B-168646, MAY 6, 1970, 49 COMP. GEN. 761

B-168646: May 6, 1970

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ALLEGED THE AWARD WAS VOID AB INITIO BECAUSE THE INSERTION OF THREE DASHES ( ) IN THE BID ACCEPTANCE PERIOD BLANK WAS EQUIVALENT TO LEAVING THE SPACE BLANK AND. ITS BID WAS NON-RESPONSIVE. MAY NOT HAVE THE CONTRACT SET ASIDE. THE CONTRACTOR IS LEFT TO ITS APPEAL. WHILE THE CONTRACTING OFFICER HAD HE BEEN AWARE OF THE BID DEFECT WOULD HAVE BEEN WITHOUT AUTHORITY TO MAKE AWARD. HAVE THE CONTRACT SET ASIDE AT ITS INSTANCE. THE CONTRACT IS NOT VOID AB INITIO. IS VOIDABLE ONLY AT THE OPTION OF THE GOVERNMENT. A BINDING CONTRACT WAS CONSUMMATED. 1970: REFERENCE IS MADE TO YOUR LETTERS OF DECEMBER 16. WHICH WAS AWARDED YOUR CLIENT UNDER INVITATION FOR BIDS (IFB) N00039-69-B-2017. WAS A 100 PERCENT SMALL BUSINESS SET ASIDE.

B-168646, MAY 6, 1970, 49 COMP. GEN. 761

CONTRACTS -- TERMINATION -- BID ALLEGED NONRESPONSIVE UPON CONTRACT TERMINATION FOR FAULTY PERFORMANCE, THE CONTRACTOR WHO AFTER FILED A TIMELY APPEAL TO THE TERMINATION, ALLEGED THE AWARD WAS VOID AB INITIO BECAUSE THE INSERTION OF THREE DASHES ( ) IN THE BID ACCEPTANCE PERIOD BLANK WAS EQUIVALENT TO LEAVING THE SPACE BLANK AND, THEREFORE, ITS BID WAS NON-RESPONSIVE, MAY NOT HAVE THE CONTRACT SET ASIDE, AND THE CONTRACTOR IS LEFT TO ITS APPEAL. WHILE THE CONTRACTING OFFICER HAD HE BEEN AWARE OF THE BID DEFECT WOULD HAVE BEEN WITHOUT AUTHORITY TO MAKE AWARD, THE CONTRACTOR HAVING FAILED TO TAKE ACTION PRIOR TO THE EXECUTION OF THE CONTRACT, MAY NOT AS ONE BENEFITTING FROM THE CONTRACT, HAVE THE CONTRACT SET ASIDE AT ITS INSTANCE, AND THE CONTRACT IS NOT VOID AB INITIO, BUT IS VOIDABLE ONLY AT THE OPTION OF THE GOVERNMENT. THEREFORE, THE BID ACCEPTANCE PERIOD INTENDED FOR THE BENEFIT OF THE GOVERNMENT, WHEN THE PROVISION BECAME INOPERATIVE UPON CONTRACT AWARD, A BINDING CONTRACT WAS CONSUMMATED.

TO STRASSER, SPIEGELBERG, FRIED, FRANK & KAMPELMAN, MAY 6, 1970:

REFERENCE IS MADE TO YOUR LETTERS OF DECEMBER 16, 1969, AND FEBRUARY 13, 1970, ON BEHALF OF QATRON CORPORATION, ROCKVILLE, MARYLAND, PROTESTING AGAINST THE DEPARTMENT OF THE NAVY'S NAVAL ELECTRONICS SYSTEMS COMMAND ENTERING A DEFAULT TERMINATION ON CONTRACT NO. N00039 69-C-2550, WHICH WAS AWARDED YOUR CLIENT UNDER INVITATION FOR BIDS (IFB) N00039-69-B-2017.

THE REFERENCED SOLICITATION, ISSUED ON OCTOBER 15, 1968, WAS A 100 PERCENT SMALL BUSINESS SET ASIDE, AND IT CALLED FOR BIDS BY NOVEMBER 15, 1968, FOR 30 PP4473( ) UG POWER SUPPLY, TELETYPE 12 AMPERES AT 150 VOLTS D.C. (FSC 6130), ASSOCIATED DATA REQUIREMENTS, TOGETHER WITH AN OPTION QUANTITY FOR 15 ADDITIONAL UNITS OF THE POWER SUPPLIER. IN ACCORDANCE WITH THE SOLICITATION, DELIVERY OF THE FIRST ARTICLE TEST REPORT WAS TO HAVE BEEN MADE BY JUNE 20, 1969, AND PREPRODUCTION DELIVERIES OF 5 UNITS BY APRIL 20, 1970, 10 UNITS BY MAY 20, 1970, AND 15 UNITS BY JUNE 20, 1970.

