B-167993(1), OCT. 28, 1969

B-167993(1): Oct 28, 1969

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HIS PROTEST IS DENIED AND AWARD TO BIDDER OFFERING DISCOUNT IS PROPER. SINCE USE OF SF 33 WHICH WAS APPROVED BY CONTRACTING OFFICER AS A PROPER EXERCISE OF DELEGATED AUTHORITY AND MODIFIED TO INCORPORATE SUBSTANTIALLY SAME PROVISIONS FOUND IN CONSTRUCTION CONTRACT BID FORM DOES NOT RENDER INVITATION FOR BIDS (IFB) DEFECTIVE. SINCE COST TO CHANGE CONTRACTORS WAS NOT INCLUDED IN IFB IT IS NOT FOR CONSIDERATION IN EVALUATION. THE BASIC BID FORM IS STANDARD FORM (SF) 33. AS FOLLOWS: "ALL OFFERS ARE SUBJECT TO THE FOLLOWING: 1. WHICH IS ATTACHED OR INCORPORATED HEREIN BY REFERENCE. 3. SPECIFICATIONS AS ARE ATTACHED OR INCORPORATED HEREIN BY REFERENCE. (ATTACHMENTS ARE LISTED IN THE SCHEDULE.)" (SF 23A IS A CONSTRUCTION CONTRACT FORM.).

B-167993(1), OCT. 28, 1969

BIDS--DISCOUNTS--CONSTRUCTION CONTRACTS WHERE OTHERWISE LOW BIDDER CHALLENGED USE OF DISCOUNT PROVISION AND STANDARD FORM (SF) 33 UNDER FEDERAL PROCUREMENT REGULATIONS (FPR) AND TRADE PRACTICE AND CONTENDED COST OF USING NEW CONTRACTOR ON WORKSITE SHOULD BE WEIGHT IN BID EVALUATION, HIS PROTEST IS DENIED AND AWARD TO BIDDER OFFERING DISCOUNT IS PROPER, SINCE USE OF SF 33 WHICH WAS APPROVED BY CONTRACTING OFFICER AS A PROPER EXERCISE OF DELEGATED AUTHORITY AND MODIFIED TO INCORPORATE SUBSTANTIALLY SAME PROVISIONS FOUND IN CONSTRUCTION CONTRACT BID FORM DOES NOT RENDER INVITATION FOR BIDS (IFB) DEFECTIVE, REPORTED PRACTICE OF TRADE MAY NOT BE INVOKED TO PRECLUDE CONSIDERATION OF DISCOUNT AS TRADE PRACTICE CANNOT ALTER CLEAR TERMS OR FORCE PARTIES TO CONTRACT IN ACCORDANCE WITH CUSTOM, AND SINCE COST TO CHANGE CONTRACTORS WAS NOT INCLUDED IN IFB IT IS NOT FOR CONSIDERATION IN EVALUATION.

TO SELLERS, CONNER AND CUNEO:

WE REFER TO YOUR PROTEST, BY LETTERS DATED SEPTEMBER 26 AND OCTOBER 13, 1969, ON BEHALF OF AMBROSE-AUGUSTERFER CORPORATION (A-AND-A), AGAINST AWARD TO ANY OTHER BIDDER UNDER INVITATION FOR BIDS (IFB) NO. 17, ISSUED AUGUST 25, 1969, BY THE SUPERINTENDENT, UNITED STATES MINT (THE MINT), PHILADELPHIA, PENNSYLVANIA. THE PROCUREMENT COVERS ALL MATERIALS AND LABOR REQUIRED FOR A COMPLETE MECHANICAL INSTALLATION AT THE MINT OF A CLADDING MILL, A CLEANING LINE, AND A STRIP CLEANING LINE WHICH THE MINT HAS PURCHASED.

