Board of Contract Appeals General Services Administration Washington, D.C. 20405 _________________________________________________________________ _______ RESPONDENT'S MOTION FOR SUMMARY RELIEF DENIED: November 10, 1999 ___________________________- _____________________________________________ GSBCA 14900, 14901, 14902 GRANCO INDUSTRIES, INC., Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Darcy V. Hennessy of Moore Brower Hennessy & Freeman, P.C., Kansas City, MO, counsel for Appellant. John E. Cornell and Robert T. Hoff, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges PARKER, BORWICK, and WILLIAMS. WILLIAMS, Board Judge. In these appeals, appellant, Granco Industries, Inc. (Granco), challenges the termination for cause of two contract line items under a requirements contract.[foot #] 1 Granco asserts three grounds for its appeals. First, it claims it withdrew its bid for the two line items and, therefore, no contract existed between Granco and the Government for those items. Second, even if there was a valid contract for those items, the Government caused the delay of the delivery of such items. Third, appellant contends that the Government waived the delivery dates of the subject orders. This matter comes before ----------- FOOTNOTE BEGINS --------- [foot #] 1 Appellant challenges three terminations for cause in these consolidated appeals -- its right to proceed further with purchase orders and two contract line items in their entirety. Appeal File, Exhibits 24, 30, 37. ----------- FOOTNOTE ENDS ----------- 2 the Board on respondent's motion for summary relief. Because there are genuine issues of material fact, we deny the motion. Background On July 14, 1997, the General Services Administration (GSA) issued solicitation number 6FES-F7-97F70145-S for socket wrenches for the contract period October 1, 1997, through September 30, 1999. Appeal File, Exhibit 1. The solicitation was an invitation for bids (IFB), and the date specified for receipt of bids was August 26, 1997, at 2:00 p.m. Id. at 2. The solicitation contained the Minimum Bid Acceptance Period (October 1985) clause, which provided: (a) "Acceptance period," as used in this provision, means the number of calendar days available to the Government for awarding a contract from the date specified in this solicitation for receipt of bids. (b) This provision supersedes any language pertaining to the acceptance period that may appear elsewhere in this solicitation. (c) The Government requires a minimum acceptance period of *120* calendar days. (d) In the space provided immediately below, bidders may specify a longer acceptance period than the Government's minimum requirement. (Insert any number equal to or greater than the minimum requirement stated in paragraph (c) of this provision. Failure to insert any number means the offeror accepts the minimum in paragraph (c)). The bidder allows the following total acceptance period: _______ calendar days. (e) A bid allowing less than the Government's minimum acceptance period will be rejected. (f) The bidder agrees to execute all that it has undertaken to do, in compliance with its bid, if that bid is accepted in writing within (1) the acceptance period stated in paragraph (c), above, or (2) any longer acceptance period stated in paragraph (c), above, or (3) any extension of the offered acceptance period as may be subsequently agreed to by the bidder. Id. at 74. 3 The solicitation also contained Clause 552.225-71, Notice of Procurement Restriction - Hand or Measuring Tools or Stainless Steel Flatware (May 1989), which provided: (a) Awards under this solicitation will only be made to offerors that will furnish hand or measuring tools or stainless steel flatware that are domestic end products. Pursuant to the requirements of the current Department of Defense Appropriations Act, GSA has determined, in accordance with Section 6-104.4 of the Armed Services Procurement Regulation (6/15/70) (32 CFR 6-104.4), that it is in the national interest to reject foreign products. As used in this clause, a "domestic end product," is -- (1) Any hand or measuring tool, except for an electric or air-motor driven hand tool, or stainless steel flatware, wholly produced or manufactured, including all components, in the United States or its possessions; or (2) Any electric or air-motor driven hand tool if the cost of its components produced or manufactured in the United States exceeds 75 percent of the cost of all its components. (b) Tool kits or sets, being procured under this solicitation, will not be considered domestic end products if any individual tool classified in FSC Group 51 or 52 and included in a tool kit or set is not a domestic end product as defined in paragraph (a) of this clause. The