B-170202, SEP. 1, 1970

B-170202: Sep 1, 1970

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PRIME CONTRACTOR'S DETERMINATION TO REJECT ALL BIDS UNDER AN INITIAL CONSTRUCTION SOLICITATION DUE TO DELETION OF A PORTION OF WORK AND TO REJECT A LATE HAND CARRIED BID WERE ACTIONS WITHIN DETERMINATION OF PRIME CONTRACTOR WHERE THERE IS NO SHOWING THAT AWARD IS PREJUDICIAL TO UNITED STATES. ACTION IN REJECTING LATE BID WAS CONSISTENT WITH FEDERAL PROCUREMENT REGULATIONS. INCORPORATED: THIS IS IN REFERENCE TO YOUR LETTER OF JUNE 10. WHICH WAS FORWARDED TO OUR OFFICE. THE AEC HAS FURNISHED OUR OFFICE WITH THE FOLLOWING INFORMATION REGARDING THE BACKGROUND OF YOUR PROTEST: "COMPETITIVE BIDS WERE REQUESTED ON APRIL 22. FIVE BIDS WERE RECEIVED AND AT 1:00 P.M. THEY WERE PUBLICLY OPENED AND RECORDED.

B-170202, SEP. 1, 1970

BID PROTEST - LATE BID DENIAL OF PROTEST OF THE CARDAN COMPANY, INC., LOW BIDDER, AGAINST THE AWARD OF A SUBCONTRACT TO ANOTHER CONCERN PURSUANT TO A SOLICITATION ISSUED BY WESTINGHOUSE ELECTRIC CORP., PRIME CONTRACTOR WITH AEC. PRIME CONTRACTOR'S DETERMINATION TO REJECT ALL BIDS UNDER AN INITIAL CONSTRUCTION SOLICITATION DUE TO DELETION OF A PORTION OF WORK AND TO REJECT A LATE HAND CARRIED BID WERE ACTIONS WITHIN DETERMINATION OF PRIME CONTRACTOR WHERE THERE IS NO SHOWING THAT AWARD IS PREJUDICIAL TO UNITED STATES. ALSO, ACTION IN REJECTING LATE BID WAS CONSISTENT WITH FEDERAL PROCUREMENT REGULATIONS.

TO THE CARDAN COMPANY, INCORPORATED:

THIS IS IN REFERENCE TO YOUR LETTER OF JUNE 10, 1970, WHICH WAS FORWARDED TO OUR OFFICE, PROTESTING AGAINST THE AWARD OF A SUBCONTRACT TO ANOTHER CONCERN PURSUANT TO A SOLICITATION ISSUED BY WESTINGHOUSE ELECTRIC CORPORATION (WESTINGHOUSE), AS PRIME CONTRACTOR WITH THE ATOMIC ENERGY COMMISSION (AEC).

AEC'S REPORT STATES THAT WESTINGHOUSE HAS HELD CONTRACT NO. AT-11-1 GEN- 14, A COST-PLUS-FIXED-FEE CONTRACT, WITH AEC SINCE DECEMBER 10, 1948. UNDER THIS CONTRACT, WESTINGHOUSE MANAGES FOR AEC THE BETTIS ATOMIC POWER LABORATORY AT PITTSBURGH AND THE NAVAL REACTORS FACILITY AT THE NATIONAL REACTOR TESTING STATION IN IDAHO.

ARTICLE XIII OF WESTINGHOUSE'S CONTRACT WITH AEC PROVIDES THAT AEC HAS RESERVED THE RIGHT TO APPROVE ALL PROCUREMENTS UNDER THAT CONTRACT. ARTICLE IIIC) OF THIS CONTRACT PROVIDES THAT UPON REQUEST OF AEC AND ACCEPTANCE THEREOF BY WESTINGHOUSE, WESTINGHOUSE SHALL PROCURE BY SUBCONTRACT THE CONSTRUCTION OF NEW FACILITIES OR REPAIR OF GOVERNMENT- OWNED FACILITIES. ARTICLE IIIC) FURTHER PROVIDES THAT ANY SUBCONTRACT ENTERED INTO UNDER THAT PARAGRAPH SHALL BE SUBJECT TO THE WRITTEN APPROVAL OF AEC.

