B-169838, B-169839, OCT. 30, 1970

B-169838, B-169839, OCT. 30, 1970

BID PROTEST - NEGOTIATIONS - REVISED REQUIREMENTS DENIAL OF PROTEST OF INTERNATIONAL TELEPHONE & TELEGRAPH CORP., AGAINST THE ACCEPTANCE OF BIDS FROM VARCO AND RCA FOR IMAGE INTENSIFIER ASSEMBLIES REQUESTED BY THE U.S. ARMY ELECTRONICS COMMAND. HIGH OFFEROR, WHO CLAIMS THAT THE CHANGES CLAUSE OF A CONTRACT WHICH PROVIDED FOR REVIEW OF TECHNICAL DRAWINGS FOR A PERIOD NOT TO EXCEED 90 DAYS AFTER NEGOTIATING THE CONTRACT BUT BEFORE PROCEEDING WITH PRODUCTION, PROVIDED LOW BIDDER WITH A METHOD OF "BUYING IN" AT A LOW PRICE CANNOT BE SUSTAINED IN HIS CONTENTION THAT THE ABOVE CONDITIONS RENDERED THE INVITATION FOR BIDS (IFB) FATALLY DEFECTIVE. THE ASPR COMMITTEE UPHELD THE "PREPRODUCTION EVALUATION" CLAUSE USED BY THE FRANKFORD ARSENAL, SIMILAR TO THE CONTRACT NOTE UNDER ATTACK BY ITT, AS NOT IN CONFLICT WITH THE STANDARD CHANGES CLAUSE AND AS NO DEVIATION UNDER ASPR 1-109.

TO VOM BAUR, COBURN, SIMMONS & TURTLE:

REFERENCE IS MADE TO YOUR REQUEST BY LETTERS DATED AUGUST 11 AND 12, 1970, FOR RECONSIDERATION OF OUR DECISION B-169838, B-169839, JULY 28, 1970, RELATING TO YOUR PROTEST, ON BEHALF OF INTERNATIONAL TELEPHONE AND TELEGRAPH CORPORATION (ITT), AGAINST AWARD OF ANY CONTRACTS UNDER TWO INVITATIONS FOR BIDS (IFB) ISSUED BY THE UNITED STATES ARMY ELECTRONICS COMMAND (ECOM). THE PROCUREMENT ITEMS WERE 25MM AND 40MM IMAGE INTENSIFIER ASSEMBLIES, AND THE RESPECTIVE IFB'S WERE DAAB07-70-B 0362, ISSUED APRIL 20, 1970, AND DAAB07-70-B-0363, DATED APRIL 22, 1970.

YOU PROTESTED THAT THE IFB'S WERE MATERIALLY DEFECTIVE IN SEVERAL AREAS AND THEREFORE CANCELLATION OF THE IFB'S AND RESOLICITATION OF THE RESPECTIVE PROCUREMENT REQUIREMENTS WERE WARRANTED. FOR THE REASONS STATED IN OUR DECISION, WE DENIED YOUR PROTEST AND HELD THAT CONTRACT AWARDS COULD BE MADE TO THE LOWEST RESPONSIVE AND RESPONSIBLE BIDDERS ON THE TWO PROCUREMENTS.

YOUR REQUEST FOR RECONSIDERATION CONCERNS A PROVISION IN EACH IFB DESIGNATED AS CONTRACT NOTE 21. THIS PROVISION, WHICH IS ENTITLED "TECHNICAL REQUIREMENTS FOR EXAMINATION AND REVIEW OF ENGINEERING DRAWINGS," RELATES TO A REQUIREMENT IN LINE ITEMS 6 AND 15 IN IFB B 0362 AND IN LINE ITEMS 4 AND 11 IN IFB 0363. THE PURCHASE DESCRIPTION FOR EACH OF THE LINE ITEMS INCLUDED THE FOLLOWING LANGUAGE:

"TECHNICAL EXAMINATION AND REVIEW OF GOVERNMENT FURNISHED USAECOM ENGINEERING DRAWINGS LISTED WITHIN THIS CONTRACT IN ACCORDANCE WITH CONTRACT NOTE 21 ENTITLED, 'TECHNICAL REQUIREMENTS FOR EXAMINATION AND REVIEW OF ENGINEERING DRAWINGS'."

