B-168116, DEC. 22, 1969

B-168116: Dec 22, 1969

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AFTER WAIVER WAS REQUESTED. AWARD WAS DETERMINED INVALID SINCE PROTESTANT WAS NOT LOW RESPONSIVE BIDDER. PROTEST TO CANCELLATION OF AWARD IS DENIED. PURPOSE OF STATUTES REQUIRING USE OF COMPETITIVE BIDDING SYSTEM IS TO GIVE ALL PERSONS EQUAL RIGHT TO COMPETE FOR GOVERNMENT CONTRACTS. WILL BE MOST ADVANTAGEOUS TO GOVT. IS DENIED SINCE INVALID CONTRACT CREATES NO RIGHT TO PAYMENT FOR BENEFITS NOT RECEIVED BY PUBLIC BODY PRIOR TO CONTRACT CANCELLATION. RIGHT TO PAYMENT ON QUANTUM VALEBAT OR QUANTUM MERUIT BASIS IS PREDICATED ON THEORY THAT IT WOULD BE INEQUITABLE FOR GOVERNMENT TO RETAIN BENEFITS OF OTHER PARTY'S LABOR AND THERE IS NO INDICATION THAT TANGIBLE BENEFITS WERE CONFERRED ON GOVT.

B-168116, DEC. 22, 1969

AWARDS--CANCELLATION--ERRONEOUS AWARDS UNDER INVITATION FOR DESICCANT, BIDDER WHO RECEIVED AWARD, HAD TAKEN EXCEPTION TO SPECIFICATIONS ON PARTICLE SIZE. AFTER WAIVER WAS REQUESTED, SUCCESSOR CONTRACTING OFFICER DETERMINED THAT REQUESTED DEVIATION FROM SPECIFICATIONS WENT TO SUBSTANCE OF BID AND COULD NOT BE WAIVED, AWARD WAS DETERMINED INVALID SINCE PROTESTANT WAS NOT LOW RESPONSIVE BIDDER. PROTEST TO CANCELLATION OF AWARD IS DENIED. PURPOSE OF STATUTES REQUIRING USE OF COMPETITIVE BIDDING SYSTEM IS TO GIVE ALL PERSONS EQUAL RIGHT TO COMPETE FOR GOVERNMENT CONTRACTS--TO COMPETE ON COMMON BASIS. GOVERNING 10 U.S.C. 2305 (C) REQUIRES AWARD TO RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO INVITATION, WILL BE MOST ADVANTAGEOUS TO GOVT; PRICE AND OTHER FACTORS CONSIDERED. AWARDS- CANCELLATION--PREPARATION COSTS, ETC. CLAIM FOR $1,430.03, REPRESENTING EXPENSES PURPORTEDLY INCURRED IN ATTEMPTING TO DETERMINE DEFENSE SUPPLY AGENCY REQUIREMENTS PRIOR TO CANCELLATION OF CONTRACT FOR ERRONEOUS AWARD TO OTHER THAN LOW BIDDER - CONTRARY TO STATUTORY REQUIREMENT -- IS DENIED SINCE INVALID CONTRACT CREATES NO RIGHT TO PAYMENT FOR BENEFITS NOT RECEIVED BY PUBLIC BODY PRIOR TO CONTRACT CANCELLATION. RIGHT TO PAYMENT ON QUANTUM VALEBAT OR QUANTUM MERUIT BASIS IS PREDICATED ON THEORY THAT IT WOULD BE INEQUITABLE FOR GOVERNMENT TO RETAIN BENEFITS OF OTHER PARTY'S LABOR AND THERE IS NO INDICATION THAT TANGIBLE BENEFITS WERE CONFERRED ON GOVT.

