B-166351, APR. 23, 1969

B-166351: Apr 23, 1969

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THE FUNDS WERE COMMITTED UNDER THE PUBLIC WORKS AND ECONOMIC DEVELOPMENT ACT OF 1965 (PUBLIC LAW 89-136). THE EDA HAS NOT BEEN A PARTY TO ANY BIDDING IN CONNECTION WITH THE CONTRACT FOR THE CONSTRUCTION OF THE FACILITIES AND THE RESULTANT CONTRACT WOULD BE BETWEEN THE CITY OF CORDOVA AND THE CONSTRUCTION COMPANY TO WHICH THE CONTRACT IS AWARDED. YOU STATE THAT THE LOW BID FOR SCHEDULE "A" WAS SUBMITTED BY YUTAN. YOU ALSO STATE THAT THE INVITATION REQUIRES DEDUCTIVE ALTERNATES TO BE TAKEN IN NUMERICAL ORDER WHICH IS NOT BEING DONE IN ORDER TO JUSTIFY AWARD OF A CONTRACT TO THE SECOND LOW BIDDER. IT IS ADMINISTRATIVELY REPORTED THAT THE REQUEST FOR BIDS DIVIDED THE WORK TO BE PERFORMED INTO SCHEDULE "A" AND SCHEDULE "B" WITH DIFFERENT COMPANIES BIDDING FOR EACH PORTION OF THE WORK.

B-166351, APR. 23, 1969

TO MR. RICHARD M. STANISLAW:

YOUR TELEGRAM OF MARCH 6, 1969, PROTESTS ON BEHALF OF JAMES A. CARROLL, D.B.A. YUTAN CONSTRUCTION COMPANY (YUTAN), AGAINST THE AWARD OF A CONTRACT FOR SCHEDULE "A" TO ANY COMPANY OTHER THAN YUTAN UNDER ALASKA PROJECT NO. EDA 07-1-00539.

IT APPEARS THAT THE ECONOMIC DEVELOPMENT ADMINISTRATION (EDA) HAS OFFERED TO MAKE A LOAN IN THE AMOUNT OF $321,000 AND A GRANT NOT TO EXCEED $1,284,000 TO THE CITY OF CORDOVA, ALASKA, TO ENABLE THAT CITY TO BUILD A DOCK AND DOCK APPROACH IMPROVEMENTS. THE FUNDS WERE COMMITTED UNDER THE PUBLIC WORKS AND ECONOMIC DEVELOPMENT ACT OF 1965 (PUBLIC LAW 89-136). THE EDA HAS NOT BEEN A PARTY TO ANY BIDDING IN CONNECTION WITH THE CONTRACT FOR THE CONSTRUCTION OF THE FACILITIES AND THE RESULTANT CONTRACT WOULD BE BETWEEN THE CITY OF CORDOVA AND THE CONSTRUCTION COMPANY TO WHICH THE CONTRACT IS AWARDED.

IN YOUR TELEGRAM OF MARCH 6, 1969, YOU STATE THAT THE LOW BID FOR SCHEDULE "A" WAS SUBMITTED BY YUTAN. YOU ALSO STATE THAT THE INVITATION REQUIRES DEDUCTIVE ALTERNATES TO BE TAKEN IN NUMERICAL ORDER WHICH IS NOT BEING DONE IN ORDER TO JUSTIFY AWARD OF A CONTRACT TO THE SECOND LOW BIDDER. YOU REQUEST THAT WE DIRECT AWARD TO YUTAN TO INSURE COMPLIANCE WITH THE FEDERAL PROCUREMENT REGULATIONS.

IT IS ADMINISTRATIVELY REPORTED THAT THE REQUEST FOR BIDS DIVIDED THE WORK TO BE PERFORMED INTO SCHEDULE "A" AND SCHEDULE "B" WITH DIFFERENT COMPANIES BIDDING FOR EACH PORTION OF THE WORK. SCHEDULE "A" CALLED FOR THE BUILDING OF AN ACCESS ROAD, FILL AREA AND WATERLINE CONSTRUCTION. SCHEDULE "B" CALLED FOR THE CONSTRUCTION OF THE DOCK, DOCK APPROACH STRUCTURE AND ELECTRICAL WORK. A TOTAL OF $1,275,000 WAS ALLOWED UNDER THE EDA-APPROVED BUDGET TO COVER CONSTRUCTION COSTS FOR BOTH SCHEDULES "A" AND "B" WORK.

THE BID INSTRUCTIONS PROVIDED FOR THE USE OF DEDUCTION ALTERNATES IN THE EVENT THE BIDS EXCEEDED ALLOWABLE CONSTRUCTION COSTS. THE THIRD COMPLETE PARAGRAPH ON PAGE BP-4 OF THE BID FORM PROVIDES:

"IF THE LOWEST COMBINATION OF BASIC BIDS EXCEEDS THE AVAILABLE FUNDS, THE OWNER MAY REJECT ALL BIDS OR AWARD THE CONTRACT ON THE BASIS OF THE LOWEST COMBINATION OF BASIC BIDS AFTER DEDUCTING ALTERNATES (IN NUMERICAL ORDER) UNTIL SUCH DEDUCTIONS APPLIED IN NUMERICAL ORDER AS LISTED ON BID FORMS PRODUCES A NET AMOUNT WHICH IS WITHIN THE AVAILABLE FUNDS.'

