B-149427, AUG. 20, 1962

B-149427, AUG. 20, 1962

TO MR. D. A. BOONE:

REFERENCE IS MADE TO YOUR LETTER OF JULY 11, 1962, AND SUBSEQUENT CORRESPONDENCE, WHEREIN YOU PROTEST AGAINST AN AWARD TO YOUR FIRM OF ANYTHING LESS THAN ALL THE WORK ADVERTISED UNDER IFB 34-601-62-446 AS AMENDED.

THE SUBJECT INVITATION ORIGINALLY SOLICITED BIDS FOR THE CONSTRUCTION OF SIXTEEN AIRCRAFT MAINTENANCE DOCKS AT THREE DIFFERENT AIR FORCE BASES AS FOLLOWS: EIGHT TO BE ERECTED AT NELLIS, SIX AT LUKE AND TWO AT PERRIN. THROUGH SUBSEQUENT AMENDMENT OF THE INVITATION, CONSTRUCTION AT PERRIN WAS DELETED AND DEMOLITION AT NELLIS WAS INCLUDED. SCHEDULE "C," WHICH WAS FURNISHED WITH THE ORIGINAL INVITATION, WAS REVISED TO CONFORM TO THE CHANGED REQUIREMENTS AND A REVISED SCHEDULE UPON WHICH BIDDERS WERE TO PLACE THEIR BIDS WAS FURNISHED TO PROSPECTIVE BIDDERS. SCHEDULE "C," AS REVISED, SOLICITED BIDS AS FOLLOWS:

CHART

"ITEM NR DESCRIPTION OF ITEMS UNIT AMOUNT

FURNISH ALL PLANT, LABOR, MATERIALS AND

EQUIPMENT AND PERFORM

ALL WORK NECESSARY FOR THE

CONSTRUCTION AND ERECTION OF FOURTEEN

(14) EACH AIRCRAFT MAINTENANCE DOCKS

(FIGHTERS WITH SHOPS) IN QUANTITIES

SPECIFIED, AT LOCATIONS SET FORTH

BELOW. WORK SHALL BE IN STRICT

COMPLIANCE WITH SCHEDULE "B,"

SCHEDULE OF DRAWINGS AND SPECIFICATIONS

ATTACHED HERETO.

"1. NELLIS AIR FORCE BASE, L.S. $----

LAS VEGAS, NEVADA

(8 EACH, WITH SHOPS)

"2. LUKE AIR FORCE BASE, L.S.$-----

GLENDALE, ARIZONA

(6 EACH, WITH SHOPS)

"3. REMOVAL AND DISPOSAL OF BUILDINGS L.S. $----

T-97, T-125, T-132.

SALVAGE MATERIAL BECOMES PROPERTY

OF CONTRACTOR. SEE ATTACHMENT A

TOTAL PRICE $-----

"PERCENTAGE OF REDUCTION BIDDER WILL ALLOW IF AWARDED ITEMS 1 THROUGH 3-- --- PERCENT"

FURTHER, PARAGRAPH 10 (C) OF THE INSTRUCTIONS TO BIDDERS PROVIDED:

"THE GOVERNMENT MAY ACCEPT ANY ITEM OR COMBINATION OF ITEMS OF A BID, UNLESS PRECLUDED BY THE INVITATION FOR BIDS OR THE BIDDER INCLUDES IN HIS BID A RESTRICTIVE LIMITATION.'

IN RESPONSE TO THE INVITATION, NINE BIDS WERE RECEIVED, BUT ONLY THE BIDS FROM YOUR COMPANY AND MAHOUT CONSTRUCTION COMPANY ARE PERTINENT TO THE PROTEST. THOSE TWO BIDS WERE AS FOLLOWS:

TABLE

TRI-COR MAHOUT

ITEM 1 $1,019,019 $1,067,921

ITEM 2 739,379 716,921

ITEM 3 3,100 3,000

TOTAL PRICE $1,761,498 $1,787,842

ON THE BASES OF THE BIDS RECEIVED, A DETERMINATION WAS MADE TO AWARD ON CONTRACT TO TRI-COR FOR ITEMS 1 AND 3 AND ANOTHER CONTRACT TO MAHOUT FOR ITEM 2. SPLITTING THE AWARD BETWEEN THE TWO FIRMS WAS CONSIDERED TO BE ADVANTAGEOUS TO THE GOVERNMENT IN THAT THE TOTAL COST THAT WAY WOULD BE ONLY $1,739,040 AND WOULD SAVE THE GOVERNMENT $22,458 OVER THE TOTAL PRICE IT WOULD HAVE TO PAY IF IT AWARDED ALL THREE ITEMS TO YOUR FIRM.

