B-168567, APR. 16, 1970

B-168567: Apr 16, 1970

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WAS PROPERLY REJECTED AS NONRESPONSIVE SINCE SUCH QUALIFICATION CONSTITUTED MATERIAL EXCEPTION TO SOLICITATION'S TERMS. TO INTERNATIONAL HARVESTER COMPANY: FURTHER REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 5. THE SOLICITATION WAS ISSUED SEPTEMBER 17. WHICH WAS ACKNOWLEDGED BY YOU IN YOUR BID. " OF THE SOLICITATION WAS AMENDED BY THE ADDITION OF THE FOLLOWING LANGUAGE TO THE "GUARANTEE" SUBPARAGRAPH (PAGES 14 AND 15 OF THE SOLICITATION): "IF ACTION TO EFFECT REPAIRS UNDER WARRANTY IS NOT INITIATED WITHIN THREE WORKING DAYS AND COMPLETED IN A REASONABLE LENGTH OF TIME OR IF THE CONTRACTOR HAS NO REPAIR FACILITIES IN THE CITY OR COUNTY IN WHICH THE VEHICLE OPERATES. WHERE WARRANTY WORK IS PERFORMED AT A COMMERCIAL GARAGE BECAUSE NO MANUFACTURER OR GOVERNMENT FACILITY IS AVAILABLE.

B-168567, APR. 16, 1970

BIDS--QUALIFIED--WARRANTIES UNDER INVITATION FOR POST OFFICE DEPARTMENT TRUCKS RESERVING GOVERNMENT RIGHT TO REIMBURSEMENT FOR WARRANTY REPAIRS MADE ELSEWHERE BECAUSE NOT INITIATED OR COMPLETED BY CONTRACTOR UNDER WARRANTY WITHIN SPECIFIED TIME, BID THAT INCLUDED PROVISIONS REQUIRING BIDDER'S APPROVAL FOR REPAIRS MADE IN FACILITIES OTHER THAN BIDDER'S, WAS PROPERLY REJECTED AS NONRESPONSIVE SINCE SUCH QUALIFICATION CONSTITUTED MATERIAL EXCEPTION TO SOLICITATION'S TERMS, SUBSTANTIALLY LIMITING GOVERNMENT'S CONTRACTUAL RIGHTS WITHIN MEANING OF FEDERAL PROCUREMENT REGULATIONS 1-2.404-2 (B) (5), AFFECTING AS IT DID, PRICE AND QUALITY OF VEHICLES OFFERED, AND SUBSTANTIALLY DILUTING WARRANTY CLAUSE IN SOLICITATION. SEE COMP. GEN. DECS. CITED.

TO INTERNATIONAL HARVESTER COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 5, 1969, WITH ENCLOSURES, PROTESTING THE REJECTION OF YOUR BID UNDER SOLICITATION NO. FPNMH-H-17321-A-10-17-69, ISSUED BY THE GENERAL SERVICES ADMINISTRATION (GSA). YOUR COMPANY SUBMITTED THE ONLY BID IN RESPONSE TO THE SOLICITATION.

THE SOLICITATION WAS ISSUED SEPTEMBER 17, 1969, FOR A DEFINITE QUANTITY CONTRACT FOR 458 VAN BODY POST OFFICE DEPARTMENT TRUCKS IN ACCORDANCE WITH SPECIFICATIONS CONTAINED IN THE SOLICITATION. BY AMENDMENT NO. 1 DATED SEPTEMBER 26, 1969, WHICH WAS ACKNOWLEDGED BY YOU IN YOUR BID, PARAGRAPH 21, "WARRANTY OR GUARANTEE," OF THE SOLICITATION WAS AMENDED BY THE ADDITION OF THE FOLLOWING LANGUAGE TO THE "GUARANTEE" SUBPARAGRAPH (PAGES 14 AND 15 OF THE SOLICITATION):

