B-177285, APR 6, 1973

B-177285: Apr 6, 1973

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BID PROTEST - PROGRESS PAYMENTS - CONSIDERATION OF IN PREPARATION OF ESTIMATES BY CONTRACTING OFFICER - OFFSITE MATERIALS - RESPONSIVENESS IF CONSIDERATION IS TO BE GIVEN TO MAKING PROGRESS PAYMENTS FOR OFFSITE MATERIAL. SECRETARY: REFERENCE IS MADE TO LETTERS DATED NOVEMBER 22. THAT: MATERIAL DELIVERED TO THE CONTRACTOR AT LOCATIONS OTHER THAN THE SITE MAY ALSO BE TAKEN INTO CONSIDERATION (1) IF SUCH CONSIDERATION IS SPECIFICALLY AUTHORIZED BY THE CONTRACT AND (2) IF THE CONTRACTOR FURNISHES SATISFACTORY EVIDENCE THAT HE HAS ACQUIRED TITLE TO SUCH MATERIAL AND THAT IT WILL BE UTILIZED ON THE WORK COVERED BY THIS CONTRACT. THERE WERE NO OTHER PROVISIONS IN THE SOLICITATION CONCERNING THE CONSIDERATION OF OFFSITE MATERIALS IN MAKING PROGRESS PAYMENTS.

B-177285, APR 6, 1973

BID PROTEST - PROGRESS PAYMENTS - CONSIDERATION OF IN PREPARATION OF ESTIMATES BY CONTRACTING OFFICER - OFFSITE MATERIALS - RESPONSIVENESS IF CONSIDERATION IS TO BE GIVEN TO MAKING PROGRESS PAYMENTS FOR OFFSITE MATERIAL, BIDDERS SHOULD BE SO NOTIFIED BY A SEPARATE PROVISION IN THE INVITATION.

TO MR. SECRETARY:

REFERENCE IS MADE TO LETTERS DATED NOVEMBER 22, 1972, AND FEBRUARY 1, 1973, FROM THE GENERAL COUNSEL AND ASSISTANT GENERAL COUNSEL, RESPECTIVELY, OFFICE OF THE CHIEF OF ENGINEERS, FURNISHING OUR OFFICE REPORTS RELATIVE TO THE PROTEST OF THE STEVENS COMPANY (STEVENS) UNDER IFB NO. DACA01-72-B-0107, ISSUED BY THE MOBILE DISTRICT.

THE INSTANT SOLICITATION REQUESTED BIDS FOR ALL WORK NECESSARY FOR THE FURNISHING OF A PROPULSION ENGINE TEST FACILITY (REPLACEMENT OF EXHAUST GAS COOLERS) AT ARNOLD ENGINEERING DEVELOPMENT CENTER (AEDC), ARNOLD AIR FORCE STATION, TULLAHOMA, TENNESSEE. PARAGRAPH 7 "PAYMENTS TO CONTRACTOR (1964 JUN)" OF THE GENERAL PROVISIONS ADVISED BIDDERS, IN CONNECTION WITH THE PREPARATION OF ESTIMATES BY THE CONTRACTING OFFICER FOR THE MAKING OF PROGRESS PAYMENTS, THAT:

MATERIAL DELIVERED TO THE CONTRACTOR AT LOCATIONS OTHER THAN THE SITE MAY ALSO BE TAKEN INTO CONSIDERATION (1) IF SUCH CONSIDERATION IS SPECIFICALLY AUTHORIZED BY THE CONTRACT AND (2) IF THE CONTRACTOR FURNISHES SATISFACTORY EVIDENCE THAT HE HAS ACQUIRED TITLE TO SUCH MATERIAL AND THAT IT WILL BE UTILIZED ON THE WORK COVERED BY THIS CONTRACT.

THERE WERE NO OTHER PROVISIONS IN THE SOLICITATION CONCERNING THE CONSIDERATION OF OFFSITE MATERIALS IN MAKING PROGRESS PAYMENTS.

