What Recourse is Available to the Gov't When We Buy the Wrong Thing?

[Troy]

I was asked for advice on the subject of returning goods and requesting a refund when the Gov’t purchases the wrong thing. I wanted to see what advice others might suggest.

The scenario is as follows:

The requesting service submitted a procurement package for LCD monitors for endoscopic cameras. The solicitation was issued seeking brand name or equal products. Offerors proposed “or equal” products which were evaluated and one selected. Award was made products were delivered and accepted. Two months later a Bio-Med engineer informs the requesting service that the monitors are the wrong ones. The surgical service business manager suggests that the initial request should have been a sole source procurement. The service now wants to return the monitors, get a refund and issue a new sole source solicitation.

The questions:

1 - Can the Gov’t return the products now?

2 - Is the Gov’t entitled to a refund if products are returned?

[ji20874]

You will need to read your contract if you're looking to find a "right" to return the products for a refund -- you might find, or you might not, depending on its words.

But almost anything might be possible by negotiation with the contractor...

[Guest Vern Edwards]

If you received the items and accepted them, they're yours. You might be able to talk the contractor into accepting a return in accordance with its ordinary business practices. I know of no standard contract clause that provides for returns and refunds.

The thing you have to worry about is: if you paid the contractor and the contractor agrees to accept the return and refund the money, who gets it -- your office or the U.S. Treasury? See the GAO Red Book, Vol. II, Section E.

[joel hoffman]

I was asked for advice on the subject of returning goods and requesting a refund when the Gov’t purchases the wrong thing. I wanted to see what advice others might suggest.

The scenario is as follows:

The requesting service submitted a procurement package for LCD monitors for endoscopic cameras. The solicitation was issued seeking brand name or equal products. Offerors proposed “or equal” products which were evaluated and one selected. Award was made products were delivered and accepted. Two months later a Bio-Med engineer informs the requesting service that the monitors are the wrong ones. The surgical service business manager suggests that the initial request should have been a sole source procurement. The service now wants to return the monitors, get a refund and issue a new sole source solicitation.

The questions:

1 - Can the Gov’t return the products now?

2 - Is the Gov’t entitled to a refund if products are returned?

Probing a bit deeper...

Was the brand name item specified the correct item that would have worked?

If so, was the "or equal" item that was proposed and accepted not "equal" to the specified product, to the extent that the substitute won't work?

If so, then the proposed substitute doesn't, in fact, meet the contract requirements.

[Navy_Contracting_4]

Probing a bit deeper...

Was the brand name item specified the correct item that would have worked?

If so, was the "or equal" item that was proposed and accepted not "equal" to the specified product, to the extent that the substitute won't work?

If so, then the proposed substitute doesn't, in fact, meet the contract requirements.

Sometimes, in "brand name or equal" procurements, when the government specifies the "salient characteristics" that an "equal" item must meet to be acceptable for award, it turns out that the brand name had a design feature that was not recognized as being among the important characteristics, and so was not listed. Then, an "equal" item gets accepted for award and doesn't work right, because it doesn't have this unspecified feature. The item may not work in practice, but if it met all the salient characteristics specified, can you fairly say it didn't meet contract requirements?

[joel hoffman]

Sometimes, in "brand name or equal" procurements, when the government specifies the "salient characteristics" that an "equal" item must meet to be acceptable for award, it turns out that the brand name had a design feature that was not recognized as being among the important characteristics, and so was not listed. Then, an "equal" item gets accepted for award and doesn't work right, because it doesn't have this unspecified feature. The item may not work in practice, but if it met all the salient characteristics specified, can you fairly say it didn't meet contract requirements?

I don't necessarily disagree with Navy but I think that my questions are still relevant. I'm not sure that I fully understand the scenario.. Perhaps only the specified brand can meet the requirements and the mistake was in allowing an "or equal"? Or perhaps an "equal" brand could work but the product doesn't equal the specified brand? Or perhaps, the government didn't correctly identify the "or equal" aspects that had to be met? Or perhaps the specified brand isn't the same product as that which the customer now wants to procure as sole source? Or...?

I'm trying to gets some clarification concerning what happened. The answers to the original questions may depend upon the underlying facts of the situation - or not...

[Guest Vern Edwards]

The scenario is as follows:

The requesting service submitted a procurement package for LCD monitors for endoscopic cameras. The solicitation was issued seeking brand name or equal products. Offerors proposed “or equal” products which were evaluated and one selected. Award was made products were delivered and accepted. Two months later a Bio-Med engineer informs the requesting service that the monitors are the wrong ones. The surgical service business manager suggests that the initial request should have been a sole source procurement. The service now wants to return the monitors, get a refund and issue a new sole source solicitation.

The scenario seems clear to me. They received a proposal, accepted it as an "or equal," received items, accepted them, and paid for them. Now they're not happy with what they got. The "or equal" turns out not to meet their needs.

Acceptance is final except for latent defects, fraud, or gross mistakes amounting to fraud. The original poster has said nothing about any of those things. It was a government screw-up, that's all.

[Troy]

To clarify the scenario, an 'or equal' product was offered, evaluated and deemed technically acceptable. However, two months after delivery, there is a determination made within the using service that the product is not acceptable. So it is absolutely a mistake on the part of the government no doubt.

I just feel bad that I can't think of any good advice to help remedy this situation. It appears that ultimately the government may end up eating the cost of its mistake in addition to expending more to procure the correct product. Clearly not the most efficient way to handle tax dollars.

[Guest Vern Edwards]

To clarify the scenario, an 'or equal' product was offered, evaluated and deemed technically acceptable. However, two months after delivery, there is a determination made within the using service that the product is not acceptable. So it is absolutely a mistake on the part of the government no doubt.

I just feel bad that I can't think of any good advice to help remedy this situation. It appears that ultimately the government may end up eating the cost of its mistake in addition to expending more to procure the correct product. Clearly not the most efficient way to handle tax dollars.

When you said that it was determined that the product is not acceptable, did you mean that it did not meet the specification and that the delivery should not have been accepted by the government, or did you mean that it met the specification but did not satisfy the actual need? Which is it? Your answer will reveal the nature of the problem.

Are you new to the contracting field?

[Troy]

The product met the specification but did not satisfy the actual need. This was not an acquisition that I worked on, however I am relatively new to the contracting field, so I was hoping to get input from some more seasoned CO's in order to offer the best advice to my colleague.

[Guest Vern Edwards]

The requisitioner is responsible for specifying its needs. As a CO there probably is not a lot that you can do about a poor product specification. If you have product knowledge, experience, and skill in specification writing you might be able assist the requisitioner, if you have the time. Do you have product knowledge, experience, skill, and time?

[Troy]

I certainly can't afford to invest any time in support of those efforts. Guess this will be a lesson learned the hard way. I appreciate everyones time and input.

[Retreadfed]

Troy, for future reference take a look at FAR 7.103(n). It might be helpful going forward.