B-166697, JUN. 27, 1969

B-166697: Jun 27, 1969

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INCLUDING THE COST OF PRODUCING THE FIRST ARTICLES WHICH WERE TO BE IN ADDITION TO THE 350 PRODUCTION UNITS OF EACH ITEM. THE REQUIRED DELIVERY SCHEDULE WILL COMMENCE IN 150 DAYS IN LIEU OF 270 DAYS AND AT THE SAME RATE AS SHOWN IN SECTION D. WAIVER OF REQUIREMENT FOR FIRST ARTICLE APPROVAL. "/B) WHERE SUPPLIES IDENTICAL OR SIMILAR TO THOSE CALLED FOR HAVE BEEN PREVIOUSLY FURNISHED BY THE OFFEROR OR QUOTER AND HAVE BEEN ACCEPTED BY THE GOVERNMENT. THE ALTERNATIVE OFFER OR QUOTATION WILL BE CONSIDERED IN THE EVALUATION FOR AWARD IF THE GOVERNMENT DETERMINES THAT THE OFFEROR OR QUOTER IS ELIGIBLE TO HAVE THE FIRST ARTICLE APPROVAL TESTS WAIVED. ALTERNATIVE OFFERS OR QUOTATIONS MAY PROPOSE AN ACCELERATED DELIVERY SCHEDULE FOR THE PRODUCTION QUANTITY OF THE SUPPLIES EXCLUDING FIRST ARTICLE APPROVAL AND SUCH DELIVERY SCHEDULE WILL BE CONSIDERED IF FIRST ARTICLE APPROVAL IS WAIVED BY THE GOVERNMENT AND EARLIER DELIVERY IS IN THE INTEREST OF THE GOVERNMENT.

B-166697, JUN. 27, 1969

TO MR. SECRETARY:

BY LETTER DATED MAY 26, 1969, WITH ENCLOSURES, YOUR ACTING COUNSEL, NAVAL AIR SYSTEMS COMMAND (NAVAIR), FURNISHED A DOCUMENTED REPORT ON THE PROTEST OF HAYES INTERNATIONAL CORPORATION (HAYES) UNDER INVITATION FOR BIDS (IFB) NO. N00019-69-B-0063.

THE INVITATION, ISSUED ON OCTOBER 28, 1968, BY NAVAIR, WASHINGTON, D.C., REQUESTED BIDS FOR 350 UNITS OF TDU-22A/B AND 350 UNITS OF TDU 22/B TARGETS WITH OPTIONS OF 175 UNITS FOR EACH. THE BID SCHEDULE CALLED FOR SEPARATE PRICES TO BE STATED FOR COSTS ATTRIBUTABLE TO FIRST ARTICLE APPROVAL, INCLUDING THE COST OF PRODUCING THE FIRST ARTICLES WHICH WERE TO BE IN ADDITION TO THE 350 PRODUCTION UNITS OF EACH ITEM. ARTICLE F-13 OF THE SCHEDULE SET OUT THE REQUIREMENTS FOR FIRST ARTICLE APPROVAL, AND INCLUDED AS PARAGRAPH (J) THE FOLLOWING:

"IN THE EVENT THAT THE GOVERNMENT DESIRES TO WAIVE THE REQUIREMENT FOR FIRST ARTICLE TESTING, THE REQUIRED DELIVERY SCHEDULE WILL COMMENCE IN 150 DAYS IN LIEU OF 270 DAYS AND AT THE SAME RATE AS SHOWN IN SECTION D, - DELIVERIES-, INCLUDING OPTION REQUIREMENTS.'

ARTICLE 47 OF THE ADDITIONAL SOLICITATION INSTRUCTIONS AND CONDITIONS OF THE INVITATION STATED IN PART:

"47. WAIVER OF REQUIREMENT FOR FIRST ARTICLE APPROVAL.

