B-176014, AUG 4, 1972

B-176014: Aug 4, 1972

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INC.: FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE TERMS OF IFB NO. YOU CORRECTLY INFER THAT THERE IS NO CURRENT STATUTORY OR REGULATORY PROVISION AUTHORIZING OR DIRECTING AN ADJUSTMENT IN CONTRACT PRICES ON THE BASIS OF AN AMENDMENT TO THE MINIMUM WAGE LAW. NEITHER IS THERE SUCH A PROVISION IN THE REFERENCED PROPOSED LEGISLATION. WHICH WILL RESULT IN THE GOVERNMENT PAYING AN EXCESSIVE AMOUNT. IF THE LEGISLATION IS NOT PASSED. A COPY OF WHICH WAS FURNISHED YOU. THE RATIONALE FOR THIS SITUATION APPEARS TO BE THAT ALL POTENTIAL BIDDERS FOR THESE CONTRACTS HAVE THE SAME KNOWLEDGE REGARDING POSSIBLE CHANGES IN THE MINIMUM WAGE LAW DURING THE CONTRACT PERIOD. CONSIDERATIONS SUCH AS THESE ARE THOUGHT TO BE NORMAL RISKS OF DOING BUSINESS WITH THE GOVERNMENT FOR WHICH EVERY PRUDENT BUSINESS MAN SHOULD BE ABLE TO PROVIDE IN BIDDING ON CONTRACTS THAT DO NOT EXCEED ONE YEAR.

B-176014, AUG 4, 1972

BID PROTEST - MINIMUM WAGE RATES - PRICE ESCALATION CLAUSES DENIAL OF PROTEST BY INDUSTRIAL MAINTENANCE SERVICES, INC., AGAINST THE TERMS OF AN IFB ISSUED AT FORT RUCKER, ALA. PROTESTANT CONTENDS THAT THE SOLICITATION AND RESULTING CONTRACT SHOULD CONTAIN A PRICE ADJUSTMENT CLAUSE TO PROTECT THE CONTRACTOR IN THE EVENT PENDING LEGISLATION RAISES THE MINIMUM WAGE RATE ABOVE THE WAGE DETERMINATION FIGURE. SINCE THE PROCUREMENT REGULATIONS DO NOT CURRENTLY PROVIDE FOR PRICE ESCALATION CLAUSES TO BE USED IN ONE-YEAR, ADVERTISED, FIXED-PRICE, SERVICE CONTRACTS, GAO CANNOT DIRECT THE INCLUSION OF A PRICE ESCALATION CLAUSE IN THIS SOLICITATION.

TO INDUSTRIAL MAINTENANCE SERVICES, INC.:

FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE TERMS OF IFB NO. DABC01-72-B-0087, ISSUED AT FORT RUCKER, ALABAMA.

YOUR PROTEST CENTERS AROUND THE FACT THAT WHILE THE INSTANT INVITATION CONTAINS A CURRENT WAGE DETERMINATION OF $1.65 PER HOUR, PLUS HEALTH AND WELFARE BENEFITS, IT DOES NOT CONTAIN A PRICE ADJUSTMENT CLAUSE TO PROTECT THE CONTRACTOR IN THE EVENT PENDING LEGISLATION BEFORE CONGRESS RAISES THE MINIMUM WAGE RATE ABOVE THE WAGE DETERMINATION FIGURE.

YOU UNDOUBTEDLY MAKE REFERENCE TO THE PROPOSED AMENDMENT TO THE FAIR LABOR STANDARDS ACT OF 1938 (29 U.S.C. 201-219), NOW PENDING BEFORE THE CONGRESS. IN THIS CONNECTION, YOU CORRECTLY INFER THAT THERE IS NO CURRENT STATUTORY OR REGULATORY PROVISION AUTHORIZING OR DIRECTING AN ADJUSTMENT IN CONTRACT PRICES ON THE BASIS OF AN AMENDMENT TO THE MINIMUM WAGE LAW. NEITHER IS THERE SUCH A PROVISION IN THE REFERENCED PROPOSED LEGISLATION. YOU THEREFORE ASSERT THAT THIS PLACES THE CONTRACTOR IN A POSITION OF TRYING TO SECOND-GUESS THE LEGISLATIVE BRANCH OF THE GOVERNMENT, WHICH WILL RESULT IN THE GOVERNMENT PAYING AN EXCESSIVE AMOUNT, AND THE CONTRACTOR RECEIVING A WINDFALL, IF THE LEGISLATION IS NOT PASSED.

AS THE DEPARTMENT OF THE ARMY POINTS OUT IN ITS REPORT IN RESPONSE TO YOUR PROTEST, A COPY OF WHICH WAS FURNISHED YOU, THE PROCUREMENT REGULATIONS DO NOT CURRENTLY PROVIDE FOR PRICE ESCALATION CLAUSES TO BE USED IN ONE-YEAR, ADVERTISED, FIXED-PRICE, SERVICE CONTRACTS. THE RATIONALE FOR THIS SITUATION APPEARS TO BE THAT ALL POTENTIAL BIDDERS FOR THESE CONTRACTS HAVE THE SAME KNOWLEDGE REGARDING POSSIBLE CHANGES IN THE MINIMUM WAGE LAW DURING THE CONTRACT PERIOD, AND CONSIDERATIONS SUCH AS THESE ARE THOUGHT TO BE NORMAL RISKS OF DOING BUSINESS WITH THE GOVERNMENT FOR WHICH EVERY PRUDENT BUSINESS MAN SHOULD BE ABLE TO PROVIDE IN BIDDING ON CONTRACTS THAT DO NOT EXCEED ONE YEAR.

IN THIS REGARD, IT WOULD APPEAR THAT THE NUMBER OF GOVERNMENT SERVICE CONTRACTS MAKE UP ONLY A SMALL PROPORTION OF THE TOTAL NUMBER OF SIMILAR CONTRACTS. IN THE PRIVATE SECTOR, SUCH MATTERS WOULD ORDINARILY BE THE SUBJECT OF CONTRACT NEGOTIATIONS, AND WHETHER IT IS ADVISABLE TO MAKE AN EXCEPTION ONLY IN GOVERNMENT CONTRACTS SO AS TO PROTECT CONTRACTORS AGAINST THE EFFECT OF A RAISE IN MINIMUM WAGES IS DEBATABLE. UNDER THE CIRCUMSTANCES, THIS OFFICE IS NOT IN A POSITION TO DIRECT THE INCLUSION OF AN ESCALATION PROVISION, SUCH AS YOU PROPOSE, IN THE INSTANT INVITATION FOR BIDS, AND IT APPEARS THAT APPROPRIATE LEGISLATION MAY BE THE ONLY MEANS OF ASSURING RELIEF TO A CONTRACTOR WHO MAY BE AFFECTED BY ENACTMENT OF ANY NEW MINIMUM WAGE LEGISLATION.

ACCORDINGLY, YOUR PROTEST MUST BE DENIED.