B-170360, APR 6, 1971

B-170360: Apr 6, 1971

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ALTHOUGH SUCCESSFUL LOW BIDDER MAY HAVE SUBMITTED A BID $40. 000 BELOW THE GOVERNMENT'S ESTIMATE SUCH A "BUY-IN" BID IS NOT PROHIBITED BY STATUTE OR REGULATION. THERE IS NO INDICATION THAT THE LOW BIDDER WAS NONRESPONSIBLE AND WHILE THE COMP. MUST CONCLUDE THAT THERE IS NO LEGAL BASIS TO QUESTION THE AWARD TO LAW BROTHERS THE ARMY IS BEING ADVISED TO SCRUTINIZED CAREFULLY ANY REQUESTED CHANGES IN LIGHT OF ASPR 1-311. AWARD WAS MADE TO LAW BROTHERS - THE LOWEST BIDDER - BECAUSE THE CONTRACT SERVICES. WERE REQUIRED BEFORE THE ADVENT OF WINTER WEATHER. THE LAW BROTHERS' BID UNDER THE SUBJECT INVITATION WAS INITIALLY REJECTED AS UNREASONABLY LOW AND AWARD MADE TO THE ROY SEEBER COMPANY. IT WAS DETERMINED THAT INSUFFICIENT EVIDENCE EXISTED TO SUPPORT THE DETERMINATION THAT LAW BROTHERS WAS NONRESPONSIBLE.

B-170360, APR 6, 1971

BID PROTEST - BUY IN BID DECISION DENYING PROTEST AGAINST CONTRACT AWARDED TO LAW BROTHERS CONTRACTING CORP., UNDER AN IFB ISSUED BY THE PURCHASING AND CONTRACTING OFFICE, CAMP DRUM, NEW YORK, FOR THE ROOFING OF ARMY BUILDINGS. ALTHOUGH SUCCESSFUL LOW BIDDER MAY HAVE SUBMITTED A BID $40,000 BELOW THE GOVERNMENT'S ESTIMATE SUCH A "BUY-IN" BID IS NOT PROHIBITED BY STATUTE OR REGULATION. THERE IS NO INDICATION THAT THE LOW BIDDER WAS NONRESPONSIBLE AND WHILE THE COMP. GEN. MUST CONCLUDE THAT THERE IS NO LEGAL BASIS TO QUESTION THE AWARD TO LAW BROTHERS THE ARMY IS BEING ADVISED TO SCRUTINIZED CAREFULLY ANY REQUESTED CHANGES IN LIGHT OF ASPR 1-311.

TO GALL, LANE, POWELL AND KILCULLEN:

YOUR LETTERS OF AUGUST 28 AND OCTOBER 16, 1970, PROTESTED ON BEHALF OF THE ROY H. SEEBER ROOFING COMPANY AGAINST THE PROPOSED AWARD OF A CONTRACT TO THE LAW BROTHERS CONTRACTING CORP. UNDER INVITATION FOR BIDS NO. DABB16 -70-B-0040, ISSUED BY THE PURCHASING AND CONTRACTING OFFICE, CAMP DRUM, NEW YORK. SUBSEQUENT TO THE PROTEST, ON SEPTEMBER 15, 1970, AWARD WAS MADE TO LAW BROTHERS - THE LOWEST BIDDER - BECAUSE THE CONTRACT SERVICES, WHICH CONSISTED OF ROOFING ARMY BUILDINGS AT FORT DRUM, WERE REQUIRED BEFORE THE ADVENT OF WINTER WEATHER.

THE LAW BROTHERS' BID UNDER THE SUBJECT INVITATION WAS INITIALLY REJECTED AS UNREASONABLY LOW AND AWARD MADE TO THE ROY SEEBER COMPANY, THE SECOND LOW BIDDER, ON JUNE 29, 1970. HOWEVER, UPON REVIEW BY HEADQUARTERS, FIRST UNITED STATES ARMY, IT WAS DETERMINED THAT INSUFFICIENT EVIDENCE EXISTED TO SUPPORT THE DETERMINATION THAT LAW BROTHERS WAS NONRESPONSIBLE. THEREAFTER, THE AWARD TO THE ROY SEEBER COMPANY WAS ADMINISTRATIVELY CANCELED AND AWARD WAS MADE TO LAW BROTHERS.

THE GIST OF YOUR PROTEST IS THAT THE DETERMINATION BY HIGHER AUTHORITY THAT THE AWARD SHOULD BE MADE TO LAW BROTHERS WAS A USURPATION OF THE CONTRACTING OFFICER'S AUTHORITY AND, THEREFORE, WAS WITHOUT LEGAL EFFECT. IN SUPPORT OF THIS POSITION, YOU CITE CLIMATIC RAINWEAR CO., INC. V UNITED STATES, 115 CT. CL. 520 (1950); AND SOL O. SCHLESINGER V UNITED STATES, 182 CT. CL. 571 (1968), BOTH TO THE EFFECT THAT A CONTRACTING OFFICER'S DECISION UNDER THE CONTRACT DISPUTE CLAUSES MUST BE UNBIASED AND CAN NEITHER BE DELEGATED TO NOR USURPED BY ANYONE NOT AUTHORIZED BY THE TERMS OF THE CONTRACT. THE DETERMINATION HERE DID NOT INVOLVE THE CONTRACTING OFFICER'S AUTHORITY UNDER THE TERMS OF A CONTRACT BUT RATHER WHETHER HE POSSESSED THE LEGAL AUTHORITY TO MAKE A VALID AWARD TO OTHER THAN THE LOW, RESPONSIBLE BIDDER. THE DISTINCTION IS SIGNIFICANT BECAUSE A PURPORTED AWARD IN EXCESS OF THE AUTHORITY VESTED IN THE CONTRACTING OFFICER IS WITHOUT LEGAL EFFECT. SEE 37 COMP. GEN. 532 (1958).

