B-163026, NOVEMBER 18, 1968, 48 COMP. GEN. 326

B-163026, NOVEMBER 18, 1968, 48 COMP. GEN. 326

CONTRACTS - LABOR STIPULATIONS - NONDISCRIMINATION - "AFFIRMATIVE ACTION PROGRAMS" THE SO-CALLED "PHILADELPHIA PRE-AWARD PLAN" TO IMPLEMENT COMPLIANCE ON FEDERALLY ASSISTED PROGRAMS WITH THE EQUAL EMPLOYMENT OPPORTUNITY CONDITIONS OF EXECUTIVE ORDER NO. 11246, WHICH DOES NOT ESTABLISH STANDARDS OR CRITERIA FOR JUDGING COMPLIANCE BUT INSTEAD PROVIDES FOR A PREAWARD CONFERENCE TO NEGOTIATE AN ACCEPTABLE REVISION OF A LOW BIDDER'S INITIALLY UNACCEPTABLE ACTION PROGRAM IS INCONSISTENT WITH THE STATUTORY REQUIREMENTS OF COMPETITIVE BIDDING. FEDERALLY ASSISTED PROGRAMS ARE REQUIRED TO BE AWARDED ON THE BASIS OF PUBLICLY ADVERTISED COMPETITIVE BIDDING AND, THEREFORE, THE PLAN FOR THE SUBMISSION OF AFFIRMATIVE ACTION PROGRAMS SHOULD INFORM PROSPECTIVE BIDDERS OF MINIMUM REQUIREMENTS TO BE MET BY A PROPOSED COMPLIANCE PROGRAM, AND THE STANDARDS AND CRITERIA ESTABLISHED FOR JUDGING PROGRAMS.

TO REPRESENTATIVE WILLIAM C. CRAMER, NOVEMBER 18, 1968:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 8, 1968, REGARDING OUR LETTER TO YOU OF MAY 22, 1968, 47 COMP. GEN. 666, WHICH CONCERNED THE APPLICATION OF A PROPOSED ORDER BY THE DEPARTMENT OF LABOR TO THE FEDERAL- AID HIGHWAY PROGRAM'S STATUTORY REQUIREMENT FOR COMPETITIVE BIDDING, WHICH ORDER WOULD REQUIRE BIDDERS TO SUBMIT ACCEPTABLE AFFIRMATIVE ACTION PROGRAMS TO ENSURE COMPLIANCE WITH THE EQUAL EMPLOYMENT OPPORTUNITY CONDITIONS OF EXECUTIVE ORDER NO. 11246.

IN OUR LETTER OF MAY 22 WE EXPRESSED THE OPINION THAT, CONSIDERING THE BASIC PRINCIPLES OF COMPETITIVE BIDDING, THERE WOULD APPEAR TO BE A TECHNICAL DEFECT IN INVITATIONS FOR BIDS ON FEDERALLY ASSISTED HIGHWAY CONSTRUCTION PROJECTS WHICH REQUIRE SUBMISSION AND GOVERNMENT APPROVAL OF AN ACCEPTABLE AFFIRMATIVE ACTION PROGRAM PRIOR TO CONTRACT AWARD, BUT DO NOT INCLUDE OR INCORPORATE A STATEMENT OF DEFINITE MINIMUM STANDARDS OR CRITERIA BY WHICH THE ACCEPTABILITY OF SUCH A PROGRAM WILL BE JUDGED.

YOU STATE THAT IT HAS COME TO YOUR ATTENTION THAT THE PHILADELPHIA FEDERAL EXECUTIVE BOARD HAS ESTABLISHED A SO-CALLED "PHILADELPHIA PRE AWARD PLAN" WHICH SEEMS TO BE INCONSISTENT WITH THE PRINCIPLES ENUNCIATED IN OUR LETTER OF MAY 22. THE PLAN IS UNDERSTOOD TO REQUIRE THE APPARENT LOW BIDDER ON EACH FEDERALLY ASSISTED CONTRACT TO SUBMIT AN AFFIRMATIVE ACTION PROGRAM BEFORE AWARD OF THE CONTRACT, WITH ARRANGEMENTS TO BE MADE FOR A PREAWARD CONFERENCE TO NEGOTIATE AN ACCEPTABLE REVISION OF A LOW BIDDER'S INITIALLY UNACCEPTABLE PROGRAM. THE PLAN DOES NOT CONTAIN A STATEMENT OF DEFINITE MINIMUM REQUIREMENTS TO BE MET BY THE BIDDER'S PROGRAM OR STANDARDS OR CRITERIA BY WHICH THE ACCEPTABILITY OF SUCH PROGRAM WILL BE JUDGED, AND IT APPEARS THAT THE PLAN RECOGNIZES THE ABSENCE OF SUCH DETAILS BY THE STATEMENT CONTAINED THEREIN: ALTHOUGH "AFFIRMATIVE ACTION" IS CRITICIZED AS AMBIGUOUS, THE VERY LACK OF SPECIFIC DETAIL AND RIGID GUIDELINE REQUIREMENTS, PERMITS THE UTMOST IN CREATIVITY, INGENUITY AND IMAGINATION.

