B-145715, JUNE 7, 1961, 40 COMP. GEN. 668

B-145715, JUNE 7, 1961, 40 COMP. GEN. 668

BIDS - MISTAKES - DISCOUNTS - CHANGE OF CLASSIFICATION FROM FOREIGN TO DOMESTIC - EXTENSION ERRORS A BIDDER WHO, WHEN ASKED TO VERIFY AN APPARENT ERROR IN AN EXTENDED PRICE, ALLEGED THAT THE TOTAL PRICE WAS CORRECT AND IN ACCORD WITH AN INTENTION TO OFFER A DISCOUNT ON THE EXTRA UNITS ANTICIPATED FOR DELIVERY LATER IN THE YEAR, ALTHOUGH NO MENTION OF A DISCOUNT HAD BEEN MADE IN THE BID AND NO FURTHER EVIDENCE WAS GIVEN AS TO WHETHER THE INTENDED DISCOUNT WAS APPLICABLE TO EACH UNIT OR ONLY IN EVENT ALL THE UNITS WERE ORDERED, HAS SUBMITTED A BID WHICH IS INDEFINITE AS TO THE ULTIMATE COST TO THE GOVERNMENT AND, THEREFORE, MAY NOT BE CONSIDERED FOR AWARD. TO PERMIT A BIDDER, WHO INDICATES THAT THE EQUIPMENT OFFERED IN THE BID IS FOREIGN AND WHO HAS CLASSIFIED THE SAME EQUIPMENT AS FOREIGN UNDER PREVIOUS PROCUREMENTS, TO CHANGE THE CLASSIFICATION FROM FOREIGN TO DOMESTIC, IN ORDER TO ELIMINATE THE SIX PERCENT DIFFERENTIAL REQUIRED TO BE ADDED TO THE FOREIGN BID PRICES UNDER THE BUY AMERICAN ACT, 41 U.S.C. 10A, WOULD BE TO GIVE THE BIDDER AN OPTION AFTER OPENING TO BECOME ELIGIBLE OR INELIGIBLE FOR AWARD CONTRARY TO THE PURPOSES OF THE STATUTORY ADVERTISING REQUIREMENTS. A BIDDER WHO, WHEN REQUESTED TO VERIFY AN APPARENT ERROR IN AN EXTENDED PRICE FOR ONE ITEM, STATED THAT ALTHOUGH THE EXTENDED PRICE WAS INCORRECT THE TOTAL PRICE WAS CORRECT, BECAUSE A DISCOUNT FOR THE ADDITIONAL UNITS HAD BEEN INADVERTENTLY OMITTED, MUST HAVE THE EXTENDED PRICE CORRECTED UNDER THE PROVISION IN THE INVITATION THAT IN CASE OF ERROR IN EXTENSION PRICE, THE UNIT PRICE WILL GOVERN; THEREFORE, HAVING REGARD FOR THE ERROR IN THE EXTENDED PRICE AND THE ABSENCE OF ANY DISCOUNT, THERE IS NOTHING TO ESTABLISH THAT THE BIDDER ACTUALLY INTENDED THE TOTAL PRICE SHOWN IN THE BID SO THAT BID MAY NOT BE CONSIDERED FOR AWARD.

TO JOHN R. BOGGS, VETERANS ADMINISTRATION SUPPLY DEPOT, JUNE 7, 1961:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 26, 1961, FILE NO. 7023) 134N2, REQUESTING DECISION AS TO THE ACTION TO BE TAKEN WITH RESPECT TO ERRORS ALLEGED BY NORTH AMERICAN PHILIPS COMPANY, INC; 525 WEST 52ND STREET, NEW YORK 19, NEW YORK, TO HAVE BEEN MADE IN ITS BID SUBMITTED IN RESPONSE TO YOUR INVITATION FOR BIDS NO. M6-83-61, DATED FEBRUARY 17, 1961.

