B-148282, APR. 27, 1962

B-148282: Apr 27, 1962

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INC.: REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 28. WERE REJECTED AND YOU CONTEND THAT THIS REJECTION WAS IMPROPER. THE FIRST INVITATION FOR BIDS WAS ISSUED ON OCTOBER 30. THE OPENING DATE FOR BIDS WAS NOVEMBER 16. FOUR BIDS WERE RECEIVED. 900 WAS THE LOWEST RECEIVED. THE OTHER BIDS RECEIVED WERE IN THE AMOUNTS OF $830. 650 AND WERE SUBMITTED BY MARKOWITZ BROTHERS. THE FORMS WERE NOT ATTACHED TO THE BIDDING DOCUMENTS BUT WERE AVAILABLE UPON REQUEST. WHEN AWARD OF THE CONTRACT WAS BEING CONSIDERED. THIS FACTOR WAS THE MAIN REASON FOR REJECTING ALL BIDS AND ISSUING A NEW INVITATION FOR BIDS. TO WHAT EXTENT THE COSTS OF PERFORMANCE ARE INCREASED OR DECREASED BY THIS EXTENSION OF TIME IS NOT ASCERTAINABLE FROM THE RECORD.

B-148282, APR. 27, 1962

TO THE JOHN C. GRIMBERG COMPANY, INC.:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 28, 1962, AND THE LETTERS OF MARCH 16, APRIL 18, AND APRIL 25, 1962, FROM YOUR ATTORNEYS, PROTESTING THE POSSIBLE AWARD OF A CONTRACT TO ANOTHER BIDDER UNDER INVITATION FOR BIDS NO. GS-R3-B-11020/6660 ISSUED BY GENERAL SERVICES ADMINISTRATION ON FEBRUARY 9, 1962. ALL BIDS RECEIVED UNDER THE FIRST INVITATION IN THIS CASE WHICH HAD BEEN ISSUED ON OCTOBER 30, 1961, WERE REJECTED AND YOU CONTEND THAT THIS REJECTION WAS IMPROPER.

THE WORK TO BE PERFORMED COVERS THE SITE PREPARATION AND INSTALLATION OF CHILLED WATER MAINS AT THE VIRGINIA HEATING AND REFRIGERATION PLANT AND FOB (FEDERAL OFFICE BUILDING) NO. 2, ARLINGTON, VIRGINIA. THE FIRST INVITATION FOR BIDS WAS ISSUED ON OCTOBER 30, 1961, AND THE OPENING DATE FOR BIDS WAS NOVEMBER 16, 1961, LATER EXTENDED BY ADDENDUM NO. 1 TO DECEMBER 28, 1961. FOUR BIDS WERE RECEIVED. YOUR BID IN THE AMOUNT OF $759,900 WAS THE LOWEST RECEIVED. THE OTHER BIDS RECEIVED WERE IN THE AMOUNTS OF $830,000, $848,500 AND $977,650 AND WERE SUBMITTED BY MARKOWITZ BROTHERS, INC., NORAIR ENGINEERING CORPORATION AND W. G. CORNELL CO. OF WASHINGTON, INC., RESPECTIVELY. YOUR FIRM AND MARKOWITZ DID NOT SUBMIT WITH YOUR BIDS THE SECURITY CLEARANCE FORMS REQUIRED BY SECTION 2-11 OF THE SPECIFICATIONS. THE FORMS WERE NOT ATTACHED TO THE BIDDING DOCUMENTS BUT WERE AVAILABLE UPON REQUEST. YOU SUBMITTED THE EXECUTED FORMS AFTER OPENING OF BIDS.

