B-157574, OCT. 7, 1965

B-157574, OCT. 7, 1965

TO THE SECRETARY OF THE INTERIOR:

REFERENCE IS MADE TO LETTER DATED SEPTEMBER 22, 1965, FROM THE DEPUTY ASSISTANT SECRETARY FOR ADMINISTRATION, FURNISHING A REPORT ON THE PROTEST FROM BOGLE, GATES, DOBRIN, WAKEFIELD AND LONG, ATTORNEYS FOR LEASE COMPANY, INCORPORATED, AGAINST AN AWARD TO WESTERN CONSTRUCTION COMPANY UNDER INVITATION FOR BIDS NO. 1585.

ON JULY 19, 1965, THE BUREAU OF LAND MANAGEMENT, THROUGH ITS PORTLAND SERVICE CENTER, ISSUED INVITATION FOR BIDS NO. 1585, FOR THE CONSTRUCTION OF AN INTEGRATED FIRE CONTROL STATION NEAR ANCHORAGE, ALASKA. THE BID SCHEDULE WAS BROKEN DOWN INTO SCHEDULES A, B, C, AND D TO COVER VARIOUS PHASES OF THE CONSTRUCTION. SINCE THE CONSTRUCTION IS EXPECTED TO TAKE APPROXIMATELY TWO OR THREE YEARS FOR COMPLETION, AND IN AN EFFORT TO OBTAIN BALANCED BIDS, THE FOLLOWING CLAUSE WAS INCLUDED IN THE INVITATION:

"* * * BASIS OF AWARD BIDS WILL BE RECEIVED FOR:

(1)SCHEDULE A - PHASE I CONSTRUCTION (2) SCHEDULE B - PARTIAL PHASE II CONSTRUCTION (3) SCHEDULE C - ADDITIONAL PHASE II CONSTRUCTION (4) SCHEDULE D - PHASE III CONSTRUCTION.

BIDS WILL BE EVALUATED ON THE BASIS OF THE AGGREGATE BIDS RECEIVED FOR SCHEDULES A, B, C, AND D. AWARD WILL BE MADE FOR SCHEDULE A AND THE PARTS OF SCHEDULES B, C, AND D TO THE EXTENT THAT FUNDS ARE AVAILABLE. THE GOVERNMENT RESERVES THE OPTION TO ADD TO THE CONTRACT AWARDED HEREUNDER WITHIN ONE YEAR AFTER AWARD BY UNILATERAL CHANGE ORDER AT THE PRICES IN THE BID SCHEDULE, ANY WORK ITEMS NOT INCLUDED IN THE ORIGINAL AWARD. IS UNDERSTOOD AND AGREED THAT THE GOVERNMENT SHALL NOT BE LIABLE ON ACCOUNT OF ITS FAILURE TO AWARD ANY SCHEDULE OR PARTS OF SCHEDULES OR TO EXERCISE ITS OPTION TO ISSUE A CHANGE ORDER ADDING WORK AS PROVIDED HEREIN. THE BIDS ON SCHEDULE C MUST NOT TOTAL LESS THAN 15 PERCENT OF THE TOTAL PRICE BID FOR SCHEDULES A, B, C, AND D. THE BID ON SCHEDULE D MUST NOT TOTAL LESS THAN 20 PERCENT OF THE TOTAL PRICE BID FOR SCHEDULES A, B, C, AND D.'

IT IS REPORTED THAT THE ABOVE PERCENTAGE REQUIREMENTS WERE ADDED TO THE "BASIS OF AWARD" AS ADMINISTRATIVE CONDITIONS TO REQUIRE BIDDERS TO BALANCE THEIR BIDS IN RELATION TO THE PHASES OF WORK TO BE PERFORMED OVER THE 3-YEAR PERIOD, AND TO PREVENT THEM FROM "LOADING" THEIR BID PRICES IN THE FIRST SCHEDULES TO BE AWARDED.

THE EIGHT BIDS RECEIVED WERE OPENED AT 2:00 P.M; P.D.T; AUGUST 18, 1965, AS SCHEDULED. THE TWO LOW BIDS, FROM WESTERN CONSTRUCTION COMPANY OF ANCHORAGE, ALASKA, AND LEASE COMPANY, INCORPORATED, OF SEATTLE, WASHINGTON, WERE AS FOLLOWS:

TABLE WESTERN CONSTRUCTION CO; INC. LEASE CO; INC.