"/B) WHERE SUPPLIES IDENTICAL OR SIMILAR TO THOSE CALLED FOR HAVE BEEN PREVIOUSLY FURNISHED BY THE OFFEROR OR QUOTER AND HAVE BEEN ACCEPTED BY THE GOVERNMENT, THE OFFEROR OR QUOTER MAY SUBMIT AN ALTERNATIVE OFFER OR QUOTATION EXCLUDING FIRST ARTICLE APPROVAL. THE ALTERNATIVE OFFER OR QUOTATION SHALL BE SET FORTH ON A SEPARATE SHEET AND ATTACHED TO THE OFFER OR QUOTATION. A UNIT PRICE SHALL BE SHOWN FOR EACH ITEM OFFERED OR QUOTED ON EXCLUDING FIRST ARTICLE APPROVAL AND THE UNIT PRICE SHOWN MUST BE IDENTIFIED TO SHOW THE ITEM IN THE OFFER OR QUOTATION TO WHICH IT PERTAINS. A TOTAL AMOUNT SHALL BE ENTERED FOR EACH ITEM OFFERED OR QUOTED ON EXCLUDING FIRST ARTICLE APPROVAL. THE ALTERNATIVE OFFER OR QUOTATION WILL BE CONSIDERED IN THE EVALUATION FOR AWARD IF THE GOVERNMENT DETERMINES THAT THE OFFEROR OR QUOTER IS ELIGIBLE TO HAVE THE FIRST ARTICLE APPROVAL TESTS WAIVED. THE GOVERNMENT RESERVES THE RIGHT TO MAKE AN AWARD AT THE UNIT PRICES OFFERED OR QUOTED EXCLUDING FIRST ARTICLE APPROVAL.

"UNLESS OTHERWISE SPECIFIED IN THIS SOLICITATION, ALTERNATIVE OFFERS OR QUOTATIONS MAY PROPOSE AN ACCELERATED DELIVERY SCHEDULE FOR THE PRODUCTION QUANTITY OF THE SUPPLIES EXCLUDING FIRST ARTICLE APPROVAL AND SUCH DELIVERY SCHEDULE WILL BE CONSIDERED IF FIRST ARTICLE APPROVAL IS WAIVED BY THE GOVERNMENT AND EARLIER DELIVERY IS IN THE INTEREST OF THE GOVERNMENT. ANY DIFFERENCE IN DELIVERY SCHEDULES RESULTING FROM A WAIVER OF FIRST ARTICLE APPROVAL SHALL NOT BE A FACTOR IN THE EVALUATION FOR AWARD.' (UNDERLINING FURNISHED.)

THREE BIDS SUBMITTED BY TWO CONTRACTORS WERE RECEIVED AND OPENED ON FEBRUARY 4, 1969. THE BIDS WERE ABSTRACTED AS FOLLOWS:

OXFORD CORPORATION $243,950.00

HAYES INTERNATIONAL CORPORATION

(1) BASIC BID $299,984.11

(2) ALTERNATIVE QUOTATION 263,584.58

(ATTACHMENT C) THE OXFORD CORPORATION BID WAS DEEMED NONRESPONSIVE BECAUSE PRICES WERE NOT ENTERED ON ITEMS 3, 4, 5 AND 6 AS REQUIRED BY THE INVITATION.

THE NAVAIR REPORT STATED THAT HAYES INTERNATIONAL CORPORATION (HAYES) BID WAS LIKEWISE NONRESPONSIVE FOR THE FOLLOWING REASONS: "HAYES SUBMITTED AN -ATTACHMENT C- AS ITS -ALTERNATE QUOTATION EXCLUDING FIRST ARTICLE APPROVAL-. APPARENTLY, THIS -ALTERNATE- BID WAS TO BE CONSIDERED IF NAVAIR CHOSE TO WAIVE FIRST ARTICLE APPROVAL, AND THE -BASIC- BID WAS TO BE CONSIDERED IF FIRST ARTICLE APPROVAL WAS REQUIRED. THE ALTERNATE BID WAS DEEMED NON-RESPONSIVE IN THAT IT DID NOT SUBMIT A PRICE FOR THE OPTION ITEMS 10 AND 11 AND DID NOT INCLUDE ITEMS 7, 8, 9 AND 12. ***. "IF HAYES HAD NOT QUALIFIED ITS BID WITH ATTACHMENT C-, AN AWARD COULD HAVE BEEN MADE ON THE BASIC BID ELIMINATING THE FIRST ARTICLE APPROVAL. LIKEWISE, IF THE GOVERNMENT HAD DESIRED FIRST ARTICLE APPROVAL AN AWARD COULD HAVE BEEN MADE TO HAYES. IT SHOULD BE EMPHASIZED THAT HAYES DID NOT SUBMIT TWO INDEPENDENT BIDS BUT RATHER RELATED ALTERNATE BIDS WHICH WOULD CONSTITUTE THE HAYES OFFER DEPENDING ON THE GOVERNMENT'S DECISION AS TO WHETHER OR NOT TO BUY FIRST ARTICLE APPROVAL. "AFTER THE RECEIPT OF THE BIDS, IT WAS THE INTENTION OF NAVAIR TO WAIVE FIRST ARTICLE APPROVAL IN REGARD TO HAYES AND, THEREFORE, THERE WAS NO RESPONSIVE BID UPON WHICH TO MAKE AN AWARD.'

