BNUMBER:  B-281465 
DATE:  February 10, 1999
TITLE: Interstate Construction, Inc., B-281465, February 10, 1999
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Matter of:Interstate Construction, Inc.

File:     B-281465

Date:February 10, 1999

Robert E. Thurbon, Esq., for the protester.
Clark J. Hulce, Esq., Department of the Army, Corps of Engineers, for 
the agency.
Susan K. McAuliffe, Esq., and Christine S. Melody, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Bid imposing condition on performance is nonresponsive where it 
modifies material terms of the solicitation, limits contractor's 
liability to the government, and limits the rights of the government 
under the contract.

DECISION

Interstate Construction, Inc. protests the award of a contract to 
Kinley Construction Company under invitation for bids (IFB) No. 
DACA05-98-B-0026, issued by the Department of the Army, Corps of 
Engineers, Sacramento District, for the repair and upgrade of the jet 
fuel hydrant system and bulk fuel storage area at Beale Air Force 
Base, California.  Interstate contends that Kinley's bid is 
nonresponsive, since it included a material condition on performance 
of the contract which may not be waived by the agency to make Kinley's 
bid responsive.

We sustain the protest.

The IFB, issued on August 12, 1998 and amended four times prior to the 
September 18 bid opening, sought bids for the repair and upgrade of 
the fuel hydrant system and fillstand.  The solicitation's pricing 
schedule sought prices for seven basic items (Nos. 0001-0007) relating 
to repairs/upgrades at the Pumphouse No. 1 site, and two option items 
(Nos. 0008 and 0009) relating to repairs/upgrades at the bulk fuel 
storage area.  IFB at 00010-5.  Item No. 0009, relevant here and 
discussed more fully below, involves lowering the high-level shut-off 
valves on three bulk fuel storage tanks.  Id.  All "major work items" 
listed in the IFB (including all of the basic and option items in the 
pricing schedule) were to be included in a total lump-sum price for 
evaluation and award purposes.  Id. at 00010-5, 01025-1, 00100-13, and 
00100-14.

Twelve bids were received by bid opening.  Kinley submitted the 
apparent low bid (at $1,591,566) and Interstate submitted the apparent 
second low bid (at $1,649,867).  The Kinley bid included the following 
statement, identified as a bid "qualification":  "Bid Item #9--Tanks 
will be cleaned and gas free by government before commencement of 
work."  By letter of September 23, the contracting officer rejected 
the Kinley bid as nonresponsive under Federal Acquisition Regulation 
(FAR)  sec.  14.404-2(d), which provides that "[a] bid shall be rejected 
when the bidder imposes conditions that would modify requirements of 
the invitation or limit the bidder's liability to the Government, 
since to allow the bidder to impose such conditions would be 
prejudicial to other bidders."

In response to this rejection notice, Kinley submitted a letter of 
protest to the contracting officer stating that the IFB required award 
to be made to Kinley as the low bidder.  Kinley also contended that 
the agency could waive the firm's bid qualification regarding item No. 
0009 as a minor informality or irregularity in the bid, since, upon a 
subsequent review of the IFB by Kinley, particularly, IFB Drawing No. 
CC4, the firm concluded that "there is not a specified condition for 
the tanks to be clean and gas free."  Letter from Kinley to 
Contracting Officer (Sept. 23, 1998).  By letter of September 25, 
Kinley notified the contracting officer that the firm was withdrawing 
the qualification in its bid; specifically, Kinley stated that "[b]y 
withdrawal of our qualification statement, there are no liabilities 
put forth on the government or prejudice against other bidders."

Upon advice from agency technical personnel and legal counsel, on 
October 7, the contracting officer concluded that Kinley could be 
asked to delete the objectionable qualification from its bid, since 
the condition was one of form and not of substance.  See FAR  sec.  14.405.  
Specifically, the contracting officer found that the qualification did 
not render the bid nonresponsive since neither of the tasks listed in 
the qualification to Kinley's bid--"cleaning" the tanks and making 
them "gas free"--was required to perform the work called for under the 
line item at issue.  

Consequently, on October 8, Kinley withdrew its agency-level protest.  
The agency awarded a contract under the IFB to Kinley on November 4.  
Interstate filed its protest of the award with our Office on November 
5.  The agency reports that it has suspended performance of the 
contract pending a decision by our Office on Interstate's protest.  

