B-170168, SEP. 10, 1970

B-170168: Sep 10, 1970

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AN AWARD TO A BIDDER ON A LOW BASE BID THAT WAS WITHIN THE ESTABLISHED FUNDING CONTROL LIMITATION RATHER THAN AWARD TO THE SECOND LOW BIDDER ON THE BASIS OF A COMBINED ADDITIVE BID WAS WITHIN DISCRETION OF THE ADMINISTRATIVE AGENCY. ALTHOUGH ADDITIONAL FUNDING WAS MADE AVAILABLE TO THE CONTRACTING AGENCY BEFORE AWARD. ONCE THE LOW BIDDER IS ASCERTAINED BASED ON THE FUNDING AVAILABLE BEFORE BID OPENING. SUCH BIDDER MAY NOT BE DISPLACED WHEN ADDITIONAL FUND IS MADE AVAILABLE. BISHOP: REFERENCE IS MADE TO YOUR LETTERS OF JUNE 30 AND AUGUST 12. BIDS WERE REQUESTED UNDER ITEM 1 FOR THE ABOVE CONSTRUCTION WORK AND FOR CERTAIN ADDITIVE WORK UNDER ITEMS 2 THROUGH 4. PLUS OR MINUS (IN THE ORDER OF PRIORITY LISTED IN THE SCHEDULE) THOSE ADDITIVE OR DEDUCTIVE BID ITEMS PROVIDING THE MOST FEATURES OF THE WORK WITHIN THE FUNDS DETERMINED BY THE GOVERNMENT TO BE AVAILABLE BEFORE BIDS ARE OPENED.

B-170168, SEP. 10, 1970

BID PROTEST - BASE OR ADDITIVE ITEM AWARD - FUNDING LIMITATION DENIAL OF PROTEST AGAINST AWARD OF A CONTRACT TO GILES AND COTTING, INC., LOW BIDDER, FOR CONSTRUCTION OF HANGAR AT ANDREWS AIR FORCE BASE ON BASIS THAT PROTESTANT'S COMBINED BASE AND ADDITIVE BID WOULD BE MORE ADVANTAGEOUS AND WITHIN FINAL FUNDING LIMITATION. AN AWARD TO A BIDDER ON A LOW BASE BID THAT WAS WITHIN THE ESTABLISHED FUNDING CONTROL LIMITATION RATHER THAN AWARD TO THE SECOND LOW BIDDER ON THE BASIS OF A COMBINED ADDITIVE BID WAS WITHIN DISCRETION OF THE ADMINISTRATIVE AGENCY. ALTHOUGH ADDITIONAL FUNDING WAS MADE AVAILABLE TO THE CONTRACTING AGENCY BEFORE AWARD, ONCE THE LOW BIDDER IS ASCERTAINED BASED ON THE FUNDING AVAILABLE BEFORE BID OPENING, UNDER AN ADDITIVE AND DEDUCTIVE CLAUSE, SUCH BIDDER MAY NOT BE DISPLACED WHEN ADDITIONAL FUND IS MADE AVAILABLE.

TO MR. JOHN J. BISHOP:

REFERENCE IS MADE TO YOUR LETTERS OF JUNE 30 AND AUGUST 12, 1970, PROTESTING ON BEHALF OF A. C. SEEMAN, INC., AGAINST THE AWARD MADE UNDER INVITATION NO. N62477-69-C-0060, ISSUED BY THE NAVAL FACILITIES ENGINEERING COMMAND, WASHINGTON NAVY YARD, WASHINGTON, D.C.

THE INVITATION REQUESTED BIDS ON CONSTRUCTION OF A MAINTENANCE ORGANIZATION ADDITION TO A HANGAR AT ANDREWS AIR FORCE BASE. BIDS WERE REQUESTED UNDER ITEM 1 FOR THE ABOVE CONSTRUCTION WORK AND FOR CERTAIN ADDITIVE WORK UNDER ITEMS 2 THROUGH 4. PURSUANT TO PARAGRAPH 2 201(B)(XLI) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), PARAGRAPH 1CX.4 OF THE INVITATION CONTAINED THE CLAUSE ENTITLED "ADDITIVE OR DEDUCTIVE ITEMS," READING AS FOLLOWS:

"THE LOW BIDDER FOR PURPOSES OF AWARD SHALL BE THE CONFORMING RESPONSIBLE BIDDER OFFERING THE LOW AGGREGATE AMOUNT FOR THE FIRST OR BASE BID ITEM, PLUS OR MINUS (IN THE ORDER OF PRIORITY LISTED IN THE SCHEDULE) THOSE ADDITIVE OR DEDUCTIVE BID ITEMS PROVIDING THE MOST FEATURES OF THE WORK WITHIN THE FUNDS DETERMINED BY THE GOVERNMENT TO BE AVAILABLE BEFORE BIDS ARE OPENED. IF ADDITION OF ANOTHER BID ITEM IN THE LISTED ORDER OF PRIORITY WOULD MAKE THE AWARD EXCEED SUCH FUNDS FOR ALL BIDDERS, IT SHALL BE SKIPPED AND THE NEXT SUBSEQUENT ADDITIVE BID ITEM IN A LOWER AMOUNT SHALL BE ADDED IF AWARD THEREON CAN BE MADE WITHIN SUCH FUNDS. FOR EXAMPLE, WHEN THE AMOUNT AVAILABLE IS $100,000 AND A BIDDER'S BASE BID AND FOUR SUCCESSIVE ADDITIVES ARE $85,000, $10,000, $8,000, $6,000 AND $4,000, THE AGGREGATE AMOUNT OF THE BID FOR THE PURPOSES OF AWARD WOULD BE $99,000 FOR THE BASE BID PLUS THE FIRST AND FOURTH ADDITIVES, THE SECOND AND THIRD ADDITIVES BEING SKIPPED BECAUSE EACH OF THEM WOULD CAUSE THE AGGREGATE BID TO EXCEED $100,000. IN ANY CASE, ALL BIDS SHALL BE EVALUATED ON THE BASIS OF THE SAME ADDITIVE OR DEDUCTIVE BID ITEMS, DETERMINED AS ABOVE PROVIDED. THE LISTED ORDER OF PRIORITY NEEDS TO BE FOLLOWED ONLY FOR DETERMINING THE LOW BIDDER. AFTER DETERMINATION OF THE LOW BIDDER AS STATED, AWARD IN THE BEST INTERESTS OF THE GOVERNMENT MAY BE MADE TO HIM ON HIS BASE BID AND ANY COMBINATION OF HIS ADDITIVE OR DEDUCTIVE BID FOR WHICH FUNDS ARE DETERMINED TO BE AVAILABLE AT THE TIME OF THE AWARD, PROVIDED THAT AWARD ON SUCH COMBINATION OF BID ITEMS DOES NOT EXCEED THE AMOUNT OFFERED BY ANY OTHER CONFORMING RESPONSIBLE BIDDER FOR THE SAME COMBINATION OF BID ITEMS."

BID OPENING WAS HELD ON JUNE 10, 1970, AND BIDS WERE RECEIVED FROM 10 BIDDERS, EACH BIDDER SUBMITTING A BID ON EACH OF THE FOUR ITEMS. THE LOW BIDDER ON ITEM 1 WAS GILLES & COTTING, INC., WITH A BID OF $504,000. SECOND LOW BIDDER ON THAT ITEM WAS A. C. SEEMAN, INC., IN THE AMOUNT OF $504,890. OTHER BIDS ON ITEM 1 RANGED FROM $509,621 TO $594,792. THE CONTROL AMOUNT (FUNDS AVAILABLE FOR THE PURPOSE OF DETERMINING THE LOW BIDDER ON THE INVITATION) WAS FIXED AS TO THIS PROCUREMENT ON MAY 22, 1970, IN THE AMOUNT OF $504,792. AWARD OF ITEM 1 ALONE WAS MADE TO GILLES & COTTING AS THE LOWEST BIDDER ON THAT BASE BID ITEM.

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

HOWEVER, SEEMAN WAS NOT LOW BIDDER ON ITEM 1, AND PURSUANT TO THE ABOVE- QUOTED CLAUSE THE LOW BIDDER FOR PURPOSES OF AWARD IS THAT BIDDER OFFERING THE LOWEST PRICE FOR THE BASE BID ITEM PLUS AS MANY OF THE ADDITIVE ITEMS WHICH ARE WITHIN THE CONTROL AMOUNT OF $504,792.

