B-189704, MAR 29, 1978

B-189704, MAR 29, 1978

1. PROTEST BY APPARENT LOW BIDDER AGAINST REASONABLENESS OF GOVERNMENT HIRED LABOR ESTIMATE IS DENIED WHERE PROTESTER FAILED TO MEET BURDEN OF AFFIRMATIVELY PROVING GOVERNMENT'S DATA, CALCULATIONS, AND ESTIMATE INCORRECT. FACT THAT ALL BIDS SUBMITTED WERE HIGHER THAN GOVERNMENT ESTIMATE IS NOT SUFFICIENT TO SHOW ESTIMATE UNREASONABLE. 2. WHERE GOVERNMENT ESTIMATE WAS REVIEWED FOR REASONABLENESS AND REVISED IN RESPONSE TO APPARENT LOW BIDDER'S PROTEST, AWARD COULD NOT LEGALLY BE MADE TO PROTESTER WHOSE BID STILL EXCEEDED AWARDABLE RANGE PRESCRIBED BY 33 U.S.C. SEC. 624 (1970), CALCULATED ON BASIS OF REVISED ESTIMATE. 3. REJECTION OF APPARENT LOW BID AND PERFORMANCE OF WORK BY GOVERNMENT PLANT WERE PROPER EXERCISE OF CONTRACTING OFFICER'S DISCRETION, PURSUANT TO 33 U.S.C. SEC. 624 (1970) AND IMPLEMENTING REGULATION, WHERE GOVERNMENT ESTIMATE WAS NOT UNREASONABLE AND BIDS RECEIVED WERE UNREASONABLE IN COMPARISON WITH GOVERNMENT ESTIMATE, BECAUSE STATUTE PROHIBITS AWARD IF CONTRACT PRICE IS MORE THAN 25 PERCENT IN EXCESS OF ESTIMATED COST OF PERFORMANCE BY GOVERNMENT PLANT.

DUROCHER DOCK & DREDGE, INC.:

DUROCHER DOCK & DREDGE, INC. (DUROCHER), PROTESTS AGAINST THE REJECTION OF ITS BID FOR MAINTENANCE DREDGING AT LITTLE LAKE HARBOR, MICHIGAN, IN RESPONSE TO INVITATION FOR BIDS (IFB) NO. DACW35-77-B 0019, ISSUED BY THE DEPARTMENT OF THE ARMY (ARMY), CORPS OF ENGINEERS, DETROIT DISTRICT.

THE IFB WAS ISSUED ON MAY 2, 1977, IN ACCORDANCE WITH THE REQUIREMENTS OF THE CORPS OF ENGINEERS INDUSTRY CAPABILITY PROGRAM, 42 FED. REG. 62118 (1977) (FORMERLY CALLED THE TESTING-OF-THE-MARKET PROGRAM). THE ARMY SUBSEQUENTLY DETERMINED THAT THE ST. PAUL DISTRICT'S CRANE BARGE WOULD BE AVAILABLE FOR THE PROJECT AND THAT BIDS RECEIVED IN RESPONSE TO THE IFB WOULD BE COMPARED WITH USE OF THE GOVERNMENT BARGE AS THE GOVERNMENT'S HIRED LABOR ESTIMATE FOR THE PROJECT. SEE 33 U.S.C. SEC. 624 (1970); ENGINEER REGULATION (ER) 1180 1-1, SEC. 1-372 (CHANGE 22 APRIL 10, 1974).

BID OPENING, ORIGINALLY SCHEDULED FOR JUNE 1, 1977, WAS EXTENDED BY AN AMENDMENT ISSUED ON MAY 26, 1977, TO JUNE 9, 1977. EIGHT BIDS WERE RECEIVED ON SCHEDULE I (GOVERNMENT-FURNISHED DISPOSAL AREA), RANGING FROM A LOW OF $88,900, SUBMITTED BY DUROCHER, TO A HIGH OF $239,250. THE GOVERNMENT'S HIRED LABOR ESTIMATE FOR THE PROJECT, REVIEWED AND APPROVED BY THE ARMY'S CHIEF OF CONSTRUCTION-OPERATIONS DIVISION ON MAY 25, 1977, WAS $44,311.30.

DUROCHER PROTESTED AGAINST THE REASONABLENESS OF THE GOVERNMENT ESTIMATE BY TELEGRAM TO THE ARMY'S CONTRACTING OFFICER ON JUNE 9, 1977. THE ARMY REPLIED ON THE FOLLOWING DAY, REQUESTING A DETAILED STATEMENT OF THE PROTEST AND SUPPORTING DATA BY JUNE 25, 1977, WITH WHICH DUROCHER COMPLIED. ER 1180-1-1, SEC. 2-407.8(B) (CHANGE 29 JULY 28, 1975).

