B-157606, DEC. 13, 1965

B-157606, DEC. 13, 1965

TO CURTISS-WRIGHT CORPORATION:

WE REFER TO YOUR LETTER OF AUGUST 31, 1965, CONCERNING THE USE OF A COMMERCIAL WARRANTY CLAUSE IN INVITATION FOR BIDS NO. 41-608-65-661, ISSUED BY THE DIRECTORATE, PROCUREMENT AND PRODUCTION, SAN ANTONIO AIR MATERIEL AREA, KELLY AIR FORCE BASE, TEXAS.

THE INVITATION DATED MARCH 5, 1965, REQUESTED BIDS ON A QUANTITY OF DEFLECTOR ASSEMBLIES IN ACCORDANCE WITH VARIOUS WRIGHT AERO DRAWINGS. APRIL 5, 1965, THE INVITATION WAS MODIFIED TO INCLUDE THE COMMERCIAL WARRANTY CLAUSE PRESCRIBED BY ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-324.2 (C) WHICH READS AS FOLLOWS:

"THE CONTRACTOR AGREES THAT THE SUPPLIES OR SERVICES FURNISHED UNDER THIS CONTRACT SHALL BE COVERED BY THE MOST FAVORABLE COMMERCIAL WARRANTIES THE CONTRACTOR GIVES TO ANY CUSTOMER FOR SUCH SUPPLIES OR SERVICES.'

AT THE OPENING OF BIDS ON APRIL 19, 1965, IT APPEARED THAT YOU SUBMITTED THE LOWEST BID OF THE FOUR RECEIVED. HOWEVER, IN A LETTER ATTACHED TO YOUR BID YOU TOOK EXCEPTION TO THE COMMERCIAL WARRANTY CLAUSE BY EXCLUDING IT FROM YOUR BID. YOU STATED IN YOUR LETTER THAT:

"ALTHOUGH THIS COMPANY'S EXCEPTION TO THE REQUIREMENT MENTIONED ABOVE MAY BE CONSIDERED NON-RESPONSIVE, WE OFFER THE FOLLOWING EXPLANATION OF OUR POSITION.

"A) SINCE "THE MOST FAVORABLE COMMERCIAL WARRANTIES" WOULD VARY WIDELY BETWEEN BIDDERS AND SINCE THE IFB DOES NOT REQUIRE A DESCRIPTION OF THE CONTENT OF THE WARRANTY, IT WOULD NOT BE POSSIBLE TO MAKE A FAIR EVALUATION OF THE BIDS.

"B) THE WARRANTY USED BY THIS COMPANY WITH ITS COMMERCIAL CUSTOMERS WOULD BE IMPRACTICAL TO ADMINISTER AND DIFFICULT TO ENFORCE.

"C) UNDER SECTION 1-324.2 (C) OF THE ARMED SERVICES PROCUREMENT REGULATION THE WARRANTIES POLICY DOES NOT CALL FOR APPLICATION OF THIS "COMMERCIAL WARRANTY" TO ADVERTISED SOLICITATIONS, NEITHER EXPRESSED NOR IMPLIED.'

THE LOW BID OF YOUR COMPANY WAS DETERMINED TO BE NONRESPONSIVE BECAUSE OF THE EXCEPTION TAKEN TO THE COMMERCIAL WARRANTY CLAUSE AND THEREFORE, AWARD WAS MADE ON MAY 28, 1965, TO APPLIED DYNAMICS CORPORATION AS THE NEXT LOWEST RESPONSIVE BIDDER. WHILE NOT PROTESTING AGAINST SUCH AWARD, YOU REQUEST OUR OPINION AS TO THE PROPRIETY OF INCLUDING THE QUOTED COMMERCIAL WARRANTY CLAUSE IN A FORMAL ADVERTISEMENT FOR BIDS. IT IS YOUR POSITION, WITH WHICH WE AGREE, THAT THE USE OF THIS CLAUSE IN ADVERTISED PROCUREMENTS PRECLUDES THE EQUAL EVALUATION OF BIDS; THAT BIDDERS MAY BE BIDDING DIFFERENT COMMERCIAL WARRANTIES; THAT THERE IS NO WAY OF MAKING INTELLIGENT PRICE ALLOWANCE FOR DIFFERENT WARRANTY TERMS, AND THAT UNDER THIS CLAUSE THE BIDDER EXTENDING THE GREATEST (AND COSTLIEST) WARRANTY TO THE GOVERNMENT WOULD BE PENALIZED THE MOST.

ASPR 1-324.2 (C) LIMITS THE USE OF THE QUOTED CLAUSE TO NEGOTIATED PROCUREMENTS, AND WE ARE ADVISED BY THE AIR FORCE THAT THE PERTINENT ASPR MINUTES CONFIRM THAT SUCH WAS THE INTENTION OF THE ASPR COMMITTEE. ADDITIONALLY, WE BELIEVE, AS DOES THE AIR FORCE, THAT THE USE OF THIS CLAUSE IN COMPETITIVE ADVERTISING IS INCONSISTENT WITH THE BASIC PRINCIPLE OF FORMAL ADVERTISING THAT ALL BIDDERS MUST BE AFFORDED AN OPPORTUNITY TO COMPETE ON EQUAL TERMS SO AS TO ALLOW THE PREPARATION AND EVALUATION OF BIDS ON A COMMON BASIS. OBVIOUSLY, WHERE AN INVITATION PERMITS BIDDERS TO BID ON THE BASIS OF VARYING COMMERCIAL WARRANTIES WITHOUT PROVIDING CRITERIA TO AID IN BID PREPARATION AND EVALUATION, THERE IS LACKING A BASIS FOR THE EXACT COMPARISON OF BIDS, CONTRARY TO 10 U.S.C. 2305 (A) AND (B). SEE 43 COMP. GEN. 544; 42 ID. 383; ID. 717, AND THE CASES THEREIN CITED.

THE AIR FORCE HAS ADVISED US THAT YOUR COMPLAINT HAS BEEN BROUGHT TO THE ATTENTION OF THE ASPR COMMITTEE SO THAT IT MAY CONSIDER WHETHER THE PRESENT INSTRUCTIONS CONCERNING THE USE OF THE ASPR 1-324.2 (C) CLAUSE REQUIRE CLARIFICATION.