CONTRACT NOTE 21 SPELLED OUT THE SCOPE OF THE DRAWINGS REVIEW; REQUIRED THE CONTRACTOR TO SUBMIT TO THE GOVERNMENT NOTICES OF REVISION FOR EACH DRAWING REQUIRING REVISION; AND STIPULATED THAT THE GOVERNMENT WOULD NOT BE RESPONSIBLE FOR DAMAGES, OR EXTRA COSTS, OR DELAY IN DELIVERY RESULTING FROM AN INADEQUATE CHECK OF THE DRAWINGS. PARAGRAPH B OF THE NOTE STATED THAT THE PURPOSE OF THE REVIEW WAS TO DETERMINE, IDENTIFY AND CORRECT THE EXISTENCE OF ANY OMISSION, DISCREPANCY, ERROR, OR DEFICIENCY IN DESIGN OR TECHNICAL DATA WHICH MIGHT PRECLUDE PRACTICAL MANUFACTURE OF THE ASSEMBLIES OR WHICH MIGHT PRECLUDE ATTAINMENT OF THE REQUIRED PERFORMANCE AS SET FORTH IN THE SPECIFICATIONS. PARAGRAPH G PROVIDED FOR PROCESSING OF DRAWING REVISIONS APPROVED BY THE GOVERNMENT AS A SINGLE ENGINEERING CHANGE PROPOSAL.

CONTRACT NOTE 22, ENTITLED "ENGINEERING DRAWINGS REVISIONS," INCLUDED THE FOLLOWING PERTINENT PARAGRAPH:

"A. IN THE EVENT THE GOVERNMENT MAKES CHANGES IN THE DRAWINGS, DESIGNS OR SPECIFICATIONS PURSUANT TO THE CHANGES CLAUSE OF THIS CONTRACT, THE CONTRACTOR AGREES UPON AN ORDER FROM THE CONTRACTING OFFICER TO REVISE THE GOVERNMENT-FURNISHED ENGINEERING DRAWINGS TO REFLECT SUCH CHANGES IN ACCORDANCE WITH THIS PROVISION. THE GOVERNMENT SHALL ALSO HAVE THE RIGHT TO ORDER REVISED DRAWINGS WHERE SUCH REVISION IS FOUND TO BE NECESSARY AS A RESULT OF ACTIONS TAKEN UNDER THE PROVISION OF THIS CONTRACT ENTITLED 'TECHNICAL REQUIREMENTS FOR EXAMINATION AND REVIEW OF ENGINEERING DRAWINGS'. THE CONTRACTOR FURTHER AGREES TO UTILIZE THE REVISED SET OF GOVERNMENT DRAWINGS AS BASIC ENGINEERING DATA FOR ORDERING MATERIALS AND PARTS, AND IN THE CONSTRUCTION, INSPECTION, AND TEST OF THE EQUIPMENT TO WHICH THEY APPLY. THE GOVERNMENT AND THE CONTRACTOR WILL NEGOTIATE AN EQUITABLE ADJUSTMENT IN PRICE FOR SUCH REVISIONS TO THE ENGINEERING DRAWINGS IN ACCORDANCE WITH THE PROCEDURE SET FORTH IN THE CHANGES CLAUSE OF THIS CONTRACT. THE EQUITABLE ADJUSTMENT MAY BE REFLECTED AS A SEPARATE ITEM IN THE CONTRACT. PAYMENT FOR ALL ORDERED ENGINEERING DRAWINGS OR REVISIONS THERETO WILL BE MADE AFTER FINAL ACCEPTANCE OF THE FINAL SET OF DRAWINGS BY THE GOVERNMENT."

CONTRACT NOTE 28 IDENTIFIED THE FULL SIZE ECOM DRAWINGS TO BE FURNISHED BY THE GOVERNMENT AFTER AWARD, ALL OF WHICH WERE FURNISHED WITH THE BID PACKAGE IN MICROFILM FORM AS PER ARTICLE 39(N) OF THE BIDDING INSTRUCTIONS AND SOME ALSO AS BIDDING MATERIAL UNDER CONTRACT NOTE 18. IN ADDITION, CONTRACT NOTE 28 REQUIRED THE CONTRACTOR, WITHIN 15 DAYS AFTER RECEIPT OF THE FULL SIZE DRAWINGS, TO FURNISH TO THE PROCUREMENT CONTRACTING OFFICER (PCO) A WRITTEN CERTIFICATION ATTESTING TO EXAMINATION OF THE DRAWINGS AND LISTING ANY ILLEGIBLE OR MISSING DRAWINGS. THE GOVERNMENT, IN TURN, WAS REQUIRED TO REPLACE ALL OF THE REPORTED ILLEGIBLE AND MISSING DRAWINGS WITHIN 15 CALENDAR DAYS AFTER RECEIPT BY THE PCO OF THE CERTIFICATION FROM THE CONTRACTOR.

