B-154210, JUL. 22, 1964

B-154210: Jul 22, 1964

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

KONRAD: REFERENCE IS MADE TO YOUR LETTER OF MAY 13. (A) BIDS AND MODIFICATIONS OR WITHDRAWALS THEREOF RECEIVED AT THE OFFICE DESIGNATED IN THE INVITATION FOR BIDS AFTER THE EXACT TIME SET FOR OPENING OF BIDS WILL NOT BE CONSIDERED UNLESS: (1) THEY ARE RECEIVED BEFORE AWARD IS MADE. EITHER (2) THEY ARE SENT BY REGISTERED MAIL OR BY CERTIFIED MAIL FOR WHICH AN OFFICIAL DATED POST OFFICE STAMP (POSTMARK) ON THE ORIGINAL RECEIPT FOR CERTIFIED MAIL HAS BEEN OBTAINED. IT IS DETERMINED BY THE GOVERNMENT THAT THE LATE RECEIPT WAS DUE SOLELY TO DELAY IN THE MAILS. FOR WHICH THE BIDDER WAS NOT RESPONSIBLE. IT IS DETERMINED THAT THE LATE RECEIPT WAS DUE SOLELY TO MISHANDLING BY THE GOVERNMENT AFTER RECEIPT AT THE GOVERNMENT INSTALLATION: PROVIDED.

B-154210, JUL. 22, 1964

TO MR. GEORGE E. KONRAD:

REFERENCE IS MADE TO YOUR LETTER OF MAY 13, 1964, AND SUPPLEMENTAL LETTER OF MAY 28, 1964, WITH ENCLOSURE, PROTESTING, AS ATTORNEY FOR NATIONAL SECURITY SYSTEM, INC., NEW ORLEANS, LOUISIANA, AGAINST THE AWARD OF A CONTRACT TO QUALITY MAINTENANCE COMPANY, INC., KANSAS CITY, MISSOURI, UNDER INVITATION FOR BIDS NO. BM04-180, ISSUED MARCH 23, 1964, BY THE GENERAL SERVICES ADMINISTRATION AT DALLAS, TEXAS.

THE INVITATION SOLICITED BIDS FOR FURNISHING DURING THE PERIOD MAY 15, 1964, TO MAY 14, 1965, ALL NECESSARY GUARD SERVICES AND RELATED FUNCTIONS FOR THE PROTECTION OF GOVERNMENT PROPERTY AND BUILDINGS LOCATED AT 701 LOYOLA AVENUE AND AT 120 NORTH MARAIS STREET, NEW ORLEANS, LOUISIANA, THE UNITED STATES POST OFFICE AND FEDERAL OFFICE BUILDING AND THE WIRTH BUILDING, RESPECTIVELY.

PARAGRAPH 7 (A) OF THE INSTRUCTIONS TO BIDDERS ON THE REVERSE SIDE OF THE INVITATION, GSA FORM 1467, PROVIDED:

"7. LATE BIDS AND MODIFICATIONS OR WITHDRAWALS.

(A) BIDS AND MODIFICATIONS OR WITHDRAWALS THEREOF RECEIVED AT THE OFFICE DESIGNATED IN THE INVITATION FOR BIDS AFTER THE EXACT TIME SET FOR OPENING OF BIDS WILL NOT BE CONSIDERED UNLESS: (1) THEY ARE RECEIVED BEFORE AWARD IS MADE; AND EITHER (2) THEY ARE SENT BY REGISTERED MAIL OR BY CERTIFIED MAIL FOR WHICH AN OFFICIAL DATED POST OFFICE STAMP (POSTMARK) ON THE ORIGINAL RECEIPT FOR CERTIFIED MAIL HAS BEEN OBTAINED, OR BY TELEGRAPH IF AUTHORIZED, AND IT IS DETERMINED BY THE GOVERNMENT THAT THE LATE RECEIPT WAS DUE SOLELY TO DELAY IN THE MAILS, OR DELAY BY THE TELEGRAPH COMPANY, FOR WHICH THE BIDDER WAS NOT RESPONSIBLE; OR (3) IF SUBMITTED BY MAIL (OR BY TELEGRAM IF AUTHORIZED), IT IS DETERMINED THAT THE LATE RECEIPT WAS DUE SOLELY TO MISHANDLING BY THE GOVERNMENT AFTER RECEIPT AT THE GOVERNMENT INSTALLATION: PROVIDED, THAT TIMELY RECEIPT AT SUCH INSTALLATION IS ESTABLISHED UPON EXAMINATION OF AN APPROPRIATE DATE OR TIME STAMP (IF ANY) OF SUCH INSTALLATION, OR OF OTHER DOCUMENTARY EVIDENCE OF RECEIPT (IF READILY AVAILABLE) WITHIN THE CONTROL OF SUCH INSTALLATION OR THE POST OFFICE SERVING IT. HOWEVER, A MODIFICATION WHICH MAKES THE TERMS OF THE OTHERWISE ACCEPTABLE BID MORE FAVORABLE TO THE GOVERNMENT WILL BE CONSIDERED AT ANY TIME IT IS RECEIVED AND MAY THEREAFTER BE ACCEPTED.'

