B-161930, SEP. 25, 1967

BIDS - REJECTION AND READVERTISEMENT - JUSTIFICATION DECISION TO A.R.F. PRODUCTS, INC. RE PROTEST TO CANCELLATION, AFTER OPENING, OF SECOND PHASE OF TWO-STEP PROCUREMENT FOR TRANSPONDER BY NAVAL AIR SYSTEMS COMMAND AND TO AMENDED INVITATION ON BASIS OF AMBIGUITY. THE CANCELLATION OF AN INVITATION FOR THE SECOND PHASE OF A TWO-STEP PROCUREMENT ON THE BASIS THAT THE SPECIFICATIONS WITH RESPECT TO TESTING WERE INADEQUATE RATHER THAN BECAUSE OF AN AMBIGUITY IN THE NUMBER OF UNITS REQUIRED TO BE TESTED MAY NOT BE CONSIDERED AS IMPROPER BY THE CONTRACTING OFFICER WHEN BASED ON SUBSTANTIAL REASONS FOR THE CONTRACTING OFFICER'S BONA FIDE BELIEF THAT THE INTERESTS OF THE GOVERNMENT WILL BE SERVED THEREBY. ALLEGATION THAT THE AMENDED INVITATION WAS AMBIGUOUS IS NOT SUSTAINED AND SINCE AWARD HAS BEEN MADE TO LOWEST RESPONSIVE, RESPONSIBLE BIDDER NO BASIS IS PRESENTED TO QUESTION AWARD.

TO A.R.F. PRODUCTS, INC:

REFERENCE IS MADE TO YOUR LETTER OF JULY 3, 1967, WITH ENCLOSURES, AND SUBSEQUENT CORRESPONDENCE, PROTESTING AGAINST THE REJECTION OF ALL BIDS AND CANCELLATION, AFTER BID OPENING, OF INVITATION FOR BIDS NO. N00019-67- B-0054 ISSUED ON MARCH 31, 1967, BY THE NAVAL AIR SYSTEMS COMMAND AS THE SECOND STEP OF A TWO-STEP FORMALLY ADVERTISED PROCUREMENT FOR THE FURNISHING OF TRANSPONDER, MISS DISTANCE INDICATORS AND ANCILLARY ITEMS. YOU ALSO REQUEST THAT THE CORRECTED INVITATION, ISSUED ON JUNE 10, 1967, BE CANCELLED BECAUSE IT IS PATENTLY AND SUBSTANTIALLY AMBIGUOUS.

SECTION B OF THE SCHEDULE OF THE ORIGINAL INVITATION PROVIDED THAT THE SUPPLIES BEING PROCURED THEREUNDER WERE TO BE PRODUCED IN ACCORDANCE WITH SPECIFICATION MIL-M-23073A/AS). PARAGRAPH 4.3 ET SEQ. OF THE SPECIFICATION REQUIRED THAT ALL UNITS PRODUCED UNDER THE CONTRACT WERE TO BE INDIVIDUALLY TESTED TO DETERMINE COMPLIANCE WITH THE REQUIREMENTS FOR MATERIAL, WORKMANSHIP, OPERATIONAL ADEQUANCY, AND RELIABILITY, AND THAT NOT LESS THAN FOUR NOR MORE THAN TWELVE OF THE UNITS WOULD BE TESTED PURSUANT TO SPECIFICATION MIL-R-22973/WEP) TO DETERMINE RELIABILITY IN TERMS OF THE MEAN-TIME-BETWEEN-FAILURE (MTBF). PARAGRAPH NO. 3.2 OF THE LATTER SPECIFICATION PROVIDED THAT NOT LESS THAN THREE NOR MORE THAN TEN UNITS WOULD BE TESTED TO DETERMINE MTBF. IN ACCORDANCE WITH PARAGRAPH NO. 6.6 (E) OF THE SAME SPECIFICATION, WHICH STATED THAT THE EXACT NUMBER OF UNITS TO BE TESTED WOULD BE SPECIFIED IN THE INVITATION, ITEM NO. 7 (E) OF THE SCHEDULE--REFERENCING PARAGRAPH NO. 6.6 (E) OF THE SPECIFICATION-- PROVIDED THAT THREE SUCH UNITS WOULD BE TESTED.

