B-156607, MAY 27, 1965, 44 COMP. GEN. 753

B-156607, MAY 27, 1965, 44 COMP. GEN. 753

CONTRACTS - SPECIFICATIONS - FAILURE TO FURNISH SOMETHING REQUIRED - ADDENDA ACKNOWLEDGMENT - WAIVER - CRITERIA THE FAILURE OF THE LOW BIDDER TO ACKNOWLEDGE AN AMENDMENT TO THE INVITATION, PURSUANT TO PARAGRAPH 1-2.207 (B) (4) OF THE FEDERAL PROCUREMENT REGULATION, FOR ADDITIONAL WORK TO COST APPROXIMATELY $373, EVEN THOUGH ONLY .16 PERCENT OF THE BID PRICE, OR LESS THAN 1 1/2 PERCENT OF THE DIFFERENCE BETWEEN THE ONLY TWO BIDS RECEIVED, COMES WITHIN THE GENERAL RULE THAT THE FAILURE TO ACKNOWLEDGE AN ADDENDUM THAT AFFECTS THE PRICE, QUANTITY OR QUALITY OF THE PROCUREMENT MAY NOT BE WAIVED AS A MINOR IRREGULARITY THAT PERTAINS TO AN IMMATERIAL OR INCONSEQUENTIAL DEFECT IN THE BID, AND, THEREFORE, THE ESTIMATED $373 COST FOR THE ADDITIONAL WORK IS NOT REGARDED AS TRIVIAL OR NEGLIGIBLE WITHIN THE PURVIEW OF PARAGRAPH 1 -2.405 OF THE REGULATION, THE ADDITIONAL COST EXCEEDING THE AMOUNT OF LESS THAN $200 USED AS A CRITERIA TO APPLY THE DE MINIMIS RULE DOCTRINE TO JUSTIFY WAIVER OF AN UNACKNOWLEDGED ADDENDUM AS A MINOR INFORMALITY, A RULE THAT SHOULD BE LIMITED RATHER THAN ENLARGED, AND REJECTION OF THE LOW BID IS REQUIRED.

TO THE ACTING ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION, MAY 27, 1965:

BY LETTER DATED APRIL 22, 1965, YOUR GENERAL COUNSEL HAS REQUESTED OUR DECISION CONCERNING THE PROPRIETY OF AWARD OF A CONTRACT TO THE LOW BIDDER ON PROJECT NO. S0204-001, UNITED STATES POST OFFICE, CLARKSVILLE, TEXAS.

THE PROJECT WAS ADVERTISED FOR BIDDING UNDER INVITATION ISSUED FEBRUARY 19, 1965, WHICH SPECIFIED THAT BIDS WERE TO BE RECEIVED BY MARCH 16 AND OPENED ON MARCH 18. AMENDMENT NO. 1, DATED FEBRUARY 25, 1965, MODIFIED THE INSTRUCTIONS TO BIDDERS ON STANDARD FORM 22 WITH RESPECT TO BID MODIFICATIONS, LATE BIDS AND MODIFICATIONS AND WITHDRAWALS, AND BID GUARANTEE. AMENDMENT NO. 2, DATED MARCH 3, 1965, MADE CHANGES IN THE SPECIFICATIONS, DELETED SOME ITEMS OF WORK OR MATERIALS AND ADDED OTHERS. BOTH AMENDMENTS BORE THE NOTATION REQUIRED BY FEDERAL PROCUREMENT REGULATION 1-2.207 (B) (4) CAUTIONING BIDDERS THAT FAILURE TO ACKNOWLEDGE THE RECEIPT OF THE AMENDMENTS MIGHT RESULT IN REJECTION OF THE BIDS.

ON MARCH 18, THE TWO BIDS WHICH HAD BEEN SUBMITTED WERE OPENED. THE FLORSHEIM COMPANY WAS LOW WITH A BID OF $232,750; AND OTHER BID, FROM LEON H. STANLEY, INCORPORATED, WAS IN THE AMOUNT OF $258,852, A DIFFERENCE OF $26,102. SINCE FLORSHEIM HAD FAILED TO ACKNOWLEDGE ON THE BID FORM RECEIPT OF THE INVITATION AMENDMENTS, STANLEY PROTESTED AWARD TO FLORSHEIM ON THE BASIS THAT THE BID WAS NONRESPONSIVE. STANLEY CONCEDES THAT ACKNOWLEDGMENT OF AMENDMENT NO. 1 IS ONLY A MINOR INFORMALITY WHICH MAY BE WAIVED BUT CONTENDS THAT BY NOT ACKNOWLEDGING AMENDMENT NO. 2, FLORSHEIM DID NOT BIND ITSELF TO PERFORM THE WORK COVERED BY THAT AMENDMENT.

