B-151534, JUN. 14, 1963

B-151534, JUN. 14, 1963

TO THE POSTMASTER GENERAL:

WE REFER TO A LETTER OF MAY 14, 1963, FROM THE DEPUTY ASSISTANT POSTMASTER GENERAL REQUESTING OUR DECISION AS TO THE RESPONSIVENESS OF A BID SUBMITTED BY NYDAR RESEARCH AND MANUFACTURING, NC., 2482 W. FOND DU LAC AVENUE, MILWAUKEE, WISCONSIN.

BY INVITATION NO. 267, DATED MARCH 26, 1963, THE POST OFFICE DEPARTMENT SOLICITED BIDS FOR A QUANTITY OF COTTON CLOTH PATCHES OF VARIOUS SIZES. THE FOLLOWING BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION:

TABLE

1. NYDAR RESEARCH AND MANUFACTURING, INC. $199,815

2. PRESS-ON, INC. 227,655

3. DEWYER, INC. 273,917

THE INVITATION SPECIFIED THAT BIDS WERE TO BE OPENED AT 2:00 P.M. ON APRIL 16, 1963. THE INVITATION CONSISTED OF TEN PAGES PLUS AMENDMENT NO. 1, DATED MARCH 27, 1963, WHICH THE BIDDER WAS REQUIRED TO SIGN AND RETURN WITH HIS BID.

THE BID SUBMITTED BY NYDAR RESEARCH AND MANUFACTURING, INC., CONSISTED OF PAGES 1 THROUGH 4 OF THE INVITATION WHICH WERE RECEIVED BY THE CONTRACTING OFFICER PRIOR TO THE TIME SCHEDULED FOR BID OPENING. THE FIRST PAGE CONTAINED THE SIGNATURE OF JOSEPH P. BONO, THE PRESIDENT OF NYDAR RESEARCH AND MANUFACTURING, INC. THE SECOND PAGE CONTAINED THE TERMS AND CONDITIONS OF THE INVITATION. PAGES THREE AND FOUR CONTAINED INFORMATION ON THE TYPE OF COTTON PATCHES TO BE FURNISHED PLUS INFORMATION ON DELIVERIES. THESE PAGES ALSO CONTAINED THE QUANTITY OF PATCHES TO BE FURNISHED. THE BIDDER WAS TO FILL IN HIS UNIT PRICE IN THE SPACES PROVIDED AND EXTEND THE TOTAL TO AN AMOUNT COLUMN. THE AMOUNT COLUMN WAS THEN TO BE TOTALED WITH THIS FIGURE BEING THE BID PRICE. AMENDMENT NO. 1, DATED MARCH 27, 1963, WAS SIGNED BY JOSEPH BONO AND ALSO SUBMITTED PRIOR TO BID OPENING AS REQUIRED. THIS AMENDMENT MADE CERTAIN CHANGES IN THE DELIVERY SCHEDULE CONTAINED IN THE SPECIFICATIONS. THE AMENDMENT ALSO PROVIDED THAT "ALL OTHER CONDITIONS AS SPECIFIED IN INVITATION NO. 267 WILL REMAIN THE SAME.' NYDAR RESEARCH AND MANUFACTURING, INC., DID NOT RETURN PAGES 5 THROUGH 10 OF THE BID TO THE CONTRACTING OFFICER UNTIL TWO DAYS AFTER THE BIDS WERE OPENED. THESE PAGES CONTAINED MANY PROVISIONS WHICH MUST BE CONSIDERED AS GOING TO THE SUBSTANCE OF THE BID.

