B-140481, SEPTEMBER 8, 1959, 39 COMP. GEN. 173

B-140481, SEPTEMBER 8, 1959, 39 COMP. GEN. 173

CONTRACTS - BIDDERS' QUALIFICATIONS - EXPERIENCE - SUBCONTRACTORS A LOW BIDDER WHO DOES NOT HAVE THE REQUISITE PREVIOUS EXPERIENCE SPECIFIED IN THE INVITATION BUT WHO PROPOSES TO USE EXPERIENCED SUBCONTRACTORS--- ALTHOUGH HE HAS NEVER PARTICIPATED WITH THE SUBCONTRACTORS IN ANY WORK--- DOES NOT QUALIFY AS A COMPETENT BIDDER TO WHOM THE GOVERNMENT IS REQUIRED TO LOOK FOR FULL RESPONSIBILITY AND SATISFACTORY PERFORMANCE. TO CONSTRUE A BIDDER'S COMPETENCY REQUIREMENT IN AN INVITATION WHICH SPECIFIES THAT CONTRACTS WILL BE LIMITED TO BIDDERS WHO HAVE "EITHER WITH THEIR OWN ORGANIZATION OR THROUGH THE SUBCONTRACTOR" MET CERTAIN EXPERIENCE REQUIREMENTS TO PERMIT A BIDDER WITH NO PREVIOUS EXPERIENCE TO QUALIFY AS A COMPETENT BIDDER BY PROPOSING TO USE EXPERIENCED SUBCONTRACTORS WOULD BE TANTAMOUNT TO TRANSFERRING THE RESPONSIBILITY FOR SATISFACTORY PERFORMANCE TO THE SUBCONTRACTOR. THE DETERMINATION OF WHETHER EXPERIENCE QUALIFICATIONS REQUIRED OF PROSPECTIVE BIDDERS UNDER INVITATION IS RESTRICTIVE OF COMPETITION DEPENDS ON THE NEEDS OF THE PROCURING AGENCY AND, IN THE ABSENCE OF EVIDENCE THAT THE REQUIREMENTS ARE UNNECESSARY TO MEET THE AGENCY'S NEEDS OR TO PROTECT THE INTERESTS OF THE UNITED STATES, THE ADMINISTRATIVE DETERMINATION TO REQUIRE EXPERIENCE WILL NOT BE QUESTIONED. WHEN THERE IS REASON TO DOUBT A LOW BIDDER'S LACK OF RESPONSIBILITY BASED ON OFFICIAL OPINION CONCERNING HIS QUALIFICATION TO PERFORM SATISFACTORILY, EVEN THOUGH THE BIDDER FAILS TO MEET THE DETAILED EXPERIENCE REQUIREMENTS IN THE INVITATION, THE REJECTION OF THE LOW BID AND AWARD TO ANOTHER BIDDER SHOULD BE SUPPORTED BY A SPECIFIC FACTUAL DETERMINATION THAT THE LOW BIDDER WAS NOT A RESPONSIBLE BIDDER.

TO THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION, SEPTEMBER 8, 1959:

YOUR LETTER DATED AUGUST 13, 1959, TRANSMITTED A COPY OF THE SPECIFICATIONS UNDER WHICH BIDS WERE REQUESTED FOR FURNISHING AND INSTALLING THE ELEVATOR PLANT IN THE UNITED STATES COURT HOUSE AND FEDERAL OFFICE BUILDING AT PHOENIX, ARIZONA. YOU ADVISE THAT THE THREE BIDS RECEIVED ON THESE SPECIFICATIONS WERE OPENED ON JUNE 25, 1959, AND WERE FOUND TO BE AS FOLLOWS:

PHOENIX ELEVATOR COMPANY----------------------------$259,978.00

OTIS ELEVATOR COMPANY------------------------------- 262,917.00

WESTINGHOUSE ELECTRIC CORPORATION------------------- 325,291.00

OTIS ELEVATOR COMPANY HAS PROTESTED AGAINST AWARD TO PHOENIX ELEVATOR COMPANY ON THE GROUND THAT THE LATTER COMPANY DOES NOT HAVE THE EXPERIENCE QUALIFICATIONS REQUIRED BY SECTION 2-22 OF THE SPECIFICATIONS, WHICH READS AS FOLLOWS:

