B-166846, NOVEMBER 19, 1969, 49 COMP. GEN. 324

B-166846: Nov 19, 1969

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AN OPTION TO PURCHASE BOTH INTERIM AND LONG LEAD TIME REPAIR PARTS FOR THE UNITS WAS NOT A QUALIFIED BID THAT ELIMINATED THE GOVERNMENT'S OPTION RESERVATIONS AND THE AWARD TO THE BIDDER IS VALID. 1969: FURTHER REFERENCE IS MADE TO A TELEGRAM DATED MAY 2. WAS EXPLAINED AT PAGE 5 OF THE BID SCHEDULE AS FOLLOWS: ITEM 3. " WHERE THE FIXED PRICE WOULD OTHERWISE HAVE BEEN INSERTED. THIRTEEN BIDS WERE OPENED ON APRIL 30. IN THE EVENT THAT THE FIRST ARTICLE APPROVAL TEST REQUIREMENT IS WAIVED BY THE GOVERNMENT. THERE WILL BE NO COST FOR LINE ITEM 8. THE PRICING OF ALL OTHER LINE ITEMS WILL REMAIN UNCHANGED. IS REDUCED TO $670. A DETERMINATION TO AWARD DESPITE THE PENDENCY OF A PROTEST WAS MADE PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2- 407.9(B)(3).

B-166846, NOVEMBER 19, 1969, 49 COMP. GEN. 324

BIDS -- QUALIFIED -- ALL OR NONE -- DEFINITE QUANTITIES A LOW BID SUBMITTED ON AN ALL OR NONE BASIS UNDER AN INVITATION RESERVING TO THE GOVERNMENT AN OPTION TO INCREASE BY 50 PERCENT THE NUMBER OF AIR CONDITIONING UNITS SOLICITED, AND AN OPTION TO PURCHASE BOTH INTERIM AND LONG LEAD TIME REPAIR PARTS FOR THE UNITS WAS NOT A QUALIFIED BID THAT ELIMINATED THE GOVERNMENT'S OPTION RESERVATIONS AND THE AWARD TO THE BIDDER IS VALID. THE "ALL OR NONE" CONDITION ONLY INDICATED THE BIDDER'S UNWILLINGNESS TO ACCEPT AN AWARD FOR LESS THAN THE DEFINITE QUANTITY STATED IN THE INVITATION AND BY THIS EFFORT TO PROTECT ITSELF FROM THE POSSIBILITY OF AN AWARD FOR A LESSER INITIAL QUANTITY PURSUANT TO STANDARD FORM 33A, AND THE BIDDER DID NOT INTEND TO INCLUDE THE OPTION ITEMS ON WHICH THE GOVERNMENT RESERVED THE RIGHT TO MAKE AN AWARD AT A LATER TIME.

TO THE A. G. SCHOONMAKER COMPANY, INCORPORATED, NOVEMBER 19, 1969:

FURTHER REFERENCE IS MADE TO A TELEGRAM DATED MAY 2, 1969, AS SUPPLEMENTED BY LETTERS OF MAY 8, 23, 27 AND JUNE 17, 1969, PROTESTING, ON BEHALF OF A. G. SCHOONMAKER COMPANY, INCORPORATED (SCHOONMAKER), AGAINST AWARD BY THE DEPARTMENT OF THE NAVY OF A CONTRACT TO AMERICAN AIR FILTER COMPANY, INCORPORATED (AAF), UNDER INVITATION FOR BIDS NO. N00019-69-B- 0056, ISSUED FEBRUARY 28, 1969, BY THE NAVAL AIR SYSTEMS COMMAND (NAVAIR), WASHINGTON, D.C.

