURE OF FEDDERS TO COMPLY WITH THE ACKNOWLEDGMENT REQUIREMENTS AS A MINOR IRREGULARITY UNDER FEDERAL PROCUREMENT REGULATIONS (FPR) 1 2.405 (D) (2).

YOUR PROTEST IS BASED UPON THIS FAILURE OF FEDDERS TO COMPLY WITH THE REQUIREMENTS OF THE SPECIAL NOTICE REGARDING ACKNOWLEDGMENT OF THE CHANGES MADE BY THE NOTICE. YOU CONTEND THAT THE CHANGE "COULD HAVE A MEANINGFUL EFFECT ON THE TOTAL COST OF THE GOODS TO BE PROVIDED INASMUCH AS PALLETS OR SKIDS WITH SIX AIR CONDITIONERS ON EACH WOULD ULTIMATELY RESULT IN A GREATER NUMBER OF SKIDS AND CONSEQUENTLY A GREATER CUBE WHICH WOULD, OF COURSE, HAVE A SUBSTANTIAL EFFECT ON THE OVERALL COST OF DELIVERING THE GOODS TO THEIR FINAL DESTINATION.' YOU CONCLUDE YOUR PROTEST BY CONTENDING THAT THE REQUIREMENT FOR ACKNOWLEDGMENT WAS MANDATORY AND THAT WAIVER OF THE REQUIREMENT WOULD PERMIT FEDDERS AN OPPORTUNITY TO WITHDRAW ITS BID SHOULD IT CHOOSE TO DO SO.

THE QUESTION WITH REGARD TO THE EFFECT OF A BIDDER'S FAILURE TO ACKNOWLEDGE AN ADDENDUM HAS BEEN BEFORE OUR OFFICE ON A NUMBER OF OCCASIONS. AS WAS STATED IN 37 COMP. GEN. 785, THE GENERAL RULE ON THE EFFECT OF FAILURE TO ACKNOWLEDGE AN ADDENDUM IS THAT IF AN AMENDMENT TO AN INVITATION AFFECTS THE PRICE, QUANTITY OR QUALITY OF THE PROCUREMENT, FAILURE OF THE BIDDER TO ACKNOWLEDGE THAT AMENDMENT IN THE MANNER REQUIRED BY THE INVITATION OR AMENDMENT CANNOT BE WAIVED. 44 COMP. GEN. 753. THIS GENERAL RULE IS PREDICATED UPON THE PRINCIPLE THAT THE ACCEPTANCE OF A BID WHICH DISREGARDS A MATERIAL ASPECT OF AN INVITATION, AS AMENDED, WOULD BE PREJUDICIAL TO OTHER BIDDERS. B-138392, FEBRUARY 25, 1959. IT IS ALSO SAID THAT THE FAILURE TO ACKNOWLEDGE GIVES THE FAILING BIDDER AN OPTION TO DECIDE AFTER BID OPENING TO BECOME ELIGIBLE FOR THE AWARD BY COMING FORTH WITH EVIDENCE OUTSIDE THE BID ITSELF THAT MATERIAL ADDENDUM HAD BEEN CONSIDERED, OR TO AVOID AWARD BY REMAINING SILENT. B-141299, DECEMBER 14, 1959.

WHILE THE GENERAL RULE SET FORTH IN 37 COMP. GEN. 785 IS BASED ON SOUND POLICY AND FURTHERS THE SPIRIT AND PURPOSE OF THE LAW GOVERNING PUBLIC CONTRACT PROCUREMENTS PURSUANT TO FORMAL ADVERTISING, THE GENERAL RULE HAS NOT BEEN APPLIED INDISCRIMINATELY BY OUR OFFICE TO PREVENT WAIVER IN ALL CASES INVOLVING FAILURE TO ACKNOWLEDGE ADDENDA. SUCH FAILURE MAY BE WAIVED WHERE THE AMENDMENT INVOLVES ONLY A MATTER OF FORM, OR HAS EITHER NO EFFECT OR MERELY A TRIVIAL OR NEGLIGIBLE EFFECT ON PRICE, QUALITY, QUANTITY, OR DELIVERY OF THE ITEM BID UPON. FPR 1-2.405 (D) (2). THUS, WAIVER HAS BEEN PERMITTED WHERE THE MODIFICATION COULD HAVE AFFECTED THE COST OF THE WORK ONLY TO A NEGLIGIBLE DEGREE, 34 COMP. GEN. 581; OR WHERE THE ADDITIONAL COST WAS TOO TRIVIAL AS A PRACTICAL MATTER WHEN COMPARED WITH THE TOTAL COST OF THE WORK, B-141383, JANUARY 14, 1960. IN B-144185, JANUARY 25, 1961, THE ADDITIONAL COST INVOLVED WAS SAID TO BE NEGLIGIBLE AND WAIVER WAS PROPER; AND IN B-144784, JUNE 21, 1961, THE FACTS DID NOT JUSTIFY A CONCLUSION "THAT THE ADDENDA PROVISIONS WERE OF A SUBSTANTIAL NATURE WITH REGARD TO THE OVERALL COST OF THE WORK OR THAT THE FAILURE OF THE LOW BIDDER TO EXECUTE THE ADDENDUM PREJUDICED OTHER BIDDERS.'