THE AEC HAS FURNISHED OUR OFFICE WITH THE FOLLOWING INFORMATION REGARDING THE BACKGROUND OF YOUR PROTEST:

"COMPETITIVE BIDS WERE REQUESTED ON APRIL 22, 1970, BY WESTINGHOUSE FOR MODIFICATIONS AND ALTERATIONS TO THE EXPENDED CORE FACILITY AT THE NAVAL REACTORS FACILITY, IDAHO FALLS, IDAHO. FIVE BIDS WERE RECEIVED AND AT 1:00 P.M., MAY 27, 1970, THEY WERE PUBLICLY OPENED AND RECORDED. THE BASE BIDS ON WHICH THE EVALUATION WAS MADE WERE AS FOLLOWS:

"THE CARDAN COMPANY $2,336,770

HUNTER-SAUCERMAN CONSTRUCTION COMPANY 2,400,900

ARRINGTON CONSTRUCTION COMPANY 2,457,250

MORRISON-KNUDSEN COMPANY, INCORPORATED 3,557,000

W. G. CLARK COMPANY 5,000,000

"THE ARCHITECT-ENGINEER'S FINAL ESTIMATE FOR CONSTRUCTION OF THIS PROJECT WAS $1,820,000. THE LOW BID FROM CARDAN WAS SUBSTANTIALLY IN EXCESS OF THIS ESTIMATE. RECEIPT OF CLOSELY COMPETITIVE BIDS, AS NOTED ABOVE, WAS STRONG INDICATION THAT CONSIDERATION SHOULD BE GIVEN TO MODIFICATION OF THE DESIGN IN ORDER TO BRING THE COST OF CONSTRUCTION INTO LINE WITH THE ORIGINAL FUNDING ESTIMATE. IN SUCH SITUATIONS, SECTION 204.07 A. OF THE WESTINGHOUSE PURCHASING MANUAL PROVIDES THAT 'CONSIDERATION SHALL BE GIVEN TO PROVIDING ALL OFFERORS AN EQUITABLE OPPORTUNITY TO SUBMIT REVISED PROPOSALS UNDER THE REVISED REQUIREMENTS.'

"ALL BIDS WERE REJECTED, THE PLANS FOR THE PROJECT WERE REVISED AND PROPOSALS WERE SOLICITED FROM ALL FIRMS THAT HAD SUBMITTED BIDS WITHIN A COMPETITIVE RANGE. HOWEVER, ACTION WAS ALSO TAKEN AS DESCRIBED BELOW TO ALLOW THE OTHER BIDDERS TO PARTICIPATE IF THEY SO DESIRED."

ON MAY 28, 1970, THE NAVAL REACTORS FACILITY SENT A TELEGRAM TO CARDAN, HUNTER-SAUCERMAN AND ARRINGTON, ADVISING THESE CONCERNS THAT THEIR BIDS WERE TOO HIGH. THIS TELEGRAM FURTHER STATED THAT WESTINGHOUSE WOULD NEGOTIATE A CONTRACT FOR THE MODIFICATION PROJECT WITH ALL THOSE OFFERORS WITHIN A COMPETITIVE RANGE. EACH OF THESE THREE COMPANIES WAS ADVISED THAT IT WOULD BE CONTACTED TO MAKE ARRANGEMENTS FOR THESE NEGOTIATIONS. MORRISON-KNUDSEN AND W. G. CLARK WHICH WESTINGHOUSE DETERMINED WERE NOT IN A COMPETITIVE RANGE, WERE ALSO ADVISED ON MAY 28, 1970, THAT THE PRICES RECEIVED WERE TOO HIGH. HOWEVER, THE TELEGRAM TO EACH OF THESE CONCERNS STATED THAT IT WOULD BE ASSUMED THAT THE CONCERN HAD NO FURTHER INTEREST IN THE PROJECT UNLESS WESTINGHOUSE RECEIVED SPECIFIC ADVICE TO THE CONTRARY.

