B-152862, NOV. 27, 1963

B-152862: Nov 27, 1963

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THE PERFORMANCE OF ALL OR ANY PART OF THE WORK IS FOR AN UNREASONABLE PERIOD OF TIME SUSPENDED. OR BY HIS FAILURE TO ACT WITHIN THE TIME SPECIFIED IN THE CONTRACT (OR IF NO TIME IS SPECIFIED. PERFORMANCE BY THE CONTRACTOR WOULD HAVE BEEN PREVENTED BY OTHER CAUSES EVEN IF THE WORK HAD NOT BEEN SO SUSPENDED. NO CLAIM UNDER THIS CLAUSE SHALL BE ALLOWED (I) FOR ANY COSTS INCURRED MORE THAN TWENTY DAYS BEFORE THE CONTRACTOR SHALL HAVE NOTIFIED THE CONTRACTING OFFICER IN WRITING OF THE ACT OR FAILURE TO ACT INVOLVED (BUT THIS REQUIREMENT SHALL NOT APPLY WHERE A SUSPENSION ORDER HAS BEEN ISSUED). IS ASSERTED IN WRITING AS SOON AS PRACTICABLE AFTER THE TERMINATION OF SUCH SUSPENSION. THE INTENT OF THE UNDERSCORED LANGUAGE IS TO ELIMINATE FROM PRICES TO BE OFFERED BY POTENTIAL UNITED STATES CONTRACTORS A COST FACTOR TO COVER THE CONTINGENCY OF DELAYS WHICH MAY BE CAUSED BY MEXICAN CONTRACTORS.

B-152862, NOV. 27, 1963

TO THE COMMISSIONER, INTERNATIONAL BOUNDARY AND WATER COMMISSION, UNITED STATES AND MEXICO:

IN YOUR LETTER OF NOVEMBER 8, 1963, YOU ASK OUR OPINION REGARDING THE PROPRIETY OF INCLUSION OF A CERTAIN PROVISION IN A PROPOSED INVITATION FOR BIDS TO BE ISSUED BY YOUR AGENCY FOR THE CONSTRUCTION OF THE AMISTAD DAM AND RESERVOIR PROJECT, AN INTERNATIONAL PROJECT AUTHORIZED BY THE TREATY OF FEBRUARY 3, 1944, AND THE ACT OF JULY 7, 1960 (74 STAT. 360).

THE RELEVANT PARAGRAPH, REVISED AS UNDERSCORED, WOULD READ AS FOLLOWS:

"PRICE ADJUSTMENT FOR SUSPENSION, DELAY, OR INTERRUPTION OF THE WORK.

"/B) IF, WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR, THE PERFORMANCE OF ALL OR ANY PART OF THE WORK IS FOR AN UNREASONABLE PERIOD OF TIME SUSPENDED, DELAYED, OR INTERRUPTED BY AN ACT OF THE CONTRACTING OFFICER IN THE ADMINISTRATION OF THE CONTRACT, OR BY HIS FAILURE TO ACT WITHIN THE TIME SPECIFIED IN THE CONTRACT (OR IF NO TIME IS SPECIFIED, WITHIN A REASONABLE TIME), OR BY DELAYS OF THE MEXICAN CONTRACTOR OR GOVERNMENT IN CONNECTION WITH PERFORMANCE OF THE WORK ALLOCATED TO MEXICO FOR CONSTRUCTION OF THE AMISTAD DAM, AN ADJUSTMENT SHALL BE MADE BY THE CONTRACTING OFFICER FOR ANY INCREASE IN THE COST OF PERFORMANCE OF THE CONTRACT (EXCLUDING PROFIT) NECESSARILY CAUSED BY THE UNREASONABLE PERIOD OF SUCH SUSPENSION, DELAY OR INTERRUPTION, AND THE CONTRACT SHALL BE MODIFIED IN WRITING ACCORDINGLY. NO ADJUSTMENT SHALL BE MADE TO THE EXTENT THAT, PERFORMANCE BY THE CONTRACTOR WOULD HAVE BEEN PREVENTED BY OTHER CAUSES EVEN IF THE WORK HAD NOT BEEN SO SUSPENDED, DELAYED, OR INTERRUPTED. NO CLAIM UNDER THIS CLAUSE SHALL BE ALLOWED (I) FOR ANY COSTS INCURRED MORE THAN TWENTY DAYS BEFORE THE CONTRACTOR SHALL HAVE NOTIFIED THE CONTRACTING OFFICER IN WRITING OF THE ACT OR FAILURE TO ACT INVOLVED (BUT THIS REQUIREMENT SHALL NOT APPLY WHERE A SUSPENSION ORDER HAS BEEN ISSUED), AND (II) UNLESS THE CLAIM, IN AN AMOUNT STATED, IS ASSERTED IN WRITING AS SOON AS PRACTICABLE AFTER THE TERMINATION OF SUCH SUSPENSION, DELAY, OR INTERRUPTION BUT NOT LATER THAN THE DATE OF FINAL PAYMENT UNDER THE CONTRACT. ANY DISPUTE CONCERNING A QUESTION OF FACT ARISING UNDER THIS CLAUSE SHALL BE SUBJECT TO THE DISPUTES CLAUSE.'