TO MULTIFORM DESICCANT PRODUCTS, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 9, 1969, WITH ENCLOSURES, PROTESTING AGAINST THE ACTION OF THE DEFENSE SUPPLY AGENCY, DEFENSE GENERAL SUPPLY CENTER, RICHMOND, VIRGINIA, IN CANCELING CONTRACT NO. DSA-400-69-C-5713 WHICH WAS AWARDED TO YOUR FIRM PURSUANT TO SOLICITATION NO. DSA-400-69-B-5960.

THE SOLICITATION DATED MARCH 19, 1969, REQUESTED BIDS FOR FURNISHING 3,200 BAGS OF DESICCANT IN ACCORDANCE WITH THE FOLLOWING NOMENCLATURE: "FSN 6850-856-6632 "DESICCANT ACTIVATED: ACTIVE INGREDIENT CALCIUM AND SODIUM OXIDES OF ALUMINOSILICATE IN CLOTH BAG OVERPACKED AS DESCRIBED IN REFERENCE DWG UNIT QTY 2 LB BAG ORD CORPS DWG 8034671 DTD 12 JUN 63" THE CITED DRAWING SPECIFICALLY REQUIRES A 1/8-INCH PELLET SIZE OR 8-12 MESH. YOUR BID OF $2.71 PER BAG WAS THE LOWEST OF THE THREE BIDS RECEIVED ON THE DESICCANT.

IT IS REPORTED THAT IN EVALUATING THE BIDS RECEIVED, THE PROCUREMENT AGENT NOTED THAT YOU HAD INSERTED THE FOLLOWING LANGUAGE ON THE ITEM DESCRIPTION PAGE OF THE SOLICITATION: "HI-DRY (R) 32 CONTAINING NATRASORB (R) 5A-40 (CALCIUM ALUMINO SILICATE) 16 TO 40 MESH, ACTIVATED.'

THE RECORD INDICATES THAT ON APRIL 14, 1969, THE PROCUREMENT AGENT TELEPHONED MR. JOHN S. CULLEN OF YOUR FIRM AND INQUIRED WHETHER THE FOREGOING NOTATION IN YOUR BID WAS INTENDED AS AN EXCEPTION TO THE SPECIFICATIONS. MR. CULLEN INFORMED THE PROCUREMENT AGENT THAT NO EXCEPTIONS TO THE SPECIFICATIONS WERE INTENDED AND THAT SUCH NOTATION WAS INTENDED ONLY FOR CLARIFICATION OF THE MATERIAL BEING OFFERED BY YOUR FIRM. ON APRIL 30, 1969, A CONTRACT FOR FURNISHING THE DESICCANT WAS AWARDED TO YOUR FIRM. THE NOTICE OF AWARD DID NOT MENTION THE EXCEPTION THAT YOU HAD TAKEN TO THE SPECIFICATIONS.

BY LETTER DATED JUNE 26, 1969, YOU ADVISED THE CONTRACTING OFFICER AS FOLLOWS:

"NOTE THAT ON OUR BID WE OFFERED TO SUPPLY OUR PART NUMBER HI-DRY (R) 32 CONTAINING NATRASORB (R) 5A-40, 16 TO 40 MESH, ACTIVATED FOR THIS REQUIREMENT.

"THIS IS A MINOR CHANGE IN SO FAR AS IT AFFECTS THE PARTICLE SIZE OF THE ACTIVE INGREDIENT WITHIN THE BAG ONLY AND SUCH WAS CONFIRMED BY TELEPHONE ON AN INQUIRY FROM YOUR AGENCY APRIL 14TH REGARDING THE BID.

"WHILE THE USE OF NATRASORB (R) 5A-40, 16 TO 40 MESH IS NOT AN EXCEPTION WITHIN THE SCOPE OF THE PART IT SHOULD BE CLARIFIED ON YOUR CONTRACT SO AS NOT TO CONFUSE THE ISSUE WHEN THE PRODUCTS ARE READY FOR INSPECTION.'

