B-172052, MAY 12, 1971

B-172052, MAY 12, 1971

CONTRACTS - BID RESPONSIVENESS - QUALIFICATIONS DECISION HOLDING THAT AWARD OF A CONTRACT TO MORRISON INDUSTRIAL EQUIPMENT CO., FOR A BATTERY OPERATED FORKLIFT TRUCK ON A BRAND NAME OR EQUAL BASIS SHOULD NOT HAVE BEEN MADE AND SHOULD THEREFORE BE CANCELLED. EQUAL BASIS SHOULD NOT HAVE BEEN MADE AND SHOULD THEREFORE BE CANCELLED. WHERE THE INSTANT CONTRACT INCLUDED A TRADE-IN ALLOWANCE ON A USED POWER WORKLIFT ON AN "AS IS" AND "WHERE IS" BASIS AND SUCCESSFUL SOLE BIDDER MORRISON QUALIFIED ITS $800 TRADE-IN ALLOWANCE BY REQUIRING THAT THE EQUIPMENT BE IN "RUNNING CONDITION", THE BID WAS RESPONSIVE, NOTWITHSTANDING THE FACT THAT THE VA HAD RESERVED THE RIGHT TO DISREGARD ANY TRADE-IN OFFER AND IN EFFECT AWARD A CONTRACT FOR THE FORKLIFT TRUCK ITEM ALONE.

TO MR. JOHNSON:

WE REFER TO LETTER 134G, DATED FEBRUARY 19, 1971, FROM THE DIRECTOR, SUPPLY SERVICE, DEPARTMENT OF MEDICINE AND SURGERY, AND SUBSEQUENT DOCUMENTATION FURNISHED ON MARCH 17, 31, AND APRIL 9, 1971. THE FOREGOING RELATES THE CLAIM OF MORRISON INDUSTRIAL EQUIPMENT CO. FOR A CONTRACT PRICE ADJUSTMENT AS A RESULT OF A MISTAKE IN BID ALLEGED AFTER THE AWARD OF ORDER FOR SUPPLIES OR SERVICES (CONTRACT) NO. 1519 BY THE SUPPLY DIVISION, VETERANS ADMINISTRATION HOSPITAL, BATTLE CREEK, MICHIGAN.

THE INVITATION FOR BIDS (IFB) CALLED FOR A BATTERY OPERATED FORKLIFT TRUCK "W/24 VOLT BATTERY" UNDER A BRAND NAME OR EQUAL REQUIREMENT SPECIFYING CLARK EQUIPMENT COMPANY MODEL NST 25. A TRADE-IN ALLOWANCE ALSO WAS SOLICITED ON A USED POWER WORKLIFT WITH BATTERY AND CHARGER. EIGHT SOURCES WERE SOLICITED, BUT ONLY MORRISON SUBMITTED A BID. DECEMBER 16, 1970, MORRISON WAS AWARDED A CONTRACT IN THE TOTAL AMOUNT OF $5,215, COMPUTED ON THE BASIS OF THE $6,015 UNIT PRICE FOR THE NEW ITEM LESS THE $800 OFFERED AS A TRADE-IN ALLOWANCE ON THE OLD EQUIPMENT. SUBSEQUENT TO THE AWARD, MORRISON INFORMED THE VETERANS ADMINISTRATION CONTRACTING OFFICIALS OF AN ERROR IN BID IN THAT THE $1,127 COST OF THE BATTERY TO BE USED AS THE FORKLIFT TRUCK POWER SUPPLY HAD NOT BEEN INCLUDED IN THE BID PRICE.

WITH ITS BID MORRISON SUBMITTED A LETTER WHICH MADE REFERENCE TO MORRISON QUOTATION NO. 5811. THE QUOTATION WAS NOT RECEIVED WITH THE BID. HOWEVER, AS A PART OF THE EVIDENCE FURNISHED TO SUPPORT THE ERROR IN BID, MORRISON HAS SUBMITTED A COPY OF THE QUOTATION WHICH INDICATES A PRICE OF $6,015 FOR THE BRAND NAME TRUCK AND A PRICE OF $1,127 FOR A BATTERY, TOTALING $7,142.

FOR REASONS HEREINAFTER STATED, THE PURPORTED CONTRACT SHOULD BE CANCELED WITHOUT LIABILITY TO MORRISON. IT IS THEREFORE UNNECESSARY TO CONSIDER THE ERROR IN BID QUESTION.

PARAGRAPH 1 OF THE SUPPLEMENTARY GENERAL PROVISIONS OF THE IFB CONTAINS THE FOLLOWING LANGUAGE CONCERNING THE TRADE-IN EQUIPMENT UPON WHICH BIDDERS WERE TO SUBMIT PRICES:

