B-157692, NOV. 2, 1965

B-157692, NOV. 2, 1965

TO UNITED MANUFACTURING DIVISION, UMC ELECTRONICS COMPANY:

BY LETTER OF SEPTEMBER 17, 1965, WITH ENCLOSURES, YOU REQUEST THAT OUR OFFICE REVIEW A PROCUREMENT BY THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA), LEWIS RESEARCH CENTER, CLEVELAND, OHIO, OF A LOAD BANK UNDER INVITATION FOR BIDS (IFB) NO. C-267158, ISSUED MAY 19, 1965, IN WHICH AWARD WAS MADE TO ANOTHER BIDDER, AND, IF POSSIBLE, THAT WE DIRECT NASA TO AWARD THE CONTRACT TO YOU UNDER THE SAME IFB.

THE IFB WAS DISTRIBUTED TO 23 SOURCES. ONLY TWO OF THE SOURCES, YOU AND AVTRON MANUFACTURING, INCORPORATED, SUBMITTED BIDS, BOTH OF WHICH WERE OPENED ON JUNE 14, 1965. YOUR BID OF $12,750.21, F.O.B. NORTH HAVEN, CONNECTICUT, OR $12,869.86, INCLUDING ESTIMATED FREIGHT CHARGES OF $119.65 TO DESTINATION, WAS LOWER THAN EITHER AVTRON'S BID OF $14,750 F.O.B. DESTINATION OR THE GOVERNMENT'S ESTIMATE OF $14,658. HOWEVER, UPON EVALUATION OF YOUR BID, NASA DETERMINED THAT YOU DID NOT OFFER TO COMPLY WITH SECTION J.3. OF THE SPECIFICATIONS, AS AMENDED, QUOTED BELOW. THEREFORE, YOUR BID WAS REJECTED AS NONRESPONSIVE, AND AWARD WAS MADE ON JUNE 30 TO AVTRON, WHO OFFERED THE ITEM THAT NASA NEEDED.

IN A SUBSEQUENT EXCHANGE OF CORRESPONDENCE BETWEEN YOU AND NASA, THERE WAS DISCUSSED THE INTERPRETATION OF SECTION J.3., WHICH READS AS FOLLOWS:

"J. THE LOAD BANK SHALL BE DIVIDED INTO FOUR SECTIONS AS FOLLOWS:

"3. THE THIRD AND FOURTH SECTIONS SHALL BE 0 TO 3 KVAR EACH, TO SERVE AS VERNIER LOAD CONTROLS TO ENABLE EXACT LOAD SETTINGS ON LARGER SECTIONS.

"A. INDEPENDENT PHASE CONTROL SHALL BE PROVIDED BY MOTOR OPERATED (32 SECONDS PER REVOLUTION) WHICH CONTROL 1.0 KVAR OF LOAD PER PHASE.

"B. AUTOTRANSFORMERS SHALL BE MOUNTED IN THE LOAD BANK CABINET AND REMOTELY CONTROLLED BY THREE POSITION, SPRING LOADED TOGGLE SWITCHES.

"C. EACH AUTOTRANSFORMER SHALL BE PROVIDED WITH AN AC COLTMETER, CALIBRATED IN KVAR AND CONNECTED TO SERVE AS A POSITION INDICATOR.'

IN SUPPORT OF YOUR CONTENTION THAT YOU WERE RESPONSIVE TO THE IFB, YOU MADE THE FOLLOWING STATEMENTS IN A LETTER DATED JULY 16 TO NASA:

"* * * IT IS OUR UNDERSTANDING THAT IN PARAGRAPH J-3 OF YOUR SPECIFICATION YOU INTENDED THAT TWO SECTIONS BE FURNISHED, EACH SECTION TO CONTAIN 0-3 KW AND 0-3 KVAR OF LOADING. IN CONTRAST TO THIS, OUR BID PROPOSED ONE SECTION OF 0-3 KW AND THE OTHER SECTION OF 0-3 KVAR. WHILE OUR PROPOSAL MAY NOT HAVE MET YOUR REQUIREMENT, IT DID MEET YOUR SPECIFICATION. YOU WILL NOTE THAT YOUR SPECIFICATION REQUIRES THESE TWO SECTIONS TO BE "0-3 KVA EACH.' YOUR SPECIFICATION ALSO REQUIRES THAT INDEPENDENT PHASE CONTROL BE PROVIDED TO CONTROL 1.0 KW OR 1.0 KVAR OF LOAD PER PHASE (NOT SECTION). IN OUR PROPOSAL WE GAVE YOU A SECTION CONTAINING 3 SEPARATE 1.0 KW PER PHASE CONTROL. THIS IS THE 3 KVA YOU REQUIRE. OUR FOURTH SECTION WAS 3 SEPARATE 1 KVAR CONTROLS (1 PER PHASE) AND THIS ALSO IS 3 KVA. IF WE WERE TO GIVE YOU THE 0-3 KW AND THE 0-3 KVAR IN EACH SECTION THAN EACH SECTION WOULD BE 0-4.2 KVA. THIS FIGURE, 4.2, IS DERIVED FROM THE VECTOR REPRESENTATION THAT SHOULD BE FAMILIAR TO ALL ELECTRICAL ENGINEERS. THE 3 KW WOULD BE THE IN-PHASE COMPONENT AND THE 3 KVAR WOULD BE THE 90 DEGREE OUT OF PHASE COMPONENT THE SUMMATION OF THE TWO IS THE HYPOTENUSE OF THE RIGHT TRIANGLE, AND TOTAL 4.2 KVA. YOUR SPECIFICATION DID NOT REQUIRE 4.2 KVA. THUS, IT IS OUR VERY STRONG CONTENTION THAT WE MET THE REQUIREMENT OF YOUR SPECIFICATION AND THAT WE HAD NO WAY OF KNOWING THAT THE PERSON WHO WROTE THE SPECIFICATION REALLY HAD SOMETHING ELSE IN MIND.'

NASA'S REPLY BY LETTER OF JULY 28 INCLUDES THE FOLLOWING STATEMENTS:

"THIS LETTER IS IN REPLY TO YOUR LETTER OF JULY 16, 1965 REGARDING THE AWARD OF SUBJECT INVITATION FOR BID. IT POINTS OUT ANOTHER AREA OF TECHNICAL NON-RESPONSIVENESS AND FURTHER AMPLIFIES PARAGRAPH U-3 AS MENTIONED IN OUR LETTER TO YOU DATED JULY 15, 1965.

"PARAGRAPH 1-A OF THE SPECIFICATIONS FOR IFB C-267158 CALLS FOR A LOAD BANK IN FOUR SECTIONS WITH A TOTAL LOAD CAPABILITY OF 30 KVA TO PROVIDE CONTINUOUS LOAD AT POWER FACTORS FROM UNITY TO 0.7 LAGGING.

"IN ORDER TO HAVE A LOAD BANK WHICH IS CAPABLE OF DISSIPATING LOADS RATED IN KVA AS REQUIRED IN THE SPECIFICATIONS, THE CAPABILITY TO DISSIPATE LOADS AT POWER FACTORS OTHER THAN UNITY AND ZERO MUST BE SUPPLIED WITHIN THE LOAD BANK. A LOAD BANK WITH A UNITY POWER FACTOR RATING WOULD BE RATED IN KW ONLY WHILE A LOAD BANK WITH A ZERO POWER FACTOR RATING WOULD BE RATED IN KVAR ONLY.

"PARAGRAPH J-3 OF THE SPECIFICATIONS STATES,"THE THIRD AND FOURTH SECTIONS SHALL BE 0 TO 3 KVA EACH.' THIS REQUIRES THE CAPABILITY OF EACH SECTION TO DISSIPATE LOADS AT POWER FACTORS OTHER THAN UNITY AND ZERO. THIS FOLLOWS FROM PARAGRAPH 1-A OF THE SPECIFICATIONS WHICH CALLS FOR A LOAD BANK RATED IN KVA.

