B-167025, MARCH 5, 1970, 49 COMP. GEN. 534

B-167025: Mar 5, 1970

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FOR INSPECTION OF PRODUCTION SAMPLES BY THE GOVERNMENT PRIOR TO DELIVERY AND BY THE CONTRACTOR TO INSURE THAT THE DELIVERED PRODUCT WAS "MANUFACTURED AND PROCESSED IN A CAREFUL AND WORKMANLIKE MANNER. OFFERED TO MEASURE PERFORMANCE ON THE BASIS OF THE SPECIFICATIONS AND TO MEET THE WORKMANSHIP STANDARDS THE INSPECTION WAS INTENDED TO INSURE. WAS A QUALIFIED BID AS IT ELIMINATED THE REQUIREMENT THAT THE GOVERNMENT'S TEST RESULTS WOULD CONTROL AND IMPOSED A DIFFERENT STANDARD OF PRODUCT ACCEPTABILITY. CONSIDERATION MANDATORY A TELEGRAM BY AN UNSUCCESSFUL BIDDER STATING THE INTENT TO PROTEST TO THE UNITED STATES GENERAL ACCOUNTING OFFICE SHOULD A CONTRACT AWARD BE MADE TO THE LOW BIDDER ALLEGED TO HAVE QUALIFIED ITS BID.

B-167025, MARCH 5, 1970, 49 COMP. GEN. 534

CONTRACTS -- SPECIFICATIONS -- SAMPLES -- TESTS TO DETERMINE PRODUCT ACCEPTABILITY UNDER AN INVITATION FOR BIDS THAT CONTAINED PROVISIONS FOR THE SUBMISSION OF BID SAMPLES AS PART OF THE BID, AND FOR INSPECTION OF PRODUCTION SAMPLES BY THE GOVERNMENT PRIOR TO DELIVERY AND BY THE CONTRACTOR TO INSURE THAT THE DELIVERED PRODUCT WAS "MANUFACTURED AND PROCESSED IN A CAREFUL AND WORKMANLIKE MANNER, IN ACCORDANCE WITH GOOD PRACTICE," A BID THAT SUBMITTED ACCEPTABLE SAMPLES BUT TOOK EXCEPTION TO PRODUCTION SAMPLE INSPECTION DUE TO THE LACK OF STANDARD TEST EQUIPMENT IN THE INDUSTRY TO ASSURE THE FINISHED PRODUCT WOULD MEET THE GOVERNMENT'S TEST, AND OFFERED TO MEASURE PERFORMANCE ON THE BASIS OF THE SPECIFICATIONS AND TO MEET THE WORKMANSHIP STANDARDS THE INSPECTION WAS INTENDED TO INSURE, WAS A QUALIFIED BID AS IT ELIMINATED THE REQUIREMENT THAT THE GOVERNMENT'S TEST RESULTS WOULD CONTROL AND IMPOSED A DIFFERENT STANDARD OF PRODUCT ACCEPTABILITY. CONTRACTS -- PROTESTS -- CONSIDERATION MANDATORY A TELEGRAM BY AN UNSUCCESSFUL BIDDER STATING THE INTENT TO PROTEST TO THE UNITED STATES GENERAL ACCOUNTING OFFICE SHOULD A CONTRACT AWARD BE MADE TO THE LOW BIDDER ALLEGED TO HAVE QUALIFIED ITS BID, AND ADVISING A SUPPORTING LETTER WOULD FOLLOW, SHOULD HAVE BEEN TREATED AS A PROTEST AND THE AWARD MADE TO THE LOW BIDDER THE DAY BEFORE RECEIPT OF THE PROMISED LETTER WITHHELD UNTIL THE DISPUTE WAS RESOLVED, PARTICULARLY IN VIEW OF THE FACT THE PROTESTANT'S DECLARATION OF INTENT TO FILE A PROTEST WITH GAO IN THE EVENT OF A CONTRACT AWARD, WAS SUFFICIENT STANDING ALONE TO REQUIRE THE CONCLUSION THAT THE TELEGRAM CONSTITUTED A PROTEST. HOWEVER, THE CONTRACT HAVING BEEN SUBSTANTIALLY PERFORMED, IT WOULD NOT BE IN THE BEST INTERESTS OF THE GOVERNMENT TO REQUIRE CANCELLATION OF THE CONTRACT.