WHEN AWARD OF THE CONTRACT WAS BEING CONSIDERED, A QUESTION AROSE REGARDING THE AVAILABILITY OF THE WORTHINGTON AIR CONDITIONING MACHINES BEING PURCHASED BY THE GOVERNMENT (PHASE 1 OF THE WORK) AND IT BECAME APPARENT THAT THE CONTRACT COMPLETION TIME HAD TO BE EXTENDED FROM 210 DAYS TO 365 DAYS. THIS FACTOR WAS THE MAIN REASON FOR REJECTING ALL BIDS AND ISSUING A NEW INVITATION FOR BIDS. TO WHAT EXTENT THE COSTS OF PERFORMANCE ARE INCREASED OR DECREASED BY THIS EXTENSION OF TIME IS NOT ASCERTAINABLE FROM THE RECORD. ON THE ONE HAND THE REPORT OF THE GENERAL SERVICES ADMINISTRATION INDICATES THAT THE RISKS ASSUMED BY A CONTRACTOR WOULD BE FEWER IN NUMBER AND SAVINGS SHOULD BE REALIZED. IN SUPPORT OF THIS ARGUMENT IT IS ASSERTED THAT THERE WOULD BE LESS NEED FOR PAYMENT OF PREMIUM PRICES FOR MATERIALS OR EQUIPMENT WHERE ADDITIONAL TIME WOULD PERMIT SECURING BETTER PRICES AND THERE WOULD BE LESS LIKELIHOOD OF PAYMENT OF OVERTIME LABOR COSTS FOR TEMPORARY SWITCHES AND CONTROLS FOR TEMPORARY OPERATION, WHICH COSTS COULD BE CONSIDERABLE WHERE 13,000 VOLT, 2750 HORSEPOWER MOTORS ARE INVOLVED. YOU DENY ALL OF THESE CONTENTIONS. ON THE OTHER HAND, YOU ADMIT, HOWEVER, THAT THE LABOR AND OVERHEAD COSTS WOULD BE INCREASED BECAUSE THE EXTENSION OF THE TIME FOR PERFORMANCE WOULD ENTAIL AN INCREASE IN THE RATE OF WAGES TO BE PAID FOR LABOR. ALSO THERE WOULD BE SOME INCREASE IN THE PREMIUMS ON THE PAYMENT AND PERFORMANCE BONDS.

YOU HAD OFFERED TO ACCEPT THE CONTRACT UNDER A REVISED SCHEDULE FOR THE WORK WITHOUT ANY INCREASE IN YOUR BID PRICE BUT THE CONTRACTING OFFICER DETERMINED ON JANUARY 9, 1962, WHICH DETERMINATION WAS CONCURRED IN BY THE REGIONAL DIRECTOR, PUBLIC BUILDINGS SERVICE, THAT IT WAS DOUBTFUL THAT THE "WORK SPECIFIED UNDER PARTS "A" AND "C" UNDER PARAGRAPH 2-4 CAN BE COMPLETED IN TIME SO AS NOT TO ADVERSELY AFFECT THE AIR CONDITIONING OF THE PENTAGON BUILDING DURING THE COOLING SEASON OF 1962.' IN HIS DETERMINATION HE STATED FURTHER THAT---

"THIS IS DUE IN PART TO THE DELAY IN THE OPENING OF THE BIDS AND TO THE FAILURE OF THE CONTRACTOR UNDER PHASE 1 TO HAVE THE EQUIPMENT AT THE JOB SITE.

"THE SCHEDULE OF THE FOUR PARTS OF THE CONTRACT INCLUDED IN PARAGRAPH 2-4 WILL HAVE TO BE ADJUSTED TO MEET OPERATION REQUIREMENTS AND PRODUCTION SCHEDULE OF THE CONTRACTOR FOR PHASE 1 OF THE PROJECT. IT IS NOT BELIEVED THAT IT WOULD BE POSSIBLE TO NEGOTIATE A CHANGE IN THIS SCHEDULE WITH A CONTRACTOR AFTER THE AWARD OF A CONTRACT.

"THEREFORE, PURSUANT TO THE AUTHORITY DELEGATED TO ME, I HEREBY DETERMINE THAT ALL BIDS BE REJECTED, THE SPECIFICATIONS REVISED AND THE PROJECT READVERTISED WITH A MINIMUM BIDDING PERIOD OF FOUR WEEKS.'

ON JANUARY 11, 1962, THE CONTRACTING OFFICER ADDRESSED A LETTER TO YOU STATING THAT---

"BECAUSE OF THE TIME REMAINING BEFORE THE NEXT COOLING SEASON, AND THE SCHEDULE OF DELIVERY FOR GOVERNMENT FURNISHED EQUIPMENT, IT IS NECESSARY TO CHANGE THE SCHEDULE OF THE VARIOUS PARTS OF THE PROJECT FROM THAT ORIGINALLY SPECIFIED. THE CHANGING OF THE SCHEDULE IS OF SUFFICIENT MAGNITUDE TO PRECLUDE OUR NEGOTIATION FOR AN AMENDMENT TO THE CONTRACT HAD ONE BEEN AWARDED ON THE BASIS OF THE BIDS RECEIVED DECEMBER 28, 1961.

"WE APPRECIATE YOUR INTEREST IN HAVING ATTEMPTED TO EXPEDITE THE COMPLETION OF THE PROJECT HAD IT BEEN AWARDED TO YOU. HOWEVER, IN ACCORDANCE WITH PARAGRAPH 2-3., BASIS OF AWARD,"THE GOVERNMENT RESERVES THE RIGHT TO ACCEPT OR REJECT ANY OR ALL BIDS.'"

