B-158692, APR. 11, 1966

B-158692: Apr 11, 1966

Additional Materials:

Contact:

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

 

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

ARE AS FOLLOWS. THE PURPOSE OF THE LOAN AGREEMENT IS EXPRESSED IN SECTIONS 1.1 AND 1.2 OF THE AGREEMENT. "SUCH GOODS AND SERVICES FINANCED HEREUNDER ARE HEREINAFTER REFERRED TO AS "ELIGIBLE ITEMS" * * "SECTION 1.2. WHICH THE BORROWER IS PROVIDING OUT OF RESOURCES OTHER THAN THIS LOAN.'. HAVE BEEN MADE FOR CONSTRUCTION AND/OR PROCUREMENT SERVICES TO CARRY OUT THE PROJECT. * * *" THE LOAN AGREEMENT WAS ALSO SUBJECT TO THE STANDARD PROVISIONS ANNEX. WHICH WAS ATTACHED TO THE AGREEMENT. BORROWER WILL CARRY OUT THE PROGRAM WITH DUE DILIGENCE AND EFFICIENTLY (SIC) AND IN CONFORMITY WITH FINANCIAL PRACTICES. BIDS FOR THE CONSTRUCTION OF THE DAM AND FOR THE ERECTION OF THE TURBINES WERE FIRST SOLICITED IN THE WINTER OF 1964-65.

B-158692, APR. 11, 1966

TO STRASSER, SPIEGELBERG, FRIED, FRANK AND KAMPELMAN:

WE REFER TO YOUR LETTERS OF MARCH 8, 14 AND 22, 1966, WRITTEN ON BEHALF OF YOUR CLIENTS, THE GROVE JOINT VENTURE CONSISTING OF GROVE SHEPHERD WILSON AND KRUGE, INC., C. J. MONTAG AND SONS, INC., CARL M. HALVORSON, INC., MCLAUGHLIN, INCORPORATED, AND WESTERN CONTRACTING CORPORATION. YOUR LETTERS PROTEST A DECISION BY THE AGENCY FOR INTERNATIONAL DEVELOPMENT (AID) NOT TO APPROVE FOR AID FINANCING ANY AWARD BY THE PUBLIC POWER CORPORATION OF GREECE (PPC) OF A CIVIL WORKS CONTRACT FOR CONSTRUCTION OF THE KASTRAKI HYDROELECTRIC PROJECT TO THE GROVE JOINT VENTURE.

THE FACTS AND CIRCUMSTANCES LEADING UP TO YOUR PROTEST, AS REPORTED BY AID IN A LETTER TO OUR OFFICE DATED MARCH 18, 1966, ARE AS FOLLOWS. PURSUANT TO THE FOREIGN ASSISTANCE ACT OF 1961, AS AMENDED, 22 U.S.C. 2151 ET. SEQ., AID ENTERED INTO LOAN AGREEMENT NO. 240-H-029 OF AUGUST 26, 1963, WITH THE PUBLIC POWER CORPORATION OF GREECE, A GREEK GOVERNMENT CORPORATION, AND WITH THE GOVERNMENT OF GREECE. THE PURPOSE OF THE LOAN AGREEMENT IS EXPRESSED IN SECTIONS 1.1 AND 1.2 OF THE AGREEMENT, AS FOLLOWS:

"SECTION 1.1. THE LOAN. A.I.D. HEREBY AGREES TO LEND BORROWER PURSUANT TO THE FOREIGN ASSISTANCE ACT OF 1961, AS AMENDED, TWENTY ONE MILLION, SIX HUNDRED THOUSAND ($21,600,000) DOLLARS, FOR THE FOREIGN EXCHANGE COSTS OF GOODS AND SERVICES OF UNITED STATES SOURCE AND ORIGIN FOR THE PROJECT SPECIFIED IN SECTION 1.2.

"SUCH GOODS AND SERVICES FINANCED HEREUNDER ARE HEREINAFTER REFERRED TO AS "ELIGIBLE ITEMS" * *

"SECTION 1.2. THE PROJECT. THE PROJECT * * * CONSISTS OF THE CONSTRUCTION OF A DAM AT KASTRAKI ON THE ACHELOOS RIVER IN GREECE WITH A POWER-GENERATING INSTALLATION OF 160,000 KW CAPACITY AND SO DESIGNED THAT FURTHER GENERATING CAPACITY OF 80,000 KW MIGHT BE ADDED. THE PROJECT DOES NOT INCLUDE A RELATED TRANSMISSION SYSTEM, INCLUDING SUBSTATIONS, WHICH THE BORROWER IS PROVIDING OUT OF RESOURCES OTHER THAN THIS LOAN.' OTHER PROVISIONS OF THE LOAN AGREEMENT RELATING TO LOAN DISBURSEMENTS READ AS FOLLOWS:

"SECTION 3.1. CONDITIONS PRECEDENT TO INITIAL FINANCING. PRIOR TO THE FIRST DISBURSEMENT OR TO THE ISSUANCE OF THE FIRST LETTER OF COMMITMENT, BORROWER SHALL FURNISH A.I.D. IN FORM AND SUBSTANCE SATISFACTORY TO A.I.D.:

"/C) CONTRACT WITH ENGINEERS SATISFACTORY TO A.I.D. FOR ENGINEERING SERVICES FOR THE PROJECT.

"SECTION 3.2. ADDITIONAL CONDITIONS PRECEDENT WITH RESPECT TO FINANCING OTHER THAN ENGINEERING SERVICES. PRIOR TO ANY DISBURSEMENT OR THE ISSUANCE OF LETTERS OF COMMITMENT FOR ELIGIBLE ITEMS OTHER THAN ENGINEERING SERVICES, BORROWER SHALL FURNISH A.I.D. WITH INFORMATION, IN FORM AND SUBSTANCE SATISFACTORY TO A.I.D., OF THE CONSTRUCTION, INSTALLATION, AND PROCUREMENT NECESSARY TO COMPLETE THE PROJECT. ADDITION, BORROWER SHALL FURNISH TO A.I.D. BEFORE A.I.D. SHALL MAKE ANY DISBURSEMENT OR ISSUE LETTER OF COMMITMENT FOR ELIGIBLE ITEMS OTHER THAN ENGINEERING SERVICES,

"/A) SUCH ADDITIONAL PLANS AND SPECIFICATIONS FOR THE PROJECT AS A.I.D. MAY REQUEST;

"/B) EVIDENCE THAT ARRANGEMENTS SATISFACTORY TO A.I.D. HAVE BEEN MADE FOR CONSTRUCTION AND/OR PROCUREMENT SERVICES TO CARRY OUT THE PROJECT; * * *" THE LOAN AGREEMENT WAS ALSO SUBJECT TO THE STANDARD PROVISIONS ANNEX, WHICH WAS ATTACHED TO THE AGREEMENT. PERTINENT PROVISIONS OF THE ANNEX READ AS FOLLOWS:

"SECTION 100.2 METHOD OF PROCUREMENT. NO MORE THAN REASONABLE PRICES SHALL BE PAID FOR ANY ELIGIBLE ITEM AND ALL SUCH ITEMS (EXCEPT ARCHITECTURAL, ENGINEERING, MANAGEMENT AND SUCH OTHER PROFESSIONAL SERVICES AS A.I.D. MAY SPECIFY) SHALL BE PROCURED ON A FAIR COMPETITIVE BASIS. REASONABLE PRICES (EXCEPT FOR THE FOREGOING PROFESSIONAL SERVICES) SHOULD NORMALLY APPROXIMATE THE LOWEST COMPETITIVE PRICE FOR THE ELIGIBLE ITEM PROCURED, OPERATING COST,QUALITY, TIME AND COST OF DELIVERY, TERMS OF PAYMENT, AND OTHER FACTORS CONSIDERED. * * *

"SECTION 101.1 EXECUTION OF PROGRAM. BORROWER WILL CARRY OUT THE PROGRAM WITH DUE DILIGENCE AND EFFICIENTLY (SIC) AND IN CONFORMITY WITH FINANCIAL PRACTICES, AND PROCUREMENT ARRANGEMENTS APPROVED BY A.I.D. BORROWER SHALL OBTAIN A.I.D. CONCURRENCE PRIOR TO ANY MATERIAL MODIFICATION OF ANY SUCH PRACTICES OR ARRANGEMENTS.'

BIDS FOR THE CONSTRUCTION OF THE DAM AND FOR THE ERECTION OF THE TURBINES WERE FIRST SOLICITED IN THE WINTER OF 1964-65. IN RESPONSE TO THIS INVITATION TWO BIDS WERE SUBMITTED BY JANUARY 27, 1965, THE BID OPENING DATE. AID REPORTS THAT BOTH OF THESE BIDS WERE HEAVILY QUALIFIED AND INCLUDED MANY MODIFICATIONS OF THE CONTRACT PROVISIONS CONTAINED IN THE INVITATION FOR BIDS. AID'S REPORT ADVISES AS FOLLOWS:

"IN VIEW OF THE URGENCY OF THE PROJECT AND THE FACT THAT ALL BIDS SUBMITTED WERE HEAVILY QUALIFIED, A.I.D. INDICATED IT WOULD NOT OBJECT IF PPC NEGOTIATED WITH THE APPARENT LOW BIDDER, UP TO THE AMOUNT OF THE OTHER BID, WITH A VIEW TO ARRIVING AT A SATISFACTORY CONTRACT. AFTER ALMOST SIX MONTHS OF NEGOTIATIONS THE ATTEMPT TO ARRIVE AT A CONTRACT WAS ABANDONED BY THE MUTUAL CONSENT OF PPC AND THE APPARENT LOW BIDDER. UPON THE COLLAPSE OF THESE NEGOTIATIONS, A.I.D. WORKED IN CLOSE COLLABORATION WITH PPC TO REVISE THE BIDDING DOCUMENTS. IT WAS A.I.D.'S OPINION THAT THE BIDDING DOCUMENTS WHICH HAD BEEN USED WERE NOT CONDUCIVE TO SECURING ACCEPTABLE BIDS. THIS OPINION HAD BEEN EXPRESSED TO PPC PRIOR TO ISSUANCE OF THE INVITATION-FOR-BIDS, BUT PPC FELT THAT THE BIDDING DOCUMENTS WERE ADEQUATE. AFTER A.I.D. WAS PROVED CORRECT BY THE EVENT, AT A.I.D.'S SUGGESTION OVER 100 CHANGES WERE MADE IN THE INVITATION-FOR-BIDS BEFORE THE PROJECT WAS READVERTISED.'

BY LETTER DATED NOVEMBER 5, 1965, EBASCO SERVICES, INC., (EBASCO), THE CONSULTING ENGINEERS TO PPC, FORWARDED THE BIDDING DOCUMENTS TO THE BIDDERS AND INVITED BIDS FOR THE WORK IN QUESTION. PERTINENT PROVISIONS OF THE INVITATION FOR BIDS READ AS FOLLOWS:

"II AGREEMENT

"AN AGREEMENT SHALL BE ENTERED INTO BETWEEN PUBLIC POWER CORPORATION, REPRESENTED BY EBASCO SERVICES, INCORPORATED, AGENT, AND THE FIRM TO BE SELECTED * * * ON THE BASIS OF THE LOWEST RESPONSIVE BID BY A RESPONSIBLE BIDDER IN ACCORDANCE WITH THE TERMS AND CONDITIONS HEREOF * * * CORPORATION RESERVES TO ITSELF THE RIGHT TO REJECT ALL BIDS AS BEING TOO HIGH OR NOT RESPONSIVE. CORPORATION FURTHER RESERVES TO ITSELF THE RIGHT TO WAIVE INFORMALITIES AND MINOR IRREGULARITIES. ANY BID THAT CORPORATION DEEMS UNRESPONSIVLE (SIC) OR IRREGULAR IN A MATERIAL RESPECT WILL BE REJECTED. SINCE THE DOLLAR PORTION OF THE COST OF CONSTRUCTION WILL BE FINANCED BY A LOAN GRANTED BY THE UNITED STATES AGENCY FOR INTERNATIONAL DEVELOPMENT (AID) APPROVAL BY AID OF THE CONTRACT WILL BE REQUIRED IN ORDER FOR THE CONTRACT TO BECOME EFFECTIVE.

"VI OTHER DATA CONCERNING BID

"2. IN THE BID, A STATEMENT SIGNED BY THE CONTRACTOR MUST BE INCLUDED SPECIFYING THAT THE BID SHALL BE VALID UNTIL MARCH 9, 1966, AND THAT DURING THE TERM OF SUCH VALIDITY OF THE BID, THE CONTRACTOR WAIVES EXPRESSLY AND UNRESERVEDLY THE RIGHT TO REVOKEOR AMEND SAME IN ANY WAY WHATSOEVER.