restrictions of this clause do not apply to individual hand or measuring tools that are contained in the tool kit or set but are not classified in FSC Group 51 or 52. Appeal File, Exhibit 1 at 74. The solicitation also included Clause F-FSS-260, Time of Delivery (Feb 1986), which provided: Delivery is required to be made at destination within *90* calendar days after receipt of order. (NOTE: SEALED BIDS: A change in the number of days will make your bid nonresponsive and it will be rejected.) Appeal File, Exhibit 1 at 49. The solicitation's Termination for Cause Clause stated: 4 Termination for cause. The Government may terminate this contract, or any part hereof, for cause in the event of any default by the Contractor, or if the Contractor fails to comply with any contract terms and conditions, or fails to provide the Government, upon request, with adequate assurances of future performance. In the event of termination for cause, the Government shall not be liable to the Contractor for any amount for supplies or services not accepted, and the Contractor shall be liable to the Government for any and all rights and remedies provided by law. If it is determined that the Government improperly terminated this contract for default, such termination shall be deemed a termination for convenience. Appeal File, Exhibit 1 at 40. The solicitation included a schedule soliciting seventeen separate line items. Appeal File, Exhibit 1 at 27-31. Multiple offers were encouraged, and the Government could accept individual items of an offer or groups of items. Id. at 73. On August 14, 1997, Granco submitted a bid including unit prices for all line items except for Nos. 6 and 10. In particular, appellant bid a unit price of $4.40 for line item no. 5, hinged handles, national stock no. (NSN) 5120-00-240-5396(5396), and a unit price of $4.80 for line item no. 8, socket wrench handles, NSN 5120-00-240-5364(5364). Appeal File, Exhibit 1 at 29. On December 17, 1997, one week before Granco's bid would have expired, the contracting officer sent Mr. Dennis Waldo, the vice president of Granco, the following letter: The date within which the Government may accept your bid on the above captioned invitation is specified in block 2 above [December 24, 1997]. Due to the time required to complete the orderly evaluation of bids received, we request an extension of the acceptance period shown in block 3 above [February 24, 1998]. An extension of acceptance time is necessary to preserve the bid for further consideration should no award be made within the time presently available. IT IS ESSENTIAL THAT AN EXTENSION OF ACCEPTANCE TIME BE COMMUNICATED IN WRITING (OR BY TELEGRAPHIC MESSAGE) AND BE RECEIVED AT THE OFFICE SPECIFIED BELOW BY THE DATE SPECIFIED IN BLOCK 4 ABOVE [DECEMBER 19, 1997]. In case a reply is not received by the 5 specified date, the Government may proceed to expedite the evaluation and to make an award to your firm on or before the date of bid acceptance above. For your convenience you may complete and sign the statement prepared below and return to the office. Appeal File, Exhibit 12. On the face of that same letter, Mr. Waldo, in his capacity as vice president of Granco, signed the referenced statement which provided: "The undersigned extends the date for acceptance for subject bid to February 24, 1998." The statement was dated December 17, 1997. Appeal File, Exhibit 12. There were no annotations on this statement which would indicate that less than all of the line items on which Granco had bid were included. Id. On January 23, 1998, Granco sent a letter to GSA stating that Granco "is hereby notifying you of our intent to withdraw our bid on the following items: 4, 5, 7, 8, and 9. Please note that as of January 23, 1998, Granco Industries, Inc. has withdrawn our bid on the above mentioned items." Appeal File, Exhibit 12. On February 18, 1998, Granco's vice president signed a form letter identical to that which he had signed on December 17, 1997, except this time extending the date for acceptance of "the subject bid" until March 28, 1998. Appeal File, Exhibit 13. Again, no notations were made on this letter indicating that any line items had been excluded from the bid extension. Id. Granco admits that its vice president signed the document extending its bid until March 28, but denies that it extended its bid with respect to the items listed in its January 23, 1998, letter. Appellant's Statement of Genuine Issues 2. Granco's vice president testified in his affidavit: I sent GSA a letter dated January 23, 1998, withdrawing the items listed . . . . When GSA subsequently asked Granco to extend its bid from February 24, 1998, to March 28,1998, . . . I personally signed the extension, but on the basis that I had withdrawn items 5 and 8, among others. I did not specifically mention that I was not extending those items. However, I did not feel it was necessary because I had placed GSA on notice that I was withdrawing these items. Affidavit of Dennis Waldo (Waldo Affidavit) (July 21, 1999) 4, 5. 