B-154322, OCT. 26, 1964

B-154322: Oct 26, 1964

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ROSE: FURTHER REFERENCE IS MADE TO YOUR LETTER OF MAY 28. BIDS WERE REQUESTED FOR CERTAIN CONSTRUCTION WORK IN ALASKA. HERE INVOLVED ARE SCHEDULES A. WAS $330. WAS THE LOW BID FOR THE WORK TO BE PERFORMED UNDER THOSE SCHEDULES. THAT BIDDERS HAD NOT BEEN ADVISED THAT THERE WAS AN ADMINISTRATIVE LIMITATION OF $25. WHEN B AND A COMPANY WAS ADVISED BY TELEGRAM OF MAY 11. ALL BIDDERS WERE ADVISED BY LETTERS DATED MAY 14. THE LATTER INVITATION WAS ISSUED ON MAY 18. WAS NOT THE LOW BIDDER. YOUR PROTEST WAS FORWARDED TO THE OFFICE OF THE CHIEF OF ENGINEERS. SINCE IT WAS CONSIDERED TO BE MERITORIOUS. AGREEMENT OF THE COMPANY TO ACCEPT THE AWARD UNDER THAT INVITATION APPARENTLY WAS CONSIDERED NECESSARY BECAUSE THE REJECTION OF ALL BIDS UNDER THAT INVITATION WAS BELIEVED TO HAVE TERMINATED THE GOVERNMENT'S RIGHT TO UNILATERALLY ACCEPT THE B AND A BID UNDER THE EARLIER INVITATION.

B-154322, OCT. 26, 1964

TO MR. NISSEL A. ROSE:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MAY 28, 1964, AND SUBSEQUENT CORRESPONDENCE, INCLUDING YOUR LETTER OF SEPTEMBER 10, 1964, PROTESTING ON BEHALF OF B AND A COMPANY, AGAINST THE NONAWARD, THE REJECTION OF ALL BIDS, THE DECISION TO READVERTISE, AND THE READVERTISING FOR BIDS FOR THE CONSTRUCTION OF A MULTI-PURPOSE BUILDING AT NEWENHAM, ALASKA.

BY INVITATION NO. ENG-95-507-64-34, DATED APRIL 7, 1964, TO BE OPENED MAY 5, 1964, BIDS WERE REQUESTED FOR CERTAIN CONSTRUCTION WORK IN ALASKA, DIVIDED INTO GROUPS UNDER VARIOUS SCHEDULES. HERE INVOLVED ARE SCHEDULES A, B AND C, UNDER GROUP 1, ALL TO BE AWARDED UNDER ONE CONTRACT. THE B AND A COMPANY'S TOTAL BID ON SCHEDULES A, B AND C, AS MODIFIED PRIOR TO BID OPENING, WAS $330,000, AND WAS THE LOW BID FOR THE WORK TO BE PERFORMED UNDER THOSE SCHEDULES. IT APPEARS, HOWEVER, THAT BIDDERS HAD NOT BEEN ADVISED THAT THERE WAS AN ADMINISTRATIVE LIMITATION OF $25,000 ON SCHEDULE B INCLUDING GOVERNMENT COSTS. WHEN B AND A COMPANY WAS ADVISED BY TELEGRAM OF MAY 11, 1964, THE LOW BID COULD NOT BE ACCEPTED BECAUSE OF FUND LIMITATIONS ON SCHEDULE B, IT LOWERED ITS PRICE ON SCHEDULE B BY $3,000. BY TELEGRAM OF MAY 13, 1964, IT OFFERED A FURTHER REDUCTION OF $2,000 IN THAT SCHEDULE AND A REDUCTION OF $5,000 ON SCHEDULE A, MAKING A TOTAL REDUCTION OF $10,000 FROM ITS ALREADY LOW BID. HOWEVER, SINCE OTHER BIDDERS HAD NOT BEEN ADVISED OF THE ADMINISTRATIVE LIMITATION ON SCHEDULE B AND ALL HAD EXCEEDED $25,000 ON THAT SCHEDULE, ALL BIDDERS WERE ADVISED BY LETTERS DATED MAY 14, 1964, THAT DUE TO MONETARY LIMITATION ALL BIDS RECEIVED UNDER INVITATION NO. ENG-95-507-64-34 HAD BEEN REJECTED AND THAT THE REQUIREMENTS WOULD BE READVERTISED UNDER INVITATION NO. ENG-95-507-64 76.

