sequently provide a warranty to the Government, it would be willing to furnish the stated certification after the generators are built if they have been assembled properly and in accordance with DDA's recommendations. We think DDA's position in this respect is reasonable. We can understand the reluctance of the engine manufacturer, a subcontractor under this IFB, to commit itself in advance to warrant that the prime contractor has assembled the generator units in such a way that the engine is adequate and proper for the use to which it has been put. This requirement of paragraph C-12 probably cannot be achieved by any bidder who does not also manufacture the turbine. However, since NAVFAC has indicated a willingness to make award to S&S, we assume that literal compliance was neither intended nor sought at this time, and that a more general certification, such as that furnished by DDA, will satisfy the Navy's requirements.

It does not appear that the Navy has specifically evaluated the certifications presented by the two low bidders in light of the total record that has been amassed during the tendency of these protests; nor would the bidders be precluded from offering other certification data or even other engines. Accordingly, consideration of the issue by our Office at this time would be premature. However, we believe that requirements of this type in future procurements should be thought out with great care and precisely stated.

The claim of CAPCO that all lower bidders do not meet the experience requirement of paragraph C-12 is not supported by the record. As indicated above, this involves a matter of responsibility, and with respect to Abbott, the issue is foreclosed by the Certificate of Competency. With respect to other bidders it is well established that, except where a Certificate of Competency has been or would be issued, the question of bidder responsibility is primarily for determination by the contracting officer, and we will regard that determination as conclusive unless there is convincing evidence that it was the result of bad faith or arbitrary action. 43 Comp. Gen. 228 (1963). CAPCO has submitted no evidence to support its allegation.

Emerson's protest is based on a literal reading of paragraph 3.10 of the specifications, which states that the gear box component of the generator "*** shall be of a proven design recommended and in use by the manufacturer of the gas turbine engine." During preaward surveys both Abbott and S&S indicated an intention to furnish a turbine manufactured by Detroit Diesel Allison (DDA) and a gear unit produced by Western Gear Corporation, although Abbott also stated that it had not made a final decision as to which gear it would use and objected to having to provide this information prior to award. While DDA is willing to recommend the use of the Western gear with its

engine, Emerson claims that the specification requires that the gear must also have been used by DDA, and that DDA has in fact never used the Western gear in its own production of generators of this type. Emerson asserts that only a Falk gear can satisfy this requirement, and it further asserts that it will be prejudiced if use of another gear is allowed because its bid was based on providing a DDA engine coupled with the much more costly Falk unit. In support of its assertion, Emerson has submitted figures to us indicating that its bid price could have been more than $360,000 lower had it anticipated the use of other than a Falk gear.

At the outset, we must reject any implication in the Emerson protest that the two low bids were nonresponsive with respect to this gear requirement. The invitation did not require bidders to identify either the turbine or the gear that would be used in the generator, and nothing was submitted with the bids to indicate which components would be furnished or that the specifications would not be met. We think it is clear that the invitation allowed a successful bidder, upon award of a contract, to furnish a generator with any turbine and gear combination that would meet the detailed specifications of the IFB.

We understand that certain engine manufacturers now produce or have, in the past, produced entire generator units for their own use or for use by their customers. We also understand that while DDA formerly supplied complete generator units, which utilized Falk gears, it no longer builds complete systems and now provides only the engine. The record indicates that S&S, one of DDA's franchised distributors, has supplied a generator unit using a DDA engine coupled with a Western gear. DDA has also pointed out that it currently has in use for this application at its plant only two gears, one manufactured by General Electric and one developed by DDA. However, it would not recommend either gear for commercial use with its engine.

Emerson claims that the words "and in use by the manufacturer," contained in paragraph 3.10, clearly require the contractor to furnish a gear that has been used by the engine manufacturer, and asserts as a fact that only a Falk gear has been used by DDA. Since DDA has stated that it uses gears other than Falk, but has supplied generators using only the Falk gear, it appears that Emerson is claiming that the specifications require the use of a gear that has been furnished by a turbine manufacturer as part of its generator unit. NAVFAC personnel read the specification more broadly, claiming that the use of a gear by a manufacturer's distributor in furnishing a complete generator unit to a customer satisfies the specification. NAVFAC's counsel also points out in his June 8, 1972, letter that "there could be no substantial difference with respect to assuring a satisfactory combination

whether the use experience had been by the manufacturer or its distributor."

We think a strictly literal interpretation of the words in paragraph 3.10 would require the contractor to furnish a gear box that is currently in use by the engine manufacturer, as opposed to Emerson's assertion that the gear need only be one that has been used by the manufacturer. The expert opinion of a university English professor, submitted by Emerson as part of its protest file, supports this strict interpretation. Therefore, such a reading of paragraph 3.10 would require the use of either a DDA gear or a General Electric gear with a DDA engine, assuming DDA's recommendation could also be obtained, a result not advocated by the Navy, Emerson, nor any other protesting party. Furthermore, since generally the customer, not the manufacturer, has the units in use, such as interpretation, contrary to the NAVFAC's purpose, could eliminate the gear/turbine combinations which have had the greatest amount of proven experience.

