B-152313, SEP. 9, 1963, 43 COMP. GEN. 238

B-152313, SEP. 9, 1963, 43 COMP. GEN. 238

CONTRACTS - LABOR STIPULATIONS - DAVIS-BACON ACT - MINIMUM WAGE DETERMINATIONS - EXPIRATION DATE OMISSION. BONDS - BID - SUFFICIENCY THE OMISSION OF THE EXPIRATION DATE OF THE PREVAILING WAGE DETERMINATION MADE BY THE SECRETARY OF LABOR UNDER THE DAVIS-BACON ACT, 40 U.S.C. 276A, WHICH OCCURRED PRIOR TO THE BID OPENING DATE SCHEDULED IN THE INVITATION FOR CONSTRUCTION WORK THAT INCLUDED BOTH A WAGE DETERMINATION AND A PROVISION FOR EQUITABLE ADJUSTMENT OF THE CONTRACT PRICE SHOULD THE WAGE RATE DETERMINATION EXPIRE AFTER BID OPENING DATE AND PRIOR TO AWARD, DOES NOT REQUIRE THE WITHHOLDING OF A CONTRACT AWARD UNDER THE INVITATION, THE BIDDERS HAVING COMPETED ON THE BASIS OF RATES ADVERTISED IN THE INVITATION AND, THEREFORE, ON AN EQUAL BASIS, AND AN EQUITABLE ADJUSTMENT TO THE SUCCESSFUL LOW BIDDER NEITHER PREJUDICING THE GOVERNMENT NOR THE OTHER BIDDERS; HOWEVER, WHILE THERE IS NO LEGAL OBJECTION TO THE AWARD, EVERY EFFORT SHOULD BE MADE TO ASSURE THAT CONTRACTS ARE AWARDED ON THE BASIS OF CURRENT WAGE-RATE DETERMINATIONS. A DEFICIENCY IN A BID BOND SUBMITTED IN AN AMOUNT LESS THAN THAT REQUIRED BY THE INVITATION FOR BIDS, BUT IN AN AMOUNT GREATER THAN THE DIFFERENCE BETWEEN THE LOW AND SECOND LOW BIDS DOES NOT REQUIRE REJECTION OF THE LOW BID, SUBSECTION 1-10.102-5 (B) OF THE FEDERAL PROCUREMENT REGULATIONS PROVIDING FOR ACCEPTANCE OF A LOW BID WHERE THE BID GUARANTEE ALTHOUGH LESS THAN THE AMOUNT REQUIRED BY THE INVITATION FOR BIDS EQUALS OR IS GREATER THAN THE DIFFERENCE BETWEEN THE PRICE STATED IN THE BID AND THE PRICE STATED IN THE NEXT HIGHER ACCEPTABLE BID.

TO THE ADMINISTRATOR, VETERANS ADMINISTRATION, SEPTEMBER 9, 1963:

REFERENCE IS MADE TO A LETTER DATED AUGUST 16, 1963, FROM THE CONSTRUCTION CONTRACTING OFFICER OF YOUR AGENCY, FILE 086D, REQUESTING A DECISION ON TWO QUESTIONS ARISING IN CONNECTION WITH THE AWARD OF A CONTRACT UNDER INVITATION FOR BIDS FOR PERFORMANCE OF CONSTRUCTION WORK UNDER PROJECT NO. 18-5077 AT THE VETERANS ADMINISTRATION CENTER, TOGUS, MAINE.

THE INVITATION FOR BIDS ISSUED ON JUNE 21, 1963, SOLICITED BIDS--- TO BE OPENED JULY 30, 1963--- FOR PERFORMANCE OF CERTAIN CONSTRUCTION WORK. WAGE DETERMINATION DECISION NO. AB-26,360, DATED APRIL 11, 1963, WAS INCLUDED IN THE SPECIFICATIONS SETTING FORTH THE MINIMUM HOURLY WAGE RATES TO BE PAID UNDER THE CONTRACT PURSUANT TO THE DAVIS-BACON ACT, 40 U.S.C. 276A. THESE RATES EXPIRED ON JULY 9, 1963, BUT THE EXPIRATION DATE WAS NOT INCLUDED IN THE SPECIFICATIONS. CLAUSE 18 (C) OF THE GENERAL CONDITIONS PROVIDES AS FOLLOWS:

EXPIRATION OF THE ABOVE MENTIONED WAGE DETERMINATION AFTER THE OPENING OF BIDS BUT PRIOR TO AWARD SHALL NOT REQUIRE REJECTION OF ALL BIDS AND READVERTISING. AN ADVISORY OPINION REFLECTING WAGE RATES PREVAILING AS OF THE DATE OF AWARD WILL BE OBTAINED FROM THE SECRETARY OF LABOR WHICH SHALL BE INCORPORATED INTO THE CONTRACT PURSUANT TO CLAUSE 3 (SF 23A) THEREOF.

THE FIRST QUESTION PRESENTED IS WHETHER AWARD MAY BE MADE IN THE CIRCUMSTANCES PRESENTED SINCE NO BIDDER WAS FURNISHED ANY INFORMATION REGARDING THE EXPIRATION DATE OF THE WAGE RATE DECISION AND THE WAGE RATES APPLICABLE AT THE TIME OF AWARD WOULD NECESSARILY BE REQUIRED TO BE THE SUBJECT OF A NEW DETERMINATION SINCE THE RATES IN THE INVITATION EXPIRED BEFORE THE OPENING OF BIDS.

THE DAVIS-BACON ACT, SUPRA, REQUIRES THAT "THE ADVERTISED SPECIFICATIONS FOR EVERY CONTRACT IN EXCESS OF $2000 * * * FOR CONSTRUCTION * * * SHALL CONTAIN A PROVISION STATING THE MINIMUM WAGES TO BE PAID VARIOUS CLASSES OF LABORERS AND MECHANICS WHICH SHALL BE BASED UPON THE WAGES THAT WILL BE DETERMINED BY THE SECRETARY OF LABOR TO BE PREVAILING.' WE HAVE HELD (40 COMP. GEN. 565; 42 ID. 410) THAT THE MINIMUM WAGE RATES SO REQUIRED CANNOT BE INCORPORATED IN A CONTRACT IN ANY WAY EXCEPT AS STIPULATED IN THE ACT-- - THAT IS, BY INCLUSION IN THE SPECIFICATIONS ON WHICH BIDS OR PROPOSALS WERE SUBMITTED. WE HAVE HELD ALSO (40 COMP. GEN. 48) THAT A SPECIFICATION PROVISION THAT CONTRACTORS SHALL PAY MINIMUM WAGE RATES AS DETERMINED BY THE SECRETARY OF LABOR, WHETHER SUCH DETERMINATIONS ARE RECEIVED BY THEM BEFORE OR AFTER BID OPENING, WOULD NOT BE IN ACCORDANCE WITH THE ACT.

SO FAR AS THE STATUTE ITSELF IS CONCERNED, THERE IS NO LIMITATION OF THE TIME WITHIN WHICH AWARD MAY BE MADE AFTER ADVERTISING. THE PROBLEM OF EXPIRATION OF THE ADVERTISED WAGE RATE ARISES SOLELY FROM A REGULATION ISSUED BY THE SECRETARY OF LABOR (29 CFR 5.4 (A) ( WHICH PROVIDES THAT IF A CONTRACT HAS NOT BEEN AWARDED WITHIN 90 DAYS AFTER THE DATE OF THE PREVAILING WAGE DETERMINATION THE DETERMINATION SHALL NO LONGER BE EFFECTIVE AND A NEW DETERMINATION SHALL BE REQUESTED.

