B-151187, JUL. 11, 1963

B-151187, JUL. 11, 1963

TO HARRIS REFRIGERATION SALES AND SERVICE COMPANY, INC.:

IN YOUR LETTER OF MARCH 29, 1963, AND SUBSEQUENT CORRESPONDENCE, YOU PROTEST THE AWARD OF A CONTRACT TO BE ISSUED UNDER BID NO. BC-2970 FOR THE CONSTRUCTION OF A FACILITY TO HOUSE THE NEW JERSEY DEPARTMENT OF HEALTH. THE PROJECT, ESTIMATED TO COST $8,456,889, INCLUDES THE FURNISHING AND INSTALLATION OF REFRIGERATION EQUIPMENT FOR WALK-IN COLD ROOMS. FEDERAL FUNDS IN THE AMOUNT OF $750,000 HAVE BEEN COMMITTED FOR THE PROJECT UNDER TITLE VI OF THE PUBLIC HEALTH SERVICE ACT, AS AMENDED (POPULARLY KNOWN AS THE HILL-BURTON ACT), 42 U.S.C. 291.

THE RECORD ESTABLISHES THAT THE SPECIFICATIONS OF THIS INVITATION FOR THE WALK-IN COLD ROOMS REQUIRED THAT AIR DISTRIBUTION SHOULD BE THROUGH FIXED VENT OPENINGS IN A PLENUM TO BLANKET THE ROOM IN SUCH A MANNER AS TO INSURE UNIFORM DISTRIBUTION. YOU OFFERED A SYSTEM WHICH USED A SINGLE AIR DIFFUSER FOR DISTRIBUTING AIR THROUGH THE COLD ROOM. THE PROJECT ENGINEER DETERMINED THAT YOUR SYSTEM DID NOT MEET THE SPECIFICATIONS AND THAT THE EQUIPMENT OFFERED BY THE SECOND LOW BIDDER SUPPLIED AN APPRECIABLE OPERATIONAL ADVANTAGE. IN THE CASE OF A PROCUREMENT ACTION BY A GOVERNMENT AGENCY, THE QUESTION AS TO WHETHER THE TECHNICAL PERFORMANCE REQUIREMENTS ARE NECESSARY TO MEET THE MINIMUM NEEDS OF THE PROCURING ACTIVITY, AND THE QUESTION AS TO THE MATERIALITY OF THE DIFFERENCES BETWEEN YOUR MACHINE AND THE ONE CALLED FOR IN THE SPECIFICATIONS, ARE NOT ORDINARILY CONSIDERED TO BE WITHIN THE JURISDICTION OF THIS OFFICE. OUR DECISION B-139830, DATED AUGUST 19, 1959, WE MADE THE FOLLOWING OBSERVATION:

"THIS OFFICE HAS NEITHER AN ENGINEERING STAFF NOR A TESTING LABORATORY TO EVALUATE THE TECHNICAL ASPECTS OF SPECIFICATIONS. MOREOVER, IN DISPUTES OF FACT BETWEEN A PROTESTANT AND A GOVERNMENT AGENCY, WE USUALLY ARE REQUIRED TO ACCEPT THE ADMINISTRATIVE REPORT AS CORRECT. WHETHER A PARTICULAR BID IS RESPONSIVE TO THE TECHNICAL DETAILS OF THE SPECIFICATIONS IS NOT A MATTER, ORDINARILY, FOR OUR DETERMINATION. * *

IN THIS REGARD, WE HELD IN OUR DECISION B-143389, DATED AUGUST 26, 1960, AS FOLLOWS:

"THE QUESTION AS TO THE ACTION, IF ANY, WHICH OUR OFFICE SHOULD TAKE IN CASES INVOLVING THE EVALUATION OF TECHNICAL REQUIREMENTS OF SPECIFICATIONS, ETC., HAS BEEN THE SUBJECT OF A NUMBER OF DECISIONS BY OUR OFFICE. YOUR PROTEST IS BASED UPON SUCH AN EVALUATION. OF NECESSITY, OUR OFFICE HAS ESTABLISHED A RULE GOVERNING SUCH SITUATIONS. IN A DECISION DATED JANUARY 8, 1938, TO THE PRESIDENT, BOARD OF COMMISSIONERS, DISTRICT OF COLUMBIA, PUBLISHED AT 17 COMP. GEN. 554, 557, WE SET FORTH THE FOLLOWING RULE WHICH WE CONSIDER TO BE CONTROLLING IN THE INSTANT MATTER:

" "IT IS THE PROVINCE OF ADMINISTRATIVE OFFICERS TO DRAFT PROPER SPECIFICATIONS NECESSARY TO SUBMIT FOR FAIR COMPETITIVE BIDDING PROPOSED CONTRACTS TO SUPPLY GOVERNMENTAL NEEDS, AND TO DETERMINE FACTUALLY WHETHER ARTICLES OFFERED MEET THOSE SPECIFICATIONS. * * *" "

