B-155724, MAR. 15, 1965

B-155724, MAR. 15, 1965

TO THE ARO CORPORATION:

REFERENCE IS MADE TO YOUR LETTERS OF DECEMBER 7, 1964, AND FEBRUARY 2, 1965, PROTESTING ANY AWARD TO THE BENDIX CORPORATION UNDER INVITATION FOR BIDS NO. 600-91-65, ISSUED BY THE U.S. NAVY PURCHASING OFFICE, REQUESTING BIDS TO BE OPENED DECEMBER 2, 1964, FOR FURNISHING A QUANTITY OF LIQUID OXYGEN CONVERTERS.

THE BENDIX CORPORATION WAS LOW BIDDER AND YOUR INITIAL PROTEST WAS SOLELY ON THE GROUND THAT THE BENDIX BID WAS CONTINGENT UPON THE "NO CHARGE" USE OF GOVERNMENT FACILITIES IN THE POSSESSION OF BENDIX UNDER A FACILITIES CONTRACT WITH THE BUREAU OF NAVAL WEAPONS AND WAS THEREFORE NONRESPONSIVE.

PAGE 6 OF THE INVITATION CONTAINS THE FOLLOWING PROVISION:

"GOVERNMENT PROPERTY (SPECIAL TOOLING AND OTHER PROPERTY)

"/A) IN PREPARING BIDS UNDER THIS INVITATION FOR BIDS, BIDDERS SHOULD ASSUME THAT GOVERNMENT TOOLING IS NOT AVAILABLE AT THIS TIME. HOWEVER, SHOULD IT BE MADE AVAILABLE AT A LATER DATE AND BE FURNISHED TO THE CONTRACTOR, AN EQUITABLE ADJUSTMENT WILL BE MADE IN THE CONTRACT PRICE.

"/B) OTHER GOVERNMENT PROPERTY. IF THE BIDDER PLANS TO USE, IN PERFORMING THE WORK BID UPON, ANY ITEMS OF GOVERNMENT PROPERTY OTHER THAN GOVERNMENT-OWNED SPECIAL TOOLING AS SPECIFIED IN PARAGRAPH (A) ABOVE IN THE BIDDER'S POSSESSION UNDER A FACILITIES CONTRACT OR OTHER AGREEMENT WITH THE GOVERNMENT INDEPENDENT OF THIS INVITATION FOR BID, THE BIDDER SHALL SO INDICATE BY CHECKING THE FOLLOWING BOX ( ). IN SUCH EVENT THE BIDDER MAY USE SUCH GOVERNMENT PROPERTY AT THE RENTAL RATES STIPULATED IN SUCH FACILITIES CONTRACT OR OTHER AGREEMENT PROVIDED SUCH USE IS THEREBY AUTHORIZED; AND THE BIDDER AGREES, UPON REQUEST OF THE CONTRACTING OFFICER, TO SUBMIT EVIDENCE THAT A FACILITIES CONTRACT OR OTHER SEPARATE AGREEMENT WITH THE GOVERNMENT AUTHORIZES THE BIDDER TO USE EACH ITEM OF SUCH GOVERNMENT PROPERTY FOR PERFORMING THE WORK BID UPON. HOWEVER, BIDS SUBMITTED CONTINGENT UPON USE OF SUCH GOVERNMENT PROPERTY ON A NO CHARGE BASIS WILL BE CONSIDERED NONRESPONSIVE.'

BENDIX CHECKED THE BOX APPEARING IN THE ABOVE QUOTATION INDICATING THAT IT INTENDED TO USE GOVERNMENT PROPERTY UNDER AN INDEPENDENT AGREEMENT AND AT THE RENTAL RATES STIPULATED THEREIN. ALSO, IN TRANSMITTING ITS BID TO THE NAVY PURCHASING OFFICE BY LETTER OF NOVEMBER 27, 1964, BENDIX STATED THAT IT INTENDED TO UTILIZE GOVERNMENT FACILITIES IN THE PERFORMANCE OF ANY CONTRACT AWARDED AS A RESULT OF THE BID, AND AGREED TO FURNISH, IF REQUIRED, EVIDENCE OF A FACILITY CONTRACT AUTHORIZING THE USE OF GOVERNMENT PROPERTY. IN RESPONSE TO A REQUEST BY THE NAVY, THE BENDIX CORPORATION, BY LETTER OF DECEMBER 11, 1964, ADVISED AS FOLLOWS:

"/1) OUR FACILITIES CONTRACT NUMBER IS NOW6124-U EFFECTIVE 1 JANUARY 1962 FOR A PERIOD OF FIVE YEARS;

"/2) THE PRICE QUOTED IN OUR IFB BID RESPONSE INCLUDES A RENTAL CHARGE FOR USE OF THESE FACILITIES WHICH IS IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF OUR FACILITIES CONTRACT AND THE IFB;

"/3) A COPY OF THE COVER PAGE OF OUR FACILITIES CONTRACT IS ENCLOSED FOR YOUR REVIEW AND LE.'

THE CITED FACILITIES CONTRACT PROVIDES FOR THE PAYMENT OF A USE CHARGE AND THE METHOD OF COMPUTING SAME. IT CONTAINS NO AUTHORIZATION FOR RENT- FREE USE OF THE FACILITIES IN PERFORMING CONTRACTS OF THE TYPE HERE INVOLVED. THESE PROVISIONS WERE CALLED TO THE ATTENTION OF YOUR REPRESENTATIVES, TOGETHER WITH ADVICE THAT NAVY RECORDS SHOWED REGULAR QUARTERLY PAYMENT OF USE CHARGES BY BENDIX PURSUANT TO THE TERMS OF THE AGREEMENT.

APPARENTLY BECAUSE THE RECORD DID NOT SUPPORT YOUR BELIEF THAT THE FACILITIES WERE BEING AND WOULD BE USED ON A NO CHARGE BASIS, BY LETTER OF FEBRUARY 2, 1965, YOU RAISED ADDITIONAL OBJECTIONS BASED PRIMARILY UPON PARAGRAPH I (G) OF SECTION B OF THE FACILITIES CONTRACT, READING AS FOLLOWS:

"I (G) THE CONTRACTOR AGREES TO SUBMIT, TOGETHER WITH EACH BID, PROPOSAL, OR QUOTATION FOR EACH TYPE OF CONTRACT OR SUBCONTRACT IN EXCESS OF $20,000.00 IN THE PERFORMANCE OF WHICH THE CONTRACTOR IS AUTHORIZED IN PARAGRAPH I (A), ABOVE, TO USE THE FACILITIES, A STATEMENT THAT THE CONTRACTOR INTENDS TO USE FACILITIES PROVIDED BY THE GOVERNMENT IN THE PERFORMANCE OF SUCH CONTRACT OR SUBCONTRACT AWARDED TO THE CONTRACTOR AND IDENTIFYING, BY NUMBER, THE CONTRACT UNDER WHICH THE FACILITIES ARE ACCOUNTABLE AND THE ISSUING OFFICE OF SAID CONTRACT. EXCEPT WITH RESPECT TO THOSE TYPES OF CONTRACTS AND SUBCONTRACTS DESCRIBED IN PARAGRAPH I (C) (I), ABOVE, THE CONTRACTOR FURTHER AGREES TO SUBMIT, CONCURRENTLY WITH AND IN ADDITION TO THE SUBMISSION REFERRED TO IN THE IMMEDIATELY PRECEDING SENTENCE, A STATEMENT THAT (1) THE ESTIMATED ALLOCABLE CHARGE RELATED TO THE PARTICULAR CONTRACT OR SUBCONTRACT INVOLVED HAS BEEN DETERMINED IN ACCORDANCE WITH PARAGRAPH I (B) (I) OF THIS PROVISION, (2) SUCH CHARGE, IN AN AMOUNT TO BE SPECIFIED, IS INCLUDED IN THE TOTAL AMOUNT SET FORTH IN SUCH BID, PROPOSAL OR QUOTATION AND (3) ANY SUCH CONTRACT OR SUBCONTRACT AWARDED TO THE CONTRACTOR MUST BE FOR SAID TOTAL AMOUNT, INCLUSIVE OF SUCH CHARGE, IF THE FACILITIES ARE NOT AND WILL NOT BE AUTHORIZED TO BE USED ON A NO-CHARGE BASIS IN THE PERFORMANCE OF SUCH CONTRACT OF SUBCONTRACT.'

