B-178640, JUL 31, 1973, 53 COMP GEN 64

B-178640: Jul 31, 1973

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

CONTRACTS - SPECIFICATIONS - FAILURE TO FURNISH SOMETHING REQUIRED - ADDENDA ACKNOWLEDGMENT - EVIDENCE THE FAILURE TO ACKNOWLEDGE AN AMENDMENT TO AN INVITATION FOR THE CONSTRUCTION OF A NAVAL AND MARINE CORPS RESERVE CENTER WHICH IS NOT CONSIDERED TO BE A MINOR INFORMALITY OR IRREGULARITY IN BID TO PERMIT CORRECTION UNDER PARAGRAPH 2-405(IV)(B) OF THE ARMED SERVICES PROCUREMENT REGULATION MAY NOT BE WAIVED ON THE BASIS THE BIDDER'S WORKING PAPERS ESTABLISHES THE AMENDMENT WAS CONSIDERED IN BID COMPUTATION SINCE THE ACKNOWLEDGMENT WAS REQUIRED TO BE RECEIVED BEFORE BID OPENING. 1973: REFERENCE IS MADE TO YOUR LETTER OF JUNE 14. AWARD WAS MADE BY THE COMMAND PRIOR TO OUR RESOLUTION OF THE PROTEST AFTER PROPER NOTIFICATION TO OUR OFFICE.

B-178640, JUL 31, 1973, 53 COMP GEN 64

CONTRACTS - SPECIFICATIONS - FAILURE TO FURNISH SOMETHING REQUIRED - ADDENDA ACKNOWLEDGMENT - EVIDENCE THE FAILURE TO ACKNOWLEDGE AN AMENDMENT TO AN INVITATION FOR THE CONSTRUCTION OF A NAVAL AND MARINE CORPS RESERVE CENTER WHICH IS NOT CONSIDERED TO BE A MINOR INFORMALITY OR IRREGULARITY IN BID TO PERMIT CORRECTION UNDER PARAGRAPH 2-405(IV)(B) OF THE ARMED SERVICES PROCUREMENT REGULATION MAY NOT BE WAIVED ON THE BASIS THE BIDDER'S WORKING PAPERS ESTABLISHES THE AMENDMENT WAS CONSIDERED IN BID COMPUTATION SINCE THE ACKNOWLEDGMENT WAS REQUIRED TO BE RECEIVED BEFORE BID OPENING, NOR DOES THE USE OF "MAY" IN STATING THAT FAILURE TO ACKNOWLEDGE THE AMENDMENT WOULD CONSTITUTE GROUNDS FOR BID REJECTION MEAN THE CONTRACTING OFFICER HAS WAIVER DISCRETION, AND FURTHERMORE, TO PERMIT A BIDDER TO DETERMINE THE VALUE OF AN INVITATION AMENDMENT WOULD BE INAPPROPRIATE AS IT WOULD GIVE HIM THE OPTION TO BECOME ELIGIBLE FOR AWARD BY CITING COSTS THAT WOULD BRING HIM WITHIN THE DE MINIMIS DOCTRINE, OR TO AVOID AWARD BY PLACING A LARGER COST VALUE ON THE EFFECTS OF THE AMENDMENT.

TO TARRICONE, BILGORE, WELTMAN & SILVER, JULY 31, 1973:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 14, 1973, AND PRIOR CORRESPONDENCE, PROTESTING ON BEHALF OF THE JOHN LUTHER AND SONS COMPANY AGAINST THE FAILURE OF THAT FIRM TO RECEIVE AWARD UNDER INVITATION FOR BIDS NO. N62472-72-B-0163 ISSUED BY THE NAVAL FACILITIES ENGINEERING COMMAND, PHILADELPHIA. AWARD WAS MADE BY THE COMMAND PRIOR TO OUR RESOLUTION OF THE PROTEST AFTER PROPER NOTIFICATION TO OUR OFFICE.

THE INVITATION, ISSUED MARCH 16, 1973, SOLICITED BIDS FOR THE CONSTRUCTION OF A NAVAL AND MARINE CORPS RESERVE CENTER AT ROCHESTER, NEW YORK. ON APRIL 3, AMENDMENT NO. 0001 WAS ISSUED TO THE INVITATION MAKING CHANGES IN THE EARTHWORK AND PLANTING SECTIONS OF THE SPECIFICATIONS. THESE CHANGES WERE ESTIMATED BY THE COMMAND TO INCREASE THE GOVERNMENT ESTIMATE FOR THE WORK BY $5,500.

