B-150764, MAY 18, 1964

B-150764, MAY 18, 1964

TO MOTOROLA COMMUNICATIONS AND ELECTRONICS, INC.:

BY LETTER DATED MARCH 27, 1964, WITH ENCLOSURES, YOU PROTESTED AGAINST THE ISSUANCE OF INVITATION FOR BIDS NO. SPA-360 (REV.) ON THE BASIS THAT MOTOROLA ALREADY HAD BEEN AWARDED CONTRACT NO. 14-02-0001 1090 FOR THE MICROWAVE SYSTEM NOW COVERED BY THAT INVITATION.

THIS CONTEMPLATED PROCUREMENT BY THE SOUTHWESTERN POWER ADMINISTRATION, DEPARTMENT OF THE INTERIOR, WAS THE SUBJECT OF TWO DECISIONS OF OUR OFFICE DATED FEBRUARY 21, 1963, AND MAY 23, 1963. IN OUR FIRST DECISION WE HELD THAT EXCEPTIONS TAKEN BY MOTOROLA IN ITS BID SUBMITTED IN RESPONSE TO THE INVITATION ISSUED ON NOVEMBER 2, 1962, WENT TO THE SUBSTANCE OF ITS BID AND, AS SUCH, COULD NOT BE WAIVED OR CORRECTED AFTER BID OPENING. AGREED WITH THE CONTRACTING OFFICER'S RECOMMENDATION THAT ALL BIDS SHOULD BE REJECTED FOR THE REASONS SET FORTH IN THE CONTRACTING OFFICER'S STATEMENT OF FACTS DATED FEBRUARY 1, 1963. THIS DECISION, IN TURN, GENERATED A PROTEST BY THE GENERAL ELECTRIC COMPANY, THE SECOND LOW BIDDER UNDER THE INVITATION. BY DECISION DATED MAY 23, 1963, WE HELD THAT GENERAL ELECTRIC'S BID WAS NONRESPONSIVE TO THE GUARANTEE PROVISIONS OF THE INVITATION AND WAS PROPERLY REJECTED. IN THIS DECISION WE CONCLUDED BY STATING:

"YOU (CONTRACTING OFFICER) ADVISE THAT ALL BIDS SUBMITTED IN RESPONSE TO THE INVITATION HAVE BEEN REJECTED AS NONRESPONSIVE TO THE ADVERTISED SPECIFICATIONS, AND THAT IT WAS DETERMINED TO NEGOTIATE THE PROCUREMENT IN THE BEST INTERESTS OF THE GOVERNMENT. EACH OF THE RESPONDING BIDDERS WAS NOTIFIED OF THAT FACT AND OF THE PROPOSAL TO NEGOTIATE, AND ALL BIDDERS HAVE SINCE MET WITH YOU FOR THE PURPOSE OF NEGOTIATING THE PROPOSED PROCUREMENT. WE UNDERSTAND THAT THE DETERMINATION TO NEGOTIATE THE INSTANT PROCUREMENT WAS JUSTIFIED UNDER 41 U.S.C. 252 (E//10) AS IMPLEMENTED BY FPR SEC. 1-3.210, AND THAT SUCH DETERMINATION WAS JUSTIFIED AND DOCUMENTED AS EVIDENCED BY AN ADMINISTRATIVE FINDING MADE BY YOU AND THE MINUTES OF THE MEETINGS OF THE BOARD OF AWARDS HELD ON JANUARY 18 AND FEBRUARY 26, 1963, TO CONSIDER THE BIDS SUBMITTED UNDER INVITATION FOR BIDS NO. SPA-360. ON THE RECORD BEFORE US, WE HAVE NO OBJECTION TO AWARD OF THE PROCUREMENT BY NEGOTIATION.'

THEREAFTER, THE FIVE MANUFACTURERS WHO HAD SUBMITTED BIDS UNDER THE INVITATION WERE REQUESTED TO FURNISH PROPOSALS BASED ON THE PERFORMANCE REQUIREMENTS OF THE INVITATION. NEGOTIATIONS WERE CONDUCTED WITH MOTOROLA AND GENERAL ELECTRIC AND PROCEEDED TO THE POINT WHERE ON JUNE 24, 1963, THE CONTRACTING OFFICER ADVISED MOTOROLA AS FOLLOWS:

"AS A RESULT OF OUR NEGOTIATIONS, WE HAVE PREPARED AND ARE TRANSMITTING SIX COPIES OF PROPOSED CONTRACT NO. 14-02-001-1090, WHICH COVERS THE FURNISHING AND INSTALLING OF A COMPLETE MICROWAVE SYSTEM.

"IF SATISFACTORY, PLEASE EXECUTE TWO COPIES OF THE PROPOSED CONTRACT AND RETURN TO THIS OFFICE. UPON ACCEPTANCE BY THIS ADMINISTRATION, ONE EXECUTED AND ANY NUMBER OF CONFORMED COPIES DESIRED WILL BE SUPPLIED FOR YOUR RECORDS.'

