B-157369, NOV. 22, 1965

B-157369: Nov 22, 1965

Additional Materials:

Contact:

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

 

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

TO BRIGGS AND MORGAN: REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 16. THE PROCUREMENT WAS SET ASIDE FOR THE EXCLUSIVE PARTICIPATION OF SMALL BUSINESS CONCERNS AND BIDS WERE SOLICITED BY INVITATION DATED JUNE 3. BIDS WERE OPENED AS SCHEDULED ON JULY 15. 000 (EXCLUDING ALTERNATES) WAS SUBMITTED BY A. WHILE AN AMENDMENT TO THE BID INCLUDING THE LIST OF SUBCONTRACTORS WAS SUBSEQUENTLY RECEIVED IN THE MAILS BY THE GENERAL SERVICES ADMINISTRATION. AN INVESTIGATION SHOWED THAT THE AMENDMENT WAS NOT MAILED IN TIME TO ARRIVE BEFORE BID OPENING AND THE HEDENBERG BID WAS THEREFORE REJECTED AS NONRESPONSIVE. THE LOW RESPONSIVE BID WAS SUBMITTED BY FRED R. ALTHOUGH SUCH FIRM WAS DETERMINED TO BE TECHNICALLY QUALIFIED TO PERFORM THE WORK.

B-157369, NOV. 22, 1965

TO BRIGGS AND MORGAN:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 16, 1965, WITH ENCLOSURES, PROTESTING ON BEHALF OF FRED R. COMB, JR., INC., AGAINST THE AWARD OF A CONTRACT TO A. HEDENBERG AND CO., INC., FOR CONSTRUCTION OF THE WATER QUALITY STANDARDS RESEARCH LABORATORY AT DULUTH, MINNESOTA, GENERAL SERVICES ADMINISTRATION PROJECT NO. 21079.

THE PROCUREMENT WAS SET ASIDE FOR THE EXCLUSIVE PARTICIPATION OF SMALL BUSINESS CONCERNS AND BIDS WERE SOLICITED BY INVITATION DATED JUNE 3, 1965, WHICH SHOWED THE ESTIMATED COST RANGE OF THE PROJECT AS $1,440,000 TO $1,800,000.

BIDS WERE OPENED AS SCHEDULED ON JULY 15, 1965, AND THE LOW BASE BID OF $1,876,000 (EXCLUDING ALTERNATES) WAS SUBMITTED BY A. HEDENBERG AND CO., INC. SUCH BID, HOWEVER, DID NOT INCLUDE A LIST OF PROPOSED SUBCONTRACTORS AS REQUIRED BY PARAGRAPH 2-08 OF THE INVITATION'S SPECIAL CONDITIONS. WHILE AN AMENDMENT TO THE BID INCLUDING THE LIST OF SUBCONTRACTORS WAS SUBSEQUENTLY RECEIVED IN THE MAILS BY THE GENERAL SERVICES ADMINISTRATION, PUBLIC BUILDINGS SERVICE, ON JULY 16, 1965, AN INVESTIGATION SHOWED THAT THE AMENDMENT WAS NOT MAILED IN TIME TO ARRIVE BEFORE BID OPENING AND THE HEDENBERG BID WAS THEREFORE REJECTED AS NONRESPONSIVE. THE LOW RESPONSIVE BID WAS SUBMITTED BY FRED R. COMB, JR., INC., IN THE BASE AMOUNT OF $1,998,000. ALTHOUGH SUCH FIRM WAS DETERMINED TO BE TECHNICALLY QUALIFIED TO PERFORM THE WORK, ITS BID WAS CONSIDERED TO BE TOO HIGH IN RELATION TO THE FUNDS AVAILABLE FOR THE PROJECT TO PERMIT COMPLETION THEREOF WITHIN THE LIMITS OF THE APPROPRIATION CONCERNED. THE GENERAL SERVICES ADMINISTRATION THEREAFTER CONCLUDED THAT ALL BIDS SHOULD BE REJECTED AND YOUR CLIENT WAS ADVISED OF SUCH DECISION BY TELEGRAMS DATED AUGUST 2 AND 6, 1965.

