B-163611, MAY 29, 1968

B-163611: May 29, 1968

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TO WACHTEL AND WIENER LAW OFFICES: REFERNCE IS MADE TO YOUR LETTERS OF FEBRUARY 19 AND MARCH 13. DAAH01-68-B-0227 ON THE BASIS THAT IT WAS NONRESPONSIVE TO THE INVITATION. WAS THE LOWEST RECEIVED IN RESPONSE TO THE INVITATION. SUBSEQUENT TO BID OPENING AND WHILE A PREAWARD SURVEY WAS BEING PERFORMED ON SENTINEL. THIS QUANTITY REDUCTION WAS ACCOMPLISHED BY MEMORANDUM FOR RECORD DATED FEBRUARY 1. ADVISING THAT A REQUISITION AMENDMENT WAS IN PROCESS REDUCING THE REQUIREMENTS. THE AMENDMENT TO THE REQUISITION WAS ISSUED ACCOMPLISHING THE REDUCTION TO 20 UNITS. ITS BID WAS REJECTED AS NONRESPONSIVE IN ACCORDANCE WITH ARMED SERVICES PROCUREMENT REGULATION 2-404.2 (D). SINCE TO ALLOW THE BIDDER TO IMPOSE SUCH CONDITIONS WOULD BE PREJUDICIAL TO OTHER BIDDERS. * * * THE RECORD FURTHER INDICATES THAT THE CONTRACT WAS SUBSEQUENTLY AWARDED TO CRESTWOOD ELECTRONICS.

B-163611, MAY 29, 1968

TO WACHTEL AND WIENER LAW OFFICES:

REFERNCE IS MADE TO YOUR LETTERS OF FEBRUARY 19 AND MARCH 13, 1968, PROTESTING THE REJECTION OF THE BID OF SENTINEL ELECTRONICS, INC., UNDER INVITATION FOR BIDS NO. DAAH01-68-B-0227 ON THE BASIS THAT IT WAS NONRESPONSIVE TO THE INVITATION.

THE INVITATION, ISSUED DECEMBER 4, 1967, BY THE ARMY MISSILE COMMAND, REDSTONE ARSENAL, SOLICITED BIDS FOR THE PURCHASE OF 74 POWER SUPPLY AMPLIFIERS (ITEM 0001) AND ONE IDENTICAL UNIT FOR FIRST ARTICLE APPROVAL (ITEM 0001AC).

PARAGRAPH 10 (C) OF STANDARD FORM 33A, ENTITLED,"SOLICITATION INSTRUCTIONS AND CONDITIONS," PROVIDED AS FOLLOWS:

"/C) THE GOVERNMENT MAY ACCEPT ANY ITEM OR GROUP OF ITEMS OF ANY OFFER, UNLESS THE OFFEROR QUALIFIES HIS OFFER BY SPECIFIC LIMITATIONS. UNLESS OTHERWISE PROVIDED IN THE SCHEDULE, OFFERS MAY BE SUBMITTED FOR ANY QUANTITIES LESS THAN THOSE SPECIFIED, AND THE GOVERNMENT RESERVES THE RIGHT TO MAKE AN AWARD ON ANY ITEM FOR A QUANTITY LESS THAN THE QUANTITY OFFERED AT THE UNIT PRICES OFFERED UNLESS THE OFFEROR SPECIFIES OTHERWISE IN HIS OFFER.'

THE RECORD INDICATES THAT SENTINEL'S BID OF $369 PER UNIT FOR ITEM 0001 AND $569 FOR ITEM 0001AC, TOTALING $27,875, WAS THE LOWEST RECEIVED IN RESPONSE TO THE INVITATION. HOWEVER, SENTINEL STAMPED THE FOLLOWING STATEMENT ON PAGE 5 OF ITS BID.

"THE BIDDER HEREBY RESERVES THE RIGHT TO REFUSE AN AWARD FOR ANY QUANTITY LESS THAN THAT ORIGINALLY BID UPON.'

