B-161231, JUN. 2, 1967

B-161231, JUN. 2, 1967

TO ELECTROSOLIDS CORPORATION:

REFERENCE IS MADE TO YOUR PROTEST BY LETTER DATED APRIL 7, 1967, AGAINST AWARD BY THE DEPARTMENT OF THE ARMY TO ANY OTHER BIDDER OF A CONTRACT TO FURNISH BATTERY CHARGERS AND RELATED ITEMS UNDER INVITATION FOR BIDS (IFB) NO. DAABO5-67-B-0991, ISSUED JANUARY 30, 1967, BY THE UNITED STATES ARMY ELECTRONICS COMMAND, PHILADELPHIA, PENNSYLVANIA. THE PROCUREMENT WAS INITIATED UNDER THE MULTI-YEAR PROCUREMENT PROCEDURES PRESCRIBED IN ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-322, AND THE MULTI-YEAR PERIOD IS OF TWO YEARS' DURATION.

ALTERNATE A IN THE IFB, AS AMENDED, COMPRISES ITEMS NUMBERED 1, 2, 3, 4 AND 11, AND SETS FORTH A SINGLE-YEAR REQUIREMENT FOR 528 UNITS OF THE BATTERY CHARGERS, WITH ACCESSORY ITEMS. ALTERNATE B, COMPRISING ITEMS 5 THROUGH 10 AND ITEMS 12 AND 13, SETS FORTH THE MULTI-YEAR REQUIREMENTS FOR TWO SEPARATE YEARS, THE FIRST-YEAR REQUIREMENT COVERING 528 UNITS, AND THE SECOND-YEAR REQUIREMENT COVERING 3,876 UNITS.

THE MULTI-YEAR PROVISIONS REQUIRE THAT BIDS ON EITHER ALTERNATE COVER THE TOTAL REQUIREMENTS FOR THE PARTICULAR ALTERNATE, AND THAT THE UNIT PRICE OF EACH MATCHING ITEM UNDER ALTERNATE B BE THE SAME FOR ALL PROGRAM YEARS.

EVALUATION PROVISIONS INDICATE THAT EACH OF THE TWO ITEM GROUPS, A AND B, WILL BE CONSIDERED AS A SINGLE ITEM AND WILL BE AWARDED ONLY AS A UNIT, THEREBY NECESSITATING QUOTATION ON EACH ITEM IN THE GROUP IN ORDER TO BE ELIGIBLE FOR AWARD OF SUCH GROUP. ONE-YEAR BIDS WILL BE COMPARED WITH MULTI-YEAR BIDS BY MULTIPLYING THE EVALUATED UNIT PRICE FOR EACH ITEM OF THE LOWEST EVALUATED OFFER RECEIVED ON THE FIRST PROGRAM YEAR ALTERNATE BY TOTAL NUMBER OF UNITS REQUIRED BY THE MULTI YEAR ALTERNATE. IF THE MULTI- YEAR PRICE IS LOW, AWARD SHALL BE MADE ON THAT BASIS; OTHERWISE AWARD WILL BE ON THE ONE-YEAR BASIS.

PARAGRAPH 1 OF THE BIDDING INSTRUCTIONS INCORPORATED IN THE BID PAPERS ADVISES BIDDERS TO READ ALL DRAWINGS, SPECIFICATIONS, AND INSTRUCTIONS AND CAUTIONS THAT FAILURE TO DO SO WILL BE AT THE RISK OF THE BIDDER. PARAGRAPH 9 (A) OF SUCH INSTRUCTIONS PROVIDES, IN LINE WITH ASPR 2-103 AND THE PROCUREMENT STATUTE, 10 U.S.C. 2305, THAT AWARD WILL BE MADE TO THE RESPONSIBLE BIDDER WHOSE OFFER CONFORMING TO THE SOLICITATION WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED.

ON MARCH 9, THE 23 BIDS RECEIVED WERE OPENED. BASED ON THE PRICES QUOTED ON THE PREFERRED DELIVERY SCHEDULE, THE STANDING OF THE FIRST FIVE BIDDERS ON THE RESPECTIVE ALTERNATES IS AS FOLLOWS:

ALTERNATE A (SINGLE-YEAR PRICE TIMES MULTI-YEAR QUANTITY)

TABLE

BIDDER AMOUNT

ELECTROSOLIDS CORPORATION $3,561,558.84

ELCO CORPORATION 3,981,211.68

DON LEE 4,069,462.44

HENRY PRODUCTS, INC. 4,359,253.79

DUFFERS ASSOCIATES, INC. 4,366,130.28

ALTERNATE B (MULTI-YEAR REQUIREMENTS)

