B-165391, NOVEMBER 5, 1968, 48 COMP. GEN. 285

B-165391: Nov 5, 1968

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PROVIDING FOR DELIVERY EARLY IN 1969 WAS IN DEROGATION OF THE TERMS AND CONDITIONS OF THE PRIOR CONTRACT THAT COULD HAVE RESULTED IN LEGAL LIABILITIES HAD THE SECOND CONTRACT NOT BEEN AWARDED TO THE CONTRACTOR PERFORMING UNDER THE FIRST CONTRACT. ALTHOUGH NO USEFUL PURPOSE WOULD BE SERVED BY CANCELLATION OF THE SECOND CONTRACT AS THE SUCCESSFUL BIDDER IS OBLIGATED TO SUPPLY THE REQUIREMENTS FOR UNIFORMS TO BE DELIVERED EARLY IN 1969 UNDER THE FIRST CONTRACT. 1968: REFERENCE IS MADE TO LETTERS DATED OCTOBER 11 AND 16. PROSPECTIVE BIDDERS WERE ADVISED BY THE TERMS OF THE INVITATION THAT TIME OF DELIVERY WOULD BE OF THE ESSENCE IN PERFORMANCE OF THE RESULTING CONTRACT. DELIVERY OF THE STOCK-SIZE UNIFORM SETS WAS SCHEDULED TO COMMENCE 45 DAYS AFTER DATE OF THE PURCHASE ORDER AT THE RATE OF 100 SETS PER MONTH UNTIL COMPLETED.

B-165391, NOVEMBER 5, 1968, 48 COMP. GEN. 285

CONTRACTS - REQUIREMENTS - OVERLAPPING AWARDS THE AWARD OF A REQUIREMENTS-TYPE CONTRACT FOR DELIVERY OF UNIFORMS DURING THE CALENDAR YEAR 1969 FOR PART OF THE REQUIREMENTS THAT AROSE DURING THE PERIOD OF AN EXISTING CONTRACT EXPIRING DECEMBER 31, 1968, AND PROVIDING FOR DELIVERY EARLY IN 1969 WAS IN DEROGATION OF THE TERMS AND CONDITIONS OF THE PRIOR CONTRACT THAT COULD HAVE RESULTED IN LEGAL LIABILITIES HAD THE SECOND CONTRACT NOT BEEN AWARDED TO THE CONTRACTOR PERFORMING UNDER THE FIRST CONTRACT--- THE LOW BIDDER HAVING QUALIFIED HIS BID. ALTHOUGH NO USEFUL PURPOSE WOULD BE SERVED BY CANCELLATION OF THE SECOND CONTRACT AS THE SUCCESSFUL BIDDER IS OBLIGATED TO SUPPLY THE REQUIREMENTS FOR UNIFORMS TO BE DELIVERED EARLY IN 1969 UNDER THE FIRST CONTRACT, ACTION SHOULD BE TAKEN TO PRECLUDE A REOCCURRENCE OF THE CIRCUMSTANCES SURROUNDING THE AWARD OF THE SECOND CONTRACT.

TO THE COMMISSIONER, DISTRICT OF COLUMBIA, NOVEMBER 5, 1968:

REFERENCE IS MADE TO LETTERS DATED OCTOBER 11 AND 16, 1968, FROM THE ACTING PROCUREMENT OFFICER, D.C., REPORTING ON THE PROTEST OF BRANKO STUPAR, ESQUIRE, AGAINST THE REJECTION OF THE BID OF DONALD S. LAVIGNE, INC., AND THE SUBSEQUENT AWARD OF A CONTRACT TO HOWARD UNIFORM COMPANY UNDER INVITATION FOR BIDS 84-087-9-0175-EM.

THE INVITATION, ISSUED SEPTEMBER 11, 1968, SOLICITED BIDS FOR UNIFORMS FOR THE METROPOLITAN POLICE AND FIRE DEPARTMENTS IN ACCORDANCE WITH DISTRICT SPECIFICATIONS NOS. 84-1-P-AND-F AS AMENDED, 84-3 PD, AND 84-4- PD. THOSE SPECIFICATIONS PROVIDE, IN PART, THAT CERTAIN OF THE ARTICLES OF CLOTHING IN EACH UNIFORM SET BE OF 50-50 PERCENT WOOL AND DACRON CLOTH AND THAT THE CLOTH BE DYED A SPECIAL COLOR, I.E., INDIGO-BLUE BLACK.