BY LETTER DATED JULY 16, 1969, AND TELEGRAM OF AUGUST 12, 1969, YOU REQUESTED A WAIVER OF THE PARTICLE SIZE ON ORDNANCE DRAWING 8034671 WHICH SPECIFIES A 1/8-INCH PELLET-SIZED PRODUCT AND NOT THE MUCH FINER PARTICLES OFFERED BY YOUR FIRM.

AFTER REVIEWING THE FILE, THE CONTRACTING OFFICER DETERMINED THAT THE AWARD TO YOUR FIRM HAD BEEN ISSUED IN ERROR SINCE IT WAS MADE ON THE BASIS OF AN ERRONEOUS ASSUMPTION THAT YOUR FIRM HAD NOT TAKEN AN EXCEPTION TO THE PARTICLE SIZE REQUIREMENTS OF THE SOLICITATION. BY TELEGRAM OF SEPTEMBER 10, 1969, AND LETTER DATED SEPTEMBER 11, 1969, THE CONTRACTING OFFICER ADVISED YOUR FIRM THAT THE AWARD OF A CONTRACT TO YOUR FIRM UNDER THE SUBJECT SOLICITATION WAS BEING CANCELED BECAUSE IT WAS IMPROPER AND NOT AUTHORIZED BY LAW. YOUR WERE ALSO ADVISED THAT NO SUPPLIES WOULD BE ACCEPTED OR PAYMENTS MADE UNDER THAT CONTRACT.

IN A LETTER DATED OCTOBER 9, 1969, TO OUR OFFICE, YOU CONTEND THAT YOU ENTERED INTO THE CONTRACT WITH THE GOVERNMENT IN GOOD FAITH, CLEARLY SPECIFYING THE NATURE OF THE PRODUCT YOU WERE OFFERING IN YOUR PROPOSAL OF APRIL 7, 1969, AND AGAIN IN YOUR TELEPHONE CONVERSATION OF APRIL 14, 1969, WITH A REPRESENTATIVE OF THE PROCURING ACTIVITY. YOU ALLEGE THAT FROM THE TIME THE CONTRACT WAS AWARDED TO YOUR FIRM TO THE TIME IT WAS CANCELED, YOUR COMPANY INCURRED EXPENSES AMOUNTING TO $1,430.03 WHICH YOU STATE ARE NOT RECOVERABLE BY YOUR FIRM. YOU STATE THAT IT IS NOT YOUR RESPONSIBILITY TO ABSORB THIS LOSS IN ATTEMPTING TO DETERMINE THE AGENCY'S REQUIREMENTS FOR THESE PRODUCTS.

A SIMILAR SITUATION WAS CONSIDERED BY OUR OFFICE IN 16 COMP. GEN. 392 (1936) WHERE AN AWARD WAS MADE IN IGNORANCE OF A MATERIAL QUALIFICATION INSERTED IN THE BID BUT NOT ABSTRACTED OR BROUGHT TO THE ATTENTION OF THE CONTRACTING OFFICER UNTIL AFTER AWARD. WE HELD IN THAT CASE, WHICH IS EQUALLY APPLICABLE HERE, THAT:

"IN THE AWARDING OF GOVERNMENT CONTRACTS THERE IS A WELL ESTABLISHED PRINCIPLE THAT THE CONTRACT OFFERED THE SUCCESSFUL BIDDER MUST BE THE EXACT CONTRACT WHICH WAS SUBMITTED TO COMPETITION. 8 COMP. GEN. 649, A 56760, AUGUST 15, 1934. SEE, ALSO, PASCOE V BARLUM, 65 ALR 833, AND ANNOTATIONS FOLLOWING SAID CASE. THE BID OF AUSTIN, NICHOLS AND COMPANY WAS NOT IN SUBSTANTIAL COMPLIANCE WITH THE ADVERTISED SPECIFICATIONS AND FOR THAT REASON SHOULD HAVE BEEN REJECTED OR DISREGARDED BY THE CONTRACTING OFFICER.