"VII EXAMINATION OF BID DOCUMENTS

"THE BIDDER SHALL BE RESPONSIBLE FOR CHECKING AND IDENTIFYING ALL DRAWINGS RECEIVED WITH THE BID DOCUMENTS AGAINST THE DRAWING LIST INCLUDED THEREIN. SHOULD THE BIDDER FIND DISCREPANCIES IN OR OMISSIONS FROM THE SPECIFICATIONS, DRAWINGS OR OTHER DIVISIONS OF THE BID DOCUMENTS, OR SHOULD THE INTENT OR MEANING APPEAR TO HIM TO BE OBSCURE OR AMBIGUOUS, HE SHALL IMMEDIATELY MAKE A WRITTEN REQUEST TO EBASCO SERVICES INCORPORATED FOR INTERPRETATION, CLARIFICATION OR CORRECTION BEFORE SUBMITTING HIS BID. ANY SUCH REQUEST MUST BE RECEIVED NOT LATER THAN TWENTY (20) CALENDAR DAYS BEFORE THE SPECIFIED OPENING DATE AND IT SHALL BE THE SOLE RESPONSIBILITY OF THE BIDDER FOR MAKING SUCH REQUESTS IN TIME. REPLIES WILL BE MADE IN THE FORM OF ADDENDA TO THE BID DOCUMENTS.

"IX CONDITIONS REGARDING SUBMITTAL AND OPENING OF BIDS

"1. SUBMITTAL

"EACH BIDDER SHALL SUBMIT HIS BID IN A SINGLE SEALED ENVELOPE * * *

"2. BID OPENING

"A) BIDS WILL BE PUBLICLY OPENED IN THE XENIAS ROOM AT THE OFFICES OF PUBLIC POWER CORPORATION, 28 CHALKOKONDYLIS STREET, ATHENS, GREECE, AT 12:30 HOURS, ATHENS TIME, ON JANUARY 27, 1966.

"B) NO BID SUBMITTED MAY BE AMENDED, SUPPLEMENTED OR WITHDRAWN FOR ANY REASON OR CAUSE WHATSOEVER.'

TWO BIDS WERE SUBMITTED IN RESPONSE TO THE SECOND INVITATION FOR BIDS AND WERE OPENED ON JANUARY 27, 1966. ONE BID WAS SUBMITTED BY A JOINT VENTURE SPONSORED BY THE PERINI CORPORATION; THE OTHER WAS SUBMITTED BY YOUR CLIENTS, THE GROVE JOINT VENTURE. THE PERINI BID WAS IN THE AMOUNT OF $29,853,900 AND WAS COMPLETELY RESPONSIVE TO THE TERMS OF THE INVITATION FOR BIDS. THE BID SUBMITTED BY THE GROVE JOINT VENTURE WAS IN THE AMOUNT OF $27,899,872 BUT WAS ACCOMPANIED BY A LETTER WHICH STATED IN PART:

"WE ARE PLEASED TO TRANSMIT HEREWITH OUR PROPOSAL FOR CONSTRUCTION OF CIVIL AND HYDRAULIC WORKS, INCLUDING TURBINE ERECTION FOR KASTRAKI HYDROELECTRIC, PROJECT - 1969 - 160 OOO KW INSTALLATION - UNITS 1 AND 2

"WITH RESPECT TO THE FOLLOWING MATTERS THE PROPOSAL TRANSMITTED HEREWITH IS CONDITIONED UPON MODIFICATION OF THE PRESENT CONTRACT DOCUMENTS AS HEREINAFTER STATED, THE EXACT WORDING OF THE SAID MODIFICATIONS TO BE FIXED BY MUTUAL AGREEMENT.' THE LETTER CONCLUDED WITH A LIST OF 28 MODIFICATIONS AND EXCEPTIONS TO THE DRAFT CONTRACT INCLUDED IN THE BID SOLICITATION DOCUMENTS.

SUBSEQUENT TO BID OPENING, EBASCO ENTERED INTO DISCUSSIONS WITH THE GROVE JOINT VENTURE. AS A RESULT OF THESE DISCUSSIONS THE GROVE JOINT VENTURE INFORMED EBASCO ON FEBRUARY 3, 1966, THAT THEY WERE WITHDRAWING THEIR LETTER OF JANUARY 27, 1966, WHICH HAD ACCOMPANIED THEIR BID AND WERE SUBSTITUTING THEIR LETTER OF FEBRUARY 3, 1966, IN ITS PLACE. IN THE LETTER OF FEBRUARY 3 THE GROVE JOINT VENTURE EXPRESSLY WITHDREW 10 OF THEIR ORIGINAL 28 MODIFICATIONS BUT RESTATED, IN SOMEWHAT MODIFIED FORM, 17 OF THE ORIGINAL MODIFICATIONS. IN A LETTER TO PPC DATED FEBRUARY 3, 1966, EBASCO ESTIMATED THAT THE COST OF 3 OF THE 17 RESTATED MODIFICATIONS WOULD BE $225,000. NO ATTEMPT WAS MADE IN EBASCO'S LETTER TO ESTIMATE THE POSSIBLE ADDED COST OF THE REMAINING MODIFICATIONS. EBASCO'S LETTER OF FEBRUARY 3 READS, IN PART, AS FOLLOWS:

"WE HAVE HELD EXPLORATORY MEETINGS WITH MEMBERS OF THE JOINT VENTURE SPONSORED BY GROVE, SHEPHERD, WILSON AND KRUGE, IN AN EFFORT TO RESOLVE THE QUALIFICATIONS PLACED UPON THEIR BID FOR CIVIL CONSTRUCTION OF THE KASTRAKI PROJECT. OUR FIRST AND PRIMARY EFFORT WAS TO ELIMINATE ALL QUALIFICATIONS AND FAILING THAT, TO REDUCE THE QUALIFICATIONS TO THOSE WHICH REFER SOLELY TO CLARIFICATION OF CONTRACT WORDING. AS A RESULT OF THESE MEETINGS, WE WERE ABLE TO OBTAIN COMPLETE ELIMINATION OF ELEVEN ITEMS OUT OF THE ORIGINAL TWENTY-EIGHT AND THE WITHDRAWAL OF ALL QUALIFICATIONS, AS SUCH, SUBJECT TO THE CHANGES REQUESTED IN A LETTER FROM THE JOINT VENTURERS, DATED FEBRUARY 3, 1966, ATTACHED HERETO. OF THESE REQUESTED CHANGES, FIVE RELATED ONLY TO CLARIFICATION OR MINOR REVISION OF CONTRACT LANGUAGE, WHICH WE BELIEVE CAN BE ACCEPTED WITHOUT SUBSTANTIAL CHANGE.

"OUR COMMENTS RELATIVE TO THE ITEMS WHICH APPEAR TO BE OF SUBSTANCE APPEAR BELOW. SINCE THE PROBABLE EXPOSURE TO ADDED COSTS IS NOT GREAT, IT IS OUR RECOMMENDATION THAT, AFTER REVIEW OF OUR COMMENTS, THE BID COMMITTEE MEET DIRECTLY WITH THE JOINT VENTURERS, IN AN EFFORT TO ARRIVE AT A MUTUALLY SATISFACTORY AGREEMENT AS TO CHANGES IN THE CONTRACT LANGUAGE. WE FEEL THAT THE AGREEMENT CAN BE REACHED IN A VERY SHORT TIME IF THE MAJORITY OF THE REQUESTS ARE ACCEPTED IN PRINCIPLE. AFTER SUCH AN AGREEMENT IS REACHED, WE WILL BE HAPPY TO PARTICIPATE IN REDRAFTING THE CHANGES IN THE CONTRACT DOCUMENTS.' BY LETTER DATED FEBRUARY 4, 1966, EBASCO ADVISED THE PPC, IN PART THAT:

"* * * OUR RECOMMENDATION, THEREFORE, IN THE LIGHT OF ALL THE CIRCUMSTANCES, IS THAT AWARD BE MADE TO THE LOW BIDDER, THE JOINT VENTURE SPONSORED BY GROVE, SHEPHERD, WILSON AND KRUGE, FOLLOWING RESOLUTION WITH THEM OF THE REQUESTED CHANGES IN CONTRACT LANGUAGE.'

AID REPORTS THAT AT THIS STAGE OF THE PROCEEDING, IN RESPONSE TO INQUIRIES FROM PPC, AID ADVISED PPC THROUGH APPROPRIATE CHANNELS THAT AID COULD NOT APPROVE, FOR AID FINANCING, AN AWARD OF THE KASTRAKI CONTRACT BASED UPON THE BID OF THE GROVE JOINT VENTURE. THEREAFTER, IT IS REPORTED, REPRESENTATIVES OF THE GROVE JOINT VENTURE MET ON MARCH 1, 1966, WITH THE ADMINISTRATOR OF AID AND OTHER SENIOR OFFICIALS OF AID IN AN EFFORT TO PERSUADE AID TO ALTER ITS DECISION NOT TO APPROVE AN AWARD TO THE GROVE JOINT VENTURE. SUBSEQUENT TO THIS MEETING, THE GROVE JOINT VENTURE ADVISED THE ADMINISTRATOR OF AID IN WRITING ON MARCH 3, 1966, THAT THEY WERE WITHDRAWING THEIR LETTERS OF JANUARY 27 AND FEBRUARY 3, 1966, AND THAT THEIR BID SHOULD BE CONSIDERED ON THE BASIS THAT THOSE LETTERS WERE NULL AND VOID. ON MARCH 5, 1966, THE ADMINISTRATOR OF AID WROTE TO THE AUTHORIZED REPRESENTATIVE OF THE GROVE JOINT VENTURE AND ADVISED THAT THE BIDS MUST BE JUDGED AS ORIGINALLY SUBMITTED. HIS REASONS FOR THIS CONCLUSION WERE STATED IN HIS LETTER AS FOLLOWS: "1. THERE IS NO DOUBT THAT A.I.D. MUST REVIEW THE CIRCUMSTANCES OF THE BIDDING AND PROPOSED CONTRACTOR SELECTION IN THIS CASE. UNDER THE TERMS OF THE A.I.D. LOAN AGREEMENT COVERING THIS PROJECT, AS WELL AS, SINCE 1963, THE REQUIREMENTS OF THE FOREIGN ASSISTANCE AND RELATED AGENCIES APPROPRIATION ACTS, THE UNITED STATES MUST APPROVE THE TERMS OF CONTRACTS FOR ENGINEERING, PROCUREMENT, AND CONSTRUCTION SERVICES IN CONNECTION WITH THE PROJECT, AND ALSO THE FIRMS TO PROVIDE SUCH SERVICES. IN THIS CONNECTION, SECTION 611 (C) OF THE FOREIGN ASSISTANCE ACT REQUIRES THAT TO THE MAXIMUM EXTENT POSSIBLE SUCH CONTRACTS BE "MADE ON A COMPETITIVE BASIS.'

"2. THE CASE MUST BE DECIDED ON THE BASIS OF THE BIDS AS SUBMITTED. THE OFFERS YOU MADE, AFTER THE BID OPENING, TO WITHDRAW SOME OR ALL OF YOUR 28 PROPOSED MODIFICATIONS, CANNOT BE CONSIDERED. SOUND COMPETITIVE BIDDING PRACTICES CLEARLY RULE OUT ANY CONSIDERATION OF LATER AMENDMENTS TO BIDS MADE, A PRINCIPLE APPLIED IN THIS CASEIN THE PROVISION OF THE INVITATION- FOR-BIDS WHICH READS "NO BID SUBMITTED MAY BE AMENDED, SUPPLEMENTED OR WITHDRAWN FOR ANY REASON OR CAUSE WHATSOEVER.'

"3. THE KEY ISSUE, THEREFORE, IS WHETHER YOUR ORIGINAL BID, INCLUDING ITS PROPOSED 28 MODIFICATIONS TO THE DRAFT CONTRACT CONTAINED IN THE INVITATION-FOR-BIDS, SHOULD BE CONSIDERED TO BE A RESPONSIVE BID. THIS AGENCY HAS REVIEWED THE PROPOSED MODIFICATIONS CAREFULLY, AND CONCLUDED THAT WHILE 11 OF THE PROPOSED MODIFICATIONS REPRESENT MINOR MATTERS OF CLARIFICATION, 17 OF THE PROPOSED MODIFICATIONS WOULD REPRESENT MATERIAL AND SIGNIFICANT CHANGES IN THE DRAFT CONTRACT. IT IS POSSIBLE, IN OUR JUDGMENT, TO ESTIMATE THE ADDED COST OF SOME OF YOUR MODIFICATIONS WITH A REASONABLE DEGREE OF CERTAINTY, BUT FOR OTHERS IT IS NOT POSSIBLE TO MAKE SUCH AN ESTIMATE. MY CONCLUSION IS THAT IT IS NOT POSSIBLE TO PLACE YOUR BID ON A COMPARABLE FOOTING TO THE OTHER BID; THE COSTS OF THE PROJECT TO THE OWNER UNDER YOUR BID WOULD BE HIGHER, TO A MATERIAL BUT NOT PRECISELY CALCULABLE EXTENT, THAN THE FACE AMOUNT OF YOUR BID. I BELIEVE YOUR BID CANNOT THEREFORE BE FOUND TO BE RESPONSIVE TO THE INVITATION-FOR-BIDS.

