B-165018, SEPT. 19, 1968

B-165018, SEPT. 19, 1968

TO UNIDYNAMICS DIVISION OF UMC INDUSTRIES, INC.:

REFERENCE IS MADE TO YOUR LETTERS OF AUGUST 8 AND AUGUST 13, 1968, WITH ENCLOSURES, PROTESTING ANY AWARD OF A CONTRACT BY THE DEPARTMENT OF THE NAVY FOR A LESSER NUMBER OF LAUNCHING GROUPS (ANTI-SUBMARINE ROCKETS) THAN THE 20 GROUPS (WITH ASSOCIATED REQUIREMENTS) CALLED FOR UNDER INVITATION FOR BIDS NO. N00017-68-B-1104.

THE INVITATION INCLUDED STANDARD FORM 33A, SOLICITATION INSTRUCTIONS AND CONDITIONS, WHICH PROVIDED UNDER PARAGRAPH 10 (A) THAT THE CONTRACT WOULD BE AWARDED TO THAT RESPONSIBLE OFFEROR WHOSE OFFER CONFORMING TO THE SOLICITATION WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. PARAGRAPH 10 (C) STATED:

"/C) THE GOVERNMENT MAY ACCEPT ANY ITEM OR GROUP OF ITEMS OF ANY OFFER, UNLESS THE OFFEROR QUALIFIES HIS OFFER BY SPECIFIC LIMITATIONS. UNLESS OTHERWISE PROVIDED IN THE SCHEDULE, OFFERS MAY BE SUBMITTED FOR ANY QUANTITIES LESS THAN THOSE SPECIFIED; AND THE GOVERNMENT RESERVES THE RIGHT TO MAKE AN AWARD ON ANY ITEM FOR A QUANTITY LESS THAN THE QUANTITY OFFERED AT THE UNIT PRICES OFFERED UNLESS THE OFFEROR SPECIFIES OTHERWISE IN HIS OFFER.' PARAGRAPH (1) B OF THE SUPPLEMENTAL SOLICITATION INSTRUCTIONS AND CONDITIONS MODIFIED PARAGRAPH 10 (C) AS FOLLOWS:

"B. NOTWITHSTANDING ANY STATEMENT IN PARAGRAPH 10 (C) OF THE SOLICITATION INSTRUCTIONS AND CONDITIONS (STANDARD FORM 33A) TO THE CONTRARY, OFFERS WHICH SUBMIT PRICES FOR ANY QUANTITIES LESS THAN THOSE SPECIFIED IN THE SCHEDULE WILL BE REJECTED AS NONRESPONSIVE.'

THE INVITATION INCORPORATED BY REFERENCE THE BUY AMERICAN ACT, 41 U.S.C. 10A-D, AS IMPLEMENTED BY EXECUTIVE ORDERS AND SECTION VI, PART 1, OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR). BIDDERS WERE NOTIFIED THAT FOREIGN BIDS WERE BEING SOLICITED AND IF A BID OFFERING FOREIGN END PRODUCTS WOULD BE ACCEPTABLE FROM THE STANDPOINT OF PRICE AND OTHER FACTORS BUT FOR THE BUY AMERICAN ACT CLAUSE, THE MATTER WOULD BE SUBMITTED TO THE SECRETARY OF DEFENSE FOR A DETERMINATION AS TO WHETHER IT WOULD BE IN THE PUBLIC INTEREST TO EXCEPT THE FOREIGN END PRODUCT FROM THE RESTRICTIONS OF THE BUY AMERICAN ACT. UNDER THE BUY AMERICAN CERTIFICATE APPEARING ON THE BACK OF THE SOLICITATION, OFFER, AND AWARD, STANDARD FORM 33, BIDDERS WERE REQUIRED TO LIST EACH END PRODUCT WHICH THEY PROPOSED TO FURNISH THAT WAS NOT A DOMESTIC SOURCE END PRODUCT, TOGETHER WITH ITS COUNTRY OF ORIGIN.

