B-138355, FEBRUARY 27, 1959, 38 COMP. GEN. 572

B-138355: Feb 27, 1959

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A BIDDER WHOSE OVERALL BID WAS EQUAL TO MAXIMUM LIMITATION AND WAS LOWER THAN ANY OF THE OTHER BIDS ONLY BECAUSE OF THE NOMINAL PRICE QUOTED FOR THE ADDITIVES. WHO SUBMITTED WITH THE BID INFORMATION WHICH INDICATED THAT THE NEWLY FORMED CORPORATION WAS UNDER THE MANAGEMENT AND CONTROL OF OFFICIALS WITH A REPUTATION FOR RESPONSIBILITY AND EXPERIENCE IN SIMILAR PROJECTS. WAS A VALID LEGAL CORPORATION UNDER CALIFORNIA LAW AND THE ADMINISTRATIVE DETERMINATION THAT THE BIDDER WAS AN ELIGIBLE BIDDER UNDER 42 U.S.C. 1594 (B) IS PROPERLY SUPPORTED BY THE RECORD. 1959: REFERENCE IS MADE TO YOUR CORRESPONDENCE AND THE CORRESPONDENCE FROM YOUR ATTORNEYS. THIS OPENING TIME WAS EXTENDED BY CHANGE NOTICE NO. 3.

B-138355, FEBRUARY 27, 1959, 38 COMP. GEN. 572

BIDS - EVALUATION - PRICE DIFFERENCES - BIDDERS' QUALIFICATIONS UNDER AN INVITATION FOR THE CONSTRUCTION OF A CAPEHART HOUSING PROJECT WHICH REQUIRED BIDDERS TO FURNISH QUOTATIONS ON A BASIC BID AND SEPARATE QUOTATIONS ON CERTAIN ADDITIVES, SUBJECT TO A MAXIMUM LIMITATION, AND WHICH CONTAINED AN ITEMIZED COST ESTIMATE PREPARED BY THE GOVERNMENT, A BIDDER WHOSE OVERALL BID WAS EQUAL TO MAXIMUM LIMITATION AND WAS LOWER THAN ANY OF THE OTHER BIDS ONLY BECAUSE OF THE NOMINAL PRICE QUOTED FOR THE ADDITIVES, MAY NOT BE REGARDED AS HAVING SUBMITTED AN ERRONEOUS BID OR A BID OTHER THAN AS INTENDED, IN THE ABSENCE OF ANY DISCREPANCIES ON THE FACE OF THE BID, AND IN VIEW OF THE LIMITATION AND THE KNOWLEDGE THE BIDDER HAD OF THE ACTUAL PROJECT COSTS. A LOW BIDDER FOR THE CONSTRUCTION OF A CAPEHART HOUSING PROJECT WHO, THE DAY BEFORE BID OPENING, FILED ARTICLES OF INCORPORATION WITH THE SECRETARY OF STATE OF CALIFORNIA, BUT WHO SUBMITTED WITH THE BID INFORMATION WHICH INDICATED THAT THE NEWLY FORMED CORPORATION WAS UNDER THE MANAGEMENT AND CONTROL OF OFFICIALS WITH A REPUTATION FOR RESPONSIBILITY AND EXPERIENCE IN SIMILAR PROJECTS, WAS A VALID LEGAL CORPORATION UNDER CALIFORNIA LAW AND THE ADMINISTRATIVE DETERMINATION THAT THE BIDDER WAS AN ELIGIBLE BIDDER UNDER 42 U.S.C. 1594 (B) IS PROPERLY SUPPORTED BY THE RECORD.

TO THE H. L. COBLE CONSTRUCTION COMPANY, FEBRUARY 27, 1959:

REFERENCE IS MADE TO YOUR CORRESPONDENCE AND THE CORRESPONDENCE FROM YOUR ATTORNEYS, PROTESTING THE ISSUANCE BY THE DEPARTMENT OF THE NAVY TO ATLANTIC CONTRACTORS, INC., NORTH HOLLYWOOD, CALIFORNIA, OF A " LETTER OF ACCEPTABILITY" IN CONNECTION WITH THE 800 UNIT CAPEHART HOUSING PROJECT AT CAMP LEJUNE, NORTH CAROLINA, INVITATION NO. NBY ( CH) 7757, FHA PROJECT NO. 1053-81022-MC-2.

