B-163415, FEB. 2, 1968

B-163415, FEB. 2, 1968

BIDS - DEVIATIONS - PROGRESS PAYMENTS DECISION TO CONTRACTING OFFICER OF NATIONAL BUREAU OF STANDARDS, COMMERCE DEPT. CONCERNING PROTEST OF LECTRO MAGNETICS INC., LOW BIDDER, AGAINST REJECTION OF BID FOR SHIELDED ENCLOSURE TO BE CONSTRUCTED. A LOW BID FOR FURNISHING A SHIELDED ENCLOSURE WITHIN 45 DAYS AFTER AWARD WHICH WAS ACCOMPANIED BY A REQUEST FOR PROGRESS PAYMENTS WHEN THE INVITATION DID NOT CONTAIN ANY PROVISION FOR PROGRESS PAYMENTS WAS PROPERLY REJECTED AS NONRESPONSIVE. THERE IS NO AUTHORITY FOR CONSIDERING THE PROGRESS PAYMENT MATTER AS A MERE REQUEST RATHER THAN DEMAND. SEE B-154755, SEPT. 23, 1964.

TO MR. BETTS:

REFERENCE IS MADE TO YOUR LETTER OF JANUARY 23, 1968, WITH ENCLOSURES, FILE REFERENCE 161.40, TRANSMITTING FOR DECISION THE PROTEST OF LECTRO MAGNETICS, INC. (LMI), LOS ANGELES, CALIFORNIA, AGAINST THE REJECTION OF ITS BID UNDER SOLICITATION NO. ESSA 26-28, AS AMENDED. YOU INDICATE THAT AN AWARD IS BEING HELD IN ABEYANCE PENDING OUR DECISION.

THE ENVIRONMENTAL SCIENCE SERVICES ADMINISTRATION, BOULDER, COLORADO, REQUESTED BIDS UNDER THE SOLICITATION FOR FURNISHING ONE SHIELDED ENCLOSURE TO BE CONSTRUCTED IN ACCORDANCE WITH THE GOVERNMENT'S SPECIFICATIONS. PROSPECTIVE BIDDERS WERE ADVISED THAT DELIVERY OF THE ENCLOSURE TO DESTINATION WAS DESIRED WITHIN 45 DAYS AFTER APPROVAL OF DRAWINGS AND THAT BIDS OFFERING DELIVERY IN EXCESS OF 90 DAYS AFTER APPROVAL OF DRAWINGS WILL BE REJECTED AS NONRESPONSIVE TO THE SOLICITATION.

FOUR BIDS WERE RECEIVED AND OPENED AS SCHEDULED ON DECEMBER 7, 1967. THE LOWEST BID IN THE AMOUNT OF $17,586 WAS SUBMITTED BY LMI. THE THREE OTHER BIDS WERE IN THE AMOUNTS OF $21,000, $38,018.42 AND $51,200.

ALTHOUGH LMI'S BID IS SOMEWHAT LOWER THAN THE NEXT LOWEST BID RECEIVED, IT IS YOUR RECOMMENDATION THAT IT BE REJECTED AS NONRESPONSIVE BECAUSE IT WAS CONDITIONED UPON RECEIVING PROGRESS PAYMENTS CONTRARY TO THE TERMS OF THE SOLICITATION WHICH PROVIDE FOR PAYMENT ONLY UPON DELIVERY AND ACCEPTANCE OF THE ITEM BEING PROCURED IN ACCORDANCE WITH THE "PAYMENTS" CLAUSE OF THE GENERAL PROVISIONS, STANDARD FORM 32, JUNE 1964 EDITION. THE BASIS FOR CONCLUDING THAT LMI'S BID IS CONDITIONED UPON RECEIVING PROGRESS PAYMENTS IS THE FOLLOWING LANGUAGE APPEARING ON THE FACE SHEET OF ITS BID:

"* * * 90 PERCENT PAYMENT DUE ON COMPLETION OF INSTALLATION, BALANCE OF 10 PERCENT DUE ON APPROVAL. SEE ATTACHED LETTER DATED 20 NOVEMBER 1967.' IN ITS LETTER OF NOVEMBER 20, 1967, ATTACHED TO THE BID, LMI STATED: "ALSO, WE ARE REQUESTING THAT A PROGRESS PAYMENT OF 90 PERCENT OF THE CONTRACT BE PAID UPON THE COMPLETION OF INSTALLATION IN AS MUCH AS ACCEPTANCE TEST SCHEDULES ARE ESTABLISHED BY OTHERS AS REFERENCED IN PARAGRAPH P, TESTING, ON PAGE 4 OF OUR TECHNICAL PROPOSAL AND PER YOUR ESSA 26-68. THE FINAL 10 PERCENT WILL BE PAID UPON FINAL TESTING AND FULL ACCEPTANCE BY ESSA.'

LMI CONTENDS IN ITS LETTER OF DECEMBER 8, 1967, THAT THE LANGUAGE WAS NOT INTENDED AS, AND IS NOT, A CONDITION OR QUALIFICATION OF ITS BID, BUT WAS MERELY A REQUEST, NOT A DEMAND, FOR CONSIDERATION OF THAT SUBJECT IN VIEW OF THE FACT THAT SUCH TYPE OF REQUEST IS ROUTINE IN THE CONSTRUCTION BUSINESS. LMI CONTENDS THAT THE REQUEST FOR A PROGRESS PAYMENT SHOULD BE DELETED AND WAIVED BY THE CONTRACTING OFFICER UNDER THE PROVISIONS OF PARAGRAPHS 10 (A) AND 10 (B) OF THE SOLICITATION INSTRUCTIONS AND CONDITIONS WHICH PROVIDE AS FOLLOWS: "10. AWARD OF CONTRACT. (A) THE CONTRACT WILL BE AWARDED TO THAT RESPONSIBLE OFFEROR WHOSE OFFER CONFORMING TO THE SOLICITATION WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED.

"/B) THE GOVERNMENT RESERVES THE RIGHT TO REJECT ANY OR ALL OFFERS AND TO WAIVE INFORMALITIES AND MINOR IRREGULARITIES IN OFFERS RECEIVED.'

YOU STATE THAT NO PROVISION FOR PROGRESS PAYMENTS WAS MADE IN THE SOLICITATION BECAUSE THE PROCUREMENT DOES NOT MEET EITHER THE TIME OR DOLLAR CRITERIA FOR PROGRESS PAYMENTS AS SET FORTH IN FPR SECS. 1 30.503 AND 1-30.504; THAT THE APPLICABLE FUNDING WAS LESS THAN $100,000; THAT THE MAXIMUM ALLOWABLE PERIOD FOR DELIVERY WAS 90 DAYS; AND THAT PARTIAL PAYMENTS WERE NOT CONSIDERED BECAUSE THE ENCLOSURE WILL BE A SINGLE UNIT WITH PERTITIONS AND WILL NOT BE SEPARABLE FOR ANY PURPOSE. YOU ALSO STATE THAT IN THE PAST IT HAS BEEN THE CUSTOM OF THE BOULDER LABORATORIES TO PURCHASE SHIELDED ROOMS UNDER FIXED PRICE SUPPLY CONTRACTS BECAUSE THE MATERIALS, MANUFACTURING TECHNIQUES AND PERFORMANCE REQUIREMENTS DIFFER FROM THE REQUIREMENTS NORMALLY ASSOCIATED WITH CONSTRUCTION CONTRACTS. YOU ALSO STATE THAT UNDER THE FIXED-PRICE SUPPLY TYPE OF CONTRACT PAYMENT IN FULL HAS FOLLOWED INSTALLATION AND ACCEPTANCE.

