B-159579, JUL. 20, 1966

B-159579, JUL. 20, 1966

TO CHIEF, PROCUREMENT SECTION, NATIONAL BUREAU OF STANDARDS:

REFERENCE IS MADE TO YOUR LETTER DATED JUNE 28, 1966, WITH ENCLOSURES, REQUESTING OUR DECISION ON THE LEGALITY OF THE PROPOSED AWARD OF A CONTRACT FOR THREE UNIVERSAL TESTING MACHINES TO GILMORE INDUSTRIES, INC., PURSUANT TO INVITATION FOR BIDS NO. B-158566, WHICH WAS ISSUED MARCH 29, 1966.

BIDS WERE SOLICITED FROM 13 FIRMS AND THE PROCUREMENT WAS SYNOPSIZED IN THE COMMERCE BUSINESS DAILY. THE FOLLOWING THREE BIDS WERE RECEIVED AND OPENED ON MAY 20, 1966:

TABLE

OPTION NOT

OPTION I OPTION II SPECIFIED

-------- --------- ---------- STEELCRAFT ENGINEERING

$142,600

CORP. TINIUS OLSEN TESTING $179,785 $219,335

MACHINE CO. GILMORE INDUSTRIES, INC. $224,000 $259,000

IT IS REPORTED THAT IN EVALUATION OF THE BIDS, STEELCRAFT'S WAS DETERMINED TO BE NONRESPONSIVE BECAUSE IT DID NOT STATE THE "MODELS OF THE MACHINES" OFFERED AND INCLUDED NO DESCRIPTIVE LITERATURE AS REQUIRED BY PARAGRAPH 5 OF THE SPECIFICATIONS. TINIUS OLSEN'S BID WAS ALSO FOUND NONRESPONSIVE BECAUSE:

"/A) IN SEVERAL INSTANCES THEIR LETTER ACCOMPANYING THEIR BID CONTAINS WHAT WE CONSIDER MAJOR EXCEPTIONS TO OUR SPECIFICATIONS, CHIEFLY (I) BY DEVIATING FROM OUR TECHNICAL REQUIREMENTS AND (II) INCLUDING LANGUAGE WHICH DOES NOT GUARANTEE THAT THE NATIONAL BUREAU OF STANDARDS WILL IN FACT OBTAIN EQUIPMENT MEETING OUR REQUIREMENTS IF AN ORDER SHOULD BE PLACED WITH THEM.'

SINCE THE PRICE BID BY GILMORE, THE ONLY REMAINING RESPONSIVE BIDDER, WAS CONSIDERED HIGH, NEGOTIATIONS FOR A REDUCTION IN ITS OFFER WERE UNDERTAKEN, WHICH RESULTED IN A LOWERING OF ITS PRICE FOR OPTION II TO $219,900, AND AWARD TO IT IN THE REDUCED AMOUNT IS PROPOSED.

TINIUS OLSEN IN ITS OWN BEHALF AND THROUGH ITS ATTORNEYS, OBERMAYER, REBMANN, MAXWELL AND HIPPEL, HAS PROTESTED REJECTION OF ITS BID AND THE PROPOSED AWARD TO GILMORE. THE BASIS OF ITS PROTEST HAS BEEN STATED IN ITS CONFERENCE WITH PROCURING ACTIVITY PERSONNEL ON JUNE 14, 1966, AND IN ITS LETTER OF JUNE 21, 1966, TO THE PROCURING ACTIVITY AND IN ITS ATTORNEY'S LETTER OF JUNE 28, 1966, TO OUR OFFICE. IN VIEW OF OUR CONCLUSION HEREINAFTER STATED, IT IS NOT NECESSARY TO DISCUSS THE ARGUMENTS PRESENTED BY TINIUS OLSEN.

SINCE REJECTION OF THE STEELCRAFT BID WAS BASED UPON ITS FAILURE TO FURNISH DESCRIPTIVE LITERATURE, AND REJECTION OF THE TINIUS OLSEN BID WAS BASED UPON EXCEPTIONS TO THE ADVERTISED SPECIFICATIONS, THE FIRST QUESTION FOR CONSIDERATION IS THE PROPRIETY AND EFFECT OF THE INCLUSION OF THE REQUIREMENT FOR DESCRIPTIVE LITERATURE IN THE SUBJECT INVITATION. THE REQUIREMENT FOR DESCRIPTIVE LITERATURE, AS AMENDED, READS, IN PERTINENT PART, AS FOLLOWS:

"5.1 BID SUBMISSION--- THE BIDS SHALL INCLUDE SUFFICIENT TECHNICAL DATA, DESCRIPTIVE MATERIAL AND DRAWINGS TO CLEARLY INDICATE THE NATURE AND CAPABILITIES OF THE EQUIPMENT OFFERED.