OUR INVESTIGATION OF THE CIRCUMSTANCES, AND ANALYSIS THEREOF, HAS DEVELOPED THE FOLLOWING INFORMATION AND CONCLUSIONS.

THE INVITATION TO BID, ISSUED BY THE DEPARTMENT OF THE NAVY ON OCTOBER 15, 1958, STIPULATED THE OPENING TIME FOR BIDS TO BE 2:00 P.M., DECEMBER 2, 1958. THIS OPENING TIME WAS EXTENDED BY CHANGE NOTICE NO. 3, ISSUED NOVEMBER 14, 1958, TO 2:00 P.M., DECEMBER 9, 1958, BECAUSE REPRESENTATIVES OF FOUR PROSPECTIVE BIDDERS MADE ORAL REQUESTS FOR SUCH AN EXTENSION. THE INVITATION FURNISHED DETAILED INFORMATION CONCERNING THE PREPARATION OF BIDS, DATA THAT WOULD BE REQUIRED TO BE ATTACHED TO THE BIDS SHOWING THE EXPERIENCE AND FINANCIAL RESPONSIBILITY OF THE BIDDERS AND THOSE WHO MIGHT PARTICIPATE WITH THEM ON THE PROJECT, AND THE METHOD THAT WOULD BE USED TO EVALUATE THE BIDS. PARAGRAPH 4, PART I, OF THE INVITATION INVITED SPECIFIC ATTENTION TO THE "ADDITIVE" AND "DEDUCTIVE" ITEMS, AND WITH RESPECT TO THE "ADDITIVE" ITEMS IT WAS PROVIDED THAT THEY "WILL BE ADDED CUMULATIVELY IN THE ORDER IN WHICH THEY APPEAR HEREIN TO BASIC BIDS RECEIVED UNTIL SUCH ITEMS ARE EXHAUSTED OR UNTIL THE ADDITION OF A FURTHER "ADDITIVE" ITEM WOULD RESULT IN RAISING ALL BASIC BIDS ABOVE THE AMOUNT WHICH THE FEDERAL HOUSING ADMINISTRATION DETERMINES TO BE THE MAXIMUM INSURABLE MORTGAGE AMOUNT OR AN AMOUNT EQUAL TO AN AVERAGE OF $16,250.00 PER DWELLING UNIT, WHICHEVER IS LESSER.' FURTHER, PARAGRAPH 4 DIRECTED ATTENTION TO PARAGRAPH 10, PART II, OF THE INVITATION WHICH, INSOFAR AS PERTINENT, STATES:

CERTAIN ITEMS OF THE PLANS AND SPECIFICATIONS MAY BE TERMED THEREIN AS "ADDITIVE ITEMS.' THE BASIC BID PURSUANT TO THIS INVITATION, AS DEFINED BELOW, WILL NOT INCLUDE SUCH ITEMS BUT BIDDERS WILL BE REQUIRED TO STATE, IN THE NATURE OF A SEPARATE INDIVIDUAL BID, THE COST OF THE CONSTRUCTION OR INSTALLATION, AS THE CASE MAY BE, OF EACH SUCH ITEM. THE DEPARTMENT WILL ADD SUCH ITEMS, IN THE EXACT ORDER SET FORTH IN PARAGRAPH 4 OF PART I OF THIS INVITATION, TO ANY AND ALL BIDS TO THE MAXIMUM EXTENT POSSIBLE WITHIN THE AMOUNT THE FEDERAL HOUSING ADMINISTRATION DETERMINES TO BE THE MAXIMUM INSURABLE MORTGAGE AMOUNT OR AN AMOUNT EQUAL TO AN AVERAGE OF $16,250 PER DWELLING UNIT, WHICHEVER IS LESSER. DETERMINATION OF LOWEST ACCEPTABLE BID WILL THEN BE MADE AFTER SUCH ITEMS HAVE BEEN ADDED AS AFORESAID. IT IS, THEREFORE, POSSIBLE THAT A BIDDER MAY SUBMIT THE LOWEST BASIC BID, BUT NOT THE LOWEST ACCEPTABLE BID WHEN THE ADDITIVES HAVE BEEN INCLUDED AS PERMITTED ABOVE. BIDDERS SHOULD NOTE THAT THE DEPARTMENT OF THE NAVY EXERCISES NO DISCRETION IN INCLUDING OR EXCLUDING ANY OR ALL ADDITIVES. THIS MATTER WILL BE ENTIRELY CONTROLLED BY THE PROCEDURE PROVIDED HEREIN.