THE INVITATION REQUESTED BIDS--- TO BE OPENED MARCH 15, 1961--- FOR FURNISHING FLUOROSCOPIC IMAGE INTENSIFIERS. ITEM NO. 1 COVERED TWO UNITS FOR DELIVERY TO SOMERVILLE, NEW JERSEY; ITEM NO. 2 COVERED THREE UNITS FOR DELIVERY TO HINES, ILLINOIS; AND ITEM NO. 3 COVERED TEN UNITS AS THE ,ESTIMATED REQUIREMENT FOR A PERIOD OF ONE YEAR FROM EFFECTIVE DATE OF CONTRACT" FOR DELIVERY TO VARIOUS DEPOTS AS ORDERS ARE PLACED. ADDENDUM NO. 1 DATED MARCH 1, 1961, PARAGRAPH 12, PAGE 4 OF THE INVITATION, WAS CHANGED TO READ AS FOLLOWS:

12. BUY AMERICAN ACT: WHEN BIDS ARE RECEIVED COVERING MATERIALS OF FOREIGN ORIGIN AT PRICES LOWER THAN BIDS OFFERING MATERIALS OF DOMESTIC ORIGIN, 6 PERCENT WILL BE ADDED TO THE BID PRICE OF THE FOREIGN MATERIAL FOR COMPARISON PURPOSES WHEN MAKING AN AWARD, EXCEPT, WHEN THE BID OR OFFER OF THE LOWEST DOMESTIC SUPPLIER CERTIFIES THAT HE WILL PERFORM OR CAUSE TO BE PERFORMED THE RESULTANT CONTRACT IN AN AREA DESIGNATED BY THE SECRETARY OF LABOR AS A PERSISTENT OR SUBSTANTIAL LABOR SURPLUS AREA, 12 PERCENT WILL BE ADDED TO THE BID PRICE OF THE FOREIGN MATERIAL FOR COMPARISON PURPOSES. MATERIAL SHALL BE CONSIDERED TO BE OF FOREIGN ORIGIN IF THE COST OF THE FOREIGN PRODUCT USED IN SUCH MATERIAL CONSTITUTES 50 PERCENT OR MORE OF THE COST OF ALL THE PRODUCTS USED IN SUCH MATERIALS.

THE INVITATION PROVIDED THAT "IN CASE OF ERROR IN EXTENSION OF PRICE, THE UNIT PRICE WILL ERN.'

IN RESPONSE TO THE INVITATION, NORTH AMERICAN PHILIPS COMPANY, INC. (HEREINAFTER REFERRED TO AS NORTH AMERICAN), QUOTED A UNIT PRICE OF $6,745 FOR THE INTENSIFIERS IN ALL THREE ITEMS AND EXTENDED PRICES OF $13,490, $13,490 AND $67,450 ON ITEMS NOS. 1, 2 AND 3, RESPECTIVELY--- A TOTAL BID OF $94,430. ON PAGE 6 OF THE INVITATION, THE BIDDER INDICATED THAT THE EQUIPMENT OFFERED WAS FOREIGN. THE TWO OTHER BIDS RECEIVED WERE IN THE TOTAL AMOUNTS OF $107,700 ( PICKER X-RAY CORPORATION) AND $186,502 (1KELEKET X-1RAY CORPORATION), BOTH BIDDERS OFFERING TO FURNISH DOMESTIC EQUIPMENT. IN EVALUATING THE BIDS, IT WAS NOTED THAT PICKER X-RAY CORPORATION PROPOSED TO FURNISH EQUIPMENT TO BE MANUFACTURED IN AREAS DESIGNATED BY THE SECRETARY OF LABOR AS SUBSTANTIAL LABOR SURPLUS AREAS.

IN VIEW OF THE APPARENT ERROR IN THE EXTENDED PRICE IN ITEM NO. 2 (WHICH PRICE WAS THE SAME FOR THREE UNITS AS THE EXTENDED PRICE FOR TWO UNITS IN ITEM NO. 1), NORTH AMERICAN WAS REQUESTED TO VERIFY ITS BID. IN ITS LETTER OF MARCH 21, 1961, NORTH AMERICAN STATED THAT THE CORRECT TOTAL BID PRICE WAS $94,430 AS SHOWN IN ITS BIDS "AND NOT A LARGER FIGURE WHICH CAN BE COMPUTED BY EXTENDING THE UNIT PRICES OF THE INDIVIDUAL ITEMS COMPRISING THE BID.' IT WAS STATED FURTHER THAT NORTH AMERICAN HAD CONCLUDED THAT THE EQUIPMENT OFFERED WAS DOMESTIC RATHER THAN FOREIGN.

