B-169755, OCT. 6, 1970

B-169755: Oct 6, 1970

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

MAY NOT HAVE DELIVERY REQUIREMENTS WAIVED AS OF MINOR SIGNIFICANCE. SINCE FEDERAL PROCUREMENT RULES ARE NOT BINDING IN CASE OF CONTRACT FINANCED BY AID THE AGENCY IS GIVEN PRIMARY AUTHORITY TO DETERMINE COMPLIANCE WITH THE REGULATIONS. TO TRANS-NATIONAL EXPORT-IMPORT CORPORATION: REFERENCE IS MADE TO YOUR LETTER DATED MAY 7. THE AWARD WAS MADE PURSUANT TO THE KOREAN GOVERNMENT'S INVITATION FOR BIDS NO. BIDS WERE OPENED IN ACCORDANCE WITH THE INVITATION AS AMENDED ON MARCH 12. THE PURCHASE OF THE DESIRED EQUIPMENT IS TO BE FINANCED WITH FUNDS PROVIDED UNDER A LOAN AGREEMENT BETWEEN THE UNITED STATES AND THE REPUBLIC OF KOREA. ALTHOUGH THE UNITED STATES IS NOT A PARTY TO THE CONTRACT WITH HUNT.

B-169755, OCT. 6, 1970

BID PROTEST - SPECIFICATIONS - DELIVERY REQUIREMENTS DENIAL OF PROTEST OF TRANS-NATIONAL EXPORT-IMPORT, SECOND LOW BIDDER, AGAINST REJECTION OF BID AS NONRESPONSIVE, AND AGAINST THE AWARD OF CONTRACT TO WILLIAM HUNT & COMPANY, THIRD LOW BIDDER FOR PUMPS MOTORS AND VALUES FOR THE SEOUL WATERWORKS, FINANCED BY AID FOR THE OFFICE OF SUPPLY, GOVERNMENT OF THE REPUBLIC OF KOREA. SECOND LOW BIDDER WHO HAD BID CONSIDERED NONRESPONSIVE WHEN UNABLE TO CHANGE TO AN EARLIER DELIVERY DATE AS REQUIRED BY AN AMENDMENT TO THE INVITATION, MAY NOT HAVE DELIVERY REQUIREMENTS WAIVED AS OF MINOR SIGNIFICANCE, SINCE FEDERAL PROCUREMENT RULES ARE NOT BINDING IN CASE OF CONTRACT FINANCED BY AID THE AGENCY IS GIVEN PRIMARY AUTHORITY TO DETERMINE COMPLIANCE WITH THE REGULATIONS.

TO TRANS-NATIONAL EXPORT-IMPORT CORPORATION:

REFERENCE IS MADE TO YOUR LETTER DATED MAY 7, 1970, WITH ENCLOSURES, PROTESTING THE AWARD OF A CONTRACT TO WILLIAM HUNT & COMPANY (INTERNATIONAL), INCORPORATED (HUNT), BY THE OFFICE OF SUPPLY, GOVERNMENT OF THE REPUBLIC OF KOREA, FOR PUMPS, MOTORS AND VALVES FOR THE SEOUL WATERWORKS. THE AWARD WAS MADE PURSUANT TO THE KOREAN GOVERNMENT'S INVITATION FOR BIDS NO. AID/L-9063-P. BIDS WERE OPENED IN ACCORDANCE WITH THE INVITATION AS AMENDED ON MARCH 12, 1970.

THE PURCHASE OF THE DESIRED EQUIPMENT IS TO BE FINANCED WITH FUNDS PROVIDED UNDER A LOAN AGREEMENT BETWEEN THE UNITED STATES AND THE REPUBLIC OF KOREA. ALTHOUGH THE UNITED STATES IS NOT A PARTY TO THE CONTRACT WITH HUNT, THE AWARD WAS BASED ON A RECOMMENDATION BY THE AGENCY FOR INTERNATIONAL DEVELOPMENT (AID), AFTER THE KOREAN GOVERNMENT HAD PROPOSED TO MAKE AN AWARD TO YOUR COMPANY AS THE LOWEST RESPONSIBLE AND RESPONSIVE BIDDER.