THIS LETTER WAS IN REPLY TO YOUR LETTER OF JANUARY 10 IN WHICH YOU SUGGESTED THAT THE TIME OF COMPLETION BE CHANGED FROM 210 DAYS TO 360 DAYS AND THAT THE TIME OF COMPLETION OF WORK UNDER PARTS A, C AND D BE EXTENDED. YOU HAD STATED THAT THE CONTRACT PRICE WOULD NOT BE CHANGED AND THAT YOU PROTESTED ANY CONSIDERATION FOR READVERTISING THE PROJECT.

ON FEBRUARY 9, 1962, A SECOND INVITATION FOR BIDS WAS ISSUED AND THIS INVITATION CONTAINED A NUMBER OF REVISIONS. THE SPECIFICATIONS ELIMINATED THE SMALL BUSINESS SET-ASIDE PROVISION WHICH DID NOT CONFORM TO THE JOINT CLASS SET-ASIDE FOR SMALL BUSINESS OF JULY 15, 1960, WHICH EMBRACED CONSTRUCTION WORK WITH AN ESTIMATED COST OF FROM $2,000 TO $300,000. THE SECURITY CLAUSE WAS OMITTED IN THIS INVITATION. CERTAIN LARGE BUTTERFLY AND GATE VALVES WERE TO BE FURNISHED BY THE CONTRACTOR RATHER THAN BY THE GOVERNMENT; VENT MANHOLES WERE ADDED; CONNECTIONS ON MACHINES WERE CLARIFIED; SUBSTITUTION OF CEMENT ASBESTOS PIPE FOR REINFORCED PIPE WAS INCLUDED AS AN ALTERNATE PRICE; AND NEW COMPLETION DATES FOR THE SEVERAL PARTS OF THE WORK WERE ESTABLISHED. FOR EXAMPLE, THE TIME OF COMPLETION FOR THE ENTIRE CONTRACT WORK WAS TO BE 365 CALENDAR DAYS (INSTEAD OF 210 CALENDAR DAYS) FROM DATE OF RECEIPT OF NOTICE TO PROCEED. INDIVIDUAL PARTS OF THE PROJECT WERE TO BE COMPLETED AS FOLLOWS: PART A, BY DECEMBER 1, 1962; PART B, BY FEBRUARY 15, 1963; AND PART C, BY MARCH 15, 1963. FOUR BIDS WERE RECEIVED ON THIS INVITATION AS FOLLOWS:

TABLE

BIDDER BID NO. 1 BID NO. 2

------ --------- --------- NORAIR ENGINEERING CORP.

$788,400 $781,500 JOHN C. GRIMBERG CO., INC. 805,000 795,000 W. G. CORNELL CO. OF WASH., INC. 815,000 805,000 THOMAS CONCRETE COST. CO., INC. 852,000 902,000

