B-164826, AUG. 29, 1968

B-164826, AUG. 29, 1968

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER OF JULY 19, 1968, WITH ATTACHMENT, FROM THE DIRECTOR OF CONTRACTS, NAVAL ELECTRONIC SYSTEMS COMMAND, REQUESTING A DECISION WHETHER AN AWARD UNDER INVITATION FOR BIDS NO. N00039-68-B-2050 INCORRECTLY MADE TO MULTRONICS, INCORPORATED, ON JUNE 28, 1968, SHOULD BE CANCELED AND PLACED WITH THE PROTESTOR, GULF AEROSPACE CORPORATION.

THREE BIDS WERE RECEIVED UNDER THE INVITATION, ISSUED ON MAY 31, 1968, FOR 300 DT-302/PDR56 RADIAC DETECTOR AUXILIARY X-RAY PROBES, AND WERE OPENED ON JUNE 26, 1968.

THE INVITATION CALLED FOR BIDS ON AN F.O.B. ORIGIN BASIS AND PROVIDED FOR EVALUATION BY ADDING TO THE ORIGIN PRICE ALL TRANSPORTATION COSTS TO THE DESIGNATED DESTINATIONS, CONSIDERED FOR THE PURPOSE OF EVALUATING OFFERS TO BE 50 PERCENT TO NORFOLK, VIRGINIA, AND 50 PERCENT TO OAKLAND, CALIFORNIA. THREE BIDDERS SUBMITTED PRICES AS FOLLOWS:

BIDDER TOTAL GULF AEROSPACE CORPORATION

$131,250.00 MULTRONICS $132,333.26 NUCLEAR RESEARCH CORPORATION $208,353.00

THE PROCURING ACTIVITY COMPUTED THE FREIGHT COSTS AS $30,870 FOR GULF AEROSPACE AND $26,070 FOR MULTRONICS. BASED UPON THESE AMOUNTS, THE CONTRACTING OFFICER EVALUATED THE TOTAL BID PRICE OF MULTRONICS AT $158,403.26 AND THE TOTAL BID PRICE OF GULF AEROSPACE AT $162,120. AWARD WAS MADE TO MULTRONICS AS LOW BIDDER.

GULF AEROSPACE, BY TELEGRAM DATED JULY 11, 1968, PROTESTED THE AWARD CONTENDING THAT THE FREIGHT RATE DIFFERENTIAL BETWEEN MULTRONICS AND GULF AEROSPACE ON LIKE EQUIPMENT WAS NOT ENOUGH TO SUPPLANT GULF AEROSPACE AS THE LOW BIDDER. AN EXAMINATION REVEALED THAT THE TRANSPORTATION EVALUATOR MADE AN ERROR IN HIS CALCULATION BY MISPLACING THE DECIMAL POINTS AND THAT THE PROPER SHIPPING COSTS WERE $308.70 FOR GULF AEROSPACE AND $246.00 FOR MULTRONICS. THE REEVALUATED BIDS INCLUDING SHIPPING COSTS AND DISCOUNT WERE: GULF AEROSPACE CORPORATION

$131,558.70 MULTRONICS $132,579.26 IT IS APPARENT, THEREFORE, THAT THE BID SUBMITTED BY GULF AEROSPACE, EVALUATED CORRECTLY ON AN F.O.B. DESTINATION BASIS WAS LOW AND THAT THE ACTUAL AWARD WAS NOT MADE UPON THE BASIS OF THE LOWEST ACCEPTABLE BID.

IN REQUESTING OUR ADVICE AS TO WHETHER THE CONTRACT SHOULD BE CANCELED, THE ADMINISTRATIVE REPORT NOTES THAT THERE WAS NO FAULT ON THE PART OF MULTRONICS, THE AWARD WAS MADE IN GOOD FAITH, THE DIFFERENCE IN BIDS IS COMPARATIVELY SMALL AND MULTRONICS HAS EXPERIENCED SOME COSTS UNDER THE AWARD.

BY TELEGRAM DATED JULY 18, 1968, AND BY SUPPLEMENTING LETTER OF COUNSEL, DATED AUGUST 2, 1968, MULTRONICS HAS PROTESTED ANY PROPOSED CANCELLATION OF THE CONTRACT, CONTENDING THAT SUCH ACTION WOULD NOT BE IN THE BEST INTERESTS OF THE GOVERNMENT. THE CORRESPONDENCE INDICATES THAT MULTRONICS BEGAN WORK UPON RECEIPT OF NOTICE OF AWARD ON JUNE 28, 1968, AND CONTINUED UNTIL JULY 17, 1968, WHEN IT WAS ADVISED THAT "THE CONTRACT HAD BEEN CANCELLED". IT IS NOTED THAT THE FIRM INCURRED COSTS OF $3,200 FOR DRAFTING, DESIGN, TOOLING AND PRODUCTION PLANNING EXPENSE AND FOR TOOLING MATERIAL. THIS IS APPROXIMATELY THREE TIMES THE DIFFERENCE OF $1,020.56 BETWEEN THE BIDS AS CORRECTLY EVALUATED. IT IS URGED THAT IN VIEW OF THE ABOVE AND THE GOOD FAITH OF THE PARTIES THE RECENT PRECEDENTS OF OUR OFFICE SUPPORT PERMITTING THE AWARD TO STAND.