TABLE

BIDDER AMOUNT

ELECTROSOLIDS CORPORATION $3,075,896.04

DUFFERS ASSOCIATES 3,504,461.52

HENRY PRODUCTS, INC. 3,529,066.54

ELCO CORPORATION 3,827,612.08

DON LEE 3,916,093.14

AFTER CONSIDERATION OF PROMPT PAYMENT DISCOUNT, TRANSPORTATION, PACKAGING AND ADMINISTRATIVE COSTS, THE PROCURING ACTIVITY HAS CONCLUDED THAT A MULTI-YEAR AWARD WITH COMMERCIAL PACKAGING AND PACKING SERVICES WOULD BE IN THE BEST INTEREST OF THE GOVERNMENT.

EXAMINATION OF YOUR BID REVEALS TWO DEFICIENCIES. FIRST, YOU QUOTED NO PRICE ON ITEMS 11, 12 AND 13 COVERING MONTHLY PRODUCTION PROGRESS REPORTS, WHICH WERE ADDED TO THE PROCUREMENT REQUIREMENTS BY AN IFB AMENDMENT DATED FEBRUARY 23, 1967, ALTHOUGH YOU TIMELY ACKNOWLEDGED RECEIPT OF SUCH AMENDMENT. SECOND, IN YOUR ALTERNATE B BID, YOU QUOTED TWO DIFFERENT UNIT PRICES FOR THE BASIC PROCUREMENT ITEM FOR EACH OF THE PROGRAM YEARS, YOUR FIRST-YEAR UNIT PRICE OF $791.46 ON ITEM 5 BEING $125.30 HIGHER THAN YOUR SECOND-YEAR UNIT PRICE OF $666.16 ON ITEM 9, THE SECOND-YEAR QUANTITY OF THE SAME ARTICLE.

IN AN UNSOLICITED LETTER DATED MARCH 15, 1967, TO THE PROCURING ACTIVITY, YOU ATTEMPTED TO CLARIFY YOUR BID. THE LETTER INCLUDES THE FOLLOWING STATEMENTS:

"THE UNIT PRICE IN ITEMS 5 AND 9 IS, IN FACT, $666.16 EACH; HOWEVER, AS IS NOTED IN ITEMS 7 AND 8, NON-RECURRING COSTS ARE INCLUDED IN ITEM 5. THESE NON-RECURRING COSTS AMOUNT TO $66,158.40 OR $125.30 PER UNIT ON 528 UNITS. ELECTROSOLIDS FELT THAT IN EVENT OF THE EXERCISING OF THE OPTION OF 3876 UNITS, THE GOVERNMENT WOULD PREFER THE PRICE OF $666.16 EACH RATHER THAN THE AVERAGE UNIT PRICE OF ITEMS 5 AND 9. MAKING THE BID IN THIS MANNER WILL SAVE THE GOVERNMENT $66,158.40 SHOULD THEY CHOOSE TO EXERCISE THIS OPTION. IN ADDITION, IN THE EVENT OF A TERMINATION ON THE MULTI-YEAR REQUIREMENT, ELECTROSOLIDS WOULD NOT BE ABLE TO RECOVER THEIR NON-RECURRING COSTS UNLESS THESE COSTS WERE CONSIDERED PART OF ITEM 5.

"ITEMS 11, 12 AND 13 WERE NOTED AS RECEIVED BY THE SIGNATURE ON AMENDMENT 0001 SIGNED BY MR. JOSEPH A. FRABUTT PRIOR TO THE BID OPENING. SINCE THIS AMENDMENT CALLED FOR MONTHLY PROGRESS REPORTS ON THE PROCUREMENT AND SINCE THESE MONTHLY PROGRESS REPORTS ARE CONSIDERED PART OF OUR NORMAL OVERHEAD AND ARE SUPPLIED TO MANY OF OUR OTHER CUSTOMERS, IT IS INTENDED THAT NO CHARGE BE MADE FOR THESE REPORTS.

"THIS LETTER IS INTENDED AS A CLARIFICATION TO OUR BID WHICH WE FEEL WILL SAVE THE GOVERNMENT MORE THAN $400,000. ON THIS PROCUREMENT; NOT CONSIDERING THE ADDITIONAL SAVING SHOULD THE OPTION BE EXERCISED. WE DO NOT INTEND TO CHANGE OUR PRICE ON THE PACKAGE; HOWEVER, IF NECESSARY, WE WILL TAKE THE NON-RECURRING COSTS OUT OF ITEM 5 AND INCLUDE THEM IN ITEMS 7 AND 8 SO THAT ITEMS 5 AND 9 ARE THE SAME.

