B-94518, NOVEMBER 8, 1950, 30 COMP. GEN. 179

B-94518: Nov 8, 1950

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1950: FURTHER REFERENCE IS MADE TO THE PROTEST OF STEWART AND STEVENSON SERVICES. A REPORT OF THE FACTS IN THE MATTER WAS TRANSMITTED TO THIS OFFICE BY LETTER DATED JUNE 12. PROSPECTIVE BIDDERS WERE ADVISED THAT THE RIGHT WAS RESERVED. FIVE BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION. THE BID OF THE WOLVERINE DIESEL POWER COMPANY WAS LOW AS TO PRICE BUT THAT BID WAS ACCOMPANIED BY A LETTER DATED MARCH 25. WHEREIN IT WAS STATED THAT IN THE EVENT THAT COMPANY WAS AWARDED A CONTRACT. IT WAS STATED FURTHER THAN AN EXCEPTION WAS TAKEN TO SUBPARAGRAPH E-10I (1) OF THE APPLICABLE U.S. WHEREAS THE INVITATION FOR BIDS SPECIFIED THAT DELIVERY WAS REQUIRED TO BEGIN WITHIN 60 DAYS AND BE COMPLETED WITHIN 120 DAYS.

B-94518, NOVEMBER 8, 1950, 30 COMP. GEN. 179

BIDS - DEVIATIONS FROM ADVERTISED SPECIFICATIONS DEVIATIONS IN A BID FROM THE ADVERTISED SPECIFICATIONS RELATIVE TO THE DESIGN, PARTS, AND DELIVERY DATE OF THE ARTICLES BID UPON GO TO THE SUBSTANCE OF THE BID BY AFFECTING EITHER THE PRICE, QUANTITY, OR QUALITY OF THE ARTICLES, SO AS TO BE PREJUDICIAL TO THE RIGHTS OF OTHER BIDDERS, AND THEREFORE SUCH DEVIATIONS MAY NOT BE WAIVED AS MERE BID INFORMALITIES IN CONSIDERING THE BID FOR ACCEPTANCE. 20 COMP. GEN. 4, AMPLIFIED.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF THE AIR FORCE, NOVEMBER 8, 1950:

FURTHER REFERENCE IS MADE TO THE PROTEST OF STEWART AND STEVENSON SERVICES, INC., AGAINST THE AWARD OF A CONTRACT FOR ELECTRICAL EQUIPMENT ON WRIGHT-PATTERSON AIR FORCE BASE INVITATION NO. 33-038 1038, TO ANY CONCERN OTHER THAN THE SAID COMPANY. A REPORT OF THE FACTS IN THE MATTER WAS TRANSMITTED TO THIS OFFICE BY LETTER DATED JUNE 12, 1950, FROM COLONEL J. R. GILCHRIST, USAF, ACTING DIRECTOR OF FINANCE, DEPARTMENT OF THE AIR FORCE.

IT APPEARS FROM THE RECORD THAT HEADQUARTERS, AIR MATERIEL COMMAND, PROCUREMENT DIVISION, SERVICES SECTION, ADVERTISING AND ORDERS BRANCH, WRIGHT-PATTERSON AFB, DAYTON, OHIO, REQUESTED BIDS--- TO BE OPENED MARCH 21, 1950--- FOR FURNISHING CERTAIN ITEMS OF ELECTRIC EQUIPMENT (ELECTRIC POWER PLANTS, ETC.) TO BE IN ACCORDANCE WITH THE GOVERNMENT'S SPECIFICATIONS THEREFOR. IN PARAGRAPH 4 OF THE INSTRUCTIONS TO BIDDERS, PROSPECTIVE BIDDERS WERE ADVISED THAT THE RIGHT WAS RESERVED, AS THE INTERESTS OF THE GOVERNMENT MIGHT REQUIRE, TO REJECT ANY OR ALL BIDS AND TO WAIVE ANY MINOR INFORMALITY OR IRREGULARITY IN BIDS RECEIVED AND THAT THE CONTRACT WOULD BE AWARDED TO THAT RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WOULD BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICES AND OTHER FACTORS CONSIDERED.