TWELVE BIDS WERE RECEIVED BY THE INVITATION OPENING DATE OF NOVEMBER 15, 1968. QATRON'S BID OF $17,160, EXCLUSIVE OF OPTION ITEMS, WAS THE LOWEST BID AND THE CORPORATION WAS REQUESTED AND DID CONFIRM ITS BID PRICE ON NOVEMBER 25, 1968. FOLLOWING A PREAWARD SURVEY, AWARD WAS MADE TO THE CORPORATION ON DECEMBER 20, 1968, IN THE AMOUNT OF $25,740, WHICH INCLUDED THE AWARD OF THE OPTION ITEM.

FOLLOWING AWARD AND WITHOUT RAISING ANY QUESTIONS CONCERNING NON RESPONSIBILITY, QATRON CORPORATION PROCEEDED WITH PERFORMANCE OF THE CONTRACT.

THE PROCURING ACTIVITY STATES THAT THEIR FILES DISCLOSE THE FOLLOWING EVENTS, WHICH THEY STATE ARE NOT ALL INCLUSIVE. ON APRIL 22, 1969, QATRON REQUESTED A CLARIFICATION OF THE SPECIFICATIONS REGARDING VOLTMETERS. APRIL 29, 1969, THE TEST PROGRAM WAS SUBMITTED. ON MAY 26, 1969, NONSTANDARD PARTS INFORMATION ON THE VOLTMETER WAS SUBMITTED. ON JUNE 3, 1969, QATRON SUBMITTED A REVISED DELIVERY SCHEDULE FOR THE FIRST ARTICLE. ON JUNE 30, 1969, QATRON SUBMITTED NOT STANDARD PARTS INFORMATION FOR THE POWER TRANSFORMER. ON AUGUST 5, 1969, AND ON AUGUST 19, 1969, ADDITIONAL NONSTANDARD PARTS INFORMATION WAS SUBMITTED. ON AUGUST 26, 1969, QATRON REQUESTED THAT TECHNICAL MANUALS FOR PACKING WITH EACH EQUIPMENT BE SUPPLIED IN ACCORDANCE WITH THE CONTRACT. ON OCTOBER 13, 1969, DCASD BALTIMORE SUBMITTED A PRODUCTION PROGRESS REPORT WHICH INDICATED THAT MECHANICAL ASSEMBLY OF THE FIRST ARTICLE WAS COMPLETE WITH FINAL ASSEMBLY WIRING IN PROCESS AND FORESAW OCTOBER 20, 1969, AS THE DATE FOR THE START OF FIRST ARTICLE TESTS. ON NOVEMBER 21, 1969, YOUR FIRM SUBMITTED A LETTER TO THE NAVAL ELECTRONICS SYSTEMS COMMAND IN QATRON'S BEHALF LISTING FOUR ITEMS OF GOVERNMENT ACTION OR INACTION UNDER THE CONTRACT WHICH MIGHT BE THE SUBJECT OF AN EQUITABLE ADJUSTMENT IN THE CONTRACT PRICE, BUT SUGGESTING THAT TERMINATION OF THE CONTRACT FOR CONVENIENCE WOULD RESULT IN LOWER COSTS TO THE GOVERNMENT THAN PAYMENT OF THE EQUITABLE ADJUSTMENT. THE LETTER ALSO TOOK THE POSITION FOR THE FIRST TIME, AFTER 11 MONTHS OF ATTEMPTED PERFORMANCE BY QATRON, THAT THE CORPORATION'S BID WAS NONRESPONSIVE AND THAT THE CONTRACT WAS THEREFORE VOID AB INITIO. YOU ATTRIBUTE SUCH DELAY TO THE FACT THAT ONLY AFTER CONSULTATION WITH COUNSEL DID THE CORPORATION REALIZE THE INVALIDITY OF THE PURPORTED AWARD AND CEASE PERFORMANCE ON THE CONTRACT.

SUBSEQUENT TO THE SUBMISSION OF YOUR QUESTION TO THIS OFFICE, THE DEPARTMENT OF THE NAVY TERMINATED QATRON'S CONTRACT FOR DEFAULT, AND QATRON HAS FILED A TIMELY APPEAL FROM SUCH TERMINATION WHICH IS PRESENTLY PENDING BEFORE THE ARMED SERVICES BOARD OF CONTRACT APPEALS.

