B-152307, NOV. 20, 1963

B-152307, NOV. 20, 1963

TO FOSTORIA CORPORATION:

WE REFER TO YOUR LETTER WITH ENCLOSURE DATED AUGUST 15, 1963. YOUR LETTER STATES THAT YOU SUBMITTED THE LOW BID IN RESPONSE TO INVITATION FOR BIDS NO. 41-608-63-813 BUT THAT YOUR LOW BID WAS REJECTED BY THE CONTRACTING OFFICER AS NONRESPONSIVE. YOU REQUEST THAT THIS OFFICE ADVISE YOU AS TO THE REASONS FOR THIS DETERMINATION AND YOU REQUEST THAT THIS OFFICE LEGALLY EVALUATE YOUR "TERMS AND CONDITIONS OF SALE" WHICH ACCOMPANIED YOUR BID AND CONSTITUTED THE BASIS FOR THE REJECTION OF YOUR BID IN THIS INSTANCE.

ON MAY 23, 1963, THE DIRECTORATE OF PROCUREMENT AND PRODUCTION, SAAMA, KELLY AIR FORCE BASE, TEXAS, ISSUED INVITATION FOR BIDS NO. 41 608-63-813 FOR THE PROCUREMENT OF 23 ELECTRIC INFRARED HEATERS. THE INVITATION STATED THESE HEATERS WERE TO BE IN ACCORD WITH MILITARY SPECIFICATION, MIL -H-9957, AUGUST 16, 1962, ISSUED BY THE DEPARTMENT OF THE AIR FORCE. PAGE 1 C OF THIS INVITATION SPECIFICALLY STATED THAT STANDARD FORM 32, SEPTEMBER 1961, WAS AMONG THE GENERAL PROVISIONS OF THIS INVITATION. CLAUSE 8 OF THE TERMS AND CONDITIONS OF THE INVITATION ON THE REVERSE SIDE OF PAGE 1 PROVIDED THAT A CONTRACT WOULD BE AWARDED TO THAT RESPONSIBLE BIDDER WHOSE BID CONFIRMING TO THE INVITATION FOR BIDS WAS MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. THIS CLAUSE ALSO PROVIDED THAT THE GOVERNMENT HAD THE RIGHT TO REJECT ANY AND ALL BIDS AND TO WAIVE INFORMALITIES AND MINOR IRREGULARITIES IN BIDS RECEIVED.

IN RESPONSE TO THIS INVITATION FOUR BIDS WERE RECEIVED AND OPENED ON JUNE 7, 1963. YOUR BID QUOTED A PRICE OF $148.50 FOR EACH OF THE 23 ITEMS SPECIFIED OR A TOTAL OF $3,415.50 AND YOUR BID WAS THE LOWEST BID RECEIVED. THE BID OF INDUSTRIAL HEAT SYSTEMS, 517 W. GARFIELD AVENUE, GLENDALE, CALIFORNIA, QUOTED A PRICE OF $160 FOR EACH OF THE 23 ITEMS SPECIFIED OR $3,680 AND WAS THE SECOND LOWEST BID RECEIVED. THIS BID PROVIDED FOR A PROMPT PAYMENT DISCOUNT OF 1/2 PERCENT, 10 DAYS. THE OTHER TWO BIDS ARE NOT MATERIAL TO THE ISSUES UNDER CONSIDERATION HERE. ON JUNE 25, 1963, CONTRACT NO. AF41 (608/-25550 WAS AWARDED TO INDUSTRIAL HEAT SYSTEMS AS THE LOWEST RESPONSIVE BIDDER TO THIS INVITATION.