6 On February 25, 1998, GSA awarded Granco a contract for items 1, 4, 5, 8, 14, 15, and 16 under the solicitation. Appeal File, Exhibit 1. On March 2, 1998, Granco received the letter notifying it of this award. Id. According to appellant, after it was notified of the award, the president of Granco called the procuring contracting officer because he knew that Granco had withdrawn its bid for line item nos. 4, 5, and 8. Affidavit of Ray Waldo (July 21, 1999) 3. Granco's president testified: I was very surprised GSA had attempted to award these items to Granco despite our request to withdraw. This conversation took place subsequent to award and to the best of my recollection within a month or two after award. I asked [the procuring contracting officer] why GSA did not respond to our request to withdraw. He said that he did not understand why GSA had not responded. I told him I did not think it was fair. I also told him that Granco could not obtain the subject parts because there was not a U.S. manufacturer of all the components including raw materials. As an example, I told him that the nickel plating came from Russia and that there was no U.S. source for this material. I told him that, due to a previous case, I was told by GSA's Washington office that if I had a question whether I was supplying an item complying with all the provisions of the contract, that I should not supply it. I further told him that I did not wish to get into a fraud investigation because Granco had supplied an item which did not meet the meaning of this so-called GSA Buy American Act, Clause 552-235-71 [sic] . . . . Id. On April 27, 1998, one order was placed for line item no. 5 and two orders were placed for line item no. 8. All three orders were due to be shipped on July 29, 1998. Respondent's Statement of Uncontested Facts 9; Appellant's Statement of Genuine Issues 1. Additional orders were placed for these items. Id. By letter dated July 22, 1998, Granco asked the following question regarding whether the tools it was to provide must be "domestic end products:" Is raw material, raw forgings, etc., acceptable coming from foreign sources? These items are manufactured, plated, and assembled in the United States, but as stated, the raw material is of foreign source, which only makes up less than 10% of the total cost. Granco has spent a great deal of time attempting to locate a 7 supplier who could supply 100% American made material. We have found any such materials to be non-existent [sic]. Our attorney . . . spoke with GSA counsel . . . who wrote an opinion on the subject a few years ago. We believe our interpretation of the subject GFAR [sic] clause is consistent with her opinion. If it is not GSA's interpretation of the clause, then Granco respectfully requests the no cost termination of this contract for the subject line items. Granco attempted to withdraw its bid for the subject line items before bid opening, but GSA would not let Granco withdraw it [sic] bid. Although Granco subsequently worked with GSA on this contract, Granco did not intend to supply the subject line items, because of its concern over GSA's possible adverse interpretation of the subject clause. Appeal File, Exhibit 3. On August 13, 1998, GSA responded to the July 22 letter as follows: With regard to your 7/22/98 letter, inquiring whether or not raw material used from foreign sources would meet the domestic end product's clause in contract . . . the following opinion was received: If only the raw material is foreign and there are at least two distinct manufacturing processes through which the material goes . . . to produce the final product, . . . the tool is considered a domestically manufactured item. Please advise if use of the foreign material would meet the criteria above; if so, please proceed with shipping contract POs [purchase orders], if not, please advise me of that. Appeal File, Exhibit 8. According to appellant, after receiving this response it procured sample parts through its supplier for its use in manufacturing line item Nos. 5 and 8. "During this process, a GSA inspector came to appellant's plant on other business . . . reviewed their proposed materials and parts and had doubts as to whether it would meet the requirements of the subject clause." Waldo Affidavit 10. Granco's vice president further testified: Subsequently, in late August 1998 . . . the official inspector of the subject contract reviewed our proposed materials and parts. He