B-170148, SEP. 30, 1970

B-170148: Sep 30, 1970

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DETERMINATION THAT A SMALL BUSINESS RESTRICTED PROCUREMENT WAS A NEGOTIATED PROCUREMENT SO THAT AN AWARD TO THE LOW SMALL BUSINESS BIDDER COULD BE MADE AFTER THE ORIGINAL WAGE RATE DETERMINATION HAD EXPIRED AND NEW RATES WERE TO BE INCORPORATED IN THE CONTRACT WAS NOT PROPER. SINCE A SMALL BUSINESS RESTRICTED ADVERTISING PROCUREMENT IS NOT A NEGOTIATED PROCUREMENT BUT UNDER ASPR 1-706.5(B) IS TO BE CONDUCTED AS AN ADVERTISED PROCUREMENT. THEREFORE INCORPORATION OF NEW WAGE RATES WAS CONTRARY TO THE REGULATIONS AND AN AWARD UNDER EXPIRED WAGE RATES WOULD NOT BE PROPER. CANCELLATION OF THE INVITATION WAS THE ONLY RECOURSE. THE DEPARTMENT IS TAKING REMEDIAL ACTION TO PREVENT REPETITION OF SIMILAR CIRCUMSTANCES IN THE FUTURE.

B-170148, SEP. 30, 1970

BID PROTEST - CANCELLATION OF INVITATION - SMALL BUSINESS SET-ASIDE - NEW WAGE RATES DENIAL OF PROTEST AGAINST CONSUMATION OF AWARD WITH LOW SMALL BUSINESS BIDDER FOR CONSTRUCTION OF DRIVEWAYS AT GRISSOM AIR FORCE BASE WHEN WAGE RATES EXPIRED BEFORE PROTESTANT RECEIVED CERTIFICATE OF COMPETENCY. DETERMINATION THAT A SMALL BUSINESS RESTRICTED PROCUREMENT WAS A NEGOTIATED PROCUREMENT SO THAT AN AWARD TO THE LOW SMALL BUSINESS BIDDER COULD BE MADE AFTER THE ORIGINAL WAGE RATE DETERMINATION HAD EXPIRED AND NEW RATES WERE TO BE INCORPORATED IN THE CONTRACT WAS NOT PROPER. SINCE A SMALL BUSINESS RESTRICTED ADVERTISING PROCUREMENT IS NOT A NEGOTIATED PROCUREMENT BUT UNDER ASPR 1-706.5(B) IS TO BE CONDUCTED AS AN ADVERTISED PROCUREMENT. THEREFORE INCORPORATION OF NEW WAGE RATES WAS CONTRARY TO THE REGULATIONS AND AN AWARD UNDER EXPIRED WAGE RATES WOULD NOT BE PROPER. HENCE, CANCELLATION OF THE INVITATION WAS THE ONLY RECOURSE. THE DEPARTMENT IS TAKING REMEDIAL ACTION TO PREVENT REPETITION OF SIMILAR CIRCUMSTANCES IN THE FUTURE.

TO C. A. SEIFERT CONSTRUCTION & SUPPLY, INC.:

REFERENCE IS MADE TO YOUR LETTERS OF JUNE 22 AND AUGUST 28, 1970, CONCERNING YOUR PROTEST UNDER INVITATION FOR BIDS (IFB) NO. F12617-70-B 0476, WHICH WAS ISSUED AS A TOTAL SMALL BUSINESS SET-ASIDE BY THE PROCUREMENT DIVISION OF GRISSOM AIR FORCE BASE ON NOVEMBER 28, 1969, FOR THE REPAIR OF CERTAIN DRIVEWAYS, SIDEWALKS, CURBS AND CARPORTS AT THE BASE. THE IFB, AS AMENDED, CONTAINED WAGE RATE DETERMINATION NO. AJ-4799, WHICH WAS ISSUED BY THE AUTHORITY OF THE SECRETARY OF LABOR ON DECEMBER 16, 1969, FOR INCORPORATION IN ANY CONTRACT TO BE AWARDED UNDER THE SUBJECT IFB. THE DETERMINATION PROVIDED THAT THE RATES PRESCRIBED THEREIN WOULD EXPIRE ON APRIL 14, 1970.