BY LETTER DATED JUNE 27, 1963, MOTOROLA RETURNED SIX SIGNED COPIES OF THE PROPOSED CONTRACT TO THE CONTRACTING OFFICER. HOWEVER, PRIOR TO ACCEPTANCE OF THIS PROPOSED CONTRACT, AND WHILE IT WAS STILL UNDER ADMINISTRATIVE CONSIDERATION, JERROLD ELECTRONICS CORPORATION, ONE OF THE FIVE FIRMS WHICH HAD SUBMITTED PROPOSALS, TOOK EXCEPTION TO THE METHOD OF NEGOTIATIONS AND PROTESTED AGAINST ANY AWARD TO MOTOROLA. UPON REVIEW OF THE PROCUREMENT, A NUMBER OF DEFICIENCIES IN PROCEDURE WERE DISCLOSED, AMONG WHICH WERE (1) A QUESTIONABLE JUSTIFICATION TO SUPPORT NEGOTIATION IN LIEU OF ADVERTISING; (2) INADEQUACY OF NEGOTIATIONS; AND (3) FAILURE TO INCLUDE DAVIS-BACON ACT PROVISIONS IN THE SPECIFICATIONS.

WITH RESPECT TO THE JUSTIFICATION FOR NEGOTIATION UNDER FPR SEC. 1 3.210 (A), THE CONTRACTING OFFICER RELIED UPON SUBSECTION 11 THEREOF WHICH PERMITS NEGOTIATION "WHEN IT IS IMPOSSIBLE TO DRAFT FOR AN INVITATION FOR BIDS ADEQUATE SPECIFICATIONS OR ANY OTHER ADEQUATELY DETAILED DESCRIPTION OF THE REQUIRED PROPERTY OR SERVICES.' IN ORDER TO MEET THIS CRITERIA, THE CONTRACTING OFFICER FOUND THAT IT WAS IMPRACTICAL TO SECURE COMPETITION BY FORMAL ADVERTISING BECAUSE: (1) NO TWO MANUFACTURERS DESIGN MICROWAVE SYSTEMS THAT ARE THE SAME IN ALL RESPECTS DUE TO THEIR COMPLEXITY AND THE ENGINEERING DESIGN WORK REQUIRED; (2) RAPID ADVANCE AND CHANGES IN DESIGN MAKE EXTREMELY DIFFICULT PREPARATION OF DETAILED TECHNICAL SPECIFICATIONS FOR MICROWAVE SYSTEMS WHICH WILL NOT BE RESTRICTIVE; AND (3) EXPERIENCE GAINED IN REVIEWING BIDS IN RESPONSE TO THE INVITATION INDICATED THAT A MAJORITY OF BIDS IN RESPONSE TO READVERTISING WOULD CONTAIN ONE OR MORE EXCEPTIONS TO THE TECHNICAL SPECIFICATIONS WHICH WOULD BE OF SUCH SIGNIFICANCE AS TO MAKE THE BIDS NONRESPONSIVE. SUCH A FINDING, IN THE OPINION OF THE PROCUREMENT AGENCY, WAS NOT NECESSARY. A CITATION TO SUBSECTION (3) OF THE CITED PROVISION OF THE FPR WOULD HAVE BEEN ADEQUATE. THIS PERMITS NEGOTIATION WITHOUT FORMAL ADVERTISING "WHEN BIDS HAVE BEEN SOLICITED PURSUANT TO THE REQUIREMENTS OF FORMAL ADVERTISING, AND NO RESPONSIVE BID HAS BEEN RECEIVED FROM A RESPONSIBLE BIDDER.'

THE PROCUREMENT AGENCY ADVISED THAT THE CONTRACTING OFFICER WAS MISLED BY THE NONRESPONSIVENESS OF ALL BIDS SUBMITTED WHEN HE CONCLUDED THAT DEFINITIVE SPECIFICATIONS COULD NOT BE PREPARED WHICH WOULD BE FREE FROM OBJECTIONABLE RESTRICTIONS. HOWEVER, THE NONRESPONSIVENESS WAS DUE TO ADMINISTRATIVE AND TECHNICAL DEVIATIONS IN THE BIDS THEMSELVES, AND WAS NOT ATTRIBUTABLE TO ANY DEFICIENCY IN THE SPECIFICATIONS OR TO IMPOSSIBILITY OR DIFFICULTY IN SUBMITTING BIDS RESPONSIVE THERETO. THE FACT THAT DEFINITE SPECIFICATIONS COULD HAVE BEEN DRAWN WAS DEMONSTRATED BY OUR DECISION B-151192 OF APRIL 11, 1963, 42 COMP. GEN. - , WHICH INVOLVED A PROCUREMENT BY THE BUREAU OF RECLAMATION OF A MICROWAVE RADIO SYSTEM UNDER COMPETITIVE BIDDING PROCEDURES. IT THUS MAY BE REASONABLY STATED THAT THE SUBJECT PROCUREMENT IS ALSO CAPABLE OF BEING FULLY AND ADEQUATELY DESCRIBED AND PARTICULARIZED BY SPECIFICATIONS AND DRAWINGS SO AS TO BE APPROPRIATE FOR FORMAL ADVERTISING.