THE LATTER INVITATION WAS ISSUED ON MAY 18, 1964, TO BE OPENED JUNE 2, 1964. B AND A COMPANY SUBMITTED A BID OF $330,000 UNDER THAT INVITATION ON SCHEDULES A, B AND C, AND WAS NOT THE LOW BIDDER. IN THE MEANTIME, BY LETTER OF MAY 19, 1964, TO THE DISTRICT ENGINEER, YOU HAD PROTESTED ON BEHALF OF B AND A COMPANY AGAINST THE FAILURE TO MAKE AN AWARD TO B AND A UNDER THE FIRST INVITATION, THE REJECTION OF ALL BIDS, THE READVERTISING OF THE REQUIREMENTS UNDER ANOTHER INVITATION, AND THE AWARD OF A CONTRACT TO ANYONE OTHER THAN B AND A.

YOUR PROTEST WAS FORWARDED TO THE OFFICE OF THE CHIEF OF ENGINEERS, AND SINCE IT WAS CONSIDERED TO BE MERITORIOUS, THE ACTING DIRECTOR OF MILITARY CONSTRUCTION ADVISED THE DIVISION ENGINEER THAT AWARD SHOULD BE MADE TO B AND A COMPANY UNDER INVITATION FOR BIDS NO. ENG-95-507-64 34, IF AGREEABLE TO THE COMPANY, AT ITS VOLUNTARY REDUCTION IN PRICE. AGREEMENT OF THE COMPANY TO ACCEPT THE AWARD UNDER THAT INVITATION APPARENTLY WAS CONSIDERED NECESSARY BECAUSE THE REJECTION OF ALL BIDS UNDER THAT INVITATION WAS BELIEVED TO HAVE TERMINATED THE GOVERNMENT'S RIGHT TO UNILATERALLY ACCEPT THE B AND A BID UNDER THE EARLIER INVITATION. THEREFORE, BY TELEGRAM DATED JUNE 24, 1964, AN OFFER WAS MADE TO YOU AS FOLLOWS:

"* * * IF AGREEABLE WITH YOUR FIRM, AWARD UNDER IFB ENG-95-507-64 34 WILL BE MADE IN THE AMOUNT OF $320,000. YOUR UNCONDITIONAL OFFER TO PERFORM ALL WORK IN STRICT ACCORDANCE WITH ENG-95-507-64-34 MUST BE RECEIVED NOT LATER THAN 26 JUN 64. THE COMPLETION OF WORK SHALL BE PREDICATED ON THE TERMS AND CONDITIONS AS SET FORTH IN PARAGRAPH SC-1 OF ENG-95-507-64-34. ACCORDINGLY, IF NOTICE TO PROCEED IS RECEIVED BY YOU ON 29 JUN, A TIME EXTENSION OF 40 CALENDAR DAYS WILL BE ALLOWED. IT SHALL BE UNDERSTOOD AND AGREED THAT NO COMPENSATION WILL BE PAID FOR ABOVE TIME EXTENSION.'

