B-167769, SEPTEMBER 30, 1969, 49 COMP. GEN. 211

B-167769: Sep 30, 1969

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CANCELLATION AND REINSTATEMENT OF INVITATION THE CANCELLATION AND READVERTISING OF AN INVITATION FOR COPPER SUPERCONDUCTOR WIRE UPON DETERMINATION THE LOWER RESISTIVITY RATIO WIRE OFFERED BY THE LOWEST BIDDER EQUALLY MET THE MINIMUM NEEDS OF THE GOVERNMENT AS DID THE HIGHER RATIO MORE COSTLY WIRE SOLICITED WAS NOT REQUIRED AND THE ORIGINAL INVITATION SHOULD BE REINSTATED. ALTHOUGH A REVISION OF SPECIFICATIONS IS A "COMPELLING REASON" FOR REJECTING ALL BIDS AND READVERTISING A PROCUREMENT. ERRONEOUSLY STATED A CONTRACT AWARD TO THE LOW BIDDER WHICH WOULD HAVE PERMITTED THE BIDDER WHO HAD DELIBERATELY DEVIATED FROM THE SPECIFICATION REQUIREMENTS TO FURNISH AN ITEM NEITHER ASKED FOR IN THE INVITATION NOR OFFERED BY THE OTHER BIDDERS WOULD NOT BE THE CONTRACT OFFERED TO ALL BIDDERS AND.

B-167769, SEPTEMBER 30, 1969, 49 COMP. GEN. 211

CONTRACTS -- SPECIFICATIONS -- MINIMUM NEEDS REQUIREMENT -- CANCELLATION AND REINSTATEMENT OF INVITATION THE CANCELLATION AND READVERTISING OF AN INVITATION FOR COPPER SUPERCONDUCTOR WIRE UPON DETERMINATION THE LOWER RESISTIVITY RATIO WIRE OFFERED BY THE LOWEST BIDDER EQUALLY MET THE MINIMUM NEEDS OF THE GOVERNMENT AS DID THE HIGHER RATIO MORE COSTLY WIRE SOLICITED WAS NOT REQUIRED AND THE ORIGINAL INVITATION SHOULD BE REINSTATED, AS ADEQUATE COMPETITION HAD BEEN OBTAINED UNDER THE ORIGINAL INVITATION AND ONLY A RELATIVELY SMALL PRICE DIFFERENCE EXISTED BETWEEN THE TWO LOSEST BIDS. ALTHOUGH A REVISION OF SPECIFICATIONS IS A "COMPELLING REASON" FOR REJECTING ALL BIDS AND READVERTISING A PROCUREMENT, CANCELLATION OF AN INVITATION SHOULD BE LIMITED TO INSTANCES IN WHICH AN AWARD UNDER THE ORIGINAL SPECIFICATIONS WOULD NOT SERVE THE GOVERNMENT'S NEEDS, BUT WHEN AS HERE THE SPECIFICATIONS DO, READVERTISING AFTER THE EXPOSURE OF BIDS WOULD BE PREJUDICIAL TO THE COMPETITIVE BIDDING SYSTEMS. CONTRACTS -- SPECIFICATIONS -- MINIMUM NEEDS REQUIREMENT -- ERRONEOUSLY STATED A CONTRACT AWARD TO THE LOW BIDDER WHICH WOULD HAVE PERMITTED THE BIDDER WHO HAD DELIBERATELY DEVIATED FROM THE SPECIFICATION REQUIREMENTS TO FURNISH AN ITEM NEITHER ASKED FOR IN THE INVITATION NOR OFFERED BY THE OTHER BIDDERS WOULD NOT BE THE CONTRACT OFFERED TO ALL BIDDERS AND, THEREFORE, THE REJECTION OF THE NONCONFORMING LOW BID WAS PROPER, EVEN THOUGH THE DELIBERATELY SUBSTITUTED ITEM WOULD HAVE MET THE MINIMUM NEEDS OF THE GOVERNMENT. TO INSURE THE BENEFITS OF COMPETITION TO THE GOVERNMENT, IT IS ESSENTIAL THAT CONTRACT AWARDS BE MADE ON THE BASIS OF THE SPECIFICATION REQUIREMENTS SUBMITTED FOR COMPETITION, AND A DEVIATION TO THE REQUIREMENTS MAY ONLY BE WAIVED IF THE DEVIATION DOES NOT GO TO THE SUBSTANCE OF THE BID OR WORK AN INJUSTICE ON OTHER BIDDERS, AND THE DEVIATION IN THE LOW BID HAVING BEEN DELIBERATELY TAKEN MAY NOT BE CONSIDERED TRIVIAL OR MINIMAL SO AS TO JUSTIFY WAIVER AS A MINOR IRREGULARITY.

