drawn to cover a certain patented car manufactured under license by one producer only. Held: All bids must be rejected and the contract readvertised on the basis of new specifications drafted so as to meet the needs of the service and not restrictive of competition. (b) Where the invitation did not provide for the consideration of all factors of cost to the Government. Illustrative case." The superintendent of lighthouses at Key West, Florida, advertised for bids on the repair of a lighthouse tender. It appeared that acceptance of the lowest bid would involve delay and extra costs in moving the vessel to the bidder's shipyard and also involve extra inspection and superintendence costs. The invitation had not stated that such factor would be taken into consideration. Held: That, since addition of the mentioned expenses would raise the low bid to a price level in excess of the next low bid, the requirement should be readvertised and the new invitation should state all relevant competitive factors. The public interest prohibited acceptance of the low bid. (c) Where there are important errors in the invitation for bids. Illustrative case.78 The superintendent of prisons advertised for bids on certain steel work. Some of the bidders received incorrect blueprints and based their bids thereon. One of these bidders was awarded a contract for a portion of the requirement. Held: The contract must be cancelled and readvertised on the basis of proper specifications and blueprints that permit bidders to compete on a common basis. (d) Where evaluation of the bids proves that bid prices are too high. Illustrative case." The Department of Interior issued invitations for exploratory drilling water testing. Three bids were received and were rejected by the contracting officer on the basis that the prices were unreasonably high. Thereafter, a new invitation was issued which resulted in a protest to the Comptroller General. Held: "We have constantly sought to protect and maintain the principles of impartiality and fair play upon which the competitive bidding system depends, and have never countenanced the rejection of bids merely for the purpose of affording the 78 Comp. Gen. 649 (1929). But see 35 Comp. Gen. 603 (1956). 78 9 Comp. Gen. 432 (1930). TO 36 Comp. Gen. 364 (1956); also see 6 Comp. Gen. 514 (1927); 9 id. 24 (1929); 36 id. 62 (1956). bidders an opportunity to better the prices of their competitors. We cannot, however, consider the matter of competitive bidding for Government contracts solely as a game, in which the contract must automatically go to the lowest bidder without regard to the reasonableness of his price or to other attempted bids which cannot for technical reasons be accepted. When in the light of all the facts, including those disclosed by the bidding, it is administratively determined that the lowest acceptable bid is in excess of the amount for which the Government should be able to obtain the supplies or services sought, we believe that the rejection of all bids and readvertising of the contract is a proper exercise of administrative discretion, in conformity with the duty of the administrative officials to act in the best interest of the Government." (e) Where the contracting officer finds that all bids were not independently arrived at in open competition, or were collusive, or were submitted in bad faith. Illustrative case.80 The Treasury Department advertised for bids on a procurement of automobile tires and tubes. In response, fourteen different bidders whose offices were located in six different states (but who were members of a trade association which was a clearing house for bid prices) quoted prices identical to the cent on a large number of items. In only fifteen instances in 129 items were the bids not identical, and one company was responsible for the major portion of these divergent bids. The divergent bids, except for one item, were higher than all the other bids. The Attorney General advised the Secretary of the Treasury: Under the facts given in your letter you would be fully When possible violations of the antitrust laws are involved, the matter should be reported through channels to the Attorney General as required by the Armed Services Procurement Act.81 9. Award. The Armed Services Procurement Act provides in pertinent part:82 Award shall be made with reasonable promptness by giving written notice to the responsible bidder whose bid conforms to the invitation So 39 Op. Atty. Gen. 93 (1937). 81 10 U.S.C. 2305(d) (1958). ASPR 1-111.2 (1 July 1960). 