B-157982, MAR. 23, 1966, 45 COMP. GEN. 604

B-157982: Mar 23, 1966

Additional Materials:

Contact:

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

 

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

OTHER BIDDERS ARE NOT PREJUDICED. ALTHOUGH ORDINARILY IT IS SPECULATIVE WHETHER A CHANGE IN THE RATE OF LIQUIDATED DAMAGES WOULD AFFECT A BID PRICE. UNDER THE INVITATION IT IS DOUBTFUL THAT BIDDERS WOULD HAVE INCLUDED AN AMOUNT FOR LIQUIDATED DAMAGES. THE LOW BIDDER WAS NOT AT FAULT IN FAILING TO TIMELY ACKNOWLEDGE THE ADDENDUM. 1966: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF NOVEMBER 5. THE INVITATION FOR BIDS WAS ISSUED SEPTEMBER 30. ADDENDUM NO. 1 WAS ISSUED OCTOBER 14. THE LOW BID ON ITEM 1 WAS SUBMITTED BY BURN UP AND SIMS. THE SECOND LOW BID ON ITEM 1 WAS SUBMITTED BY PREMIER ELECTRIC INTERNATIONAL CORPORATION IN THE AMOUNT OF $184. WHEN THE BIDS WERE OPENED IT WAS DISCOVERED THAT THE LOW BIDDER HAD FAILED TO ACKNOWLEDGE ADDENDUM NO. 1.

B-157982, MAR. 23, 1966, 45 COMP. GEN. 604

CONTRACTS - SPECIFICATIONS - FAILURE TO FURNISH SOMETHING REQUIRED - ADDENDA ACKNOWLEDGEMENT - WAIVER THE FAILURE OF THE LOW BIDDER UNDER AN INVITATION FOR THE CONSTRUCTION OF A FACILITY TO ACKNOWLEDGE IN ITS BID AN ADDENDUM INCREASING THE DAILY RATE OF THE LIQUIDATED DAMAGES PROVIDED IN THE INVITATION AND CHANGING THE SPECIFICATIONS MAY BE WAIVED AS A MINOR INFORMALITY WITHIN THE MEANING OF SECTION 2-405 OF THE ARMED SERVICES PROCUREMENT REGULATION ON THE BASIS THE CHANGED SPECIFICATIONS NEGLIGIBLY AFFECT THE BID PRICE AND, THEREFORE, OTHER BIDDERS ARE NOT PREJUDICED, AND THAT, ALTHOUGH ORDINARILY IT IS SPECULATIVE WHETHER A CHANGE IN THE RATE OF LIQUIDATED DAMAGES WOULD AFFECT A BID PRICE, UNDER THE INVITATION IT IS DOUBTFUL THAT BIDDERS WOULD HAVE INCLUDED AN AMOUNT FOR LIQUIDATED DAMAGES, THE 60-DAY BID ACCEPTANCE PERIOD, A PERIOD LONGER THAN THAT PROVIDED FOR COMPLETION OF THE WORK, MAKING THE LIQUIDATED DAMAGE PROVISION UNENFORCEABLE, AND SUFFICIENT TIME, IN ACCORDANCE WITH PARAGRAPH 2-208, NOT HAVING BEEN ALLOWED BIDDERS TO CONSIDER ADDENDUM INFORMATION, THE LOW BIDDER WAS NOT AT FAULT IN FAILING TO TIMELY ACKNOWLEDGE THE ADDENDUM.

TO PREMIER ELECTRICAL CONSTRUCTION CO., MARCH 23, 1966:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF NOVEMBER 5, 1965, AND CONFIRMING LETTER OF THE SAME DATE, PROTESTING AWARD TO THE LOW BIDDER ON SAN JUAN SPECIFICATION 63512-65, ST. CROIX, ISSUED BY THE BUREAU OF YARDS AND DOCKS, DEPARTMENT OF THE NAVY.

