B-192116, NOVEMBER 27, 1978

B-192116, NOVEMBER 27, 1978

DIGEST: 1. WHERE IFB CALLS FOR INCLUSION OF ALL APPLICABLE TAXES A BID WHICH PROVIDES "ALL TAXES EXCLUDED" IS NONRESPONSIVE. 2. BIDDER ASSUMES THE RISK WHERE IT RELIES ON ORAL ADVICE FURNISHED BY PERSONNEL OF THE CONTRACTING AGENCY SINCE THEY CANNOT BY ORAL INSTRUCTIONS CHANGE OR MODIFY IFB. 3. WHERE A TIME DELAY RESULTS FROM THE GOVERNMENT AGENCY LOCATING MATERIAL REQUESTED BY GAO, THE 5-DAY RULE DOES NOT APPLY.

NASCO PRODUCTS COMPANY:

INVITATION FOR BIDS (IFB) DLA 400-78-B-0250 WAS ISSUED BY THE DEFENSE GENERAL SUPPLY CENTER (DGSC) AT RICHMOND, VIRGINIA, DEFENSE LOGISTICS AGENCY, FOR THE PROCUREMENT OF ELECTRIC MICROWAVE OVENS.

BIDS WERE OPENED ON MARCH 9, 1978, AND ON MAY 26, 1978, A 1-YEAR REQUIREMENTS TYPE CONTRACT WAS AWARDED TO TAYLOR FREEZER SALES, CO., INC. (TAYLOR). ON JUNE 2, 1978, NASCO PRODUCTS COMPANY (NASCO) WAS NOTIFIED THAT ITS BID HAD BEEN REJECTED BECAUSE IT CONTAINED ON PAGE 19 THE STATEMENT "ALL TAXES EXCLUDED," WHICH, ACCORDING TO THE CONTRACTING OFFICER, WAS IN CONFLICT WITH THE SOLICITATION SPECIFICATIONS AND MADE THE BID NONRESPONSIVE.

ON JUNE 6, 1978, NASCO SENT A MAILOGRAM TO THE GENERAL ACCOUNTING OFFICE (GAO) IN WHICH NASCO PROTESTED THE REJECTION OF ITS BID, CONTENDING THAT BIDDERS SHOULD NOT BE HELD RESPONSIBLE FOR INCALCULABLE TAXES WHICH COULD POSSIBLY RESULT FROM AN INFINITE NUMBER OF UNNAMED DELIVERY POINTS.

IN A LETTER DATED JUNE 9, 1978, NASCO PROTESTED THE AWARD OF THE CONTRACT TO TAYLOR, STATING THAT THE TAX EXCLUSION IN ITS BID WAS TO PROTECT ITSELF FROM LIABILITY FOR TAXES AND DUTIES, BOTH BEFORE AND AFTER THE CONTRACT DATE, WHICH WERE UNKNOWN TO BOTH DGSC AND TO THE BIDDERS. NASCO CONTENDS THAT IT DID NOT INTEND TO TAKE EXCEPTION TO THE IFB TAX CLAUSE, BUT IT WAS ITS INTENTION TO WARRANT AND FURNISH EVIDENCE THAT NO AMOUNT WAS INCLUDED IN THE BID PRICE AS A CONTINGENCY AGAINST FUTURE FEDERAL, STATE OR LOCAL TAXES. NASCO ASSERTS THAT ON TWO PREVIOUS SOLICITATIONS IT WAS ADVISED BY PERSONNEL OF DGSC TO INSERT IN ITS BID THE WORDS "ALL TAXES EXCLUDED."