FOUR BIDS WERE RECEIVED ON THE 20 LAUNCHING GROUPS SPECIFIED. THE LOW BID WAS SUBMITTED BY VICKERS LIMITED ENGINEERING GROUP, ARMAMENT AND COMMERCIAL ENGINEERING DIVISION, VICKERS-ARMSTRONG ELSWICK WORKS, NEWCASTLE UPON TYNE, ENGLAND (VICKERS), IN THE AMOUNT OF $5,620,452, AND NO FOREIGN END PRODUCTS WERE LISTED IN THE SPACE PROVIDED THEREFOR IN THE BUY AMERICAN CERTIFICATE. YOUR FIRM SUBMITTED THE SECOND-LOW BID OF $6,916,216 WHICH WAS RESTRICTED BY THE FOLLOWING NOTATION IN YOUR BID TO THE TOTAL QUANTITY OF THE 20 LAUNCHING GROUPS SPECIFIED IN THE NVITATION: "AS ALLOWED BY STD FORM 33A, ITEM 10 (C), UNLESS OTHERWISE PROVIDED IN THIS SCHEDULE, THIS OFFER IS PREDICATED ON THE GOVERNMENT'S ACCEPTANCE OF ALL ITEMS OFFERED AND OF THE QUANTITIES OFFERED AT THE UNIT PRICES OFFERED.' THE THIRD-LOW BID OF $7,144,500 WAS RECEIVED FROM A CANADIAN FIRM, CANADIAN VICKERS, LTD., WHICH LISTED NO FOREIGN END PRODUCTS BUT INSERTED THE WORD "CANADA" IN THE SPACE PROVIDED IN THE BUY AMERICAN CERTIFICATE FOR DESIGNATING THE COUNTRY OF ORIGIN FOR THOSE FOREIGN END PRODUCTS WHICH A BIDDER PROPOSED TO FURNISH. THE REMAINING BID WAS SUBMITTED BY ENTWISTLE MANUFACTURING CORPORATION, CRANSTON, RHODE ISLAND, IN THE AMOUNT OF $10,043,320 ON DOMESTIC SOURCE END PRODUCTS.

BY CABLEGRAM AND LETTER OF AUGUST 6, 1968, VICKERS ADVISED THE PURCHASING ACTIVITY THAT IT HAD INADVERTENTLY FAILED TO INDICATE IN THE BUY AMERICAN CERTIFICATE THAT IT WOULD NOT FURNISH DOMESTIC END PRODUCTS, AND THAT THE LAUNCHING GROUPS AND COMPONENTS WOULD BE MANUFACTURED IN THE UNITED KINGDOM OF GREAT BRITAIN WITH THE EXCEPTION OF CERTAIN COMPONENTS (AMOUNTING TO ABOUT 30 PERCENT OF ITS BID PRICE) WHICH WOULD BE PRODUCED IN THE UNITED STATES. VICKERS ASKED THAT ITS UNINTENTIONAL MISTAKE OF OMISSION BE CORRECTED, AND REFERRED TO VARIOUS MEETINGS WITH NAVY OFFICIALS AND PROCUREMENT PERSONNEL THE OBJECT OF WHICH WAS TO DESCRIBE THE TECHNICAL CAPABILITY AND CAPACITY OF THE VICKERS FACILITIES AT ELSWICK IN THE UNITED KINGDOM TO MANUFACTURE THE LAUNCHING GROUPS AND TO REQUEST THAT OFFERS BE ACCEPTED FROM FIRMS IN THE UNITED KINGDOM UNDER THE TREATY BETWEEN THE UNITED STATES AND THE UNITED KINGDOM REGARDING DEFENSE SHARING. VICKERS ALSO ENCLOSED A COPY OF A PRIOR COMMUNICATION TO THE ASSISTANT SECRETARY OF THE NAVY SETTING OUT SUCH POINTS.

ON THE BASIS OF THE ABOVE FACTORS AND THE CONTRACTING OFFICER'S STATEMENT OF HIS PRIOR KNOWLEDGE FROM VARIOUS SOURCES, INCLUDING APLANT SURVEY AND DISCUSSIONS OF VICKERS PRODUCTION PLANS, THAT VICKERS INTENDED TO FURNISH END PRODUCTS MANUFACTURED IN ENGLAND, THE ACTING DEPUTY COMMANDER, PURCHASING, NAVAL SUPPLY SYSTEMS COMMAND, MADE A DETERMINATION UNDER ASPR 2-406.3 (A) AS TO SUCH MISTAKE IN VICKERS' BID AND PERMITTED CORRECTION OF THE BUY AMERICAN CERTIFICATE TO BE CHANGED TO SHOW AN INTENTION TO FURNISH END PRODUCTS OF ENGLISH ORIGIN.

