B-158137, FEB. 14, 1966

B-158137: Feb 14, 1966

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PRESIDENT: REFERENCE IS MADE TO TELEGRAM OF DECEMBER 6. BIDS FOR THE SUBJECT PROJECT WERE SOLICITED BY THE COLLEGE. WAS THE LOW BIDDER BY $5. WHILE IT IS A REQUIREMENT OF THE ACADEMIC FACILITIES PROGRAM THAT THE AWARD OF A CONSTRUCTION CONTRACT BE MADE TO THE LOWEST RESPONSIBLE BIDDER. THE FACTORS WHICH THE COLLEGE RELIED UPON IN DETERMINING THAT WINSCO WAS NOT A RESPONSIBLE BIDDER FOR THE IMMEDIATE PROJECT MAY BE SUMMARIZED AS FOLLOWS: 1. WINSCO IS A YOUNG CORPORATION WITH ONLY TWO CONSTRUCTION CONTRACTS FOR HIGH SCHOOLS IN THE AMOUNT OF $1 MILLION AND $1. ALTHOUGH WINSCO'S DUN AND BRADSTREET RATING IS FAVORABLE. ITS NET WORTH WAS $100. MILTON WEINSTEIN WAS PROMINENT. IS TAKEN INTO ACCOUNT.

B-158137, FEB. 14, 1966

TO MR. MILTON WEINSTEIN, PRESIDENT:

REFERENCE IS MADE TO TELEGRAM OF DECEMBER 6, 1965, AND COPY OF A LETTER OF DECEMBER 9, 1965, TO THE HOUSING AND HOME FINANCE AGENCY, PROTESTING AGAINST THE AWARD BY UPSALA COLLEGE TO ANOTHER BIDDER OF A CONTRACT FOR THE CONSTRUCTION OF A SCIENCE BUILDING FINANCED IN PART BY FEDERAL GRANT AND LOAN FUNDS UNDER THE HIGHER EDUCATION FACILITIES ACT OF 1963, 20 U.S.C. 701.

BIDS FOR THE SUBJECT PROJECT WERE SOLICITED BY THE COLLEGE. WINSCO, HAVING SUBMITTED A BID OF $2,192,000, WAS THE LOW BIDDER BY $5,000. HOWEVER, WHILE IT IS A REQUIREMENT OF THE ACADEMIC FACILITIES PROGRAM THAT THE AWARD OF A CONSTRUCTION CONTRACT BE MADE TO THE LOWEST RESPONSIBLE BIDDER, THE COLLEGE BOARD OF TRUSTEES PASSED A RESOLUTION TO AWARD THE CONTRACT TO THE SECOND LOW BIDDER, CONFORTI AND EISELE, INC. THE COLLEGE REQUESTED CONCURRENCE IN THE PROPOSED AWARD FROM THE REGIONAL OFFICE OF THE HOUSING AND HOME FINANCE AGENCY COMMUNITY FACILITIES ADMINISTRATION (CFA) CHARGED WITH THE RESPONSIBILITY OF REVIEWING THE CONTRACT PROPOSED BY THE COLLEGE. THE REGIONAL CFA REQUESTED THAT IT BE ADVISED WHY THE COLLEGE SHOULD NOT MAKE AN AWARD TO WINSCO. THE COLLEGE, THROUGH ITS ATTORNEY, SUBMITTED A STATEMENT SHOWING THE FACTORS WHICH IT CONSIDERED JUSTIFIED A CONCLUSION THAT WINSCO DID NOT POSSESS THE QUALIFICATIONS NECESSARY TO PERFORM THE CONTRACT. THEREAFTER, THE REGIONAL OFFICE CONCURRED IN THE PROPOSED AWARD AND THE COLLEGE MADE THE AWARD.

THE FACTORS WHICH THE COLLEGE RELIED UPON IN DETERMINING THAT WINSCO WAS NOT A RESPONSIBLE BIDDER FOR THE IMMEDIATE PROJECT MAY BE SUMMARIZED AS FOLLOWS:

1. WINSCO IS A YOUNG CORPORATION WITH ONLY TWO CONSTRUCTION CONTRACTS FOR HIGH SCHOOLS IN THE AMOUNT OF $1 MILLION AND $1,257,000, RESPECTIVELY.

