B-135383, APR. 29, 1958

B-135383: Apr 29, 1958

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INC.: FURTHER REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 20. BY THE REFERRED-TO INVITATION BIDS WERE REQUESTED. BIDS WERE REQUESTED ON THE BASIS OF A BASE BID (SCHEDULE A) AND TEN ADDITIVE ALTERNATES. PERTINENT PROVISIONS OF THE INVITATION ARE AS FOLLOWS: "10. BIDDERS ARE ADVISED THAT THE MAXIMUM INSURABLE MORTGAGE MAY NOT EXCEED THE LESSER OF THREE ITEMS BEING (1) AMOUNT OF LOWEST ACCEPTABLE BID. ATTENTION IS INVITED TO THE COPY OF FHA'S FINAL APPRAISAL AND ELIGIBILITY STATEMENT ATTACHED HERETO. THE BIDDER WILL BE REQUIRED TO PAY THE PRESCRIBED FEES. "20 (E) THE BIDS WILL BE EVALUATED ON THE BASIS OF PROVIDING THE MAXIMUM USABLE CONSTRUCTION WHICH MAY BE OBTAINED WITHIN THE FUNDS AVAILABLE AS DETERMINED BY THE AGGREGATE COST OF SCHEDULE A.

B-135383, APR. 29, 1958

TO GREEN MANOR CONSTRUCTION CO., INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 20, 1958, WITH ATTACHMENT, PROTESTING THE AWARD OF A CONTRACT TO ANOTHER BIDDER PURSUANT TO INVITATION NO. ENG-36-109-58-5, ISSUED BY THE DISTRICT ENGINEER, PHILADELPHIA, PENNSYLVANIA.

BY THE REFERRED-TO INVITATION BIDS WERE REQUESTED--- TO BE OPENED FEBRUARY 6, 1958--- FOR THE CONSTRUCTION OF 702 CAPEHART HOUSING UNITS AT FORT DIX, NEW JERSEY. BIDS WERE REQUESTED ON THE BASIS OF A BASE BID (SCHEDULE A) AND TEN ADDITIVE ALTERNATES. PERTINENT PROVISIONS OF THE INVITATION ARE AS FOLLOWS:

"10. BIDDERS ARE ADVISED THAT THE MAXIMUM INSURABLE MORTGAGE MAY NOT EXCEED THE LESSER OF THREE ITEMS BEING (1) AMOUNT OF LOWEST ACCEPTABLE BID, (2) FHA TOTAL ESTIMATED REPLACEMENT COST OF THE PROPERTY OR PROJECT OR (3) AN AVERAGE PER FAMILY UNIT OF $16,500 LESS THE ESTIMATED VALUE OF ANY USABLE UTILITIES WITHIN THE PROPERTY OR PROJECT WHERE OWNED OR FURNISHED FROM OTHER THAN MORTGAGE PROCEEDS. ATTENTION IS INVITED TO THE COPY OF FHA'S FINAL APPRAISAL AND ELIGIBILITY STATEMENT ATTACHED HERETO. THE BIDDER WILL BE REQUIRED TO PAY THE PRESCRIBED FEES.

"20 (E) THE BIDS WILL BE EVALUATED ON THE BASIS OF PROVIDING THE MAXIMUM USABLE CONSTRUCTION WHICH MAY BE OBTAINED WITHIN THE FUNDS AVAILABLE AS DETERMINED BY THE AGGREGATE COST OF SCHEDULE A, PLUS EACH ADDITIVE OR PORTION OF AN ADDITIVE ITEM IN THE ADDITIVE PRIORITY STATED IN THE LUMP SUM PRICE SCHEDULE. IF A COMPLETE ADDITIVE CANNOT BE AWARDED BECAUSE OF FUND LIMITATION AND PORTION OF THAT ADDITIVE WILL PROVIDE USABLE CONSTRUCTION INCREMENTS, THAT PORTION OF THE ADDITIVE WHICH MAY BE AWARDED WITHIN THE STATED FUNDS LIMITATION WILL BE AWARDED AT ITS DIRECT PROPORTIONATE COST OF THE TOTAL ADDITIVE AS HAS BEEN STATED IN THE BID SCHEDULE BY THE BIDDERS; PROVIDED, HOWEVER, THAT AFTER THE RELATIVE ORDER OF BIDDERS HAS BEEN DETERMINED AS PROVIDED ABOVE, THE GOVERNMENT RESERVES THE RIGHT TO SUBSTITUTE AND AWARD ANOTHER OR OTHER ADDITIVE ITEMS AT PRICES QUOTED THEREFOR IN LIEU OF ANY ONE OR MORE ADDITIVE ITEMS OF HIGHER STATED PRIORITY IF SUCH SUBSTITUTION WILL HAVE NO EFFECT ON THE PREVIOUS DETERMINATION OF THE LOW OR ULTIMATELY SUCCESSFUL BIDDER.'

