B-147073, FEB. 6, 1962

B-147073, FEB. 6, 1962

TO CAMPBELL MACHINE, INC.:

FURTHER REFERENCE IS MADE TO YOUR WESTERN UNION TELEFAX OF AUGUST 30, 1961, PROTESTING THE AWARD MADE TO BETHLEHEM STEEL COMPANY UNDER BID INVITATION NO. 3-62, DATED AUGUST 14, 1961, ISSUED BY THE UNITED STATES NAVAL STATION, SAN DIEGO, CALIFORNIA.

THE RECORD FURNISHED IN THIS MATTER SHOWS THAT UNDER THE CITED INVITATION, BIDS WERE REQUESTED FOR THE ACTIVATION AND OVERHAUL, IN ACCORDANCE WITH THE ATTACHED SPECIFICATIONS AND THE PROVISIONS OF THE MASTER CONTRACT FOR REPAIR AND ALTERATION OF VESSELS (ASPR FORM NO. 1 OF JULY 1961), OF TWO VESSELS, THE U.S.S. BEGOR AND U.S.S. WEISS. OF THE FOUR LETTER BIDS RECEIVED, NATIONAL STEEL AND SHIPBUILDING COMPANY SUBMITTED THE LOWEST BID; $257,725, FOR THE WORK REQUIRED ON THE U.S.S. BEGOR AND YOUR FIRM SUBMITTED THE LOWEST BID, $254,897, FOR THE WORK REQUIRED ON THE U.S.S. WEISS. SINCE BETHLEHEM STEEL COMPANY'S EVALUATED BID OF $509,821 FOR THE REQUIRED WORK ON BOTH VESSELS WAS LESS THAN THE TOTAL OF THE TWO LOWEST BIDS, $512,622, FOR EACH VESSEL, AWARD WAS MADE TO THAT COMPANY IN ACCORDANCE WITH THE PROVISION IN THE INVITATION TO THE EFFECT THAT AWARD WOULD BE MADE ON AN INDIVIDUAL OR COMBINED BASIS,"AS MAY BE IN THE BEST INTEREST OF THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED.'

YOUR PROTEST AGAINST THE AWARD TO BETHLEHEM STEEL COMPANY IS BASED ON THE ALLEGATION THAT, BY THE INCLUSION OF THE STATEMENT IN ITS LETTER BID CONTAINING ITS PRICE QUOTATION THAT "THE ABOVE SUMS DO NOT INCLUDE ANY STATE OR CITY SALES TAX," THE BIDDER SUBMITTED A "QUALIFIED NONCONFORMING BID.' YOU CONTEND THAT THIS STATEMENT REPRESENTED A MATERIAL DEVIATION FROM THE TAX CLAUSE INCLUDED IN THE INVITATION REQUIREMENTS, THE WAIVER OF WHICH WAS PREJUDICIAL TO THE RIGHTS OF OTHER BIDDERS. IN SUPPORT OF YOUR POSITION, REFERENCE IS MADE TO CERTAIN DECISIONS OF THE COURTS AND OF THIS OFFICE, REFERRED TO IN THE SECOND EDITION OF THE VOLUME ENTITLED "NAVY CONTRACT LAW," RELATING TO NONCONFORMING BIDS.

THE TAX CLAUSE INVOLVED, ARTICLE 14 OF THE MASTER SHIP REPAIR CONTRACT FORM, IS THE STANDARD ,FEDERAL, STATE AND LOCAL TAXES" CLAUSE PRESCRIBED BY APPLICABLE REGULATIONS WHICH PROVIDES, IN PERTINENT PART, AS FOLLOWS:

"EXCEPT AS MAY BE OTHERWISE PROVIDED IN THE JOB ORDER, THE JOB ORDER PRICE INCLUDES ALL FEDERAL, STATE AND LOCAL TAXES AND DUTIES IN EFFECT AND APPLICABLE TO THE JOB ORDER ON THE TAX INCLUSIVE DATE, EXCEPT TAXES (OTHER THAN FEDERAL TRANSPORTATION TAXES) FROM WHICH THE GOVERNMENT, THE CONTRACTOR OR THE TRANSACTIONS OR PROPERTY COVERED BY THE JOB ORDER ARE THEN EXEMPT.'

THE DECISIONS REFERRED TO BY YOU HOLD, IN EFFECT, THAT PUBLIC OFFICERS ARE NOT AUTHORIZED TO ACCEPT BIDS NOT COMPLYING IN SUBSTANCE WITH THE ADVERTISED SPECIFICATIONS OR TO PERMIT BIDDERS TO VARY THEIR PROPOSALS AFTER THE BIDS ARE OPENED. ALSO, UNDER THE PROVISIONS OF APPLICABLE LAW, 10 U.S.C. 2305 (C), BIDS ARE REQUIRED TO CONFORM WITH THE TERMS OF THE ADVERTISED INVITATION TO BE ELIGIBLE FOR AWARD. HOWEVER, AS PROPERLY RECOGNIZED IN PARAGRAPH 2-405 OF THE ARMED SERVICES PROCUREMENT REGULATION, THE CITED DECISIONS AND STATUTORY PROVISION DO NOT PRECLUDE PUBLIC OFFICERS FROM WAIVING OR PERMITTING BIDDERS TO CURE INFORMALITIES OR MINOR IRREGULARITIES IN BIDS. AS STATED IN 39 COMP. GEN. 595:

"IT MUST BE RECOGNIZED, HOWEVER, THAT AN AUTOMATIC REJECTION OF A BID BECAUSE OF A FAILURE TO CONFORM TO A PURELY TECHNICAL OR OVERLITERAL READING OF THE STATED REQUIREMENTS MAY BE AS ARBITRARY AS A WAIVER OF NONRESPONSIVENESS TO A MATERIAL AND SUBSTANTIAL REQUIREMENT.'