TO THE ADMINISTRATOR, NATIONAL AERONAUTICS AND SPACE ADMINISTRATION, SEPTEMBER 30, 1969:

REFERENCE IS MADE TO LETTER DATED SEPTEMBER 5, 1969, FROM THE DIRECTOR OF PROCUREMENT FURNISHING A REPORT ON THE PROTEST OF SUPERTECHNOLOGY CORPORATION AGAINST THE OPENING OF BIDS AND AWARD OF A CONTRACT UNDER READVERTISED SOLICITATION NO. C-404597-(RE-AD), DATED JULY 29, 1969.

THE RECORD SHOWS THAT INVITATION NO. C-404597, ISSUED ON MAY 23, 1969, BY THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION, LEWIS RESEARCH CENTER, REQUESTED BIDS FOR FURNISHING A QUANTITY OF 130,000 FEET OF SUPERCONDUCTOR WIRE, AS FOLLOWS:

NIOBIUM-TITANIUM-COPPER COMPOSITE SUPERCONDUCTOR MATERIAL SHALL BE IN ACCORDANCE WITH SPECIFICATION NO. C-404597 DATED MAY 7, 1969 (2 PAGES), WHICH IS ATTACHED HERETO.

PARAGRAPH "B" OF THE SPECIFICATIONS STATED THAT "THE COPPER SHALL BE OFHC GRADE WITH A MINIMUM RESISTANCE RATIO OF R300 DEGS. K/R4.2 DEG. K 200" (HEREINAFTER REFERRED TO AS 200 RATIO). THE FOLLOWING BIDS WERE RECEIVED AT BID OPENING ON JUNE 12, 1969:

NAME AMOUNT

CRYOMAGNETICS $96,590.00

SUPERTECHNOLOGY 97,256.25

NORTON COMPANY 99,450.00

AIRCO AIR REDUCTION CO. 117,000.00

HOWEVER, CRYOMAGNETICS PROPOSED TO SUPPLY SUPERCONDUCTOR WIRE WITH TWISTED FILAMENTS HAVING A RESISTANCE RATIO OF 180 AS AGAINST THE 200 RATIO CALLED FOR IN THE SPECIFICATIONS. CONSEQUENTLY, ITS BID WAS DETERMINED TO BE NONRESPONSIVE. THE NEXT LOW BIDDER, SUPERTECHNOLOGY CORPORATION, WAS DETERMINED TO BE NONRESPONSIBLE BECAUSE IT HAD BEEN IN BUSINESS ONLY A SHORT TIME. THE MATTER OF SUPERTECHNOLOGY'S RESPONSIBILITY WAS REFERRED TO THE SMALL BUSINESS ADMINISTRATION AND THAT AGENCY DETERMINED SUPERTECHNOLOGY TO BE A RESPONSIBLE BIDDER UNDER ITS CERTIFICATE OF COMPETENCY PROCEDURES. IN THE MEANTIME, CRYOMAGNETICS, THE LOW BIDDER, PROTESTED AGAINST THE REJECTION OF ITS BID AS NONRESPONSIVE AND THE GOVERNMENT TECHNICAL PERSONNEL CONCLUDED THAT STABILIZED SUPERCONDUCTOR OF OFHC COPPER WITH A RESISTIVITY RATIO OF 180 OFFERED BY CRYOMAGNETICS MET OR EXCEEDED THE REQUIREMENTS OF THE INVITATION. ADDITIONALLY, AND PERHAPS MORE IMPORTANTLY, AVCO EVERETT RESEARCH LABORATORY, THE INTENDED USER OF THE SUPERCONDUCTOR, ADVISED NASA-LEWIS ON AUGUST 21, 1969, WITH REFERENCE TO THE ACCEPTABILITY OF 180-RATIO WIRE THAT:

*** FRANKLY, I DO NOT KNOW OF ANY SIGNIFICANT DIFFERENCES IN THE BEHAVIOR OF A HIGH FIELD COIL WHEN THE RESISTANCE RATION IS 200 VERSUS 180, NAMELY 10% DIFFERENT. BY THE TIME THE MAGNITO-RESISTANCE IS ADDED, THE TWO RESISTANCE RATIO VALUES SHOULD MAKE ONLY A NEGLIGIBLY SMALL DIFFERENCE IN THE CONDUCTOR STABILITY. I THEREFORE BELIEVE THAT WE WOULD BE HARD PRESSED TO OBSERVE ANY REAL DIFFERENCES IN COILS BETWEEN RR 180 AND 200.

HOWEVER, BECAUSE COPPER HAVING A 200 RATIO IS HIGHER IN PRICE (APPROXIMATELY $373) FOR THE QUANTITY INVOLVED THAN COPPER HAVING A 180 RATIO, IT WAS CONCLUDED BY THE CONTRACTING AGENCY THAT A CONTRACT AWARD TO CRYOMAGNETICS WOULD BE PREJUDICIAL TO THE OTHER BIDDERS WHO BID IN GOOD FAITH ON 200-GRADE MATERIAL AS SPECIFIED. ACCORDINGLY, A DECISION WAS MADE ON JULY 29, 1969, TO CANCEL THE INVITATION AND READVERTISE THE REQUIREMENT BECAUSE THE SPECIFICATIONS OF THE INVITATION DID NOT SPECIFY THE MINIMUM NEEDS OF THE GOVERNMENT.

BY LETTER OF AUGUST 20, 1969, THE ATTORNEYS FOR SUPERTECHNOLOGY HAVE PROTESTED AGAINST THE OPENING OF THE READVERTISEMENT SCHEDULED FOR SEPTEMBER 26, 1969, AND HAVE REQUESTED THAT THE FIRST INVITATION BE REINSTATED AND THAT AWARD OF A CONTRACT BE MADE TO SUPERTECHNOLOGY CORPORATION AS THE LOWEST RESPONSIVE BIDDER THEREUNDER.

INSOFAR AS THE LOW BID OF CRYOMAGNETICS IS CONCERNED, WE AGREE WITH THE CONTRACTING OFFICER THAT THE BID MUST BE REJECTED AS NONRESPONSIVE. IT IS A RECOGNIZED RULE THAT A CONTRACT AWARDED TO A BIDDER MUST BE THE SAM CONTRACT OFFERED TO ALL BIDDERS. 42 COMP. GEN. 96, 97 (1962). IT IS OBVIOUS THAT A CONTRACT AWARDED TO CRYOMAGNETICS WHICH WOULD PERMIT THE FURNISHING OF COPPER MATERIAL OF 180 RATIO, WHICH WAS NEITHER ASKED FOR IN THE INVITATION NOR OFFERED BY THE OTHER THREE BIDDERS, WOULD NOT BE THE CONTRACT OFFERED TO ALL. FURTHERMORE, TO INSURE TO THE GOVERNMENT THE BENEFITS OF COMPETITION, IT IS ESSENTIAL THAT AWARDS OF CONTRACTS BE MADE UPON THE BASIS OF THE REQUIREMENTS OF THE SPECIFICATIONS SUBMITTED FOR COMPETITION. SEE NASA PROCUREMENT REGULATIONS, 41 C.F.R. 18-2.301. ANY DEVIATION BY A BIDDER FROM THE INVITATION REQUIREMENTS MAY ONLY BE WAIVED IF IT DOES NOT GO TO THE SUBSTANCE OF THE BID OR WORK AN INJUSTICE TO OTHER BIDDERS. SEE 33 COMP. GEN. 441 (1954): 30 ID. 179 (1950): PRESTEX INC. V UNITED STATES, 162 CT. CL. 620. IN THE INSTANT CASE IT IS CLEAR THAT THE DEVIATION FROM THE ADVERTISED REQUIREMENTS BY CRYOMAGNETICS WAS DELIBERATELY TAKEN AND, THEREFORE, MAY NOT BE CONSIDERED TRIVIAL OR MINIMAL SO AS TO JUSTIFY WAIVER AS A MINOR IRREGULARITY. 47 COMP. GEN. 496, 499 (1968). SEE 41 C.F.R. 18-2.404-2.

