B-142683, JUL. 5, 1960

B-142683, JUL. 5, 1960

TO WILLIAMS BROTHERS COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF APRIL 22, 1960, WITH ENCLOSURES, AND PREVIOUS CORRESPONDENCE, RELATIVE TO THE REJECTION OF ALL BIDS SUBMITTED UNDER INVITATION FOR BIDS NO. ENG-92-144-60-1, AS AMENDED, AND THE SUBSEQUENT SOLICITATION OF PROPOSALS COVERING THE WORK FORMERLY ADVERTISED UNDER THE INVITATION.

THE INVITATION, DATED JANUARY 16, 1960, REQUESTED BIDS FOR THE CONSTRUCTION OF AN AIRFIELD IN THE VICINITY OF HAMADAN, IRAN. SEVEN BIDS WERE RECEIVED AND OPENED ON MARCH 31, 1960. IT APPEARED THAT A JOINT- VENTURE, UNDER THE NAME OF M-K-O, SUBMITTED THE LOWEST BID IN THE AMOUNT OF $5,874,417.96. THE SECOND LOW BID IN THE AMOUNT OF $6,473,266 WAS SUBMITTED BY YOUR COMPANY IN JOINT VENTURE WITH RAYMOND INTERNATIONAL, INC. YOUR COMPANY PROTESTED AGAINST ANY CONTRACT AWARD TO M-K-O, CONTENDING THAT THE BID OF M-K-O WAS NONRESPONSIVE SINCE IT HAD BEEN SUBMITTED IN THE NAME OF A FOREIGN CORPORATION, KAISER INTERNATIONAL, LTD., A LIBERIAN SUBSIDIARY OF THE HENRY J. KAISER CONSTRUCTION COMPANY. THE BASIS OF SUCH PROTEST WAS A LIST OF QUESTIONS AND ANSWERS RELATIVE TO THE PROPOSED FISCAL YEAR 1959 CONSTRUCTION PROGRAM IN IRAN WHICH WAS DISTRIBUTED TO INTERESTED BIDDERS ON SEPTEMBER 30, 1958, WHEREIN THE QUESTION AS TO WHETHER BIDDERS WOULD BE COMPETING AGAINST FOREIGN COMPETITION OR AGAINST AMERICAN FIRMS ONLY WAS ANSWERED: "COMPETITION WILL BE LIMITED TO QUALIFIED UNITED STATES CONTRACTORS.'

ON APRIL 13, 1960, BIDDERS WERE ADVISED THAT ALL BIDS WERE REJECTED AND THAT PROPOSALS WOULD BE SOLICITED FROM THE PARTICIPATING BIDDERS FOR THE PURPOSE OF NEGOTIATING A CONTRACT FOR THE SAME PROJECT. THE LETTER OF REJECTION STATED, IN PART, THAT:

"ISSUANCE OF INVITATIONS FOR BIDS WAS LIMITED TO UNITED STATES CONTRACTORS, ALTHOUGH ADVICE OF THIS RESTRICTION WAS NOT INCORPORATED INTO THE BIDDING DOCUMENTS. HOWEVER, ADVICE OF SUCH ACTION WAS OTHERWISE GIVEN TO SOME OF THE PROSPECTIVE BIDDERS, THUS CREATING AN INEQUALITY AMONG THE PROSPECTIVE BIDDERS AND A SITUATION PREJUDICIAL TO THE SUBMISSION OF LOWEST COMPETITIVE BIDS. IT HAS,THEREFORE, BEEN DETERMINED THAT ACCEPTANCE OF ANY BID WOULD NOT BE IN THE BEST INTERESTS OF THE GOVERNMENT.'

PARAGRAPH 12 OF THE INSTRUCTIONS TO BIDDERS, ACCOMPANYING THE INVITATION, RESERVED TO THE GOVERNMENT THE RIGHT TO REJECT ANY OR ALL BIDS IN THE INTERESTS OF THE GOVERNMENT. THIS RESERVATION OF AUTHORITY TO REJECT ANY OR ALL BIDS SPECIFICALLY IS PROVIDED FOR BY STATUTE (10 U.S.C. 2305 (C) ). THE COURTS, AS WELL AS OUR OFFICE, HAVE CONSISTENTLY TAKEN THE POSITION THAT A DETERMINATION MADE PURSUANT TO SUCH AUTHORITY IS NOT SUBJECT TO REVIEW IN THE ABSENCE OF COMPELLING CIRCUMSTANCES INDICATIVE OF FRAUD, ERROR AMOUNTING TO BAD FAITH, OR UNCONSCIONABLE ABUSE OF DISCRETION. SEE 31 A.L.R.2D 469; ERIE COAL AND COKE COMPANY V. UNITED STATES, 266 U.S. 518; 38 COMP. GEN. 235; 36 ID 364.