IN ITS REPORT TO THIS OFFICE DATED AUGUST 12, 1968, NAVY STATED: "THE 20 LAUNCHERS IN THE IFB REFLECTED FIRM REQUIREMENTS. HOWEVER, PARTICULARLY IN VIEW OF NATIONAL FISCAL RETRENCHMENTS AND THEIR REPERCUSSIONS ON THE NAVY AROUND THE TURN OF THE FISCAL YEAR, IT BECAME APPARENT THAT, ALTHOUGH 20 LAUNCHERS PERHAPS MIGHT STILL BE NEEDED, IT SEEMED MORE LIKELY THAT THE NUMBER OF NEW SHIPS WOULD BE REDUCED FROM PREVIOUSLY PLANNED FIGURES TO SOME LESSER AMOUNT, POSSIBLY VERY SMALL. "AS THE TIME DREW NEAR FOR THE BIDS TO EXPIRE (14 JULY 1968), THE REQUIREMENTS WERE STILL BEING REEXAMINED AND THE CONTRACTING OFFICER DID NOT KNOW WHAT QUANTITY TO AWARD. ACCORDINGLY, BY TELEGRAM DATED 11 JUNE 1968 (EXHIBIT 3) THE BIDDERS WERE ASKED TO EXTEND THEIR BIDS UNTIL 14 AUGUST 1968. ALL FOUR BIDDERS DID SO. "IT HAS RECENTLY BECOME CLEAR THAT WE DO NOT REQUIRE 20 LAUNCHERS AND THAT THE REQUIRED QUANTITY IS 16, SO THAT THE COMMAND NOW KNOWS THE QUANTITY FOR WHICH IT SHOULD MAKE AWARD ON THE SUBJECT IFB * * *.' IT WAS FURTHER REPORTED THAT ALMOST IMMEDIATE AWARD OF THE 16 UNITS WAS CONSIDERED URGENTLY NECESSARY IN VIEW OF SHIP DELIVERY DATES AND PRODUCTION LEAD TIMES INVOLVED, AND THAT A DETERMINATION HAD BEEN MADE PURSUANT TO ASPR 2-407.9 (B) (3) TO AWARD THE CONTRACT ON AUGUST 14 SHOULD THIS OFFICE BE UNABLE TO RENDER ITS DECISION ON YOUR PROTEST BY THAT DATE. A CONTRACT FOR THE 16 LAUNCHING GROUPS AND ASSOCIATED REQUIREMENTS WAS AWARDED TO VICKERS ON AUGUST 14.

YOU PROTEST THE AWARD ON THE PRINCIPAL GROUNDS (1) THAT PARAGRAPH (1) B ABROGATES PARAGRAPH 10 (C) RENDERING NONRESPONSIVE ANY OFFER FOR LESS THAN THE 20 LAUNCHING GROUPS SOLICITED IN THE INVITATION, AND BY THE TERMS OF PARAGRAPH 10 (A) THE GOVERNMENT MAY NOT MAKE AWARD ON AN OFFER WHICH IS NOT IN CONFORMITY WITH THE SOLICITATION; (2) THAT BY NOT LISTING ANY EXCEPTIONS IN THE BUY AMERICAN CERTIFICATE, VICKERS OFFERED DOMESTIC SOURCE END PRODUCTS, AND SINCE THAT FIRM DID NOT INTEND TO OFFER A DOMESTIC PRODUCT ITS BID WAS NOT RESPONSIVE; (3) THAT VICKERS MUST BE DISQUALIFIED AS NONRESPONSIBLE SINCE A PRE-AWARD SURVEY WOULD SHOW THAT IT DOES NOT HAVE FACILITIES IN THE UNITED STATES FOR PRODUCING THE DOMESTIC SOURCE END PRODUCTS WHICH IT CERTIFIED IT WOULD SUPPLY; AND (4) THAT THE MISTAKE IN BID PROVISIONS OF ASPR 2-406.3 ARE APPLICABLE ONLY TO THOSE FACTORS INVOLVED IN ARRIVING AT THE OVERALL BID PRICE, SUCH AS MISTAKES IN QUANTITY, MATERIALS, ETC., AND WERE NOT INTENDED TO PERMIT CORRECTION OF A MISTAKE CONCERNING THE SOURCE OF THE END PRODUCTS.

