B-164653, SEPT. 10, 1968

B-164653, SEPT. 10, 1968

TO SHEARER, LANCTOT, THOMAS AND KNORP:

FURTHER REFERENCE IS MADE TO YOUR LETTERS OF JUNE 21 AND JULY 11, 1968, PROTESTING ON BEHALF OF YOUR CLIENT, PELLEGRINI REFRIGERATION AND RESTAURANT EQUIPMENT COMPANY, INC. (PELLEGRINI), AGAINST THE CANCELLATION OF INVITATION FOR BIDS NO. F04699-68-B-0044 ISSUED BY THE UNITED STATES AIR FORCE, MCCLELLAN AIR FORCE BASE, CALIFORNIA.

THE INVITATION WAS ISSUED ON APRIL 18, 1968, AND CALLED FOR THE FURNISHING AND INSTALLING OF WALK-IN REFRIGERATORS FOR THE COMMISSARY AT THE ABOVE BASE, INCLUDING THE NECESSARY REFRIGERATION EQUIPMENT.

IT IS REPORTED BY THE PROCURING AGENCY THAT IT WAS THEIR INTENT AND DESIRE THAT THE MOTORS TO BE FURNISHED WERE NOT TO BE HERMETICALLY SEALED WITH THE COMPRESSORS, BUT BE SEPARATE SO AS TO BE READILY REPLACEABLE IN CASE OF FAILURE, AND THUS MINIMIZE POSSIBLE LOSS OF THE CONTENTS OF THE REFRIGERATORS DURING A BREAKDOWN.

IN AN ATTEMPT TO SECURE THEIR INTENDED NEEDS, THE PROCURING AUTHORITIES INCLUDED IN THE SPECIFICATIONS, PARAGRAPH 6, READING IN PERTINENT PART AS FOLLOWS: "EACH COMPRESSOR SHALL BE DRIVEN BY AN ELECTRIC MOTOR, EITHER DIRECT-CONNECTED OR BY MULTIPLE V-BELTS.' IN ADDITION, PAGE 10 OF THE IFB CONTAINED THE FOLLOWING NOTATIONS:"A. THE CLAUSE ENTITLED -BRAND NAE OR EQUAL- APPLIES TO THE FOLLOWING COMPONENT PARTS:

"/1) COLLAR FOR VAPOR-PROOF CEILING FIXTURES, MARCO A141VT-C53 OF MCPHILBEN 43-88-P1679 OR EQUAL.

"/2) CONDENSER FOR MINUS 10 DEGREES F REFRIGERATOR, BRUNNER W 10NR20FL OR EQUAL.

"/3) CONDENSER FOR PLUS 35 DEGREES F REFRIGERATOR, BRUNNER W 7NR10FC OR EQUAL.'

IT IS REPORTED THAT THE WORD "CONDENSER" AS USED ABOVE, COVERS THE COMPRESSOR, MOTOR AND CONDENSER AS A SINGLE UNIT. THE REFERENCED BRUNNER MODELS HAD EXTERNAL MOTORS BUT, AS WAS DISCOVERED LATER, WERE OBSOLETE AND DISCONTINUED.

ON MAY 29, 1968, THE BIDS WERE OPENED AND THE FOLLOWING FOUR BIDS WERE RECEIVED:

NAME TOTAL

BUETTNER, CARTER, DENTON AND ASSOC. $113,176.00

BROCKER AND JAMES 113,432.00

CROWDER AND SON 108,201.00

PELLEGRINI REFRIGERATION 108,442.80

THE LOWEST BIDDER, CROWDER AND SON, AND BUETTNER, CARTER, DENTON AND ASSOCIATES OFFERED TYLER BRAND CONDENSERS THAT HAD INTERNAL MOTORS, WHEREAS YOUR CLIENT'S FIRM AND THAT OF BROCKER AND JAMES INDICATED IN THEIR BIDS THAT THEY WOULD SUPPLY BRUNNER-DUNHAM BUSH EQUIPMENT THAT HAD EXTERNAL MOTORS.

IN HIS REPORT TO OUR OFFICE ON YOUR PROTEST THE CONTRACTING OFFICER HAS CITED THE FOLLOWING DEFICIENCIES AND AMBIGUITIES IN THE SUBJECT INVITATION:

"SUBSEQUENT TO THE BID OPENING, THE SECOND-LOWEST BIDDER (PELLEGRINI REFRIGERATION AND RESTAURANT EQUIPMENT COMPANY INC.) ADVISED THE PURCHASING OFFICE THAT THE COMPRESSOR OFFERED BY THE LOW BIDDER IN LIEU OF THE -OR EQUAL- BRAND NAME AND MODEL DID NOT MEET THE SPECIFICATION. INVESTIGATION DISCLOSED THAT THE LOW BIDDER INTENDED TO USE A HERMETICALLY SEALED UNIT. MEETINGS HELD WITH EACH OF THE TWO LOWEST BIDDERS AND SUBSEQUENT COMPARISON OF THE INTENDED REQUIREMENTS WITH THOSE EXPRESSED IN THE IFB DISCLOSED THREE FACTS IMPORTANT TO THE DISPOSITION OF THE IFB: FIRST, THE -BRAND NAME OR EQUAL- IDENTIFIED IN THE SOLICITATION, ALTHOUGH POSSESSING THE PROPER CONFIGURATION CHARACTERISTICS, HAD BEEN OUT OF PRODUCTION FOR MORE THAN TWO YEARS. SECOND, THE SPECIFICATION WAS WRITTEN IN A MANNER THAT WOULD PERMIT EITHER TYPE COMPRESSOR (HERMETICALLY SEALED OR ONE HAVING A SEPARATE, EXTERNALLY CONNECTED MOTOR) TO QUALIFY. FINALLY, THE DESIGN ENGINEER, ALTHOUGH FAMILIAR WITH THE -BRAND NAME OR EQUAL- PURCHASE DESCRIPTIONS AS USED WITH CONSTRUCTION CONTRACTS, DID NOT UNDERSTAND THE DISTINCT DIFFERENCE IN HANDLING THAT TYPE OF PURCHASE DESCRIPTION ON SUPPLY CONTRACTS. (THE USE OF TRADE NAME, MAKE, OR CATALOG NUMBER IN CONSTRUCTION CONTRACTS IS EXPLAINED IN THE CLAUSE FOUND IN ASPR 7 602.9, -MATERIAL AND WORKMANSHIP.- IN THIS APPLICATION, THE BRAND NAME ESTABLISHES A STANDARD OF QUALITY AND THE CONTRACTOR MAY SUBMIT ALTERNATIVE ITEMS FOR APPROVAL BY THE CONTRACTING OFFICER PRIOR TO THEIR INCORPORATION IN THE WORK. IN SUPPLY CONTRACTS, THE -BRAND NAME OR EQUAL- IS USED TO -... INDICATE THE QUALITY AND CHARACTERISTICS..- (ASPR 1- 1206.3) OF ITEMS FOR WHICH -... AN ADEQUATE SPECIFICATION OR MORE DETAILED DESCRIPTION CANNOT FEASIBLY BE MADE AVAILABLE...- (ASPR 1-1206.1) SINCE IT WAS POSSIBLE TO DRAFT SUITABLE DESCRIPTIVE INFORMATION, -BRAND NAME OR EQUAL- SHOULD NOT HAVE BEEN USED IN THIS INSTANCE.)"

UPON THE ABOVE FACTS IT WAS DETERMINED BY THE CONTRACTING OFFICER THAT THE INVITATION WAS DEFECTIVE AND HE THEREFORE ADVISED THE BIDDERS THAT IT WAS CANCELLED PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) SECTIONS 2-404.1 (B) (I) AND (II), WHICH PROVIDE THAT INVITATIONS FOR BIDS MAY BE CANCELLED AFTER OPENING BUT PRIOR TO AWARD WHERE THE CONTRACTING OFFICER DETERMINES THAT THE PARTICULAR INVITATION INCLUDES INADEQUATE OR AMBIGUOUS SPECIFICATIONS.

A NEW INVITATION FOR BIDS NO. F04699-68-B-0113, WAS ISSUED ON JUNE 15, 1968, TO ALL FIRMS WHO HAD RECEIVED THE CANCELLED INVITATION, AND PARAGRAPH 6 ON PAGE 15A-5 OF THE SPECIFICATIONS WAS AMENDED TO READ AS FOLLOWS: "COMPRESSORS SHALL BE OPEN TYPE, WITH EXTERNAL DRIVE. HERMETIC OR SEMIHERMETIC UNITS OR OTHER UNITS WITH MOTOR WINDINGS IN THE REFRIGERATION CIRCUIT ARE NOT ACCEPTABLE.' ONLY THE COLLAR FOR VAPOR- PROOF CEILING FIXTURES WAS REFERENCED TO THE "BRAND NAME OR EQUAL" CLAUSE.

THE BIDS UNDER THE SECOND INVITATION WERE OPENED AS SCHEDULED ON JUNE 26, 1968, EVEN THOUGH YOU HAD PROTESTED ON BEHALF OF PELLEGRINI ON JUNE 20, 1968, TO THE CONTRACTING OFFICER FOR HIS FAILURE TO AWARD A CONTRACT TO PELLEGRINI UNDER THE PREVIOUS INVITATION. THE BIDS UNDER THE SECOND INVITATION WERE AS FOLLOWS:

NAME AMOUNT

BROCKER AND JAMES $124,490

CROWDER AND SON 102,374

FREDERICK J. CHAPEK 125,100

PELLEGRINI REFRIGERATION 107,023 PURSUANT TO ASPR 2-407.9 (B) (2), AWARD WAS MADE TO CROWDER AND SON ON JUNE 28, 1968, AS THE LOWEST RESPONSIVE AND RESPONSIBLE BIDDER.