"IN THESE CIRCUMSTANCES, I HAVE CONCLUDED THAT AN AWARD OF THE CONTRACT TO YOUR JOINT VENTURE SHOULD NOT BE APPROVED FOR FINANCING BY THE AGENCY FOR INTERNATIONAL DEVELOPMENT.

"I AM CONSCIOUS OF THE FACT THAT THIS DECISION MIGHT--- ALTHOUGH THERE IS NO WAY TO BE SURE--- RESULT IN A HIGHER COST PROJECT THAN CONCEIVABLY COULD EVENTUATE FROM THE ALTERNATIVE DECISION. AS I HAVE INDICATED, NO CERTAIN STATEMENT CAN BE MADE ON THE QUESTION OF ALTERNATIVE COSTS BECAUSE SOME OF THE QUALIFICATIONS ATTACHED TO YOUR BID CANNOT REASONABLY BE COSTED. HOWEVER, IT IS EVIDENT THAT IF YOUR BID WERE DEEMED RESPONSIVE, AND SUBSEQUENTLY YOU WITHDREW YOUR ORIGINAL MODIFICATIONS (AS YOU HAVE NOT STATED YOU WOULD BE WILLING TO DO), THE RESULT CLEARLY WOULD BE A LOWER COST CONTRACT THAN UNDER THE FULLY RESPONSIVE ALTERNATIVE BID. BUT I SEE NO WAY TO ESCAPE THE CONCLUSIONS THAT YOUR BID, BECAUSE IT WAS SUBMITTED WITH ATTACHED QUALIFICATIONS OF A MATERIAL NATURE--- SOME OF WHICH COULD BE COSTED, SOME OF WHICH COULD NOT--- CANNOT BE CONSIDERED A RESPONSIVE BID, AND THAT THE PROPOSED AMENDMENTS TO YOUR BID CANNOT BE ENTERTAINED UNDER ANY SOUND CONCEPT OF COMPETITIVE BIDDING AND FAIR TREATMENT OF OTHER U.S. BIDDERS.

"ACCORDINGLY, I BELIEVE THE CONCLUSION I HAVE REACHED MUST STAND EVEN THOUGH IT COULD CONCEIVABLY ENTAIL HIGHER COSTS. THE RULINGS OF THE COMPTROLLER GENERAL, INCLUDING AT LEAST ONE APPLYING TO AN A.I.D. CASE, SEEM TO ME CLEARLY TO SUPPORT THIS VIEW.'

SECTION 112 OF THE FOREIGN AID AND RELATED AGENCIES APPROPRIATION ACT, 1963, 76 STAT. 1166, PROVIDES THAT:

"NONE OF THE FUNDS APPROPRIATED OR MADE AVAILABLE UNDER THIS ACT FOR CARRYING OUT THE FOREIGN ASSISTANCE ACT OF 1961, AS AMENDED, MAY BE USED TO MAKE PAYMENTS WITH RESPECT TO ANY CAPITAL PROJECT FINANCED BY LOANS OR GRANTS FROM THE UNITED STATES WHERE THE UNITED STATES HAS NOT DIRECTLY APPROVED THE TERMS OF THE CONTRACTS AND THE FIRMS TO PROVIDE ENGINEERING, PROCUREMENT, AND CONSTRUCTION SERVICES ON SUCH PROJECT.' THE ABOVE PROVISION, WHICH FIRST APPEARED IN THE 1963 APPROPRIATIONS ACT, HAS BEEN INCORPORATED IN THE APPROPRIATIONS ACT FOR EACH OF THE SUCCEEDING FISCAL YEARS. SEE PUBLIC LAWS 88-258, 88 634 AND 89-273.

SECTION 201, OF THE FOREIGN ASSISTANCE ACT OF 1961, AS AMENDED, 22 U.S.C. 2161 (B) PROVIDES, IN PART, THAT:

"THE PRESIDENT IS AUTHORIZED TO MAKE LOANS PAYABLE AS TO PRINCIPAL AND INTEREST IN UNITED STATES DOLLARS ON SUCH TERMS AND CONDITIONS AS HE MAY DETERMINE IN ORDER TO PROMOTE THE ECONOMIC DEVELOPMENT OF LESS DEVELOPED FRIENDLY COUNTRIES AND AREAS, WITH EMPHASIS UPON ASSISTING LONG-RANGE PLANS AND PROGRAMS DESIGNED TO DEVELOP ECONOMIC RESOURCES AND INCREASE PRODUCTIVE CAPACITIES * * *" SECTION 611 OF THE FOREIGN ASSISTANCE ACT OF 1961, AS AMENDED, 22 U.S.C. 2361, PROVIDES, IN PART, AS FOLLOWS:

"/A) RESTRICTION ON AGREEMENTS OR GRANTS.

"NO AGREEMENT OR GRANT WHICH CONSTITUTES AN OBLIGATION OF THE UNITED STATES GOVERNMENT IN EXCESS OF $100,000 UNDER SECTION 200 OF TITLE 31 SHALL BE MADE FOR ANY ASSISTANCE AUTHORIZED UNDER SECTIONS 2161-2165, 2171 -2176, 2191-2193, 2241 AND 2242 OF THIS TITLE -

"/1) IF SUCH AGREEMENT OR GRANT REQUIRES SUBSTANTIVE TECHNICAL OR FINANCIAL PLANNING, UNTIL ENGINEERING, FINANCIAL, AND OTHER PLANS NECESSARY TO CARRY OUT SUCH ASSISTANCE, AND A REASONABLY FIRM ESTIMATE OF THE COST TO THE UNITED STATES GOVERNMENT OF PROVIDING SUCH ASSISTANCE, HAVE BEEN COMPLETED; AND

"/2) IF SUCH AGREEMENT OR GRANT REQUIRES LEGISLATIVE ACTION WITHIN THE RECIPIENT COUNTRY, UNLESS SUCH LEGISLATIVE ACTION MAY REASONABLY BE ANTICIPATED TO BE COMPLETED IN TIME TO PERMIT THE ORDERLY ACCOMPLISHMENT OF THE PURPOSES OF SUCH AGREEMENT OR GRANT.

"/C) CONTRACTS FOR CONSTRUCTION OUTSIDE UNITED STATES; COMPETITIVE BASIS.

"TO THE MAXIMUM EXTENT PRACTICABLE, ALL CONTRACTS FOR CONSTRUCTION OUTSIDE THE UNITED STATES MADE IN CONNECTION WITH ANY AGREEMENT OR GRANT SUBJECT TO SUBSECTION (A) OF THIS SECTION SHALL BE MADE ON A COMPETITIVE BASIS.' PURSUANT TO EXECUTIVE ORDER 10973 (NOVEMBER 3, 1961, 26 F.R. 10469), AS AMENDED, (WITH CERTAIN EXCEPTIONS NOT HERE RELEVANT), "ALL FUNCTIONS CONFERRED UPON THE PRESIDENT" BY THE FOREIGN ASSISTANCE ACT OF 1961, AS AMENDED, WERE DELEGATED TO THE SECRETARY OF STATE. BY VIRTUE OF STATE DEPARTMENT DELEGATION OF AUTHORITY NO. 104, (NOVEMBER 3, 1961), AS AMENDED, THESE FUNCTIONS WERE REDELEGATED TO THE ADMINISTRATOR OF AID.

YOUR LETTER OF MARCH 14, 1966, SETS FORTH TWO MAIN BASES FOR QUESTIONING AID'S ACTION IN THIS CASE. YOU CONTEND THAT (1) AID EXCEEDED ITS LEGAL AUTHORITY IN DETERMINING THAT THE GROVE JOINT VENTURE PROPOSAL WAS NONRESPONSIVE, AND (2) ALTERNATIVELY, YOU CONTEND THAT AID IMPROPERLY USED STANDARDS WHICH ARE NOT APPLICABLE TO THIS TYPE OF SOLICITATION.

IN CONNECTION WITH THE FIRST GROUND OF PROTEST, YOU SAY THAT ALL ACTIONS OF FEDERAL GOVERNMENT AGENCIES MUST STEM EITHER FROM THE CONSTITUTION OR FROM A FEDERAL STATUTE, BUT THAT THE AID ACTION IN DETERMINING THAT GROVE'S PROPOSAL WAS NONRESPONSIVE WAS NOT AUTHORIZED UNDER EITHER THE CONSTITUTION OR A FEDERAL STATUTE.

YOU CONTEND THAT SECTION 611 (C) OF THE FOREIGN ASSISTANCE ACT OF 1961, AS AMENDED, DOES NOT GIVE AID AUTHORITY TO DETERMINE THAT A BID IS NONRESPONSIVE BUT MERELY REQUIRES THAT THE MAXIMUM COMPETITION PRACTICABLE BE OBTAINED ON A CONSTRUCTIVE PROCUREMENT BY A FOREIGN GOVERNMENT PURSUANT TO AN AID LOAN AGREEMENT. IN YOUR OPINION, THE PRE-QUALIFICATION OF THE FIVE OR SIX FIRMS OR JOINT VENTURES BY THE PPC WITH THE APPROVAL OF AID, AND THE ISSUANCE OF THE SOLICITATION TO THESE FIRMS COMPLETELY SATISFIED THIS STATUTORY REQUIREMENT. THAT MAXIMUM COMPETITION WAS OBTAINED IN FACT ON THIS SOLICITATION IS SUBSTANTIATED, YOU ASSERT, BY THE RECEIPT OF TWO BIDS.

YOU ALSO SUBMIT THAT SECTION 112 OF THE FOREIGN AID AND RELATED AGENCIES APPROPRIATION ACT, 1963, DOES NOT GIVE AID AUTHORITY TO DETERMINE THAT A BID IS NONRESPONSIVE AND TO ADVISE THE FOREIGN GOVERNMENT OF SUCH DETERMINATION. THIS AUTHORITY TO "APPROVE THE TERMS OF THE CONTRACTS AND THE FIRMS TO PROVIDE * * * CONSTRUCTION SERVICES" DOES NOT, YOU CONTEND, CARRY WITH IT ANY AUTHORITY TO SELECT THE TERMS OF THE CONTRACT AND THE FIRMS TO RECEIVE SUCH CONTRACTS, WHICH, YOU FURTHER CONTEND, AID HAS IN EFFECT DONE IN THIS SOLICITATION. IN THAT CONNECTION YOU NOTE THAT THE BILL WHICH ULTIMATELY WAS ENACTED INTO LAW AS THE FOREIGN AID AND RELATED AGENCIES APPROPRIATION ACT, 1963, WAS INTRODUCED IN THE HOUSE OF REPRESENTATIVES ON SEPTEMBER 18, 1962, AS H.R. 13175. THIS BILL DID NOT CONTAIN THE ABOVE QUOTED LANGUAGE WHICH IS NOW SECTION 112 OF THE STATUTE. YOU FURTHER NOTE THAT ON SEPTEMBER 20, 1962, THE HOUSE OF REPRESENTATIVES PASSED THE FOLLOWING AMENDMENT TO H.R. 13175 AS REPORTED IN THE CONGRESSIONAL RECORD, SEPTEMBER 20, 1962, P. 19066:

"SEC. 113 NONE OF THE FUNDS APPROPRIATED OR MADE AVAILABLE UNDER THIS ACT FOR CARRYING OUT THE FOREIGN ASSISTANCE ACT OF 1961 * * * MAY BE USED TO MAKE PAYMENTS WITH RESPECT TO ANY CAPITAL PROJECT FINANCED BY LOANS * * * FROM THE UNITED STATES WHERE THE UNITED STATES HAS NOT SELECTED DIRECTLY THE FIRMS TO PROVIDE * * * CONSTRUCTION SERVICES ON SUCH PROJECT.' YOU FURTHER POINT OUT THAT THE SENATE COMMITTEE ON APPROPRIATIONS AMENDED THE ABOVE LANGUAGE BY CHANGING THE WORD ,SELECTED" TO "APPROVED" IN THE VERSION OF THE BILL REPORTED OUT OF COMMITTEE ON SEPTEMBER 28, 1962, AND THAT WHILE THE CONFERENCE COMMITTEE ULTIMATELY REVISED THIS SECTION TO ITS PRESENT FOR, IT ELECTED TO KEEP THE WORD "APPROVED" RATHER THAN "SELECTED" IN THIS PROVISION. FROM THIS LEGISLATIVE HISTORY, YOU CONCLUDE THAT CONGRESS INTENDED TO RESTRICT AID'S AUTHORITY IN THIS AREA TO THE APPROVAL OF THE FOREIGN GOVERNMENT'S SELECTION OF THE TERMS OF THE CONTRACT AND THE FIRMS TO RECEIVE SUCH CONTRACTS. FURTHERMORE, YOU CONTEND THAT AID'S ACTIONS IN DETERMINING THAT THE GROVE JOINT VENTURE BID WAS NONRESPONSIVE IN ANSWER TO THE REQUEST OF THE GOVERNMENT OF GREECE TO APPROVE AN AWARD OF A CONTRACT TO THE GROVE JOINT VENTURE,"WENT BEYOND THE FUNCTION OF APPROVAL AND WERE TANTAMOUNT TO SELECTION," WHICH WAS IN DEROGATION OF THE CONGRESSIONAL MANDATE.

