B-119030, MAY 12, 1954, 33 COMP. GEN. 549

B-119030: May 12, 1954

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CONTRACTS - CONDITIONAL AWARDS - LEGALITY THE AWARD OF A CONTRACT WHICH IS MADE ON CONDITION THAT THE BIDDER JOIN WITH AN ADDITIONAL PARTY IN ITS EXECUTION. WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT.'. A BIDDER OTHERWISE QUALIFIED WHO IS UNABLE TO MEET THE FINANCIAL RESPONSIBILITY REQUIREMENTS SET OUT IN THE INVITATION FOR BIDS. WHO IS ABLE TO FURNISH A BOND GUARANTEEING THE SATISFACTORY PERFORMANCE OF THE CONTRACT WORK. 1954: REFERENCE IS MADE TO YOUR LETTER DATED APRIL 27. WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT. - WHICH IS WHAT THE LAW CONTEMPLATES. IT IS CONCLUDED THAT SUCH AN AWARD MAY NOT PROPERLY BE MADE. - IS PRIMARILY THE FUNCTION OF THE ADMINISTRATIVE OFFICIALS EMPOWERED TO AWARD THE CONTRACT.

B-119030, MAY 12, 1954, 33 COMP. GEN. 549

CONTRACTS - CONDITIONAL AWARDS - LEGALITY THE AWARD OF A CONTRACT WHICH IS MADE ON CONDITION THAT THE BIDDER JOIN WITH AN ADDITIONAL PARTY IN ITS EXECUTION, WITH JOINT AND SEVERAL LIABILITY, WOULD NOT CONSTITUTE AN ACCEPTANCE OF THE BID SUBMITTED, BUT WOULD BE A COUNTERPROPOSAL WHICH WOULD RESULT IN A CONTRACT ONLY UPON ITS ACCEPTANCE BY BOTH THE BIDDER AND THE ADDITIONAL PARTY, AND SUCH RESULTING CONTRACT WOULD NOT BE A CONTRACT AWARDED UNDER THE INVITATION, OR IN ACCORDANCE WITH THE REQUIREMENT OF SECTION 3 (B) OF THE ARMED SERVICES PROCUREMENT ACT OF 1947 THAT THE AWARD BE MADE "TO THAT RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT.' A BIDDER OTHERWISE QUALIFIED WHO IS UNABLE TO MEET THE FINANCIAL RESPONSIBILITY REQUIREMENTS SET OUT IN THE INVITATION FOR BIDS, BUT WHO IS ABLE TO FURNISH A BOND GUARANTEEING THE SATISFACTORY PERFORMANCE OF THE CONTRACT WORK, MAY BE AWARDED THE CONTRACT IF ADMINISTRATIVELY DETERMINED TO BE IN THE PUBLIC INTEREST.

ACTING COMPTROLLER GENERAL WEITZEL TO THE SECRETARY OF THE ARMY, MAY 12, 1954:

REFERENCE IS MADE TO YOUR LETTER DATED APRIL 27, 1954, WITH ENCLOSURES, INCLUDING A REPORT OF THE STATUS OF PREAWARD ACTION ON BIDS SUBMITTED UNDER INVITATION NO. ENG-36-109-54-161. YOU REQUEST A DECISION AS TO WHETHER AN AWARD OF A CONTRACT PURSUANT TO THE INVITATION MAY PROPERLY BE MADE, AS RECOMMENDED BY THE CONTRACTING OFFICER, TO WALTER W. JOHNSON COMPANY, INC., "ON CONDITION THAT THE RESULTANT CONTRACT BE EXECUTED BY IT AND STOLTE, INC., AS JOINT VENTURERS, WITH JOINT AND SEVERAL LIABILITY.'

SUCH A CONDITIONAL AWARD WOULD NOT CONSTITUTE AN ACCEPTANCE OF THE BID SUBMITTED, BUT A COUNTERPROPOSAL WHICH WOULD RESULT IN A CONTRACT ONLY UPON ITS ACCEPTANCE BY BOTH THE BIDDER AND THE ADDITIONAL PARTY NAMED. SEE 1 CORBIN ON CONTRACTS, SEC. 82. THE RESULTING CONTRACT WOULD, THEREFORE, NOT BE A CONTRACT AWARDED UNDER THE INVITATION, OR IN ACCORDANCE WITH THE REQUIREMENT OF SECTION 3 (B) OF THE ARMED SERVICES PROCUREMENT ACT OF 1947, 62 STAT. 23, THAT AWARD BE MADE "TO THAT RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED.' ( ITALICS SUPPLIED.) THE CONTRACT WOULD BE AWARDED IN SUCH A CASE NOT TO THE PERSON OR CORPORATION SUBMITTING THE BID--- WHICH IS WHAT THE LAW CONTEMPLATES--- BUT TO AN ENTIRELY DIFFERENT ENTITY.