THE BASIC BID FORM IS STANDARD FORM (SF) 33, ENTITLED SOLICITATION, OFFER, AND AWARD, ONE OF THE FORMS PRESCRIBED BY FEDERAL PROCUREMENT REGULATION (FPR) 1-16.101 (CITED IN THE UPPER LEFT CORNER OF SF 33) FOR USE IN FORMALLY ADVERTISED SUPPLY CONTRACTS. BLOCK 9 OF THE FORM, AS ADAPTED BY THE MINT FOR THE PROCUREMENT, READS, IN PERTINENT PART, AS FOLLOWS:

"ALL OFFERS ARE SUBJECT TO THE FOLLOWING:

1. THE ATTACHED SOLICITATION INSTRUCTIONS AND CONDITIONS, SF 33A.

2. THE GENERAL PROVISIONS, SF 23A EDITION, WHICH IS ATTACHED OR INCORPORATED HEREIN BY REFERENCE.

3. THE SCHEDULE INCLUDED BELOW AND/OR ATTACHED HERETO.

4. SUCH OTHER PROVISIONS, REPRESENTATIONS, CERTIFICATIONS, AND SPECIFICATIONS AS ARE ATTACHED OR INCORPORATED HEREIN BY REFERENCE. (ATTACHMENTS ARE LISTED IN THE SCHEDULE.)"

(SF 23A IS A CONSTRUCTION CONTRACT FORM.)

BENEATH THE PURCHASE DESCRIPTION ON THE FACE OF SF 33, THERE APPEARED THE NOTATION "CONTINUED ON PAGE 3 WHICH IS PART HEREOF.' PAGE 3 CONTAINED A LIST OF ATTACHED DOCUMENTS APPLYING TO THE PROCUREMENT, INCLUDING SF 19A, LABOR STANDARDS PROVISIONS; SF 24, BID BOND; SF 25, PERFORMANCE OND; SF 25A, PAYMENT BOND; CERTIFICATION OF NONSEGREGATED FACILITIES; AND APPLICABLE MINIMUM HOURLY RATES OF WAGES PRESCRIBED BY THE DEPARTMENT OF LABOR PURSUANT TO THE DAVIS-BACON ACT, 40 U.S.C. 276A.

BLOCK 16 ON THE FACE OF SF 33 WAS ALTERED AS FOLLOWS:

"16. DISCOUNT FOR PROMPT PAYMENT

---- PERCENT 20 CALENDAR DAYS;

---- PERCENT 30 CALENDAR DAYS; ---- PERCENT ---- CALENDAR DAYS"

FOUR BIDS WERE RECEIVED, EACH ON SF 33. LAUGRO COMPANY, INC. (LAUGRO), WITH A PRICE OF $325,000, WAS THE ONLY BIDDER WHO OFFERED A DISCOUNT; I.E., IN BLOCK 16 LAUGRO ENTERED 1/2 OF 1 PERCENT FOR 20 CALENDAR DAYS, $1,625, OR A REDUCTION TO $323,375. THE LOWEST BID, WITH A PRICE OF $315,000, BORE NO ENTRY IN BLOCK 16; HOWEVER, IT WAS NOT ACCOMPANIED BY THE REQUIRED BID BOND AND WAS THEREFORE REJECTED AS NONRESPONSIVE. A-AND- A'S BID, IN THE AMOUNT OF $324,000, SHOWED THE WORD ,NET" IN THE SPACE IN BLOCK 16 PRECEDING THE PERIOD OF 30 CALENDAR DAYS, THEREBY INDICATING THAT PAYMENT WAS TO BE MADE WITHIN 30 DAYS AND WITHOUT ANY DISCOUNT. THE REMAINING BID, IN THE AMOUNT OF $340,000, SHOWED ZERO PERCENT FOR EACH OF THE THREE DISCOUNT SPACES, LIKEWISE INDICATING THAT NO DISCOUNT WAS OFFERED.

THE SUBSTANCE OF YOUR PROTEST IS THAT DISCOUNTS ARE NOT AUTHORIZED IN CONSTRUCTION CONTRACTS FOR TWO REASONS. FIRST, YOU CLAIM THAT THE EXCLUSION OF CONSTRUCTION CONTRACTS FROM THE REQUIREMENTS OF FPR 1 2.201 (B) AND 1-2.407-3 (A), RELATING TO INSERTION OF DISCOUNT PROVISIONS IN SOLICITATIONS FOR SUPPLY CONTRACTS, CONVEYS THE INTENTION THAT NO IFB'S FOR CONSTRUCTION WORK WILL CONTAIN DISCOUNT PROVISIONS.