YOU FEEL THAT NORAIR REDUCED ITS BID BECAUSE IT KNEW THE AMOUNT OF YOUR BID ON THE FIRST INVITATION. AS WAS STATED IN 39 COMP. GEN. 563, WE RECOGNIZE THE UNDESIRABILITY OF REJECTING BIDS AFTER OPENING. AND AS WAS STATED FURTHER IN 39 COMP. GEN. 396, 399, WE RECOGNIZE THAT THE AUTHORITY VESTED IN THE CONTRACTING OFFICER TO REJECT ANY OR ALL BIDS AND READVERTISE IS EXTREMELY BROAD AND ORDINARILY SUCH ACTION WILL NOT BE QUESTIONED BY OUR OFFICE. HOWEVER, IN EXERCISING SUCH AUTHORITY, THE CONTRACTING OFFICER MUST NOT ACT ARBITRARILY. EACH CASE MUST BE, OF COURSE, DECIDED ON THE FACTS. IN THIS CASE THERE WAS THE QUESTION OF YOUR FAILURE TO FURNISH SECURITY CLEARANCE FORMS IN THE FIRST INVITATION. REALIZE THAT SINCE THIS REQUIREMENT WAS ELIMINATED IN THE SECOND INVITATION IT MAY BE DOUBTFUL WHETHER THIS MATTER SHOULD HAVE BEEN CONSIDERED AS AN IMPORTANT FACTOR IN MAKING AWARD. AS TO THE MATTER OF REQUIRING THE CONTRACTOR TO PROCURE THE BUTTERFLY VALVES, RATHER THAN THE GOVERNMENT, WE REALIZE ALSO THAT THIS MIGHT HAVE BEEN AN APPROPRIATE SUBJECT OF A CHANGE ORDER AFTER A CONTRACT HAD BEEN AWARDED. IT APPEARS, HOWEVER, THAT THE FACT THAT THE GOVERNMENT KNEW BEFORE ANY AWARD COULD BE MADE UNDER THE FIRST INVITATION THAT IT COULD NOT FURNISH THE THREE AIR CONDITIONING MACHINES TO BE INSTALLED BY THE CONTRACTOR AND THAT THIS WOULD REQUIRE AN UNUSUAL EXTENSION OF THE TIME REGARDED AS A COGENT REASON FOR REJECTION OF BIDS. THIS IS NOT A CASE OF A $5 CHANGE IN A $1,000,000 PROJECT, AS CONTENDED IN YOUR LETTER OF APRIL 25, 1962. THE FACT THAT YOU OFFERED TO COMPLY WITH THE REQUIRED SCHEDULE OF TIME WITHOUT ANY COMPENSATION DOES NOT NECESSARILY LABEL THIS CONTEMPLATED CHANGE AS TRIVIAL. THE INCREASE IN YOUR BID BY BY $45,100 WHEN THE COST OF THE BUTTERFLY VALVES TO BE PROCURED BY THE BY THE CONTRACTOR WAS ONLY ABOUT $30,000 WOULD INDICATE THAT YOU TOOK OTHER MATTERS INTO ACCOUNT IN ADDITION TO THE ALLEGED INCREASED LABOR COST OF $5,000. IF THE GOVERNMENT HAD PROCEEDED TO MAKE AN AWARD UNDER THE FIRST INVITATION WITHOUT DISCLOSING TO THE BIDDERS THE KNOWLEDGE IT THEN HAD, THAT IS, THAT THE FAILURE TO FURNISH THE AIR CONDITIONING MACHINES WOULD PREVENT THE CONTRACTOR FROM ACHIEVING TIMELY PERFORMANCE, IT WOULD HAVE BEEN LIABLE FOR ANY INCREASED COSTS TO THE CONTRACTOR RESULTING THEREFROM. THE ADMINISTRATIVE OFFICE FEELS THAT YOU COULD HAVE TAKEN ANY ONE OF SEVERAL POSITIONS WHICH INCLUDED---

"1. REFUSE TO ACCEPT A CONTRACT WITH THE REVISED SCHEDULE ON THE GROUNDS THAT THE GOVERNMENT WAS MAKING A COUNTEROFFER.

"2. IF AN AWARD WAS MADE UNDER THE SPECIFICATIONS AS ADVERTISED, HE COULD REFUSE TO SIGN AN AMENDMENT CONTAINING THE REVISED SCHEDULE UNLESS THE GOVERNMENT AGREED TO PAY ADDITIONAL COMPENSATION, SINCE THE CHANGE WAS BEYOND THE SCOPE OF THE CHANGES CLAUSE.

"3. IF AN AWARD WAS MADE UNDER THE SPECIFICATIONS AS ADVERTISED, HE COULD PERFORM UNDER THE REVISED SCHEDULE AND SUE FOR DAMAGES FOR GOVERNMENT- CAUSED DELAYS. THE CHANGES CLAUSE OF THE CONTRACT WOULD NOT AUTHORIZE THE PAYMENT OF ADDITIONAL MONEY RESULTING FROM GOVERNMENT-CAUSED DELAYS, AND THE CHANGE IN SCHEDULE COULD BE CONSTRUED AS A GOVERNMENT-CAUSED DELAY.

"4. ACCEPT THE REVISED SCHEDULE UNDER THE GOVERNMENT'S COUNTEROFFER WITHOUT A CHANGE IN PRICE. (IN EFFECT, THIS WOULD BE THE TERMS UNDER WHICH GRIMBERG WAS WILLING TO NEGOTIATE).'

IN VIEW OF THE FOREGOING WE ARE OF THE VIEW THAT THE ACTION OF THE CONTRACTING OFFICER IN REJECTING ALL BIDS UNDER THE FIRST INVITATION WAS NEITHER SO ARBITRARY NOR SO GROSSLY ERRONEOUS SO AS TO REQUIRE A REINSTATEMENT OF YOUR BID UNDER THE FIRST INVITATION AND ACCEPTANCE THEREOF, WITH PROPER MODIFICATIONS. ACCORDINGLY, THERE IS NO LEGAL BASIS FOR QUESTIONING THE ADMINISTRATIVE ..END :