ONLY THREE OF THE FOURTEEN BIDDERS RESPONDING TO THE INVITATION SUBMITTED BASIC BIDS WITHIN THE MAXIMUM PRICE LIMITATION OF $13,000,000 ON 800 DWELLING UNITS AT AN AVERAGE COST OF $16,250 EACH):

BASE BID ADDITIVE 1 ADDITIVE 2 H. L. COBLE CONSTRUCTION CO------ $12,888,000 $441,400 $18,700 T. A. LOVING AND CO---------------- 12,997,000 443,000 37,000 ATLANTIC CONTRACTORS, INC---------- 12,998,000 1,000 1,000

ADDITIVE ITEM 1 IS SUMMER AIR-CONDITIONING AND ADDITIVE ITEM 2 IS SUBSTITUTION OF BRONZE PORCH SCREENING FOR ALUMINUM. IN VIEW OF THE AMOUNTS QUOTED BY THESE BIDDERS, REFERENCE NEED NOT BE MADE TO ADDITIVE NUMBER 3, NOR TO THE DEDUCTIVE ITEMS. BECAUSE OF THE AMOUNTS ATLANTIC INCLUDED FOR ADDITIVES 1 AND 2, IT WAS REQUESTED TO CONFIRM ITS BID AT THE OPENING AND IT DID SO.

ON JANUARY 12, 1959," LETTER OF ACCEPTABILITY" WAS ISSUED BY THE DEPARTMENT OF THE NAVY TO ATLANTIC CONTRACTORS, INC., INFORMING THAT COMPANY THAT ITS BID DATED DECEMBER 9, 1958, IN THE AMOUNT OF $13,000,000, ARRIVED AT AFTER ADDITIVES 1 AND 2 WERE APPLIED TO THE BASIC BID PRICE, WAS DETERMINED TO BE THE LOWEST ACCEPTABLE BID, AND REQUIRING IT TO BE READY FOR THE FINAL "CLOSING" ON OR BEFORE MARCH 4, 1959.

THIS ISSUANCE OF THE LETTER OF ACCEPTABILITY IS PROTESTED BASICALLY ON THE GROUND THAT ATLANTIC WAS NOT AN "ELIGIBLE BIDDER," AS DEFINED IN THE HOUSING AMENDMENTS OF 1955, AS AMENDED, 42 U.S.C. 1594 (B), IN THAT IT DID NOT SUBMIT THE "LOWEST ACCEPTABLE BID," AND THAT IT WAS NOT A PERSON, PARTNERSHIP, FIRM OR CORPORATION QUALIFIED BY EXPERIENCE AND FINANCIAL RESPONSIBILITY TO CONSTRUCT HOUSING OF THE TYPE REQUIRED.

