Protest of Rejection of Bid as Nonresponsive

A firm protested the Army's rejection of its bid for pneumatic aircraft tires as nonresponsive. The Army determination was based on the protester's exclusion of Federal Excise Tax (FET) from its bid price. The protester contended that it properly excluded the FET from its bid price, because the tax does not apply to tires procured for military aircraft. The solicitation specifically stated that, unless it was otherwise provided in the contract, the contract price included all applicable taxes. Regulations concerning the FET state that military aircraft are only exempt from excise under certain conditions: the purchase must be substantial, the contracting officer must determine at the time of purchase that the supplies are intended for use on military aircraft, and the administrative burden of insuring that the supplies are used for exempt purposes must not make the use of exemption uneconomical. As a result of these conditions, the contractor cannot be assured that an exemption certificate will be issued, and the contractor, therefore, may have to pay the FET. Since there was no assurance that the FET would not have to be paid, GAO believed that the case fell within the rule that where tax is of doubtful applicability and a bidder states in its bid that it is not including the tax, the bidder must specify the tax and the amount excluded. The protester's bid did not indicate the tax which was excluded from the bid price. Therefore, GAO determined that the protester's bid was properly rejected as nonresponsive. Accordingly, the protest was denied.