B-156681, JUN. 2, 1965

B-156681, JUN. 2, 1965

TO DRESSER CONTROLS, DIVISION OF DRESSER INDUSTRIES, INC.:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 27, 1965, PROTESTING THE REJECTION OF YOUR BID SUBMITTED IN RESPONSE TO INVITATION FOR BIDS NO. DS- 6216 ISSUED BY THE BUREAU OF RECLAMATION, DEPARTMENT OF THE INTERIOR, DENVER, COLORADO, ON JANUARY 2, 1965.

THE INVITATION SOLICITED BIDS FOR FURNISHING SUPERVISORY CONTROL AND DIGITAL TELEMETERING EQUIPMENT FOR MONTROSE POWER OPERATIONS CENTER, MONTROSE, COLORADO. YOUR LOW BID OF $32,255, EXCLUSIVE OF ENGINEERING SERVICES, WAS REJECTED AS NONRESPONSIVE AND YOU WERE SO NOTIFIED BY LETTER OF MARCH 2, 1965, FROM THE CONTRACTING OFFICE WHICH IS IN PERTINENT PART AS FOLLOWS:

"THE 3-YEAR WARRANTY STATED IN YOUR TECHNICAL PROPOSAL WHICH WAS SUBMITTED WITH YOUR BID AND WHICH WAS SPECIFICALLY REFERRED TO IN YOUR PROPOSAL IS NOT IN ACCORDANCE WITH PARAGRAPH 5, SECTIONS B AND D, OF THE GENERAL PROVISIONS. THEREFORE, YOUR PROPOSAL IS UNACCEPTABLE FOR AWARD OF CONTRACT. THIS CONTRACT WAS AWARDED TO THE SECOND LOW BIDDER, GULTON INDUSTRIES, SCHILLER PARK, ILLINOIS, ON MARCH 1, 1965.'

SECTIONS (B) AND (D) OF PARAGRAPH 5 OF STANDARD FORM 32, JUNE 1964 EDITION, REFERRED TO IN SAID LETTER CONTAIN THE FOLLOWING PROVISIONS:

"/B) IN CASE ANY SUPPLIES OR LOTS OF SUPPLIES ARE DEFECTIVE IN MATERIAL OR WORKMANSHIP OR OTHERWISE NOT IN CONFORMITY WITH THE REQUIREMENTS OF THIS CONTRACT, THE GOVERNMENT SHALL HAVE THE RIGHT EITHER TO REJECT THEM (WITH OR WITHOUT INSTRUCTIONS AS TO THEIR DISPOSITION) OR TO REQUIRE THEIR CORRECTION. SUPPLIES OR LOTS OF SUPPLIES WHICH HAVE BEEN REJECTED OR REQUIRED TO BE CORRECTED SHALL BE REMOVED OR, IF PERMITTED OR REQUIRED BY THE CONTRACTING OFFICER, CORRECTED IN PLACE BY AND AT THE EXPENSE OF THE CONTRACTOR PROMPTLY AFTER NOTICE, AND SHALL NOT THEREAFTER BE TENDERED FOR ACCEPTANCE UNLESS THE FORMER REJECTION OR REQUIREMENT OF CORRECTION IS DISCLOSED. IF THE CONTRACTOR FAILS PROMPTLY TO REMOVE SUCH SUPPLIES OR LOTS OF SUPPLIES WHICH ARE REQUIRED TO BE REMOVED, OR PROMPTLY TO REPLACE OR CORRECT SUCH SUPPLIES OR LOTS OF SUPPLIES, THE GOVERNMENT EITHER (I) MAY BY CONTRACT OR OTHERWISE REPLACE OR CORRECT SUCH SUPPLIES AND CHARGE TO THE CONTRACTOR THE COST OCCASIONED THE GOVERNMENT THEREBY, OR (II) MAY TERMINATE THIS CONTRACT FOR DEFAULT AS PROVIDED IN THE CLAUSE OF THIS CONTRACT ENTITLED "DEFAULT.' UNLESS THE CONTRACTOR CORRECTS OR REPLACES SUCH SUPPLIES WITHIN THE DELIVERY SCHEDULE, THE CONTRACTING OFFICER MAY REQUIRE THE DELIVERY OF SUCH SUPPLIES AT A REDUCTION IN PRICE WHICH IS EQUITABLE UNDER THE CIRCUMSTANCES. FAILURE TO AGREE TO SUCH REDUCTION OF PRICE SHALL BE A DISPUTE CONCERNING A QUESTION OF FACT WITHIN THE MEANING OF THE CLAUSE OF THIS CONTRACT ENTITLED "DISPUTES.'