PROSPECTIVE BIDDERS WERE ADVISED BY THE TERMS OF THE INVITATION THAT TIME OF DELIVERY WOULD BE OF THE ESSENCE IN PERFORMANCE OF THE RESULTING CONTRACT, AND THAT A SINGLE PURCHASE ORDER FOR 350 STOCK SIZE UNIFORM SETS WOULD BE ISSUED BY THE POLICE DEPARTMENT SOON AFTER JANUARY 1, 1969. DELIVERY OF THE STOCK-SIZE UNIFORM SETS WAS SCHEDULED TO COMMENCE 45 DAYS AFTER DATE OF THE PURCHASE ORDER AT THE RATE OF 100 SETS PER MONTH UNTIL COMPLETED. IN ADDITION, THE INVITATION PROVIDED THAT IN CONSIDERATION FOR THE GUARANTEE OF THE DISTRICT TO PURCHASE ALL OF ITS UNIFORM REQUIREMENTS FROM THE CONTRACTOR, THE CONTRACTOR WAS REQUIRED TO ENTER HIS ORDER WITH THE MILL SUPPLIER FOR THE NECESSARY PIECE GOODS WITHIN 10 WORKING DAYS AFTER RECEIPT OF AWARD OF THE CONTRACT. IT IS REPORTED THAT THIS REQUIREMENT WAS INSERTED IN THE INVITATION "TO ASSURE AVAILABILITY OF MATERIAL AND PREVENT DELAY IN DELIVERY OF THE FINISHED UNIFORMS.'

THE REPORT STATES THAT IT WAS THE INTENTION OF THE COGNIZANT CONTRACTING OFFICIALS TO COMPLETE THE ANTICIPATED AWARD ACTION BY OCTOBER 1, 1968, TO ALLOW THE CONTRACTOR SUFFICIENT LEAD TIME TO PROCURE THE PIECE GOODS FROM THE MILL SO THAT THE MATERIAL WOULD BE IN HIS POSSESSION AT THE TIME THE CONTRACT WENT INTO EFFECT ON JANUARY 1, 1969. WE NOTE IN THIS RESPECT THAT THE INVITATION PROVIDED ON PAGE 1 THAT THE TERM OF THE CONTRACT WOULD BE FROM JANUARY 1, 1969, THROUGH DECEMBER 31, 1969. WE ARE ADVISED THAT WHILE IT IS TRUE THAT 120 DAYS IS USUALLY REQUIRED FOR DELIVERY OF THE PIECE GOODS TO THE CONTRACTOR, THE PROCUREMENT OFFICE INTENDED TO INSIST UPON A HIGH LEVEL OF PERFORMANCE FROM BOTH PARTIES (CONTRACTOR AND MILL) SO THAT UNDER THE VERY BEST OF CONDITIONS THE PIECE GOODS WOULD BE AVAILABLE FOR PRODUCTION OPERATIONS WITHIN 90 DAYS AFTER AWARD OF CONTRACT.