FIVE BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION. THE BID OF THE WOLVERINE DIESEL POWER COMPANY WAS LOW AS TO PRICE BUT THAT BID WAS ACCOMPANIED BY A LETTER DATED MARCH 25, 1950, TO THE CONTRACTING OFFICE, WHEREIN IT WAS STATED THAT IN THE EVENT THAT COMPANY WAS AWARDED A CONTRACT, IT WOULD BE NECESSARY FOR THE AIR FORCE TO FURNISH THE SAID COMPANY WITH 130 OIL TRANSFER VALVES. IT WAS STATED FURTHER THAN AN EXCEPTION WAS TAKEN TO SUBPARAGRAPH E-10I (1) OF THE APPLICABLE U.S. ARMY SPECIFICATION NO. 94-32343-B, AMENDMENT NO. 4, DATED SEPTEMBER 9, 1948, RELATIVE TO THE DESIGN OF AN INTEGRAL HEATER FOR THE ELECTRIC POWER PLANTS COVERED BY THE INVITATION. ALSO, THE COMPANY OFFERED TO COMMENCE DELIVERY OF THE POWER PLANTS WITHIN 75 DAYS AND TO COMPLETE DELIVERY WITHIN 90 DAYS, WHEREAS THE INVITATION FOR BIDS SPECIFIED THAT DELIVERY WAS REQUIRED TO BEGIN WITHIN 60 DAYS AND BE COMPLETED WITHIN 120 DAYS. HOWEVER, THE LETTER CONTAINS A NOTATION DATED APRIL 12, 1949 (APPARENTLY SHOULD BE 1950), AT THE BOTTOM OF PAGE 2, WHEREIN THE BIDDER REQUESTED THAT THE EXCEPTIONS AS TAKEN BE DELETED IN THEIR ENTIRETY, WITHOUT, IN ANY MANNER, AFFECTING THE TOTAL BID PRICES FOR FURNISHING THE ITEMS CALLED FOR ON THE INVITATION FOR BIDS. THE BID OF THE WOLVERINE DIESEL POWER COMPANY WAS ACCEPTED ON BEHALF OF THE GOVERNMENT ON MAY 4, 1950.

THE BASIS FOR THE ORIGINAL PROTEST OF STEWART AND STEVENSON SERVICES, INC., AGAINST THE AWARD OF A CONTRACT TO ANY BIDDER OTHER THAN THAT CONCERN WAS SUMMARIZED IN ITS LETTER OF APRIL 12, 1950, TO THIS OFFICE, AS FOLLOWS:

(1) ALL BIDS SHOULD BE CONSIDERED ONLY ON THE BASIS ON WHICH THEY WERE SUBMITTED AND NO BIDDER SHOULD BE ALLOWED TO REVISE ITS BID OR TO WITHDRAW ITS EXCEPTIONS TO THE ADVERTISED SPECIFICATIONS,

(2) THE GOVERNMENT SHOULD MAINTAIN FAITH WITH BIDDERS TO THE EXTENT THAT BIDS WILL NOT BE REJECTED OR REBID OR NEGOTIATED SINCE THIS WOULD ELIMINATE THE PROTESTING BIDDER FROM CONSIDERATION, AND

(3) THE CONTRACT SHOULD BE AWARDED TO STEWART AND STEVENSON SERVICES, INC., BECAUSE THAT CONCERN SUBMITTED THE LOW BID IN ACCORDANCE WITH THE INVITATION TO BID AND THE GOVERNMENT'S SPECIFICATIONS.