THE PROCUREMENT UNDER ITEM 1 REQUIRED A QUANTITY OF 50 TRAILER MOUNTED, DIESEL POWERED, AIR CONDITIONING UNITS, MODEL NR-10. OTHER ITEMS INCLUDED RELATED DATA PUBLICATIONS, ENGINEER-DRAWINGS AND FIRST ARTICLE APPROVAL TESTING. ITEM 3, CALLING FOR PROVISIONING DOCUMENTATION, WAS EXPLAINED AT PAGE 5 OF THE BID SCHEDULE AS FOLLOWS: ITEM 3--THE PROVISIONING DOCUMENTATION AND SERVICES SHALL BE PREPARED IN ACCORDANCE WITH SPECIFICATION MIL-P-21873 AND ADDENDUM 1, ATTACHED HERETO ENTITLED "PROVISIONING REQUIREMENTS STATEMENT." WHEN DOCUMENTATION AND SERVICES CANNOT BE PROVIDED IN A TIME FRAME TO PERMIT THE SELECTION AND ACQUISITION OF SPARES AND REPAIR PARTS, THROUGH NORMAL PROVISIONING PROCESS, TO SUPPORT THE SCHEDULED DELIVERY/OPERATIONAL DATES OF ITEM 1, THE INTERIM REPAIR PARTS OPTION ITEM 6 MAY BE EXERCISED.

ITEMS 6 AND 7 COVERED INTERIM REPAIR PARTS AND LONG LEAD TIME REPAIR PARTS RESPECTIVELY, AND AS TO THOSE TWO ITEMS THE BID SCHEDULE INCLUDED THE PREPRINTED WORD "OPTION," WHERE THE FIXED PRICE WOULD OTHERWISE HAVE BEEN INSERTED. ALSO WITH RESPECT TO ITEMS 6 AND 7 THE SCHEDULE PROVIDED AT PAGE 5: ITEM 6--THE INTERIM REPAIR PARTS SHALL BE AS DETERMINED BY THE REQUIRING ACTIVITY, AVIATION SUPPLY OFFICE, PHILADELPHIA, IN ACCORDANCE WITH SPECIFICATION MIL-P-21873 AND ADDENDUM 1, ATTACHED HERETO ENTITLED "PROVISIONING REQUIREMENTS STATEMENT." ITEM 7--THE REPAIR PARTS SHALL BE AS DETERMINED BY THE REQUIRING ACTIVITY AVIATION SUPPLY OFFICE, PHILADELPHIA AS A RESULT OF THE PROVISIONING CONFERENCE HELD IN ACCORDANCE WITH MIL-P-21873 AND ADDENDUM 1, ATTACHED HERETO ENTITLED "PROVISIONING REQUIREMENTS STATEMENT."

THE INVITATION CALLED FOR A TOTAL AGGREGATE PRICE EXCLUDING ITEMS 6, 7 AND 9 AND RESERVED THE RIGHT UNDER AN OPTION CLAUSE TO INCREASE THE QUANTITY OF ITEM 1 BY 50 PERCENT EITHER AT TIME OF AWARD OR WITHIN 120 DAYS THEREAFTER. THIRTEEN BIDS WERE OPENED ON APRIL 30, 1969, WITH YOUR TOTAL BID PRICE LOW IN THE AMOUNT OF $692,200, ALLOWING $20,000 FOR ITEM 8, FIRST ARTICLE APPROVAL TESTING. AAF, THE SECOND LOW BIDDER AT $693,726 (ALLOWING $22,852 FOR ITEM 8, FIRST ARTICLE APPROVAL TESTING, HAD INSERTED AT THE TOP OF PAGE 3, OF THE BID SCHEDULE THE LEGEND, "BID ON ALL OR NONE BASIS." ALSO A LETTER ACCOMPANYING THE AAF BID STATED:

WITH REFERENCE TO THE CONTRACT REQUIREMENT FOR FIRST ARTICLE APPROVAL TESTING (ITEM 8), AND IN ACCORDANCE WITH ARTICLE 46 OF THE ADDITIONAL SOLICITATION INSTRUCTIONS AND CONDITIONS, WE WISH TO SUBMIT AN ALTERNATE OFFER BASED ON WAIVER OF THE FIRST ARTICLE TEST REQUIREMENT. IN THE EVENT THAT THE FIRST ARTICLE APPROVAL TEST REQUIREMENT IS WAIVED BY THE GOVERNMENT, THERE WILL BE NO COST FOR LINE ITEM 8, AND THE PRICING OF ALL OTHER LINE ITEMS WILL REMAIN UNCHANGED. IN OTHER WORDS, OUR TOTAL CONTRACT PRICE OF $693,726, IS REDUCED TO $670,874 (A NET REDUCTION OF $22,852) IN THE EVENT THAT THE GOVERNMENT ELECTS TO ACCEPT OUR ALTERNATE OFFER BASED ON EXCLUSION OF THE FIRST ARTICLE APPROVAL TEST REQUIREMENT.