rejected the parts because the parts were forged from a foreign source and the parts 8 would not lose their identity at the point of finished product. I showed him the July 22, 1998, letter from GSA interpreting the subject clause. He said that the interpretation was simply wrong. I subsequently attempted to, again, find a supplier of the subject items 5 and 8 which would meet the interpretation given me by the inspector. I was unsuccessful locating any parts meeting the clause, at a commercially practical price. I subsequently requested GSA extend the delivery date in hopes that I could eventually locate a manufacturer of items 5 and 8 which would meet the requirements of the subject clause. . . . All of my subsequent efforts to obtain such parts at an economically practical price were unsuccessful. Id. 11-14. By letter dated August 26, 1998, GSA advised Granco that certain orders were delinquent and that it was considering terminating purchase orders under line item nos. 5 and 8 for default. Appeal File, Exhibit 10. The letter continued: Pending a final decision in this matter, it will be necessary to determine whether your failure to perform arose from causes beyond your control and without fault or negligence on your part. Accordingly, you are given the opportunity to present in writing any facts bearing on the question . . . within ten days after receipt of this notice. Your failure to present any explanation within this time frame may be considered as an admission that none exists. In such case, the Government may consider that you have defaulted and may proceed with the termination of the above orders . . . . Id. The facsimile cover sheet accompanying this show-cause letter stated: While the issues raised in your 7/22/98 letter . . . are still being discussed and evaluated, this does not alleviate Granco's responsibility to deliver the attached contract orders on a timely basis. Please review and reply to the attached letter. Id. at 2. On August 27, 1998, GSA representatives had discussions with Granco's vice president concerning Granco's plan for supplying the delinquent items. Granco's vice president stated that 9 forgings made by United States suppliers would be available but their price would not allow him to sell at the price bid. Appeal File, Exhibit 11. Granco's vice president also reiterated a number of times "that he tried to withdraw his bid before award was made." Id. By letter dated September 10, 1998, Granco offered a monetary consideration of $2957 to extend the delivery dates of the delinquent orders until November 26, 1998, through January 23, 1999. Appeal File, Exhibit 13. On September 22, 1998, GSA requested Granco to clarify its September 10 offer specifying the amount of consideration attributable to each order and asking if Granco could reduce the length of the requested extensions and provide specific reasons for the delay. Id., Exhibit 20. By letter dated September 30, 1998, Granco advised GSA of a breakdown of individual purchase orders for extended delivery consideration. Id., Exhibit 17. In addition, Granco stated: The main reason for the delay of the subject purchase orders was in receiving clarification of clause 552.225-71 [Domestic End Product]. Receiving this clarification on raw material versus forged material was critical in our manufacturing process. Corrective action: Since receiving the clarification on forged material, we have found two domestic sources for our forgings to manufacture the subject items. Orders have already been placed for this material and our manufacturing process has begun. Granco believes that with two reliable sources in place, and the attention that we are giving to this contract, we should be granted the delivery extensions set forth in this correspondence. Id. at 2. On October 6, 1998, GSA issued a modification extending the delivery dates of several orders to and until October 30, 1998. Id., Exhibit 4. GSA further explained: As there are backorder demands for these items, it is not in the Government's best interest to grant the extensions requested by Granco. As such, the Government is exercising its right to unilaterally reestablish the delivery dates for these orders . . . to October 30, 1998. In the event that your firm fails to deliver these purchase orders . . . by the reestablished date, the Government may terminate the orders for cause. Id., Exhibit 20 at 2. 