2. THE INABILITY TO GET A SATISFACTORY JOB SUPERINTENDENT AND A LACK OF COORDINATION ON ONE OF THE HIGH SCHOOL JOBS.

3. WINSCO HAD NEVER CONSTRUCTED A BUILDING IN NEW JERSEY AND ITS VALLEY STREAM LOCATION RAISES A QUESTION OF ADEQUATE SUPERVISION.

4. ALTHOUGH WINSCO'S DUN AND BRADSTREET RATING IS FAVORABLE, ITS NET WORTH WAS $100,000, AND ITS ORGANIZATION CONSISTS OF ONLY SEVEN PERSONS.

5. IF THE EXPERIENCE OF WEBSCO, A PREDECESSOR CORPORATION IN WHICH MR. MILTON WEINSTEIN WAS PROMINENT, IS TAKEN INTO ACCOUNT, IT MUST ALSO BE CONSIDERED THAT THE THREE CONTRACTS HELD BY WEBSCO WITH THE STATE OF NEW YORK ARE ALL INVOLVED IN LITIGATION. WHATEVER THE DETERMINATION OF THESE CASES,"THERE IS NOTHING * * * IN THE HISTORY OF WEBSCO THAT ENHANCES THE REPUTATION OF WINSCO.'

6. THE PROPOSED SCIENCE BUILDING AT UPSALA IS A HIGHLY SOPHISTICATED AND SPECIALLY DESIGNED BUILDING COSTING $2 MILLION; WINSCO'S EXPERIENCE IS WITH ORDINARY SCHOOL BUILDINGS AND THE LARGEST AMOUNT INVOLVED WAS$1,257,000.

CFA HAS DISCOUNTED MOST OF THE REASONS ADVANCED BY THE COLLEGE FOR CONSIDERING WINSCO AS NOT RESPONSIBLE. IT POINTS OUT THAT, ALTHOUGH THE COLLEGE MAKES AN ISSUE OF THE FACT THAT WINSCO'S PRINCIPAL OFFICE IS IN NEW YORK, THE CONTRACTOR WHICH WAS AWARDED THE CONTRACT IS LOCATED IN NEW YORK AS WELL. ADDITIONALLY, IT OBSERVES THAT WHILE SOME OBJECTION HAS BEEN STATED AGAINST THE SUPERINTENDENT EMPLOYED BY WINSCO ON ONE JOB, THE ARCHITECT ON THE JOB STATED THAT WINSCO IS COOPERATIVE AND WILLING TO DO THE COMPLEX COORDINATION REQUIRED BY MULTIPLE CONTRACTS. THE OBJECTION TO WINSCO'S CAPITAL IS STATED TO BE EQUIVOCAL IN LIGHT OF ITS DUN AND BRADSTREET RATING AND ITS ABILITY TO OBTAIN BONDS. FURTHER, IT OBSERVES THAT WEBSCO, THE PREDECESSOR CORPORATION, WHICH HAD THE SAME PRINCIPAL OFFICER AS WINSCO NOW HAS, HAD COMPLETED 25 MAJOR PROJECTS, 11 PRICED AT MORE THAN $1 MILLION AND 4 AT MORE THAN $2 MILLION.

HOWEVER, IN VIEW OF THE FACT THAT THREE OF THE PROJECTS AWARDED TO WEBSCO ARE INVOLVED IN LITIGATION AND THAT THE SCIENCE BUILDING TO BE CONSTRUCTED IS HIGHLY COMPLEX IN NATURE, CFA BELIEVES THAT IT CAN BE CONSIDERED THAT THERE IS A REASONABLE BASIS FOR THE COLLEGE'S DETERMINATION.

