B-148284, MARCH 13, 1962, 41 COMP. GEN. 593

B-148284: Mar 13, 1962

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WHEN BIDS WERE OPENED AS SCHEDULED ON DECEMBER 14. THE LUFKIN COMPANY WAS FOUND TO HAVE SUBMITTED THE LOW BID FOR THE ENTIRE JOB AS WELL AS FOR THE ALTERNATES CONSTITUTING PARTS THEREOF. AWARD WAS DELAYED. WOULD HAVE TO BE REPLACED BY A NEW DETERMINATION WHICH YOU HAVE BEEN INFORMALLY ADVISED WOULD DECREASE THE HOURLY RATE FOR ELECTRICIANS AND INCREASE THE RATE FOR SHEET METAL WORKERS. UNDER THE CIRCUMSTANCES IT IS PROPOSED. IT IS STATED TO BE YOUR BELIEF THAT THE BEST INTERESTS OF THE GOVERNMENT WOULD THEREBY BE SERVED BECAUSE THE ONLY ALTERNATIVE. IT IS NOTED ALSO THAT LUFKIN'S BID WAS ALMOST $7. 000 LESS THAN THE NEXT BID AND WE ASSUME IT TO BE YOUR POSITION THAT THE DIFFERENCE IS MATERIALLY GREATER THAN ANY DIFFERENCE WHICH WOULD RESULT FROM THE CHANGES IN THE MINIMUM WAGE RATES.

B-148284, MARCH 13, 1962, 41 COMP. GEN. 593

BIDS - DISCARDING ALL BIDS - READVERTISEMENT JUSTIFICATION AN AWARD OF A CONSTRUCTION CONTRACT, AFTER THE DAVIS-BACON ACT WAGE DETERMINATION IN THE ADVERTISED SPECIFICATIONS HAS BECOME OBSOLETE, TO THE LOW BIDDER AT EITHER HIS BID PRICE OR AT A PRICE TO BE NEGOTIATED ON THE BASIS OF A CHANGED WAGE DETERMINATION WOULD NOT BE THE SELECTION OF A LOW BIDDER ON THE BASIS OF BIDS ON SPECIFICATIONS ACTUALLY TO BE USED IN THE WORK AND ON THE SAME TERMS OFFERED TO ALL BIDDERS, AND, EVEN THOUGH THE DIFFERENCE IN PRICE WHICH WOULD BE EFFECTED BY THE CHANGE IN THE WAGE RATES MIGHT NOT CHANGE THE RELATIVE STANDING OF THE LOW BIDDER, SUCH AN AWARD WOULD VIOLATE THE RULES OF COMPETITIVE HOLDING; THEREFORE, ALL BIDS SHOULD BE REJECTED AND THE PROCUREMENT READVERTISED.

TO THE SECRETARY OF HEALTH, EDUCATION, AND WELFARE, MARCH 13, 1962:

BY LETTER OF FEBRUARY 28, 1962, WITH ENCLOSURES, SIGNED BY THE ACTING CHIEF, PROCUREMENT AND SUPPLY MANAGEMENT BRANCH, DIVISION OF GENERAL SERVICES, OUR DECISION HAS BEEN REQUESTED AS TO WHETHER A CONTRACT MAY PROPERLY BE AWARDED TO THE LUFKIN CONSTRUCTION COMPANY PURSUANT TO INVITATION FOR BIDS NO. 2641-11-9-62, ISSUED BY THE PUBLIC HEALTH SERVICE, FOR THE INSTALLATION OF AN AIR CONDITIONING SYSTEM AT A HOSPITAL IN SACATON, ARIZONA. THE INVITATION, ISSUED OCTOBER 12, 1961, SOLICITED BIDS ON THE BASIS OF THE ENTIRE JOB AND, AS ALTERNATES, PORTIONS THEREOF. THE SPECIFICATIONS INCLUDED, AT PAGE 25, OF ADDENDUM NO. 3, MINIMUM HOURLY WAGE RATES TO BE PAID UNDER THE CONTRACT AS DETERMINED BY THE SECRETARY OF LABOR ON OCTOBER 16, 1961, PURSUANT TO THE DAVIS-BACON ACT, AS AMENDED, 40 U.S.C. 276A.

