B-154287, JUL. 13, 1964

B-154287, JUL. 13, 1964

TO THE HONORABLE JOHN S. GLEASON, JR., ADMINISTRATOR, VETERANS ADMINISTRATION:

REFERENCE IS MADE TO LETTER DATED MAY 25, 1964, FILE 074B, FROM YOUR DIRECTOR, SUPPLY MANAGEMENT SERVICE, OFFICE OF MANAGEMENT AND EVALUATION, REQUESTING A DECISION ON THE REQUEST OF MR. HENRY A. STEILBERG, AS PRESIDENT OF HENRY A. STEILBERG, INC., LOUISVILLE, KENTUCKY, FOR RELIEF UNDER CONSTRUCTION CONTRACT NO. V5230C-49.

BY INVITATION FOR BIDS ISSUED FEBRUARY 1, 1963, BY THE HOSPITAL DIRECTOR, VETERANS ADMINISTRATION HOSPITAL, LOUISVILLE, KENTUCKY, BIDS WERE SOLICITED FOR A TWO-STORY AND BASEMENT ADDITION TO RADIOISOTOPE BUILDING NO. 19 AT THE HOSPITAL, PROJECT NO. 16-5167, TOGETHER WITH RELATED WORK AND EQUIPMENT INCLUDING A LABORATORY GLASSWARE WASHER DESIGNATED IN PARAGRAPH 12, SECTION 508 (STERILIZING EQUIPMENT), OF THE SPECIFICATIONS AS FOLLOWS:

"508-12. (VS-33) LABORATORY GLASSWARE WASHER: SHALL CONFORM TO THE REQUIREMENTS OF VETERANS ADMINISTRATION SPECIFICATION X-459B, DATED DECEMBER 10, 1957, EXCEPT WASH PUMP MOTOR SHALL BE 1 H.P., 208 VOLT, 3- PHASE, 60 CYCLE, SHALL BE TYPE I, COUNTER MODEL, SIZE 30 IN. WIDE BY 19 IN. DEEP BY 35 IN. HIGH, OVERALL. MACHINE SHALL BE EQUIPPED WITH 6 FT. 0 IN. OF PLASTIC HOSE.'

PARAGRAPH 32 OF SECTION "G" (GENERAL CONDITIONS) PROVIDES THAT AGENCY STANDARD SPECIFICATIONS REFERRED TO IN PROJECT SPECIFICATIONS SHALL HAVE FULL FORCE AND EFFECT AS THOUGH PRINTED IN DETAIL IN PROJECT SPECIFICATIONS.

MR. STEILBERG STATES IN HIS LETTER OF FEBRUARY 3, 1964:

"DURING OUR SOLICITATION OF SUPPLIERS FOR PRICES WE WERE ADVISED BY THEM THAT THE REFERENCED PORTION OF THE SPECIFICATION (V.A. SPEC. X 459) WAS NOT IN THEIR POSSESSION, NOR HAD THEY ANY KNOWLEDGE OF ITS CONTENTS AND WERE UNABLE TO OBTAIN SUFFICIENT DESCRIPTIVE INFORMATION FROM THE V-A OFFICE TO QUOTE A FIXED PRICE. FOR THIS REASON ABOUT A WEEK BEFORE BIDDING TIME, WE CALLED THE LOCAL V-A OFFICE FOR A MORE COMPLETE DESCRIPTION OF THE WASHER AND WERE ADVISED BY PHONE THAT NO ACCURATE DESCRIPTION COULD BE OBTAINED THERE NOR COULD A V-A SPEC. X 459 BE SUPPLIED TO US BEFORE THE BID DATE.'

IT IS FURTHER STATED THEREIN THAT BASED ON THE LIMITED DESCRIPTIVE INFORMATION AVAILABLE, AND OPINIONS OF LOCAL SUPPLIERS, IT WAS ESTIMATED IN PREPARING THE FIRM'S BID THAT THE REASONABLE COST OF THE WASHER WOULD BE $700, WHICH AMOUNT WAS INCLUDED IN THE BID OF $182,900 ON WHICH THE CONTRACT AWARD WAS MADE. THEREAFTER DURING PERFORMANCE OF THE CONTRACT IT WAS DISCOVERED THAT THE ACTUAL COST FOR SUPPLYING A WASHER CONTAINING ALL THE FEATURES SET FORTH IN THE REFERENCED VETERANS ADMINISTRATION SPECIFICATION NO. X-459B WAS $1,635.64. IN VIEW OF SUCH EXCESS COST MR. STEILBERG ASKS THE GOVERNMENT TO ASSUME SOME REASONABLE PORTION OF THE DIFFERENCE BETWEEN THE ESTIMATED AND ACTUAL COSTS FOR THE WASHER.