OUR OFFICE DOES NOT BELIEVE THAT WINSCO SHOULD HAVE BEEN PREJUDICED BY THE EXISTENCE OF PENDING LITIGATION. THERE IS NOTHING UNUSUAL ABOUT THE FACT THAT A CONTRACTOR MAY ON OCCASION HAVE TO RESORT TO LITIGATION TO SETTLE CERTAIN CLAIMS WHICH MAY ARISE IN THE COURSE OF ITS CONTRACT WORK. IT WOULD BE UNFAIR FOR CONTRACTORS TO HAVE TO FOREGO LITIGATION ON CLAIMS THEY BELIEVE TO BE MERITORIOUS IN ORDER TO AVOID BEING CONSIDERED IRRESPONSIBLE IN CONNECTION WITH FUTURE CONTRACTS. THIS IS EVEN MORE IMPORTANT IN A SITUATION LIKE THE PRESENT ONE WHERE THE COLLEGE IS NOT PREPARED TO ESTABLISH THAT THE LITIGATION IS FRIVOLOUS OR UNFOUNDED AND WHERE CFA THINKS IT POSSIBLE THAT THE CLAIMS IN LITIGATION AGAINST THE STATE MIGHT BE PROVEN AS VALID.

MOREOVER, WHILE IT IS INDICATED THAT THE SCIENCE BUILDING TO BE CONSTRUCTED IS A HIGHLY SOPHISTICATED BUILDING, THERE IS NOTHING IN THE RECORD WHICH ACTUALLY SHOWS THAT WINSCO COULD NOT SATISFACTORILY PERFORM THE CONTRACT. IN THAT CONNECTION, IN THE COLLEGE MEMORANDUM, IT IS STATED THAT IT IS POSSIBLE THAT WINSCO MIGHT BE ABLE TO PERFORM THE CONTRACT WITHOUT ANY PROBLEMS, BUT THAT ITS ORGANIZATION, CAPITAL, LOCATION AND ACTUAL EXPERIENCE ARE SUCH AS TO JUSTIFY A FINDING THAT IT LACKS THE NECESSARY QUALIFICATIONS. BUT, AS NOTED ABOVE, THE LATTER FACTORS ARE DISCOUNTED BY CFA TO A CONSIDERABLE EXTENT.

IF IT HAD BEEN THE FUNCTION OF OUR OFFICE TO MAKE THE INITIAL DETERMINATION OF WHETHER WINSCO WAS RESPONSIBLE WE WELL MIGHT HAVE REACHED A DIFFERENT CONCLUSION. HOWEVER, IT IS NOT THE FUNCTION OF OUR OFFICE TO DETERMINE WHETHER OR NOT PARTICULAR BIDDERS ARE RESPONSIBLE. THAT DETERMINATION IS A MATTER OF JUDGMENT WITHIN THE DISCRETION OF THE PEOPLE RESPONSIBLE FOR LETTING CONTRACTS. 39 COMP. GEN. 705, 711. FOR, AS THE COURTS HAVE INDICATED, THE FINAL SELECTION OF A CONTRACTOR INVOLVES DISCRETION THAT IS NOT ORDINARILY SUBJECT TO REVIEW. FRIEND V. LEE, 221 F.2D 96. IN FACT, THE COURTS HAVE GONE TO THE EXTENT OF INDICATING THAT CONDUCT TANTAMOUNT TO FRAUD MUST BE PROVED AS A CONDITION TO REVIEWING THE DETERMINATION OF RESPONSIBILITY. IBID. THEREFORE, SINCE THE CONCLUSION THAT WINSCO WAS NOT RESPONSIBLE WAS REVIEWED BY AND CONCURRED IN BY THE REGIONAL CFA OFFICE AND NEITHER THE COLLEGE NOR CFA APPEARS TO HAVE ACTED ARBITRARILY OR UPON SOME PERSONAL WHIM OR CAPRICE, OUR OFFICE WILL NOT REQUIRE THE CFA TO DISTURB THE AWARD WHICH WAS MADE. HOWEVER, BY SEPARATE LETTER TO THE SECRETARY OF HOUSING AND URBAN DEVELOPMENT, WE ARE SUGGESTING THAT IN THE FUTURE MORE SUBSTANTIAL GROUNDS BE REQUIRED FOR A DETERMINATION THAT A BIDDER IS NOT RESPONSIBLE.