B-134744, FEBRUARY 21, 1958, 37 COMP. GEN. 529

B-134744, FEBRUARY 21, 1958, 37 COMP. GEN. 529

CONTRACTS - SPECIFICATIONS - LUMP-SUM QUOTATIONS - FAILURE TO SUBMIT UNIT PRICES ON ALTERNATE ITEMS - RESPONSIVENESS UNDER AN INVITATION WHICH REQUIRES A LUMP-SUM QUOTATION FOR COMPLETE PERFORMANCE AND SPECIFICALLY PROVIDES THAT THE UNIT PRICES REQUESTED ON ALTERNATE ITEMS OF WORK WOULD NOT BE CONSIDERED IN EVALUATION OF THE BIDS, BUT WOULD BE A BASIS FOR A SUBSEQUENT PRICE ADJUSTMENT IN EVENT THE ITEMS OF WORK SHOULD BE MORE OR LESS THAN THE AMOUNT OF WORK SHOWN ON THE DRAWINGS AND SPECIFICATIONS, THE UNIT PRICES ARE NOT AN ESSENTIAL PART OF THE BID SO THAT FAILURE ON THE PART OF TWO LOW BIDDERS TO SUBMIT A UNIT PRICE ON ONE OF THE ALTERNATE ITEMS DOES NOT MAKE THEIR BIDS NONRESPONSIVE TO THE INVITATION.

TO GRAYCO BUILDERS, FEBRUARY 21, 1958:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JANUARY 3, 1958, PROTESTING THE AWARD OF THE CONTRACT MADE UNDER INVITATION FOR BIDS NO. 103-30235-58 FOR THE CONSTRUCTION OF THE UNITED STATES COAST GUARD MANHATTAN BASE BUILDING TO BE LOCATED AT SOUTH FERRY, MANHATTAN ISLAND, NEW YORK.

THE PROTEST IS BASED ON THE CONTENTION THAT THE LOW BID AND THE SECOND LOW BID WERE NOT RESPONSIVE TO THE INVITATION SINCE THEY FAILED TO QUOTE A UNIT PRICE FOR ITEM (E) WHICH COVERS THE ADJUSTMENT TO BE MADE IN THE CONTRACT PRICE IN THE EVENT THE NUMBER OF PILES TO BE REMOVED IS MORE OR LESS THAN THE QUANTITY SHOWN ON THE PLANS, DRAWINGS, AND SPECIFICATIONS.

INVITATION FOR BID NO. 103-30235-58 WAS ISSUED ON NOVEMBER 12, 1957, BY THE THIRD COAST GUARD DISTRICT, NEW YORK, NEW YORK, AND THE BIDS WERE TO BE PUBLICLY OPENED ON DECEMBER 16, 1957. ITEM 1 REQUESTED LUMP SUM BIDS FOR FURNISHING ALL LABOR, EQUIPMENT, AND MATERIALS AND PERFORMING ALL WORK FOR THE CONSTRUCTION OF A REINFORCED CONCRETE AND BRICK-FACED AIR CONDITIONED THREE-STORY BUILDING IN STRICT ACCORDANCE WITH ATTACHED SPECIFICATIONS, SCHEDULES, AND DRAWINGS. THE INVITATION ALSO REQUESTED QUOTATIONS ON SEVERAL ITEMS OF ALTERNATE WORK, A-1 THROUGH A-10. THE INVITATION FURTHER REQUESTED BIDDERS TO QUOTE UNIT PRICES ON FOUR ITEMS (A THROUGH D) OF WORK TO BE USED AS THE BASIS OF COMPUTATION FOR ADJUSTMENT OF THE CONTRACT PRICE IF THE WORK SHOULD BE MORE OR LESS THAN THE AMOUNT OF WORK SHOWN ON THE PLANS, DRAWINGS, AND SPECIFICATIONS, AND UPON WHICH THE CONTRACT PRICE WAS BASED. THE PLACE FOR BIDDERS TO SHOW THE UNIT PRICES FOR THE FOUR ITEMS WAS ON PAGE 1 OF THE BID FORM ( STANDARD FORM 21).

ADDENDUM NO. 2 ISSUED ON DECEMBER 4, 1957, IN ADDITION TO OTHER CHANGES, PROVIDED FOR BIDDERS TO QUOTE A FIFTY UNIT PRICE, ITEM (E), WHICH WAS TO BE USED AS A BASIS FOR THE COMPUTATION FOR ADJUSTMENT OF THE CONTRACT PRICE IF THE NUMBER OF LINEAR FEET OF PILING REMOVED WAS MORE OR LESS THAN THE NUMBER SHOWN ON THE PLANS, DRAWINGS, AND SPECIFICATIONS. BIDDERS WERE REQUIRED TO ADD ITEM (E) ON THE FIRST PAGE OF THE BID FORM.