THE LOW BID WAS DETERMINED BY THE KOREAN GOVERNMENT TO BE NONRESPONSIVE IN CERTAIN MATERIAL RESPECTS. THE NEXT LOW BID, SUBMITTED BY YOUR COMPANY AND OFFERING TO SUPPLY LAYNE & BOWLER EQUIPMENT, WAS CONSIDERED BY THE KOREAN GOVERNMENT TO BE RESPONSIVE EVEN THOUGH YOUR PROPOSED DELIVERY TIME OF FOUR MONTHS FROM RECEIPT OF AN IRREVOCABLE LETTER OF CREDIT DID NOT MEET THE SPECIFIED DELIVERY PERIOD OF 16 WEEKS FROM RECEIPT OF AN IRREVOCABLE LETTER OF CREDIT. HUNT WAS THE THIRD LOW BIDDER AND HE PROPOSED TO SUPPLY ALLIS-CHALMERS EQUIPMENT. BOTH THE KOREAN GOVERNMENT AND AID CONSIDERED HUNT'S BID TO BE RESPONSIVE IN ALL MATERIAL RESPECTS. YOU HAVE RAISED CERTAIN POINTS WITH RESPECT TO HUNT'S BID.

AID ADVISED THE KOREAN GOVERNMENT'S BUREAU OF FOREIGN PROCUREMENT THAT YOUR BID WAS DETERMINED TO BE MATERIALLY NONRESPONSIVE IN THAT IT DID NOT MEET THE DELIVERY REQUIREMENT OF AMENDMENT NO. 2 TO THE INVITATION FOR BIDS THAT "EARLIEST POSSIBLE DELIVERY IS DESIRED, BUT NO LATER THAN 16 WEEKS AFTER RECEIPT OF IRREVOCABLE LETTER OF CREDIT." IT IS CLEAR THAT YOUR OFFERED TIME OF DELIVERY OF FOUR MONTHS IS ABOUT 10 DAYS MORE THAN THE SPECIFIED DELIVERY TIME OF 16 WEEKS.

YOU CONTEND THAT DELIVERY TIME DEVIATION IN YOUR BID SHOULD HAVE BEEN WAIVED AS OF MINOR SIGNIFICANCE. YOU ALSO CONTEND THAT, SINCE NONE OF THE FOUR BIDS RECEIVED WAS COMPLETELY RESPONSIVE, THE KOREAN GOVERNMENT PROPERLY COULD HAVE NEGOTIATED A CONTRACT WITH YOUR COMPANY ON THE BASIS OF PARAGRAPH 8 OF AMENDMENT NO. 2 TO THE INVITATION FOR BIDS UNDER WHICH, IN THE EVENT THAT NO BID WAS RESPONSIVE TO ALL OF THE SPECIFIC TERMS AND ITEMS OF THE AMENDED INVITATION, THE KOREAN GOVERNMENT RESERVED THE RIGHT TO NEGOTIATE AND MAKE AN AWARD ON THE BASIS OF PRICE, QUALITY OF CONSTRUCTION, PERFORMANCE, AND RESPONSIVENESS TO THE SPECIFICATIONS.

YOU CONTEND THAT HUNT'S BID SHOULD NOT BE CONSIDERED RESPONSIVE SINCE IT DID NOT LIST THE TEMPERATURE RISE FOR THE OFFERED ALLIS-CHALMERS PUMP MOTORS. YOU ALSO CONTEND THAT THE MINIMUM SHAFT DIAMETER OF THE ITEM OFFERED BY HUNT DEVIATES BY 1/4 INCH FROM THE MINIMUM SHAFT DIAMETER OF 2- 15/16 INCHES WHICH WAS SPECIFIED IN THE PURCHASE DESCRIPTION MADE A PART OF THE INVITATION FOR BIDS, AS AMENDED.