ARTICLE (46) "WAIVER OF REQUIREMENT FOR FIRST ARTICLE APPROVAL," OF THE INVITATION PERMITTED THE BIDDER TO IDENTIFY ANY PREVIOUS CONTRACT UNDER WHICH THE GOVERNMENT HAD ACCEPTED IDENTICAL OR SIMILAR ITEMS FROM THE BIDDER AND PROVIDED FOR WAIVER OF FIRST ARTICLE APPROVAL WITH CONSEQUENT REDUCTION IN PRICE OF THE AMOUNT INCLUDED IN THE BID THEREFOR. THE AAF BID IDENTIFIED CONTRACT NO. N00019-67-C-0606 AS ONE UNDER WHICH THE GOVERNMENT HAD ACCEPTED THE IDENTICAL OR SIMILAR ITEMS, AS A RESULT, NAVAIR WAIVED FIRST ARTICLE APPROVAL TESTING AND DETERMINED AAF TO BE THE LOW RESPONSIVE, RESPONSIBLE BIDDER AT $670,874. DUE TO THE URGENCY OF THE PROCUREMENT, A DETERMINATION TO AWARD DESPITE THE PENDENCY OF A PROTEST WAS MADE PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2- 407.9(B)(3). THE CONTRACT WAS AWARDED TO AAF ON MAY 20, 1969.

IT IS CONTENDED ON BEHALF OF SCHOONMAKER THAT BY BIDDING ON AN ALL OR NONE BASIS, AAF REQUIRED THAT THE CONTRACT INCORPORATE THE ADDITIONAL OPTION QUANTITY OF 25 FOR ITEM 1 AND AN AUTHORIZATION TO FURNISH ALL ITEMS LISTED, INCLUDING 6 AND 7, THUS ELIMINATING THE GOVERNMENT'S RIGHT TO ORDER THESE ITEMS AT ITS OPTION AND, WITH RESPECT TO ITEMS 6 AND 7, CALLING INSTEAD FOR CONCURRENT ORDERING TO THE EXTENT AUTHORIZED BY SPECIFICATION MIL-P-21873 WHICH WAS PART OF THE INVITATION FOR BIDS. WITH RESPECT TO ITEMS 6 AND 7 YOU POINT OUT THAT AAFF, THE ONLY BIDDER WHO HAD PREVIOUSLY PRODUCED AND DELIVERED THE MODEL NR-10 AIR CONDITIONER FOR NAVAIR, WAS IN THE BEST POSITION TO KNOW THE INTERIM REPAIR PARTS AND LONG LEAD TIME ITEMS WHICH WERE REQUIRED FOR ADEQUATE SUPPORT IN THE FIELD. YOU ASSERT THAT SUCH A BIDDER WHO COULD COMPUTE HIS BID PRICES ON THE BASIS OF MANUFACTURING INTERIM REPAIR PARTS AND LONG LEAD TIME ITEMS CONCURRENTLY WITH MANUFACTURE OF UNITS UNDER ITEM 1 WOULD BE IN A FAVORABLE COMPETITIVE POSITION. FURTHER YOU CONTEND THAT SCHOONMAKER'S BID PRICES WOULD HAVE BEEN SUBSTANTIALLY LOWER IF IT COULD HAVE BID ON THE SAME BASIS. IN SUM, IT IS YOUR POSITION THAT THE USE OF THE ALL OR NONE PROVISION RENDERED THE AAF BID NONRESPONSIVE AS IN CONFLICT WITH THE GOVERNMENT'S OPTIONS TO INCREASE THE ITEM 1 QUANTITY AND TO ORDER UNDER ITEMS 6 AND 7 OR, AT THE LEAST, THAT THE BID WAS AMBIGUOUS.