THE BIDS WERE TO BE EVALUATED ON THE BASIS OF THE MONTHLY RATE SHOWN AND WHEN THEY WERE OPENED AS SCHEDULED ON APRIL 14, 1964, QUALITY'S BID OF $2,990 A MONTH FOR THE SPECIFIED SERVICES AT THE TWO LOCATIONS (PLUS $1.68 AN HOUR FOR ANY ADDITIONAL SERVICES) WAS FOUND TO BE LOW AND NATIONAL'S BID OF $3,156.59 A MONTH (PLUS $1.75 AN HOUR FOR ADDITIONAL SERVICES) WAS SECOND LOW.

BY LETTER DATED APRIL 15, 1964, TO THE GENERAL SERVICES ADMINISTRATION, NATIONAL REQUESTED THAT ITS BID BE MODIFIED TO SHOW THE BASIC AND ADDITIONAL SERVICES RATES AS $2,890.59 A MONTH AND $2.50 AN HOUR, RATHER THAN THE AMOUNTS PREVIOUSLY BID, AND THAT SUCH MODIFICATION BE CONSIDERED IN THE AWARDING OF A CONTRACT UNDER THE INVITATION. PARAGRAPH 7 (A) OF THE INVITATION'S INSTRUCTIONS TO BIDDERS, AND PARTICULARLY THE LAST SENTENCE THEREOF, WAS CITED AS PROVIDING AUTHORITY FOR THE REQUESTED ACTION. BY LETTER OF APRIL 17, 1964, THE GENERAL SERVICES ADMINISTRATION ADVISED YOUR CLIENT THAT INASMUCH AS IT HAD NOT SUBMITTED THE LOW RESPONSIVE BID, TO WHICH THE CITED PROVISION OF PARAGRAPH 7 (A) APPLIED, CONSIDERATION COULD NOT BE GIVEN TO THE REQUESTED MODIFICATION OF THE BID. AWARD OF A CONTRACT WAS THEREAFTER MADE TO QUALITY ON MAY 7, 1964, AS THE LOW RESPONSIVE AND RESPONSIBLE BIDDER.

YOU STATE YOUR CLIENT'S POSITION IN THE MATTER AS FOLLOWS:

"NATIONAL SECURITY SYSTEM, INC.'S POSITION IS, THAT THE GENERAL SERVICES ADMINISTRATION HAS NO ALTERNATIVE, AND UNDER LAW, THE REGULATIONS, AND THE PROVISIONS OF THE "INVITATION FOR BIDS," MUST CONSIDER NATIONAL SECURITY SYSTEM, INC.'S BID AS MODIFIED, AND AS SUCH FIND SAME, MOST FAVORABLE, ACCEPTABLE AND ADVANTAGEOUS TO THE GOVERNMENT AND AS SUCH MAKE AN "AWARD" ACCORDINGLY.'