B AND A COMPANY REPLIED BY TELEGRAM DATED JUNE 25 AS FOLLOWS:

"* * * WE PROMISED UNCONDITIONALLY BY SUBMITTAL OF OUR BID TO PERFORM AS SPECIFIED. GOVERNMENT CAUSED DELAY IN MAKING AWARD REQUIRES EQUITABLE ADJUSTMENT IN BOTH COMMENCEMENT AND COMPLETION TIME. OUR BID PRICE REMAINS FIRM. WE ARE PREPARED TO DISCUSS NEW COMPLETION DATE TO BE ADJUSTED ON BASIS OF DATE OF ACTUAL NOTICE TO PROCEED AND REASONABLE PROGRESS SCHEDULE WITH DUE CONSIDERATION TO TIME FOR SUBMITTALS, APPROVALS, PUBLICATION, SHIPPING SCHEDULES AND SEASONAL CLIMATIC CONSIDERATIONS AS COMPLICATED BY IFB. IF ABOVE DOES NOT MEET YOUR APPROVAL WE SHALL ACCEPT AWARD AND PROCEED AS DIRECTED SUBJECT TO SUBSEQUENT ADJUSTMENT AS MAY BE REQUIRED.'

PARAGRAPH SC-1 OF THE SPECIAL CONDITIONS CONTAINED IN INVITATION FOR BIDS ENG-95-507-64-34, TO WHICH REFERENCE WAS MADE IN THE TELEGRAM OF JUNE 24, READS AS FOLLOWS:

"SC-1 COMMENCEMENT, PROSECUTION AND COMPLETION OF WORK: THE CONTRACTOR WILL BE REQUIRED TO COMMENCE WORK UNDER THIS CONTRACT WITHIN 30 CALENDAR DAYS AFTER THE DATE OF RECEIPT BY HIM OF NOTICE TO PROCEED, TO PROSECUTE SAID WORK WITH FAITHFULNESS AND ENERGY, AND TO COMPLETE THE ENTIRE WORK READY FOR USE NOT LATER THAN THE FOLLOWING COMPLETION DATES:

CHART

PROJECT COMPLETION DATE SCHEDULE "A" - REPAIR DINING HALL

BLDG. T2-174 15 OCTOBER 1964 SCHEDULE "B" - WEATHER STATION

15 OCTOBER 1964 SCHEDULE "C" - REC. MULTIPURPOSE BLDG. 15 NOVEMBER 1964

THE FOREGOING REQUIREMENTS ARE BASED ON THE ASSUMPTION THAT THE SUCCESSFUL BIDDER WILL RECEIVE NOTICE TO PROCEED BY 20 MAY 1964. THE GOVERNMENT WILL EXTEND THE COMPLETION DATE SET FORTH HEREIN BY THE NUMBER OF CALENDAR DAYS AFTER THE ABOVE DATE THAT THE CONTRACTOR RECEIVED NOTICE TO PROCEED, PROVIDED THAT THE CONTRACTOR PROMPTLY ACKNOWLEDGES SUCH RECEIPT, AND PROVIDED FURTHER THAT DELAY IN ISSUANCE OF SUCH NOTICE DOES NOT RESULT FROM THE CONTRACTOR'S FAILURE TO EXECUTE THE CONTRACT AND GIVE REQUIRED PERFORMANCE AND PAYMENT BONDS WITHIN THE TIME SPECIFIED IN THE BID. THE TIME STATED FOR COMPLETION SHALL INCLUDE FINAL CLEAN-UP OF THE PREMISES.'

YOUR COMMUNICATION OF JUNE 25 WAS CONSTRUED BY THE ALASKA DISTRICT AS INDICATING A QUALIFIED AGREEMENT TO ACCEPT, CONDITIONED UPON THE GRANTING OF ADDITIONAL COMPLETION TIME AND/OR ADDITIONAL COMPENSATION. IN VIEW OF THE QUALIFICATIONS BY THE COMPANY AS TO ACCEPTANCE OF THE OFFER OF AWARD, AND SINCE BIDS WERE TO EXPIRE ON JUNE 26, 1964, UNDER THE READVERTISED INVITATION AND THERE WAS DOUBT WHETHER ARNDT BROTHERS, THE LOW BIDDER UNDER THE SECOND INVITATION, WOULD FURTHER EXTEND ITS BID DUE TO THE SHORT CONSTRUCTION PERIOD AND SHIPPING SEASON EXISTING AT THE ISOLATED LOCATION OF THE WORK, THE DIVISION COUNSEL REQUESTED INSTRUCTIONS FROM THE OFFICE, CHIEF OF ENGINEERS.