THE REGULATIONS READ, IN PERTINENT PART, AS FOLLOWS:

"1-2.201 PREPARATION OF INVITATIONS FOR BIDS.

(B) FOR SUPPLY AND SERVICES CONTRACTS, EXCLUDING CONSTRUCTION, INVITATIONS FOR BIDS SHALL CONTAIN THE FOLLOWING, IN ADDITION TO THE INFORMATION REQUIRED BY SEC. 1-2.201 (A), IF APPLICABLE TO THE PROCUREMENT INVOLVED.

(1) DISCOUNT PROVISIONS (SEE SEC. 1-2.407-3).

"1-2.407-3 DISCOUNTS.

(A) PRIOR TO ISSUING AN INVITATION FOR BIDS (EXCEPT ONE FOR CONSTRUCTION), A DETERMINATION SHALL BE MADE AS TO WHAT MINIMUM PERIOD FOR PROMPT PAYMENT DISCOUNTS WILL BE CONSIDERED IN THE EVALUATION OF BIDS AND SUCH MINIMUM PERIOD SHALL BE STATED IN THE INVITATION FOR BIDS. * * *"

IN LIGHT OF THE REGULATIONS, WHICH YOU INTERPRET AS PRECLUDING DISCOUNT PROVISIONS IN CONSTRUCTION CONTRACTS, AS WELL AS CONSIDERATION OF DISCOUNTS IN THE EVALUATION OF CONSTRUCTION BIDS, YOU STATE THAT THE USE OF BLOCK 16 ON SF 33 FOR PROMPT PAYMENT DISCOUNTS IN THIS PROCUREMENT WAS ERRONEOUS AND UNAUTHORIZED AND THAT CONSIDERATION OF THE LAUGRO DISCOUNT WOULD CONFER AN UNFAIR ADVANTAGE ON LAUGRO.

SECOND, YOU CLAIM THAT THE GRANTING OF PROMPT PAYMENT DISCOUNTS ON CONSTRUCTION CONTRACTS IS IN VIOLATION OF TRADE PRACTICE AND CUSTOM; THAT BIDDERS HAVE A RIGHT TO RELY ON TRADE PRACTICE; AND THAT THE USE BY THE MINT OF A COMBINATION OF TWO TYPES OF FORMS, I.E., SUPPLY AND CONSTRUCTION, CREATED A SITUATION IN WHICH BIDDERS WOULD NOT REASONABLY EXPECT THAT DISCOUNTS WOULD BE EVALUATED IN DETERMINING THE LOW BID, A CONCLUSION WHICH YOU CLAIM IS SUPPORTED BY THE ABSENCE OF A DISCOUNT OFFER FROM THE THREE BIDDERS WHO COMPETED WITH LAUGRO.

IN ADDITION, YOU CLAIM THAT SINCE FPR 1-16.401 AND 1-16.402 PRESCRIBE FORMS OTHER THAN SF 33 FOR USE IN ADVERTISED CONSTRUCTION PROCUREMENTS, THE USE OF SF 33 WAS AN UNAUTHORIZED DEVIATION WHICH MAY OPERATE TO THE DETRIMENT OF AN OTHERWISE LOW BIDDER, I.E., A-AND-A.

FINALLY, YOU STATE THAT A-AND-A IS PRESENTLY WORKING AT THE CONTRACT SITE WITH ITS OWN SCAFFOLDING AND THAT AWARD TO LAUGRO AT ITS DISCOUNTED PRICE OF $323,375 WOULD REQUIRE EITHER THE REMOVAL OF THE A AND-A SCAFFOLDING OR THE RENTAL THEREOF BY THE MINT FOR USE BY LAUGRO, EITHER OF WHICH ACTIONS WILL COST THE GOVERNMENT FAR MORE THAN THE $625 DIFFERENTIAL BETWEEN A-AND -A'S BID OF $324,000 AND LAUGRO'S DISCOUNTED BID PRICE. SUCH A FACTOR, YOU CLAIM, SHOULD BE DECISIVE OF AWARD TO A AND-A AS ONE OF THE "OTHER FACTORS" CONTEMPLATED BY THE PROVISIONS OF FPR 1-2.407-1 REQUIRING AWARD TO "THAT RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED," PARTICULARLY SINCE THE A-AND-A BID IS SO CLOSE AND SINCE LAUGRO BECAME THE LOW BIDDER "BY UNFAIR ADVANTAGE.' ACCORDINGLY, YOU REQUEST THAT OUR OFFICE ADVISE THE CONTRACTING OFFICER TO MAKE AWARD TO A- AND-A.

