B-160185, DEC. 13, 1966

B-160185, DEC. 13, 1966

TO FEDERAL ELECTRIC CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF OCTOBER 4 AND LETTERS OF OCTOBER 6 AND DECEMBER 8, 1966, PROTESTING THE CANCELLATION OF INVITATION FOR BIDS (IFB) NO. 19-628-66-343 BY THE ELECTRONIC SYSTEMS DIVISION, AIR FORCE SYSTEMS COMMAND, BEDFORD, MASSACHUSETTS.

THE PROCEDUREMENT IS FOR SERVICES, EQUIPMENT AND SUPPLIES NECESSARY FOR THE INSTALLATION OF A COMMUNICATION SYSTEM IN JAPAN KNOWN AS "KANTO PLAINS.' IT WAS INITIATED AS A TWO-STEP ADVERTISED PROCUREMENT. FOUR TECHNICAL PROPOSALS WERE RECEIVED IN THE FIRST STEP AND THE PROPOSALS OF YOUR CORPORATION AND NIPPON ELECTRIC COMPANY, LTD. (NEC), WERE DETERMINED TECHNICALLY ACCEPTABLE. YOUR FIRM AND NEC SUBMITTED BIDS UNDER THE SECOND STEP WHICH WERE OPENED JULY 13, 1966, AND THE CONTRACTING OFFICER DETERMINED THAT NEITHER YOUR BID NOR THAT OF NEC WAS RESPONSIVE TO THE INVITATION. THE BID OF NEC WAS NONRESPONSIVE BECAUSE IT ATTACHED A NUMBER OF CONDITIONS TO IT WHICH WERE NOT COMPATIBLE WITH THE TERMS OF THE INVITATION. YOUR BID WAS NONRESPONSIVE IN THAT YOU FAILED TO FURNISH THE TRANSPORTATION DATA AND GUARANTEED SHIPPING WEIGHTS REQUIRED BY THE INVITATION. SINCE NO RESPONSIVE BID WAS RECEIVED THE INVITATION WAS CANCELED AND NEGOTIATIONS WERE ENTERED INTO WITH YOUR FIRM AND NEC PURSUANT TO ASPR 3-210.2. NEC REAFFIRMED ITS BID PRICE OF $13,683,835 AND WITHDREW THE CONDITIONS WHICH HAD MADE ITS BID NONRESPONSIVE. YOU SUBMITTED THE NECESSARY TRANSPORTATION DATA AND REDUCED YOUR PRICE BY $100,000 TO $16,686,000. THE ADMINISTRATIVE OFFICE REPORTS THAT IT HAS DETERMINED THAT THE TRANSPORTATION COSTS APPLICABLE TO YOUR PROPOSAL ARE APPROXIMATELY $27,0000 GREATER THAN THE TRANSPORTATION COSTS APPLICABLE TO THE NEC PROPOSAL. IT FURTHER REPORTS THAT IN EVALUATING BIDS FOR PURPOSES OF AWARD UNDER THE IFB BALANCE OF PAYMENT PROVISIONS (PART IX, SP-1), WHICH REQUIRE THE ADDITION OF A 50-PERCENT PENALTY" FOR THE FOREIGN COSTS, INCLUDED IN EACH PROPOSAL, YOUR ADJUSTED PRICE OF $18,631,028 IS $1,796,764 GREATER THAN THE ADJUSTED PRICE OF $16,834,264 OF NEC. AS A RESULT OF THE NEGOTIATIONS THE ADMINISTRATIVE OFFICE HAS DETERMINED THAT NEC SHOULD RECEIVE THE CONTRACT AWARD.

IN YOUR LETTER OF OCTOBER 6, 1966, YOU STATE THAT THE INVITATION WAS IMPROPERLY CANCELED AND THAT SINCE YOU SUBMITTED THE ONLY RESPONSIVE BID THE CONTRACT SHOULD HAVE BEEN AWARDED TO YOUR FIRM. YOU STATE THAT WHILE PARAGRAPH SPECIAL PROVISION 3 (SP-3) REQUIRED BIDDERS TO FURNISH GUARANTEED SHIPPING WEIGHTS, PARAGRAPH "D," PART V, OF THE BIDDING SCHEDULE REQUIRED THE BIDDERS TO FURNISH SUCH INFORMATION ON THE ATTACHED AFPI FORM 28A. IT IS YOUR CONTENTION THAT THESE TWO PROVISIONS OF THE INVITATION ARE SO INTERRELATED THAT COMPLIANCE WITH SP-3 COULD NOT BE EFFECTED WITHOUT THE USE OF AFPI FORM 28A. THEREFORE, YOU STATE THAT SINCE THE AFPI FORM 28A WAS NOT FURNISHED WITH THE BIDDING DOCUMENTS YOU WERE NOT REQUIRED TO FURNISH THE GUARANTEED SHIPPING WEIGHTS AS PROVIDED BY PARAGRAPH SP-3. YOU FURTHER CONTEND THAT EVEN IF THE SHIPPING WEIGHTS WERE MANDATORY, THE FAILURE TO SUBMIT SUCH INFORMATION SHOULD BE WAIVED AS A MINOR INFORMALITY. IN SUPPORT OF YOUR CONTENTIONS, YOU CITE DECISIONS OF OUR OFFICE TO THE EFFECT THAT WHERE AN INVITATION FAILED TO INCLUDE A GUARANTEED SHIPPING WEIGHT PROVISION, NO VALID REASON EXISTED FOR CANCELING THE INVITATIONS PARTICULARLY WHERE THE ACTUAL WEIGHTS WOULD NOT AFFECT THE RELATIVE STANDING OF THE LOW BIDDERS.