THE REVIEW PERIOD WAS STIPULATED IN THE DELIVERY SCHEDULE FOR THE RELATED LINE ITEMS IN EACH IFB. IN IFB B-0362, THE CONTRACTOR WAS REQUIRED TO SUBMIT THE NOTICES OF DISCREPANCIES IN THE DRAWINGS TO THE GOVERNMENT NOT LATER THAN 90 CALENDAR DAYS AFTER AWARD, AND THE GOVERNMENT WAS REQUIRED TO RESOLVE ANY DISCREPANCIES WITHIN NOT MORE THAN 30 CALENDAR DAYS AFTER RECEIPT OF THE CONTRACTOR'S STATEMENT. IN IFB B-0363 THE DELIVERY SCHEDULE ALLOWED 60 CALENDAR DAYS AFTER AWARD FOR SUBMISSION BY THE CONTRACTOR OF NOTICES OF REVISION AND MARKED PRINTS TO THE GOVERNMENT AND 45 CALENDAR DAYS AFTER RECEIPT OF SUCH INFORMATION FROM THE CONTRACTOR FOR THE GOVERNMENT TO RESOLVE ALL DISCREPANCIES.

INFORMATION FURNISHED TO OUR OFFICE BY THE ARMY MATERIEL COMMAND INDICATES THAT AS OF THE DATE OF OUR DECISION ECOM HAD BEEN USING CONTRACT NOTE 21 FOR APPROXIMATELY FIVE MONTHS, OR SINCE MARCH 1970. IN ECOM'S WORDS, THE NOTE, WHICH IS A REWRITE BY ECOM OF A 1953 SIGNAL CORPS CLAUSE ENTITLED "PRODUCTION DRAWING CHANGES," HIGHLIGHTS THE NEED FOR REVIEW OF THE DRAWINGS PRIOR TO COMMITMENTS, AND OFFERS TO PAY FOR THE REVIEW AS A DIRECT LINE ITEM IN LIEU OF HAVING IT "BURIED" IN THE COST OF THE PRINCIPAL ITEM. IN ADDITION, ECOM STATES, "THE NOTE IS DESIGNED TO BE USED IN SUPPLY CONTRACTS FOR THE FIRST, SECOND AND PERHAPS THIRD PROCUREMENT, AND THEREAFTER THE NEED TO REVIEW THE DRAWINGS WOULD ABATE BECAUSE BY THAT TIME THE DRAWINGS WOULD HAVE BEEN PROVEN."

REFERENCE TO THE "PRODUCTION DRAWING CHANGES" CLAUSE ON WHICH CONTRACT NOTE 21 IS BASED VERIFIES ECOM'S STATEMENTS AS TO THE SIMILARITY OF THE TWO CLAUSES. AMONG OTHER PROVISIONS, BOTH CLAUSES PROVIDE FOR REVIEW OF THE DRAWINGS BEFORE PROCEEDING WITH PRODUCTION, FOR NEGOTIATION OF ANY EQUITABLE ADJUSTMENTS IN PRICE FOR AUTHORIZED CHANGES IN ACCORDANCE WITH THE TERMS OF THE STANDARD CHANGES CLAUSE, AND FOR RELIEF OF THE GOVERNMENT FROM LIABILITY FOR DAMAGES OR EXTRA COSTS RESULTING FROM INADEQUATE CHECK BY THE CONTRACTOR OF THE DRAWINGS OR REVISIONS THEREOF.

IN ADDITION TO THE PROVISIONS CITED ABOVE, EACH OF THE IFB'S INCLUDED THE STANDARD CHANGES CLAUSE PRESCRIBED BY ASPR 7-103.2, UNDER WHICH THE CONTRACTING OFFICER MAY MAKE CHANGES, WITHIN THE GENERAL SCOPE OF THE CONTRACT, IN THE DRAWINGS, AMONG OTHER ITEMS, WITH CORRESPONDING EQUITABLE ADJUSTMENTS IN THE CONTRACT PRICE, AS WELL AS STANDARD FORM 33A, SOLICITATION INSTRUCTIONS AND CONDITIONS, ARTICLE 2(A) OF WHICH PLACES UPON PROSPECTIVE BIDDERS THE BURDEN OF EXAMINING DRAWINGS AND OTHER BID DOCUMENTS BEFORE BID PREPARATION, AND PROVIDES THAT FAILURE TO DO SO WILL BE AT THEIR OWN RISK.