UPON REVIEW OF THE GOVERNMENT ESTIMATE, THE ARMY CONCLUDED THAT CERTAIN "INADVERTENT OMISSIONS" MADE IN ITS FORMULATION WOULD HAVE INCREASED THE ESTIMATE BY $423.50. ADDITIONAL ERRORS CONCERNING THE OMISSION OF APPLICABLE PER DIEM AND OVERHEAD COSTS IN THE RESPECTIVE AMOUNTS OF $9,550 AND $9,862.14 WERE DISCOVERED. NOTWITHSTANDING THE FACT THAT TOTAL OMISSIONS FROM THE ESTIMATE OF $19,835.64 WERE CONCEDED, BRINGING THE GOVERNMENT'S REVISED HIRED LABOR ESTIMATE TO $64,146.94, THE CONTRACTING AGENCY DETERMINED THAT DUROCHER'S BID OF $88,900 (38.6 PERCENT IN EXCESS OF THE REVISED ESTIMATE) DID NOT FALL WITHIN THE PRESCRIBED 25-PERCENT CEILING OF THE REVISED HIRED LABOR ESTIMATE AND WAS THEREFORE NOT APPROPRIATE FOR ACCEPTANCE. 33 U.S.C. SEC. 624 (1970); ARMED SERVICES PROCUREMENT REGULATION (ASPR) SEC. 18 306.1 (DEFENSE PROCUREMENT CIRCULAR NO. 76-7 APRIL 29, 1977); ER 1180-1 1, SEC. 372(F) (CHANGE 22 APRIL 10, 1974). CONSEQUENTLY, THE ARMY NOTIFIED DUROCHER BY TELEGRAM OF JULY 21, 1977, THAT THE FIRM'S PROTEST HAD BEEN DENIED AND THAT THE WORK WOULD BE PERFORMED BY GOVERNMENT PLANT.

THE ARMY ISSUED A NOTICE TO PROCEED WITH THE WORK TO THE ST. PAUL DISTRICT ON JULY 22, 1977, WHICH THE DISTRICT ACKNOWLEDGED ON AUGUST 1, 1977. WORK WAS TO BE COMPLETED BY SEPTEMBER 15, 1977. ALTHOUGH WORK WAS COMMENCED ON AUGUST 10, 1977, THE ST. PAUL DISTRICT ENCOUNTERED INCLEMENT WEATHER AND WAS DIRECTED TO CEASE WORK ON SEPTEMBER 9, 1977, WITH ONLY ABOUT 50 PERCENT OF THE DREDGING COMPLETED. THE ARMY STATES THAT THE REMAINDER OF THE PROJECT WILL BE FORMALLY ADVERTISED IN THE NEXT DREDGING SEASON.

DUROCHER PROTESTED TO OUR OFFICE AGAINST THE ARMY'S DENIAL OF THE FIRM'S PROTEST, ARGUING, INTER ALIA, THAT THE GOVERNMENT'S HIRED LABOR ESTIMATES WERE UNREASONABLY LOW, THAT THE INITIAL ESTIMATE WAS FORMULATED IN VIOLATION OF THE THEN TESTING-OF-THE-MARKET PROGRAM BECAUSE IT WAS NOT INDEPENDENTLY PREPARED AGAINST THE ST. PAUL'S DISTRICT'S BID, AND THAT THE ST. PAUL BID DID NOT INCLUDE WAGE AND FRINGE BENEFIT RATES REQUIRED BY THE DAVIS-BACON ACT, 40 U.S.C. SECS. 276A-276A-7 (1970). COUNSEL FOR DUROCHER ASSERTS THAT NUMEROUS COMPONENT FACTORS OF THE ESTIMATES ARE INCORRECT, BASED PARTIALLY UPON ACTUAL DREDGING EXPERIENCE REFLECTED BY THE DREDGE LOGS FOR WORK PERFORMED BY THE GOVERNMENT BARGE AT LITTLE LAKE HARBOR.

