B-154972, OCT. 8, 1964

B-154972, OCT. 8, 1964

TO BECKMAN/COMPUTER OPERATIONS:

REFERENCE IS MADE TO YOUR TELEGRAM OF AUGUST 14, 1964, PROTESTING THE REJECTION OF YOUR BID SUBMITTED IN RESPONSE TO INVITATION FOR BIDS NO. 9841 WHICH WAS ISSUED BY THE BONNEVILLE POWER ADMINISTRATION ON JULY 10, 1964, FOR THE FURNISHING OF ELECTRONIC DIFFERENTIAL ANALYZER EQUIPMENT. THIS WAS THE SECOND STEP OF A TWO-STEP PROCUREMENT.

CLAUSE 112 OF SUPPLEMENTARY GENERAL PROVISIONS SGP-4-1, WHICH WAS MADE PART OF THE INVITATION, PROVIDES AS FOLLOWS:

"112. CONTRACTOR'S GUARANTEE. A. THE CONTRACTOR GUARANTEES THAT THE EQUIPMENT FURNISHED UNDER THE CONTRACT MEETS ALL THE REQUIREMENTS OF THESE SPECIFICATIONS.

"B. THE CONTRACTOR HEREBY AGREES TO REPAIR OR REPLACE ANY EQUIPMENT OR PART THEREOF WHICH FAILS IN OPERATION DURING NORMAL AND PROPER USE WITHIN ONE YEAR FROM DATE OR COMPLETION OF INSTALLATION DUE TO DEFECTS IN DESIGN, MATERIAL OR WORKMANSHIP, NOTWITHSTANDING THAT FINAL ACCEPTANCE AND PAYMENT MAY HAVE BEEN CONSUMMATED; PROVIDED, HOWEVER, THAT IN SUCH CASE THE CONTRACTING OFFICER SHALL HAVE PROMPTLY FORWARDED WRITTEN NOTICE OF SUCH FAILURE TO THE CONTRACTOR AND PROVIDED FURTHER THAT IN CASE INSTALLATION IS DELAYED FOR MORE THAN SIX (6) MONTHS AFTER THE DATE OF PRELIMINARY ACCEPTANCE AT DESTINATION BY CONDITIONS BEYOND THE CONTROL OF THE CONTRACTOR, THIS GUARANTEE SHALL REMAIN IN FULL FORCE AND EFFECT FOR A PERIOD OF EIGHTEEN (18) MONTHS FROM THE DATE OF PRELIMINARY ACCEPTANCE AT DESTINATION REGARDLESS OF THE DATE OF COMPLETION OF INSTALLATION. ALL REPLACEMENTS OF EQUIPMENT OR PARTS THEREOF AS A RESULT OF FAILURES AFTER FINAL ACCEPTANCE SHALL BE MADE PROMPTLY AND FREE OF CHARGE F.O.B. DESTINATION. THE COST OF INSTALLING THESE REPLACEMENTS AFTER FINAL ACCEPTANCE WILL BE BORNE BY THE GOVERNMENT.

"C. ANY EQUIPMENT OR PART THEREOF WHICH HAS BEEN REPLACED UNDER THE PROVISIONS OF THIS GUARANTEE SHALL BECOME THE PROPERTY OF THE CONTRACTOR. SHOULD THE CONTRACTOR DESIRE THE DEFECTIVE EQUIPMENT OR PART THEREOF RETURNED TO HIM, HE SHALL PAY TRANSPORTATION CHARGES FOR RETURN. IN CASE THE CONTRACTOR DOES NOT REQUEST THE RETURN OF SUCH REPLACED PARTS WITHIN SIX MONTHS FROM DATE OF REPLACEMENT, THEY SHALL BECOME THE PROPERTY OF THE GOVERNMENT.

"D. THE REMEDIES AFFORDED THE GOVERNMENT BY PARAGRAPH B SHALL BE EXCLUSIVE AS TO ANY BREACH OF WARRANTY, EXPRESS OR IMPLIED, EXCEPT AS TO ANY BREACH INVOLVING LATENT DEFECTS, FRAUD OR SUCH GROSS MISTAKE AS AMOUNTS TO FRAUD.'

YOU ATTACHED TO YOUR BID THE FOLLOWING "WARRANTY:"

"INSTRUMENTS SOLD BY BERKELEY DIVISION, BECKMAN INSTRUMENTS, INC., (HEREAFTER CALLED "THE COMPANY") ARE WARRANTED ONLY AS STATED BELOW.