NASCO ALSO ASKS WHEN THE CONTRACTING OFFICER WAS ADVISED BY TAYLOR THAT THE ARTICLES BID UPON BY ANOTHER BIDDER, KESSEL KITCHEN EQUIPMENT COMPANY (KESSEL), DID NOT MEET THE SPECIFICATIONS, ABOUT THE FILING OF TIME EXTENSIONS BY THE OTHER BIDDERS, AND ABOUT THE TIME TAKEN BY THE CONTRACTING OFFICER TO REPLY TO NASCO'S STATEMENTS IN REPLY TO THE CONTRACTING OFFICER'S REPORT. NASCO ALSO SEEKS A STOP ORDER ON ANY DELIVERIES UNDER THE CONTRACT PRIOR TO A DETERMINATION BY THE GAO.

BIDS WERE SOLICITED ON AN F.O.B. ORIGIN BASIS AND THE IFB ON PAGE 31, INCORPORATED BY REFERENCE PARAGRAPH 7-103.10 OF THE DEFENSE ACQUISITION REGULATIONS (DAR) WHICH PROVIDES:

"(A) EXCEPT AS MAY BE OTHERWISE PROVIDED IN THIS CONTRACT, THE CONTRACT PRICE INCLUDES ALL APPLICABLE FEDERAL, STATE, AND LOCAL TAXES AND DUTIES.

(B) NEVERTHELESS, WITH RESPECT TO ANY FEDERAL EXCISE TAX OR DUTY ON THE TRANSACTIONS OR PROPERTY COVERED BY THIS CONTRACT, IF A STATUTE, COURT DECISION, WRITTEN RULING, OR REGULATIONS TAKES EFFECT AFTER THE CONTRACT DATE, AND--

(1) RESULTS IN THE CONTRACTOR BEING REQUIRED TO PAY OR BEAR THE BURDEN OF ANY SUCH FEDERAL EXCISE TAX OR DUTY OR INCREASE IN THE RATE THEREOF WHICH WOULD NOT OTHERWISE HAVE BEEN PAYABLE ON SUCH TRANSACTIONS OR PROPERTY, THE CONTRACT PRICE SHALL BE INCREASED BY THE AMOUNT OF SUCH TAX OR DUTY OR RATE INCREASE, PROVIDED THE CONTRACTOR WARRANTS IN WRITING THAT NO AMOUNT FOR SUCH NEWLY IMPOSED FEDERAL EXCISE TAX OR DUTY OR RATE INCREASE WAS INCLUDED IN THE CONTRACT PRICE AS A CONTINGENCY RESERVE OR OTHERWISE;

WHILE NASCO CONTENDS THAT IT DID NOT INTEND TO TAKE EXCEPTION TO THE TAX CLAUSE, WE THINK THE LANGUAGE "ALL TAXES EXCLUDED" DOES NOT CLEARLY EXPRESS SUCH INTENTION IN THE BID. RATHER, WE THINK THAT THE STATEMENT, REASONABLY CONSTRUED, INDICATES THAT NASCO WAS ATTEMPTING TO TRANSFER ALL LIABILITY FOR THE DETERMINATION OF THE APPLICABLE TAXES TO THE GOVERNMENT, WHICH IS CONTRARY TO THE PROVISIONS OF THE IFB.

IN THE GEORGE SOLLITT CONSTRUCTION CO., B-190743, SEPTEMBER 25, 1978, 78-2 CPD 224, WE STATED:

"WE HAVE PREVIOUSLY HELD THAT A TAX WHICH IS APPLICABLE OR IS OF DOUBTFUL APPLICABILITY MUST BE INCLUDED IN THE BID. 37 COMP.GEN. 864, 868 (1958). . . . UNLESS OTHERWISE SPECIFIED IN THE DOCUMENTS CONSTITUTING AN INVITATION FOR BIDS, THE INCLUSION OF THE TAX CLAUSE IN A CONTRACT FORM, WHICH IS IN TURN INCLUDED IN THE INVITATION, CONSTITUTES NOTICE TO ALL BIDDERS THAT BIDS ARE SOLICITED AND WILL BE EVALUATED ON A TAX-INCLUDED BASIS. 41 COMP.GEN. 289 (1961). A BID WILL BE CONSIDERED EVEN IF IT EXCLUDES A TAX NOT SPECIFIED FOR EXCLUSION BY THE IFB, IF THE CLASS AND AMOUNT OF THE TAX ARE SPECIFIED IN THE BID. 37 COMP.GEN., SUPRA. WHEN A BID IS SUBMITTED ON A TAX EXCLUSIVE BASIS, THE CLASS AND AMOUNT OF THE TAX EXCLUDED ARE REQUIRED SO AS TO PERMIT THE PROCURING AGENCY TO EVALUATE ALL BIDS ON AN EQUAL BASIS. ABSENT THAT, THE BID MUST BE CONSIDERED NONRESPONSIVE. 41 COMP.GEN., SUPRA."

