B-168809, MAR. 17, 1970

B-168809: Mar 17, 1970

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5-PERCENT TOLERANCE OFFER WAS NONRESPONSIVE SINCE IT INDICATED INTENTION TO DEVIATE FROM 10-PERCENT AND WAS INAPPROPRIATE. WAS NOT FULLY RESPONSIVE AS "USUAL" DOES NOT INDICATE REFERENCE TO PURCHASER'S OPTION RIGHTS. AWARD TO "USUAL" BIDDER IS NOT SUBJECT TO OBJECTION BECAUSE SUCH CONTRACTS FINANCED BY AID ARE NOT U.S. CONTRACTS AND GOVERNING FEDERAL PROCUREMENT RULES ARE NOT BINDING UPON AID'S APPROVAL. TO INTERNATIONAL COMMODITIES EXPORT CORPORATION: REFERENCE IS MADE TO YOUR TELEGRAM OF FEBRUARY 13. IS LOWEST IN PRICE. UNLESS ANOTHER BID IS DEMONSTRABLY MORE ADVANTAGEOUS TO THE IMPORTER BECAUSE OF ANY FACTOR (OTHER THAN PRICE) SET FORTH IN THE INVITATION FOR BIDS AS A FACTOR TO BE CONSIDERED IN THE EVALUATION OF BIDS.".

B-168809, MAR. 17, 1970

BIDS--COMPETITIVE SYSTEM--FEDERAL AID, GRANTS, ETC.--COMPLIANCE WITH REQUIREMENTS CONCERNING LOAN BY AID FOR FERTILIZER PROCUREMENT BY BORROWER (PAKISTAN) THROUGH FORMAL COMPETITIVE BID PROCEDURES, WHERE INVITATION PROVIDED 10- PERCENT TOLERANCE OPTION, 5-PERCENT TOLERANCE OFFER WAS NONRESPONSIVE SINCE IT INDICATED INTENTION TO DEVIATE FROM 10-PERCENT AND WAS INAPPROPRIATE; "PLUS MINUS USUAL TOLERANCE" OFFER, ALTHOUGH NOT DEVIATION IN SUBSTANCE REQUIRING BID REJECTION, WAS NOT FULLY RESPONSIVE AS "USUAL" DOES NOT INDICATE REFERENCE TO PURCHASER'S OPTION RIGHTS. HOWEVER, AWARD TO "USUAL" BIDDER IS NOT SUBJECT TO OBJECTION BECAUSE SUCH CONTRACTS FINANCED BY AID ARE NOT U.S. CONTRACTS AND GOVERNING FEDERAL PROCUREMENT RULES ARE NOT BINDING UPON AID'S APPROVAL. SEE COMP. GEN. DECS. CITED.

TO INTERNATIONAL COMMODITIES EXPORT CORPORATION:

REFERENCE IS MADE TO YOUR TELEGRAM OF FEBRUARY 13, 1970, AND TO PRIOR CORRESPONDENCE FROM YOUR COMPANY, REGARDING THE REJECTION OF THE OFFER TO SUPPLY FERTILIZER SUBMITTED BY YOUR COMPANY'S AGENT, MARSH & CO; UNDER GOVERNMENT OF PAKISTAN TENDER PD/ADC/US-LOAN-144/UREA COVERED BY AGENCY FOR INTERNATIONAL DEVELOPMENT (AID) LOAN AGREEMENT 391-H-144.

AID ENTERED INTO THE LOAN AGREEMENT WITH THE GOVERNMENT OF PAKISTAN UNDER THE FOREIGN ASSISTANCE ACT OF 1961, AS AMENDED, 22 U.S.C. 2151, CT SEQ. THE LOAN AGREEMENT PROVIDES FOR THE PROCUREMENT OF FERTILIZER BY THE BORROWER THROUGH FORMAL COMPETITIVE BID PROCEDURES IN ACCORDANCE WITH SECTION 201.22 OF AID REGULATION 1 AND FOR THE AID REVIEW AND APPROVAL OF THE TENDER, CONTRACT DOCUMENTS AND PROPOSED AWARD. THE PAKISTAN INVITATION FOR BIDS IN THIS CASE STATED THAT THE BIDS WOULD BE SUBJECT TO SECTION 201.22 OF THE AID REGULATION.

