B-171938, APR 15, 1971, 50 COMP GEN 733

B-171938: Apr 15, 1971

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WAS PROPER UNDER SECTION 1-2.404-2(B)(5) OF THE FEDERAL PROCUREMENT REGULATIONS. ALTHOUGH OBJECTIONABLE CONDITIONS MAY BE DELETED IF THEY DO NOT GO TO THE SUBSTANCE OF A BID - THAT IS. THAT THEY ONLY HAVE A TRIVIAL OR NEGLIGIBLE EFFECT ON PRICE. A CONTRACTING OFFICER IS WITHOUT AUTHORITY TO OBLIGATE THE GOVERNMENT TO PAY INTEREST ON UNPAID INVOICES. 5 U.S.C. 649. 1971: FURTHER REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 17. THE SOLICITATION WAS ISSUED ON OCTOBER 6. BIDS WERE OPENED ON NOVEMBER 16. WARREN WAS THE LOW BIDDER FOR GROUP NO. 1. WARREN'S BID WAS REJECTED AS NONRESPONSIVE BECAUSE IN BLOCK 16 OF STANDARD FORM 33 IT HAD INSERTED. GSA ADVISED WARREN THAT MODIFICATION COULD NOT BE PERMITTED SINCE ITS BID AS SUBMITTED WAS NONRESPONSIVE.

B-171938, APR 15, 1971, 50 COMP GEN 733

BIDS - QUALIFIED - INTEREST ON PAST DUE INVOICES THE REJECTION OF A BID UNDER A SOLICITATION ISSUED FOR A FEDERAL SUPPLY SCHEDULE CONTRACT TO FURNISH WOOD OFFICE FURNITURE BECAUSE OF THE INCLUSION OF THE QUALIFYING PROVISION "1-1/2% INTEREST PER MONTH ON PAST DUE INVOICES," WHICH THE CONTRACTING OFFICER REFUSED TO DELETE, WAS PROPER UNDER SECTION 1-2.404-2(B)(5) OF THE FEDERAL PROCUREMENT REGULATIONS. THE REGULATION PROVIDES FOR THE REJECTION OF A BID IF THE BIDDER IMPOSES CONDITIONS WHICH WOULD MODIFY THE REQUIREMENTS OF AN INVITATION, OR LIMIT HIS LIABILITY OR THE RIGHTS OF THE GOVERNMENT TO HIS ADVANTAGE, AND ALTHOUGH OBJECTIONABLE CONDITIONS MAY BE DELETED IF THEY DO NOT GO TO THE SUBSTANCE OF A BID - THAT IS, THAT THEY ONLY HAVE A TRIVIAL OR NEGLIGIBLE EFFECT ON PRICE, QUANTITY, QUALITY, OR DELIVERY - THE CONDITION IMPOSED AFFECTED PRICE AND COULD NOT BE DELETED. FURTHERMORE, A CONTRACTING OFFICER IS WITHOUT AUTHORITY TO OBLIGATE THE GOVERNMENT TO PAY INTEREST ON UNPAID INVOICES. 5 U.S.C. 649, MODIFIED.

TO H. EDWARD CHOZICK, APRIL 15, 1971:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 17, 1971, PROTESTING ON BEHALF OF WARREN FURNITURE, INCORPORATED, AGAINST REJECTION OF ITS BID UNDER SOLICITATION NO. FPNFO-S3-28063-A-1116-70, ISSUED BY THE GENERAL SERVICES ADMINISTRATION, A FORMALLY ADVERTISED PROCUREMENT.

THE SOLICITATION WAS ISSUED ON OCTOBER 6, 1970, FOR A FEDERAL SUPPLY SCHEDULE CONTRACT TO SUPPLY VARIOUS GROUPS OF WOOD OFFICE FURNITURE IN 10 ZONES. BIDS WERE OPENED ON NOVEMBER 16, 1970, AND WARREN WAS THE LOW BIDDER FOR GROUP NO. 1, FURNITURE FOR ZONE 3, AND GROUP NO. 2, FURNITURE FOR ZONES 2, 3, 5 AND 7 THROUGH 10.

HOWEVER, WARREN'S BID WAS REJECTED AS NONRESPONSIVE BECAUSE IN BLOCK 16 OF STANDARD FORM 33 IT HAD INSERTED, " *** 1-1/2 INTEREST PER MONTH ON PAST DUE INVOICES." BY LETTER DATED DECEMBER 15, 1970, WARREN REQUESTED THAT THIS LANGUAGE BE DELETED. GSA ADVISED WARREN THAT MODIFICATION COULD NOT BE PERMITTED SINCE ITS BID AS SUBMITTED WAS NONRESPONSIVE. THIS DECISION WAS AFFIRMED BY GSA ON FEBRUARY 9, 1971.