IN SUBSEQUENT LETTERS DATED MAY 29 AND JUNE 2 AND 8, 1950, STEWART AND STEVENSON SERVICES, INC., STATED THAT OTHER WORK HAD BEEN RECEIVED TO KEEP ITS PLANT IN OPERATION AND, AWARD HAVING BEEN MADE TO THE WOLVERINE DIESEL POWER COMPANY, IT WAS INTERESTED IN THIS PARTICULAR CASE ONLY FOR THE PURPOSE OF ASCERTAINING WHETHER BIDDERS PROPERLY MAY BE PERMITTED TO WAIVE DEVIATIONS FROM THEIR BIDS AFTER THE OPENING DATE.

IN THE REPORT OF THE FACTS TRANSMITTED TO THIS OFFICE BY COLONEL GILCHRIST, IT IS STATED THAT THE BID OF THE WOLVERINE DIESEL POWER COMPANY WAS ACCEPTED FOR THE REASON THAT THE SAID COMPANY HAD PREVIOUSLY SUPPLIED THE AIR FORCE WITH MANY POWER PLANTS OF THE SAME TYPE; THAT ON ALL PREVIOUS CONTRACTS, THE COMPANY HAD BEEN FURNISHED THE OIL TRANSFER VALVES REQUESTED IN ITS BID IN THIS CASE DUE TO THE FACT THAT THERE WAS A SURPLUS OF SUCH VALVES IN AF STOCK; AND THAT AS A RESULT OF HAVING BEEN FURNISHED WITH THE VALVES ON THE PREVIOUS BIDS, THE SAID COMPANY FELT THAT THE SAME CONDITION WOULD APPLY IN THIS INSTANCE AND BASED ITS BID ACCORDINGLY. IS STATED FURTHER THAT:

IN VIEW OF THE DIFFERENCE IN THE UNIT PRICE BETWEEN THE LOW BID AND THE NEXT LOW BID, CURRENT MARKET PRICES WERE OBTAINED ON ITEMS REQUESTED TO BE FURNISHED AS GFP BY WOLVERINE DIESEL, AND IT WAS FOUND THAT THE 130 OIL TRANSFER VALVES COULD BE PROCURED FOR $5.50 EACH AND THE 130 FITTINGS FOR ?50 EACH. IN EFFECT, THIS RESULTED IN A LOW BID PRICE OF $1,907,36 PER UNIT BY WOLVERINE, AND IT WAS STILL SUBSTANTIALLY LOWER THAN THE NEXT LOW BID OF $1,926.00 PER UNIT PLUS $3,500.00 FOR DATA. AS A RESULT, IT WAS FELT THAT IT WOULD NOT BE PREJUDICIAL TO ANY OTHER BIDDER TO PERMIT WOLVERINE TO WITHDRAW THIS OBJECTIONABLE CONDITION AT NO CHANGE IN BID PRICE AND IT CERTAINLY WAS IN THE BEST INTERESTS OF THE GOVERNMENT TO DO SO. AUTHORITY FOR PERMITTING THIS WITHDRAWAL WAS BASED UPON COMPTROLLER GENERAL DECISION 20-4.

IN A SUBSEQUENT REPORT DATED JULY 27, 1950, THE HEADQUARTERS, AIR MATERIEL COMMAND, WRIGHT-PATTERSON AIR FORCE BASE, DAYTON, OHIO, STATED THAT THE BID OF THE WOLVERINE DIESEL POWER COMPANY WAS ACCEPTED BEFORE RECEIPT OF NOTICE THAT THE FORMAL PROTEST HAD BEEN FILED WITH THIS OFFICE.

THE DECISION OF JULY 2, 1940, 20 COMP. GEN. 4, CITED AS AUTHORITY FOR THE AWARD OF THE CONTRACT TO THE WOLVERINE DIESEL POWER COMPANY, INVOLVED THE QUESTION AS TO WHETHER AN OTHERWISE ACCEPTABLE LOW BIDDER MIGHT BE PERMITTED TO WAIVE LIMITING CONDITIONS ATTACHED TO ITS BID, AFTER THE BID OPENING DATE, WHEN SUCH WAIVER WAS IN THE INTEREST OF THE GOVERNMENT. THAT DECISION, THE SECRETARY OF THE INTERIOR WAS INFORMED THAT THE PRACTICE IN THAT DEPARTMENT OF REQUESTING A LOW BIDDER TO ELIMINATE SUCH LIMITING CONDITIONS FROM ITS BID AND OF ACCEPTING THE LOW BID UPON SUCH ELIMINATION WAS NOT OBJECTIONABLE SUBJECT TO CERTAIN CONDITIONS SET FORTH THEREIN.