IN DETERMINING WHETHER THE NONCONFORMANCE OF A BID GOES TO THE FORM OR SUBSTANCE OF THE INVITATION FOR BIDS, NAVY CONTRACT LAW, QUOTING FROM A DECISION OF THIS OFFICE, 30 COMP. GEN. 179, STATES ON PAGE 83 IN PERTINENT PART THAT:

"THE QUESTION AS TO WHETHER DEVIATIONS FROM THE REQUIREMENTS OF ADVERTISED SPECIFICATIONS MIGHT BE WAIVED AFTER THE OPENING DATE HAS BEEN BEFORE THIS OFFICE MANY TIMES; AND IT HAS BEEN CONSISTENTLY HELD THAT SUCH DEVIATIONS MAY BE WAIVED PROVIDED THEY DO NOT GO TO THE SUBSTANCE OF THE BID OR WORK AN INJUSTICE TO OTHER BIDDERS. IN OTHER WORDS, THE PRIMARY QUESTION FOR DETERMINATION IN THIS AND SIMILAR CASES IS WHETHER THE DEVIATION PROPOSED TO BE WAIVED GOES TO THE SUBSTANCE OF THE BID SO AS TO AFFECT THE PRICE, QUANTITY, OR QUALITY OF THE ARTICLES OFFERED AND THEREFORE IS PREJUDICIAL TO THE RIGHTS OF OTHER BIDDERS OR IS MERELY A MATTER OF FORM OR SOME IMMATERIAL VARIATION FROM THE EXACT REQUIREMENTS OF THE SPECIFICATIONS SUCH AS WOULD NOT AFFECT THE PRICE, QUALITY, OR QUANTITY OF THE ARTICLES OFFERED.'

CONSIDERED IN THE LIGHT OF THE FOREGOING PRINCIPLES, THE QUESTION PRESENTED IN THIS CASE BY THE BID OF BETHLEHEM STEEL COMPANY IS WHETHER CONSIDERATION THEREOF IN THE FORM PRESENTED WAS PREJUDICIAL TO THE RIGHTS OF THE OTHER BIDDERS. WE CONCLUDE THAT THIS QUESTION MUST BE ANSWERED IN THE NEGATIVE. IN THAT CONNECTION, IT IS OUR OPINION THAT THE BID OF BETHLEHEM STEEL COMPANY HAS BEEN SUBMITTED IN A FORM WHICH IS CAPABLE OF EVALUATION ON AN EQUAL BASIS WITH THE OTHER BIDS COMPUTED, IN ACCORDANCE WITH THE INTENT OF THE INVITATION FOR BIDS, TO INCLUDE ALL APPLICABLE TAXES. CF. B-147218 OF NOVEMBER 6, 1961, 41 COMP. GEN. - .

THE TAX CLAUSE INVOLVED REQUIRES THE INCLUSION OF ONLY THOSE FEDERAL, STATE AND LOCAL TAXES AND DUTIES WHICH ARE APPLICABLE TO THE JOB ORDER PRICE AND, WITH THE SOLE EXCEPTION OF FEDERAL TRANSPORTATION TAXES, SPECIFICALLY EXCLUDES THOSE TAXES "FROM WHICH THE GOVERNMENT, THE CONTRACTOR, OR THE TRANSACTIONS OR PROPERTY COVERED BY THE JOB ORDER ARE THEN EXEMPT.' IT IS ADMINISTRATIVELY REPORTED THAT THE CALIFORNIA STATE AND CITY SALES TAXES ARE NOT APPLICABLE TO THE CONTRACT HERE INVOLVED. CONFIRMATION THEREOF, WE NOTE THAT, IN RECOGNITION OF THE WELL-SETTLED PRINCIPLE OF LAW THAT THE FEDERAL GOVERNMENT IS IMMUNE FROM THE PAYMENT OF SALES TAXES, SUCH AS HERE INVOLVED, WHICH AUTHORIZE OR REQUIRE RETAILERS TO INCREASE BY THE AMOUNT OF SUCH TAX THE COST OF PROPERTY SOLD OR SERVICES RENDERED TO THE CONSUMER, SECTION 6381 OF THE CALIFORNIA SALES TAX ACT, AS AMENDED, SPECIFICALLY PROVIDES FOR EXEMPTION FROM THE PAYMENT OF SALES TAX ON SALES TO THE UNITED STATES OR ITS AGENCIES AND INSTRUMENTALITIES. BASED THEREON, IT MUST BE ASSUMED THAT THE OTHER BIDS RECEIVED, INCLUDING THAT OF YOUR FIRM, THOUGH NOT CONTAINING A SPECIFIC STATEMENT TO THAT EFFECT, LIKEWISE RECOGNIZED, OR SHOULD HAVE RECOGNIZED, THAT THE WORK INVOLVED WAS NOT SUBJECT TO CALIFORNIA STATE OR CITY SALES TAX AND, AS CONTEMPLATED BY THE CITED TAX CLAUSE, EXCLUDED THE AMOUNT THEREOF FROM THE PRICES QUOTED. IT NECESSARILY FOLLOWS THAT, SO FAR AS CONCERNS THE INCLUSION OF ALL APPLICABLE TAXES, THE BIDS RECEIVED, INCLUDING THAT OF BETHLEHEM STEEL COMPANY, WERE SUBMITTED ON THE SAME BASIS.

ACCORDINGLY, SINCE THE RECORD SHOWS THAT ALL BIDS WERE SUBMITTED AND EVALUATED ON THE SAME BASIS AND THE CONTRACT AWARDED TO THE LOWEST RESPONSIVE BIDDER, WE FIND NO LEGAL BASIS TO QUESTION THE AWARD AS MADE.