IN OUR DECISION OF JULY 28 WE STATED THAT IN OUR VIEW THE LANGUAGE OF CONTRACT NOTE 21 LENDS ITSELF TO BUT ONE REASONABLE INTERPRETATION; I.E., THE PROVISION SIMPLY PLACES A LIMITATION ON THE PERIOD AFTER AWARD DURING WHICH BIDDERS ARE TO REVIEW THE FULL SIZE DRAWINGS TO DETECT ANY DEFICIENCIES WHICH MIGHT PRECLUDE COMPLIANCE WITH THE GOVERNMENT SPECIFICATIONS AND THEREAFTER TRANSFERS TO THE CONTRACTORS THE RISK OF ANY DEFICIENCIES WHICH THE CONTRACTORS SHOULD HAVE DISCOVERED DURING THE REVIEW PERIOD.

YOU TAKE EXCEPTION TO OUR OPINION ON THE BASIS THAT CONTRACT NOTE 21 IS SUSCEPTIBLE TO MORE THAN ONE REASONABLE INTERPRETATION, AND YOU ASSERT THAT VARO AND THE ARMY HAVE GIVEN THE PROVISION WIDELY DIFFERENT MEANINGS. ESSENTIALLY, YOU CLAIM THAT A BIDDER COULD VIEW THE NOTE AS A MEANS FOR OBTAINING LARGE POST-AWARD PRICE ADJUSTMENTS WITH THE RESULT THAT THE BIDDER COULD DISPENSE WITH PREBID REVIEW OR REMAIN SILENT ABOUT ANY KNOWN DEFECTS AND "BUY IN" AT A LOW BID PRICE, OR A BIDDER COULD CONSTRUE THE NOTE AS AN INDICATION THAT THE GOVERNMENT DRAWINGS ARE DEFECTIVE AND COMPENSATION WILL BE PAID ONLY FOR THE DEFECTS DISCOVERED IN THE REVIEW PERIOD, THEREBY INDUCING THE BIDDER TO INCLUDE IN ITS BID A CONTINGENCY FOR DEFECTS NOT DISCOVERABLE.

IN PURSUIT OF THE "BUY IN" ISSUE WHICH YOU RAISED IN YOUR ORIGINAL PROTEST, YOU TAKE ISSUE WITH A STATEMENT IN OUR DECISION TO THE EFFECT THAT THERE WAS NO INDICATION OF RECORD THAT ANY BIDDER "BOUGHT IN," AND WHICH NOTED THAT THE FIRST THREE BIDS ON EACH PROCUREMENT WERE RELATIVELY CLOSE IN PRICE. IN THIS REGARD, YOU CHARGE THAT WE HAVE IGNORED THE FACT THAT THE LOWEST BID (VARO'S) ON THE 25MM ASSEMBLIES "WAS CLOSE TO A MILLION DOLLARS OR AT LEAST ONE-QUARTER OF THE SECOND BID" AND THAT WE FAILED TO NOTE THE SIGNIFICANCE OF THE ABSENCE OF ANY ADMINISTRATIVE STATEMENT AS TO WHAT WOULD HAVE BEEN A REASONABLE PRICE FOR THE 25MM ASSEMBLIES.

YOU ALSO SUMMARIZE SEVERAL AREAS IN WHICH YOU CONTEND THAT CONTRACT NOTE 21 IS AT VARIANCE WITH THE STANDARD CHANGES CLAUSE, AND YOU CITE THE ABSENCE OF ANY INDICATION OF APPROVAL OF THE NOTE AS A DEVIATION FROM THE CHANGES CLAUSE PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1- 109.