TO THE SECRETARY OF THE AIR FORCE, MARCH 5, 1970:

REFERENCE IS MADE TO LETTER AFSPPOA OF OCTOBER 7, 1969, FROM THE CHIEF, PROCUREMENT OPERATIONS DIVISION, DIRECTORATE OF PROCUREMENT POLICY, DEPUTY CHIEF OF STAFF, SYSTEMS AND LOGISTICS, AND TO PREVIOUS CORRESPONDENCE, REPORTING ON THE PROTEST OF THE AMPEX CORPORATION AGAINST THE AWARD OF A REQUIREMENTS CONTRACT TO THE MINNESOTA MINING AND MANUFACTURING COMPANY (3M) UNDER INVITATION FOR BIDS (IFB) NO. F08650-69-B-0073, ISSUED BY THE AIR FORCE EASTERN TEST RANGE, BASE PROCUREMENT BRANCH, PATRICK AIR FORCE BASE, FLORIDA. SUBSEQUENT CORRESPONDENCE WAS RECEIVED FROM BOTH AMPEX AND 3M AND INFORMAL DISCUSSIONS WERE CONDUCTED IN OUR OFFICE WITH REPRESENTATIVES OF 3M.

THE INVITATION WAS ISSUED ON APRIL 2, 1969, FOR THE FURNISHING OF ESTIMATED QUANTITIES OF FOUR DIFFERENT INSTRUMENTATION TAPES. THE INVITATION SPECIFIED THAT ONLY ONE AWARD WOULD BE MADE FOR ALL ITEMS AND INCLUDED THE FOLLOWING PROVISIONS: PART III--BID SAMPLES (1965 OCT)

A. BID SAMPLES, IN THE QUANTITIES, SIZES, ETC., REQUIRED FOR THE ITEMS SO INDICATED IN THIS INVITATION FOR BIDS, MUST BE FURNISHED AS A PART OF THE BID AND MUST BE RECEIVED BEFORE THE TIME SET FOR OPENING BIDS. ***

C. PRODUCTS DELIVERED UNDER ANY RESULTING CONTRACT SHALL CONFORM TO THE APPROVED SAMPLE AS TO THE CHARACTERISTICS LISTED FOR TEST OR EVALUATION AND SHALL CONFORM TO THE SPECIFICATIONS AS TO ALL OTHER CHARACTERISTICS.

* * * * * PART IX--INSPECTION AND ACCEPTANCE

A. INSPECTION OF PRODUCTION SAMPLES FOR THE GOVERNMENT SHALL BE PERFORMED AT AIR FORCE EASTERN TEST RANGE *** PRODUCTION SAMPLES, AS REQUIRED, SHALL BE SUBMITTED BEFORE THE LOT IS OFFERED FOR FINAL DELIVERY. ***

B. THE CONTRACTOR SHALL PERFORM PRODUCTION SAMPLE INSPECTION TO INSURE THAT THE DELIVERED LOT SHALL BE MANUFACTURED AND PROCESSED IN A CAREFUL AND WORKMANLIKE MANNER, IN ACCORDANCE WITH GOOD PRACTICE. ***

TWO BIDS WERE RECEIVED AND OPENED ON MAY 1, 1969. THE LOW BID IN THE TOTAL AMOUNT OF $1,344,024.72 WAS SUBMITTED BY 3M. THE OTHER BID IN THE TOTAL AMOUNT OF $1,778,569.58 WAS SUBMITTED BY AMPEX. THE 3M BID WAS ACCOMPANIED BY A LETTER OF TRANSMITTAL WHICH STATED:

THE 3M COMPANY IS PLEASED TO SUBMIT THE ENCLOSED ORIGINAL AND 2 COPIES OF OUR QUOTATION IN RESPONSE TO THE ABOVE REFERENCED IFB.