THE INVITATION FOR BIDS WAS ISSUED SEPTEMBER 30, 1965, BY THE OFFICER IN CHARGE OF CONSTRUCTION, BUREAU OF YARDS AND DOCKS CONTRACTS, CARIBBEAN DIVISION, SAN JUAN, PUERTO RICO, AND REQUESTED BIDS, TO BE OPENED AT 3:00 P.M. AST OCTOBER 19, 1965, FOR THE CONSTRUCTION OF AN OUT OF SIGHT CONTROL FACILITY AT ST. CROIX, VIRGIN ISLANDS. ITEM 1 COVERED THE COMPLETE JOB AND ITEMS 2, 3 AND 4 COVERED THE JOBS LESS CERTAIN SPECIFIED DEDUCTIVES.

PARAGRAPH 1A.4 OF THE GENERAL REQUIREMENTS OF THE IFB READS AS FOLLOWS:

1A.4 TIME FOR COMPLETION. THE WORK SHALL BE DIVIDED IN TWO PHASES AS FOLLOWS:

PHASE 1--- SHALL BE THE CONSTRUCTION OF THE TRAILER CONCRETE PADS RADAR FOUNDATION, THE SUBGRADE PREPARATION OF THE ACCESS ROAD FROM INTERSECTION V-17 UP TO THE PADS AND THE WIDENING OF CURVES TO PERMIT PASSAGE OF TRAILERS COMPLETE BY DECEMBER 15, 1965.

PHASE 11--- SHALL BE THE REMAINDER OF THE WORK TO BE COMPLETED WITHIN 120 CALENDAR DAYS AFTER THE DATE OF RECEIPT OF A NOTICE OF AWARD OR ANY OTHER AUTHORIZATION TO PROCEED.

PARAGRAPH 1A.5 OF THE ABOVE GENERAL REQUIREMENTS PROVIDES FOR ASSESSMENT OF LIQUIDATED DAMAGES AT THE RATE OF $85 PER CALENDAR DAY FOR DELAY IN THE COMPLETION OF THE WORK. ADDENDUM NO. 1 WAS ISSUED OCTOBER 14, 1965, INCREASING THE RATE OF LIQUIDATED DAMAGES FROM $85 TO $200 PER CALENDAR DAY FOR DELAY IN COMPLETION OF THE WORK UNDER PHASE I AND MAKING CERTAIN CHANGES IN THE SPECIFICATIONS, INCLUDING A REQUIREMENT THAT ALL EXPOSED FERROUS BOLTS, WASHERS, HANDLES, AND MISCELLANEOUS FASTENERS AND HARDWARE BE HOT DIP GALVANIZED UNLESS OTHERWISE SHOWN OR SPECIFIED. THIS ADDENDUM ALSO REQUIRES EACH BIDDER TO REFER IN HIS BID TO ALL ADDENDA AND NOTIFIES BIDDERS THAT "FAILURE TO DO SO MAY CONSTITUTE AN INFORMALITY IN THE BID.'

THE LOW BID ON ITEM 1 WAS SUBMITTED BY BURN UP AND SIMS, INC., IN THE AMOUNT OF $159,356, AND THE SECOND LOW BID ON ITEM 1 WAS SUBMITTED BY PREMIER ELECTRIC INTERNATIONAL CORPORATION IN THE AMOUNT OF $184,885. WHEN THE BIDS WERE OPENED IT WAS DISCOVERED THAT THE LOW BIDDER HAD FAILED TO ACKNOWLEDGE ADDENDUM NO. 1. BURN UP AND SIMS WAS SO NOTIFIED AND WAS PERMITTED TO ACKNOWLEDGE THE ADDENDUM BY LETTER OF OCTOBER 21, 1965, WHICH ALSO REDUCED ITS BID PRICE ON ITEM 1 BY $100. ON OCTOBER 25, 1965, BURN UP AND SIMS WAS AWARDED A CONTRACT AT THEIR REDUCED BID PRICE AND WAS NOTIFIED TO PROCEED WITH THE WORK.

