B-216002, MAR 4, 1985, 85-1 CPD 267

B-216002, MAR 4, 1985, 85-1 CPD 267

BIDS - INVITATION FOR BIDS - EXCEPTIONS TAKEN TO INVITATION TERMS DIGEST: 1. THE RESPONSIVENESS OF A BID IS DETERMINED BY WHETHER THE BID AS SUBMITTED IS AN OFFER TO PERFORM, WITHOUT EXCEPTION, THE EXACT THING CALLED FOR IN THE INVITATION AND, UPON ACCEPTANCE, WILL BIND THE CONTRACTOR TO PERFORM IN ACCORDANCE WITH THE SOLICITATION'S MATERIAL TERMS AND CONDITIONS. THEREFORE, WHERE A FIRM'S COVER LETTER SUBMITTED WITH ITS BID TAKES EXCEPTION TO A MATERIAL SOLICITATION REQUIREMENT FOR CERTAIN SPARE PARTS AND IS AMBIGUOUS AS TO WHETHER THE DESIGN OF ITS PRODUCT MEETS OTHER SOLICITATION REQUIREMENTS, THE BID MUST BE REJECTED AS NONRESPONSIVE. BIDS - RESPONSIVENESS - EXCEPTIONS TAKEN TO INVITATION TERMS 2. AN OVERALL OFFER TO CONFORM CAN CURE SPECIFIC DEVIATIONS FROM SOLICITATION REQUIREMENTS ONLY IF THE OFFER MAKES IT PATENTLY CLEAR THAT THE BIDDER DID IN FACT INTEND TO CONFORM TO THE INVITATION. CONTRACTS - NEGOTIATION - PRICES - REASONABLENESS - ADMINISTRATIVE DETERMINATION 3. THE DETERMINATION CONCERNING PRICE REASONABLENESS IS A MATTER OF ADMINISTRATIVE DISCRETION WHICH GAO WILL NOT QUESTION UNLESS THE DETERMINATION IS UNREASONABLE OR THERE IS A SHOWING OF BAD FAITH OR FRAUD. THE FACT THAT A MARKET SURVEY SHOWED THAT THE AWARDEE'S BID PRICE WAS LOWER THAN THE MARKET PRICE WAS SUFFICIENT TO ESTABLISH THE REASONABLENESS OF THE AWARDEE'S BID PRICE. CONTRACTORS - RESPONSIBILITY - DETERMINATION - REVIEW BY GAO 4. WHETHER A BIDDER UNDER A SMALL BUSINESS SET-ASIDE INTENDS TO COMPLY WITH THE BID'S AGREEMENT TO FURNISH AN END ITEM MANUFACTURED BY A SMALL BUSINESS RAISES A MATTER OF RESPONSIBILITY THAT GAO ONLY WILL REVIEW IN LIMITED CIRCUMSTANCES NOT PRESENT HERE. FURTHER, WHETHER THE CONTRACTOR ACTUALLY COMPLIES WITH THE AGREEMENT DURING PERFORMANCE INVOLVES A MATTER OF CONTRACT ADMINISTRATION WHICH GAO WILL NOT REVIEW.

ECLIPSE SYSTEMS, INC:

ECLIPSE SYSTEMS, INC. (ECLIPSE), PROTESTS THE REJECTION OF ITS BID UNDER INVITATION FOR BIDS (IFB) NO. DAAA09-84-B-0083 ISSUED BY THE DEPARTMENT OF THE ARMY. THE IFB, SET ASIDE FOR SMALL BUSINESS, WAS FOR THE ACQUISITION OF 8,537 SPRAY PAINT GUNS FOR PAINTING MILITARY VEHICLES. THE ARMY FOUND ECLIPSE'S BID TO BE NONRESPONSIVE BECAUSE A COVER LETTER THAT THE COMPANY SUBMITTED WITH THE BIG INDICATED EXCEPTIONS TO THE IFB'S REQUIREMENTS FOR ACCESSORY GASKETS AND SIPHON CUPS WITH A CERTAIN TYPE OF COATING TO FACILITATE CLEANING. ECLIPSE CONTENDS THAT THE ARMY MISINTERPRETED THE COVER LETTER, AND THAT IT WAS ECLIPSE'S INTENTION TO COMPLY WITH THE IFB'S REQUIREMENTS. IN ADDITION, ECLIPSE PROTESTS THAT THE AWARD TO ANOTHER BIDDER AT A SIGNIFICANTLY HIGHER PRICE WAS UNREASONABLE, AND THAT THE AWARDEE'S SPRAY GUN IS MANUFACTURED BY A LARGE BUSINESS.