IN THE EXPLANATORY NOTES WHICH FORMED PART OF THE SPECIFICATIONS IT WAS STATED IN PART:

"A. THE INTENT OF THE GOVERNMENT IN SOLICITING BIDS FOR THIS PROJECT IS TO PROVIDE FAMILY HOUSING OF THE HIGHEST POSSIBLE LIVING STANDARDS WITHIN THE FUNDS AVAILABLE. THE AWARD OR AWARDS WILL BE MADE TO THE LOWEST RESPONSIBLE BIDDERS, WHOSE BID WILL GIVE THE MOST ADDITIVES, TAKEN IN THE ORDER LISTED, WITH THE AVAILABLE FUNDS. AWARD WILL BE MADE TO THE RESPONSIBLE BIDDER WHOSE BID CONFORMING TO THE INVITATION FOR BIDS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED.

"B. THE GOVERNMENT RESERVES THE RIGHT TO DELETE ANY OR ALL ADDITIVE ITEMS IN THE INVITATION FOR BIDS, IF THE CORRESPONDING ITEMS CANNOT BE AWARDED BECAUSE OF FUND LIMITATIONS.'

THE RECORD SHOWS THAT FIVE BIDS WERE RECEIVED AND, BASED ON AN EVALUATION AS PROVIDED IN PARAGRAPH 20 (E) OF THE INVITATION, QUOTED ABOVE, THE BID OF TERMINAL CONSTRUCTION CORPORATION WAS DETERMINED TO BE THE LOWEST SINCE UNDER IT THE GOVERNMENT WOULD OBTAIN WITHIN THE MAXIMUM INSURABLE FUNDS THE BASIC HOUSING UNITS AS PROVIDED UNDER SCHEDULE A AND ADDITIVE ITEMS NOS. 1, 2, 3, 4 AND $98,447 WORTH OF 91.4 PERCENT OF ADDITIVE NO. 5. USING THE SAME EVALUATION METHOD, YOUR BID WOULD COVER SCHEDULE A AND ADDITIVE ITEMS NOS. 1, 2, 3, 4 AND $34,400 WORTH OR 34.4 PERCENT OF ADDITIVE NO. 5.

IN REGISTERING YOUR PROTEST YOU STATE THAT YOURS WAS THE LOWEST BID RECEIVED, PRICE AND OTHER FACTORS CONSIDERED. BASICALLY, YOU CONTEND THAT, IN CONSTRUING THE WORDS "MOST ADDITIVES" AS ONE OF THE BASES FOR AWARD, THE BEST INTEREST OF THE GOVERNMENT WOULD BE SERVED BY ACCEPTING THE BID WHICH NOT ONLY IS THE LOWEST IN AGGREGATE AMOUNT BUT WHICH ALSO GIVES THE GREATEST AGGREGATE OF FHA REPLACEMENT COSTS. IN THIS CONNECTION, YOU CONTEND FURTHER THAN AN ADDITIVE MAY BE OMITTED FROM THE NUMERICAL LIST IN ORDER TO PRODUCE THE MAXIMUM AMOUNT OF CONSTRUCTION. BASED ON THIS REASONING, IT APPEARS THAT IF ADDITIVE NO. 3 WERE OMITTED YOU WOULD BE ENTITLED TO THE AWARD SINCE, AS COMPARED WITH THE BID OF TERMINAL CONSTRUCTION, A GREATER PERCENTAGE OF ADDITIVE NO. 8 COULD BE SECURED. IN THIS REGARD, YOU STRESS THE FACT THAT THE FHA REPLACEMENT VALUE OF ADDITIVE NO. 3 WAS NOT REVISED AT THE TIME OF THE ISSUANCE OF ADDENDUM NO. 1 TO THE INVITATION WHICH ELIMINATED SOME OF THE WORK COVERED BY ADDITIVE NO. 3.

