A-19143, SEPTEMBER 2, 1927, 7 COMP. GEN. 181

A-19143: Sep 2, 1927

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ADVERTISING - BIDS - ACCEPTANCE OF OTHER THAN LOWEST WHERE IN CONNECTION WITH PROPOSED FOREST HIGHWAY CONSTRUCTION PROSPECTIVE BIDDERS WERE TO BE FURNISHED WITH PLANS AND SPECIFICATIONS UPON SUBMISSION OF PROOF OF THEIR FINANCIAL ABILITY AND EXPERIENCE. ACCEPTANCE OF OTHER THAN THE LOWEST BID WAS NOT AUTHORIZED BASED ON THE OPINION OF THE ENGINEER OFFICER THAT THE BIDDER LACKED EXPERIENCE AND ABILITY AND ON THE FACT THAT THE AMOUNT OF HIS BID WAS CONSIDERABLY LOWER THAN THE ENGINEER'S ESTIMATE OF THE COST OF THE WORK. INASMUCH AS THE INTERESTS OF THE GOVERNMENT WOULD HAVE BEEN PROTECTED AGAINST DEFAULTS OR DEFECTS IN THE WORK BY THE PERFORMANCE BOND WHICH THE LOWEST BIDDER. WHEREIN CREDIT WAS DISALLOWED FOR THE SUM OF $7.

A-19143, SEPTEMBER 2, 1927, 7 COMP. GEN. 181

ADVERTISING - BIDS - ACCEPTANCE OF OTHER THAN LOWEST WHERE IN CONNECTION WITH PROPOSED FOREST HIGHWAY CONSTRUCTION PROSPECTIVE BIDDERS WERE TO BE FURNISHED WITH PLANS AND SPECIFICATIONS UPON SUBMISSION OF PROOF OF THEIR FINANCIAL ABILITY AND EXPERIENCE, ACCEPTANCE OF OTHER THAN THE LOWEST BID WAS NOT AUTHORIZED BASED ON THE OPINION OF THE ENGINEER OFFICER THAT THE BIDDER LACKED EXPERIENCE AND ABILITY AND ON THE FACT THAT THE AMOUNT OF HIS BID WAS CONSIDERABLY LOWER THAN THE ENGINEER'S ESTIMATE OF THE COST OF THE WORK, INASMUCH AS THE INTERESTS OF THE GOVERNMENT WOULD HAVE BEEN PROTECTED AGAINST DEFAULTS OR DEFECTS IN THE WORK BY THE PERFORMANCE BOND WHICH THE LOWEST BIDDER, IN SUBMITTING HIS PROPOSAL, HAD AGREED TO EXECUTE; IT ALSO APPEARING THAT THE BIDDER HAD PREVIOUSLY AND PRESUMABLY SATISFACTORILY EXECUTED A $20,000 CONTRACT FOR CONCRETE ROAD CONSTRUCTION AND THAT HIS OTHER WORK HAD BEEN CHIEFLY CONCRETE CONSTRUCTION AND STRUCTURE EXCAVATION.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF AGRICULTURE, SEPTEMBER 2, 1927:

THERE HAS BEEN RECEIVED A LETTER OF JULY 7, 1927, FROM THE CHIEF, BUREAU OF PUBLIC ROADS, UNITED STATES DEPARTMENT OF AGRICULTURE, PRESUMABLY AT YOUR DIRECTION, REQUESTING REVIEW OF SETTLEMENT K-10110 A, DATED JUNE 21, 1927, WHEREIN CREDIT WAS DISALLOWED FOR THE SUM OF $7,215.02 PAID ON VOUCHERS 02342 AND 02700 OF THE MARCH QUARTER, 1926, ACCOUNT OF A. W. SMITH, DISTRICT FISCAL AGENT, UNITED STATES FOREST SERVICE, REPRESENTING THE DIFFERENCE BETWEEN THE AMOUNT PAID TO TIESLAU BROS. FOR ROAD CONSTRUCTION AND THE AMOUNT FOR WHICH CHARLES HARLOWE, JR., BY HIS PROPOSAL DATED JUNE 16, 1925, AGREED TO PERFORM THE SERVICE.

