B-129158, OCTOBER 12, 1956, 36 COMP. GEN. 311

B-129158: Oct 12, 1956

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SUBCONTRACT BIDS - QUALIFIED - SPECIFICATIONS - DEFINITENESS REQUIREMENT - RULES APPLICABLE TO SUBCONTRACT PROCUREMENT A SUBCONTRACT BID WHICH WAS SUBMITTED IN RESPONSE TO AN INVITATION CONTEMPLATING THE PERFORMANCE OF SOME WORK OUTSIDE OF NORMAL WORKING HOURS BUT WHICH SPECIFIED THAT ALL WORK WOULD BE PERFORMED DURING NORMAL WORKING HOURS WITHOUT ANY PROVISION FOR EXTRA PREMIUM TIME COSTS FOR OVERTIME IS A QUALIFIED BID WHICH MAY NOT BE CONSIDERED FOR AWARD. SPECIFICATIONS WHICH REQUIRE THE SUBCONTRACTOR TO PERFORM WORK OF RELOCATING EQUIPMENT IN A PRIME CONTRACTOR'S PLANT AT SUCH TIMES AS WILL NOT INTERFERE WITH THE WORK BUT WHICH DOES NOT GIVE THE BIDDERS ANY CRITERIA WITH RESPECT TO THE AMOUNT OF WORK TO BE PERFORMED OUTSIDE NORMAL WORKING HOURS ARE NOT SUFFICIENTLY DEFINITE TO ENABLE BIDDERS TO ACCURATELY COMPUTE BID PRICES AND A CONTRACTING OFFICER WOULD NOT BE JUSTIFIED IN APPROVING A SUBCONTRACT WHICH WOULD BIND THE GOVERNMENT TO PAY THE BID PRICE TO THE PRIME CONTRACTOR.

B-129158, OCTOBER 12, 1956, 36 COMP. GEN. 311

SUBCONTRACT BIDS - QUALIFIED - SPECIFICATIONS - DEFINITENESS REQUIREMENT - RULES APPLICABLE TO SUBCONTRACT PROCUREMENT A SUBCONTRACT BID WHICH WAS SUBMITTED IN RESPONSE TO AN INVITATION CONTEMPLATING THE PERFORMANCE OF SOME WORK OUTSIDE OF NORMAL WORKING HOURS BUT WHICH SPECIFIED THAT ALL WORK WOULD BE PERFORMED DURING NORMAL WORKING HOURS WITHOUT ANY PROVISION FOR EXTRA PREMIUM TIME COSTS FOR OVERTIME IS A QUALIFIED BID WHICH MAY NOT BE CONSIDERED FOR AWARD. SPECIFICATIONS WHICH REQUIRE THE SUBCONTRACTOR TO PERFORM WORK OF RELOCATING EQUIPMENT IN A PRIME CONTRACTOR'S PLANT AT SUCH TIMES AS WILL NOT INTERFERE WITH THE WORK BUT WHICH DOES NOT GIVE THE BIDDERS ANY CRITERIA WITH RESPECT TO THE AMOUNT OF WORK TO BE PERFORMED OUTSIDE NORMAL WORKING HOURS ARE NOT SUFFICIENTLY DEFINITE TO ENABLE BIDDERS TO ACCURATELY COMPUTE BID PRICES AND A CONTRACTING OFFICER WOULD NOT BE JUSTIFIED IN APPROVING A SUBCONTRACT WHICH WOULD BIND THE GOVERNMENT TO PAY THE BID PRICE TO THE PRIME CONTRACTOR, THEREFORE, ALL BIDS SHOULD BE REJECTED AND THE WORK READVERTISED. ALTHOUGH IN THE SOLICITATION OF SUBCONTRACT BIDS BY A PRIME CONTRACTOR THERE IS NO STATUTORY REQUIREMENT THAT ALL QUALIFIED BIDDERS BE GIVEN AN EQUAL OPPORTUNITY TO COMPETE AND THAT THE UNITED STATES DERIVE THE BENEFITS TO BE EXPECTED FROM OPEN COMPETITION, WHERE THE SOLICITATION IS REQUIRED BY THE PROCURING AGENCY AND THE AWARD OF THE SUBCONTRACT IS SUBJECT TO APPROVAL BY A GOVERNMENT REPRESENTATIVE, AN EVALUATION OF BIDS BASED ON THE SAME FACTORS WHICH WOULD BE FOR CONSIDERATION IN DIRECT PROCUREMENT IS JUSTIFIED.