THE QUESTION AS TO WHETHER DEVIATIONS FROM THE REQUIREMENTS OF ADVERTISED SPECIFICATIONS MIGHT BE WAIVED AFTER THE OPENING DATE HAS BEEN BEFORE THIS OFFICE MANY TIMES; AND IT HAS BEEN CONSISTENTLY HELD THAT SUCH DEVIATIONS MAY BE WAIVED PROVIDED THEY DO NOT GO TO THE SUBSTANCE OF THE BID OR WORK AN INJUSTICE TO OTHER BIDDERS. IN OTHER WORDS, THE PRIMARY QUESTION FOR DETERMINATION IN THIS AND SIMILAR CASES IS WHETHER THE DEVIATION PROPOSED TO BE WAIVED GOES TO THE SUBSTANCE OF THE BID SO AS TO AFFECT EITHER THE PRICE, QUANTITY, OR QUALITY OF THE ARTICLES OFFERED AND THEREFORE IS PREJUDICIAL TO THE RIGHTS OF OTHER BIDDERS OR IS MERELY A MATTER OF FORM OR SOME IMMATERIAL VARIATION FROM THE EXACT REQUIREMENTS OF THE SPECIFICATIONS SUCH AS WOULD NOT AFFECT EITHER THE PRICE, QUALITY, OR QUANTITY OF THE ARTICLES OFFERED.

IN THE PRESENT MATTER, IT CLEARLY APPEARS THAT THE DEVIATIONS FROM THE ADVERTISED SPECIFICATIONS WERE OF SUCH SUBSTANCE AS TO AFFECT NOT ONLY THE PRICE BUT THE QUALITY AND QUANTITY OF THE EQUIPMENT OFFERED BY THE LOW BIDDER. THE CONDITION WHICH WOULD HAVE REQUIRED THE GOVERNMENT TO FURNISH THE VALVES IN QUESTION GOES TO THE PRICE, NOT IN THE SENSE THAT THE GOVERNMENT WOULD HAVE BEEN CHARGED MORE FOR THE POWER PLANTS OFFERED, BUT IN THE SENSE THAT A CHARGE FOR THE VALVES UNDOUBTEDLY WOULD HAVE BEEN MADE IN THE FIRST INSTANCE HAD THE LOW BIDDER QUOTED ON THE BASIS OF FURNISHING THOSE PARTS; AND SUCH DEVIATION GOES TO THE QUANTITY AND QUALITY OF THE EQUIPMENT IN THAT EVERYTHING REQUIRED WAS NOT ORIGINALLY PROPOSED TO BE FURNISHED. SIMILARLY, IT SEEMS REASONABLE TO ASSUME THAT THE DEVIATION WHICH WOULD HAVE PERMITTED A LONGER DELIVERY PERIOD THAN THAT SPECIFIED WAS DESIGNED TO AVOID THE NECESSITY OF PAYING OVERTIME OR ACQUIRING SOME OTHER MATERIAL ADVANTAGE AFFECTING THE CONTRACTOR'S COST OF PERFORMANCE AND THEREFORE THE CONTRACT PRICE. THE EXCEPTION TAKEN TO SUBPARAGRAPH E- 10I (1) OF THE SPECIFICATIONS IS A FURTHER INDICATION THAT THE BIDDER DID NOT PROPOSE TO COMPLY WITH THE ESSENTIAL REQUIREMENTS OF THAT PART OF THE SPECIFICATIONS.

