B-170452, SEP. 3, 1970

B-170452, SEP. 3, 1970

CONTRACTS - MISTAKE DENYING PROTEST OF BIOCOUSTICS, INC., SECOND LOW BIDDER, AGAINST PROPOSED NATIONAL AERONAUTICS AND SPACE ADMINISTRATION AWARD OF CONTRACT TO AUDIO SUTTLE CORPORATION FOR AN AUDIOMETRIC RESEARCH SYSTEM AND RELATED ELECTRONIC EQUIPMENT FOR TESTING HUMAN HEARING. LOW BIDDER, SUBMITTED TELEGRAPHIC BID AMENDMENT, WITH CONFIRMATION BY LETTER, INCREASING BID PRICE PRIOR TO BID OPENING. UPON OPENING A POSSIBLE MISTAKE IN LOW BIDDER'S PRICE QUOTATION WAS NOTED AND FOLLOWING VERIFICATION BY CONTRACTING OFFICER ERROR CONFIRMED AND BID ADJUSTED UPWARD, BUT REMAINING LOW BID. AUTHORITY PERMITTING CORRECTION OF BIDS, AS PROVIDED IN NASA PROCUREMENT REGULATIONS 2,406-3(A)(2) WAS GRANTED BY GAO - B-140233, 2 3-61, (SUBJECT TO OUR REVIEW) AND THE CONTENTION THAT THE LOW BIDDER DOES NOT QUALIFY AS A REGULAR DEALER OR MANUFACTURE UNDER WALSH-HEALEY PUBLIC CONTRACTS ACT, AS AMENDED, IS FOR DETERMINATION OF THE CONTRACTING OFFICER SUBJECT TO FINAL REVIEW BY DEPARTMENT OF LABOR. AUDIO'S BID MAY BE CORRECTED AND CONSIDERED FOR AWARD.

TO BIOCOUSTICS, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JULY 27, 1970, PROTESTING AGAINST CERTAIN PROCUREMENT PROCEDURES UTILIZED BY THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA) UNDER ITS INVITATION FOR BIDS NO. L51-947, AND THE PROPOSED AWARD OF A CONTRACT TO AUDIO SUTTLE CORPORATION (AUDIO).

THE SUBJECT SOLICITATION, ISSUED BY THE LANGLEY RESEARCH CENTER ON APRIL 13, 1970, SOUGHT TO PROCURE AN AUDIOMETRIC RESEARCH SYSTEM, TOGETHER WITH A SOUNDPROOFED ROOM AND OTHER ASSOCIATED ELECTRONIC EQUIPMENT REQUIRED TO CONDUCT TESTS ON HUMAN HEARING.

ON THE AMENDED BID OPENING DATE OF MAY 11, 1970, THREE BIDS WERE RECEIVED AS FOLLOWS:

FIRM PRICE

AUDIO $10,400

BIOCOUSTICS, INC. 20,760

NICHOLS DYNAMICS, INC. 26,474

THE FIGURE QUOTED ABOVE FOR AUDIO IS THAT SUBMITTED BY ITS TELEGRAPHIC BID AMENDMENT (AS PERMITTED BY NASA PROCUREMENT REGULATION (NASAPR) 2.304) OF MAY 7, 1970, AND CONFIRMED BY ITS LETTER OF MAY 8, 1970, WHICH INCREASED ITS THEN UNDISCLOSED ORIGINAL BID PRICE OF $6,942 BY $3,458.

SINCE AUDIO'S BID PRICE AT THE TIME OF BID OPENING WAS APPROXIMATELY 50 PERCENT LOWER THAN THAT OF YOUR FIRM'S BID, AND MORE THAN 50 PERCENT LOWER THAN THE GOVERNMENT'S ESTIMATE, THE CONTRACTING OFFICER HAD REASON TO BELIEVE THAT A MISTAKE MAY HAVE OCCURRED IN THE PREPARATION OF AUDIO'S BID. ACCORDINGLY, AND PURSUANT TO NASAPR 2.406-3, THE CONTRACTING OFFICER BY LETTER OF MAY 15, 1970, REQUESTED AUDIO TO VERIFY ITS BID PRICE AND TO FURNISH DOCUMENTARY EVIDENCE OF ANY ERROR AND ITS AMOUNT IF BID CORRECTION WAS DESIRED. IN ITS LETTER OF JUNE 1, 1970, AUDIO FURNISHED DOCUMENTARY EVIDENCE IN SUPPORT OF ITS ADVICE THAT AN ERROR IN THE AMOUNT OF $6,000 HAD OCCURRED IN CARRYING OVER ITS SUPPLIER'S TELEPHONIC PRICE QUOTATION FOR AUDIOMETRIC EQUIPMENT FROM THE TELEPHONE REPORT FORM TO THE ESTIMATING SHEET USED TO CALCULATE THE TOTAL BID PRICE.