YOUR BID SUBMITTED ON JUNE 4, 1963, CONSISTED OF THE FOLLOWING ITEMS. COVER LETTER STATING THAT YOUR QUOTATION FOR THE 23 ITEMS SPECIFIED IN THE INVITATION WAS ENCLOSED. THE PRINTED GOVERNMENT BID FORM FOR THIS PROCUREMENT SIGNED BY YOUR AUTHORIZED REPRESENTATIVE WHICH CONTAINED YOUR PRICES FOR THE ITEMS SPECIFIED, YOUR PROPOSED DELIVERY SCHEDULE, AND YOUR STATEMENTS, THAT THESE ITEMS WOULD BE SHIPPED F.O.B. TOLEDO, OHIO, AND THAT THERE WOULD BE NO SUBCONTRACTING BY YOU FOR THIS ITEM. A FORM ENTITLED "TERMS AND CONDITIONS OF SALE" PRINTED UNDER YOUR LETTERHEAD ALSO ACCOMPANIED THE ABOVE ITEMS. CLAUSE 4 OF YOUR TERMS AND CONDITIONS PROVIDED AS FOLLOWS:

"4. SHIPMENT--- THE DELIVERY DATE QUOTED IS SUBJECT TO THE FOLLOWING: (1) PRIOR SALE OF STOCK ITEMS. (2) DELAYS IMPOSED BY OTHER SUPPLIERS. (3) ALL GOVERNMENT REGULATIONS AND DIRECTIVES THAT MAY BE IMPOSED OR WHICH APPLY DURING TERMS OF CONTRACT. (4) ACCIDENTS, FIRES, STRIKES AND OTHER CAUSES BEYOND THE CONTROL OF FOSTORIA CORPORATION.

UNLESS OTHERWISE STATED, ON QUOTATIONS FOR A DESIGNATED QUANTITY OF SPECIAL ITEMS MANUFACTURED TO PURCHASER'S SPECIFICATIONS, FOSTORIA CORPORATION RESERVES THE RIGHT TO OVER--- OR UNDER--- SHIP TEN PERCENT OF THE QUANTITY SPECIFIED ON PURCHASER'S ORDER, THE DIFFERENCE TO BE PAID FOR OR ALLOWED AT THE PREVAILING PRICE.'

THE CONTRACTING OFFICER DETERMINED THAT THIS CLAUSE IN YOUR TERMS AND CONDITIONS OF SALE CONFLICTED WITH CLAUSE 11 ENTITLED "DEFAULT" OF THE GENERAL PROVISIONS, STANDARD FORM 32, SEPTEMBER 1961, WHICH WAS SPECIFICALLY MADE A PART OF THIS INVITATION. THE CONTRACTING OFFICER ALSO DETERMINED THAT CLAUSE 2 OF YOUR TERMS AND CONDITIONS ENTITLED "ACCEPTANCE" WHICH STATED THAT ALL ORDERS ARE SUBJECT TO ACCEPTANCE BY AN AUTHORIZED AGENT AT YOUR HOME OFFICE CONFLICTED WITH CLAUSE 8D OF THE TERMS AND CONDITIONS FOUND ON THE REVERSE SIDE OF PAGE 1 OF THE INVITATION WHICH STATED THAT A WRITTEN AWARD MAILED (OR OTHERWISE FURNISHED) TO THE SUCCESSFUL BIDDER WITHIN THE TIME FOR ACCEPTANCE SPECIFIED IN THE BID SHALL BE DEEMED TO RESULT IN A BINDING CONTRACT WITHOUT FURTHER ACTION BY EITHER PARTY.