THE INTENT OF THE UNDERSCORED LANGUAGE IS TO ELIMINATE FROM PRICES TO BE OFFERED BY POTENTIAL UNITED STATES CONTRACTORS A COST FACTOR TO COVER THE CONTINGENCY OF DELAYS WHICH MAY BE CAUSED BY MEXICAN CONTRACTORS. APPEARS FROM YOUR REPORT THAT UNDER THE SUBJECT TREATY, ITS RATIFICATION BY THE UNITED STATES SENATE, AND THE PROPOSED TERMS AND CONDITIONS OF THE MEXICAN INVITATION FOR BIDS AND CONTRACT, THE UNITED STATES CONTRACTOR MIGHT HAVE NO REMEDY FOR SUCH DAMAGES, IN THE ABSENCE OF THE UNDERSCORED LANGUAGE, UNLESS ITS CLAIM WAS SUBMITTED TO AND APPROVED BY THE INTERNATIONAL BOUNDARY AND WATER COMMISSION, UNITED STATES AND MEXICO, AND THE EXPENDITURE FOR SUCH CLAIM APPROVED BY THE CONGRESS OF THE UNITED STATES.

UNDER THE FACTS YOU HAVE REPORTED TO US, WE SEE NO LEGAL OBJECTION TO THE PROPOSED REVISION OF THE PRICE ADJUSTMENT CLAUSE. CF. H. E. CROCK COMPANY, INC. V. UNITED STATES, 270 U.S. 4 (1926).

IN A LETTER OF NOVEMBER 16, 1963, YOU ALSO ASK OUR OPINION REGARDING THE FOLLOWING PROPOSED INVITATION CLAUSE REGARDING THE SUBMISSION AND EVALUATION OF BIDS:

ALTERNATE VI

"BIDDERS MAY SUBMIT A BID ON ONE OR BOTH OF THE FOLLOWING:

" "A" BID. ON THE BASIS OF THE BIDDER OF ONE COUNTRY BEING AWARDED THE CONTRACT INDEPENDENTLY, THAT IS, WITHOUT REGARD TO THE IDENTITY OF THE CONTRACTOR WHO MAY BE AWARDED THE CONTRACT OF THE OTHER COUNTRY.

" "B" BID. ON THE BASIS THE BIDDER WOULD ACCEPT THE CONTRACT ON THE CONDITION THAT THE CONTRACT FOR THE OTHER COUNTRY WOULD BE AWARDED TO A SPECIFIED BIDDER WITH WHOM HE IS ASSOCIATED.

"THE UNITED STATES AND MEXICAN SECTIONS OF THE COMMISSION WILL EACH SEPARATELY CONSIDER ANY "A" BIDS WHICH IT MAY RECEIVE, AND THE TWO SECTIONS WILL SEPARATELY AND JOINTLY CONSIDER THE "B" BIDS THAT MAY BE RECEIVED.

"THE UNITED STATES AWARD WILL BE MADE TO THE LOWEST QUALIFIED BIDDER:

"1) THE LOWEST QUALIFIED UNITED STATES "A" BID, UNLESS THERE IS A LOWER QUALIFIED UNITED STATES "B" BID, DEFINED AS:

"2) THE LOWEST QUALIFIED UNITED STATES "B" BID WHICH WITH THE SPECIFIED ASSOCIATE MEXICAN "B" BID COMPRISE THE LOWEST ASSOCIATED "B" BIDS IN EACH OF THE TWO RESPECTIVE COUNTRIES, DETERMINED AS FOLLOWS:

"A. THE U.S. SECTION OF THE COMMISSION WILL INDEPENDENTLY DETERMINE ALL THE QUALIFIED "B" BIDS RECEIVED BY IT WHICH ARE LOWER THAN THE LOWEST "A" BID RECEIVED BY THAT SECTION. THE MEXICAN SECTION WILL DO LIKEWISE.

"B. THE U.S. SECTION WILL INDEPENDENTLY LIST ITS COUNTRY'S QUALIFIED "B" BIDS IN THEIR ORDER OF MAGNITUDE, FROM THE LOWEST TO THE HIGHEST. THE MEXICAN SECTION WILL DO LIKEWISE.

"C. THE UNITED STATES AND MEXICAN SECTIONS WILL JOINTLY CONSIDER THE "B" BIDS LISTED INDEPENDENTLY BY EACH OF THEM, IN THEIR ORDER OF MAGNITUDE, AND EACH SECTION WILL RESPECTIVELY SELECT ITS LOWEST "B" BID WHICH IS SPECIFICALLY ASSOCIATED WITH THE LOWEST "B" BID OF CORRESPONDING ORDER OF MAGNITUDE OF THE OTHER COUNTRY.