THE TELEPHONE REPORT FORM RECORDS A TELEPHONE CONVERSATION BETWEEN A REPRESENTATIVE OF THE INTENDED SUPPLIER OF THE EQUIPMENT AND AUDIO'S MARKETING MANAGER WHO PREPARED THE BID IN QUESTION. THE RECORD REVEALS A TOTAL PRICE QUOTATION, WITH DISCOUNTS, OF $7,700 FOR THE EQUIPMENT TO BE SUPPLIED AUDIO. ALSO ATTACHED TO AUDIO'S LETTER OF JUNE 1 IS A COPY OF THE SUPPLIER'S PRINTED BROCHURE DESCRIBING THE EQUIPMENT OFFERED AT THE PRICES QUOTED ON THE TELEPHONE REPORT FORM WITHOUT DISCOUNT. IN COMPUTING ITS BID PRICE, THIS $7,700 FIGURE WAS CARRIED OVER TO THE ESTIMATING SHEET WITH THE FIRST DIGIT "7" HASTILY WRITTEN, SO THAT IT COULD BE EASILY MISTAKEN FOR THE NUMERAL "1". THE TOTAL FIGURE COULD THEN READILY BE READ AS $1,700 INSTEAD OF THE $7,700 INTENDED. WITH APPROPRIATE ADJUSTMENTS FOR OVERHEAD AND PROFIT THE EVIDENCE PRESENTED SHOWED THAT THE INTENDED BID PRICE WOULD HAVE BEEN $18,650 IN THE ABSENCE OF THE MISTAKE. IN THIS REGARD "ONE MUST BE WILLING TO BELIEVE THAT EVIDENCE IS 'CLEAR AND CONVINCING' ON THE BASIS OF A REASONABLE PROBABILITY THAT THE MARKUP ON THE HIGHER COSTS WOULD BE COMPUTED IN THE SAME WAY IT WAS ON THE MISTAKEN LOWER ONES." CF. CHRIS BERG V UNITED STATES, CT. CL. 235-68, DECIDED MAY 15, 1970. CONSEQUENTLY, ON JUNE 25, 1970, THE DIRECTOR OF PROCUREMENT DETERMINED THAT THE BID IN QUESTION SHOULD BE CORRECTED TO READ $18,650. THIS CORRECTIVE ACTION STILL LEFT AUDIO IN LINE FOR CONTRACT AWARD AS THE APPARENT LOW RESPONSIVE, RESPONSIBLE BIDDER. HOWEVER, BEFORE AWARD COULD BE MADE YOUR FIRM ENTERED AN ADMINISTRATIVE PROTEST ON JULY 22, 1970, TO NASA'S DIRECTOR OF PROCUREMENT. BEFORE ACTION COULD BE COMPLETED BY NASA ON YOUR PROTEST THERE, YOU ENTERED THE PRESENT PROTEST TO OUR OFFICE ON JULY 27, 1970.

IN YOUR LETTER TO OUR OFFICE AS WELL AS IN YOUR PROTEST LETTER TO NASA YOU LIST SEVERAL OBJECTIONS TO THE PROCUREMENT PROCEDURES EMPLOYED, AND PRESENT SEVERAL ARGUMENTS AS TO WHY AUDIO SHOULD NOT RECEIVE THE AWARD. HOWEVER, YOUR BASIC CONTENTIONS MAY BE SUMMARIZED AS FOLLOWS:

1. AN AWARD UNDER THE INVITATION IS APPARENTLY BEING CONSIDERED OUTSIDE OF WHAT APPEARS TO BE NORMAL BID PROCEDURES, BECAUSE GIVING AUDIO AN OPPORTUNITY TO REVISE ITS BID PRIOR TO BID OPENING AND ALLOWING AUDIO TO CHANGE ITS BID AFTER ALL OTHER BIDS HAVE BEEN OPENED AND EXAMINED IS PREJUDICIAL TO THE INTERESTS OF OTHER BIDDERS, AND THE BIDDING PROCEDURE TAKES ON THE COMPLEXION OF A NEGOTIATED AWARD TO AUDIO (AT A PRICE 56 PERCENT GREATER THAN THE SAME COMPANY'S SEALED BID PRICE), AND A SINGLE SEALED BID PROCEDURE FOR ALL OTHERS.