THE BUREAU OF THE MINT TAKES THE POSITION THAT THE CITED FPR PROVISIONS (WHICH REQUIRE DISCOUNT PROVISIONS TO BE INCLUDED IN ADVERTISED SUPPLY PROCUREMENT SOLICITATIONS), BY EXCLUDING CONSTRUCTION CONTRACTS, HAVE THE EFFECT OF REMOVING CONSTRUCTION CONTRACTS FROM THE MANDATORY ASPECT OF THE REGULATIONS. ACCORDINGLY, THE BUREAU URGES, THERE APPEARS TO BE NO BASIS FOR CONCLUDING THAT PROCURING AGENCIES ARE THEREBY PROHIBITED FROM OBTAINING DISCOUNTS IN CONSTRUCTION CONTRACTS WHEN APPROPRIATE. FURTHER, THE BUREAU STATES THAT THE MINT, BY DELETING FROM BLOCK 16 THE SPACE PROVIDED FOR ENTRY OF A DISCOUNT FOR 10 CALENDAR DAYS, CLEARLY EXPRESSED ITS INTENTION TO CONSIDER PROMPT PAYMENT DISCOUNTS (FOR OTHER PERIODS) IN EVALUATING BIDS FOR AWARD. IN ADDITION, THE BUREAU ASSERTS THAT ALL BIDDERS HAD EQUAL OPPORTUNITY TO OFFER DISCOUNTS, AND IT REPORTS THAT NO BIDDER PROTESTED AGAINST THE DISCOUNT PROVISIONS PRIOR TO THE RECEIPT OF YOUR POST-BID OPENING PROTEST OF SEPTEMBER 26.

FPR 1-1.009-1, PERTAINING TO DEVIATIONS FROM THE REQUIREMENTS OF THE FEDERAL PROCUREMENT REGULATIONS, INCLUDES IN THE DEFINITION OF THE TERM "DEVIATION" ACTIONS INVOLVING THE USE OF A FORM OTHER THAN THE STANDARD OR OTHER FORM PRESCRIBED FOR A PROCUREMENT. FPR 1-1.009-2, RELATING TO DEVIATIONS IN INDIVIDUAL CASES, PROVIDES FOR ADMINISTRATIVE AUTHORIZATION IN LINE WITH THE FORMAL PROCEDURE ESTABLISHED BY THE HEAD OF THE AGENCY AND REQUIRES THAT THE FILE IN EACH INSTANCE DISCLOSE THE NATURE OF THE DEVIATION AND THE REASON FOR SUCH SPECIAL ACTION. SUCH REGULATIONS ARE CONSISTENT WITH THE HOLDING IN HARTFORD ACCIDENT AND INDEMNITY CO. V UNITED STATES, 127 F.SUPP. 565 (1955), THAT RULES AND REGULATIONS RELATIVE TO PUBLIC CONTRACTS PROVIDING THAT A CERTAIN STANDARD FORM SHALL BE USED FOR CONSTRUCTION CONTRACTS DO NOT PREVENT THE GOVERNMENT FROM ENTERING INTO A CONTRACT WHICH DEVIATES FROM THE STANDARD FORM.