TO THE SECRETARY OF THE NAVY, OCTOBER 12, 1956:

REFERENCE IS MADE TO LETTER OF THE CHIEF, BUREAU OF YARDS AND DOCKS, DATED SEPTEMBER 17, 1956, FILE L-400C/MB NOA-1096, SUBMITTING CERTAIN QUESTIONS CONCERNING THE ADVERTISING AND AWARD OF SUBCONTRACT NO. 7 FOR " RELOCATION OF EQUIPMENT IN DIE CASTING FOUNDRY" UNDER CONTRACT NOA 1096 WITH THE BENDIX AVIATION CORPORATION, ECLIPSE-PIONEER DIVISION, TETERBORO, NEW JERSEY.

THE RECORD SUBMITTED WITH THE LETTER INDICATES THAT BENDIX AVIATION CORPORATION, PURSUANT TO AUTHORIZATION GRANTED UNDER CONTRACT NOA-1096, INVITED THE SUBMISSION OF FORMAL BIDS ON A FIXED PRICE BASIS FOR THE RELOCATION OF EQUIPMENT INTO THE GOVERNMENT-OWNED DIE CASTING FOUNDRY AT TETERBORO, NEW JERSEY. PARAGRAPH 10 OF THE INSTRUCTIONS TO BIDDERS PROVIDED IN PERTINENT PART AS FOLLOWS:

10. AWARD OR REJECTION OF BIDS.--- THE CONTRACT WILL BE AWARDED TO THE LOWEST RESPONSIBLE BIDDER COMPLYING WITH THE CONDITIONS PRESCRIBED, PROVIDED HIS BID IS REASONABLE AND IT IS TO THE INTEREST OF THE GOVERNMENT AND CONTRACTOR TO ACCEPT IT. * * * THE GOVERNMENT AND CONTRACTOR RESERVE THE RIGHT TO MAKE AWARDS IN ACCORDANCE WITH ANY OF THE BIDDING ITEMS, TO REJECT ANY AND ALL BIDS, AND TO WAIVE ANY INFORMALITY IN BIDS, WHENEVER SUCH IS IN THE INTEREST OF THE GOVERNMENT AND CONTRACTOR.

PARAGRAPH 2 OF SUCH INSTRUCTIONS PROVIDED IN PART AS FOLLOWS:

2. FORM OF BIDS.--- * * * BIDDERS ARE CAUTIONED NOT TO QUALIFY THEIR BIDS, SINCE QUALIFICATION, IF RELEVANT, MAY DISQUALIFY AN OTHERWISE SATISFACTORY BID.

ADDITIONALLY, SUCH INSTRUCTIONS PROVIDED, FOLLOWING PARAGRAPH 15 THAT FAILURE ON THE PART OF ANY BIDDER TO OBSERVE THE PROVISIONS OF THE INSTRUCTIONS WOULD BE CAUSE FOR REJECTION OF HIS BID.

SECTION 1.20 OF THE GENERAL CLAUSES ACCOMPANYING THE INVITATION REQUIRED PERFORMANCE OF THE WORK "AT TIMES THAT WILL NOT INTERFERE WITH THE NORMAL OPERATION OF THE RELATED FACILITIES OR INTERRUPT THE ELECTRICAL OR OTHER SERVICES," AND SECTION 1.29 REQUIRED THE SUBCONTRACTOR TO CONSULT WITH THE CONTRACTOR'S REPRESENTATIVE "AS TO SCHEDULING OF THE WORK SO AS NOT TO INTERFERE WITH THE CONTRACTOR'S OPERATIONS.'

EIGHT BIDS WERE RECEIVED AND WERE OPENED ON JULY 12, 1956. THE LOW BID WAS SUBMITTED BY MANHATTAN INDUSTRIAL CONTRACTING COMPANY, INC., IN THE AMOUNT OF $98,613. THE REMAINING BIDS RANGED FROM $108,000 TO $124,211. HOWEVER, THE LOW BID STATED THAT "ALL WORK CONTEMPLATED HEREIN IS BASED ON PERFORMANCE DURING NORMAL WORKING HOURS OF A NORMAL WORK WEEK.'