WE DENY ECLIPSE'S PROTEST IN PART AND DISMISS IT IN PART.

THE IFB REQUESTED BIDS FOR THE SPRAY PAINT GUNS WITH OR WITHOUT FIRST ARTICLE TESTING AND REQUIRED THE GUNS TO BE MADE IN ACCORDANCE WITH A CITED MILITARY SPECIFICATION EXCEPT WITH RESPECT TO ACCESSORY EQUIPMENT. REGARDING ACCESSORIES, THE IFB REQUIRED SIPHON CUPS INTERNALLY COATED WITH "POLYTETRAFLUOROETHYLENE, SPECIFICALLY PERFLUOROALKOXY," AND 10 OF EACH OF TWO KINDS OF GASKETS.

THE ARMY RECEIVED BIDS ONLY FROM ECLIPSE AND FLUID-AIR PRODUCTS, INC. (FLUID-AIR). ECLIPSE WAS THE APPARENT LOW BIDDER WITH A BID OF $39.50 PER GUN WITH FIRST ARTICLE TESTING AND $39 PER GUN WITHOUT FIRST ARTICLE TESTING. FLUIDAIR'S BID WAS $119 PER GUN WITH FIRST ARTICLE TESTING. A COVER LETTER TO ITS BID, ECLIPSE STATED THAT IT WAS OFFERING ITS SPRAY GUN, PART NUMBER 50-6510, AND SIPHON CUP, PART NUMBER 50-6514. ADDITION, ECLIPSE STATED:

"AS A POINT OF INFORMATION, THE DESIGN OF THE ECLIPSE SYSTEMS, INC. SPRAY GUN ELIMINATES THE REQUIREMENT FOR THE GASKETS INDICATED ON PAGE 12 OF THE REFERENCED SOLICITATION (THE SPARES). CONSEQUENTLY, WE WILL SUPPLY THE SIPHON CUP IN ACCORDANCE WITH THE MILITARY SPECIFICATION, THE SPRAY GUN IN ACCORDANCE WITH THE MILITARY SPECIFICATION AND THE FLUID NEEDLE AND FLUID NOZZLE IN ACCORDANCE WITH THE REFERENCED MILITARY SPECIFICATION. ADDITION, THE SIPHON CUP INTERIOR SHALL BE PERMANENTLY COATED WITH POLYTETRAFLUOROETHYLENE."

THE ARMY REJECTED ECLIPSE'S BID AS NONRESPONSIVE BECAUSE THE AGENCY INTERPRETED THE COVER LETTER TO MEAN THAT SPARE PART GASKETS WOULD NOT BE SUPPLIED AND BECAUSE THE LETTER DID NOT SPECIFY THAT THE SPRAY GUN WOULD BE COATED WITH PERFLUOROALKOXY. THE ARMY THEREFORE AWARDED THE CONTRACT TO FLUID-AIR.

ECLIPSE ASSERTS THAT THE STATEMENT IN THE COVER LETTER THAT THE DESIGN OF THE ECLIPSE GUN ELIMINATED THE REQUIREMENT FOR GASKETS ONLY MEANT THE GASKETS IN ITS GUN WERE IN A DIFFERENT LOCATION THAN THE GASKETS SET FORTH IN TNE SOLICITATION. ACCORDING TO ECLIPSE, THE INTENT OF ITS COVER LETTER WAS TO CLARIFY THE FACT THAT THE COMPANY WOULD NOT SUPPLY AS SPARE PARTS THE GASKETS DESCRIBED BY THE SOLICITATION, BUT INSTEAD WOULD SUPPLY "FUNCTIONALLY THE SAME" GASKETS, WHICH WOULD FIT THE ECLIPSE GUN. AS TO THE COATING OF THE SIPHON CUP, ECLIPSE ARGUES THAT IT WAS SIMPLY STATING THAT THE CUP WOULD BE COATED AS REQUIRED BY THE SOLICITATION. THE PROTESTER POINTS OUT THAT IN THE COVER LETTER, IT ALSO STATED THAT IT WOULD COMPLY WITH THE MILITARY SPECIFICATION.