"ASPR 2-405 STATES AS FOLLOWS: "THE CONTRACTING OFFICER MAY WAIVE ANY DEFICIENCIES WHERE IT IS TO THE ADVANTAGE OF THE GOVERNMENT.'"

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

CONCERNING THE EFFECT OF YOUR FAILURE TO QUOTE ANY PRICE OR TO NOTE "NO CHARGE" ON ITEMS 11, 12 AND 13, THE CONTRACTING OFFICER CALLS ATTENTION TO THE STATEMENT IN BLOCK 9 ON THE FACE SHEET OF THE BID FORM DD 1490,"IN COMPLIANCE WITH THE ABOVE, THE UNDERSIGNED OFFERS AND AGREES ...... TO FURNISH ANY OR ALL OF THE ITEMS UPON WHICH PRICES ARE OFFERED, AT THE PRICES SET OPPOSITE EACH ITEM ....' ACCORDINGLY, THE CONTRACTING OFFICER STATES, IT IS ASSUMED THAT IT WAS YOUR INTENTION NOT TO FURNISH THE ITEMS FOR WHICH NO PRICES WERE QUOTED.

WITH REGARD TO YOUR INCLUDING THE PRICES FOR THE PROVISIONING DOCUMENTATION AND THE PRODUCTION DRAWINGS IN YOUR FIRST-YEAR PRICE FOR THE BASIC ITEM (ITEM 5) UNDER ALTERNATE B, THE CONTRACTING OFFICER STATES THAT THE LOADING OF ALL NONRECURRING COSTS IN THE FIRST PROGRAM YEAR OF THE MULTI-YEAR PROCUREMENT WOULD ENABLE YOU TO RECOVER THE COST TWICE IF THE SECOND-YEAR QUANTITY WERE CANCELLED. IN ADDITION, HEADQUARTERS, UNITED STATES ARMY MATERIEL COMMAND (AMC), STATES THAT FAILURE TO QUOTE IDENTICAL PRICES FOR EACH PROGRAM YEAR VIOLATES ASPR 1-322.2 (B) (IV) AND THE TERMS OF THE IFB, THE INTENT OF THE REQUIREMENT BEING TO PRECLUDE UNREALISTIC PRICE QUOTATIONS BY REASON OF GAMBLING ON THE DISCONTINUANCE OF A PROGRAM.

IN VIEW OF THE FOREGOING, IT IS THE CONTRACTING OFFICER'S POSITION, WITH WHICH AMC CONCURS, THAT THE DEVIATIONS IN YOUR BID UNDER BOTH ALTERNATES ARE MATERIAL AND THEREFORE NOT SUBJECT TO WAIVER; THAT THE BID BEING THEREBY RENDERED NONRESPONSIVE MAY NOT BE CORRECTED UNDER THE MISTAKE-IN- BID PROCEDURES PRESCRIBED IN THE ASPR; AND THAT FOR SUCH REASONS AWARD SHOULD BE MADE TO THE NEXT LOW MULTI-YEAR BIDDER, WHO IS BOTH RESPONSIVE AND RESPONSIBLE. HOWEVER, PENDING OUR DECISION ON YOUR PROTEST, AWARD IS BEING WITHHELD.

YOU CONTEND THAT THE DEFICIENCIES IN YOUR BID ARE MINOR AND THEREFORE SUBJECT TO WAIVER UNDER ASPR 2-405. YOU FURTHER CONTEND THAT WHILE YOU OVERLOOKED THE IFB REQUIREMENT THAT THE SAME UNIT PRICES BE QUOTED ON CORRESPONDING ITEMS FOR EACH YEAR OF THE MULTI YEAR PROCUREMENT, SEPARATION OF THE NONRECURRING COSTS OF $66,158.40 FROM YOUR BASIC ITEM PRICE TO CONFORM TO THE IFB REQUIREMENT WOULD NOT AFFECT YOUR STATUS AS LOW BIDDER, NOR WOULD IT ALTER THE CHARGES TO THE GOVERNMENT IN THE EVENT OF CANCELLATION OF THE SECOND-YEAR QUANTITY. FINALLY, YOU URGE THAT AWARD OF A CONTRACT TO YOU, ON EITHER A SINGLE-YEAR OR A MULTI-YEAR BASIS, WILL RESULT IN A CONSIDERABLE SAVING TO THE GOVERNMENT.