THE INSTANT PROCUREMENT WAS NOT CONDUCTED BY AN AGENCY OF THE UNITED STATES GOVERNMENT. HOWEVER, THE PROVISIONS OF 42 U.S.C. 291E, SECTION 53.127/C) (1) OF THE PUBLIC HEALTH SERVICE REGULATIONS (42 CFR 53.127 (C) (1) ( REQUIRES THAT TO BE ELIGIBLE FOR A GRANT UNDER THE HILL BURTON ACT THE PROJECT SPONSOR MUST PROVIDE THE FOLLOWING ASSURANCES TO THE STATE AGENCY:

"/1) THAT ACTUAL CONSTRUCTION WORK WILL BE PERFORMED BY THE LUMP SUM (FIXED PRICE) CONTRACT METHOD, THAT ADEQUATE METHODS OF OBTAINING COMPETITIVE BIDDING WILL BE OR HAVE BEEN EMPLOYED PRIOR TO AWARDING THE CONSTRUCTION CONTRACT, EITHER BY PUBLIC ADVERTISING OR CIRCULARIZING THREE OR MORE BIDDERS, AND THAT THE AWARD OF A CONTRACT WILL BE OR HAS BEEN MADE TO THE RESPONSIBLE BIDDER SUBMITTING THE LOWEST ACCEPTABLE BID. * * * "

WITH RESPECT TO PROCUREMENTS OF THE TYPE HERE UNDER CONSIDERATION, WE THINK THAT THE PROCURING ACTIVITY OF THE STATE STANDS IN THE POSITION OF THE FEDERAL PROCURING AGENCY. HOWEVER, THE PROCURING ACTIVITY IS NOT A FEDERAL AGENCY, AND FEDERAL FUNDS ARE INVOLVED IN THE PROJECT ONLY TO THE EXTENT APPROVED BY THE SURGEON GENERAL, WITHIN THE LIMITS AUTHORIZED BY THE ACT. THE ACT IMPOSES UPON THE SURGEON GENERAL THE DUTY OF APPROVING CONSTRUCTION PROJECTS UPON HIS FINDING THAT THE PLANS AND SPECIFICATIONS ARE IN ACCORD WITH THE REGULATIONS PRESCRIBED PURSUANT TO 42 U.S.C. 291E. IN THESE CIRCUMSTANCES, WE HAVE HELD THAT THE PRIMARY AUTHORITY OF THE SURGEON GENERAL TO DETERMINE COMPLIANCE WITH THE REGULATIONS IMPOSED BY HIM MUST BE RECOGNIZED. SEE B-141932, DATED MAY 2, 1960.

THE ONLY REMEDY FOR VIOLATION OR BREACH OF THE REQUIREMENTS OF THE STATUTE OR REGULATIONS, BY A SPONSOR OF AN APPROVED PROJECT, IS THAT PROVIDED IN 42 U.S.C. 291J, AS FOLLOWS:

"WHENEVER THE SURGEON GENERAL, AFTER REASONABLE NOTICE AND OPPORTUNITY FOR HEARING TO THE STATE AGENCY * * * FINDS THAT THE STATE AGENCY IS NOT COMPLYING SUBSTANTIALLY WITH THE PROVISIONS REQUIRED * * * BY REGULATIONS PRESCRIBED PURSUANT TO SECTION 291E OF THIS TITLE * * * THE SURGEON GENERAL MAY FORTHWITH NOTIFY THE SECRETARY OF THE TREASURY AND THE STATE AGENCY THAT NO FURTHER CERTIFICATION WILL BE MADE UNDER SECTIONS 291A- 291C, SECTIONS 291D-291H, 291P-291R, OR 291S 291V OF THIS TITLE * * * OR THAT NO FURTHER CERTIFICATIONS WILL BE MADE FOR ANY PROJECT OR PROJECTS DESIGNATED BY THE SURGEON GENERAL AS BEING AFFECTED BY THE DEFAULT, AS THE SURGEON GENERAL MAY DETERMINE TO BE APPROPRIATE UNDER THE CIRCUMSTANCES; AND * * * HE MAY WITHHOLD FURTHER CERTIFICATIONS UNTIL THERE IS NO LONGER ANY FAILURE TO COMPLY * * *.'

IT WILL BE NOTED THAT THE QUOTED PROVISION PERMITS THE WITHHOLDING OF CERTIFYING ACTION AT THE DISCRETION OF THE SURGEON GENERAL; IT DOES NOT REQUIRE SUCH ACTION EVEN IF IT IS FOUND THAT THE REGULATIONS HAVE BEEN BREACHED. IN THE INSTANT CASE, THE SURGEON GENERAL HAS CONCLUDED THAT THE CIRCUMSTANCES OF THE PRESENT CASE DO NOT JUSTIFY INVOKING THE WITHHOLDING PROCEDURES. IN ADDITION, WE FIND NO BASIS IN THE PRESENT RECORD TO OBJECT TO HIS DETERMINATION THAT THERE HAS BEEN NO VIOLATION OF SECTION 53.127/E) OF THE PUBLIC HEALTH SERVICE REGULATIONS. CF. 37 COMP. GEN. 251.