THE INVITATION FOR BIDS IN THIS PROCUREMENT CONTAINED STANDARD FORM 33A (JULY 1966), ENTITLED "SOLICITATION INSTRUCTIONS AND CONDITIONS" AND STANDARD FORM 33 (JULY 1966), ENTITLED "SOLICITATION, OFFER AND AWARD." OF RELEVANCE TO OUR CONSIDERATION HERE, THE "OFFER" PORTION OF THE LATTER FORM PROVIDES AS FOLLOWS: IN COMPLIANCE WITH THE ABOVE, THE UNDERSIGNED OFFERS AND AGREES, IF THIS OFFER IS ACCEPTED WITHIN -- CALENDAR DAYS (60 CALENDAR DAYS UNLESS A DIFFERENT PERIOD IS INSERTED BY THE OFFEROR) FROM THE DATE FOR RECEIPT OF OFFERS SPECIFIED ABOVE, TO FURNISH ANY OR ALL ITEMS UPON WHICH PRICES ARE OFFERED, AT THE PRICE SET OPPOSITE EACH ITEM, DELIVERED AT THE DESIGNATED POINTS, WITHIN THE TIME SPECIFIED IN THE SCHEDULE.

IN SECTION I OF THE SCHEDULE, ENTITLED "EVALUATION AND AWARD FACTORS" THE PROCURING ACTIVITY IMPOSED THE FOLLOWING CONDITION:

(1) OFFER ACCEPTANCE PERIOD (APR. 1960): OFFERS OFFERING LESS THAN 90 DAYS FOR ACCEPTANCE BY THE GOVERNMENT FROM THE DATE SET FOR OPENING OF OFFERS WILL BE CONSIDERED NONRESPONSIVE AND WILL BE REJECTED.

QATRON INSERTED NO TIME PERIOD IN THE BLANK SPACE PROVIDED IN THE "OFFER" PORTION OF STANDARD FORM 33, BUT INSTEAD PUT THREE DASHES --- IN THE SPACE.

YOUR PROTEST CONTENDS THAT QATRON SUBMITTED A NONRESPONSIVE BID, AND SINCE A CONTRACT AWARDED TO A NONRESPONSIVE BIDDER DOES NOT CREATE VALID OBLIGATIONS AND LIABILITIES BETWEEN THE PARTIES, YOU BELIEVE THE CONTRACT MUST BE CONSIDERED VOID AB INITIO. YOU EMPHASIZE THAT IN 47 COMP. GEN. 769 (1968), THIS OFFICE WAS FACED WITH THE IDENTICAL QUESTION OF WHETHER A BID COULD BE ACCEPTED WHEN THE INVITATION REQUIRED A 90-DAY BID ACCEPTANCE PERIOD, THE STANDARD FORM 33 IN THE INVITATION INDICATED THAT A 60-DAY BID ACCEPTANCE PERIOD WOULD RESULT UNLESS A DIFFERENT PERIOD WAS INSERTED BY THE BIDDER AND THE BIDDER LEFT BLANK THE BLOCK ON HIS BID WITH REGARD TO THE BID ACCEPTANCE PERIOD. YOU CORRECTLY STATE THAT OUR OFFICE FOUND THE FAILURE TO SUBMIT ANY BID ACCEPTANCE PERIOD, THUS AUTOMATICALLY RESULTING IN A 60 DAY BID ACCEPTANCE PERIOD, MADE FOR A NONRESPONSIVE BID WHICH COULD NOT BE CONSIDERED FOR AWARD.

YOU NEXT CONTEND THAT, SINCE QATRON'S BID WAS NONRESPONSIVE, "'IT IS ELEMENTARY THAT A PURPORTED AWARD OF A CONTRACT TO A NONRESPONSIVE BIDDER DOES NOT CREATE VALID OBLIGATIONS AND LIABILITIES BETWEEN THE PARTIES.' COMPTROLLER GENERAL UNPUBLISHED DECISION NO. B-162631 (DECEMBER 28, 1967)." B-162631 WAS A MISTAKE IN BID CLAIM, WHICH CONCERNED A BID FROM A PROTESTANT OFFERING THE BRAND NAME EQUIPMENT SPECIFIED IN THE INVITATION. IT WAS LATER DISCOVERED THAT THE BRAND NAME MANUFACTURER HAD STATED IN HIS BID THAT THE EQUIPMENT IT INTENDED TO FURNISH WOULD NOT MEET THE REQUIREMENTS OF A PARTICULAR CLAUSE OF THE INVITATION, SO THAT THIS OFFICE FOUND THE BIDS OF BOTH FIRMS WERE NONRESPONSIVE AND THEREFORE NOT FOR CONSIDERATION IN MAKING AN AWARD.