YOU HAVE PROTESTED THIS AWARD ON THE GROUND THAT THE BID OF BURN UP AND SIMS WAS NONRESPONSIVE FOR FAILURE TO ACKNOWLEDGE ADDENDUM NO. 1, AND YOU MAKE SPECIFIC REFERENCE TO THE CHANGE IS THE RATE OF LIQUIDATED DAMAGES ON PHASE I OF THE WORK AND TO THE REQUIREMENT THAT EXPOSED BOLTS AND NUTS BE HOT DIP GALVANIZED.

SECTION 2-405 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) PROVIDES, WITH REFERENCE TO MINOR INFORMALITIES OR IRREGULARITIES IN BIDS, THAT THE CONTRACTING OFFICER SHALL EITHER GIVE THE BIDDER AN OPPORTUNITY TO CURE THE DEFICIENCY, OR SHALL WAIVE SUCH DEFICIENCY WHERE IT IS TO THE ADVANTAGE OF THE GOVERNMENT. A MINOR INFORMALITY OR IRREGULARITY IS DEFINED AS ONE "HAVING NO EFFECT OR MERELY A TRIVIAL OR NEGLIGIBLE EFFECT ON PRICE, AND NO EFFECT ON QUALITY, QUANTITY, OR DELIVERY OF THE SUPPLIES OR PERFORMANCE OF THE SERVICES BEING PROCURED, AND THE CORRECTION OR WAIVER OF WHICH WOULD NOT AFFECT THE RELATIVE STANDING OF, OR BE OTHERWISE PREJUDICIAL TO, DERS.'

BEFORE PERMITTING BURN UP AND SIMS TO ACKNOWLEDGE ADDENDUM NO. 1, THE CONTRACTING OFFICER DETERMINED THAT ITS EFFECT ON PRICE WOULD BE TRIVIAL, AND HE HAS ESTIMATED THE TOTAL INCREASE IN THE CONTRACT PRICE AS A RESULT OF THE AMENDMENT TO BE $20.70, COMPUTED AS FOLLOWS:

TABLE

GALVANIZING 6 ANCHOR BOLTS AT $0.25 $ 1.50

GALVANIZING 20 CARRIAGE BOLTS AT $0.25 5.00

$ 6.50

PAINT POSTS 70 SF AT $0.10 7.00

MASTIC COMPOUND 12 SF AT $0.60 7.20

$20.70

THIS DIFFERENCE WAS CONSIDERED AS NEGLIGIBLE, AND THEREFORE AS A MINOR INFORMALITY WITHIN THE MEANING OF SECTION 2-405 OF ASPR REFERRED TO ABOVE. WHETHER THE CHANGE IN THE RATE OF LIQUIDATED DAMAGES ON PHASE I WOULD AFFECT PRICE AT ALL IS SPECULATIVE. IF A BIDDER IS CONFIDENT OF HIS ABILITY TO MEET PERFORMANCE DATES SPECIFIED IN THE CONTRACT, THERE WOULD BE NO REASON TO INCLUDE ANY AMOUNT IN THE ORIGINAL BID PRICE TO COVER POSSIBLE DEDUCTIONS OF LIQUIDATED DAMAGES, OR TO INCREASE THE BID PRICE BECAUSE OF AN INCREASE IN THE RATE OF LIQUIDATED DAMAGES. THIS IS PARTICULARLY TRUE WHERE AMPLE TIME IS ALLOWED FOR COMPLETION OF THE WORK. IN THIS CONNECTION IT IS REPORTED BY THE NAVY THAT PHASE I INVOLVED ONLY 22 PERCENT OF THE TOTAL CONTRACT WORK, AND THE ESTIMATED TIME FOR MOBILIZATION AND CONSTRUCTION OF PHASE I WAS 37 DAYS. HOWEVER, AN INCONGRUOUS SITUATION IS PRESENTED BY THE FACT THAT THE INVITATION FOR BIDS ALLOWED THE GOVERNMENT 60 DAYS FROM THE DATE OF BID OPENING TO MAKE AN AWARD, BUT IT ALSO REQUIRED THAT THE WORK UNDER PHASE I BE COMPLETED BY DECEMBER 15, 1965. SINCE BID OPENING WAS SCHEDULED FOR OCTOBER 19, 1965, AND 60 DAYS FROM THE OPENING WOULD BE DECEMBER 18, 1965, IT WOULD HAVE BEEN POSSIBLE TO ACCEPT A BID ON DECEMBER 18, AND SUCH ACCEPTANCE WOULD HAVE CONSUMMATED A CONTRACT REQUIRING COMPLETION OF PHASE I OF THE WORK BY DECEMBER 15. SINCE A LIQUIDATED DAMAGE PROVISION CLEARLY WOULD NOT HAVE BEEN ENFORCEABLE UNDER SUCH CIRCUMSTANCES, IT WOULD APPEAR THAT THE GOVERNMENT MUST HAVE CONTEMPLATED, AND BIDDERS WERE ENTITLED TO ASSUME THAT AN AWARD WOULD BE MADE WITH SUFFICIENT PROMPTNESS AFTER BID OPENING SO THAT AMPLE TIME WOULD REMAIN TO COMPLETE THE PHASE I WORK BY DECEMBER 15. IN THIS CONNECTION, IT IS REPORTED THAT NO BIDDERS TOOK ADVANTAGE OF THE OPPORTUNITY TO PROTECT THEMSELVES FROM SUCH CONSEQUENCES OF A LATE AWARD BY SPECIFYING A SHORTER PERIOD THAN 60 DAYS FOR BID ACCEPTANCE, AND SINCE THE PERIOD OF 57 DAYS FROM BID OPENING ON OCTOBER 19 TO COMPLETION OF PHASE I ON DECEMBER 15 IS SUBSTANTIALLY IN EXCESS OF THE ESTIMATED COMPLETION TIME FOR PHASE I, WE ARE UNABLE TO CONCLUDE THAT BIDDERS NECESSARILY WOULD INCLUDE ANY AMOUNT IN THEIR BID PRICES TO PROVIDE FOR LIQUIDATED DAMAGES ON PHASE I AT $85 PER DAY, OR THAT THE INCREASE TO $200 PER DAY UNDER ADDENDUM NO. 1 WOULD NECESSARILY RESULT IN AN INCREASE IN THE BID PRICE OF ANY BIDDER.

WITH REFERENCE TO THE FAILURE OF BURN UP AND SIMS TO ACKNOWLEDGE THE ADDENDUM, THE NAVY REPORTS THAT SINCE THE ORIGINAL BID PAPERS HAD BEEN PICKED UP BY A REPRESENTATIVE OF THE SAN JUAN OFFICE OF BURN UP AND SIMS THE ADDENDUM WAS THEREFORE MAILED TO THE SAN JUAN OFFICE ON THE EVENING OF THURSDAY, OCTOBER 14, 1965, AND WAS RECEIVED THERE ON MONDAY OCTOBER 18, 1965. IT APPEARS, HOWEVER, THAT THE BID WAS ACTUALLY PREPARED IN THE ST. CROIX OFFICE OF BURN UP AND SIMS, AND THAT THE ADDENDUM WAS THEREFORE FORWARDED BY THE SAN JUAN OFFICE TO ST. CROIX UPON ITS RECEIPT ON OCTOBER 18, 1965, AND WAS RECEIVED IN ST. CROIX ON THURSDAY, OCTOBER 19, 1965, AFTER OPENING OF THE BIDS.

SECTION 2-208 OF ASPR PROVIDES AS FOLLOWS:

2-208 AMENDMENT OF INVITATION FOR BIDS.