"TRADE-IN EQUIPMENT - BIDS ARE BEING SOLICITED WITH PROVISIONS FOR TRADE- IN ALLOWANCE OF USED EQUIPMENT. THIS EQUIPMENT IS OFFERED 'AS IS' AND 'WHERE IS' AND MUST BE REMOVED BY THE CONTRACTOR AT HIS OWN EXPENSE WITHIN TEN DAYS FROM DATE OF DELIVERY OF NEW EQUIPMENT. BIDDERS ARE INVITED TO INSPECT THIS EQUIPMENT MONDAYS THROUGH FRIDAYS EXCEPT HOLIDAYS, BETWEEN THE HOURS OF 8:00 A.M. AND 4:00 P.M. BIDDERS ARE INSTRUCTED TO SUBMIT SEPARATE BID PRICES ON NEW EQUIPMENT AND A SEPARATE BID ON THE TRADE-IN EQUIPMENT. THE VETERANS ADMINISTRATION RESERVES THE RIGHT TO MAKE NO AWARD ON TRADE-IN OFFERS IF IT IS DETERMINED TO BE TO THE BEST INTEREST OF THE GOVERNMENT TO SELL SUCH EQUIPMENT UNDER SEPARATE SOLICITATION." HOWEVER, THE MORRISON LETTER WHICH ACCOMPANIED THE BID SETS FORTH THE FOLLOWING CONTINGENCY OR QUALIFICATION OF THE $800 TRADE-IN ALLOWANCE:

"IN ORDER TO OFFER YOU THE HIGHEST TRADE-IN POSSIBLE, OUR OFFER IS CONTINGENT UPON THE EQUIPMENT BEING RECEIVED IN RUNNING CONDITION AND IN THE SAME GENERAL REPAIR AS REPORTED IN OUR SURVEY REPORT. ANY VARIATION WILL ALTER THE TRADE-IN VALUE ACCORDINGLY. THIS OFFER IS OPEN FOR YOUR ACCEPTANCE FOR 30 DAYS."

THIS QUALIFICATION WAS CONTRARY TO THAT PORTION OF THE IFB, QUOTED ABOVE, ADVISING BIDDERS THAT THE TRADE-IN EQUIPMENT WAS OFFERED "AS IS" AND "WHERE IS." WE HAVE HELD THAT THE SALE OF EQUIPMENT ON SUCH BASIS CONSTITUTES AN ENFORCEABLE DISCLAIMER OF WARRANTY BY WHICH THE GOVERNMENT PROTECTS ITSELF. SEE 45 COMP. GEN. 675, 677 (1966). THUS, THE IFB PLACED THE RISK OF THE CONDITION OF THE PROPERTY UPON THE BIDDER. WHERE, AS HERE, A BIDDER SUBMITS A LETTER WITH THE BID WHICH DISCUSSES THE REQUIREMENTS OF THE SPECIFICATIONS, HE IS TAKING THE RISK THAT THE LETTER MAY HAVE QUALIFIED THE BID WITH RESPECT TO CERTAIN MATERIAL REQUIREMENTS. B-167891, OCTOBER 30, 1969. THE EFFECT OF THE MORRISON LETTER WAS TO QUALIFY THE BID WITH RESPECT TO THE CONDITION OF THE TRADE-IN EQUIPMENT. IN VIEW THEREOF, THE BID ON THE TRADE-IN EQUIPMENT WAS NONRESPONSIVE.

WE ARE NOT UNMINDFUL THAT THE ABOVE-CITED IFB PROVISION RESERVED IN THE VETERANS ADMINISTRATION THE RIGHT TO DISREGARD ANY TRADE-IN OFFER AND, IN EFFECT, AWARD A CONTRACT FOR THE FORKLIFT TRUCK ITEM ALONE. WE NOTE, HOWEVER, THAT THE MORRISON LETTER STATED FURTHER:

"AT THE REQUEST OF MR. TOM ZELINSKY, OUR SALES REPRESENTATIVE, WE WILL ALLOW YOU THE FOLLOWING TRADE-IN ALLOWANCE TO APPLY AGAINST THE PURCHASE OF THE NEW CLARK LIFT TRUCK PER OUR QUOTATION #5811.

"CLARK MODEL AND S/N: 20TTF 109-QE-244

"PRICE $800.00 WITH BATTERY AND CHARGER" AS STATED, SUPRA, THE QUOTATION FORM WAS NOT RECEIVED WITH THE BID. NEVERTHELESS, WE REGARD THIS STATEMENT AS GIVING RISE TO AN AMBIGUITY WHICH FURTHER QUALIFIED THE MORRISON BID. THE PRACTICAL EFFECT OF THAT STATEMENT WAS TO OFFER THE VETERANS ADMINISTRATION THE DESIRED TRUCK IN ACCORDANCE WITH A SEPARATE QUOTATION FORM, IN ADDITION TO THE IFB SPECIFICATIONS, WHICH MAY OR MAY NOT HAVE COMPLIED WITH THE SPECIFICATIONS SET FORTH IN THE INVITATION. SEE 50 COMP. GEN. (B-169813, JULY 6, 1970), AND CASES CITED THEREIN. SINCE BIDS IN ADVERTISED PROCUREMENTS MUST CONFORM TO THE MATERIAL REQUIREMENTS OF THE INVITATION AT THE TIME BIDS ARE OPENED, NO FURTHER INQUIRY BY THE CONTRACTING OFFICE TO DETERMINE THE FORM'S CONTENTS WOULD HAVE BEEN PERMISSIBLE. SEE B-171417, MARCH 9, 1971. FURTHER, WHERE A BID IS AMBIGUOUS AS TO WHETHER THE PRODUCT OFFERED COMPLIES WITH THE ADVERTISED SPECIFICATIONS, IT MUST BE REJECTED AS NONRESPONSIVE. SEE B- 170006, AUGUST 17, 1970. IN THE CIRCUMSTANCES, AN AWARD SHOULD NOT HAVE BEEN MADE TO MORRISON AND IT SHOULD THEREFORE BE CANCELED.

THE ENCLOSED PAPERS ARE RETURNED AS REQUESTED.