THE TEST TO BE APPLIED IN DETERMINING THE RESPONSIVENESS OF A BID IS WHETHER THE BID AS SUBMITTED IS AN OFFER TO PERFORM, WITHOUT EXCEPTION, THE EXACT THING CALLED FOR IN THE INVITATION AND, UPON ACCEPTANCE, WILL BIND THE CONTRACTOR TO PERFORM IN ACCORDANCE WITH ALL THE INVITATION'S MATERIAL TERMS AND CONDITIONS. FITTS CONSTRUCTION CO., INC., 62 COMP.GEN. 815 (1983), 83-2 CPD PARA. 190. A BID WHICH TAKES EXCEPTION TO A MATERIAL REQUIREMENT OF THE SOLICITATION OR IS AMBIGUOUS WITH RESPECT TO WHETHER IT REPRESENTS AN OFFER TO COMPLY WITH A MATERIAL SOLICITATION REQUIREMENT MAY NOT BE CHANGED OR CLARIFIED AFTER BID OPENING AND MUST BE REJECTED AS NONRESPONSIVE. SOUTHWEST BOAT CORP., B-216026, SEPT. 10, 1984, 84-2 CPD PARA. 278; SULLAIR CORPORATION, B-214121, APR. 17, 1984, 84-1 CPD PARA. 436. THIS IS TO ASSURE THAT ALL BIDDERS COMPETE ON A COMMON BASIS, WITH NO ADVANTAGE BEING GIVEN TO ANY BIDDER OVER ANOTHER, AND THUS TO INSURE THAT THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM IS MAINTAINED. SEE WILLIAMSBURG STEEL PRODUCTS COMPANY, B-185097, JAN. 23, 1976, 78-1 CPD PARA. 40.

THE PROTESTER'S STATEMENT IN THE COVER LETTER TO ITS BID THAT THE "DESIGN OF (ITS) SPRAY GUN ELIMINATES" THE SOLICITATION REQUIREMENT FOR SPARE GASKETS IS A CLEAR EXCEPTION TO THE REQUIREMENT; THE STATEMENT INDICATES THAT THE ACCEPTANCE OF THE PROTESTER'S BID WOULD NOT OBLIGATE ECLIPSE TO FURNISH THE SPARE GASKETS WITHIN THE BID PRICE. MORE IMPORTANTLY, THE PROTESTER'S STATEMENT IS AT BEST AMBIGUOUS AS TO WHETHER THE DESIGN OF THE PROTESTER'S SPRAY GUN INCORPORATES ANY GASKETS AT ALL. IN THIS RESPECT, THE MILITARY SPECIFICATIONS CITED IN THE IFB SHOWS THE LOCATION OF GASKETS WITHIN THE REQUIRED SPRAY GUN AND ALSO THE TYPE OF GASKETS TO BE USED AT THOSE LOCATIONS. FURTHER, THE RECORD INDICATES THAT A GASKETLESS GUN DESIGN IS ALSO COMMERCIALLY AVAILABLE.

IN ADDITION, WE NOTE THAT THE ARMY, IN THE PAST, HAS PURCHASED INEXPENSIVE SPRAY GUNS THAT HAVE PROVEN UNSATISFACTORY. NEVERTHELESS, THE ARMY STATES THAT BECAUSE OF ITS CONCERN WITH THE PROSPECTIVE CONTRACT PRICE, THE AGENCY ATTEMPTED, AFTER ECLIPSE FILED ITS PROTEST, TO BUY 25 SPRAY GUNS FROM ECLIPSE AS A SMALL PURCHASE; THE ARMY'S ASSERTED PURPOSE WAS TO ASCERTAIN WHETHER THE PROTESTER'S SPRAY GUNS WOULD SUBSTANTIALLY SATISFY THE GOVERNMENT'S NEEDS, AS ALLEGED BY ECLIPSE. THE ARMY'S EFFORT, HOWEVER, WAS FRUSTRATED BY ECLIPSE'S REFUSAL TO SELL THE GUNS TO THE GOVERNMENT, SO THAT THE ARMY CONCLUDED:

"IT IS IMPOSSIBLE TO STATE WHETHER OR NOT THE PROTESTER'S GUNS WOULD EVEN SUBSTANTIALLY COMPLY WITH THE SPECIFICATIONS. GIVEN THAT FACT, THE PRICES OFFERED BY FLUID-AIR PRODUCTS AND THE PROTESTER ARE NOT COMPARABLE."

WE THINK THE ARMY ACTED CORRECTLY IN FINDING ECLIPSE NONRESPONSIVE. SINCE THE DETERMINATION OF RESPONSIVENESS MUST BE MADE FROM THE DOCUMENTS AT THE TIME OF OPENING, ECLIPSE'S POST-BID-OPENING EXPLANATION THAT IT INTENDED TO SUPPLY SPARE GASKETS AND THAT IT ONLY MEANT TO INDICATE THAT IT HAD DIFFERENT GASKETS AT DIFFERENT LOCATIONS IN THE GUN THAT WERE FUNCTIONALLY EQUIVALENT TO THOSE SPECIFIED CANNOT BE CONSIDERED. IN ANY EVENT, WE NOTE THE ARMY WAS UNSUCCESSFUL IN ITS ATTEMPT TO CONFIRM THE ALLEGED ACCEPTABILITY OF ECLIPSE'S GUNS.

WITH REGARD TO ECLIPSE'S STATEMENT IN ITS COVER LETTER THAT IT WOULD COMPLY WITH THE MILITARY SPECIFICATION, AN OVERALL OFFER TO CONFORM CAN CURE SPECIFIC DEVIATIONS FROM INVITATION REQUIREMENTS ONLY IF THE OFFER TO CONFORM MAKES IT PATENTLY CLEAR THAT THE BIDDER DID IN FACT INTEND TO CONFORM WITH THE INVITATION. SEARLE CT SYSTEMS, B-191307, JUNE L3, 1978, 78-1 CPD PARA. 433. ECLIPSE STATED IN THE COVER LETTER ONLY THAT THE SIPHON CUP, SPRAY GUN, AND FLUID NEEDLE AND NOZZLE WOULD BE SUPPLIED IN ACCORDANCE WITH THE MILITARY SPECIFICATION. ECLIPSE MADE NO REFERENCE TO WHETHER IT WOULD COMPLY WITH THE SOLICITATION'S REQUIREMENTS FOR SPARE GASKETS. FURTHERMORE, WE DO NOT THINK THAT ECLIPSE'S GENERAL REFERENCE TO SUPPLYING THE SPRAY GUN IN ACCORDANCE WITH THE MILITARY SPECIFICATION WAS SUFFICIENT TO CURE THE AMBIGUITY RAISED IN THE COVER LETTER AS TO WHETHER ECLIPSE HAD A GASKETLESS SPRAY GUN.

ECLIPSE, ARGUING THAT THE REQUIREMENT FOR ACCESSORY GASKETS WAS IMMATERIAL IN COST, ALSO SUGGESTS THAT ANY FAILURE OF ITS BID TO COMPLY WITH THE REQUIREMENT SHOULD HAVE BEEN WAIVED. WHILE PERTINENT PROCUREMENT REGULATIONS PERMIT WAIVER OF MINOR IRREGULARITIES WHEN THEIR EFFECT ON PRICE, QUANTITY, QUALITY, OR DELIVERY IS NEGLIGIBLE, SEE IBI SECURITY SERVICE, INC., B-215732, JULY 26, 1984, 84-2 CPD PARA. 118, THE ARMY'S REPORT INDICATES THAT THE GASKETS ARE AN INTEGRAL PART OF THE SPRAY GUN REQUIRED BY THE IFB AND THUS NECESSARY TO THE PROPER FUNCTIONING OF THE GUN. CONSEQUENTLY, IT IS UNIMPORTANT, IN OUR OPINION, WHETHER THE REQUIREMENT FOR SPARE GASKETS IS IMMATERIAL SINCE ECLIPSE'S BID IS ALSO AMBIGUOUS AS TO WHETHER IT COMPLIES WITH A MATERIAL IFB DESIGN REQUIREMENT.