(A) IF AFTER ISSUANCE OF AN INVITATION FOR BIDS, BUT BEFORE THE TIME FOR BID OPENING, IT BECOMES NECESSARY TO MAKE CHANGES IN QUANTITY, SPECIFICATIONS, DELIVERY SCHEDULES, OPENING DATES, ETC., OR TO CORRECT A DEFECTIVE OR AMBIGUOUS INVITATION, SUCH CHANGES SHALL BE ACCOMPLISHED BY ISSUANCE OF AN AMENDMENT TO THE INVITATION FOR BIDS, USING DD FORM 1260 (SEE 16-101), WHETHER OR NOT A PRE-BID CONFERENCE IS HELD. THE AMENDMENT SHALL BE SENT TO EVERYONE TO WHOM INVITATIONS HAVE BEEN FURNISHED AND SHALL BE DISPLAYED IN THE BID ROOM.

(B) BEFORE ISSUING AN AMENDMENT TO AN INVITATION FOR BIDS, THE PERIOD OF TIME REMAINING UNTIL BID OPENING AND THE NEED FOR EXTENDING THIS PERIOD BY POSTPONING THE TIME SET FOR OPENING MUST BE CONSIDERED. WHERE ONLY A SHORT TIME REMAINS BEFORE THE TIME SET FOR BID OPENING, CONSIDERATION SHOULD BE GIVEN TO NOTIFYING BIDDERS OF AN EXTENSION OF TIME BY TELEGRAM OR TELEPHONE. SUCH NOTIFICATION SHOULD BE CONFIRMED IN THE AMENDMENT.

(C) ANY INFORMATION GIVEN TO A PROSPECTIVE BIDDER CONCERNING AN INVITATION FOR BIDS SHALL BE FURNISHED PROMPTLY TO ALL OTHER PROSPECTIVE BIDDERS, AS AN AMENDMENT TO THE INVITATION, WHETHER OR NOT A PRE-BID CONFERENCE IS HELD, IF SUCH INFORMATION IS NECESSARY TO THE BIDDERS IN SUBMITTING BIDS ON THE INVITATION OR IF THE LACK OF SUCH INFORMATION WOULD BE PREJUDICIAL TO UNINFORMED BIDDERS. NO AWARD SHALL BE MADE ON THE INVITATION UNLESS SUCH AMENDMENT HAS BEEN ISSUED IN SUFFICIENT TIME TO PERMIT ALL PROSPECTIVE BIDDERS TO CONSIDER SUCH INFORMATION IN SUBMITTING OR MODIFYING THEIR BIDS.

IN VIEW OF THE SHORT TIME ELAPSING BETWEEN THE DISPATCH OF THE AMENDMENT BY THE NAVY ON OCTOBER 14 AND THE OPENING OF BIDS ON OCTOBER 19, WITH A WEEKEND INTERVENING, AND SINCE THE ADDENDUM WAS NOT EVEN RECEIVED IN BURN UP AND SIMS' SAN JUAN OFFICE UNTIL OCTOBER 18, IT WOULD APPEAR THAT SUFFICIENT TIME WAS NOT ALLOWED TO PERMIT ALL PROSPECTIVE BIDDERS TO CONSIDER THE INFORMATION CONTAINED IN THE ADDENDUM, AND THAT BURN UP AND SIMS WAS NOT AT FAULT IN FAILING TO MAKE A TIMELY ACKNOWLEDGEMENT OF THE ADDENDUM. IN VIEW OF THE PROVISION OF SECTION 2-208 (C) OF ASPR, QUOTED ABOVE, THAT NO AWARD SHALL BE MADE UNLESS THE AMENDMENT HAS BEEN ISSUED IN SUFFICIENT TIME TO PERMIT ALL PROSPECTIVE BIDDERS TO CONSIDER SAME, THERE IS A QUESTION AS TO WHETHER ANY AWARD SHOULD HAVE BEEN MADE. THE ONLY APPARENT ALTERNATIVE TO MAKING AN AWARD WOULD HAVE BEEN CANCELLATION OF THE INVITATION AFTER OPENING AND READVERTISEMENT OF THE GOVERNMENT'S REQUIREMENTS, WHICH SHOULD BE DONE ONLY FOR A VERY COMPELLING REASON WHERE ALL BID PRICES HAVE BEEN EXPOSED (2-404.1 OF ASPR).