IN YOUR LETTER OF DECEMBER 8, YOU FURTHER CONTEND THAT THE ASSERTION BY THE AIR FORCE THAT NEC SUBMITTED THE REQUIRED GUARANTEED SHIPPING WEIGHTS IS NOT FACTUALLY CORRECT. YOU STATE THAT NEC FURNISHED "ESTIMATED" MAXIMUM SHIPPING WEIGHTS ONLY AND YOU VERBALLY POINTED OUT TO REPRESENTATIVES OF OUR OFFICE THAT THIS IS SUBSTANTIATED BY THE FACT THAT NEC DID NOT SHOW ANY CUBIC FOOTAGE FOR THE INSTALLATION MATERIAL. THEREFORE, YOU URGE THAT SINCE NEITHER BIDDER SUPPLIED GUARANTEED SHIPPING WEIGHTS, THERE WAS NOT A SUFFICIENTLY COGENT OR COMPELLING REASON TO CANCEL THE IFB. IN SUPPORT THEREOF, YOU CITE B 159267, JUNE 30, 1966; B- 153613, MAY 6, 1964; AND B-158570, JULY 25, 1966, WHEREIN OUR OFFICE HELD THAT AWARDS TO NONRESPONSIVE BIDDERS WERE NOT OBJECTIONABLE WHERE ALL OTHER BIDDERS WERE EQUALLY NONRESPONSIVE.

IN ADDITION, YOU STATE THAT NEC DID NOT SUBMIT A COST PROPOSAL UNDER STEP TWO OF THE IBF BECAUSE THE IFB WAS SIGNED "C. TSUNEOKA" AND DESCRIBED IN TYPED LETTERS AS "CHISHIRO TSUNEOKA, TREASURER OF NIPPON ELECTRIC N.Y., INC.' HENCE, YOU CONTEND THAT THE BID COULD NOT BE CONSIDERED AS A BID SUBMITTED BY NEC AND, THEREFORE, IT WAS NOT ELIGIBLE FOR CONSIDERATION.

WE DO NOT AGREE WITH YOUR CONTENTION THAT THE NONRECEIPT OF AFPI FORM 28A RELIEVED YOU OF THE OBLIGATION FOR FURNISHING SHIPPING DATA IN COMPLIANCE WITH SPECIAL PROVISION SP-3 OF THE IFB. FIRST OF ALL, THE GOVERNMENT DENIES THAT IT FAILED TO ATTACH AFPI FORM 28A TO THE BIDDING DOCUMENTS FURNISHED YOU, BUT EVEN IF IT HAD SO FAILED, THIS FACTOR WAS NOT A VALID BASIS FOR WAIVING THE REQUIREMENT OF SPECIAL PROVISION SP-3. THE INFORMATION CALLED FOR IN THAT PARAGRAPH WAS A SUBSTANTIVE REQUIREMENT AND WAS NOT IN CONFLICT WITH PARAGRAPH "D" WHICH REQUIRED COMPLETION OF THE ATTACHED AFPI FORM 28A. THE USE OF AFPI FORM 28A WAS ONLY A CONVENIENT MEANS BY WHICH THE INFORMATION COULD BE PROVIDED. FURTHERMORE, WHEN YOU DISCOVERED THAT FORM 28A WAS NOT ATTACHED TO THE BIDDING DOCUMENTS, WE BELIEVE THERE WAS NO BASIS FOR ASSUMING THAT THE REQUIREMENTS OF SP-3 WERE INAPPLICABLE; RATHER, YOU SHOULD HAVE CONTACTED THE OFFICES SPECIFIED IN PARAGRAPHS SP-16 AND SP-17 TO OBTAIN THE NECESSARY DOCUMENT.