YOU FURTHER SUBMIT THAT AID, IN THE PROPER EXERCISE OF ITS AUTHORITY TO APPROVE THE TERMS OF THE CONTRACT AND THE FIRM TO RECEIVE SUCH CONTRACT, MUST APPROVE THE REQUEST OF THE PPC TO AWARD A CONTRACT TO GROVE. YOU NOTE THAT AID ALREADY HAS APPROVED THE PROVISIONS OF THE SOLICITATION PRIOR TO ITS ISSUANCE BY EBASCO TO PROSPECTIVE BIDDERS, AND SINCE GROVE HAS WITHDRAWN ALL PROPOSED MODIFICATIONS TO ITS BID AND HAS ADVISED AID AND THE PPC THAT IT WILL ACCEPT AN AWARD AT ITS ORIGINAL BID PRICE IN CONFORMITY WITH THE TERMS AND CONDITIONS OF THE SOLICITATION, YOU CONTEND, IN EFFECT, THAT AID CAN ONLY DISAPPROVE GROVE ON THE BASIS OF PRICE. THAT POINT, YOU SAY THAT AID CERTAINLY CANNOT DISAPPROVE AN AWARD TO GROVE SINCE ITS PRICE IS APPROXIMATELY $2,000,000 LESS THAN THE OTHER BIDDER.

IN VIEW OF THE FOREGOING YOU REQUEST THAT OUR OFFICE REQUIRE AID TO APPROVE AN AWARD TO GROVE ON THE SUBJECT PROCUREMENT, AND YOU STATE THAT SUCH REQUEST IS MADE WITH THE REALIZATION THAT AID DETERMINATIONS RELATIVE TO THE RESPONSIVENESS OF BIDS IN PROCUREMENTS MADE BY FOREIGN GOVERNMENTS UNDER LOAN AGREEMENTS HAVE PREVIOUSLY BEEN UPHELD BY OUR OFFICE IN DECISIONS B-150067, JANUARY 14, 1963; B-152326, DECEMBER 6, 1963; B- 156660, OCTOBER 28, 1965; AND B-157421, JANUARY 19 AND FEBRUARY 16, 1966. YOUR ANALYSIS OF THESE DECISIONS IS AS FOLLOWS:

"* * * SINCE IT CLEARLY APPEARS FROM THE ABOVE-CITED DECISIONS THAT THE QUESTION OF THE LEGAL AUTHORITY OF AID TO DETERMINE RESPONSIVENESS WAS NEVER RAISED, IT IS SUBMITTED THAT THESE CASES DO NOT GIVE SANCTION TO AID'S ACTIONS HEREIN. IN ANY EVENT, THE FACTUAL SITUATIONS IN ALL FOUR CASES APPEAR TO BE COMPLETELY DISTINGUISHABLE FROM THE INSTANT FACTS. WHEREAS AID IN THIS CASE HAS DETERMINED THAT THE GROVE JOINT VENTURE BID IS NON-RESPONSIVE DESPITE THE ACCEPTABILITY OF THE BID TO THE FOREIGN GOVERNMENT, COMPTROLLER GENERAL DECISIONS B-150067, B 152326,B-156660 CLEARLY INDICATE THAT THE PROTESTANTS THEREIN WERE REJECTED BY THE FOREIGN GOVERNMENTS AND AID WAS MERELY APPROVING THE FOREIGN GOVERNMENT'S CHOICES OF CONTRACTORS. ALTHOUGH THE DECISIONS IN B-157421 ARE SILENT ON THE FOREIGN GOVERNMENT'S CHOICE OF CONTRACTOR, THE GROVE JOINT VENTURE HAS INFORMATION AND BELIEF THAT AID IN THAT CASE WAS NOT MAKING A DETERMINATION OF NON-RESPONSIVENESS WHICH WAS CONTRARY TO THE WISHES OF THE FOREIGN GOVERNMENT. IN SUMMATION, THE GROVE JOINT VENTURE SUBMITS THAT THE ABOVE-CITED CASES DO NOT AND CANNOT SANCTION AN ACTION BY AID WHICH CLEARLY IS CONTRARY TO THE WISHES OF THE FOREIGN GOVERNMENT AND IS IN DEROGATION OF A SPECIFIC CONGRESSIONAL NDATE.' YOUR LETTER OF MARCH 22, 1966, AMPLIFIES THE ANALYSIS QUOTED ABOVE. IN THAT LETTER YOU ASSERT THAT SINCE THE PPC REQUESTED AID TO APPROVE AN AWARD TO THE GROVE JOINT VENTURE, THE PPC MUST HAVE DETERMINED THAT THE GROVE BID WAS ACCEPTABLE AND RESPONSIVE UNDER THE STANDARDS OF THE GOVERNMENT OF GREECE. YOU FURTHER ASSERT THAT IN OUR DECISIONS B-149843, NOVEMBER 5, 1962; B-152326, DECEMBER 6, 1963; B-154399, NOVEMBER 17, 1964; AND B 157421, JANUARY 19, 1966, WE HAVE HELD "THAT THE STANDARDS OF THE FOREIGN GOVERNMENT AND NOT RULES AND REGULATIONS GOVERNING PROCUREMENTS BY THE UNITED STATES GOVERNMENT ARE TO BE APPLIED IN DETERMINING THE RESPONSIVENESS OF BIDS TO SOLICITATIONS ISSUED BY FOREIGN GOVERNMENTS PURSUANT TO AID LOAN AGREEMENTS.' YOU SAY THAT SINCE AID MUST HAVE APPLIED ITS OWN STANDARDS IN DETERMINING THAT THE GROVE BID WAS NONRESPONSIVE AFTER THE GOVERNMENT OF GREECE HAD DETERMINED THAT THE BID WAS RESPONSIVE, THE AID DETERMINATION OF NONRESPONSIVENESS CLEARLY WAS CONTRARY TO THE ABOVE CITED CASES. IN ADDITION, YOU SAY THAT THE REFUSAL OF AID TO APPROVE AN AWARD TO GROVE LEFT THE GOVERNMENT OF GREECE WITH TWO ALTERNATIVES: (1) EITHER AWARD A CONTRACT TO GROVE WITHOUT AID FINANCING, OR (2) AWARD A CONTRACT WITH AID FINANCING TO THE PERINI JOINT VENTURE AT A PRICE APPROXIMATELY $2,000,000 HIGHER. YOU SAY THAT SINCE GREECE NEEDS THE AID FINANCING TO OBTAIN THESE CONSTRUCTION SERVICES, THE AID ACTION IN DETERMINING THAT THE GROVE BID WAS NONRESPONSIVE WAS TANTAMOUNT TO A SELECTION OF THE CONTRACT RECIPIENT--- A FUNCTION WHICH CONGRESS SPECIFICALLY DENIED TO AID.

FINALLY, IN REGARD TO YOUR CONTENTION THAT AID HAS EXCEEDED ITS AUTHORITY IN THIS MATTER, YOU NOTE THAT THE MARCH 5, 1966, LETTER FROM THE ADMINISTRATOR OF AID TO GROVE ALSO INDICATES THAT AID RELIED ON THE LOAN AGREEMENT WITH PPC AND THE GOVERNMENT OF GREECE AS AUTHORITY FOR ITS PURPORTED RIGHT TO DETERMINE THAT THE GROVE BID WAS NONRESPONSIVE. YOU SUBMIT THAT THE LOAN AGREEMENT DOES NOT CONTAIN SUCH AUTHORITY, BUT YOU SAY IT IS UNNECESSARY TO DETERMINE THIS QUESTION IN ANY EVENT BECAUSE, IN EFFECT, AID'S ACTION IS CONTRARY TO THE SPECIFIC CONGRESSIONAL PROHIBITION IN THIS REGARD AND AID CANNOT JUSTIFY AN ILLEGAL ACTION BY RELYING ON A CONTRACT. YOU FURTHER SUBMIT THAT THE CONGRESSIONAL MANDATE WOULD BE NULLIFIED IF WE WERE TO UPHOLD AID'S POSITION.

IN REGARD TO YOUR SECOND BASIS FOR PROTESTING AID'S ACTION, YOU STATE THAT EVEN IF IT IS ASSUMED AID'S ACTION IS AUTHORIZED BY THE FOREIGN ASSISTANCE ACT OF 1961 OR THE FOREIGN AID AND RELATED AGENCIES APPROPRIATIONS ACTS, YOU CONTEND THAT AID ACTED IMPROPERLY AND UNREASONABLY IN MAKING ITS DETERMINATION IN THE INSTANT CASE. BASICALLY, YOUR POSITION APPEARS TO BE THAT AID'S DETERMINATION IS AN IMPROPER AND UNWARRANTED APPLICATION TO A PROCUREMENT BY A FOREIGN GOVERNMENT OF THE RULES AND REGULATIONS APPLICABLE TO PROCUREMENTS BY DEPARTMENTS AND AGENCIES OF THE UNITED STATES GOVERNMENT. YOU EMPHASIZE THAT THE PPC REQUESTED AID TO APPROVE AN AWARD TO GROVE AND SINCE THE PPC RESERVED THE RIGHT IN THE SOLICITATION TO REJECT BIDS WHICH IT (NOT AID) DEEMED NONRESPONSIVE OR IRREGULAR IN A MATERIAL RESPECT, IT MUST BE ASSUMED THAT THE GOVERNMENT OF GREECE DID NOT CONSIDER THE GROVE BID NONRESPONSIVE UNDER ITS STANDARDS. IN DETERMINING THAT THE GROVE BID WAS NONRESPONSIVE YOU SAY THAT AID SUPERIMPOSED THE RULES AND REGULATIONS APPLICABLE TO PROCUREMENTS BY UNITED STATES GOVERNMENT AGENCIES ON THIS PROCUREMENT BY A FOREIGN GOVERNMENT, CONTRARY TO PREVIOUS DECISIONS BY OUR OFFICE.

YOU CONTENTION IN THIS RESPECT IS SUPPORTED, YOU ASSERT, BY THE POSITION WHICH AID AND ITS PREDECESSOR AGENCY HAS TAKEN ON OTHER PROCUREMENTS BY THE GOVERNMENT OF GREECE UNDER LOAN AGREEMENTS WITH THE UNITED STATES. YOU STATE THAT IN A PROCUREMENT BY PPC PURSUANT TO DEVELOPMENT LOAN FUND LOAN NO. 107 FOR THE DIVERSION TUNNEL OF THE KREMESTA HYDROELECTRIC PROJECT ON THE ACHELOOS RIVER IN GREECE IN 1961, DLF (WHICH SHORTLY THEREAFTER MERGED WITH ICA BO BECOME AID) APPROVED THE REQUEST OF THE PPC TO MAKE AN AWARD TO THE LOW BIDDER, WHO WAS CLEARLY NONRESPONSIVE UNDER THE RULES AND REGULATIONS APPLICABLE TO PROCUREMENTS BY THE UNITED STATES GOVERNMENT, ON THE BASIS THAT THE PPC DETERMINATION OF RESPONSIVENESS WAS CONTROLLING. YOU CITE A LETTER TO THE BIDDERS ON THAT PROCUREMENT DATED OCTOBER 19, 1961, WRITTEN BY THE DLF GENERAL COUNSEL READING, IN PART, AS FOLLOWS:

"* * * DLF DOES NOT PRESCRIBE THE BIDDING PROCEDURES TO BE USED BY ITS BORROWERS; HOWEVER, THE AGENCY MUST BE SATISFIED THAT THE PROCEDURE UTILIZED WILL RESULT IN FAIR COMPETITION AND A REASONABLE PRICE. ORDINARILY COMPLIANCE WITH THE BORROWERS BIDDING PROCEDURES IS A MATTER FOR THE BORROWER TO DECIDE AND DLF WILL NOT INTERVENE IN THE ABSENCE OF MALFEASANCE OR EVIDENCE THAT THE PROCEDURE IS SUCH AS TO MAKE IT UNLIKELY THAT REASONABLE PRICES WILL BE TENDERED THROUGH FAIR COMPETITION.'

