B-173276, AUG 19, 1971

B-173276: Aug 19, 1971

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IT HAS BEEN DETERMINED THAT INDUSTRIAL'S VERIFIED BID IS BELOW THE MINIMUM LABOR COSTS AND PAYROLL TAXES WHICH THE CONTRACTING AGENCY HAS DETERMINED WILL BE REQUIRED FOR PERFORMANCE OF THE CONTRACT REQUIREMENTS. A DETERMINATION MUST FIRST BE MADE AS TO WHETHER INDUSTRIAL IS A RESPONSIBLE BIDDER. IF INDUSTRIAL IS DETERMINED TO BE A RESPONSIBLE BIDDER. SECRETARY: REFERENCE IS MADE TO A REPORT DATED JULY 14. AFTER BIDS WERE OPENED ON APRIL 27. ASSERTED A MISTAKE IN BID AND WAS PERMITTED TO WITHDRAW ITS OFFER. THE NEXT-LOW BID WAS SUBMITTED BY INDUSTRIAL IN THE AMOUNT OF $420. IN THIS CONNECTION WE ARE ADVISED THAT INDUSTRIAL HAS CONFIRMED ITS BID PRICE. THAT THE BID IS MORE THAN $1. 900 BELOW THE MINIMUM LABOR COSTS AND PAYROLL TAXES WHICH YOUR DEPARTMENT ESTIMATES WILL BE REQUIRED FOR PERFORMANCE OF THE CONTRACT REQUIREMENTS.

B-173276, AUG 19, 1971

BID PROTEST - RESPONSIBLE BIDDER - BELOW COST BID DECISION CONCERNING THE PROTEST OF INDUSTRIAL MAINTENANCE SERVICES, INC. (INDUSTRIAL) AGAINST THE AWARD OF A CONTRACT FOR CUSTODIAL SERVICES AT THE PENSACOLA NAVAL COMPLEX TO ANY OTHER BIDDER. IT HAS BEEN DETERMINED THAT INDUSTRIAL'S VERIFIED BID IS BELOW THE MINIMUM LABOR COSTS AND PAYROLL TAXES WHICH THE CONTRACTING AGENCY HAS DETERMINED WILL BE REQUIRED FOR PERFORMANCE OF THE CONTRACT REQUIREMENTS. WHILE A BID MAY NOT BE DECLARED NONRESPONSIVE MERELY BECAUSE IT WOULD RESULT IN A LOSS ON THE CONTRACT TO THE BIDDER, IN THIS CASE, A DETERMINATION MUST FIRST BE MADE AS TO WHETHER INDUSTRIAL IS A RESPONSIBLE BIDDER. IF INDUSTRIAL IS DETERMINED TO BE A RESPONSIBLE BIDDER, THEY CANNOT BE LEGALLY DENIED THE CONTRACT.

TO MR. SECRETARY:

REFERENCE IS MADE TO A REPORT DATED JULY 14, 1971, FAC 0211E:RSL:WH, FROM THE NAVAL FACILITIES ENGINEERING COMMAND, CONCERNING THE PROTEST OF INDUSTRIAL MAINTENANCE SERVICES, INC. (INDUSTRIAL), AGAINST AWARD OF CONTRACT NO. N62467-71-B-7020 FOR CUSTODIAL SERVICES AT THE PENSACOLA NAVAL COMPLEX, PENSACOLA, FLORIDA, TO ANY BIDDER OTHER THAN ITSELF.

AFTER BIDS WERE OPENED ON APRIL 27, 1971, THE LOWEST BIDDER, CONTRACT MAINTENANCE, INC., ASSERTED A MISTAKE IN BID AND WAS PERMITTED TO WITHDRAW ITS OFFER. THE NEXT-LOW BID WAS SUBMITTED BY INDUSTRIAL IN THE AMOUNT OF $420,685, WITH AN 8-1/2 PERCENT, 20 DAYS, PROMPT PAYMENT DISCOUNT, FOR AN EVALUATED BID PRICE OF $384,926.77. IN THIS CONNECTION WE ARE ADVISED THAT INDUSTRIAL HAS CONFIRMED ITS BID PRICE, AND THAT THE BID IS MORE THAN $1,900 BELOW THE MINIMUM LABOR COSTS AND PAYROLL TAXES WHICH YOUR DEPARTMENT ESTIMATES WILL BE REQUIRED FOR PERFORMANCE OF THE CONTRACT REQUIREMENTS.