IN A LETTER DATED MARCH 24, 1951, NORTH AMERICAN STATED THAT THE EXTENDED PRICE IN ITEM NO. 2 SHOULD BE $20,235 INSTEAD OF $13,490 BUT THAT THE TOTAL PRICE OF $94,430 WAS CORRECT AND IN ACCORD WITH ITS POLICY "TO EXTEND AN ADDITIONAL DISCOUNT ON QUANTITY PURCHASES TO MAKE IT ATTRACTIVE TO OBTAIN THE TOTAL AWARD.' IT WAS STATED THAT 10 PERCENT DISCOUNT HAD BEEN EXTENDED ON THE EXTRA TEN UNITS ANTICIPATED FOR DELIVERY DURING THE YEAR BUT THAT MENTION ON THE DISCOUNT WAS ACCIDENTALLY OMITTED FROM THE BID.

WITH RESPECT TO THE CLASSIFICATION OF THE OFFERED EQUIPMENT AS FOREIGN OR DOMESTIC, NORTH AMERICAN STATED IN ITS LETTER OF MARCH 24, 1961, THAT SUCH CLASSIFICATION WAS NOT EXPLAINED TO OR UNDERSTOOD BY IT UNTIL MARCH 17, 1961, AND THE COSTS OF VARIOUS COMPONENTS OF THE OFFERED EQUIPMENT WERE LISTED, PURPORTING TO SHOW THAT THE COST OF FOREIGN COMPONENTS WAS ONLY APPROXIMATELY 47.8 PERCENT OF THE COST OF ALL COMPONENTS. THEREFORE, NORTH AMERICAN REQUESTED PERMISSION TO CHANGE THE CLASSIFICATION IN ITS BID FROM FOREIGN TO DOMESTIC.

IT IS STATED IN YOUR LETTER OF APRIL 26, 1961, THAT IN SUBMITTING A BID DATED MAY 25, 1960, ON TEN INTENSIFIERS IDENTICAL WITH THOSE COVERED BY INVITATION NO. M6-82-61, NORTH AMERICAN OFFERED NO DISCOUNT FOR A QUANTITY PURCHASE AND STATED THAT THE EQUIPMENT OFFERED WAS OF FOREIGN ORIGIN. IS STATED FURTHER THAN A REVIEW OF YOUR PREVIOUS INVITATIONS ON WHICH NORTH AMERICAN SUBMITTED BIDS SHOWS THAT DISCOUNTS FOR QUANTITY PURCHASES WERE NOT OFFERED BY NORTH AMERICAN ON OTHER RECENT BIDS.

IN THE INSTANT MATTER, NORTH AMERICAN CONCEDES THE OBVIOUS FACT THAT ITS EXTENDED BID PRICE ON ITEM NO. 2 IS ERRONEOUS AND SHOULD BE $20,235 INSTEAD OF $13,490. HAVING REGARD FOR THE ABOVE-QUOTED PROVISION OF THE INVITATION MAKING THE UNIT PRICE CONTROLLING IN CASE OF ERROR IN THE EXTENSION OF BIDS, IT SEEMS CLEAR THAT THE TOTAL BASIC BID PRICE SHOULD BE $101,175 INSTEAD OF $94,430 AND WOULD NOT BE THE LOW BID UNLESS THE CLASSIFICATION OF THE EQUIPMENT OFFERED WERE CHANGED FROM FOREIGN TO DOMESTIC.

IT IS TO BE NOTED THAT NO MENTION OF ANY DISCOUNT IS MADE IN THE BID ALTHOUGH, AS ABOVE STATED, NORTH AMERICAN ALLEGED IN ITS LETTER OF MARCH 24, 1961, THAT IT HAD EXTENDED A DISCOUNT OF 10 PERCENT ON THE EXTRA TEN UNITS ANTICIPATED FOR DELIVERY DURING THE YEAR BUT HAD ACCIDENTALLY OMITTED FROM THE BID ANY MENTION OF DISCOUNTS. IT IS NOTED ALSO THAT NO OTHER EVIDENCE OF THE INTENDED ALLOWANCE OF DISCOUNT HAS BEEN FURNISHED.