"* * * IN ADDITION TO THE BIDDERS SUBMISSION FOR THE ITEMS IN STRICT ACCORDANCE WITH THE SPECIFICATION, DEVIATIONS FROM THIS SPECIFICATION MAY BE PROPOSED, BUT TO BE CONSIDERED THEY MUST BE MINOR IN NATURE AND MEET THE FOLLOWING CONDITIONS:

"A) DEVIATIONS MUST BE DESCRIBED IN DETAIL SEPARATE FROM THE OTHER MATERIAL SUBMITTED.

"B) ONLY DEVIATIONS WHICH WILL PROVIDE IMPROVED PERFORMANCE IN THESE MACHINES OR THE AUXILIARY CONTROL CONSOLE WILL BE ACCEPTED.

"C) THE COSTS RESULTING FROM THE DEVIATIONS MUST BE LOWER THAN OR EQUAL TO THE PRICES FOR THIS EQUIPMENT AS SPECIFIED.'

WE HAVE RECOGNIZED THAT IN PROCURING HIGHLY TECHNICAL, SPECIALIZED, COMPLEX, OR NOVEL EQUIPMENT AN ADMINISTRATIVE AGENCY MAY REQUIRE BIDDERS TO SUPPLY SPECIFIC DESCRIPTIVE DATA ON THE ARTICLES OFFERED, TO ENABLE IT TO CONCLUDE PRECISELY WHAT THE BIDDER PROPOSES TO FURNISH, AND WHAT THE GOVERNMENT WOULD BE BINDING ITSELF TO PURCHASE BY MAKING AN AWARD. COMP. GEN. 415. HOWEVER, WE HAVE ALSO HELD THAT A REQUIREMENT THAT BIDDERS FURNISH UNSPECIFIED DATA WHICH IS "SUFFICIENT" OR ,ADEQUATE" TO PROVE COMPLIANCE WITH THE SPECIFICATIONS, MAY RENDER AN INVITATION DEFECTIVE FOR FAILURE TO PUT BIDDERS ON NOTICE OF THE EXTENT OF DETAIL THAT THE AGENCY REQUIRED THEIR DESCRIPTIVE DATA TO INCORPORATE. 42 COMP. GEN. 598, 42 ID. 737.

THE FEDERAL PROCUREMENT REGULATIONS (FPR) AT SECTION 1-2.202-5 (B), (C) AND (D) ARE ALSO CONCERNED WITH THE INCLUSION OF DESCRIPTIVE LITERATURE REQUIREMENTS IN INVITATIONS FOR BIDS, AND PROVIDE THAT BIDDERS SHALL NOT BE REQUIRED TO FURNISH DESCRIPTIVE LITERATURE AS A PART OF THEIR BIDS UNLESS THE PROCUREMENT OFFICE DEEMS THAT SUCH LITERATURE IS NEEDED TO ENABLE IT TO DETERMINE BEFORE AWARD WHETHER PRODUCTS OFFERED MEET THE SPECIFICATION REQUIREMENTS OF THE INVITATION FOR BIDS AND TO ESTABLISH EXACTLY WHAT THE BIDDER PROPOSES TO FURNISH. ALSO, THE REASONS WHY ACCEPTABLE PRODUCTS CANNOT BE PROCURED WITHOUT THE SUBMISSION OF DESCRIPTIVE LITERATURE ARE REQUIRED TO BE SET FORTH AND FILED IN THE CASE FILE. MOREOVER, THE REGULATION STATES THAT WHEN DESCRIPTIVE LITERATURE IS REQUIRED, THE INVITATION SHALL CLEARLY STATE WHAT DESCRIPTIVE LITERATURE IS TO BE FURNISHED, THE PURPOSE FOR WHICH IT IS REQUIRED, THE EXTENT TO WHICH IT WILL BE CONSIDERED IN THE EVALUATION OF BIDS, AND THE RULES WHICH WILL APPLY IF A BIDDER FAILS TO FURNISH IT BEFORE BID OPENING.