WHEN BIDS WERE OPENED AS SCHEDULED ON DECEMBER 14, 1961, THE LUFKIN COMPANY WAS FOUND TO HAVE SUBMITTED THE LOW BID FOR THE ENTIRE JOB AS WELL AS FOR THE ALTERNATES CONSTITUTING PARTS THEREOF. BECAUSE OF AN ALLEGATION OF ERROR IN THE BID ON ONE OF THE ALTERNATES, AWARD WAS DELAYED. IN THE MEANTIME IT HAS APPARENTLY BEEN DETERMINED THAT AWARD SHOULD BE MADE FOR THE ENTIRE JOB WHICH WOULD NOT BE AFFECTED BY THE ALLEGATION OF ERROR. HOWEVER, A PROBLEM HAS ARISEN BECAUSE THE WAGE RATE DETERMINATION, WHICH PURSUANT TO 29 CFR 5.4 (A) EXPIRES AFTER 90 DAYS IF THE CONTRACT HAS NOT BEEN AWARDED, WOULD HAVE TO BE REPLACED BY A NEW DETERMINATION WHICH YOU HAVE BEEN INFORMALLY ADVISED WOULD DECREASE THE HOURLY RATE FOR ELECTRICIANS AND INCREASE THE RATE FOR SHEET METAL WORKERS. UNDER THE CIRCUMSTANCES IT IS PROPOSED, SUBJECT TO OUR APPROVAL, TO REQUEST A NEW WAGE DETERMINATION FROM THE SECRETARY OF LABOR AND TO MAKE AWARD TO LUFKIN FOR THE ENTIRE JOB, EITHER AT THE BID PRICE OR AT A FIGURE TO BE NEGOTIATED ON THE BASIS OF THE CHANGED WAGE DETERMINATION. NOTWITHSTANDING THE NOVELTY OF THE PROPOSED ACTION, IT IS STATED TO BE YOUR BELIEF THAT THE BEST INTERESTS OF THE GOVERNMENT WOULD THEREBY BE SERVED BECAUSE THE ONLY ALTERNATIVE, READVERTISING, WOULD DO DAMAGE TO THE PRINCIPLE OF COMPETITIVE BIDDING AND WOULD PROBABLY RESULT IN INCREASING THE COST OF THE PROJECT. IT IS NOTED ALSO THAT LUFKIN'S BID WAS ALMOST $7,000 LESS THAN THE NEXT BID AND WE ASSUME IT TO BE YOUR POSITION THAT THE DIFFERENCE IS MATERIALLY GREATER THAN ANY DIFFERENCE WHICH WOULD RESULT FROM THE CHANGES IN THE MINIMUM WAGE RATES.

THE DAVIS-BACON ACT, AS AMENDED, REQUIRES THAT ADVERTISED SPECIFICATIONS FOR CONTRACTS IN EXCESS OF $2,000 FOR CONSTRUCTION, ALTERATION OR REPAIR OF PUBLIC WORKS OR PUBLIC BUILDINGS SET OUT MINIMUM WAGES TO BE PAID TO LABORERS AND MECHANICS BASED UPON WAGES "THAT WILL BE DETERMINED BY THE SECRETARY OF LABOR TO BE PREVAILING" IN THE AREA. THE SECRETARY OF LABOR, PURSUANT TO THE STATUTORY PROVISION, HAS ISSUED REGULATIONS CONTAINED IN PART 5 OF TITLE 29 OF THE CODE OF FEDERAL REGULATIONS, INCLUDING THE ABOVE -REFERENCED SECTION 5.4 (A), ESTABLISHING A WAGE DETERMINATION AS OBSOLETE IF THE PROPOSED CONTRACT HAS NOT BEEN AWARDED WITHIN 90 DAYS OF THE ISSUANCE THEREOF. SINCE MORE THAN 90 DAYS HAVE PASSED WITHOUT AWARD FROM THE TIME THE WAGE RATES INCLUDED IN THE SPECIFICATIONS WERE ISSUED, IT APPEARS TO BE THE POSITION OF THE SECRETARY OF LABOR, PURSUANT TO HIS AUTHORITY UNDER THE CITED ACT AND REGULATIONS, THAT THEY SHOULD NOT BE INCLUDED IN THE SPECIFICATIONS UNDER WHICH THE CONTRACT IS TO BE PERFORMED.