2-22. COMPETENCY OF BIDDER.--- CONSIDERATION FOR AWARD OF THIS CONTRACT WILL BE LIMITED TO BIDDERS WHO, ON THE DATE OF THE OPENING OF BIDS, HAVE EITHER WITH THEIR OWN ORGANIZATIONS OR THROUGH THE SUBCONTRACTOR THEY WILL USE ON THIS PROJECT MET THE FOLLOWING REQUIREMENTS:

(A) THE BIDDER MUST HAVE HAD NOT LESS THAN THREE YEARS EXPERIENCE IN INSTALLING AND SERVICING ELEVATORS WHICH MEET THE REQUIREMENTS OF THIS SPECIFICATION IN RESPECT TO CONTROL AND OPERATION.

(B) THE BIDDER MUST HAVE INSTALLED THE ELEVATORS IN THREE SEPARATE BUILDINGS WHERE THE CONTROL AND OPERATION MEET, AND THE LOADS AND SPEEDS MEET OR EXCEED, THAT REQUIRED BY THIS SPECIFICATION, ALL OF WHICH HAVE BEEN IN SUCCESSFUL OPERATION AT LEAST TWO YEARS. THESE THREE INSTALLATIONS MUST EACH INCLUDE A MINIMUM OF FOUR ELEVATORS OPERATING TOGETHER IN A BANK OR GROUP FROM A RISER OR COMMON RISERS OF LANDING PUSH BUTTONS, AND THE ELEVATOR CONTROLLERS, GROUP SUPERVISORY CONTROL SYSTEM, SELECTOR, MACHINES M.G. SETS, USED MUST BE THE PRODUCT OF SAME MANUFACTURER OR COMBINATION OF MANUFACTURES, WHICH THE BIDDER WILL USE ON THIS PROJECT IF HE IS THE SUCCESSFUL BIDDER. A LIST OF THE THREE INSTALLATIONS AS REQUIRED ABOVE SHALL BE SUBMITTED UPON REQUEST BY THE SERVICE AFTER THE BIDS ARE OPENED. THE LIST SHOULD INCLUDE THE NAME OF THE BUILDING OWNER OR MANAGER, THE LOCATION AND THE NAME OF THE BUILDING. FAILURE TO MEET THE FOREGOING EXPERIENCE REQUIREMENTS, OR TO SUBMIT THE LIST OF INSTALLATIONS REQUIRED, WILL BE REASON FOR DISQUALIFICATION.

THIS CONTRACT WILL NOT BE AWARDED TO ANY CONTRACTOR WHO HAS ESTABLISHED ON FORMER JOBS, EITHER GOVERNMENT, MUNICIPAL OR COMMERCIAL, A RECORD FOR UNSATISFACTORY ELEVATOR INSTALLATIONS, OR HAS REPEATEDLY FAILED TO COMPLETE CONTRACTS AWARDED HIM WITHIN THE CONTRACT TIME, OR HAS NOT THE REQUISITE RECORD OF SATISFACTORILY PERFORMING ELEVATOR INSTALLATIONS OF SIMILAR TYPE AND IMPORTANCE.

