B-151186, APRIL 29, 1963, 42 COMP. GEN. 604

B-151186, APRIL 29, 1963, 42 COMP. GEN. 604

BIDS - ACCEPTANCE TIME LIMITATION - EXTENSION - AFTER EXPIRATION. BIDS ACCEPTANCE TIME LIMITATION - EXTENSION - PURPOSE. BIDS - ACCEPTANCE TIME LIMITATION - EXTENSION - RESPONSIBILITY TO PERMIT CONSIDERATION OF A BID WHICH CONTAINED A SHORTER ACCEPTANCE PERIOD THAN THAT SPECIFIED IN THE INVITATION AND WHICH WAS NOT EXTENDED UNTIL AFTER EXPIRATION OF THE PERIOD WOULD BE TO GIVE THE BIDDER A CHOICE TO BE OBLIGATED OR NOT, AND AN AWARD TO THE SECOND LOW BIDDER WHO PRIOR TO EXPIRATION OF ITS LONGER BID ACCEPTANCE PERIOD EXTENDED THE ACCEPTANCE TIME WOULD BETTER SERVE THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM THAN AN AWARD TO THE LOW BIDDER WHO PERMITTED ITS BID TO EXPIRE PRIOR TO OFFERING AN EXTENSION. THE PROVISION FOR EXTENSIONS OF BID ACCEPTANCE PERIODS IN THE EVENT OF ADMINISTRATIVE DELAYS AFTER BID OPENING IN SECTION 1-2.404-1 (C) OF THE FEDERAL PROCUREMENT REGULATIONS WAS FOR THE PURPOSE OF AUTHORIZING EXTENSION REQUESTS WHENEVER FAILURE TO DO SO WOULD REQUIRE READVERTISEMENT AND WAS NOT FOR APPLICATION WHEN ONE OF TWO OR MORE ACCEPTABLE BIDS WERE INADVERTENTLY PERMITTED TO EXPIRE. ALTHOUGH UNDER THE PROVISION FOR EXTENSIONS OF BID ACCEPTANCE PERIODS IN THE EVENT OF ADMINISTRATIVE DELAYS AFTER OPENING IN SECTION 1-2.404-1 (C) OF THE FEDERAL PROCUREMENT REGULATIONS A DUTY MAY BE IMPOSED UPON THE CONTRACTING OFFICER TO REQUEST BIDDERS TO EXTEND THE BID ACCEPTANCE TIME, BIDDERS LIKEWISE HAVE AN OBLIGATION TO CHECK WITH THE CONTRACTING OFFICER BEFORE THE BID ACCEPTANCE PERIOD EXPIRES IF THEY HAVE A CONTINUING INTEREST IN HAVING THEIR BIDS CONSIDERED FOR AWARD.

TO THE POSTMASTER GENERAL, APRIL 29, 1963:

REFERENCE IS MADE TO LETTER OF MARCH 28, 1963, FROM THE DEPUTY ASSISTANT POSTMASTER GENERAL, REQUESTING A DECISION WITH RESPECT TO A PROPOSED AWARD TO THE ARMSTRONG PRODUCTS CORPORATION UNDER AN INVITATION ISSUED JANUARY 8, 1963, FOR FURNISHING 300 PORTABLE STEEL RACKS FOR MAIL SACKS.

IT IS STATED THAT IN RESPONSE TO THE INVITATION WHICH CALLED FOR BIDS TO BE OPENED AT 2 P.M., JANUARY 29, 1963, 12 BIDS WERE RECEIVED. THE SIGNIFICANT PROVISION OF THE INVITATION PROVIDED THAT---

IN COMPLIANCE WITH THE ABOVE, THE UNDERSIGNED OFFERS AND AGREES, IF THIS BID BE ACCEPTED WITHIN ONE CALENDAR DAY (60 CALENDAR DAYS UNLESS A DIFFERENT PERIOD BE INSERTED BY THE BIDDER) FROM THE DATE OF OPENING, TO FURNISH ANY OR ALL OF THE ITEMS UPON WHICH PRICES ARE QUOTED, AT THE PRICE SET OPPOSITE EACH ITEM, DELIVERED AT THE DESIGNATED POINT/S) WITHIN THE TIME SPECIFIED IN THE SCHEDULE. * * *

THE LOW BIDDER, ENGINEERING AND MANUFACTURING COMPANY, OFFERED TO FURNISH THE STEEL RACKS FOR A TOTAL PRICE OF $17,876 WITH A DISCOUNT OF 1 PERCENT, 20 DAYS, OR A NET OF $17,697.24. THIS BIDDER SPECIFIED 20 DAYS FROM DATE OF OPENING FOR ACCEPTANCE, OR UNTIL FEBRUARY 18, 1963.