AT THE APRIL 19 BID OPENING, THE TWO LOW BIDS WERE:

JOHN LUTHER AND SONS COMPANY $1,242,828

RAYMOND LE CHASE, INC. 1,269,118

THE JOHN LUTHER AND SONS COMPANY FAILED TO SUBMIT STANDARD FORM 19B AND TO ACKNOWLEDGE AMENDMENT NO. 0001. IN VIEW OF THE GOVERNMENT ESTIMATE FOR THE AMENDMENT, THE COMMAND DETERMINED THAT THE AMENDMENT WOULD HAVE MORE THAN A "TRIVIAL OR NEGLIGIBLE" EFFECT ON THE PRICE OF THE WORK AND THAT THE FAILURE TO ACKNOWLEDGE THE AMENDMENT COULD NOT BE CONSIDERED A MINOR INFORMALITY OR IRREGULARITY IN BID FOR CORRECTION UNDER PARAGRAPH 2- 405(IV)(B) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR).

YOU BELIEVE THAT THE JOHN LUTHER AND SONS COMPANY, AS LOW BIDDER, SHOULD HAVE RECEIVED AWARD UNDER THE INVITATION. THE BIDDER DID RECEIVE THE AMENDMENT AND DID, YOU CONTEND, TAKE IT INTO CONSIDERATION IN COMPUTING ITS BID. THAT THE AMENDMENT WAS CONSIDERED IN BID COMPUTATION MAY BE AVERRED, YOU NOTE, BY EXAMINING THE BID WORKING PAPERS WHEREIN THE COST OF CHANGING THE RESPONSIBILITY FOR THE QUALITY CONTROL ORGANIZATION FROM THE GOVERNMENT TO THE CONTRACTOR WAS RECORDED, THEREBY INCREASING THE TOTAL CONSTRUCTION COST BY $750.

FURTHER, ALTHOUGH THE GOVERNMENT ESTIMATE FOR THE ADDITIONAL WORK OCCASIONED BY THE AMENDMENT WAS $5,500, YOU BELIEVE THAT THE PROPER SUM FOR CONSIDERATION IN DETERMINING WHETHER THE AMENDMENT HAD A "TRIVIAL OR NEGLIGIBLE" EFFECT ON PRICE SHOULD BE THE $750 INCREASE IN THE LOW BIDDER'S BID. THE ORIGINAL JOHN LUTHER AND SONS COMPANY ESTIMATED COST, ASIDE FROM THE $750 SUM, COULD BE ADJUSTED, WITHOUT ADDITIONAL COST, TO THE INCREASED EFFORT CALLED FOR BY THE AMENDMENT. ALSO THE INCREASED COST FOR LIME WAS FELT TO BE OFFSET BY THE DECREASE IN COST FOR SEED CAUSED BY THE AMENDMENT. INASMUCH AS THE $750 CONSTITUTES, YOU STATE, ONLY .06 PERCENT OF THE TOTAL BID PRICE OF $1,200,000 AND APPROXIMATELY ONLY 2 PERCENT OF THE DIFFERENCE BETWEEN THE JOHN LUTHER AND SONS COMPANY BID AND THAT OF THE NEXT LOW BIDDER, THE FAILURE TO ACKNOWLEDGE THE AMENDMENT MAY BE WAIVED, YOU CONTEND, UNDER THE DE MINIMIS DOCTRINE.

LASTLY, YOU NOTE THAT THE AMENDMENT STATED THAT A FAILURE TO ACKNOWLEDGE THE AMENDMENT "MAY" - NOT SHALL - CONSTITUTE GROUNDS FOR REJECTION OF THE BID. THE FAILURE TO SO ACKNOWLEDGE HERE SHOULD CONSEQUENTLY, YOU BELIEVE, BE WAIVED AS A MINOR INFORMALITY UNDER THE APPROPRIATE ASPR PROVISIONS.

WE DO NOT BELIEVE THAT A BIDDER'S WORKING PAPERS MAY BE USED TO SHOW THAT AN AMENDMENT TO AN INVITATION WAS RECEIVED AND CONSIDERED AND THEREBY ACT AS A RETROACTIVE ACKNOWLEDGMENT OF THAT AMENDMENT. THE BIDDER WAS DIRECTED BY THAT AMENDMENT TO MAKE ACKNOWLEDGMENT PRIOR TO BID OPENING EITHER BY ACKNOWLEDGING RECEIPT ON EACH COPY OF HIS OFFER SUBMITTED UNDER THE INVITATION OR BY SEPARATE LETTER OR TELEGRAM WHICH WAS TO INCLUDE A REFERENCE TO THE SOLICITATION AND AMENDMENT NUMBERS. THIS WAS NOT DONE. FURTHER, THAT THE AMENDMENT STATED THAT FAILURE TO MAKE PROPER ACKNOWLEDGMENT "MAY" CONSTITUTE GROUNDS FOR REJECTION OF THE BID DOES NOT MEAN THAT THE CONTRACTING OFFICER MAY IGNORE A FAILURE TO MAKE PROPER ACKNOWLEDGMENT SOLELY AT HIS OWN DISCRETION. HE MAY WAIVE THE FAILURE ONLY WHEN LEGALLY PERMISSIBLE.