PARAGRAPH (D) OF THE CITED SECTION 201.22 (22 CFR 201.22) PROVIDES:

"AWARDS. EVERY AWARD SHALL BE MADE TO THAT RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, IS LOWEST IN PRICE, UNLESS ANOTHER BID IS DEMONSTRABLY MORE ADVANTAGEOUS TO THE IMPORTER BECAUSE OF ANY FACTOR (OTHER THAN PRICE) SET FORTH IN THE INVITATION FOR BIDS AS A FACTOR TO BE CONSIDERED IN THE EVALUATION OF BIDS."

THE PAKISTAN INVITATION SOLICITED BIDS FOR SUPPLYING UP TO 90,000 METRIC TONS OF UREA AND PROVIDED THAT THE OFFERS MUST BE FOR 5,000 METRIC TONS OR MORE. THE INVITATION PROVIDED THAT WHERE A BIDDER OFFERS MORE THAN 5,000 METRIC TONS, THE PURCHASER HAS THE RIGHT TO ACCEPT ANY QUANTITY OF 5,000 TONS OR MORE AT THE PRICE QUOTED FOR THE TOTAL QUANTITY. ADDITIONALLY, THE INVITATION STATED THAT THE PURCHASER MIGHT DESIRE TO INCREASE THE PURCHASES UP TO 25 PERCENT OF THE TOTAL TONNAGE (90,000 METRIC TONS) AND REQUESTED BIDDERS TO INDICATE WHETHER OR NOT THEY ARE WILLING TO PROVIDE AN ADDITIONAL 25 PERCENT TONNAGE AT THE BID PRICE. THE INVITATION STATED THAT THE PURCHASER MIGHT REQUIRE THE ADDITIONAL TONNAGE TO BE SUPPLIED WHERE THE BIDDER HAS INDICATED A WILLINGNESS TO BE SO BOUND AND THE INVITATION INDICATED THAT IF AN ELECTION IS MADE FOR ALL OR ANY PART OF THE ADDITIONAL QUANTITY IT WOULD BE INDICATED IN THE NOTICE OF AWARD. FURTHER, THE INVITATION PROVIDED THAT "CONTRACTED QUANTITIES WILL BE SUBJECT TO 10% TOLERANCE AT PURCHASER'S OPTION FOR PURPOSES OF SHIPMENTS."

MARSH & CO. FURNISHED BIDS FOR ONE 10,000-METRIC-TON QUANTITY, DESIGNATED OFFER 1, AND FOR THREE 5,000-METRIC-TON QUANTITIES DESIGNATED OFFERS 2, 3 AND 4. THE LETTER CONTAINING THE OFFERS STATED:

"HOWEVER, FOR PURPOSES OF SHIPMENT, OUR OFFERS NOS. 2, 3 AND 4 ARE SUBJECT TO 10% TOLERANCES OF CONTRACTED QUANTITIES AT BUYER'S OPTION. OUR OFFER NO. 1 PERMITS A TOLERANCE OF 5% ONLY FOR PURPOSES OF SHIPMENT." AID HAS REPORTED THAT SINCE THE 5-PERCENT TOLERANCE IN OFFER 1 WAS NOT IN ACCORD WITH THE 10-PERCENT TOLERANCE PROVIDED IN THE INVITATION, THE GOVERNMENT OF PAKISTAN WITH THE APPROVAL OF AID REJECTED OFFER 1 AS NONRESPONSIVE.

YOUR COMPANY HAS STATED THAT THE 5-PERCENT TOLERANCE WAS INTENDED TO ESTABLISH 10,500 TONS AS THE OUTSIDE LIMIT ON THE 10,000-TON OFFER AND THAT SINCE THE BUYER HAD AN OPTION TO PURCHASE ANY QUANTITY OVER 5,000 TONS, AN AWARD COULD HAVE BEEN MADE, FOR EXAMPLE, FOR 9,000 OR 9,500 TONS WITH A 10-PERCENT TOLERANCE BUYER'S OPTION, SO THAT OFFER 1 SHOULD NOT HAVE BEEN REJECTED AS NONRESPONSIVE. IN THAT REGARD, YOUR COMPANY HAS STATED THAT ALTHOUGH THE BID SUBMITTED ON BEHALF OF YOUR COMPANY WAS REJECTED, THE BID FROM A COMPETITOR WAS ACCEPTED FOR AWARD ALTHOUGH IT DID NOT STATE IN ITS OFFER WHETHER IT WAS WILLING TO PROVIDE AN ADDITIONAL 25- PERCENT TONNAGE AND USED THE EXPRESSION "USUAL TOLERANCE" IN OFFERING QUANTITIES.