82 10 U.S.C. 2305 (b) (1958). and will be the most advantageous to the United States, price and other factors considered. In order to receive an award a bidder must be determined to be "responsible." Whether or not a bidder is "responsible" may be determined by information supplied by the prospective contractor,84 by information existing within the Department of Defense,85 or by the use of Pre-Award Survey.se In addition, contracting officers must asure themselves that the prospective contractor has not been declared ineligible to receive an award. The military departments maintain lists of bidders debarred or declared ineligible by the authorities cited in ASPR 1-603 (1 July 1960). In case a low bid is submitted by a person or firm which has been placed in a "suspended" status 88 (as opposed to debarred status) because of suspicion of fraud or criminal conduct, the contracting officer should transmit the matter to higher authority before he makes the award or rejects the bid.89 a. Award on the basis of price and/or other factors. Although the language of the Armed Services Procurement Act 90 states that an award may be made on factors other than price, the Comptroller General has held that, in the absence of statutory authority, such language cannot be used to broaden the scope of existing advertising requirements or to introduce new bid criteria in order to permit awards to other than the lowest bidder on the basis of experience, superior performance, financial resources, and other factors where the low bidder is able to meet the specifications.91 For purposes of determining which bid is the lowest, however, discounts offered by bidders must be deducted from the amount of their bids, unless it is reasonably clear that the Government cannot take advantage of the discount within the period offered. Where the invitation permits the bidders to include escalation provisions in their bids or when the invitation is silent as to escalation and some or all bidders include escalation provisions in their bids (capable of being evaluated), 92 63 ASPR 1-904.1 (1 July 1960). See par. 3e, supra, for factors involved in determining responsibility. Also see Ms. Comp. Gen. B-141138, 23 December 1959. 84 ASPR 1-905.3 (1) (1 July 1960). 88 ASPR 1-605.2 (1 July 1960). 80 ASPR 1-605.3 (a) (1 July 1960). 90 10 U.S.C. 2305(b) (1958). 91 31 Comp. Gen. 550 (1958). Also see 28 Comp. Gen. 662 (1949); 31 id. 279 (1952). 92 ASPR 2-407.3 (1 July 1960). In the absence of contrary stipulations, the discount period should be computed from the date supplies are delivered or services performed. 30 Comp. Gen. 10 (1950). Par. 7(b) of the Terms and Conditions found on the reverse side of Standard Form 30 and Standard Form 33, provides for computation of the discount period from the date of delivery or from the date correct invoices or vouchers (properly certified by the contractor) are received in the office specified by the Government, whichever is later. See 34 Comp. Gen. 123 (1954); Carolina Paper Mills, Inc., ASBCA No. 4488 and 4614 (1958), digested in par. 7, DA Pam 715-50-33 (1958). such bids will be evaluated at maximum escalation for purposes of determining the lowest bid on the procurement.93 b. Form of award. As required by 10 U.S.C. 2305 (c), award is made in writing. If the invitation was issued on Standard Form 30, the award is made on Standard Form 26, "Award"; if the invitation was issued on Standard Form 33, the award is made on the same form. When written notice of award is sent to the winning bidder by mail, the effective date of the award is the date the notice of award is mailed.9* c. Bidders' rights. The statutory requirement of competitive bidding exists for the benefit of the United States and does not confer any enforceable rights on bidders.95 However, a bidder has a right to have his bid honestly considered and where the Government solicits his bid with no intention of seriously considering it, the bidder may recover the expense to which he was put in preparing the bid. Illustrative case. The Army advertised for bids on 5,500 low voltage circuit testers. An unsuccessful bidder brought suit in the Court of Claims for the cost of preparing the bid and for loss of anticipated profits. His action was predicated on the theory that the Armed Services Procurement Act required contracting officers to accept that bid which was most advantageous to the Government; that his bid so qualified because he was the lowest responsive, responsible bidder; but that the contracting officer arbitrarily and capriciously awarded the contract to a higher bidder, thereby discriminating against him and showing favoritism to his competitors. The bidder alleged and offered evidence which, if true, would strongly indicate that the contracting officer had no intention to award to him