IN 41 COMP. GEN. 593, MARCH 13, 1962, WE CONSIDERED A CASE IN WHICH BIDS WERE OPENED ON DECEMBER 14, 1961, UNDER AN INVITATION CONTAINING MINIMUM WAGE RATES DETERMINED BY THE SECRETARY OF LABOR UNDER DATE OF OCTOBER 16, 1961. BECAUSE OF AN ALLEGATION OF ERROR BY ONE OF THE BIDDERS NO AWARD WAS MADE WITHIN THE 90-DAY PERIOD OF EFFECTIVENESS OF THE WAGE DETERMINATION AND IT WAS PROPOSED TO MAKE AN AWARD TO THE LOW BIDDER EITHER AT HIS BID PRICE OR AT A PRICE TO BE NEGOTIATED ON THE BASIS OF A NEW PREVAILING WAGE DETERMINATION. IN REJECTING THIS PROPOSAL WE NOT ONLY POINTED OUT THAT AWARD OF A CONTRACT ON A BASIS DIFFERENT FROM THE PROVISIONS OF THE ADVERTISED SPECIFICATIONS WOULD BE IN VIOLATION OF SETTLED RULES OF COMPETITIVE BIDDING, BUT STATED FURTHER: "IN SITUATIONS INVOLVING A CHANGE IN WAGE RATES THE GOVERNMENT PROPERLY COULD NOT REQUIRE OR PERMIT AN OTHERWISE SUCCESSFUL BIDDER TO PERFORM AT HIS ORIGINAL PRICE OR A DIFFERENT PRICE IN THE ABSENCE OF A PROVISION IN THE INVITATION FOR BIDS SPECIFICALLY PROVIDING FOR SUCH PROCEDURE.'

IT IS NOTED THAT THE ABOVE-QUOTED CLAUSE IN THE INVITATION PROVIDES FOR AN EQUITABLE ADJUSTMENT OF THE CONTRACT PRICE IN THOSE CASES WHERE A PARTICULAR WAGE RATE DETERMINATION EXPIRES AFTER THE DATE OF OPENING OF BIDS AND PRIOR TO AWARD. IT IS ASSUMED THAT THE INSERTION OF THE CLAUSE IN THE INVITATION WAS FOR THE PURPOSE OF COMPLYING WITH THE EXCEPTION IMPLIED IN THE QUOTED STATEMENT IN 41 COMP. GEN. 593. IT SEEMS APPARENT ALSO THAT THE BIDDERS COMPETED ON THE BASIS OF THE RATES ADVERTISED IN THE INVITATION AND THEREFORE ON AN EQUAL BASIS, AND THAT AN EQUITABLE ADJUSTMENT TO THE SUCCESSFUL LOW BIDDER WOULD NEITHER PREJUDICE THE GOVERNMENT NOR THE OTHER BIDDERS.

ACCORDINGLY, WHILE WE FEEL THAT EVERY EFFORT SHOULD BE MADE TO ASSURE THAT CONTRACTS ARE AWARDED ON THE BASIS OF CURRENT WAGE-RATE DETERMINATIONS, WE SEE NO LEGAL OBJECTION TO YOUR AWARDING A CONTRACT UNDER THE PRESENT INVITATION.

WITH REGARD TO THE SECOND QUESTION PRESENTED AND WHICH DEALS WITH THE SUFFICIENCY OF THE BID BOND, YOUR ATTENTION IS INVITED TO OUR DECISION IN 40 COMP. GEN. 561 AND PART 1-10.102-5 (B) OF THE FEDERAL PROCUREMENT REGULATIONS TO THE EFFECT THAT REJECTION OF A BID IS NOT REQUIRED WHERE THE AMOUNT OF THE BID GUARANTEE, THOUGH LESS THAN THE AMOUNT REQUIRED BY THE INVITATION FOR BIDS, IS EQUAL TO OR GREATER THAN THE DIFFERENCE BETWEEN THE PRICE STATED IN THE BID AND THE PRICE STATED IN THE NEXT HIGHER ACCEPTABLE BID. SINCE THE AMOUNT OF THE BID BOND, AS TO WHICH THERE IS NO CONTROVERSY, IS $60,000 AND SINCE THIS AMOUNT IS GREATER THAN THE DIFFERENCE BETWEEN THE AMOUNT OF THE LOW BID AND THE AMOUNT OF THE SECOND LOW BID, THE BID OF THE LOW BIDDER, THE RAFF CORPORATION, NEED NOT BE REJECTED BECAUSE OF THE DEFICIENCY IN THE BID BOND.