ALTHOUGH THE CONTRACTING OFFICER STATES IN HIS REPORT OF APRIL 29, 1964, THAT TO THE BEST OF HIS KNOWLEDGE MR. STEILBERG'S STATEMENTS ARE SUBSTANTIALLY CORRECT, IT IS NOTED HE REPORTS THAT AFTER THE BIDS WERE OPENED MR. STEILBERG REQUESTED A COPY OF SPECIFICATION NO. X-459B, WHICH WAS OBTAINED IN APPROXIMATELY 30 DAYS, AND NO SPECIFIC VERIFICATION IS MADE OF THE TELEPHONE REQUEST FOR A COMPLETE DESCRIPTION OF THE WASHER WHICH MR. STEILBERG STATES WAS MADE PRIOR TO BID OPENING.

ON THE FRONT OF THE INVITATION FOR BIDS, STANDARD FORM 20, IT IS PROVIDED THAT BIDDING MATERIALS MAY BE OBTAINED ONLY UPON "WRITTEN" APPLICATION TO THE ISSUING OFFICE AND THAT SUCH A REQUEST SHOULD ALLOW 5 WORKING DAYS AFTER RECEIPT FOR REPRODUCTION IN ADDITION TO MAIL DELIVERY TIME. WHILE THE INFORMATION FURNISHED DOES NOT INDICATE THAT THE DESIRED SPECIFICATION WOULD HAVE BEEN MADE AVAILABLE TO THE BIDDER IN THAT ALLOTTED PERIOD OF TIME, THE INVITATION PROVISION CONTEMPLATES THAT SUCH SIGNIFICANT REQUESTS, WHICH MAY AFFECT THE EXECUTION OF A BINDING CONTRACT, WILL BE REFLECTED IN THE PERMANENT WRITTEN RECORD OF THE PROCUREMENT.

PURSUANT TO THE STATUTES GOVERNING PROCUREMENT BY FORMAL ADVERTISING, SPECIFICATIONS ARE REQUIRED TO BE SUFFICIENTLY DEFINITE TO INSURE THE FREE AND FULL COMPETITION REQUIRED IN ORDER TO EFFECT A VALID AND BINDING CONTRACT. THE SUBJECT INVITATION DID NOT DESCRIBE IN DETAIL THE WASHER REQUIRED BY THE GOVERNMENT BUT REFERRED PROSPECTIVE BIDDERS TO CERTAIN SPECIFICATIONS FOR SUCH DETAILS. PARAGRAPH 1-2.201 (A) OF THE FEDERAL PROCUREMENT REGULATIONS PROVIDES THAT FOR SUPPLY AND SERVICE CONTRACTS, INCLUDING CONSTRUCTION, INVITATIONS FOR BIDS SHALL CONTAIN, WHEN APPLICABLE, CERTAIN INFORMATION INCLUDING DIRECTIONS FOR OBTAINING COPIES OF ANY DOCUMENTS, SUCH AS PLANS, DRAWINGS, AND SPECIFICATIONS, WHICH HAVE BEEN INCORPORATED BY REFERENCE. ALTHOUGH THE WASHER CONSTITUTED ONLY A MINOR PART OF THE PROCUREMENT, IT WAS ESSENTIAL THAT THE SPECIFICATIONS THEREFOR BE MADE AVAILABLE WHEN REQUESTED BY A BIDDER, IN ACCORDANCE WITH THE TERMS OF THE INVITATION, FOR USE IN DETERMINING THE AMOUNT TO BE INCLUDED FOR THE ITEM IN HIS TOTAL BID PRICE. IF AN ADEQUATE DESCRIPTION OF THE ITEM COULD NOT BE FURNISHED TO SUCH A BIDDER PRIOR TO THE SCHEDULED BID OPENING THEN IN ORDER TO SATISFY THE ELEMENT OF GOOD FAITH, WHICH IS NECESSARY TO THE FORMATION OF A VALID CONTRACT, IT WOULD BE INCUMBENT UPON THE CONTRACTING OFFICER TO CONSIDER THE FEASIBILITY OF POSTPONING THE TIME SET FOR BID OPENING UNTIL THE REFERENCED SPECIFICATIONS WERE MADE AVAILABLE TO THE BIDDER OR TO REMOVE THE ITEM FROM THE INVITATION, BY AMENDMENT, FOR SUBSEQUENT PROCUREMENT.