THE PROCUREMENT REVIEW ALSO DISCLOSED THAT THE FORMALLY ADVERTISED AND NEGOTIATED SPECIFICATIONS DID NOT INCLUDE PROVISIONS FOR MINIMUM WAGE RATES REQUIRED BY THE DAVIS-BACON ACT. THE SCOPE OF THE WORK UNDER THE PROPOSED CONTRACT CLEARLY INVOLVED "CONSTRUCTION" OF A "PUBLIC WORKS" WITHIN THE PURVIEW OF THE DAVIS-BACON ACT (40 U.S.C. 276 (A) ). THE ADVERTISED SPECIFICATIONS CALLED FOR THE FURNISHING OF A MICROWAVE COMMUNICATIONS SYSTEM INCLUDING THE INSTALLATION AND ERECTION OF A NUMBER OF MICROWAVE TOWERS FABRICATED FROM STEEL MEMBERS AND ANCHORED TO CONCRETE FOUNDATIONS, AND THE ERECTION OF A CONTROL HOUSE AND OTHER BUILDINGS, WHICH, ALTHOUGH PREFABRICATED, HAD TO BE ERECTED ON CONCRETE FOUNDATIONS. WE HAVE TAKEN THE VIEW THAT THE APPLICABILITY OF THE DAVIS-BACON ACT IS FOR DETERMINATION ON THE BASIS OF THE CONTRACT CONTENT AS A WHOLE AND THAT: "IF A CONTRACT IS ESSENTIALLY OR SUBSTANTIALLY FOR CONSTRUCTION, ALTERATION OR REPAIR, THEN ALL WORK UNDER IT IS COVERED. IF NOT, NONE IS COVERED.' B 150905, MAY 23, 1963; 40 COMP. GEN. 565. THE SPECIFICATIONS HERE INVOLVED APPEAR TO SUPPORT THE ADMINISTRATIVE DETERMINATION THAT DAVIS BACON ACT PROVISIONS SHOULD HAVE BEEN INCLUDED SINCE THE ON-SITE CONSTRUCTION WORK IS SUBSTANTIAL IN RELATION TO THE COST OF THE EQUIPMENT AND IS ALSO ESSENTIAL TO THE PERFORMANCE OF THE WORK UNDER THE CONTEMPLATED CONTRACT.

WE, THEREFORE, AGREE WITH THE ADMINISTRATIVE OFFICE THAT DAVIS-BACON ACT PROVISIONS PROPERLY SHOULD HAVE BEEN INCLUDED IN THE SPECIFICATIONS. THAT CONNECTION, 40 COMP. GEN. 565, 571, HELD:

". . . WE MIGHT AGREE THAT THE PUBLIC POLICY MANIFEST IN THE PROVISIONS OF THE DAVIS-BACON ACT WARRANTS CANCELLATION AND READVERTISEMENT, IF FEASIBLE, OF WORK AWARDED WITHOUT CLEARLY APPLICABLE CONDITIONS * * *"

WE NOTE THAT NEGOTIATIONS WERE CONFINED TO TWO OFFERORS (MOTOROLA AND GENERAL ELECTRIC) BASED ON A CONSIDERATION AS TO WHETHER THE EQUIPMENT OFFERED MET THE GOVERNMENT'S NEEDS. HOWEVER, THERE WAS A FAILURE TO ENTER INTO NEGOTIATIONS WITH JERROLD WHICH HAD ALSO OFFERED A COMPETITIVE PRICE. THE ADMINISTRATIVE RECORD ON THIS NEGOTIATION REVEALS NO EVIDENCE THAT ANY COMPETITIVE NEGOTIATION OF PRICE WAS CONDUCTED. IT THUS APPEARS THAT ALL OFFERORS WHO SUBMITTED COMPETITIVE OFFERS WERE NOT OFFERED AN EQUAL OPPORTUNITY, AS CONTEMPLATED BY FPR SEC. 1-3.805 (A) (2), TO SUBMIT SUCH PRICE, TECHNICAL OR OTHER REVISIONS IN THEIR PROPOSALS AS MAY RESULT FROM NEGOTIATIONS. SINCE THE MOTOROLA PROPOSAL WAS REVISED AT LEAST TWICE, A DOUBT EXISTS WHETHER THERE HAD BEEN COMPLIANCE WITH FPR SEC. 1- 3.805 (A) (2) WHICH PROVIDES THAT WHERE ANY ONE PROPOSAL REPRESENTS A MATERIAL DEPARTURE FROM THE STATED REQUIREMENTS AND IS BEING FAVORABLY CONSIDERED, ALL OTHER OFFERORS SHALL BE GIVEN AN OPPORTUNITY TO SUBMIT NEW PROPOSALS ON A COMPARABLE BASIS. SEE, IN THIS CONNECTION,B-150978, OCTOBER 10, 1963, 4O COMP. GEN. - , TO THE SECRETARY OF THE INTERIOR, WHEREIN WE HELD AS FOLLOWS:

"IT IS OUR OPINION THAT THE FEDERAL PROCUREMENT REGULATIONS, THE PROCUREMENT REGULATIONS OF YOUR DEPARTMENT, AND THE INVITATION FOR PROPOSALS ISSUED IN THE INSTANT PROCUREMENT RECOGNIZE THE NECESSITY FOR PRICE COMPETITION IN THE PROCUREMENT OF SUPPLIES OR NONPROFESSIONAL SERVICES, AND FOR THE CONSIDERATION OF OFFERED PRICES IN DETERMINING WHETHER THE AWARD OF A PARTICULAR TYPE OF CONTRACT TO A PARTICULAR CONTRACTOR WOULD BE IN THE BEST INTEREST OF THE GOVERNMENT. SOLICITATION AND CONSIDERATION OF COMPETITIVE PRICES ARE THEREFORE MATERIAL REQUIREMENTS IN SUCH PROCUREMENTS, AND COMPLIANCE WITH SUCH REQUIREMENTS MUST BE CONSIDERED A NECESSARY PREREQUISITE TO A VALID CONTRACT AWARD.

"WE MUST THEREFORE CONCLUDE THAT YOUR DEPARTMENT WAS WITHOUT AUTHORITY UNDER APPLICABLE PROCUREMENT LAW AND REGULATIONS HAVING THE FORCE AND EFFECT OF LAW (SEE PAUL V. UNITED STATES, 371 U.S. 245, 255) TO NEGOTIATE A CONTRACT FOR THE PROCESSING AND SALE OF SEALSKINS WITH ANY OFFEROR WHO RESPONDED TO THE INVITATION FOR PROPOSALS, UNTIL FIRM PROPOSALS, INCLUDING PRICE PROPOSALS, HAD BEEN SOLICITED FROM ALL RESPONSIBLE OFFERORS, AND UNTIL DUE CONSIDERATION HAD BEEN GIVEN TO THE COMPARATIVE MERITS OF BOTH PRICE AND ALL OTHER FACTORS INCLUDED IN SUCH FIRM PROPOSALS.'

IN VIEW OF THE FOREGOING, WE AGREE WITH THE ADMINISTRATIVE OFFICE THAT ANY AWARD MADE UNDER THE CIRCUMSTANCES DISCUSSED ABOVE WOULD BE SUBJECT TO LEGAL OBJECTION.

CONCERNING YOUR CONTENTION THAT A VALID CONTRACT CAME INTO BEING WHEN THE AUTHORIZED MOTOROLA OFFICIAL EXECUTED COPIES OF THE PROPOSED CONTRACT PURSUANT TO THE CONTRACTING OFFICER'S LETTER OF JUNE 24, 1963, WE MUST CONCLUDE THAT SUCH SECTIONS DID NOT BIND THE GOVERNMENT BY CONTRACT. SHOULD BE NOTED THAT THE JUNE 24 LETTER REFERRED TO "PROPOSED CONTRACT NO. 14-02-0001-1090" AND THAT "UPON ACCEPTANCE," AN "EXECUTED" AND CONFORMED COPY THEREOF WOULD BE SUPPLIED TO MOTOROLA. IT WILL ALSO BE NOTED THAT NO WORDS PURPORTING TO EFFECT AN AWARD WERE EMPLOYED. THERE WAS IN EFFECT NOTHING MORE THAN A SOLICITATION OF AN OFFER WHICH COULD NOT RIPEN INTO A CONTRACT UNTIL ACCEPTED BY THE ADMINISTRATIVE OFFICE. THE LATTER, OF COURSE, NEVER ACCEPTED THE OFFER SUBMITTED BY YOU.

WE, THEREFORE, CONCLUDE THAT THE UNITED STATES WAS NOT CONTRACTUALLY BOUND TO PROCURE THE MICROWAVE SYSTEM FROM MOTOROLA.

IN VIEW OF THE FOREGOING, WE PERCEIVE OF NO LEGAL OBJECTIONS TO AN AWARD UNDER INVITATION NO. SPA-360 (REV.) TO THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER. YOUR PROTEST IS THEREFORE DENIED.