B-144459, JANUARY 3, 1961, 40 COMP. GEN. 393

B-144459, JANUARY 3, 1961, 40 COMP. GEN. 393

BIDS - EVALUATION - DELIVERY PROVISIONS - AMBIGUITIES A LOW BIDDER WHO, IN RESPONSE TO AN INVITATION REQUIRING BID EVALUATION ON THE BASIS OF TOTAL COST TO THE GOVERNMENT AT DESTINATION, QUOTES A PRICE F.O.B. BIDDER'S DESIGNATED SHIPPING POINT AND FURTHER SPECIFIES THAT THE QUOTED PRICE IS FIRM AND IS A ZONE PRICE FOR DELIVERY IN THE UNITED STATES HAS SUBMITTED AN AMBIGUOUS BID INVOLVING DIRECTLY CONFLICTING DELIVERY PROVISIONS WHICH WOULD NOT JUSTIFY ACCEPTANCE BY THE GOVERNMENT ON THE BASIS OF THE MOST ADVANTAGEOUS PRICE AND, IN VIEW OF THE TWO POSSIBLE MEANINGS OF THE TERMS OF THE BID, THE BIDDER MAY NOT BE ALLOWED TO EXPLAIN THE MEANING WHEN SUCH ACTION WOULD PREJUDICE OTHER BIDDERS OR AFFECT THE RESPONSIVENESS OF THE BID.

TO L. C. STEWART, DEPARTMENT OF THE INTERIOR, JANUARY 3, 1961:

BY LETTER OF NOVEMBER 10, 1960, WITH ENCLOSURES, YOU REQUEST OUR DECISION AS TO THE PROPER INTERPRETATION OF A BID SUBMITTED BY THE H. K. PORTER COMPANY, INC., DELTA-STAR ELECTRIC DIVISION, IN RESPONSE TO INVITATION FOR BIDS NO. 9207, ISSUED BY THE BONNEVILLE POWER ADMINISTRATION, PORTLAND, OREGON, ON OCTOBER 12, 1960.

THE INVITATION CALLED FOR BIDS ON 17 ITEMS OF DISCONNECTING SWITCHES. UNDER EACH ITEM OF THE BID SCHEDULE TWO LINES WERE PROVIDED FOR PRICE OFFERED, ONE FOR DELIVERY TO THE DESTINATION STATED FOR THE ITEM AND ONE FOR DELIVERY F.O.B. THE BIDDER'S SHIPPING POINT. BIDDERS WERE REQUESTED TO INDICATE ON THE BID FORM WHETHER THE PRICES QUOTED WERE "1ZONE PRICES" APPLICABLE TO ANY DESTINATION ON THE BONNEVILLE POWER ADMINISTRATION TRANSMISSION SYSTEM. IN THIS RESPECT, PARAGRAPH NO. 101 OF THE SUPPLEMENTARY GENERAL PROVISIONS" PROVIDED:

101. DESTINATION. THE GOVERNMENT RESERVES THE RIGHT TO CHANGE THE DESTINATION OR SPECIFY OTHER DESTINATIONS SUBSEQUENT TO AWARD OF CONTRACT. WHEN AWARD IS MADE F.O.B. DESTINATION, AND DELIVERY DESIGNATED TO DESTINATIONS OTHER THAN SPECIFIED HEREIN, PAYMENT WILL BE MADE ON THE BASIS OF UNIT PRICES BID. * * * IF PRICES ARE "1ZONE PRICES" THEY WILL BE CONSIDERED TO BE APPLICABLE TO ANY DESTINATION ON THE BONNEVILLE POWER ADMINISTRATION TRANSMISSION SYSTEM IN OREGON, WASHINGTON, IDAHO, AND MONTANA AND NO ADJUSTMENT IN PAYMENT WILL BE MADE, * * * PRICES WILL NOT BE CONSIDERED TO BE "1ZONE PRICES" UNLESS DEFINITE STATEMENT TO THAT EFFECT IS PLACED ON THE SCHEDULE IN SUBMISSION OF BID.

