Hanel protests that Kardex’s warehouse units do not satisfy a
material solicitation requirement. Protest at 6-7. Specifically,
citing various depictions and passages from Kardex’s quotation,
the protester argues that Kardex’s extractor system is suspended
centrally on the sides of its proposed warehouse units, and not
suspended on four corners, contrary to the RFQ’s explicit
requirement. See Protester’s Comments at 4-5.
The VA concedes that the RFQ “specified precise technical
requirements” for the solicited storage units, and does not
dispute the protester’s argument that Kardex’s extractor system
is not suspended on four corners as required by the RFQ. See AR
at 2-3. The agency instead argues (citing, inter alia, Zarc
Int’l, Inc., B‑292708, Oct. 3, 2003, 2003 CPD ¶ 172 and
Spacesaver, B‑224339, Aug. 22, 1986, 86-2 CPD ¶ 219, aff’d
Spacesaver--Recon., B‑224339.2, Sept. 19, 1986, 86-2 CPD ¶ 328,
Spacesaver--2nd Recon., B‑224339.3, Oct. 16, 1986, 86-2 CPD ¶
435) that because quotations are not offers that the agency can
accept, the agency may select a quotation that does not comply
with the RFQ’s identified requirements, where the agency finds
that the quotation will otherwise satisfy the agency’s needs. AR
at 2-3. We disagree.
The legal nature of a quotation vis-à-vis “offer” and
“acceptance” in the context of a RFQ issued to FSS vendors does
not alter the fundamental requirement that the FSS competition
be conducted fairly and in a manner that affords vendors an
opportunity to compete on an equal basis. In Zarc Int’l, cited
by the agency, we specifically explained that where an agency
determines that a nonconforming quotation will satisfy its
needs, the agency generally should amend the RFQ and reopen the
competition to allow all vendors to compete for its actual
requirements on an equal basis. See Zarc Int’l, Inc., supra, at
2.
Further, in Spacesaver, also cited by the agency, we explained
that agencies must treat all vendors equally and afford them an
opportunity to compete on an equal basis. See Spacesaver, supra,
at 2. Normally, an agency does not assure equal competition
where it identifies a particular model or requirement in a
solicitation but does not impose that requirement on an offeror
who deviates from the terms of the solicitation. This is so even
when only quotations are requested, since it can lead vendors to
quote on different bases. Id. In this regard, we have held that
clearly stated technical requirements are considered material to
the needs of the government, and a quotation that fails to
conform to material solicitation requirements is technically
unacceptable and cannot form the basis for award. Carahsoft
Tech. Corp., B‑401169, B‑401169.2, June 29, 2009, 2009 CPD ¶ 134
at 5.
Although we ultimately denied the protests in Zarc Int’l and
Spacesaver, the outcome in these cases turned on the question of
competitive prejudice, not the fact that the vendors submitted
quotations instead of offers. In Zarc Int’l, the procuring
agency issued a purchase order to a FSS vendor that did not
quote the particular product number identified in the RFQ after
determining, like here, that the vendor’s product met the
agency’s needs. Zarc Int’l, supra, at 1-2. We nevertheless
denied the protest because the protester failed to establish a
reasonable possibility that it was prejudiced by the agency’s
actions. Id. at 2. Similarly, in Spacesaver, we denied the
protest of an agency’s issuance of purchase order to a FSS
vendor that did not quote the product model specified in the RFQ
because the protester had not alleged that it would have offered
a product other than the specified model had it been on notice
that the agency would consider equivalent items. Spacesaver,
supra, at 2.
Here, however, Hanel represents that it would have proposed a
different, lower‑priced system had it known that the VA would
accept a 2-point center suspension extraction system, instead of
the specified 4-corner suspension system. Protester’s Comments
at 1. We have recognized the possibility of prejudice where a
protester that was the only vendor offering the product
specified in an RFQ alleges that it would have lowered its price
had it been aware of the potential for competition, and where
the vendor offering the specified product alleges that it could
have offered a different, lower-priced, acceptable product had
it been on notice that the agency would consider equivalent
items. Zarc Int’l, supra, at 2. Accordingly, we find a
reasonable possibility that Hanel was prejudiced by the agency’s
failure to evaluate quotations based on the requirements set
forth in the solicitation. (Hanel
Storage Systems, L.P. B-409030.2: Sep 15, 2014) (pdf)
As an initial
matter, the agency contends that Sea Box is not an interested
party because its quotation had expired. In this regard, the
agency notes that Sea Box’s quotation failed to provide that its
price would be held firm for 90 days as requested by the RFQ.
See Contracting Officer’s Statement at 17.
We do not agree with the agency that the “expiration” of Sea
Box’s quotation rendered the quotation unacceptable. We
recognize that, in practice, agencies and vendors often treat
quotations as if they were offers. Nonetheless, as a matter of
law, quotations are different from bids or offers.