PAGE TWO OF THE BID FORM (SF-20) INFORMED BIDDERS THAT LIQUIDATED DAMAGES FOR DELAY IN COMPLETION WOULD BE ASSESSED AT THE RATE OF $200 PER CALENDAR DAY; PARTIAL PAYMENTS WOULD BE MADE ON THE CONTRACT; COMPLETION WAS REQUIRED WITHIN 365 CALENDAR DAYS AFTER DATE OF RECEIPT OF NOTICE TO PROCEED; THAT BIDDERS SHOULD INSERT QUOTATIONS FOR ALL ALTERNATE ITEMS, NOS. A-1 THROUGH A-10; AND THAT BIDDERS SHOULD INSERT QUOTATIONS IN APPROPRIATE SPACES ON THE BID FORM (SF-21) FOR THE " UNIT PRICES" ITEMS. WITH RESPECT TO THE LATTER, BIDDERS WERE FURTHER ADVISED THAT---

SHOULD THE AMOUNT OF WORK OF ANY CATEGORY LISTED BELOW BE INCREASED OR DECREASED DUE TO SPECIAL CONDITIONS FOUND AT THE SITE OR DUE TO CHANGES REQUIRED BY THE CONTRACTING OFFICER, THE FOLLOWING UNIT PRICES WILL BE THE BASIS OF COMPUTATION FOR ADJUSTMENT OF THE CONTRACT PRICE FOR THE WORK WHICH IS MORE THAN OR LESS THAN THAT INDICATED. THESE UNIT PRICES WILL NOT BE CONSIDERED IN EVALUATING BIDS. THE CONTRACTING OFFICER MAY ACCEPT OR REJECT ANY OR ALL OF THE PROPOSED UNIT PRICES AT THE TIME THE CONTRACT IS AWARDED, OR SUBSTITUTE FOR THEM PRICES NEGOTIATED WITH THE CONTRACTOR AT THAT TIME. ( ITALICS SUPPLIED.)

THE INVITATION CONTAINED THE GENERAL PROVISIONS APPLICABLE TO CONSTRUCTION CONTRACTS, STANDARD FORM 23-A. ARTICLE 3 ENTITLED "1CHANGES" PROVIDES THAT THE " CONTRACTING OFFICER MAY AT ANY TIME, BY WRITTEN ORDER, AND WITHOUT NOTICE TO THE SURETIES, MAKE CHANGES IN THE DRAWINGS AND/OR SPECIFICATIONS OF THIS CONTRACT AND WITHIN THE GENERAL SCOPE THEREOF. SUCH CHANGES CAUSE AN INCREASE OR DECREASE IN THE AMOUNT DUE UNDER THIS CONTRACT, OR IN THE TIME REQUIRED FOR ITS PERFORMANCE, AN EQUITABLE ADJUSTMENT SHALL BE MADE AND THE CONTRACT SHALL BE MODIFIED IN WRITING ACCORDINGLY.'

THERE WERE 15 BIDS RECEIVED IN RESPONSE TO THE INVITATION. IN ADDITION TO QUOTING A BASIC BID PRICE ( ITEM 1), ALL OF THE BIDDERS SUBMITTED QUOTATIONS ON ALTERNATE ITEMS A-1 THROUGH A-10, AND UNIT PRICE ITEMS (A), (B), (C), AND (D). HOWEVER, EIGHT OF THE FIFTEEN BIDDERS DID NOT ADD UNIT PRICE ITEM (E) TO THE FIRST PAGE OF THE BID FORM AND DID NOT SUBMIT A QUOTATION THEREON. THE LOW BASIC BID IN THE AMOUNT OF $707,000 AND SECOND LOW BASIC BID IN THE AMOUNT OF $711,000 WERE TWO OF THE EIGHT BIDS WHICH DID NOT CONTAIN A QUOTATION FOR UNIT PRICE ITEM (E). YOUR BID QUOTING A BASIC PRICE OF $743,000 WAS THE LOWEST BID WHICH QUOTED PRICES ON ALL FIVE UNIT PRICE ITEMS.

AT THE TIME OF THE OPENING OF THE BIDS AND THEREAFTER, YOU PROTESTED THE CONSIDERATION OF ANY BID WHICH FAILED TO QUOTE ON UNIT PRICE ITEM (E) ON THE BASIS THAT SUCH A BID WAS INFORMAL AND INCOMPLETE. THE PROTEST WAS DENIED BY THE COAST GUARD FOR THE REASON THAT THE FAILURE TO QUOTE A PRICE FOR ITEM (E) DID NOT GO TO THE SUBSTANCE OF THE BID SINCE THE INVITATION STATED THAT THE UNIT PRICE ITEMS WOULD NOT BE CONSIDERED IN EVALUATION OF THE BIDS.