YOU ALSO QUESTION THE RESPONSIBILITY OF QUALITY AND CONTEND THAT AS OF MAY 25, 1964, SUCH FIRM WAS NOT QUALIFIED UNDER THE LAWS OF LOUISIANA NOR OF THE CITY OF NEW ORLEANS AND THAT IT HAD NOT COMPLIED WITH ALL THE VARIOUS CONDITIONS OF THE CONTRACT (WHICH BECAME EFFECTIVE ONLY TEN DAYS BEFORE ON MAY 15) CONCERNING THEIR PERSONNEL AND EQUIPMENT.

IT IS NOTED THAT THE PROVISIONS RELATING TO THE MODIFICATION OF BIDS AS CONTAINED IN PARAGRAPH 7 (A) OF THE INVITATION; IN PARAGRAPH 1 2.305, FEDERAL PROCUREMENT REGULATIONS; AND IN 41 U.S.C. APP. 1-2.305 (SUPP. IV), TO WHICH YOU REFER AS SUPPORT FOR YOUR CLIENT'S POSITION, CONSISTENTLY USE THE TERM "THE OTHERWISE ACCEPTABLE BID" WHEREAS YOU CONCLUDE THAT "THE PREVAILING CONDITONS, * * * (DO) NOT REQUIRE THE BID TO BE THE LOW RESPONSIVE BID; BUT RATHER, IN THE ABSENCE OF THE MODIFICATION AN "OTHERWISE ACCEPTABLE" BID.' APPARENTLY, YOU DO NOT ATTACH ANY SIGNIFICANCE TO THE LIMITING IMPORT OF THE WORD "THE" AS USED IN THE PHRASE AND WHICH IS NECESSITATED BY THE LONG ESTABLISHED LEGAL PRINCIPLES GOVERNING PROCUREMENTS BY FORMAL ADVERTISING.

WE CANNOT AGREE WITH YOUR CONTENTION THAT THE BID WHICH IS SUBJECT TO MODIFICATION AFTER BID OPENING NEED NOT BE THE LOW RESPONSIVE BID BUT MERELY AN OTHERWISE ACCEPTABLE BID. THERE MAY BE SEVERAL RESPONSIBLE BIDDERS WHO SUBMIT RESPONSIVE BIDS UNDER AN INVITATION, BUT UNLESS A BIDDER SUBMITS THE LOW RESPONSIVE BID, HIS BID IS NOT "THE" OTHERWISE ACCEPTABLE BID. THERE CAN BE ONLY ONE BID WHICH IS "THE" OTHERWISE ACCEPTABLE BID WITHIN THE CONTEMPLATION OF THE CITED PROVISIONS AND THAT BID IS THE LOW RESPONSIVE BID FROM A RESPONSIBLE BIDDER AT THE TIME OF BID OPENING. TO HOLD THAT ANY BUT THE LOW RESPONSIVE AND RESPONSIBLE BIDDER COULD MODIFY HIS BID AFTER THE PUBLIC OPENING IN ORDER TO OFFER A LOWER PRICE, AND THUS DISPLACE THE LOW BID RECEIVED AT TIME OF OPENING, WOULD CREATE HAVOC AND MAKE A MOCKERY OF THE COMPETITIVE BIDDING SYSTEM.

ONE OF THE PURPOSES OF THE FORMAL ADVERTISING PROCEDURE IS TO SECURE TO ALL QUALIFIED BUSINESS CONCERNS AN EQUAL OPPORTUNITY FOR OBTAINING CONTRACTS WITH THE GOVERNMENT, THEREBY ELIMINATING ANY POSSIBILITY OF CHARGES OF FAVORITISM AND COLLUSION IN THE AWARD OF GOVERNMENT CONTRACTS. TO THAT END, IT HAS CONSISTENTLY BEEN HELD BY OUR OFFICE AND THE COURTS THAT--- EXCEPT IN CERTAIN CASES INVOLVING OBVIOUS ERROR WHERE THE INTENDED BID IS CONCLUSIVELY ESTABLISHED--- BIDDERS SHOULD NOT BE PERMITTED TO VARY THEIR PROPOSALS AFTER THE BIDS ARE OPENED, IT BEING CONSIDERED THAT THE PRESERVATION OF THE COMPETITIVE-BID SYSTEM IS INFINITELY MORE IN THE PUBLIC INTEREST THAN OBTAINING AN APPARENTLY PECUNIARY ADVANTAGE IN A PARTICULAR CASE. AS WAS SAID BY THE COURT IN CITY OF CHICAGO V. MOHR, 216 ILL. 320, 74 N.E. 1056 "WHEN A BID IS PERMITTED TO BE CHANGED (AFTER THE OPENING), IT IS NO LONGER THE SEALED BID SUBMITTED IN THE FIRST INSTANCE, AND, TO SAY THE LEAST, IS FAVORITISM, IF NOT A FRAUD--- A DIRECT VIOLATION OF THE LAW--- AND CANNOT BE TOO STRONGLY CONDEMNED.'