"IF ACTION TO EFFECT REPAIRS UNDER WARRANTY IS NOT INITIATED WITHIN THREE WORKING DAYS AND COMPLETED IN A REASONABLE LENGTH OF TIME OR IF THE CONTRACTOR HAS NO REPAIR FACILITIES IN THE CITY OR COUNTY IN WHICH THE VEHICLE OPERATES, THE GOVERNMENT RESERVES THE RIGHT TO MAKE SUCH REPAIRS AND BE REIMBURSED BY THE MANUFACTURER AT THE RATE OF $9.00 PER HOUR FOR LABOR BASED ON THE MANUFACTURER'S FLAT RATE TIME SCHEDULE AND FULL COST OF EXPENDITURES FOR PARTS. WHERE WARRANTY WORK IS PERFORMED AT A COMMERCIAL GARAGE BECAUSE NO MANUFACTURER OR GOVERNMENT FACILITY IS AVAILABLE, THE NET COST OF THE PARTS AND ACTUAL COST OF THE LABOR WILL BE BILLED TO THE MANUFACTURER."

THE SOLICITATION PROVIDED IN THIS RESPECT THAT:

"THE BIDDER WILL FURNISH BELOW AN OUTLINE OF THE METHOD OF IMPLEMENTATION OF THE CORRECTIVE ACTION UNDER THIS WARRANTY CLAUSE, INCLUDING (1) TO WHAT OFFICES) OR AGENCY (AGENCIES) OF THE CONTRACTOR, REPORTS OF DEFECTIVE ASSEMBLIES OR PARTS SHOULD BE MADE BY THE FIELD INSTALLATION EXPERIENCING WARRANTABLE DIFFICULTY, (2) WHERE IMMEDIATE REPLACEMENT OF DEFECTIVE ITEMS MAY BE OBTAINED AND (3) OTHER INFORMATION WHICH WILL FACILITATE PROMPT ACTION ON WARRANTY CLAIMS SUBMITTED. (ATTACH ADDITIONAL SHEETS IF SUFFICIENT SPACE IS NOT PROVIDED.)"

IN THE SPACE THEREIN PROVIDED, YOUR BID CONTAINED THE FOLLOWING TYPED INFORMATION:

"ALL COMPLAINTS FOR CORRECTIVE ACTION CAN BE PLACED WITH THE NEAREST INTERNATIONAL HARVESTER COMPANY DISTRICT, RETAIL BRANCH OR DEALER AND CORRECTIVE ACTION WILL BE IMMEDIATELY TAKEN. PRIOR WRITTEN APPROVAL MUST BE OBTAINED FROM INTERNATIONAL HARVESTER COMPANY, 1707 L STREET, N.W; WASHINGTON, D.C. 20036, IF ANY UNIT IS TO BE CORRECTED IN ANY FACILITY OTHER THAN THOSE OF INTERNATIONAL HARVESTER COMPANY OR ITS DEALERS IN ORDER TO OBTAIN PAYMENT ON THOSE CLAIMS. (THIS PROCEDURE IS NOT REQUIRED FOR INTERNATIONAL HARVESTER COMPANY FACILITIES OR THOSE OF ITS DEALERS.)"

THE CONTRACTING OFFICER DETERMINED THAT THIS LANGUAGE SUBSTANTIALLY QUALIFIED YOUR BID AS TO THE WARRANTY PROVISIONS AND RENDERED IT NONRESPONSIVE. SEE 42 COMP. GEN. 96, 97 (1962). SINCE A NONRESPONSIVE BID MAY NOT BE AMENDED AFTER OPENING TO CORRECT SUCH DEFICIENCY (38 COMP. GEN. 819 (1960)), NO AWARD WAS MADE UNDER THE SOLICITATION.