THE SECOND LOW BID WAS SUBMITTED BY ARMSTRONG PRODUCTS CORPORATION, WHICH OFFERED TO FURNISH THE STEEL RACKS FOR $18,000 NET, SUBJECT TO A 60-DAY ACCEPTANCE PERIOD FROM DATE OF OPENING OF THE BIDS.

IT IS REPORTED THAT AT THE TIME BIDS WERE OPENED THE PROCUREMENT OFFICE WAS FACED WITH SEVERAL PROJECTS OF UNUSUALLY HIGH PRIORITY; THAT THIS WORKLOAD, COUPLED WITH ABSENCES DUE TO ILLNESS, RESULTED IN THE INADVERTENT EXPIRATION OF THE 20-DAY ACCEPTANCE PERIOD IN THE E AND M BID; AND THAT NO REQUEST FOR AN EXTENSION OF THE ACCEPTANCE PERIOD WAS MADE PRIOR TO EXPIRATION THEREOF ON FEBRUARY 18, 1963. IT IS REPORTED FURTHER THAT ON MARCH 8 WHEN THE LOW BIDDER INQUIRED AS TO THE STATUS OF THE PROPOSED PROCUREMENT IT WAS INFORMED THAT SINCE ITS BID HAD BEEN INADVERTENTLY PERMITTED TO EXPIRE THE BID COULD NOT BE CONSIDERED FOR AWARD. BY TELEGRAM DATED MARCH 8, THE LOW BIDDER NOTIFIED THE DEPARTMENT OF ITS WILLINGNESS TO EXTEND THE ACCEPTANCE DATE OF ITS BID UNTIL MARCH 22. BY LETTER DATED MARCH 12 E AND M STATED THAT IT WAS THE LOW BIDDER AND REQUESTED A FULL HEARING AS TO WHY IT WAS NOT AWARDED A CONTRACT.

IN EXPLANATION OF THE REFUSAL TO CONSIDER THE E. AND M. BID FOR AN AWARD IT IS STATED THAT THE LOW BIDDER DELIBERATELY SELECTED A PERIOD OF 20 DAYS FOR ACCEPTANCE RATHER THAN GRANTING THE DEPARTMENT THE USUALLY CONTEMPLATED BID ACCEPTANCE PERIOD OF 60 DAYS; THAT DUE TO THE UNUSUAL CONDITIONS EXISTING AT THAT TIME THE DEPARTMENT DID NOT ACT WITHIN THE 20- DAY ACCEPTANCE PERIOD; THAT IT IS THE DEPARTMENT'S VIEW THAT THE LOW BIDDER ASSUMED THE RISK OF ITS BID ACCEPTANCE PERIOD EXPIRING BEFORE AN AWARD COULD BE MADE; THAT AFTER ITS BID EXPIRED, E AND M HAD THE LEGAL RIGHT TO REFUSE TO ACCEPT ANY AWARD THE DEPARTMENT MIGHT MAKE TO IT; AND THAT TO NOW ALLOW THE E AND M BID TO BE CONSIDERED WOULD HAVE THE EFFECT OF GIVING THAT BIDDER AN OPTION AFTER BID OPENING TO ACCEPT OR REJECT AN AWARD AS IT THOUGHT BEST. IN THE CIRCUMSTANCES, IT IS STATED THAT IT IS PROPOSED TO AWARD THE CONTRACT TO ARMSTRONG, THE SECOND LOW BIDDER, WHOSE BID OF $18,000 IS $302.76 MORE THAN THE LOW BID. IN THIS REGARD, THE RECORD SHOWS THAT BY LETTER DATED MARCH 16 ARMSTRONG EXTENDED THE ACCEPTANCE PERIOD OF ITS BID TO MAY 1, 1963. IN CONCLUSION IT IS STATED THAT THE REQUIREMENT FOR THE ITEMS COVERED BY THE INVITATION STILL EXISTS AND THAT IN VIEW OF THE CLOSE BIDDING THE DEPARTMENT IS UNABLE TO REJECT ALL BIDS PURSUANT TO SECTION 1-2.404-1 OF THE FEDERAL PROCUREMENT REGULATIONS.

