B-169460, JUL. 28, 1970

B-169460: Jul 28, 1970

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THE NAMES OF SUBCONTRACTORS ARE NOT MADE KNOWN TO THE DISTRICT UNTIL AFTER CONTRACT IS SIGNED AND THE NOTICE TO COMMENCE WORK HAD BEEN ISSUED. IF CONFLICT OF INTEREST IS ACKNOWLEDGEABLE BETWEEN CONTRACTOR AND SUBCONTRACTOR THE CASE WILL BE TURNED OVER TO THE ANTI TRUST DIVISION. ON BASIS OF PRESENT RECORD THERE IS NO REASON TO DISTURB THE AWARD. PELLAND & BRAUDE: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM DATED APRIL 1. THE SOLICITATION WAS ISSUED ON DECEMBER 10. IT IS REPORTED THAT CARD NOTICES OF THE PROCUREMENT WERE MAILED TO 698 GENERAL CONTRACTORS. SUBCONTRACTORS AND/OR MATERIALS SUPPLIERS WHO MIGHT HAVE AN INTEREST IN THE PROJECT. THE FOUR BIDS RECEIVED WERE OPENED ON FEBRUARY 12.

B-169460, JUL. 28, 1970

CONTRACTS -- BID PROTEST -- RESTRICTIVE -- BIDDER RESPONSIBILITY -- ANTI TRUST LAWS DECISION ON BEHALF OF THE WALTER TRULAND CORPORATION SECOND LOW BIDDER, DENYING PROTEST AGAINST THE AWARD OF CONTRACT TO ERNST-NAGER, JOINT VENTURE, LOW BIDDER, FOR CONSTRUCTION OF THE CENTER LEG OF THE INTERLOOP, D STREET SW, TO D STREET NW, MALL TUNNEL IN THE DISTRICT OF COLUMBIA. SECOND LOW BIDDER WHO ALLEGES THAT THE LOW BIDDER POSSESSES AN INTEREST IN THE SOURCE OF THE SUPPLIES FOR SPECIFIC MATERIAL NEEDED IN CONSTRUCTION OF THE INTERLOOP TUNNEL, AND THUS HAD AN UNFAIR ADVANTAGE OVER OTHER BIDDERS PROVIDES NO BASIS TO REJECT LOW BIDDER IN VIEW OF INFORMATION AVAILABLE THAT DOES NOT INDICATE ANY VIOLATIONS OF LAW OR UNFAIR TRADE PRACTICES. SINCE, THE NAMES OF SUBCONTRACTORS ARE NOT MADE KNOWN TO THE DISTRICT UNTIL AFTER CONTRACT IS SIGNED AND THE NOTICE TO COMMENCE WORK HAD BEEN ISSUED, AT THAT TIME, IF CONFLICT OF INTEREST IS ACKNOWLEDGEABLE BETWEEN CONTRACTOR AND SUBCONTRACTOR THE CASE WILL BE TURNED OVER TO THE ANTI TRUST DIVISION, DEPT. OF JUSTICE FOR NECESSARY ACTION. THEREFORE, ON BASIS OF PRESENT RECORD THERE IS NO REASON TO DISTURB THE AWARD.

TO SADUR, PELLAND & BRAUDE:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM DATED APRIL 1, 1970, AND YOUR LETTER DATED APRIL 15, 1970, PROTESTING ON BEHALF OF WALTER TRULAND CORPORATION, ANY AWARD OF CONTRACT TO ERNST-NAGER, JOINT VENTURE, PURSUANT TO THE BID PROPOSAL AND SPECIAL PROVISION FOR INVITATION NO. C-70115-H FOR CONSTRUCTION OF THE CENTER LEG OF THE INTERLOOP, D STREET, SOUTHWEST, TO D STREET, NORTHWEST, MALL TUNNEL CONTRACT NO. 7.