THE ATLANTIC BID HAS BEEN REFERRED TO AS AN "UNBALANCED" BID. IN THE CASE OF FRANK STAMATO AND CO. V. CITY OF NEW BRUNSWICK, 90 A.2D 34, 36 WHICH APPEARS TO BE PARTICULARLY APPLICABLE HERE, IT WAS HELD AS FOLLOWS:

AN UNBALANCED BID COMPREHENDS A BID BASED ON NOMINAL PRICES FOR SOME WORK AND ENHANCED PRICES FOR OTHER WORK. THE MERE FACT THAT A BIDDER HAS SUBMITTED AN UNBALANCED BID, DOES NOT AUTOMATICALLY OPERATE TO INVALIDATE AN AWARD OF THE CONTRACT TO SUCH BIDDER. THERE MUST BE PROOF OF COLLUSION OR OF FRAUDULENT CONDUCT ON THE PART OF SUCH BIDDER AND THE CITY OR ITS ENGINEER OR OTHER AGENT, OR PROOF OF OTHER IRREGULARITY OF SUCH SUBSTANTIAL NATURE AS WILL OPERATE TO AFFECT FAIR AND COMPETITIVE BIDDING.

SEE ALSO WALTER V. MCCLELLAN, 99 N.Y. SUPP. 78, 84, AND PHIFER V. CITY OF BAYONNE, 146 ATL. 463, 465.

WE THINK IT CORRECTLY MAY BE SAID THAT PARAGRAPH 10 OF THE INVITATION CONTEMPLATED THAT DIFFERENT BIDDERS MIGHT QUOTE WIDELY DIVERGENT PRICES FOR THE ADDITIVES SPECIFIED. AS POINTED OUT, THE PROVISIONS RECOGNIZED THAT IT WAS POSSIBLE FOR A BIDDER TO SUBMIT THE LOWEST BASIC BID AND NOT TO BE THE LOWEST ACCEPTABLE BID WHEN THE ADDITIVES HAD BEEN INCLUDED. HOWEVER, THE OBJECTION TO THE BID AS MADE IS PREMISED ON THE GROUND THAT THE BIDDER SOUGHT TO GAIN AN OPPORTUNITY TO SECOND GUESS THE OTHER BIDDERS AFTER ALL THE BIDS WERE OPEN, SINCE ITS NOMINAL PRICES ON ADDITIVES 1 AND 2 ALLEGEDLY PUT IT IN A POSITION TO ALLEGE ERROR IF IT WISHED TO DO SO.

IT SHOULD BE NOTED THAT THE BIDDING SITUATION UNDER THE SUBJECT INVITATION WAS ESSENTIALLY DIFFERENT FROM BIDDING UNDER ORDINARY CIRCUMSTANCES. GENERALLY, WHEN INVITING PRICES FOR CONSTRUCTION WORK, BIDDERS ARE APPRISED ONLY OF THE JOB SPECIFICATIONS. BUT HERE, IN ADDITION TO THAT INFORMATION, BIDDERS WERE PUT ON NOTICE OF A SPECIFIC $13,000,000 LIMITATION CONTROLLING THE AWARD AND WERE SUPPLIED WITH ESTIMATE OF THE PROJECT PREPARED BY FHA. CONSIDERING THE MATTER AGAIN THIS BACKGROUND, AND THE FURTHER FACT THAT ATLANTIC HAD RECEIVED REAL BIDS FROM PROSPECTIVE SUBCONTRACTORS, IT SEEMS CLEAR THAT ATLANTIC WAS AWARE OF WHAT THE ACTUAL COST OF THE ADDITIVE ITEMS MIGHT BE, BUT THAT IT INTENDED TO BID AS IT DID TO COME WITHIN THE $13,000,000 PRICE LIMITATION INCLUSIVE OF ADDITIVES 1 AND 2. THE INVITATION DID NOT REQUIRE THE BIDDER TO STATE ITS ACTUAL COST FOR THE ADDITIVE ITEMS, BUT ONLY ITS BID PRICE. FROM A REVIEW OF THE CIRCUMSTANCES AND AFTER CONDUCTING AN INDEPENDENT INVESTIGATION OF THIS MATTER, THERE IS NO REASON APPARENT TO US NOR HAS ANY PLAUSIBLE REASON BEEN ESTABLISHED TO SHOW THAT THE PURPOSE OF BIDDING THE $1,000 PRICES WAS TO GAIN ANY ADVANTAGE OVER OTHER BIDDERS. RATHER IT WOULD APPEAR THAT THE OBJECTIVE GAINED BY ATLANTIC BY THIS METHOD OF BIDDING WAS A LEGITIMATE ONE, THE AWARD OF THE CONTRACT.