IT IS YOUR CONTENTION THAT THE LANGUAGE IN QUESTION SHOULD NOT BE CONSIDERED A QUALIFICATION OF THE BID, BUT RATHER A MINOR IRREGULARITY WHICH SHOULD BE EITHER WAIVED UNDER ARTICLE 10(B) OF STANDARD FORM 33A OR DELETED AS A MODIFICATION UNDER ARTICLE 8(A) OF STANDARD FORM 33A. SUPPORT OF THE CONTENTION THAT WARREN SHOULD BE PERMITTED TO DELETE THE INSERTED LANGUAGE AS IT HAS OFFERED TO DO, YOU CITE 5 COMP. GEN. 649 (1926).

IN THE CITED CASE, WE HELD THAT IN THE ABSENCE OF SPECIFIC STATUTORY AUTHORITY NO CONTRACTING OFFICER COULD OBLIGATE THE GOVERNMENT TO PAY INTEREST ON INVOICES NOT PAID WITHIN A SPECIFIED TIME. WE WENT ON TO SAY THAT IF THE LOW BIDDER INSISTED UPON SUCH PROVISION IN ANY CONTRACT AWARDED, ITS BID SHOULD BE REJECTED. IT HAS LONG BEEN OUR POSITION THAT A NONRESPONSIVE BID DOES NOT CONSTITUTE AN OFFER WHICH MAY PROPERLY BE ACCEPTED; AND TO PERMIT A BIDDER TO MAKE HIS BID RESPONSIVE BY CHANGING, ADDING TO, OR DELETING A MATERIAL PART OF THE BID AFTER OPENING WOULD BE TANTAMOUNT TO PERMITTING A BIDDER TO SUBMIT A NEW BID. 38 COMP. GEN. 819 (1959). INSOFAR AS OUR HOLDING IN 5 COMP. GEN. 649 IMPLIES THAT A BID NONRESPONSIVE AS SUBMITTED MAY BE CORRECTED, AFTER OPENING, IT IS INCONSISTENT WITH THE FOREGOING AND IS MODIFIED ACCORDINGLY.

UNDER SECTION 1-2.404-2(B)(5) OF THE FEDERAL PROCUREMENT REGULATIONS (FPR), A BID MUST BE REJECTED WHERE THE BIDDER IMPOSES CONDITIONS WHICH WOULD MODIFY REQUIREMENTS OF THE INVITATION FOR BIDS OR LIMIT HIS LIABILITY TO OR LIMIT THE RIGHTS OF THE GOVERNMENT SO AS TO GIVE HIM AN ADVANTAGE OVER OTHER BIDDERS. OBJECTIONABLE CONDITIONS MAY BE DELETED UNDER THE REGULATION WHERE THEY DO NOT GO TO THE SUBSTANCE, AS DISTINGUISHED FROM THE FORM, OF THE BID. A CONDITION GOES TO THE SUBSTANCE OF THE BID WHEN IT AFFECTS PRICE, QUANTITY, QUALITY, OR DELIVERY OF THE ITEMS OFFERED. FPR 1-2.405 PROVIDES THAT A BIDDER SHALL EITHER BE GIVEN AN OPPORTUNITY TO CURE ANY DEFICIENCY RESULTING FROM A MINOR INFORMALITY OR IRREGULARITY, OR THE CONTRACTING OFFICER SHALL WAIVE SUCH DEFICIENCY. HOWEVER, THIS PROVISION DEFINES A MINOR INFORMALITY OR IRREGULARITY AS AN IMMATERIAL AND INCONSEQUENTIAL DEFECT WHEN ITS SIGNIFICANCE AS TO PRICE, QUANTITY, QUALITY OR DELIVERY IS TRIVIAL OR NEGLIGIBLE, THE CORRECTION OR WAIVER OF WHICH WOULD NOT BE PREJUDICIAL TO OTHER BIDDERS.

SINCE WARREN'S BID INCLUDED A CONDITION AFFECTING PRICE, THE ABOVE REGULATIONS PROHIBIT ITS DELETION OR WAIVER AND REQUIRE REJECTION OF THE BID. 30 COMP. GEN. 179 (1950). FURTHERMORE, A CONTRACTING OFFICER IS WITHOUT AUTHORITY TO OBLIGATE THE GOVERNMENT TO PAY INTEREST ON UNPAID INVOICES. 5 COMP. GEN. 649 (1926).

SO FAR AS CONCERNS YOUR POSITION THAT THE INCLUSION OF THE DEMAND FOR INTEREST ON PAST DUE INVOICES SHOULD BE TREATED AS A REVERSE PROMPT PAYMENT, IN ADDITION TO THE FACT THAT ITS CONSIDERATION WOULD BE CONTRARY TO 5 COMP. GEN. 649, THE SOLICITATION FORM HAS NO PROVISION FOR REVERSE PROMPT PAYMENT DISCOUNTS AND TO CONSIDER SUCH DISCOUNTS COULD WELL ADD A SUBSTANTIAL CONJECTURAL FACTOR TO THE EVALUATION PROCESS TO THE DETRIMENT OF THE COMPETITIVE BID SYSTEM'S INTEGRITY.

ACCORDINGLY, WARREN'S BID WAS PROPERLY REJECTED.