The submission of a bid or proposal constitutes, by its very
nature, an offer by a contractor that, if accepted, creates a
binding legal obligation on both parties. Computer Assocs.
Int’l, Inc.–Recon., B-292077.6, May 5, 2004, 2004 CPD ¶ 110 at
3. Because of the binding nature of bids and offers, they are
held open for acceptance within a specified or reasonable period
of time, and our case law has necessarily developed rules
regarding the government’s acceptance of “expired” bids or
proposals. See, e.g., Consultants Ltd., B-286688.2, May 16,
2001, 2001 CPD ¶ 92.
A quotation, on the other hand, is not a submission for
acceptance by the government to form a binding contract; rather,
vendor quotations are purely informational. Zarc Int’l, Inc.,
B-292708, Oct. 3, 2003, 2003 CPD ¶ 172 at 2. In the RFQ context,
it is the government that makes the offer, albeit generally
based on the information provided by the vendor in its
quotation, and no binding agreement is created until the vendor
accepts the offer. FAR § 13.004(a). A vendor submitting a price
quotation therefore could, the next moment, reject an offer from
the government at its quoted price. Because vendors in the RFQ
context hold the power of acceptance and their submissions are
purely informational, there is nothing for vendors to hold open.
Thus, we have not applied the acceptance period concept or the
attendant rules regarding expiration of bids or offers to RFQs.
See Computer Assocs. Int’l, Inc.–Recon., supra. (Sea
Box, Inc., B-405711.2, Mar 19, 2012) (pdf)
Uncertainty as to
the identity of an offering entity renders an offer technically
unacceptable, since ambiguity as to an offeror’s identity could
result in there being no party bound to perform the obligations
of the contract. See Dick Enterprises, Inc., B-259686.2, June
21, 1995, 95-1 CPD ¶ 286 at 2. The information readily
available, such as records for incorporation and DUNS numbers,
must reasonably establish that the differently-identified
entities are in fact the same concern. Id.; see also Trandes
Corp., B-271662, Aug. 2, 1996, 96-2 CPD ¶ 57 at 2. Moreover, as
a general matter, the entity awarded the contract should be the
entity that submitted the initial proposal. Townsend & Co.,
B-211762, Mar. 27, 1984, 84-1 CPD ¶ 352 at 4; Pedestrian Bus
Stop Shelters, Ltd., B-212570, Mar. 20, 1984, 84-1 CPD ¶ 331 at
3.
It is undisputed that DQSI, LLC was the offering entity. Its
name is the only name that appears anywhere in the proposal. It
is also undisputed that the contracting officer made award to
DQSI, Corporation, the name that appears on the award document.
The contracting officer reasonably turned to the CAGE code and
DUNS number in DQSI, LLC’s proposal to ascertain the firm’s
eligibility for award. CAGE codes are assigned to discrete
business entities by the Defense Logistics Agency and are used
to dispositively establish the identity of a legal entity for
contractual purposes. URS Group, Inc., B-402820, July 30, 2010,
2010 CPD ¶ 175 at 4. Similarly, the DUNS numbering system is
established by Dunn & Bradstreet Information Services, which
assigns discrete 9-digit numbers for purposes of establishing
the precise identification of an offeror or contractor. Id.; FAR
§§ 2.101, 4.605(b). These numbers are used to identify the
entity that is the offeror for a given procurement.
However, the Army’s searches of various databases using this
identifying information, as well as the information it received
from SBA, revealed a discrepancy between the identity of the
offering entity and the identity of the entity to whom those
numbers were assigned. Although this discrepancy introduced
uncertainty as to the identity of the offering entity, the
contracting officer appears to have made no effort to ensure
that the two entities were the same concern. She did not seek
clarification from SBA, and there is no evidence that she sought
additional information from DQSI. Instead, she appears to have
simply assumed that the two entities were the same because the
same person was the vice president and chief executive officer
of both entities. While this fact may show that there is a
relationship between the two concerns, it does not show that
they are the same legal entity, particularly given the differing
legal structures denoted by their respective names.
W.B. Construction has provided copies of documents, certified by
the Secretary of State of Louisiana, concerning DQSI, LLC.
Comments, Exhibit D. These documents show that DQSI, Corporation
converted from the organizational form of a corporation to the
organizational form of a limited liability company, DQSI, LLC,
in 2009. As a result, it appears that the entity called DQSI,
Corporation no longer exists. According to the protester, under
Louisiana law, a limited liability company and a corporation are
different and distinct legal entities formed under different
statutes--the distinction between the two legal structures is
not a mere formality or name change.
The record demonstrates that the Army failed to resolve the
uncertainty as to the identity of the offering entity and its
eligibility for award of this 8(a) contract, and awarded the
contract to an entity that was not an original participant in
this procurement, and does not appear to be a successor in
interest to the offering entity. We therefore find that the Army
improperly found the firm’s proposal technically acceptable and
sustain the protest. (W. B.