"IN YOUR BID, THE THIRD SECTION AS DESCRIBED IS A RESISTIVE LOAD WHICH CAN BE RATED ONLY IN KW, WHILE THE FOURTH SECTION IS AN INDUCTIVE LOAD WHICH CAN BE RATED ONLY IN KVAR. THE TWO SECTIONS (THIRD AND FOURTH) OF YOUR BID COMBINED WOULD HAVE THE CAPABILITY OF MEETING THE REQUIREMENTS OF EITHER THE THIRD OR FOURTH SECTION OF THE SPECIFICATIONS. THEREFORE, ANOTHER SECTION WOULD HAVE TO BE ADDED TO MEET NASA'S SPECIFICATIONS TO HAVE THE CAPABILITY TO DISSIPATE LOADS AT POWER FACTORS OTHER THAN UNITY AND ZERO AND CAN THEREFORE BE RATED IN KVA, WHICH IS THE REQUIREMENTS FOR EACH SECTION OF THE THIRD AND FOURTH SECTIONS. YOUR BID, THEREFORE, WAS JUDGED TO BE NON RESPONSIVE.'

SUBSEQUENTLY, AFTER CONSIDERATION OF ADDITIONAL CORRESPONDENCE FROM YOU AND UPON FURTHER REVIEW OF THE SPECIFICATIONS, NASA DETERMINED THAT SECTION J.3. WAS AMBIGUOUS BECAUSE OF THE USE OF THE WORD "OR" IN SUBSECTION A., BETWEEN "1.0 KW" AND "1.0 KVAR," LEAVING BIDDERS SEVERAL CHOICES OF INTERPRETATION. ACCORDINGLY, THE CONTRACT WITH AVTRON WAS TERMINATED FOR THE CONVENIENCE OF THE GOVERNMENT, AND THE PROCUREMENT WAS READVERTISED UNDER REVISED PERFORMANCE SPECIFICATIONS, WHICH CLARIFY THE GOVERNMENT'S REQUIREMENTS. UNDER THE SECOND IFB, NO. C-267353, ISSUED SEPTEMBER 24, 1965, WHICH WAS SENT TO ALL OF THE FIRMS ORIGINALLY SOLICITED, BID OPENING WAS SCHEDULED FOR OCTOBER 25. AWARD WILL BE DEFERRED BY NASA, HOWEVER, PENDING OUR DECISION ON YOUR PROTEST UNDER THE ORIGINAL IFB.

NOTWITHSTANDING THAT NASA HAS CONCLUDED THE ITEM YOU OFFER IN YOUR BID ON THE FIRST IFB WILL NOT MEET ITS REQUIREMENTS, YOU MAINTAIN THAT AWARD SHOULD BE MADE TO YOU UNDER THE ORIGINAL IFB ON THE BASIS THAT YOUR LOW BID WAS RESPONSIVE TO THAT IFB, WHICH, YOU CLAIM, WAS NOT AMBIGUOUS. YOU OBJECT TO READVERTISEMENT OF THE PROCUREMENT ON THE GROUNDS THAT AVTRON WILL BE AT AN ADVANTAGE SINCE IT KNOWS YOUR PREVIOUS PRICE, HAS PROBABLY COMPLETED ITS ENGINEERING, AND CAN BID A LOWER PRICE BECAUSE OF RECEIPT OF TERMINATION CHARGES ON ITS CONTRACT UNDER THE ORIGINAL IFB.

IT IS NASA'S POSITION THAT WHILE AVTRON OFFERED THE EQUIPMENT NASA NEEDS AND INTENDED TO PURCHASE UNDER THE ORIGINAL IFB, THE FACT THAT THE SPECIFICATIONS THEREIN WERE SUSCEPTIBLE OF INTERPRETATIONS OTHER THAN THE ONE INTENDED BY NASA WARRANTED TERMINATION OF THE CONTRACT AWARDED THEREUNDER TO AVTRON AND READVERTISEMENT OF THE PROCUREMENT UNDER PROPER SPECIFICATIONS TO AFFORD ALL BIDDERS AN OPPORTUNITY TO COMPETE ON AN EQUAL BASIS. FURTHER, NASA POINTS OUT THAT UNDER THE NEW IFB THE DELIVERY TIME IS 150 DAYS, AS COMPARED WITH 90 DAYS IN THE ORIGINAL IFB; THAT THIS FACTOR SHOULD NULLIFY AN ADVANTAGE GAINED BY AVTRON FROM ITS EXPERIENCE UNDER THE ORIGINAL CONTRACT; AND THAT TERMINATION COSTS ARE LESS THAN $400, THEREBY MINIMIZING THEIR EFFECT ON THE REBIDDING. REGARDING THE EFFECT OF THE EXPOSURE OF BID PRICES, IT IS NASA'S VIEW THAT SUCH ACTION IS MORE DETRIMENTAL TO AVTRON THAN TO YOU SINCE ONLY AVTRON'S BID UNDER THE DEFECTIVE IFB WAS RESPONSIVE TO NASA'S REQUIREMENTS.