ASPR 1-322, WHICH HAS BEEN PROMULGATED PURSUANT TO 10 U.S.C. 2301 ET SEQ., HAS THE FORCE AND EFFECT OF LAW. ACCORDINGLY, AND SINCE IT IS WELL SETTLED THAT ADMINISTRATIVE REGULATIONS WHICH ARE ISSUED, AS HERE, IN IMPLEMENTATION OF A STATUTE ARE BINDING UPON THE HEAD OF THE AGENCY AND UPON HIS SUBSIDIARY OFFICERS AS WELL AS UPON THE PERSONS SUBJECT THERETO OR AFFECTED THEREBY, THE REQUIREMENT IN THE IFB, INCLUDED PURSUANT TO ASPR 1-322.2 (B) (IV), THAT THE UNIT PRICE OF EACH ITEM IN THE MULTI-YEAR REQUIREMENT SHALL BE THE SAME FOR ALL PROGRAM YEARS, CANNOT BE DISREGARDED. 44 COMP. GEN. 347, 352, AND COURT CASES THERE CITED.

ASPR 2-404.2 (A) REQUIRES REJECTION OF ANY BID WHICH FAILS TO CONFORM TO THE ESSENTIAL REQUIREMENTS OF THE INVITATION FOR BIDS. ASPR 2-405, RELATING TO MINOR INFORMALITIES OR IRREGULARITIES IN BIDS, READS, IN PART, AS FOLLOWS:

"2-405 MINOR INFORMALITIES OR IRREGULARITIES IN BIDS. A MINOR INFORMALITY OR IRREGULARITY IS ONE WHICH IS MERELY A MATTER OF FORM OR IS SOME IMMATERIAL VARIATION FROM THE EXACT REQUIREMENTS OF THE INVITATION FOR BIDS, HAVING NO EFFECT OR MERELY A TRIVIAL OR NEGLIGIBLE EFFECT ON PRICE, AND NO EFFECT ON QUALITY, QUANTITY, OR DELIVERY OF THE SUPPLIES OR PERFORMANCE OF THE SERVICES BEING PROCURED, AND THE CORRECTION OR WAIVER OF WHICH WOULD NOT AFFECT THE RELATIVE STANDING OF, OR BE OTHERWISE PREJUDICIAL TO, BIDDERS. THE CONTRACTING OFFICER SHALL EITHER GIVE TO THE BIDDER AN OPPORTUNITY TO CURE ANY DEFICIENCY RESULTING FROM A MINOR INFORMALITY OR IRREGULARITY IN A BID, OR, WAIVE ANY SUCH DEFICIENCY WHERE IT IS TO THE ADVANTAGE OF THE GOVERNMENT. * * *"

ASPR 2-406 PRESCRIBES THE CONDITIONS UNDER WHICH CERTAIN MISTAKES IN BID MAY BE CORRECTED AFTER BID OPENING BUT BEFORE AWARD UPON COMPLIANCE WITH STATED EVIDENTIARY REQUIREMENTS. HOWEVER, SUCH PROCEDURE MAY BE USED ONLY WHEN THE BID AS SUBMITTED IS RESPONSIVE TO THE INVITATION FOR BIDS, FOR AN UNRESPONSIVE BID DOES NOT CONSTITUTE AN OFFER WHICH MAY PROPERLY BE ACCEPTED, AND TO PERMIT A BIDDER TO MAKE HIS BID RESPONSIVE BY CHANGING, ADDING TO, OR DELETING A MATERIAL PART OF THE BID ON THE BASIS OF AN ERROR ALLEGED AFTER THE OPENING WOULD BE TANTAMOUNT TO PERMITTING A BIDDER TO SUBMIT A NEW BID. 38 COMP. GEN. 819, 821; 40 ID. 132, 134. THE FACT THAT ACCEPTANCE OF A NONRESPONSIVE BID IN A GIVEN CASE COULD RESULT IN A SUBSTANTIAL SAVING TO THE GOVERNMENT DOES NOT WARRANT EXCEPTION TO SUCH RULE, SINCE IT IS INFINITELY MORE IN THE PUBLIC INTEREST TO ABIDE BY THE RULES OF COMPETITIVE BIDDING THAN TO GAIN A PECUNIARY ADVANTAGE BY VIOLATION THEREOF. 17 COMP. GEN. 554, 558.

UNDER SUCH REGULATIONS, THE DETERMINATION WHETHER YOUR BID UNDER EITHER OR BOTH ALTERNATES MAY BE CORRECTED AND CONSIDERED FOR AWARD IS DEPENDENT UPON WHETHER THE BID IS, IN THE FIRST INSTANCE, RESPONSIVE WITHOUT THE CORRECTIONS WHICH YOU REQUEST.