WE WILL AGREE WITH YOUR CONTENTION THAT THE INSERTION OF DASHES IN THE BID ACCEPTANCE PERIOD BLOCK WAS THE EQUIVALENT OF LEAVING THE BLOCK BLANK SO THAT UNDER 47 COMP. GEN. 769, DISCUSSED ABOVE, THE BID COULD HAVE BEEN FOUND NONRESPONSIVE. NONETHELESS, IT SHOULD BE EMPHASIZED THAT 47 COMP. GEN. 769, TOGETHER WITH 46 COMP. GEN. 418 (1966) AND 39 COMP. GEN. 779 (1960), THE OTHER TWO CASES YOU CITED IN SUPPORT OF YOUR POSITION THAT QATRON'S BID WAS NONRESPONSIVE AND THEREFORE COULD NOT PROPERLY BE ACCEPTED, ALL INVOLVED SITUATIONS IN WHICH THE QUESTION WAS RAISED PRIOR TO AWARD. IN SUCH CIRCUMSTANCES BOTH THE RIGHTS OF COMPETING BIDDERS AND THE FACT THAT THE CONTRACTING OFFICER IS ON NOTICE OF POSSIBLE DEFECT IN THE LOW BID IS FOR CONSIDERATION. THUS, WHILE THERE CAN BE NO DOUBT THAT A CONTRACTING OFFICER WOULD BE WITHOUT AUTHORITY TO AWARD A BINDING CONTRACT TO A LOW BIDDER IF HE WAS PUT ON NOTICE PRIOR TO AWARD BY EITHER THE LOW BIDDER OR ANY OTHER BIDDER OF A MATERIAL DEFECT IN THE LOW BID, IT IS OUR OPINION THAT ANY SUCH RIGHT ON THE PART OF THE LOW BIDDER MUST BE EXERCISED PRIOR TO AWARD.

THE AWARD OF THE CONTRACT TO ONE WHO DOES NOT STATE A BID ACCEPTANCE PERIOD WHEN THE SOLICITATION REQUIRES SUCH A PERIOD TO BE STATED, CANNOT BE SET ASIDE AT THE INSTANCE OF THE ONE RECEIVING THE BENEFIT ON THE GROUND THAT HE IS NOT ENTITLED TO IT. THIS IS A GROUND AVAILABLE ONLY TO THOSE INJURED BY THE AWARD ACTION, NOT TO THE PARTY WHO BENEFITS BY IT. SUCH A CONTRACT IS NOT VOID AB INITIO BUT IS VOIDABLE ONLY AT THE OPTION OF THE GOVERNMENT. SEE OTIS STEEL PRODUCTS CORPORATION V UNITED STATES, 161 CT. CL. 694, 316 F. 2D 937, 941 (1963); 49 COMP. GEN. 369 (1969), AND CASES CITED THEREIN. IN THIS RESPECT, 40 COMP. GEN. 447 (1961) AND 40 COMP. GEN. 679 (1961), THE CASES YOU HAVE CITED AS SUPPORTING THE VOID AB INITIO CONCEPT, CONCERNED CASES IN WHICH THE GOVERNMENT WAS THE PARTY CANCELING THE CONTRACT. IN THE INSTANT CASE, QATRON'S MISTAKE MUST BE CONSIDERED AS ONE WHICH DEALS WITH A CLAUSE THAT WAS ENACTED FOR THE BENEFIT OF THE GOVERNMENT AND, SO FAR AS THE BIDDER WHO RECEIVES THE AWARD IS CONCERNED, BECOMES INOPERATIVE WHEN THE CONTRACT IS AWARDED. SEE UNITED STATES V RUSSELL ELECTRIC CO., 250 F. SUPP. 2,22 (1965).

FOR THE ABOVE REASONS WE MUST CONCLUDE THAT THE AWARD TO QATRON CONSUMMATED A CONTRACT WHICH WAS BINDING UPON QATRON, AND ITS PROTEST MUST THEREFORE BE DENIED.