WITH REGARD TO THE DELIVERY REQUIREMENTS, BIDDERS WOULD NOT BE COMPETING ON A COMMON BASIS IF MATERIAL DEVIATIONS FROM THE SPECIFIED WERE PERMITTED WITHOUT ANY PROVISION IN THE INVITATION AUTHORIZING SUCH DEVIATION AND DEFINING ITS MAXIMUM ACCEPTABLE LIMITS. 36 COMP. GEN. 181 (1956).

REGARDING YOUR CONTENTION THAT HUNT'S BID DEVIATES FROM THE MINIMUM SHAFT DIAMETER DIMENSION, AID'S REPORT STATES AS FOLLOWS:

"WITH RESPECT TO THE CLAIM OF TRANS-NATIONAL THAT HUNT OFFERED PUMPS WITH A SPECIFIED SHAFT DIAMETER OF 2-11/16 INCHES, THE FACTS ARE AS FOLLOWS. MENTION OF THE SHAFT DIAMETER OCCURS IN FOUR PLACES IN THIS PROPOSAL: IN THREE, INCLUDING THE MANUFACTURER'S OWN DATA, IT SHOWS AS 2-15/16 INCHES.

"THE REFERENCES ARE AS FOLLOWS: (1) IN ALLIS-CHALMERS' PROPOSAL TO HUNT (ALLIS-CHALMERS' PROPOSAL NUMBER I-9-003 DATED MARCH 3, 1970, INCLUDED IN THE BID), IT IS PROVIDED AT PAGE 2:

'DRIVE SHAFT WILL BE OF CARBON STEEL AISC C-1045 OF AMPLE DIMENSION TO SAFELY TRANSMIT THE LOAD WITHOUT BENDING OR TWISTING; ACCURATELY MACHINED AND POLISHED TO INSURE INTERCHANGEABILITY OF SHAFT AND PARTS; AND ENCLOSED IN A TUBE OF EXTRA HEAVY SCHEDULE 80 CARBON STEEL TUBING, AND OF 2-15/16" MINIMUM SHAFT DIAMETER.'

"(2) UNDER 'DETAILED SPECIFICATION INFORMATION' ON PAGE NUMBERED 27, NEXT TO 'SPECIFICATION REFERENCE (1)(2) D (4),' REFERRING TO THE PUMP SHAFTS, THERE IS THE TYPED STATEMENT: 'MIN. 2-15/16 IN. DIA--YES.'

"'YES' SIGNIFIES THAT THE PRODUCT COMPLETELY CONFORMS TO THE SPECIFICATION DESCRIPTION.

"(3) IN ANOTHER INSTANCE OF REFERENCE TO SHAFT DIAMETER, HUNT, FILLING IN BLANKS UNDER 'PUMP DATA, B-5,' HAS WRITTEN IN INK, '2-11/16' INCHES.

"(4) FINALLY, IN THE ALLIS-CHALMERS 'CERTIFIED PUMP DIMENSION SHEET,' NO. 52-113-047, SUBMITTED AS PART OF THE HUNT BID, THE DRAWING OF THE PUMP TO BE FURNISHED SHOWS THE COLUMN SHAFT DIMENSION TO BE '2-15/16.'

"ON THIS RECORD, IT SEEMS CLEAR THAT THE ONE DESCRIPTION OF PUMP SHAFT SIZE AT 2-11/16 INCHES WAS A MINOR INFORMALITY IN THE NATURE OF A CLERICAL ERROR: THE MANUFACTURER'S OWN PROPOSAL, CITED ABOVE, AND INCLUDED IN THE HUNT BID, AS WELL AS ITS DETAILED PUMP DIMENSION SHEET, LISTS THE CORRECT DIAMETER OF 2-15/16 INCHES, AS DOES THE REMAINING SPECIFICATION REFERENCE IN THE BID. WHERE THREE OUT OF FOUR REFERENCES GIVE THE SIZE AS 2-15/16; WHERE THOSE THREE ARE EVIDENTLY CAREFULLY DRAWN (TYPED OR IN AN ENGINEERING DRAWING), AND WHERE THE FOURTH IS HAND-WRITTEN BY THE SUPPLIER; AND WHERE TWO OF THOSE THREE CORRECT LISTINGS ARE FROM THE MANUFACTURER AND DESIGNER OF THE UNITS WHICH WILL BE FURNISHED, IT SEEMS CLEAR THAT THE FOURTH AND INCORRECT INSERTION WAS A MINOR INFORMALITY CAUSED BY A CLERICAL ERROR OF THE SUPPLIER WHICH WAS WAIVABLE BY THE BORROWER UNDER THE AFORESAID PROVISION OF THE CAPITAL PROJECTS GUIDELINES.