ON MARCH 21, 1969, NAVAIR CANCELLED THE SUBJECT IFB ON THE BASIS THAT "NONE OF THE BIDS RECEIVED WERE RESPONSIVE.' BY LETTER OF APRIL 28, 1969, NAVAIR NOTIFIED HAYES OF THE URGENT REQUIREMENT FOR TDU 22A/B AND TDU-22/B TARGETS, WHICH WOULD BE PROCURED THROUGH NEGOTIATIONS. NAVAIR THEN TRANSMITTED A REQUEST FOR PROPOSALS (RFP) FOR THE SAME REQUIREMENT CANCELLED UNDER THE SUBJECT IFB. OXFORD WAS LIKEWISE NOTIFIED.

ALTHOUGH IT IS STATED THAT AWARD IS INTENDED TO BE MADE UNDER THIS RFP, NAVAIR ADVISED THAT NO AWARD WOULD BE MADE UNTIL THE PROTEST OF HAYES AGAINST THE CANCELLATION IS CONSIDERED BY OUR OFFICE.

BY LETTER DATED APRIL 11, 1969, HAYES PROTESTED TO OUR OFFICE THE REJECTION OF ITS BID AND CANCELLATION OF THE SUBJECT IFB. HAYES STATED THAT A MEETING TOOK PLACE WITH THE NAVAIR PERSONNEL TO ASCERTAIN THE REASONS FOR NAVY'S REJECTION OF ITS BID. HAYES WAS TOLD THAT WHEN IN RESPONSE TO AN INVITATION A REQUIRED BID AND AN ALTERNATE BID ARE SUBMITTED, BOTH MUST BE INDEPENDENTLY RESPONSIVE, AND SINCE HAYES' ATTACHMENT C ALTERNATE BID WAS NOT RESPONSIVE SO AS TO QUALIFY INDEPENDENTLY OF THE REQUIRED BID, AWARD COULD NOT BE MADE ON THE REQUIRED BID EVEN THOUGH THE BASIC BID AS CONSIDERED ALONE WAS RESPONSIVE.

WE HAVE HELD THAT THE SUBMISSION OF AN UNACCEPTABLE ALTERNATE BID DOES NOT PRECLUDE CONSIDERATION OF OTHER PROPOSALS SUBMITTED IN THE SAME BID WHICH DO CONFORM TO THE GOVERNMENT'S REQUIREMENTS. SEE 46 COMP. GEN. 807; 43 ID. 663; 33 ID. 499. IN ADDITION, THE COURT OF CLAIMS STATED IN MASSMAN CONSTRUCTION COMPANY V U.S., 102 CT. CL. 699, 719, THAT "TO HAVE A SET OF BIDS DISCARDED AFTER THEY ARE OPENED AND EACH BIDDER HAS LEARNED HIS COMPETITOR'S PRICE IS A SERIOUS MATTER, AND IT SHOULD NOT BE PERMITTED EXCEPT FOR COGENT REASONS.' TO THE SAME EFFECT IS SECTION 2-404.1 OF THE ARMED SERVICES PROCUREMENT REGULATION, WHICH STATES THAT THE PRESERVATION OF THE INTEGRITY OF THE COMPETITIVE BID SYSTEM DICTATES THAT AFTER BIDS HAVE BEEN OPENED, AWARD MUST BE MADE TO THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER, UNLESS THERE IS COMPELLING REASON TO REJECT ALL BIDS AND CANCEL THE INVITATION.