FROM YOUR LETTER AND ITS ENCLOSURES IT APPEARS THAT THE SYSTEM COVERED BY THE SPECIFICATIONS CONSISTS OF A SINGLE BANK OF FOUR GEARLESS ELECTRIC ELEVATORS WITH GROUP AUTOMATIC SUPERVISORY CONTROLS, AND THAT THE LOW BIDDER, WHILE ENGAGED IN THE BUSINESS OF INSTALLING ELEVATORS FOR 26 YEARS AND CONSIDERED GENERALLY TO BE BOTH RELIABLE AND COMPETENT IN THAT FIELD, HAS BEEN LIMITED IN HIS OPERATIONS CHIEFLY TO THE STATE OF ARIZONA, AND IS UNABLE TO SHOW, AS REQUIRED BY SECTION 2 22, THAT HE HAS MADE COMPLETE NEW INSTALLATIONS OF ELEVATORS IN ANY BUILDINGS WHERE THE NUMBERS, CONTROLS, AND OPERATION MEET THE REQUIREMENTS OF THE PRESENT SPECIFICATIONS. IT IS FURTHER UNDERSTOOD THAT, BECAUSE OF THE COMPARATIVE NEWNESS AND INTRICACIES OF GROUP AUTOMATIC SUPERVISORY CONTROLS, ONLY ONE CONCERN IN THE UNITED STATES OTHER THAN OTIS, WESTINGHOUSE, AND HAUGHTON HAS THE QUALIFYING EXPERIENCE NECESSARY TO MEET THE REQUIREMENTS OF THE QUOTED SPECIFICATION. FOR THIS REASON IT IS CONTENDED THAT THE SPECIFICATIONS, IF INTERPRETED TO REQUIRE THAT THE BIDDER MUST SHOW PRIOR INSTALLATIONS WHICH HE HIMSELF INSTALLED, IS UNDULY RESTRICTIVE. IN THE ALTERNATIVE, IT IS CONTENDED THAT THE PROVISIONS OF SECTION 2-22 OF THE SPECIFICATIONS MAY BE SATISFIED BY SHOWING THAT THE SUBCONTRACTORS, WHO MANUFACTURE THE ELEVATOR HOISTING EQUIPMENT AND THE CONTROL SYSTEM AND WHOM THE BIDDER APPARENTLY INTENDS TO USE TO INSTALL SUCH EQUIPMENT, HAVE PREVIOUSLY INSTALLED, IN A SATISFACTORY MANNER, SYSTEMS COMPARABLE TO THOSE REQUIRED BY THE SPECIFICATIONS, EVEN THOUGH THE BIDDER ITSELF DID NOT PARTICIPATE IN SUCH INSTALLATION.

YOU THEREFORE ASK OUR OPINION ON THE FOLLOWING QUESTIONS:

1. DOES PHOENIX QUALIFY AS A COMPETENT AND QUALIFYING BIDDER UNDER SECTION 2-22 OF THE SPECIFICATIONS?

2. IS SECTION 2-22 OF THE SPECIFICATIONS RESTRICTIVE?

3. IF SO RESTRICTIVE, MAY WE DISREGARD SECTION 2-22 AND AWARD TO THE LOW BIDDER OR MUST WE REVISE AND READVERTISE?

4. IS SECTION 2-21 OF THE RECENTLY REVISED SPECIFICATIONS CONSIDERED RESTRICTIVE?

5. IN LIGHT OF OUR EXPLANATION CONCERNING THE DIFFERENCE BETWEEN THREE BANK OR LESS AND FOUR BANK OR MORE INSTALLATIONS, WOULD YOU INTERPRET THE VETERANS ADMINISTRATION COMPETENCY REQUIREMENTS, WHICH WE UNDERSTAND WERE CLEARED WITH GAO, AS PERMITTING AN AWARD TO PHOENIX?

