B-150764, MAY 23, 1963

B-150764, MAY 23, 1963

TO MR. FRED C. MCCURDY, CONTRACTING OFFICER, SOUTHWESTERN POWER ADMINISTRATION:

BY LETTER DATED APRIL 23, 1963, WITH ENCLOSURES, YOU REQUESTED OUR DECISION AS TO THE PROPER DISPOSITION OF A PROTEST BY THE GENERAL ELECTRIC COMPANY AGAINST THE AWARD OF A CONTRACT TO ANY OTHER BIDDER UNDER INVITATION FOR BIDS NO. SPA-360 OR THROUGH NEGOTIATION PROCEDURES. IN OUR DECISION OF FEBRUARY 21, 1963, WE CONSIDERED THE BID OF MOTOROLA COMMUNICATIONS AND ELECTRONICS, INC., WHICH WAS DETERMINED TO BE NONRESPONSIVE TO THE INVITATION BECAUSE OF PROPOSED ADDITIONS AND MODIFICATIONS TO THE TERMS OF THE INVITATION.

GENERAL ELECTRIC IN ITS BID PROPOSED TO SUBSTITUTE ITS STANDARD COMMERCIAL WARRANTY CLAUSE IN LIEU OF THE GUARANTY PROVISIONS CONTAINED IN PARAGRAPHS SC-2 AND -3 OF THE SPECIAL CONDITIONS OF THE INVITATION. THOSE PARAGRAPHS PROVIDED:

"SC-2. GUARANTY.--- THE CONTRACTOR SHALL REPLACE F.O.B. POINT OF DELIVERY ANY PART OF THE EQUIPMENT FURNISHED BY HIM UNDER THESE SPECIFICATIONS WHICH, UNDER NORMAL AND PROPER USE IS PROVED TO BE DEFECTIVE IN DESIGN, MATERIAL OR WORKMANSHIP, WITHIN ONE YEAR FROM DATE OF FIRST USE IN SERVICE, NOTWITHSTANDING FINAL ACCEPTANCE AND PAYMENT MAY HAVE BEEN CONSUMMATED: PROVIDED, THAT IF, THROUGH NO FAULT OF THE CONTRACTOR, THE FIRST USE IN SERVICE IS NOT MADE WITHIN SIX MONTHS AFTER DELIVERY, THEN THIS GUARANTY SHALL IN NO EVENT EXCEED EIGHTEEN MONTHS AFTER SUCH DELIVERY. SHOULD THE CONTRACTOR DESIRE THE DEFECTIVE MATERIAL OR APPARATUS RETURNED TO HIM, HE SHALL PAY TRANSPORTATION CHARGES FOR RETURN.

"SC-3. FAILURE TO MEET GUARANTIES.---

"/A) SHOULD ANY ITEM/S) FAIL TO MEET THE GUARANTIES OR OTHER REQUIREMENTS OF THE CONTRACT WITHIN THE TIME COVERED BY THE GUARANTY, THE CONTRACTING OFFICER MAY REJECT THE ITEM/S), OR MAY DIRECT THE CONTRACTOR TO PROCEED AT ONCE TO MAKE ALTERATIONS OR FURNISH REPLACEMENTS AS MAY BE NECESSARY TO MEET THE REQUIREMENTS. ALL EXPENSE OF FURNISHING AND INSTALLING THE REPLACEMENTS AND TESTS MADE NECESSARY BY FAILURE OF THE MATERIALS TO MEET THE GUARANTIES AND OTHER REQUIREMENTS OF THE SPECIFICATIONS, SHALL BE BORNE BY THE CONTRACTOR.

"/B) IF, AFTER DUE NOTICE, THE CONTRACTOR SHALL REFUSE OR PERSISTENTLY NEGLECT TO CORRECT ANY DEFECTS, ERRORS, OMISSIONS, OR ANY OTHER FAILURE OF THE EQUIPMENT TO MEET THE REQUIREMENTS OF THE SPECIFICATIONS WHICH MIGHT DEVELOP DURING THE GUARANTY PERIOD, THE GOVERNMENT MAY PROCEED AT ITS OWN EXPENSE TO CORRECT SUCH DEFECTS, ERRORS, OMISSIONS, OR FAILURE AND DEDUCT FROM ANY PAYMENTS OR MONIES DUE THE CONTRACTOR AN AMOUNT EQUAL TO THE ACTUAL EXPENSE INCURRED.'