AS WAS STATED IN OFFICE DECISION B-93245, MARCH 17, 1950, TO YOU, THE PURPOSE OF THE STATUTORY REQUIREMENT OF ADVERTISING FOR BIDS IN MATTERS OF THIS TYPE IS TO SECURE FREE AND OPEN COMPETITION AMONG BIDDERS IN ORDER THAT THE NEEDS OF THE GOVERNMENT MAY BE SUPPLIED UPON THE MOST ADVANTAGEOUS TERMS AVAILABLE AND TO GIVE ALL PERSONS AN EQUAL RIGHT TO COMPLETE FOR GOVERNMENT BUSINESS. TO INSURE TO THE GOVERNMENT THE BENEFITS OF SUCH COMPETITION IT IS ESSENTIAL THAT AWARDS OF CONTRACTS BE FAIRLY MADE UPON THE BASIS OF THE ESSENTIAL REQUIREMENTS OF THE SPECIFICATIONS SUBMITTED FOR COMPETITION. WHILE THE GOVERNMENT RESERVED THE RIGHT IN THE INVITATION FOR BIDS TO WAIVE ANY INFORMALITY IN BIDS RECEIVED, THE INFORMALITIES WHICH MAY BE WAIVED ARE THOSE OF FORM AND NOT OF SUBSTANCE, OR OF SOME IMMATERIAL AND INCONSEQUENTIAL DEFECT IN OR VARIATION OF A BID FROM THE EXACT REQUIREMENTS OF THE ADVERTISED INVITATION AND SPECIFICATIONS. AS WAS STATED IN 17 COMP. GEN. 554, 558, 559---

* * * TO PERMIT PUBLIC OFFICERS TO ACCEPT BIDS NOT COMPLYING IN SUBSTANCE WITH THE ADVERTISED SPECIFICATIONS OR TO PERMIT BIDDERS TO VARY THEIR PROPOSALS AFTER THE BIDS ARE OPENED WOULD SOON REDUCE TO A FARCE THE WHOLE PROCEDURE OF LETTING PUBLIC CONTRACTS ON AN OPEN COMPETITIVE BASIS. THE STRICT MAINTENANCE OF SUCH PROCEDURE, REQUIRED BY LAW, IS INFINITELY MORE IN THE PUBLIC INTEREST THAN OBTAINING AN APPARENTLY PECUNIARY ADVANTAGE IN A PARTICULAR CASE BY A VIOLATION OF THE RULES. AS WAS SAID BY THE COURTS IN CITY OF CHICAGO V. MOHR, 216 ILL. 320; 74 N.E. 1056---

"* * * WHERE A BID IS PERMITTED TO BE CHANGED (AFTER THE OPENING) IT IS NO LONGER THE SEALED BID SUBMITTED IN THE FIRST INSTANCE, AND, TO SAY THE LEAST, IS FAVORITISM, IF NOT FRAUD--- A DIRECT VIOLATION OF LAW--- AND CANNOT BE TOO STRONGLY CONDEMNED.'

IT FOLLOWS THAT THE CONTRACT IN THE PRESENT CASE SHOULD NOT HAVE BEEN AWARDED TO THE WOLVERINE DIESEL POWER COMPANY.

WHILE NO FURTHER QUESTION WILL BE RAISED TO THE ADMINISTRATIVE ACTION TAKEN IN THIS INSTANCE, THE MATTER IS BEING BROUGHT TO YOUR ATTENTION FOR SUCH ACTION AS MAY BE NECESSARY TO ASSURE THAT IN FUTURE CASES BIDDERS WILL NOT BE PERMITTED TO CHANGE OR ALTER THEIR BIDS IN MATERIAL RESPECTS AFTER THE DATE SET FOR OPENING OF BIDS. THE CONCLUSION STATED IN 20 COMP. GEN. 4, TO THE EXTENT IT MAY BE INTERPRETED TO BE IN CONFLICT WITH WHAT IS STATED HEREIN, SHOULD NO LONGER BE APPLIED IN THIS TYPE OF CASE.