AS YOU CONTEND, A CHANGE WHICH COULD AFFECT THE CUBIC VOLUME OF A SHIPMENT COULD HAVE AN EFFECT ON THE OVERALL COST OF DELIVERING THE GOODS TO THEIR FINAL DESTINATION. HERE, HOWEVER, BIDS WERE EVALUATED ON THE BASIS OF THE OVERALL COST TO THE GOVERNMENT AND WHETHER A BIDDER SPECIFIED SIX OR EIGHT ITEMS TO A PALLET, THE LOWEST BID WOULD STILL PREVAIL. FURTHER, THE SPECIAL NOTICE PERMITTED BIDDERS AN OPTION TO PACK IN A DIFFERENT MANNER IF THEY CHOSE TO DO SO. THUS, THEY WERE PROVIDED AN OPTION OR A CHOICE WHICH WAS DENIED TO FEDDERS. TO APPLY YOUR CONTENTION OF A ,MEANINGFUL EFFECT ON THE TOTAL COST," SUCH EFFECT, IF THERE WERE ANY ADVANTAGE PROVIDED BY THE SPECIAL NOTICE, ACCRUED ONLY TO THOSE BIDDERS WHICH ACKNOWLEDGED THE NOTICE. IN THIS REGARD, HOWEVER, IT IS NOTED THAT BOTH YOUR COMPANY AND FEDDERS OFFERED EIGHT AIR CONDITIONERS PER CONTAINER. IT IS CLEAR, THEREFORE, THAT BOTH BIDS WERE SUBMITTED ON A COMPETITIVE BASIS, AND THAT FEDDERS HAD NO UNFAIR ADVANTAGE OVER YOU BY REASON OF ITS FAILURE TO ACKNOWLEDGE THE SPECIAL NOTICE.

REGARDING YOUR CONTENTION THAT THE REQUIREMENT FOR ACKNOWLEDGMENT WAS MANDATORY AND NOT PERMISSIVE, WE HAVE HELD THAT AN AUTOMATIC REJECTION OF A BID BECAUSE OF A FAILURE TO CONFORM TO A PURELY TECHNICAL OR OVER- LITERAL READING OF THE STATED REQUIREMENTS MAY BE AS ARBITRARY AS THE WAIVER OF NONRESPONSIVENESS TO A MATERIAL AND SUBSTANTIAL REQUIREMENT. COMP. GEN. 435. THE CITED DECISION HELD, IN EFFECT, THAT NO REQUIREMENT OF AN INVITATION MAY BE MADE MATERIAL BY THE LANGUAGE OF THE INVITATION UNLESS IT SERVES SOME REAL PURPOSE. HERE, THE SPECIAL NOTICE MERELY PROVIDED FOR AN OPTION OR A CHOICE AND DID NOT REQUIRE HIGHER STANDARDS OF PERFORMANCE. WE THEREFORE BELIEVE THAT THE REQUIREMENTS OF THE SPECIAL NOTICE WERE OF FORM RATHER THAN OF SUBSTANCE. PARAGRAPH 10 (B) OF THE INVITATION PROVIDES THAT THE GOVERNMENT RESERVES THE RIGHT TO WAIVE INFORMALITIES AND MINOR IRREGULARITIES IN OFFERS RECEIVED.

YOUR CONTENTION THAT BY WAIVER OF THE ACKNOWLEDGMENT REQUIREMENT FEDDERS WAS AFFORDED AN OPPORTUNITY TO WITHDRAW ITS BID MAY BE BASED ON THE THEORY THAT A BIDDER CANNOT BE REQUIRED TO FULFILL CONTRACT REQUIREMENTS IN EXCESS OF THOSE WHICH IT OFFERED TO PERFORM. THIS POSITION WOULD BE TENABLE IF THE NOTICE HAD REQUIRED HIGHER STANDARDS OF PERFORMANCE THAN THE ORIGINAL INVITATION. HOWEVER, SUCH IS NOT THE CASE HERE AND FEDDERS HAS OFFERED TO PERFORM IN A MANNER CONSISTENT WITH BOTH THE INITIAL AND AMENDED REQUIREMENTS. THERE IS NO BASIS, THEREFORE, FOR A REFUSAL OF PERFORMANCE BY FEDDERS OR FOR A REQUEST TO WITHDRAW ITS BID.

THE FACT THAT THE NOTICE STATED THAT FAILURE TO COMPLY WITH THE ACKNOWLEDGMENT REQUIREMENT WILL BE CAUSE FOR REJECTION OF THE BID DOES NOT OF ITSELF REQUIRE REJECTION UPON FAILURE TO ACKNOWLEDGE. 39 COMP. GEN. 881. NOR DOES IT CONFER UPON BIDDERS ANY RIGHT TO INSIST THAT A BID BE REJECTED FOR FAILURE TO ACKNOWLEDGE RECEIPT OF AN AMENDMENT WHICH CONTAINS PROVISIONS THE WAIVER OF WHICH WOULD NOT RESULT IN ANY UNFAIR COMPETITIVE ADVANTAGE. TO HOLD OTHERWISE WOULD BE TO AUTHORIZE AN AWARD TO A HIGHER BIDDER FOR THE PURPOSE OF ENFORCING A PROVISION IN AN INVITATION WHICH, IF WAIVED, RESULTS IN NO DISADVANTAGE TO THE HIGHER BIDDER AND, IF NOT WAIVED, WOULD OPERATE TO FORECLOSE AND IGNORE THE RIGHTS AND INTERESTS OF THE GOVERNMENT. 41 COMP. GEN. 550.

IN THE CIRCUMSTANCES, WE CONCLUDE THAT THE FAILURE TO SUBMIT THE ACKNOWLEDGMENT REQUIRED BY THE SPECIAL NOTICE WAS PROPERLY WAIVED AND THAT THE LOW BID OF FEDDERS MAY BE CONSIDERED FOR AWARD. YOUR PROTEST IS THEREFORE DENIED.