IT APPEARS THAT ON MAY 26, 1925, SEALED PROPOSALS WERE REQUESTED FOR CONSTRUCTING THE YUBA PASS EXTENSION FOREST HIGHWAY, TAHOE NATIONAL FOREST, SIERRA COUNTY, CALIF., IN ACCORDANCE WITH PLANS AND SPECIFICATIONS TO BE FURNISHED TO PROSPECTIVE BIDDERS ON A SHOWING OF FINANCIAL ABILITY AND EXPERIENCE AND UPON DEPOSIT OF A CHECK FOR $10. THE REQUEST FOR PROPOSALS REQUIRED EACH BIDDER IN SUBMITTING HIS PROPOSAL TO INCLOSE A CHECK IN THE AMOUNT OF APPROXIMATELY 5 PERCENT OF HIS TOTAL BID AS A GUARANTY OF THE GOOD FAITH OF HIS PROPOSAL, WHICH AMOUNT HE AGREED TO FORFEIT TO THE UNITED STATES, AS LIQUIDATED DAMAGES, IN CASE HIS PROPOSAL WAS ACCEPTED AND HE SHOULD FAIL TO EXECUTE A CONTRACT AND FURNISH A SATISFACTORY PERFORMANCE BOND IN THE AMOUNT OF 50 PERCENT OF HIS TOTAL BID.

IN RESPONSE TO THE REQUEST FOR PROPOSALS THERE WERE RECEIVED NINE BIDS, RANGING IN AMOUNTS FROM $74,140.47, THE LOWEST BID AS SUBMITTED BY CHARLES HARLOWE, JR., TO THE HIGHEST BID OF $176,529.35. THE CONTRACT WAS AWARDED TO TIESLAU BROS., WHOSE BID, THE SECOND LOWEST RECEIVED, WAS IN THE AMOUNT OF $88,031.13, SUCH ACTION BEING TAKEN UPON THE RECOMMENDATION OF C. H. SWEETSER, DISTRICT ENGINEER, FOR THE REASONS SET FORTH IN HIS LETTER OF JUNE 17, 1925, TO THE CHIEF, BUREAU OF PUBLIC ROADS, WASHINGTON, D.C., AS FOLLOWS:

THE BIDS RECEIVED ON ITEMS NOS. 1, 4, 6, 8, 10, 11, 12, 19, 20, 21, 42, AND 45 ARE AS FOLLOWS:

CHART

NAME ADDRESS AMOUNT 1. CHAS. HARLOWE, JR. --- OAKLAND, CALIF ----------- - $74,140.47 2. TIESLAU BROS --------- BERKELEY, CALIF ------------ 88,031.13 3. COATS AND MACDOUGALL - MARYSVILLE, CALIF ---------- 96,362.51 4. J. M. DELUCA --------- OAKLAND, CALIF ------------- 97,202.85 5. HARLAN WHITE --------- SAN FRANCISCO, CALIF ------- 102,639.53 6. T. E. CONNOLLY ------- ------ DO ------------------ 104,063.90 7. A. J. AND J. L.

FAIRBANKS ----------- ------ DO ------------------ 104,866.36 8. PALMER AND MCBRYDE --- ------ DO ------------------ 114,204.29 9. ISBELL CONSTR. CO. --- FRESNO, CALIF -------------- 176,529.35

