B-141323, DEC. 28, 1959

B-141323, DEC. 28, 1959

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO LETTER DATED DECEMBER 7, 1959, FROM THE ASSISTANT CHIEF FOR PURCHASING BUREAU OF SUPPLIES AND ACCOUNTS, FURNISHING A REPORT RELATIVE TO THE CANCELLATION OF INVITATION FOR BIDS NO. IFB-197-96-60, AND THE REQUIREMENTS UNDER THE READVERTISED PROCUREMENT UNDER INVITATION FOR BIDS NO. IFB-197-116-60 ISSUED BY THE NAVAL ORDNANCE PLANT, LOUISVILLE, KENTUCKY.

INVITATION FOR BIDS NO. IFB-197-96-60, ISSUED ON OCTOBER 8, 1959, REQUESTED BIDS FOR 2,426 SOLID PROPELLANT ROCKET MOTOR CHAMBERS UNDER TWO ALTERNATIVE SPECIFICATIONS WHICH WERE DESIGNATED AS ITEMS 1 AND 1A. ITEM 2 PROVIDED FOR "TOOLING FOR ABOVE (ITEM 1 OR 1A), TO BECOME THE PROPERTY OF U.S. NAVAL ORDNANCE PLANT, LOUISVILLE, KENTUCKY, AFTER COMPLETION OF CONTRACT.' A MAXIMUM ACCEPTABLE DELIVERY TIME OF 210 CHAMBERS IN 80 DAYS AFTER DATE OF CONTRACT WITH 210 CHAMBERS PER MONTH THEREAFTER WAS PROVIDED FOR IN THE INVITATION.

PARAGRAPH 8 OF THE TERMS AND CONDITIONS OF THE INVITATION FOR BIDS PROVIDES THAT THE CONTRACT WILL BE AWARDED TO THAT RESPONSIBLE BIDDER WHOSE BID CONFORMING TO THE INVITATION FOR BIDS WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED, AND THAT THE GOVERNMENT MAY ACCEPT ANY ITEM OR GROUP OF ITEMS OF ANY BID, UNLESS THE BIDDER QUALIFIES HIS BID BY SPECIFIC LIMITATIONS. THE INVITATION CONTAINS NO OTHER REFERENCE TO THE MANNER IN WHICH THE AWARD WILL BE MADE WITH RESPECT TO THE TWO ITEMS.

FIVE BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION; HOWEVER, ONLY THE BIDS OF NORRIS-THERMADOR CORPORATION AND THE PRESSED STEEL TANK COMPANY NEED TO BE CONSIDERED HERE AND ONLY THE PRICES QUOTED FOR ITEM 1A AND ITEM 2 WILL BE REFERRED TO.

PRESSED STEEL TANK COMPANY QUOTED A UNIT PRICE OF $32.60 OR A TOTAL PRICE OF $79,087.60 FOR ITEM 1A. IT DID NOT QUOTE A PRICE FOR ITEM 2. THE NORRIS-THERMADOR CORPORATION QUOTED A UNIT PRICE OF $30.57 OR A TOTAL PRICE OF $74,162.82 FOR ITEM 1A. WITH RESPECT TO ITEM 2 IT WAS STATED IN A LETTER ACCOMPANYING THE BID AND SPECIFICALLY MADE A PART THEREOF, AS FOLLOWS:

"WE HAVE QUOTED A TOOLING PRICE OF $19,921.57, RESPONSIVE TO YOUR REQUEST FOR A PRICE ON TOOLING, I.E., COMPLETE, FOR ITEMS 1 OR 1A. IN COMPARING BIDS IT IS OUR CONTENTION THAT NO BID IS RESPONSIVE UNLESS IT IS ESTABLISHED THAT THE QUOTED PRICE INCLUDES COMPLETE TOOLING. IF, AFTER BID EVALUATION AND AWARD, YOU SHOULD DESIRE TO WAIVE THIS REQUIREMENT, YOU COULD, OF COURSE, PROPERLY DO SO WITHOUT PREJUDICING ANY BIDDER. FOR THIS PURPOSE, ALTHOUGH EVALUATIONS SHOULD BE BASED ON PRICES QUOTED ON COMPLETE TOOLING, THIS IS TO ADVISE THAT IF YOU SHOULD ELECT TO CONFINE DELIVERIES TO SUCH SUPPLEMENTAL TOOLING AS WE MAY REQUIRE, OUR QUOTED TOOLING PRICE IS REDUCED TO $10,703.02, BEING THE COST OF OUR NEW TOOLING REQUIREMENTS EXCLUSIVE OF EXISTING USEABLE TOOLING WHICH WE NOW OWN.'

THUS, THE PRICE THE GOVERNMENT WOULD BE REQUIRED TO PAY FOR THE 2,426 CHAMBERS UNDER THE BID OF NORRIS-THERMADOR AS SUBMITTED WOULD BE $94,084.39, INCLUDING "COMPLETE TOOLING," OR $84,865.84 INCLUDING ONLY "SUPPLEMENTAL TOOLING.' HOWEVER, THERE WAS NO INDICATION AS TO THE QUANTITY, TYPE, OR CONDITION OF THE TOOLING INCLUDED UNDER THE PHRASE "COMPLETE TOOLING" AND "SUPPLEMENTAL TOOLING.'

THE CONTRACTING OFFICER MADE THE AWARD FOR ITEM 1A TO THE PRESSED STEEL TANK COMPANY AS THE BID REPRESENTING THE LOWEST OVERALL COST TO THE GOVERNMENT, SINCE THE GOVERNMENT DID NOT REQUIRE THE TOOLING.

