B-139414, DEC. 7, 1959

B-139414, DEC. 7, 1959

TO EDWARD GALLAGHER, ESQUIRE:

WE REFER TO YOUR LETTERS OF JUNE 5 AND AUGUST 13, 1959, WITH ENCLOSURES, PROTESTING ON BEHALF OF THE SIDNEY MACHINE TOOL COMPANY THE REJECTION OF LOW BIDS SUBMITTED BY IT PURSUANT TO INVITATIONS NO. 600-1518-59 AND NO. 600-1596-59.

INVITATION NO. 600-1518-59 WAS ISSUED BY THE NAVY PURCHASING OFFICE IN WASHINGTON, D.C., ON FEBRUARY 16, 1959, FOR THE PROCUREMENT OF A HEAVY DUTY ENGINE LATHE 25 INCHES BY 312 INCHES CC. INVITATION NO. 600 1596-59 WAS ISSUED BY THE SAME OFFICE ON MARCH 2, 1959, FOR THE PURCHASE OF ONE ENGINE LATHE 32 INCHES BY 36 INCHES DOUBLE CARRIAGE. BIDS SUBMITTED PURSUANT TO BOTH INVITATIONS WERE OPENED ON APRIL 1, 1959.

IN A TRANSMITTAL LETTER TO ITS BID ON THE 25 INCH LATHE THE SIDNEY COMPANY STATED:

"THE LATHE WE ARE OFFERING IS OUR LATEST NEW DESIGN AND SUPERSEDES OUR FORMER 25 INCH HEAVY DUTY ENGINE LATHE. AT THE PRESENT TIME, THE NEW COMMERCIAL LITERATURE IS NOT AVAILABLE COVERING THIS LATEST RE DESIGN. HAVE, HOWEVER, INCLUDED COMPLETE TYPE WRITTEN DETAILED SPECIFICATIONS AND ALSO TYPE WRITTEN DESCRIPTIVE MATTER COVERING THE LATHE WE PROPOSE TO FURNISH. THIS NEW SIDNEY MODEL 36, SIZE 3220 HEAVY DUTY ENGINE LATHE MEETS ALL REQUIREMENTS OUTLINED IN THE SPECIFICATIONS COVERED IN THE SUBJECT INVITATION FOR BIDS. WE TAKE NO EXCEPTION WHATSOEVER.'

ALSO SUBMITTED WITH THE BID WERE TYPE-WRITTEN DETAILED SPECIFICATIONS PERTAINING TO THE LATHE OFFERED. THESE SPECIFICATIONS SET FORTH CERTAIN CAPACITIES AND DIMENSIONS AT VARIANCE WITH THE SPECIFICATIONS FORMING A PART OF THE INVITATION. NOTWITHSTANDING SUCH VARIANCE THE CONTRACTING OFFICER CONSTRUED THE LANGUAGE QUOTED ABOVE AS AN OVERALL OFFER TO COMPLY AND SOUGHT CONFIRMATION OF THAT CONSTRUCTION FROM THE BIDDER. SUBSEQUENTLY THE CONTRACTING OFFICER DETERMINED THAT THE LATHES OFFERED BY SIDNEY UNDER BOTH INVITATIONS FAILED TO CONFORM WITH A PROVISION OF THE INVITATIONS TITLED "MANUFACTURER'S MODEL" AS FOLLOWS:

"THE MACHINE SHALL BE NEW. FURTHER, THE MACHINE SHALL BE (I) AN EXISTING MODEL OF A MACHINE WHICH WAS DESIGNED TO PERFORM ALL MAJOR FUNCTIONS SPECIFIED AND WHICH HAS PROVEN SATISFACTORY IN OPERATION, OR (II) A NEW MODEL OF SUCH A PROVEN MACHINE, EXCEPT THAT UNDER EITHER (I) OR (II) ABOVE, THE MACHINE MAY BE MODIFIED IN MINOR RESPECTS TO CONFORM TO APPLICABLE SPECIFICATIONS, AND ANY ATTACHMENTS OR PARTS INESSENTIAL TO PROPER OPERATION OF THE MACHINE IN CONFORMANCE WITH REQUIREMENTS OF THE APPLICABLE SPECIFICATION MAY BE OMITTED.'