REGARDING THE QUESTION AS TO WHETHER THE SECOND LOW BID OF SUPERTECHNOLOGY SHOULD HAVE BEEN ACCEPTED RATHER THAN CANCELING THE SOLICITATION, THE ATTORNEYS FOR THE NORTON COMPANY, THE THIRD LOW BIDDER, CONTEND THAT THE CANCELLATION WAS PROPER. IN SUPPORT OF THEIR CONTENTION SEVERAL OF OUR DECISIONS ARE CITED. THOSE DECISIONS HOLD THAT CANCELLATION AND READVERTISEMENT IS PROPER IN CASES WHERE THE ADMINISTRATIVE OFFICIALS OF THE GOVERNMENT DETERMINE THAT THE PURCHASE OF AN ITEM WHICH IS NOT RESPONSIVE TO THE SPECIFICATIONS WOULD BE IN THE INTEREST OF THE GOVERNMENT (43 COMP. GEN. 209 (1963)); WHERE THE INITIAL INVITATION SOLICITED AN EXCESS OVER ITS MINIMAL REQUIREMENTS (B 153229, FEBRUARY 5, 1964); AND WHERE IT BECAME APPARENT THAT A SUBSTANTIAL REDUCTION IN COST WOULD ACCRUE TO THE GOVERNMENT BY READVERTISEMENT OF THE PROCUREMENT. (43 COMP. GEN. 268 (1963); B 151910, AUGUST 20, 1963; B- 143263, DECEMBER 22, 1960; B-103380, JULY 3, 1951.) WE HAVE CAREFULLY CONSIDERED THESE PRIOR DECISIONS IN THE LIGHT OF THE CIRCUMSTANCES OF THE INSTANT CASE BUT WE DO NOT FEEL THAT THEY SUPPORT THE REJECTION AND READVERTISEMENT ACTION CONTEMPLATED. IT IS ALSO URGED THAT THE COST SAVING TO THE GOVERNMENT THROUGH READVERTISING CANNOT BE DETERMINED BY COMPUTING THE DIFFERENCE BETWEEN THE NONRESPONSIVE BID OF THE LOW BIDDER AND THE NEXT RESPONSIVE LOW BIDDER. HENCE, IT IS CONTENDED THAT REINSTATEMENT OF THE INITIAL SOLICITATION SHOULD NOT BE MADE UNLESS THERE IS COGENT EVIDENCE THAT THE DOLLAR SAVINGS TO RESULT FROM THE READVERTISING WILL BE DE MINIMIS. IN ADDITION, THE CONTENTION IS MADE THAT SUPERTECHNOLOGY IS NEITHER A "REGULAR DEALER" NOR A "MANUFACTURER" WITHIN THE MEANING OF THE WALSH-HEALEY ACT, 41 U.S.C. 35-45. IT IS STATED THAT IN A LETTER OF AUGUST 4, 1969, SUPERTECHNOLOGY ADVISED THAT DEFENSE CONTRACT ADMINISTRATION SERVICES REGION (DCASR) DETERMINED THAT IT WAS NOT A REGULAR DEALER OR A MANUFACTURER WITHIN THE MEANING OF THE WALSH-HEALEY ACT.