NORRIS-THERMADOR CORPORATION PROTESTS THE ACTION TAKEN BY THE CONTRACTING OFFICER ON THE BASIS (1) PRESSED STEEL'S BID WAS NOT RESPONSIVE TO THE INVITATION, SINCE IT DID NOT BID ON ITEM 2, AND (2) PRESSED STEEL DID NOT SUBMIT THE LOWEST BID ON ITEM 1A.

AS A RESULT OF THE PROTEST THE DEPARTMENT OF THE NAVY CONCLUDED THAT ANY AWARD UNDER THE INVITATION WAS IMPROPER AND, THEREFORE, THE AWARD MADE TO PRESSED STEEL TANK COMPANY WAS RESCINDED. A NEW AND REVISED INVITATION WAS ISSUED ON NOVEMBER 20, 1959, WITH THE OPENING DATE SET FOR NOVEMBER 30, 1959. THIS INVITATION ELIMINATED THE ITEM OF TOOLING AND PROVIDED FOR DELIVERY OF 210 CHAMBERS 30 DAYS AFTER DATE OF CONTRACT. HOWEVER, AS A RESULT OF A FURTHER PROTEST BY NORRIS THERMADOR THAT THE REDUCED DELIVERY TIME REQUIREMENT OF THE REVISED INVITATION WOULD EFFECTIVELY ELIMINATE COMPETITION SINCE ALL BIDDERS OTHER THAN PRESSED STEEL TANK COMPANY WOULD HAVE TO OBTAIN TOOLING, THE BUREAU OF ORDNANCE REVISED THE PRODUCTION SCHEDULE AT THE NAVAL ORDNANCE PLANT, LOUISVILLE, AND THE INVITATION WAS AMENDED ON NOVEMBER 27, 1959, TO PROVIDE FOR THE INITIAL DELIVERY OF 210 CHAMBERS 80 DAYS AFTER DATE OF CONTRACT AND THE OPENING DATE WAS EXTENDED TO DECEMBER 9, 1959.

PRESSED STEEL TANK COMPANY PROTESTS THE CANCELLATION OF THE AWARD MADE TO IT ON THE BASIS THAT THE INTENTION OF THE BIDDERS AND OF THE UNITED STATES WAS THAT TOOLING WAS NOT TO BE CONSIDERED AS A SEPARATE ITEM TO BE PURCHASED BY THE NAVY, BUT RATHER BIDS WERE TO BE CONSIDERED AS A WHOLE ON THE BASIS OF TOTAL COST.

IT IS A FUNDAMENTAL PRINCIPLE OF THE COMPETITIVE BIDDING SYSTEM THAT INVITATIONS AND SPECIFICATIONS MUST BE SUCH AS TO PERMIT COMPETITORS TO COMPETE ON A COMMON BASIS, AND THAT THE BIDS RECEIVED MUST BE EVALUATED ON A COMMON BASIS. ALTHOUGH UNDER THE TERMS OF THE ORIGINAL INVITATION THE GOVERNMENT RESERVED THE RIGHT TO ACCEPT ANY ITEM OR GROUP OF ITEMS OF ANY BID UNLESS THE BIDDER QUALIFIED HIS BID BY SPECIFIC LIMITATION, IT IS CLEAR THAT THE GOVERNMENT COULD NOT HAVE MADE AWARD OF ITEM 2 TO ANY OTHER BIDDER THAN THE BIDDER TO WHOM THE AWARD WAS MADE FOR ITEM 1 OR 1A. THE TOOLING REQUIREMENT OF ITEM 2 IS COMPLETELY INDEFINITE IN THAT THERE ARE NO ITEMIZATIONS, SPECIFICATIONS, OR DRAWINGS WITH RESPECT TO TOOLING. NEITHER WERE BIDDERS REQUIRED TO STATE IN THEIR BIDS THE QUANTITY, TYPE OR CONDITION OF THE TOOLING OFFERED. IT CAN BE ARGUED THAT THE LACK OF DEFINITENESS DOES NOT MAKE ANY DIFFERENCE BECAUSE THE GOVERNMENT WAS NOT INTERESTED IN THE TOOLING, BUT ONLY THE TOTAL PRICE WITHOUT TOOLING. HOWEVER, THIS PROPOSITION OVERLOOKS THE FACT THAT THE TOOLING UNDOUBTEDLY WOULD BE OF SOME VALUE, IF ONLY JUNK VALUE, AND BIDDERS WERE NOT ADVISED THAT NO CONSIDERATION WOULD BE GIVEN TO TOOLING.

WITH RESPECT TO THE CONTENTION OF NORRIS-THERMADOR THAT IF THE GOVERNMENT WAS NOT INTERESTED IN THE TOOLING IT COULD HAVE ACCEPTED ITS BID AND AFTERWARDS COULD HAVE NEGOTIATED TO ELIMINATE THE TOOLING, THE OBVIOUS ANSWER IS THAT ANY SUCH PROCEDURE WOULD BE DEFINITELY IMPROPER AND WOULD NOT BE COMPETITIVE BIDDING AS REQUIRED BY 10 U.S.C. 2304 (A).

THE ORIGINAL INVITATION IN OUR OPINION WAS LEGALLY DEFECTIVE IN THAT IT WAS AMBIGUOUS AND INDEFINITE AND DID NOT PERMIT BIDDERS TO COMPETE ON A COMMON BASIS. IT FOLLOWS, THEREFORE, THAT NO VALID AWARD COULD BE MADE ON THE BASIS OF THE INVITATION. UNDER THE CIRCUMSTANCES INVOLVED, THE ACTION TAKEN BY YOUR DEPARTMENT WAS PROPER AND, THEREFORE, THE OBJECTIONS RAISED BY NORRIS-THERMADOR CORPORATION AND PRESSED STEEL TANK COMPANY MUST BE DENIED.