THE CONFUSION THAT WAS ENGENDERED BY THE CONFLICTING PROVISIONS OF THE INVITATION IS EVIDENCED BY THE FACT THAT YOUR BID WAS BASED UPON A COST FACTOR OF TESTING NOT LESS THAN FOUR NOR MORE THAN TWELVE UNITS AS REQUIRED BY SPECIFICATION MIL-M-20373A/AS). HOWEVER, THE PROCURING AGENCY, IN ACCORDANCE WITH PARAGRAPH NO. 16 OF THE "BIDDING INSTRUCTIONS, TERMS, AND CONDITIONS," ENTITLED ,ORDER OF PRECEDENCE," DETERMINED THAT ITEM NO. 7 (E) OF THE SCHEDULE WAS CONTROLLING IN THIS INSTANCE; THEREFORE, ONLY THREE UNITS WERE TO BE TESTED.

WE ARE ADVISED BY THE PROCUREMENT AGENCY THAT IN VIEW OF THE CONFLICTING REQUIREMENTS OF THE INVITATION RELATIVE TO THE NUMBER OF UNITS TO BE TESTED THEREUNDER, IT WAS DETERMINED THAT THE INVITATION WAS SERIOUSLY AND SUBSTANTIALLY AMBIGUOUS. WE ARE ADVISED, HOWEVER, THAT THE DETERMINATION TO CANCEL THE ORIGINAL INVITATION WAS NOT PREDICATED UPON THIS FACTOR.

BASED UPON A DETERMINATION MADE BY THE TECHNICAL DIVISION OF THE PROCURING AGENCY THAT 100 PERCENT RELIABILITY TESTING IS A CRITICAL FACTOR IN ALL PROCUREMENTS FOR THE SUBJECT ITEM AND THAT A LACK THEREOF CONSTITUTED A SERIOUS INADEQUACY, THE CONTRACTING OFFICER CANCELLED THE INVITATION PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2- 404.1 (B) (I), WHICH AUTHORIZES SUCH ACTION WHEN IT IS DETERMINED THAT INADEQUATE SPECIFICATIONS HAVE BEEN CITED IN THE INVITATION.

YOU PROTESTED THE CANCELLATION OF THE ORIGINAL INVITATION ON THE BASIS THAT THE INVITATION WAS NOT AMBIGUOUS, AND THAT IF THE PROCURING AGENCY DESIRED TO INCREASE THE NUMBER OF UNITS TO BE TESTED, THE INVITATION SHOULD HAVE BEEN AMENDED AND AWARD MADE TO A.R.F., WHOSE BID WOULD STILL HAVE BEEN THE LOWEST SUBMITTED.

AS STATED ABOVE, HOWEVER, THE INVITATION WAS NOT CANCELLED ON THE BASIS THAT IT WAS AMBIGUOUS, BUT RATHER, BECAUSE THE SPECIFICATIONS CITED THEREIN WERE INADEQUATE. THIS OFFICE HAS HELD THAT THE REJECTION OF ALL BIDS AFTER OPENING IS A SERIOUS MATTER WHICH SHOULD BE DONE ONLY FOR THE MOST COGENT REASONS SINCE IT RESULTS IN THE EXPOSURE OF PRICES TO A BIDDER'S COMPETITORS. HOWEVER, WE HAVE RECOGNIZED THAT SINCE CONTRACTING OFFICERS ARE AGENTS OF, AND ARE REQUIRED TO WORK IN THE BEST INTERESTS OF, THE GOVERNMENT, THEIR ACTIONS IN REJECTING ALL BIDS AND CANCELLING AN INVITATION MAY NOT BE CONSIDERED IMPROPER WHEN BASED ON SUBSTANTIAL REASONS LEADING TO ABONA FIDE BELIEF THAT THE INTERESTS OF THE GOVERNMENT WILL BE SERVED THEREBY. WE THINK THAT THIS RATIONALE APPLIES EQUALLY HERE.