PARAGRAPH 4 (C) OF THE INVITATION'S INSTRUCTIONS TO BIDDERS LENDS FURTHER SUPPORT TO THE CONCLUSION REACHED HEREIN. THAT PARAGRAPH PROVIDES IN PERTINENT PART THAT "MODIFICATION OF BIDS ALREADY SUBMITTED WILL BE CONSIDERED IF RECEIVED AT THE OFFICE DESIGNATED IN THE INVITATION FOR BIDS BY THE TIME SET FOR OPENING OF BIDS.' THIS PROVISION STATES THE LONG ESTABLISHED GENERAL RULE FOR THE CONSIDERATION OF BID MODIFICATIONS UNDER FORMAL ADVERTISING PROCEDURES. THE PROVISIONS OF PARAGRAPH 7 (A), ON THE OTHER HAND, SET FORTH THE FEW NARROW EXCEPTIONS TO THAT RULE. THESE EXCEPTIONS, IT WILL BE NOTED, ARE CAREFULLY CLOTHED WITH EVIDENTIARY SAFEGUARDS WHICH ARE OBVIOUSLY DESIGNED TO PREVENT THE VERY PRACTICE THAT YOU CONTEND IS PROPER. TO ACCEPT THE VIEW ADVOCATED BY YOU WOULD SEVERELY PREJUDICE THE RIGHTS OF ALL BIDDERS TO FAIR AND EQUAL TREATMENT UNDER THE PROCUREMENT LAWS. HOWEVER, THE CONSIDERATION OF A MORE FAVORABLE LATE BID MODIFICATION FROM A RESPONSIVE AND RESPONSIBLE BIDDER WHO IS ALREADY LOW ADVANCES THE INTERESTS OF THE GOVERNMENT AND DOES NOT VIOLATE THE RIGHTS OF OTHER BIDDERS SINCE THE LOW BIDDER WOULD BE ENTITLED TO THE AWARD IN ANY EVENT. THE LAST SENTENCE OF PARAGRAPH 7 (A) RECOGNIZES THE GOVERNMENT'S INTERESTS AND AUTHORIZES THE CONTRACTING AGENCY TO TAKE ADVANTAGE OF BETTER TERMS WHEN, AND ONLY WHEN, IT DOES NOT RESULT IN PREJUDICE TO THE COMPETITIVE POSITION OF THE UNSUCCESSFUL BIDDERS. WE DO NOT THINK THAT THE LANGUAGE USED IN PARAGRAPH 7 (A) CAN REASONABLY BE INTERPRETED AS SUPPORTING YOUR VIEW OF THE MATTER.

IN REGARD TO QUALITY'S RESPONSIBILITY, THE RECORD SHOWS THAT YOU WERE ADVISED BY LETTER DATED APRIL 22, 1964, FROM THE GENERAL SERVICES ADMINISTRATION THAT A CHECK WAS BEING MADE TO DETERMINE WHETHER THE LOWEST BIDDER (QUALITY) WAS RESPONSIBLE AND IF IT WAS DETERMINED THAT SUCH BIDDER DID NOT MEET THE NECESSARY REQUIREMENTS, CONSIDERATION WOULD BE GIVEN TO YOUR CLIENT'S BID, WHICH WAS NEXT LOW, TOGETHER WITH THE MODIFICATION THEREOF. UPON COMPLETION OF HIS INVESTIGATION THE CONTRACTING OFFICER DETERMINED THAT QUALITY WAS RESPONSIBLE AND THE CONTRACT WAS ACCORDINGLY AWARDED TO THAT FIRM.