THE SOLICITATION WAS ISSUED ON DECEMBER 10, 1969. IT IS REPORTED THAT CARD NOTICES OF THE PROCUREMENT WERE MAILED TO 698 GENERAL CONTRACTORS, SUBCONTRACTORS AND/OR MATERIALS SUPPLIERS WHO MIGHT HAVE AN INTEREST IN THE PROJECT. FIFTY-SEVEN FIRMS OBTAINED BID PAPERS INCLUDING PLANS AND SPECIFICATIONS. THE FOUR BIDS RECEIVED WERE OPENED ON FEBRUARY 12, 1970. E. C. ERNST, INCORPORATED, AND NAGER ELECTRIC COMPANY, INCORPORATED, BIDDING AS A JOINT VENTURE, WERE THE LOW BIDDER QUOTING A PRICE OF $10,299,292.88. WALTER TRULAND CORPORATION SUBMITTED THE SECOND LOWEST BID IN THE AMOUNT OF $10,845,909.63. THE CONTRACT WAS AWARDED TO THE LOW BIDDER ON APRIL 1, 1970.

YOU ALLEGE THAT THE SPECIFICATIONS INCORPORATE A REQUIREMENT FOR CERMET COATING FOR CORROSION PROTECTION OF BASE METAL WHICH IS AVAILABLE ONLY FROM A SOLE SOURCE. YOU FURTHER ALLEGE THAT THE LOW BIDDER HAS EITHER A DIRECT OR INDIRECT INTEREST IN THAT SOLE SOURCE SUPPLIER, ENABLING IT TO EXERCISE CONTROL OVER THE PRICE OF THE CERMET COATING THEREBY CREATING AN UNFAIR COMPETITIVE ADVANTAGE OVER OTHER BIDDERS.

IN THIS REGARD, WE QUOTE FROM THE REPORT DATED APRIL 23, 1970, FROM THE DIRECTOR, DEPARTMENT OF HIGHWAYS AND TRAFFIC:

"CERMET COATING ESSENTIALLY INVOLVES A PROCESS OF APPLYING TO METAL A MIXTURE CONTAINING GLASS PARTICLES, CALLED 'FRIT', IN A TITANIUM ALUMINUM BASE. THE COATED METAL IS THEN SUBJECTED TO HEAT TREATMENT. THE COATING PROVIDES AN INTERFACE AND A BARRIER AGAINST CORROSION, CHEMICALS AND DETERIORATION. CERMET COATING WAS SPECIFIED BECAUSE OF ITS DESIRABLE PROPERTIES AND SUPERIORITY TO OTHER AVAILABLE MATERIALS IN CONNECTION WITH SAFETY AND MAINTENANCE CONSIDERATIONS.

"OUR UNDERSTANDING IS THAT NORTH AMERICAN ROCKWELL COMPANY HOLDS A PATENT ON THE MANUFACTURE OF THE 'FRIT' WHICH IS USED IN THE PROCESS BUT THAT SEVERAL COMPANIES HAVE BEEN LICENSED BY NORTH AMERICAN ROCKWELL COMPANY. ONE OF THE LICENSEES IS METAL CONSTRUCTION SERVICES CORPORATION.

"IN EARLY JANUARY, SOME BIDDERS WERE COMPLAINING THAT FIRM PRICES COULD NOT BE OBTAINED ON THE 'FRIT' MATERIAL. UPON BEING INFORMED OF SUCH COMPLAINTS A SUPPLIER SENT A TELEGRAM TO ALL APPLICATORS STATING THAT 'FRIT' COULD BE OBTAINED FOR $5.15 PER POUND AND FURTHER GUARANTEED THE PRICE FOR ONE YEAR. (ATTACHMENT #1).

"ON FEBRUARY 11, 1970, FOUR PROSPECTIVE BIDDERS (1) WILLIAMS ENTERPRISES INC., (2) STEEL ERECTORS, (3) JOHN J. MURPHY CO., AND (4) RITTINER INDUSTRIAL ENAMELING CO.) TELEGRAPHICALLY COMPLAINED ON VARIOUS GROUNDS CONCERNING THE SPECIFIED CERMET COATING. (ATTACHMENT #2).

