B-168473, MARCH 5, 1970, 49 COMP. GEN. 541

B-168473, MARCH 5, 1970, 49 COMP. GEN. 541

BIDS -- CORRECTION -- INITIALING REQUIREMENT THE FAILURE TO INITIAL AN ERASURE AND CORRECTION OF UNIT PRICE IN THE LOW BID SUBMITTED UNDER AN INVITATION FOR AN INDEFINITE QUANTITY OF RODS, WHERE THERE WAS NO DOUBT OF THE INTENDED BID PRICE AND NO NEED TO QUESTION WHETHER THE PERSON SIGNING THE BID EFFECTED THE CHANGES AS THE ABSTRACT OF BIDS EVIDENCED THE PRICE HAD BEEN CORRECTED PRIOR TO BID OPENING, WAS A MINOR INFORMALITY OF FORM THAT SHOULD HAVE BEEN WAIVED PURSUANT TO PARAGRAPH 2-405 OF THE ARMED SERVICES PROCUREMENT REGULATION IN THE INTEREST OF THE GOVERNMENT AS THE LOW BIDDER RESPONSIBLE FOR THE CONTENTS OF THE BID SUBMITTED WOULD BE REQUIRED TO PERFORM AT THE CORRECTED BID PRICE. CONTRACTS -- AWARDS -- ERRONEOUS - PERFORMANCE ALTHOUGH THE REJECTION OF THE LOW BID UNDER AN INVITATION FOR AN INDEFINITE QUANTITY OF RODS WAS IMPROPER AND THE AWARD OF A CONTRACT TO THE SECOND LOW BIDDER WAS UNAUTHORIZED, IN VIEW OF THE EXPENSES INCURRED BY THE CONTRACTOR, THE MINIMUM QUANTITY ORDERED UNDER THE CONTRACT MAY STAND AND PAYMENT MADE AT THE CONTRACT PRICE. HOWEVER, NO ADDITIONAL ORDERS MAY BE PLACED UNDER THE CONTRACT, EVEN THOUGH THE BID PRICE WAS COMPUTED IN ANTICIPATION OF OBTAINING ORDERS FOR THE MAXIMUM QUANTITY STATED IN THE CONTRACT, AND THE CONTRACTOR PURCHASED MORE MATERIAL THAN NEEDED TO FILL THE MINIMUM QUANTITY ORDERED, AS THE EXTENT OF CONTRACTOR PERFORMANCE IS NOT FOR CONSIDERATION IN DECIDING WHETHER TO PRECLUDE FURTHER PERFORMANCE WHERE THE GOVERNMENT HAS THE RIGHT NOT TO EXERCISE AN OPTION TO PURCHASE.

TO THE SECRETARY OF THE ARMY, MARCH 5, 1970:

REFERENCE IS MADE TO THE PROTEST OF TOMPKINS PRODUCTS AGAINST THE AWARD OF A CONTRACT UNDER INVITATION FOR BIDS NO. DAAF01-70-B-0133, ISSUED BY ROCK ISLAND ARSENAL, ILLINOIS. THIS MATTER WAS THE SUBJECT OF A REPORT DATED DECEMBER 18, 1969, FROM THE DEPUTY DIRECTOR OF PROCUREMENT, ARMY MATERIEL COMMAND, REFERENCE AMCGC-P

THE INVITATION REQUESTED BIDS ON AN INDEFINITE QUANTITY OF SMALL ARMS CLEANING RODS. THE INVITATION PROPOSED TO OBLIGATE THE GOVERNMENT TO ORDER A MINIMUM QUANTITY OF 23,220 RODS DURING THE CONTRACT YEAR AND TO COMMIT THE CONTRACTOR TO FURNISH TO THE GOVERNMENT, WHEN AND IF ORDERED, UP TO AND INCLUDING THE QUANTITY OF SUPPLIES DESIGNATED IN THE SCHEDULE AS THE "MAXIMUM," 92,880 RODS. THE TYPE OF CONTRACT INTENDED IS AN "INDEFINITE QUANTITY CONTRACT" AS DEFINED IN ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-409.3.