SEE ALSO: UNITED MCGILL CORPORATION AND LIEB-JACKSON, INC., B-190418, FEBRUARY 10, 1978, 78-1 CPD 119.

SINCE NASCO'S BID GIVES NO INDICATION OF THE TYPE OR THE AMOUNT OF THE TAXES WHICH MAY HAVE BEEN EXCLUDED, WE CONCLUDE THAT ITS BID WAS NONRESPONSIVE TO THE IFB AND WAS PROPERLY REJECTED BY DGSC.

REGARDING NASCO'S ALLEGATION THAT IT WAS INSTRUCTED BY DGSC PERSONNEL ON PREVIOUS SOLICITATIONS TO INCLUDE THE STATEMENT "ALL TAXES EXCLUDED" IN ITS BIDS, WE POINT OUT THAT BIDDERS RELY ON ORAL ADVICE AT THEIR OWN RISK, AND THAT AGENCY PERSONNEL CANNOT BY ORAL INSTRUCTIONS CHANGE OR MODIFY IFB PRINTED SPECIFICATIONS. UNITRON, INCORPORATED, B-191273, JULY 5, 1978, 78-2 CPD 7; A. L. LEFTHERIOTIS, LTD., B-190720, MARCH 30, 1978, 78-1 CPD 251.

MOREOVER, THE PURCHASING AGENT AT DGSC IN RICHMOND, VIRGINIA, STATES THAT SHE DID NOT AT ANY TIME ADVISE NASCO THAT IT WAS EITHER NECESSARY OR DESIRABLE TO INCLUDE THE STATEMENT "ALL TAXES EXCLUDED" IN PROPOSALS SUBMITTED BY THEM. SHE FURTHER STATES THAT NASCO WAS NOT THE LOW BIDDER ON ONE SOLICITATION AND THAT THE OTHER SOLICITATION WAS CANCELLED WITHOUT AN AWARD.

AS TO THE INFORMATION FURNISHED TO THE CONTRACTING OFFICER THAT SOME BIDDERS HAD BID ON ARTICLES WHICH DID NOT COMPLY WITH THE SPECIFICATIONS, WE NOTE THAT KESSEL DECLINED SUBSEQUENTLY TO EXTEND ITS BID. TAYLOR ON THE OTHER HAND DID EXTENT ITS BID AND WAS AWARDED THE CONTRACT.

ON THE PROCEDURAL QUESTION RAISED BY NASCO PERTAINING TO DGSC'S FAILURE TO RESPOND IN 5 DAYS TO NASCO'S REPLY TO THE ADMINISTRATIVE REPORT, WE POINT OUT THAT THE INFORMATION WAS REQUESTED BY THE GENERAL ACCOUNTING OFFICE TO CLARIFY THE RECORD AND THAT THE SOURCE OF THE MATERIAL WAS LOCATED OUTSIDE OF THE LOCAL AREA. ON REQUESTS OF THIS TYPE THE ADDRESSEE IS ASKED TO FURNISH THE INFORMATION AS EXPEDITIOUSLY AS POSSIBLE. SEE 4 C.F.R. 20.6.

SINCE THE PROTEST IS DENIED, THE REQUEST FOR A STOPWORK ORDER IS MOOT AND NOT FOR CONSIDERATION.

PROTEST DENIED.