"IF NO PAIR OF "B" BIDS IS COMPOSED OF MUTUALLY SPECIFIED ASSOCIATES, AWARD WILL BE MADE TO THE LOWEST QUALIFIED "A" BID.'

YOU HAVE ENCLOSED THE FOLLOWING SAMPLE TABULATION AND ANALYSIS OF HYPOTHETICAL BIDS TO BE EVALUATED ACCORDING TO THE ABOVE CLAUSE:

"AMISTAD DAM - U.S. AND MEXICAN CONSTRUCTION CONTRACTS

SAMPLE TABULATION OF BIDS RECEIVED AT OPENING. -------------------- ---- ------------------------------------------------ BIDDER

U.S. CONTRACT MEXICAN CONTRACT

NO. BIDS BIDS ------------------------ ----------------------------------

1 LOWEST "A" BID $40,000,000 LOWEST "A" BID

$30,000,000 -------- ----------------------------------------------------

2 "B" BID $36,000,000 "B" BID $31,000,000

(ASSOCIATED) --------------------- --------------------------------------

3 "B" BID $42,000,000 "B" BID $26,500,000

(ASSOCIATED) ----------------------------------------------------- ------

4 "B" BID $38,000,000 "B" BID $28,000,000

(ASSOCIATED) -------------------------------------------- ---------------

5 "B" BID $37,500,000 "B" BID $28,500,000

(ASSOCIATED) ----------------------------------- ------------------------

6 "B" BID $38,500,000 "B" BID $27,000,000

(ASSOCIATED) -------------------------- ---------------------------------

"SAMPLE ANALYSIS OF BIDS

AMISTAD DAM - U.S. AND MEXICAN CONSTRUCTION CONTRACTS

COMPARISON OF LOW "A" BID WITH LOWER "B" BIDS TABULATED INDEPENDENTLY BY EACH SECTION OF THE COMMISSION IN ASCENDING ORDER OF MAGNITUDE FROM LIST OF BIDS RECEIVED BY EACH COUNTRY "ORDER OF

U.S. BIDS MEXICAN BIDS REMARKS

MAGNITUDE --------------------------------------------------------- -----

A 40,000,000 A 30,000,000 LOWEST "A" BID

RECEIVED BY

EACH COUNTRY

(1) B-2 36,000,000 B-3 26,500,000 ELIMINATE - NOT

SPECIFIED

ASSOCIATES

(2) B-5 37,500,000 B-6 27,000,000 ELIMINATE - NOT

SPECIFIED

ASSOCIATES

(3) B-438,000,000 B-4 28,000,000 VALID BID

(4)B-6 38,500,000 B-5 28,500,000 ELIMINATE - NOT

SPECIFIED

ASSOCIATES

(5) B-3 42,000,000 B-2 31,000,000 ELIMINATE - HIGHER

THAN "A" BID"

PRESUMABLY, THE ABOVE SAMPLES WILL ALSO BE INCLUDED WITH THE INVITATION FOR BIDS. IT IS RECOGNIZED THAT EACH COUNTRY MAY RECEIVE ASSOCIATED "B" BIDS NOT OF THE SAME ORDER OF MAGNITUDE WHICH ARE LOWER IN EACH COUNTRY THAN THE RESPECTIVE "A" BIDS AND RESPECTIVE ASSOCIATED "B" BIDS OF THE SAME ORDER OF MAGNITUDE, IN WHICH EVENT YOU WOULD ACCEPT THE LOWEST "B" BID OF THE SAME ORDER OF MAGNITUDE AS ITS CORRESPONDING ASSOCIATED "B" BID.

UNDER THE CIRCUMSTANCES, THE OPPORTUNITY FOR A UNITED STATES CONTRACTOR TO PERFORM THE WORK WITH AN ASSOCIATED MEXICAN FIRM MAY RESULT IN REDUCED COSTS TO THE UNITED STATES. ON THE BASIS OF THE INFORMATION SUBMITTED TO US, IT DOES NOT APPEAR THAT THE PROPOSED SYSTEM OF EVALUATION WHICH PERMITS THE POSSIBLE SAVINGS WOULD VIOLATE THE PRINCIPLES OF COMPETITIVE ADVERTISING. THE INVITATION WILL ALLOW A BIDDER TO CONDITION THE ACCEPTANCE OF ONE OF ITS OFFERS ON THE ACCEPTANCE BY THE MEXICAN GOVERNMENT, UNDER PRESCRIBED PROCEDURES, OF A BID OF A PARTICULAR MEXICAN COMPANY OR COMPANIES. IF THE CONDITION IS NOT MET, THE OFFER, ALBEIT LOW, CANNOT BY ITS TERMS BE ACCEPTED.

UNDER THE FACTS YOU HAVE REPORTED TO US, WE PERCEIVE NO LEGAL OBJECTION TO ISSUING THE INVITATION FOR BIDS IN THE MANNER SUGGESTED.