PERCENTAGE PERCENTAGE BID ITEMS AMOUNT BID OF TOTAL BID AMOUNT BID OF TOTAL BID SCHEDULE A 545,000.00 47.2 PERCENT 547,716.00 46.3 PERCENT SCHEDULE B 212,000.00 18.4 PERCENT 214,438.00 18.2 PERCENT SCHEDULE C-1 34,000.00) 38,000.00) SCHEDULE C-2 20,000.00) 13.2 PERCENT 23,444.00) 15.2 PERCENT SCHEDULE C-3 98,000.00)

118,557.00) SCHEDULE D 245,000.00 21.2 PERCENT 240,000.00 20.3 PERCENT

1,154,000.00 100.0 PERCENT 1,182,155.00 100.0 PERCENT

INCLUDING A TELEGRAPHIC MODIFICATION, DISCUSSED BELOW, WESTERN'S BID BECOMES:

TABLE

BIDS READ AT TELEGRAPHIC FINAL BID PERCENTAGE BID ITEMS OPENING

MODIFICATION OF TOTAL BID SCHEDULE A 545,000.00 DEDUCT 4,000.00 541,000.00 47.2 PERCENT SCHEDULE B 212,000.00 - 212,000.00 18.4 PERCENT SCHEDULE C 1 34,000.00 ADD 6,000.00 40,000.00) SCHEDULE C-2 20,000.00 ADD

6,000.00 26,000.00) 14.3 PERCENT SCHEDULE C-3 98,000.00 - 98,000.00) SCHEDULE D 245,000.00 DEDUCT 15,000.00 230,000.00 20.1 PERCENT TOTAL BID 1,154,000.00 7,000.00 1,147,000.00 100.0 PERCENT

WESTERN AND LEASE HAVE PROTESTED AGAINST AN AWARD OF A CONTRACT TO ANY OTHER BIDDER THAN ITSELF.

IT IS CLAIMED ON BEHALF OF LEASE THAT THE PERCENTAGE REQUIREMENTS IN THE ABOVE-QUOTED "BASIS OF AWARD" CLAUSE ARE MATERIAL REQUIREMENTS OF THE INVITATION WHICH CANNOT BE WAIVED; AND SINCE IT DID NOT MEET THE PERCENTAGE REQUIREMENTS OF SCHEDULE C, WESTERN'S LOW BID MUST BE CONSIDERED NONRESPONSIVE. WESTERN CLAIMS THAT THE FAILURE OF ITS BID TO MEET THE 15 PERCENT REQUIREMENT OF SCHEDULE C IS AN INFORMALITY WHICH THE GOVERNMENT RESERVES THE RIGHT TO WAIVE AND WHICH SHOULD BE WAIVED IN THE INTEREST OF THE GOVERNMENT. WESTERN FURTHER URGES THAT ITS BID SHOULD BE REGARDED AS RESPONSIVE SINCE IT WAS NOT UNBALANCED AND THE REQUIREMENT WAS INTENDED ONLY TO PREVENT UNBALANCED BIDS.

IN THE LETTER OF SEPTEMBER 22, 1965, YOUR DEPARTMENT STATES THAT THE LANGUAGE QUOTED FROM THE INVITATION IS SUSCEPTIBLE OF THE INTERPRETATION GIVEN TO IT BY LEASE AND, THEREFORE, IS IS LEADING; AND WHEN THIS MATTER FIRST CAME TO THE ATTENTION OF THE DEPARTMENTAL OFFICIALS SERIOUS CONSIDERATION WAS GIVEN BY THE BUREAU OF LAND MANAGEMENT TO AGAIN READVERTISING THE PROJECT TO ELIMINATE ANY POSSIBILITY OF DOUBT AS TO WHETHER THE PERCENTAGE REQUIREMENTS COULD BE WAIVED. HOWEVER, IN VIEW OF THE PRESSING NEED FOR THE COMPLETED PROJECT IT WAS DECIDED TO SUBMIT THE QUESTION HERE FOR DECISION.

WE CONSIDER FIRST THE QUESTION WHETHER THE TELEGRAM RECEIVED FROM WESTERN, AFTER THE BID OPENING, PROPERLY MAY BE CONSIDERED AS MODIFYING ITS BID. BY THE TELEGRAM WESTERN ATTEMPTED TO REVISE ITS PRICE FOR SCHEDULES A, C, AND D AS SHOWN IN THE ABOVE TABULATION. THE REVISION, IF PROPER FOR CONSIDERATION, WOULD CHANGE THE PERCENTAGES OF SCHEDULE C FROM13.2 TO 14.3 AND OF SCHEDULE D FROM 21.2 TO 20.1. THE TOTAL PERCENTAGE FOR SCHEDULES C AND D IS 44.4 WITH OR WITHOUT THE MODIFICATION. SINCE THE OVERALL EFFECT OF THE ATTEMPTED MODIFICATION IS SOLELY A REDUCTION OF $7,000 OF THE TOTAL BID PRICE WITHOUT CURING THE DEFICIENCY IN THE PERCENTAGE OF SCHEDULE C, IF THE BID AS SUBMITTED MAY BE REGARDED AS RESPONSIVE, THE TELEGRAPHIC MODIFICATION MAY BE CONSIDERED PURSUANT TO FPR 1-2.305 WHICH PROVIDES THAT A LATE MODIFICATION OF AN OTHERWISE LOW BID MAY BE CONSIDERED AT ANY TIME IF IT MAKES THE TERMS OF THE BID MORE FAVORABLE TO THE GOVERNMENT.