ON JUNE 18, 1963, THE CONTRACTING OFFICER INFORMED YOU THAT YOUR TERMS AND CONDITIONS MATERIALLY MODIFIED PROVISIONS IN THIS INVITATION FOR BIDS AND THAT YOUR BID WAS REJECTED AS NONRESPONSIVE PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION, SEC. 2-402.2 (D) (VI) ENTITLED ,REJECTION OF INDIVIDUAL BIDS.' THIS REGULATION PROVIDES THAT BIDS WHICH LIMIT THE RIGHTS OF THE GOVERNMENT UNDER ANY CONTRACT CLAUSE SHALL BE REJECTED. THIS REGULATION ALSO PROVIDES THAT BIDDERS MAY BE REQUESTED TO DELETE OBJECTIONABLE CONDITIONS FROM BIDS PROVIDED THAT THESE CONDITIONS DO NOT GO TO THE SUBSTANCE, AS DISTINGUISHED FROM THE FORM, OF THE BID, OR WORK AN INJUSTICE ON OTHER BIDDERS. ON JULY 5, 1963, YOU DIRECTED A LETTER TO THE CONTRACTING OFFICER IN WHICH YOU PROPOSED TO WAIVE ANY OF THE OBJECTIONABLE CONDITIONS IN YOUR BID. ON JULY 9, 1963, THE CONTRACTING OFFICER INFORMED YOU THAT THESE CONDITIONS COULD NOT BE WAIVED, AND ON AUGUST 15, 1963, YOU DIRECTED YOUR LETTER TO THIS OFFICE.

IN THESE CIRCUMSTANCES WE FIND THAT THE CONTRACTING OFFICER PROPERLY CONSIDERED THE TERMS AND CONDITIONS WHICH ACCOMPANIED YOUR COVER LETTER AND THE PRINTED GOVERNMENT BID FORM AS AN INTEGRAL PART OF YOUR BID. CLAUSE 4 OF YOUR TERMS AND CONDITIONS CLEARLY LIMITED YOUR LIABILITY IF A CONTRACT WERE AWARDED TO YOU AND YOU DELAYED OR FAILED IN YOUR PERFORMANCE. THIS LIMITATION PLACED A CONDITION ON THE RIGHTS OF THE GOVERNMENT IF THE CONTRACT AWARDED TO YOU WERE TERMINATED FOR DEFAULT BY THE GOVERNMENT PURSUANT TO CLAUSE 11, STANDARD FORM 32, SEPTEMBER 1961, WHICH WAS SPECIFICALLY MADE A PART OF THIS INVITATION, AND IN THIS REGARD WE HAVE STATED THAT THIS IS A MATERIAL DEVIATION WHICH MAY NOT BE WAIVED. SEE 36 COMP. GEN. 525. WHILE CONTRACTUAL OFFICERS OF THE GOVERNMENT HAVE AUTHORITY TO WAIVE INFORMALITIES IN BIDS WHEN IN THE INTEREST OF THE UNITED STATES THERE IS NO AUTHORITY TO WAIVE A DEVIATION WHICH GOES TO THE SUBSTANCE OF THE BID AS SUCH A WAIVER WOULD BE PREJUDICIAL TO OTHER BIDDERS. SEE 30 COMP. GEN. 179; 37 COMP. GEN. 110; B-146039, JULY 20, 1961. MOREOVER, THE RULE IS WELL ESTABLISHED THAT THE CONTRACT AWARDED TO A BIDDER MUST BE THE CONTRACT OFFERED TO ALL BIDDERS. SEE 17 COMP. GEN. 554; B-147461, DECEMBER 14, 1961. IN THIS REGARD WHERE ONE BIDDER RESERVES RIGHTS AND IMMUNITIES FROM RESPONSIBILITY FOR BREACH NOT EXTENDED TO ALL BIDDERS BY THE ADVERTISED CONDITIONS AND SPECIFICATIONS, IT IS CLEAR THAT A CONTRACT AWARDED UPON THE BASIS OF SUCH A BID WOULD NOT BE THE CONTRACT OFFERED TO ALL PROSPECTIVE BIDDERS. FOR THESE REASONS WE CONCLUDE THAT YOUR BID WAS PROPERLY REJECTED AS NONRESPONSIVE.

WHILE WE WILL NOT MAKE A LEGAL EVALUATION OF YOUR "TERMS AND CONDITIONS OF SALE" WE ARE ENCLOSING COPIES OF OUR DECISIONS B-146039, JULY 20, 1961, AND B-147461, DECEMBER 14, 1961, FOR YOUR FURTHER INFORMATION IN THIS REGARD.