YOU ALSO ASSERT THAT THE PERINI CORPORATION WAS AWARDED A CONTRACT BY THE PPC, WITH THE APPROVAL OF AID, AS THE LOW BIDDER FOR THE CONSTRUCTION OF THE KREMESTA DAM PROJECT ON THE ACHELOOS RIVER IN GREECE EVEN THOUGH THE PERINI BID CONTAINED MATERIAL QUALIFICATIONS WHICH WOULD HAVE REQUIRED ITS REJECTION AS NONRESPONSIVE UNDER THE RULES AND REGULATIONS APPLICABLE TO PROCUREMENTS BY AGENCIES OF THE UNITED STATES GOVERNMENT. IN ADDITION YOU STATE THAT THE GROVE JOINT VENTURE HAS INFORMATION AND BELIEF THAT THE PPC, WITH THE APPROVAL OF AID, AWARDED A CONTRACT FOR THE SUPPLY OF TURBINES FOR THE INSTANT KASTRAKI DAM TO THE LOW BIDDER WHO HAD SUBMITTED A LETTER OF QUALIFICATIONS WITH HIS BID WHICH WOULD HAVE REQUIRED REJECTION AS NONRESPONSIVE IF THE SOLICITATION HAD BEEN ISSUED BY AID AND GOVERNED BY THE RULES APPLICABLE TO AID PROCUREMENTS. YOU ALSO NOTE THAT AID ATTEMPTED TO APPROVE AN AWARD TO EACH OF THE TWO BIDDERS ON THE EARLIER SOLICITATION FOR THE INSTANT PROJECT, ALTHOUGH BOTH BIDDERS HAD QUALIFIED THEIR BIDS TO SUCH AN EXTENT THAT THE BIDS WERE NONRESPONSIVE UNDER UNITED STATES GOVERNMENT PROCUREMENT RULES. FINALLY, YOU CITE A CASE WHEREIN THE GOVERNMENT OF ETHIOPIA, WITH THE APPROVAL OF DLF, AWARDED A CONTRACT TO GROVE SHEPHERD WILSON AND KRUGE, INC., IN 1961 FOR THE CONSTRUCTION OF AN AIRFIELD, DESPITE THE FACT THAT GROVE SHEPHERD HAD QUALIFIED ITS LOW BID MUCH IN THE SAME MANNER AS WAS DONE BY THE GROVE JOINT VENTURE IN THE INSTANT CASE. IN VIEW OF SUCH PROCUREMENT HISTORY, YOU CONTEND THAT GROVE WAS JUSTIFIED IN BELIEVING THAT IT WAS NOT NECESSARY TO SUBMIT A COMPLETELY RESPONSIVE BID IN THE INSTANT PROCUREMENT.

IN CONCLUSION, AND IN THE ALTERNATIVE, YOU STATE THAT EVEN IF AID HAS THE LEGAL AUTHORITY TO DETERMINE THE RESPONSIVENESS OF THE GROVE BID, AND EVEN IF IT CAN PROPERLY UTILIZE ITS OWN PROCUREMENT RULES AND REGULATIONS IN MAKING THIS DETERMINATION, YOU SUBMIT THAT THE PROCUREMENT SHOULD BE CANCELLED AND READVERTISED IN THE BEST INTERESTS OF BOTH GREECE AND UNITED STATES.

WITH RESPECT TO THE INTERESTS OF GREECE, YOU ASSERT THAT IF THE AID ACTION IN THIS CASE IS UPHELD THE GOVERNMENT OF GREECE WILL HAVE NO CHOICE BUT TO MAKE AN AWARD TO THE PERINI JOINT VENTURE ON THIS SOLICITATION IF IT WISHES TO RECEIVE AID FUNDS, AND SINCE THE AID FUNDS ARE A LOAN THE REJECTION OF THE GROVE BID WILL COST THE GOVERNMENT OF GREECE APPROXIMATELY $2,000,000 MORE THAN IF THE CONTRACT WERE AWARDED TO GROVE.

WITH RESPECT TO THE INTERESTS OF THE UNITED STATES, YOU CONTEND THAT THE STATUS OF THE UNITED STATES "WILL BE DIMINISHED IN THE EYES OF GREECE AND POSSIBLY OTHER FOREIGN GOVERNMENTS IF AID NOW CHANGES ITS LONG-STANDING POLICY AND REFUSES TO APPROVE AN AWARD TO THE CONTRACTOR SELECTED BY THE PPC. YOUR FURTHER ASSERT THAT IF AID'S ACTION IS UPHELD IT WOULD PROBABLY RESULT IN A RELUCTANCE BY AMERICAN COMPANIES TO COMPETE ON FUTURE PROCUREMENTS BY FOREIGN GOVERNMENTS PURSUANT TO AID LOAN AGREEMENTS, AND THIS RESULTANT DECREASE IN COMPETITION UNDOUBTEDLY WOULD IMPAIR THE AID LOAN PROGRAM.

AS YOUR LETTER OF MARCH 14 NOTES WE HAVE HELD THAT THE GENERAL RULES APPLICABLE TO PROCUREMENTS BY THE DEPARTMENTS AND AGENCIES OF THE UNITED STATES ARE NOT APPLICABLE TO PROCUREMENTS BY FOREIGN GOVERNMENTS PURSUANT TO LOAN AGREEMENTS WITH AID. B-157421, JANUARY 19, 1966. SEE, ALSO, B- 152326, DECEMBER 6, 1963 AND B-154399, NOVEMBER 17, 1964 AND B-157421, JANUARY 19, 1966, AS STANDING FOR THE FURTHER PROPOSITION THAT THE STANDARDS OF THE FOREIGN GOVERNMENT AND NOT RULES AND REGULATIONS GOVERNING PROCUREMENTS BY THE UNITED STATES GOVERNMENT ARE TO BE APPLIED IN DETERMINING THE RESPONSIVENESS OF BIDS TO SOLICITATIONS ISSUED BY FOREIGN GOVERNMENTS PURSUANT TO AID LOAN AGREEMENTS. WE DO NOT READ THE LAST FOUR CITED DECISIONS AS STANDING FOR THE PROPOSITION YOU ASSERT. THOSE DECISIONS GO NO FURTHER THAN TO REITERATE THE RULE PREVIOUSLY NOTED ABOVE IN B-157421, JANUARY 19, 1966, THAT THE GENERAL PROCUREMENT RULES APPLICABLE TO AGENCIES OF THE UNITED STATES ARE NOT APPLICABLE TO PROCUREMENTS BY FOREIGN GOVERNMENTS PURSUANT TO AID LOAN AGREEMENTS.

YOU RECOGNIZE THAT OUR OFFICE HAS UPHELD AID DETERMINATIONS OF THE RESPONSIVENESS OF BIDS TO PROCUREMENTS MADE BY FOREIGN GOVERNMENTS UNDER LOAN AGREEMENTS. HOWEVER, YOU CONTEND THAT THE DECISIONS OF OUR OFFICE UPHOLDING SUCH AID DETERMINATIONS DO NOT GIVE SANCTION TO AID'S ACTION IN THE INSTANT CASE BECAUSE THE LEGAL AUTHORITY OF AID TO DETERMINE RESPONSIVENESS WAS NEVER RAISED IN THOSE DECISIONS. MOREOVER, THOSE DECISIONS, YOU NOTE, DID NOT INVOLVE SITUATIONS WHEREIN AID FOUND BIDS TO BE NONRESPONSIVE THAT WERE ACCEPTABLE TO THE FOREIGN GOVERNMENTS AS YOU CONTEND IS TRUE IN THE INSTANT CASE. WE AGREE THAT THOSE DECISIONS DID NOT INVOLVE SITUATIONS IN WHICH THE AID DETERMINATION WAS CONTRARY TO THE FOREIGN GOVERNMENT'S DETERMINATION; HOWEVER, THAT DOES NOT MEAN THE FOREIGN GOVERNMENT'S DETERMINATION AS TO RESPONSIVENESS IS CONTROLLING IN AID. FOR THE REASONS BELOW, WE THINK THAT AID DOES HAVE THE AUTHORITY TO DETERMINE THE RESPONSIVENESS OF BIDS.

SECTION 201 OF THE FOREIGN ASSISTANCE ACT OF 1961 AUTHORIZES THE PRESIDENT TO "MAKE LOANS * * * ON SUCH TERMS AND CONDITIONS AS HE MAY DETERMINE * * *.' THIS AUTHORITY WAS EVENTUALLY DELEGATED TO THE ADMINISTRATOR OF AID AS NOTED ABOVE. SECTION 611 (C) OF THE SAME ACT REQUIRES THAT "TO THE MAXIMUM EXTENT PRACTICABLE, ALL CONTRACTS FOR CONSTRUCTION OUTSIDE THE UNITED STATES MADE IN CONNECTION WITH ANY AGREEMENT * * * SHALL BE MADE ON A COMPETITIVE BASIS.' MOREOVER, SECTION 112 OF THE FOREIGN AID AND RELATED AGENCIES APPROPRIATION ACT, 1963, WHICH HAS BEEN CARRIED FORWARD IN SUCCEEDING FISCAL YEARS, PROHIBITS THE USE OF APPROPRIATED FUNDS TO MAKE PAYMENTS WITH RESPECT TO ANY CAPITAL PROJECT FINANCED BY LOANS FROM THE UNITED STATES WHERE THE UNITED STATES HAS NOT ,DIRECTLY APPROVED" THE TERMS OF THE CONTRACTS AND THE FIRMS TO PROVIDE CONSTRUCTION SERVICES ON THE PROJECT.

THE PROVISIONS OF SECTION 201 OF THE FOREIGN ASSISTANCE ACT OF 1961 CONFER DISCRETIONARY AUTHORITY ON THE PRESIDENT TO DETERMINE THE TERMS AND CONDITIONS UPON WHICH LOANS SHALL BE MADE. THIS BROAD AUTHORITY APPEARS TO BE LIMITED, INSOFAR AS IS HERE MATERIAL, ONLY BY THE PROVISIONS OF 611 (C) OF THE ACT REQUIRING THAT TO THE MAXIMUM EXTENT PRACTICABLE ALL CONTRACTS FOR CONSTRUCTION OF THE TYPE HERE INVOLVED SHALL BE MADE ON A "COMPETITIVE BASIS.' THE CENTRAL QUESTION THEREFORE IS WHETHER AID'S REFUSAL TO APPROVE GROVE AS A CONTRACTOR FOR THE REASON THAT GROVE'S BID WAS NONRESPONSIVE CAN BE SAID TO VIOLATE THE REQUIREMENT THAT THE CONTRACT SHALL BE MADE ON A COMPETITIVE BASIS TO THE MAXIMUM EXTENT PRACTICABLE.