2. THAT AUDIO FALSELY REPRESENTED ITSELF TO BE A MANUFACTURER OF THE SUPPLIES OFFERED BY CHECKING THE APPROPRIATE BLOCK IN ITEM 2, PAGE 2, OF STANDARD FORM 33, AND SINCE AUDIO DOES NOT MANUFACTURE ALL OF THE REQUIRED EQUIPMENT THERE IS SERIOUS QUESTION REGARDING ITS ABILITY TO PERFORM THE CONTRACT.

YOUR FIRST ARGUMENT APPARENTLY MAKES REFERENCE TO THE FACT THAT PRIOR TO BID OPENING, AUDIO IN ACKNOWLEDGING RECEIPT OF AMENDMENT 1, INCREASED ITS ORIGINAL BID PRICE FROM $6,942 TO $10,400 BY ITS TELEGRAPHIC BID. THUS, YOU CONTEND THAT SINCE AUDIO HAD ALREADY TAKEN ADVANTAGE OF ONE OPPORTUNITY TO REVISE ITS BID PRICE DURING THE COURSE OF THIS PROCUREMENT, "IT IS INCONCEIVABLE THAT NASA WOULD ALLOW A THIRD ADJUSTMENT."

AS INDICATED ABOVE, NASAPR 2.304 PERMITS TELEGRAPHIC MODIFICATIONS OF BIDS TO BE SUBMITTED UP TO THE TIME SET FOR THE OPENING OF BIDS. THUS, ONLY THE AMENDED BID PRICE WAS FOR CONSIDERATION FOR AWARD PURPOSES AT THE TIME OF OPENING OF BIDS, AND WE KNOW OF NO REASON WHY THE EARLIER MISTAKE WOULD PRECLUDE A CONSIDERATION OF THE ALLEGED ERROR IN THE AMENDED BID PRICE.

WITH RESPECT TO WHETHER THE ALLEGED MISTAKE IN THE AMENDED BID PRICE WAS PROCESSED UNDER NORMAL AND ACCEPTABLE PROCEDURES, OUR OFFICE HAS CONSISTENTLY HELD, AND IT IS SO PROVIDED IN NASAPR 2.406-3(A)(2), THAT WHERE A MISTAKE IN A BID IS ALLEGED AFTER OPENING BUT BEFORE AWARD AND THERE IS PRESENTED CLEAR AND CONVINCING EVIDENCE OF THE MISTAKE, HOW IT OCCURRED, AND WHAT THE BID WOULD HAVE BEEN EXCEPT FOR THE MISTAKE, THE BID MAY BE CORRECTED, IF SUCH CORRECTION WOULD NOT AFFECT THE RELATIVE STANDING OF OTHER BIDDERS. 35 COMP. GEN. 279 (1955); 37 COMP. GEN. 210 (1957). THE AUTHORITY TO PERMIT CORRECTION OF BIDS, AS PROVIDED IN NASAPR 2.406-3(A)(2), WAS GRANTED TO NASA (SUBJECT TO OUR REVIEW) BY OUR DECISION B-140233, FEBRUARY 3, 1961.

WE HAVE CAREFULLY EXAMINED THE DOCUMENTS SUBMITTED BY AUDIO IN SUPPORT OF ITS ALLEGATION OF ERROR AND WE MUST CONCLUDE THAT THEY AMPLY SUPPORT THE DETERMINATION BY THE DIRECTOR OF PROCUREMENT OF NASA THAT AUDIO'S BID WAS PROPERLY FOR CORRECTION AND AS CORRECTED WAS FOR CONSIDERATION ALONG WITH THE OTHER BIDS RECEIVED. WE ARE THEREFORE UNABLE TO AGREE WITH YOUR CONTENTION THAT THE APPLICABLE PROCUREMENT REGULATIONS AND PROCEDURES WERE NOT FOLLOWED BY NASA IN PERMITTING CORRECTION OF AUDIO'S BID.