THE FILE SUBMITTED WITH THE REPORT OF DECEMBER 18, 1969, INDICATES THAT TOMPKINS PRODUCTS SUBMITTED THE LOWEST BID OF $1.85 FOR EACH ROD, BUT THAT ITS BID WAS REJECTED AS NONRESPONSIVE TO THE INVITATION FOR FAILURE TO INITIAL THE ERASURE IN ITS BID PRICE. AN AWARD WAS MADE TO JEFFREY-ALAN MANUFACTURING & ENGINEERING CORPORATION AT A UNIT PRICE OF $1.89 AND A PURCHASE ORDER FOR THE ENTIRE MINIMUM QUANTITY WAS ISSUED ON NOVEMBER 19, 1969. IT IS NOTED THAT SUCH ACTION WAS TAKEN APPROXIMATELY 2 MONTHS AFTER BID OPENING AND AFTER TWO PREAWARD SURVEYS HAD BEEN REQUESTED ON TOMPKINS, AS A RESULT OF WHICH THE COMPANY WAS DETERMINED TO BE CAPABLE OF PERFORMANCE.

YOUR REPORT POINTS OUT THAT INITIALING OF ERASURES IS REQUIRED BY PARAGRAPH 2(B) OF THE "SOLICITATION INSTRUCTIONS AND CONDITIONS," WHICH ADVISES THAT "ERASURES OR OTHER CHANGES MUST BE INITIALED BY THE PERSON SIGNING THE OFFER." THE CONTRACTING OFFICER HAS STATED THAT HIS DECISION TO REJECT THE LOW BID WAS BASED UPON THE DETERMINATION THAT FAILURE TO INITIAL THE ERASURE OF THE UNIT PRICE WAS A MATERIAL ASPECT OF THE BID, RATHER THAN A MINOR BID IRREGULARITY WHICH COULD BE WAIVED PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2-405. THE CONTRACTING OFFICER REASONED THAT NO INFORMATION WAS AVAILABLE TO HIM TO INDICATE THAT THE PERSON SIGNING THE BID EFFECTED THE ERASURE AND INSERTED THE PRICE OF $1.85, OR THAT THE PERSON SUBSCRIBING THE BID WAS AWARE OF SUCH ERASURE AND SUBSEQUENT INSERTION OF THIS FIGURE.

YOUR DEPARTMENT HAS TAKEN THE POSITION THAT THE CONTRACTING OFFICER'S DECISION TO REJECT THE LOW BID WAS NOT ARBITRARY, CAPRICIOUS OR UNREASONABLE AND WAS, THEREFORE, A PROPER EXERCISE OF HIS DISCRETION IN THE MATTER.

A DETERMINATION BY A CONTRACTING OFFICER THAT A BID IS NONRESPONSIVE, WHICH AS IN THE PRESENT CASE, INVOLVES INTERPRETATION OF THE INVITATION AND BID AND THE APPLICATION OF PERTINENT PROVISIONS OF ASPR, HAS BEEN HELD TO BE A LEGAL QUESTION WHICH IS SUBJECT TO FINAL REVIEW BY THIS OFFICE. SEE B-161722, JANUARY 11, 1968. REGARDING THE CONTRACTING OFFICER'S DETERMINATION THAT THE LOW BID IN THE INSTANT CASE WAS NONRESPONSIVE, WE HAVE CONSISTENTLY HELD THAT IF A BIDDER FAILS TO INITIAL AN ERASURE IN THE BID PRICE, BUT THE ERASURE AND CORRECTION LEAVE NO DOUBT AS TO WHAT THE INTENDED BID PRICE IS, SUCH A BIDDER HAS MADE A LEGALLY BINDING OFFER, ACCEPTANCE OF WHICH WOULD CONSUMMATE A VALID CONTRACT WHICH THE BIDDER WOULD BE OBLIGED TO PERFORM AT THE OFFERED PRICE. UNDER SUCH CIRCUMSTANCES WE HAVE CONCLUDED THAT THE REQUIREMENT FOR INITIALING CHANGES IS A MATTER OF FORM WHICH MAY BE CONSIDERED AN INFORMALITY AND WAIVED IN THE INTEREST OF THE GOVERNMENT. SEE B-149134, SEPTEMBER 20, 1962; B-147106(2), SEPTEMBER 25, 1961; B-148081, MARCH 5, 1962; B-148560, APRIL 10, 1962; AND B 159376, AUGUST 2, 1966.

WE PERCEIVE NO SUBSTANTIAL REASON IN THE PRESENT CASE FOR QUESTIONING WHETHER THE PERSON SIGNING THE BID EFFECTED THE ERASURE, SINCE IT IS APPARENT FROM THE ABSTRACT OF BIDS THAT THE PRICE HAD BEEN CORRECTED PRIOR TO THE TIME SEALED BIDS WERE PUBLICLY OPENED. IN SUCH CIRCUMSTANCES A BIDDER MUST BE HELD RESPONSIBLE FOR THE CONTENTS OF ITS BID, UNITED STATES V SABIN METAL CORP., 151 F. SUPP. 683 (1957), AFFIRMED 253 F. 2D 956 (1958), AND MAY THEREFORE BE HELD TO PERFORM AT ITS BID PRICE AS SUBMITTED. IT IS THEREFORE OUR OPINION THAT REJECTION OF TOMPKINS' LOW BID WAS IMPROPER.