IN ACCORDANCE WITH THE INITIAL BIDS RECEIVED, THE BID SUBMITTED BY YUTAN IN THE AMOUNT OF $390,750 WAS LOW BID FOR THE SCHEDULE "A" CONSTRUCTION. THE BID SUBMITTED BY AMERICAN INTERNATIONAL CONSTRUCTORS, INC., AND ODIN JENSEN AND SONS, A JOINT VENTURE (AMERICAN), IN THE AMOUNT OF $942,678 WAS LOW BID FOR THE SCHEDULE "B" CONSTRUCTION. THE COMBINED SUM OF CONSTRUCTION COSTS WAS $1,333,428 OR $58,482 IN EXCESS OF $1,275,000, THE BUDGET AMOUNT ALLOCATED TO CONSTRUCTION COSTS.

DEDUCTIVE ALTERNATE NO. 1 WOULD REDUCE THE DOCK WIDTH TO 62 FEET AND THE COSTS OF CONSTRUCTION OF THE SCHEDULE "B" WORK TO $913,678, ACCORDING TO THE BID OFFERED BY AMERICAN WHICH WOULD STILL BE LOWEST BIDDER. IF ONLY DEDUCTIVE ALTERNATE NO. 1 IS TAKEN, HOWEVER, THE COMBINED COSTS OF THE PROJECT WOULD TOTAL $1,304,428, AN AMOUNT STILL IN EXCESS OF ALLOWABLE CONSTRUCTION COSTS.

DEDUCTIVE ALTERNATE NO. 2 WOULD REDUCE THE WIDTH OF THE ROADWAY CUT AND THE ADJACENT FILL SO THAT THE FILL AREAS WOULD BE REDUCED BY APPROXIMATELY ONE ACRE. IF DEDUCTIVE ALTERNATE NO. 2 IS TAKEN WITH RESPECT TO THE SCHEDULE "A" CONSTRUCTION, YUTAN WOULD NO LONGER BE LOWEST BIDDER; EYAK CONSTRUCTION COMPANY WOULD BECOME LOW BIDDER, WITH A BID OF $345,600.

INITIALLY, THE CITY OF CORDOVA WISHED TO TAKE DEDUCTIVE ALTERNATE NO. 2 ONLY, STATING THAT, IN THAT MANNER, CONSTRUCTION COSTS WOULD BE REDUCED TO A TOLERABLE LEVEL. THE BID FORM PROVIDES, HOWEVER, THAT DEDUCTIVE ALTERNATES MUST BE TAKEN IN NUMERICAL ORDER. FURTHERMORE, IF ONLY DEDUCTIVE ALTERNATE NO. 2 IS TAKEN, CONSTRUCTION COSTS WOULD ONLY BE REDUCED TO $1,288,278, AN AMOUNT IN EXCESS OF ALLOWABLE CONSTRUCTION COSTS.

IF BOTH DEDUCTIVE ALTERNATES NOS. 1 AND 2 ARE TAKEN, COMBINED CONSTRUCTION COSTS WOULD TOTAL $1,259,278. IT IS CLEAR, THEREFORE, THAT BOTH DEDUCTIVE ALTERNATES NOS. 1 AND 2 MUST BE APPLIED IN ORDER TO KEEP CONSTRUCTION COSTS WITHIN THE ALLOWABLE FUNDS. IT IS OUR UNDERSTANDING THAT THE CITY OF CORDOVA HAS USED DEDUCTIVE ALTERNATES NOS. 1 AND 2 IN THAT ORDER AND AWARDED THE SCHEDULE ,A" PART OF THE CONTRACT TO EYAK CONSTRUCTION COMPANY AND SCHEDULE "B" TO AMERICAN IN ACCORDANCE WITH THE TERMS OF THE BID OFFER.

EXPENDITURE OF FEDERAL FUNDS GRANTED TO A STATE OR POLITICAL SUBDIVISION THEREOF GENERALLY IS NOT SUBJECT TO THE FEDERAL LAWS APPLICABLE TO THE EXPENDITURE OF APPROPRIATED MONEYS BY THE DEPARTMENTS AND ESTABLISHMENTS OF THE GOVERNMENT. SEE 36 COMP. GEN. 221. ALTHOUGH IT APPEARS THAT THE FEDERAL PROCUREMENT REGULATIONS ARE NOT APPLICABLE TO THE PROCUREMENT, IT IS OUR VIEW THAT THE ACTION TAKEN BY THE CITY OF CORDOVA WAS IN CONSONANCE WITH THOSE REGULATIONS. UNDER THE FEDERAL PROCUREMENT LAWS AND IMPLEMENTING REGULATIONS CONTRACTS MUST BE AWARDED TO THE LOWEST RESPONSIVE AND RESPONSIBLE BIDDER. ALSO, THE INVITATION FOR BIDS MUST CONTAIN SPECIFICATIONS WHICH WILL PERMIT FULL AND FREE COMPETITION AND MUST INCLUDE NOTICE TO BIDDERS AS TO HOW THE BIDS WILL BE EVALUATED. THIS CASE THE BIDS WERE EVALUATED AS SPECIFIED IN THE INVITATION AND AWARD WAS MADE TO THE LOWEST RESPONSIVE BIDDER.