YOUR LETTER OF DECEMBER 26 IS IN PART AS FOLLOWS:

ALTHOUGH WE ARE AWARE THAT THE AWARD OF THE CONTRACT IS NOT BASED ON UNIT PRICES, THIS DOES NOT PRECLUDE THE NECESSITY OF EVERY BIDDER TO SUBMIT SUCH UNIT PRICES. IN ADDITION, THE FAILURE OF A BIDDER TO SUBMIT A UNIT PRICE SPECIFICALLY CALLED FOR UNDER AN ADDENDUM, CAN CONSTITUTE A CONDITION WHEREBY AN UPSET BID HAS BEEN ENCOURAGED BY THE GOVERNMENT. YOU CAN READILY DETERMINE FROM THE DIFFERENCE IN UNIT PRICES SUBMITTED FOR THIS ITEM OF OVER 500 PERCENT VARIATION AS COMPARED TO ALL OTHER UNIT PRICES WITH NOMINAL VARIATIONS, JUST HOW SIGNIFICANT THIS UNIT PRICE IS.

WE CONSIDER THAT IT IS THE INTENTION OF THE GOVERNMENT TO AWARD CONTRACT TO THE LOWEST BIDDER, THAT EACH BIDDER BE REQUIRED TO SUBMIT THE SAME ADDITIONAL INFORMATION AS REQUIRED BY THE BID, IN PARTICULAR UNIT PRICES, AND THAT ONCE SUCH UNIT PRICES HAD BEEN RECORDED THE LOW BIDDER BE REQUIRED TO PERFORM ACCORDINGLY. WE REALIZE THAT WHEN A PARTICULAR UNIT PRICE SUBMITTED BY A LOW BIDDER IS TOO FAR OUT OF LINE TO PERMIT ITS APPLICATION TO THE JOB, IT WOULD BE NECESSARY FOR THE CONTRACTING OFFICER TO HAVE THE OPPORTUNITY TO NEGOTIATE SUCH UNIT PRICES IN THE GOVERNMENT'S INTEREST. HOWEVER, WE HARDLY CONSIDER SUCH SITUATION APPLICABLE TO THIS CASE WHERE NO UNIT PRICE HAS BEEN SUBMITTED.

THEREFORE, THE PREROGATIVE OF THE CONTRACTING OFFICER TO NEGOTIATE UNIT PRICES SHOULD NOT BE CONSTRUED AS AN OPPORTUNITY TO NEGOTIATE WITH A BIDDER WHO HAS NOT SUBMITTED ANY UNIT PRICE FOR AN ITEM, AND WHO POSSIBLY, DEPENDING ON THE OUTCOME OF SUCH NEGOTIATION, MAY OR MAY NOT DESIRE THE AWARD OF CONTRACT.

THE GOVERNMENT CANNOT ENTER INTO NEGOTIATION WITH A LOW BIDDER TO DETERMINE SUCH A SIGNIFICANT UNIT PRICE WITH ANY CONSCIENCE THAT IT HAS PROTECTED THE RIGHTS OF ALL OTHER BIDDERS. IT WOULD IN EFFECT MAKE THE LOW BIDDER'S BID INFORMAL, AND AT THE SAME TIME BE HOLDING BINDING BIDS FROM ALL OTHER BIDDERS WHO HAVE SUBMITTED ALL UNIT PRICES AND HAVE NO OPPORTUNITY TO NEGOTIATE.

THE GOVERNMENT'S RIGHT TO NEGOTIATE ON A UNIT PRICE SUBMITTED BY A LOW BIDDER AND THE AWARD OF CONTRACT ON LOW BID AND NOT EVEN ON UNIT PRICES IS SUPPOSED TO REPRESENT A SHIELD TO THE LOW BIDDER TO PREVENT HIS ELIMINATION AS THE LOW BIDDER BECAUSE OF A HIGHER UNIT PRICE, AND TO PROTECT THE GOVERNMENT TO THE EXTENT THAT THE GOVERNMENT COULD NEGOTIATE WITH SUCH OTHERWISE LOW BIDDER TO RECEIVE A MORE EQUITABLE UNIT PRICE. HOWEVER, FOR A CONTRACTOR TO USE SUCH SHIELD AS AN OPPORTUNITY TO NEGOTIATE SUCH SIGNIFICANT UNIT PRICE, AND IF NOT TO HIS LIKING BE ABLE TO FREE HIMSELF OF HIS BASE BID, WOULD BE DISTORTING THE INTENTIONS OF THE GOVERNMENT.