CONSIDERATION OF THE FIRST QUESTION NECESSARILY INVOLVES CONSIDERATION OF WHETHER EXPERIENCE OF THE SUBCONTRACTORS PROPOSED TO BE USED BY A BIDDER MAY BE IMPUTED TO THE BIDDER UNDER SECTION 2-22. THE DEVELOPMENT OF THIS SECTION, AS OUTLINED IN APPENDICES 1 THROUGH 3 ENCLOSED WITH YOUR LETTER, INDICATES THAT UNDER PREVIOUS " COMPETENCY OF BIDDER" REQUIREMENTS USED BY YOUR AGENCY ON ELEVATOR INSTALLATION ALL QUALIFICATION REQUIREMENTS REFERRED ONLY TO THE BIDDER HIMSELF AND NO MENTION WAS MADE OF THE USE, QUALIFICATIONS, OR EXPERIENCE OF SUBCONTRACTORS. PRESUMABLY THIS WAS BECAUSE FULL RESPONSIBILITY FOR SATISFACTORY PERFORMANCE WOULD BE PLACED UPON THE PRIME CONTRACTOR, AND BECAUSE SATISFACTORY PERFORMANCE OF PRIOR CONTRACTS, WHETHER ACCOMPLISHED SOLELY BY USE OF THE PRIME CONTRACTOR'S ORGANIZATION OR WITH THE AID OF SUBCONTRACTORS, WOULD BE INDICATIVE OF THE PRIME CONTRACTOR'S COMPETENCY AND RESPONSIBILITY. WE ARE UNABLE TO INTERPRET THE PHRASES "EITHER WITH THEIR OWN ORGANIZATIONS OR THROUGH THE SUBCONTRACTOR THEY WILL USE ON THIS PROJECT," AS IT APPEARS IN THE FIRST PARAGRAPH OF SECTION 2-22 AS PRESENTLY CONSTITUTED, AS BEING A RELAXATION OF THE FORMER REQUIREMENT. THE JUSTIFICATION FOR INCLUSION IN AN INVITATION FOR BIDS OF ANY EXPERIENCE REQUIREMENT DESIGNED TO INDICATE A BIDDER'S COMPETENCY TO PERFORM THE CONTRACT MUST NECESSARILY BE BASED UPON DETERMINING WHETHER THE BIDDER HIMSELF HAS THE QUALIFICATIONS REQUIRED, AND NOT UPON A DETERMINATION OF WHETHER THE BIDDER IS CAPABLE OF, OR INTENDS TO, PROCURE THE SERVICES OF A NUMBER OF SUBCONTRACTORS WHOSE COMBINED EXPERIENCE IS SUFFICIENT TO MEET THE EXPERIENCE REQUIREMENTS SET OUT IN THE INVITATION FOR BIDS. TO HOLD OTHERWISE IN CONSTRUING SECTION 2 -22 WOULD PERMIT A BIDDER WITH NO PREVIOUS ELEVATOR INSTALLATION EXPERIENCE TO QUALIFY AS COMPETENT SIMPLY BY PROPOSING TO USE EXPERIENCED SUBCONTRACTORS. AS INDICATED ABOVE, THE GOVERNMENT LOOKS TO THE RESPONSIBILITY AND COMPETENCY OF ITS PRIME CONTRACTORS. THIS MUST BE DETERMINED IN THE FIRST INSTANCE BY THE PERFORMANCE OF THE BIDDER'S OWN ORGANIZATION AND ONLY SECONDARILY BY THE QUALIFICATIONS OF SUBCONTRACTORS WHICH THE BIDDER PROPOSES TO USE. THIS CONCLUSION IS SUPPORTED BY SECTION 1-11 OF THE GENERAL CONDITIONS OF THE INVITATION, WHICH REQUIRES THE PRIME CONTRACTOR, WITH HIS OWN ORGANIZATION, TO EXECUTE WORK EQUIVALENT TO AT LEAST 12 PERCENT OF THE CONTRACT PRICE. WITHOUT CONSIDERING THE QUESTION OF WHETHER THE SUBCONTRACTORS PROPOSED TO BE USED BY PHOENIX HAVE OR HAVE NOT PREVIOUSLY INSTALLED THEIR RESPECTIVE HOISTING AND CONTROL EQUIPMENT IN COMBINATION IN AT LEAST THREE SYSTEMS, IT IS, THEREFORE, OUR OPINION THAT THE FAILURE OF PHOENIX TO HAVE PREVIOUSLY MADE SUCH INSTALLATIONS, EITHER WITH ITS OWN ORGANIZATION OR BY USING THE SUBCONTRACTORS NOW PROPOSED, PRECLUDES THAT COMPANY FROM QUALIFYING AS A COMPETENT BIDDER UNDER SECTION 2-22. YOUR FIRST QUESTION MUST, THEREFORE, BE ANSWERED IN THE NEGATIVE.