THE BASIS OF YOUR PROTEST IS THAT THE FIRST INVITATION SHOULD NOT HAVE BEEN CANCELLED BECAUSE THE SPECIFICATIONS WERE NOT AMBIGUOUS, AND SINCE THE BID OF CROWDER AND SON WAS NOT RESPONSIVE THERETO, YOUR CLIENT, THE SECOND LOW BIDDER, SHOULD HAVE BEEN AWARDED THE CONTRACT. THIS ARGUMENT OVERLOOKS THE FACT THAT CROWDER AND SON SUBMITTED A RESPONSIVE BID IN THE RESPECT THAT ITS BID MET A PERMISSIBLE INTERPRETATION OF THE EXPRESSED IFB REQUIREMENTS, ALTHOUGH NOT THE INTENDED REQUIREMENTS. ALSO PERTINENT ARE THE COMMENTS AND CONCLUSIONS MADE BY THE CONTRACTING OFFICER WHERE HE SAID: "* * * THE BASIS FOR CANCELLING THE FIRST IFB WAS NOT THAT TWO BIDDERS OFFERED PROPERLY CONFIGURED COMPRESSORS, BUT RATHER, THAT ALL BIDDERS COULD NOT DETERMINE FROM THE SOLICITATION THE CONFIGURATION THAT WAS INTENDED TO BE PROCURED. THE ADDENDUM REFERRED TO IN THE SECOND STATEMENT WAS WRITTEN TO REMOVE THE INADEQUACIES AND AMBIGUITIES THAT EXISTED IN THE PRIOR (CANCELLED) IFB. THE FACT THAT TWO OF THE FOUR BIDDERS ON THE FIRST IFB OFFERED THE INTENDED CONFIGURATION OF COMPRESSOR, WHILE THE OTHER TWO OFFERED HERMETICALLY SEALED UNITS (THE EXPRESSED BUT NOT INTENDED CONFIGURATION OF COMPRESSORS) WAS CONSIDERED TO BE CONCLUSIVE EVIDENCE THAT THE SPECIFICATIONS WERE INDEED AMBIGUOUS AND IN NEED OF CLARIFICATION.'

UNDER 10 U.S.C. 2305 (B) THE AIR FORCE 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 THE AIR FORCE 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 MORE THAN ONE INTERPRETATION WITH THE RESULT THAT PELLEGRINI OFFERED THE EXACT EQUIPMENT WHICH THE AIR FORCE INTENDED TO PURCHASE AND NEEDED, WHILE TWO OTHER BIDDERS OFFERED EQUIPMENT IN ACCORDANCE WITH THEIR INTERPRETATION OF THE SAME SPECIFICATIONS WHICH DID NOT MEET THE AIR FORCE'S REQUIREMENTS. ACCORDINGLY, WE MUST CONCUR WITH THE AIR FORCE'S CONCLUSION THAT THE IFB WAS AMBIGUOUS.

IT HAS CONSISTENTLY BEEN HELD THAT AN INVITATION FOR BIDS DOES NOT IMPORT AN OBLIGATION ON THE GOVERNMENT TO ACCEPT ANY OF THE OFFERS RECEIVED, AND THAT ALL BIDS MAY BE REJECTED WHERE IT IS DETERMINED TO BE IN THE BEST INTEREST OF THE GOVERNMENT TO DO SO. 17 COMP. GEN. 554; 26 ID. 49; 37 ID. 760; PERKINS V LUKENS STEEL CO., 310 U.S. 113. MOREOVER, BY PARAGRAPH 10 (B) OF THE TERMS AND CONDITIONS OF THE INVITATION, STANDARD FORM 33-A, THE GOVERNMENT EXPRESSLY RESERVED THE RIGHT TO REJECT ANY AND ALL BIDS RECEIVED UNDER THE INVITATION, WHICH AUTHORITY IS IN ACCORDANCE WITH THE PROVISIONS OF 10 U.S.C. 2305 (C). AS INDICATED HERETOFORE, ASPR 2-404.1 (B) (I) ALSO RECOGNIZES THE AUTHORITY OF THE CONTRACTING OFFICER TO REJECT ALL BIDS AFTER OPENING AND PRIOR TO AWARD WHERE HE DETERMINES THAT THE PARTICULAR INVITATION INCLUDES INADEQUATE OR AMBIGUOUS SPECIFICATIONS. FROM THE FOREGOING, IT IS CLEAR THAT THE QUESTION OF REJECTING ALL BIDS AND READVERTISING IS PRIMARILY A MATTER OF ADMINISTRATIVE DISCRETION.