ENGINEER'S ESTIMATE --- ---------------------------- 93,396.27

THE BID OF CHAS. HARLOWE, JR., IS VERY LOW AND APPEARS TO HAVE BEEN PREPARED WITHOUT ADEQUATE STUDY OF THE WORK REQUIRED. IN CANVASSING HIS EXPERIENCE WE FIND THAT HIS ROAD EXPERIENCE IS LIMITED TO THE CONSTRUCTION IN 1919 OF ONE MILE OF CONCRETE PAVING FOR SOLANO COUNTY, CALIFORNIA, AT A COST OF $20,000. ALL HIS OTHER WORK HAS BEEN CHIEFLY CONCRETE CONSTRUCTION AND MINOR STRUCTURE EXCAVATION. HE ADMITTED THAT HIS BID WAS HASTILY PREPARED AND ON REVIEW OF HIS FIGURES DISCOVERED THAT HE HAD NEGLECTED TO TAKE INTO ACCOUNT SEVERAL IMPORTANT ITEMS. HE CALCULATED ON ABOUT 10,000 CU.YDS. OVERCAST WHEREAS NONE IS SHOWN ON THE PLANS. ON THE CONTRARY THE WORK IS CLOSELY BALANCED AND INVOLVES A LARGE AMOUNT OF END HAUL. HE FORGOT THE ITEM OF STRUCTURE EXCAVATION WHEN CALCULATING HIS CONCRETE PRICE AND ALSO THE WATERING IN HIS CRUSHED ROCK SURFACING PRICE. HE ALSO ADMITTED THAT HE HAD NEVER PLACED ANY CRUSHED ROCK SURFACING. IS THEREFORE EVIDENT THAT THIS BIDDER IS NOT QUALIFIED TO UNDERTAKE THE WORK AND IT WOULD BE UNWISE TO CONSIDER THE BID. I THEREFORE RECOMMEND THAT THE BID OF CHAS. HARLOWE, JR., BE REJECTED.

IN MAKING AN AWARD OF THIS CHARACTER THE MAIN QUESTION TO BE DETERMINED IS WHETHER THE LOWEST BIDDER WAS REASONABLY QUALIFIED TO FULFILL HIS AGREEMENT. THE REJECTION OF THE LOWEST BID IS NOT AUTHORIZED IN THE ABSENCE OF A CLEAR SHOWING OF SUCH FACTS AS REASONABLY WOULD JUSTIFY THE CONCLUSION THAT THE ONE SUBMITTING SUCH BID COULD NOT OR WOULD NOT RENDER SATISFACTORY SERVICE. THE OPINION OF A GOVERNMENT OFFICER THAT A BIDDER MIGHT POSSIBLY BE UNABLE TO FULFILL THE TERMS OF THE CONTRACT DOES NOT REQUIRE OR JUSTIFY THE REJECTION OF A LOW BID, BUT IS FOR CONSIDERATION WHEN THE CONTRACTOR, SELECTED ON THE BASIS OF THE LOWEST BID, FAILS TO FULFILL THE TERMS OF THE CONTRACT.

FROM THE ENGINEER'S STATEMENT QUOTED THE REASONS FOR THE REJECTION OF THE LOWEST BID IN THE PRESENT CASE MAY BE SUMMARIZED AS (1) LACK OF EXPERIENCE AND ABILITY AND (2) THAT THE AMOUNT OF THE BID WAS CONSIDERABLY LOWER THAN THE ENGINEER'S ESTIMATE OF THE COST.

IN VIEW OF THE PROVISION IN THE "NOTICE TO CONTRACTORS," DATED MAY 26, 1925, THAT "PLANS AND SPECIFICATIONS WILL BE FURNISHED CONTRACTORS WHO CONTEMPLATE BIDDING, ON A SHOWING OF FINANCIAL ABILITY AND EXPERIENCE," IT MUST BE ASSUMED FROM THE FACT THAT MR. HARLOWE WAS FURNISHED THE PLANS AND SPECIFICATIONS UPON WHICH TO BASE HIS PROPOSAL THAT THE REQUIREMENT OF A SHOWING AS TO HIS EXPERIENCE WAS SATISFACTORILY MET. FORMER EXPERIENCE IN PLACING CRUSHED ROCK SURFACING WAS NOT STIPULATED AS ONE OF THE REQUIREMENTS OF BIDDERS, NOR WAS THE FACT THAT HE WAS INEXPERIENCED IN THAT PARTICULAR WORK HELD TO DISQUALIFY HIM FROM SUBMITTING A BID. THE FACT THAT HE HAD PREVIOUSLY, AND PRESUMABLY SATISFACTORILY, EXECUTED A $20,000 CONTRACT FOR THE CONSTRUCTION OF ONE MILE OF CONCRETE ROAD, AND THAT HIS OTHER WORK HAD BEEN CHIEFLY CONCRETE CONSTRUCTION AND STRUCTURE EXCAVATION IS EVIDENCE OF HIS ABILITY TO PERFORM OTHER WORK OF THE SAME GENERAL CHARACTER. ACCORDINGLY, THE REJECTION OF HIS BID ON THE GROUND OF INEXPERIENCE AND OF INABILITY TO PERFORM THE WORK APPEARS TO HAVE BEEN UNWARRANTED. SEE 6 COMP. GEN. 210; ID. 557.