UNDER THE RULES GOVERNING ADVERTISED PROCUREMENTS BY UNITED STATES DEPARTMENTS AND AGENCIES, EVERY EFFORT MUST BE MADE TO STATE SPECIFICATIONS AND SOLICITATIONS IN TERMS THAT WILL PERMIT THE BROADEST FIELD OF COMPETITION WITHIN THE NEEDS REASONABLY REQUIRED. WE HAVE STATED THAT WHERE ONE BIDDER TAKES EXCEPTION TO CERTAIN SPECIFICATION REQUIREMENTS UNDER CIRCUMSTANCES NOT EXTENDED TO ALL BIDDERS, IT IS CLEAR THAT A CONTRACT AWARDED ON THE BASIS OF SUCH A BID WOULD NOT BE THE CONTRACT TENDERED TO ALL BIDDERS. SEE B-148277, MAY 10, 1962. WE HAVE RECOGNIZED THAT CONTRACTING OFFICERS MAY WAIVE INFORMALITIES AND MINOR IRREGULARITIES IN BIDS IN THE INTERESTS OF THE GOVERNMENT; HOWEVER, THE INFORMALITIES AND MINOR IRREGULARITIES WHICH CAN BE WAIVED MAY NOT GO TO THE SUBSTANCE OF THE BID AND THUS PREJUDICE THE RIGHTS OF OTHER BIDDERS. SEE 30 COMP. GEN. 179; 40 ID. 458. WERE THE INSTANT PROCUREMENT ONE WHICH WAS SUBJECT TO THE ABOVE RULES, IT WOULD APPEAR THAT NEARLY EVERY ONE OF THE 28 EXCEPTIONS TO THE SOLICITATION TAKEN BY GROVE WOULD BE ENOUGH BY ITSELF, WITHOUT THE AID OF THE OTHER 27, TO RENDER THE BID NONRESPONSIVE. THESE EXCEPTIONS CANNOT BE SAID TO BE MINOR IRREGULARITIES OR INFORMALITIES AND, THUS, SUBJECT TO WAIVER BY THE CONTRACTING OFFICER. HOWEVER, SINCE THE RULES APPLICABLE TO UNITED STATES GOVERNMENT PROCUREMENTS ARE NOT APPLICABLE TO THE TYPE OF PROCUREMENT INVOLVED HERE AND, THUS, CANNOT BE TAKEN AS THE MEASURE FOR DETERMINING WHAT IS MEANT BY MAKING THE CONTRACT ON A ,COMPETITIVE BASIS," THE QUESTION OF WHAT RULES WILL SATISFY THE REQUIREMENT OF SECTION 611 (C) AND WHO MAY MAKE THE DETERMINATIONS REGARDING THE CONFORMABILITY OF BIDS TO THOSE RULES REMAINS TO BE ANSWERED. GROVE CONTENDS (1) THAT THE REQUIREMENT OF SECTION 611 (C) WAS SATISFIED BY THE PREQUALIFICATION OF FIVE OR SIX FIRMS OR JOINT VENTURES BY THE PPC WITH THE APPROVAL OF AID AND THE ISSUANCE OF THE SOLICITATION TO THESE FIRMS TOGETHER WITH THE RECEIPT OF TWO BIDS, AND (2) THAT IT IS THE FOREIGN BORROWER GOVERNMENT THAT DETERMINES THE RESPONSIVENESS OF BIDS IN ACCORDANCE WITH ITS OWN PROCUREMENT RULES. BELIEVE BOTH OF THESE CONTENTIONS TO BE UNSOUND AND LEGALLY INSUPPORTABLE. WITH RESPECT TO THE FIRST CONTENTION, WE THINK THAT THE PHRASE "COMPETITIVE BASIS" CONNOTES SOMETHING MORE THAN THE RECEIPT OF "BIDS," WHATEVER THEY MAY CONTAIN, FROM TWO OR MORE RESPONSIBLE BIDDERS. GROVE'S BID WAS SO HEAVILY QUALIFIED THAT AN AWARD THEREON SUBJECT TO THOSE QUALIFICATIONS WOULD HAVE RESULTED IN A CONTRACT SUBSTANTIALLY DIFFERENT THAN THE CONTRACT UPON WHICH THE PERINI JOINT VENTURE SUBMITTED ITS BID. UNDER THOSE CIRCUMSTANCES IT CANNOT BE SAID THAT THE TWO BIDS WERE SUBMITTED ON A "COMPETITIVE BASIS.' THE MERE SUBMISSION OF BIDS IS NOT ENOUGH--- THE BIDS MUST BE SUBMITTED ON A COMMON BASIS, AND THE SAME CONTRACT TENDERED TO ALL BIDDERS.

MOREOVER, ONCE BIDS ARE OPENED BIDDERS CANNOT BE ALLOWED TO AMEND THEIR BIDS TO CURE THE INITIAL NONRESPONSIVENESS. TO ALLOW SUCH AN AMENDMENT WOULD DESTROY THE INTEGRITY OF THE BIDDING PROCEDURE SET FORTH IN THE BID SOLICITATION, A PRIME CONDITION OF WHICH, EXPRESSLY PROHIBITED THE AMENDMENT, SUPPLEMENTATION OR WITHDRAWAL OF A BID FOR ANY REASON OR CAUSE WHATSOEVER. ACCORDINGLY, AID'S REFUSAL TO ALLOW OR RECOGNIZE GROVE'S SUBSEQUENT WITHDRAWAL OF ITS INITIAL MODIFICATIONS WAS NOT ONLY CONSISTENT WITH, BUT REQUIRED, BY THE STATUTORY DIRECTIVE THAT THE CONTRACT BE MADE ON A COMPETITIVE BASIS.

IN REGARD TO GROVE'S SECOND CONTENTION, IT NEED ONLY BE NOTED THAT THE REQUIREMENTS IN SECTION 611 (C) THAT ALL CONTRACTS BE MADE ON A COMPETITIVE BASIS IS DIRECTED AT THE UNITED STATES OFFICIALS CHARGED WITH THE RESPONSIBILITY FOR CARRYING OUT THE OBJECTIVES OF THE FOREIGN ASSISTANCE ACT OF 1961, AS AMENDED, AND NOT AT THE FOREIGN BORROWER. THE RESPONSIBILITY IMPOSED ON AID BY SECTION 611 (C) WAS EXERCISED THROUGH THE LOAN AGREEMENT WITH THE GOVERNMENT OF GREECE BY THE INCORPORATION OF CERTAIN REQUIREMENTS TO BE MET BEFORE THE FIRST DISBURSEMENT OF FUNDS. THUS, SECTION 3.2 OF THE AGREEMENT REQUIRES THE BORROWER TO FURNISH AID, IN FORM AND SUBSTANCE SATISFACTORY TO AID, INFORMATION ON THE CONSTRUCTION, INSTALLATION, AND PROCUREMENT NECESSARY TO COMPLETE THE PROJECT. IN ADDITION, THAT SECTION PROVIDES THAT THE BORROWER MUST FURNISH AID WITH EVIDENCE THAT ARRANGEMENTS SATISFACTORY TO AID HAVE BEEN MADE FOR CONSTRUCTION AND/OR PROCUREMENT SERVICES TO CARRY OUT THE PROJECT. SECTION 100.2 OF THE STANDARD PROVISIONS ANNEX TO THE LOAN AGREEMENT REQUIRES THAT ALL "ELIGIBLE ITEMS" (WHICH INCLUDES CONSTRUCTION SERVICES FOR THE PROJECT--- SEE SECTIONS 1.1 AND 1.2) SHALL BE PROCURED ON A "FAIR COMPETITIVE BASIS.' FINALLY, SECTION 101.1 OF THE ANNEX REQUIRES THE BORROWER TO CARRY OUT THE PROGRAM WITH DUE DILIGENCE AND EFFICIENCY AND IN CONFORMITY WITH "* * * PROCUREMENT ARRANGEMENTS APPROVED BY AID.'

PURSUANT TO ITS LOAN AGREEMENT WITH THE UNITED STATES THAT THE PROJECT COVERED BY THE LOAN SHALL BE PROCURED ON A "FAIR COMPETITIVE BASIS," THE PPC SET FORTH CERTAIN CONDITIONS IN ITS SOLICITATION FOR BIDS DESIGNED TO ACHIEVE THIS PURPOSE. NOT THE LEAST OF THESE CONDITIONS WAS THE ADVICE TO BIDDERS (1) THAT THE FIRM TO BE SELECTED WOULD BE ON THE BASIS OF THE LOWEST RESPONSIVE BID IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE SOLICITATION AND (2) THAT NO BID SUBMITTED COULD BE AMENDED, SUPPLEMENTED OR WITHDRAWN FOR ANY REASON OR CAUSE WHATSOEVER. IN OUR OPINION, AID DID NOT EXCEED ITS AUTHORITY IN REFUSING TO APPROVE A CONTRACTOR WHOSE BID FAILED MATERIALLY TO MEET THE ABOVE CONDITIONS OF THE BID SOLICITATION WHICH WERE DESIGNED TO ASSURE THAT THE PROCUREMENT WOULD BE MADE ON A FAIR COMPETITIVE BASIS.

IN REGARD TO YOUR ASSERTION THAT AID'S ACTIONS WENT BEYOND THE FUNCTION OF APPROVAL AND WERE TANTAMOUNT TO SELECTION IN DEROGATION OF THE PROVISIONS OF SECTION 112 OF THE FOREIGN AID AND RELATED AGENCIES APPROPRIATION ACT, 1963, YOU CONCEDE THAT THE RIGHT TO APPROVE CARRIES WITH IT A RIGHT TO DISAPPROVE. IT WOULD APPEAR THAT SUCH DISAPPROVAL IS PRECISELY WHAT AID HAS DONE HERE. AID, IN ITS REPORT TO OUR OFFICE OF MARCH 18, STATES THAT IT IS NOT ASSERTING THE RIGHT TO ,SELECT" THE CONTRACTOR, AND THE REPORT CONTINUES AS FOLLOWS:

" * * * ALL A.I.D. IS DOING IN INFORMING THE PPC THAT IT WILL NOT APPROVE AN AWARD TO THE GROVE JOINT VENTURE. WHAT THE PPC DOES THEN IS UP TO IT. OF COURSE, IF PPC NEVERTHELESS DECIDES TO AWARD THE CONTRACT TO THE GROVE JOINT VENTURE OR TO AWARD IT TO ANY OTHER AMERICAN FIRM UNDER PROCEDURES NOT APPROVED BY A.I.D. OR TO AWARD IT TO A NON-AMERICAN GROUP THE CONTRACT WOULD NOT BE FINANCED BY AMERICAN FUNDS. UNDOUBTEDLY, THEREFORE, THE AVAILABILITY OF AMERICAN FUNDS WILL BE AN IMPORTANT FACTOR IN WHATEVER DECISION PPC MAKES. THIS DOES NOT MEAN, HOWEVER, THAT A.I.D. IS BY ITS DECISION SELECTING THE CONTRACTOR.'

CARRIED TO ITS LOGICAL CONCLUSION, GROVE'S ARGUMENT, IN THOSE CASES INVOLVING ONLY TWO BIDDERS, WOULD PRECLUDE AID FROM REFUSING TO APPROVE A CONTRACTOR SELECTED BY THE BORROWER BECAUSE SUCH ACTION WOULD AMOUNT TO SELECTING THE OTHER BIDDER FOR THE AWARD OF THE CONTRACT. WE PERCEIVE NO LEGAL BASIS FOR GROVE'S POSITION WHICH WOULD RESULT IN THE ABSURD CONCLUSION THAT AID IS RENDERED INCAPABLE IN CASES INVOLVING ONLY TWO BIDDERS OF FOLLOWING THE MANDATE OF SECTION 112 THAT IT DIRECTLY APPROVE THE FIRM TO PROVIDE CONSTRUCTION SERVICES ON THE PROJECT.

ALTERNATIVELY, YOU CONTEND THAT EVEN IF IT IS ASSUMED AID'S ACTION IS AUTHORIZED BY THE FOREIGN ASSISTANCE ACT OF 1961 OR THE FOREIGN AID AND RELATED AGENCIES APPROPRIATIONS ACT, AID ACTED IMPROPERLY AND UNREASONABLY IN MAKING ITS DETERMINATION IN THIS CASE SINCE, IN EFFECT, AID SUPERIMPOSED NONAPPLICABLE UNITED STATES PROCUREMENT RULES ON A PROCUREMENT BY A FOREIGN GOVERNMENT CONTRARY TO PREVIOUS DECISIONS OF OUR OFFICE. YOU STATE THAT THE PPC REQUESTED AID TO APPROVE AN AWARD TO GROVE AND SINCE THE PPC RESERVED THE RIGHT IN THE SOLICITATION TO REJECT BIDS WHICH IT (NOT AID) DEEMED NONRESPONSIVE IT MUST BE ASSUMED THAT THE GOVERNMENT OF GREECE DID NOT CONSIDER THE GROVE BID NONRESPONSIVE UNDER ITS STANDARDS.

THE RECORD BEFORE US IS NOT CLEAR AS TO PRECISELY WHAT THE ATTITUDE OF THE GOVERNMENT OF GREECE IS ON THE QUESTION CONCERNING THE EFFECT OF THE NONRESPONSIVENESS OF GROVE'S BID. IN VIEW OF THE FACT THAT THE PPC MADE INQUIRIES AS TO WHETHER AID WOULD APPROVE AN AWARD TO GROVE, IT WOULD SEEM THAT THE GOVERNMENT OF GREECE WOULD PREFER TO AWARD THE CONTRACT TO GROVE IF AWARD IS TO BE MADE UNDER THE SOLICITATION WITH THE USE OF AID FUNDS. HOWEVER, THERE IS EVIDENCE IN THE RECORD TO INDICATE THAT THE GOVERNMENT OF GREECE UNDER ITS OWN PROCUREMENT RULES RECOGNIZES THAT THE GROVE BID IS NONRESPONSIVE. IT WILL BE RECALLED THAT BY LETTERS DATED FEBRUARY 3 AND 4, 1966, TO THE PPC, EBASCO RECOMMENDED THAT AWARD BE MADE TO GROVE "FOLLOWING RESOLUTION WITH THEM OF THE REQUESTED CHANGES IN CONTRACT LANGUAGE.' IN RESPONSE TO THESE LETTERS THE PPC BY LETTER DATED FEBRUARY 9, 1966, ADVISED EBASCO AS FOLLOWS:

"UPON DELIVERING YOUR FIRST ABOVE MENTIONED LETTER TO THE BID COMMITTEE FOR THE SUBJECT PROJECT, YOU ASSURED SAID COMMITTEE THAT THIS LETTER CONSTITUTED YOUR RECOMMENDATION REGARDING THE ABOVE BIDDING. WE HAVE CAREFULLY CONSIDERED ALL YOUR ABOVE LETTERS AND WE WISH TO ADVISE YOU OF THE FOLLOWING:

"SAID LETTERS DO NOT FORM AS THEY SHOULD, AN EVALUATION OF THE SUBMITTED BIDS IN COMPARISON WITH ONE ANOTHER, AS WELL AS WITH YOUR COST ESTIMATE. ALSO THEY DO NOT JUSTIFY THE SERIOUS DISCREPANCIES EXISTING BETWEEN THEM, AND THEREFORE RESULT TO CONCLUSIONS NOT ADEQUATELY JUSTIFIED AS TO WHAT SHOULD BE DONE IN ACCORDANCE WITH YOUR OPINION.

