B-132796, AUG. 30, 1957

B-132796: Aug 30, 1957

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THE UNITED STATES IS NOT A PARTY TO THE CONSTRUCTION CONTRACT. THE COOPERATIVE SOLICITED SEALED BIDS FOR THE CONSTRUCTION WHICH WERE OPENED ON JUNE 25. FIVE BIDS WERE RECEIVED. THE THREE LOWEST OF WHICH WERE AS FOLLOWS: CHART BIDDER AMOUNT OF BID DAYS FOR COMPLETION LONG CONSTRUCTION COMPANY $1. THIS STATEMENT WAS DETERMINED TO BE CONTRARY TO ARTICLE III. THE LOW BID WAS REJECTED. THE SECOND LOW BID WAS ALSO REJECTED AND THE THIRD LOW BID ACCEPTED UPON A DETERMINATION THAT IT WOULD BE IN THE BEST INTEREST OF THE COOPERATIVE TO ACCEPT THE LATTER BID BASED ON THE VIEW THAT THE EARLIER COMPLETION TIME MORE THAN OFFSET THE DIFFERENCE IN THE BID PRICES. YOU PROTEST THAT THE STIPULATION CONTAINED IN YOUR BID WAS.

B-132796, AUG. 30, 1957

TO LONG CONSTRUCTION COMPANY:

YOUR LETTER OF AUGUST 2, 1957, PROTESTS THE AWARD OF A CONTRACT BY THE BRAZOS VALLEY ELECTRIC POWER COOPERATIVE, INC., TO ANOTHER BIDDER FOR THE CONSTRUCTION OF A POWER PLANT AT WEATHERFORD, TEXAS.

THE COOPERATIVE PROPOSES TO PAY FOR THE CONSTRUCTION WITH FUNDS BORROWED FROM THE RURAL ELECTRIFICATION ADMINISTRATION PURSUANT TO THE RURAL ELECTRIFICATION ACT OF 1936, AS AMENDED, 7 U.S.C 901,ET SEQ. EXCEPT IN ITS ROLE AS CREDITOR, THE UNITED STATES IS NOT A PARTY TO THE CONSTRUCTION CONTRACT.

THE COOPERATIVE SOLICITED SEALED BIDS FOR THE CONSTRUCTION WHICH WERE OPENED ON JUNE 25, 1957. FIVE BIDS WERE RECEIVED, THE THREE LOWEST OF WHICH WERE AS FOLLOWS:

CHART

BIDDER AMOUNT OF BID DAYS FOR COMPLETION LONG CONSTRUCTION COMPANY $1,617,000 300 E. E. FARROW COMPANY 1,644,480 450 H. B. ZACHRY COMPANY 1,661,869 265

THE LOW BID, SUBMITTED BY YOUR COMPANY, INCLUDED THE FOLLOWING STATEMENT INSERTED ON PAGE 13:

"PAYMENT TO BE MADE FOR MATERIALS DELIVERED TO THE SITE AND STORED FOR LATER INSTALLATION.'

THIS STATEMENT WAS DETERMINED TO BE CONTRARY TO ARTICLE III, SECTION 1 (A) OF THE INVITATION FORM WHICH PROVIDES, IN PART, FOR MONTHLY PAYMENTS "FOR CONSTRUCTION ACCOMPLISHED.' FOR THAT REASON, THE LOW BID WAS REJECTED. THE SECOND LOW BID WAS ALSO REJECTED AND THE THIRD LOW BID ACCEPTED UPON A DETERMINATION THAT IT WOULD BE IN THE BEST INTEREST OF THE COOPERATIVE TO ACCEPT THE LATTER BID BASED ON THE VIEW THAT THE EARLIER COMPLETION TIME MORE THAN OFFSET THE DIFFERENCE IN THE BID PRICES.

YOU PROTEST THAT THE STIPULATION CONTAINED IN YOUR BID WAS, AT MOST, ONLY A MINOR IRREGULARITY WHICH SHOULD BE WAIVED IN VIEW OF THE DIFFERENCE BETWEEN YOUR BID AND THAT OF THE SUCCESSFUL BIDDER. YOU ALSO INDICATE THAT THE LONGER COMPLETION TIME OFFERED BY YOU WOULD NOT OFFSET THE LOWEST PRICES BASED ON THE DAILY LIQUIDATED DAMAGES ASSESSMENT PROVIDED FOR IN THE INVITATION.

