B-130565, MAR. 8, 1957

B-130565, MAR. 8, 1957

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO LETTER DATED FEBRUARY 14, 1957, R11.1L4 1/L4/NT4-14, WITH ENCLOSURES, FROM THE CHIEF, BUREAU OF SUPPLIES AND ACCOUNTS, FURNISHING THE REPORT REQUESTED BY OUR OFFICE LETTER OF FEBRUARY 13, 1957, RELATIVE TO THE PROTEST OF THE INGERSOLL-RAND COMPANY AGAINST THE AWARD TO ANY OTHER BIDDER OF A CONTRACT PURSUANT TO IFB-160-235-57, ISSUED DECEMBER 21, 1956, BY THE YARDS AND DOCKS SUPPLY OFFICE, PORT HUENEME, CALIFORNIA.

THE INVITATION AS AMENDED REQUESTED BIDS TO BE OPENED JANUARY 18, 1957, FOR FURNISHING 4 ITEMS OF ROTARY AIR COMPRESSORS TO BE IN ACCORDANCE WITH MILITARY SPECIFICATIONS. BIDDERS WERE ADVISED THAT "BIDS WHICH DO NOT CONFORM EXACTLY WITH THE ADVERTISED REQUIREMENTS WILL NOT BE CONSIDERED.' IT WAS PROVIDED ON PAGE 10 OF THE CONTINUATION SHEET OF STANDARD FORM 36, MADE A PART OF THE INVITATION, THAT THE COMPRESSORS SHOULD CONFORM TO MILITARY SPECIFICATIONS MIL-C 555A, COMPRESSORS, RECIPROCATING AND ROTARY AIR, DIESEL-ENGINE-DRIVEN, DATED 15 NOVEMBER 1954, EXCEPT AS MODIFIED IN THE INVITATION. THE CONTRACTING OFFICER REPORTS THAT 5 BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION; THAT THE LOWEST WAS SUBMITTED BY THE JAEGER MACHINE COMPANY, AND THE NEXT LOWEST BY THE INGERSOLL-RAND COMPANY. THE BID OF THE JAEGER MACHINE COMPANY WAS FORWARDED TO THE YARDS AND DOCKS SUPPLY OFFICE, PORT HUENEME, CALIFORNIA, WITH A LETTER DATED JANUARY 12, 1957, CONTAINING THE FOLLOWING STATEMENT.

"SPECIFICATION MIL-C-555-A, PARAGRAPH 3.1.4. INSTRUMENT PANEL--- SPECIFIES THE PANEL TO INCLUDE AN "INDICATOR--- LUBRICATING OIL TEMPERATURE IN ENGINE" . WE TAKE EXCEPTION TO THIS REQUIREMENT ON ITEM NOS. 2, 3 AND 4, AS WE HAVE BEEN INFORMED BY DETROIT DIESEL ENGINE DIVISION OF GENERAL MOTORS CORPORATION THAT THEY HAVE NO PROVISION FOR ITS INSTALLATION AT PRESENT. SHOULD PROVISION FOR ITS INSTALLATION BE MADE PRIOR TO MANUFACTURE WE WILL INSTALL THE TEMPERATURE INDICATOR AT NO INCREASE IN PRICE.'

WITH LETTER OF FEBRUARY 2, 1957, THE JAEGER MACHINE COMPANY FORWARDED TO THE YARDS AND DOCKS SUPPLY OFFICE A LETTER FROM THE GENERAL MOTORS CORPORATION ADVISING THAT THE LUBRICATING OIL TEMPERATURE INDICATOR WAS AVAILABLE AND COULD BE SUPPLIED ON ANY OF THE ENGINES COVERED BY THE ITEMS IN THE INVITATION. BY TELEGRAM RECEIVED HERE FEBRUARY 4, 1957, THE INGERSOLL-RAND COMPANY PROTESTED ANY AWARD TO THE JAEGER MACHINE COMPANY ON THE GROUND THAT ITS BID WAS QUALIFIED TO SUCH AN EXTENT AS TO CONSTITUTE A MATERIAL DEVIATION FROM THE ADVERTISED REQUIREMENTS.

IN A LETTER DATED FEBRUARY 18, 1957, A REPRESENTATIVE OF THE JAEGER MACHINE COMPANY ADVISED OUR OFFICE THAT BOTH THAT COMPANY AND THE INGERSOLL-RAND COMPANY OFFERED "IDENTICAL ENGINES, IN PART, TO BE FURNISHED BY THE SAME MANUFACTURER, GENERAL MOTORS" AND THAT "THE GAUGE IN QUESTION IS PROBABLY NOT AN ESSENTIAL MECHANISM TO THE SATISFACTORY OPERATION OF THE ENGINE AND ITS INSTALLATION COST WOULD BE VERY REASONABLE --- APPROXIMATELY $5 PER ENGINE.' IT WAS ALSO CONTENDED IN THAT LETTER THAT IT WAS JAEGER'S INTENTION, DESPITE THE EXCEPTION STATED IN ITS BID, TO MEET SPECIFICATIONS IN EVERY PARTICULAR, INCLUDING THE ENGINE OIL TEMPERATURE GAUGE.