THE BASIC QUESTION RAISED BY THE PROTEST IS WHETHER THE GOVERNMENT'S HIRED LABOR ESTIMATE WAS REASONABLE. THE AWARD OF A CONTRACT TO PRIVATE INDUSTRY FOR MAINTENANCE DREDGING OF AN AUTHORIZED FEDERAL NAVIGATION PROJECT IS RESTRICTED AS FOLLOWS BY SECTION 8 OF THE RIVER AND HARBOR ACT OF MARCH 2, 1919, 33 U.S.C. SEC. 624 (1970):

"NO PART OF THE FUNDS APPROPRIATED FOR WORKS OF RIVER AND HARBOR IMPROVEMENT SHALL BE USED TO PAY FOR ANY WORK DONE BY PRIVATE CONTRACT IF THE CONTRACT PRICE IS MORE THAN 25 PER CENTUM IN EXCESS OF THE ESTIMATED COST OF DOING THE WORK BY GOVERNMENT PLANT: ***"

THE IMPLEMENTING ENGINEER REGULATION (ER) 1180-1-1 SEC. 1-372(G) (CHANGE 22 APRIL 10, 1974) PROVIDES IN PERTINENT PART:

"WHEN SUITABLE GOVERNMENT PLANT IS AVAILABLE *** THE AWARD OF THE CONTRACT IS SUBJECT TO THE STATUTORY 25 PERCENT LIMITATION IN 33 U.S.C. 624. IN SUCH CASES, IF THE PROPOSED CONTRACT PRICE PLUS ATTENDANT GOVERNMENT COSTS, INCLUDING SUPERVISION INSPECTION, AND OVERHEAD, BUT EXCLUDING THE COST OF MATERIALS TO BE FURNISHED BY THE UNITED STATES, EXCEEDS THE GOVERNMENT 'HIRED LABOR ESTIMATE' BY MORE THAN 25 PERCENT, THE OFFICER AUTHORIZED TO MAKE AWARD IS DIRECTED TO REJECT ALL BIDS AND TO READVERTISE OR RECOMMEND TO HQDA (DAEN-CWO-M) WASH DC 20314 (CORPS HEADQUARTERS) THAT THE WORK BE DONE BY GOVERNMENT PLANT AND HIRED LABOR.

IN REGARD TO DUROCHER'S CONTENTION THAT THE GOVERNMENT'S HIRED LABOR ESTIMATE WAS UNREALISTICALLY LOW, WE HAVE HELD THAT THE MERE FACT THAT BIDS SUBMITTED IN RESPONSE TO AN IFB WERE SUBSTANTIALLY HIGHER THAN THE APPLICABLE GOVERNMENT ESTIMATE DOES NOT SUFFICE TO ESTABLISH THE UNREASONABLENESS OF THE GOVERNMENT'S ESTIMATE. C.J. COAKLEY COMPANY, INC., B-181057, JULY 23, 1974, 74-2 CPD 51; W.G. CONSTRUCTION CORPORATION, B-188837, AUGUST 9, 1977, 77-2 CPD 100. HOWEVER, WHEN SUCH CIRCUMSTANCES DO OCCUR, THE CONTRACTING AGENCY SHOULD BE ON NOTICE OF POSSIBLE ERROR IN ITS ESTIMATE AND THE ESTIMATE SHOULD BE CAREFULLY REVIEWED. W.G. CONSTRUCTION CORPORATION, SUPRA. AS NOTED ABOVE, THE GOVERNMENT'S HIRED LABOR ESTIMATE WAS REVIEWED FOR REASONABLENESS AT THE DISTRICT, DIVISION, AND HEADQUARTERS LEVELS OF THE ARMY AND WAS REVISED SEVERAL TIMES IN RESPONSE TO DUROCHER'S PROTEST. DESPITE THESE CORRECTIONS, DUROCHER'S BID DID NOT COME WITHIN THE STATUTORILY PRESCRIBED AWARDABLE RANGE.

IT IS OUR OPINION THAT THE ARMY HAS PROVIDED REASONABLE BASES IN SUPPORT OF ITS ESTIMATE CONCERNING THE ADDITIONAL COMPONENT FACTORS TO WHICH THE PROTESTER TAKES EXCEPTION. ASSUMING, ARGUENDO, THAT EVEN THE REVISED ESTIMATE IS REPLETE WITH ADDITIONAL ERRORS, THAT ALONE DOES NOT RENDER THE ESTIMATE UNREASONABLE. C.J. COAKLEY COMPANY, INC., SUPRA; OKC DREDGING INC., B-189507, JANUARY 18, 1978, 78-1 CPD 44. MOREOVER, WHERE CONFLICTING STATEMENTS OF THE PROTESTER AND THE CONTRACTING AGENCY CONSTITUTE THE ONLY EVIDENCE, THE ARMY'S ESTIMATE IS ADOPTED BECAUSE DUROCHER HAS NOT MET THE BURDEN OF AFFIRMATIVELY PROVING THAT THE FIRM'S DATA, CALCULATIONS, AND PROPOSED ESTIMATE ARE CORRECT AND THAT THOSE OF THE ARMY ARE INCORRECT. SEE, E.G., THE PUBLIC RESEARCH INSTITUTE OF THE CENTER FOR NAVAL ANALYSIS OF THE UNIVERSITY OF ROCHESTER, B-187639, AUGUST 15, 1977, 77-2 CPD 116; THE RAYMOND CORPORATION; AIR FORCE - REQUESTS FOR CONSIDERATION, B-188277, SEPTEMBER 16, 1977, 77-2 CPD 197. IN VIEW OF THE ABOVE, WE CANNOT CONCLUDE THAT THE ARMY'S HIRED LABOR ESTIMATE WAS UNREASONABLE.

