B-163845, APR. 17, 1968

B-163845, APR. 17, 1968

TO FOREST-GERIS:

REFERENCE IS MADE TO YOUR TELEGRAM OF MARCH 19, 1968, AND LETTER OF MARCH 28, 1968, FROM YOUR ATTORNEY TO THE FEDERAL AVIATION ADMINISTRATION (FAA), PROTESTING AGAINST THE REJECTION OF YOUR BID WHICH RESULTED FROM THE ACTION OF FAA IN CANCELLING INVITATION FOR BIDS NO. CE00-8-6 FOR THE CONSTRUCTION OF AN AIR TRAFFIC CONTROL TOWER AT DETROIT CITY AIRPORT, DETROIT, MICHIGAN, AND READVERTISING THE PROCUREMENT.

THE INVITATION IN QUESTION WHICH WAS ISSUED SEPTEMBER 19, 1967, BY THE FAA CENTRAL REGION IN KANSAS CITY, MISSOURI, CONTAINED MINIMUM WAGE DETERMINATION NO. AH-472 ISSUED BY THE DEPARTMENT OF LABOR ON AUGUST 31, 1967, EFFECTIVE THROUGH DECEMBER 30, 1967. BIDS WERE OPENED AS SCHEDULED ON OCTOBER 23, 1967. FIVE BIDS WERE RECEIVED. THE LOWEST BID AT $670,000 WAS THAT OF FOREST-GERIS, A JOINT VENTURE OF FOREST BUILDERS, INC., PITTSBURGH, AND A. GERIS, INC., CHESWICK, PENNSYLVANIA.

DURING THE EARLY PART OF OCTOBER 1967, ALL PROCUREMENT OBLIGATIONS AND EXPENDITURES OF FAA WERE CURTAILED EXCEPT THOSE WHICH MET CERTAIN TESTS OF ESSENTIALITY. IT IS REPORTED THAT SINCE IT SEEMED LIKELY THAT AWARD WOULD NOT BE MADE WITHIN THE 60-DAY BID ACCEPTANCE PERIOD, THE CONTRACTING OFFICER REQUESTED AND OBTAINED A 60-DAY EXTENSION FROM THE TWO LOWEST BIDDERS; THAT IN THE LATTER PART OF JANUARY 1968 THE CENTRAL REGION WAS AUTHORIZED TO PROCEED WITH ACTION ON THE INVITATION FOR BIDS SUBJECT TO THE CONDITION THAT GOVERNMENT EXPENDITURES ON THE CONTRACT DURING FISCAL YEAR 1968 WOULD BE LIMITED TO $25,000; AND THAT MAY 15, 1968, WAS THUS ESTABLISHED AS THE APPROXIMATE DATE ON WHICH THE NOTICE TO PROCEED WOULD BECOME EFFECTIVE.

ON FEBRUARY 2, 1968, THE CONTRACTING OFFICER DETERMINED THAT FOREST GERIS WAS A RESPONSIBLE PROSPECTIVE CONTRACTOR AND BY LETTER OF THE SAME DATE ADVISED THE JOINT VENTURE AS FOLLOWS: "IN CONNECTION WITH YOUR BID, WE HAVE PREPARED THE PROPOSED CONTRACT (NO. FA68CE-3550) AND ARE ENCLOSING THE FOLLOWING CONTRACTUAL DOCUMENTS, IN TRIPLICATE, FOR YOUR REVIEW, EXECUTION, AND RETURN OF ALL COPIES:

1. CONSTRUCTION CONTRACT U.S. STANDARD FORM NO. 23

2. PERFORMANCE BOND U.S. STANDARD FORM NO. 25

3. PAYMENT BOND U.S. STANDARD FORM NO. 25A "IT IS REQUESTED THAT THE CONTRACT BE SIGNED ON THE REVERSE SIDE OF SF-23 BY AN AUTHORIZED OFFICER. THE BOND FORMS MUST BE EXECUTED BY THE PRINCIPAL AND SURETY, IN ACCORDANCE WITH INSTRUCTIONS ON THE REVERSE SIDE OF THE FORMS, ALL SIGNATURES ATTESTED AND SEALS AFFIXED IN THE SPACE PROVIDED THEREFOR. "ALL ENCLOSURES SHALL BE RETURNED TO THIS OFFICE AT THE EARLIEST POSSIBLE DATE, BUT NO LATER THAN TEN DAYS FROM RECEIPT, FOR FURTHER PROCESSING BY THE GOVERNMENT. UPON COMPLETION OF EXECUTION, A COPY OF THE CONTRACT AND BONDS WILL BE RETURNED FOR YOUR RETENTION. "YOU WILL BE FURTHER CONTACTED ABOUT THE PRE-CONSTRUCTION ETING.' THE BONDS WERE EXECUTED BY AN ACCEPTABLE SURETY ON FEBRUARY 7, 1968, AND SIGNED COPIES OF ALL FORMS WERE RETURNED TO THE CONTRACTING OFFICER. BY LETTER DATED FEBRUARY 12, 1968, FORWARDING THEIR AFFIRMATIVE ACTION PROGRAM GOREST-GERIS MADE THE FOLLOWING STATEMENT:

"ENCLOSED HEREWITH IS THE AFFIRMATIVE ACTION PROGRAM FOR EQUAL EMPLOYMENT OPPORTUNITY UNDER EXECUTIVE ORDER 11246 CONTEMPLATED FOR USE UNDER THE SUBJECT PROJECT IF AN AWARD WILL BE MADE.'

UNDER SUBPART 2-50.203-2 (A) OF THE FEDERAL AVIATION ADMINISTRATION PROCUREMENT MANUAL PROCUREMENT ACTIONS OVER $250,000 BUT NOT OVER $1 MILLION ARE REQUIRED TO BE APPROVED BY THE ASSOCIATE ADMINISTRATOR FOR DEVELOPMENT PRIOR TO THEIR EXECUTION BY THE CONTRACTING OFFICER. THE WASHINGTON OFFICE'S REVIEW OF THE PROPOSED CONTRACT SHOWED THAT THE CONTRACTING OFFICER HAD, ON THE REVERSE OF THE CONSTRUCTION CONTRACT FORM, DELETED THE WAGE DETERMINATION ISSUED WITH THE INVITATION AND SUBSTITUTED WAGE DETERMINATION NO. AH-8-143 DATED DECEMBER 31, 1967, AND EFFECTIVE THROUGH APRIL 30, 1968. THE LATTER DETERMINATION CONTAINS RATES FOR SOME CLASSIFICATIONS HIGHER THAN THOSE CONTAINED IN THE ADVERTISED DETERMINATION. BY SIGNING THE CONSTRUCTION CONTRACT FORM, YOU AGREED TO PAY THE HIGHER RATES. HOWEVER, THE GOVERNMENT NEVER EXECUTED IT. SINCE THE WAGE RATE CONTAINED IN THE ADVERTISED SPECIFICATIONS HAD EXPIRED WITHOUT ANY ACCEPTANCE OF YOUR BID AS SUBMITTED, AND THE DEPARTMENT OF LABOR HAD REFUSED TO ISSUE AN EXTENSION THEREOF, THE INVITATION WAS CANCELLED AND THE PROCUREMENT WAS READVERTISED.

YOU PROTEST AGAINST SUCH ACTION ON THE BASES (1) THAT SINCE THE CONTRACTOR HAS AGREEMENTS WITH LABOR UNIONS CALLING FOR THE PAYMENT OF MINIMUM WAGES AT RATES HIGHER THAN THOSE CALLED FOR IN THE EXPIRED WAGE RATE DETERMINATION, THE DEPARTMENT OF LABOR UPON REQUEST WILL READILY EXTEND THE EFFECTIVE PERIOD OF SUCH DETERMINATION TO INCLUDE THE DATE OF AWARD AND (2) THAT THE CONTRACT HAD ALREADY BEEN AWARDED TO FOREST GERISBEFORE CANCELLATION OF THE INVITATION.