YOU ALSO NOTE THAT THE EXTENSION OF THE DELIVERY SCHEDULE BY 60 DAYS UNDER THE TERMS OF AMENDMENT NO. 3 TO THE INVITATION IS INCONSISTENT WITH THE DETERMINATION THAT AWARD SHOULD NOT BE WITHHELD PENDING OUR DECISION. YOU STATE THAT THE LACK OF URGENCY IS SUPPORTED BY THE FACT THAT THE INVITATION FOR BIDS REQUIRED ITEM 1 TO BE PRESERVED AND PACKED FOR DOMESTIC SHIPMENT ONLY.

WE CANNOT AGREE THAT THE INCLUSION OF THE ALL OR NONE PROVISION IN THE AAF BID COULD REASONABLY BE INTERPRETED TO ELIMINATE THE GOVERNMENT'S OPTIONS TO INCREASE THE QUANTITY OF ITEM 1 OR WITH RESPECT TO PLACING ORDERS UNDER ITEMS 6 AND 7. IN ADDITION TO THE SCHEDULE PROVISIONS ALREADY QUOTED RELATING TO THE ITEMS, IT IS INDICATED ON PAGE 13 OF THE SCHEDULE THAT SPARE PARTS SHALL BE DELIVERED AS SPECIFIED BY THE DOCUMENT THAT EXERCISES THE OPTION. UNDER ITEM 6 THE OPTION IS TO BE EXERCISED "IF AT ALL" WITHIN 210 DAYS AFTER CONTRACT AWARD; UNDER ITEM 7 THE OPTION IS TO BE EXERCISED "IF AT ALL" BY WRITTEN CHANGE TO THE CONTRACT. AT PAGE 15 OF THE SCHEDULE THE FOLLOWING PROVISION APPEARS: REPAIR PARTS OPTION

THERE IS HEREBY CREATED AN OPTION IN BEHALF OF THE GOVERNMENT TO PURCHASE FROM THE CONTRACTOR, AT FAIR AND REASONABLE PRICES, REPAIR PARTS IN THE RANGE AND QUANTITY DETERMINED NECESSARY BY THE GOVERNMENT TO SUPPORT THE EQUIPMENT BEING PROCURED. THIS OPTION IS EXERCISABLE FOR A PERIOD OF TWO (2) YEARS AFTER ACCEPTANCE BY THE GOVERNMENT OF THE LAST PRODUCTION END ITEM PROCURED UNDER ITEM 1 OF THIS CONTRACT. EXERCISE OF THIS OPTION WILL BE BY WRITTEN NOTICE FROM THE REQUIRING ACTIVITY FOR ITEM 7 HEREIN.

IF, AS YOU CONTEND, THE EFFECT OF AAF'S ALL OR NONE CONDITION WAS TO ELIMINATE THE GOVERNMENT'S OPTION EITHER TO ORDER OR NOT TO ORDER ITEMS 6 AND 7, THAN THE BID MUST BE REGARDED AS MATERIALLY QUALIFYING THE TERMS OF THE INVITATION FOR BIDS. FURTHER, IF THOSE ITEMS ARE INCLUDED IN THE CONTRACT AWARD THEY SHOULD BE EVALUATED TO DETERMINE THE LOW BIDDER, AN IMPOSSIBILITY SINCE AT TIME OF AWARD THEY COULD NEITHER BE PRICED NOR IDENTIFIED. HOWEVER, WE THINK THIS INVITATION IS CONTROLLED BY THE PRECEDENT ESTABLISHED IN E-129322, NOVEMBER 16, 1956. IN THAT CASE, THE INVITATION FOR BIDS CALLED FOR THE MANUFACTURE OF 465,980 PAIRS OF TROUSERS. ALSO, THE GOVERNMENT RESERVED THE OPTION TO ORDER SUBSEQUENT TO AWARD AN ADDITIONAL QUANTITY UP TO 50 PERCENT OF THE BASE QUANTITY. THE SPACE PROVIDED FOR THE BIDDER TO INSERT THE QUANTITY BID ON, THE LOW BIDDER INSERTED THE LEGEND "465,980 (EA.) PLUS OPTION- ALL OR NONE." HELD THAT THE PROPER INTERPRETATION OF THE LEGEND WAS THAT THE BIDDER WISHED TO INDICATE THAT HE WAS NOT WILLING TO ACCEPT AN AWARD FOR LESS THAN 465,980 PAIRS OF TROUSERS AND THAT AT THE SAME TIME HE WAS NOT PRECLUDING THE AWARD OF THE OPTION. IN OTHER WORDS, NOTWITHSTANDING THE USE IN THE LOW BID OF THE PHRASE "PLUS OPTION" THE ALL OR NONE QUALIFICATION WAS LIMITED TO THE QUANTITIES DEFINITELY SPECIFIED FOR AWARD UNDER THE TERMS OF THE IMVITATION FOR BIDS AND DID NOT INCLUDE ANY QUANTITIES WHICH UNDER THE TERMS OF THE INVITATION FOR BIDS THE GOVERNMENT RESERVED THE OPTION TO AWARD AT A LATER TIME. WE THINK THE SAME CONCLUSION IS REQUIRED HERE. THE REASONABLE INTERPRETATION OF THE CONDITION IN THE LOW BID IN THIS CASE IS THAT THE BIDDER WISHED TO PROTECT HIMSELF FROM THE POSSIBILITY THAT A QUANTITY OF LESS THAN THE 50 UNITS CALLED FOR UNDER ITEM 1 COULD BE AWARDED PURSUANT TO PARAGRAPH 10(C) OF THE STANDARD FORM 33A, ENTITLED SOLICITATION INSTRUCTIONS AND CONDITIONS," WHICH PROVIDES IN PERTINENT PART 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. *** :