IN FURTHER SUPPORT OF YOUR POSITION THAT CONTRACT NOTE 21 RENDERED THE IFB'S IN QUESTION FATALLY DEFECTIVE, YOU REFER TO AN ARTICLE IN FEDERAL CONTRACTS REPORT NO. 337, AUGUST 3, 1970, PAGE A-8, RELATING TO OPPOSITION REGISTERED, IN A LETTER TO THE ASSISTANT SECRETARY OF DEFENSE FROM THE CHAIRMAN OF THE PUBLIC CONTRACTS SECTION OF THE AMERICAN BAR ASSOCIATION (ABA), TO THE USE BY FRANKFORD ARSENAL OF A CLAUSE ENTITLED "PREPRODUCTION EVALUATION." THE ABA ASSERTED THAT THE "PREPRODUCTION EVALUATION" CLAUSE, THE WORDING OF WHICH IS SIMILAR TO CONTRACT NOTE 21, CONSTITUTES AN UNAUTHORIZED DEVIATION FROM ASPR AND ALSO REPRESENTS UNSOUND PROCUREMENT POLICY. THE DEVIATION ISSUE, YOU URGE, HAS SUPPORT IN CASE LAW. IN THIS REGARD, YOU CITE JACK STONE COMPANY V UNITED STATES, 344 F. 2D 370 (1965), AND G. L. CHRISTIAN AND ASSOCIATES V UNITED STATES, 320 F. 2D 345 (1963). THE RELIEF REQUESTED BY THE ABA WAS ISSUANCE OF INSTRUCTIONS TO THE ASPR COMMITTEE FOR DISCONTINUANCE OF THE USE OF THE "PREPRODUCTION EVALUATION" CLAUSE AND SIMILAR CLAUSES UNTIL APPROPRIATE ASPR COVERAGE CAN BE ADOPTED.

FINALLY, YOU ASK WHAT RELIEF OUR OFFICE WILL PROVIDE IN THE EVENT WE AFFIRM OUR DECISION OF JULY 28 AND ITT'S PREDICTIONS AS TO LARGE EQUITABLE ADJUSTMENTS BY THE LOW, SUCCESSFUL BIDDERS, VARO AND RCA, ON THESE TWO PROCUREMENTS ULTIMATELY PROVE TO BE JUSTIFIED. IN THIS CONNECTION, YOU SUGGEST CANCELLATION OF THE CONTRACTS, DISALLOWANCE OF THE EXCESS COST OF ADJUSTMENTS IN THE ACCOUNTS OF THE RESPONSIBLE FINANCE OFFICERS, AND ENTERTAINMENT OF CLAIMS BY ITT FOR MONETARY RELIEF.

THE ASPR COMMITTEE HAS INFORMED OUR OFFICE THAT THE "PREPRODUCTION EVALUATION" CLAUSE USED BY FRANKFORD ARSENAL WAS DISCUSSED AT A COMMITTEE MEETING ON SEPTEMBER 18, 1970. THE CONSENSUS OF THE COMMITTEE WAS THAT THE CLAUSE DOES NOT CONFLICT WITH THE STANDARD CHANGES CLAUSE FOR SUPPLY CONTRACTS, THAT IT REQUIRES NO DEVIATION UNDER ASPR 1-109, AND THAT IT MAY THEREFORE BE USED BY THE DEPARTMENT OF THE ARMY WHEN DEEMED APPROPRIATE. IN THE CIRCUMSTANCES, WE CANNOT CONCLUDE THAT THE USE OF CONTRACT NOTE 21 WITH ITS SIMILAR WORDING IS REQUIRED TO BE REGARDED AS AN UNAUTHORIZED DEVIATION FROM ASPR, AND WE DO NOT BELIEVE THAT EITHER THE STONE OR CHRISTIAN CASES, SUPRA, WARRANT A CONTRARY VIEW.

AS TO THE INTERPRETATION TO BE PLACED ON CONTRACT NOTE 21 IN THESE TWO INVITATIONS, WE HAVE STATED THAT INVITATIONS FOR BIDS, LIKE CONTRACTS, SHOULD BE INTERPRETED SO AS TO GIVE MEANING TO EACH PART. 39 COMP. GEN. 247 (1959). THE INTENT AND MEANING OF AN INVITATION FOR BIDS ARE NOT TO BE DETERMINED BY CONSIDERATION OF AN ISOLATED SECTION AS A PROVISION STANDING ALONE; RATHER, THE INVITATION MUST BE CONSIDERED IN ITS ENTIRETY AND EACH PROVISION MUST BE CONSTRUED IN ITS RELATIONSHIP TO OTHER PROVISIONS AND IN LIGHT OF THE GENERAL PURPOSE INTENDED TO BE ACCOMPLISHED. 39 COMP. GEN. 17 (1959).