THE RECORDS FORWARDED TO OUR OFFICE SHOW THAT AMENDMENT NO. 2 WAS FURNISHED TO BOTH FLORSHEIM AND STANLEY ON MARCH 5. IN ADDITION, THE CHIEF, ESTIMATES BRANCH, HAS FURNISHED A DETAILED ANALYSIS OF THE WORK REQUIRED BY AMENDMENT NO. 2 EVIDENCING HIS OPINION THAT THE NET ADDITIONAL COST WOULD BE APPROXIMATELY $373.00, OR .16 PERCENT OF FLORSHEIM'S BID OF $232,750.

THE GENERAL RULE AS TO THE EFFECT OF THE FAILURE OF A BIDDER TO ACKNOWLEDGE AN AMENDMENT TO AN INVITATION FOR BIDS IS THAT WHEN THE AMENDMENT AFFECTS THE PRICE, QUANTITY OR QUALITY OF THE PROCUREMENT, THE BIDDER'S FAILURE TO ACKNOWLEDGE THE AMENDMENT IN COMPLIANCE WITH THE TERMS OF THE INVITATION OR AMENDMENT CANNOT BE WAIVED. 37 COMP. GEN. 785. THE BASIS FOR THE GENERAL RULE IS THE PRINCIPLE THAT THE ACCEPTANCE OF A BID WHICH DISREGARDS A MATERIAL PROVISION OF AN INVITATION, AS AMENDED, WOULD BE PREJUDICIAL TO OTHER BIDDERS. CLARIFICATION OF THE BID AFTER OPENING MAY NOT BE PERMITTED BECAUSE THE BIDDER IN SUCH CIRCUMSTANCES WOULD HAVE THE OPTION TO DECIDE TO BECOME ELIGIBLE BY FURNISHING EXTRANEOUS EVIDENCE THAT THE AMENDMENT HAD BEEN CONSIDERED, OR TO AVOID AWARD BY REMAINING SILENT. 41 COMP. GEN. 550 AND DECISIONS CITED THEREIN.

HOWEVER, THE GENERAL RULE HAS NOT BEEN APPLIED INDISCRIMINATELY BY OUR OFFICE TO PRECLUDE WAIVER IN ALL CASES INVOLVING FAILURE TO ACKNOWLEDGE AN INVITATION AMENDMENT. WAIVER HAS BEEN PERMITTED WHERE THE MODIFICATION COULD HAVE AFFECTED THE COST OF THE WORK ONLY TO A NEGLIGIBLE DEGREE, 34 COMP. GEN. 581; WHERE THE ADDITIONAL COST WAS TRIVIAL WHEN COMPARED WITH THE TOTAL COST OF THE WORK, B-141383, JANUARY 14, 1960, AND B-144784, JUNE 21, 1961; AND WHERE THE ADDITIONAL COST WAS CONSIDERED NEGLIGIBLE, B- 144185, JANUARY 25, 1961. SEE, ALSO 41 COMP. GEN. 550.

FEDERAL PROCUREMENT REGULATION 1-2.405, RELATIVE TO MINOR INFORMALITIES OR IRREGULARITIES IN BIDS, READS IN PART AS FOLLOWS:

"SEC. 1-2.405 MINOR INFORMALITIES OR IRREGULARITIES IN BIDS.

"A MINOR INFORMALITY OR IRREGULARITY IS ONE WHICH IS MERELY A MATTER OF FORM AND NOT OF SUBSTANCE OR PERTAINS TO SOME IMMATERIAL OR INCONSEQUENTIAL DEFECT OR VARIATION OF A BID FROM THE EXACT REQUIREMENT OF THE INVITATION FOR BIDS, THE CORRECTION OR WAIVER OF WHICH WOULD NOT BE PREJUDICIAL TO OTHER BIDDERS. THE DEFECT OR VARIATION IN THE BID IS IMMATERIAL AND INCONSEQUENTIAL WHEN ITS SIGNIFICANCE AS TO PRICE, QUANTITY, QUALITY, OR DELIVERY IS TRIVIAL OR NEGLIGIBLE WHEN CONTRASTED WITH THE TOTAL COST OR SCOPE OF THE SUPPLIES OR SERVICES BEING PROCURED. THE CONTRACTING OFFICER SHALL EITHER GIVE THE BIDDER AN OPPORTUNITY TO CURE ANY DEFICIENCY RESULTING FROM A MINOR INFORMALITY OR IRREGULARITY IN A BID OR WAIVE SUCH DEFICIENCY, WHICHEVER IS TO THE ADVANTAGE OF THE GOVERNMENT. EXAMPLES OF MINOR INFORMALITIES OR IRREGULARITIES INCLUDE:

(D) FAILURE TO A BIDDER TO ACKNOWLEDGE RECEIPT OF AN AMENDMENT TO AN INVITATION FOR BIDS, BUT ONLY IF:

(2) THE AMENDMENT INVOLVES ONLY A MATTER OF FORM OR IS ONE WHICH HAS EITHER NO EFFECT OR MERELY A TRIVIAL OR NEGLIGIBLE EFFECT ON PRICE, QUANTITY, QUALITY, OR DELIVERY OF THE ITEM BID UPON.'

AS INDICATED ABOVE, THE ESTIMATED ADDITIONAL COST OF THE WORK OCCASIONED BY THE ISSUANCE OF AMENDMENT NO. 2 AMOUNTS TO LESS THAN TWO TENTHS OF ONE PERCENT OF FLORSHEIM'S BID PRICE. IT ALSO IS LESS THAN ONE AND A HALF PERCENT OF THE DIFFERENCE BETWEEN THE TWO LOW BIDS. UNDER THE CITED DECISIONS, AND REGULATION, THE AMENDMENT MAY BE REGARDED AS HAVING MERELY A TRIVIAL OR NEGLIGIBLE EFFECT ON THE PRICE OF THE BID ITEM, AND FLORSHEIM'S FAILURE TO ACKNOWLEDGE ON THE BID FORM RECEIPT OF THE AMENDMENT MAY BE REGARDED AS A MINOR INFORMALITY OR IRREGULARITY IN BID WHICH THE CONTRACTING OFFICER MAY WAIVE, ONLY IF THE ESTIMATED COST OF $373.00 BE REGARDED AS TRIVIAL OR NEGLIGIBLE.

IT IS TO BE NOTED THAT NEITHER IN OUR DECISIONS NOR IN THE REGULATION HAS ANY EFFORT BEEN MADE TO DEFINE WHAT WILL BE CONSIDERED AS "TRIVIAL" OR "NEGLIGIBLE.' WE FIND NO DECISION AUTHORIZING OR APPROVING WAIVER OF A DEFECT OR VARIATION IN A BID IN SUCH A SITUATION AS THE ONE PRESENTED WHERE THERE APPEARED TO BE INVOLVED AN ACTUAL OR ESTIMATED AMOUNT OF MORE THAN A VERY FEW DOLLARS. IN 34 COMP. GEN. 581 THE PROCURING AGENCY ESTIMATED THAT THE COST OF CHANGED WORK MIGHT BE FROM $20 TO $150, ON A PROJECT COST IN EXCESS OF $400,000, WHERE THE DIFFERENCE BETWEEN BIDS WAS IN EXCESS OF $12,000. OUR DECISION WAS BASED UPON THE CONCLUSION THAT THE CHANGE COULD HAVE AFFECTED THE COST "ONLY TO A NEGLIGIBLE DEGREE, IF AT ALL.' IN B-141383 THE ESTIMATED COST INCREASE RESULTING FROM THE AMENDMENT WAS $1.16. IN B-144185, WHERE THE AMENDMENT ADDED A REQUIREMENT FOR SUBMISSION OF REPORTS OF STATUS OF PERFORMANCE, THE CONTRACTING OFFICER REPORTED THAT THE FURNISHING OF SUCH REPORTS WOULD CONSIST MERELY OF SUBMITTING FIGURES OR INFORMATION WHICH THE CONTRACTOR WOULD HAVE IN ANY EVENT AND WOULD INVOLVE NO MATERIAL AMOUNT OF COSTS. IN B-144784 A COMPETING BIDDER ALLEGED THAT THE COST WAS INCREASED BY $194.00, BUT THE CONTRACTING OFFICER REPORTED THAT NO INCREASE WAS NECESSARILY INVOLVED. IN B 148162 (41 COMP. GEN. 550) THE EFFECT OF THE CHANGE WAS REPORTED TO BE A COST DECREASE OF $15.00. IN B-153271 THERE WAS NO DETERMINATION OR ESTIMATE AS TO THE COST EFFECT OF THE CHANGE IN CERTAIN MINIMUM WAGE RATES AND THE BID WHICH DID NOT ACKNOWLEDGE RECEIPT OF THE AMENDMENT WAS REJECTED.