THE REPORT TO OUR OFFICE STATES THAT AFTER EVALUATING THE PROPOSED DESIGN CHANGES AGAINST THE PROJECT DATA SHEET AND CONCLUDING THAT THE PLANNED ACTIONS DID NOT RESULT IN ANY CHANGE IN THE PROGRAMMIC PURPOSE OR IN THE OPERATIONAL CAPACITY OF THE PROJECT, WESTINGHOUSE INSTRUCTED THE ARCHITECT -ENGINEER TO MODIFY THE DESIGN. THE PROJECT WAS REVISED TO DELETE ONE OF THE UNDERWATER TRANSFER CANALS AND AN UNDERWATER WORK STATION. WESTINGHOUSE ESTIMATED THE COST OF THE DELETED ITEMS TO BE $270,000.

AEC HAS FURNISHED OUR OFFICE WITH A DETAILED ACCOUNT REGARDING WHY WESTINGHOUSE REJECTED A LATE HAND-CARRIED BID ON THE RESOLICITATION FROM YOUR CONCERN. THE DETAILS IN AEC'S REPORT ARE AS FOLLOWS:

"ON JUNE 12, 1970, A REVISED INVITATION WAS ISSUED TO FOUR FIRMS: THE THREE PREVIOUSLY SUBMITTING OFFERS IN A COMPETITIVE RANGE AND MORRISON KNUDSEN, WHICH HAD REPLIED AFFIRMATIVELY TO THE MAY 28, 1970, TWX. THE NEW PROPOSALS WERE TO BE RECEIVED BY AND PUBLICLY OPENED AT THE NAVAL REACTORS FACILITY, NATIONAL REACTOR TESTING STATION, IDAHO, AT 3:30 P.M. LOCAL TIME ON JUNE 24, 1970.

"ON JUNE 24, 1970, AT APPROXIMATELY 3:20 P.M., MR. BENT H. CARDAN CALLED MR. W. H. WALKER, MANAGER, ADMINISTRATIVE SERVICES, NAVAL REACTORS FACILITY (WESTINGHOUSE) AND STATED THAT CARDAN COMPANY HAD MADE A LAST MINUTE DECISION TO SUBMIT A BID. HE WENT ON TO STATE, HOWEVER, THAT HIS EMPLOYEE WOULD NOT ARRIVE AT THE NAVAL REACTORS FACILITY ON TIME BECAUSE OF PLANE TROUBLE IN SALT LAKE CITY. MR. WALKER ADVISED THAT WESTINGHOUSE POLICY FORBADE ACCEPTANCE OF LATE HAND CARRIED BIDS.

"AT 3:30 P.M. ON JUNE 24, 1970, THE FOLLOWING BIDS HAD BEEN RECEIVED AND WERE PUBLICLY OPENED:

FIRM BASE BID

HUNTER-SAUCERMAN $2,053,000

ARRINGTON 2,059,440

MORRISON-KNUDSEN 2,451,000

"AT 3:40 P.M. (AFTER COMPLETION OF THE BID OPENING WHICH WAS ATTENDED BY REPRESENTATIVES OF WESTINGHOUSE, IDAHO BRANCH OFFICE OF THE AEC PITTSBURGH NAVAL REACTORS OFFICE, AND THE THREE BIDDERS, ARRINGTON, HUNTER-SAUCERMAN AND MORRISON-KNUDSEN) MR. W. H. WALKER RECEIVED A TELEPHONE CALL FROM A MR. OWEN BROWN WHO STATED THAT HE WAS CARRYING THE CARDAN PROPOSAL. HIS CALL WAS MADE FROM ATOMIC CITY (ABOUT 16 MILES FROM THE NAVAL REACTORS FACILITY). HE DESCRIBED THE TRAVEL PROBLEMS THAT CAUSED HIM TO MISS THE BID OPENING. MR. WALKER EXPLAINED THAT THE BID OPENING HAD BEEN CONDUCTED AS SCHEDULED AND THAT HIS LATE BID WOULD NOT BE CONSIDERED. MR. WALKER INFORMED MR. BROWN THAT IF HE SO DESIRED HE COULD DELIVER HIS SEALED BID TO THE AEC IDAHO BRANCH OFFICE AND PROVIDE AN EXPLANATION AS TO WHY HE WAS LATE.