Construction and Sons, Inc., B-405874; B-405874.2, December
16, 2011) (pdf)
On the other hand, while challenges to the legal sufficiency of
a solicitation are not often raised in this forum, we have
considered, and will consider, a protester's timely claim that a
solicitation anticipates award of a contractual instrument that
is legally insufficient in some way. For example, we will
sustain a protest against the terms of a cancellation clause
where it purports to deny a contractor under an indefinite
quantity contract the benefit of the minimum guarantee.
Southwest Lab. of Okla., Inc., B-251778, May 5, 1993, 93-1 CPD
para. 368 at 4 (protest sustained where cancellation clause
converted agency failure to meet the minimum guarantee into a
termination for convenience to avoid liability for the minimum
guarantee).
Here, however, the solicitation specifically recognizes the
government's obligation to honor the minimum guarantee in the
event of a cancellation by the government. The protester has
shown no other basis to question the GSA's use of the
cancellation clause in this RFP issued under the FSS program.
(Advanced
Scientific Applications, Inc., B-400312.2, February 5, 2009)
(pdf)
Since the lease
does not contain a termination for convenience clause, we would
customarily find that remedial action that may disturb the award
is not feasible; in the absence of a termination for convenience
clause, we would ordinarily not recommend termination of an
awarded lease, even if we sustained the protest and found the
award improper. Peter N.G. Schwartz Co. Judiciary Square Ltd.
P’ship, B‑239007.3, Oct. 31, 1990, 90-2 CPD para. 353 at 11.
Here, however, Fedcar argues that remedial action is appropriate
because no legally binding lease contract between GSA and Duke
was formed. Based on our review of the record, we agree with
Fedcar that GSA did not form a legally binding lease contract
with Duke because it did not unconditionally accept Duke’s
offer. In this regard, the record shows that on December 17,
2007, when GSA accepted Duke’s offer and notified Duke of the
award, GSA forwarded to Duke a draft lease containing various
changes from the terms of the SFO and Duke’s offer, and
requested that Duke execute and return the lease. AR, Tab 13,
GSA’s Award Letter (Dec. 17, 2007). Fedcar has identified
various changes in this draft lease that it regards as material
deviations from the terms of the SFO and Duke’s offer. For
example, the agency changed a section of the SFO regarding the
installation of roof antennas by making the agency’s right to
mount an antenna conditional on Duke’s consent and added new
provisions addressing the removal of the antennas. The draft
lease also limited the lessor’s right to negotiate price and
imposed a mandatory procedure involving the use of appraisals to
determine the purchase price. Neither GSA nor Duke has asserted
that these are not changes from the SFO or Duke’s offer, or
explained why these changes are not material. Based on our
review of the record, we find these changes are material.
Moreover, the record does not include the modified draft lease
executed by both GSA and Duke, even though this document (if it
is in existence) was requested to be produced.
A purported acceptance of an offer that is conditioned on the
offeror’s assent to terms additional to or different from than
those offered is not an acceptance but a counteroffer, and does
not create a binding contract. 1st Home Liquidating Trust, et
al. v. United States, 76 Fed. Cl. 731, 739 (2007) (citing
Restatement (Second) of Contracts sect. 59); Romala Corp. v.
United States, 20 Cl.Ct. 435, 443 (1990); Climax Molybdenum Co.,
B-193828, July 3, 1979, 79‑2 CPD para. 2 at 4. On this record,
we find that GSA’s conditional acceptance of Duke’s offer did
not form a legally binding lease contract. Because GSA has
made material changes to the lease agreement from those
contained in the SFO, we recommend that GSA amend the SFO and
obtain revised proposals. We also recommend that GSA make a new
source selection decision taking into account the correct
present value ANSI/BOMA office area per square foot price of the
offers. In so doing, the agency should fully document its
cost/technical tradeoff, including a comparison of the
proposals’ strengths and weaknesses as well as the evaluated
price difference. In the event that Fedcar’s proposal is found
to be the best value, award should be made to that firm. We also
recommend that Fedcar be reimbursed the reasonable costs of
filing and pursuing the protests, including reasonable
attorneys’ fees. 4 C.F.R. sect. 21.8(d)(1). Fedcar should submit
its certified claim for costs, detailing the time expended and
costs incurred, directly to the agency within 60 days after the
receipt of this decision. (Fedcar
Company, Ltd., B-310980; B-310980.2; B-310980.3, March 25,
2008) (pdf)
Proposal submitted prior to the
issue date of a request for proposals (RFP) is an offer in
response to the RFP that the contracting agency must consider
where the agency provided the offeror with prior written notice
that it would do so. (STG,
Inc., B-285910, September 20, 2000) |