BY LETTER DATED JULY 13, 1956, THE DAY FOLLOWING BID OPENING, THE LOW BIDDER ADVISED AS FOLLOWS:

ALL WORK CONTEMPLATED IS BASED ON PERFORMANCE DURING NORMAL WORKING HOURS OF A NORMAL WORK WEEK OTHER THAN POWER OR SERVICE TIE-INS AND/OR CONNECTIONS WITHOUT INTERFERENCE OF PLANT OPERATIONS. HOWEVER, BY SEPARATE LETTER, ALSO DATED JULY 13, THE LOW BIDDER AGREED "TO PERFORM THE WORK UNDER THE GENERAL DIRECTION OF THE BUREAU OF YARDS AND DOCKS, NAVY DEPARTMENT.' THE RECORD DOES NOT INDICATE WHICH, IF EITHER, OF THESE LETTERS MODIFIED THE OTHER.

UNDER THE TERMS OF THE PREAMBLE TO SUBCONTRACT NO. 7, WHICH IS TO BE EXECUTED WITH THE SUCCESSFUL BIDDER, THE CHIEF OF THE BUREAU OF YARDS AND DOCKS, DEPARTMENT OF THE NAVY, IS DESIGNATED AS CONTRACTING OFFICER AND REPRESENTATIVE OF THE GOVERNMENT IN ALL MATTERS RELATING TO THE PERFORMANCE OF THE SUBCONTRACT. SUCH PREAMBLE ALSO RECITES THE AGREEMENT OF THE PARTIES THAT, UPON APPROVAL BY THE CONTRACTING OFFICER OF THE EXECUTED SUBCONTRACT, THE SUBCONTRACTOR SHALL ACCOMPLISH THE WORK FOR AND IN THE STEAD OF THE CONTRACTOR, IN STRICT ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE SUBCONTRACT.

UNDER THE CIRCUMSTANCES, THE BUREAU ADVISES THAT IT CONSIDERS THE DEVIATION IN THE LOW BID FROM THE TERMS OF THE SPECIFICATIONS IS NOT SUCH AS MAY BE WAIVED BY THE CONTRACTING OFFICER, THAT THE LOW BID IS QUALIFIED TO SUCH EXTENT THAT THE AWARD OF A CONTRACT BASED THEREON WOULD NOT BE UPON THE TERMS OF THE INVITATION, AND THAT THE CONTRACTING OFFICER THEREFORE IS WITHOUT AUTHORITY TO APPROVE AN AWARD TO THE LOW BIDDER EVEN THOUGH THE BIDDER MAY BE WILLING TO WITHDRAW OR MODIFY SUCH QUALIFICATION. ADDITIONALLY, IT IS INDICATED THAT, WHILE THE CONTRACTOR INTENDED THAT THE SUBCONTRACTOR SHOULD ALLOW FOR EXTRA OR PREMIUM TIME COSTS OR WORK OUTSIDE NORMAL HOURS IN COMPUTING HIS BID PRICE, THE SPECIFICATIONS AS DRAWN GIVE NO INFORMATION RELATIVE TO THE ESTIMATED OR APPROXIMATE AMOUNT OF SUCH WORK WHICH THE SUCCESSFUL BIDDER MAY REASONABLY BE EXPECTED TO PERFORM, AND THAT SUCH LACK OF INFORMATION COULD RESULT IN INFLATED BID PRICES OR CLAIMS FOR COSTS OF EXTRA WAGES IN THE EVENT OF A CONTRACT AWARD BASED ON THE BIDS RECEIVED. ACCORDINGLY, IT IS SUGGESTED THAT ALL BIDS SHOULD BE REJECTED AND THE WORK READVERTISED WITH PROVISIONS DEFINITELY ADVISING BIDDERS OF THE HOURS WITHIN WHICH WORK IS TO BE PERFORMED OR, IF NECESSARY, SETTING FORTH A BASIS FOR PRICE ADJUSTMENT FOR PREMIUM HOURS. A DECISION IS REQUESTED ON THE QUESTIONS PRESENTED.

