B-158915, JUN. 17, 1966, 45 COMP. GEN. 809

B-158915, JUN. 17, 1966, 45 COMP. GEN. 809

CONTRACTS - PAYMENTS - PROGRESS - REQUEST A BID RECITING "PROGRESS PAYMENTS ARE REQUESTED" UNDER AN INVITATION THAT DID NOT PROVIDE FOR PROGRESS PAYMENTS BUT FOR PAYMENTS UPON DELIVERY AND ACCEPTANCE OF ITEMS IS A NONRESPONSIVE BID, EVEN THOUGH IN THE ORDINARY SENSE THE WORD "REQUEST" IS PRECATORY IN NATURE AS ITS PRECISE MEANING DEPENDS UPON EXISTING CIRCUMSTANCES, AND THE REQUEST FOR PROGRESS PAYMENT SUBJECT TO TWO POSSIBLE MEANINGS, TO PERMIT AN EXPLANATION OF THE REQUEST WOULD PLACE THE BIDDER IN A POSITION TO AFFECT THE RESPONSIVENESS OF THE BID. CONTRACTS - PAYMENTS - PROGRESS SMALL BUSINESS CONCERNS ALTHOUGH THE PURPOSE OF APPENDIX E TO THE ARMED SERVICES PROCUREMENT REGULATION, PROMULGATED IN IMPLEMENTATION OF 10 U.S.C. 2307 (A), IS TO FACILITATE AND ACCELERATE THE MAKING OF PROGRESS PAYMENTS REQUESTED BY SMALL BUSINESS CONCERNS BIDDING ON GOVERNMENT CONTRACTS, THE DISCRETION TO DETERMINE WHETHER OR NOT TO INCLUDE A PROGRESS PAYMENT PROVISION REPOSING IN THE CONTRACTING OFFICER, THE REGULATION REQUIRES THE INCLUSION OF A PROVISION CONTEMPLATING PROGRESS PAYMENTS IN INVITATIONS ONLY WHEN THE PERIOD BETWEEN THE INITIATION OF WORK AND THE FIRST DELIVERY OF PRODUCTION UNITS MAY BE EXPECTED TO EXCEED 6 MONTHS IN DURATION; THEREFORE, A PROGRESS PAYMENTS CLAUSE COULD NOT BE INCLUDED IN AN ULTIMATE CONTRACT THAT WOULD TAKE LESS THAN 6 MONTHS TO PERFORM AND THE SUCCESSFUL CONTRACTOR WOULD BE ENTITLED TO REQUEST AND RECEIVE IN PARTIAL PAYMENTS MORE THAN HALF THE TOTAL CONTRACT PRICE WITHIN 180 DAYS AFTER THE DATE OF THE CONTRACT.

TO SPACE AVIONICS INCORPORATED, JUNE 17, 1966:

BY TELEFAX OF APRIL 8 AND LETTER DATED APRIL 28, 1966, YOU PROTESTED THE AWARD OF A CONTRACT TO AIR-A-PLANE CORPORATION, A HIGHER BIDDER, UNDER INVITATION FOR BIDS NO. 189-211-66 ISSUED ON NOVEMBER 18, 1965, BY THE UNITED STATES NAVAL SUPPLY CENTER, NORFOLK, VIRGINIA. THE INVITATION COVERED THE MANUFACTURE AND DELIVERY OF 1669 EACH KITS MODIFYING FREQUENCY GENERATOR VC-731/URC TO ACCEPT THE FREQUENCY CONVERTER CV-1749 ( ( (OR FOR USE ON RADIO SETS AN/URC-32. THE WORK WAS TO BE ACCOMPLISHED IN ACCORDANCE WITH MILITARY SPECIFICATION MIL-E 16400E (NAVY) DATED JUNE 15, 1962, AND AMENDMENT NO. 5, OF AUGUST 16, 1965, THERETO.