ON APRIL 18, 1963, NYDAR RESEARCH AND MANUFACTURING, INC., NOTIFIED THE CONTRACTING OFFICER BY LETTER THAT THE COST OF OVERHEAD, AT 10 PERCENT, HAD BEEN OMITTED FROM THE BID SUBMITTED. NYDAR ALSO SUBMITTED WORKSHEETS WITH ITS LETTER TO THE CONTRACTING OFFICER TO SUBSTANTIATE THE ALLEGATION OF ERROR. THE BIDDER'S FIGURES IN THE WORKSHEETS INDICATE THE BID PRICE OF $199,815 WAS BASED ON $185,515 OF ACTUAL COST PLUS PROFIT OF $14,000 COMPUTED AT 7.54 PERCENT OF THE ACTUAL COST. THE BIDDER'S FIGURES ALSO INDICATE THAT THE PROPER BID SHOULD HAVE BEEN $218,704.26 BASED ON $185,815 OF ACTUAL COST PLUS 10 PERCENT OF THE ACTUAL COST FOR OVERHEAD OR $18,581.50, PLUS PROFIT OF $14,307.76, BASED ON 7 PERCENT OF THE COMBINED ACTUAL COST AND OVERHEAD. THE BIDDER ADMITS RESPONSIBILITY FOR THE ERROR. THE BIDDER REQUESTS THE CONTRACTING OFFICER TO ACCEPT THE BID AS CORRECTED AND STATES IT WOULD BE DISASTROUS TO THAT CONCERN IF THE BID WERE ACCEPTED AS SUBMITTED. THE POST OFFICE DEPARTMENT HAS CONCLUDED THAT EVEN IF THE EVIDENCE SUBMITTED BY NYDAR IS CONSIDERED TO ESTABLISH THAT THE BID WAS IN ERROR BECAUSE OF ITS FAILURE TO INCLUDE OVERHEAD COSTS, THE INTENDED BID HAS NOT BEEN ESTABLISHED BY EVIDENCE CLEAR AND CONVINCING ENOUGH TO AUTHORIZE CORRECTION, SINCE THERE WAS INADEQUATE EVIDENCE TO ESTABLISH THAT A 10 PERCENT OVERHEAD RATE WOULD HAVE BEEN USED. THE POST OFFICE DEPARTMENT DECIDED TO REJECT THE BID OF NYDAR PURSUANT TO FPR 1- 2.406-3 (D) (5) WHICH AUTHORIZES SUCH REJECTION IF THERE ARE OTHER INDICATIONS OF ERROR SO CLEAR AS REASONABLY TO JUSTIFY THE CONCLUSION THAT ACCEPTANCE OF THE BID WOULD BE UNFAIR TO THE BIDDER. ON MAY 10, 1963, NYDAR RESEARCH AND MANUFACTURING, INC., BY TELEGRAM TO THE POST OFFICE DEPARTMENT PROTESTED THE ACTION TAKEN. ON MAY 13, 1963, NYDAR RESEARCH AND MANUFACTURING, INC., DIRECTED A LETTER TO THIS OFFICE, ADVISING US OF THE ACTION TAKEN BY THE POST OFFICE DEPARTMENT.

IN REGARD TO CORRECTION OF AN ALLEGED ERROR IN BID WE HAVE STATED THAT TO PERMIT CORRECTION EITHER PRIOR TO OR AFTER AWARD, A BIDDER MUST SUBMIT CLEAR AND CONVINCING EVIDENCE THAT AN ERROR HAS BEEN MADE, THE MANNER IN WHICH THE ERROR OCCURRED, AND THE INTENDED BID PRICE. 35 COMP. GEN. 279, 31 ID. 183; 23 ID. 596; 17 ID. 598. BASICALLY, THESE SAME REQUIREMENTS FOR THE CORRECTION OF A BID ARE ALSO FOUND IN FPR 1 2.406-3 (A) (2). THESE CONDITIONS FOR THE CORRECTION OF BIDS HAVE BEEN FORMALIZED TO ASSURE THAT A PROCUREMENT BY ADVERTISING WILL REMAIN ON A COMPETITIVE BASIS, AND THAT NO BIDDER WILL HAVE THE OPPORTUNITY AFTER THE OPENING OF BIDS TO ACT IN A MANNER THAT WOULD BE UNFAIR OR DETRIMENTAL TO OTHER BIDDERS. WE HAVE REVIEWED THE VARIOUS DOCUMENTS SUBMITTED BY NYDAR RESEARCH AND MANUFACTURING, INC., AND ALTHOUGH THE BIDDER HAS FURNISHED EVIDENCE AFTER BID OPENING AS TO WHAT HIS ACTUAL COSTS WERE, THE BID ITSELF DOES NOT INDICATE THAT THE UNIT PRICES CONTAINED THEREIN WERE BASED ON FACTORS OTHER THAN THE BIDDER INTENDED. FURTHERMORE, THERE IS NO INDICATION THAT THE 10 PERCENT OVERHEAD, WHICH THE BIDDER ALLEGES WAS OMITTED, WAS THE ACTUAL OVERHEAD WHICH WOULD HAVE BEEN APPLIED IN THIS CASE. IN VIEW OF THE FOREGOING WE CONCLUDE THAT THE ACTION OF THE POST OFFICE DEPARTMENT IN REFUSING TO CORRECT THE BID SUBMITTED BY NYDAR RESEARCH AND MANUFACTURING, INC., WAS PROPER. MOREOVER, IN VIEW OF THE NATURE OF THE EVIDENCE PRESENTED BY THE BIDDER TO SUPPORT THE ALLEGATION OF ERROR AND THE BIDDER'S ASSERTION THAT AWARD ON THE BASIS OF THE BID SUBMITTED WOULD BE DISASTROUS TO THAT CONCERN, WE CONCLUDE THAT THE POST OFFICE DEPARTMENT PROPERLY REJECTED THE NYDAR RESEARCH AND MANUFACTURING, INC., BID PURSUANT TO FPR 1-2.406-3 (D) (5).