SUBSEQUENT TO BID OPENING AND WHILE A PREAWARD SURVEY WAS BEING PERFORMED ON SENTINEL, THE USING ACTIVITY REQUESTED A UNIT REDUCTION IN THE PROCUREMENT FROM 74 TO 20 UNITS. THIS QUANTITY REDUCTION WAS ACCOMPLISHED BY MEMORANDUM FOR RECORD DATED FEBRUARY 1, 1968, TO THE CONTRACTING OFFICER, ADVISING THAT A REQUISITION AMENDMENT WAS IN PROCESS REDUCING THE REQUIREMENTS. ON FEBRUARY 9, 1968, THE AMENDMENT TO THE REQUISITION WAS ISSUED ACCOMPLISHING THE REDUCTION TO 20 UNITS. IN VIEW OF SENTINEL'S RESERVATION TO REFUSE AN AWARD FOR ANY QUANTITY LESS THAN 74 UNITS, ITS BID WAS REJECTED AS NONRESPONSIVE IN ACCORDANCE WITH ARMED SERVICES PROCUREMENT REGULATION 2-404.2 (D). THAT PROVISION READS:

"ORDINARILY, A BID SHOULD BE REJECTED WHERE THE BIDDER ATTEMPTS TO IMPOSE CONDITIONS WHICH WOULD MODIFY REQUIREMENTS OF THE INVITATION FOR BIDS OR LIMIT HIS LIABILITY TO THE GOVERNMENT, SINCE TO ALLOW THE BIDDER TO IMPOSE SUCH CONDITIONS WOULD BE PREJUDICIAL TO OTHER BIDDERS. * * *

THE RECORD FURTHER INDICATES THAT THE CONTRACT WAS SUBSEQUENTLY AWARDED TO CRESTWOOD ELECTRONICS, INC., THE NEXT LOW BIDDER, AT UNIT PRICES OF $440 AND $600, RESPECTIVELY, TOTALING $9,400.

YOU ARGUE IN YOUR LETTER OF MARCH 13 THAT PARAGRAPH 10 (C) OF THE INVITATION, SUPRA, SPECIFICALLY GRANTED TO BIDDERS THE RIGHT TO REFUSE TO ACCEPT AN AWARD FOR ANY QUANTITY LESS THAN THE QUANTITY ADVERTISED, AND THAT SENTINEL'S ACTIONS WERE ENTIRELY CONSISTENT WITH THAT RIGHT.

IT SHOULD BE NOTED THAT UNDER PARAGRAPH 10 (A) OF STANDARD FORM 33A, THE CONTRACT AWARD MAY BE BASED ON THE BID WHICH WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT. THERE CAN BE NO DOUBT THAT IT WAS MOST ADVANTAGEOUS TO EVALUATE THE BIDS ON THE BASIS OF THE GOVERNMENT'S ACTUAL REQUIREMENTS WHICH WERE ESTABLISHED AS 20 UNITS. WHILE SENTINEL'S STAMPED QUALIFICATION MAY NOT BE VIEWED AS RENDERING ITS BID INITIALLY NONRESPONSIVE, SINCE PARAGRAPH 10 (C) GIVES THE BIDDER THE RIGHT TO SPECIFY THAT ITS BID PRICE IS BASED ON AN AWARD OF THE TOTAL QUANTITY ADVERTISED, OR ANY MINIMUM QUANTITY WHICH THE BIDDER MAY CHOOSE, SENTINEL'S STATEMENT CLEARLY INDICATES THAT ITS PRICE REMAINS FIRM ONLY IF THE GOVERNMENT AWARDS THE TOTAL QUANTITY ON WHICH BIDS WERE REQUESTED.

