B-166366, MAY 14, 1969

B-166366: May 14, 1969

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MORGULAS AND FOREMAN: REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 27. IT APPEARS THAT THIS PROVISION WAS THE REASON FOR THE REJECTION BY THE ARCHITECT OF THE CONTRACTOR'S PROPOSAL TO SUBSTITUTE A DIFFERENT TEMPERATURE CONTROL SYSTEM THAN THE BRAND NAME EQUIPMENT SPECIFIED IN THE CONTRACT. THE INSTANT CONTRACT WAS NOT AWARDED BY AN AGENCY OF THE FEDERAL GOVERNMENT BUT BY THE PROJECT SPONSOR WHICH HAD RECEIVED A CONSTRUCTION GRANT UNDER THE HILL-BURTON ACT. THE GRANT IS ADMINISTERED ON THE PART OF THE FEDERAL GOVERNMENT BY THE PUBLIC HEALTH SERVICE WHICH HAS THE RESPONSIBILITY FOR MAKING THE GRANT AND OBTAINING CERTAIN ASSURANCES FROM THE GRANTEE INCLUDING THOSE WHICH PERTAIN TO COMPETITIVE BIDDING AS REQUIRED BY 42 CFR 53.128 (C).

B-166366, MAY 14, 1969

TO M. CARL LEVINE, MORGULAS AND FOREMAN:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 27, 1969, ON BEHALF OF WALTER KIDDE CONSTRUCTORS, INC., PROTESTING ADMINISTRATION OF ITS CONTRACT WITH THE COMMUNITY HOSPITAL GROUP, INC., FOR THE CONSTRUCTION OF THE JOHN F. KENNEDY COMMUNITY HOSPITAL IN EDISON, NEW JERSEY. THE CONTRACT INVOLVED THE USE OF FEDERAL FUNDS GRANTED UNDER THE HILL BURTON ACT, 42 U.S.C. 291.

YOUR PROTEST RELATES TO A PROVISION IN THE CONTRACT WHICH REQUIRED BIDDERS TO OBTAIN APPROVAL ON BRAND NAME EQUIPMENTS OTHER THAN THOSE SPECIFIED BY NAME NOT LESS THAN 14 DAYS BEFORE BID OPENING. IT APPEARS THAT THIS PROVISION WAS THE REASON FOR THE REJECTION BY THE ARCHITECT OF THE CONTRACTOR'S PROPOSAL TO SUBSTITUTE A DIFFERENT TEMPERATURE CONTROL SYSTEM THAN THE BRAND NAME EQUIPMENT SPECIFIED IN THE CONTRACT.

THE INSTANT CONTRACT WAS NOT AWARDED BY AN AGENCY OF THE FEDERAL GOVERNMENT BUT BY THE PROJECT SPONSOR WHICH HAD RECEIVED A CONSTRUCTION GRANT UNDER THE HILL-BURTON ACT. THE GRANT IS ADMINISTERED ON THE PART OF THE FEDERAL GOVERNMENT BY THE PUBLIC HEALTH SERVICE WHICH HAS THE RESPONSIBILITY FOR MAKING THE GRANT AND OBTAINING CERTAIN ASSURANCES FROM THE GRANTEE INCLUDING THOSE WHICH PERTAIN TO COMPETITIVE BIDDING AS REQUIRED BY 42 CFR 53.128 (C). THE FEDERAL GOVERNMENT IS NOT A PARTY TO ANY CONSTRUCTION CONTRACTS PERFORMED IN ACCORDANCE WITH THE HILL-BURTON ACT AND ITS SOLE RESPONSIBILITY IS ONE OF DETERMINING WHETHER THERE HAS BEEN SUCH FAILURE ON THE PART OF THE GRANTEE TO SUBMIT OR COMPLY WITH REQUIREMENTS AS WOULD WARRANT THE DISAPPROVAL OF THE APPLICATION OR THE WITHHOLDING OF FEDERAL FUNDS.

THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE IN ITS REPORT TO OUR OFFICE STATES:

"IN THE PRESENT CASE, THE SPECIFICATIONS, INCLUDING THE GENERAL AND SUPPLEMENTARY GENERAL CONDITIONS, WERE APPROVED BY THE PUBLIC HEALTH SERVICE AS CONSISTENT WITH FEDERAL REQUIREMENTS. SPECIFICALLY, THE REQUIREMENTS IN THE SUPPLEMENTARY CONDITIONS THAT THE BIDDERS SUBMIT REQUESTS FOR SUBSTITUTION OF MATERIAL OR EQUIPMENT 14 DAYS PRIOR TO BID OPENING WAS REGARDED AS A REASONABLE MEANS OF ASSURING THAT EACH CONTRACTOR WOULD BE BIDDING ON AN EQUAL BASIS AND THAT THE APPLICANT WOULD OBTAIN THE BENEFIT OF ANY COMPLETION THAT MIGHT OCCUR PRIOR TO THE RECEIPT OF BIDS. UNDER THESE CIRCUMSTANCES, THERE WOULD SEEM TO BE NO BASIS ON WHICH THIS DEPARTMENT COULD HAVE REQUIRED THE APPLICANT TO WAIVE THE 14- DAY PERIOD (OF WHICH THE CONTRACTOR WAS ADVISED BY PARAGRAPH 37 (E) ( IN ORDER TO ENABLE THE CONTRACTOR TO REALIZE A SAVING BY SUBSTITUTION OF A DIFFERENT PRODUCT.

"ACCORDINGLY, IT IS THE POSITION OF THIS DEPARTMENT THAT THE ACTION OF THE APPLICANT (OR THE ARCHITECT) IN THIS CASE FURNISHES NO GROUNDS FOR WITHHOLDING FEDERAL FUNDS OR TAKING ANY OTHER ADVERSE ACTION WITH RESPECT TO THE PROJECT.'

OUR OFFICE HAS HELD THAT THE WITHHOLDING OF CERTIFYING ACTION IS DISCRETIONARY UNDER THE ACT (42 U.S.C. 291J) WITH THE SURGEON GENERAL AND THAT SUCH ACTION IS NOT REQUIRED EVEN IF IT WERE FOUND THAT REGULATIONS HAVE BEEN BREACHED. SEE B-161681, AUGUST 11, 1967, AND CASES CITED THEREIN.

ACCORDINGLY, SINCE THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE HAS DETERMINED THAT THE WITHHOLDING OF FUNDS WOULD NOT BE PROPER IN THIS CASE, YOUR PROTEST IS DENIED.