BIDS WERE OPENED ON SEPTEMBER 24, 1968, AND IT APPEARS THAT THE LOW AND SECOND LOW AGGREGATE BIDS WERE RECEIVED FROM, RESPECTIVELY, LAVIGNE AND HOWARD. HOWEVER, BY LETTER DATED SEPTEMBER 20, 1968, ATTACHED TO ITS BID, LAVIGNE ADVISED THE PROCUREMENT OFFICER THAT: THE PARAGRAPH ENTITLED ,ORDERING PERIOD FOR--- STOCK SIZES" INDICATES THAT AN ORDER COVERING UNIFORM REQUIREMENTS AND STOCK SIZES WILL BE PLACED SOON AFTER JANUARY 1, 1969, WHILE THE PARAGRAPH ENTITLED "TIME OF DELIVERY ESSENTIAL" INDICATES THAT STOCK SIZE ITEMS MUST BE DELIVERED 45 CALENDAR DAYS FROM DATE OF PURCHASE ORDER. IT SHOULD BE NOTED THAT OUR "PROMISE TO MEET THIS DELIVERY REQUIREMENT MUST BE MADE CONTINGENT ON THE AVAILABILITY OF THE SPECIFIED PIECE GOODS AT THE MILL AT THE TIME THE JANUARY 1969 ORDER IS PLACED.' THE REASON FOR THIS QUALIFICATION IS DUE TO THE FACT THAT STILLWATER MILLS INDICATES THAT THEY WILL REQUIRE FOUR MONTHS AFTER RECEIPT OF ORDER FOR DELIVERY OF THE NECESSARY PIECE GOODS AND WHILE THERE "IS A POSSIBILITY" THAT WE CAN BETTER THIS DELIVERY WE CANNOT COMMIT FOR LESS THAN FOUR MONTHS. SINCE THERE IS ONLY ONE MILL ABLE TO DELIVER THIS FABRIC THERE IS NO ALTERNATE SOURCE OF SUPPLY WITH BETTER DELIVERY. WHILE WE WILL HAVE NO TROUBLE WHATSOEVER IN MEETING THE CONTRACTUAL DELIVERY REQUIREMENT OF COURSE THIS CANNOT BE DONE UNLESS THE SOLE SOURCE MILL HAS THE GOODS AVAILABLE FOR IMMEDIATE SHIPMENT AT THE TIME YOUR INITIAL ORDER IS PLACED.

IN VIEW OF THE ABOVE-QUOTED STATEMENTS, THE CONTRACTING OFFICER DETERMINED THAT LAVIGNE'S BID CONTAINED A MATERIAL QUALIFICATION TO THE SPECIFIED DELIVERY SCHEDULE AND WAS THEREFORE NONRESPONSIVE. IN THIS RESPECT, ARTICLE 12 OF THE INSTRUCTIONS TO BIDDERS PROVIDED THAT "THE CONTRACT WILL BE AWARDED TO THE LOWEST RESPONSIBLE BIDDER COMPLYING WITH ALL THE PROVISIONS OF THE INVITATION * * *.' THE CONTRACT WAS AWARDED TO HOWARD ON OCTOBER 4, 1968, AS THE LOWEST RESPONSIBLE BIDDER.

BY LETTER DATED OCTOBER 8, 1968, THE ATTORNEY FOR LAVIGNE PROTESTED THE REJECTION OF ITS BID ON THE GROUND THAT SINCE ALL OF THE RESPONDING BIDDERS WERE LIMITED BY THE SPECIFICATIONS TO PROCURE THE NECESSARY 50-50 PERCENT WOOL AND DACRON PIECE GOODS FROM THE SAME SOURCE WHICH HAD REFUSED TO PROMISE DELIVERY WITHIN 4 MONTHS, THE QUALIFICATION IN LAVIGNE'S BID DID NOT RENDER IT NONRESPONSIVE. IT IS CONTENDED THAT THE QUALIFICATION WAS SIMPLY AN HONEST STATEMENT OF THE FACTS AS THEY EXISTED. THE ATTORNEY CONCLUDES, THEREFORE, THAT THE CONTRACT SHOULD HAVE BEEN AWARDED TO LAVIGNE BECAUSE THAT BIDDER OFFERED THE LOWEST PRICE AND, IN EFFECT, A DELIVERY TIME NO DIFFERENT THAN THAT OFFERED BY ANY OTHER BIDDER. THE ATTORNEY BASED HIS CONCLUSION ON THE FACT THAT TIMELY DELIVERY OF THE FINISHED UNIFORMS FROM ALL OF THE RESPONDING BIDDERS WOULD HAVE BEEN SUBJECT TO THE AVAILABILITY OF THE PIECE GOODS FROM A SOLE SOURCE SUPPLIER WHO HAD OFFERED THE IDENTICAL TERMS TO EACH BIDDER.

HOWEVER, WE DO NOT FEEL THAT THE DISPOSITION OF THE PROTEST NECESSITATES CONSIDERATION OF THE RESPONSIVENESS OF THE LAVIGNE BID.

