B-154399, NOV. 17, 1964

B-154399, NOV. 17, 1964

TO ULRICH STRICKLER SONS, INC.:

IN YOUR LETTER OF JUNE 5, 1964, WITH ENCLOSURES, YOU ASKED WHETHER OUR OFFICE HAS AUTHORITY PURSUANT TO THE "FOREIGN ASSISTANCE ACT OF 1961," APPROVED SEPTEMBER 4, 1961, PUBLIC LAW 87-195, 75 STAT. 454, TO DIRECT THAT AN AWARD OF A CONTRACT BE MADE TO THE LOW BIDDER. SPECIFICALLY, YOU REFERENCE A PROPOSED CONTRACT FOR DIESEL ENGINE GENERATORS TO BE AWARDED BY THE BRAZILIAN FIRM OF CENTRAIS DE MINAS GERAIS ELECTRICAS (CEMIG), THE PROPOSED RECIPIENT OF LOAN NO. 512-L 014 FROM THE AGENCY FOR INTERNATIONAL DEVELOPMENT (AID). YOU ALSO SAY YOU SUSPECT THAT AN ATTEMPT MAY BE UNDERWAY "TO AWARD THIS CONTRACT TO OTHER THAN THE LOW BIDDER BY THE PROCESS OF WITHHOLDING INFORMATION TO THE POINT WHERE AN AWARD HAS BEEN MADE AND THE LOW BIDDER RECEIVES A NOTICE THAT THE AWARD HAS BEEN MADE AND THE LOW BIDDER GETS ANOTHER EXPRESSION OF SYMPATHY.'

AID REPORTS THAT NO AWARD HAS BEEN OR WILL BE MADE UNDER THE SPECIFICATIONS WHICH WERE EMPLOYED IN THIS PROCUREMENT, WHICH WERE PREPARED BY CEMIG WITHOUT THE BENEFIT OF ADVICE FROM A CONSULTING ENGINEER, AND WERE NOT REVIEWED BY AID PERSONNEL, AS THEY SHOULD HAVE BEEN, UNTIL AFTER THEY HAD BEEN PUBLISHED IN THE DEPARTMENT OF COMMERCE WEEKLY. AFTER CEMIG, IN ACCORDANCE WITH THE LOAN AGREEMENT, EMPLOYED A UNITED STATES CONSULTING FIRM, IT WAS ADVISED THAT THE SPECIFICATIONS WERE INADEQUATE AND WOULD NOT ASSURE THE PROCUREMENT OF THE BEST EQUIPMENT FOR THE INTENDED PURPOSE. THE CONSULTING ENGINEER THEREFORE RECOMMENDED RESUBMITTAL TO MANUFACTURERS OF A COMPREHENSIVE SPECIFICATION WHICH WOULD COVER OR CLARIFY THE FOLLOWING ADDITIONAL REQUIREMENTS:

"1 - PERMIT INTERMEDIATE RATINGS FOR POSSIBLY MORE ECONOMIC UNITS.

2 - CHARACTERISTICS OF UNITS PERMITTING TO OPERATE IN PARALLEL WITH OTHER UNITS OR WITH DISTRIBUTION SYSTEM OF SAME VOLTAGE.

3 - GENERATOR CHARACTERISTICS, ESPECIALLY POWER FACTOR, TEMPERATURE RISE IN STATOR AND IN ROTOR, MAXIMUM SERVICE OVERVOLTAGE, MAX. KVA AT REDUCED VOLTAGE, AUTOMATIC AND MANUAL VOLTAGE REGULATOR, RECOVERING OF FULL VOLTAGE UPON SUDDEN APPLICATION OF STATED LOADS,ETC.

4 - PREFERENCE FOR 2.4 KV DELTA OR 4.16 KV WYE CONNECTION AND METHOD OF NEUTRAL GROUNDING FOR WYE CONNECTION.

5 - IDENTICAL DESIGN FOR ALL UNITS WITH COMPLETE INTERCHANGEABILITY OF PARTS, AS WELL AS LISTING OF SPARES.

6 - MINIMUM REQUIREMENTS FOR GAGES AND ALARMS, SUCH AS ENGINE SPEED, COOLING WATER AND OIL TEMPERATURES AND PRESSURES, OVERSPEED TRIP, ETC.

7 - CLARIFYING REQUIREMENTS ON ENGINE SPEEDS, FUEL TANKS, ACCESSIBILITY TO EQUIPMENT COMPONENTS FOR INSPECTION, AND SIMILAR APPURTENANT REQUIREMENTS.

8 - GENERAL CONDITIONS RELATIVE TO GUARANTEES, READY MAINTENANCE ASSISTANCE, DELIVERIES, INSPECTION, SHOP DRAWINGS, ETC.'