THE GENERAL RULE AS TO THE EFFECT OF A BIDDER'S FAILURE TO ACKNOWLEDGE AN AMENDMENT TO AN INVITATION FOR BIDS IS THAT WHEN THE AMENDMENT AFFECTS IN OTHER THAN A "TRIVIAL OR NEGLIGIBLE" MANNER THE PRICE, QUANTITY, OR QUALITY OF THE PROCUREMENT, THE BIDDER'S FAILURE TO ACKNOWLEDGE THE AMENDMENT IN COMPLIANCE WITH THE TERMS OF THE INVITATION OR AMENDMENT CANNOT BE WAIVED. SEE ASPR 2-405. THE BASIS FOR THIS RULE IS THE PRINCIPLE THAT THE ACCEPTANCE OF A BID WHICH DISREGARDS A MATERIAL PROVISION OF AN INVITATION, AS AMENDED, WOULD BE PREJUDICIAL TO OTHER BIDDERS. CLARIFICATION OF THE BID AFTER OPENING MAY NOT BE PERMITTED BECAUSE THE BIDDER IN SUCH CIRCUMSTANCES WOULD HAVE THE OPTION TO DECIDE TO BECOME ELIGIBLE BY FURNISHING EXTRANEOUS EVIDENCE THAT THE AMENDMENT HAD BEEN CONSIDERED, OR TO AVOID AWARD BY REMAINING SILENT. 41 COMP. GEN. 550 (1962) AND CASES CITED THEREIN.

IN A RECENT DECISION, 52 COMP. GEN. 544 (1973), WE UPHELD AS REASONABLE A CONTRACTING OFFICER'S WAIVER OF A BIDDER'S FAILURE TO ACKNOWLEDGE AN AMENDMENT WHICH THE GOVERNMENT ESTIMATED TO HAVE INCREASED THE VALUE OF THE WORK TO BE PERFORMED BY $966. IN THAT INSTANCE, THE VALUE OF THE AMENDMENT WAS .1376 PERCENT OF THE LOW BID. IT WAS ONLY 4.92 PERCENT OF THE $19,000 DIFFERENCE BETWEEN THE LOW AND SECOND LOW BIDS.

IN THE CASE BEFORE US THE $5,500 VALUE OF THE AMENDMENT, AS DETERMINED PRIOR TO BID OPENING BY THE PROCUREMENT ACTIVITY, WAS .434 PERCENT OF THE LOW BID OF $1,242,828. IT WAS, HOWEVER, 20.9 PERCENT OF THE $26,290 DIFFERENCE BETWEEN THE LOW AND SECOND LOW BIDS. WHILE YOU CONTEST THE VALIDITY OF THE $5,500 ESTIMATE, WE BELIEVE THAT IN DETERMINING WHETHER THE VALUE OF AN INVITATION AMENDMENT IS SUCH AS TO ALLOW WAIVER OF THE FAILURE TO ACKNOWLEDGE RECEIPT THEREOF IT WOULD BE INAPPROPRIATE TO ACCEPT THE VALUATION PLACED UPON IT BY THE BIDDER SEEKING THE WAIVER. TO ALLOW THAT WOULD BE TO REVERT TO THE SITUATION WHEREIN A BIDDER AFTER PUBLICATION OF BID PRICES WOULD HAVE THE OPTION TO DECIDE TO BECOME ELIGIBLE FOR AWARD BY CITING COSTS WHICH WOULD BRING HIM WITHIN THE DE MINIMIS DOCTRINE, OR TO AVOID AWARD BY PLACING A LARGER COST VALUE ON THE EFFECTS OF THE AMENDMENT. CONSEQUENTLY, WE MUST ACCEPT THE DETERMINATION MADE HERE PRIOR TO BID OPENING BY THE PROCUREMENT ACTIVITY THAT THE AMENDMENT INCREASED THE COST OF THE PROCUREMENT BY $5,500.

IN THE CIRCUMSTANCES, WE DO NOT BELIEVE THAT THE DECISION TO REJECT THE LOW BID SUBMITTED BY THE JOHN LUTHER AND SONS COMPANY WAS UNREASONABLE. ACCORDINGLY, THE PROTEST IS DENIED.