THE ADMINISTRATIVE FILE FURNISHED IN THIS CASE DOES NOT INCLUDE ANY MEMORANDUM JUSTIFYING INCLUSION OF THE REQUIREMENT IN THE SUBJECT INVITATION. THE SPECIFICATIONS OF THE EQUIPMENT BEING PROCURED APPEAR TO BE STATED IN SUCH DETAIL AS TO "THE NATURE AND CAPABILITIES OF THE EQUIPMENT OFFERED" THAT THEY LEAVE ALMOST NOTHING FOR THE BIDDER TO DESCRIBE IN THOSE RESPECTS, AND FURNISH NO STANDARDS FOR EVALUATION OF DESIGN, MATERIALS OR COMPONENTS EXCEPT TO THE EXTENT THAT SUCH ELEMENTS ARE SPECIFICALLY PRESCRIBED IN THE SPECIFICATIONS. NOTHING IN THERECORD INDICATES THAT THE ARTICLES CALLED FOR BY THE SPECIFICATIONS ARE OF SUCH A NOVEL, COMPLEX, OR UNUSUAL CHARACTER AS TO LEAVE ROOM FOR DOUBT AS TO WHETHER THEY COULD BE PRODUCED BY A COMPETENT AND EXPERIENCED MANUFACTURER OF ARTICLES OF THE SAME GENERAL NATURE. EVEN IF IT WERE SHOWN THAT AN ACCEPTABLE PRODUCT COULD NOT BE PROCURED WITHOUT DESCRIPTIVE LITERATURE, A REQUIREMENT FOR SUCH LITERATURE SHOULD ADVISE BIDDERS WITH PARTICULARITY BOTH AS TO THE EXTENT OF THE DETAIL REQUIRED AND THE PURPOSE IT IS EXPECTED TO SERVE. 38 COMP. GEN. 59; 42 ID. 598; FPR 1-2.202-5 (D). ORDER FOR EACH BIDDER TO BE ON AN EQUAL BASIS IN SUPPLYING DESCRIPTIVE LITERATURE, IT IS ESSENTIAL THAT THE NEED FOR SUCH LITERATURE BE SET FORTH IN THE INVITATION IN THE GREATEST DETAIL PRACTICAL. THE MERE STATEMENT THAT THE BIDS SHALL INCLUDE "SUFFICIENT TECHNICAL DATA, DESCRIPTIVE MATERIAL AND DRAWINGS TO CLEARLY INDICATE THE NATURE AND CAPABILITIES OF THE EQUIPMENT" IS NOT SUFFICIENT TO MEET THIS REQUIREMENT WHERE, AS IN THIS INSTANCE, THOSE CHARACTERISTICS ARE CLEARLY AND DEFINITELY STATED IN THE SPECIFICATIONS.

FOR THE FOREGOING REASONS IT IS OUR OPINION THAT THE DESCRIPTIVE LITERATURE REQUIREMENT WAS IMPROPERLY INCLUDED IN THE INVITATION. CONVERSELY, IF ITS INCLUSION CAN BE JUSTIFIED, IT IS OUR OPINION THAT THE INVITATION WAS DEFECTIVE BECAUSE THE EXTENT OF DETAIL REQUIRED IN THE DESCRIPTIVE LITERATURE, AND THE PURPOSE TO BE SERVED BY IT, WERE NOT PROPERLY SET OUT.

A FURTHER REASON WHY, IN OUR OPINION, INCLUSION OF THE REQUIREMENT HAS THE EFFECT OF MAKING THE INVITATION DEFECTIVE IS THE LANGUAGE THEREIN, TO THE EFFECT THAT "MINOR" DEVIATIONS FROM THE SPECIFICATIONS MAY BE PROPOSED AND WILL NOT REQUIRE REJECTION OF THE BID. THIS LANGUAGE PERMITTED BIDDERS TO OFFER EQUIPMENT VARYING FROM THE SPECIFICATIONS TO SOME UNDEFINED EXTENT, EXCEPT FOR THE CONDITION THAT DEVIATIONS MUST PROVIDE IMPROVED PERFORMANCE, WITHOUT ADVISING THE BIDDERS THE BASIS UPON WHICH THEIR POINTS OF NONCOMPLIANCE WOULD BE EVALUATED OR HOW THE ,IMPROVED PERFORMANCE" WOULD BE DETERMINED. AS WE HELD IN 36 COMP. GEN. 380, 385:

"THE "BASIS" OF EVALUATION WHICH MUST BE MADE KNOWN IN ADVANCE TO THE BIDDERS SHOULD BE AS CLEAR, PRECISE AND EXACT AS POSSIBLE. IDEALLY, IT SHOULD BE CAPABLE OF BEING STATED AS A MATHEMATICAL EQUATION. IN MANY CASES, HOWEVER, THAT IS NOT POSSIBLE. AT THE MINIMUM, THE BASIS" MUST BE STATED WITH SUFFICIENT CLARITY AND EXACTNESS TO INFORM EACH BIDDER PRIOR TO BID OPENING, NO MATTER HOW VARIED THE ACCEPTABLE RESPONSES, OF OBJECTIVELY DETERMINABLE FACTORS FROM WHICH THE BIDDER MAY ESTIMATE WITHIN REASONABLE LIMITS THE EFFECT OF THE APPLICATION OF SUCH EVALUATION FACTOR ON HIS BID IN RELATION TO OTHER POSSIBLE BIDS. BY THE TERM "OBJECTIVELY DETERMINABLE FACTORS" WE MEAN FACTORS WHICH ARE MADE KNOWN TO OR WHICH CAN BE ASCERTAINED BY THE BIDDER AT THE TIME HIS BID IS BEING PREPARED. FACTORS WHICH ARE BASED ENTIRELY OR LARGELY ON A SUBJECTIVE DETERMINATION TO BE ANNOUNCED BY REPRESENTATIVES OF THE CONTRACTING AGENCY AT THE TIME OF OR SUBSEQUENT TO THE OPENING OF BIDS VIOLATE THE PRINCIPLE FOR THE REASON THAT THEY ARE NOT DETERMINABLE BY THE BIDDER AT THE TIME HIS BID IS BEING PREPARED.'

SEE ALSO 37 COMP. GEN. 479; 39 ID. 570; 43 ID. 544.

ALTHOUGH THE DRAFTING OF SPECIFICATIONS TO REFLECT THE NEEDS OF THE GOVERNMENT AND THE DETERMINATION AS TO WHETHER THOSE NEEDS CAN BE MET BY A GIVEN PRODUCT ARE PRIMARILY WITHIN THE JURISDICTION OF THE PROCURING AGENCY, 38 COMP. GEN. 190, PURCHASES SUCH AS THIS, ADVERTISED PURSUANT TO 41 U.S.C. 253, MUST PERMIT FULL AND FREE COMPETITION CONSISTENT WITH THE PROCUREMENT OF THE PROPERTY. THE FULL AND FREE COMPETITION REQUIRED CANNOT BE OBTAINED UNLESS THE INVITATION AND THE SPECIFICATIONS ARE SUFFICIENTLY DEFINITE TO PERMIT THE PREPARATION AND EVALUATION OF BIDS ON A COMMON BASIS, 36 COMP. GEN. 380, AND WE MUST THEREFORE CONCLUDE THAT FULL AND FREE COMPETITION WAS NOT OBTAINED UNDER THE INVITATION IN THE INSTANT PROCUREMENT.

WITH RESPECT TO THE PROPRIETY OF NEGOTIATING A LOWER PRICE WITH GILMORE, IN OUR DECISION OF NOVEMBER 4, 1965, B-157411, WE HELD THAT CONFINING NEGOTIATIONS TO ONLY ONE BIDDER, WHOSE BID PRICE WOULD OTHERWISE HAVE BEEN CONSIDERED UNREASONABLE, WOULD CONSTITUTE A VIOLATION OF 10 U.S.C. 2304 (A) (15), WHICH REQUIRES NEGOTIATION WITH ALL RESPONSIBLE BIDDERS WHERE THE BID PRICES ARE CONSIDERED UNREASONABLE. COMPARE B-157055, JUNE 21, 1966, WHERE NEGOTIATION WAS PERMITTED WITH ONLY ONE BIDDER BECAUSE ALL OTHER BIDDERS WERE CONSIDERED NONRESPONSIBLE. SINCE IN THE INSTANT CASE, THERE HAS BEEN NO DETERMINATION THAT EITHER STEELCRAFT OR TINIUS OLSEN WAS NONRESPONSIBLE, IT IS OUR OPINION THAT ANY NEGOTIATION WITH GILMORE, BASED UPON A DETERMINATION THAT ITS BID PRICE WAS UNREASONABLE, MUST BE ACCOMPLISHED UNDER THE SIMILAR PROVISIONS OF 41 U.S.C. 252 (C) (14), WHICH APPLY HERE AND WOULD ALSO REQUIRE THE CONDUCT OF NEGOTIATIONS WITH STEELCRAFT AND TINIUS OLSEN.

IN VIEW OF THE FOREGOING, WE MUST CONCLUDE THAT THE PROCUREMENT SHOULD EITHER BE READVERTISED UNDER SPECIFICATIONS WHICH PROPERLY SET FORTH THE NEEDS OF THE GOVERNMENT AND THE STANDARDS TO BE APPLIED IN THE EVALUATION OF BIDS, OR THAT NEGOTIATIONS BE CONDUCTED IN ACCORD WITH 41 U.S.C. 252 (C) (14).