YOUR CONTENTION THAT NEC DID NOT SUBMIT THE REQUIRE GUARANTEED SHIPPING WEIGHTS IS NOT SUBSTANTIATED BY THE RECORD. IN ITS BID, NEC REFERRED TO PARAGRAPH SP-3, THE GUARANTEED SHIPPING WEIGHTS CLAUSE, AND PREPARED ITS WEIGHT INFORMATION DOCUMENT WITH THE HEADING "GUARANTEED MAXIMUM SHIPPING WEIGHTS.' BENEATH THIS HEADING NEC STATED, AS YOU ALLEGE, THAT THE ESTIMATED SHIPPING WEIGHTS WERE AS SET FORTH THEREIN. WE DO NOT REGARD THE USE OF THE WORD "ESTIMATED" AS A QUALIFICATION OF ITS GUARANTEE OF THE SHIPPING WEIGHTS. CONSIDERING THAT NEC REFERRED IN ITS BID TO THE GUARANTEED SHIPPING WEIGHTS CLAUSE, WE CONCLUDE THAT IT DID GUARANTEE THE ESTIMATED WEIGHTS SHOWN. WHILE YOU STATE THAT NEC DID NOT SHOW THE CUBIC FEET FOR INSTALLATION MATERIALS, THE ADMINISTRATIVE OFFICE REPORTS THAT THE SHIPPING DATA WAS FURNISHED IN A FORMAT SUSCEPTIBLE FOR EVALUATION. IN THE CIRCUMSTANCES, WE MUST ACCEPT THE ADMINISTRATIVE STATEMENT IN THE MATTER. HENCE, SINCE NEC FURNISHED THE SHIPPING DATA REQUIRED, THE ABOVE- CITED OFFICE DECISIONS ARE NOT APPLICABLE TO THE FACTS HERE INVOLVED.

SINCE WE CONCLUDE THAT THE SHIPPING DATA WAS REQUIRED, THE QUESTION ARISES AS TO WHETHER THE REQUIREMENT CAN LEGALLY AND PROPERLY BE WAIVED. WHERE, AS HERE, SHIPPING DESTINATIONS ARE KNOWN, OUR OFFICE HAS CONSISTENTLY HELD THAT THIS REQUIREMENT MAY NOT BE WAIVED. SEE 38 COMP. GEN. 819 AND B-157112, SEPTEMBER 28, 1965. WE HAVE CAREFULLY CONSIDERED THE OTHER DECISIONS OF OUR OFFICE WHICH WERE CITED BY YOU IN SUPPORT OF YOUR POSITION THAT AWARD PROPERLY SHOULD BE MADE TO YOUR FIRM AS THE LOWEST "RESPONSIVE" BIDDER. BUT THOSE DECISIONS ARE NOT GERMANE TO THE ISSUES INVOLVED HERE, ESPECIALLY SINCE THE PROCUREMENT EVOLVED INTO ONE CONTEMPLATED BY THE NEGOTIATION PROCEDURES OF ASPR 3 210.2.

WE ARE ADVISED BY THE ADMINISTRATIVE OFFICE THAT YOUR BID WAS OVER $3,000,000 IN EXCESS OF THE BID OF NEC AND THAT IT EXCEEDED THE PROGRAM OFFICE'S COST ESTIMATE BY OVER $2,000,000. IN THESE CIRCUMSTANCES, IT IS REPORTED THAT EVEN IF YOU HAD INITIALLY FURNISHED SHIPPING DATA WITH YOUR BID, IT WOULD HAVE BEEN REJECTED AS UNREASONABLE AND THE PROCUREMENT NEGOTIATED TO OBTAIN A REASONABLE PRICE TO THE GOVERNMENT.

ALSO, ON THE RECORD BEFORE US, WE CONCLUDE THAT NEC DID SUBMIT A COST PROPOSAL UNDER STEP TWO OF THE IFB NOTWITHSTANDING THE MANNER IN WHICH IT WAS SIGNED. IT IS TRUE THAT THE NEC BID WAS SIGNED IN BLOCK 16,"SIGNATURE OF PERSON AUTHORIZED TO SIGN OFFER," OF DD FORM 1490, BY C. TSUNEOKA AND IN BLOCK 15 HE IS DESCRIBED AS "CHISHIRO TSUNEOKA, TREASURER OF NIPPON ELECTRIC NEW YORK, INC.' HOWEVER, BLOCK 12, TITLED "FULL NAME AND BUSINESS ADDRESS OF OFFEROR," OF THE SAME FORM CONTAINS THE FOLLOWING ENTRY:

"NIPPON ELECTRIC COMPANY, LTD.

7-15 SHIBA GOCHOME, MINATO-KU

TOKYO, JAPAN.'

IT SEEMS EVIDENT THAT MR. TSUNEOKA SIGNED THE BID ON BEHALF OF NIPPON ELECTRIC COMPANY, LTD., THE COMPANY WHICH SUBMITTED THE TECHNICAL PROPOSAL UNDER STEP ONE. FURTHERMORE, THE CONTRACTING OFFICER STATES THAT HE RECEIVED A TWX FROM NEC PRIOR TO BID OPENING WHICH AUTHORIZED MR. TSUNEOKA AS TREASURER OF NIPPON ELECTRIC, NEW YORK, INC., TO ACT FOR, AND ON BEHALF OF, NEC IN THIS PROCUREMENT.

IN VIEW OF THE FOREGOING, WE MUST CONCLUDE THAT THE CANCELLATION OF THE INVITATION FOR BIDS AND THE NEGOTIATIONS THEREAFTER CONDUCTED WERE PROPER IN THE CIRCUMSTANCES.