WE FIND NO PROPER BASIS ON WHICH TO QUESTION THE RESPONSIVENESS OF VICKERS' BID BECAUSE OF THAT FIRM'S FAILURE TO INDICATE THAT IT PROPOSED TO FURNISH FOREIGN END PRODUCTS INSTEAD OF DOMESTIC PRODUCTS. TO BE RESPONSIVE AND CONSIDERED FOR AWARD, A BID MUST COMPLY IN ALL MATERIAL RESPECTS WITH THE INVITATION FOR BIDS. HERE, THE INVITATION PERMITTED BIDDERS TO OFFER EITHER DOMESTIC OR FOREIGN END PRODUCTS, AND VICKERS' BID, OFFERING A DOMESTIC SOURCE END PRODUCT UNDER THE BUY AMERICAN CERTIFICATE, WAS CLEAR AND NOT ON ITS FACE CONTRARY TO THAT PROVISION OF THE INVITATION. IF VICKERS HAD INDICATED IN THE BUY AMERICAN CERTIFICATE THAT IT WAS OFFERING ENGLISH END PRODUCTS, THE BID WOULD ALSO HAVE BEEN RESPONSIVE IN THAT RESPECT.

UNDER THOSE CONDITIONS THE EFFECT OF ACCEPTANCE OF, OR EXCEPTION TO, THE BUY AMERICAN CLAUSE WOULD CONCERN ONLY THE EVALUATION OF THE BID, AND NOT ITS RESPONSIVENESS TO THE INVITATION'S SPECIFICATIONS OR OTHER REQUIREMENTS. WE BELIEVE THE INFORMATION OF RECORD CLEARLY SUPPORTS THE DECISION OF THE ACTING DEPUTY COMMANDER, PURCHASING, TO CHANGE VICKERS' BID TO SHOW IN ACCORDANCE WITH THAT FIRM'S FACILITIES, PRODUCTION PLANS, AND PREVIOUSLY EXPRESSED INTENTIONS THAT THE LAUNCHING GROUPS WOULD BE MANUFACTURED PRINCIPALLY AT THE VICKERS ARMSTRONG ELSWICK WORKS IN ENGLAND. WE HAVE CONSIDERED ALL THE PREVIOUS DECISIONS OF OUR OFFICE CITED IN YOUR LETTERS IN CONNECTION WITH THE BUY AMERICAN CERTIFICATE, AND FIND THEM TO BE READILY DISTINGUISHABLE IN MATERIAL FACTS FROM THE CASE UNDER CONSIDERATION. HERE, THE VICKERS' BID WAS RESPONSIVE AS SUBMITTED AND WAS THE LOWEST BID RECEIVED AFTER PROPER EVALUATION UNDER THE BUY AMERICAN ACT. IN THESE CIRCUMSTANCES, CHANGING THE PLACE OF MANUFACTURE DID NOT PREJUDICE THE RIGHTS OF OTHER BIDDERS. NOR DID THE AWARD OF THE CONTRACT AS CHANGED RESULT IN MAKING A CONTRACT ON ANY BASIS OTHER THAN THAT OBVIOUSLY INTENDED BY THE PARTIES.

SINCE WE CONSIDER THE CHANGE OF VICKERS' BID TO SHOW THE OFFERING OF ENGLISH END PRODUCTS TO HAVE BEEN AUTHORIZED AND PROPER UNDER THE CIRCUMSTANCES CONCERNED, YOUR CONTENTION THAT VICKERS IS NONRESPONSIBLE FOR THE REASON THAT IT CANNOT SUPPLY A DOMESTIC SOURCE END PRODUCT BECOMES ACADEMIC.

CONCERNING YOUR CONTENTION THAT THE GOVERNMENT COULD NOT LEGALLY AWARD FOR LESS THAN 20 LAUNCHING GROUPS FOR THE REASON THAT "PARAGRAPH (1) B COMPLETELY ABROGATES THE WORDING AND THE EFFECT OF PARAGRAPH 10 (C)," SUCH POSITION SEEMS INCOMPATIBLE WITH YOUR PREVIOUS ACTION BY WHICH YOU RESTRICTED YOUR BID TO THE TOTAL QUANTITIES OFFERED. IT IS NOTED THAT IN MAKING SUCH RESTRICTION YOU SPECIFICALLY STATED "AS ALLOWED BY STD FORM 33A, ITEM 10 (C).' WHILE THE PROCURING ACTIVITY COULD HAVE BETTER STATED ITS APPARENT INTENTION IN (1) BTO OBTAIN THE TOTAL REQUIREMENTS WHICH MIGHT BE PROCURED UNDER THAT INVITATION BY AN AWARD TO ONLY ONE OFFEROR, IT DOES NOT APPEAR THAT YOU WERE IN ANYWAY PREJUDICED OR MISLED BY (1) B INTO THINKING THAT THE GOVERNMENT HAD NOT RESERVED THE RIGHT AS SET FORTH IN 10 (C) TO AWARD FOR A QUANTITY LESS THAN THAT OFFERED.