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.

FURTHER, WE FIND NOTHING IN THE RECORD WHICH SHOWS THE AAF PURPOSELY BID LOW ON ITEMS USED IN THE EVALUATION RELYING ON KNOWN QUANTITIES OF THE OPTION ITEMS. THE ABSTRACT SHOWS THAT THE AAF BID PRICE OF $13,365 A UNIT ON ITEM 1 IS $65 HIGHER THAN YOUR UNIT PRICE OF $13,300. IT IS, HOWEVER, TRUE THAT ALL OFFERORS DO NOT HAVE THE FAMILIARITY WITH THE DRAWINGS AND DATA EQUAL TO THE FIRM WHO PREVIOUSLY PRODUCED THE EQUIPMENT; THE SAME IS TRUE IN ANY PROCUREMENT INVOLVING PRIOR PRODUCERS. A NATURAL COMPETITIVE ADVANTAGE OF THIS TYPE IS ONE WHICH THE PROCUREMENT LAWS DO NOT RECOGNIZE AS UNLAWFUL OR EVEN NECESSARILY UNDESIRABLE.

CONCERNING YOUR QUESTION ON THE NEED FOR THE CHANGE IN DELIVERY SCHEDULES EFFECTED BY AMENDMENT NO. 3 TO THE INVITATION FOR BIDS, THE NAVAIR REPORT STATES THAT THE EXTENSION OF DELIVERY SCHEDULES WAS INTENDED TO PROVIDE SUFFICIENT TIME FOR FABRICATION AND TESTING OF THE FIRST ARTICLES AND THE PRODUCTION UNITS. RATHER THAN SHOWING A LACK OF URGENCY, THIS NECESSARY CHANGE MADE A PROMPT AWARD EVEN MORE IMPORTANT IN ORDER TO MEET FLEET NEEDS. REGARDING THE PACKAGING FOR ITEM 1, IT IS EXPLAINED THAT WHILE THE UNITS ARE FOR USE IN SOUTHEAST ASIA, THE PACKING REQUIREMENTS FOR THIS TYPE OF EQUIPMENT ARE MINIMAL. NORMALLY, THE UNITS ARE TIED DOWN AND THE TIRES ARE BLOCKED. THEY ARE NOT PACKAGED OR CRATED REGARDLESS OF SHIPPING DESTINATION.

SINCE THE FACTS AND CIRCUMSTANCES SHOWN BY THE RECORD BEFORE US DO NOT ESTABLISH THAT THE AAF BID QUALIFICATION ALTERED OR NULLIFIED IN ANY WAY THE REQUIREMENTS OF THE GOVERNMENT, WE FIND NO BASIS FOR HOLDING THE AWARD AS MADE TO BE INVALID.

ACCORDINGLY, YOUR PROTEST IS DENIED.