"WE SHOULD ALSO LIKE TO ADVISE, THAT THE JUSTIFICATIONS PRESENTED IN CONNECTION WITH THE SUBSTANTIAL DISCREPANCIES EXISTING BETWEEN YOUR 1965 AND 1966 COST ESTIMATES APPEAR TO US EXTREMELY INADEQUATE AND VAGUE. THIS IS THE MORE SO, AS THE SUBSTANTIAL MODIFICATIONS OF THE BID DOCUMENTS IN FAVOR OF CONTRACTOR, FOLLOWING A.I.D.'S INSTRUCTIONS, DO NOT APPEAR, IN ANY WAY, TO HAVE BEEN CONSIDERED.

"IN VIEW OF THE ABOVE, WE WISH TO REQUEST YOU, IN YOUR CAPACITY AS OUR CONSULTANTS, TO SUBMIT US A RESPONSIBLE AND WELL GROUNDED RECOMMENDATION REGARDING SUBJECT INVITATION, IN ORDER THAT IT BE SUBMITTED, TOGETHER WITH OUR PROPOSAL, TO THE BOARD OF DIRECTORS OF THE CORPORATION. * * *" IN ADDITION, A SUPPLEMENTAL REPORT FROM AID DATED MARCH 24, 1966, ADVISES THAT:

"2. THE REBUTTAL STATEMENT OF THE GROVE JOINT VENTURE SUGGESTS THAT THE ONLY OPTIONS NOW BEFORE PPC ARE TO UTILIZE THE SERVICES OF THE GROVE JOINT VENTURE WITHOUT A.I.D. FINANCING, TO USE THE PERINI CONSORTIUM WITH A.I.D. FINANCING, OR, PRESUMABLY, TO READVERTISE WITH A.I.D. APPROVAL. AS THE MEMBERS OF THE GROVE JOINT VENTURE ARE AWARE, PPC HAS ALWAYS HAD THE OPTION TO BUILD THIS PROJECT WITH GREEK OR OTHER NON-AMERICAN CONTRACTORS, AND HAS ALWAYS BEEN CAREFUL TO PRESERVE THAT OPTION. PPC HAS BEEN CONSTANTLY EXPLORING THE COST OF USING GREEK CONTRACTORS SO THAT IT MIGHT DETERMINE WHETHER THE LOWER COST INVOLVED IN USING GREEK CONTRACTORS WILL BE SUFFICIENTLY OFFSET BY THE ADVANTAGES ACCRUING FROM A.I.D. FINANCING TO JUSTIFY THE USE OF AMERICAN CONTRACTORS. PPC HAS NEVER ACTUALLY DETERMINED TO AWARD THE CONTRACT IN QUESTION TO THE GROVE JOINT VENTURE. AS INDICATED ON PAGES 5-6 OF A.I.D.'S STATEMENT IN RESPONSE TO THE GROVE PROTEST, PPC HAS MADE INQUIRIES AS TO WHETHER A.I.D. WOULD APPROVE AN AWARD TO THE GROVE JOINT VENTURE. IF PPC DECIDES TO UTILIZE A.I.D. FINANCING, IT WILL NATURALLY WANT TO ACCEPT THE LOWEST AMERICAN BID ACCEPTABLE TO A.I.D. WITH THE MODIFICATIONS WITHDRAWN, THE BID OF THE GROVE JOINT VENTURE IS CLEARLY THE LOW BID. THE QUESTION IS WHETHER A.I.D. CAN REFUSE TO COUNTENANCE PROCEDURES WHICH PERMIT A WITHDRAWAL OF MODIFICATIONS. WHAT PPC WILL OR WILL NOT ULTIMATELY DO IN THIS MATTER CANNOT BE ASCERTAINED AT THIS MOMENT. ALL THAT A.I.D. CAN DO IS TO INFORM THE PPC OF THE CONDITIONS UPON WHICH A.I.D. FINANCING WILL BE MADE AVAILABLE. THE REST IS UP TO THE PPC.'

"REGARDLESS OF THE ATTITUDE OF THE GOVERNMENT OF GREECE ON THE QUESTION OF THE EFFECT OF THE NONRESPONSIVENESS OF GROVE'S BID, WE ARE OF THE OPINION THAT AID'S DETERMINATION NOT TO APPROVE GROVE FOR AWARD IS FOUNDED UPON ADEQUATE AUTHORITY PROPERLY EXERCISED. AS NOTED PREVIOUSLY UNITED STATES PROCUREMENT RULES ARE NOT APPLICABLE TO THIS PROCUREMENT BUT THIS DOES NOT MEAN THAT NO RULES ARE APPLICABLE. WE THINK THAT THE MANDATE OF SECTION 611 (C) OF THE FOREIGN AID ASSISTANCE ACT OF 1961 EXPRESSES AN INTENT BY THE CONGRESS THAT AID, IN CARRYING OUT ITS FUNCTIONS UNDER THE ACT, SHOULD INSIST, AND TAKE STEPS TO INSURE, THAT CONTRACTS SUBJECT TO THE ACT WILL BE LET UNDER CERTAIN MINIMUM RULES OF FAIR PLAY AND COMPETITION. IT SEEMS TO US THAT ONE REASONABLE MINIMUM TEST FOR DETERMINING IF A PARTICULAR CONTRACT WILL BE MADE ON A "COMPETITIVE BASIS" IS WHETHER THE BIDDERS HAVE RECEIVED EQUAL TREATMENT UNDER THE GROUND RULES AND BIDDING CONDITIONS SET FORTH IN THE BID SOLICITATION DOCUMENTS. THIS TEST SEEMS TO HAVE BEEN ADOPTED BY AID IN ITS INTERNAL REGULATIONS, WHICH SET FORTH STANDARDS AND CRITERIA FOR AID PERSONNEL IN REVIEWING CONSTRUCTION CONTRACTS FOR APPROVAL. FOR EXAMPLE, AID MANUAL ORDER 1443.2 DATED DECEMBER 12, 1963, PROVIDES IN PART, AS FOLLOWS:

"I. PURPOSE

"THE PURPOSE OF THIS MANUAL ORDER IS TO PROVIDE STANDARDS AND CRITERIA TO GUIDE AID/W AND MISSION PERSONNEL IN THE REVIEW AND APPROVAL FOR FINANCING OF BORROWER/GRANTEE CONTRACTING FOR CONSTRUCTION SERVICES (INCLUDING MAJOR EQUIPMENT INSTALLATION). (IN THIS CONNECTION, SEE SEC. 112 OF THE FOREIGN AID AND RELATED AGENCIES APPROPRIATION ACT OF 1963, WHICH PROVIDES: * * *") IT IS INTENDED TO PROVIDE A USEFUL BASIS FOR ADVICE (DESIGNED TO FACILITATE AND EXPEDITE THE REVIEW PROCESS) TO BORROWER/GRANTEE PERSONNEL ENGAGED IN SUCH CONTRACTING.

"III TYPE OF CONTRACT

"IT IS AID POLICY TO APPROVE BORROWER/GRANTEE CONSTRUCTION CONTRACTS FOR FINANCING ONLY IF THEY ARE OF THE FIXED PRICE (LUMP-SUM OR UNIT PRICE) TYPE, AND LET ON THE BASIS OF COMPETITIVE SEALED BIDS, PUBLICLY OPENED. ANY EXCEPTION TO THIS POLICY REQUIRES PRIOR WRITTEN APPROVAL BY AID, BASED UPON WRITTEN JUSTIFICATION FOR THE EXCEPTION. WHENEVER SUCH AN EXCEPTION IS GRANTED BY AID, IT MUST SPECIFICALLY INDICATE THE EXTENT TO WHICH THE REQUIREMENTS OF THIS MANUAL ORDER SHALL NEVERTHELESS SUPPLY (SIC) AND MUST PRESCRIBE SUCH OTHER OR ADDITIONAL TERMS AND CONDITIONS OF APPROVAL AS MAY BE APPROPRIATE TO THE PROPOSED CONTRACT. ATTACHMENT R TO ANNEX A OF MANUAL ORDER 1263.1 DATED NOVEMBER 6, 1964, REFLECTS ALL THE REQUIREMENTS, PROCEDURES, AND POLICIES OF MANUAL ORDER 1443.2. THE MANUAL ORDER TRANSMITTAL LETTER DATED NOVEMBER 9, 1964, WHICH TRANSMITTED ATTACHMENT R STATES THAT "IT IS PLANNED THAT THIS ATTACHMENT WILL EVENTUALLY BE SUPPLANTED BY A COMPREHENSIVE AID REGULATION GOVERNING CAPITAL PROJECT PROCUREMENT AND CONTRACTING BY BORROWERS.' PERTINENT PROVISIONS OF ATTACHMENT R READ AS FOLLOWS:

"PROCEDURES AND REQUIREMENTS FOR APPROVAL OF CONSTRUCTION CONTRACTS

"I. INTRODUCTION

"THIS ATTACHMENT PROVIDES INSTRUCTIONS AND GUIDANCE TO THE BORROWER WITH RESPECT TO OBTAINING REQUIRED AID APPROVAL RELATING TO ITS CONTRACTING FOR CONSTRUCTION SERVICES TO BE FINANCED WITH AID LOAN FUNDS. "A. GENERAL REQUIREMENTS FOR AID APPROVAL

"1. REQUESTS FOR AID APPROVAL SHALL BE SUBMITTED BY THE BORROWER TO THE US AID IN THE BORROWER'S COUNTRY * * *

"2) THE BORROWER SHALL OBTAIN PRIOR APPROVAL BY AID OF THE INVITATION FOR BIDS (IFB) * * * BEFORE ISSUING THAT DOCUMENT * * *

"3. THE BORROWER SHALL OBTAIN PRIOR APPROVAL BY AID OF THE CONSTRUCTION CONTRACT AND OF THE PROPOSED AWARD. AID'S REVIEW WILL BE BASED ON THE PROVISIONS OF SECTIONS IV AND V BELOW.

"B. GENERAL REQUIREMENT FOR FORMAL COMPETITIVE BID PROCEDURE "1. METHOD OF CONTRACTING; TYPE OF CONTRACT

"THE BORROWER SHALL LET THE CONSTRUCTION CONTRACT IN STRICT COMPLIANCE WITH THE FORMAL COMPETITIVE BID PROCEDURE SPECIFIED BELOW. SUCH CONTRACTS SHALL BE OF THE FIXED-PRICE TYPE (LUMP SUM OR DERIVED FROM UNIT PRICES). AID WILL CONSIDER REQUESTS FOR EXCEPTIONS TO THESE REQUIREMENTS ONLY IN MOST UNUSUAL CIRCUMSTANCES AND WHERE SUPPORTED BY A DETAILED WRITTEN JUSTIFICATION SUBMITTED BY THE BORROWER.

"IV. RECEIPT AND PROCESSING OF BIDS AND MAKING OF AWARDS

"A. GENERAL

"BIDS RECEIVED PRIOR TO THE DATE AND TIME SET IN THE INVITATION FOR OPENING OF BIDS SHALL BE KEPT SECURE AND UNOPENED UNTIL SUCH TIME. AFTER PUBLIC OPENING, THE BIDS SHALL BE TABULATED AND RECORDED BY INVITATION NUMBER, DATE, NAME OF BIDDER AND OTHER APPROPRIATE IDENTIFICATION, AND WILL BE ANALYZED AND EVALUATED BY THE BORROWER'S ENGINEER, AFTER WHICH A SELECTION FOR PROPOSED AWARD WILL BE MADE. TO BE CONSIDERED FOR AWARD, A BID MUST COMPLY IN ALL MATERIAL RESPECTS WITH THE IFB. AWARD IS MADE TO THAT RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE IFB, IS LOWEST IN PRICE UNLESS ANOTHER BID IS DEMONSTRABLY MORE ADVANTAGEOUS TO THE BORROWER, BECAUSE OF ANY FACTOR (OTHER THEN PRICE) SET FORTH IN THE IFB AS A FACTOR TO BE CONSIDERED IN THE EVALUATION OF BIDS.