THE INSTRUMENTATION TAPE PRODUCT IN OUR BID HAS BEEN PROVIDED BY THE 3M COMPANY IN THE PAST ON THE BASIS OF ITS ABILITY TO MEET SPECIFIED GOVERNMENT NEEDS AND HAS IN EACH INSTANCE SUCCESSFULLY MET THOSE PROCUREMENT REQUIREMENTS. WE BELIEVE THAT THE 3M BRAND 888 TAPE WILL IN ALL RESPECTS MEET THE GOVERNMENT'S OPERATIONAL REQUIREMENTS FOR THIS PRODUCT. HOWEVER, CERTAIN OF THE PRESCRIBED SPECIFICATIONS CONCERNING PRODUCT SAMPLE INSPECTION CANNOT BE MET WITH COMPLETE ASSURANCE BECAUSE OF THE LACK OF STANDARD REFERENCE TEST EQUIPMENT WITHIN THE INDUSTRY AND THE RESULTANT VARIABLES WHICH ARE THEREBY INTRODUCED TO INSPECTION APPROVAL.

ACCORDINGLY, 3M COMPANY OFFERS ITS BID WITH THE UNDERSTANDING THAT THE APPLICABLE SPECIFICATIONS WILL BE APPLIED TO MEASURE CONTRACT PERFORMANCE ON THE BASIS OF THE COMMENTS CONCERNING THOSE SPECIFICATIONS AS SET FORTH IN PART 9B OF THE IFB AND THAT 3M SHALL DELIVER A PRODUCT WHICH IS " ... MANUFACTURED AND PROCESSED IN A CAREFUL AND WORKMANLIKE MANNER IN ACCORDANCE WITH GOOD PRACTICE."

ON MAY 5, 1969, AMPEX SENT THE BASE PROCUREMENT BRANCH AT PATRICK AIR FORCE BASE THE FOLLOWING TELEGRAM: SUBJECT: IFB F08650-69-B-0073

AMPEX CORPORATION IS FORWARDING A LETTER TO YOUR OFFICE WHICH WILL

INCLUDE RELEVANT LEGAL CITATIONS AND A SUMMARY OF THOSE ASPECTS OF THE

3-M BID WHICH CAUSE IT TO BE NONRESPONSIVE TO THE SUBJECT IFB.

SHOULD A DECISION BE MADE TO MAKE AN AWARD TO 3-M, THIS IS TO ADVISE

YOU OF OUR INTENTION TO FILE A FORMAL PROTEST WITH THE GENERAL

ACCOUNTING OFFICE.

THE CONTRACTING OFFICER DID NOT CONSIDER THE TELEGRAM TO BE A PROTEST AND A CONTRACT WAS AWARDED TO 3M ON MAY 12, 1969. AMPEX WAS ADVISED BY LETTER DATED MAY 12, 1969, THAT THE LETTER REFERRED TO IN THE TELEGRAM HAD NOT BEEN RECEIVED AND THAT 3M'S BID HAD BEEN EVALUATED AND DETERMINED TO BE RESPONSIVE. IT IS REPORTED THAT A LETTER FROM AMPEX DATED MAY 5, 1969, WAS RECEIVED BY THE PROCUREMENT OFFICE ON MAY 13, 1969, THE DAY FOLLOWING THE AWARD OF THE CONTRACT. BY TELEGRAM DATED MAY 19, 1969, AMPEX ADVISED THE CONTRACTING AGENCY OF THE PROTEST TO OUR OFFICE. THE MAIN BASIS FOR THE PROTEST IS THAT THE 3M LETTER ACCOMPANYING THE BID WAS A MATERIAL QUALIFICATION OF THE REQUIREMENTS OF THE IFB.