YOUR SECOND CONTENTION ARGUES PRIMARILY THAT AUDIO DOES NOT QUALIFY AS A REGULAR DEALER OR MANUFACTURER UNDER THE WALSH-HEALEY PUBLIC CONTRACTS ACT, AS AMENDED, 41 U.S.C. 35. OUR OFFICE HAS CONSISTENTLY HELD THAT WE DO NOT HAVE JURISDICTION TO REVIEW DETERMINATIONS AS TO WHETHER PARTICULAR FIRMS ARE REGULAR DEALERS OR MANUFACTURERS. B 147620, JANUARY 12, 1962; B -161933, OCTOBER 20, 1967; B-162841, JANUARY 16, 1968. RATHER, WE HAVE CONSIDERED THAT SUCH DETERMINATIONS REST WITH THE CONTRACTING OFFICER SUBJECT TO FINAL REVIEW BY THE DEPARTMENT OF LABOR. B-148715, JUNE 25, 1962.

THE CONTRACTING AGENCY HAS ADVISED US THAT THE MATTER OF AUDIO'S ELIGIBILITY UNDER THE WALSH-HEALEY ACT WILL BE SUBMITTED TO THE DEPARTMENT OF LABOR FOR A FINAL DETERMINATION. SINCE, AS INDICATED ABOVE, THE AUTHORITY TO REVIEW THE DETERMINATION OF THE CONTRACTING OFFICER IN SUCH MATTER IS VESTED IN THE DEPARTMENT OF LABOR AND NOT IN OUR OFFICE, YOU MAY WISH TO PURSUE THE MATTER WITH THAT AGENCY.

ASIDE FROM THE QUESTION OF WHETHER AUDIO IS A REGULAR MANUFACTURER, YOUR PROTEST RAISES A QUESTION AS TO WHETHER AUDIO IS TECHNICALLY QUALIFIED TO PERFORM THE CONTRACT, SINCE IT DOES NOT MANUFACTURE THE AUDIOMETRIC EQUIPMENT NEEDED TO CONSTRUCT A COMPLETE AUDIOMETRIC RESEARCH SYSTEM. WHILE ADMITTING THAT AUDIO PLANS TO PURCHASE THE NECESSARY AUDIOMETRIC EQUIPMENT FROM A SUPPLIER, NASA POINTS OUT THAT NEITHER THE SOLICITATION NOR STANDARD PROCUREMENT PRACTICES PRECLUDE SUCH AN ARRANGEMENT. CONVERSELY, IN FORMALLY ADVERTISED, FIXED-PRICE, PROCUREMENTS IT IS GENERALLY NECESSARY THAT A BIDDER SHOW ONLY THAT HE IS ABLE TO OBTAIN NECESSARY PARTS OR ASSEMBLIES FROM QUALIFIED MANUFACTURERS IN ORDER TO QUALIFY AS A RESPONSIBLE BIDDER. SEE NASAPR 1.903-1(VI) AND (VII). SINCE NASA ADVISES THAT THERE IS NO NEED IN THE PRESENT PROCUREMENT TO LIMIT COMPETITION BY REQUIRING THE PRIME CONTRACTOR TO BE THE MANUFACTURER OF THE AUDIOMETRIC EQUIPMENT (AND WITHOUT REFERENCE TO WHETHER SUCH MANUFACTURE MAY BE CONSIDERED NECESSARY BY THE DEPARTMENT OF LABOR TO QUALIFY AS A "MANUFACTURER" UNDER THE WALSH-HEALEY ACT) WE MUST AGREE WITH NASA THAT AUDIO NEED NOT MANUFACTURE THE AUDIOMETRIC EQUIPMENT IN ORDER TO QUALIFY AS A RESPONSIBLE BIDDER.

IN VIEW OF THE RECORD BEFORE US, WE SEE NO VALID BASIS FOR OBJECTING TO THE ACTION TAKEN BY NASA AND IN DETERMINING THAT AUDIO'S BID MAY BE CORRECTED AND CONSIDERED FOR AWARD. ACCORDINGLY, YOUR PROTEST IS DENIED.