"IT IS STATED IN YOUR LETTER THAT THE -AWARD WAS MADE BEFORE THE QUALIFICATION IN THIS FIRM'S BID WAS DISCOVERED BY THE PURCHASING OFFICER * * *.- IN OTHER WORDS, IT APPEARS THE PURCHASING OFFICER SENT THE NOTICE OF ACCEPTANCE UNDER THE ERRONEOUS ASSUMPTION THAT THE BID WAS IN COMPLIANCE WITH THE ADVERTISED SPECIFICATIONS. THIS BIDDER DID NOT INTEND TO AND DID NOT SUBMIT ITS BID IN ACCORDANCE WITH THE ADVERTISED SPECIFICATIONS AND THE CONTRACTING OFFICER DID NOT INTEND TO AND LACKED THE AUTHORITY TO ACCEPT A BID NOT IN ACCORDANCE WITH THE ADVERTISED SPECIFICATIONS.

"IT IS ELEMENTARY THAT A CONTRACT CAN RESULT ONLY FROM A MUTUAL ASSENT, A CONSCIOUS MEETING OF THE MINDS, OF THE CONTRACTING PARTIES IN A COMMON INTENTION. THERE BEING NO SUCH MEETING OF THE MINDS IN THE INSTANT CASE, IT IS CLEAR THAT NO CONTRACT RESULTED FROM THE NEGOTIATIONS. * * *" SEE ALSO 44 COMP. GEN. 193 (1964).

YOUR BID TOOK EXCEPTION TO THE PARTICLE SIZE REQUIREMENT OF THE SOLICITATION AND AFTER YOU REQUESTED A WAIVER OF SUCH REQUIREMENT, THE SUCCESSOR CONTRACTING OFFICER DETERMINED THAT THE REQUESTED DEVIATION FROM THE SPECIFICATIONS WENT TO THE SUBSTANCE OF YOUR BID AND COULD NOT BE WAIVED. A DEVIATION FROM ADVERTISED REQUIREMENTS MAY NOT BE WAIVED IF IT GOES TO THE SUBSTANCE OF THE BID OR WORKS AN INJUSTICE TO OTHER BIDDERS. PRESTEX, INC. V UNITED STATES, 162 CT. CL. 620 (1963). OUR OFFICE HAS DEFINED A SUBSTANTIAL DEVIATION WHICH MAY NOT BE WAIVED AS ONE WHICH AFFECTS EITHER THE PRICE, QUANTITY, OR QUALITY OF THE ARTICLE OR SERVICE OFFERED. 30 COMP. GEN. 179 (1950).

ONE OF THE CHIEF PURPOSES OF THE STATUTES REQUIRING THE USE OF THE COMPETITIVE BIDDING SYSTEM IS TO GIVE ALL PERSONS AN EQUAL RIGHT TO COMPETE FOR GOVERNMENT CONTRACTS; THAT IS, TO COMPETE ON A COMMON BASIS. UNITED STATES V BROOKRIDGE FARM, 111 F.2D 461 (1940). COMPETING BIDDERS HAVE A RIGHT TO ASSUME THAT SPECIFICATION REQUIREMENTS CONTAINED IN THE INVITATION ARE ESSENTIAL TO THE GOVERNMENT AND THAT THOSE REQUIREMENTS WILL NOT BE WAIVED BY THE CONTRACTING AGENCY IN FAVOR OF ONE BIDDER SINCE TO DO SO WOULD PLACE THE BIDDERS ON AN UNEQUAL FOOTING. WHERE A CHANGE IN THE SPECIFICATIONS IS SOUGHT TO BE IMPOSED OR AGREED TO AS THE RESULT SOLELY OF ACTION BY ONE OR BOTH OF THE PARTIES, AWARD ON THE BASIS OF THE CHANGED SPECIFICATIONS CONTRAVENES THE ESTABLISHED PRINCIPLES OF COMPETITIVE BIDDING. 40 COMP. GEN. 55 (1960). IN PRESTEX, SUPRA, THE COURT RULED THAT THE CONTRACT THERE AWARDED WAS INVALID BECAUSE IT WAS AWARDED ON A BASIS OTHER THAN THE ADVERTISED SPECIFICATIONS.