WE HAVE BEEN ADVISED INFORMALLY BY A REPRESENTATIVE OF THE BUREAU OF YARDS AND DOCKS THAT SOLICITATION OF BIDS BY THE PRIME CONTRACTOR ON THE WORK TO BE PERFORMED UNDER SUBCONTRACT NO. 7 WAS REQUIRED BY YOUR DEPARTMENT UNDER THE PROVISIONS OF SECTION D 3.04, NAVDOCKS TP-AD-2. SUCH REQUIREMENT WAS UNDOUBTEDLY BASED ON THE PRINCIPLE THAT ALL QUALIFIED BIDDERS BE GIVEN AN EQUAL OPPORTUNITY TO COMPETE, AND THAT THE UNITED STATES SHOULD DERIVE THE BENEFITS TO BE EXPECTED FROM FREE AND OPEN COMPETITION. THESE ARE THE SAME PRINCIPLES UNDERLYING THE REQUIREMENTS FOR COMPETITIVE BIDDING WHICH ARE CONTAINED IN THE SEVERAL STATUTES APPLICABLE TO DIRECT PROCUREMENT OF SUPPLIES OR SERVICES BY THE GOVERNMENT. WHILE THERE IS NO CORRESPONDING STATUTORY REQUIREMENT GOVERNING THE SOLICITATION OF SUBCONTRACT BIDS BY A PRIME CONTRACTOR ON A COST CONTRACT, WHERE SUCH SOLICITATION IS REQUIRED BY THE PROCURING AGENCY AND THE AWARD OF A SUBCONTRACT BASED ON BIDS RECEIVED IS SUBJECT TO APPROVAL BY A REPRESENTATIVE OF SUCH AGENCY, IT IS OUR OPINION THAT AN EVALUATION OF BIDS BASED ON THE SAME FACTORS WHICH WOULD BE FOR CONSIDERATION IN PROCUREMENT UNDER THE STATUTES REQUIRING ADVERTISING IS JUSTIFIED. AS INDICATED AT 22 COMP. GEN. 367, 371, THERE IS NO AUTHORITY IN THE CONTRACTING OFFICER TO APPROVE ANY LUMP-SUM SUBCONTRACT ENTERED INTO BY THE PRIME CONTRACTOR IF THE EXECUTION OF SUCH SUBCONTRACT WOULD BE PREJUDICIAL TO THE INTERESTS OF THE UNITED STATES.

WITH RESPECT TO THE QUALIFICATION ON THE TIME DURING WHICH WORK WOULD BE PERFORMED UNDER THE PROPOSAL OF THE LOW BIDDER, WE ARE IN AGREEMENT WITH YOUR CONCLUSION THAT, NOTWITHSTANDING ANY RIGHT TO NON INTERFERENCE WITH AND ABSENCE OF INTERRUPTION TO PLANT WORK CONFERRED BY THE SPECIFICATIONS, IN THE EVENT OF AWARD OF A SUBCONTRACT BASED ON THE LOW BID AS SUBMITTED, THE UNITED STATES WOULD BE LIABLE TO THE SUBCONTRACTOR FOR ANY EXTRA COSTS INCURRED WHERE IT BECAME NECESSARY TO DIRECT THE PERFORMANCE OR WORK OUTSIDE NORMAL WORKING HOURS. CONVERSELY, SINCE THERE CAN BE NO DOUBT THAT THE CONTEXT OF THE INVITATION AS A WHOLE CONTEMPLATED THE PERFORMANCE OF SOME WORK OUTSIDE OF NORMAL WORKING HOURS, NO LIABILITY FOR ADDITIONAL PAYMENT WOULD ARISE FROM ACCEPTANCE OF A BID WHICH DID NOT CONTAIN SUCH QUALIFICATION. 11 COMP. GEN. 27; 12 ID. 179. IT IS OF COURSE, IMPRACTICABLE, IF NOT IMPOSSIBLE, TO ESTABLISH THE EXACT AMOUNT OF SUCH WORK WHICH WILL BE REQUIRED, AND IT IS ALSO IMPOSSIBLE TO ESTIMATE WITH ANY DEGREE OF ACCURACY THE AMOUNT OF TIME WHICH THE LOW BIDDER WOULD NEED TO ACCOMPLISH SUCH WORK. IT FOLLOWS THAT THE FINAL COST TO THE GOVERNMENT UNDER THE PROPOSAL OF THE LOW BIDDER COULD RESULT IN PAYMENT OF AN AMOUNT WHICH WOULD BE GREATER THAN THE UNQUALIFIED BID OF THE SECOND LOW BIDDER. UNDER THE CIRCUMSTANCES, IT IS OUR OPINION THAT THE PROPOSAL OF THE LOW BIDDER IS NOT SUBJECT TO PROPER EVALUATION AND, AS QUALIFIED, MAY NOT BE CONSIDERED FOR AWARD. 19 COMP. GEN. 614. IN VIEW OF YOUR ADVICE THAT THE CONTRACTOR CONTEMPLATES REQUIRING THE PERFORMANCE OF SOME WORK OUTSIDE OF NORMAL WORK HOURS, AND THAT SUCH WORK WOULD NECESSARILY AFFECT THE COST OF PERFORMANCE, IT IS OBVIOUS THAT ANY OFFER BY THE LOW BIDDER TO MODIFY OR WITHDRAW THE QUALIFICATION, WITHOUT GRANTING A SIMILAR OPPORTUNITY FOR THE REMAINING BIDDERS TO REVISE THEIR BID PRICES, WOULD NOT RESULT IN THE FAIR AND OPEN COMPETITION FOR WHICH THE ORIGINAL SOLICITATION OF BIDS WAS ACCOMPLISHED. 17 COMP. GEN. 554; 30 ID. 179.