"SUBJECT TO THE EXCEPTIONS AND UPON THE CONDITIONS SPECIFIED BELOW, THE COMPANY AGREES TO CORRECT, EITHER BY REPAIR, OR, AT ITS ELECTION, BY REPLACEMENT, ANY DEFECT OF MATERIAL OR WORKMANSHIP WHICH DEVELOPS WITHIN ONE YEAR AFTER DELIVERY OF THE INSTRUMENT TO THE ORIGINAL PURCHASER BY THE COMPANY OR BY AN AUTHORIZED REPRESENTATIVE, PROVIDED THAT INVESTIGATION AND FACTORY INSPECTION BY THE COMPANY DISCLOSES THAT SUCH DEFECT DEVELOPED UNDER NORMAL AND PROPER USE.

"THE EXCEPTIONS AND CONDITIONS MENTIONED ABOVE ARE THE FOLLOWING:

(A) SOME COMPONENTS AND ACCESSORIES BY THEIR NATURE ARE NOT INTENDED TO, AND WILL NOT, FUNCTION ONE YEAR. IF ANY SUCH COMPONENT OR ACCESSORY MANUFACTURED BY THE COMPANY AND PART OF THE ITEM SOLD FAILS TO GIVE REASONABLE SERVICE FOR A REASONABLE PERIOD OF TIME, THE COMPANY WILL, AT ITS ELECTION, REPLACE OR REPAIR SUCH COMPONENT OR ACCESSORY. WHAT CONSTITUTES REASONABLE SERVICE AND WHAT CONSTITUTES A REASONABLE PERIOD OF TIME SHALL BE DETERMINED SOLELY BY THE COMPANY AFTER THE COMPANY IS IN POSSESSION OF ALL THE FACTS CONCERNING OPERATING CONDITIONS AND OTHER PERTINENT FACTORS AND AFTER SUCH COMPONENT OR ACCESSORY HAS BEEN RETURNED TO THE COMPANY, TRANSPORTATION PREPAID.

(B) ALL INSTRUMENTS CLAIMED DEFECTIVE MUST BE RETURNED TO THE COMPANY, TRANSPORTATION CHARGES PREPAID, AND WILL BE RETURNED TO THE CUSTOMER WITH THE TRANSPORTATION CHARGES COLLECT, UNLESS THE ITEM IS FOUND TO BE DEFECTIVE IN WHICH CASE THE COMPANY WILL PAY ALL TRANSPORTATION CHARGES.

(C) THE COMPANY MAKES NO WARRANTY CONCERNING COMPONENTS OR ACCESSORIES NOT MANUFACTURED BY IT, SUCH AS TUBES, FUSES, BATTERIES, ETC. HOWEVER, IN THE EVENT OF THE FAILURE OF ANY COMPONENT OR ACCESSORY NOT MANUFACTURED BY THE COMPANY, THE COMPANY WILL GIVE REASONABLE ASSISTANCE TO THE PURCHASER IN OBTAINING FROM THE RESPECTIVE MANUFACTURER WHATEVER ADJUSTMENT IS REASONABLE IN THE LIGHT OF THE MANUFACTURER'S OWN WARRANTY.

(D) EXCEPT AS STATED ABOVE, THE COMPANY MAKES NO WARRANTY, EXPRESS OR IMPLIED (EITHER IN FACT OR BY OPERATION OF LAW), STATUTORY OR OTHERWISE; AND, EXCEPT TO THE EXTENT STATED ABOVE, THE COMPANY SHALL HAVE NO LIABILITY UNDER ANY WARRANTY, EXPRESS OR IMPLIED (EITHER IN FACT OR BY OPERATION OF LAW), STATUTORY OR OTHERWISE.

(E) THE COMPANY EXPRESSLY DISCLAIMS ANY LIABILITY TO ITS CUSTOMERS, DEALERS, AND TO USERS OF ITS PRODUCTS, AND TO ANY OTHER PERSON OR PERSONS FOR CONSEQUENTIAL DAMAGES OF ANY KIND AND FROM ANY CAUSE WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE MANUFACTURE, SALE, REPAIR, REPLACEMENT OF, OR ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE USE OF ANY OF ITS PRODUCTS.

(F) REPRESENTATIONS AND WARRANTIES MADE BY ANY PERSON, INCLUDING REPRESENTATIVES OF THE COMPANY, WHICH ARE INCONSISTENT OR IN CONFLICT WITH THE TERMS OF THIS WARRANTY (INCLUDING BUT NOT LIMITED TO THE LIMITATION OF THE LIABILITY OF THE COMPANY AS SET FORTH ABOVE) SHALL NOT BE BINDING UPON THE COMPANY UNLESS REDUCED TO WRITING AND APPROVED BY AN OFFICER OF THE COMPANY.

(G) THIS WARRANTY SHALL BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA.