MOREOVER, THE APPROVAL OF SUCH ACTION WOULD CONSTITUTE A HIGHLY UNDESIRABLE PRECEDENT FOR PRACTICES WHICH COULD TEND TO UNDERMINE THE FOUNDATIONS OF SOUND COMPETITIVE BIDDING PROCEDURES. FOR EXAMPLE, IT WOULD FACILITATE THE SUBMISSION OF BIDS THROUGH IRRESPONSIBLE DUMMIES, WHOSE BIDS COULD BE ALLOWED TO BE REJECTED, OR BACKED UP BY THE REAL PRINCIPLES AS THEIR INTERESTS MIGHT DICTATE. ACCORDINGLY, IT IS CONCLUDED THAT SUCH AN AWARD MAY NOT PROPERLY BE MADE.

YOU FURTHER REQUEST A DECISION AS TO WHETHER, IN THE EVENT OF A NEGATIVE REPLY TO THE FIRST QUESTION, A CONTRACT MIGHT BE AWARDED TO THE JOHNSON COMPANY, SOLELY IN ITS NAME, UPON THE SEPARATE EXECUTION BY STOLTE, INC., OF A LEGAL INSTRUMENT PROVIDING THE NECESSARY SUPPORT TO ENABLE THE FORMER TO QUALIFY AS A FINANCIALLY RESPONSIBLE BIDDER.

THE DETERMINATION OF THE RESPONSIBILITY OF A BIDDER--- WHICH HAS LONG BEEN RECOGNIZED AS INCLUDING NOT ONLY FINANCIAL RESPONSIBILITY BUT JUDGMENT, SKILL, ABILITY, CAPACITY, AND INTEGRITY--- IS PRIMARILY THE FUNCTION OF THE ADMINISTRATIVE OFFICIALS EMPOWERED TO AWARD THE CONTRACT. "THEY SHOULD CALL TO THEIR ASSISTANCE THE MEANS OF INFORMATION AT HAND TO FORM AN INTELLIGENT JUDGMENT. THEY SHOULD INVESTIGATE THE THE BIDDERS TO LEARN THEIR FINANCIAL STANDING, REPUTATION, EXPERIENCE, RESOURCES, FACILITIES, JUDGMENT AND EFFICIENCY * * *.' HIBBS V. ARENSBERG, 276 PA. 24, 119 AT. 727. IT APPEARS FROM THE REPORT FURNISHED THAT IN THIS INSTANCE THE CONTRACTING OFFICER HAS SATISFIED HIMSELF AS TO THE QUALIFICATIONS OF THE JOHNSON COMPANY IN EVERY RESPECT EXCEPT THE SUFFICIENCY OF ITS FINANCIAL CAPACITY TO FURNISH OR OBTAIN THE WORKING FUNDS NECESSARY TO CARRY THE WORK TO COMPLETION.

IT IS UNDERSTOOD FROM ADVICE INFORMALLY RECEIVED FROM YOUR DEPARTMENT THAT THE JOHNSON COMPANY NOW HAS OFFERED TO FURNISH, AT ITS OWN EXPENSE, A PERFORMANCE BOND GUARANTEEING SATISFACTORY PERFORMANCE OF THE CONTRACT WORK. OBVIOUSLY, SUCH A BOND IS A FACTOR FOR CONSIDERATION IN DETERMINING THE RESPONSIBILITY OF THE CONTRACTOR. UNDER SUCH CIRCUMSTANCES, IF YOU DETERMINE THE JOHNSON COMPANY TO BE RESPONSIBLE, THIS OFFICE PERCEIVES NO LEGAL OBJECTION TO AN AWARD TO THAT COMPANY.

COPIES OF THIS DECISION ARE BEING FORWARDED TO BOTH THE PROTESTING BIDDERS, GUNTERT AND ZIMMERMAN, INC., AND ELLICOTT MACHINE CORPORATION. IT IS REQUESTED THAT THEY BE ADVISED OF THE FINAL DECISION REACHED BY YOUR DEPARTMENT.