SINCE WE FIND THAT ECLIPSE WAS NONRESPONSIVE TO THE IFB'S REQUIREMENTS FOR SPARE GASKETS, IT IS UNNECESSARY TO DISCUSS WHETHER THE COMPANY WAS ALSO NONRESPONSIVE TO THE COATING REQUIREMENTS FOR THE SPRAY GUN'S SIPHON CUP.

TURNING TO ECLIPSE'S ARGUMENTS ABOUT THE ARMY'S ACCEPTANCE OF FLUID AIR'S BID PRICE, ECLIPSE COMPLAINS THAT THE ARMY CHOSE TO AWARD A CONTRACT TO FLUID-AIR AT A TOTAL CONTRACT PRICE OF $777,903 AS COMPARED TO ECLIPSE'S BID PRICE OF $258,211. TO THE EXTENT THAT ECLIPSE IS CONTENDING THAT IT SHOULD HAVE RECEIVED THE AWARD BECAUSE ITS BID PRICE REPRESENTED A MONETARY SAVINGS TO THE GOVERNMENT OVER FLUIDAIR'S BID PRICE, THERE IS NO BASIS AT THIS TIME TO BELIEVE THAT ECLIPSE'S SPRAY GUNS WOULD MEET THE ARMY'S NEEDS. FURTHER, ECLIPSE'S WE HAVE CONSISTENTLY HELD THAT A NONRESPONSIVE BID MAY NOT BE ACCEPTED, EVEN THOUGH IT WOULD RESULT IN SAVINGS TO THE GOVERNMENT, SINCE SUCH ACCEPTANCE WOULD COMPROMISE THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM. SEE JAY MARITIME AGENCY CORP., B-199788, DEC. 29, 1980, 80-2 CPD PARA. 443.

AS TO WHETHER FLUID-AIR'S BID PRICE WAS TOO HIGH, THE AUTHORITY VESTED IN THE CONTRACTING OFFICER WITH RESPECT TO DETERMINING THE REASONABLENESS OF BID PRICES IS EXTREMELY BROAD, AND OUR OFFICE WILL NOT QUESTION THE CONTRACTING OFFICER'S DETERMINATION UNLESS IT IS UNSUPPORTED OR THERE IS A SHOWING OF BAD FAITH OR FRAUD. FOWLER'S REFRIGERATION AND APPLIANCE, INC. -- RECONSIDERATION, B-201389.2, MAY 11, 1981, 81-1 CPD PARA. 388. THE RECORD SHOWS THAT BEFORE MAKING AN AWARD, THE ARMY CAREFULLY ANALYZED THE PRICE OFFERED BY FLUID-AIR. ESSENTIALLY, THE ARMY DETERMINED THAT BECAUSE THE SPECIFICATIONS FOR THE SPRAY GUNS WERE SUBSTANTIALLY UPGRADED, A COMPARISON WITH PRIOR PRICES WAS INAPPROPRIATE. INSTEAD, THE ARMY CONDUCTED A MARKET SURVEY, WHICH INDICATED THAT A GUN SIMILAR TO THE ONE REQUIRED BY THE IFB WOULD COST BETWEEN $159 AND $183. THUS, THE ARMY CONCLUDED THAT FLUID-AIR'S UNIT BID PRICE OF $119 WAS SIGNIFICANTLY LOWER THAN THE MARKET PRICE FOR SIMILAR GUNS. WE THEREFORE FIND THAT THE ACCEPTANCE OF FLUID-AIR'S BID PRICE WAS REASONABLE.

FINALLY, ECLIPSE ASSERTS THAT FLUID-AIR IS ACTING AS A "DISTRIBUTOR" IN THIS PROCUREMENT, SET ASIDE FOR SMALL BUSINESS, AND ALLEGES A LARGE BUSINESS WILL RECEIVE MORE THAN 50 PERCENT OF THE CONTRACT PRICE. DISMISS THIS ASPECT OF THE PROTEST.