FORMAL ADVERTISING CONTEMPLATES THE RECEIPT OF FIRM OFFERS WHICH CAN BE ACCEPTED BY UNILATERAL ACTION BY THE GOVERNMENT. AN ACCEPTANCE BY THE GOVERNMENT OF SENTINEL'S BID PRICE FOR ANYTHING LESS THAN THE SPECIFIED QUANTITY OF 74 UNITS WOULD NOT, IN THE FACE OF THE STATED QUALIFICATION, CREATE A CONTRACT WHICH COULD LEGALLY BE ENFORCED AGAINST SENTINEL WITHOUT ITS CONSENT. THEREFORE, WHEN THE CONTRACTING AGENCY CONCLUDED THAT IT HAD ACTUAL NEED FOR ONLY 20 UNITS, SENTINEL'S BID, BEING QUALIFIED AS AFOREMENTIONED, NO LONGER CONSTITUTED A FIRM RESPONSIVE OFFER WHICH WOULD BIND IT UPON ACCEPTANCE FOR THE REDUCED NUMBER OF UNITS. SEE B-152941, MARCH 12, 1964; B-160173, OCTOBER 20, 1966.

THE LAST PARAGRAPH OF YOUR LETTER OF MARCH 13, ALLEGES THAT PARAGRAPH 10 (C) OF THE INVITATION FOR BIDS IS "POORLY WORDED, CONFUSING AND PRONE" TO MISINTERPRETATION BY BIDDERS, AND REQUESTS ADVICE AS TO THE PROPER MEANS OF LIMITING THE GOVERNMENT'S EXPRESELY RESERVED RIGHT TO MAKE AWARD OF A QUANTITY LESS THAN ADVERTISED. IN RESPONSE THERETO, YOU ATTENTION IS DIRECTED BELOW TO THE ADVICE OBTAINED FROM THE LEGAL SERVICES DIVISION OF THE PROCURING ACTIVITY:

"* * * THE CONTENTION THAT PARAGRAPH 10 (C), GSA SF 33A, IS POORLY WORDED, CONFUSING AND PRONE TO PRODUCE VARIED REACTIONS FROM BIDDERS IS NOT CONSIDERED AN ISSUE OF PROTEST NOR IS IT SUPPORTED BY THE RESPONSE OF THE SEVEN OTHER BIDDERS IN THE INSTANT CASE NOR IN THE OVERALL LANGUAGE OF THE PROTEST LETTER WHICH, TO THE CONTRARY, REFLECTS SENTINEL'S VERY DEFINITE UNDERSTANDING OF THE MEANING THEREOF.

"* * * AT THE TIME IFBS ARE ISSUED FOR REQUIREMENTS SUCH AS DESCRIBED IN SUBJECT IFB, IT IS THE DEFINITE INTENTION OF THE GOVERNMENT TO PROCURE THE TOTAL QUANTITY SET FORTH IN THE IFB. THERE BEING NO INTENT TO PURCHASE LESS AND NO KNOWN BASIS ON WHICH TO DETERMINE PRICE/QUANTITY BREAKING POINTS, BUT RECOGNIZING REQUIREMENTS ARE SUBJECT TO CHANGE, THE GOVERNMENT ACCORDINGLY SOLICITS BIDS ON A ONE QUANTITY BASIS IN CONJUNCTION WITH THE TERMS OF AFOREMENTIONED PARAGRAPH 10 (C). THE BIDDER, ON THE OTHER HAND, MAY RESPOND WITH A BID OF A UNIT PRICE APPLICABLE TO THE TOTAL STATED QUANTITY OR ANY PORTION THEREOF OR HE MAY SUBMIT ANY NUMBER OF UNIT PRICES APPLICABLE TO A STATED QUANTITY OR QUANTITIES. THE EXTENT TO WHICH THE BIDDER WOULD PRICE QUALIFY VARIOUS QUANTITIES WOULD DEPEND ON SEVERAL FACTORS SUCH AS PRODUCTION AND HANDLING COSTS.'

ACCORDINGLY, WE CONCLUDE THAT THE REJECTION OF THE BID OF SENTINEL AS QUALIFIED WAS PROPER AND THAT NO VALID BASIS EXISTS FOR CANCELLING THE AWARD SO AS TO REQUIRE A READVERTISEMENT OF THE PROCUREMENT.