HOWEVER, AS A RESULT OF AN UNFAVORABLE FACILITY CAPABILITY REPORT ON MAHOUT, THE CONTRACTING OFFICER DECIDED THAT THE FIRM WAS NOT A RESPONSIBLE BIDDER AND THEREFORE INELIGIBLE TO RECEIVE THE PROPOSED AWARD. THUS, THE CONTRACTING OFFICER DECIDED TO AWARD A CONTRACT FOR ALL THREE ITEMS TO YOUR COMPANY SINCE THAT WAS CONSIDERED TO BE THE NEXT MOST ADVANTAGEOUS AWARD FOR THE GOVERNMENT. OFFICERS OF YOUR COMPANY WERE REQUESTED TO OBTAIN THE NECESSARY BONDS AND TO MEET WITH THE CONTRACTING OFFICER TO EXECUTE THE CONTRACT. DURING THE MEETING, THE CONTRACTING OFFICER TALKED TO THE OFFICER WHO WOULD HAVE TO APPROVE THE CONTRACT AND ADVISED HIM OF THE ACTION THAT WAS BEING TAKEN AND HE VOICED ORAL APPROVAL. THE CONTRACT WAS EXECUTED ON BEHALF OF YOUR COMPANY AND LEFT WITH THE CONTRACTING OFFICER WHO ADVISED THAT IT WOULD BE ISSUED TO YOUR FIRM THE BEGINNING OF THE FOLLOWING WEEK.

BEFORE THE CONTRACT COULD BE FORMALLY APPROVED AND RELEASED TO YOUR COMPANY, MAHOUT PROTESTED AGAINST THE NEGATIVE FACILITY CAPABILITY REPORT. ON THE BASIS OF ADDITIONAL INFORMATION OBTAINED, THE NEGATIVE REPORT WAS CANCELED AND AN AFFIRMATIVE REPORT WAS ISSUED. UPON RECEIPT OF THE NEW REPORT, THE CONTRACTING OFFICER DETERMINED THAT MAHOUT WAS A RESPONSIBLE BIDDER ELIGIBLE FOR AWARD AND THEREFORE REVERTED TO THE ORIGINAL INTENTION OF MAKING TWO AWARDS.

YOU PROTEST THE SPLITTING OF THE AWARD ON TWO GROUNDS. FIRST, YOU CONTEND THAT THE INVITATION CONTEMPLATED THAT AN AWARD WOULD BE MADE TO A SINGLE BIDDER FOR ALL THE WORK REQUIRED BY THE INVITATION. SECOND, YOU CONTEND THAT A CONTRACT BINDING ON THE GOVERNMENT WAS CONSUMMATED WHEN THE PARTIES EXECUTED THE CONTRACT DOCUMENTS AND FURNISHED THE NECESSARY BONDS BASED UPON THE ORAL APPROVAL OF THE OFFICER THAT WOULD FORMALLY APPROVE THE CONTRACT.

WITH RESPECT TO THE FIRST CONTENTION, IT SHOULD BE NOTED THAT SCHEDULE "C," AS ISSUED ORIGINALLY AND AS REVISED, INVITED BIDDERS TO PROVIDE A PERCENTAGE REDUCTION IN PRICE "IF AWARDED ITEMS 1 THROUGH 3.' THIS IS OBVIOUSLY INCONSISTENT WITH AN INTENTION TO MAKE A SINGLE AWARD ONLY. IT WAS CONTEMPLATED THAT ALL THE ITEMS WERE TO BE AWARDED ONLY TO A SINGLE BIDDER THEN THE PRICE REDUCTION PROVISION WOULD BE WITHOUT PURPOSE OR MEANING. IN OUR OPINION, THE PRICE REDUCTION PROVISION IS EVIDENCE THAT THE GOVERNMENT INTENDED TO RETAIN THE OPTION SPECIFICALLY RESERVED IN PARAGRAPH 10 (C) OF THE INSTRUCTIONS TO BIDDERS TO AWARD BY ITEMS IF NO ADVANTAGE WAS OTHERWISE GAINED. THEREFORE, SINCE YOUR BID DID NOT RESTRICT ITS PRICES TO CONSIDERATION ON THE CONDITION THAT IT RECEIVE AN AWARD OF ALL THE ITEMS, SUCH A CONDITION CANNOT PROPERLY BE PLACED UPON THE BID AFTER THE OPENING OF BIDS.

