B-163094, JUL. 25, 1968

B-163094: Jul 25, 1968

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INC.: FURTHER REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 11. THE AMOUNT OF WHICH WAS PARTIALLY FUNDED UNDER A GRANT MADE PURSUANT TO TITLE II OF THE LIBRARY SERVICES AND CONSTRUCTION ACT (20 U.S.C. 355A-355D). ONE OF THE PROCEDURES WHICH THE STATE IS REQUIRED TO FOLLOW IN APPROVING CONSTRUCTION PROJECTS UNDER TITLE II OF THE LIBRARY SERVICES AND CONSTRUCTION ACT IS SET FORTH IN THE RULES AND REGULATIONS AT 45 CODE OF FEDERAL REGULATIONS (CFR) SEC. 130.79: "ALL CONTRACTS FOR PUBLIC LIBRARY CONSTRUCTION (AS DEFINED IN SEC. 130.1 (I) ( SHALL BE AWARDED TO THE LOWEST QUALIFIED BIDDER ON THE BASIS OF OPEN COMPETITIVE BIDDING: PROVIDED HOWEVER. THAT IF ONE OR MORE ITEMS OF CONSTRUCTION ARE COVERED BY AN ESTABLISHED ALTERNATIVE PROCEDURE.

B-163094, JUL. 25, 1968

TO HAYS AND NICOULIN, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 11, 1967, WITH ENCLOSURES, PROTESTING THE AWARD OF A CONTRACT BY THE LIBRARY BOARD OF FLOYD COUNTY, INDIANA, TO THE EARL EMBREY CONSTRUCTION COMPANY, FOR THE CONSTRUCTION OF THE NEW ALBANY-FLOYD LIBRARY, THE AMOUNT OF WHICH WAS PARTIALLY FUNDED UNDER A GRANT MADE PURSUANT TO TITLE II OF THE LIBRARY SERVICES AND CONSTRUCTION ACT (20 U.S.C. 355A-355D).

UNDER THAT STATUTE, THE UNITED STATES COMMISSIONER OF EDUCATION ALLOTS, IN ACCORDANCE WITH A STATUTORY FORMULA, FEDERAL FUNDS TO STATES UNDER STATE PLANS APPROVED BY THE COMMISSIONER AS MEETING CERTAIN REQUIREMENTS PRESCRIBED BY THE STATUTE. THE STATE THEN APPROVES PROJECTS FOR THE CONSTRUCTION OF PUBLIC LIBRARY FACILITIES IN ACCORDANCE WITH POLICIES AND PROCEDURES SET FORTH IN THE STATE PLAN AS REQUIRED BY THE STATUTE,AND USES THE FEDERAL FUNDS ALLOTTED TO IT FOR A CERTAIN PERCENTAGE OF THE TOTAL COST OF THE PROJECT, BUT NOT TO EXCEED THE MAXIMUM FEDERAL SHARE FOR THE STATE AS DETERMINED BY THE COMMISSIONER PURSUANT TO THE STATUTE. ONE OF THE PROCEDURES WHICH THE STATE IS REQUIRED TO FOLLOW IN APPROVING CONSTRUCTION PROJECTS UNDER TITLE II OF THE LIBRARY SERVICES AND CONSTRUCTION ACT IS SET FORTH IN THE RULES AND REGULATIONS AT 45 CODE OF FEDERAL REGULATIONS (CFR) SEC. 130.79:

"ALL CONTRACTS FOR PUBLIC LIBRARY CONSTRUCTION (AS DEFINED IN SEC. 130.1 (I) ( SHALL BE AWARDED TO THE LOWEST QUALIFIED BIDDER ON THE BASIS OF OPEN COMPETITIVE BIDDING: PROVIDED HOWEVER, THAT IF ONE OR MORE ITEMS OF CONSTRUCTION ARE COVERED BY AN ESTABLISHED ALTERNATIVE PROCEDURE, CONSISTENT WITH STATE AND LOCAL LAWS AND REGULATIONS, WHICH IS APPROVED BY THE STATE AGENCY AS DESIGNED TO ASSURE CONSTRUCTION IN AN ECONOMICAL MANNER CONSISTENT WITH SOUND BUSINESS PRACTICE, SUCH ALTERNATIVE PROCEDURE MAY BE FOLLOWED.'