IN ITS REPORT ON THE MATTER OF YOUR PROTEST, THE DEPARTMENT OF THE ARMY STATES THAT, WHILE THE GOVERNMENT COULD HAVE PROVIDED THAT AWARD WOULD BE MADE TO THAT COMBINATION OF THE BASE BID AND ADDITIVES WHICH WOULD YIELD THE LARGEST AMOUNT OF CONSTRUCTION AS EXPRESSED IN TERMS OF FHA REPLACEMENT COST, BIDS WERE NOT SO ADVERTISED. IT IS OBSERVED THAT, WHILE THE GOVERNMENT RESERVED THE RIGHT TO DELETE ANY OR ALL ADDITIVES BECAUSE OF FUND LIMITATIONS, PARAGRAPH 20 (E) OF THE INVITATION CLEARLY PROVIDES THAT ADDITIVES WOULD BE CONSIDERED IN THE ORDER LISTED AND THE ONLY PROVISION FOR A DEVIATION FROM THE ORDER LISTED IS WHERE SUCH DEVIATION "WILL HAVE NO EFFECT ON TE PREVIOUS DETERMINATION OF THE LOW OR ULTIMATELY SUCCESSFUL BIDDER.' CONSEQUENTLY, IN APPLYING THE PROVISIONS OF PARAGRAPH 20 (3) FOR PURPOSES OF BID EVALUATION IT HAS BEEN DETERMINED ADMINISTRATIVELY THAT AWARD WILL BE MADE UNDER SCHEDULE A AND SO MANY OF THE ADDITIVES BEGINNING WITH THE FIRST AND WORKING DOWN IN THE STATED ORDER UNTIL AVAILABLE FUNDS ARE EXHAUSTED. IN THIS CONNECTION, IT IS REPORTED THAT THE ORDER OF THE ADDITIVES WAS SELECTED ON THE BASIS OF THE NEEDS AND DESIRES OF THE USING SERVICE AND REPRESENT THE FEATURES DESIRED BY THE USING SERVICE ARRANGED IN ORDER OF PRIORITY. THUS, THE OMISSION BY THE USING SERVICE ARRANGED IN ORDER OF PRIORITY. THUS, THE OMISSION OF ADDITIVE NO. 3 WOULD RESULT IN THE LOSS OF A DESIRABLE FEATURE AND SUBSTITUTING OTHERS WHICH ARE LESS DESIRABLE.

REFERRING TO YOUR CONTENTION THAT THE FHA REPLACEMENT COST OF ADDITIVE NO. 3 IS TOO HIGH BECAUSE ADDENDUM NO. 1 ELIMINATED CERTAIN IMPORTANT REQUIREMENTS FOR THE WORK COVERED BY ADDITIVE NO. 3, WITHOUT MAKING A CORRESPONDING DECREASE IN THE COSTS AND THAT, THEREFORE, ADDITIVE NO. 3 SHOULD BE ELIMINATED FROM CONSIDERATION, IT IS STATED IN THE REPORT THAT--

"12. AN OVERSTATEMENT OF THE REPLACEMENT COST OF ADDITIVE ITEM 3 WOULD NOT IN ANY WAY EFFECT THE ACCEPTABILITY OF THE TERMINAL CONSTRUCTION CORPORATION'S BID SINCE IT DOES NOT APPEAR THAT ITS BID IS UNBALANCED. SUBSTANTIAL VARIATIONS BETWEEN THE BIDS SUBMITTED BY VARIOUS BIDDERS ON CERTAIN ITEMS ARE NOT UNUSUAL. SOME BIDDERS ARE BETTER EQUIPPED TO DO CERTAIN TYPES OF WORK THAN OTHERS AND AS A RESULT THE VARIOUS ITEMS WILL VARY EITHER UPWARD OR DOWNWARD WITHOUT THE BID BEING UNBALANCED. AS A MATTER OF FACT, FHA HAS ADVISED THAT ADDENDUM NO. 1 HAD THE EFFECT OF REDUCING THE ESTIMATED REPLACEMENT COST OF ADDITIVE ITEM 3 BY APPROXIMATELY $5,000, NOT $100,000 AS ALLEGED BY GREEN MANOR ESTATES, INC.'

CAREFUL CONSIDERATION HAS BEEN GIVEN TO YOUR VARIOUS CONTENTIONS IN THE MATTER AND IT IS OUR VIEW THAT, BASED UPON ALL THE ATTENTION FACTORS MENTIONED ABOVE, THE DETERMINATION OF THE CONTRACTING OFFICER TO AWARD THE CONTRACT TO THE TERMINAL CONSTRUCTION CORPORATION ACCORDS WITH THE PROVISIONS OF THE INVITATION FOR BIDS AND IS IN THE BEST INTEREST OF THE GOVERNMENT. CONSEQUENTLY, IT MUST BE CONCLUDED THAT YOUR PROTEST FURNISHES NO BASIS ON WHICH WE WOULD BE JUSTIFIED IN QUESTIONING THE ADMINISTRATIVE ACTION PROPOSED TO BE TAKEN IN THIS CASE.