B-122707, FEBRUARY 23, 1955, 34 COMP. GEN. 395

B-122707, FEBRUARY 23, 1955, 34 COMP. GEN. 395

CONTRACTS - AWARDS - CANCELLATION - PREMATURE OPENING OF BIDS A CONTRACT AWARDED TO THE LOW BIDDER WHOSE BID WAS RECEIVED AND OPENED AT THE TIME SPECIFIED IN THE INVITATION, BUT AFTER THE ADMINISTRATIVE AGENCY HAD ERRED IN OPENING THE OTHER BIDS TWO AND ONE HALF HOURS PRIOR TO THE TIME SPECIFIED, MAY NOT BE CANCELED BY THE GOVERNMENT WITHOUT INCURRING LIABILITY WHERE EVIDENCE SUPPORTS ADMINISTRATIVE DETERMINATION THAT THE LOW BIDDER DID NOT OBTAIN UNFAIR ADVANTAGE.

COMPTROLLER GENERAL CAMPBELL TO THE JOY MANUFACTURING COMPANY, FEBRUARY 23, 1955:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JANUARY 24, 1955, PROTESTING AGAINST THE AWARD OF THE CONTRACT MADE BY THE NAVY PURCHASING OFFICE, WASHINGTON, D.C., UNDER INVITATION FOR BIDS NO. 600 659-55.

YOUR PROTEST IS MADE ON THE BASIS THAT, SINCE TWO BIDS INCLUDING YOURS, WERE OPENED PRIOR TO THE TIME SPECIFIED FOR THE BID OPENING, AWARD LEGALLY COULD NOT BE MADE TO A THIRD BIDDER WHOSE BID WAS OPENED LATER BUT AT THE SPECIFIED TIME.

AS YOU WERE ADVISED IN LETTER OF JANUARY 26, 1955, THE DEPARTMENT OF THE NAVY WAS REQUESTED TO FURNISH A COMPLETE REPORT RELATIVE TO THE MATTER. THE REQUESTED REPORT, TOGETHER WITH PERTINENT PAPERS NOW HAS BEEN RECEIVED.

THE RECORD SHOWS THAT INVITATION FOR BIDS NO. 600-659-55, AS AMENDED, WAS ISSUED ON DECEMBER 2, 1954, WITH THE OPENING SCHEDULED FOR 10:30 A.M. DECEMBER 22, 1954. IT IS REPORTED THAT THE NAVY PURCHASING OFFICE NORMALLY SCHEDULES BIDS TO BE OPENED AT 10:30 A.M. ON EACH WORKING DAY EXCEPT MONDAY. MONDAY OPENINGS ARE NORMALLY SCHEDULED AT 1:00 P.M. SO AS TO BETTER MEET MAIL DELIVERY SCHEDULES. AFTER THE ISSUANCE OF THE INVITATION, AMENDMENT NO. 2 WAS DRAFTED WHICH, IN ADDITION TO OTHER CHANGES, POSTPONED THE OPENING DATE TO MONDAY, JANUARY 3, 1955, AT 1:00 P.M., BUT PRIOR TO ISSUANCE OF THE AMENDMENT THE DATE WAS CHANGED TO JANUARY 5, 1955, AND THROUGH INADVERTENCE THE HOUR WAS NOT CHANGED TO 10:30 A.M. AMENDMENT NO. 2 AS ISSUED ON DECEMBER 6, 1954, ACCORDINGLY PROVIDED THAT THE BIDS WOULD BE OPENED ON WEDNESDAY, JANUARY 5, 1955, AT 1:00 P.M.

ON JANUARY 5, 1955, AT 10:30 A.M., THE NAVY PUBLISHING OFFICE PERSONNEL BEGAN THE ROUTINE OF OPENING, PUSHING AND RECORDING THE BIDS RECEIVED ON THE FOUR OPENINGS SCHEDULED FOR THAT DATE, INCLUDING THE BIDS RECEIVED ON THE INVITATION INVOLVED, WITHOUT NOTING THAT THE INVITATION PROVIDED FOR 1:00 P.M. OPENING. TWO BIDS HAD BEEN RECEIVED IN RESPONSE TO THE INVITATION, YOURS AND ONE FROM THE WORTHINGTON CORPORATION. THESE BIDS WERE OPENED AND RECORDED.