THE ADMINISTRATIVE REPORTS INDICATE THAT THE 3M LETTER WAS EVALUATED TO DETERMINE IF THE LANGUAGE IN THE LETTER WAS WORDED SO AS TO IMPOSE CONDITIONS ON THE GOVERNMENT NOT REQUIRED BY THE IFB OR TOOK EXCEPTION TO A MATERIAL REQUIREMENT IMPOSED BY THE IFB AND WAS CONSIDERED TO HAVE NO MATERIAL EFFECT. THIS WAS BECAUSE SAMPLES FURNISHED WITH THE BID WERE TESTED PRIOR TO AWARD AND FOUND ACCEPTABLE IN ALL RESPECTS AND PARAGRAPH "C" OF PART III OF THE INVITATION PROVIDED THAT:

PRODUCTS DELIVERED UNDER ANY RESULTING CONTRACT SHALL CONFORM TO THE APPROVED SAMPLE AS TO THE CHARACTERISTICS LISTED FOR TEST OR EVALUATION AND SHALL CONFORM TO THE SPECIFICATIONS AS TO ALL OTHER CHARACTERISTICS. SINCE THE PRODUCTS DELIVERED UNDER THE CONTRACT ARE TO CONFORM TO THE SAMPLE WHICH HAD BEEN TESTED AND FOUND TO BE ACCEPTABLE, IT WAS BELIEVED THAT THE GOVERNMENT WOULD BE ABLE TO ENFORCE THE CONTRACT REQUIREMENT.

WITH RESPECT TO THAT PART OF THE 3M LETTER DEALING WITH "PRODUCTION SAMPLE INSPECTION," IT WAS STATED THAT THE ONLY RESPONSIBILITY THAT 3M WAS TO HAVE MET IN THE AREA OF PRODUCTION SAMPLE INSPECTION WAS TO "INSURE THAT THE DELIVERED LOT SHALL BE MANUFACTURED AND PROCESSED IN A CAREFUL AND WORKMANLIKE MANNER, IN ACCORDANCE WITH GOOD PRACTICE." THE 3M LETTER WAS CONSIDERED TO HAVE AFFIRMED THAT RESPONSIBILITY. IT WAS THEREFORE THE ADMINISTRATIVE POSITION THAT THERE WAS NO LANGUAGE IN THE LETTER UNDER QUESTION THAT WOULD DETRACT FROM THE OBLIGATIONS ON THE PART OF 3M TO FURNISH A PRODUCT THAT WOULD BE IN FULL CONFORMANCE WITH THE BID SAMPLES THAT HAD BEEN TESTED PRIOR TO AWARD.

IN A LETTER OF DECEMBER 10, 1969, TO OUR OFFICE, 3M STATED THAT THE COVER LETTER WHICH ACCOMPANIED THE BID WAS INTENDED TO CLEARLY STATE FOR THE RECORD THAT A LACK OF UNIFORM TESTING EQUIPMENT WITHIN BOTH THE AIR FORCE AND INDUSTRY LABORATORIES WOULD NECESSITATE THE USE OF DIFFERENT "PRODUCTION SAMPLE INSPECTION" TESTS BY THE CONTRACTOR DURING THE COURSE OF CONTRACT PERFORMANCE. 3M CONSIDERS ITS COVER LETTER AS INDICATING THAT ANY VARIABLES IN TEST RESULTS BETWEEN THE CONTRACTOR AND THE AIR FORCE WOULD BE RESOLVED IN FAVOR OF THE GOVERNMENT.