WITH REGARD TO THE FIRST BASIS OF YOUR PROTEST, AS STATED ABOVE, THE DEPARTMENT OF LABOR HAS IN FACT ADVISED FAA THAT IT WOULD NOT EXTEND THE EFFECTIVE PERIOD OF WAGE RATE DETERMINATION NO. AH-8-472 EXCEPT UPON CONDITION THAT THE CONTRACTOR WOULD AGREE TO BE BOUND BY THE RATES INCLUDED IN THE LATER DETERMINATION. IT WOULD APPEAR THAT YOUR CONTENTIONS IN THIS RESPECT SHOULD HAVE BEEN ADDRESSED TO THAT DEPARTMENT RATHER THAN TO THIS OFFICE. THE LABOR DEPARTMENT REGULATION INVOLVED, NAMELY 29 CFR 5.4 (A), PROVIDES THAT WAGE DETERMINATIONS INITIALLY ISSUED SHALL BE EFFECTIVE FOR 120 CALENDAR DAYS FROM THE DATE OF DETERMINATION. THE REGULATION PROVIDES THAT IF A WAGE DETERMINATION IS NOT USED IN THE PERIOD OF ITS EFFECTIVENESS, IT IS VOID. IF IT APPEARS THAT A WAGE DETERMINATION MAY EXPIRE BETWEEN BID OPENING AND AWARD, AGENCIES ARE INSTRUCTED TO REQUEST A NEW WAGE DETERMINATION SUFFICIENTLY IN ADVANCE OF THE BID OPENING TO ASSURE PRIOR RECEIPT THERETO. THE REGULATIONS ALSO PROVIDE THAT, WHEN DUE TO UNAVOIDABLE CIRCUMSTANCES A DETERMINATION EXPIRES BEFORE AWARD AND AFTER BID OPENING, THE SOLICITOR OF LABOR UPON A WRITTEN FINDING TO THAT EFFECT BY THE HEAD OF THE FEDERAL AGENCY IN INDIVIDUAL CASES MAY EXTEND THE EXPIRATION DATE OF A DETERMINATION WHENEVER HE FINDS IT NECESSARY AND PROPER IN THE PUBLIC INTEREST TO PREVENT INJUSTICE OR UNDUE HARDSHIP OR TO AVOID SERIOUS IMPAIRMENT IN THE CONDUCT OF GOVERNMENT BUSINESS, BUT SUCH ACTION APPEARS TO BE IN THE SOLE DISCRETION OF THE SOLICITOR.

THE DAVIS-BACON ACT, 40 U.S.C. 276A, REQUIRES THAT "THE ADVERTISED SPECIFICATIONS FOR EVERY CONTRACT IN EXCESS OF $2,000 * * * FOR CONSTRUCTION * * * SHALL CONTAIN A PROVISION STATING THE MINIMUM WAGES TO BE PAID VARIOUS CLASSES OF LABORERS AND MECHANICS WHICH SHALL BE BASED UPON THE WAGES THAT WILL BE DETERMINED BY THE SECRETARY OF LABOR TO BE PREVAILING * * *.' IN CONSTRUING THIS STATUTORY LANGUAGE, WE HAVE HELD THAT, AS A GENERAL RULE, THE MINIMUM WAGE RATES SO REQUIRED CANNOT BE INCORPORATED IN A CONTRACT IN ANY WAY OTHER THAN AS STIPULATED IN THE STATUTE -- THAT IS BY INCLUSION IN THE SPECIFICATIONS UPON WHICH BIDS OR PROPOSALS LEADING TO THE CONTRACT WERE INVITED. 40 COMP. GEN. 565; 42 ID. 410. WE HAVE ALSO HELD THAT A SPECIFICATION PROVISION THAT CONTRACTORS SHALL PAY MINIMUM WAGE RATES AS DETERMINED BY THE SECRETARY OF LABOR, WHETHER SUCH DETERMINATIONS ARE RECEIVED BEFORE OR AFTER BID OPENING, WOULD NOT BE IN ACCORDANCE WITH THE STATUTE. 40 COMP. GEN. 48. THEREFORE, WE CONCLUDE THAT THE AWARD OF A CONTRACT ON THE BASIS OF A WAGE DETERMINATION OTHER THAN THE ONE ADVERTISED IN THE BID INVITATION OR AMENDMENT THEREOF ISSUED PRIOR TO BID OPENING IS NOT IN ACCORDANCE WITH THE DAVIS-BACON ACT AND AS SUCH IS CONTRARY TO LAW. 44 COMP. GEN. 776. IN ADDITION, AN AWARD MADE ON THE BASIS ORIGINALLY CONTEMPLATED BY THE CONTRACTING OFFICER IN THIS INSTANCE WOULD NOT BE AN AWARD BASED UPON THE BID SUBMITTED BUT UPON TERMS NEGOTIATED AFTER BID OPENING AND WOULD THEREFORE VIOLATE THE BASIC PRINCIPLES OF THE COMPETITIVE BIDDING PROCEDURE. ACCORDINGLY, AN AWARD PROPERLY COULD NOT HAVE BEEN MADE ON SUCH A BASIS. B-162944, DECEMBER 8, 1967.