WITH RESPECT TO THE CONTRACTS WHICH WERE AWARDED TO VARO AND RCA UNDER THE IFB'S IN QUESTION, THERE IS FOR APPLICATION THE SAME RULE, AS ENUNCIATED BY THE COURTS, THAT AN INTERPRETATION WHICH GIVES A REASONABLE MEANING TO ALL PARTS OF AN INSTRUMENT WILL BE PREFERRED TO ONE WHICH LEAVES A PORTION OF IT USELESS, INAPPLICABLE, INOPERATIVE, VOID, INSIGNIFICANT, MEANINGLESS OR SUPERFLUOUS, NOR SHOULD ANY PROVISION BE CONSTRUED AS BEING IN CONFLICT WITH ANOTHER UNLESS NO OTHER REASONABLE INTERPRETATION IS POSSIBLE. HOLGAR MANUFACTURING CORPORATION V UNITED STATES, 351 F. 2D 972, 979 (1965). THERE IS ALSO FOR APPLICATION THE RULE THAT WHILE AN IMPROVIDENT INTERPRETATION PLACED BY A CONTRACTOR UPON THE SPECIFICATIONS MAY EVEN BE CONSIDERED REASONABLE, SUCH INTERPRETATION ALONE IS NOT A SUFFICIENT BASIS FOR CONSTRUCTION OF THE CONTRACT AGAINST THE AUTHOR OF THE LANGUAGE IF SUCH INTERPRETATION IS NOT REASONABLE WHEN THE CONTRACT IS CONSIDERED AS A WHOLE AND IN LIGHT OF THE PURPOSE OF THE CONTRACT. BISHOP ENGINEERING COMPANY, INC. V UNITED STATES, 180 CT. CL. 411 (1967). PARAGRAPH 2(A) OF STANDARD FORM 33A, BY CHARGING BIDDERS WITH THE RESPONSIBILITY FOR EXAMINING THE GOVERNMENT DRAWINGS BEFORE BIDDING, AND REQUIRING THEM TO ASSUME THE RISK OF FAILURE TO DO SO, IS IN KEEPING WITH THE RULE (STATED AT PAGE 7 OF OUR DECISION) LONG APPLIED BY THE COURTS, THAT WHERE THERE IS AN APPARENT CONFLICT BETWEEN GOVERNMENT DRAWINGS AND SPECIFICATIONS, OR WHEN THE CONTRACTOR DETECTS MAJOR DISCREPANCIES OR ERRORS IN THE GOVERNMENT'S SPECIFICATIONS OR DRAWINGS, IT IS INCUMBENT UPON THE CONTRACTOR TO BRING SUCH MATTERS TO THE ATTENTION OF THE GOVERNMENT, AND FAILURE TO DO SO IS AT HIS PERIL. STATED ANOTHER WAY, A BIDDER BY REMAINING SILENT AND ACCEPTING A CONTRACT WITH KNOWLEDGE OF A DEFECT IN A SPECIFICATION, DOES NOT THEREBY ACQUIRE A RIGHT TO AN INCREASE IN THE CONTRACT PRICE UPON CORRECTION OF THE DEFECT PURSUANT TO ORDER OF THE GOVERNMENT AFTER AWARD. UNION PAINTING CO. V UNITED STATES, 198 F. SUPP. 282 (1961).

WE SEE NOTHING IN THE LANGUAGE OF CONTRACT NOTE 21 WHICH COULD BE CONSTRUED AS RELIEVING A BIDDER OF HIS RESPONSIBILITY FOR PREBID REVIEW OF THE DRAWINGS WHICH WERE INCLUDED IN THE BID PACKAGE. CONVERSELY, WE BELIEVE THERE CAN BE NO DOUBT THAT TWO SEPARATE REVIEWS WERE CONTEMPLATED BY THE TERMS OF THE IFB'S. ON THE ONE HAND, BIDDERS WERE RESPONSIBLE FOR EXAMINING THE MICROFILM AND OTHER DRAWING COPIES IN THE BID PACKAGE FOR BID PREPARATION PURPOSES AND, ON THE OTHER HAND, THE SUCCESSFUL BIDDER UNDER EACH IFB IS REQUIRED TO REVIEW THE FULL SIZE ENGINEERING DRAWINGS FOR THE PURPOSES STATED IN PARAGRAPH B OF CONTRACT NOTE 21. IN VIEW OF THE RULE FOLLOWED IN THE BISHOP AND UNION PAINTING CASES, SUPRA, WE DO NOT BELIEVE IT WOULD INURE TO A BIDDER'S BENEFIT TO DELIBERATELY BID LOW, OR "BUY IN," WITH THE EXPECTATION OF LATER INCREASING THE CONTRACT PRICE UNDER CLAIMS BASED UPON DEFECTS IN DRAWINGS AS TO WHICH HE COULD BE CHARGED WITH NOTICE ON THE BASIS OF THE DATA IN THE BID PACKAGE.