SINCE YOU CONTEND THAT BENDIX FAILED TO SUBMIT THE INFORMATION CALLED FOR BY THE ABOVE SECTION I (G) "TOGETHER WITH" ITS BID, YOU HAVE CITED A NUMBER OF DECISIONS OF THIS OFFICE ENUNCIATING THE RULE THAT ANY MATERIAL VARIATION BETWEEN THE BID AND THE INVITATION WHICH GIVES A BIDDER "TWO BITES AT THE APPLE" MAKES THE BID NONRESPONSIVE. YOU THEREFORE CONTEND THAT SAID INFORMATION WAS NECESSARY TO ENABLE THE CONTRACTING OFFICER TO EVALUATE THE BENDIX BID AND THAT FAILURE TO FURNISH SAME WITH THE BID GAVE BENDIX AN OPPORTUNITY TO TAKE A "SECOND LOOK," WHICH VIOLATED THE ,TWO BITE" RULE AND MADE THE BID NONRESPONSIVE.

THE GENERAL RULE TO WHICH YOU REFER REQUIRES A BID TO MEET ALL ESSENTIAL PROVISIONS OF THE INVITATION. AS STATED ABOVE, THE INVITATION REQUIRED ONLY THAT THE BIDDER INDICATE WHETHER HE PLANNED TO USE GOVERNMENT PROPERTY UNDER A FACILITIES CONTRACT OR OTHER AGREEMENT INDEPENDENT OF THE INVITATION, AND THAT HE AGREE TO SUBMIT EVIDENCE OF AUTHORITY FOR SUCH USE UPON REQUEST OF THE CONTRACTING OFFICER. THIS BENDIX DID.

THE MAJORITY OF THE CASES CITED BY YOU IN SUPPORT OF YOUR PROTEST INVOLVE USE OF GOVERNMENT PROPERTY WITHOUT CHARGE, WHICH IS NOT THE CASE HERE. WITH REFERENCE TO THE REQUIREMENT THAT THE SAME CONTRACT BE OFFERED TO ALL BIDDERS, NO VIOLATION OF THAT RULE APPEARS TO EXIST IN THE INSTANT CASE. THE ONLY OBJECTION TO THE USE OF GOVERNMENT PROPERTY IN THE PERFORMANCE OF A GOVERNMENT CONTRACT IS THE POSSIBILITY THAT THE POSSESSION OF SUCH PROPERTY BY A POTENTIAL CONTRACTOR MAY RESULT IN A COMPETITIVE ADVANTAGE. SINCE BENDIX IS PAYING FOR THE USE OF GOVERNMENT PROPERTY ON THE BASIS OF CONTRACTUAL PROVISIONS WHICH MUST BE PRESUMED TO FIX A REASONABLE COMPENSATION THEREFOR, THERE IS NO SUCH ADVANTAGE, BECAUSE THE COMPETITIVE SITUATION OF ALL BIDDERS IS EQUALIZED IN THE SENSE THAT EACH OF THEM MUST BEAR THE COST OF PROVIDING NECESSARY PLANT AND EQUIPMENT EITHER BY PAYMENT OF RENTAL CHARGES FOR GOVERNMENT OR COMMERCIALLY FURNISHED FACILITIES, OR BY FINANCING AND AMORTIZATION COSTS OF ITS OWN FACILITIES.

WE CANNOT AGREE WITH YOUR CONTENTION THAT THE FAILURE OF BENDIX TO SPECIFY A RENTAL COMPUTATION WITH ITS BID REQUIRED THE CONTRACTING OFFICER TO ASSUME THAT BENDIX INTENDED TO USE GOVERNMENT-OWNED FACILITIES ON A NO CHARGE BASIS. THE BENDIX LETTER OF NOVEMBER 27, 1964, TRANSMITTING ITS BID, IS SO WORDED THAT IT OBVIOUSLY IS TIED IN WITH, AND CANNOT BE READ AS TAKING EXCEPTION TO, THE PROVISION OF THE INVITATION QUOTED ABOVE RELATIVE TO USE OF GOVERNMENT PROPERTY, WHICH REQUIRES PAYMENT OF RENTAL IN ORDER FOR THE BID TO BE RESPONSIVE.