WE CANNOT AGREE WITH YOUR CONTENTION THAT THE M-K-O BID WAS NONRESPONSIVE AND SHOULD HAVE BEEN REJECTED. AS ABOVE INDICATED, THE INTENTION TO RESTRICT THE WORK TO AMERICAN CONTRACTORS WAS INDICATED IN A GENERAL QUESTIONNAIRE, ISSUED APPROXIMATELY 15 MONTHS BEFORE THE INSTANT INVITATION, AND WAS DISCLOSED TO "SOME" PROSPECTIVE BIDDERS. HOWEVER, SUCH RESTRICTION WAS NOT CONTAINED IN THE INVITATION NOR WERE BIDDERS OTHERWISE SPECIFICALLY APPRAISED THAT IT WOULD APPLY TO THE INSTANT JOB. IN THESE CIRCUMSTANCES THE FACT THAT THE M-K-O BID WAS SUBMITTED IN THE NAME OF A FOREIGN CORPORATION WOULD HAVE FURNISHED NO LEGAL BASIS FOR REJECTION OF THAT BID. IT IS FUNDAMENTAL THAT A BID CANNOT BE RENDERED NONRESPONSIVE OR A BIDDER DETERMINED TO BE INELIGIBLE UPON THE BASIS OF FACTORS NOT CONTAINED IN THE INVITATION OR IN AN APPLICABLE STATUTE OR REGULATION. HOWEVER, SINCE IT WAS IN FACT THE DESIRE TO LIMIT COMPETITION TO UNITED STATES CONTRACTORS, AND THIS WAS KNOWN BY CERTAIN PROSPECTIVE BIDDERS BUT WAS NOT MADE CLEAR IN THE BIDDING DOCUMENTS, THE DECISION OF THE CORPS OF ENGINEERS TO REJECT ALL BIDS CANNOT BE LEGALLY QUESTIONED.

PURSUANT TO THE AUTHORITY CONTAINED IN SECTION 2304 (A) OF TITLE 10, U.S.C., TO NEGOTIATE CONTRACTS FOR SERVICES TO BE PROCURED AND USED OUTSIDE THE UNITED STATES AND THE TERRITORIES, COMMONWEALTHS, AND POSSESSIONS, THE PROCUREMENT AGENCY ISSUED REQUEST FOR PROPOSALS NO. ENG- 92-144-/NEG-60-2) ON APRIL 16, 1960, WHICH RESTRICTED SOLICITATION TO AMERICAN CONTRACTORS. ALL PREVIOUS BIDDERS WERE INVITED TO PARTICIPATE, EXCEPT THAT SOLICITATION WAS EXTENDED TO THE HENRY J. KAISER CONSTRUCTION COMPANY RATHER THAN TO KAISER INTERNATIONAL, LTD. FOUR PROPOSALS WERE RECEIVED AND OPENED ON APRIL 30, 1960. THE LOWEST PROPOSAL IN THE AMOUNT OF $5,874,417.96 WAS SUBMITTED BY MORRISON KNUDSEN COMPANY, INC., THE KAISER COMPANY, OMAN CONSTRUCTION COMPANY, INC., R. P. FRANSWORTH AND COMPANY, INC., AND THE WRIGHT CONTRACTING COMPANY, IN JOINT VENTURE DENOMINATED AS M-K-O. PROOF WAS FURNISHED BY THE JOINT VENTURE IN THE FORM OF A CERTIFICATE FROM THE SECRETARY OF STATE OF NEVADA THAT "HENRY J. KAISER CONSTRUCTION CO., INC.' HAS BY APPROPRIATE PROCEDURES CHANGED ITS CORPORATE NAME TO "THE KAISER COMPANY.' THE PROPOSAL SUBMITTED BY M-K-O WAS IDENTICAL WITH THE BID SUBMITTED IN RESPONSE TO THE INVITATION BY THE SIMILARLY NAMED JOINT VENTURE WHICH HAD INCLUDED THE LIBERIAN CORPORATION. ALL PARTICIPANTS IN THE M-K-O PROPOSAL WERE DETERMINED TO HAVE BEEN INCORPORATED IN THE UNITED STATES. PROPOSALS ALSO WERE RECEIVED FROM YOUR COMPANY IN JOINT VENTURE WITH RAYMOND INTERNATIONAL, INC., AND FROM TWO OTHER BIDDERS WHO HAD SUBMITTED BIDS UNDER THE INVITATION. HOWEVER, YOUR PROPOSAL WAS NOT LOW BEING IN THE SAME AMOUNT AS YOUR ORIGINAL BID. AWARD, THEREFORE, WAS MADE ON MAY 2, 1960, TO M-K-O AT ITS PROPOSED PRICE OF $5,874,417.96.

IN THIS REGARD IT IS NOTED THAT IN THE UNDATED REQUEST FOR PROPOSALS ADDRESSED TO YOU BY THE CORPS OF ENGINEERS, YOU WERE ADVISED THAT IF "THE CONTRACTING OFFICER IS SATISFIED THAT THE MOST FAVORABLE PROPOSAL IS FAIR AND REASONABLY PRICED, AWARD MAY BE MADE ON THE BASIS OF THE INITIAL PROPOSAL WITHOUT ORAL OR WRITTEN DISCUSSION.' THIS PROCEDURE WAS IN ACCORDANCE WITH 3.805-1 (B), OF THE ARMED SERVICES PROCUREMENT REGULATION.

OUR REVIEW OF THE CIRCUMSTANCES INVOLVED IN THIS PROCUREMENT DOES NOT THEREFORE REVEAL ANYTHING WHICH WOULD REQUIRE OUR OFFICE TO QUESTION THE AWARD MADE.