ON JUNE 10, 1967, THE CORRECTED INVITATION WAS REISSUED TO THE PROSPECTIVE CONTRACTORS WHO ORIGINALLY QUALIFIED UNDER THE FIRST STEP OF THE PROCUREMENT. THE SECOND INVITATION SPECIFICALLY ADVISED BIDDERS THAT ALL UNITS PRODUCED UNDER THE TERMS OF THE RESULTING CONTRACT WOULD BE SUBJECTED TO ACCEPTANCE TESTS TO DETERMINE THEIR RELIABILITY IN ACCORDANCE WITH SPECIFICATIONS MIL-M-23073A/AS) AND MIL R-22973/WEP).

BY TELEGRAM DATED JULY 3, 1967, YOU ALLEGED THAT THE SECOND INVITATION WAS PATENTLY AND SUBSTANTIALLY AMBIGUOUS IN REGARD TO THE COST OF TESTING THE OPTIONAL UNITS, PLACE OF INSPECTION, AND TIME OF DELIVERY, AND THAT IT SHOULD BE CANCELLED ON THE SAME GROUNDS AS WAS THE ORIGINAL INVITATION.

YOU ALLEGE FIRST THAT ITEM NO. 8, WHICH PROVIDES AN OPTION FOR THE PURCHASE OF ADDITIONAL UNITS, DOES NOT CLEARLY STATE WHETHER THE PRICES BID THEREON SHOULD INCLUDE THE COST OF TESTING THE ADDITIONAL UNITS. ARE OF THE OPINION, HOWEVER, THAT THE LANGUAGE OF THE INVITATION CLEARLY NEGATES YOUR ALLEGATION. SECTION B OF THE SCHEDULE PROVIDES WITH REFERENCE TO ITEMS 1 AND 8 THAT ALL PRODUCTION UNITS ARE TO BE TESTED. UNDER THE REVISED INVITATION, IT WAS MADE ABUNDANTLY CLEAR THAT ALL EQUIPMENTS WERE SUBJECT TO MTBF TESTING IN ACCORDANCE WITH THE CITED SPECIFICATIONS (SEE ITEM 7 (E) ON PAGE 10 OF THE INVITATION). IN THIS REGARD, THE PROCUREMENT AGENCY REPORTS THAT: "* * * THE FIRST AMBIGUITY CLAIMED IS THAT THE OPTION ITEM, ITEM 8, RAISES A QUESTION AS TO WHETHER A PRICE THEREFORE SHOULD INCLUDE A PRICE FOR RELIABILITY TESTING. AMBIGUITY CAN BE FOUND IN THIS ITEM SINCE IT WAS SPECIFICALLY DESCRIBED ON PAGE 4 OF THE IFB AND A BIDDER WOULD CERTAINLY UNDERSTAND THAT TESTING WOULD BE REQUIRED AS INCLUDED IN THAT DESCRIPTION. THE REASON THERE WAS A SEPARATE PRODUCTION ACCEPTANCE TEST LINE ITEM FOR THE FIRM QUANTITIES, I.E. ITEM 7, WAS A PURELY ADMINISTRATIVE ACTION TO PERMIT THIS COMMAND TO DETERMINE THE AMOUNT THAT IT WOULD PAY FOR THIS TYPE OF TESTING ON A QUANTITY OF 280 ITEMS.'

THE SECOND BASIS OF YOUR PROTEST CONCERNING PLACE OF INSPECTION IS LIKEWISE WITHOUT MERIT. YOU POINT TO THE ALLEGED INCONSISTENCY BETWEEN SECTIONS H AND E OF THE SCHEDULE. SECTION H (II) OF THE SCHEDULE STATED THAT THE INSPECTION SITE FOR UNITS PRODUCED UNDER THE CONTRACT WOULD BE ESTABLISHED AT THE TIME OF AWARD. HOWEVER, SECTION E PROVIDED THAT THE UNITS WOULD BE INSPECTED AT THE CONTRACTOR'S PLANT, AND REQUIRED THAT EACH BIDDER ADVISE THE PROCURING AGENCY OF THE ADDRESS WHERE THE UNITS WERE TO BE PRODUCED. WE DO NOT FEEL THAT THESE TWO CLAUSES ARE INCONSISTENT, AND WE AGREE WITH THE FOLLOWING STATEMENT OF THE PROCUREMENT ACTIVITY:

"THE PROTESTANT THEN SPEAKS APPARENTLY TO SECTION H, CONTRACT ADMINISTRATION DATA, WHICH SAYS IN (II) THAT THE PLACE WHERE INSPECTION WILL BE MADE WILL BE SET FORTH IN THE CONTRACT WHEN IT IS ISSUED, ALTHOUGH ANOTHER SECTION OF THE CONTRACT HAS A BLANK SPACE FOR PLACE OF INSPECTION WHICH IS TO BE INSERTED WITH THE PLACE OF MANUFACTURE BY THE BIDDERS; THIS LATTER SECTION WOULD APPARENTLY BE SECTION E. SECTION E STATES THAT, IN ADDITION TO OTHER REQUIREMENTS RELATING TO INSPECTION SET FORTH ELSEWHERE IN THE IFB, INSPECTION SHALL BE MADE AT THE PLACE DESIGNATED IN THE AWARD AT THE TIME IT IS ISSUED. IT IS APPARENT FROM THE CLAUSE, WHICH APPEARS ON PAGE 17 OF THE SECOND IFB, THAT, AT THE TIME OF ITS WRITING, IT WAS TO BE PRESUMED THAT INSPECTION WOULD TAKE PLACE AT THE CONTRACTOR'S PLANT, THE ADDRESS OF WHICH THE CONTRACTOR WAS TO SUPPLY TO THE GOVERNMENT. THERE IS NO INCONSISTENCY BETWEEN THESE CLAUSES SINCE SECTION E MERELY PROVIDES SPACE FOR THE ADDRESS OF THE CONTRACTOR'S PLANT AND AGREES ENTIRELY WITH SECTION H THAT THE AWARD WILL FINALLY DETERMINE THE PLACE OF INSPECTION.'

FINALLY, YOU ARGUE THAT IT WOULD BE IMPOSSIBLE FOR ANY BIDDER TO PERFORM THE CONTRACT WITHIN THE TIME STATED IN CLAUSE 3 ON PAGE 7 OF THE "INFORMATION TO OFFERORS," AND THAT, ADDITIONALLY, SUCH CLAUSE WAS INCONSISTENT WITH THE DELIVERIES CLAUSE OF THE SCHEDULE. THE PROCUREMENT ACTIVITY HAS ADVISED US THAT THE DATE OF DECEMBER 31, 1967, APPEARING IN CLAUSE 3 WAS INTENDED TO APPLY TO THE INDEFINITE QUANTITY CONTRACT CONTEMPLATED BY THE ORIGINAL INVITATION, BUT THAT SUCH CLAUSE WAS INADVERTENTLY INSERTED IN THE SECOND INVITATION WHICH- WITH THE EXCEPTION OF THE OPTION QUANTITY WHICH HAS BEEN DELETED--IS FOR A FIXED DEFINITE QUANTITY. WHILE THE TWO PROVISIONS MAY BE INCONSISTENT, THE INCONSISTENCY IS RESOLVED BY THE ORDER OF PRECEDENCE CLAUSE OF THE INVITATION WHICH PROVIDES THAT THE SCHEDULE HAS PRECEDENCE OVER INVITATION INSTRUCTIONS AND CONDITIONS.

WE HAVE BEEN ADVISED THAT CONTRACT NO. N00019-67-C-0609 WAS AWARDED TO DORSETT ELECTRONICS, C., ON JUNE 30, 1967, AS THE LOWEST RESPONSIBLE, RESPONSIVE BIDDER UNDER THE INVITATION. ON THE RECORD BEFORE US, WE FIND NO LEGAL BASIS TO QUESTION THAT AWARD OR THE SUFFICIENCY OF THE INVITATION.