LATER IN THE DAY AT APPROXIMATELY 12:35 P.M., MR. G. E. HANCOCK, REPRESENTING INGERSOLL-RAND COMPANY, ARRIVED AT THE BID ROOM AND HANDED OVER A SEALED BID ON THIS SAME INVITATION. IN AN AFFIDAVIT DATED JANUARY 7, 1955, MR. HANCOCK STATES THAT, AFTER HANDING THE BID IN, AND AFTER INFORMING "ONE OF THE ATTENDANTS" THAT HE WAS AWAITING A BID OPENING, HE WAS ADVISED THAT ALL SCHEDULED BID OPENINGS HAD BEEN EFFECTED COMMENCING AT 10:30 A.M., IN ACCORDANCE WITH STANDARD PRACTICE ON ALL DAYS OTHER THAN MONDAYS. THEREUPON, A BID ROOM EMPLOYEE TOOK THE UNOPENED BID WHICH PREVIOUSLY HAD BEEN HANDED IN TO HER SUPERIOR, THE DIRECTOR OF THE PURCHASE DOCUMENTS DIVISION, WHO, IN TURN, HANDED IT OVER TO THE OFFICER IN CHARGE TO RESOLVE THE PROBLEM PRESENTED. MR. HANCOCK REQUESTED THAT HIS BID BE LEFT UNOPENED IF ALL BIDS WERE TO BE REJECTED DUE TO THE EARLIER OPENING.

THE OFFICER IN CHARGE MADE AN INVESTIGATION OF THE CIRCUMSTANCES AND AFTER CONSULTING WITH COUNSEL DECIDED THAT, INASMUCH AS THE BID WAS RECEIVED ON TIME AND IN ACCORDANCE WITH THE TERMS OF THE INVITATION, IT WAS PROPER THAT THE BID BE OPENED, PUBLISHED, AND RECORDED WITH THE FULL INTENT THAT IT RECEIVE CONSIDERATION FOR AWARD, IF IT COULD BE SATISFACTORILY ESTABLISHED THAT NO LEAKAGE OF INFORMATION EXISTED AND THE ACTION WOULD NOT BE PREJUDICIAL TO THE OTHER BIDDERS. MR. HANCOCK WAS ADVISED OF THE DECISION TO OPEN AND RECORD HIS BID AND WAS ALSO INFORMED THAT A DETERMINATION WOULD HAVE TO BE MADE THAT NO ADVANTAGE ACCRUED TO HIS COMPANY BY VIRTUE OF THE EARLIER OPENING BEFORE CONSIDERATION COULD BE GIVEN TO THE INGERSOLL-RAND BID IF, IN FACT, IT PROVED TO BE THE LOWEST ACCEPTABLE BID.

THE BIDS RECEIVED WERE EVALUATED ON THE BASIS OF 50 PERCENT OF THE UNITS TO BE PROCURED WOULD BE SHIPPED TO THE EAST COAST ( NORFOLK) AND 50 PERCENT TO THE WEST COAST ( OAKLAND). ON SUCH BASIS THE TOTAL DELIVERY COST OF EQUIPMENT WAS AS FOLLOWS: WORTHINGTON CORPORATION, $214,986.22; INGERSOLL-RAND COMPANY $215,183.85; AND JOY MANUFACTURING COMPANY, $233,230.32. ALTHOUGH THE BID OF WORTHINGTON CORPORATION WAS THE LOWEST, IT WAS NONRESPONSIVE TO THE INVITATION BECAUSE OF MAJOR EXCEPTIONS TAKEN TO THE SPECIFICATIONS. THE BID OF INGERSOLL-RAND WAS, THEREFORE, THE LOWEST BID COMPLYING WITH THE SPECIFICATIONS BY APPROXIMATELY $18,000.

IN HIS AFFIDAVIT DATED JANUARY 7, 1955, MR. HANCOCK AVERS THAT THE ADVICE BY NAVY PERSONNEL IN THE BID OPENING ROOM WAS THE FIRST INDICATION THAT HE, OR ANYONE ELSE IN THE INGERSOLL-RAND COMPANY, HAD THAT OTHER BIDS ON THIS INVITATION HAD ALREADY BEEN OPENED; THAT THE BID OF INGERSOLL-RAND COMPANY HAD BEEN PREPARED IN NEW YORK CITY AND WAS SIGNED BY AN OFFICIAL OF THE COMPANY IN NEW YORK ON JANUARY 4; THAT THE BID WAS MAILED TO HIM ALREADY EXECUTED WITH ALL PRICES AND OTHER DATA ON THE BID FORM COMPLETELY FILLED OUT; THAT THE COVERING LETTER DATED JANUARY 5 WAS PREPARED IN THE WASHINGTON OFFICE FROM DATA CONTAINED IN A LETTER FROM NEW YORK DATED JANUARY 4; AND THAT NO CHANGES WERE MADE IN THE BID FORM AS RECEIVED FROM NEW YORK. WE HAVE VERIFIED THE FACTS OF THESE LETTERS.