TEN BIDS WERE RECEIVED BY THE TIME OF BID OPENING ON NOVEMBER 4, 1960. THE BID ABSTRACT SHOWS THAT THE THREE LOWEST BIDS AS TO PRICE WERE SUBMITTED BY THE H. K. PORTER COMPANY, INC., DELTA-STAR ELECTRIC DIVISION, THE GENERAL ELECTRIC COMPANY, AND LINE MATERIAL INDUSTRIES. THE PORTER COMPANY DID NOT QUOTE INDIVIDUAL PRICES ON THE SEVERAL ITEMS, BUT SUBMITTED A TOTAL BID PRICE ON ITEMS NOS. 1 TO 17, INCLUSIVE,"1F.O.B. BIDDER'S SHIPPING POINT, CHICAGO, ILLINOIS," OF $37,299. IT FURTHER DESIGNATED ITS PRICE AS A "1ZONE PRICE.' IN AN ACCOMPANYING QUOTATION ON ITS OWN FORM PORTER QUOTED ITS PRICE "1FOB BIDDER'S SHIPPING POINT CHICAGO, ILL.)" AND IT FURTHER STATED "PRICE INDICATED IS FIRM AND IS ZONE PRICE IN THE USA.' THE BIDDER ALSO SPECIFIED A TIME OF DELIVERY FOR EACH ITEM ON THE BASIS OF A DELIVERY "1F.O.B. BIDDER'S SHIPPING POINT.' THE GENERAL ELECTRIC COMPANY QUOTED A TOTAL BID PRICE "1F.O.B. DESTINATION" OF $38,800, AND LINE MATERIAL INDUSTRIES QUOTED A BID PRICE OF $39,290 ON THE BASIS OF BOTH "1F.O.B. DESTINATION" AND "1F.O.B. BIDDER'S SHIPPING POINT.'

YOU REPORT THAT THE BIDS OF BOTH THE H. K. PORTER COMPANY, INC., AND THE GENERAL ELECTRIC COMPANY OFFER EQUIPMENT MEETING THE SPECIFICATIONS AND ARE OTHERWISE RESPONSIVE TO THE INVITATION. DETERMINATION OF THE LOWEST BID AS BETWEEN PORTER AND GENERAL ELECTRIC IS DEPENDENT ON WHETHER, UNDER THE PORTER BID, THE GOVERNMENT WOULD BE REQUIRED TO PAY THE FREIGHT TRANSPORTATION COSTS FROM THE BIDDER'S SHIPPING POINT OF CHICAGO, ILLINOIS, TO THE DESTINATIONS STATED IN THE INVITATION. IF THE PORTER BID IS EVALUATED ON THE BASIS THAT THE GOVERNMENT CAN REQUIRE DELIVERY TO ITS U.S.A. DESTINATIONS AT THE BID PRICE OF $37,299, THEN THE H. K. PORTER COMPANY IS THE LOW BIDDER; HOWEVER, IF THE PORTER BID IS EVALUATED AS F.O.B. CHICAGO, ILLINOIS, THEN THE EVALUATED PRICE IS $39,945.62, WHICH IS HIGHER THAN THE GENERAL ELECTRIC BID OF $38,800.

YOU RECOMMEND AN INTERPRETATION OF THE H. K. PORTER BID ON THE BASIS OF ZONE DELIVERY TO ANY DESTINATION ON THE BONNEVILLE SYSTEM FOR THE STATED TOTAL PRICE OF $37,299, AFTER CONSIDERING THE FOLLOWING ADDITIONAL FACTORS:

1. THE RESOLUTION OF THE AMBIGUITY IN THE BID, CREATED BY THE BIDDER, IN THE MANNER MOST ADVANTAGEOUS TO THE GOVERNMENT IS IN LINE WITH THE PRINCIPLES ENDORSED BY YOUR OFFICE IN RECENT DECISIONS (39 COMP. GEN. 546, JANUARY 1960, AND 39 COMP. GEN. 653, MARCH 1960).

2. TWO OTHER BIDDERS ON THIS SAME INVITATION NO. 9207, LINE MATERIAL INDUSTRIES AND JAMES R. KEARNEY CORPORATION, ALSO SUBMITTED BIDS IN WHICH EACH CLEARLY STATED IDENTICAL PRICES BOTH F.O.B. OUR DESTINATIONS AND F.O.B. THEIR RESPECTIVE SHIPPING POINTS. THIS CONFIRMS THAT THE BIDDING OF A SHIPPING POINT PRICE AS ALSO APPLICABLE TO DELIVERY TO DESTINATION IS NOT AN UNCOMMON PRACTICE IN THE DISCONNECTING SWITCH INDUSTRY.