THE FACT THAT THE BID OPENING DATE WAS NOT EXTENDED WAS APPARENTLY DUE TO THE URGENCY OF THE PROJECT, DELAY IN COMPLETION OF WHICH WOULD REPORTEDLY HAVE SHARPLY REDUCED THE CAPABILITY OF THE ATLANTIC FLEET WEAPONS RANGE TO PROVIDE OUT OF SIGHT CONTROL OF TARGET DRONES DURING AN IMPENDING LARGE FLEET TRAINING EXERCISE. THE NAVY REPORTS THAT WORK UNDER THIS CONTRACT WAS AN URGENT, IMMEDIATE AND NECESSARY MILITARY REQUIREMENT AND THAT ANY DELAY WOULD HAVE SUBSTANTIALLY AFFECTED THE DEFENSE EFFORT. IT IS FURTHER REPORTED THAT BECAUSE OF THIS URGENCY AN IMMEDIATE PRECONSTRUCTION CONFERENCE WAS HELD ON OCTOBER 27, 1965; THE CONTRACTOR COMMENCED WORKING AT THE SITE ON OCTOBER 28; AND AS OF NOVEMBER 22 PHASE I CONSTRUCTION WAS 75 PERCENT COMPLETED FOR A WORK IN PLACE VALUE OF APPROXIMATELY $30,000, MATERIALS FOR PHASE II (LESS GENERATORS) WERE ON ORDER, AND 15 TO 20 PERCENT OF THE PHASE II MATERIAL WAS EN ROUTE BY SHIP. PHASE I WAS COMPLETED NOVEMBER 29, 1965, 16 DAYS IN ADVANCE OF THE DUE DATE.

WE AGREE WITH THE CONCLUSION OF THE CONTRACTING OFFICER THAT THE ESTIMATED EFFECT ON PRICE SET FORTH IN HIS ABOVE COMPUTATION IS NEGLIGIBLE. ADDITIONALLY, AS INDICATED ABOVE, THE INCREASE IN THE RATE OF LIQUIDATED DAMAGES ON PHASE I DOES NOT NECESSARILY AFFECT PRICE, AND WHILE THIS INCREASE PLACES A HIGHER PREMIUM ON PROMPT PERFORMANCE, IT WOULD NOT APPEAR TO AFFECT TIME OF PERFORMANCE AS CONTEMPLATED BY SECTION 2-405OF ASPR.

WHILE THERE DOES NOT APPEAR TO HAVE BEEN EXACT COMPLIANCE WITH ALL PERTINENT PROVISIONS OF ASPR, IT DOES APPEAR THAT THE CONTRACTING OFFICER ACTED IN GOOD FAITH IN THE HANDLING OF THE AMENDMENT AND IN HIS INTERPRETATION OF ASPR AND IT DOES NOT APPEAR THAT ACCEPTANCE OF THE LOW BID MAY BE SAID TO HAVE PREJUDICED THE RIGHTS OF OTHER BIDDERS. IN VIEW THEREOF, AND SINCE BURN UP AND SIMS WAS NOT AT FAULT IN THE MATTER AND THERE WAS NEED FOR SPEED IN THE COMPLETION OF THE PROJECT, WE BELIEVE THE GOVERNMENT'S BEST INTEREST WERE SERVED AND THAT THE CONTRACTING OFFICER WAS JUSTIFIED IN PERMITTING WORK TO CONTINUE. WE THEREFORE DO NOT FEEL REQUIRED TO QUESTION THE AWARD AS MADE, AND YOUR PROTEST IS DENIED.