B-151791, SEP. 25, 1963

B-151791, SEP. 25, 1963

TO HAYTRONICS, INCORPORATED:

REFERENCE IS MADE TO YOUR TELEGRAM OF JUNE 13, 1963, PROTESTING AGAINST THE AWARD OF A CONTRACT TO ANY FIRM OTHER THAN YOUR OWN UNDER INVITATION FOR BIDS NO. 19-628-63-225.

THE SUBJECT INVITATION FOR BIDS WAS ISSUED ON MARCH 18, 1963, BY ELECTRONICS SYSTEMS DIVISION, AIR FORCE SYSTEMS COMMAND, BEDFORD, MASSACHUSETTS, AND CALLED FOR FURNISHING 50 MINIATURE TIMERS, A. W. HAYDON COMPANY MODEL NO. C-4417 OR EQUAL. TWO BIDS WERE RECEIVED AND OPENED AS SCHEDULED ON APRIL 8, 1963. YOUR BID WAS LOW AND QUOTED A UNIT PRICE OF $184.75. THE OTHER BIDDER, A.W. HAYDON COMPANY, OFFERED A UNIT PRICE OF $294.60. BOTH YOU AND A.W. HAYDON OFFERED BID ACCEPTANCE PERIODS OF 60 DAYS COMMENCING WITH THE BID OPENING DATE (APRIL 8, 1963).

THE CONTRACTING OFFICER REPORTS THAT YOUR BID WAS REVIEWED BY THE TECHNICAL MONITOR AND IT WAS INITIALLY DETERMINED TO BE NOT ACCEPTABLE BECAUSE IT EXCEEDED THE DIMENSIONAL SPECIFICATIONS. A SECOND TECHNICAL REVIEW, HOWEVER, ESTABLISHED THAT YOUR PRODUCT DID NOT EXCEED THE DIMENSIONAL REQUIREMENTS AND THE CONTRACTING OFFICER PROPOSED TO MAKE AWARD TO YOUR FIRM. IT WAS THEN NOTED, STATES THE CONTRACTING OFFICER, THAT THE SPECIFICATIONS HAD FAILED TO INCLUDE A FILTER AND UPON INVESTIGATION IT WAS FOUND THAT A.W. HAYDON'S BID INCLUDED THE FILTER. THE CONTRACTING OFFICER PROPOSED TO MAKE AN AWARD ON THE ORIGINAL INVITATION FOR BIDS AND THEN BY SUPPLEMENTAL AGREEMENT ISSUED SIMULTANEOUSLY WITH THE AWARD TO PROCURE THE FILTERS. ACCORDINGLY YOUR FIRM WAS REQUESTED TO SUBMIT A PRICE FOR THE FILTERS.

THE BIDS BY THEIR TERMS EXPIRED ON JUNE 6, 1963, BUT NEITHER YOU NOR A.W. HAYDON WERE REQUESTED TO EXTEND THE ACCEPTANCE PERIODS OF YOUR BIDS UNTIL JULY 10, 1963--- MORE THAN A MONTH AFTER THE BID EXPIRATION DATE. LETTER OF JULY 15, 1963, TO THE CONTRACTING OFFICER YOU ADVISED THAT THE ACCEPTANCE PERIOD WAS EXTENDED TO AUGUST 8, 1963, "WITH ALL TERMS AND CONDITIONS TO REMAIN IN EFFECT AS QUOTED EXCEPT AS TO PRICE.' YOUR LETTER QUOTED A NEW PRICE OF $268.75 PER UNIT WITHOUT THE FILTER AND A PRICE OF $289.75 INCLUDING THE FILTER. YOU STATED THAT THE INCREASE IN PRICE WAS NECESSITATED BY THE LONG LAPSE OF TIME SINCE BID OPENING AND BECAUSE YOUR SUPPLIERS HAD INCREASED THEIR PRICES TO YOU.

THE DEPARTMENT OF THE AIR FORCE TAKES THE POSITION THAT TO PERMIT AN UPWARD PRICE ADJUSTMENT AFTER OPENING AND PUBLICATION OF BID PRICES CONSTITUTES A VIOLATION OF THE SPIRIT AND INTENT OF THE COMPETITIVE BIDDING SYSTEM. THE DEPARTMENT PROPOSES TO CANCEL THE INVITATION AND READVERTISE THE PROCUREMENT IF THE REQUIREMENT STILL EXISTS. WE THINK THAT THE AIR FORCE POSITION IN THIS REGARD IS CORRECT. ASSUMING ARGUENDO THAT AWARD COULD HAVE BEEN MADE TO YOU HAD YOU PROPERLY EXTENDED OUR BID ACCEPTANCE PERIOD (SEE 34 COMP. GEN. 535), IT IS CLEAR THAT THE MANNER IN WHICH YOU EXTENDED THE BID ACCEPTANCE PERIOD REQUIRES REJECTION OF YOUR BID. WE HAVE REPEATEDLY HELD THAT TO PERMIT BIDDERS TO VARY THEIR PROPOSALS AFTER THE BIDS ARE OPENED WOULD SOON REDUCE TO A FARCE THE WHOLE PROCEDURE OF LETTING PUBLIC CONTRACTS ON AN OPEN COMPETITIVE BASIS. COMP. GEN. 167, AND CASES CITED THEREIN. YOUR PROPOSAL TO FURNISH THE TIMERS AT AN INCREASE IN PRICE AMOUNTED TO A COUNTER-OFFER WHICH MUST BE REJECTED UNDER THE RULES GOVERNING FORMAL ADVERTISING SINCE TO ACCEPT SUCH A PROPOSAL WOULD BE TO ACCOMPLISH THE PROCUREMENT BY NEGOTIATION PROCEDURES.

FURTHERMORE, REGARDLESS OF THE FOREGOING CONSIDERATION, IT APPEARS THAT CANCELLATION OF THE INVITATION IS NOT ONLY AUTHORIZED BUT WOULD BE IN THE BEST INTERESTS OF THE GOVERNMENT SINCE FILTERS FOR THE TIMERS WERE APPARENTLY NEEDED BY THE AIR FORCE BUT WERE NOT INCLUDED IN THE APPLICABLE SPECIFICATIONS. SEE PARAGRAPH 2-404.1 OF THE ARMED SERVICES PROCUREMENT REGULATIONS. WHERE FORMAL ADVERTISING IS REQUIRED, THE MERE FACT THAT A NEEDED ITEM OF RELATED EQUIPMENT IS, THROUGH OVERSIGHT, NOT INCLUDED IN AN INVITATION FOR BIDS, AND SUCH FACT IS DISCOVERED PRIOR TO AWARD, DOES NOT AUTHORIZE THE SUBSEQUENT PURCHASE OF THAT ITEM BY NEGOTIATION. AN AWARD OF THE CONTRACT ON THE BASIS ORIGINALLY PROPOSED WITH A SUBSEQUENT NEGOTIATION CULMINATING IN A SUPPLEMENTAL AGREEMENT FOR THE PURCHASE OF THE FILTERS WOULD, THEREFORE, HAVE BEEN IMPROPER.