OF THE THREE BIDS OPENED ON DECEMBER 17, 1965, THE LOWEST BID OF TECHNICAL ACCESSORIES COMPANY OFFERING A UNIT PRICE OF $24.90 AND A PROMPT PAYMENT DISCOUNT OF ONE-HALF PERCENT, 10 DAYS, WAS REJECTED AS THE RESULT OF AN UNSATISFACTORY PREAWARD SURVEY AND NOTIFICATION FROM THE SMALL BUSINESS ADMINISTRATION THAT THE CONCERN HAD DECLINED TO APPLY FOR A CERTIFICATE OF COMPETENCY. YOUR BID, THE NEXT LOWEST SUBMITTED, SET FORTH A UNIT PRICE OF $56.03 TOGETHER WITH A DISCOUNT OF 10.2 PERCENT FOR PAYMENT IN 10 DAYS, 10.1 PERCENT, 20 DAYS, AND 10 PERCENT, 30 DAYS. BUT YOUR BID WAS DISREGARDED BECAUSE IT RECITED "PROGRESS PAYMENTS ARE REQUESTED" ON PAGE 2 UNDER THE SECTION ENTITLED "SUPPLIES OR SERVICES AND PRICES" AND THERE WAS NO PROVISION IN THE INVITATION FOR MAKING PROGRESS PAYMENTS.

IT IS YOUR CONTENTION THAT EVEN THOUGH THE INVITATION DID NOT SPECIFICALLY PROVIDE FOR PROGRESS PAYMENTS, NEITHER DID IT EXPRESSLY DISALLOW THEM. WE HAVE IN THE PAST HELD THAT BIDDERS MAY NOT REQUEST THE INCLUSION OF PROGRESS PAYMENT PROVISIONS IN CONTRACTS TO BE AWARDED TO THEM UNLESS THE INVITATION EXPLICITLY CONTEMPLATES THEIR PERMISSIBILITY AND SOLICITS BIDS ON SUCH BASIS. THUS IN B-128454 DATED OCTOBER 11, 1956, WE STATED THAT A BID CONDITIONED UPON THE RECEIPT OF PROGRESS PAYMENTS, WHEN NOT AUTHORIZED IN THE INVITATION MUST, BE TREATED AS NONRESPONSIVE IN A MATERIAL RESPECT. IN B-154755, SEPTEMBER 23, 1964, WE SAID THAT THE QUESTION IS NOT WHETHER THE INVITATION MAKES NO MENTION OF PROGRESS PAYMENTS BUT RATHER WHETHER THERE IS A PAYMENTS CLAUSE IN THE INVITATION WHICH PRESCRIBES A ALLOWABILITY OF PROGRESS PAYMENTS. CF. 38 COMP. GEN. 131 HOLDING THAT A BID CONDITIONED UPON RECEIPT OF ANY MANNER OF PAYMENT AT VARIANCE WITH THE ADVERTISED PAYMENTS CLAUSE MUST BE DECLARED NONRESPONSIVE. THE PRESENT INVITATION INCORPORATED BY REFERENCE, AS THE SOLE STATEMENT ON THE SUBJECT OF CONTRACT PAYMENTS, ARTICLE 7 OF STANDARD FORM 32, JUNE 1964 EDITION, WHICH PROVIDES FOR PAYMENTS ONLY FOR ITEMS WHICH HAVE BEEN DELIVERED TO AND ACCEPTED BY THE GOVERNMENT.

YOU ARGUE THAT THE GRANTING OF PROGRESS PAYMENTS WAS NOT AND SHOULD NOT HAVE BEEN TREATED AS A CONDITION OF YOUR BID, AND THAT THEREFORE THE NAVY SHOULD HAVE AWARDED YOU THE CONTRACT AS THE LOWEST RESPONSIVE BIDDER WITHOUT A PROGRESS PAYMENTS PROVISION. AS WAS OBSERVED IN B 154755 REFERRED TO ABOVE:

WHILE WE WOULD AGREE THAT IN THE ORDINARY SENSE THE WORD "REQUEST" IS PRECATORY IN NATURE, ITS PRECISE MEANING MUST DEPEND UPON THE EXISTING CIRCUMSTANCES. * * * SINCE THE INVITATION PROVIDED FOR A METHOD OF PAYMENT WE THINK IT NOT UNREASONABLE TO VIEW YOUR REQUEST AS SOMETHING MORE THAN A MERE WISH OR DESIRE. HAD YOUR BID BEEN ACCEPTED IT COULD HAVE BEEN ARGUED THAT THE GOVERNMENT ACCEPTED YOUR REQUEST FOR PROGRESS PAYMENTS WAS BOUND TO MAKE PAYMENT IN ACCORDANCE THEREWITH. IF, AS SUGGESTED, YOUR REQUEST WAS IN THE NATURE OF MERE HOPE OR WISH AND YOU INTENDED TO ACCEPT A CONTRACT SUBJECT TO THE "PAYMENTS" ARTICLE, IT WAS INCUMBENT UPON YOU TO CLEARLY EXPRESS SUCH INTENTION. * * * IT IS A RULE OF LONG STANDING THAT WHERE TWO POSSIBLE MEANINGS CAN BE REACHED FROM THE TERMS OF A BID A BIDDER MAY NOT BE PERMITTED TO EXPLAIN WHAT HE INTENDED SINCE HE WOULD THEN BE IN A POSITION TO AFFECT THE RESPONSIVENESS OF HIS BID. * * *.

AS A SMALL BUSINESS CONCERN YOU MAINTAIN THAT THE INVITATION SHOULD HAVE PERMITTED REQUESTS FOR PROGRESS PAYMENTS BECAUSE OF THE ANNOUNCED PURPOSE OF APPENDIX E TO THE ARMED SERVICES PROCUREMENT REGULATION,PROMULGATED IN IMPLEMENTATION OF 10 U.S.C. 2307 (A), TO FACILITATE AND ACCELERATE THE MAKING OF PROGRESS PAYMENTS REQUESTED BY SMALL BUSINESS CONCERNS BIDDING ON GOVERNMENT CONTRACTS. E-001 AND E 204. THE REGULATIONS REQUIRE THE INCLUSION OF A PROVISION CONTEMPLATING PROGRESS PAYMENTS IN INVITATIONS ONLY WHEN THE PERIOD BETWEEN THE INITIATION OF WORK AND THE FIRST DELIVERY OF PRODUCTION UNITS MAY BE EXPECTED TO EXCEED 6 MONTHS IN DURATION. CF. B -149730 DATED OCTOBER 12, 1962. WE COMPUTE THE PERTINENT TIME PERIOD HERE TO BE LESS THAN 6 MONTHS AND THE RECORD SHOWS THAT IF THE FIRST ARTICLE IS APPROVED WHEN AND AS SUBMITTED, AND DELIVERIES ARE MADE AS SPECIFIED, THE SUCCESSFUL CONTRACTOR IS ENTITLED TO REQUEST AND RECEIVE A MINIMUM OF $49,500 IN PARTIAL PAYMENTS WITHIN 180 DAYS AFTER THE DATE OF THE CONTRACT. THIS REPRESENTS MORE THAN HALF OF THE TOTAL CONTRACT PRICE. WHILE WE AGREE THAT YOU MAY NOT HAVE BEEN ADEQUATELY FOREWARNED IN THIS INSTANCE THAT A PROGRESS PAYMENTS CLAUSE COULD NOT BE INCLUDED IN THE ULTIMATE CONTRACT CONTRARY TO THE CLEAR IMPORT OF SECTION E-504.6 OF THE APPLICABLE REGULATIONS, THE DISCRETION TO DETERMINE WHETHER OR NOT PROVISION FOR PROGRESS PAYMENTS IS TO BE MADE IN INVITATIONS IS REPOSED IN THE CONTRACTING OFFICER AND OUR OFFICE IS WITHOUT AUTHORITY TO OBJECT TO HIS FAILURE TO EXERCISE IT ON THE FACTS OF THIS CASE.

FOR THE REASONS OUTLINED ABOVE YOUR PROTEST IS DENIED.