CONCERNING YOUR SECOND QUESTION, A DETERMINATION OF WHETHER SPECIFICATIONS SETTING OUT SPECIFIC QUALIFICATIONS REQUIRED OF BIDDERS PROPOSING TO FURNISH SERVICES IN A SPECIALIZED FIELD IS RESTRICTIVE DEPENDS UPON WHETHER THE BEST INTERESTS OF THE GOVERNMENT MAY REASONABLY BE SAID TO NECESSITATE THE IMPOSITION OF SUCH REQUIREMENTS. SEE 37 COMP. GEN. 196; 35 ID. 161; 26 ID. 676; 20 ID. 862, 865. DETERMINATIONS WITH RESPECT TO TYPES OF EXPERIENCE, EXTENT OF SUCH EXPERIENCE, AND THE METHOD OF PROVING EXPERIENCE ARE, IN THE FIRST INSTANCE, SOLELY WITHIN THE PROVINCE OF THE PROCURING AGENCY, AND IN THE ABSENCE OF CONVINCING EVIDENCE THAT THE REQUIREMENTS IMPOSED BY A PROCURING AGENCY IN THIS AREA ARE CLEARLY UNNECESSARY TO MEET AN AGENCY'S NEEDS AND ADEQUATELY PROTECT THE INTERESTS OF THE GOVERNMENT, OR ARE SO RESTRICTIVE AS TO LIMIT COMPETITION TO THE EXTENT THAT THE GOVERNMENT IS DEPRIVED OF THE BENEFITS OF COMPETITIVE BIDDING, THIS OFFICE IS NOT INCLINED TO SUBSTITUTE ITS JUDGMENT FOR THAT OF THE PROCURING AGENCY.

IN THIS CONNECTION, WE NOTE THAT EXHIBIT NO. 9 ENCLOSED WITH YOUR LETTER SETS OUT A STATEMENT OF OPINION BY THE ASSISTANT CHIEF, DESIGN AND CONSTRUCTION DIVISION, PUBLIC BUILDINGS SERVICE, SAN FRANCISCO, CALIFORNIA, TO THE EFFECT THAT THE EXPERIENCE OF THAT OFFICE WITH THE PHOENIX ELEVATOR COMPANY HAS BEEN THAT THEY ARE HIGHLY COMPETENT AND RESPONSIBLE ELEVATOR CONSTRUCTORS, AND THAT OFFICE HAS NO DOUBT BUT THAT THEY COULD MAKE A SATISFACTORY INSTALLATION.

IT APPEARS TO BE YOUR POSITION, HOWEVER, THAT THE QUALIFICATION OF THE LOW BIDDER MUST BE DETERMINED ON THE BASIS OF HIS CONFORMITY TO THE REQUIREMENTS OF THE INVITATION WITHOUT OTHER OR FURTHER CONSIDERATION OF HIS ACTUAL CAPABILITIES AND COMPETENCY.

WHILE WE HAVE, AS ABOVE INDICATED, APPROVED THE PRESCRIPTION BY BID INVITATION OF THIS TYPE OF EXPERIENCE QUALIFICATION OF BIDDERS, AND SUSTAINED THE REJECTION OF BIDS FROM BIDDERS NOT MEETING THE QUALIFICATIONS PRESCRIBED, WE BELIEVE THAT IT MAY BE STATED AS A GENERAL PROPOSITION THAT IN THE CASES DEALT WITH IN OUR PRIOR DECISIONS THE RECORD AS A WHOLE WOULD HAVE REASONABLY SUPPORTED A DETERMINATION THAT THE REJECTED BIDDER WAS NOT IN FACT A RESPONSIBLE BIDDER. IN THE FACE OF THE STATEMENT OF THE ASSISTANT CHIEF OF DESIGN AND CONSTRUCTION OF THE COGNIZANT FIELD OFFICE, AND THE ABSENCE OF ANY CONTRARY RULING BY HIGHER AUTHORITY, WE CANNOT MAKE THE SAME STATEMENT ON THE RECORD HERE BEFORE US.