PURSUANT TO AUTHORITY DELEGATED BY THE COMMISSIONER, PUBLIC BUILDINGS SERVICE, TO THE ACTING ASSISTANT COMMISSIONER FOR CONSTRUCTION, PUBLIC BUILDINGS SERVICE, IN GSA ORDER PBS P5450.9 DATED JUNE 22, 1964, AND IN ACCORDANCE WITH SECTION 302 (C) (2) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, 63 STAT. 377, AS AMENDED, 41 U.S.C. 252 (C) (2), THE ACTING ASSISTANT COMMISSIONER DETERMINED ON AUGUST 6, 1965, THAT THE PUBLIC EXIGENCY WOULD NOT ADMIT OF THE DELAY INCIDENT TO ADVERTISING AND THAT A LUMP-SUM CONTRACT SHOULD BE NEGOTIATED FOR THE PROJECT. FACTORS INVOLVED IN SUCH DETERMINATION HAVE BEEN ADMINISTRATIVELY REPORTED BY THE GSA CENTRAL OFFICE IN WASHINGTON, D.C., AS FOLLOWS:

"THE PROJECT IS IN DULUTH, MINNESOTA, AN AREA WHERE SEVERE WINTERS ARE TO BE EXPECTED. FROZEN GROUND WILL MAKE EXCAVATION DIFFICULT. SNOWSTORMS AND THE LIKE ARE ALMOST CERTAIN TO REDUCE THE NUMBER OF WORKING DAYS AND ICY CONDITIONS WILL MAKE THE WORK HAZARDOUS. DELAY UNTIL WINTER IN BEGINNING THE WORK IS LIKELY TO RESULT IN FURTHER DELAYS CAUSED BY THE WINTER ITSELF. NOT ONLY WILL THE DIFFICULTIES OF WINTER WORK RESULT IN A NATURAL AND PROBABLE INCREASE IN BID PRICES BUT THIS LABORATORY IS URGENTLY NEEDED FOR USE AT THE EARLIEST POSSIBLE DATE. A DETERMINATION WAS THEREFORE MADE THAT A PUBLIC EXIGENCY EXISTED WITHIN THE MEANING OF SEC. 302 (C) (2).'

THE SPECIFICATIONS WERE MODIFIED TO REDUCE THE SCOPE OF THE WORK AND THE REVISED PLANS, TOGETHER WITH INSTRUCTIONS CONCERNING THE SOLICITATION, WERE ISSUED TO THE MAXIMUM NUMBER OF QUALIFIED SOURCES, INCLUDING REPRESENTATIVES OF THE FIRMS OF A. HEDENBERG AND CO., INC., AND FRED R. COMB, JR., INC., AT A MEETING HELD BY THE CONTRACTING OFFICER IN DULUTH ON AUGUST 10, 1965. THE PROPOSALS WERE OPENED AS SCHEDULED ON AUGUST 13 AND THE LOW BASE PRICE OF $1,845,000 (PLUS APPROVED ALTERNATES OF $77,100) WAS OFFERED BY HEDENBERG, WHEREAS THE BASE PRICE OFFERED BY THE COMB FIRM WAS $1,954,000 (PLUS $82,000 FOR THE APPROVED ALTERNATES). AWARD WAS MADE TO HEDENBERG BY LETTER FROM THE CONTRACTING OFFICER DATED AUGUST 17, 1965.