WE HAVE BEEN ADVISED BY THE BUREAU OF THE MINT THAT WHILE NO WRITTEN AUTHORIZATION APPEARS IN THE MINT'S PROCUREMENT FILE COVERING THE USE OF SF 33 IN LIEU OF ONE OF THE CONSTRUCTION CONTRACT FORMS PRESCRIBED BY FPR 1-16.402-3 FOR CONTRACTS ESTIMATED TO EXCEED $10,000, THE SOLICITATION AS ISSUED HAD THE APPROVAL OF THE SUPERINTENDENT OF THE MINT AT PHILADELPHIA, TO WHOM THE DIRECTOR OF THE MINT HAS DELEGATED AUTHORITY TO SIGN CONTRACTS, PURCHASE ORDERS, OR OTHER DOCUMENTS OFFICIALLY CREATING OR AUTHORIZING AN OBLIGATION. FURTHER, UNDER REGULATIONS ISSUED BY THE DIRECTOR OF THE MINT, PURSUANT TO FPR 1 1.008, THE SUPERINTENDENT IS A CONTRACTING OFFICER, WHO IS DEFINED BY THE BUREAU'S REGULATIONS AS "AN OFFICIAL DESIGNATED TO ENTER INTO OR ADMINISTER CONTRACTS AND MAKE RELATED DETERMINATIONS AND FINDINGS.' THE DIRECTOR OF THE MINT IS ONE OF THE OFFICIALS TO WHOM AUTHORITY HAS BEEN DELEGATED BY THE ASSISTANT SECRETARY OF THE TREASURY, UNDER TREASURY DEPARTMENT ORDER 208, DATED MARCH 31, 1966, TO UTILIZE THE PROVISIONS OF TITLE III OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, WHEN PROCURING PROPERTY AND SERVICES AND TO REDELEGATE SUCH AUTHORITY TO ANY SUBORDINATE OFFICER OR EMPLOYEE EXCEPT FOR THE PURPOSES OF SECTION 307 (B) OF THE ACT (WHICH RELATES TO CERTAIN NEGOTIATED PROCUREMENTS).

IN THE CIRCUMSTANCES, AND SINCE THE VARIOUS OTHER DOCUMENTS AND PROVISIONS INCORPORATED IN THE CONTRACT INCLUDE SUBSTANTIALLY THE SAME PROVISIONS AS WOULD BE APPLICABLE TO THE PROCUREMENT HAD ONE OF THE CONSTRUCTION CONTRACT BID FORMS BEEN USED FOR THE BASIC BID FORM, WE DO NOT BELIEVE THAT THE USE OF SF 33 FOR THE BASIC BID FORM RENDERS THE IFB DEFECTIVE SO AS TO WARRANT DISCARDING OF ALL BIDS, AFTER OPENING, AND READVERTISEMENT OF THE PROCUREMENT NEED.

AS TO THE PROPRIETY OF INCLUDING THE DISCOUNT PROVISIONS IN THE INSTANT IFB, WE HAVE HELD WITH RESPECT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2-407.3 (THE WORDING OF WHICH IS SIMILAR TO FPR 1 2.407-3 (A) (, THAT WHILE SUCH REGULATION GIVES RECOGNITION TO THE PRACTICE OF BIDDERS FURNISHING SUPPLIES TO OFFER PROMPT PAYMENT DISCOUNTS AND MAKES MANDATORY THE INCLUSION OF DISCOUNT PROVISIONS IN SUPPLY AND SERVICE CONTRACTS, THERE IS NOTHING IN THE REGULATION WHICH PROHIBITS THE INCLUSION OF PROMPT PAYMENT DISCOUNT PROVISIONS IN AN INVITATION FOR BIDS ON A CONSTRUCTION CONTRACT. ACCORDINGLY, WE HAVE STATED THAT EVALUATION OF A BID OFFERING A DISCOUNT UNDER SUCH PROVISIONS IN A CONSTRUCTION INVITATION MAY PROPERLY INCLUDE CONSIDERATION OF THE DISCOUNT. B-158095, FEBRUARY 9, 1966. SEE, ALSO, B-152417, OCTOBER 3, 1963.

WE HAVE ALSO HELD THAT EVEN WHEN AN INVITATION FOR BIDS ON CONSTRUCTION WORK DOES NOT SOLICIT PROMPT PAYMENT DISCOUNTS, SUCH A DISCOUNT MAY BE CONSIDERED IN THE EVALUATION OF A BID. 40 COMP. GEN. 518 (1961).

