B-136093, JUN. 27, 1958

B-136093, JUN. 27, 1958

TO THE SECRETARY OF THE ARMY:

A LETTER OF JUNE 17, 1958, SIGNED BY THE DEPUTY ASSISTANT SECRETARY OF THE ARMY (LOGISTICS) REQUESTS OUR DECISION ON THE PROPER DISPOSITION OF CONTRACT NO. DA 30-122-AI-434 AWARDED APRIL 29, 1958, TO THE GIULIANI CONTRACTING COMPANY.

INVITATION FOR BIDS NO. DA 30-122-58-19 WAS ISSUED ON APRIL 15, 1958, FOR THE REPLACEMENT OF DETERIORATED METAL CORNICES WITH WOOD CORNICES AT FORT HANCOCK, NEW JERSEY. THE INVITATION SOLICITED A "BASE BID" FOR THE REPLACEMENT OF THE CORNICES AND ALTERNATES FOR THE REPLACEMENT OF CORNICES ON LESS THAN ALL OF THE BUILDINGS. IT ALSO CONTAINED AN ITEM HEADED "DETERIORATED UMBER" FOR REPLACEMENT OF STATED APPROXIMATE QUANTITIES OF THREE VARIETIES OF DETERIORATED LUMBER AND AN ITEM FOR THE REPLACEMENT OF AN APPROXIMATE AMOUNT OF DETERIORATED SLATE. DETERIORATED LUMBER AND DETERIORATED SLATE REPLACEMENT BIDS WERE TO BE INSERTED ON A BOARD FOOT AND SQUARE FOOT BASIS, RESPECTIVELY, WITH PRICES APPLIED TO THE ESTIMATED QUANTITIES TO ARRIVE AT TOTALS. ON PAGE 2 OF THE INVITATION IT WAS PROVIDED THAT THE GOVERNMENT RESERVED THE RIGHT TO INCREASE OR DECREASE THE ESTIMATED QUANTITIES BY 50 PERCENT AND THAT PAYMENT WOULD BE MADE AT THE UNIT PRICE FOR THE ACTUAL QUANTITY OF EACH ITEM INSTALLED.

FINALLY, THE INVITATION PROVIDED "AWARD OF THIS CONTRACT, IF ANY, WILL BE MADE TO THAT RESPONSIBLE BIDDER WHOSE BASE BID IS THE LOWEST * * *.'

THE TWO LOW BIDS SUBMITTED WERE AS FOLLOWS:

CHART

BIDS

GIULIANI SEWITCH

-------- ------- BASE BID $ 87,000 $ 95,488 DETERIORATED LUMBER 13,040 5,600 DETERIORATED SLATE 4,500 1,500

TOTAL $104,540 $102,588 TOTAL AT 50 PERCENT OF

ESTIMATED QUANTITY OF

DETERIORATED LUMBER AND

SLATE $ 95,970 $ 99,038

A CONTRACT WAS AWARDED ON APRIL 29, 1958, PURSUANT TO THE TERMS OF THE INVITATION, TO THE GIULIANI CONTRACTING COMPANY, THE LOW BASE BIDDER. LEON SEWITCH AND SONS PROTESTED THE AWARD, CONTENDING THAT ACCEPTANCE OF THEIR BID WOULD RESULT IN THE LOWEST COST TO THE GOVERNMENT CONSIDERING BOTH THE BASE BID AND THE ESTIMATED QUANTITIES OF DETERIORATED LUMBER AND SLATE TO BE REPLACED. ON MAY 8, 1958, THE CONTRACTOR WAS DIRECTED TO STOP WORK PENDING RESOLUTION OF THE PROTEST. BY THAT TIME, IT APPEARS FROM THE ADMINISTRATIVE REPORT, THE CONTRACTOR HAD SET UP EXTENSIVE SCAFFOLDING, HAD MOVED MATERIALS AND OTHER ITEMS, SOME OF THEM RENTED, TO THE JOB SITE, AND HAD BEGUN DEMOLITION IN CONNECTION WITH THE CONTRACT.

THE LETTER OF JUNE 17 POINTS OUT THAT BID PRICES FOR REPLACEMENT OF DETERIORATED LUMBER AND SLATE SHOULD HAVE BEEN CONSIDERED IN AWARDING THE CONTRACT SINCE IT REPRESENTED AN INTEGRAL AND ESSENTIAL PART OF THE WORK.

BIDS SHOULD NOT BE EVALUATED ON A BASIS CONTRARY TO THAT STATED IN THE INVITATION, 10 COMP. GEN. 261. THEREFORE, IN VIEW OF THE LANGUAGE OF THE INVITATION, IT WOULD NOT HAVE BEEN PROPER TO EVALUATE THE BIDS ON OTHER THAN THE BASE BID. ON THE OTHER HAND, 10 U.S.C. 2305 (B) PROVIDES ,AWARDS SHALL BE MADE * * * TO THE RESPONSIBLE BIDDER WHOSE BID CONFORMS TO THE INVITATION AND WILL BE THE MOST ADVANTAGEOUS TO THE UNITED STATES, PRICE AND OTHER FACTORS CONSIDERED.' IT IS CLEAR THAT THE MOST ADVANTAGEOUS PRICE CAN BE DETERMINED ONLY UPON A CONSIDERATION OF THE TOTAL COST OF THE PROCUREMENT TO THE GOVERNMENT. TO IGNORE A SUBSTANTIAL PART OF THAT COST IN EVALUATING BID PRICES APPEARS NOT ONLY CONTRARY TO THE QUOTED STATUTORY PROVISION BUT WOULD ENCOURAGE THE SUBMISSION OF BIDS SIGNIFICANTLY UNDERSTATING THE PRICE OF THAT PORTION OF THE REQUIREMENT UPON WHICH BIDS WOULD BE EVALUATED AND INFLATING THE PRICE OF THE REMAINDER OF THE ITEMS. WE STRONGLY RECOMMEND THAT STEPS BE TAKEN TO INSURE THAT FUTURE INVITATIONS PROVIDE FOR EVALUATION ON THE BASIS OF THE PRICE OFFERED FOR THE ACTUAL PROCUREMENT TO BE EFFECTED, AS NEARLY AS IT MAY BE ASCERTAINABLE. SEE COMP. GEN. 555, 557.

THE ADMINISTRATIVE REPORT INDICATES THAT THE ACTUAL AMOUNT OF DETERIORATED LUMBER AND SLATE TO BE REPLACED IN THIS PROJECT WILL BE SUBSTANTIALLY LOWER THAN ORIGINALLY ESTIMATED, SO THAT THERE EXISTS A STRONG LIKELIHOOD THAT COMPLETION OF THE WORK UNDER THE PRESENT CONTRACT WILL RESULT IN A LOWER PRICE TO THE GOVERNMENT THAN WOULD A CONTRACT ON THE BASIS OF THE BID SUBMITTED BY LEON SEWITCH AND SONS. FURTHER, IT APPEARS THAT THE CONTRACTOR HAS INCURRED SUBSTANTIAL COSTS IN CARRYING OUT THE CONTRACT. THEREFORE, AND IN THE ABSENCE OF ANY AFFIRMATIVE INDICATION THAT THE PARTIES ACTED IN OTHER THAN GOOD FAITH, WE CONCLUDE THAT CANCELLATION IS NOT REQUIRED.