"AT 4:38 P.M., MR. OWEN BROWN DELIVERED THE CARDAN SEALED BID TO THE IDAHO BRANCH OFFICE REPRESENTATIVE, MR. R. C. WILKINSON. HE THEN PREPARED A HAND-WRITTEN DOCUMENT CONTAINING THE REASONS FOR HIS NOT ARRIVING ON TIME FOR THE BID OPENING. A TYPED COPY OF THAT DOCUMENT IS ENCLOSED, EXHIBIT B.

"ON JUNE 25, 1970, MR. CARDAN PHONED MR. WALKER TO INQUIRE AS TO THE DISPOSITION OF HIS LATE BID. MR. WALKER TOLD MR. CARDAN THAT A TWX HAD ALREADY BEEN SENT THAT SAME DAY ADVISING HIM THAT WESTINGHOUSE COULD NOT CONSIDER HIS PROPOSAL FOR AWARD AND THAT HIS PROPOSAL WOULD BE RETURNED UNOPENED AFTER CONTRACT PLACEMENT, WHICH WESTINGHOUSE ANTICIPATED WOULD BE WITHIN THE NEXT FEW DAYS. MR. CARDAN ASSERTED THAT THE DELAY IN SUBMITTING THE BID OCCURRED FOR REASONS BEYOND HIS CONTROL AND ASKED IF THE REGULATIONS DID NOT PERMIT ACCEPTANCE OF A BID UNDER SUCH CIRCUMSTANCES. MR. WALKER TOLD HIM THAT THEY DID NOT. MR. CARDAN ASKED WHY THE ARMED SERVICES PROCUREMENT REGULATION DID NOT APPLY SINCE HE UNDERSTOOD THAT THIS WAS A NAVY JOB. MR. WALKER INFORMED HIM THAT IT WAS AN AEC PROJECT, NOT NAVY. THE CONVERSATION ENDED WITH MR. CARDAN STATING THAT HE WOULD EXAMINE THE REGULATIONS AND WOULD CONTACT MR. WALKER AGAIN.

"ON JUNE 26, 1970, AT 2:40 P.M., MR. D. TAYLOR, WESTINGHOUSE BETTIS MANAGER, CONTRACT ADMINISTRATION, RETURNED A TELEPHONE CALL WHICH HAD BEEN PLACED TO HIS OFFICE AT 2:10 P.M. THAT DAY AND WAS PUT IN TOUCH WITH AN INDIVIDUAL IDENTIFYING HIMSELF AS JACK PAUL, ATTORNEY FOR CARDAN. MR. PAUL INDICATED THAT A MR. AL GOLBERT OF HIS OFFICE WAS ON THE LINE WITH HIM AND THEN WENT ON TO SPEAK OF THE UNUSUAL DELAYS WHICH HAD CAUSED CARDAN'S CARRIER TO MISS THE ITEM SET FOR BID OPENING. HE QUESTIONED WHETHER IN VIEW OF THESE CIRCUMSTANCES, AND THE HARSH RESULT OF STRICTLY ENFORCING THE BID OPENING TIME, WESTINGHOUSE MIGHT HAVE THE LATITUDE TO CONSIDER THE CARDAN BID. MR. TAYLOR REPLIED TO THE EFFECT THAT ALTHOUGH WESTINGHOUSE WAS NOT LEGALLY OBLIGED TO FOLLOW FEDERAL OR AEC PROCUREMENT REGULATIONS, THE ESTABLISHED PRACTICES AT BETTIS CLOSELY PARALLEL THOSE REGULATIONS.