OUR ATTENTION HAS BEEN INVITED TO DECISIONS OF THIS OFFICE WHERE AN AWARD MADE IN GOOD FAITH ON A BID ERRONEOUSLY CONCLUDED TO BE LOW BECAUSE OF AN ERROR ON THE PART OF THE GOVERNMENT IN COMPUTING FREIGHT RATES WAS ALLOWED TO STAND. IN ONE OF THESE DECISIONS, B-155133, DECEMBER 4, 1964, WE FOUND THAT ALTHOUGH THE SUCCESSFUL BID WAS NOT LOW AT TIME OF EVALUATION, BECAUSE OF INTERVENING CHANGES THE AWARD IN FACT RESULTED IN THE LOWEST COST TO THE GOVERNMENT. WE HELD IN THOSE CIRCUMSTANCES THAT CANCELLATION OF THE AWARD WAS NOT IN THE BEST INTERESTS OF THE GOVERNMENT. MULTRONICS ALSO CITES B-143983, SEPTEMBER 28, 1960. HOWEVER, OUR OFFICE IN A RECONSIDERATION OF THAT CASE DATED NOVEMBER 23, 1960, BASED UPON ADDITIONAL FACTUAL INFORMATION, CONCLUDED THAT THE AWARD SHOULD NOT BE ALLOWED TO STAND FOR THE REASON THAT IT WAS NOT IN FACT MADE TO THE LOWEST RESPONSIBLE BIDDER AS REQUIRED BY 10 U.S.C. 2305 (C) AND WAS, THEREFORE, ILLEGAL. THIS IS THE GENERAL RULE. SEE B-162535, OCTOBER 13, 1967; B- 149466, JULY 27, 1962.

MULTRONICS HAS ALSO CITED 39 COMP. GEN. 503 IN SUPPORT OF ITS POSITION. THERE A BID WAS FOUND TO BE LOW BASED ON A DETERMINATION THAT A GIVEN TAX APPLIED. AFTER AWARD IT WAS FOUND THAT THE TAX WAS NOT APPLICABLE AND ON THAT BASIS ANOTHER BID WAS LOW. WE HELD IN THE CIRCUMSTANCES THAT THE AWARD SHOULD NOT BE DISTURBED. IN THAT CASE AWARD WAS MADE TO OTHER THAN THE LOW BIDDER BASED ON A LEGAL CONCLUSION AS TO THE APPLICABILITY OF A GIVEN TAX WHICH WAS LATER FOUND TO HAVE BEEN ERRONEOUS BY THE INTERNAL REVENUE SERVICE. IN THE PRESENT CASE THE IMPROPER AWARD RESULTED FROM A MERE ERROR IN MATHEMATICAL COMPUTATION. WE THINK THE TWO CASES ARE DISTINGUISHABLE ON THAT BASIS. SEE 37 COMP. GEN. 330, 331.

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 TES,"PRICE AND OTHER FACTORS CONSIDERED". WE HAVE HELD THAT THE QUOTED PHRASE REQUIRES THAT, WITH CERTAIN EXCEPTIONS NOT APPLICABLE HERE, AWARD, IF ANY, BE MADE TO THE LOW BIDDER. 28 COMP. GEN. 662, 664. IN DECIDING WHETHER A CONTRACT AWARDED ERRONEOUSLY BUT IN GOOD FAITH TO OTHER THAN THE LOW RESPONSIVE AND RESPONSIBLE BIDDER SHOULD BE CANCELED, WE HAVE CONSIDERED ALL OF THE RELEVANT AND MATERIAL FACTORS SURROUNDING THE AWARD AND BASED OUR DECISION ON THE BEST INTERESTS OF THE UNITED STATES. IT IS NOT ENOUGH THAT THE AWARD BE MADE IN GOOD FAITH. SEE B 161722, JANUARY 11, 1968.

IN THIS CASE IT IS CLEAR THAT THE AWARD TO MULTRONICS RESULTED FROM A MISTAKE OF FACTS AND WAS CONTRARY TO THE CITED STATUTORY PROVISION GOVERNING COMPETITIVE BIDDING. WHILE WE ANTICIPATE THAT MULTRONICS MAY HAVE INCURRED SOME OBLIGATION AS A RESULT OF THE ERRONEOUS AWARD, WE NOTE THAT THE CONTRACT REQUIRES DELIVERY OF THE FIVE ITEMS FOR "FIRST ARTICLE" APPROVAL 240 DAYS FROM THE EFFECTIVE DATE OF CONTRACT OR APPROXIMATELY FEBRUARY 23, 1969. THE REGULAR PRODUCTION SCHEDULE ESTABLISHED IN THE CONTRACT CALLS FOR DELIVERY OF FIVE UNITS IN NOVEMBER 1969, TEN UNITS IN DECEMBER 1969, AND TWENTY EACH MONTH FOLLOWING UNTIL ALL 300 UNITS HAVE BEEN DELIVERED. ALSO A REPORT FROM A NAVY CONTRACT SPECIALIST DATED JULY 18, 1968, AFTER MULTRONICS HAD CEASED WORK, SHOWS THAT NO PRODUCTION WORK HAD BEEN UNDERTAKEN AND NO PURCHASE ORDERS PLACED. WHILE THE SITUATION, AS IT AFFECTS MULTRONICS, INCORPORATED, IS MOST UNFORTUNATE, WE THINK THAT THE PRIMARY CONSIDERATION IS UPHOLDING THE INTEGRITY OF THE COMPETITIVE BID SYSTEM. WE DO NOT FIND HERE A SUFFICIENT BASIS TO DEVIATE FROM THE GENERAL RULE ALREADY CITED. ACCORDINGLY, THE CONTRACT WITH MULTRONICS SHOULD BE CANCELED AND AWARD MADE TO GULF AEROSPACE CORPORATION, IF OTHERWISE PROPER.

COPIES OF THIS DECISION ARE BEING FURNISHED TO BOTH MULTRONICS AND GULF AEROSPACE.