THE QUESTION OF THE EFFECT OF A BID CONDITIONED UPON RECEIVING PROGRESS PAYMENTS WHERE THE INVITATION CONTAINS NO PROVISION FOR SUCH PAYMENTS AND SPECIFIES A PARTICULAR METHOD OF PAYMENT HAS BEEN BEFORE OUR OFFICE ON SEVERAL OCCASIONS. WE HAVE CONSISTENTLY HELD THAT A BID SO QUALIFIED IS NONRESPONSIVE IN A MATERIAL RESPECT AND SUCH DEVIATION MAY NOT BE WAIVED. 38 COMP. GEN. 131; 45 ID. 809.

LMI CONTENDS THAT THE GRANTING OF PROGRESS PAYMENTS WAS NOT AND SHOULD NOT HAVE BEEN TREATED AS A CONDITION OF ITS BID, AND THAT, THEREFORE, THE PURCHASING ACTIVITY SHOULD HAVE AWARDED IT THE CONTRACT AS THE LOWEST RESPONSIVE BIDDER WITHOUT A PROGRESS PAYMENTS PROVISION. WITH REGARD TO LMI'S STATEMENT THAT IT ONLY "REQUESTED" AND HAD NOT DEMANDED PROGRESS PAYMENTS, WE HELD IN 46 COMP. GEN. 368, 369, CITING B-154755, SEPTEMBER 23, 1964:

"WHILE WE WOULD AGREE THAT IN THE ORDINARY SENSE THE WORD -REQUEST- IS PRECATORY IN NATURE, ITS PRECISE MEANING MUST DEPEND UPON THE EXISTING CIRCUMSTANCES. AS STATED BY JUDGE LEARNED HAND IN CENTRAL HANOVER BANK AND TRUST COMPANY V COMMISSIONER OF INTERNAL REVENUE, 159 F.2D 167, 169, - THERE IS NOT MORE LIKELY WAY TO MISAPPREHEND THE MEANING OF LANGUAGE -- BE IT IN A CONSTITUTION, A STATUTE, A WILL OR A CONTRACT -- THAN TO READ WORDS LITERALLY, FORGETTING THE OBJECT WHICH THE DOCUMENT AS A WHOLE IS MEANT TO SECURE.- SINCE THE INVITATION PROVIDED FOR A METHOD OF PAYMENT WE THINK IT NOT UNREASONABLE TO VIEW YOUR REQUEST AS SOMETHING MORE THAN A MERE WISH OR DESIRE. HAD YOUR BID BEEN ACCEPTED IT COULD HAVE BEEN ARGUED THAT THE GOVERNMENT ACCEPTED YOUR REQUEST FOR PROGRESS PAYMENTS AND WAS BOUND TO MAKE PAYMENT IN ACCORDANCE THEREWITH. IF, AS SUGGESTED, YOUR REQUEST WAS IN THE NATURE OF MERE HOPE OR WISH AND YOU INTENDED TO ACCEPT A CONTRACT SUBJECT TO THE -PAYMENTS' ARTICLE, IT WAS INCUMBENT UPON YOU TO CLEARLY EXPRESS SUCH INTENTION. SEE B-124572, JANUARY 11, 1956, AND B- 150313, DECEMBER 5, 1962. IT IS A RULE OF LONG STANDING THAT WHERE TWO POSSIBLE MEANINGS CAN BE REACHED FROM THE TERMS OF A BID A BIDDER MAY NOT BE PERMITTED TO EXPLAIN WHAT HE INTENDED SINCE HE WOULD THEN BE IN A POSITION TO AFFECT THE RESPONSIVENESS OF THIS BID. 36 COMP. GEN. 705; 40 ID. 393.'

SINCE THE BID OF LMI WAS MATERAILLY CONDITIONED ON RECEIVING PROGRESS PAYMENTS, THE BID WAS NONRESPONSIVE AND MUST BE REJECTED.