BASED UPON THE STATEMENTS MADE IN E AND M'S LETTER OF MARCH 12 IT APPARENTLY IS THE BIDDER'S CONTENTION THAT IT IS ENTITLED TO AN AWARD BECAUSE IT SUBMITTED THE LOWEST BID AND THAT BECAUSE AS OF MARCH 8, OR OVER 2 WEEKS AFTER ITS BID ACCEPTANCE PERIOD UNTIL MARCH 22. AS TO SUCH CONTENTION GENERALLY, IT MAY BE STATED THAT STATUTES WHICH REQUIRE PURCHASES TO BE MADE AFTER ADVERTISING FOR BIDS WERE ENACTED FOR THE BENEFIT OF THE UNITED STATES AND NOT THE BIDDERS, AND IT CONSISTENTLY HAS BEEN HELD BY THE ACCOUNTING OFFICERS OF THE GOVERNMENT AND BY THE COURTS THAT A REQUEST FOR BIDS DOES NOT IMPORT ANY OBLIGATION TO ACCEPT ANY OF THE BIDS RECEIVED, INCLUDING THE LOWEST CORRECT BID. 17 COMP. GEN. 554; 26 ID. 49; 41 COMP. GEN. 709, 711; PERKINS V. LUKENS STEEL CO., 310 U.S. 113; O-BRIEN V. CARNEY, ET AL., 6 F.SUPP. 761. FURTHERMORE, SUBPARAGRAPH (B) OF PARAGRAPH 8 OF THE TERMS AND CONDITIONS OF THE INVITATION FOR BIDS SPECIFICALLY RESERVED TO THE GOVERNMENT THE RIGHT TO REJECT ANY AND ALL BIDS.

AS POINTED OUT IN THE LETTER OF MARCH 28, E AND M IN SUBMITTING ITS BID ELECTED TO PROVIDE FOR A BID ACCEPTANCE PERIOD OF 20 DAYS INSTEAD OF THE 60-DAY LIMITATION OTHERWISE PROVIDED FOR IN THE INVITATION. IN THE ABSENCE OF A WAIVER OR AN EXTENSION OF THE 20-DAY ACCEPTANCE PERIOD BY E AND M PRIOR TO THE EXPIRATION THEREOF SUCH LIMITATION OPERATED AS A CONDITION PRECEDENT TO A VALID AWARD AND A CONTRACTUAL OBLIGATION TO FURNISH STEEL RACKS. SINCE, FOR THE REASONS STATED IN THE LETTER OF MARCH 28 THE E AND M BID WAS NOT ACCEPTED WITHIN 20 DAYS FROM THE BID OPENING DATE (JANUARY 29, 1963), THAT COMPANY'S BID AUTOMATICALLY EXPIRED ON FEBRUARY 18, 1963, AND IT WAS NO LONGER AVAILABLE TO THE GOVERNMENT FOR ACCEPTANCE. 14 COMP. GEN. 612; 16 ID. 699; 35 ID. 50.

AN ACCEPTANCE LIMITATION MADE A CONDITION OF A BID IS SOLELY FOR THE BENEFIT AND PROTECTION OF THE BIDDER AND, OF COURSE, MAY BE WAIVED BY HIM IF HE IS STILL WILLING TO ACCEPT AN AWARD. SINCE THE RECORD CONTAINS NO FURTHER COMMUNICATION FROM E AND M FOLLOWING ITS LETTER OF MARCH 12, IT IS ASSUMED THAT THE BIDDER IS STILL WILLING TO ACCEPT AN AWARD AT THE PRICE OFFERED IN ITS BID. IN SUCH CIRCUMSTANCES IT IS PROBABLE THAT AN AWARD TO E AND M WOULD BE HELD ENFORCEABLE BY THE COURTS. AN AWARD TO THAT BIDDER, HOWEVER, RAISES THE QUESTION WHETHER THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM WOULD BEST BE SERVED IN THE PRESENT PROCUREMENT BY MAKING SUCH AWARD TO THE LOW BIDDER WHO PERMITTED ITS BID TO EXPIRE PRIOR TO GRANTING AN EXTENSION OR TO ARMSTRONG, THE NEXT LOW BIDDER, WHICH EXTENDED ITS BID ACCEPTANCE PERIOD BEFORE EXPIRATION OF ITS BID. WE RECOGNIZE THE FACT THAT SITUATIONS MAY ARISE, SUCH AS IMPROPER REJECTION OF ALL BIDS, WHERE THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM IS BETTER SERVED BY ACCEPTANCE OF SUCH A REJECTED BID THAN BY READVERTISING,BUT THIS IS NOT, IN OUR OPINION, SUCH A CASE.