AS A GENERAL RULE, REQUIREMENTS SET FORTH IN AN INVITATION ARE TO BE CONSTRUED AND ENFORCED AS WRITTEN. HOWEVER, AS STATED AT 39 COMP. GEN. 595, 597, IT MUST BE RECOGNIZED THAT AN AUTOMATIC REJECTION OF A BID BECAUSE OF A FAILURE TO CONFORM TO A PURELY TECHNICAL OR OVER LITERAL READING OF THE STATED REQUIREMENTS MAY BE AS ARBITRARY AS THE WAIVER OF NONRESPONSIVENESS TO A MATERIAL AND SUBSTANTIAL REQUIREMENT. IN THE INSTANT CASE, THE PURPOSE OF THE PERCENTAGE PROVISIONS WAS TO PREVENT AN OVERPAYMENT IN THE FIRST PHASE OF THE WORK, PARTICULARLY SHOULD THE NECESSARY FUNDS NOT BE MADE AVAILABLE TO CARRY OUT THE OTHER PHASES OF THE WORK.

WESTERN'S BID AS ORIGINALLY SUBMITTED WAS LOWER THAN LEASE'S ON EACH ITEM EXCEPT SCHEDULE D, WHICH WOULD BE PERFORMED AND PAID FOR LAST. IF, WITHOUT CONSIDERING THE REDUCTIONS OFFERED IN THE TELEGRAM, THE WESTERN BID IS INCREASED BY AN AMOUNT NECESSARY TO BRING THE PRICE FOR SCHEDULE C UP TO THE SPECIFIED MINIMUM PERCENTAGE, IT STILL REMAINS THE LOW OVERALL BID. INCREASING THE WESTERN BID ON SCHEDULE C FROM A TOTAL OF $152,000 TO $177,000 (AS COMPARED TO $180,001 FOR LEASE) RESULTS IN AN OVERALL BID WHICH WOULD STILL BE LOW AT $1,179,000. HOWEVER, THE BID AS INCREASED WOULD MEET ALL OF THE STATED PERCENTAGE REQUIREMENTS. THEREFORE, TO APPLY LITERALLY THE MINIMUM PERCENTAGE REQUIREMENTS STATED IN THE INVITATION WOULD, IN EFFECT, REQUIRE REJECTION OF THE LOW BID BECAUSE THE OVERALL BID AND PARTICULARLY THE BID ON SCHEDULE C WERE NOT HIGHER BY SOME $22,000. IF WESTERN'S BID IS REJECTED FOR FAILURE TO COMPLY WITH THE PROVISION DESIGNED TO PREVENT PAYING TOO MUCH FOR THE FIRST PHASE OF THE WORK, EVEN MORE (BY SOME $9,000) WILL HAVE TO BE PAID FOR THE FIRST PHASE OF THE WORK, AND SOME $26,000 MORE FOR THE REMAINING WORK. STATED ANOTHER WAY, LITERAL APPLICATION OF THE INVITATION REQUIREMENTS WHICH WERE INTENDED TO SAVE THE GOVERNMENT MONEY WOULD RESULT IN REJECTION OF THE LOW BID BECAUSE IT WAS TOO LOW AND SAVED THE GOVERNMENT TOO MUCH MONEY. SUCH A CONCLUSION WOULD BE ABSURD AND DEMEANING TO THE COMPETITIVE BID CONCEPT.

IN THIS CASE THE PERCENTAGE LIMITATION PROVISION WAS DESIGNED TO EFFECT A VALID PURPOSE: TO PREVENT A BIDDER FROM OBTAINING A COMPETITIVE ADVANTAGE BY SO PRICING THE SCHEDULES AS TO OBTAIN PAYMENT FOR THE EARLIER WORK OUT OF PROPORTION TO THE WORK DONE. UNFORTUNATELY, IT WAS NOT DESIGNED WITH SUFFICIENT CARE TO AVOID UNREASONABLE AND UNINTENDED RESULTS. UNDER THE CIRCUMSTANCES, WE CONCLUDE THAT THE PROVISION SHOULD BE INTERPRETED TO GIVE EFFECT TO ITS PURPOSE WITHOUT APPLYING IT LITERALLY. UNDER SOME CIRCUMSTANCES THE PROVISION AS WRITTEN MIGHT PROPERLY BE REGARDED AS SO GREAT A DEFECT IN THE INVITATION AS TO REQUIRE READVERTISING. HOWEVER, SINCE IT DOES NOT APPEAR THAT COMPETITION HAS BEEN ADVERSELY AFFECTED OR THAT ANY BIDDER WOULD OBTAIN AN UNDUE ADVANTAGE THEREBY, AWARD MAY PROPERLY BE MADE UNDER AN INTERPRETATION OF THE PROVISION WHICH GIVES EFFECT TO ITS PURPOSE AND RENDERS THE INVITATION VALID. 43 COMP. GEN. 23, 26.

FOR THE FOREGOING REASONS, YOU ARE ADVISED THAT THE FAILURE OF WESTERN'S BID TO COMPLY STRICTLY WITH PERCENTAGE REQUIREMENTS OF THE INVITATION MAY BE WAIVED. SINCE THE BID IS THEREFORE ELIGIBLE FOR AWARD AS SUBMITTED THE REDUCTIONS OFFERED IN THE TELEGRAPHIC MODIFICATION SHOULD BE ACCEPTED PURSUANT TO THE AUTHORITY CITED ABOVE.