WE THINK THIS CASE CLEARLY IS DISTINGUISHABLE FROM 35 COMP. GEN. 33. THAT CASE ON THE FACE OF THE BID THERE WERE DISCREPANCIES BETWEEN UNIT PRICES AND EXTENDED AMOUNTS AND IT WAS READILY APPARENT THAT THE BIDDER COULD HAVE CREATED THOSE DISCREPANCIES INTENTIONALLY IN ORDER TO PLACE HIMSELF IN THE POSITION WHERE HE COULD TAKE ADVANTAGE OF THE UNIT PRICES AND THEREBY MAKE HIMSELF THE LOW BIDDER SHOULD HE FIND AFTER OPENING THAT HE WAS NOT LOW ON THE BASIS OF HIS EXTENDED TOTAL PRICES. HOWEVER IN THIS INSTANCE, THERE ARE NO DISCREPANCIES ON THE FACE OF ATLANTIC'S BID AND, ALL FACTORS CONSIDERED, ITS BID PRICES CANNOT BE SAID TO BE OBVIOUSLY ERRONEOUS OR OTHER THAN AS INTENDED.

ALSO IT HAS BEEN ALLEGED THAT, BY ITS $13,000,000 BID, ATLANTIC GAINED ANOTHER OPPORTUNITY TO SECOND GUESS THE OTHER BIDDERS IN THAT, IF THE WAGE RATE DETERMINATIONS TO BE MADE BY THE DEPARTMENT OF LABOR WOULD HAVE REQUIRED THE PROJECT PRICE TO EXCEED THE STATUTORY CEILING, IT COULD HAVE ELECTED TO PERFORM AT NO MORE THAN THE CEILING OR TO WITHDRAW ITS BID. HOWEVER, ATLANTIC HAD NO MORE OF AN ADVANTAGE THAN ANY OTHER LOW BIDDER WOULD HAVE HAD IN THIS REGARD, SINCE PARAGRAPH 5 OF PART II OF THE INVITATION FOR BIDS SPECIFICALLY PROVIDED:

* * * SECTION 212 (A) OF THE NATIONAL HOUSING ACT, AS AMENDED, AND THE DAVIS-BACON ACT REQUIRE THAT WAGES PAID TO LABORERS AND MECHANICS BE THE PREVAILING WAGE AS DETERMINED BY THE SECRETARY OF LABOR NOT MORE THAN 90 DAYS PRIOR TO THE COMMENCEMENT OF CONSTRUCTION. SINCE MORE THAN 90 DAYS MAY ELAPSE FROM THE DATE OF THIS INVITATION FOR BIDS TO THE COMMENCEMENT OF CONSTRUCTION, THE BIDS CALLED FOR BY THIS INVITATION FOR BIDS WILL INCLUDE A PROVISION FOR ADJUSTMENT OF THE DOLLAR AMOUNT THEREIN SPECIFIED TO REFLECT ANY DIFFERENCE BETWEEN THE TENTATIVE MINIMUM WAGE SCHEDULE ATTACHED HERETO AND THE APPLICABLE MINIMUM WAGE SCHEDULE AS FINALLY DETERMINED BY THE SECRETARY OF LABOR. ANY SUCH ADJUSTMENT WILL BE IN AN AMOUNT DETERMINED BY THE COMMISSIONER TO REFLECT SUCH DIFFERENCES, AND THE AMOUNT OF THE LOWEST ACCEPTABLE BID AND THE FHA ESTIMATED REPLACEMENT COST OF THE PROPERTY OR PROJECT WILL BE AMENDED IN THE AMOUNT SO DETERMINED BY THE COMMISSIONER; EXCEPT THAT, IF SUCH AN ADJUSTMENT WOULD INCREASE THE AMOUNT OF THE BID ABOVE THE AMOUNT OF ANY OTHER STATUTORY MAXIMUM APPLICABLE TO THE INSURABLE MORTGAGE, THE ELIGIBLE BUILDER WILL HAVE THE OPTION OF REDUCING HIS BID TO SUCH STATUTORY MAXIMUM OR OF WITHDRAWING HIS BID.