UPON COMPARISON OF SIGNEY'S EXISTING MODELS WITH THE ITEMS OFFERED IN THE TWO BIDS IT WAS DETERMINED BY TECHNICAL REPRESENTATIVES OF THE BUREAU OF SHIPS THAT THE LATTER REPRESENTED A COMPLETE REDESIGN OF MAJOR COMPONENTS SUCH THAT THE LATHES OFFERED WERE REGARDED AS PROTOTYPES NOT IN CONFORMITY WITH THE ABOVE-QUOTED PROVISION. ACCORDINGLY, IN EACH INSTANCE THE SIDNEY BID WAS REJECTED AS NON RESPONSIVE AND AWARD MADE TO ANOTHER BIDDER.

IN YOUR LETTERS YOU CONTEND THAT THE SIDNEY BIDS WERE IMPROPERLY REJECTED AND THAT THE BIDS WERE FULLY RESPONSIVE. IN AN ENCLOSURE TO THE LETTER OF AUGUST 13, IT IS STATED THAT THE REDESIGNED LATHES--- WHILE YOU DO NOT DENY THAT THE CHANGES FROM THE OLDER MODELS ARE SIGNIFICANT--- SIMPLY INCORPORATED PAST EXPERIENCE AND DO NOT INVOLVE ANY SERIOUS MANUFACTURING PROBLEMS. YOU FURTHER CONTEND THAT THE REDESIGNED LATHE IS NOT A PROTOTYPE, WHICH YOU STATE DENOTES SOMETHING "EXPERIMENTAL AND VAGUE," BUT THAT ALL NECESSARY ENGINEERING AND DESIGN CHANGES HAVE BEEN COMPLETELY ACCOMPLISHED.

THE ONLY ISSUE FOR CONSIDERATION IS WHETHER THE SIDNEY BIDS WERE PROPERLY REJECTED UNDER THE CITED CLAUSE. OTHER ISSUES HAVE BEEN RAISED IN THE COURSE OF THE DEVELOPMENT OF THE MATTER, SUCH AS THE EFFECT OF THE SUBMISSION OF DESCRIPTIVE LITERATURE AND OF THE OVERALL OFFER TO COMPLY, THAT ARE NOT GERMANE AND, THEREFORE, WILL NOT BE CONSIDERED.

THE FULL AND FREE COMPETITION REQUIRED UNDER THE ADVERTISING STATUTES CANNOT BE ACCOMPLISHED UNLESS THE SPECIFICATIONS ARE CLEAR AND UNAMBIGUOUS. FOR IF THE SPECIFICATIONS ARE SUBJECT TO VARYING INTERPRETATIONS THE BIDDERS WILL NOT BE BIDDING ON THE SAME BASIS AND THEREFORE WILL NOT BE IN DIRECT COMPETITION. 36 COMP. GEN. 380, 384. APPEARS IN THIS CASE THAT A DIFFERENCE EXISTS WITH RESPECT TO THE MEANING OF THE PHRASE "NEW MODEL OF EXISTING MACHINE" UNDER THE CLAUSE IN QUESTION. IT SEEMS TO BE YOUR VIEW THAT ANY SUCCESSOR PRODUCT OF THE MANUFACTURER SERVING THE SAME PURPOSES AND OF THE SAME GENERAL CAPACITY AS A PREVIOUSLY MANUFACTURED PRODUCT QUALIFIES AS A NEW MODEL OF AN EXISTING MACHINE UNDER THE CLAUSE. ON THE OTHER HAND, THE CONTRACTING AGENCY CONSTRUES THE PROVISION AS HAVING THE EFFECT OF RESTRICTING COMPETITION TO A PRODUCT PROVEN SATISFACTORY IN OPERATION, OR A NEWER VERSION OF SUCH PRODUCT INCORPORATING ONLY MINOR CHANGES, SUCH THAT THE OPERATING EXPERIENCE ON THE OLDER MODEL WOULD BE EQUALLY AND DIRECTLY APPLICABLE TO THE NEWER VERSION.