3. THE QUOTATION OF A SHIPPING POINT PRICE AND ITS FURTHER DESIGNATION AS A USA ZONE PRICE FOR DELIVERY, ALTHOUGH SOMEWHAT UNUSUAL, IS NOT AN UNREASONABLE INTERPRETATION OF A TYPE OF BID SOLICITED.

4. AN EXAMINATION OF OUR FILES OF ABSTRACTS FOR THE PAST SEVERAL MONTHS REVEALS THAT ON PREVIOUS BIDS THE H. K. PORTER COMPANY, INC., HAS CONSISTENTLY QUOTED DESTINATION PRICES AND IN RESPONSE TO THE BID INQUIRY AS TO ZONE PRICES HAS CONSISTENTLY STATED " YES, IN USA.' THIS WOULD INDICATE A COMPANY POLICY OF HAVING A SINGLE PRICE ON THIS TYPE OF EQUIPMENT APPLICABLE TO ANY POINT IN THE UNITED STATES, WHETHER A SHIPPING POINT OR A DESTINATION.

IT IS REPORTED THAT PORTER HAS NOT BEEN QUERIED AS TO ITS INTENTION IN REGARD TO THIS MATTER, BECAUSE YOU THOUGHT IT INAPPROPRIATE TO PERMIT THE BIDDER TO DETERMINE ITS OWN COMPETITIVE STANDING AFTER BID OPENING.

IN THIS CASE, BIDDERS WERE GIVEN THE RIGHT BY THE INVITATION TO DESIGNATE AS THE F.O.B. POINT (THE POINT OF FREE DELIVERY TO THE (GOVERNMENT) THE BIDDER'S SHIPPING POINT, OR THE PLACE OF DESTINATION. ALL BIDS ARE FOR EVALUATION ON THE BASIS OF THE TOTAL COST TO THE GOVERNMENT AT DESTINATION. THE H. K. PORTER COMPANY DESIGNATED ITS SHIPPING POINT AT CHICAGO, ILLINOIS, AS ITS F.O.B. POINT AND IT FURTHER DESIGNATED THAT "ITS QUOTED PRICE IS FIRM AND IS ZONE PRICE IN THE A.' UNDER PARAGRAPH 101 OF THE SUPPLEMENTARY GENERAL PROVISIONS TO THE INVITATION, ZONE PRICES ARE CONSIDERED TO BE APPLICABLE TO ANY DESTINATION ON THE BONNEVILLE POWER ADMINISTRATION TRANSMISSION SYSTEM IN OREGON, WASHINGTON, IDAHO, AND MONTANA, AND NO ADJUSTMENT IN PAYMENT IS TO BE MADE FOR A CHANGE IN DESTINATION WITHIN THE SYSTEM. THE AMBIGUITY ARISES BECAUSE, PRESUMABLY, THE BIDDER WOULD NOT QUOTE A PRICE "1F.O.B. BIDDER'S SHIPPING POINT," IF IT INTENDED TO ASSUME THE FREIGHT CHARGES FROM ITS SHIPPING POINT AT CHICAGO, ILLINOIS, TO ANY DESTINATION IN THE UNITED STATES, AS APPEARS FROM ITS OFFER OF ZONE PRICES.

YOU SUGGEST THAT, IN ORDER TO GIVE MEANING TO THE OFFER OF A ZONE PRICE FOR DELIVERY, IT MAY BE REASONABLE TO CONSTRUE THE BID FOR EVALUATION PURPOSES AS, IN EFFECT, QUOTING A DESTINATION PRICE. ON THE OTHER HAND, THE BID EXPLICITLY SPECIFIES AS QUOTED PRICE "1F.O.B. BIDDER'S SHIPPING POINT," DESPITE THE PROVISION OF A LINE FOR PRICING F.O.B. DESTINATION, AND IT ALSO SPECIFIES A DELIVERY SCHEDULE ON THE BASIS OF TIME OF DELIVERY TO THE BIDDER'S SHIPPING POINT. UNDER THESE CIRCUMSTANCES, WE CANNOT SAY WITHOUT DOUBT FROM THE LANGUAGE OF THE BID ITSELF THAT THE H. K. PORTER COMPANY DID QUOTE OR INTENDED TO QUOTE A PRICE OF $37,299 APPLICABLE TO ALL DESTINATION POINTS ON THE BONNEVILLE POWER ADMINISTRATION TRANSMISSION SYSTEM.