THE ADMINISTRATOR OF REA IS AUTHORIZED, UNDER 7 U.S.C. 904, TO MAKE LOANS FOR RURAL ELECTRIFICATION TO COOPERATIVES AND OTHER ORGANIZATIONS AND INDIVIDUALS TO FINANCE THE CONSTRUCTION OF GENERATING PLANTS, ELECTRIC TRANSMISSION AND DISTRIBUTION LINES OR SYSTEMS TO FURNISH ELECTRIC ENERGY TO PERSONS IN RURAL AREAS NOT RECEIVING CENTRAL STATION SERVICE. THE STATUTE FURTHER PROVIDES THAT:

"SUCH LOANS SHALL BE ON SUCH TERMS AND CONDITIONS RELATING TO THE EXPENDITURES OF THE MONEYS LOANED AND THE SECURITY THEREFOR AS THE ADMINISTRATOR SHALL DETERMINE. * * *"

NOTHING IN THE ACT, AS AMENDED, REQUIRES THE BORROWERS TO ADVERTISE FOR BIDS AND AWARD CONTRACTS TO THE LOWEST RESPONSIBLE BIDDER. SIMILARLY, THE REGULATIONS PROMULGATED TO CARRY OUT THE PURPOSES OF THE ACT DO NOT REQUIRE AWARD OF CONSTRUCTION CONTRACTS BY COMPETITIVE ADVERTISING TO THE LOWEST RESPONSIBLE BIDDER. THE LOAN AGREEMENT BETWEEN THE REA AND THE COOPERATIVE ENTERED INTO AS OF MAY 14, 1956, PROVIDES AT ARTICLE III, SECTION 3:

"SEC. 3. THE BORROWER SHALL, IF THE ADMINISTRATOR SHALL SO REQUIRE, INVITE BIDS FOR CONSTRUCTION WORK PERTAINING TO THE SYSTEM, AND FOR MATERIALS, EQUIPMENT, OR SUPPLIES TO BE USED THEREIN, AND THE BORROWER SHALL INCLUDE ALL PERSONS DESIGNATED BY THE ADMINISTRATOR AMONG THOSE INVITED TO SUBMIT BIDS. IF THE ADMINISTRATOR SHALL SO REQUIRE, THE BORROWER SHALL OPEN BIDS IN THE PRESENCE OF A REPRESENTATIVE OF THE ADMINISTRATOR AND, IN ANY EVENT, THE BORROWER SHALL OPEN ALL BIDS PUBLICLY AT THE TIME AND PLACE WHICH SHALL HAVE BEEN SPECIFIED IN THE NOTICE TO BIDDERS. THE BORROWER SHALL AWARD EACH CONTRACT TO THE LOWEST RESPONSIBLE BIDDER, UNLESS ALL BIDS ARE REJECTED OR THE ADMINISTRATOR SHALL APPROVE THE AWARD OF THE CONTRACT TO ANOTHER RESPONSIBLE BIDDER UPON A SHOWING THAT THE AWARD OF THE CONTRACT TO SUCH BIDDER IS IN THE BEST INTERESTS OF THE BORROWER.'

IT SHOULD BE NOTED THAT THE LOAN AGREEMENT PROVIDES FOR AWARD OF A CONSTRUCTION CONTRACT TO OTHER THAN THE LOWEST RESPONSIBLE BIDDER UPON APPROVAL BY THE ADMINISTRATOR AND A SHOWING THAT THE AWARD TO SUCH OTHER BIDDER IS IN THE BEST INTERESTS OF THE BORROWER. SUCH APPROVAL WAS MADE BY THE ADMINISTRATOR IN THE CASE UPON WHAT HE APPARENTLY CONSIDERED A PROPER SHOWING.

WE HAVE HELD THAT CONTRACTS AWARDED BY OTHER THAN AGENCIES OF THE FEDERAL GOVERNMENT ARE SUBJECT TO THE LAWS GOVERNING THE AWARD OF CONTRACTS BY THE FEDERAL GOVERNMENT WHERE GOVERNMENT FUNDS ARE USED IN WHOLE OR IN PART FOR SUCH CONTRACTS AND WHERE COMPETITIVE BID PROCEDURES ARE REQUIRED TO BE UTILIZED EITHER BY STATUTE OR BY REGULATION. SEE, FOR EXAMPLE, B-132346, AUGUST 14, 1957, AND B 131443, JUNE 19, 1957. IN THIS CASE, THE ONLY REQUIREMENT FOR COMPETITIVE BID PROCEDURES WAS CONTAINED IN THE QUOTED PROVISION OF THE LOAN AGREEMENT. THAT PROVISION IS NOT APPLICABLE HERE, HOWEVER, FOR THE REASONS STATED ABOVE.

THEREFORE, NOTWITHSTANDING WHAT OUR DETERMINATION MAY HAVE BEEN HAD THIS MATTER BEEN SUBJECT TO THE RULES GENERALLY APPLICABLE TO PROCUREMENT BY GOVERNMENT AGENCIES UNDER COMPETITIVE BID PROCEDURES, THERE IS NO BASIS UPON WHICH WE MAY CONCLUDE THAT SUCH PROCEDURES SHOULD HAVE BEEN APPLIED IN THIS SITUATION. ACCORDINGLY, CONSIDERATION OF YOUR PROTEST IS NOT WITHIN OUR JURISDICTION. CF. B 121511, JANUARY 4, 1955.