MR. TAYLOR FURTHER STATED THAT WESTINGHOUSE WAS NOT AWARE OF ANY FACTS WHICH, WHEN JUDGED BY WESTINGHOUSE'S ESTABLISHED AND WRITTEN POLICIES, WOULD JUSTIFY OPENING OR CONSIDERING THE CARDAN BID. MR. PAUL POINTED OUT THAT THE INQUIRY INSTRUCTIONS SAID NOTHING ABOUT NOT ACCEPTING LATE BIDS. MR. TAYLOR REPLIED TO THE EFFECT THAT BY SETTING A TIME AND PLACE FOR BID OPENING WESTINGHOUSE HAD PUT POTENTIAL BIDDERS ON NOTICE THAT LATE BIDS MIGHT NOT BE CONSIDERED PARTICULARLY WHEN, AS IN THIS CASE, OTHER BIDS WERE OPENED AT THE APPROPRIATE TIME. AT MR. PAUL'S REQUEST, MR. TAYLOR AGREED TO CONFIRM TO HIM THE TELEPHONE CONVERSATION. A TYPED COPY OF MR. TAYLOR'S LETTER IS ENCLOSED, EXHIBIT C."

AEC'S REPORT GOES ON TO QUOTE A SECTION FROM THE WESTINGHOUSE BETTIS PURCHASING MANUAL, AS APPROVED BY AEC'S PITTSBURGH NAVAL REACTORS OFFICE, PROVIDING, IN EFFECT, THAT IT IS WESTINGHOUSE'S POLICY NOT TO ACCEPT HAND- CARRIED CONSTRUCTION PROPOSALS WHICH ARE NOT RECEIVED PRIOR TO THE BID OPENING TIME SET FORTH IN THE SOLICITATION.

IN YOUR LETTER OF JUNE 10, 1970, YOU HAVE PROTESTED AGAINST THE REJECTION OF ALL BIDS UNDER THE INITIAL SOLICITATION AND IT IS YOUR CONTENTION THAT WESTINGHOUSE'S PROCEDURES CONSTITUTED "BID SHOPPING."

IT SEEMS THAT WESTINGHOUSE IS AN INDEPENDENT CONTRACTOR AND NOT A PURCHASING AGENT OF THE UNITED STATES. IN VIEW OF THIS STATUS WE HAVE RECOGNIZED THAT THE CONTRACTING PRACTICES AND PROCEDURES EMPLOYED BY PRIME CONTRACTORS OF THE UNITED STATES IN THE AWARD OF SUBCONTRACTS ARE GENERALLY NOT SUBJECT TO THE STATUTORY AND REGULATORY REQUIREMENTS WHICH WOULD GOVERN DIRECT PROCUREMENT BY THE UNITED STATES. SEE B 169942, JULY 27, 1970, AND CASES CITED THEREIN. ARTICLE IIIC) OF WESTINGHOUSE'S CONTRACT WITH AEC PROVIDES THAT UPON REQUEST OF THE COMMISSION AND ACCEPTANCE BY THE CONTRACTOR, THE CONTRACTOR SHALL PROCURE BY SUBCONTRACT THE CONSTRUCTION OF NEW FACILITIES OR THE ALTERATION OR REPAIR OF GOVERNMENT-OWNED FACILITIES. IT IS FURTHER PROVIDED THAT ANY SUBCONTRACT ENTERED INTO UNDER THAT PARAGRAPH SHALL BE SUBJECT TO THE WRITTEN APPROVAL OF THE COMMISSION.