THERE IS INVOLVED THE FURTHER PROBLEM AS TO HOW AND WHEN THE REFERRED-TO DISCOUNT WOULD BE ALLOWED ON THE EXTRA UNITS ANTICIPATED FOR DELIVERY DURING THE YEAR. THERE IS NO ASSURANCE THAT THE GOVERNMENT WILL ORDER THE TEN EXTRA UNITS PROVIDED FOR IN ITEM NO. 3 OF THE INVITATION. IN ANY EVENT, IT SEEMS THAT THEY WILL NOT BE ORDERED AT THE SAME TIME. THERE BEING NO DISCOUNT PROVISION IN THE BID, NORTH AMERICAN MIGHT CONTEND THAT EACH UNIT SHOULD BE PAID FOR AT THE UNIT PRICE STATED IN THE BID AND THAT NO DISCOUNT IS ALLOWABLE UNLESS ALL TEN OF THE EXTRA UNITS ARE ORDERED. IT THUS APPEARS THAT THE BID OF NORTH AMERICAN IS INDEFINITE AS TO THE ULTIMATE COST TO THE GOVERNMENT.

THE OBVIOUS ERROR IN THE EXTENDED BID PRICE ON ITEM NO. 2 MUST BE CORRECTED AS REQUIRED BY THE PROVISION OF THE INVITATION THAT "IN CASE OF ERROR IN EXTENSION OF PRICE, THE UNIT PRICE WILL GOVERN.' THERE IS NOT FOUND ANY CLEAR AND CONVINCING EVIDENCE THAT, HAVING REGARD FOR THE ERROR IN THE EXTENDED PRICE AND THE ABSENCE OF ANY MENTION OF QUANTITY IN THE BID, NORTH AMERICAN ACTUALLY INTENDED ITS TOTAL BID PRICE OF $94,430 AS SHOWN IN ITS BID. ALSO, IT IS OUR VIEW THAT NORTH AMERICAN MAY NOT, AFTER THE BIDS ARE OPENED, CHANGE THE CLASSIFICATION OF THE EQUIPMENT OFFERED FROM FOREIGN TO DOMESTIC AND THEREBY BECOME ELIGIBLE FOR AWARD.

IN VIEW OF THE FOREGOING, IT APPEARS THAT THE BID AS SUBMITTED BY NORTH AMERICAN WOULD GIVE THE BIDDER AN OPTION, AFTER BID OPENING, TO BECOME ELIGIBLE OR INELIGIBLE FOR THE AWARD. ONE OF THE PURPOSES OF THE STATUTORY REQUIREMENT OF ADVERTISING FOR BIDS IN MATTERS OF THIS TYPE IS TO SECURE TO ALL QUALIFIED BUSINESS CONCERNS AN EQUAL OPPORTUNITY FOR OBTAINING CONTRACTS WITH THE GOVERNMENT, THEREBY ELIMINATING ANY POSSIBILITY OF CHARGES OF FAVORITISM AND COLLUSION IN THE AWARD OF GOVERNMENT CONTRACTS. IN VIEW THEREOF, IT HAS CONSISTENTLY BEEN HELD BY OUR OFFICE AND THE COURTS THAT BIDDERS SHOULD NOT BE PERMITTED TO VARY THEIR PROPOSALS AFTER THE BIDS ARE OPENED, IT BEING CONSIDERED THAT THE STRICT MAINTENANCE OF SUCH RULE IS INFINITELY MORE IN THE PUBLIC INTEREST THAN OBTAINING AN APPARENT PECUNIARY ADVANTAGE IN A PARTICULAR CASE. WAS SAID BY THE COURT IN CITY OF CHICAGO V. MOHR, 216 ILLINOIS 320, 74 N.E. 1056 "WHERE A BID IS PERMITTED TO BE CHANGED (AFTER BID 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.' SEE 17 COMP. GEN. 554; 20 ID. 4; 30 ID. 179; 31 ID. 660; 33 ID. 421.

FOR THE REASONS ABOVE SET FORTH, THE BID OF NORTH AMERICAN MAY NOT BE CONSIDERED FOR AWARD.

THE ENCLOSURES TRANSMITTED WITH YOUR LETTER FOF APRIL 26, 1961, ARE RETURNED HEREWITH AS REQUESTED.