THE PERTINENT STATUTORY PROVISION FOR APPLICATION IS THAT "AWARD SHALL BE MADE * * * TO THAT RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED.' ( SECTION 303, FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, 41 U.S.C. 253.)

UNDER SIMILAR STATE STATUTES REQUIRING AWARDS TO THE LOWEST RESPONSIBLE BIDDER, IT IS HELD THAT RESPONSIBILITY IS A QUESTION OF FACT, AND THAT REJECTION OF THE LOWEST BIDDER ON THE GROUND OF LACK OF RESPONSIBILITY MUST BE BASED UPON A FULL AND HONEST INVESTIGATION OF THE QUALIFICATIONS OF THE BIDDER ( PEARLMAN V. CITY OF PITTSBURGH, 304 PA. 24, 155 A. 118); OR SUPPORTED BY A FINDING THAT THE BIDDER WAS SO LACKING IN THE EXPERIENCE, FINANCIAL ABILITY, MACHINERY AND FACILITIES NECESSARY TO PERFORM THE CONTRACT AS TO JUSTIFY A BELIEF UPON THE PART OF FAIR MINDED AND REASONABLE MEN THAT HE WOULD NOT BE ABLE TO PERFORM THE CONTRACT ( SILLITA V. CEDAR GROVE TOWNSHIP, 133 N.J.L. 41, 42 A. 2D 383); AND THAT SPECIFICATIONS REQUIRING BIDDERS TO HAVE CERTAIN QUALIFICATIONS WHICH GAVE UNDUE COMPETITIVE ADVANTAGE TO ONE PROSPECTIVE BIDDER AND WERE NOT REASONABLY RELATED TO THE PURPOSE OF THE CONTRACT WERE ILLEGAL AND COULD NOT RESULT IN A VALID CONTRACT ( WASZEN V. ATLANTIC CITY, ( N.J.) 63 A. 2D 255).

RECOGNIZING THE DESIRABILITY, BOTH FROM THE STANDPOINT OF ADMINISTRATIVE CONVENIENCE AND FROM THAT OF PROSPECTIVE BIDDERS WHO MAY BE SAVED USELESS EXPENSE AND EFFORT, OF INCLUDING IN INVITATIONS FOR BIDS SOME NOTICE TO BIDDERS OF MINIMUM STANDARDS TO BE APPLIED IN DETERMINING THE QUALIFICATIONS OF BIDDERS, WE FEEL NEVERTHELESS THAT THE STATEMENT OF SUCH QUALIFICATIONS SHOULD NOT BE CONSIDERED AS HAVING THE EFFECT OF TRANSFORMING THE PURELY FACTUAL QUESTION OF RESPONSIBILITY INTO A LEGAL QUESTION OF CONFORMITY TO THE INVITATION.

WHEN, AS IN THE PRESENT CASE, THERE APPEARS TO BE REASONABLE GROUND FOR DOUBT AS TO A LOW BIDDER'S LACK OF RESPONSIBILITY, EVEN THOUGH THE BIDDER MAY FAIL TO MEET SOME OF THE QUALIFICATIONS PRESCRIBED BY THE INVITATION, WE BELIEVE THAT REJECTION OF THE LOW BID AND AWARD TO ANY OTHER BIDDER SHOULD BE SUPPORTED BY A SPECIFIC DETERMINATION, BASED UPON CONSIDERATION OF THE QUALIFICATIONS OF THE PARTICULAR BIDDER, THAT THE LOW BIDDER WAS NOT A "RESPONSIBLE" BIDDER WITHIN THE MEANING OF THE STATUTE. IF SUCH A DETERMINATION CANNOT BE MADE, THE QUALIFICATIONS PRESCRIBED BY THE INVITATION MUST BE REGARDED AS UNREASONABLY RESTRICTIVE. IN THAT EVENT, IT WOULD APPEAR THAT THE INVITATION SHOULD BE CANCELED AND THE PROCUREMENT READVERTISED UNDER PROPER SPECIFICATION REQUIREMENTS.