YOU OBJECT TO THE POSITION TAKEN BY GSA THAT YOUR BID WAS NONRESPONSIVE AND MAINTAIN THAT THE ONLY ISSUE IS ONE OF THE "IMPLEMENTATION OF THE PROVISIONS OF PARAGRAPH 21 'WARRANTY OR GUARANTEE' OF THE IFB." IT IS YOUR POSITION THAT YOU HAVE RESPONDED TO THE IMPLEMENTATION REQUIREMENT, QUOTED ABOVE, IN A MANNER WHICH IN NO WAY LIMITS THE GOVERNMENT'S CONTRACTUAL RIGHTS, AND THAT YOU HAVE IMPOSED NO LIMITATION ON YOUR GUARANTY LIABILITY. RATHER, IT IS YOUR VIEW THAT THE LANGUAGE INSERTED IN YOUR BID TO THE EFFECT THAT YOUR PRIOR APPROVAL WOULD BE NECESSARY IF CORRECTIVE WORK IS NOT TO BE DONE BY YOUR COMPANY OR ITS DEALERS WAS FOR THE PURPOSE OF DETERMINING WHETHER SUCH CORRECTIVE WORK WAS IN FACT WARRANTY WORK UNDER PARAGRAPH 21. YOU STATE FURTHER THAT WITHOUT THE IMPLEMENTATION STATED IN YOUR BID THE GOVERNMENT WOULD BE THE SOLE PARTY DETERMINING WHETHER WORK WAS CONTEMPLATED BY PARAGRAPH 21.

WITH REGARD TO THE REJECTION OF INDIVIDUAL BIDS, THE FEDERAL PROCUREMENT REGULATIONS (FPR) PROVIDE, IN PERTINENT PART, AS FOLLOWS:

"SEC. 1-2.404-2 REJECTION OF INDIVIDUAL BIDS.

"(A) ANY BID WHICH FAILS TO CONFORM TO THE ESSENTIAL REQUIREMENTS OF THE INVITATION FOR BIDS, SUCH AS SPECIFICATIONS, DELIVERY SCHEDULE, OR PERMISSIBLE ALTERNATES THERETO, SHALL BE REJECTED AS NONRESPONSIVE.

"(B) ORDINARILY A BID SHALL BE REJECTED WHERE THE BIDDER IMPOSES CONDITIONS WHICH WOULD MODIFY REQUIREMENTS OF THE INVITATION FOR BIDS OR LIMIT HIS LIABILITY TO THE GOVERNMENT SO AS TO GIVE HIM AN ADVANTAGE OVER OTHER BIDDERS. FOR EXAMPLE, BIDS SHALL BE REJECTED IN WHICH THE BIDDER:

"(5) LIMITS RIGHTS OF GOVERNMENT UNDER ANY CONTRACT CLAUSE. HOWEVER, A LOW BIDDER MAY BE REQUESTED TO DELETE OBJECTIONABLE CONDITIONS FROM HIS BID IF THESE CONDITIONS DO NOT GO TO THE SUBSTANCE, AS DISTINGUISHED FROM THE FORM OF THE BID. A CONDITION GOES TO THE SUBSTANCE OF A BID WHERE IT AFFECTS PRICE, QUANTITY, QUALITY, OR DELIVERY OF THE ITEMS OFFERED."

IT IS A FUNDAMENTAL RULE IN COMPETITIVE BIDDING THAT A CONTRACT MAY BE AWARDED ONLY ON A BID WHICH IS RESPONSIVE TO THE TERMS OF THE INVITATION. THE AWARD MUST BE MADE UPON THE TERMS ADVERTISED, AND NO BINDING CONTRACT RESULTS WHEN THE SUBMITTED BID IS MATERIALLY AT VARIANCE WITH THE TERMS OF THE INVITATION. 44 COMP. GEN. 193 (1964); 36 COMP. GEN. 535, 539 (1957); 16 COMP. GEN. 392 (1936). ALSO, WE HAVE RECOGNIZED THAT THE TERMS OF A WARRANTY UNQUESTIONABLY MAY BE MATERIAL AND THAT A QUALIFICATION OF WARRANTY TERMS STIPULATED IN THE INVITATION REQUIRES REJECTION OF THE NONCONFORMING BID. 42 COMP. GEN. 96, 97, SUPRA; B-138307, MAY 15, 1959. IN THIS CASE, THE EFFECT OF THE ADDITIONAL WARRANTY CLAUSE INSERTED IN THE SOLICITATION BY AMENDMENT NO. 1 WAS SUBSTANTIALLY DILUTED BY THE QUALIFICATION STATED IN YOUR BID.