THE NORTH PACIFIC DIVISION WAS THEREAFTER INSTRUCTED TO HAVE THE ALASKA DISTRICT AGAIN CONTACT B AND A COMPANY AND MAKE A FIRM OFFER OF AWARD ON THE BASIS OF ITS BID UNDER THE FIRST INVITATION INCLUDING THE REDUCTION IN PRICE AND EXTENSION OF TERMS IN ACCORDANCE WITH SC-1 OF THE INVITATION. THE COMPANY ALSO WAS TO BE ADVISED THAT THIS WAS THE ONLY BASIS UPON WHICH AWARD COULD BE MADE TO IT. IN THE EVENT B AND A COMPANY REFUSED AN UNQUALIFIED AWARD ON THIS BASIS, AWARD TO THE LOW BIDDER, ARNDT BROTHERS, UNDER THE ADVERTISED INVITATION WAS AUTHORIZED.

ON JUNE 26, 1964, THE ALASKA DISTRICT ENGINEER WIRED THE B AND A COMPANY AS FOLLOWS:

"REFERENCE INVITATION FOR BIDS ENG-95-507-64-34, AWARD OF A CONTRACT UNDER THIS INVITATION WILL BE MADE TO YOUR FIRM IN THE AMOUNT OF $320,000.00, AND COMPLETION DATES THEREIN WILL BE EXTENDED IN ACCORDANCE WITH PROVISIONS OF SPECIAL CONDITIONS, PARAGRAPH SC-1 (APPROXIMATELY 40 CALENDAR DAYS) IF UNCONDITIONAL ACCEPTANCE OF THESE TERMS IS AGREED UPON BY YOU. PLEASE CONFIRM YOUR ANSWER BY TELEGRAM AS SOON AS POSSIBLE.'

B AND A COMPANY REPLIED BY TELEGRAM OF JUNE 28 AS FOLLOWS:

"RE YOUR WIRE OF 26 JUNE 1964 RE IFB ENG-95-507-64-34. WE REPEAT THAT WE WILL ACCEPT AWARD ON THE TERMS OF INVITATION ENG-95-507-64-34 IN TOTAL BID PRICE OF $320,000. ANY ADJUSTMENTS WHICH MAY BE REQUIRED TO BE GOVERNED BY TERMS OF CONTRACT IDENTICAL TO INVITATION, WE CANNOT CONCUR IN ANY SPECIFIC EXTENSION OF COMPLETION TIME UNTIL NEED FOR EXTENSION CAN BE PROPERLY EVALUATED.'

THE RECORD SHOWS THAT THERE WERE SEVERAL TELEPHONE CALLS BETWEEN REPRESENTATIVES OF THE ALASKA DISTRICT, AN OFFICIAL OF B AND A COMPANY, AND YOU, IN WHICH EFFORTS WERE MADE TO OBTAIN CLARIFICATION OF THE COMPANY'S POSITION WITH RESPECT TO WHETHER IT WOULD AGREE TO COMPLETE THE WORK IN ACCORDANCE WITH THE TERMS OF SC-1 OF THE INVITATION. THE DISTRICT REPRESENTATIVES' INTERPRETATION OF THESE CONVERSATIONS WAS THAT THE COMPANY REPRESENTATIVE STEADFASTLY REFUSED TO AGREE TO THE ESTABLISHMENT OF A SPECIFIC COMPLETION DATE IN ACCORDANCE WITH SC-1, INSISTING THAT THE MATTER OF COMPLETION DATE BE LEFT OPEN FOR LATER DISCUSSION. WHILE, IN CERTAIN PORTIONS OF THE RECORDED TELEPHONE CONVERSATIONS, THE B AND A COMPANY REPRESENTATIVE AND/OR YOU APPEARED TO AGREE TO ACCEPTANCE OF A CONTRACT UNDER THE TERMS OF THE INVITATION, AND THE REPRESENTATIVE OF THE ALASKA DISTRICT APPEARED TO BE IMPOSING CONDITIONS NOT COVERED BY THE INVITATION, WE BELIEVE THE RECORD AS A WHOLE SHOWS A SUBSTANTIAL BASIS FOR THE ADMINISTRATIVE VIEW THAT B AND A WAS ASKED WHETHER OR NOT IT WOULD ACCEPT AN AWARD ON THE INVITATION AS ADVERTISED AND ITS BID, AS REDUCED, AND THAT B AND A REFUSED TO ACCEPT AWARD ON THAT BASIS. ACCORDINGLY, ON JUNE 29, 1964, A CONTRACT WAS AWARDED TO ARNDT BROTHERS.