IN THE LETTER WHICH ACCOMPANIED THE BID OF THE JAEGER MACHINE COMPANY IT WAS SPECIFICALLY STATED THAT THE BIDDER TOOK "EXCEPTION" TO THE REQUIREMENT OF AN ENGINE OIL TEMPERATURE INDICATOR, BECAUSE THE BIDDER HAD BEEN INFORMED BY THE DETROIT DIESEL ENGINE DIVISION OF GENERAL MOTORS CORPORATION THAT NO PROVISION HAD BEEN MADE AT THE TIME FOR THE INSTALLATION OF SUCH AN INDICATOR. IT WAS STATED FURTHER "SHOULD PROVISION FOR INSTALLATION BE MADE PRIOR TO MANUFACTURE WE WILL INSTALL THE TEMPERATURE INDICATOR AT NO INCREASE IN PRICE.' THE BIDDER DID NOT BECOME AWARE THAT THE GENERAL MOTORS CORPORATION HAD MADE PROVISION FOR INSTALLATION OF THE INDICATOR UNTIL SOMETIME AFTER BIDS WERE OPENED. WHATEVER JAEGER'S ACTUAL INTENTION MAY HAVE BEEN, IT WOULD NOT INSTALL THE INDICATOR UNLESS GENERAL MOTORS CORPORATION MADE PROVISION FOR ITS INSTALLATION PRIOR TO MANUFACTURE; CERTAINLY ACCEPTANCE OF ITS BID AS SUBMITTED WOULD NOT HAVE OBLIGATED IT TO SUPPLY IT AT ALL EVENTS.

THE OBLIGATION OF JAEGER WAS FIXED AT THE TIME BIDS WERE OPENED AND NOT AT SOME FUTURE TIME WHEN IT DISCOVERED THAT GENERAL MOTORS HAD FOR SOME REASON PROVIDED FOR THE INSTALLATION. A FORMER ATTORNEY GENERAL OF THE UNITED STATES HAS SAID THAT THE LAW REALLY ACCEPTS THE LOWEST COMPETENT BID AT THE MOMENT THE SEALED PROPOSALS ARE OPENED, SO THAT ON CORRECT ANALYSIS IT IS THE ADVERTISEMENT WHICH CORRESPONDS TO THE COMMON LAW OFFER, AND THE BID WHICH CORRESPONDS TO THE COMMON LAW ACCEPTANCE. OP.ATTY.GEN. 56, 57. WHETHER OR NOT WE FULLY ACCEPT THAT VIEW IN ALL CASES, WE DO NOT FEEL THAT THE EXTENT OF A BIDDER'S OBLIGATION IN THE EVENT OF ACCEPTANCE OF HIS BID SHOULD ORDINARILY BE LEFT DEPENDENT UPON A CONTINGENCY.

IN THE PRESENT CASE PARAGRAPH 3.14 OF SPECIFICATION MIL-C-555A CLEARLY REQUIRED ON INDICATOR, AND IF JAEGER INTENDED TO COMPLY WITH THAT REQUIREMENT UNCONDITIONALLY WE DO NOT UNDERSTAND WHY IT WAS NECESSARY TO MAKE THE STATEMENT IN THE LETTER WHICH ACCOMPANIED ITS BID. WHILE JAEGER NOW CONTENDS THAT ITS BID IS FULLY RESPONSIVE AND DOES NOT CONSTITUTE A MATERIAL DEVIATION FROM THE ADVERTISED REQUIREMENT, THAT BIDDER DID TAKE "EXCEPTION" TO THE REQUIREMENT AND DID CONDITION ITS BID BY OFFERING TO FURNISH THE INDICATOR AT NO INCREASE IN COST ONLY IN THE EVENT PROVISION FOR ITS INSTALLATION BE MADE BY THE GENERAL MOTORS CORPORATION PRIOR TO MANUFACTURE. WHILE THE COST OF THE INDICATOR AND ITS INSTALLATION MAY BE COMPARATIVELY LITTLE, IT IS OBVIOUS THAT IT DOES AFFECT THE COST OF THE COMPRESSORS TO SOME EXTENT, AND SUCH BEING THE CASE WE MUST HOLD THAT THE DEVIATION IS SO SUBSTANTIAL AS TO CONSTITUTE A MATERIAL DEVIATION FROM THE ADVERTISED REQUIREMENTS. IT FOLLOWS THAT THE BID OF JAEGER AS THUS QUALIFIED SHOULD BE DISREGARDED AS UNRESPONSIVE TO THE INVITATION FOR BIDS.

AS THE MILITARY SPECIFICATIONS MADE DIRECTLY APPLICABLE IN THIS CASE ARE FOR COMPRESSORS, RECIPROCATING AND ROTARY, AIR DIESEL-ENGINE DRIVEN RATHER THAN FOR ENGINES, THERE IS BROUGHT TO YOUR ATTENTION THE SUGGESTION OF JAEGER'S REPRESENTATIVE THAT THE GAUGE QUALIFICATION ON THE ENGINE SHOULD BE SHOWN IN THE ENGINE SPECIFICATIONS INSTEAD OF IN THE SPECIFICATIONS FOR THE COMPRESSORS, TO AVOID POSSIBLE CONFUSION ON THE PART OF BIDDERS.