WE BELIEVE THAT YOUR SPECIFIC EXCEPTION TO THE GOVERNMENT'S RIGHT TO ACCEPT LESS THAN 20 LAUNCHERS INDICATED YOUR BELIEF AT THE TIME OF BIDDING THAT THE LAST PORTION OF 10 (C), PROVIDING ,AND THE GOVERNMENT RESERVES THE RIGHT TO MAKE AN AWARD ON ANY ITEM FOR A QUANTITY LESS THAN THE QUANTITY OFFERED AT THE UNIT PRICES OFFERED UNLESS THE OFFEROR SPECIFIES OTHERWISE IN HIS OFFER," WAS INTENDED TO REMAIN A MATERIAL PART OF THE INVITATION, AND WAS NOT ABROGATED, LITERALLY OR OTHERWISE, BY (1) B. IN OUR VIEW THE ONLY STATEMENT IN 10 (C) WHICH WAS INTENDED TO BE MODIFIED, AND MUST BE REGARDED AS HAVING BEEN RENDERED INEFFECTIVE BY (1) B, WAS THAT WHICH AUTHORIZED (UNLESS OTHERWISE PROVIDED) SUBMISSION OF BASIC BIDS FOR ANY QUANTITIES LESS THAN THOSE SPECIFIED IN THE INVITATION. ACCORDINGLY, WHILE (1) B DID NOT PERMIT SUBMISSION OF BASIC BIDS ON LESS THAN THE TOTAL QUANTITIES SPECIFIED, 10 (C) AS MODIFIED BY (1) B CLEARLY ADVISED PROSPECTIVE CONTRACTORS THAT THE GOVERNMENT COULD AWARD FOR LESSER QUANTITIES AT THE PRICES OFFERED FOR THE TOTAL QUANTITIES UNLESS THE OFFEROR SPECIFIED OTHERWISE -- AS YOU DID. IN THIS CONNECTION, IT IS ALSO OF SOME SIGNIFICANCE THAT IN THE TELEGRAM SENT TO ALL BIDDERS ON JUNE 11, 1968, REQUESTING EXTENSION OF THE TIME FOR BID ACCEPTANCE, ATTENTION WAS SPECIFICALLY DIRECTED TO THE PROVISIONS OF PARAGRAPH 10 (C).

IN VIEW OF THE FOREGOING, WE BELIEVE THAT THE AWARD OF A CONTRACT FOR 16 LAUNCHING GROUPS WAS NOT PRECLUDED BY THE TERMS OF THE INVITATION OR OF VICKERS' BID, AND YOUR PROTEST ON THAT GROUND MUST THEREFORE ALSO BE DENIED. HOWEVER, WE ARE CONCERNED THAT BIDDERS WISHING TO OFFER DIFFERENT PRICES ON LESSER QUANTITIES THAN THE SPECIFIED QUANTITIES BID UPON, COULD BE DETERRED BY THE LANGUAGE OF PARAGRAPH (1) B FROM OFFERING SUCH PRICES ON THE LESSER QUANTITIES, FOR FEAR OF HAVING THEIR BASIC BIDS REJECTED AS NONRESPONSIVE, AND SUCH BIDDERS MIGHT THEREFORE BE CAUSED TO SUBMIT "ALL OR NONE" BIDS. SINCE SUCH ACTION WOULD UNNECESSARILY REDUCE THE COMPETITION IN THOSE SITUATIONS WHERE, AS HERE, THE GOVERNMENT'S REQUIREMENTS CHANGE PRIOR TO AWARD AND THE CONTRACTS ARE AWARDED FOR QUANTITIES LESS THAN THOSE QUANTITIES SPECIFIED IN THE INVITATIONS, WE ARE RECOMMENDING TO THE SECRETARY OF THE NAVY THAT THE PROVISIONS OF PARAGRAPH (1) B BE APPROPRIATELY MODIFIED IN FUTURE INVITATIONS WHERE MULTIPLE AWARDS WOULD NOT BE IN THE INTEREST OF THE GOVERNMENT.