WITH REGARD TO THE SECOND CONTENTION, WHILE IT IS YOUR POSITION THAT, IN VIEW OF THE PROCEDURES ACTUALLY FOLLOWED BY THE CONTRACTING AGENCY IN THIS CASE, THE FORMAL WRITTEN APPROVAL AND MAILING OF THE CONTRACT WAS NOT NECESSARY TO MAKE AN ENFORCEABLE CONTRACT, GENERAL PROVISION 36 IN THE INVITATION FOR BIDS IS SPECIFIC THAT---

"THIS CONTRACT SHALL BE SUBJECT TO THE WRITTEN APPROVAL OF THE SECRETARY OF THE AIR FORCE OR HIS DULY AUTHORIZED REPRESENTATIVE AND SHALL NOT BE BINDING UNTIL SO APPROVED.'

IN OUR DECISION B-132593, NOVEMBER 21, 1957, THERE WAS CONSIDERED A CASE SOMEWHAT SIMILAR TO THE IMMEDIATE ONE. THE INVITATION SPECIFIED THAT THE CONTRACT WAS SUBJECT TO THE APPROVAL OF THE COMMANDING GENERAL AND BASED UPON APPROVAL INFORMALLY OBTAINED THE PROSPECTIVE CONTRACTOR WAS ADVISED THAT AN AWARD HAD BEEN MADE TO IT, BUT WHEN THE CONTRACT WAS LATER PROCESSED THROUGH FOR FORMAL WRITTEN APPROVAL IT WAS DISAPPROVED. THE PROSPECTIVE CONTRACTOR CONTENDED THAT THE AWARD CONSTITUTED A VALID ACCEPTANCE OF THE BID AND FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES TO THE CONTRACT.

IN CONSIDERING THE MATTER IN THE CITED DECISION, IT WAS STATED:

"IT IS WELL SETTLED THAT TO CONSUMMATE A CONTRACT, BINDING UPON BOTH PARTIES, AN ACCEPTANCE MUST, AMONG OTHER THINGS, BE ABSOLUTE, UNAMBIGUOUS, UNEQUIVOCAL, WITHOUT CONDITION OR RESERVATION. IN THE PRESENT CASE, THE APPROVAL OF THE COMMANDING GENERAL WAS A REQUIRED FORMALITY--- NOT AN INFORMALITY, AS YOU SUGGEST--- AND CONSTITUTED A CONDITION PRECEDENT TO THE VALIDITY OF THE AGREEMENT INSOFAR AS THE GOVERNMENT IS CONCERNED. THE SUPREME COURT OF THE UNITED STATES HAS OFTEN REITERATED THE PRINCIPLE THAT CONTRACTING FORMALITIES IMPOSED UPON THE GOVERNMENT ARE FOR THE SOLE BENEFIT OF THE GOVERNMENT, AND THE LEGAL EFFECT OF THE APPROVAL REQUIREMENT WAS RESOLVED IN THE CASE OF DISTRICT OF COLUMBIA V. SINGLETON, ET AL., 81 A.2D 335, AFFIRMED 198 F.2D 945. THERE IT WAS HELD THAT CONTRACTS REQUIRED TO BE APPROVED BY THE DISTRICT OF COLUMBIA COMMISSIONERS RENDERS UNAPPROVED CONTRACTS UNENFORCEABLE AGAINST THE DISTRICT GOVERNMENT BUT BINDING UPON THE OTHER PARTIES. THE APPELLATE COURT STATED THAT "SUCH CASES (REFERRING TO CITED SUPREME COURT DECISIONS) CLEARLY CONTEMPLATE THE EXISTENCE OF AN OBLIGATION ON THE PART OF THE BIDDER PRIOR TO THE CREATION OF A CONTRACT WHICH WILL BIND THE PUBLIC BODY.'"

IN CONCLUSION, IT WAS SAID THAT, NOTWITHSTANDING THE NOTICE OF AWARD, NO CONTRACTUAL OBLIGATION WAS IMPOSED ON THE UNITED STATES IN VIEW OF THE EVENTUAL DISAPPROVAL BY THE COMMANDING GENERAL.

EVEN IF A CONTRACT DID COME INTO BEING, THAT WOULD NOT PRECLUDE THE CANCELLATION OF THE CONTRACT WHERE THE CONTRACTING OFFICER'S REJECTION OF THE OFFER OF THE LOWEST RESPONSIBLE BIDDER WAS FOUND UPON ADMINISTRATIVE REVIEW TO HAVE BEEN IMPROPER. SEE 17 COMP. GEN. 312.

ACCORDINGLY, IN VIEW OF THE ABOVE, THIS OFFICE WOULD NOT BE WARRANTED IN OBJECTING TO THE CONTRACTING AGENCY'S DISREGARD OF THE CONTRACT ORIGINALLY EXECUTED BY YOUR COMPANY NOR TO THE DETERMINATION TO MAKE A SPLIT AWARD.