UNDER 10 U.S.C. 2305 (B), NASA WAS REQUIRED TO INCLUDE IN THE IFB SPECIFICATIONS WHICH WERE SUFFICIENTLY DESCRIPTIVE IN LANGUAGE TO PERMIT FULL AND FREE COMPETITION. SUCH OBLIGATION REQUIRES THAT THE IFB BE SUFFICIENTLY DEFINITE TO REQUIRE THE PREPARATION, AND PERMIT THE EVALUATION, OF BIDS ON A COMMON BASIS. THE FACTS OF RECORD ESTABLISH THAT NASA INTENDED TO SOLICIT BIDS ON EQUIPMENT MEETING CERTAIN REQUIREMENTS AND HAD NO INTENTION OF ACCEPTING ANY ALTERNATE ITEM. HOWEVER, THE SPECIFICATIONS IN THE ORIGINAL IFB WERE SUSCEPTIBLE OF SEVERAL INTERPRETATIONS WITH THE RESULT THAT YOU OFFERED EQUIPMENT IN ACCORDANCE WITH YOUR INTERPRETATION OF THE SPECIFICATIONS, WHICH DOES NOT MEET NASA'S REQUIREMENTS, WHILE AVTRON, UNDER ITS INTERPRETATION OF THE SAME SPECIFICATIONS, OFFERED THE EXACT EQUIPMENT WHICH NASA INTENDED TO PURCHASE AND NEEDS. ACCORDINGLY, WE MUST CONCUR WITH NASA'S CONCLUSION THAT THE IFB WAS AMBIGUOUS. MOREOVER, HAD THE DEFECT BEEN DETECTED BEFORE AWARD, IT IS OUR OPINION THAT NASA COULD HAVE ELECTED, UNDER THE PROVISIONS OF NASA PROCUREMENT REGULATION 2-404.1 (B) (I), TO REJECT BOTH BIDS, CANCEL THE IFB, AND READVERTISE THE PROCUREMENT.

AS TO THE EFFECT OF YOUR STATUS AS LOW BIDDER UNDER THE DEFECTIVE IFB, YOUR ATTENTION IS DIRECTED TO THE PROVISIONS OF PARAGRAPH 8 (B) OF THE TERMS AND CONDITIONS OF THE IFB RESERVING TO THE GOVERNMENT THE RIGHT TO REJECT ANY OR ALL BIDS. UNDER SUCH PROVISIONS ALONE, NASA HAD THE RIGHT TO REJECT YOUR BID. MORE IMPORTANT, A REQUEST FOR BIDS OR OFFERS DOES NOT IMPORT ANY OBLIGATION TO ACCEPT ANY OF THE OFFERS RECEIVED, AND A CONTRACTING OFFICER IS NOT BOUND TO ACCEPT BID WHERE HE DETERMINES THAT THE PUBLIC INTEREST WOULD BE SERVED BY A REJECTION OF ALL BIDS AND READVERTISEMENT OF A PROCUREMENT UNDER SPECIFICATIONS STATING THE GOVERNMENT'S NEEDS MORE ACCURATELY. 17 COMP. GEN. 554 AND COURT CASES CITED THEREIN.

IN THE CIRCUMSTANCES, WHILE IT IS UNFORTUNATE THAT THE EXPOSURE OF BID PRICES MAY BE DETRIMENTAL TO YOU AS WELL AS TO AVTRON, IT IS OUR VIEW THAT THE READVERTISEMENT OF THE PROCUREMENT UNDER CLARIFIED SPECIFICATIONS IS IN THE BEST INTEREST OF THE COMPETITIVE BIDDING SYSTEM, CONSISTENT WITH THE PURPOSE OF THE PROCUREMENT STATUTE AND IMPLEMENTING REGULATIONS. ACCORDINGLY, WE SEE NO JUSTIFIABLE BASIS ON WHICH TO QUESTION THE ACTION BY NASA IN THIS INSTANCE, AND YOUR PROTEST MUST THEREFORE BE DENIED.