SINCE THE RESPONSIBILITY FOR MAKING A DETERMINATION TO REJECT ALL BIDS RESTS WITH THE ADMINISTRATIVE OFFICERS OF THE PURCHASING AGENCY, THIS OFFICE WILL NOT OBJECT TO SUCH ACTION IN THE ABSENCE OF CLEAR PROOF OF THE ABUSE OF THEIR DISCRETIONARY POWERS IN THIS REGARD. THIS IS ESPECIALLY TRUE WHERE, AS HERE, THE PURPOSE IS TO CORRECT A DEFICIENCY IN THE INVITATION. OF COURSE, WE HAVE REPEATEDLY OBSERVED THAT THE REJECTION OF BIDS AFTER THEY ARE OPENED AND EACH BIDDER OR PROSPECTIVE BIDDER HAS LEARNED HIS COMPETITOR'S PRICES IS A SERIOUS MATTER AND SUCH ACTION SHOULD NOT BE TAKEN EXCEPT FOR COGENT REASONS. HOWEVER, WE BELIEVE THERE WAS A PROPER BASIS FOR THE CONTRACTING OFFICER'S DETERMINATION OF THE INSUFFICIENCY OF THE INVITATION, AND THAT BEING THE CASE, WE WOULD NOT BE JUSTIFIED IN OBJECTING TO THE ACTION TAKEN IN THE MATTER.

CONCERNING YOUR CLAIM THAT YOUR CLIENT IS ENTITLED TO RECOVER ITS EXPENSES FOR THE PREPARATION OF ITS BID UNDER THE FIRST INVITATION, ITIS WELL SETTLED THAT A CLAIM FOR REIMBURSEMENT OF EXPENSES INCURRED BY A BIDDER PREPARING A BID MAY NOT BE ALLOWED FOR THE REASON THAT STATUTES WHICH REQUIRE PURCHASES TO BE MADE AFTER ADVERTISING FOR BIDS WERE ENACTED FOR THE BENEFIT OF THE UNITED STATES AND NOT FOR BIDDERS, AND THE COURTS HAVE CONSISTENTLY HELD THAT BIDDERS HAVE NO ENFORCEABLE RIGHTS IN THE EVENT THEIR BIDS ARE NOT ACCEPTED. SEE PERKINS V LUKENS STEEL COMPANY, 310 U.S. 113; COLORADO PAVING COMPANY V MURPHY, 78 F.28; AND HEYER PRODUCTS COMPANY V UNITED STATES, 177 F.SUPP. 251. WHILE IN THE LAST CITED CASE (SOME 3 YEARS AFTER THE FIRST DECISION OF THE COURT OF CLAIMS, CITED IN YOUR BRIEF, CONCERNING THE SAME PARTIES AT 140 F.SUPP. 409), THE COURT HELD THAT SUCH EXPENSES MAY BE RECOVERABLE WHERE A CONTRACT IS AWARDED TO OTHER THAN THE BIDDER LEGALLY ENTITLED THERETO, BECAUSE OF LACK OF GOOD FAITH OR ARBITRARY OR CAPRICIOUS ACTION ON THE PART OF GOVERNMENT OFFICIALS, IT DID NOT, EXPRESSLY OR BY INFERENCE, EXTEND THAT PRINCIPLE TO SITUATIONS WHERE ALL BIDS ARE PROPERLY REJECTED IN GOOD FAITH PURSUANT TO THE AUTHORITY VESTED IN THE PROCUREMENT AGENCY BY LAW AND REGULATION. THERE IS NO EVIDENCE IN THIS CASE INDICATING BAD FAITH OR ARBITRARY OR CAPRICIOUS ACTS, BUT ONLY A FAILURE TO DRAW THE SPECIFICATIONS WITH SUFFICIENT CLARITY TO INSURE THAT ARTICLES OFFERED THEREUNDER WOULD MEET THE GOVERNMENT'S ACTUAL REQUIREMENTS.

IN THE CIRCUMSTANCES HERE INVOLVED, IT IS OUR VIEW THAT THE READVERTISEMENT OF THE PROCUREMENT UNDER CLARIFIED SPECIFICATIONS WAS IN THE BEST INTERESTS OF THE GOVERNMENT, AND FULLY CONSISTENT WITH THE PURPOSE OF THE PROCUREMENT STATUTES AND IMPLEMENTING REGULATIONS. ACCORDINGLY, WE SEE NO LEGALLY JUSTIFIABLE BASIS ON WHICH TO QUESTION THE ACTION TAKEN BY THE AIR FORCE IN THIS INSTANCE, AND YOUR PROTEST MUST THEREFORE BE DENIED.