WITH RESPECT TO THE REJECTION OF THE BID FOR THE REASON THAT IT WAS CONSIDERABLY LOWER IN AMOUNT THAN THE DISTRICT ENGINEER'S ESTIMATE AND THAT MR. HARLOWE HAD ADMITTED TO THE ENGINEER IN A PERSONAL INTERVIEW HE HAD NEGLECTED TO TAKE INTO ACCOUNT SEVERAL IMPORTANT MATTERS, IT MAY BE STATED THAT THERE IS NOTHING IN THE RECORD TO INDICATE MR. HARLOWE REQUESTED TO WITHDRAW HIS BID, NOR IS IT ESTABLISHED THAT SUCH REQUEST, EVEN IF MADE, COULD PROPERLY HAVE BEEN GRANTED. SEE 6 COMP. GEN. 504; ID. 526; 24 COMP. DEC. 534; A-7062, APRIL 18, 1925. THE FACT THAT HIS TOTAL BID WAS CONSIDERABLY LESS THAN THE DISTRICT ENGINEER'S ESTIMATE WAS NOT IN ITSELF A SUFFICIENT REASON FOR ITS REJECTION, SINCE THE BID OF TIESLAU BROS., WHO APPEAR TO HAVE SATISFACTORILY PERFORMED THE SERVICE, WAS APPROXIMATELY $5,300 LOWER THAN THE ENGINEER'S ESTIMATE. THE DISTRICT ENGINEER'S ESTIMATE IS NOT NECESSARILY TO BE TAKEN AS ABSOLUTELY CORRECT; ON THE CONTRARY, THE BIDS MAY DISCLOSE VITAL ERRORS OF THE DISTRICT ENGINEER WHICH THE PROCEDURE FOLLOWED IN THIS CASE MIGHT CAUSE TO BE UNCORRECTED TO THE PREJUDICE OF THE INTERESTS OF THE UNITED STATES. FURTHERMORE, A COMPARISON OF THE BIDS OF HARLOWE AND TIESLAU BROS. DISCLOSES THAT ON FIVE OF THE ELEVEN ITEMS ON WHICH BIDS WERE SUBMITTED MR. HARLOWE'S BIDS EXCEEDED THOSE OF TIESLAU BROS.

THE REQUIREMENTS GOVERNING THE SERVICES AND MATERIAL TO BE FURNISHED IN CONNECTION WITH THE ROAD CONSTRUCTION IN QUESTION WERE CLEARLY SET FORTH IN THE PLANS AND SPECIFICATIONS, AND IF, AS STATED BY THE ENGINEER, MR. HARLOWE'S BID WAS SO LOW THAT THE SERVICES COULD HAVE BEEN FURNISHED ONLY AT A LOSS TO HIMSELF, THAT FACT ALONE WAS NOT A CONCERN OF THE DISTRICT ENGINEER, PARTICULARLY AS THE GOVERNMENT'S INTERESTS WOULD HAVE BEEN PROTECTED AGAINST DEFAULTS AND DEFECTS IN THE WORK BY A PERFORMANCE BOND WHICH, IN SUBMITTING HIS PROPOSAL, ACCOMPANIED BY A CHECK FOR $3,800 AS A GUARANTY OF GOOD FAITH, MR. HARLOWE AGREED TO EXECUTE IN THE AMOUNT OF $37,070.23. 6 COMP. GEN. 210, 557; A-12939, MAY 7, 1926.

THE MATTER WILL NOT BE FURTHER QUESTIONED AT THIS TIME AND CREDIT WILL BE ALLOWED IN THE DISBURSING ACCOUNTS ACCORDINGLY, BUT THE ADMINISTRATIVE PROCEDURE APPEARING WAS SO IRREGULAR IT IS BELIEVED NECESSARY TO BRING IT TO YOUR SPECIFIC ATTENTION.