YOU REFER TO THE SHIPPING PRACTICE IN THE DISCONNECTING SWITCH INDUSTRY AND TO THE BIDDING HISTORY OF THE H. K. PORTER COMPANY AS INDICATING THAT PORTER WELL MIGHT HAVE INTENDED TO BID A SINGLE PRICE ON THE TYPE OF EQUIPMENT HERE INVOLVED APPLICABLE TO ANY POINT IN THE UNITED STATES, SHIPPING POINT OR DESTINATION, AND POINT OUT THAT ON PREVIOUS BIDS THIS BIDDER HAS CONSISTENTLY QUOTED THE SAME PRICES DESIGNATED AS DESTINATION AND ZONE. FROM THIS INFORMATION, HOWEVER, WE DO NOT FIND ANY PERSUASIVE REASON TO CONCLUDE THAT THE BIDDER NOW INTENDS TO QUOTE ITS PRICE, STATED AS F.O.B. SHIPPING POINT, AS APPLICABLE TO DESTINATION. IT IS ALSO OBSERVED THAT TWO BIDDERS ON THIS INVITATION HAVE QUOTED PRICES EQUALLY APPLICABLE TO SHIPPING POINT AND DESTINATION, AND YOU CITE THIS CIRCUMSTANCE AS CONFIRMING THAT A PRICE EQUALLY APPLICABLE TO SHIPPING POINT AND DESTINATION IS NOT AN UNCOMMON PRACTICE IN THE INDUSTRY. AGAIN, WE DO NOT CONSIDER SUCH INFORMATION TO BE A DECISIVE INDICATION OF PRESENT INTENT, NOR DO WE FIND SUFFICIENT GROUND IN ALL THESE CIRCUMSTANCES TO JUSTIFY THE CONCLUSION THAT THE STATEMENT THAT THE QUOTED PRICE IS "ZONE PRICE IN THE USA" RENDERS MEANINGLESS THE QUOTATION F.O.B. SHIPPING POINT.

IF THE PHRASE "ZONE PRICE" IS EQUIVALENT TO "DELIVERED PRICE," THE PORTER BID CONTAINS TWO DIAMETRICALLY OPPOSITE AND WHOLLY IRRECONCILABLE TERMS: ONE, THAT THE GOODS ARE OFFERED AT THE STATED PRICE WITH THE GOVERNMENT PAYING TRANSPORTATION COSTS FROM CHICAGO; THE OTHER, THAT THEY ARE OFFERED AT THAT PRICE, DELIVERED TO DESTINATION AT THE COST OF THE BIDDER. SUCH A SITUATION WE DO NOT BELIEVE THAT THE GOVERNMENT IS EMPOWERED BY THE BIDDER TO ACCEPT THE BID AND THEREBY BIND THE BIDDER TO WHICHEVER OF THE INCONSISTENT TERMS THE GOVERNMENT MAY PREFER, TO THE COMPLETE EXCLUSION OF THE OTHER. THE CASES IN WHICH WE HAVE APPLIED THE RULE OF INTERPRETATION THAT AN AMBIGUITY WILL BE RESOLVED AGAINST THE PARTY WHO CREATED IT HAVE NOT INVOLVED ANY SUCH DIRECTLY CONFLICTING STATEMENTS; THE QUESTION IN THOSE CASES WAS RATHER AS TO WHAT INFERENCES COULD REASONABLY BE DRAWN FROM THE TERMS USED IN THE BID, WHERE SUCH TERMS FAILED TO INCLUDE A COMPLETE AND EXPRESS STATEMENT AS TO SOME MATERIAL POINT.

UNDER THE FACTS HERE, THE GOVERNMENT MUST RECOGNIZE THAT THE H. K. PORTER COMPANY BID MAY FAIRLY MEAN EITHER OF TWO THINGS WITH REGARD TO F.O.B. POINT. THE GOVERNMENT IS IN A SITUATION SIMILAR, IN SOME RESPECTS, TO THE RECIPIENT OF A BID WITH KNOWLEDGE OF AN ERROR IN THE BID. IN THOSE CASES THE COURTS WILL NOT PERMIT THE OFFEREE "TO SNAP UP AN OFFER THAT IS TOO GOOD TO BE TRUE.' SEE GEREMIA V. BOYORSKY, 140 A. 749; 17 COMP. GEN. 575, 576. IT IS SAID THAT THE SAME PRINCIPLE WOULD APPLY IN ANY CASE WHERE THE OFFEREE SHOULD KNOW THAT THE TERMS OF THE OFFER ARE UNINTENDED OR MISUNDERSTOOD BY THE OFFEROR. 1 WILLISTON CONTRACTS, SECTION 94; SEE UNITED STATES V. BRAUNSTEIN, 74 F.SUPP. 137, 139.