THE ADMINISTRATIVE REPORT DISCLOSES THAT THE ISSUANCE OF AMENDMENT NO. 1 WAS REQUESTED BY THE POST OFFICE DEPARTMENT, THE REQUISITIONING AGENCY, TO MINIMIZE VEHICLE DOWNTIME. THAT DEPARTMENT ADVISED GSA THAT IT HAD BEEN EXPERIENCING LENGTHY DELAYS IN OBTAINING WARRANTY REPAIRS.

YOU HAVE INDICATED INFORMALLY TO OUR OFFICE THAT THERE APPEARS TO BE NO NEED FOR THE ADDITION TO THE WARRANTY CLAUSE, BECAUSE, PRIOR TO ITS INCLUSION, IT WAS CUSTOMARY AND STANDARD OPERATING PROCEDURE FOR ANY AGENCY OFFICIALS TO OBTAIN PRIOR APPROVAL FOR WARRANTY REPAIRS TO BE MADE IN THE GOVERNMENT'S OWN SHOPS, AT INDEPENDENT REPAIR SHOPS, OR AT OTHER DEALER'S FACILITIES, AND THAT THIS PROCEDURE WORKED VERY WELL IN PRACTICE.

THE RECORD SHOWS THAT THE ADDED CLAUSE WAS DETERMINED TO BE NECESSARY IN ORDER TO PREVENT DELAYS IN OBTAINING WARRANTY WORK. THE QUALIFICATION IN YOUR BID WOULD SUBSTANTIALLY LIMIT THE GOVERNMENT'S CONTRACTUAL RIGHTS WITHIN THE MEANING OF FPR SEC. 1-2.404-2 (B) (5), AFFECTING AS IT DOES THE PRICE AND QUALITY OF THE VEHICLES OFFERED. MOREOVER, THE STATED QUALIFICATION MIGHT CAUSE THE VERY DELAYS IN OBTAINING WARRANTY WORK WHICH THE GOVERNMENT SOUGHT TO PREVENT BY INSERTING THE ADDITIONAL CLAUSE BY AMENDMENT.

THE ADDITION OF THE CLAUSE WILL NOT, CONTRARY TO YOUR VIEWS, CONSTITUTE THE GOVERNMENT THE SOLE PARTY TO DETERMINE WHETHER ANY CORRECTIVE WORK IS OF A WARRANTY NATURE. THE QUESTION WHETHER CORRECTIVE WORK IS COVERED BY THE WARRANTY IS ONE OF FACT AS TO WHICH THE PROCEDURES PRESCRIBED BY THE CONTRACT DISPUTES CLAUSE APPLY IN THE EVENT OF DISAGREEMENT BETWEEN THE PARTIES. THE ACCEPTANCE OF YOUR QUALIFICATION, ON THE OTHER HAND, WOULD DEPRIVE THE GOVERNMENT OF WARRANTY COVERAGE FOR REPAIRS MADE BY PARTIES OTHER THAN INTERNATIONAL HARVESTER, UNLESS YOUR COMPANY GAVE PRIOR WRITTEN APPROVAL; AND WORK COULD NOT BE PERFORMED WITHOUT SUCH APPROVAL.

SINCE YOUR COMPANY INCLUDED IN ITS BID A MATERIAL EXCEPTION TO THE TERMS AND CONDITIONS OF THE SOLICITATION, WE MUST CONCUR IN THE ADMINISTRATIVE VIEW THAT THE BID WAS NONRESPONSIVE. WE THEREFORE CONCLUDE THAT YOUR BID WAS PROPERLY REJECTED AND MAY NOT BE CONSIDERED FOR AWARD. ACCORDINGLY, YOUR PROTEST IS DENIED.