TURNING TO THE EFFECT OF THE IMPROPER REJECTION OF THE TOMPKINS BID ON THE AWARD TO JEFFREY-ALAN MANUFACTURING & ENGINEERING CORPORATION, THE APPLICABLE PROCUREMENT STATUTE, 10 U.S.C. 2305(C), WITH WHICH THE PROVISIONS OF ASPR 2-103(IV) AND 2-407.1, AND PARAGRAPH 10(A), STANDARD FORM 33A, ARE CONSISTENT, REQUIRES THAT AWARD IN A PUBLICLY ADVERTISED PROCUREMENT BE MADE TO THAT RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. AS THE RESPONSIBLE BIDDER WHO QUOTED THE LOWEST PRICE, TOMPKINS WAS IN LINE FOR AWARD. HOWEVER, THE MINIMUM QUANTITY REQUIRED TO BE ORDERED UNDER THE SOLICITATION AND THE CONTRACT AWARDED TO JEFFREY-ALAN WAS ORDERED MORE THAN 2 MONTHS AGO, AND YOUR DEPARTMENT HAS ADVISED US THAT JEFFREY-ALAN HAS PURCHASED ALL MATERIALS FOR THE MINIMUM QUANTITY ORDERED AND HAS INCURRED LABOR AND MATERIAL COSTS OF $18,500. HAVING REGARD FOR THE INTEREST OF THE GOVERNMENT, WHICH HAS BEEN COMPLICATED AND COMPROMISED BY THE FACT THAT JEFFREY-ALAN HAS MADE SUBSTANTIAL COMMITMENTS BASED ON THE AWARD AND IS PROCEEDING WITH PERFORMANCE, IT IS OUR OPINION THAT THE AWARD OF THE MINIMUM QUANTITY SHOULD BE PERMITTED TO STAND AND PAYMENT MADE AT THE COMPANY'S BID PRICE.

HOWEVER, WE HAVE BEEN ADVISED THAT YOUR DEPARTMENT WILL HAVE A DEFINITE REQUIREMENT FOR AT LEAST 20,000 ADDITIONAL ITEMS DURING THE PERIOD COVERED BY THE SOLICITATION AND THE JEFFREY-ALAN CONTRACT. IN THIS REGARD JEFFREY -ALAN HAS ADVISED THIS OFFICE THAT ITS BID PRICE WAS COMPUTED IN ANTICIPATION OF OBTAINING ORDERS FOR THE MAXIMUM QUANTITY STATED IN ITS CONTRACT, AND IT HAS THEREFORE PURCHASED SUBSTANTIAL QUANTITIES OF RAW MATERIALS, IN ADDITION TO THOSE WHICH WOULD BE REQUIRED TO FILL THE MINIMUM QUANTITY ORDERED. WHILE WE HAVE CONSISTENTLY TAKEN INTO CONSIDERATION THE EXTENT OF THE CONTRACTOR'S PERFORMANCE IN DECIDING WHETHER THE CONTRACTOR SHOULD BE PRECLUDED FROM FURTHER PERFORMANCE, WE DO NOT BELIEVE SUCH MATTERS ARE FOR CONSIDERATION HERE SINCE THE GOVERNMENT, IN ANY EVENT, WOULD HAVE THE LEGAL PRIVILEGE OF NOT EXERCISING ITS OPTION TO PURCHASE THE MAXIMUM QUANTITY. SEE DYNAMICS CORPORATION OF AMERICA V UNITED STATES, 182 CT. CL. 62, SEC. 74 (1968).

WITH REGARD TO THE FILLING OF FUTURE NEEDS OF THE GOVERNMENT, OVER AND ABOVE THE 23,220 RODS ALREADY ORDERED, WE PERCEIVE NO LEGAL BASIS JUSTIFYING ADDITIONAL PURCHASES FROM JEFFREY-ALAN UNDER ITS UNAUTHORIZED CONTRACT.

A COPY OF THIS DECISION HAS BEEN SENT TO BOTH TOMPKINS AND JEFFREY ALAN.

THE FILE FORWARDED WITH THE REPORT OF DECEMBER 18 IS RETURNED.