All bidders must compete for sealed bid contracts on a common basis.  
No individual bidder can reserve rights or immunities that are not 
extended to all bidders by the conditions and specifications 
advertised in the IFB.  See Lathan Constr. Corp., B-250487, Feb. 5, 
1993, 93-1 CPD  para.  107 at 3-4.  Therefore, in order to be responsive and 
considered for award, the bid must contain an unequivocal offer to 
perform, without exception, the exact thing called for in the IFB, in 
total conformance with the material terms of the solicitation.  NR 
Vessel Corp., B-250925, Feb. 11, 1993, 93-1 CPD  para.  128 at 2-3.  If in 
its bid a bidder attempts to impose conditions that would modify 
material requirements of the invitation, limit its liability to the 
government, or limit rights of the government under any contract 
clause, then the bid must be rejected.  Bishop Contractors, Inc., 
B-246526, Dec. 17, 1991, 91-2 CPD  para.  555 at 2-3; H.M. Kern Corp., 
B-239821, June 22, 1990, 90-1 CPD  para.  586 at 2.  Further, a bid which is 
nonresponsive on its face may not be made into a responsive bid by 
post-bid opening clarifications or corrections.  Lathan Constr. Corp., 
supra, at 3-4. 

In our opinion, the only reasonable interpretation of the asserted 
"qualification" regarding item No. 0009 is that, at the time of bid 
opening, Kinley agreed to perform the work item at the price bid only 
if the "[t]anks will be cleaned and [made] gas free by [the] 
government before commencement of [the] work."  All parties agree, and 
our review confirms, that there was no such requirement or condition 
in the IFB.  As discussed in detail below, since the Kinley bid 
qualification conditions performance by the firm on the agency taking 
steps to clean the tanks and render them "gas free," the bid imposes 
additional obligations on the agency not contemplated by the IFB which 
limit the government's rights, as well as the contractor's liability 
under the contract.  The bid therefore must be rejected as 
nonresponsive.

The IFB provided little instruction to the bidders as to the 
performance of item No. 0009, which is only generally described as 
"lowering existing high level alarm valves for three of the 
aboveground storage tanks."  IFB, Amendment No. 2, Summary of Work,  para.  
1.02D, at 01010-2.  A drawing of the tanks that was included in the 
solicitation illustrated the shut-off valves as handle-shaped objects 
that are to be repositioned to a lower elevation; the hole for the 
existing top of the handle is to be plugged and a new lower hole made 
to reattach the handle.  Drawing No. CC4.[1]

The IFB notified bidders of the fact that the contractor will be 
performing in an area with significant hazardous environmental 
conditions.  For instance, the IFB's summary of work (IFB, Amendment 
No. 2  sec.  01010), emphasized that the base will remain in full operation 
during performance of the contract (with the potential for substantial 
amounts of fuel to remain in the tanks that are being repaired) and 
that additional contractor responsibilities were included in the IFB 
(e.g., air monitoring of the enclosed work areas) to ensure the safety 
of contractor personnel and subcontractors in light of the identified 
hazards.  See also Contracting Officer's Statement at 2; IFB at 
01110-7 and 01410-4.  In particular,  para.  1.08 of the summary of work 
specifically advised bidders as follows:

     The Work entails performing activities in close proximity to 
     physical hazards.  These conditions could present potentially 
     life-threatening, or other situations of extreme consequence and 
     will require paramount attention to safety and personnel 
     protection at all times.  It is the complete and indivisible 
     responsibility of the Contractor to maintain adequate protective 
     equipment and procedures . . . .  Special attention shall be paid 
     to the following potential hazards:  1.  Vapor-freeing of 
     existing fuel components . . . .  

IFB at 01010-4 (emphasis added).

Although it is unclear what is meant by Kinley in its qualification 
that the government must render the tanks "gas free," this phrase 
could reasonably indicate that Kinley demands either that the tanks be 
fully drained of fuel, or that the tanks be free of fuel vapor.  
Either interpretation is clearly inconsistent with the IFB.  For 
instance, as discussed above, the IFB establishes that the base will 
remain in full operation and, as depicted in Drawing No. CC4, that 
fuel is continuously provided below the tanks' floating pans by an 
underground pipeline.  The agency reports that it is in fact 
impossible to completely drain the tanks--yet Kinley conditions 
performance of the item on the tanks being "gas [or fuel] free."  
Likewise, if the "gas free" term of the Kinley bid qualification means 
that the tanks must be rendered free of fuel vapor, it is also clearly 
inconsistent with the statement in the IFB, quoted above, notifying 
bidders to take into account the hazard of potential fuel 
"vapor-freeing" in formulating their bids.  As Interstate points out, 
the lowering of the valves reasonably may involve welding work, which 
will require special precautions on the part of the contractor given 
the cited hazard of potential "vapor-freeing" in the work area.  In 
this regard, the Kinley bid qualification effectively and improperly 
limits this cited risk for Kinley alone, while the other bidders were 
required to bid in the face of such risk.

