B-163492, AUG. 6, 1968

B-163492, AUG. 6, 1968

TO MR. CLAPP:

WE REFER TO OUR LETTER, B-163492 OF FEBRUARY 14, 1968, REQUESTING THE RURAL ELECTRIFICATION ADMINISTRATION (REA) TO FURNISH A REPORT RESPONSIVE TO THE ALLEGATIONS OF GEORGIA ELECTRIC COMPANY, WHO PROTESTED THE REFUSAL OF GULF COAST ELECTRIC COOPERATIVE, INCORPORATED, TO OPEN AND CONSIDER ITS BID UPON AN ELECTRIC TRANSMISSION LINE CONSTRUCTION PROJECT, FLORIDA 34 BAY. WE HAVE BY OUR DECISION OF TODAY, COPY ENCLOSED, DENIED THIS PROTEST.

THE REA REPORT OF MARCH 6, 1968, IN RESPONSE TO OUR REQUEST OF FEBRUARY 14, 1968, PARTICULARLY THE FACTUAL MATERIAL, WAS INADEQUATE TO THE POINT THAT WE WERE FORCED TO SEEK A FURTHER REPORT FROM THE ELECTRIC COOPERATIVE CONCERNED.

WE BELIEVE A THOROUGH INVESTIGATION BY REA INTO THE MATTER WAS WARRANTED, FOR IF GEORGIA ELECTRIC'S CONTENTION THAT IT HAD SUCCESSFULLY COMPLETED SIMILAR WORK FOR OTHER REA BORROWERS WERE SUPPORTABLE, GEORGIA ELECTRIC WOULD APPEAR TO BE THE LOW RESPONSIVE, RESPONSIBLE, BIDDER UNDER THE TERMS OF THE REA NOTICE AND INSTRUCTION FORM USED BY THE COOPERATIVE.

PARAGRAPH 7,"BIDDER'S QUALIFICATIONS" , IN THE NOTICE AND INSTRUCTION TO BIDDERS, PAGE 2 OF REA FORM 831, IS SILENT AS TO HOW AND WHEN PROSPECTIVE CONTRACTORS ARE TO DEMONSTRATE THE SUCCESSFUL COMPLETION OF PRIOR WORK OF THIS TYPE FOR OTHER REA BORROWERS. THEREFORE, GEORGIA ELECTRIC IS TECHNICALLY CORRECT IN ITS CONTENTION THAT QUALIFICATION BY THIS TECHNIQUE MAY BE PROPERLY PROVEN AFTER BID OPENING. IT FOLLOWS THAT THE COOPERATIVE'S REFUSAL TO OPEN AND CONSIDER GEORGIA ELECTRIC'S BID WAS QUESTIONABLE UNDER THE GENERAL PRINCIPLES OF COMPETITIVE BIDDING, WHICH REQUIRE THAT BIDS BE EVALUATED ACCORDING TO THE TERMS OF THE INVITATION, EVEN THOUGH LATER EVENTS SHOWED THAT GEORGIA ELECTRIC DID NOT, IN FACT, SATISFY THE PRIOR SUCCESSFUL REA EXPERIENCE EXCEPTION TO THE REQUIREMENT FOR ADVANCE FILING OF BIDDERS QUALIFICATION FORMS.

WE REGARD PARAGRAPH IV-D OF THE REA BULLETIN 40-6, OF NOVEMBER 27, 1959, AS INAPPLICABLE, FOR IT DIRECTS THE RETURN OF THE BIDS OF UNQUALIFIED BIDDERS WITHOUT OPENING ONLY WHERE THE NOTICE AND INSTRUCTIONS TO BIDDERS SO REQUIRE. AS STATED ABOVE, PARAGRAPH 7 OF THE NOTICE AND INSTRUCTION TO BIDDERS DOES NOT, IN OUR OPINION, REQUIRE BIDDERS TO FILE PROOF OF PRIOR REA EXPERIENCE IN ADVANCE OF BID OPENING.