THE CONTROL AMOUNT AS FIXED REPRESENTED "THE FUNDS DETERMINED BY THE GOVERNMENT TO BE AVAILABLE BEFORE BIDS ARE OPENED" WITHIN THE PURVIEW OF THE ADDITIVE AND DEDUCTIVE ITEMS CLAUSE. WITH REGARD TO THE AMOUNT OF FUNDS AVAILABLE FOR THE PROCUREMENT, THE RECORD SHOWS THAT THE SPONSORING ACTIVITY FURNISHED $546,000 FOR THE ENTIRE PROJECT. IN ACCORDANCE WITH STANDARD PRACTICE, THERE WAS DEDUCTED FROM THIS AMOUNT THE CONTRACTING OFFICER'S "OVERHEAD" FOR ADMINISTERING THE CONTRACT, AND A STATED PERCENTAGE TO COVER CONTINGENCIES WHICH OFTEN DEVELOP AFTER AWARD. THE BALANCE OF $504,792 REMAINING WAS THE CONTROL AMOUNT. THUS, THE AMOUNT AUTHORIZED FOR EXPENDITURE WAS DETERMINED BEFORE BID OPENING TO BE $504,792.

WE HAVE CONSIDERED METHODS OF BID EVALUATION SIMILAR IN PRINCIPLE TO THAT UTILIZED HEREIN. IN ONE CASE, B-148133, APRIL 9, 1962, THE PROCEDURE WAS PROTESTED ON THE BASIS THAT IT PERMITTED SELECTION OF THE LOW BIDDER TO BE CONTROLLED BY MANIPULATING THE SELECTION OF ALTERNATES AFTER THE OPENING OF BIDS. OUR OFFICE RESPONDED TO THAT PROTEST AS FOLLOWS:

" *** SUCH AN ELECTION BY THE CONTRACTING AGENCY IS NOT IMPROPER. REQUIREMENTS THAT CONTRACTS FOR PUBLIC WORK BE LET TO THE LOWEST BIDDER ARE NOT VIOLATED WHEN SPECIFICATIONS ARE DRAWN FOR DIFFERENT WORK, BIDS ARE SOUGHT ON DIFFERENT BASES, AND A CHOICE IS NOT MADE BY THE CONTRACTING OFFICIALS UNTIL AFTER ALL THE BIDS ARE OPENED. 43 AM. JUR., PUBLIC WORKS AND CONTRACTS SEC. 37; 10 MCQUILLIN, MUNICIPAL CORPORATIONS, SEC. 29.55 (3RD ED.); COHEN, PUBLIC CONSTRUCTION CONTRACTS AND THE LAW, SEC. 2.14." SEE, ALSO, 45 COMP. GEN. 651 (1966); B-157227, AUGUST 18, 1965; B-158766, APRIL 26, 1966.

FURTHER, IN OUR DECISION B-146343, NOVEMBER 1, 1961, WE STATED:

"YOUR ATTORNEY CONTENDS THAT IT IS IMPROPER FOR THE GOVERNMENT TO RESERVE UNTIL AFTER BID OPENING THE RIGHT TO CHOOSE THE PARTICULAR COMBINATION OF ITEMS ON WHICH BIDS WILL BE EVALUATED, CLAIMING THAT THE CONTRACTING OFFICER MIGHT THEREBY, THROUGH A CAREFUL SELECTION OF ITEMS, CHOOSE ANY CONTRACTOR OTHER THAN THE ONE WHO HAD SUBMITTED THE LOWEST AGGREGATE BID FOR ALL ITEMS. YOU ARE UNDOUBTEDLY AWARE THAT IT IS NOT AT ALL UNUSUAL TO SOLICIT BIDS FOR CERTAIN MINIMUM WORK, PLUS OPTIONAL ADDITIONAL WORK. THE PURPOSE OF ADVERTISING ON THIS BASIS ORDINARILY IS TO ENABLE AWARD TO BE MADE IN ACCORDANCE WITH THE FUNDS AVAILABLE AND THE BEST BARGAIN OFFERED BY BIDDERS. THE NET RESULT THEREOF IS TO REQUIRE BIDDERS TO QUOTE PRICES ON VARIOUS COMBINATIONS OF ITEMS, SUBJECT TO THE GOVERNMENT'S RIGHT TO CHOOSE ANY PARTICULAR COMBINATION IT WISHES AS THE BASIS OF AWARD.