IN A LETTER TO THE OFFICE OF EDUCATION DATED NOVEMBER 14, 1967, YOU STATE THE FOLLOWING INFORMATION. ON OCTOBER 31, 1967, YOUR FIRM SUBMITTED A BID FOR THE CONSTRUCTION OF THE NEW ALBANY-FLOYD LIBRARY. ALTHOUGH YOUR BID WAS $29,700 LOWER THAN THE BID SUBMITTED BY THE EARL EMBREY CONSTRUCTION COMPANY, THE SECOND LOW BIDDER, YOU CONTEND YOUR BID WAS REJECTED BECAUSE YOU FAILED TO SUBMIT WITH THE BID AN INDIANA QUALIFYING FORM WHICH WAS REQUIRED BY THE INVITATION. IT IS YOUR CONTENTION THAT THE FAILURE TO SUBMIT THIS FORM WAS AN INFORMALITY WHICH SHOULD HAVE BEEN WAIVED BY THE LIBRARY BOARD. YOU STATE THAT THE ARCHITECT RECOMMENDED TO THE BOARD THAT YOUR LOW BID BE ACCEPTED SINCE A BID AND PERFORMANCE BOND ALONG WITH A NONCOLLUSION AFFIDAVIT WERE SUBMITTED WITH YOUR BID. YOU STATE THAT THE INDIANA QUALIFYING FORM REQUESTS CERTAIN INFORMATION CONCERNING THE CONTRACTOR'S PERFORMANCE RECORDS, LISTS OF EQUIPMENT, FINANCIAL STATEMENTS, ETC., BUT BEARS NO RELATION TO THE LOW BID. YOU FURTHER ALLEGE THAT YOU WERE INVITED BY THE ARCHITECT TO BID ON THIS PROJECT AND HE WAS COMPLETELY AWARE OF YOUR FIRM'S REPUTATION AS A RELIABLE, COMPETENT AND FINANCIALLY SOUND CONTRACTOR AND THAT IT WAS ON THIS BASIS THAT HE RECOMMENDED TO THE BOARD THAT YOU BE GIVEN THE AWARD BASED ON YOUR LOW BID. IT IS YOUR VIEW THAT THE FAILURE OF THE LIBRARY BOARD TO AWARD THE CONTRACT TO YOUR FIRM WAS IMPROPER AND RESULTED IN THE UNNECESSARY EXPENDITURE OF $29,700 OF FEDERAL AND LOCAL FUNDS.

A REPORT ON THIS CASE FROM THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE (HEW) INDICATES THAT ON NOVEMBER 20, 1967, THE COMPLAINT FROM MR. MOON WAS DISCUSSED BY TELEPHONE WITH MISS MARCELLE K. FOOTE, FORMERLY THE HEAD OF THE EXTENSION DEPARTMENT AND NOW DIRECTOR OF THE INDIANA STATE LIBRARY. SHE REPORTED THAT THE INDIANA QUALIFYING FORM IS REQUIRED BY THE STATE OF INDIANA. SHE FURTHER REPORTED THAT YOUR BID DID NOT INCLUDE INSULATING THE BUILDING AS A SEPARATE ITEM AS REQUESTED BY THE LOCAL LIBRARY BOARD; THAT THE PERFORMANCE BOND WAS INADEQUATE; AND THAT THE ARCHITECT DID NOT RECOMMEND THAT THE AWARD BE MADE TO THE LOW BIDDER AS REPORTED BY MR. MOON. FOR THESE REASONS, THE LOCAL ATTORNEY AND BOARD DECIDED TO AWARD THE CONTRACT TO THE SECOND LOW BIDDER. ON THE BASIS OF THIS INFORMATION, HEW HAS ADVISED THAT THE EXERCISE OF THE GRANTEE'S JUDGMENT IN THE MAKING OF THE AWARD TO THE SECOND LOW BIDDER WAS WITHIN THE AMBIT OF ITS DISCRETION UNDER 45 CFR 130.79.