THE RECORD SHOWS THAT AFTER BIDS WERE OPENED ON JANUARY 26, 1970, THE CONTRACTING OFFICER PROCEEDED TO DETERMINE THE RESPONSIBILITY OF YOUR CONCERN, WHICH HAD SUBMITTED THE LOWEST BID, PRIOR TO MAKING AN AWARD FOR THE REQUIREMENT IN ACCORDANCE WITH ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-902. TO ASSIST THE CONTRACTING OFFICER IN MAKING THIS DETERMINATION A PRE-AWARD SURVEY OF YOUR CONCERN WAS ACCOMPLISHED. FEBRUARY 13, 1970, THE PRE-AWARD SURVEY TEAM RECOMMENDED THAT AN AWARD FOR THE REQUIREMENT SHOULD BE MADE TO YOUR COMPANY. HOWEVER, ON APRIL 6, 1970, THE CONTRACTING OFFICER RECEIVED ADDITIONAL INFORMATION CONCERNING THE FINANCIAL RESPONSIBILITY OF YOUR COMPANY WHICH INDICATED THAT YOU DID NOT HAVE ADEQUATE FINANCIAL RESOURCES TO PROPERLY EXECUTE THE CONTRACT. ACCORDINGLY, THE CONTRACTING OFFICER DETERMINED ON APRIL 8, 1970, THAT YOUR COMPANY WAS NON-RESPONSIBLE FOR THIS PROCUREMENT AND SUBSEQUENTLY REFERRED THE MATTER OF YOUR CAPACITY AND CREDIT TO THE SMALL BUSINESS ADMINISTRATION (SBA) FOR ITS REVIEW IN ACCORDANCE WITH ASPR 1-705.4(C).

ON APRIL 13, 1970, THE SECRETARY OF LABOR ISSUED WAGE DETERMINATION NO. AJ-12, 241 WHICH SET FORTH SUBSTANTIALLY DIFFERENT WAGE RATES FOR THE LABOR SKILLS UNDER THE SUBJECT PROCUREMENT FROM THOSE PRESCRIBED IN THE DETERMINATION OF DECEMBER 13, 1969. ON MAY 12, 1970, THE SBA ADVISED THE CONTRACTING OFFICER THAT IT HAD CERTIFIED YOUR COMPANY AS HAVING THE NECESSARY CAPACITY AND CREDIT TO PERFORM THE SUBJECT CONTRACT. IN VIEW OF THIS ADVICE THE CONTRACTING OFFICER DETERMINED THAT YOU WERE A RESPONSIBLE CONTRACTOR FOR THIS PROCUREMENT AND PROCEEDED WITH THE INITIAL STEPS WHICH WERE REQUIRED TO EFFECT AN AWARD TO YOUR CONCERN ON MAY 18, 1970. THE EVIDENCE OF THIS ACTION IS SET FORTH IN A DOCUMENT ENTITLED CONTRACT NO. F12617-70-0171, WHICH CONTAINS THE FOLLOWING INSERTION ON PAGE TWO OF STANDARD FORM (SF) 23:

"WAGE DETERMINATION DECISION NO. AJ-12, 241 DATED APRIL 13, 1970, IS HEREBY INCORPORATED INTO AND MADE A PART OF THIS CONTRACT."

THE CONTRACTING OFFICER DOCUMENTED THE CONTRACT FILE TO EXPLAIN THE INCORPORATION OF THE WAGE DETERMINATION OF APRIL 13, 1970, AS FOLLOWS:

"IFB F12617-70-B-0476 WAS OPENED ON 26 JAN 1970 WITH THE LOW BIDDER BEING C. A. SEIFERT CONSTRUCTION AND SUPPLY CO. ON 8 APRIL 1970, A DETERMINATION OF NONRESPONSIBILITY WAS MADE BY THE CONTRACTING OFFICER ON SUBJECT LOW BIDDER. AS SUCH, THE SMALL BUSINESS ADMINISTRATION WAS REQUESTED TO INVESTIGATE THE COMPETENCY OF SUCH BIDDER. ON 12 MAY 1970, THE SBA ISSUED A CERTIFICATE OF COMPETENCY IN FAVOR OF THE LOW BIDDER.

IN THE INTERIM, THE WAGE RATES, WHICH WERE IN THE IFB, EXPIRED. ASPR 18- 704.2(A)(5) STATES IN PART THAT IN FORMALLY ADVERTISED PROCUREMENT, IF THE WAGE RATES EXPIRE BEFORE AWARD, THAT THE IFB BE CANCELLED AND READVERTISED. HOWEVER, ASPR 1-706.2 ENTITLED 'CONTRACT AUTHORITY' STATES IN PART THAT CONTRACTS FOR TOTAL OR PARTIAL SET-ASIDES ENTERED INTO BY CONVENTIONAL NEGOTIATION OR BY 'SMALL BUSINESS RESTRICTED ADVERTISING' ARE NEGOTIATED PROCUREMENTS AND SHALL CITE AS AUTHORITY 10 U.S.C. 2304(A)(1).

