B-169581, MAY 8, 1970

B-169581: May 8, 1970

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BIDDER'S ARGUMENT THAT UNDER UNION AGREEMENT HE WOULD BE PAYING SAME OR HIGHER WAGE RATES IS CONSIDERED IMMATERIAL. USE AND APPLICATION OF "MODIFICATION OF MINIMUM WAGE RATES" CLAUSE IS NOT APPROVED OF SINCE SUCH CLAUSES ARE DEEMED "LEGALLY QUESTIONABLE" AND SHOULD BE DISCONTINUED. SECRETARY: REFERENCE IS MADE TO LETTER FAC-0211C/RP:KAM N62464-69-B-0251 OF APRIL 15. WE NOTE THAT THE LUTZ BID IS DATED MARCH 26. THAT THE WAGE RATE ADDENDUM IS DATED MARCH 30. THAT BIDS WERE OPENED AT 2 P.M. THE ATTORNEY FOR LUTZ HAS PROTESTED AGAINST THE REJECTION OF THE BID ON THE GROUNDS THAT THE ADDENDUM WAS NOT RECEIVED BY THE BIDDER UNTIL APRIL 2. THAT THE INDIVIDUAL WHO PREPARED THE BID WAS OUT OF TOWN AT THAT TIME.

B-169581, MAY 8, 1970

CONTRACTS--LABOR STIPULATIONS--DAVIS-BACON ACT--MINIMUM WAGE DETERMINATIONS--ADDENDA NOT ACKNOWLEDGED NAVY DEPARTMENT SHOULD REJECT BID AS NONRESPONSIVE WHERE BIDDER FAILED TO ACKNOWLEDGE ADDENDUM TO ADVERTISED SPECIFICATIONS INCORPORATING WAGE DECISION INCREASING MINIMUM RATES SINCE ACCEPTANCE OF SUCH BID WOULD NOT RESULT IN CONTRACT CONTAINING STATEMENT OF MINIMUM WAGE RATES TO BE PAID AS REQUIRED BY DAVIS-BACON ACT, AND BIDDER'S ARGUMENT THAT UNDER UNION AGREEMENT HE WOULD BE PAYING SAME OR HIGHER WAGE RATES IS CONSIDERED IMMATERIAL. MOREOVER, USE AND APPLICATION OF "MODIFICATION OF MINIMUM WAGE RATES" CLAUSE IS NOT APPROVED OF SINCE SUCH CLAUSES ARE DEEMED "LEGALLY QUESTIONABLE" AND SHOULD BE DISCONTINUED. SEE COMP. GEN. DECS. CITED.

TO MR. SECRETARY:

REFERENCE IS MADE TO LETTER FAC-0211C/RP:KAM N62464-69-B-0251 OF APRIL 15, 1970, FROM THE NAVAL FACILITIES ENGINEERING COMMAND, REQUESTING A DECISION WHETHER THE LOW BID OF LUTZ ENGINEERING COMPANY, INC; FOR CONTRACT N62464-69-C-0251 MAY BE ACCEPTED FOR AWARD NOTWITHSTANDING IT FAILED TO ACKNOWLEDGE ADDENDUM 3 TO THE ADVERTISED SPECIFICATIONS WHICH INCORPORATED A WAGE DECISION INCREASING THE MINIMUM WAGE RATES FOR TWO CLASSIFICATIONS TO BE EMPLOYED IN THE CONTRACT WORK. THE NAVAL FACILITIES ENGINEERING COMMAND ESTIMATES THE COST OF THE INCREASED WAGE RATES TO BE $692.

WE NOTE THAT THE LUTZ BID IS DATED MARCH 26, 1970; THAT THE WAGE RATE ADDENDUM IS DATED MARCH 30, 1970; AND THAT BIDS WERE OPENED AT 2 P.M. ON APRIL 2, 1970. THE ATTORNEY FOR LUTZ HAS PROTESTED AGAINST THE REJECTION OF THE BID ON THE GROUNDS THAT THE ADDENDUM WAS NOT RECEIVED BY THE BIDDER UNTIL APRIL 2; THAT THE INDIVIDUAL WHO PREPARED THE BID WAS OUT OF TOWN AT THAT TIME; AND THAT, IN ANY EVENT, BECAUSE OF A UNION AGREEMENT, THE BIDDER WOULD HAVE TO PAY THE MINIMUM SPECIFIED FOR ONE CLASSIFICATION AND IN EXCESS OF THE MINIMUM FOR ANOTHER CLASSIFICATION.