ALTHOUGH IT MAY BE THAT UNDER THE CONTRACT 3M WOULD BE REQUIRED TO FURNISH A PRODUCT CONFORMING TO THE PREVIOUSLY APPROVED SAMPLE, WHETHER THE PRODUCT IS FOUND TO CONFORM COULD VERY WELL DEPEND UPON THE EQUIPMENT WHICH TESTED IT. BY THE LETTER ACCOMPANYING THE 3M BID, IT HAS INDICATED THAT BECAUSE OF DIFFERENCES BETWEEN GOVERNMENT TEST EQUIPMENT AND INDUSTRY TEST EQUIPMENT NO ASSURANCE COULD BE FURNISHED THAT THE PRODUCT WOULD MEET THE REQUIRED CHARACTERISTICS WHEN TESTED BY GOVERNMENT EQUIPMENT. 3M'S LETTER THEN STATED THAT "ACCORDINGLY" (IN OTHER WORDS AS A CONSEQUENCE) IT WAS OFFERING ITS BID WITH THE UNDERSTANDING THAT CONTRACT PERFORMANCE WOULD BE MEASURED ON THE BASIS SET FORTH IN PART IXB OF THE INVITATION. PART IXB, AS INDICATED ABOVE, PROVIDES FOR THE CONTRACTOR PERFORMING PRODUCTION SAMPLE INSPECTION TO INSURE THAT THE DELIVERED LOT HAS BEEN MANUFACTURED IN A CAREFUL AND WORKMANLIKE MANNER, IN ACCORDANCE WITH GOOD PRACTICE. PART IXB DOES NOT OVERRIDE THE GOVERNMENT'S RIGHT OF TESTING IN PART IXA AND REJECTION ON THE BASIS OF THE RESULTS OF GOVERNMENT TESTING. HOWEVER, THE 3M LETTER QUALIFIED THE BID TO PROVIDE THAT THE MEASURE OF PERFORMANCE WOULD DEPEND UPON THE TESTING FOLLOWED BY THE CONTRACTOR IN PART IXB AND THUS ELIMINATED THE REQUIREMENT THAT THE GOVERNMENT'S TEST RESULTS WOULD CONTROL. IT FOLLOWS THEN THAT IF AS A RESULT OF GOVERNMENT TESTING IT WAS FOUND THAT AN ARTICLE DID NOT MEET THE SPECIFICATION REQUIREMENTS, 3M COULD TAKE THE POSITION THAT ITS OFFER WAS MADE WITH THE UNDERSTANDING THAT THE ACCEPTABILITY OF THE PRODUCT WOULD BE DEPENDENT SOLELY UPON THE RESULTS PRODUCED BY THE PART IXB TESTING PROCEDURE.

IT THEREFORE APPEARS THAT THE 3M LETTER WAS AN INTENTIONAL ATTEMPT TO IMPOSE A STANDARD OF DETERMINING PRODUCT ACCEPTABILITY DIFFERENT FROM THAT CONTAINED IN THE INVITATION. CONSIDERED ON THIS BASIS, THE COVER LETTER SUBMITTED BY 3M QUALIFIED ITS BID IN A MATERIAL RESPECT.

HOWEVER, IN VIEW OF THE PRESENT POSTURE OF THE CASE, THAT IS, SINCE THE REMAINING PERIOD FOR PLACING ORDERS UNDER THE CONTRACT EXPIRES ON MAY 31, 1970, AND THE CONTRACT HAS BEEN SUBSTANTIALLY PERFORMED, WE DO NOT BELIEVE IT WOULD BE IN THE GOVERNMENT'S BEST INTEREST TO REQUIRE CANCELLATION OF THE CONTRACT.

IN ADDITION TO THE FOREGOING, WE BELIEVE THAT APPROPRIATE STEPS SHOULD BE TAKEN TO INSURE THAT IN THE FUTURE A TELEGRAPHIC MESSAGE SUCH AS WAS FILED WITH THE PROCUREMENT OFFICE BY AMPEX IN THIS CASE IS CONSIDERED AND HANDLED AS A PROTEST. IN OUR OPINION, THE FACT THAT AMPEX ADVISED THE PROCUREMENT OFFICE THAT IT INTENDED TO PROTEST TO OUR OFFICE IN THE EVENT THE AWARD WAS MADE TO 3M WAS SUFFICIENT STANDING ALONE TO REQUIRE THE CONCLUSION THAT THE TELEGRAM WAS INTENDED TO CONSTITUTE A PROTEST TO THE PROCUREMENT OFFICE AGAINST AN AWARD TO 3M.