Similarly, by conditioning its bid on the government's cleaning of the 
tanks, Kinley imposed added material obligations on the agency that 
were not envisioned by the IFB.  This would improperly change the 
legal relationship between the contractor and agency, limiting the 
government's rights under the contract.  For instance, if Kinley were 
to blame any subsequent injury or explosion on the government's 
failure to adequately "clean" or make "gas free" the fuel tanks, the 
government's liability under the contract could increase, while 
Kinley's liability would decrease.  

The agency argues that the qualification is immaterial because it is 
not necessary to clean or make the tanks "gas free" before performing 
the work under item No. 0009.[2]  Whether or not, in the agency's 
view, those two tasks are in fact necessary to perform the work is not 
dispositive, however.  Rather, the point is that, as a result of the 
bid qualification, the awardee indicated that it would not perform 
unless the government cleaned and made the tanks "gas free," thereby 
conditioning its bid in a manner inconsistent with the IFB, which 
imposed no such obligations on the government.

Given the qualifying terms of the firm's offered performance, Kinley 
effectively created an opportunity for itself to refuse the award if 
it decided after bid opening that it no longer wanted the contract.  A 
bidder cannot be given the opportunity to correct a bid to remove a 
material qualification, since it would provide it the competitive 
advantage of being able to accept or reject the contract after bids 
have been publicly exposed simply by deciding to make it responsive.  
C. Iber & Sons, Inc./J.S. Alberici Constr. Co., Inc., a Joint Venture, 
B-247920.2, Aug. 12, 1992, 92-2 CPD  para.  99 at 5-6.  Since, as the 
contracting officer initially found, the Kinley bid qualification 
imposes conditions inconsistent with material IFB provisions, altering 
the legal relationship between the contractor and the agency, it is a 
matter of substance (not form) that renders the bid nonresponsive and 
may not be waived by the agency as a minor informality or irregularity 
in the bid.  NR Vessel Corp., supra, at 3-4.  Although Kinley 
emphasizes its low bid price, the possible monetary savings under a 
particular contract does not outweigh the importance of maintaining 
the integrity of the competitive bidding system by rejecting 
nonresponsive bids.  Id.  

We recommend that the agency terminate Kinley's contract for the 
convenience of the government and award a contract under the IFB to 
the protester, if otherwise appropriate.  We also recommend that the 
protester be reimbursed the reasonable cost of filing and pursuing its 
protest, including attorneys' fees.  4 C.F.R.  sec.  21.8(d)(1) (1998).  
The protester should submit its claim for costs, detailing and 
certifying the time expended and costs incurred, with the contracting 
agency within 60 days after receipt of this decision.  4 C.F.R.  sec.  
21.8(f)(1).

The protest is sustained.

Comptroller General
of the United States

1. The contracting officer describes the work required as follows:

            There are three bulk tanks, each of which contains fuel.  
            Each tank resembles a very large, tall metal cylinder, 
            with a handle like structure on the outside.  The handle 
            is the high level cutoff.  The tank contains fuel, has a 
            vented top to keep out rain and leaves, and it also has a 
            floating pan on the fuel which rises and falls with the 
            liquid level.  The task is to detach the top of the 
            handle, seal the top hole, rotate the handle 180 degrees 
            (switch top to bottom), and place a hole in the tank where 
            the new attachment of the handle is made. . . .  Such work 
            as may be done inside the tank will be done from the 
            floating pan."

Contracting Officer's Report at 2.

2. According to the agency, any work to be done inside the tank will 
be done from the "floating pan," which has seals to seal off the fuel 
from air and, as the pan falls, clean the walls.  In addition, the 
agency contends that, since each tank has a vented roof, residual 
vapors should not be a problem; although the IFB provides that 
vapor-freeing of the fuel is a critical hazard at the site, the agency 
reports that vapor readings have historically been at "non-detect" 
levels.