HAYES' ALTERNATE BID SUBMITTED AS ATTACHMENT C WAS CLEARLY AUTHORIZED BY CLAUSE 47, WAIVER OF REQUIREMENT OF FIRST ARTICLE APPROVAL, AND, HAD IT NOT FAILED TO INCLUDE PRICES ON THE OPTION ITEMS, WOULD HAVE AFFORDED THE GOVERNMENT A CHOICE BETWEEN ITS BASIC BID AND THE ALTERNATE. APPARENTLY, NAVAIR CONCLUDED THAT THE ALTERNATE BID, EVEN THOUGH NOT ENTITLED TO CONSIDERATION HAD THE EFFECT OF QUALIFYING THE BASIC BID TO THE EXTENT THAT IT DEPRIVED THE GOVERNMENT OF THE RIGHT UNDER ARTICLE F-13 OF THE SCHEDULE TO ELIMINATE THE FIRST ARTICLE REQUIREMENT AND ACCELERATE THE DELIVERY SCHEDULE AS THEREIN PROVIDED. HOWEVER, OUR EXAMINATION OF ATTACHMENT C, IN CONNECTION WITH THE SEPARATE PROVISIONS QUOTED ABOVE FROM ARTICLE F-13 OF THE SCHEDULE AND ARTICLE 47 OF THE INSTRUCTIONS, LEADS US TO THE CONCLUSION THAT THE ALTERNATIVE BID DOES NOT QUALIFY OR LIMIT HAYES' BASIC BID IN ANY WAY, BUT IS ENTIRELY SEPARATE AND INDEPENDENT, AS ARE THE REFERENCED PROVISIONS OF THE IFB. WHETHER OR NOT THE ALTERNATE BID WAS RESPONSIVE, WE SEE NO REASON WHY THE GOVERNMENT COULD NOT CHOOSE TO REJECT IT AND AWARD ON THE BASIC BID, WITH NO LOSS OF THE RIGHT EXPRESSLY RESERVED BY ARTICLE F-13. AN ALTERNATE BID IN COMPLIANCE WITH CLAUSE 47 WAS NOT A MANDATORY REQUIREMENT OF THE IFB, BUT THE GOVERNMENT'S OPTION UNDER ARTICLE F-13 WAS A PLAINLY STIPULATED CONDITION OF ANY BID SUBMITTED ON THE BASIC SCHEDULE. WE FIND NOTHING IN ARTICLE 47 OR ELSEWHERE IN THE IFB TO INDICATE THAT AN ALTERNATE OFFERED UNDER THAT PROVISION WOULD BE CONSIDERED AS A SUBSTITUTE FOR ARTICLE F-13, AND NOTHING IN THE HAYES BID INDICATES THAT IT WAS SO INTENDED. THE EFFECT OF SUCH AN ALTERNATE OFFER WAS, IN OUR OPINION, TO GIVE THE GOVERNMENT AN OPTION IN ADDITION TO, RATHER THAN IN LIEU OF, THE OPTION STATED IN ARTICLE F-13. WE CONCLUDE THAT HAYES' NONRESPONSIVE ALTERNATE QUOTATION DID NOT PRECLUDE CONSIDERATION OF THE SEPARATE AND INDEPENDENT PROPOSAL SUBMITTED IN THE SAME BID WHICH DID CONFORM TO THE INVITATION AND THAT THE BID SUBMITTED BY HAYES SHOULD HAVE BEEN CONSIDERED BY NAVAIR.

UNLESS IT IS DETERMINED THAT OTHER VALID REASONS EXIST FOR REJECTION OF HAYES' BASE BID OR FOR CANCELLATION OF THE IFB, THAT BID SHOULD BE CONSIDERED FOR AWARD, WITH WAIVER OF FIRST ARTICLE TESTING AS PROVIDED BY PARAGRAPH (J) OF ARTICLE F-13 IF DESIRED.

WE ARE TRANSMITTING A COPY OF THIS DECISION TO THE PROTESTANT, AND THE FILE FORWARDED WITH THE REPORT OF MAY 26 IS RETURNED.