WITH RESPECT TO THE QUESTION OF WHETHER AN AWARD TO ANY OTHER BIDDER MAY PROPERLY BE APPROVED ON THE BASIS OF THE PROPOSALS RECEIVED UNDER THE SPECIFICATIONS AS DRAWN, THE RULE IS WELL ESTABLISHED THAT IN ORDER FOR BIDDERS TO COMPETE ON EQUAL TERMS WHEN SUBMITTING BIDS IN RESPONSE TO AN ADVERTISEMENT FOR BIDS FOR PUBLIC WORK THE SPECIFICATIONS AND INVITATIONS MUST BE SUFFICIENTLY DEFINITE TO ENABLE THE PREPARATION AND EVALUATION OF BIDS ON A COMMON BASIS. SEE ANNOTATIONS IN 30 L.R.A.N.S., 214-221. THE INSTANT CASE, THERE IS NO EVIDENCE THAT BIDDERS WERE GIVEN ANY CRITERIA IN RESPECT TO THE EXTENT TO WHICH THE PROVISIONS OF PARAGRAPHS 1.20 AND 1.29 OF THE SPECIFICATIONS SHOULD BE CONSIDERED IN THE COMPUTATION OF BID PRICES. FURTHER, THE RECORD ON ANY BASIS WHICH MIGHT BEAR A REASONABLE RELATIONSHIP TO THE ACTUAL AMOUNT OF WORK WHICH WILL BE REQUIRED TO BE ACCOMPLISHED OUTSIDE NORMAL WORKING HOURS. WHETHER SUCH COMPUTATIONS HAVE RESULTED IN BIDS WHICH ARE HIGHER OR LOWER THAN THE REASONABLE COST OF THE WORK IS IMMATERIAL. UNLESS THE OFFICIAL AUTHORIZED TO APPROVE THE SUBCONTRACT IS REASONABLY CERTAIN THAT THE SPECIFICATIONS PRESENT A SUFFICIENTLY ACCURATE AND DETAILED DESCRIPTION OF THE REQUIRED WORK TO ENABLE BIDDERS TO SUBMIT PROPOSALS COMPUTED UPON AND REFLECTING THE TRUE VALUE OF THE WORK TO BE PERFORMED, HE WOULD NOT BE JUSTIFIED IN APPROVING A SUBCONTRACT WHICH WOULD BIND THE UNITED STATES TO PAY THE BID PRICE TO THE PRIME CONTRACTOR.

ACCORDINGLY, SINCE THE SPECIFICATIONS IN THE INSTANT CASE WERE NOT SUFFICIENTLY DEFINITE TO ENABLE BIDDERS TO ACCURATELY COMPUTE BID PRICES, WE AGREE WITH YOUR RECOMMENDATION THAT ALL BIDS BE REJECTED, AND WE WOULD INTERPOSE NO OBJECTION IF THE WORK WERE TO BE READVERTISED UNDER SPECIFICATIONS SETTING OUT THE ESTIMATED REQUIREMENTS OR PROVIDING FOR ADJUSTMENT IN THE CONTRACT PRICE BASED ON ACTUAL REQUIREMENTS WHEN ASCERTAINABLE.