We are thus faced with a situation where the clear and unambiguous, if overliteral, meaning of a material provision would result in a frustration of the procurement since the only two gears which would meet the in-use requirement so far as it pertains to the DDA turbine would not receive the recommendation of the turbine manufacturer as required by the paragraph. If this interpretation is abandoned in favor of a practical one more in accordance with the Navy's obvious purpose, we cannot say that Emerson's interpretation is unreasonable. The record establishes that the DDA turbine has always been mated commercially with a Falk gear, except in the one instance when S&S furnished a DDA engine coupled with a Western gear. Under such circumstances, Emerson's view that the specifications required the use of a Falk gear with a DDA engine is not unreasonable. Since Emerson, a DDA distributor, reasonably believed it was required to furnish Falk gears, while Abbott and S&S, with equal reason, believed the less expensive Western gear was acceptable, it is apparent that the bidders were not competing on equal terms. An award made pursuant to a solicitation which permits the preparation of bids on an unequal basis is not invalid unless a bidder has been prejudiced thereby, 39 Comp. Gen. 834 (1960); 40 id. 561 (1961). In this case, Emerson has made a prima facie showing that it could have submitted a materially lower bid affecting the bidding order if paragraph 3.10 had been reasonably clear.

Since Emerson appears to have been prejudiced in the preparation of its bid, because paragraph 3.10 cannot mean what it says and what it was intended to mean cannot readily be ascertained, the invitation. should be canceled.

NAVFAC has stated that the Western gear used with the DDA engine will satisfy its needs. Such a determination is within the requiring agency's reasonable discretion. However, any resolicitation should make the determination clear, so that all prospective bidders are made aware of the Navy's actual requirements, as required by ASPR 1.1201. With respect to compliance with the post-opening certification requirement of paragraph C-12, the matter is returned for consideration by the procuring activity in accordance with the foregoing.

[B-175838]

Agriculture Department-Indemnity Payments Contamination of Cheese Removal From Commercial Market

Cheese that contained dieldrin which was removed from the commercial market at the direction of the State of Wisconsin Department of Agriculture under 14-day hold orders beginning April 11, 1969, but the final determination that the cheese was adulterated pursuant to both State and Federal law and should not move in interstate or foreign commerce was not made until May 14, 1971, is considered to have been removed from the commercial market after November 30, 1970, thus permitting indemnity payments under section 204 (b) of the Agricultural Act of 1970, approved November 30, 1970, in view of the fact the legal effectiveness of the hold orders to remove the cheese from the commercial market prior to May 14, 1971, is doubtful. However, before making the indemnity payment action should be taken to insure the claimant will not also collect or benefit under its judgment against the farmer responsible for the contamination.

To the Secretary of Agriculture, August 16, 1972:

By letter of May 1, 1972, with enclosures, the Honorable Clarence D. Palmby, Assistant Secretary of Agriculture, forwarded for our consideration the claim of the Liberty Pole Cheese Company, Inc., of Viroqua, Wisconsin, for an indemnity payment on 163,364 pounds of Romano cheese which Liberty Pole manufactured and which had been removed from the commercial market by direction of the State of Wisconsin Department of Agriculture because such cheese contained residues of the economic poison dieldrin. The letter states that indemnity payments in such instances are authorized by section 204 (b) of the Agricultural Act of 1970, approved November 30, 1970, 84 Stat. 1362 (codified as 7 U.S.C.A. 450j-4507), for dairy products which manufacturers were directed to remove from the commercial market after the date of enactment of the act. The letter further states that your Department has determined that Liberty Pole meets the eligibility requirements of the statute and the program regulations (7 CFR 760), except that there is a question as to whether Liberty Pole was directed to remove the cheese from commercial market before or after November 30, 1970, and requests our advice as to whether, assuming all other requirements of the statute and regulations have been met,

an indemnity payment may be made to Liberty Pole on the basis that is was directed to remove its cheese from the commercial market after November 30, 1970.

The record transmitted to our Office indicates that the cheese was the subject of a "hold order" issued by the Wisconsin Department of Agriculture on April 11, 1969, prohibiting the sale or movement of the cheese for any purpose until an analysis or examination thereof had been completed, inasmuch as it was believed that the cheese was adulterated with a pesticide residue. Under Wisconsin law (Wisconsin Statutes, chapter 97, section 97.12), such order was effective only for a 14-day period, and was required to be confirmed or released within that period. This order was released on April 16, 1969, and a new 14-day holding order issued on that date. This latter order was not formally confirmed until May 12, 1969, more than 14 days after issuance of the hold order. On September 11, 1969, all prior holding orders were consolidated into one final hold order. However, the Wisconsin Department of Agriculture did not make any final decision as to the salability or ultimate disposition of the cheese pending further study and review of the matter and investigation of possible market outlets for the cheese outside the State of Wisconsin. On May 14, 1971, the Wisconsin Department of Agriculture advised Hale, Skemp, Hanson, Schnurrer & Skemp, attorneys for Liberty Pole, that it had been determined that the cheese was adulterated under both State and Federal law and hence could not be moved in interstate or foreign commerce as food for human consumption; and that since all possibilities for sale of the cheese as a food in other States or countries not having restrictions on pesticide residues in foods had proved fruitless, it had no further recourse but to order final disposition of the cheese and its diversion from human food channels. The record also shows that Liberty Pole obtained a default judgment on March 9, 1970, against the dairy farmer whose dieldrincontaminated milk caused the contamination of the cheese here involved. Liberty Pole's civil action was based upon alleged breach of warranty by the dairy farmer with respect to the milk which he sold to Liberty Pole. It is indicated that, insofar as your Department is aware, Liberty Pole has never recovered anything on this judgment. Nevertheless, there is an implication that this judgment may be construed as an admission by Liberty Pole that the cheese had been removed from the commercial market prior to November 30, 1970. Liberty Pole contends that, since it and the Wisconsin Department of Agriculture had been attempting to dispose of the cheese outside of the State of Wisconsin, it was not directed to remove the cheese from the commercial market until May 14, 1971, the date of the letter