WHILE YOUR COMPANY MIGHT NOT HAVE INTENDED THE 5-PERCENT TOLERANCE OFFER TO DEVIATE FROM THE 10-PERCENT TOLERANCE OPTION PROVIDED IN THE INVITATION FOR BIDS, THE TERMS IN WHICH IT WAS EXPRESSED DID NOT INDICATE SUCH AN INTENTION. RATHER, THE LANGUAGE EMPLOYED IN STATING THE 5-PERCENT TOLERANCE OFFER INDICATED AN INTENTION TO DEVIATE FROM THE 10-PERCENT TOLERANCE OPTION OF THE PURCHASER.

UNDER THE INVITATION, THE PURCHASER HAS A RIGHT TO SELECT FOR AWARD ANY QUANTITY OVER 5,000 TONS UP TO THE AMOUNT OFFERED BY THE BIDDER AND AN ADDITIONAL RIGHT TO REQUIRE AFTER AWARD THAT THE AMOUNT SHIPPED BE 10 PERCENT MORE OR LESS THAN THE QUANTITY AWARDED. ALTHOUGH THE BID SUBMITTED UPON BEHALF OF YOUR COMPANY DID NOT ABRIDGE THE FORMER RIGHT, IT DID LIMIT THE SECOND RIGHT IN THAT IT REDUCED THE TOLERANCE THAT THE PURCHASER COULD REQUIRE AT THE TIME OF SHIPMENT. IN B 147143, NOVEMBER 9, 1961, OUR OFFICE HELD THAT WHERE AN INVITATION PROVIDED THAT THE CONTRACTOR COULD VARY THE CONTRACT QUANTITIES BY 1 PERCENT, A BID WHICH PROVIDED FOR A 5-PERCENT VARIATION WAS NONRESPONSIVE AND SHOULD NOT HAVE BEEN ACCEPTED SINCE THE PERMISSIBLE VARIATION COULD AFFECT THE CONTRACT PRICE. FURTHER, OUR OFFICE HAS HELD THAT ANY DEVIATIONS FROM THE REQUIREMENTS OF AN INVITATION WHICH AFFECT THE PRICE, QUANTITY OR QUALITY OF THE SUPPLIES TO BE FURNISHED ARE MATERIAL DEVIATIONS AND RENDER THE BID NONRESPONSIVE. 30 COMP. GEN. 179 (1950). ALSO, NO EXCEPTION DELIBERATELY TAKEN TO AN INVITATION FOR BIDS CAN BE CONSTRUED AS TRIVIAL OR MINIMAL. 47 COMP. GEN. 496, 499 (1968). IN VIEW OF THE FOREGOING AND SINCE SECTION 201.22 (D) OF THE AID REGULATION QUOTED ABOVE PROVIDES FOR AWARD BASED UPON A "BID, CONFORMING TO THE INVITATION FOR BIDS," AN AWARD FOR ANY PART OF THE QUANTITY IN OFFER 1 ON THE BASIS OF A 10-PERCENT TOLERANCE WHERE A 5-PERCENT TOLERANCE WAS OFFERED WOULD NOT HAVE BEEN APPROPRIATE.

WITH RESPECT TO THE BID OF TRANSAMMONIA INC; AID HAS ACKNOWLEDGED THAT IT DID NOT STATE IN ITS OFFER WHETHER OR NOT IT WAS WILLING TO PROVIDE AN ADDITIONAL 25-PERCENT TONNAGE. HOWEVER, THE OMISSION WAS CONSIDERED BY AID AS A MATTER OF FORM THAT WOULD NOT JUSTIFY REJECTION OF THE BID. HENCE, AID APPROVED THE AWARD FOR THE BASIC QUANTITY OFFERED.