ALSO, THE COPY OF THE LETTER OF ACCEPTABILITY, ATTACHED TO THE INVITATION, STATED:

2. THE DEPARTMENT WILL MAKE APPLICATION TO THE SECRETARY OF LABOR FOR AN APPROPRIATE WAGE DETERMINATION FOR USE IN THE CONSTRUCTION OF THE PROJECT, AND WILL FURNISH A COPY OF SUCH DETERMINATION TO YOU AND TO THE COMMISSIONER. SUCH WAGE DETERMINATION WILL BE USED BY THE COMMISSIONER TO INCREASE OR DECREASE THE BID PRICE IN THE MANNER SPECIFIED IN YOUR BID.

AS A MATTER OF FACT, BEFORE THE WAGE RATE DETERMINATION WAS MADE, ATLANTIC AGREED THAT REGARDLESS OF THE LABOR ESCALATION, THE AMOUNT OF THE HOUSING CONTRACT WOULD NOT EXCEED $13,185,000. AND, IN ANY EVENT, ATLANTIC WILL BE REQUIRED TO PERFORM AT ITS $13,000,000 BID PRICE, BECAUSE THE DEPARTMENT OF LABOR ON FEBRUARY 9, 1959, DETERMINED THAT THERE WOULD BE NO INCREASE IN WAGE RATES FOR THIS PROJECT.

IN THE CIRCUMSTANCES, WE FIND NO REASON TO CONCLUDE THAT ATLANTIC'S BID WAS OTHER THAN THE ,LOWEST ACCEPTABLE BID.'

SO FAR AS CONCERNS THE EXPERIENCE AND FINANCIAL RESPONSIBILITY OF ATLANTIC, EACH BIDDER WAS REQUIRED TO SUBMIT WITH ITS BID CERTAIN DATA BEARING ON THE EXPERIENCE AND FINANCIAL RESPONSIBILITY OF ITSELF AND ITS GENERAL CONTRACTOR, IF ANY, AND AN AFFIDAVIT FROM EACH OF THE PARTIES THAT IT WAS NOT PARTICIPATING IN ANY OTHER BID UNDER THE SUBJECT INVITATION. ATLANTIC'S BID DATED DECEMBER 9, 1958, WAS HAND DELIVERED AND RECEIVED AT 1:30 P.M. ON DECEMBER 9, 1958. ATTACHED TO THE BID SUBMITTED BY ATLANTIC AND SIGNED BY STANLEY GUY HAYES, AS PRESIDENT OF THE CORPORATION, IS A ,PERSONAL FINANCIAL AND CREDIT STATEMENT" OF ATLANTIC CONTRACTORS, INC., BEARING THE TYPEWRITTEN SIGNATURE OF HAL B. HAYES; AN "AFFIDAVIT" AS FOLLOWS:

I CERTIFY THAT I AM THE PRESIDENT OF THE ATLANTIC CONTRACTORS INC. AND THAT I AM NOT PARTICIPATING IN ANY OTHER BID ON INV. NO. NBY (CH) 7757.

(SIGNED) STANLEY GUY HAYES

STANLEY GUY HAYES,

(SIGNED) HAL B. HAYES

HAL B. HAYES,

(SIGNED) HAL B. HAYES,

HAL B. HAYES CONTRACTOR, INC. AN "APPLICATION FOR MORTGAGE INSURANCE," ESTIMATING THE TOTAL REQUIREMENTS AT $13,000,000, SIGNED BY STANLEY GUY HAYES ON BEHALF OF ATLANTIC CONTRACTORS, INC.; AND A PORTFOLIO LABELED:

HAL B. HAYES CONTRACTOR, INC.