THE PROCUREMENT IN QUESTION IS GOVERNED BY 10 U.S.C. 2305 (C) WHICH PROVIDES THAT AWARD SHALL BE MADE TO THAT RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. CF. 37 COMP. GEN. 550 (1958). SUBSTANTIALLY, THE SAME PROVISION HAS BEEN INCLUDED IN PARAGRAPH 2-407.1 OF THE ARMED SERVICES PROCUREMENT REGULATION AND THESE REGULATIONS HAVE BEEN GIVEN THE FORCE AND EFFECT OF LAW. IN VIEW OF THE FOREGOING, WE CONCLUDE THAT THE AWARD TO YOU WAS INVALID BECAUSE YOU WERE NOT THE LOW RESPONSIVE BIDDER. IN THESE CIRCUMSTANCES, THERE EXISTS STRONG PRECEDENT FOR HOLDING THAT A CONTRACT WITHIN THE AUTHORITY OF THE PUBLIC BODY, WHICH IS INVALID BECAUSE IT WAS ENTERED INTO CONTRARY TO STATUTORY REQUIREMENT, CREATES NO RIGHT TO PAYMENT FOR BENEFITS NOT RECEIVED BY THE PUBLIC BODY PRIOR TO CONTRACT CANCELLATION. SEE PRESTEX, INC. V UNITED STATES, SUPRA, 44 COMP. GEN. 221 (1964).

WHILE THE CANCELLATION OF AN INVALID CONTRACT WHICH A PARTY ACCEPTS IN GOOD FAITH IS UNFORTUANTE AND WHILE A RIGHT TO PAYMENT IN THESE CIRCUMSTANCES ON A QUANTUM VALEBAT OR QUANTUM MERUIT BASIS IS RECOGNIZED BY THE COURTS AND OUR OFFICE (CROCKER V UNITED STATES, 240 U.S. 74 (1916); 21 COMP. GEN. 800 (1942); 33 ID 533 (1954) (, SUCH RIGHT IS PREDICATED ON THE THEORY THAT IT WOULD BE INEQUITABLE FOR THE GOVERNMENT TO RETAIN THE BENEFITS OF THE OTHER PARTY'S LABOR. SEE NEW YORK MAIL AND NEWSPAPER TRANSPORTATION COMPANY V UNITED STATES, 139 CT. CL. 751 (1957); PRESTEX, INC., SUPRA. THE SUPREME COURT IN UNITED STATES V MISSISSIPPI VALLEY GENERATING CO., 364 U.S. 520, 566 (1961) (FOOTNOTE NO. 22) STATED AS FOLLOWS:

"THE RESPONDENT ALSO CONTENDS THAT EVEN IF THE CONTRACT IS NOT ENFORCEABLE, A RECOVERY QUANTUM VALEBAT SHOULD BE DECREED. HOWEVER, SUCH A REMEDY IS APPROPRIATE ONLY WHERE ONE PARTY TO A TRANSACTION HAS RECEIVED AND RETAINED TANGIBLE BENEFITS FROM THE OTHER PARTY. SEE CROCKER V UNITED STATES, 240 U.S. 74, 81-82. SINCE THE GOVERNMENT HAS RECEIVED NOTHING FROM THE RESPONDENT, NO RECOVERY QUANTUM VALEBAT IS IN ORDER.' SEE ALSO 40 COMP. GEN. 447 AND 679 (1961).

THERE IS NO INDICATION IN YOUR LETTER THAT TANGIBLE BENEFITS WERE CONFERRED ON THE GOVERNMENT; CONSEQUENTLY, YOUR CLAIM FOR REIMBURSEMENT OF THE EXPENSES INCURRED BY YOUR FIRM IS DENIED.