AS TO WHAT INTERPRETATION MIGHT BE PLACED ON THE WORDING OF CONTRACT NOTE 21 IN CONNECTION WITH DEFECTS IN THE DRAWINGS WHICH THE CONTRACTOR FAILS TO DETECT IN THE POST-AWARD REVIEW, WE HAVE ALREADY STATED OUR OPINION (PAGE 8 OF OUR DECISION) THAT AFTER THE EXPIRATION OF THE REVIEW PERIOD THE CONTRACTOR ASSUMES THE RISK OF ANY DEFICIENCIES WHICH HE SHOULD HAVE DISCOVERED DURING THE REVIEW. THE USE OF THE TERM "INADEQUATE REVIEW" IN CONNECTION WITH THE RELEASE OF THE GOVERNMENT FROM LIABILITY INCIDENT TO DEFECTS NOT DISCOVERED DURING THE POST-AWARD REVIEW IMPLIES, IN OUR OPINION, THAT THE PROVISION WILL BE APPLIED IN A REASONABLE MANNER SO AS NOT TO PRECLUDE RELIEF TO A CONTRACTOR WHOSE REVIEW IS SHOWN TO HAVE BEEN ADEQUATE.

NOR DO WE SEE ANY CONFLICT BETWEEN THE PROVISIONS OF CONTRACT NOTE 21 AND THE CHANGES CLAUSE IN THE CONTRACT. UNDER THE TERMS OF CONTRACT NOTE 22, THE CHANGES INCIDENT TO THE DRAWING REVIEW MADE UNDER CONTRACT NOTE 21 ARE TO BE EFFECTED IN ACCORDANCE WITH THE PROVISIONS OF THE CHANGES CLAUSE, AND SUCH CHANGES WILL BE NO MORE THAN WOULD BE MADE HAD THE POST-AWARD REVIEW BEEN EFFECTED IN LINE WITH GOOD BUSINESS PRACTICES ON THE CONTRACTOR'S OWN INITIATIVE. THE EFFECT OF CONTRACT NOTE 21 AND THE RELATED IFB PROVISIONS, THEREFORE, IS SIMPLY TO SET A TIME LIMIT FOR THE EXPECTED POST-AWARD REVIEW, RATHER THAN TO LEAVE IT TO THE DISCRETION OF THE CONTRACTOR AS TO WHEN THE REVIEW SHOULD BE COMPLETED. THIS, WE BELIEVE, IS THE ONLY REASONABLE INTERPRETATION OF CONTRACT NOTE 21. FURTHER, WHILE CONTRACT NOTE 21 IS COLLATERAL TO THE CHANGES CLAUSE, IN OUR VIEW IT DOES NOT MODIFY EITHER THE CHANGES CLAUSE OR ITS PRESCRIBED APPLICATION SO AS TO REQUIRE APPROVAL PURSUANT TO ASPR 1-109.5 AS A DEVIATION. FURTHER, WE BELIEVE THAT THE OPINION EXPRESSED BY THE ASPR COMMITTEE IN ITS MINUTES OF SEPTEMBER 18, 1970, WITH RESPECT TO THE SIMILAR "PREPRODUCTION EVALUATION" CLAUSE EMPLOYED BY FRANKFORD ARSENAL SUPPORTS THIS POSITION.