"CLAIMS FOR DAMAGE IN SHIPMENT SHOULD BE FILED PROMPTLY WITH THE TRANSPORTATION COMPANY.

"ALL CORRESPONDENCE CONCERNING THE INSTRUMENT SHOULD SPECIFY THE MODEL AND SERIAL NUMBER. THIS INFORMATION APPEARS ON THE COMPANY NAME PLATE. ANY INQUIRY CONCERNING DETAILS OF OPERATION, POSSIBLE MODIFICATIONS, ETC., SHOULD BE ADDRESSED TO THE SALES DEPARTMENT, BERKELEY DIVISION OF BECKMAN INSTRUMENTS, INC., RICHMOND 4, CALIFORNIA.'

THE LETTER DATED JULY 22, 1964, TRANSMITTING YOUR BID CONTAINED THE FOLLOWING STATEMENT IN REGARD TO THE ATTACHED "WARRANTY:"

"OUR WARRANTY EXTENDS OVER THE PERIOD OF ONE YEAR AFTER ACCEPTANCE OF THE EQUIPMENT ACCORDING TO OUR WARRANTY CONDITIONS AS SHOWN ON THE ATTACHED SHEET, MEETING YOUR REQUEST AS SPECIFIED IN PARAGRAPH 112 OF YOUR FORM SGP -4-1.'

THREE TIMELY BIDS WERE RECEIVED AND WERE OPENED ON JULY 24, 1964, BECKMAN/COMPUTER OPERATIONS, YOUR FIRM, WAS THE LOW BIDDER. HOWEVER, SUCH LOW BID WAS REJECTED BY THE BONNEVILLE POWER ADMINISTRATION AS NONRESPONSIVE TO THE INVITATION AND HENCE UNACCEPTABLE TO THE GOVERNMENT. THE BASIS FOR SUCH ACTION WAS THE ADMINISTRATIVE DETERMINATION THAT THE "WARRANTY" WHICH BECKMAN/COMPUTER OPERATIONS ATTACHED TO ITS BID AND REFERENCED IN ITS TRANSMITTAL LETTER WAS A PART OF THE BID AND CONSTITUTED A QUALIFICATION THEREOF, AND THAT SUCH "WARRANTY" WAS NOT RESPONSIVE TO THE CONTRACTOR'S GUARANTEE REQUIREMENTS OF PARAGRAPH 112 OF SUPPLEMENTARY GENERAL PROVISIONS SGP 4-1. AWARD WAS THEREFORE MADE TO THE NEXT LOWEST BIDDER, ELECTRIC ASSOCIATES, C., OF EL SEGUNDO, CALIFORNIA, ON AUGUST 6, 1964.

YOU CONTEND THAT YOUR LETTER OF JULY 22, 1964, TAKES NO EXCEPTION TO THE TERMS AND CONDITIONS OF THE BID, SINCE IN THAT LETTER YOU "STATE IN FACT THAT YOUR WARRANTY EXTENDS FOR A PERIOD OF ONE YEAR AFTER ACCEPTANCE MEETING THE REQUIREMENTS OF PARA 112 OF THE INVITATION FOR BID.' YOU FURTHER STATE THAT UPON RECEIPT OF NOTICE THAT YOUR BID WAS CONSIDERED NONRESPONSIVE YOU IMMEDIATELY TELEGRAPHED THE ADMINISTRATIVE OFFICE "CLARIFYING" YOUR PROPOSAL TO STATE THAT YOU HAD ACCEPTED THE GOVERNMENT- REQUIRED WARRANTY IN TOTAL. FINALLY, YOU URGE THAT SINCE YOU HAVE AGREED TO THE GOVERNMENT'S WARRANTY PROVISIONS, AND YOUR PRICE IS LOWEST, IT IS NOT IN THE BEST INTERESTS OF THE GOVERNMENT FINANCIALLY TO PERMIT THE AWARD TO STAND.

IT IS A FUNDAMENTAL RULE IN COMPETITIVE BIDDING THAT A CONTRACT MAY BE AWARDED ONLY ON A BID WHICH IS RESPONSIVE TO THE TERMS OF THE INVITATION. THE AWARD MUST BE MADE UPON THE TERMS ADVERTISED, AND NO BIDING CONTRACT RESULTS WHEN THE SUBMITTED BID IS MATERIALLY AT VARIANCE WITH THE TERMS OF THE INVITATION. 39 COMP. GEN. 832. ALSO, WE HAVE RECOGNIZED THAT THE TERMS OF A WARRANTY MAY BE MATERIAL AND THAT A QUALIFICATION OF WARRANTY TERMS STIPULATED IN THE INVITATION WILL REQUIRE REJECTION OF THE NONCONFORMING BID. B-138307, MAY 15, 1959.