IN A LETTER ACCOMPANYING ITS BID, GENERAL ELECTRIC ADVISED THAT:

"ALSO WE ARE FURNISHING OUR STANDARD WARRANTY ON DEFECTIVE EQUIPMENT WHICH MEETS AND EXCEEDS YOUR REQUIREMENTS OF THE DEPARTMENT OF INTERIOR SPECIFICATIONS. HOWEVER, PLEASE NOTE THAT THE ATTACHED STANDARD CONDITION OF SALES PARAGRAPH 1 ONLY APPLIES TO THIS INVITATION, AND PARAGRAPH 2 THROUGH 11 DOES NOT APPLY TO THIS INVITATION. ALSO SOME OF THE WORDING IN THE WARRANTY CLAUSE HAS BEEN MARKED OUT WHICH DOES NOT APPLY TO THIS INVITATION.'

THE WARRANTY PROPOSED BY GENERAL ELECTRIC READS AS FOLLOWS:

"WARRANTY--- THE COMPANY WARRANTS TO THE PURCHASER THAT THE EQUIPMENT TO BE DELIVERED HEREUNDER SHALL CONFORM TO ITS PUBLISHED SPECIFICATIONS AND BE FREE FROM DEFECTS IN MATERIAL, WORKMANSHIP AND TITLE. THE FOREGOING WARRANTY IS EXCLUSIVE OF ALL OTHER WARRANTIES WHETHER WRITTEN, ORAL OR IMPLIED (INCLUDING ANY WARRANT OF MERCHANTABILITY OR FITNESS FOR PURPOSE). IF IT APPEARS WITHIN ONE YEAR FROM THE DATE OF SHIPMENT BY THE COMPANY THAT THE EQUIPMENT DELIVERED HEREUNDER DOES NOT MEET THE WARRANTY SPECIFIED ABOVE, AND THE PURCHASER NOTIFIES THE COMPANY PROMPTLY, THE COMPANY SHALL THEREUPON CORRECT ANY DEFECT, INCLUDING NON-CONFORMANCE WITH THE SPECIFICATION, AND AT ITS OPTION EITHER BY REPAIRING ANY DEFECTIVE PART OR PARTS OR BY MAKING AVAILABLE AT THE COMPANY'S PLANT A REPAIRED OR REPLACEMENT PART. IN LIEU OF THE FOREGOING (1) THE MANUFACTURER'S STANDARD PUBLISHED TUBE AND DIODE WARRANTIES IN EFFECT ON THE DATE HEREOF SHALL BE APPLICABLE; (2) THE WARRANTY FOR VIBRATORS SHALL BE LIMITED TO 90 DAYS FROM THE DATE OF SHIPMENT; AND (3) PILOT LIGHTS AND FUSES ARE WARRANTED TO BE OPERABLE UPON ARRIVAL ONLY. IF THE EQUIPMENT IS INSTALLED BY THE COMPANY, OR ITS INSTALLATION IS SUPERVISED BY THE COMPANY, SAID WARRANTY SHALL BE ONE YEAR FROM THE DATE OF THE COMPLETION OF THE INSTALLATION PROVIDED SAME IS NOT UNREASONABLY DELAYED BY THE PURCHASER BUT IN NO EVENT SHALL IT EXTEND 18 MONTHS BEYOND THE ORIGINAL SHIPMENT DATE BY THE COMPANY. THE LIABILITY OF THE COMPANY TO THE PURCHASER (EXCEPT AS TO TITLE) ARISING OUT OF THE SUPPLYING OF THE EQUIPMENT OR ITS USE, WHETHER ON WARRANTY, CONTRACT OR NEGLIGENCE, SHALL NOT IN ANY CASE EXCEED THE COST OF CORRECTING DEFECTS IN THE EQUIPMENT AS HEREIN PROVIDED AND UPON EXPIRATION OF SAID WARRANTY PERIOD, ALL SUCH LIABILITY SHALL TERMINATE. THE FOREGOING WARRANTY DOES NOT APPLY TO ANY USED EQUIPMENT AND THE COMPANY DOES NOT WARRANT ANY EQUIPMENT MANUFACTURED BY ANY OTHER MANUFACTURER AND A WARRANTY FOR ANY SUCH EQUIPMENT WILL BE THAT MANUFACTURER'S STANDARD WARRANTY COVERING THE EQUIPMENT, IF ANY. THE PERFORMANCE OF EQUIPMENT AND THE OBLIGATION OF THE COMPANY UNDER THIS WARRANTY PROVISION IS CONTINGENT UPON A SYSTEMATIC PROGRAM OF ROUTINE MAINTENANCE BY A QUALIFIED COMMUNICATIONS TECHNICIAN. THE NATURE OF ELECTRONIC COMMUNICATION EQUIPMENT IS SUCH THAT ROUTINE MAINTENANCE BY A QUALIFIED TECHNICIAN IS ESSENTIAL TO RELIABLE OPERATION AND MINIMIZED MAINTENANCE COST. THE FOREGOING SHALL CONSTITUTE THE SOLE REMEDY OF THE PURCHASER AND THE SOLE LIABILITY OF THE COMPANY.'