"THE LISTING OF 2-11/16 INCHES WAS NOT COMMENTED ON IN THE ABSTRACT FURNISHED BY OSROK, BUT A.I.D. WAS AWARE OF IT IN THE AID/W REVIEW OF ALL THE BIDS WHICH OCCURRED IN THE EARLY APRIL, 1970. THE CONCLUSIONS OF THIS REVIEW WERE REFLECTED IN A CABLE FROM AID/WASHINGTON TO SEOUL DATED APRIL 13, 1970, INDICATING THAT AID/W CONSIDERED THE HUNT BID RESPONSIVE (AND THUS WOULD CONCUR IN AWARD TO THIS BIDDER)."

THE CAPITAL PROJECTS GUIDELINES PROVISION REFERRED TO IN THE ABOVE QUOTE PROVIDES AS FOLLOWS:

"A RESPONSIVE BID IS ONE WHICH ACCEPTS ALL OF THE TERMS AND CONDITIONS OF THE IFB WITHOUT MATERIAL MODIFICATION. A MATERIAL MODIFICATION IS ONE WHICH AFFECTS IN ANY WAY THE PRICE, QUANTITY, QUALITY OR DELIVERY DATE OF EQUIPMENT OR MATERIALS, OR THE PRICE, QUALITY, SCOPE OR COMPLETION DATE OF CONSTRUCTION OR OTHER SERVICES TO BE SUPPLIED OR PERFORMED, OR WHICH LIMITS IN ANY WAY ANY RESPONSIBILITIES, DUTIES, OR LIABILITIES OF THE BIDDER OR ANY RIGHTS OF THE BORROWER OR OF A.I.D., AS ANY OF THE FOREGOING HAVE BEEN SPECIFIED OR DEFINED IN THE IFB. THE BORROWER MAY WAIVE ANY MINOR INFORMALITY IN A BID WHICH DOES NOT CONSTITUTE A MATERIAL MODIFICATION."

OUR OFFICE HAS RECOGNIZED THAT THE GENERAL RULES WHICH GOVERN DIRECT FEDERAL PROCUREMENTS ARE NOT BINDING IN THE CASE OF CONTRACTS FINANCED BY AID. B-168809, MARCH 17, 1969 AND B-168759, APRIL 15, 1970. MOREOVER, A FINANCING AGENCY IS GIVEN THE PRIMARY AUTHORITY TO DETERMINE COMPLIANCE WITH THE REGULATIONS PROMULGATED BY IT IN FURTHERANCE OF ITS STATUTORY RESPONSIBILITIES. SEE B-168809 AND B 168759, SUPRA.

WHILE IT COULD BE ARGUED THAT HUNT'S BID WAS AMBIGUOUS BECAUSE OF ITS (APPARENTLY INADVERTENT) INSERTION OF THE 2 11/16 INCH FIGURE, THE RULES GOVERNING DIRECT FEDERAL PROCUREMENTS DO NOT APPLY HERE, AND THERE IS NO FURTHER ACTION OUR OFFICE CAN TAKE IN THIS CASE. IN VIEW OF THIS CONCLUSION, WE DO NOT BELIEVE IT NECESSARY TO CONSIDER THE OTHER POINTS RAISED IN YOUR PROTEST.