IN B-169942, SUPRA, WHICH ALSO INVOLVED A PROTEST AGAINST THE AWARD OF A SUBCONTRACT BY AN AEC PRIME CONTRACTOR, WE QUOTED THE FOLLOWING EXCERPT FROM B-166532, APRIL 7, 1970, 49 COMP. GEN. , WHICH DEALS WITH THE VIEWS OF THIS OFFICE ON APPROVAL DETERMINATIONS BY ADMINISTRATIVE OFFICIALS:

"WE HAVE EXPRESSED THE VIEW THAT APPROVAL SHOULD NOT BE GRANTED IF THE AWARD WOULD BE PREJUDICIAL TO THE INTERESTS OF THE UNITED STATES, PARTICULARLY SINCE THE COST OF THE PROCUREMENT WILL ULTIMATELY BE BORNE BY THE UNITED STATES. 37 COMP. GEN. 315 (1957); 36 ID. 311 (1956). SUCH DETERMINATION WILL NOT BE QUESTIONED BY OUR OFFICE IN THE ABSENCE OF ILLEGALITY OR A SHOWING THAT A PROPOSED AWARD IS DEFINITELY AGAINST THE INTERESTS OF THE UNITED STATES, 37 COMP. GEN., SUPRA, AT PAGE 318.

"THE QUESTION OF WHETHER SUBCONTRACT APPROVAL WOULD BE PREJUDICIAL TO THE INTERESTS OF THE UNITED STATES IS ONE THAT MUST BE RESOLVED BY THE RESPONSIBLE CONTRACTING OFFICIALS OF THE GOVERNMENT AFTER A THOROUGH CONSIDERATION OF THE PARTICULAR FACTS AND CIRCUMSTANCES OF EACH PROCUREMENT. 46 COMP. GEN. 142 (1966). GENERALLY, WE BELIEVE THAT THE FRAME OF REFERENCE GUIDING SUCH DETERMINATION SHOULD BE THE FEDERAL NORM THAT IS EMBODIED IN THE PROCUREMENT STATUTES AND IMPLEMENTING REGULATIONS. CF. ASPR 23-202. NEVERTHELESS, IT IS EVIDENT FROM THE EXISTENCE OF PERMISSIBLE VARIATIONS IN PRIME CONTRACTING PRACTICES AND PROCEDURES THAT EVERY DETAIL OF THE FEDERAL NORM IS NOT FOR APPLICATION. (THIS IS NOT TO SAY, HOWEVER, THAT WHERE, AS A RESULT OF GOVERNMENT INTERVENTION, THE PRIME CONTRACTOR'S PROCUREMENT PRACTICES AND PROCEDURES MIRROR FEDERAL PROCUREMENT PROCEDURES, THE FEDERAL NORM SHOULD NOT BE APPLIED (CF. 36 COMP. GEN., SUPRA), OR, FOR THAT MATTER, THAT THIS NORM SHOULD NOT BE ADOPTED AND APPLIED WHEREVER FEASIBLE AND PRACTICABLE UNDER THE CIRCUMSTANCES AND CONDITIONS OF THE PRIME CONTRACT.)"

EVEN UNDER THE RULES GOVERNING DIRECT FEDERAL PROCUREMENTS AN INVITATION MAY BE CANCELLED AFTER OPENING IN THE SITUATION WHERE THERE HAS BEEN A REVISION OF THE SPECIFICATIONS. CF. FEDERAL PROCUREMENT REGULATIONS (FPR)1-2.404-1(B)(4) AND ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2- 404.1(B)(II) AND (V). SEE ALSO B-159771, SEPTEMBER 28, 1966. IT DOES NOT SEEM THAT WESTINGHOUSE CANCELLED THE INVITATION FOR THE PURPOSE OF BID SHOPPING. WITH REGARD TO WESTINGHOUSE'S DETERMINATION NOT TO CONSIDER YOUR LATE HAND-CARRIED BID ON THE RESOLICITATION, SUCH ACTION WAS CONSISTENT WITH FPR 1-2.303-5 AND ASPR 2-303.5. IN THE CIRCUMSTANCES WE HAVE NO BASIS TO QUESTION AEC'S DETERMINATION TO APPROVE AN AWARD TO OTHER THAN YOUR CONCERN. FOR THESE REASONS YOUR PROTEST IS DENIED.