IT IS WELL ESTABLISHED THAT THE AWARD OF A CONTRACT PURSUANT TO THE ADVERTISING STATUTES MUST BE MADE UPON THE SAME TERMS OFFERED TO ALL BIDDERS. 37 COMP. GEN. 524, 527, AND CASES THERE CITED. AWARD ON THE BASIS OF OTHER THAN THE PROVISIONS OF THE ADVERTISED SPECIFICATION WOULD VIOLATE THE GENERAL RULE. THE LOW BIDDER CANNOT, OF COURSE, BE REQUIRED TO PERFORM ON TERMS AT VARIANCE WITH THOSE INCLUDED IN HIS BID. BY THE SAME TOKEN, IN SITUATIONS INVOLVING A CHANGE IN WAGE RATES, THE GOVERNMENT PROPERLY COULD NOT REQUIRE OR PERMIT AN OTHERWISE SUCCESSFUL BIDDER TO PERFORM AT HIS ORIGINAL PRICE OR A DIFFERENT PRICE IN THE ABSENCE OF A PROVISION IN THE INVITATION FOR BIDS SPECIFICALLY PROVIDING FOR SUCH PROCEDURE.

IT MAY WELL BE IN THIS INSTANCE THAT THE DIFFERENCE IN PRICE WHICH WOULD BE EFFECTED BY THE CHANGES IN THE WAGE RATES WOULD NOT BE SUFFICIENT TO CHANGE THE RELATIVE STANDING OF THE LOW BIDDER. HOWEVER, THE STATUTORY ADVERTISING REQUIREMENTS DO NOT CONTEMPLATE OR SANCTION THE SELECTION OF THE LOWEST BIDDERS ON THE BASIS OF AN ESTIMATE OF WHAT THOSE BIDDERS WOULD HAVE QUOTED ON TERMS WHICH WERE NOT IN FACT ADVERTISED. WHERE A CONTRACT IS TO BE AWARDED PURSUANT TO COMPETITIVE BIDDING, THE LOW BID MUST BE DETERMINED ON THE BASIS OF BIDS ON THE SPECIFICATIONS ACTUALLY TO BE UTILIZED ON THE WORK. THE ONLY PROPER WAY TO DETERMINE THE LOWEST BIDDER IS BY ADVERTISING THE ACTUAL CONTRACT TO BE EXECUTED AND THIS, IN OUR OPINION, IS WHAT THE LAW REQUIRES. 17 COMP. GEN. 427; 15 ID. 573.

WE RECOGNIZE THAT THE REJECTION OF ALL BIDS AFTER A PUBLIC OPENING PREJUDICES THE LOW BIDDER AND MAY DO DAMAGE TO THE COMPETITIVE BID SYSTEM, PARTICULARLY IN THOSE INSTANCES WHERE THE LOW BIDDER WAS IN NO WAY RESPONSIBLE FOR THE CIRCUMSTANCES REQUIRING SUCH ACTION. HOWEVER, THE AVOIDANCE OF SUCH A RESULT CANNOT JUSTIFY AN OTHERWISE IMPROPER PROCUREMENT ACTION.

ACCORDINGLY, ALL BIDS SHOULD BE REJECTED AND THE PROCUREMENT READVERTISED.