YOU ALSO COMPLAIN THAT THE AWARD TO LAW BROTHERS PENDING RESOLUTION OF THE PROTEST WAS CONTRARY TO PARAGRAPH 2-407.8(B)(3) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) AND YOU ALLEGE THAT NOT ONLY WAS A DETERMINATION OF URGENCY NOT MADE BUT THAT BECAUSE OF WINTER WEATHER THE CONTRACT WORK WILL NOT ACTUALLY BE PERFORMED UNTIL SPRING 1971.

YOUR PROTEST MAINTAINS THAT THE LAW BROTHERS' BID OF $141,268 WAS $40,000 BELOW THE GOVERNMENT'S ESTIMATE AND THAT THE BID IS PART OF A BIDDING PATTERN ON THE PART OF LAW BROTHERS TO DISCOURAGE OTHER BIDDERS FROM BIDDING ON WORK AT CAMP DRUM. IN THIS REGARD, YOU STATE THAT:

" *** THE EFFECTS OF THIS BIDDING PATTERN CAN ALREADY BE SEEN IN THE FACT THAT A MAJORITY OF THE CONTRACTORS IN THE WATERTOWN AREA HAVE DISCONTINUED PRICING OR BIDDING OF CONTRACT WORK AT CAMP DRUM, AND THAT THE NUMBER OF BIDS ON SUCH WORK HAVE STEADILY DECLINED. WE ARE INFORMED THAT ON A NUMBER OF RECENT IFB'S LAW BROTHERS HAS BEEN THE SOLE BIDDER."

YOU CONCLUDE BY REQUESTING THAT AN INVESTIGATION OF THE BIDDING PRACTICES OF LAW BROTHERS BE CONDUCTED FOR THE PURPOSE OF ESTABLISHING A PATTERN OF UNREASONABLY LOW BIDS DESIGNED TO DESTROY COMPETITION.

CONCERNING THE AWARD OF A CONTRACT TO LAW BROTHERS NOTWITHSTANDING A PROTEST TO OUR OFFICE, OUR FILE REFLECTS THAT NOTIFICATION OF INTENT TO MAKE AWARD NOTWITHSTANDING THE PROTEST OF ROY H. SEEBER WAS FURNISHED TO OUR OFFICE ON SEPTEMBER 11, 1970, IN ACCORDANCE WITH ASPR 2 407.8(B)(2). FURTHER, BY INFORMAL TRANSMITTAL ON DECEMBER 11, 1970, WE WERE FURNISHED WITH A COPY OF A CONTRACTING OFFICER'S DETERMINATION OF URGENCY REQUIRED BY ASPR 2-407.8(B)(3). FINALLY, WE WERE ADVISED THAT AS OF NOVEMBER 30, 1970, THE CONTRACT WORK WAS 27 PERCENT COMPLETE, ALTHOUGH INCLEMENT WINTER WEATHER WILL FORCE POSTPONEMENT OF SOME OF THE WORK UNTIL SPRING 1971.

THERE IS NO STATUTORY OR REGULATORY PROHIBITION AGAINST THE ACCEPTANCE OF A "BUY-IN" BID (A BELOW COST BID MADE WITH THE INTENT OF RECOUPING LOSSES BY MEANS OF CHANGE ORDERS OR FOLLOW-ON CONTRACTS). ASPR 1-311, DEALING WITH "BUY-IN" BIDS, DOES NOT PRECLUDE THE ACCEPTANCE OF BELOW COST BIDS BUT CAUTIONS CONTRACTING OFFICERS TO ASSURE THAT LOSSES ENCOUNTERED IN THE "BUY-IN" CONTRACT ARE NOT RECOUPED THROUGH CHANGE ORDERS OR BY FOLLOW-ON CONTRACTS. THUS, SO LONG AS THE BID OF THE SUSPECTED "BUY-IN" BIDDER IS LOW AND IS OTHERWISE RESPONSIVE TO THE INVITATION REQUIREMENTS AND THE BIDDER IS DETERMINED BY THE CONTRACTING OFFICIALS TO BE RESPONSIBLE, AWARD MUST BE MADE TO THAT BIDDER AS IN THE GOVERNMENT'S BEST INTEREST. 164951, SEPTEMBER 30, 1968; B-156888, JULY 2, 1965; B-169977, JULY 23, 1970, 50 COMP. GEN. . THERE IS NO INDICATION IN THE RECORD THAT LAW BROTHERS WAS A NONRESPONSIBLE BIDDER. FURTHERMORE, THE DETERMINATION OF A BIDDER'S RESPONSIBILITY IS PRIMARILY THE FUNCTION OF THE ADMINISTRATIVE AGENCY AND IS NOT ORDINARILY SUBJECT TO QUESTION BY OUR OFFICE. SEE B 164648, DECEMBER 16, 1968. WE THEREFORE CONCLUDE THAT THE AWARD TO THE ROY H. SEEBER COMPANY WAS IN EXCESS OF THE AUTHORITY OF THE CONTRACTING OFFICER AND THAT NO LEGAL BASIS NOW EXISTS TO QUESTION THE SUBSEQUENT AWARD MADE TO LAW BROTHERS.

HOWEVER, WE ARE SUGGESTING TO THE SECRETARY OF THE ARMY THAT ANY CHANGES REQUESTED BY LAW BROTHERS UNDER ITS CONTRACTS BE SCRUTINIZED CAREFULLY IN THE LIGHT OF THE GUIDELINES CONTAINED IN ASPR 1-311.