THE SOLICITATION CONTAINED A MANDATORY CLAUSE REQUIRING THAT A SMALL BUSINESS, TO BE ELIGIBLE FOR THE SET-ASIDE, AGREE TO FURNISH END ITEMS MANUFACTURED OR PRODUCED BY SMALL BUSINESS CONCERNS. SEE DEFENSE ACQUISITION REGULATION, SECS. 1-706.5(C), 7-2003.2, REPRINTED IN 32 C.F.R. PTS. 1-39 (1983). FLUID-AIR'S BID WAS RESPONSIVE TO THIS REQUIREMENT SINCE IT CONTAINED A CERTIFICATION THAT FLUID-AIR WOULD FURNISH SUPPLIES SO MANUFACTURED OR PRODUCED. WHILE THE BID ALSO STATED THAT THE MANUFACTURE, STAMPING, ASSEMBLY AND PACKING OF THE SPRAY GUN WOULD BE PERFORMED BY BOTH IT AND A LARGE BUSINESS "WITH FLUID-AIR MAKING A SIGNIFICANT CONTRIBUTION," SUCH STATEMENT DID NOT TAKE EXCEPTION TO THE REQUIREMENT THAT THE SUPPLIES BE MANUFACTURED OR PRODUCED BY A SMALL BUSINESS SINCE THE REQUIREMENT IS FULFILLED EVEN WHERE A MAJOR PORTION OF THE WORK IS SUBCONTRACTED TO A LARGE BUSINESS IF THE BIDDER MAKES A SIGNIFICANT CONTRIBUTION TO THE MANUFACTURE OR PRODUCTION OF THE END ITEM. SEE ACTION MANUFACTURING COMPANY, B-208205.2, DEC. 13, 1982, 82-2 CPD PARA. 526.

WHETHER OR NOT FLUID-AIR ACTUALLY INTENDED TO COMPLY WITH ITS AGREEMENT TO MAKE A SIGNIFICANT CONTRIBUTION INVOLVES A MATTER OF THE BIDDER'S RESPONSIBILITY-- THAT IS, ITS ABILITY TO MEET THE IFB'S MATERIAL TERMS. SEE SURGICAL INSTRUMENT COMPANY OF AMERICA, B-215931, AUG. 28, 1984, 84-2 CPD PARA. 233. A CONTRACT AWARD NECESSARILY INCLUDES A CONTRACTING OFFICER'S FINDING THAT THE AWARDEE IS RESPONSIBLE, WHICH OUR OFFICE WILL NOT REVIEW ABSENT EITHER (1) AN ALLEGATION THAT THE SOLICITATION CONTAINED DEFINITIVE RESPONSIBILITY CRITERIA THAT WERE NOT APPLIED, OR (2) SOME SHOWING THAT THERE WAS FRAUD OR BAD FAITH ON THE PART OF PROCURING OFFICIALS. SEE MARATHON ENTERPRISES, INC., B-213648, DEC. 14, 1983, 83-2 CPD PARA. 690; LINDEN-LORENZ RIGGING CO., INC., B-217486, SEPT. 28, 1984, 84-2 CPD PARA. 372. NEITHER OF THESE BASES FOR OUR REVIEW ARE PRESENT IN THIS CASE.

MOREOVER, WHETHER DURING PERFORMANCE FLUID-AIR ACTUALLY FULFILLS ITS OBLIGATION TO MAKE A SIGNIFICANT CONTRIBUTION TO THE MANUFACTURE OR PRODUCTION OF THE SPRAY GUNS IS A MATTER OF CONTRACT ADMINISTRATION THAT THIS OFFICE DOES NOT REVIEW; RATHER, THE CONTRACTING AGENCY HAS RESPONSIBILITY FOR ADMINISTERING CONTRACTS. J. R.'S CROWN TOURS, B-218321, SEPT. 24, 1984, 84-2 CPD PARA. 340. ECLIPSE'S PROTEST IS DENIED IN PART AND DISMISSED IN PART.