IN THIS REGARD, THE TWELFTH-LOW BIDDER, KENTUCKY BUILDING MAINTENANCE, INC., SUBMITTED A NOTICE OF INTENTION TO PROTEST ANY CONTRACT AWARD WHERE THE "TOTAL PRICE OF THE BID IS LESS THAN THE MANDATORY LABOR COST WITH ENSUING TAXES."

INDUSTRIAL MAINTAINS THAT ITS BID SHOULD BE ACCEPTED FOR AWARD SINCE IT HAS CONFIRMED ITS BID PRICE AND AFFIRMATIVELY ACKNOWLEDGED THE MANNING REQUIREMENTS FOR THE CONTRACT. IN SUPPORT OF ITS POSITION, INDUSTRIAL HAS CITED DECISIONS OF OUR OFFICE, B-161057, MAY 5, 1967, AND B-154750, NOVEMBER 17, 1964, IN WHICH WE HELD THAT AN AWARD MAY NOT BE DENIED MERELY BECAUSE ANOTHER BIDDER ALLEGES THAT THE LOWEST BIDDER HAS SUBMITTED AN UNPROFITABLE PRICE, SINCE BUSINESS CIRCUMSTANCES MAY BE SUCH THAT AN OTHERWISE RESPONSIBLE CONCERN IS WILLING TO ACCEPT A LOSS ON A PARTICULAR CONTRACT.

WE FIND NO LEGAL BASIS ON WHICH INDUSTRIAL'S BID COULD BE DECLARED NONRESPONSIVE TO THE TERMS OF THE INVITATION. BUT IN VIEW OF THE DETAILED ANALYSIS PRESENTED BY YOUR DEPARTMENT WE BELIEVE THERE IS A QUESTION AS TO WHETHER INDUSTRIAL SHOULD BE CONSIDERED A RESPONSIBLE BIDDER FOR THIS PROCUREMENT. IN THIS REGARD IT WOULD APPEAR THAT THE CONCERN IS PRESENTED WITH THE FOLLOWING OPTIONS IF IT OBTAINS THE SUBJECT AWARD: (1) ABSORBING A LOSS ON THE CONTRACT; (2) FURNISHING FEWER WORKERS THAN THE IFB STIPULATES; (3) OR PAYING LESS THAN THE REQUIRED AND PREVAILING WAGES FOR THE COVERED WORKERS.

SINCE COMPLIANCE WITH THE WORKER AND WAGE PROVISIONS WOULD REQUIRE THE CONTRACTOR TO PERFORM THE CONTRACT AT A DEFICIT FOR A PORTION THEREOF, SUCH METHOD OF BUSINESS OPERATION COULD HAVE A CLEAR IMPACT ON THE ABILITY OF THE BIDDER TO SUCCESSFULLY COMPLETE THE REQUIREMENTS OF THE IFB. BELIEVE THEREFORE THAT THE CONTRACTING OFFICER SHOULD FORMALLY DETERMINE WHETHER INDUSTRIAL IS A RESPONSIBLE BIDDER FOR THIS PROCUREMENT. SEE ASPR 2-407.2.

INASMUCH AS THE RECORD DOES NOT INDICATE THAT THE CONTRACTING OFFICER HAS MADE SUCH A DETERMINATION AS TO INDUSTRIAL'S RESPONSIBILITY WE ARE RETURNING THE FILE FOR FURTHER PROCEEDINGS CONSISTENT WITH THIS DECISION.

IN THE EVENT INDUSTRIAL IS DETERMINED TO BE RESPONSIBLE, WE DO NOT BELIEVE THAT FIRM CAN BE LEGALLY DENIED THE CONTRACT MERELY BECAUSE PERFORMANCE IN ACCORDANCE WITH THE CONTRACT TERMS WILL RESULT IN A FINANCIAL LOSS TO THE CONTRACTOR.