WHEN BIDS WERE OPENED ON JULY 27, 1972, THE LOW BIDDER ALLEGED A MISTAKE IN BID AND WAS PERMITTED TO WITHDRAW ITS BID BY DETERMINATION AND FINDINGS DATED OCTOBER 12, 1972. THE BID OF STEVENS WAS THE NEXT LOWEST SUBMITTED, BUT IT WAS DETERMINED TO BE NONRESPONSIVE BECAUSE IT INCLUDED A STATEMENT ON STEVENS' LETTERHEAD WHICH READ AS FOLLOWS: "CLARIFICATION OF PROGRESS PAYMENTS FOR OFFSITE MATERIALS: PARAGRAPH 7 - GENERAL CONDITIONS IS ALL INCLUSIVE."

CONSEQUENTLY, AWARD WAS MADE TO THE THIRD-LOW BIDDER ON OCTOBER 19, 1972, AND NOTICE TO PROCEED WAS ISSUED ON OCTOBER 31, 1972.

STEVENS CONTENDS THAT IT UNDERSTOOD THAT PARAGRAPH 7 OF THE IFB'S GENERAL PROVISIONS WOULD BE A PART OF THE CONTRACT, AND THAT ITS STATEMENT WAS "SIMPLY A CONFIRMATION OF OUR UNDERSTANDING OF THEIR (CORPS OF ENGINEERS) INTERPRETATION OF THE PAYMENT CLAUSE THAT WOULD BE INCORPORATED IN THE CONTRACT AS DISCUSSED WITH THEM BY PHONE." THE PHONE CALL IS RELATED BY STEVENS AS FOLLOWS:

OUR MAJOR SUPPLIER WHO WAS SOLE SOURCE AND HIS EQUIPMENT REPRESENTED 50% OF THE JOB COSTS REQUESTED, AN INTERPRETATION OF PAR 6 PAGE 1 B2 OF THE SPECIFICATION, WHICH IN REALITY DID NOT APPLY BUT WE DID CALL THE CORPS OF ENGINEERS TO CONFIRM OUR INTERPRETATION AND THE MEMO ATTACHED WAS THE CONFIRMATION OF THIS CALL.

THE REFERENCED PROVISION OF THE SPECIFICATIONS CONCERNED PAYMENT FOR WORK REQUIRED FOR PREVENTION OF ENVIRONMENTAL POLLUTION AND WAS NOT PERTINENT TO PROGRESS PAYMENTS FOR OFFSITE MATERIALS.

THE CONTRACTING OFFICER REPORTS THAT HE WAS UNABLE TO FIND ANYONE AT THE ACTIVITY WHO TALKED TO STEVENS CONCERNING THE PAYMENT CLAUSE (PARAGRAPH 7) PRIOR TO BID OPENING. WE UNDERSTAND IT TO BE THE POSITION OF THE CONTRACTING OFFICER THAT THE MEMO INCLUDED IN STEVENS' BID WAS AN ATTEMPT BY THAT COMPANY TO LIMIT THE RIGHTS OF THE GOVERNMENT UNDER PARAGRAPH 7 OF THE GENERAL PROVISIONS TO DETERMINE WHETHER PROGRESS PAYMENTS WOULD BE MADE FOR OFFSITE MATERIALS, AND THAT THIS CONSTITUTED A QUALIFICATION OF THE BID WHICH REQUIRED ITS REJECTION UNDER PARAGRAPH 2-404.2(D) OF THE ARMED SERVICES PROCUREMENT REGULATION. HOWEVER, WE HAVE BEEN INFORMALLY ADVISED THAT THE CORPS OF ENGINEERS, AND PERHAPS OTHER COMMANDS IN YOUR DEPARTMENT, CONSTRUE PARAGRAPH 7 AS SELF-EXECUTING, AND CONSEQUENTLY THERE IS NO REQUIREMENT FOR INCLUDING A SEPARATE PROVISION IN ANY RESULTANT CONTRACT SPECIFICALLY AUTHORIZING PROGRESS PAYMENTS FOR OFFSITE MATERIALS. THIS INTERPRETATION AND CONCOMITANT PRACTICE ARE APPARENTLY WELL KNOWN TO STEVENS AND OTHER KNOWLEDGEABLE BIDDERS.