10 By letter dated October 27, 1998, Granco, through its counsel, requested that GSA cancel or rescind the contract at no cost to the Government or reestablish a realistic delivery date based upon the circumstances of Granco and recognizing that all components had to be produced domestically. Appeal File, Exhibit 21. On November 18, 1998, GSA terminated appellant's right to proceed further with purchase orders under line item nos. 5 and 8 for cause for failure to deliver. Appeal File, Exhibit 24. Granco failed to deliver items under additional purchase orders for line item nos. 5 and 8. On December 22, 1998, GSA terminated NSN 5364, line item no. 8, in its entirety for cause for failure to deliver. Appeal File, Exhibit 30. By letter dated January 28, 1999, GSA terminated line item no. 5 in its entirety for failure to deliver. Id., Exhibit 37. Discussion Resolving a case on a motion for summary relief is appropriate where no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Twigg Corp. v. General Services Administration, GSBCA 14387, 98-2 BCA 29,803. The moving party bears the burden of demonstrating the absence of a genuine issue of material fact. All evidence must be viewed in the light most favorable to the nomoving party, with all reasonable factual inferences to be drawn in favor of the nonmoving party. Twigg, 98-2 BCA at 113,625. Here, respondent has failed to meet its burden and its motion fails. Respondent asserts that its termination for cause should be upheld in that appellant had a valid contract to supply the socket wrenches because its attempted withdrawal of its bid was ineffectual. Respondent points out that appellant's bid was irrevocable during the initial acceptance period and any extension of the bid. While it is generally true that a bid is irrevocable during the acceptance period, see Nationwide Reporting and Convention Coverage, GSBCA 8309, 88-2 BCA 20,521; Western Adhesive, GSBCA 7449, 85-2 BCA 17,961, Federal Acquisition Regulation (FAR) 14.303, the question in this case is what appellant's irrevocable bid was at the time award was made. Appellant attempted to withdraw parts of its bid, including line item nos. 5 and 8, during the initial acceptance period. However, the attempted withdrawal of January 23 was ineffectual during the initial extended acceptance period. Thus, appellant's entire bid including line item nos. 5 and 8, remained in full force and effect until February 24, 1998. However, award was not made until February 25. At that point in time, appellant contends that it had only extended the portion of its bid which was still viable, which did not include line item nos. 5 and 8, which it had expressly withdrawn by the January 23 letter. The 11 Government's motion papers do not establish whether or not the bid which was actually extended was the bid for all line items or excluded the line items at issue. This is a genuine issue of material fact which prevents granting respondent's motion on that ground.[foot #] 2 Further, appellant contends that the fact that Granco attempted to withdraw its bid for line item nos. 5 and 8 should have prompted the contracting officer to verify Granco's bid pursuant to 48 CFR 14.407-3 (1997) and process the mistake in bid. Respondent has not considered this allegation in its motion papers, and this raises another issue of fact which precludes the entry of judgment. There is also a question of material fact regarding whether appellant, by proceeding to perform, ratified the contract it claims did not exist. Additionally, respondent asks this Board to render judgment in its favor and conclude that the Government did not delay appellant's performance because its erroneous advice relaxed the requirement appellant was supposed to meet. Appellant, however, contends that GSA's erroneous interpretation of the clause caused its delay. Under the circumstances, the issue as to which party delayed performance is a question of material fact and precludes the entry of summary relief. Finally, respondent contends that the Board should conclude that GSA never waived the original delivery schedule. Appellant squarely disputes this, however, and respondent admits that the contracting officer extended the delivery date to October 30, 1998, and did not terminate any orders until November 18. Because all evidence must be construed most favorably on behalf of the nonmoving party, this ground of respondent's motion also fails. Decision Respondent's motion for summary relief is DENIED. _________________________________ MARY ELLEN COSTER WILLIAMS Board Judge ----------- FOOTNOTE BEGINS --------- [foot #] 2 Specifically, the initial acceptance period by its terms expired on February 24 -- almost a month after appellant had clearly indicated to the Government that it was withdrawing its bid as to line item nos. 5 and 8. It is appellant's position that the "bid" which was extended did not include line item nos. 5 and 8. ----------- FOOTNOTE ENDS ----------- 12 We concur: ________________________________ _________________________________ ROBERT W. PARKER ANTHONY S. BORWICK Board Judge Board Judge