IN MATTERS RELATING TO THE DETERMINATION OF THE RESPONSIBILITY OF A PROSPECTIVE CONTRACTOR, THE AUTHORITIES ARE IN AGREEMENT THAT THE OFFICERS IN WHOM THE POWER IS VESTED TO DETERMINE ,RESPONSIBILITY" MUST DETERMINE THE FACT AND SUCH DETERMINATION CANNOT BE SET ASIDE UNLESS THE ACTION WAS ARBITRARY, CAPRICIOUS OR FRAUDULENT. DETERMINATION OF THE LOWEST RESPONSIBLE BIDDER IS TO BE MADE BY THE AUTHORIZED OFFICIAL OF THE CONTRACTING AGENCY, WHO IS REQUIRED TO ACT FAIRLY UPON REASONABLE INFORMATION WHICH SUPPORTS THE DETERMINATION MADE. WHEN SUCH OFFICIAL DETERMINES THE RESPONSIBILITY OF A BIDDER, THE DETERMINATION CANNOT BE OVERTHROWN BY THE COURTS OR OUR OFFICE UNLESS IT CAN BE SHOWN THAT THE DETERMINATION WAS ARBITRARY, CAPRICIOUS OR FRAUDULENT. SEE MCQUILLIN, MUNICIPAL CORPORATIONS, 3D ED., VOL. 10, SEC. 29.73, AND THE CASES THERE CITED; 38 COMP. GEN. 131; 33 ID. 549; 37 ID. 798; BROWN V. CITY OF PHOENIX, 272 P.2D 358; MCNICHOLS V. CITY AND COUNTY OF DENVER, 274 P.2D 317. THE RECORD HERE DOES NOT SUPPORT A CONCLUSION THAT THE CONTRACTING OFFICER'S ACTION WAS CAPRICIOUS, ARBITRARY OR FRAUDULENT. ALSO, IT SHOULD BE NOTED THAT STATE AND LOCAL REQUIREMENTS MAY NOT BE REGARDED AS CONTROLLING THE ELIGIBILITY OF BIDDERS TO OBTAIN GOVERNMENT CONTRACTS. ANY ACTION ON THE PART OF A STATE PREVENTING BIDDING ON GOVERNMENT CONTRACTS OR PREVENTING A CONTRACTOR FROM CARRYING OUT GOVERNMENT WORK WOULD BE IN DEROGATION OF THE GOVERNMENT'S RIGHT TO SELECT CONTRACTORS OF ITS OWN CHOOSING AND, UNDOUBTEDLY, WOULD TEND TO DISCOURAGE BIDDING AND RESTRICT THE FREE AND OPEN COMPETITION TO WHICH THE GOVERNMENT IS ENTITLED AND WHICH, UNDER FEDERAL STATUTES, IS REQUIRED IN CONNECTION WITH THE AWARD OF CONTRACTS FOR SERVICES AND SUPPLIES. SEE 19 COMP. GEN. 735, 737; AND COURT CASES CITED THEREIN HOLDING THAT THE POLICE AND TAXING POWERS OF A STATE CANNOT RIGHTFULLY BE SO EXERCISED AS TO IMPEDE, OBSTRUCT, BURDEN, OR INTERFERE WITH THE EXECUTION OF FEDERAL POWERS.

THE MANNER IN WHICH A CONTRACTOR PERFORMS UNDER AN INDIVIDUAL CONTRACT IS A MATTER OF CONTRACT ADMINISTRATION WHICH IS PRIMARILY THE RESPONSIBILITY OF THE CONTRACTING AGENCY, AND WE CANNOT CONCLUDE FROM THE EVIDENCE BEFORE US THAT QUALITY IS NOT CURRENTLY PERFORMING SATISFACTORILY IN ACCORDANCE WITH THE TERMS OF ITS CONTRACT.

FOR THE FOREGOING REASONS WE FIND NO BASIS FOR ANY ACTION BY OUR OFFICE, AND YOUR PROTEST IS THEREFORE DENIED.