YOU CITE TWO CONSTRUCTION CONTRACTS AWARDED IN THE PHILADELPHIA AREA UNDER THE PLAN WHICH WERE FINANCED IN PART BY THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, AND ONE BY THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, AS BEING ILLUSTRATIVE OF THE LEGAL AND PRACTICAL PROBLEMS RESULTING FROM SUCH CONTRACTING PROCEDURE AS WELL AS THE DIFFICULTIES AND UNCERTAINTIES CREATED IN THE IMPLEMENTATION OF THE PREAWARD CONFERENCE TO OBTAIN AN ACCEPTABLE AFFIRMATIVE ACTION PROGRAM. IT IS NOTED THAT ALTHOUGH THE STATUTES UNDER WHICH FEDERAL ASSISTANCE WAS PROVIDED IN THE CITED CASES--- THE HIGHER EDUCATION FACILITIES ACT OF 1963, 20 U.S.C. 701 ET SEQ., AND THE COLLEGE HOUSING LOAN PROGRAM, 12 U.S.C. 1749--- DO NOT EXPRESSLY REQUIRE COMPETITIVE BIDDING, POLICIES AND RULES ESTABLISHED BY THE DEPARTMENTS CHARGED WITH THE IMPLEMENTATION OF THOSE STATUTES, AS DOCUMENTED IN THE CONTRACTS, BY REGULATIONS AND/OR OTHER PUBLICATIONS, SPECIFY GENERALLY THAT CONSTRUCTION CONTRACTS SHALL BE AWARDED BY THE STATES OR INSTITUTIONS CONCERNED ON THE BASIS OF PUBLICLY ADVERTISED COMPETITIVE BIDDING.

YOU ASK OUR OPINION AS TO "WHETHER, BEFORE THE SO-CALLED PHILADELPHIA PLAN- IS FURTHER ENFORCED IN SUCH CASES, IT MUST BE APPROPRIATELY IMPLEMENTED BY REGULATIONS WHICH INCLUDE A STATEMENT OF DEFINITE MINIMUM REQUIREMENTS TO BE MET BY THE BIDDER'S PROGRAM AND ANY OTHER STANDARDS OR CRITERIA BY WHICH THE ACCEPTABILITY OF SUCH PROGRAM WILL BE JUDGED.'

WHILE THE COMPETITIVE BIDDING SYSTEM DEVELOPED BY THE GOVERNMENT AGENCIES IN THE ADMINISTRATION OF REQUIREMENTS SPECIFIED IN FEDERAL STATUTES IS GENERALLY RECOGNIZED AS BEING MORE EXTENSIVE AND INTRICATE THAN THE PROCUREMENT PROCEDURES OF PRIVATE OR STATE OR LOCAL GOVERNMENTAL AGENCIES, THE BASIC ELEMENTS OF PUBLICLY-ADVERTISED COMPETITIVE BIDDING ARE ESSENTIALLY THE SAME WHETHER THE CONTRACT IS TO BE AWARDED BY THE FEDERAL GOVERNMENT, OR A STATE, MUNICIPALITY OR LARGE INSTITUTION. WE BELIEVE IT IS FUNDAMENTAL THAT COMPETITIVE BIDDING PROCEDURES SHOULD REQUIRE INVITATIONS FOR BIDS TO BE SO DRAFTED AS TO OFFER EQUAL AND UNAMBIGUOUS TERMS AND CONDITIONS TO ALL BIDDERS. NO PROSPECTIVE CONTRACTOR CAN INTELLIGENTLY COMPUTE HIS BID, OR EVEN DECIDE THAT HE WISHES TO INCUR THE EXPENSES OF COMPETING FOR THE CONTRACT, WITHOUT BEING FULLY INFORMED BEFOREHAND OF ALL FACTORS WHICH WILL MATERIALLY AFFECT THE COST OF HIS WORK OR HIS ABILITY TO PERFORM, INCLUDING HIS HIRING METHODS, PERSONNEL QUALIFICATIONS AND SUBCONTRACTORS. UNLESS THE INVITATIONS ARE DEFINITE AND COMPLETE AS TO ALL ESSENTIAL REQUIREMENTS THERE CAN BE NO ACCURATE AND INDISPUTABLE BASIS ON WHICH TO DETERMINE WHICH BID OFFERS COMPLIANCE WITH CONTRACT CONDITIONS AND FULFILLMENT OF ALL PROJECT NEEDS AT THE LOWEST PRICE. FURTHER, WHERE MATERIAL CONDITIONS AND REQUIREMENTS ARE NOT CLEARLY DEFINED, SUCH CIRCUMSTANCE GIVES RISE TO THE OPPORTUNITY FOR FAVORITISM, ARBITRARY ACTION AND ABUSE OF AUTHORITY IN THE AWARDING, OR APPROVING OF PROPOSED AWARDS, OF THE CONTRACTS.