IN ACCORDANCE WITH THESE LEGAL AUTHORITIES WE ARE OF THE VIEW THAT IF THE GOVERNMENT NOW SHOULD PROCEED WITH AN AWARD TO THE H. K. PORTER COMPANY ON THE BASIS OF F.O.B. DELIVERY TO GOVERNMENT DESTINATION POINTS, THE BIDDER WOULD NOT BE PREVENTED IN LAW FROM ESTABLISHING THAT IT INTENDED ONLY TO BE BOUND ON THE BASIS OF F.O.B. DELIVERY AT CHICAGO, ILLINOIS.

WE RECOGNIZE THAT IN THE COURSE OF NEGOTIATIONS LEADING TO A CONTRACT BETWEEN PRIVATE PARTIES, ONE PARTY MAY FREELY SEEK CLARIFICATION OF AMBIGUOUS OR INCONSISTENT TERMS OFFERED BY THE OTHER PARTY. HOWEVER, IN THE CASE OF COMPETITIVE BIDDING ON GOVERNMENT CONTRACTS, AS YOU POINT OUT, A BIDDER MIGHT BE ABLE TO DETERMINE HIS OWN COMPETITIVE STANDING AFTER THE BIDS ARE EXPOSED BY CLARIFICATION OF HIS BID. IT HAS CONSISTENTLY BEEN STATED BY THIS OFFICE THAT IT IS IMPROPER TO ALLOW A PARTICULAR BIDDER TO CHANGE HIS BID AFTER THE PUBLIC OPENING TO THE PREJUDICE OF OTHER BIDDERS. WE HAVE GENERALLY TAKEN THE POSITION THAT AN AMBIGUOUS BID MAY NOT BE EXPLAINED AFTER OPENING SINCE THE BIDDER WOULD, IN EFFECT, HAVE AN ELECTION AS TO WHETHER OR NOT HE WISHED TO HAVE HIS BID CONSIDERED. SEE B -120202, JULY 19, 1954, B-118428, APRIL 19, 1954. IN OUR DECISION OF MARCH 29, 1960, REPORTED AT 39 COMP. GEN. 653, WE STATE THAT A BIDDER PROPERLY MAY BE REQUESTED TO CONFIRM A BID BUT THE CONFIRMATION MAY NOT BE INCONSISTENT WITH A REASONABLE INTERPRETATION OF THE BID AS SUBMITTED.

IF THE H. K. PORTER COMPANY IS ALLOWED TO CLARIFY ITS BID PRIOR TO AWARD, IT WOULD BE IN A POSITION TO ALTER ITS COMPETITIVE STANDING IN RELATION TO ANOTHER LOW BIDDER. WE THINK THE RULE PROHIBITING BIDDERS "TWO BITES AT THE APPLE" (SEE 38 COMP. GEN. 532, 535-536) IS APPLICABLE HERE. CIRCUMSTANCES WHERE EACH OF TWO POSSIBLE MEANINGS CAN BE REACHED FROM THE TERMS OF A BID, THE BIDDER SHOULD NOT BE ALLOWED TO EXPLAIN HIS MEANING WHEN HE IS IN A POSITION THEREBY TO PREJUDICE OTHER BIDDERS OR TO AFFECT THE RESPONSIVENESS OF HIS BID. SUCH ACTION WOULD SERVE TO UNDERMINE THE INTEGRITY OF THE BIDDING SYSTEM AND CAUSE OVERALL HARM TO THE SYSTEM OF COMPETITIVE BIDDING DESPITE THE IMMEDIATE ADVANTAGE GAINED BY A LOWER PRICE IN THE PARTICULAR PROCUREMENT.

FOR THE REASONS STATED, IT IS OUR VIEW THAT THE BID SUBMITTED BY THE H. K. PORTER COMPANY, INC., MAY BE EVALUATED ONLY ON THE BASIS THAT IT OFFERS A PRICE FOR DELIVERY "1F.O.B. BIDDER'S SHIPPING POINT" CHICAGO, ILLINOIS. SEE B-140606, SEPTEMBER 21, 1959.