IN VIEW OF THE ABOVE CITATION IT IS HEREBY DETERMINED THAT THIS IS A NEGOTIATED PROCUREMENT AND THAT THE NEW WAGE RATES (WAGE RATE DECISION AJ- 12241, DATED 13 APR 1970) BE INCORPORATED INTO CONTRACT F12617-70-C 0171 IN ACCORDANCE WITH PROCEDURES ESTABLISHED BY ASPR 18-704.2 ENTITLED "WAGE DETERMINATIONS" PARAGRAPH (A)(3)."

IN ACCORDANCE WITH DEPARTMENTAL PROCEDURES THE CONTRACT FILE WAS REVIEWED BY HEADQUARTERS SECOND AIR FORCE, BARKSDALE AIR FORCE BASE, LOUISIANA TO DETERMINE THE LEGAL PROPRIETY OF THE PROCUREMENT ACTIONS TAKEN BY THE CONTRACTING OFFICER IN CONTEMPLATION OF A FINAL AWARD TO YOUR FIRM. THE REVIEWING AUTHORITY DETERMINED THAT THE CONTRACTING OFFICER HAD IMPROPERLY CITED ASPR 18-704.2(A)(3) AS AUTHORITY FOR ALLOWING INCORPORATION OF THE NEW WAGE RATE DETERMINATION, AND THAT IN VIEW THEREOF, THE PROCUREMENT SHOULD BE CANCELLED.

YOU MAINTAIN THAT THE REVIEWING AUTHORITY SHOULD HAVE AUTHORIZED AN AWARD TO YOUR COMPANY AND THAT YOUR CONCERN SHOULD BE GRANTED DAMAGES FOR THE GOVERNMENT'S DELAY IN DETERMINING WHETHER TO MAKE AN AWARD TO YOUR COMPANY.

ASPR 18-704.2(A)(3) PROVIDES THAT A NEW WAGE DETERMINATION MAY BE FURNISHED TO ALL PROSPECTIVE OFFERORS IN A NEGOTIATED PROCUREMENT AS FOLLOWS:

"18-704.2 WAGE DETERMINATIONS

(A)IN GENERAL

(3) IN NEGOTIATED PROCUREMENT, WHENEVER

(I) IT APPEARS THAT A WAGE DETERMINATION WILL EXPIRE BEFORE AWARD IS MADE OR (II) THE DETERMINATION ACTUALLY DOES SO EXPIRE, A NEW WAGE DETERMINATION SHALL BE REQUESTED. IF THE NEW DETERMINATION MAKES A CHANGE IN THE WAGE RATES, THE WAGE RATE INFORMATION SPECIFIED IN THE NEW DETERMINATION SHALL BE FURNISHED TO (A) ALL PROSPECTIVE OFFERORS TO WHOM A SOLICITATION HAS BEEN SENT IF THE CLOSING DATE FOR RECEIPT OF PROPOSALS HAS NOT YET OCCURRED, OR (B) TO ALL PROSPECTIVE OFFERORS WHO HAVE SUBMITTED PROPOSALS IF THE CLOSING DATE IS PAST. ALL PROSPECTIVE OFFERORS TO WHOM SUCH INFORMATION HAS BEEN FURNISHED SHALL BE GIVEN A REASONABLE OPPORTUNITY TO AMEND THEIR PROPOSALS. THE CONTRACTING OFFICER NEED NOT DELAY OPENING AND REVIEWING PROPOSALS OR DISCUSSING THEM WITH THE RESPECTIVE OFFERORS WHILE A NEW DETERMINATION IS BEING SOUGHT AND OFFERORS ARE PREPARING AMENDED PROPOSALS. OFFERORS SHALL BE REQUESTED TO EXTEND THE PERIOD FOR ACDEPTANCE OF ANY PROPOSAL IF THAT PERIOD EXPIRES OR MAY EXPIRE WHILE THE CONTRACTING OFFICER IS WAITING FOR A NEW WAGE DETERMINATION." SINCE THE QUOTED REGULATION CONTAINS REFERENCES TO THE CLOSING DATE SET FOR RECEIPT OF PROPOSALS AND STATES THAT ALL OFFERORS WHO HAVE SUBMITTED PROPOSALS ARE TO BE FURNISHED A COPY OF THE NEW WAGE DETERMINATION, WE MUST CONCLUDE THAT THE REGULATION IS FOR APPLICATION IN THOSE PROCUREMENTS WHICH ARE CONDUCTED AS NEGOTIATED PROCUREMENTS.