" *** EACH BIDDER IS COMPETING AGAINST EACH OTHER BIDDER ON EACH POSSIBLE COMBINATION OF ITEMS, AND THE COMPARATIVE DESIRABILITY OF DIFFERENT ITEMS MAY WELL DEPEND ON THE PRICES QUOTED THEREFOR. IT IS OBVIOUS THAT AWARD COULD NOT BE MADE ON ANY COMBINATION OF ITEMS TO A BIDDER WHOSE AGGREGATE PRICE FOR THOSE ITEMS WAS NOT LOW, MERELY BECAUSE HE HAPPENED TO HAVE OFFERED AN OFFSETTING LOWER PRICE FOR WORK WHICH IS NOT TO BE PERFORMED.

AT A MEETING HELD ON AUGUST 5, 1970, AT OUR OFFICE, YOU REQUESTED THE DATE AND AMOUNT OF THE ADDITIONAL FUNDS WHICH WERE STATED BY THE DEPARTMENT OF THE NAVY IN ITS LETTER OF JULY 21, 1970, TO HAVE BEEN MADE AVAILABLE BY THE DEPARTMENT OF THE AIR FORCE, THE SPONSORING AGENCY. IS REPORTED BY THE NAVY THAT SUCH ADVICE WAS RECEIVED AFTER BID OPENING. ALTHOUGH IT IS CONCEDED THAT ADDITIONAL FUNDING WAS MADE AVAILABLE TO THE CONTRACTING AGENCY PRIOR TO AWARD, SUCH CIRCUMSTANCE COULD NOT HAVE AFFECTED THE STANDING OF GILLES & COTTING, INC., AS THE LOW BIDDER ON THE BASE BID ITEM. UNDER THE ADDITIVE AND DEDUCTIVE CLAUSE, ONCE THE LOW BIDDER IS ASCERTAINED BASED ON THE FUNDING AVAILABLE BEFORE BID OPENING, SUCH BIDDER MAY NOT BE DISPLACED BY ANOTHER BIDDER WHEN ADDITIONAL FUNDING IS MADE AVAILABLE THEREAFTER.

WHILE YOU ALLEGE FURTHER THAT AWARD OF THE CONTRACT ON BID ITEM 1 ALONE WILL NOT PROVIDE A USABLE FACILITY, THE RECORD REVEALS THAT BID ITEM 1 INITIALLY WAS THE ONLY WORK PROGRAMMED. SUBSEQUENTLY, THE HANGAR ITSELF SUFFERED STORM DAMAGE, AND THE REPAIR OF THAT DAMAGE WAS INCLUDED AS BID ITEMS 2 AND 3. THUS, THE AWARD OF BID ITEM 1 DOES PROVIDE FOR A USABLE FACILITY--THE MAINTENANCE ORGANIZATION ADDITION COMPLETE AND READY FOR USE. WHILE THE REQUESTING ACTIVITY MAY INITIATE ACTION IN THE FUTURE TO PROCURE THE ADDITIVE ITEMS, WE CANNOT SAY THAT SUCH ADDITIVE WORK SHOULD BE CURRENTLY PERFORMED. SINCE THE USING AGENCY MAY DETERMINE THE EXTENT OF ITS CONSTRUCTION PROGRAM IN THE LIGHT OF AVAILABLE FUNDS, WE SEE NO BASIS FOR YOUR CONTENTION THAT THE AGENCY SHOULD HAVE AWARDED THE ADDITIVE ITEMS UNDER THE SUBJECT SOLICITATION.

ACCORDINGLY, WE WOULD NOT BE JUSTIFIED IN QUESTIONING THE AWARD MADE TO GILLES & COTTING, INC. YOUR PROTEST IS THEREFORE DENIED.