YOU STATE THAT THE BASIS FOR YOUR OBJECTION IS SET FORTH IN YOUR LETTER OF AUGUST 25, 1965, TO THE ACTING COMMISSIONER, PUBLIC BUILDINGS SERVICE. IN THAT LETTER YOU EXPRESSED VIEWS TO THE EFFECT THAT (1) THE EXCEPTIONS SET FORTH IN SUBSECTION (E) OF 41 U.S.C. 252, TO THE REQUIREMENTS FOR ADVERTISING (SECTION 253) DO NOT INCLUDE PARAGRAPH (2) OF SUBSECTION (C) WHICH CONCERNS PUBLIC EXIGENCY; (2) THE AWARD DOES NOT COMPLY WITH ANY APPLICABLE LAW OR REGULATION; (3) THE PROCEDURE IN THIS INSTANCE RESULTED IN A CONTRACT THAT HAD BEEN REDUCED IN SCOPE BUT INCREASED IN PRICE BY APPROXIMATELY $75,000; AND (4) THE PRACTICAL AND INTENDED RESULT OF THE PROCEDURE USED HERE IN BID-SHOPPING. YOU ALSO EXPRESS THE OPINION THAT HERE THE "COMMISSIONER" OF GSA DID NOT MAKE ANY DETERMINATIONS UNDER 41 U.S.C. 252, AND THAT THE FACT THAT GSA THOUGH THE LOW RESPONSIVE BID WAS TOO HIGH PROVIDES NO PROPER JUSTIFICATION FOR THE ACTIONS TAKEN IN THIS CASE.

AT THE OUTSET, IT SHOULD BE NOTED THAT THE IFB SPECIFICALLY PROVIDES UNDER PARAGRAPH 10 (B) OF THE INSTRUCTIONS TO BIDDERS THAT THE GOVERNMENT MAY, WHEN IN ITS INTEREST, REJECT ANY OR ALL BIDS. SUCH PROVISION IS IN ACCORD WITH SUBSECTION (B) OF THE 41 U.S.C 253 (REFERENCED IN YOUR LETTER OF AUGUST 25 TO GSA) WHICH ALSO PROVIDES, IN PERTINENT PART, THAT "ALL BIDS MAY BE REJECTED WHEN THE AGENCY HEAD DETERMINES THAT IT IS IN THE PUBLIC INTEREST SO TO DO.' AS YOU HAVE BEEN PREVIOUSLY ADVISED BY GSA, THAT AGENCY IS PRECLUDED BY THE PROVISIONS OF 41 U.S.C. 12 FROM ENTERING INTO A CONTRACT FOR THE ERECTION OF A PUBLIC BUILDING WHEN SUFFICIENT FUNDS THEREFOR HAVE NOT BEEN APPROPRIATED. THE GENERAL SERVICES ADMINISTRATION HAS REPORTED THAT IN A CONTRACT FOR THE CONSTRUCTION OF A PUBLIC BUILDING IT MUST RETAIN CERTAIN SET ASIDES FROM THE APPROPRIATED FUNDS TO COVER CONTINGENCIES AND OTHER EXPENSES WHICH ARE RELATED TO THE CONTRACT AND THAT ACCEPTANCE OF YOUR BID IN RESPONSE TO THE JUNE 3 INVITATION WOULD NOT HAVE PERMITTED COMPLETION OF THE PROJECT WITHIN THE ALLOCATED FUNDS. CLEARLY NO BASIS IS PROVIDED FOR QUESTIONING A DETERMINATION TO REJECT ALL BIDS WHERE, AS IN THE PRESENT SITUATION, IT IS BASED ON A LACK OF SUFFICIENT FUNDS TO COVER THE CONTRACT IF AWARDED TO THE LOW RESPONSIVE BIDDER, AND WHERE SUCH A CONTRACT IS PROHIBITED BY LAW.