WE PERCEIVE NO COMPELLING REQUIREMENT IN THE CIRCUMSTANCES OUTLINED ABOVE FOR DIFFERENTIATION IN THE OBSERVANCE AND APPLICATION OF THE BASIC PRINCIPLES OF COMPETITIVE BIDDING, WHETHER SUCH BIDDING IS REQUIRED BY FEDERAL STATUTE AS A PREREQUISITE TO THE OBLIGATION OF PUBLIC FUNDS OR IS REQUIRED BY PUBLISHED REGULATIONS, RULES AND POLICIES FORMULATED BY THE DEPARTMENTS IN THE IMPLEMENTATION OF SUCH STATUTES. ACCORDINGLY, IN OUR VIEW WHERE FEDERALLY ASSISTED CONTRACTS ARE REQUIRED TO BE AWARDED ON THE BASIS OF PUBLICLY ADVERTISED COMPETITIVE BIDDING, AWARD MAY NOT PROPERLY BE WITHHELD PURSUANT TO THE PLAN FROM THE LOWEST RESPONSIBLE AND OTHERWISE RESPONSIVE BIDDER ON THE BASIS OF AN UNACCEPTABLE AFFIRMATIVE ACTION PROGRAM, UNTIL PROVISION IS MADE FOR INFORMING PROSPECTIVE BIDDERS OF DEFINITE MINIMUM REQUIREMENTS TO BE MET BY THE BIDDER'S PROGRAM AND ANY OTHER STANDARDS OR CRITERIA BY WHICH THE ACCEPTABILITY OF SUCH PROGRAM WOULD BE JUDGED.

ALTHOUGH IT MAY BE TRUE THAT THE PRESENT LACK OF SPECIFIC DETAIL AND RIGID GUIDELINE REQUIREMENTS FOR AN ACCEPTABLE AFFIRMATIVE ACTION PROGRAM PERMITS THE UTMOST IN CREATIVITY, INGENUITY AND IMAGINATION, IT IS EQUALLY TRUE THAT IT PERMITS DENIAL OF A CONTRACT TO THE LOW BIDDER TO BE BASED ON PURELY ARBITRARY OR CAPRICIOUS DECISIONS, AND AWARD TO BE MADE ON THE BASIS OF SIMILAR DECISIONS. WE DO NOT BELIEVE THAT A STATEMENT OF THOSE MINIMUM REQUIREMENTS DEEMED NECESSARY FOR AN ACCEPTABLE PROGRAM WOULD UNDULY INTERFERE WITH THE PROPER CHOICE OF BIDDERS FULLY QUALIFIED AND SINCERELY DESIROUS OF PERFORMING IN FULL CONFORMITY WITH ALL LEGAL REQUIREMENTS.

REGARDING THE PLAN, WHOSE STARTING DATE OF NOVEMBER 30, 1967, FOR PREAWARD EXAMINATIONS WAS PRIOR TO OUR LETTER TO YOU OF MAY 22, IT APPEARS THAT THE PHILADELPHIA FEDERAL EXECUTIVE BOARD WAS NEVERTHELESS COGNIZANT OF THE NECESSITY FOR ADVISING PROSPECTIVE BIDDERS OF AFFIRMATIVE ACTION REQUIREMENTS. WE NOTE THAT THE NEED FOR "INCLUSION OF AFFIRMATIVE ACTION DESCRIPTION IN INVITATION TO BID" WAS ONE OF THE FOUR AREAS EMPHASIZED IN THE CHAIRMAN'S MEMORANDUM OF OCTOBER 27, 1967, TRANSMITTING THE REVISED OPERATIONAL PLAN TO ALL MEMBERS OF THE BOARD, AND SUCH SUBJECT IS ADDRESSED IN A SPECIAL NOTE ON PAGE 8 OF THE PLAN IN PART AS FOLLOWS:

SOME CONTRACTING AGENCIES HAVE CUSTOMARILY INCLUDED IN THEIR SPECIFICATIONS CITED IN THE INVITATION FOR BID, A DESCRIPTION OF THE KIND OF AFFIRMATIVE ACTION REQUIRED. OTHER AGENCIES ARE CURRENTLY CONSIDERING SUCH A PROCEDURE.

THE PHILADELPHIA FEB'S OPERATIONAL PLAN UNDER ITS COORDINATING EFFORTS, ENVISIONS THE DEVELOPMENT OF STANDARD AND/OR COMPATIBLE GUIDELINES FOR AFFIRMATIVE ACTION TO BE ISSUED TO ALL CONTRACTORS IN THE BIDDING PROCESS. * * *

ALTHOUGH IT APPEARS THAT THE PHILADELPHIA FEDERAL EXECUTIVE BOARD IS IN THE PROCESS OF ESTABLISHING A STATEMENT OF AFFIRMATIVE ACTION REQUIREMENTS FOR USE IN THE COMPETITIVE BIDDING PROCESS, WE ARE CALLING OUR VIEWS AS SET OUT ABOVE TO THE ATTENTION OF THE CHAIRMAN OF THAT BOARD BY LETTER OF THIS DATE.

A COPY OF OUR LETTER TO THE CHAIRMAN, PHILADELPHIA FEDERAL EXECUTIVE BOARD, AS WELL AS A COPY OF OUR LETTER OF TODAY TO THE SECRETARY OF LABOR CONCERNING THIS MATTER, ARE ENCLOSED.