ALTHOUGH THE INVITATION REQUESTED BIDDERS TO INDICATE WHETHER OR NOT THEY WERE WILLING TO PROVIDE AN ADDITIONAL 25-PERCENT TONNAGE, IT PROVIDED FURTHER THAT THE PURCHASER MIGHT REQUIRE THE ADDITIONAL TONNAGE IF THE BIDDER INDICATED A WILLINGNESS TO BE BOUND TO FURNISH IT. THUS, THE INVITATION CONTEMPLATED THAT THE ELECTION FOR AN ADDITIONAL 25-PERCENT TONNAGE MIGHT BE EXERCISED WHERE THE BIDDER HAD INDICATED A WILLINGNESS TO FURNISH IT. NOT HAVING MADE SUCH AN OFFER, THE TRANSAMMONIA BID REASONABLY MAY BE CONSIDERED AS AN OFFER FOR THE ACTUAL QUANTITY TENDERED. SINCE THERE WAS NO REQUIREMENT THAT THE BIDDER MUST OFFER THE ADDITIONAL 25 PERCENT, THE FAILURE OF TRANSAMMONIA TO MAKE SUCH AN OFFER WAS NOT A DEVIATION IN SUBSTANCE WHICH WOULD HAVE REQUIRED REJECTION OF THE BID.

IN THE BID OF TRANSAMMONIA INC; THE LISTING OF THE AMOUNT OF FERTILIZER OFFERED IS FOLLOWED BY THE STATEMENT "PLUS MINUS USUAL TOLERANCE." AID HAS REPORTED THAT SINCE THE 10-PERCENT SHIPPING TOLERANCE HAS BEEN A STANDARD CONTRACT REQUIREMENT FOR AID-FINANCED FERTILIZER PROCUREMENTS FOR SOME TIME, THE STATEMENT IN THE BID WAS CONSIDERED RESPONSIVE TO THAT REQUIREMENT.

HOWEVER, BY OFFERING "USUAL TOLERANCE," SUCH BIDDER WAS NOT FULLY RESPONSIVE TO THE INVITATION PROVISION RESPECTING THE 10 PERCENT AT THE PURCHASER'S OPTION SINCE THE WORD "USUAL" ORDINARILY CONNOTES COMMON USE OR ORDINARY PRACTICE AND THERE IS NO INDICATION THAT THE BIDDER HAD REFERENCE TO THE PURCHASER'S OPTION RIGHTS. FURTHER, WHILE THE WORD "TOLERANCE" IS USED IN THE INVITATION IN THE SENSE OF A DEVIATION WHICH MIGHT BE REQUESTED BY THE PURCHASER, IT IS NOT APPARENT THAT THE BIDDER WAS USING THE TERM IN THE SAME FRAME OF REFERENCE, SINCE "TOLERANCE" IN THE CONTEXT USED MAY RELATE TO OTHER THAN THE PURCHASER'S OPTION TO DEVIATE PROVIDED IN THE INVITATION.

ALTHOUGH OUR OFFICE IS OF THE OPINION THAT THE TRANSAMMONIA BID SHOULD NOT HAVE BEEN CONSIDERED RESPONSIVE, THE AWARD IS NOT SUBJECT TO LEGAL OBJECTION BY OUR OFFICE. THE CONTRACTS INVOLVED WHILE SUBJECT TO AID APPROVAL ARE NOT CONTRACTS OF THE UNITED STATES. THEY ARE FINANCED UNDER LOAN AGREEMENTS PROVIDING FOR REIMBURSEMENT BY THE PURCHASER TO THE UNITED STATES FOR THE VALUE OF THE COMMODITIES FINANCED. FURTHER, OUR OFFICE HAS RECOGNIZED THAT IN THE CASE OF CONTRACTS FINANCED BY AID, THE GENERAL RULES WHICH GOVERN DIRECT FEDERAL PROCUREMENTS ARE NOT BINDING UPON AID. B-165600, SEPTEMBER 12, 1969. ALSO, WHERE FEDERAL PROCUREMENT STATUTES ARE NOT INVOLVED, OUR OFFICE HAS HELD THAT RECOGNITION MUST BE GIVEN TO THE PRIMARY AUTHORITY OF THE FINANCING AGENCY TO DETERMINE COMPLIANCE WITH THE REGULATIONS PROMULGATED BY IT IN FURTHERANCE OF ITS STATUTORY RESPONSIBILITIES. B-163094, JULY 25, 1968, AND DECISIONS CITED THEREIN.