PARAGRAPH IV-J-2 OF THE SAME BULLETIN PERMITS THE REJECTION OF BIDS WHERE THE BIDDER IS NOT QUALIFIED IN ACCORDANCE WITH THE TERMS OF THE INSTRUCTIONS TO BIDDERS. THIS WOULD APPEAR TO BE THE APPLICABLE PROCEDURE FOR HANDLING BIDDERS WHO AT THE TIME OF BID OPENING ALLEGE COMPLIANCE WITH THE REA EXPERIENCE EXCEPTION TO THE PREQUALIFICATION REQUIREMENTS OF THE INVITATION BUT WHO LATER PROVE TO BE UNQUALIFIED UNDER THE EXCEPTION.

WE UNDERSTAND THAT THE COOPERATIVE WAS FOLLOWING REA POLICY WHEN IT INTERPRETED PARAGRAPH "BIDDER'S QUALIFICATIONS" ON PAGE 2 OF REA FORM 831 AS REQUIRING THE SUBMISSION OF EVIDENCE OF PRIOR QUALIFYING EXPERIENCE IN ADVANCE OF BID OPENING AT THE SAME DATE SET FOR THE SUBMISSION OF BIDDER'S QUALIFICATIONS FORMS FOR FIRMS WITHOUT PRIOR REA EXPERIENCE, DESPITE THE FACT THAT THE PARAGRAPH, READ LITERALLY, IS SILENT ON THE MATTER OF WHEN PREVIOUSLY QUALIFIED FIRMS ARE TO DEMONSTRATE THEIR PRIOR ACCEPTABLE REA EXPERIENCE. HOWEVER, BECAUSE WE HAVE BEEN ADVISED THAT THE LANGUAGE OF THIS PARAGRAPH WILL BE MODIFIED TO ACCORD WITH THE PRESENT REA PRACTICE, NO FURTHER ACTION APPEARS WARRANTED.

THE REA REPORT OF MARCH 6, 1968, ALSO STATES THAT "THE RULES GENERALLY APPLICABLE TO PROCUREMENT BY GOVERNMENT AGENCIES UNDER COMPETITIVE BIDDING PROCEDURES DO NOT APPLY TO REA BORROWERS EXCEPT TO THE EXTENT THAT LOAN AGREEMENTS MAY MAKE THEM APPLICABLE" , CITING B 137161, OCTOBER 13, 1958; B-132796, AUGUST 30, 1957, AND OTHERS.

IT IS TRUE THAT THE REGULATIONS APPLICABLE TO PROCUREMENT BY FEDERAL AGENCIES, SUCH AS THE FEDERAL PROCUREMENT REGULATIONS AND THE ARMED SERVICES PROCUREMENT REGULATION, DO NOT APPLY TO REA BORROWERS.

IT IS EQUALLY TRUE THAT REA BORROWERS ARE CONTRACTUALLY BOUND TO OBSERVE COMPETITIVE BIDDING PROCEDURES TO THE EXTENT REQUIRED BY REA, AND THAT SUCH REA REGULATIONS AS REA BULLETIN 40-6 SET OUT THE PROCUREMENT PROCEDURES APPLICABLE TO REA BORROWERS. WE BELIEVE THESE REGULATIONS SHOULD BE ENFORCED. THE REA, AS A FEDERAL AGENCY CHARGED WITH THE RESPONSIBILITY FOR OVERSEEING THE OBLIGATION OF FEDERAL FUNDS, HAS A DUTY TO TAKE REASONABLE ADMINISTRATIVE STEPS TO INSURE THAT ITS BORROWERS ADHERE TO REA REGULATIONS REGARDING PROCUREMENT PROCEDURES. WE BELIEVE THAT, AS A MINIMUM, THE REA HAS A DUTY TO THOROUGHLY REVIEW QUESTIONABLE PROCUREMENT ACTIONS ON THE PART OF REA BORROWERS.