WE DO NOT FEEL THAT THE FAILURE OF BENDIX TO FURNISH AS A PART OF ITS BID THE INFORMATION CALLED FOR BY THE FACILITIES CONTRACT SHOULD BE REGARDED AS A FATAL DEFECT, SINCE ITS UNDERTAKING TO FURNISH SUCH INFORMATION WHEN REQUESTED BY THE CONTRACTING OFFICER APPEARS FULLY TO SATISFY THE PURPOSE OF THE PROVISIONS BOTH OF THE INVITATION AND OF THE FACILITIES CONTRACT. IN THE CASE OF A NEGOTIATED PROCUREMENT, SUCH INFORMATION WOULD BE NECESSARY FOR THE CONTRACTING OFFICER, DURING NEGOTIATION, TO DETERMINE WHETHER RENT COULD OR SHOULD BE WAIVED UNDER THE FACILITIES CONTRACT, OR WHETHER PRICES PROPOSED WERE REASONABLE. THE PRESENT INVITATION WAS A FORMAL ADVERTISEMENT FOR FIXED PRICE BIDS AND THERE WAS NO NECESSITY FOR THE CONTRACTING OFFICER TO HAVE INFORMATION AS TO THE METHOD OF ARRIVING AT THE PRICES BID IN ORDER TO EVALUATE THE BIDS AND DETERMINE WHICH WAS LOWEST. ANY ATTEMPT BY BENDIX TO COME IN AFTER THE BID OPENING AND CLAIM THAT IT FAILED TO INCLUDE CHARGES FOR USE OF GOVERNMENT PROPERTY WOULD CONSTITUTE AN ALLEGATION OF MISTAKE WHICH WOULD BE FOR DISPOSITION UNDER THE RULES APPLICABLE TO ERROR IN BID CASES. THIS WOULD NOT, HOWEVER, GIVE BENDIX AN OPPORTUNITY TO TAKE SECOND LOOK, AND WE DOUBT THAT A DELIBERATE REFUSAL TO FURNISH A REQUESTED CITATION TO A FACILITIES CONTRACT COULD HAVE EFFECTIVELY PREVENTED THE CONTRACTING OFFICER FROM OBTAINING THE INFORMATION FROM GOVERNMENT SOURCES.

THE FACILITIES CONTRACT IS A SEPARATE AGREEMENT WHICH IS UNDER THE ADMINISTRATION OF THE INSPECTOR OF NAVAL MATERIAL, CHICAGO, ILLINOIS, AND IS NOT INCORPORATED BY REFERENCE AS A PART OF THE PRESENT INVITATION. ACCORDINGLY, THE FAILURE OF THE CONTRACTOR TO FURNISH WITH ITS BID INFORMATION NOT REQUIRED BY THE INVITATION TO BE INCLUDED AS A PART OF THE BID, AND THE RECEIPT OF WHICH PRIOR TO BID OPENING IS NOT ESSENTIAL TO BID EVALUATION, EVEN IF IT WERE A BREACH OF ITS FACILITIES CONTRACT, IS NOT A MATERIAL DEVIATION FROM THE PROVISIONS OF THE INVITATION. CERTAINLY, THE CONTRACTING OFFICER COULD NOT BE CONSIDERED TO BE UNDER ANY DUTY TO EXAMINE ALL THE PROVISIONS OF THE BIDDER'S FACILITIES CONTRACT IN ORDER TO DETERMINE WHETHER THE BID WAS RESPONSIVE TO THE TERMS OF THE INVITATION. SUCH INQUIRY WOULD RATHER BE RELEVANT ONLY TO DETERMINATION OF THE BIDDER'S CAPABILITY TO PERFORM THE CONTRACT, AND THEREFORE COULD PROPERLY BE MADE AFTER BID OPENING, AS WAS CONTEMPLATED BY THE INVITATION. CONCLUDE, THEREFORE, THAT THE ..END :