"/D) THE INSPECTION AND TEST BY THE GOVERNMENT OF ANY SUPPLIES OR LOTS THEREOF DOES NOT RELIEVE THE CONTRACTOR FROM ANY RESPONSIBILITY REGARDING DEFECTS OR OTHER FAILURES TO MEET THE CONTRACT REQUIREMENTS WHICH MAY BE DISCOVERED PRIOR TO ACCEPTANCE. EXCEPT AS OTHERWISE PROVIDED IN THIS CONTRACT, ACCEPTANCE SHALL BE CONCLUSIVE EXCEPT AS REGARDS LATENT DEFECTS, FRAUD, OR SUCH GROSS MISTAKES AS AMOUNT TO FRAUD.'

INSOFAR AS CONCERNS THE "3-YEAR WARRANT" REFERRED TO IN THE REJECTION NOTICE, IT APPEARS THAT ON PAGE 10 OF YOUR TECHNICAL PROPOSAL 612-132-F ACCOMPANYING YOUR QUOTATION THERE WAS INCLUDED THE FOLLOWING:

"DRESSER CONTROLS PROVIDES A THREE-YEAR WARRANTY TO COVER ITS SUPERVISORY CONTROL TELEMETERING SYSTEMS (SEE WARRANTY CERTIFICATE). THIS EXPRESSES OUR CONFIDENCE IN THE KNOWLEDGE (PROVED BY EXPERIENCE) THAT COMPONENTS ARE CORRECTLY SELECTED AND AMPLY DERATED TO GUARANTEE THE HIGHEST STANDARD OF PERFORMANCE WITH AN ABSOLUTE MINIMUM OF INTERRUPTIONS.' ATTACHED TO THE PROPOSAL WAS A COPY OF THE WARRANTY CERTIFICATE PURPORTING TO WARRANT THE "EQUIPMENT TO BE FREE OF DEFECTIVE COMPONENTS AND WORKMANSHIP FOR A PERIOD OF THREE (3) YEARS FROM DELIVERY DATE.' AFTER THE ENUMERATION OF CERTAIN OTHER PROVISIONS, THE WARRANTY CONTAINED THE FOLLOWING CONCLUDING ARAGRAPH:

"THIS WARRANTY SUPERSEDES ALL OTHERS, BOTH EXPRESSED AND IMPLIED, AND IT IS SPECIFICALLY AGREED DRESSER CONTROLS SHALL HAVE NO OTHER LIABILITY FOR SUBJECT EQUIPMENT EITHER UNDER TORT (EXCEPT FOR GROSS NEGLIGENCE) OR CONTRACT, OTHER THAN OR BEYOND THAT PROVIDED FOR HEREIN.'

IT IS YOUR CONTENTION THAT THE WARRANTY DID NOT SUPERSEDE OR WAS IN CONFLICT WITH THE GENERAL PROVISIONS CONTAINED ON PAGE "D" OF THE BIDDING SCHEDULE WHERE IN PARAGRAPH (1) YOU HAD CHECKED IN THE SPACE PROVIDED THEREFOR THAT YOU WARRANTED "THAT THE EQUIPMENT OFFERED IN HIS BID IS IN STRICT ACCORDANCE WITH THE PROVISIONS OF THIS INVITATION, NOTWITHSTANDING ANY VARIANCE BETWEEN DESCRIPTIVE MATERIAL FURNISHED AND THE PROVISIONS OF THIS INVITATION, AND THE BIDDER FURTHER WARRANTS THAT HE IS READY, WILLING, AND ABLE TO COMPLY WITH ALL THE REQUIREMENTS OF THIS INVITATION, AND THE BIDDER FURTHER WARRANTS THAT HE IS READY, WILLING, AND ABLE TO COMPLY WITH ALL THE REQUIREMENTS OF THIS INVITATION.' ALSO, REFERENCE IS MADE TO A DECISION OF OUR OFFICE OF FEBRUARY 23, 1965, B-155918, WHICH INVOLVED THE QUESTION OF A PROVISION ACCOMPANYING THE BIDDER'S QUOTATION BEING IN CONFLICT WITH SPECIAL PROVISIONS OF THE GOVERNMENT CONTRACT FORM. THAT PROVISION PROVIDED THAT THE CONTRACT PRICE WOULD BE INCREASED BY THE AMOUNT OF ANY FEDERAL, STATE OR MUNICIPAL TAX APPLICABLE TO THE OFFERED EQUIPMENT WHEREAS THE CONTRACT FORM PROVIDED GENERALLY THAT THE CONTRACT PRICE INCLUDED ALL SUCH TAXES. WE HELD THAT THE GENERAL PROVISIONS SUCH AS CONTAINED IN THIS CASE ON PAGE "D" OF THE BIDDING SCHEDULE REFERRED TO HEREINABOVE WERE NOT CONTROLLING OVER ANY SPECIFIC QUALIFICATION--- IN THAT CASE THE EXCLUSION OF TAXES FROM THE BIDDER'S QUOTATION. IN THIS CASE THE EXCLUSION OF TAXES FROM THE BIDDER'S QUOTATION. IN THIS CASE WE MUST CONSIDER THE 3-YEAR WARRANTY PROVISION AS INCLUDED IN YOUR QUOTATION AS MEANING EXACTLY WHAT IT STATES. IF YOU DID NOT INTEND IT TO BE APPLICABLE IT IS NOT UNDERSTOOD WHY REFERENCE WAS MADE TO IT IN YOUR PROPOSAL AND WHY YOU INCLUDED A COPY OF IT WITH YOUR PROPOSAL. THE ONLY MATTER REMAINING FOR DETERMINATION IS WHETHER THIS 3- YEAR WARRANTY LIMITED YOUR RESPONSIBILITY AND LIABILITY TO LESS THAN THAT DEFINED UNDER SECTIONS (B) AND (D) OF PARAGRAPH 5 OF STANDARD FORM 32.