IN VIEW OF WHAT IS STATED ABOVE CONCERNING THE CORRECTION OF THE NYDAR RESEARCH AND MANUFACTURING, INC., BID, THE QUESTION OF THE RESPONSIVENESS OF THIS BID BECOMES ACADEMIC. WHILE WE DECLINE TO GIVE A DEFINITE ANSWER TO THE QUESTION WE WILL POINT OUT THE FOLLOWING MATTERS IN THIS REGARD. SINCE NYDAR RESEARCH AND MANUFACTURING, INC., SIGNED AND RETURNED AMENDMENT NO. 1 PRIOR TO BID OPENING IN WHICH THE BIDDER AGREED THAT ALL THE OTHER TERMS AND CONDITIONS OF THE INVITATION WOULD REMAIN THE SAME, THE QUESTION ARISES WHETHER THIS WOULD NOT BE TANTAMOUNT TO IMPLIEDLY AGREEING TO BE BOUND BY THE TERMS AND CONDITIONS OF THE INVITATION MENTIONED, IN WHICH CASE THE FAILURE TO RETURN PAGES 5 THROUGH 10 BEFORE BID OPENING WOULD NOT NECESSARILY BE FATAL TO THE BID SUBMITTED. SEE B- 113920, FEBRUARY 27, 1953, AN ANALOGOUS SITUATION IN WHICH WE HELD THAT A BIDDER WHO SUBMITTED HIS BID ON A LETTER FORM RATHER THAN THE STANDARD BID FORM IMPLIEDLY AGREED TO THE CONDITIONS OF THE INVITATION BY IDENTIFYING THE INVITATION IN THE BID AS SUBMITTED BY HIM.

A QUESTION WOULD ARISE AS TO THE EFFECT OF THE CLAUSE ON PAGE 6, RELATING TO THE PURCHASE BY THE GOVERNMENT OF ADDITIONAL QUANTITIES UP TO 25 PERCENT AT THE SAME PRICES SPECIFIED IN THE BID IF ORDERED WITHIN 90 DAYS FROM DATE OF AWARD. SINCE THIS CLAUSE REQUIRED A YES OR NO ANSWER, THE BIDDER WOULD NOT BE BOUND BY ITS TERMS UNLESS A YES ANSWER WAS RECEIVED. IN THIS CASE THE ANSWER WAS NOT RECEIVED BY THE CONTRACTING OFFICER UNTIL TWO DAYS AFTER THE BIDS HAD BEEN OPENED. IN REGARD TO AN OMITTED ITEM IN A BID WE HAVE SAID THAT IF THE BIDDER DOES NOT AGREE TO PROVISIONS REQUIRED BY THE INVITATION THAT MAY INFLUENCE THE PRICE, QUANTITY, OR QUALITY OF THE ARTICLES TO BE FURNISHED, THE OMISSION IS CONSIDERED MATERIAL AND THE BID MUST BE REJECTED AS NONRESPONSIVE. WE HAVE ALSO SAID IF AN OMITTED ITEM DOES NOT AFFECT THE PRICE, QUANTITY, OR QUALITY OF THE ITEMS TO BE FURNISHED, IT IS CONSIDERED AN INFORMALITY WHICH MAY BE SUPPLIED AFTER THE BID OPENING. 40 COMP. GEN. 132; 37 COMP. GEN. 763. THE QUESTION IS WHETHER THE INSTANT CLAUSE INFLUENCES THE PRICE, QUANTITY, OR QUALITY OF THE PROCUREMENT AND IS TO BE CONSIDERED A MATERIAL FACTOR IN THE EVALUATION OF THE BID WHICH WOULD REQUIRE REJECTION OF THE BID FOR THE BIDDER'S FAILURE TO SUPPLY THE ANSWER TO THE CLAUSE PRIOR TO BID OPENING. IN THIS REGARD IT SHOULD BE NOTED THAT THE INVITATION DID NOT SPECIFY THAT THE CLAUSE WOULD BE USED TO EVALUATE THE BID. IT SHOULD BE NOTED ALSO THAT THE BIDDER WAS GIVEN THE OPTION OF SUPPLYING A YES OR NO ANSWER. THESE CIRCUMSTANCES, IF THE ANSWER WAS MATERIAL, A BIDDER WOULD BE ENTITLED TO KNOW THAT IF HE SUPPLIED A NO ANSWER TO THE CLAUSE THIS ANSWER MIGHT PRECLUDE AN AWARD IN FAVOR OF A BIDDER THAT FURNISHED YES ANSWER. IN THESE CIRCUMSTANCES, WE BELIEVE THIS CLAUSE WOULD NOT BE MATERIAL TO THE EVALUATION OF THE BID AND THE ANSWER TO THE CLAUSE IN QUESTION COULD PROPERLY BE FURNISHED AFTER THE BID OPENING.

IT HAS INFORMALLY BEEN BROUGHT TO OUR ATTENTION THAT AWARD HAS ALREADY BEEN MADE TO PRESS-ON, INC., THE SECOND LOW BIDDER PURSUANT TO FPR 1 2.407 -8 (B) (3) ON YOUR DETERMINATION THAT THE URGENCY REQUIRED BY THE ABOVE REGULATION FOR SUCH AWARD EXISTED. IN THESE CIRCUMSTANCES THE NECESSITY FOR OUR ADVICE ON YOUR PROPOSED ACTION NO LONGER EXISTS.

WE ARE RETURNING THE RECORDS YOU SUBMITTED IN REGARD TO THIS MATTER, AND A COPY OF THE LETTER OF NYDAR RESEARCH AND MANUFACTURING, INC., TO THIS OFFICE.