IT SHOULD ALSO BE NOTED THAT UNDER 41 U.S.C. 259 (A) THE TERM "AGENCY HEAD" AS USED THROUGHOUT CHAPTER 4 (PROCUREMENT PROCEDURES) OF TITLE 41 IS NOT RESTRICTED IN MEANING TO THE HEAD OR ANY ASSISTANT HEAD OF ANY EXECUTIVE AGENCY BUT MAY IN THE CASE OF THE GENERAL SERVICES ADMINISTRATION, AND AT THE OPTION OF THE ADMINISTRATOR, INCLUDE THE CHIEF OFFICIAL OF ANY PRINCIPAL ORGANIZATIONAL UNIT. EXCEPT AS LIMITED BY SECTION 257 (B) OF THAT TITLE, ADMINISTRATIVE DETERMINATIONS AND DECISIONS SUCH AS THOSE INVOLVED UNDER SECTION 252 (C) MAY BE DELEGATED BY AN AGENCY HEAD TO ANY OTHER OFFICER OR OFFICIAL OF THE AGENCY. WITH REFERENCE TO THE DETERMINATION OF PUBLIC EXIGENCY WHICH WAS MADE BY THE ACTING ASSISTANT COMMISSIONER FOR CONSTRUCTION, PBS, PURSUANT TO APPROPRIATELY DELEGATED AUTHORITY (GSA ORDER PBS P5450.9), AND TO YOUR CONTENTION THAT PARAGRAPH (2) OF 41 U.S.C. 252 (C) IS NOT INCLUDED IN THE PARAGRAPHS WHICH ARE ENUMERATED IN SUBSECTION (E) AS "/1/-/3), (10/-/12), OR (14)," YOU ARE INFORMED THAT THE DASH AS SHOWN BETWEEN THE NUMBER (1) AND (3) IS USED AS THE EQUIVALENT OF THE WORDS "TO AND INCLUDING" AND THEREFORE ENCOMPASSES PARAGRAPH NUMBER (2). SEE THE DEFINITIONS OF THE NOUN "DASH" IN WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY AND THE PUNCTUATION SECTION THEREIN AT PAGE 50A, PARAGRAPH 7.7. FURTHER, SECTION 302 (E) OF THE BASIC LAW, THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, SHOWS PARAGRAPH "/2)" IN A LISTING OF EACH OF THE INDIVIDUAL PARAGRAPHS INVOLVED.