WE HAVE GIVEN CAREFUL CONSIDERATION TO THE ARGUMENTS PRESENTED IN YOUR MEMORANDUM OF SEPTEMBER 10, 1964, AND WHILE IT MUST BE CONCEDED THEY ARE NOT WITHOUT MERIT, WE ARE UNABLE TO CONCLUDE THAT THERE IS ADEQUATE JUSTIFICATION IN THE LIGHT OF ALL THE CIRCUMSTANCES AND THE ACTIONS TAKEN, TO REQUIRE THIS OFFICE TO REGARD THE CONTRACT AWARDED TO ARNDT BROTHERS AS VOID. UNDER SETTLED PRINCIPLES OF OFFER AND ACCEPTANCE THE GOVERNMENT'S TELEGRAM OF JUNE 26, 1964, TO YOUR CLIENT WAS IN EFFECT A COUNTER-OFFER, OR REQUEST FOR AGREEMENT TO ACCEPT AN AWARD, WHEREAS UNDER COMPETITIVE BIDDING PRINCIPLES THE PROPER ACTION WOULD HAVE BEEN AN UNQUALIFIED ACCEPTANCE OF THE ORIGINAL BID AS MODIFIED. HOWEVER, IN THE LIGHT OF THE FACT THAT THE ORIGINAL BID HAD BEEN CONDITIONED UPON ACCEPTANCE IN 7 DAYS, AND OF THE CONSIDERABLE DELAY WHICH HAD OCCURRED SINCE RECEIPT OF YOUR ORIGINAL PROTEST, AS WELL AS THE OBVIOUS CONSEQUENCES OF DELAY UPON THE COST AND DIFFICULTY OF PERFORMANCE OF THE REQUIRED WORK IN THE LOCATION INVOLVED, IT IS UNDERSTANDABLE THAT THE CONTRACTING OFFICIALS WERE CONCERNED WITH THE POSSIBILITY THAT AWARD TO B AND A WOULD BE PRODUCTIVE OF ADDITIONAL CONTROVERSY, AND OF EFFORTS TO RELY ON THE DELAY AS A BASIS FOR MODIFICATIONS OR WAIVERS OF THE CONTRACT TERMS AS TO TIME OF PERFORMANCE OR FOR INCREASED COSTS. WE BELIEVE THAT THE RECORD OF THE ENSUING NEGOTIATIONS SHOWS THAT THEIR CONCERN WAS JUSTIFIED.

UNDER THE CIRCUMSTANCES, WE ARE UNABLE TO CONCLUDE THAT THE DECISION TO MAKE AWARD TO ARNDT BROTHERS ON ITS BID UNDER THE SECOND INVITATION WAS UNAUTHORIZED, AND IT NECESSARILY FOLLOWS THAT THERE IS NO VALID BASIS ON WHICH TO QUESTION THE VALIDITY OF THE CONTRACT SO MADE.

SINCE, IN VIEW OF THE FOREGOING, WE FIND NO BASIS FOR ALLOWING YOUR PROTEST, IT MUST BE DENIED.