UNDER THE TERMS OF THE INVITATION FOR BIDS, THE WORK TO BE PERFORMED IS THAT SET FORTH ON THE DRAWINGS, PLANS, AND SPECIFICATIONS, AND BIDDERS WERE REQUIRED TO QUOTE A LUMP-SUM PRICE FOR PERFORMING SUCH WORK UNDER ITEM 1, BASIC BID. IN ADDITION THERETO BIDDERS WERE REQUESTED TO QUOTE ON CERTAIN ALTERNATE ITEMS AND FIVE UNIT PRICE ITEMS TO BE USED AS A BASIS FOR ADJUSTMENT OF THE CONTRACT PRICE IN THE EVENT THOSE ITEMS OF WORK SHOULD BE MORE OR LESS THAN THE AMOUNT OF SUCH WORK AS SHOWN ON THE PLANS, DRAWINGS, AND SPECIFICATIONS, AND UPON WHICH THE BASIC CONTRACT PRICE WAS BASED.

ONLY ITEM 1, THE BASIC BID, PLUS ANY ALTERNATES THAT THE CONTRACTING OFFICER MIGHT SELECT, FORM THE BASIS FOR THE CONTRACT TO BE AWARDED. THE UNIT PRICE ITEMS ONLY BECOME INVOLVED IN THE EVENT A CHANGE IN THE WORK COVERED BY SUCH ITEMS IS ORDERED BY THE CONTRACTING OFFICER OR SHOULD THE ACTUAL AMOUNT OF WORK ULTIMATELY PROVE TO BE MORE OR LESS THAN SPECIFIED IN THE BASIC CONTRACT. IF THIS SHOULD OCCUR, IT WOULD CONSTITUTE A CHANGE AND UNDER THE " CHANGES" ARTICLE OF THE CONTRACT AN EQUITABLE ADJUSTMENT WOULD BE REQUIRED TO BE MADE. THE PURPOSE OF THE UNIT PRICES WAS SOLELY FOR THE PURPOSE OF FIXING BEFOREHAND THE AMOUNT OF THE EQUITABLE ADJUSTMENT SHOULD THE QUANTITIES VARY FROM THOSE SPECIFIED IN THE BASIC CONTRACT.

ASIDE FROM THE FACT THAT THE INVITATION SPECIFICALLY PROVIDED THAT THE UNIT PRICES WOULD NOT BE CONSIDERED IN EVALUATING BIDS THERE WOULD BE NO BASIS FOR DOING SO IN ANY EVENT SINCE, INSOFAR AS WAS KNOWN AT THE TIME, THE QUANTITIES INVOLVED WERE AS SET FORTH IN THE DRAWINGS, PLANS AND SPECIFICATIONS. FURTHERMORE, IF THESE UNIT PRICES WERE A MATERIAL PART OF THE BID THERE WOULD BE NO AUTHORITY FOR THE CONTRACTING OFFICER TO NEGOTIATE SUCH PRICES WITH A BIDDER AFTER THE OPENING OF THE BIDS AS SUGGESTED IN THE SECOND PARAGRAPH OF YOUR LETTER QUOTED ABOVE.

THE INVITATION GAVE THE GOVERNMENT THE RIGHT TO "ACCEPT OR REJECT ANY OR ALL OF THE PROPOSED UNIT PRICES AT THE TIME THE CONTRACT IS AWARDED OR SUBSTITUTE FOR THEM PRICES NEGOTIATED WITH THE CONTRACTOR.' UNDER THIS PROVISION THE GOVERNMENT COULD REJECT ENTIRELY THE UNIT PRICES QUOTED BY ANY BIDDER, EXCEPT THE BASIC BID, PLUS ANY OR ALL ALTERNATES, AND LEAVE FOR FUTURE ADJUSTMENT UNDER THE PROVISIONS OF THE " CHANGES" CLAUSE ANY DEVIATION THAT MIGHT OCCUR FROM THE QUANTITIES SPECIFIED IN THE BASIC CONTRACT. THUS, IT IS NOT PERCEIVED HOW IT CAN BE MAINTAINED THAT THE UNIT PRICES WERE AN ESSENTIAL PART OF THE BID. FURTHERMORE, A BIDDER COULD NOT BY QUOTING A HIGH UNIT PRICE AND BY REFUSING TO NEGOTIATE A REASONABLE PRICE, PREVENT THE ACCEPTANCE OF HIS BASIC BID AS SUGGESTED BY YOU.

ACCORDINGLY, AND SINCE THE INVITATION SPECIFICALLY PROVIDED THAT THE UNIT PRICE ITEMS WOULD NOT BE CONSIDERED IN THE EVALUATION OF THE BIDS, WE FIND NO LEGAL BASIS FOR OBJECTING TO THE ACTION TAKEN BY THE ADMINISTRATIVE OFFICER IN THE MATTER.