WHILE THE FEDERAL PROCUREMENT REGULATIONS CONTEMPLATE THAT WRITTEN OR ORAL DISCUSSIONS GENERALLY SHALL BE CONDUCTED WITH THE RESPONSIBLE OFFERORS, SUCH ACTION IS NOT REQUIRED UNDER PARAGRAPH 1-3.805-1 OF THE REGULATIONS WHERE IT WOULD BE INAPPROPRIATE OR IN PROCUREMENTS IN WHICH IT CAN BE DEMONSTRATED FROM THE EXISTENCE OF ADEQUATE COMPETITION THAT ACCEPTANCE OF THE MOST FAVORABLE INITIAL PROPOSAL WITHOUT DISCUSSION WOULD RESULT IN A FAIR AND REASONABLE PRICE, PROVIDED THAT THE REQUEST FOR PROPOSALS CONTAINS A NOTICE THAT AWARD MAY BE MADE WITHOUT DISCUSSION AND THAT PROPOSALS SHOULD BE SUBMITTED INITIALLY ON THE MOST FAVORABLE TERMS. ALTHOUGH SUCH A NOTICE WAS NOT CONTAINED IN THE REVISED SOLICITATION HANDED TO THE INTERESTED PARTIES AT THE CONTRACTING OFFICER'S MEETING ON AUGUST 10, IT WOULD APPEAR THAT YOU WERE PLACED ON NOTICE BY THE CONTRACTING OFFICER'S TELEGRAM OF AUGUST 6 THAT NEGOTIATIONS MIGHT NOT BE CONDUCTED. BUT IF NEGOTIATIONS WERE CONDUCTED THE OPPORTUNITY TO NEGOTIATE WOULD BE AFFORDED ALL OFFERORS. IN THIS CONNECTION IT IS NOTED THAT IN YOUR TELEGRAM OF AUGUST 6 TO THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION, YOU SPECIFICALLY OBJECTED TO THAT AGENCY NEGOTIATING WITH ANY "BIDDER" PRIOR TO THE CONTRACT AWARD ON THE MODIFIED PLANS AND SPECIFICATIONS. SUCH OBJECTION WAS REITERATED IN YOUR LETTER OF AUGUST 13 ENCLOSING YOUR PROPOSAL. WE HAVE BEEN INFORMALLY ADVISED BY GSA THAT NO FURTHER DISCUSSIONS WERE HELD WITH ANY OF THE OFFERORS PRIOR TO THE AWARD AND THAT FURTHER DISCUSSION WAS CONSIDERED INAPPROPRIATE UNDER THE PARTICULAR CIRCUMSTANCES INVOLVED. WE FIND NO BASIS ON WHICH TO CONCLUDE THAT FURTHER DISCUSSION WOULD HAVE BEEN BENEFICIAL TO THE GOVERNMENT OR WOULD HAVE AFFECTED THE RELATIVE STANDINGS OF THE OFFERORS. IT APPEARS THAT A COMPETITIVE PRICE RANGE FOR THE PROJECT AS ORIGINALLY SPECIFIED IN THE IFB OF JUNE 3 WAS REASONABLY ESTABLISHED BY THE BIDS SUBMITTED IN RESPONSE THERETO. THE MINOR REVISIONS IN THE PROJECT, WHICH WERE DESIGNED TO EFFECT A CONTRACT WITHIN THE LIMITS OF AVAILABLE FUNDS, WERE DISCUSSED WITH THE OFFERORS AT THE MEETING OF AUGUST 10, AND RESULTED IN A REDUCTION BY ALL OFFERORS OF THEIR PRICES THAT WERE BID UNDER THE ORIGINAL SPECIFICATIONS AND IN THE AWARD OF A CONTRACT FOR LESS THAN A CONTRACT CONTAINING THE APPROVED ALTERNATES COULD HAVE BEEN MADE UNDER THE PRICES BID PURSUANT TO THE FIRST SOLICITATION. HEDENBERG'S NEW BASE PRICE OF $1,845,000 WAS $81,000 LESS THAN ITS ORIGINAL BASE BID AND COMB'S NEW BASE PRICE OF $1,947,000 WAS $51,000 LESS THAN ITS ORIGINAL BASE BID.

CONCERNING YOUR VIEW THAT PROPER JUSTIFICATION IS NOT PROVIDED FOR REJECTING ALL BIDS WHERE THE PROCURING AGENCY DETERMINES THAT THE ACCEPTABLE BIDS ARE TOO HIGH, AUTHORITY FOR SUCH ACTIONS IS PROVIDED BY 41 U.S.C. 252 (C) (14) WHICH STATES IN PERTINENT PART THAT CONTRACTS MAY BE NEGOTIATED BY THE AGENCY HEAD WITHOUT ADVERTISING IF FOR PROPERTY OR SERVICES AS TO WHICH THE AGENCY HEAD DETERMINES THAT BID PRICES AFTER ADVERTISING THEREFOR ARE NOT REASONABLE EITHER AS TO ALL OR AS TO SOME PART OF THE REQUIREMENTS. SEE FPR 1-3.214 IN CONNECTION WITH THE APPLICATIONS AND LIMITATIONS REGARDING SUCH AUTHORITY.

CONTRARY TO YOUR CONTENTION, WE FIND NOTHING IN THE FOREGOING CIRCUMSTANCES WHICH INDICATES THAT THE AWARD WAS THE RESULT OF "BID SHOPPING," NOR DO WE PERCEIVE ANY IMPROPRIETY IN THE SITUATION PRESENTED WHICH WOULD NEGATE THE APPARENT VALIDITY OF THE AWARD MADE TO A. HEDENBERG AND CO., INC., AND REQUIRE CANCELLATION OF THE CONTRACT.