WHILE THE MATTER OF THE PROPRIETY OF ACCEPTANCE OF EXPIRED BIDS EXTENDED BY AUTHORIZATION OF THE BIDDERS AFTER EXPIRATION OF THE ACCEPTANCE PERIOD IS NOT COVERED BY THE FEDERAL PROCUREMENT REGULATIONS, SUBPARAGRAPH (C) OF SECTION 1-2.404-1 PROVIDES:

(C) SHOULD ADMINISTRATIVE DIFFICULTIES BE ENCOUNTERED AFTER BID OPENING WHICH MAY DELAY AWARD BEYOND BIDDERS' ACCEPTANCE PERIODS, THE SEVERAL LOWEST BIDDERS SHOULD BE REQUESTED, BEFORE EXPIRATION OF THEIR BIDS, TO EXTEND THE BID ACCEPTANCE PERIOD (WITH CONSENT OF SURETIES, IF ANY) IN ORDER TO AVOID THE NEED FOR READVERTISEMENT.

FROM A READING OF SECTION 1-2.404-1 ENTITLED "CANCELLATION OF INVITATION AFTER OPENING" IN ITS ENTIRETY WE DO NOT BELIEVE THAT SUBPARAGRAPH (C) WAS EVER INTENDED TO APPLY TO A SITUATION WHERE ONLY ONE OF TWO OR MORE ACCEPTABLE BIDS WERE INADVERTENTLY PERMITTED TO EXPIRE. INSTEAD, WE THINK THAT THE PRIMARY PURPOSE WAS TO AUTHORIZE REQUESTS FOR EXTENSIONS IN THE SITUATION INDICATED WHENEVER FAILURE TO DO SO WOULD REQUIRE READVERTISEMENT WHICH AS WE HAVE MANY TIMES STATED AND THE FEDERAL PROCUREMENT REGULATIONS INDICATE SHOULD BE AVOIDED EXCEPT FOR THE MOST COGENT AND COMPELLING REASONS. IN THE PRESENT INSTANCE THERE IS NO NECESSITY FOR READVERTISING SINCE ARMSTRONG, THE SECOND LOW BIDDER, PRIOR TO THE EXPIRATION OF ITS BID ACCEPTANCE PERIOD EXTENDED ITS BID UNTIL MAY 1, 1963.

EVEN CONCEDING THAT THERE MAY HAVE BEEN A DUTY IMPOSED BY THE FEDERAL PROCUREMENT REGULATIONS ON THE CONTRACTING OFFICER TO REQUEST AN EXTENSION OF THE ACCEPTANCE PERIOD OF E AND M PRIOR TO EXPIRATION OF ITS BID, THERE WAS SEEMINGLY AN OBLIGATION ON THAT BIDDER TO CHECK WITH THE CONTRACTING OFFICER BEFORE ITS BID EXPIRED IF IT HAD A CONTINUING INTEREST IN BEING CONSIDERED FOR THE AWARD. E AND M COULD READILY HAVE DONE SO, EVEN THOUGH THE CONTRACTING OFFICER INADVERTENTLY FAILED TO REQUEST AN EXTENSION. ANY EVENT, SINCE THE BID OF E AND M WAS NOT TIMELY EXTENDED IT HAS A BID OR IT DOES NOT HAVE ONE AT ITS OWN CHOICE, NOT AT THE CHOICE OF THE GOVERNMENT. AS POINTED OUT IN THE LETTER OF MARCH 28, E AND M BY LIMITING ITS BID ACCEPTANCE PERIOD TO 20 DAYS ASSUMED THE RISK THAT THE GOVERNMENT DUE TO UNFORESEEN CAUSES MIGHT BE UNABLE TO ACCEPT WITHIN 20 DAYS BUT, AT THE SAME TIME, IT DID NOT ASSUME THE RISK OF A PRICE INCREASE IN THE SUPPLIES DURING THE FOLLOWING 40-DAY PERIOD AS DID ARMSTRONG IN GRANTING 60 DAYS FOR ACCEPTANCE.

IN THE CIRCUMSTANCES, IT IS OUR VIEW THAT THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM WOULD BEST BE SERVED IN THE PRESENT PROCUREMENT BY MAKING AN AWARD TO ARMSTRONG, THE SECOND LOWEST RESPONSIBLE BIDDER AS ADMINISTRATIVELY PROPOSED.