"UPON RECEIPT OF THESE TELEGRAMS, CONTACT WAS IMMEDIATELY MADE WITH A REPRESENTATIVE OF METALS CONSTRUCTION SERVICES CORPORATION. THAT REPRESENTATIVE DENIED THAT DIFFERING OR EXORBITANT PRICES WERE BEING QUOTED. HE STATED THAT THERE ARE HUNDREDS OF PLANTS ACROSS THE COUNTRY THAT ARE SET UP TO PERFORM THE APPLICATION WORK AND THAT THE PROCESS CAN BE APPLIED ANYWHERE WITHOUT SPECIALLY EXPERIENCED PERSONNEL. HE FURTHER STATED THAT THE SENDERS OF THE TELEGRAMS WOULD BE FORMALLY QUOTED A PRICE OF 45 CENTS PER POUND FOR APPLICATION OF CERMET COATING. (ATTACHMENT #3). ADDITIONALLY, THE CERMET COATING CO., OF NEWPORT, KENTUCKY, ADVISED THAT IT WAS QUOTING 45 CENTS PER POUND. (ATTACHMENT#4).

"SHORTLY AFTER THE OPENING, THE SECOND BIDDER INFORMALLY ADVISED DISTRICT OFFICIALS THAT IT HAD REASON TO BELIEVE THAT NAGER ELECTRIC HAD JOINTLY WITH METALS CONSTRUCTION SERVICES CORPORATION FORMED A CORPORATION KNOWN AS 'TUNNEL CEILWALLS, INC.' THIS CORPORATION WAS INCORPORATED ON OCTOBER 1, 1969 IN THE DISTRICT OF COLUMBIA. IT WAS ALSO STATED THAT LOCAL QUOTES FOR THE CERMET COATING WERE MADE BY TUNNEL CEILWALLS, INC. THIS BELIEF WAS BASED ON INFORMATION RECEIVED FROM THE EQUITABLE TRUST CO. OF BALTIMORE, MARYLAND. (ATTACHMENT #5).

"THEREAFTER A CONFERENCE WAS HAD WITH OFFICIALS OF E. C. ERNST, INC. AS REPRESENTATIVE OF THE JOINT VENTURE. THESE OFFICIALS CONFIRMED THAT NAGER ELECTRIC HAD AN INTEREST IN TUNNEL CEILWALLS. THEY STATED THAT A QUOTE WAS RECEIVED FROM TUNNEL CEILWALLS FOR THE CEILING WORK COMPLETELY INSTALLED IN THE AMOUNT OF $5,975,000.00 AND ALSO THAT THEY HAD RECEIVED QUOTES FROM OTHER SOURCES. IN ADDITION, THESE OFFICIALS ADVISED THAT THEY HAD NOT DETERMINED FINALLY WHO WOULD PERFORM THE WORK INVOLVED IN THE CEILING SYSTEM. THESE STATEMENTS WERE CONFIRMED BY LETTER. (ATTACHMENT #6).

"WHILE IT WAS RECOGNIZED THAT THE RELATIONSHIP BETWEEN NAGER ELECTRIC AND METALS CONSTRUCTION WAS QUESTIONABLE, I DETERMINED THAT, BASED ON THE INFORMATION AVAILABLE, THERE DID NOT APPEAR TO BE ANY CONCRETE BASIS TO REJECT THE BID BECAUSE OF A VIOLATION OF FEDERAL ANTITRUST LAWS OR LAWS CONCERNING UNFAIR TRADE PRACTICES AND COLLUSIVE BIDDING. ACCORDINGLY, IT WAS DECIDED TO AWARD THE CONTRACT TO THE LOW BIDDER. THE AWARD WAS MADE ON APRIL 1, 1970."

IT IS FURTHER REPORTED THAT GENERALLY THE NAMES OF SUBCONTRACTORS ARE NOT MADE FINALLY KNOWN TO THE DISTRICT UNTIL SOMETIME AFTER THE CONTRACT IS SIGNED AND THE NOTICE TO COMMENCE WORK HAS BEEN ISSUED. WE HAVE BEEN INFORMED THAT WHEN THE NAMES OF THE SUBCONTRACTORS ARE MADE AVAILABLE AND IF ONE OF THEM IS TUNNEL CEILWALLS, INCORPORATED, THE CASE WILL BE TURNED OVER TO THE ANTI-TRUST DIVISION OF THE UNITED STATES DEPARTMENT OF JUSTICE FOR WHATEVER ACTION THEY DEEM APPROPRIATE.

BASED ON THE PRESENT RECORD, WE CANNOT CONCLUDE THAT THERE HAS BEEN ANY RESTRAINT OF COMPETITION OR TO OTHERWISE JUSTIFY DISTURBING THE AWARD. ACCORDINGLY, YOUR PROTEST IS DENIED.