ON MAY 23, 1968, HOWARD WAS AWARDED A REQUIREMENTS-TYPE CONTRACT UNDER INVITATION FOR BIDS 84-087-8-0392-EM. ITEMS 1 THROUGH 14A OF THAT CONTRACT CALLED FOR THE SUPPLY OF THE IDENTICAL ITEMS AWARDED UNDER THE LATER OCTOBER 4 CONTRACT FROM THE DATE OF AWARD UNTIL DECEMBER 31, 1968. CERTAIN PROVISIONS OF THE EARLIER MAY 23 CONTRACT WHICH ARE PERTINENT HERE ARE AS FOLLOWS: QUANTITIES, GUARANTEED MINIMUM: FOR ITEMS 1 THRU 14-A ONLY. THE DISTRICT AGREES THAT IT WILL PURCHASE ALL ITS REQUIREMENTS FOR THE ABOVE ITEMS FROM THE CONTRACTOR. QUANTITIES SHOWN FOLLOWING EACH ITEM ARE THE BEST ESTIMATES AVAILABLE AND THE DISTRICT WILL COMMIT ITSELF TO PURCHASE AT LEAST 75 PERCENT OF THE ESTIMATED QUANTITIES SHOWN.

* * * * * * * THE USING AGENCIES (METROPOLITAN POLICE AND FIRE DEPARTMENTS) WILL SUBMIT PURCHASE ORDERS UNDER THIS CONTRACT AS FOLLOWS: A. THE BULK OF THE REQUIREMENT FOR WINTER UNIFORMS WILL BE ORDERED ON OR BEFORE JUNE 1, 1968 FOR DELIVERY NO LATER THAN 120 CALENDAR DAYS AFTER DATE OF ORDER. B. THE BULK OF THE REQUIREMENTS FOR SUMMER UNIFORMS WILL BE ORDERED ON OR BEFORE DECEMBER 1, 1968 FOR DELIVERY NO LATER THAN 120 CALENDAR DAYS AFTER DATE OF ORDER. QUANTITIES: THE DISTRICT AGREES THAT IT WILL PURCHASE ALL ITS REQUIREMENTS OF THE ARTICLES OR SERVICES INCLUDED HEREIN FROM THE CONTRACTOR. CONTRACTOR AGREES TO SUPPLY ALL SUCH ARTICLES OR SERVICES ORDERED BY THE DISTRICT DURING THE EXISTENCE OF THIS CONTRACT. THE DISTRICT DOES NOT COMMIT ITSELF TO PURCHASE ANY DEFINITE QUANTITIES UNDER THIS CONTRACT. QUANTITIES SHOWN FOLLOWING EACH ITEM ARE ESTIMATES ONLY.

WE ARE OF THE OPINION THAT THE LEGAL IMPORT OF THE CLAUSES QUOTED ABOVE, IN THE CONTRACT OF MAY 23, CLEARLY OBLIGATED THE DISTRICT TO PURCHASE ALL OF THE UNIFORMS THAT IT REQUIRED DURING THE TERM OF THAT CONTRACT, I.E., UNTIL DECEMBER 31, 1968, FROM HOWARD, EVEN THOUGH DELIVERIES MAY BE ACCOMPLISHED AFTER DECEMBER 31, 1968. IN THIS RESPECT, THE CONTRACT PROVIDED THAT THE BULK OF ORDERS FOR SUMMER UNIFORMS WOULD BE ISSUED AS LATE AS DECEMBER 1, 1968, WITH DELIVERY 120 DAYS THEREAFTER.

THE RECORD INDICATES THAT THE PROCURING OFFICIALS WERE AWARE OF THE DISTRICT'S CONTINUING OBLIGATION UNDER THE MAY 23 CONTRACT. HOWEVER, THEY CHOSE TO IGNORE THAT OBLIGATION BY CHARACTERIZING THE OCTOBER 4 CONTRACT AS ONE FOR THE PURCHASE OF UNIFORM REQUIREMENTS DURING THE CALENDAR YEAR 1969. THIS CHOICE WAS EFFECTED BY THE ISSUANCE OF THE SEPTEMBER 11, 1968, INVITATION AND BY THE AWARD MADE THEREUNDER. IN OUR OPINION, THE SEPTEMBER INVITATION AND AWARD THEREUNDER CONSTITUTED A TECHNICAL BREACH OF THE EARLIER MAY 23 REQUIREMENTS CONTRACT.