FINANCIAL STATEMENT

OCTOBER 31, 1958

THE PORTFOLIO CONTAINED AMONG OTHER THINGS LETTERS OF RECOMMENDATION OF HAL B. HAYES AND HAL B. HAYES CONTRACTOR, INC., FROM FINANCIAL INSTITUTIONS, SURETIES, AND THE COMMANDER OF AN AIR FORCE BASE, NEWSPAPER CLIPPINGS REPORTING ON MILITARY HOUSING PROJECTS BUILT BY HAL B. HAYES CONTRACTOR, INC., AT EDWARDS AIR FORCE BASE AND TO BE CONSTRUCTED BY HAL B. HAYES CONTRACTOR, INC., ,SUBSIDIARIES" AT BEALE AND GRAND FORKS AIR FORCE BASES, AND STATEMENTS DESIGNED TO POINT UP HAL B. HAYES' EXPERIENCE IN THE BUILDING FIELD. ON DECEMBER 10, 1958, THE ATLANTIC BID AND ITS ATTACHMENTS, ALONG WITH THE OTHER THIRTEEN BIDS, WAS FORWARDED TO THE FHA FOR THE STATUTORY REQUIRED CONSULTATION.' BY LETTER DATED DECEMBER 31, 1958, FHA ADVISED NAVY THAT IT "CONCLUDED THAT THE LOW BIDDER SUBMITTED, ATLANTIC CONTRACTORS, NC., HAL B. HAYES CONTRACTOR, INC., AND HAL B. HAYES ARE ACCEPTABLE" AND FURTHER THAT "WE UNDERSTAND THAT HAL B. HAYES CONTRACTOR, INC. IS THE SOLE STOCKHOLDER OF ATLANTIC CONTRACTORS, INC. AND THE RESOURCES OF THE SOLE STOCKHOLDER ARE AVAILABLE TO ATLANTIC CONTRACTORS, INC.' FHA'S FILES CONTAIN THE FOLLOWING INFORMATION:

(A) A STATEMENT THAT STANLEY GUY HAYES IS THE SECRETARY-1TREASURER OF HAL B. HAYES CONTRACTOR, INC.

(B) A LETTER DATED DECEMBER 19, 1958, FROM STANLEY GUY HAYES, SIGNED AS PRESIDENT, ATLANTIC CONTRACTORS, INC., WRITTEN ON HAL B. HAYES CONTRACTOR, INC., STATIONARY, STATING THAT HAL B. HAYES CONTRACTOR, INC., WILL FURNISH ALL NECESSARY CLOSING FUNDS AND WORKING CAPITAL TO COMPLETE THE PROJECT AND WILL INDEMNIFY 100 PERCENT THE COMPLETION THEREOF.

(C) A TELEGRAM DATED DECEMBER 19, 1958, FROM THE CONTINENTAL CASUALTY COMPANY INDICATING THAT NO DIFFICULTY WAS ANTICIPATED IN FURNISHING THE REQUIRED BONDS.

(D) A TELEGRAM DATED DECEMBER 19, 1958, FROM THE BANK OF AMERICA STATING IN PART THAT " ATLANTIC CONTRACTORS INC. THROUGH THEIR PARENT CORPORATION HAL B. HAYES CONTRACTOR INC. HAS BEEN WELL AND FAVORABLY KNOWN TO THIS BANK FOR MANY YEARS. AT PRESENT BALANCES ARE IN EXCESS OF 1,500,000,000.'

(E) A TELEGRAM FROM ASSOCIATED GENERAL CONTRACTORS RECOMMENDING " HAL B. HAYES, INC., DOING BUSINESS AS ATLANTIC CONTRACTORS, INC., "

(F) A DUN AND BRADSTREET REPORT, DATED DECEMBER 23, 1958, ON ATLANTIC CONTRACTORS, INC.

(G) KNOWLEDGE THAT HAL B. HAYES CONTRACTOR, INC., AND ITS PRINCIPALS, ARE SUCCESSFUL BUILDERS OF OTHER CAPEHART PROJECTS.