REGARDING THE SECOND BASIS FOR YOUR PROTEST, IT IS WELL ESTABLISHED THAT WHILE THE ACCEPTANCE OF A CONTRACTOR'S OFFER OR PROPOSAL BY AN AUTHORIZED CONTRACTING OFFICER OF THE GOVERNMENT RESULTS IN THE FORMATION OF A VALID AND BINDING CONTRACT BETWEEN THE PARTIES, EVEN THOUGH IT IS CONTEMPLATED THAT THE TERMS THEREOF ARE TO BE INCORPORATED SUBSEQUENTLY INTO A FORMAL WRITTEN AGREEMENT, SUCH ACCEPTANCE OF THE CONTRACTOR'S OFFER MUST BE CLEAR AND UNCONDITIONAL AND IT ALSO MUST APPEAR THAT BOTH PARTIES INTENDED TO MAKE A BINDING AGREEMENT AT THE TIME OF THE ACCEPTANCE OF THE CONTRACTOR'S BID. SEE 21 COMP. GEN. 605 AND THE AUTHORITIES CITED THEREIN. CONSIDERING THE FACTS IN THE PRESENT CASE IN THE LIGHT OF THE ABOVE PRINCIPLES IT APPEARS THAT WHILE BY THE LETTER OF FEBRUARY 2, 1968, ABOVE, THE CONTRACTING OFFICER TRANSMITTED CERTAIN FORMS, INCLUDING ONE FOR A "PROPOSED CONTRACT," FOR REVIEW AND EXECUTION BY FOREST-GERIS, NOWHERE IN SUCH LETTER WAS THERE CONTAINED ANY STATEMENT THAT YOUR BID HAD BEEN ACCEPTED OR THAT AN AWARD HAD BEEN MADE. IN FACT THE RECORD CLEARLY DEMONSTRATES THAT FOREST-GERIS UNDERSTOOD THE AWARD NOT TO HAVE BEEN MADE AS YET, SINCE ITS LETTER OF FEBRUARY 12, 1968, ABOVE, CONTAINED THE STATEMENT THAT THE ENCLOSED AFFIRMATIVE ACTION PROGRAM WAS CONTEMPLATED FOR USE "IF AN AWARD WILL BE MADE.' IN ANY EVENT, THE CONTRACTING OFFICER'S LETTER OF FEBRUARY 2, 1968, CANNOT BE CONSIDERED AS AN UNCONDITIONAL ACCEPTANCE OF YOUR BID SINCE THE CONTRACT TRANSMITTED THEREWITH CONTAINED MINIMUM WAGE RATES DIFFERING FROM THOSE UPON WHICH YOU HAD BID, AND YOU COULD NOT HAVE BEEN BOUND THEREBY WITHOUT YOUR CONSENT. AT MOST THE LETTER AND ATTACHED CONTRACT CONSTITUTED A COUNTEROFFER, WHICH WAS UNAUTHORIZED BY AND CONTRARY TO THE REQUIREMENTS OF THE PROCUREMENT LAWS. IN ADDITION, ANY AWARD TO YOU WAS SUBJECT UNDER DEPARTMENTAL PROCEDURES TO APPROVAL BY HIGHER AUTHORITY. AN UNAPPROVED CONTRACT IS UNENFORCEABLE AGAINST THE GOVERNMENT SINCE NO VALID CONTRACT RIGHTS ACCRUE TO A SUCCESSFUL BIDDER UNTIL SUCH APPROVAL IS EFFECTED. B 143073, JULY 20, 1960.