THE MAY 23 CONTRACT, AS STATED ABOVE, CLEARLY REQUIRED THE PURCHASE BY THE DISTRICT FROM HOWARD OF ALL OF ITS UNIFORM REQUIREMENTS WHICH MAY ARISE DURING THE PERIOD MAY 23 TO DECEMBER 31, 1968. THE REQUIREMENTS, COVERED BY THE OCTOBER 4 CONTRACT OSTENSIBLY FOR CALENDAR YEAR 1969, AROSE IN FACT DURING THE EFFECTIVE PERIOD OF THE MAY 23 CONTRACT. HENCE, THE AWARD OF THE OCTOBER 4 CONTRACT WAS CLEARLY IN DEROGATION OF THE TERMS AND CONDITIONS OF THE PRIOR CONTRACT.

HOWEVER, BY FORTUITOUS CIRCUMSTANCES, HOWARD WAS AWARDED THE OCTOBER 4 CONTRACT, AND IT CANNOT NOW REASONABLY BE SAID THAT HOWARD COULD OBJECT TO THE TECHNICAL BREACH OF ITS PRIOR CONTRACT SINCE IT SUFFERED NO INJURY BY VIRTUE OF THE BREACH. CONVERSELY, HAD THE OCTOBER 4 CONTRACT BEEN AWARDED TO ANY OTHER BIDDER, WE ARE OF THE OPINION THAT THE MAY 23 CONTRACT WOULD HAVE BEEN BREACHED WITH ATTENDANT LEGAL LIABILITIES. IN THIS REGARD, YOUR ATTENTION IS INVITED TO THE DECISION OF THE COURT OF CLAIMS IN FIRST SUBURBAN WATER UTILITY DISTRICT V UNITED STATES, 129 CT. CL. 8, WHEREIN THE COURT DISCUSSED THE MEANING OF THE WORD "REQUIREMENT" AS USED IN CONTRACTS OF THIS NATURE. QUOTING FROM THE HEADNOTE, THE COURT HELD THERE, AS FOLLOWS:

WHERE THE PLAINTIFF, IN 1942, ENTERED INTO A CONTRACT WITH THE GOVERNMENT TO SUPPLY WATER TO A GOVERNMENT INSTALLATION NEAR NASHVILLE, TENN., IT IS HELD THAT PLAINTIFF IS ENTITLED TO RECOVER IN ITS SUIT FOR PROFITS LOST BY REASON OF THE FACT THAT DURING THE PERIOD THAT THE CONTRACT WAS IN EFFECT, THE GOVERNMENT DID NOT TAKE FROM HE PLAINTIFF ALL OF THE WATER WHICH WAS USED, AS THE PLAINTIFF CLAIMS THE GOVERNMENT WAS OBLIGATED TO DO, BUT TOOK MOST OF ITS WATER FOR THE PROJECT FROM ANOTHER SUPPLIER.

THE RECORD SHOWS THAT HOWARD HAS, IN GOOD FAITH, IN RESPONSE TO URGINGS BY THE CONTRACTING OFFICIALS, UNDERTAKEN SUBSTANTIAL OBLIGATIONS TO INSURE THE TIMELY PERFORMANCE OF THE OCTOBER 4 CONTRACT UNDER AN ADMITTEDLY TIGHT DELIVERY SCHEDULE. SINCE HOWARD WAS ALREADY OBLIGATED TO SUPPLY THE REQUIREMENTS FOR UNIFORMS TO BE DELIVERED IN EARLY 1969, UNDER THE MAY 23 CONTRACT, NO USEFUL PURPOSE WOULD BE SERVED BY CANCELING THE OCTOBER 4 CONTRACT. HOWEVER, WE RECOMMEND THAT A THOROUGH REVIEW OF THE ACTIONS OF THE PROCUREMENT OFFICE IN THIS INSTANCE BE UNDERTAKEN WITH A VIEW TO PROCLUDING A RECURRENCE OF THE CIRCUMSTANCES GIVING RISE TO LAVIGNE'S PROTEST.