DUROCHER'S PROTEST FURTHER QUESTIONS THE PROPRIETY OF THE ARMY'S ACTIONS IN REJECTING DUROCHER'S APPARENT LOW BID AND HAVING THE WORK PERFORMED BY THE ST. PAUL DISTRICT. THE DECISION AS TO WHETHER A BID WHICH EXCEEDS AN ESTIMATE BY ANY AMOUNT SHOULD BE CONSIDERED ACCEPTABLE FOR AWARD IS A DISCRETIONARY DETERMINATION TO BE MADE BY THE CONTRACTING OFFICER AND OUR OFFICE WILL NOT INTERFERE WITH SUCH A DECISION UNLESS IT IS SHOWN TO BE UNREASONABLE. SEE CLARK BROTHERS CONTRACTORS, B-189625, JANUARY 6, 1978, 78-1 CPD 11; BUILDING MAINTENANCE SPECIALISTS, INC., B-186441, SEPTEMBER 10, 1976, 76-2 CPD 233. THE SCOPE OF THAT DISCRETION IS EXPRESSLY RESTRICTED IN THE INSTANT PROCUREMENT BY THE ABOVE-QUOTED STATUTE AND IMPLEMENTING REGULATION. THEY REQUIRE THAT BECAUSE DUROCHER'S PROPOSED CONTRACT PRICE (I.E., BID OF $88,900) EXCEEDED THE GOVERNMENT ESTIMATE OF $44,311.30 AND THE REVISED ESTIMATE OF $64,146.94 BY MORE THAN 25 PERCENT, THE ARMY'S CONTRACTING OFFICER HAD TO EITHER (1) REJECT ALL BIDS AND READVERTISE THE REQUIREMENTS OR (2) REJECT ALL BIDS AND RECOMMEND TO CORPS HEADQUARTERS THAT THE WORK BE DONE BY GOVERNMENT PLANT (THE ST. PAUL DISTRICT'S BARGE) AND HIRED LABOR. THE SECOND COURSE OF ACTION WAS FOLLOWED HERE. WHERE, AS HERE, THE GOVERNMENT ESTIMATE IS NOT SHOWN TO BE UNREASONABLE AND ALL OTHERWISE ACCEPTABLE INDUSTRY BIDS ARE DETERMINED TO BE UNREASONABLE IN COMPARISON WITH THE GOVERNMENT ESTIMATE, A REASONABLE BASIS EXISTS FOR THE REJECTION OF ALL INDUSTRY BIDS AND PERFORMANCE OF THE WORK BY GOVERNMENT PLANT. OKC DREDGING INC., SUPRA. ACCORDINGLY, WE HAVE NO BASIS TO OBJECT TO THE ACTION TAKEN.

DURING THE COURSE OF THE PROTEST DUROCHER INCLUDED REQUESTS IN ITS COMMENTS UPON THE ARMY'S REPORT, SUBMITTED IN RESPONSE TO THE FIRM'S PROTEST, FOR INFORMATION IN SUPPORT OF ITS POSITION. SEE 4 C.F.R. SECS. 20.3(C) AND (D) (1977). WE HAVE CONSISTENTLY TAKEN THE POSITION THAT THE BURDEN IS ON THE PROTESTER, NOT GAO, TO OBTAIN THE INFORMATION NECESSARY TO MAKE OUT ITS CASE; SUCH REQUESTS SHOULD BE PURSUED THROUGH THE DISCLOSURE REMEDY AVAILABLE TO THE PROTESTER UNDER THE FREEDOM OF INFORMATION ACT, 5 U.S.C. SEC. 552 (1970). SEE, E.G., ALLEN AND VICKERS, INC., 54 COMP.GEN. 1100 (1975), 75-1 CPD 399; KENDRICKS PRINTING COMPANY - REQUEST FOR RECONSIDERATION, B-186590, NOVEMBER 17, 1976, 76-2 CPD 426.

THE PROTEST IS DENIED.