WHILE IT IS WELL ESTABLISHED THAT IT IS THE RESPONSIBILITY OF THE ADMINISTRATIVE AGENCIES OF THE GOVERNMENT TO DETERMINE THEIR NEEDS WITH RESPECT TO ARTICLES TO BE PURCHASED FOR GOVERNMENT USE AND TO PREPARE THE SPECIFICATIONS FOR SUCH ARTICLES, IT IS THEIR DUTY ALSO TO HAVE THE SPECIFICATIONS IN SUCH TERMS AS WILL INSURE COMPETITION ON EQUAL TERMS FROM ALL PROSPECTIVE SUPPLIERS WHO ARE CAPABLE OF MEETING THE GOVERNMENT'S NEEDS AND WHO ARE DESIROUS OF COMPETING THEREFOR.

IN THE PRESENT INSTANCE, WE FEEL THAT THE MEANING OF THE "MANUFACTURER'S MODEL" REQUIREMENT WOULD HAVE BEEN GREATLY CLARIFIED BY THE INCLUSION OF A DEFINITION OR STATEMENT OF CRITERIA TO BE APPLIED IN DETERMINING WHAT WOULD BE CONSIDERED TO BE A "NEW MODEL.' HOWEVER, IT DOES NOT SEEM TO BE UNREASONABLE TO READ THE PROVISION AS INDICATING AN INTENTION TO LIMIT THE PROCUREMENT TO A MACHINE WHICH HAS, IN ITS SUBSTANTIAL FEATURES OR COMPONENTS, BEEN PROVEN IN ACTUAL SERVICE. IN THIS CONTEXT IT SEEMS OBVIOUS THAT WHETHER A PARTICULAR MACHINE OFFERED QUALIFIED AS A "NEW MODEL" OF A PROVEN MACHINE WITHIN THE MEANING OF THE INVITATION MAY NOT BE DETERMINED SOLELY BY THE MANUFACTURER'S DESIGNATION. WE MUST THEREFORE CONCLUDE THAT IT WAS NOT IMPROPER FOR THE PROCURING AGENCY TO CONSIDER YOUR SPECIFICATIONS TO DETERMINE WHETHER THE MACHINE OFFERED WAS ENTITLED TO BE CONSIDERED AS A "NEW MODEL," AND, IN THE ABSENCE OF A CLEAR AND CONVINCING SHOWING THAT THE DETERMINATION WAS NOT BASED UPON SUBSTANTIAL GROUNDS, WE DO NOT FEEL THAT WE WOULD BE JUSTIFIED IN ANNULLING THE ACTION TAKEN THEREON.

WHILE IT MAY BE THAT THE EVALUATING PERSONNEL WERE IN ERROR IN USING OBSOLETE LITERATURE AS THE BASIS FOR THEIR COMPARISON OF THE MACHINE OFFERED BY YOU WITH YOUR PRIOR MODEL, THAT ERROR COULD READILY HAVE BEEN PREVENTED BY YOU IF, IN OFFERING THE SPECIFICATIONS OF YOUR "NEW MODEL," YOU HAD FURNISHED THE SPECIFICATIONS OF THE PROVEN MACHINE OF WHICH THE ONE BID WAS A NEW MODEL.

IN ANY EVENT, SINCE THE CONTRACTS AWARDED WERE PRESUMABLY WELL ON THE WAY TO PERFORMANCE BY THE TIME WE RECEIVED THE REPORT OF THE NAVY DEPARTMENT ON THE MATTER, AND SHOULD BY NOW HAVE BEEN SUBSTANTIALLY COMPLETED, CANCELLATION OF THE CONTRACTS IS IMPRACTICABLE AND WE WILL RAISE NO QUESTION WITH RESPECT TO PAYMENT IN ACCORDANCE WITH THE CONTRACTS. ARE, HOWEVER, BY SEPARATE LETTER ADVISING THE SECRETARY OF THE NAVY OF OUR VIEWS AS TO THE DESIRABILITY OF ACTION TO AVOID RECURRENCE OF SUCH SITUATIONS.