IT IS STATED BY THE CONTRACTING OFFICE THAT THE 3-YEAR WARRANTY MUST BE REGARDED, BY REASON OF BEING A SPECIAL QUALIFICATION TO YOUR BID, TO HAVE LIMITED YOUR LIABILITY FOR DEFECTS AND THUS RENDERED YOUR BID NONRESPONSIVE. IN REGARD TO THIS MATTER THAT OFFICE STATES THAT "IF AT SOME TIME, THREE YEARS AFTER THE AWARD OF THIS CONTRACT, A LATENT DEFECT APPEARED IN THE EQUIPMENT SUPPLIED BY DRESSER INDUSTRIES, THIS BIDDER COULD VERY WELL ARGUE THAT THE THREE-YEAR WARRANTY, WHICH THE GOVERNMENT HAD ACCEPTED AS PART OF THE CONTRACT, HAD EXPIRED AND WITH THIS EXPIRATION THEY WERE NOT SUBJECT TO ANY LIABILITY FOR SUCH DEFECTS.' IN YOUR LETTER OF MARCH 12, 1965, DISCUSSING OUR DECISION OF FEBRUARY 23, 1965, B-155918, YOU CONCEDE THAT A QUOTATION CHANGING THE TAX REQUIREMENTS OF THE INVITATION FOR BIDS MAKES IT NONRESPONSIVE BECAUSE PAYMENT OF TAXES HAS A DIRECT EFFECT UPON PRICE AND COST BUT YOU CONTEND THAT "MINOR CHANGES IN WARRANTY LANGUAGE CLEARLY DO NOT HAVE SUCH AN OBVIOUS EFFECT.' WE MAY NOT BE ABLE TO ASCERTAIN DEFINITELY TO WHAT EXTENT A WARRANTY AGAINST LATENT DEFECTS, ETC., WITHOUT ANY LIMITATION AS TO TIME, MAY HAVE AFFECTED THE AMOUNT OF A BID OVER AND ABOVE THE AMOUNT BID ON A 3-YEAR WARRANTY BASIS. HOWEVER, THERE IS A DIFFERENCE IN LIABILITY FOR DEFECTS FOR A 3-YEAR PERIOD AND A GENERAL LIABILITY FOR LATENT DEFECTS.

IT IS A FUNDAMENTAL RULE UNDER ADVERTISED BIDDING THAT THE CONTRACT AWARDED TO A BIDDER MUST BE THE CONTRACT OFFERED TO ALL BIDDERS. 17 COMP. GEN. 554, 558. IF A BIDDER IMPOSES CONDITIONS AT VARIANCE WITH THOSE EXTENDED BY THE INVITATION TO ALL BIDDERS ITS BID MUST BE REJECTED AS NONRESPONSIVE. ONLY THOSE DEVIATIONS WHICH ARE IMMATERIAL AND DO NOT GO TO THE SUBSTANCE OF THE BID SO AS TO PREJUDICE THE RIGHTS OF THE OTHER BIDDERS MAY BE WAIVED. 30 COMP. GEN. 179. ALSO, SEE 40 COMP. GEN. 447, 448. WHILE THERE MAY BE SOME QUESTION AS TO THE DEGREE OF DIFFERENCES BETWEEN YOUR 3-YEAR WARRANTY PROVISION AND THE GENERAL PROVISIONS OF THE INVITATION, WE CANNOT DISAGREE WITH THE CONCLUSION OF THE CONTRACTING OFFICE THAT YOUR BID WAS NOT RESPONSIVE TO THE INVITATION.