IN LINE WITH SUCH DECISIONS, WE CONCLUDE THAT THE INCLUSION IN THE INSTANT IFB OF THE DISCOUNT PROVISIONS IN BLOCK 16 OF SF 33 WAS NOT CONTRARY TO THE PROCUREMENT REGULATIONS, AND THEREFORE CONSIDERATION OF THE DISCOUNT OFFERED BY LAUGRO LIKEWISE WOULD NOT BE CONTRARY TO THE PROCUREMENT REGULATIONS.

AS TO THE EFFECT IN THIS CASE OF THE CUSTOM OR PRACTICE OF CONSTRUCTION CONTRACTORS NOT TO OFFER PROMPT PAYMENT DISCOUNTS ON THE SOLICITATION OF DISCOUNTS BY THE GOVERNMENT AND THE OFFER OF A DISCOUNT BY LAUGRO, YOU ARE ADVISED THAT IT IS AN ESTABLISHED LEGAL PRINCIPLE THAT A TRADE OR BUSINESS CUSTOM OR PRACTICE MAY NOT SUPERSEDE OR ALTER THE CLEAR AND UNAMBIGUOUS TERMS OF A CONTRACT. B-122644, JUNE 27, 1955; AFFIRMED BY B-122644, OCTOBER 4, 1955. FURTHER, PROOF OF CUSTOM OR USAGE IS NOT FOR THE PURPOSE OF COMPELLING THE PARTIES TO CONTRACT IN ACCORDANCE WITH USAGE, FOR THE LAW MAKES NO REQUIREMENT THAT PARTIES SHALL USE WORDS IN ACCORDANCE WITH COMMON AND ORDINARY USAGE; NEITHER DOES IT MAKE ANY REQUIREMENT THAT THE TERMS AND PROVISIONS OF THEIR CONTRACTS SHALL BE THE SAME AS, OR EVEN SIMILAR TO, THOSE THAT THEIR NEIGHBORS OR TRADE ASSOCIATES ARE ACCUSTOMED TO AGREE UPON. CORBIN ON CONTRACTS, SEC. 565, INTERPRETATION.

CONSISTENT WITH SUCH PRINCIPLES, IT IS OUR VIEW THAT IN LIGHT OF THE CLEAR SOLICITATION BY THE GOVERNMENT IN THE IFB OF PROMPT PAYMENT DISCOUNTS FOR PERIODS OF 20, 30 OR MORE CALENDAR DAYS AND OF LAUGRO'S UNEQUIVOCAL OFFER IN ITS BID OF A 20-DAY DISCOUNT, THE REPORTED PRACTICE OF THE TRADE MAY NOT BE INVOKED TO PRECLUDE CONSIDERATION OF THE DISCOUNT IN THE EVALUATION OF LAUGRO'S BID. NOR DO WE CONSIDER THAT OUR CONCLUSION IN THIS REGARD GIVES LAUGRO AN UNFAIR ADVANTAGE, AS YOU CLAIM, OVER YOU, FOR YOU AND THE OTHER BIDDERS WERE AT LIBERTY TO OBJECT TO THE DISCOUNT PROVISIONS, OR ANY OTHER PROVISIONS OF THE IFB, BEFORE BID OPENING, AS CAUTIONED BY PARAGRAPH 3 OF SF 33A, BUT DID NOT DO SO. AS TO YOUR CONTENTION THAT IN MAKING AWARD THE MINT SHOULD CONSIDER THE COST OF USING A NEW CONTRACTOR AS OPPOSED TO USING YOU SINCE YOU ARE ALREADY AT THE WORK SITE, IT IS A CARDINAL RULE OF COMPETITIVE BIDDING PROCEDURES THAT THE INVITATION FOR BIDS SHOULD ADVISE BIDDERS OF ANY FACTOR OTHER THAN BID PRICE WHICH IS TO BE CONSIDERED IN DETERMINING THE LOW BIDDER. ACCORDINGLY, THERE BEING NO MENTION OF SUCH FACTOR IN THE IFB, IT MAY NOT BE CONSIDERED IN THE EVALUATION OF THE BIDS SO AS TO DEPRIVE LAUGRO, THE LOWEST BIDDER, OF AWARD. 45 COMP. GEN. 433, 435 (1966) AND DECISIONS THEREIN CITED.