IT IS A RULE OF LONG STANDING THAT THE QUESTION OF THE RESPONSIVENESS OF A BID IS FOR DETERMINATION UPON THE BASIS OF THE BID AS SUBMITTED, AND EXPLANATIONS FURNISHED AFTER THE BID OPENING ARE NOT TO BE CONSIDERED IN MAKING THE DETERMINATION. WE HAVE ALSO RECOGNIZED THAT WHERE THE ISSUE OF RESPONSIVENESS ARISES BECAUSE OF A STATEMENT IN THE BID, IT IS THE ACTUAL MEANING OF THE TERMS USED IN THAT STATEMENT, RATHER THAN THE INTENDED MEANING, WHICH WILL BE OBSERVED IN DECIDING WHETHER THE STATEMENT RESTRICTS OR IS INCONSISTENT WITH ANY MATERIAL PROVISION OF THE INVITATION SO AS TO RENDER THE BID NONRESPONSIVE. 38 COMP. GEN. 819 (1959).

IN THE LIGHT OF THE CORPS' INTERPRETATION OF PARAGRAPH 7, WE ARE OF THE VIEW THAT ONLY ONE REASONABLE MEANING CAN BE DRAWN FROM THE STATEMENT IN STEVENS' BID, I.E., THAT PARAGRAPH 7 WOULD BE EFFECTIVE AS WRITTEN WITHOUT THE NEED FOR A SEPARATE CONTRACTUAL PROVISION AUTHORIZING PROGRESS PAYMENTS FOR OFFSITE MATERIALS. CONSEQUENTLY, WE DO NOT BELIEVE THAT THE STATEMENT RESTRICTED THE GOVERNMENT'S RIGHTS UNDER PARAGRAPH 7 OR THAT IT WAS OTHERWISE INCONSISTENT WITH THE IFB. ACCORDINGLY, WE ARE OF THE OPINION THAT STEVENS' BID WAS IMPROPERLY DETERMINED TO BE NONRESPONSIVE.

WE WOULD BE DISPOSED TO HOLD THAT THE CONTRACT SHOULD BE TERMINATED FOR THE CONVENIENCE OF THE GOVERNMENT BUT FOR THE DELETERIOUS EFFECT OF THE TERMINATION ON THE AIR FORCE'S ENTIRE TESTING PROGRAM AT AEDC AND ON THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION'S SHUTTLE PROGRAM, TO WHICH THIS PROCUREMENT IS RELATED. WE HAVE BEEN INFORMED THAT THE AIR FORCE HAD DETERMINED PRIOR TO BIDDING THAT NO SLIPPAGE COULD BE TOLERATED IN THIS PROCUREMENT, AND THAT A TERMINATION WOULD CAUSE AN APPROXIMATE ONE YEAR SLIPPAGE IN DELIVERY OF THE ITEMS WHICH IS UNACCEPTABLE TO THE GOVERNMENT.

IN VIEW OF THE FOREGOING, WE ARE CONSTRAINED TO TAKE NO ACTION TO DISTURB THE AWARD.

IF IN FUTURE PROCUREMENTS OF A SIMILAR NATURE CONSIDERATION IS TO BE GIVEN TO MAKING PROGRESS PAYMENTS FOR OFFSITE MATERIAL, BIDDERS SHOULD BE SO NOTIFIED BY A SEPARATE PROVISION IN THE INVITATION, AS WAS DONE IN THE AMENDMENT TO IFB NO. DAC01-73-B-0010 AT PARAGRAPH SP-35A THEREOF, WHICH STATED:

SP-35A. PAYMENT - OFF-SITE FABRICATION. THE CONTRACTING OFFICER AT HIS DISCRETION, MAY AUTHORIZE PARTIAL PAYMENTS FOR OFF-SITE FABRICATION OF EQUIPMENT TO BE USED IN CONSTRUCTION OF THIS FACILITY SUBJECT TO THE REQUIREMENTS OF PARAGRAPH 7.(B) OF THE GENERAL PROVISIONS OF THIS CONTRACT ENTITLED: "PAYMENTS TO CONTRACTOR (1964 JUN)."

THE FILE FORWARDED WITH THE LETTER OF NOVEMBER 22 IS RETURNED.