because of his having previously testified before the Select Committee on Small Business of the United States Senate concerning the procurement operations of the particular activity involved. The Government moved to dismiss the petition on the ground that it failed to 93 ASPR 2-407.3 (1 July 1960). Par. 8(d), "Terms and Conditions" on reverse side of Standard Form 30 and Standard Form 33, provides: (d) A written award mailed (or otherwise furnished) to the successful bidder within the time for acceptance specified in the bid results in a binding contract without further action by either party. See 38 Comp. Gen. 876 (1959), where the Comptroller General held that the notice of award was effective upon its mailing. But see Rhode Island Tool Co. v. United States, 130 Ct. Cl. 698 (1955); 128 F. Supp. 417 (1955), where the Court of Claims held that the notice of acceptance by the offeree was not effective until received by the offeror. This ruling was based on an interpretation of the Postal Regulations which permit a writer to withdraw his writing at any time prior to actual delivery to the addressee. The court also noted that the Government must have been aware of the effect of these regulations because the Invitation stated that when the award was "received" by the bidder it would "thereupon" become a binding contract. 05 Perkins v. Lukens Steel Corp., 310 U.S. 113 (1940); United States ex rel. Goldberg v. Daniels, 231 U.S. 218 (1913); Friend v. Lee, 221 F. 2d 96 (1955). Do Heyer Products v. United States, 135 Ct. Cl. 63 (1956), 140 F. Supp. 409, digested in par. 12, p. 78, DA Pam 715-50-1 (1957). state a cause of action in that the Armed Services Procurement Act was enacted for the benefit of the United States and did not confer any rights on bidders. On the hearing of the motion, the Court of Claims, Held: Motion denied. The Acts requiring advertising and letting to the lowest responsible bidder confer no right on the bidder to secure the contract, whether or not he is the lowest responsible bidder, and, hence, he may not recover his loss of anticipated profits. We do not understand the Supreme Court in United States v. Purcell Envelope Co., 249 U.S. 313 (1919), to have intended to hold to the contrary, but it did definitely recognize that the bidder had certain rights, and that the Government was under an obligation to respect those rights. Among these rights is the right to have his bid honestly considered. The Government is under the obligation to honestly consider it and not wantonly disregard it. If this obligation is breached and the bidder is put to needless expense in preparing his bid, he is entitled to recover such expenses. Recovery can be had in only those cases where it can be shown by clear and convincing proof that there has been a fraudulent inducement for bids, with the intention, before the bids were invited or later conceived, to disregard them all except the ones from bidders to whom it was intended to let the contract, whether he was the lowest responsible bidder or not. Moreover, a bidder may protest an award that has been made or one that is proposed. In the latter case, award will be withheld pending resolution of the protest by appropriate authority. In the former case, the protest may be transmitted to the Comptroller General for action and he may declare the award illegal." Detailed procedures for handling bidders' protests are prescribed by each military department. 10. Two-step formal advertising. The purpose of two-step formal advertising is to increase the use of formal advertising in technical procurements where existing specifications are so indefinite that negotiation between prospective contractors and the Government is required. This procedure was originally developed by the Air Force upon the House Armed Services Committee's recommendation 98 and is now incorporated in ASPR Section 2, Part 5.99 Step one involves a request for technical proposals without price where definite specifications are not available yet definite evaluation criteria exist.100 The goal is to develop specifications of such definite 7 36 Comp. Gen. 94 (1956); 37 id, 330 (1957). 98 Subcommittee for Special Investigations for the House Armed Services Committee, Report on Study of Armed Services Procurement Act 652 (15 June 1957). See AFPI 2-2100 et seq. ASPR 2-501 et seq. (22 July 1960, Rev 1). 100 ASPR 2-502 (1)&(11). Two-step formal advertising must be approved at a level higher than the contracting officer. In addition, more than one technically qualified source must be expected to be available in both steps and the resulting contract must be either at a firm fixed-price or fixed-price with escalation. |