"B. REPORT ON BIDS; PROPOSED AWARD

"AFTER EVALUATION OF BIDS (UNLESS ALL BIDS ARE REJECTED AS UNRESPONSIVE TO THE IFB OR EXCESSIVE IN PRICE), THE BORROWER WILL SEND TO AID A COPY OF THE BID TABULATION AND OF THE ENGINEER'S ANALYSIS AND EVALUATION, AND WILL IDENTIFY THE BIDDER TO WHOM IT PROPOSES TO AWARD THE CONTRACT. WHERE THERE HAS NOT BEEN PRE-QUALIFICATION, THE BORROWER WILL ALSO FURNISH TO AID THE QUALIFYING INFORMATION SUBMITTED BY SUCH BIDDER IN RESPONSE TO THE IFB. WHERE THE PROPOSAL IS FOR AWARD TO A BIDDER OTHER THAN THE LOW BIDDER, THE BORROWER SHALL SUBMIT ALSO A DETAILED STATEMENT IN SUPPORT OF THE PROPOSED AWARD, (IDENTIFYING ANY FACTORS IN ADDITION TO PRICE TO WHICH CONSIDERATION WAS GIVEN AND THE WEIGHT GIVEN TO THEM) TOGETHER WITH COPIES OF THE BIDS (AND QUALIFYING INFORMATION WHERE THERE WAS NO PRE- QUALIFICATION) RECEIVED FROM THE BIDDER PROPOSED FOR AWARD AND ALL OTHER BIDDERS WHOSE BIDS ARE EQUAL TO OR LOWER THAN THAT OF THE BIDDER PROPOSED.' SECTION V OF THE ATTACHMENT PRESCRIBES CERTAIN PROVISIONS FOR INCLUSION IN THE CONTRACT AND NEED NOT CONCERN US HERE.

THE ABOVE MANUAL ORDERS ARE, IN OUR OPINION, A REASONABLE INTERNAL REGULATORY IMPLEMENTATION, FOR GUIDANCE OF AID PERSONNEL, OF THE REQUIREMENTS SET FORTH IN SECTION 611 (C) OF THE FOREIGN ASSISTANCE ACT OF 1961 AND SECTION 112 OF THE FOREIGN AID AND RELATED AGENCIES APPROPRIATION ACT, 1963. THE RULES PRESCRIBED IN THOSE ORDERS FOR APPROVING CONTRACTS PUT CONSIDERABLE EMPHASIS ON THE PRINCIPLE, WHICH IS INHERENT IN ALL COMPETITIVE PROCUREMENTS, THAT BIDS MUST CONFORM TO THE MATERIAL REQUIREMENTS OF THE BID SOLICITATION DOCUMENTS, AND THE PROVISIONS OF THE INVITATION IN THE INSTANT PROCUREMENT WOULD APPEAR TO BE IN CONFORMITY WITH MANUAL ORDERS. WHILE THE ORDERS DO PRESCRIBE A RATHER FORMALIZED BIDDING PROCEDURE WHICH MUST BE UTILIZED BY THE BORROWER BEFORE AID WILL GRANT ITS APPROVAL, WE CANNOT CONCLUDE THAT THEY GO BEYOND THE MANDATE IMPOSED BY THE CONGRESS THAT CONTRACTS SHALL, TO THE MAXIMUM EXTENT PRACTICABLE, BE MADE ON A "COMPETITIVE SIS.'

NOR DO WE THINK GROVE'S CONTENTIONS THAT THE PRESENT AID DETERMINATION IS INCONSISTENT WITH PRIOR AID DETERMINATIONS, EVEN IF CORRECT, IS CONTROLLING ON THE QUESTION OF WHETHER AID'S REFUSAL TO APPROVE GROVE IS LEGALLY IMPROPER. IN THAT CONNECTION AID IN ITS REPORT OF MARCH 18 STATES:

"* * * THE GROVE JOINT VENTURE IS CERTAINLY CORRECT IN NOTING THAT CONTRACTS HAVE BEEN AWARDED BY FOREIGN BORROWERS AND APPROVED BY A.I.D. DESPITE THE PRESENCE OF QUALIFIED OR OTHERWISE NON-RESPONSIVE BIDS. A.I.D. IS NOT ASSERTING, HOWEVER, THAT, DESIRABLE AS IT MIGHT BE, ALL NON- RESPONSIVE BIDS SHOULD BE REJECTED IN ALL CASES. WHERE ALL THE BIDS ARE UNRESPONSIVE AND INCAPABLE OF ACCURATE COSTING SUCH A COURSE OF ACTION IS NOT ALWAYS PRACTICABLE. THE A.I.D. DECISION IS BASED ON THE SPECIFIC FACTS OF THIS CASE AND WHAT WOULD BE FAIR AND IN ACCORD WITH STATUTORY DIRECTIVES IN THIS CASE. OF THE CASES CITED IN THE BRIEF OF THE GROVE JOINT VENTURE, THE KREMASTA DAM PROCUREMENT, THE KASTRAKI TURBINE PROCUREMENT (IN THE KASTRAKI TURBINE CASE BOTH BIDS WERE RESPONSIVE * * *), AND THE FIRST ROUND OF BIDDING ON THIS PARTICULAR PROJECT ARE ALL NON- COMPARABLE CASES. NONE OF THEM PRESENTED A CASE OF A HIGHLY QUALIFIED AND UNCOSTABLE BID BEING APPROVED IN THE FACE OF A COMPLETELY RESPONSIVE BID. THE ETHIOPIAN AIRFIELD PROCUREMENT, ABOUT WHICH A.I.D.'S FILES ARE SOMEWHAT INCOMPLETE, WAS AWARDED BEFORE THIS AGENCY WAS FORMED. CONSEQUENTLY, WHATEVER HAPPENED THEN, IT IS NOT THE MOST TIMELY PRECEDENT FOR THIS CASE.

"WITH RESPECT TO THE KREMASTA DAM DIVERSION TUNNEL, ALSO A PRE A.I.D. CASE, COMPLAINANTS CITE * * * A LETTER OF OCTOBER 19, 1961 FROM THE GENERAL COUNSEL OF THE DEVELOPMENT LOAN FUND, A PREDECESSOR AGENCY TO A.I.D. STATING THAT, * * * (SEE THE LETTER QUOTED ABOVE)

"* * * A READING OF THE LETTER WILL SHOW THAT IN POINT OF FACT DLF GAVE DETAILED EXAMINATION TO THE PROPOSED AWARD IN QUESTION * * * MOREOVER, THIS LETTER WAS WRITTEN IN 1961. SINCE FISCAL YEAR 1963, HOWEVER, A.I.D. HAS BEEN SPECIFICALLY REQUIRED BY SECTION 112 OF THE APPROPRIATIONS ACT TO "APPROVE" ALL AWARDS. THERE WAS NO SUCH REQUIREMENT PREVIOUSLY. FURTHERMORE, WHATEVER A.I.D., OR ANY PREDECESSOR AGENCY, MAY OR MAY NOT HAVE DONE IN THE PAST THERE IS NOTHING TO PREVENT A.I.D. FROM ATTEMPTING TO REACH, IN THE BEST INTERESTS OF THE UNITED STATES, A FAIR AND PRACTICAL DECISION IN THIS CASE.'

WHILE YOUR REBUTTAL BRIEF OF MARCH 22, 1966, TAKES EXCEPTION TO THE ACCURACY OF THE AID REPORT IN REGARD TO THE FACTUAL SITUATIONS INVOLVED IN THE FOUR CASES OF PREVIOUS AID DETERMINATIONS, THERE IS NOTHING IN THE RECORD BEFORE US TO INDICATE THAT AID'S REPORT IS INACCURATE AND YOU OFFER NO EVIDENCE TO SUBSTANTIATE YOUR BARE ALLEGATIONS IN THIS RESPECT. IN ANY EVENT, EVEN IF YOUR ALLEGATIONS ARE CORRECT, THEY DO NOT PROVIDE A SUFFICIENT BASIS FOR DISAGREEING WITH AID'S CONCLUSION THAT THERE IS NOTHING TO PREVENT AID FROM ATTEMPTING TO REACH, IN THE BEST INTERESTS OF THE UNITED STATES, A FAIR AND PRACTICAL DECISION IN THIS CASE.

DURING A CONFERENCE HELD IN OUR OFFICE ON MARCH 25, 1966, A REPRESENTATIVE OF GROVE SHEPHERD WILSON AND KRUGE, INC., REPRESENTED TO US THAT, IN EFFECT, THE GROVE JOINT VENTURE BID WAS QUALIFIED BY GROVE BECAUSE (1) IT (GROVE) HAD BEEN LED TO BELIEVE, BASED ON PAST PRACTICES OF AID IN APPROVING NONRESPONSIVE BIDS, THAT A QUALIFIED BID WOULD NOT BE REJECTED, AND (2) GROVE WAS APPREHENSIVE ON THE LEGAL EFFECT THAT MIGHT BE GIVEN TO THE CONTRACTUAL LANGUAGE EMPLOYED BY THE COURTS OF A FOREIGN COUNTRY.

WITH RESPECT TO THE FIRST REPRESENTATION, IT NEED ONLY BE NOTED THAT THE BID SOLICITATION DOCUMENTS WERE EXPLICIT IN WARNING BIDDERS THAT ANY BID DEEMED UNRESPONSIVE OR IRREGULAR WOULD BE REJECTED AND THAT NO SUBMITTED BID COULD BE AMENDED, SUPPLEMENTED OR WITHDRAWN FOR ANY REASON OR CAUSE WHATSOEVER. ACCORDINGLY, WE MUST CONCLUDE THAT GROVE KNEW, OR SHOULD HAVE KNOWN, THAT NONRESPONSIVE BIDS WERE NOT ACCEPTABLE. BE THAT AS IT MAY, HOWEVER, WE ARE RECOMMENDING TO AID BY LETTER OF TODAY, COPY ENCLOSED, THAT STEPS BE TAKEN TO PUBLISH IN THE FEDERAL REGISTER THOSE PORTIONS OF ITS MANUAL ORDERS RELATING TO AID APPROVAL OF CONTRACTS AND CONTRACTORS. WE FEEL THAT THE PUBLICATION OF THESE ORDERS, THUS MAKING THEM AVAILABLE TO THE CONSTRUCTION INDUSTRY INTERESTED IN BIDDING ON AID ASSISTED FOREIGN GOVERNMENT PROCUREMENTS, SHOULD DO MUCH TO DISPEL ANY FUTURE UNCERTAINTIES REGARDING AID'S APPROVAL CRITERIA AND POLICIES.

WITH RESPECT TO THE SECOND REPRESENTATION, IT IS NOTED THAT SOME OF THE MODIFICATIONS TO THE GROVE BID WERE OF A SUBSTANTIVE NATURE AFFECTING THE RIGHTS AND OBLIGATIONS OF THE PARTIES AND NOT MERELY DESIGNED TO "CLARIFY" CONTRACTUAL LANGUAGE. MOREOVER, AS TO THOSE MODIFICATIONS WHICH COULD BE CONSIDERED AS CLARIFICATION OF THE CONTRACTUAL LANGUAGE USED, THE BID INVITATION (SECTION VII "EXAMINATION OF BID DOCUMENTS") ADVISED BIDDERS OF THE PROCEDURE TO BE FOLLOWED SHOULD THEY FIND DISCREPANCIES OR OMISSIONS IN THE BID DOCUMENTS, OR SHOULD THE INTENT OR MEANING OF THE DOCUMENTS APPEAR TO BE OBSCURE AND AMBIGUOUS. THIS PROCEDURE WAS NOT FOLLOWED AND GROVE HAS OFFERED NO SATISFACTORY REASON FOR FAILURE TO UTILIZE THE PROCEDURE SPECIFIED. IN THAT CONNECTION, WE NOTE THAT THE BID INVITATION DOCUMENTS WERE APPARENTLY IN GROVE'S POSSESSION FOR APPROXIMATELY TWO AND ONE HALF MONTHS BEFORE BIDS WERE OPENED JANUARY 27, 1966.

IN VIEW OF THE FOREGOING ANALYSIS, WE MUST CONCLUDE THAT THERE IS NO LEGAL BASIS UPON WHICH OUR OFFICE CAN EITHER REQUIRE AID TO APPROVE THE GROVE JOINT VENTURE AS THE CONTRACTOR FOR THE PROJECT, OR TO CANCEL AND READVERTISE THE ENTIRE PROCUREMENT. ACCORDINGLY, YOUR PROTEST MUST BE DENIED.