WE HAVE BEEN ADVISED THAT CEMIG ACCEPTED THE RECOMMENDATION OF ITS CONSULTING ENGINEER, AND ACCORDINGLY RETURNED ALL BIDS WITHOUT PUBLICLY DISCLOSING THE NAMES OF THE BIDDERS OR THE AMOUNTS, TERMS, AND CONDITIONS OF ANY BID. IT ALSO DIRECTED ITS CONSULTING ENGINEER TO PREPARE A NEW SET OF SPECIFICATIONS AND BID DOCUMENTS FOR READVERTISEMENT IN THE NEAR FUTURE. IN REGARD TO SUCH FUTURE READVERTISEMENT, YOU SHOULD NOTE, SINCE THERE APPEARS TO BE SOME DISPUTE AS TO WHETHER YOUR BID OFFERED NEW OR RECONDITIONED EQUIPMENT, THAT PARAGRAPH 201.6/P) OF AID REGULATION 1 PROVIDES THAT EACH OF THE BORROWER'S PURCHASE ORDERS SHALL BE DEEMED TO INCLUDE A PROVISION WHICH PROHIBITS AID FINANCING THE PROCUREMENT OF ANY TYPE OF USED EQUIPMENT, UNLESS AN EXPRESS PROVISION FOR SUCH FINANCING IS CONTAINED IN SUCH ORDER.

IN VIEW OF THE GENERAL NATURE OF YOUR QUESTION REGARDING THE AUTHORITY OF THIS OFFICE TO DIRECT THAT CONTRACTS BE AWARDED TO LOW BIDDERS, WE THINK IT MAY BE SUFFICIENT TO DIRECT YOUR ATTENTION TO SECTION 633/A) OF THE FOREIGN ASSISTANCE ACT, WHICH PROVIDES:

"WHENEVER THE PRESIDENT DETERMINES IT TO BE IN FURTHERANCE OF THE PURPOSES OF THIS ACT, THE FUNCTIONS AUTHORIZED UNDER THIS ACT MAY BE PERFORMED WITHOUT REGARD TO SUCH PROVISIONS OF LAW (OTHER THAN THE RENEGOTIATION ACT OF 1951, AS AMENDED (50 U.S.C. APP. 1211 ET SEQ.) (, REGULATING THE MAKING, PERFORMANCE, AMENDMENT, OR MODIFICATION OF CONTRACTS AND THE EXPENDITURE OF FUNDS OF THE UNITED STATES GOVERNMENT AS THE PRESIDENT MAY SPECIFY.'

BECAUSE OF THE PROVISIONS IN EXECUTIVE ORDER NO. 10973, SIGNED NOVEMBER 3, 1961, AND EXECUTIVE ORDER NO. 10784, SIGNED OCTOBER 1, 1958, IT WOULD APPEAR THAT AID IS NOT BOUND BY GENERAL PROVISIONS OF LAW REGULATING THE MAKING OF CONTRACTS. SEE B-149176, DATED AUGUST 6, 1962, AND B-149843, DATED NOVEMBER 5, 1962. MOREOVER, NEITHER SECTION 251 OF THE ACT, AS AMENDED, WHICH AUTHORIZES THE TYPE OF LOAN AGREEMENT INVOLVED IN THIS PROCUREMENT, NOR AID REGULATIONS REQUIRE BORROWERS TO FORMALLY ADVERTISE FOR BIDS OR AWARD CONTRACTS TO THE LOWEST RESPONSIBLE BIDDER. SEE ATTACHMENT I-1 AND 2 TO ORDER NO. 1263.1, AND ORDER NO. 1421.1 OF THE AID MANUAL; SEE ALSO B-151349, MAY 3, 1963.

IN ANY EVENT, IT DOES NOT APPEAR THAT THE ACTION TAKEN IN THE PRESENT INSTANCE WOULD BE IMPROPER, SINCE THE ADVERTISED PROCUREMENT, RATHER THAN HAVING BEEN AWARDED TO OTHER THAN THE LOW BIDDER, WAS WITHDRAWN FOR REASONS WHICH WOULD JUSTIFY THE SAME ACTION UNDER THE RULES OF FORMAL ADVERTISING.

WITH RESPECT TO YOUR COMPLAINT THAT AID REFUSED YOU A COPY OF THE ABSTRACT OF BIDS RECEIVED BY CEMIG, WE BELIEVE THAT, IN VIEW OF THE DECISION TO CANCEL THE INVITATION, THE NONDISCLOSURE OF BIDS WAS CLEARLY IN THE INTEREST OF ALL BIDDERS.

ON THE BASIS OF SUCH INFORMATION AS WE HAVE RECEIVED FROM THE ADMINISTRATIVE AGENCY, THE LATITUDE WHICH AID ITSELF IS PERMITTED TO EXERCISE IN THE MAKING OF CONTRACTS PURSUANT TO THE CITED ACT, AND THE ABSENCE OF ANY INDICATION THAT THE REJECTION OF ALL BIDS UNDER THE CIRCUMSTANCES HERE INVOLVED WAS CONTRARY TO ANY APPLICABLE PROVISION OF LAW OR OF THE TERMS OF THE LOAN AGREEMENT, WE CONCLUDE THAT THERE IS NO PROPER BASIS FOR OBJECTION BY OUR OFFICE TO THE ACTIONS OF THE AGENCY WITH RESPECT TO THE INSTANT PROCUREMENT.