AS WILL BE SEEN, THE WARRANTY OFFERED BY GENERAL ELECTRIC--- A STANDARD CONDITION OF COMMERCIAL SALES--- DIFFERS IN SEVERAL MATERIAL RESPECTS FROM THE ONE REQUIRED UNDER THE INVITATION. FOR EXAMPLE, THE ADVERTISED WARRANTY GOES TO DEFECTS IN DESIGN, MATERIAL OR WORKMANSHIP WHEREAS GENERAL ELECTRIC'S WARRANTY GOES ONLY TO DEFECTS IN MATERIALS, WORKMANSHIP AND TITLE; THE GUARANTY PERIOD OF GENERAL ELECTRIC RUNS FOR ONE YEAR FROM DATE OF SHIPMENT WHILE THE ADVERTISED GUARANTY RUNS FOR ONE YEAR FROM DATE OF FIRST USE IN SERVICE; FURTHER, GENERAL ELECTRIC OFFERS TO REPAIR OR REPLACE AT ITS PLANT WHILE THE GOVERNMENT REQUIRED REPLACEMENT F.O.B. POINT OF DELIVERY; AND FINALLY GENERAL ELECTRIC LIMITS ITS GUARANTY AS TO CERTAIN PARTS CONTRARY TO THE ALL INCLUSIVE GUARANTY OF THE SPECIFICATIONS.

UPON BEING ADVISED OF THE REJECTION OF ITS BID, GENERAL ELECTRIC REQUESTED PERMISSION TO DELETE THE REFERENCE TO ITS STANDARD COMMERCIAL WARRANTY CLAUSE. THIS WAS DENIED BY YOU BY LETTER DATED MARCH 18, 1963. THE BID OF GENERAL ELECTRIC WAS QUALIFIED AND ITS CONSIDERATION FOR AWARD, OR DELETION OF THE OBJECTIONABLE WARRANTY PROVISIONS, WOULD HAVE BEEN IMPROPER UNDER FORMAL ADVERTISING PROCEDURES. 39 COMP. GEN. 832; 40 ID. 447, B-138307, MAY 15, 1959. WE, THEREFORE, AGREE THAT CONSIDERATION OF GENERAL ELECTRIC'S BID AS SUBMITTED MAY NOT BE CORRECTED AND CONSIDERED FOR AWARD. THEREFORE, SUCH BID WAS PROPERLY REJECTED AS NONRESPONSIVE. 41 U.S.C. 253 (B); B-149172, AUGUST 8, 1962, 42 COMP. GEN. -----.

YOU ADVISE THAT ALL BIDS SUBMITTED IN RESPONSE TO THE INVITATION HAVE BEEN REJECTED AS NONRESPONSIVE TO THE ADVERTISED SPECIFICATIONS, AND THAT IT WAS DETERMINED TO NEGOTIATE THE PROCUREMENT IN THE BEST INTERESTS OF THE GOVERNMENT. EACH OF THE RESPONDING BIDDERS WAS NOTIFIED OF THAT FACT AND OF THE PROPOSAL TO NEGOTIATE, AND ALL BIDDERS HAVE SINCE MET WITH YOU FOR THE PURPOSE OF NEGOTIATING THE PROPOSED PROCUREMENT. WE UNDERSTAND THAT THE DETERMINATION TO NEGOTIATE THE INSTANT PROCUREMENT WAS JUSTIFIED UNDER 41 U.S.C. 252 (C) (10) AS IMPLEMENTED BY FPR SEC. 1-3.210, AND THAT SUCH DETERMINATION WAS JUSTIFIED AND DOCUMENTED AS EVIDENCED BY AN ADMINISTRATIVE FINDING MADE BY YOU AND THE MINUTES OF THE MEETINGS OF THE BOARD OF AWARDS HELD ON JANUARY 18 AND FEBRUARY 26, 1963, TO CONSIDER THE BIDS SUBMITTED UNDER INVITATION FOR BIDS NO. SPA-360. ON THE RECORD BEFORE US, WE HAVE NO OBJECTION TO AWARD OF THE PROCUREMENT BY NEGOTIATION.