UNDER THE INDIANA FORMULA FOR DETERMINING THE AMOUNT OF FEDERAL FUNDS WHICH MAY BE ALLOTTED TO ANY GIVEN PROJECT, FLOYD COUNTY WAS ENTITLED TO A MAXIMUM AMOUNT OF $481,000 DURING FISCAL YEAR 1968, OR ABOUT 31 PERCENT OF THE TOTAL COST OF THE $1,557,250 PROJECT. THIS PERCENTAGE IS CONSIDERABLY BELOW 49.11 PERCENT, THE MAXIMUM FEDERAL SHARE PROMULGATED BY THE COMMISSIONER FOR INDIANA FOR FISCAL YEAR 1968. (31 FEDERAL REGISTER 12734, SEPTEMBER 29, 1966.) THIS MAXIMUM AMOUNT OF $481,000 FOR THE FLOYD COUNTY PROJECT WAS FIXED BY THE STATE OF INDIANA LONG IN ADVANCE OF THE BIDDING PROCESS. THEREFORE, THE DIFFERENCE BETWEEN THE LOW BID SUBMITTED BY YOUR FIRM AND THE SECOND LOW BID ACCEPTED BY THE LOCAL LIBRARY AGENCY IN FLOYD COUNTY MADE NO DIFFERENCE IN THE AMOUNT OF FEDERAL FUNDS AVAILABLE FOR USE IN THE PROJECT. WHILE THIS FACTOR WOULD NOT EXCUSE THE STATE FOR A VIOLATION OF 45 CFR 130.79 OR ANY OTHER REGULATION, IN THE EVENT A VIOLATION DID OCCUR, IT DOES SHOW THAT THE DECISION ON THE PART OF THE GRANTEE TO ACCEPT THE SECOND LOW BID RATHER THAN THE LOWEST BID WAS AT THE EXPENSE OF THE GRANTEE AND NOT THE FEDERAL GOVERNMENT. THIS FACTOR, COUPLED WITH HEW'S VIEW THAT THE GRANTEE'S ACTION DID NOT CONSTITUTE A FAILURE TO COMPLY WITH 45 CFR 130.79, IS THE REASON WHY YOU WERE ADVISED IN A LETTER OF NOVEMBER 30, 1967, THAT THIS PROBLEM WAS ONE WHICH WOULD HAVE TO BE RESOLVED BY THE STATE OF INDIANA ITSELF AND NOT THE FEDERAL GOVERNMENT.

WE BELIEVE THAT THE AUTHORITY OF THE COMMISSIONER OF EDUCATION WITH RESPECT TO GRANTS UNDER TITLE II OF THE LIBRARY SERVICES AND CONSTRUCTION ACT, 20 U.S.C. 355A-355D, IS SOMEWHAT SIMILAR TO THAT OF THE COMMISSIONER OF EDUCATION IN ADMINISTERING GRANTS UNDER TITLE I OF THE HIGHER EDUCATION FACILITIES ACT OF 1963, 20 U.S.C. 711, ET SEQ. WE HAVE HELD THAT RECOGNITION MUST BE GIVEN TO THE PRIMARY AUTHORITY OF THE COMMISSIONER OF EDUCATION TO DETERMINE COMPLIANCE WITH THE REGULATIONS PROMULGATED UNDER THE HIGHER EDUCATION FACILITIES ACT OF 1963. SEE B 161570, JANUARY 29, 1968. OUR OFFICE HAS ALSO RECOGNIZED THE PRIMARY AUTHORITY OF THE SURGEON GENERAL IN ADMINISTERING GRANTS UNDER THE HILL-BURTON ACT, AS AMENDED, 42 U.S.C. 291, ET SEQ. SEE B-141932, MAY 2, 1960; B-151187, JULY 11, 1963; AND B-161681, AUGUST 11, 1967. WE LIKEWISE BELIEVE THAT RECOGNITION MUST BE GIVEN TO THE PRIMARY AUTHORITY OF THE COMMISSIONER OF EDUCATION TO DETERMINE COMPLIANCE WITH THE REGULATIONS PROMULGATED UNDER THE LIBRARY SERVICES AND CONSTRUCTION ACT.