WITH RESPECT TO YOUR OBJECTION THAT VARO MAY HAVE "BOUGHT IN" TO THE CONTRACT ON THE 25MM ASSEMBLIES AT A LOW PRICE WITH THE INTENTION OF OBTAINING EQUITABLE ADJUSTMENTS UNDER CONTRACT NOTE 21 AFTER AWARD, WE HAVE HELD THAT AN "ATTEMPTED BUYING-IN" BY A BIDDER DOES NOT AFFORD A BASIS FOR REJECTION OF A BID SINCE ASPR 1-311 DOES NOT PROVIDE FOR REJECTION IN SUCH CIRCUMSTANCES BUT ONLY PROVIDES THAT CONTRACTING OFFICERS ASSURE THAT AMOUNTS EXCLUDED IN THE DEVELOPMENT OF THE ORIGINAL CONTRACT PRICE ARE NOT RECOVERED IN THE PRICING OF CHANGE ORDERS OR IN FOLLOW-ON PROCUREMENTS SUBJECT TO COST ANALYSIS. B 167312, SEPTEMBER 16, 1969; B-158326, MAY 5, 1966. IN ANY EVENT, WE DO NOT BELIEVE THE RECORD WOULD SUBSTANTIATE A CONCLUSION THAT VARO'S BID PRICES CONSTITUTE A "BUY IN" ON THE 25MM PROCUREMENT. WHILE VARO'S UNIT PRICE OF $385.13 WAS SUBSTANTIALLY LOWER THAN ITT'S UNIT PRICE OF $486.44, THESE PRICES REPRESENTED TOTAL PRICE REPRESENTED TOTAL PRICE DECREASES ON THE ITEM IN NEARLY THE SAME AMOUNT BY BOTH OF THESE FIRMS SINCE MAY 1966; I.E., VARO'S PRICE DROPPED BY $2,162.22 FROM ITS MAY 1966 UNIT PRICE OF $2,547.35, WHILE ITT'S PRICE DROPPED BY $2,136.56 FROM ITS MAY 1966 UNIT PRICE OF $2,623. IN THE CIRCUMSTANCES, ABSENT ANY EVIDENCE OR CLAIM OF MISTAKE BY VARO, WE CANNOT CONCLUDE THAT THE FACT THAT VARO'S TOTAL MULTI-YEAR PRICE WAS NEARLY $900,000 LOWER THAN ITT'S TOTAL MULTI-YEAR PRICE HAD ANY UNDUE SIGNIFICANCE.

IN LINE WITH THE FOREGOING, WE FIND NO LEGAL BASIS FOR OBJECTION TO THE USE OF CONTRACT NOTE 21 BY ECOM IN EITHER OF THE IFB'S AND TO THE AWARDS WHICH WERE SUBSEQUENTLY MADE TO THE LOWEST RESPONSIVE AND RESPONSIBLE BIDDERS IN ACCORDANCE WITH THE PROVISIONS OF 10 U.S.C. 2305(C). ACCORDINGLY, OUR DECISION OF JULY 28 IS AFFIRMED.

WHETHER, FROM THE STANDPOINT OF GOOD PROCUREMENT PRACTICE, THE USE OF PROVISIONS SUCH AS CONTRACT NOTE 21 SHOULD BE CONTINUED IS, OF COURSE, A MATTER OF POLICY FOR THE DEPARTMENT OF DEFENSE TO DECIDE. IT IS TO BE NOTED, HOWEVER, THAT PROVISIONS SUCH AS CONTRACT NOTE 21 HAVE BEEN USED FOR SOME 17 YEARS BY THE DEPARTMENT OF THE ARMY, APPARENTLY WITHOUT ANY SERIOUS OBJECTION BY INDUSTRY.

REGARDING YOUR REQUEST FOR ADVICE AS TO THE CORRECTIVE ACTION THIS OFFICE WILL RECOMMEND IN THE EVENT THE TWO SUCCESSFUL BIDDERS ON THE ASSEMBLIES, VARO AND RCA, SEEK LARGE EQUITABLE ADJUSTMENTS UNDER CONTRACT NOTE 21, IT WOULD APPEAR THAT ANY DETERMINATION OF THIS NATURE SHOULD BE BASED UPON CONSIDERATION OF ALL RELEVANT CIRCUMSTANCES ON WHICH THE REQUESTS FOR THE ADJUSTMENTS ARE BASED. IN VIEW THEREOF, WE BELIEVE THAT ANY DETERMINATION AT THIS TIME WOULD BE PREMATURE AND UNJUSTIFIED. WE MUST THEREFORE DECLINE TO RESPOND TO THIS PORTION OF YOUR REQUEST.

ON THE MATTER OF CLAIMS BY ITT FOR MONETARY RELIEF, YOU ARE ADVISED THAT OUR OFFICE IS NOT AWARE OF ANY AUTHORITY WHEREBY AN UNSUCCESSFUL BIDDER MAY BE COMPENSATED IN ANY AMOUNT SIMPLY BECAUSE A CONTRACT, WHICH WAS AWARDED TO ANOTHER BIDDER IN GOOD FAITH, MAY PROVE TO BE MORE COSTLY THAN ANTICIPATED BY THE GOVERNMENT AT THE TIME OF AWARD.

FOR THE REASONS STATED, YOUR PROTEST IS DENIED.