WHILE OUR OFFICE HAS RECOGNIZED IN THE DECISIONS CITED ABOVE THAT THE ADMINISTRATIVE AUTHORITY TO REJECT ALL BIDS AND READVERTISE IS EXTREMELY BROAD AND THAT ORDINARILY WE WILL NOT QUESTION SUCH ACTION, IT IS OUR VIEW THAT THE REJECTION OF ALL BIDS AND THE READVERTISEMENT OF THE PROCUREMENT WAS NOT BASED ON A "COMPELLING REASON." ALTHOUGH A REVISION IN SPECIFICATIONS IS, IN SOME INSTANCES, A "COMPELLING REASON" TO CANCEL AN INVITATION, IT WOULD SEEM THAT CANCELLATION ON THAT GROUND SHOULD BE LIMITED TO INSTANCES IN WHICH AN AWARD UNDER THE ORIGINAL SPECIFICATIONS WOULD NOT SERVE THE GOVERNMENT'S ACTUAL NEEDS.

WE CAN APPRECIATE THAT THE GOVERNMENT'S NEEDS, AT A MINIMUM, MIGHT BE SATISFIED BY SPECIFYING 180-RATIO WIRE AT A SLIGHTLY LESSER COST BUT WE FEEL THAT READVERTISING THE PROCUREMENT AFTER BIDS HAVE BEEN EXPOSED WOULD BE FAR MORE PREJUDICIAL TO THE COMPETITIVE BIDDING SYSTEM THAN AN AWARD UNDER THE 200-RATIO SPECIFICATION. WHILE THE ATTORNEYS FOR NORTON ARGUE THAT REINSTATEMENT OF THE INITIAL SOLICITATION WOULD BE IMPROPER UNLESS THERE IS COGENT EVIDENCE TO SHOW THAT THE DOLLAR SAVINGS ON READVERTISEMENT WOULD BE RELATIVELY SMALL, WE ARE OF THE VIEW THAT THE SAVINGS POSSIBLE ON READVERTISEMENT WHICH, AT THE BEST, ARE PURELY SPECULATIVE, ARE NOT FOR CONSIDERATION UNDER CIRCUMSTANCES SUCH AS INVOLVED HERE. RATHER, THE PRIMARY CONSIDERATION IN THIS TYPE OF SITUATION SHOULD BE THE COST TO THE GOVERNMENT IN THE EVENT OF AN AWARD UNDER THE INITIAL SOLICITATION. SINCE ADEQUATE COMPETITION WAS OBTAINED IN THIS CASE; SINCE THE DIFFERENCE BETWEEN THE TWO LOW BIDS IS RELATIVELY SMALL; AND SINCE THERE IS NO EVIDENCE TO INDICATE THAT THE REQUIREMENT FOR WIRE OF 200 RATIO PRECLUDED OTHER POTENTIAL BIDDERS FROM SUBMITTING RESPONSIVE BIDS, WE BELIEVE THAT THE CIRCUMSTANCES REQUIRE AN AWARD UNDER THE INITIAL SOLICITATION.

INSOFAR AS SUPERTECHNOLOGY'S STATUS UNDER THE WALSH-HEALEY ACT IS CONCERNED, WE NOTE THAT SUPERTECHNOLOGY MERELY STATED IN ITS LETTER OF AUGUST 4, 1969, THAT DCASR PRESUMABLY, UNDER THE WALSH-HEALEY ACT, "FAILED TO CLASSIFY US EITHER AS A MANUFACTURER OR A DEALER." WE DO NOT CONSTRUE THIS AS A FINDING THAT SUPERTECHNOLOGY DOES NOT SO QUALIFY. IN ANY EVENT, THE WALSH-HEALEY ELIGIBILITY OF SUPERTECHNOLOGY IS FOR DETERMINATION IN ACCORDANCE WITH NASA PROCUREMENT REGULATIONS, 41 C.F.R. 18-1.218 AND .228.

ACCORDINGLY, THE INVITATION SHOULD BE REINSTATED AND AWARD MADE TO THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER, IF PROPER IN OTHER RESPECTS. THE BIDS RECEIVED UNDER THE READVERTISEMENT SHOULD BE RETURNED TO THE BIDDERS UNOPENED.

THE FILE FORWARDED WITH THE DIRECTOR'S LETTER IS RETURNED HEREWITH AS REQUESTED.