THE ONLY CASE CONSIDERED UNDER THE CURRENT PROVISIONS OF FPR 1-2.405 APPEARS TO BE B-155827, FEBRUARY 25, 1965. IN THAT CASE THE CONTRACTING OFFICER PROPOSED TO WAIVE AN EXCEPTION TAKEN BY THE LOW BIDDER TO A MINOR DETAIL OF THE SPECIFICATIONS ON THE GROUND THAT THE DEVIATION WOULD NOT AMOUNT TO MORE THAN $100.00 IN COST ON A $238,000.00 BID, BUT IT WAS HELD THAT A DELIBERATE EXCEPTION TO AN INVITATION REQUIREMENT SHOULD NEVER BE WAIVED AS TRIVIAL OR MINIMAL. IN REACHING THAT DECISION WE TOOK OCCASION TO REMARK THAT ONLY THOSE INFORMALITIES WHICH ARE DE MINIMIS SHOULD EVER BE WAIVED. WE BELIEVE THAT STATEMENT IS ENTIRELY CONSISTENT WITH OUR PRIOR DECISIONS AND IS A CORRECT RULE TO BE OBSERVED IN ALL CASES.

IT IS CLEAR FROM THE ABOVE SUMMARY THAT WE HAVE NEVER APPROVED WAIVER IN SUCH CIRCUMSTANCES AS ARE HERE PRESENT WHERE THE MAXIMUM POSSIBLE AMOUNT OF DEVIATION WAS AS MUCH AS $200.00. EXAMINATION OF THE COURT CASES COLLECTED IN 12 WORDS AND PHRASES UNDER THE HEADINGS "DE MINIMIS" AND "DE MINIMIS NON CURAT LEX" INDICATES THAT WHERE DOLLAR AMOUNTS ARE INVOLVED THE DE MINIMIS DOCTRINE HAS GENERALLY BEEN APPLIED ONLY WITH REFERENCE TO AMOUNTS OF THE SAME ORDER OF MAGNITUDE- - THAT IS, UNDER ONE OR TWO HUNDRED DOLLARS.

WHILE IN SEVERAL OF OUR DECISIONS REFERENCE HAS BEEN MADE TO THE TOTAL OR OVERALL COST OF THE WORK INVOLVED AS A FACTOR TO BE CONSIDERED IN DETERMINING WHETHER THE POSSIBLE COST EFFECT OF AN UNACKNOWLEDGED ADDENDUM WAS SO TRIVIAL AS TO JUSTIFY WAIVER, WE BELIEVE THAT THE PROPER EFFECT OF THAT CRITERION SHOULD BE TO LIMIT RATHER THAN TO ENLARGE THE APPLICATION OF THE DE MINIMIS RULE. IN OTHER WORDS, WHILE AN AMOUNT IN THE VICINITY OF $100.00 MIGHT APPEAR TO BE TRIVIAL IN ITSELF, IF IN FACT IT WAS A FAIRLY SUBSTANTIAL PART OF THE TOTAL COST, OR MORE THAN AN INSIGNIFICANT PART OF THE DIFFERENCE BETWEEN THE DEFECTIVE BID AND THE NEXT AVAILABLE BID, IT COULD NOT PROPERLY BE CONSIDERED AS JUSTIFYING A WAIVER OF THE DEFECT. ON THE OTHER HAND, WE WOULD NOT BE INCLINED IN THE ORDINARY CASE TO CONSIDER A POSSIBLE DEVIATION OF $1,000.00 OR MORE AS TRIVIAL OR INSIGNIFICANT IN THE AREA UNDER CONSIDERATION, NO MATTER HOW SMALL A FRACTION OF THE TOTAL COST OR BID DIFFERENCE IT MIGHT BE.

IN THE LIGHT OF THE ABOVE PRINCIPLES, AND CONSIDERING THE FACT THAT THE AMENDMENT HERE INVOLVED INCLUDED CHANGES IN 15 ITEMS WHICH YOUR AGENCY REGARDED AS AFFECTING THE COST OF PERFORMANCE, AND LARGER NUMBER OF CHANGES WHICH WERE CONSIDERED AS HAVING NO COST EFFECT, WE ARE OF THE OPINION THAT THE FAILURE TO ACKNOWLEDGE THE ADDENDUM SHOULD NOT BE WAIVED AS A MINOR IRREGULARITY PERTAINING TO AN IMMATERIAL OR INCONSEQUENTIAL DEFECT OR VARIATION. THE LOW BID OF THE FLORSHEIM COMPANY SHOULD THEREFORE BE REJECTED.