IN YOUR "WARRANTY" YOU AGREE, SUBJECT TO CERTAIN STATED EXCEPTIONS AND CONDITIONS, TO CORRECT, EITHER BY REPAIR OR REPLACEMENT, ANY DEFECT OF MATERIAL OR WORKMANSHIP WHICH DEVELOPS WITHIN ONE YEAR AFTER DELIVERY OF THE INSTRUMENT TO THE PURCHASER. IN THE GUARANTEE PROVIDED BY PARAGRAPH 112 OF THE SUPPLEMENTARY GENERAL PROVISIONS, THE CONTRACTOR AGREES TO REPAIR OR REPLACE ANY DEFECTIVE EQUIPMENT WHICH FAILS IN OPERATION WITHIN ONE YEAR FROM DATE OF COMPLETION OF INSTALLATION BUT NOT TO EXCEED 18 MONTHS FROM THE DATE OF PRELIMINARY ACCEPTANCE AT DESTINATION. CONSIDERING THE PERIODS OF COVERAGE, THERE IS A SUBSTANTIAL DIFFERENCE BETWEEN YOUR "WARRANTY" AND THE GUARANTEE REQUIRED OF CONTRACTORS BY PARAGRAPH 112. THE INVITATION PARAGRAPH OFFERS THE GOVERNMENT A GUARANTEE FOR A LONGER PERIOD. IT IS OBVIOUS THAT A BIDDER WOULD HAVE AN ADVANTAGE IF HE OFFERED YOUR "WARRANTY" IN PLACE OF THE GUARANTEE REQUIRED BY THE INVITATION. SUCH A BID WOULD HAVE TO BE REJECTED. IN ADDITION, PARAGRAPH 112 IMPOSES OTHER REQUIREMENTS AS TO THE CONTRACTOR'S GUARANTEE WHICH DO NOT APPEAR AS PART OF YOUR "WARRANTY" AND/OR, CONVERSELY, THE EXCEPTIONS AND CONDITIONS OF YOUR "WARRANTY" APPEAR TO PROVIDE FURTHER AND ADDITIONAL LIMITATIONS ON THE CONTRACTOR'S LIABILITY TO REPAIR OR REPLACE DEFECTIVE EQUIPMENT.

FURTHER, WE DISAGREE WITH YOUR CONTENTION THAT YOUR BID AS TRANSMITTED BY THE COVER LETTER OF JULY 22, 1964, TOOK NO EXCEPTION TO THE TERMS AND CONDITIONS OF THE INVITATION FOR BIDS. WHERE A BID CONTAINS TWO POSITIVE STATEMENTS, ONE STATING THAT THE BIDDER TAKES NO EXCEPTION TO THE SPECIFICATIONS AND THE OTHER MAKING A MATERIAL QUALIFICATION TO THE INVITATION WARRANTY REQUIREMENTS, THE BIDDER'S GENERAL OFFER OF COMPLIANCE WITH THE TERMS AND CONDITIONS OF THE INVITATION MUST BE DISREGARDED IN THE FACE OF HIS SPECIFIC QUALIFICATION, AND THE BID MUST BE REGARDED AS NONRESPONSIVE. 42 COMP. GEN. 96. ALSO, A NONRESPONSIVE BID MAY NOT BE AMENDED AFTER OPENING TO CORRECT SUCH DEFICIENCY. 38 COMP. GEN. 819.

THE CLEAR IMPORT OF YOUR LETTER OF JULY 22, 1964, WHICH WAS A PART OF YOUR BID, IS THAT YOU WERE OFFERING YOUR "WARRANTY" IN LIEU OF THE PARAGRAPH 112 GUARANTEE. YOUR GENERAL STATEMENT OF COMPLIANCE WITH THE GUARANTEE PROVIDED IN PARAGRAPH 112 WAS QUALIFIED BY YOUR OTHER STATEMENT WHICH EVIDENCED AN INTENT TO PRECLUDE THE GUARANTEE CONTAINED IN THE INVITATION. UNDER SUCH CIRCUMSTANCES, YOUR BID, OF NECESSITY, HAD TO BE CONSIDERED NONRESPONSIVE AND SUCH A DEFECT IS NOT CURABLE BY SUBSEQUENT CORRESPONDENCE, WHICH WOULD AMOUNT IN EFFECT TO A CHANGE OF THE BID SUBMITTED. CONSEQUENTLY, YOUR BID COULD NOT PROPERLY BE CONSIDERED FOR AWARD, AND YOUR PROTEST MUST BE DENIED.