CONSIDERING FIRST THE MONTHLY PRODUCTION PROGRESS REPORT ITEMS WHICH WERE ADDED TO THE PROCUREMENT REQUIREMENTS BY THE IFB AMENDMENT OF FEBRUARY 23, THE FACT THAT SEVERAL OF THE BIDDERS QUOTED PRICES ON SUCH ITEMS RANGING FROM $50 TO $1,000 PER ITEM SHOWS THAT THE ITEM HAD MORE THAN A TRIVIAL OR NEGLIGIBLE EFFECT ON THE BID PRICES UNDER BOTH ALTERNATES. ACCORDINGLY, THE ITEMS MUST BE REGARDED AS MATERIAL REQUIREMENTS, AND PREVIOUS DECISIONS OF OUR OFFICE SUPPORT THE CONCLUSION THAT YOUR FAILURE TO INDICATE EITHER A PRICE OR A NO-CHARGE NOTATION ON EACH SUCH ITEM IS A DEVIATION WHICH MAY NOT BE WAIVED AS A MINOR INFORMALITY AND WHICH IS NOT OVERCOME SIMPLY BY ACKNOWLEDGMENT OF THE RECEIPT OF THE IFB AMENDMENT. 153262, FEBRUARY 19, 1964; B 150168, NOVEMBER 13, 1962. EVEN IF IT WERE CONSIDERED THAT YOUR ACKNOWLEDGMENT OF THE AMENDMENT AND FAILURE TO QUOTE A PRICE ON THE ITEMS INCLUDED THEREIN WOULD OBLIGATE YOU, UPON ACCEPTANCE OF YOUR BID, TO FURNISH THOSE ITEMS WITHOUT CHARGE, THIS WOULD MAKE YOUR BID RESPONSIVE ONLY AS TO ALTERNATE A, AND SINCE THERE WERE LOWER PRICES AVAILABLE UNDER ALTERNATE B YOUR ONE-YEAR BID WOULD NOT BE FOR ACCEPTANCE IN ANY EVENT.

AS TO YOUR FAILURE TO QUOTE THE SAME UNIT PRICE FOR THE BASIC ITEM FOR BOTH YEARS OF THE MULTI-YEAR REQUIREMENT UNDER ALTERNATE B, WHILE THE DEFICIENCY MIGHT HAVE BEEN DUE TO AN OVERSIGHT ON YOUR PART, AS YOU ALLEGED, AND WHILE YOUR TOTAL ALTERNATE B PRICE WOULD BE THE SAME WERE THE AMOUNT OF $66,158.40 APPORTIONED BETWEEN ITEMS 7 AND 8 (ALTHOUGH SUCH ACTION WOULD MAKE THE PRICES ON THOSE ITEMS, WHICH COVER ONLY 528 UNITS, EXCESSIVELY HIGH IN COMPARISON TO THE PRICES QUOTED THEREON BY 21 OTHER BIDDERS), THE FACT REMAINS THAT YOUR BID AS SUBMITTED DOES NOT MEET A MANDATORY REQUIREMENT IN THE IFB WHICH CANNOT BE WAIVED BY THE PROCURING AGENCY AND THEREFORE YOUR MULTI-YEAR BID IS NONRESPONSIVE. ACCORDINGLY, THE CHANGES WHICH YOU REQUEST MAY NOT BE MADE UNDER THE MISTAKE-IN-BID PROCEDURES.

FOR THE REASONS STATED, NOTWITHSTANDING THAT YOUR BID PRICES ARE MORE FAVORABLE TO THE GOVERNMENT THAN THE PRICES QUOTED BY THE OTHER BIDDERS ON BOTH ALTERNATES, WE MUST CONCUR WITH THE CONCLUSION OF THE CONTRACTING OFFICER AND AMC THAT THE DEFICIENCIES IN YOUR BID ARE MATERIAL AND MAY NEITHER BE WAIVED AS MINOR INFORMALITIES NOR CURED BY CORRECTION UNDER THE MISTAKE-IN-BID PROCEDURES. ACCORDINGLY, WE SEE NO LEGAL BASIS FOR OBJECTION TO THE REJECTION OF YOUR BID AND AWARD TO THE NEXT LOWEST RESPONSIVE, RESPONSIBLE BIDDER ON A MULTI-YEAR BASIS AS PROPOSED BY THE PROCURING AGENCY, AND YOUR PROTEST IS THEREFORE DENIED.