OTHER THAN MR. STEILBERG'S STATEMENT REGARDING A TELEPHONE CALL ALLEGEDLY MADE NEARLY ONE YEAR PRIOR THERETO, AND ADMITTEDLY ONLY A WEEK BEFORE THE BID OPENING DATE, THE MATERIAL FORWARDED BY YOUR AGENCY CONTAINS NOTHING TO INDICATE THAT HIS FIRM ACTUALLY ATTEMPTED TO OBTAIN THE WASHER SPECIFICATIONS PRIOR TO RECEIVING AWARD OF THE CONTRACT OR THAT THE CONTRACTING OFFICER, WHEN ACCEPTING THE BID, HAD ANY NOTICE OR REASON TO BELIEVE THE BID, WHICH CONTAINED NO QUALIFYING NOTATIONS OR INSERTIONS, WAS SUBMITTED ON THE BASIS OF SUPPLYING A WASHER WHICH MIGHT NOT CONFORM TO THE REQUIREMENTS OF THE SPECIFICATIONS REFERRED TO IN THE INVITATION.

ACCORDINGLY, IN VIEW OF THE FACT THAT THE INVITATION WAS ISSUED SIX WEEKS BEFORE THE BID OPENING DATE, AND SINCE THE PRESENT RECORD DOES NOT ESTABLISH THAT THE GOVERNMENT INDUCED OR CONTRIBUTED IN ANY MANNER TO THE UNDERPRICING OF THE WASHER IN THE BIDDER'S COMPUTATIONS, WE FEEL COMPELLED TO CONCLUDE THAT ON THE BASIS OF THE EVIDENCE PRESENTED THE ACCEPTANCE OF THE BID GAVE RISE TO A VALID AND BINDING CONTRACT AND VESTED IN THE UNITED STATES THE RIGHT TO HAVE PERFORMANCE STRICTLY IN ACCORDANCE WITH THE TERMS OF THE CONTRACT. NO OFFICER OF THE GOVERNMENT HAS AUTHORITY TO DIVEST THE GOVERNMENT OF SUCH VESTED RIGHT OR TO ALLOW COMPENSATION FOR PERFORMANCE IN AN AMOUNT GREATER THAN THAT AGREED UPON IN THE CONTRACT. SEE 20 COMP. GEN. 652, AND COURT CASES CITED THEREIN.

CONCERNING MR. STEILBERG'S STATEMENT THAT HE FEELS THE COST OF THE WASHER CONSTITUTES AN ,UNKNOWN CONDITION" UNDER PARAGRAPH 4 (CHANGED CONDITIONS) OF THE INVITATION'S GENERAL PROVISIONS, STANDARD FORM 23 A,WE DO NOT VIEW THAT PROVISION, WHICH PERTAINS TO PHYSICAL CONDITIONS ENCOUNTERED AT THE PROJECT SITE, AS CONTEMPLATING FACTORS AND CIRCUMSTANCES OF THE NATURE HERE INVOLVED RELATING TO THE PRICE OF A PIECE OF MANUFACTURED EQUIPMENT FOR INSTALLATION IN THE COMPLETED BUILDING. THERE IS NO SHOWING THAT THE PERTINENT SPECIFICATION COULD NOT HAVE BEEN OBTAINED IF TIMELY REQUEST HAD BEEN MADE THEREFOR, AND ANY RISK INVOLVED IN BIDDING WITHOUT FIRM PRICES ON THE WASHER WERE ASSUMED BY THE BIDDER.

THE PAPERS TRANSMITTED WITH THE DIRECTOR'S LETTER OF MAY 25 ARE RETURNED AS REQUESTED.