THESE OTHER PROJECTS WHICH WERE HANDLED BY HAL B. HAYES CONTRACTOR, INC., UNDER DIFFERENT CORPORATE NAMES ARE:

AIR FORCE: 744 UNIT PROJECT AT GRAND FORKS AIR FORCE BASE, CONSTRUCTED BY PROGRESSIVE CONTRACTORS, INC.;

570 UNIT PROJECT AT BEALE AIR FORCE BASE CONSTRUCTED BY HAL B. HAYES AND ASSOCIATES;

220 UNIT PROJECT AT MATHER AIR FORCE BASE CONSTRUCTED BY D AND L CONSTRUCTION CO.

ARMY: 490 UNIT PROJECT AT FORT BLISS CONSTRUCTED BY HAL HAYES TEXAS, INC.

ALSO, THE DEPARTMENT OF THE NAVY WAS SATISFIED, BEFORE ISSUING THE LETTER OF ACCEPTABILITY, THAT ATLANTIC AND HAL B. HAYES CONTRACTOR, INC., WERE UNDER THE MANAGEMENT AND CONTROL OF EXPERIENCED OFFICIALS WITH A REPUTATION FOR RESPONSIBILITY. IN 36 COMP. GEN. 673, WE HELD THAT IN EVALUATING A NEWLY FORMED CORPORATION, THE EXPERIENCE AND RESPONSIBILITY OF THE PRINCIPAL OFFICERS AND ITS PREDECESSOR CORPORATION COULD BE CONSIDERED.

IT HAS BEEN CONTENDED THAT ATLANTIC WAS NOT A VALID LEGAL CORPORATION QUALIFIED TO BID ON DECEMBER 9, 1958, BECAUSE ITS ARTICLES OF INCORPORATION WERE ONLY FILED WITH THE SECRETARY OF STATE OF CALIFORNIA ON DECEMBER 8, 1958. IN THIS RESPECT YOUR ATTENTION IS DIRECTED TO DEERINGS CALIFORNIA CODES, CORPORATIONS, SECTION 313:

EVIDENCE OF FORMATION AND EXISTENCE OF CORPORATION. IN ANY ACTION AT LAW, OTHER THAN ONE IN THE NATURE OF QUO WARRANT , THE ORIGINAL ARTICLES OR CERTIFICATE OF INCORPORATION OF A CORPORATION, OR A COPY OF EITHER THEREOF, DULY CERTIFIED BY THE SECRETARY OF STATE, IS CONCLUSIVE EVIDENCE OF THE FORMATION OF THE CORPORATION AND PRIMA FACIE EVIDENCE OF ITS CORPORATE EXISTENCE.

ALSO SEE DEERINGS CALIFORNIA CODES, CORPORATIONS, SECTION 25154, WHICH PERMITS THE TRANSACTION OF CORPORATE BUSINESS PRIOR TO RECEIVING A PERMIT TO ISSUE SECURITIES OR THE ISSUANCE OF SUCH SECURITIES.

WE HAVE CONSISTENTLY FOLLOWED THE RULE THAT THE MATTER OF A BIDDER'S QUALIFICATIONS AND RESPONSIBILITY IS SOLELY FOR DETERMINATION BY THE CONTRACTING AGENCY WITH WHICH THIS OFFICE WILL NOT INTERFERE IN THE ABSENCE OF A SHOWING OF BAD FAITH OR LACK OF A REASONABLE BASIS THEREFOR. 37 COMP. GEN. 430. THIS RULE IS ESPECIALLY APPLICABLE HERE SINCE THE PERTINENT STATUTORY PROVISIONS, 42 U.S.C. 1594 (B), SPECIFICALLY PLACE THE RESPONSIBILITY FOR DETERMINING THE "ELIGIBLE BIDDER" FOR A HOUSING PROJECT SUCH AS HERE INVOLVED IN "THE SECRETARY AFTER CONSULTATION WITH THE MMISSIONER.' IN VIEW THEREOF, AND SINCE THE RECORD SUPPORTS THE ADMINISTRATIVE DETERMINATION THAT ATLANTIC CONTRACTORS, INC., IS AN "ELIGIBLE BIDDER," WE THINK THERE IS NO PROPER BASIS FOR OUR OBJECTION TO THAT DETERMINATION.