THE CONTRACTING OFFICER CONSIDERED THAT THE SUBJECT PROCUREMENT WAS NEGOTIATED FOR THE PURPOSE OF APPLYING ASPR 18-704.2A(3) BECAUSE THE METHOD OF PROCUREMENT USED HERE WAS "SMALL BUSINESS RESTRICTED ADVERTISING" AND ASPR 1-706.2 STATES THAT WHEN SUCH METHOD IS EMPLOYED THE PROCUREMENT SHALL BE CONSIDERED NEGOTIATED AS FOLLOWS:

"1-706.2 CONTRACT AUTHORITY. CONTRACTS FOR TOTAL OR PARTIAL SET ASIDES ENTERED INTO BY CONVENTIONAL NEGOTIATION (SEE 1-706.5(B) AND 1 706.6(D) OR BY 'SMALL BUSINESS RESTRICTED ADVERTISING' (SEE 1-706.5(B) ARE NEGOTIATED PROCUREMENTS AND SHALL CITE AS AUTHORITY 10 U.S.C. 2304(A)(1) IN THE CASE OF A UNILATERAL DETERMINATION (SEE 3-201.2(B) (II)) OR 10 U.S.C. 2304(A)(17) AND SECTION 15 OF THE SMALL BUSINESS ACT IN THE CASE OF A JOINT DETERMINATION."

HOWEVER, ASPR 1-706.5(B) FURTHER PROVIDES THAT "SMALL BUSINESS RESTRICTED ADVERTISING" PROCUREMENTS SHALL BE CONDUCTED IN THE SAME WAY AS ADVERTISED PROCUREMENTS, AS FOLLOWS:

"1-706.5 TOTAL SET-ASIDES

(B) CONTRACTS FOR TOTAL SMALL BUSINESS SET-ASIDES MAY BE ENTERED INTO BY CONVENTIONAL NEGOTIATION OR BY A SPECIAL METHOD OF PROCUREMENT KNOWN AS "SMALL BUSINESS RESTRICTED ADVERTISING." THE LATTER METHOD SHALL BE USED WHEREVER POSSIBLE (SEE ALSO 3-201.3). WHERE MULTI-YEAR PROCUREMENT PROCEDURES ARE APPROPRIATE (SEE 1-322), TOTAL SET-ASIDES MAY BE MADE IN CONNECTION THEREWITH. INVITATIONS FOR BIDS AND REQUEST FOR PROPOSALS SHALL BE RESTRICTED TO SMALL BUSINESS CONCERNS. SMALL BUSINESS RESTRICTED ADVERTISING, INCLUDING AWARDS THEREUNDER, SHALL BE CONDUCTED IN THE SAME WAY AS PRESCRIBED FOR FORMAL ADVERTISING IN SECTION II EXCEPT THAT BIDS AND AWARDS SHALL BE RESTRICTED TO SMALL BUSINESS CONCERNS. BIDS RECEIVED FROM FIRMS WHICH DO NOT QUALIFY AS SMALL BUSINESS CONCERNS SHALL BE CONSIDERED AS NONRESPONSIVE AND SHALL BE REJECTED."

ACCORDINGLY, WE BELIEVE THAT ASPR 18-704.2(A)(3) IS INAPPLICABLE TO THE CIRCUMSTANCES OF THE SUBJECT PROCUREMENT SINCE THE PROCUREMENT WAS NOT CONDUCTED AS A NEGOTIATED PROCUREMENT. IT IS OUR FURTHER OPINION THAT ASPR 18-704(A)(5), WHICH READS AS FOLLOWS, WAS CONTROLLING UNDER THE CIRCUMSTANCES:

"(5) AFTER BIDS HAVE BEEN OPENED IN FORMALLY ADVERTISED PROCUREMENT, IF (I) IT BECOMES APPARENT THAT THE WAGE DETERMINATION WILL EXPIRE BEFORE AWARD OR (II) IN FACT THE WAGE DETERMINATION DOES EXPIRE BEFORE AWARD, THE SECRETARY, OR HIS DESIGNEE AT A LEVEL NO LOWER THAN THE HEAD OF A PROCURING ACTIVITY, MAY, UPON FINDING THAT AN EXTENSION IS IN THE PUBLIC INTEREST TO PREVENT INJUSTICE, UNDUE HARDSHIP, OR SERIOUS IMPAIRMENT OF THE CONDUCT OF GOVERNMENT BUSINESS, SUBMIT A WRITTEN REQUEST TO THE ASSOCIATE ADMINISTRATOR, DIVISION OF WAGE DETERMINATIONS, WAGE & LABOR STANDARDS ADMINISTRATION, U.S. DEPARTMENT OF LABOR, WASHINGTON, D. C. 20210, FOR AN EXTENSION OF THE EXPIRATION DATE. IF AN EXTENSION IS NOT REQUESTED, OR IF IT IS REQUESTED AND DENIED, A NEW DETERMINATION SHALL BE REQUESTED. IF THE NEW DETERMINATION CHANGES THE WAGE RATES, THE IFB SHALL BE CANCELLED AND THE PROCUREMENT READVERTISED USING THE NEW WAGE RATES." SINCE ASPR 18 704(A)(5) SPECIFICALLY REQUIRED THE CONTRACTING OFFICER TO CANCEL THE PROCUREMENT WHEN HE RECEIVED THE NEW WAGE DETERMINATION, WHICH CHANGED THE WAGE RATES FROM THOSE SET FORTH IN THE EARLIER DETERMINATION, WE MUST CONCLUDE THAT THE CONTRACTING OFFICER HAD NO LEGAL AUTHORITY TO AWARD YOUR CONCERN A CONTRACT AFTER APRIL 14, 1970.

IN THIS CONNECTION, IT IS WELL SETTLED THAT THE ACT OF A GOVERNMENT AGENT IN EXCESS OF THE AUTHORITY CONFERRED ON HIM BY STATUE OR REGULATION, WHETHER CAUSED AS A RESULT OF MISTAKE OR OTHERWISE, IS NOT BINDING ON THE UNITED STATES, FEDERAL CROP INSURANCE CORPORATION V MERRILL, 332 U.S. 380 (1947). THE UNITED STATES HAS POWER TO ACT ONLY THROUGH ITS AGENTS WHOSE AUTHORITY, AND THE MANNER OF EXERCISE THEREOF, IS PRESCRIBED AND LIMITED BY STATUTE, REGULATION, AND ADMINISTRATIVE AND JUDICIAL DETERMINATION. MAKE THE GOVERNMENT LIABLE FOR LOSSES SUFFERED BY A BIDDER AS A RESULT OF A CONTRACTING OFFICER'S UNAUTHORIZED ACTION WOULD, IN EFFECT, PERMIT AGENTS OF THE GOVERNMENT TO OBLIGATE THE UNITED STATES IN DIRECT CONTRAVENTION OF THOSE LIMITATIONS AND PRESCRIPTIONS, AND NULLIFY THE BASIC PURPOSE OF THE STATUTES, REGULATIONS AND DETERMINATIONS. COMPARE 46 COMP. GEN. 348 (1966).

ACCORDINGLY, WE MUST DENY YOUR PROTEST AGAINST CANCELLATION OF THE SUBJECT IFB. IN THIS REGARD THE DEPARTMENT HAS ADVISED US THAT IT IS TAKING REMEDIAL ACTION TO PREVENT A REPETITION OF THESE CIRCUMSTANCES IN FUTURE PROCUREMENTS.

TURNING TO YOUR CONTENTION THAT DAMAGES SHOULD BE AWARDED TO COMPENSATE YOU FOR YOUR FAILURE TO RECEIVE THE AWARD, IT WOULD APPEAR THAT SUCH DAMAGES ARE ALLOWABLE ONLY WHEN IT CAN BE DEMONSTRATED THAT GOVERNMENT OFFICIALS DELIBERATELY INTENDED TO AWARD A CONTRACT TO A PRE DETERMINED CONTRACTOR, EVEN THOUGH THE CONTRACTOR DID NOT SUBMIT THE LOWEST RESPONSIVE BID. SEE HEYER PRODUCTS CO. V UNITED STATES, 135 CT. CL. 63, 68. SINCE WE FAIL TO FIND ANY EVIDENCE THAT THE DEPARTMENT HAD SUCH INTENT IN THE SUBJECT PROCUREMENT, WE PERCEIVE NO BASIS ON WHICH YOUR CLAIM FOR DAMAGES COULD PROPERLY BE ALLOWED.