IN RESPONSE TO THE PROTEST, THE NAVAL FACILITIES ENGINEERING COMMAND HAS STATED THAT ADDENDUM 3 AND THE WAGE RATE MODIFICATION WERE READ TO ALL PROSPECTIVE BIDDERS OVER THE TELEPHONE ON MARCH 30 AND 31 AND MAILED TO THEM ON MARCH 31. THEREFORE, ALTHOUGH THE BIDDER DID NOT RECEIVE THE FORMAL ADDENDUM UNTIL APRIL 2, IT HAD BEEN VERBALLY ADVISED OF THE CONTENTS OF THE ADDENDUM AND HAD AN OPPORTUNITY TO CONSIDER THE EFFECT OF THE ADDENDUM AT LEAST 2 DAYS BEFORE BIDS WERE OPENED. WE DO NOT REGARD THE ABSENCE OF THE BID ESTIMATOR ON APRIL 2 AS A BASIS FOR WAIVING THE REQUIREMENT FOR ACKNOWLEDGMENT OF THE ADDENDUM. FURTHER, IT IS IMMATERIAL THAT THE BIDDER WOULD BE PAYING THE SAME OR HIGHER WAGE RATES TO EMPLOYEES UNDER UNION LABOR AGREEMENTS. B-157894, NOVEMBER 30, 1965.

HOWEVER, THE NAVAL FACILITIES ENGINEERING COMMAND HAS POINTED OUT THAT THE ADVERTISED SPECIFICATIONS INCLUDED A PARAGRAPH AS FOLLOWS:

"1A.14.2 MODIFICATION OF MINIMUM WAGE RATES. THE CONTRACTING OFFICER RESERVES THE RIGHT TO REQUIRE THE CONTRACTOR TO PAY THE MINIMUM WAGES SET FORTH IN THE WAGE DETERMINATION THAT IS APPLICABLE TO THIS CONTRACT AND IN EFFECT AT THE TIME OF AWARD (IRRESPECTIVE OF THE WAGE RATES SET FORTH IN THE SPECIFICATION) AND, IF NECESSARY, TO MODIFY THE CONTRACT ACCORDINGLY. THE GOVERNMENT SHALL NOT BE LIABLE TO THE CONTRACTOR TO INCREASE THE CONTRACT PRICE OR TO MAKE ANY OTHER ADDITIONAL PAYMENT AS A RESULT OF ANY SUCH MODIFICATION MADE BY THE CONTRACTING OFFICER IN THE SPECIFIED WAGE RATES, EXCEPT THAT AN EQUITABLE CONTRACT PRICE ADJUSTMENT SHALL BE MADE (1) WHEN THE CONTRACTOR CLEARLY DEMONSTRATES THAT HIS INVESTIGATION OF THE WAGE RATES AT THE SITE DID NOT, AND THAT A REASONABLE INVESTIGATION COULD NOT, DISCLOSE THAT WAGE RATES HIGHER THAN THOSE PREVIOUSLY SPECIFIED WOULD HAVE TO BE PAID, AND (2) WHEN THE CONTRACTOR CLEARLY DEMONSTRATES THAT HE ACTUALLY AND REASONABLY BASED HIS BID OR PROPOSAL UPON WAGE RATES LOWER THAN THOSE REQUIRED TO BE PAID BY SUCH MODIFICATION."

OUR OPINION IS SOLICITED AS TO WHETHER THE QUOTED LANGUAGE AFFORDS A BASIS FOR ACCEPTING THE LUTZ BID.

OUR OFFICE RULED IN 44 COMP. GEN. 776 (1965) THAT CLAUSES SIMILAR TO THE FOREGOING ARE "LEGALLY QUESTIONABLE" AND SHOULD BE DISCONTINUED. ACCORDINGLY, WE CANNOT APPROVE THE USE AND APPLICATION OF THE FOREGOING CLAUSE IN THIS CASE.

IN OUR VIEW THE CONTROLLING CONSIDERATION IN THIS AND SIMILAR CASES IS THAT WHERE A BIDDER FAILS TO ACKNOWLEDGE THE ADDENDUM HIS BID IS NONRESPONSIVE BECAUSE ACCEPTANCE OF THE BID IN THE FORM IT EXISTS AT THE TIME OF OPENING WOULD NOT RESULT IN A CONTRACT CONTAINING A STATEMENT OF THE MINIMUM WAGE RATES TO BE PAID AS REQUIRED BY THE DAVIS BACON ACT, 40 U.S.C. 276A.