THE BID OF INGERSOLL-RAND COMPANY IS DATED JANUARY 4, 1955, AND THE BID FORM AND EACH OF THE THREE AMENDMENTS ARE SIGNED BY E. R. SHEERIN, ASSISTANT SECRETARY. THE ACCOMPANYING LETTER DATED JANUARY 5 IS SIGNED BY J. J. KENNEDY, VICE PRESIDENT.

IT WAS ADMINISTRATIVELY DETERMINED ON THE BASIS OF THE FACTS AND CIRCUMSTANCES SURROUNDING THE TRANSACTION THAT INGERSOLL-RAND COMPANY DID NOT DERIVE ANY ADVANTAGE FROM THE GOVERNMENT'S ERROR IN THE OPENING OF THE BIDS; THAT IN SUCH CIRCUMSTANCES TO CANCEL THE INVITATION AND READVERTISE, WITHOUT CHANGE OF ANY KIND IN THE SPECIFICATIONS, WOULD ALLOW A NONRESPONSIVE BIDDER AND A BIDDER WHOSE BID WAS APPROXIMATELY $18,000 HIGHER THAN THE LOWEST RESPONSIVE BID, TO TAKE ADVANTAGE OF THE GOVERNMENT'S FORTUITOUS ERROR TO OBTAIN AN OPPORTUNITY TO BID AGAIN IN THE LIGHT OF THE DISCLOSED PRICES; AND THAT, THEREFORE, CANCELLATION WOULD BE PREJUDICIAL TO THE INTEGRITY OF THE COMPETITIVE BID SYSTEM, AS WELL AS TO THE LOW RESPONSIVE BIDDER WHO WAS IN NO WAY RESPONSIBLE FOR, NOR ADVANTAGED BY, THE GOVERNMENT'S ERROR. FOR THESE REASONS THE BID FOR INGERSOLL-RAND COMPANY WAS ACCEPTED.

A NECESSARY AND IMPORTANT PRINCIPLE OF THE COMPETITIVE BID SYSTEM OF PROCUREMENT IS THE PUBLIC OPENING OF ALL BIDS AT THE TIME AND PLACE STATED IN THE INVITATION. WHEN BIDS ARE NOT SO OPENED THERE IS SERIOUS QUESTION AS TO THE PROPRIETY OF THE TRANSACTION, AND ORDINARILY ALL BIDS SHOULD BE REJECTED AND THE MATTER READVERTISED. BUT THE QUESTION NOW IS NOT WHETHER ALL BIDS SHOULD BE REJECTED--- A CONTRACT WAS AWARDED ON THE BASIS OF THE LOW BID, WHICH WAS PROPERLY RECEIVED AND WAS OPENED AT THE TIME SPECIFIED. THE FACTS AND CIRCUMSTANCES SURROUNDING THE MATTER SUPPORT THE ADMINISTRATIVE DETERMINATION THAT INGERSOLL-RAND COMPANY DID NOT OBTAIN ANY ADVANTAGE OVER YOU OR ANY OTHER BIDDER BY REASON OF THE GOVERNMENT'S ERROR. IN THESE CIRCUMSTANCES, WE KNOW OF NO SOUND LEGAL BASIS WHICH WOULD PERMIT THE GOVERNMENT TO CANCEL THE CONTRACT WITHOUT INCURRING LIABILITY. CONSEQUENTLY, THERE IS NO FURTHER ACTION WE MAY TAKE IN THE MATTER. WE HAVE ADVISED THE NAVY DEPARTMENT, HOWEVER, THAT APPROPRIATE SAFEGUARDS SHOULD BE ESTABLISHED TO PRECLUDE THE RECURRENCE OF SITUATIONS SUCH AS THIS IN FUTURE CASES.