B-180075, MAY 3, 1974

B-180075: May 3, 1974

Additional Materials:

Contact:

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

 

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

HEW'S APPROVAL OF HIGHER EDUCATION FACILITIES ACT GRANTEE'S DECISION TO MAKE HIGHER-PRICED AGGREGATE RATHER THAN MULTIPLE ITEM AWARDS FOR CONSTRUCTION WORK IS NOT OBJECTIONABLE. AMOUNT OF FEDERAL GRANT IS UNAFFECTED REGARDLESS OF MANNER IN WHICH CONTRACTS WERE AWARDED. 2.SOLICITATION ISSUED BY HIGHER EDUCATION FACILITIES ACT GRANTEE IS VIEWED AS PERMITTING EITHER AGGREGATE OR MULTIPLE INDIVIDUAL ITEM AWARDS. UNDER FEDERAL COMPETITIVE BIDDING PRINCIPLES MULTIPLE AWARDS WOULD HAVE BEEN REQUIRED FOR ONE OF THE FOUR AREAS OF WORK COVERED BY SOLICITATION SINCE ADMINISTRATIVE COSTS ASSOCIATED WITH MULTIPLE AWARDS WHICH ALLEGEDLY OFFSET DIFFERENCE BETWEEN TOTAL OF MULTIPLE ITEM PRICES AND HIGHER AGGREGATE BID PRICE CAN BE CONSIDERED IN BID EVALUATION ONLY WHEN SPECIFICALLY INCLUDED IN SOLICITATION AS EVALUATION FACTOR.

B-180075, MAY 3, 1974

1. HEW'S APPROVAL OF HIGHER EDUCATION FACILITIES ACT GRANTEE'S DECISION TO MAKE HIGHER-PRICED AGGREGATE RATHER THAN MULTIPLE ITEM AWARDS FOR CONSTRUCTION WORK IS NOT OBJECTIONABLE, SINCE AGENCY HAS PRIMARY AUTHORITY TO DETERMINE COMPLIANCE WITH ITS GRANT REGULATIONS, HEW INTERPRETS SOLICITATION AS FAVORING AGGREGATE AWARD IF CIRCUMSTANCES EXISTED PERMITTING SUCH AWARD, AND AMOUNT OF FEDERAL GRANT IS UNAFFECTED REGARDLESS OF MANNER IN WHICH CONTRACTS WERE AWARDED. 2.SOLICITATION ISSUED BY HIGHER EDUCATION FACILITIES ACT GRANTEE IS VIEWED AS PERMITTING EITHER AGGREGATE OR MULTIPLE INDIVIDUAL ITEM AWARDS, OR COMBINATION THEREOF, DEPENDING ON MOST ADVANTAGEOUS PRICE, AND UNDER FEDERAL COMPETITIVE BIDDING PRINCIPLES MULTIPLE AWARDS WOULD HAVE BEEN REQUIRED FOR ONE OF THE FOUR AREAS OF WORK COVERED BY SOLICITATION SINCE ADMINISTRATIVE COSTS ASSOCIATED WITH MULTIPLE AWARDS WHICH ALLEGEDLY OFFSET DIFFERENCE BETWEEN TOTAL OF MULTIPLE ITEM PRICES AND HIGHER AGGREGATE BID PRICE CAN BE CONSIDERED IN BID EVALUATION ONLY WHEN SPECIFICALLY INCLUDED IN SOLICITATION AS EVALUATION FACTOR.

TO F. J. BUSSE COMPANY, INC.:

BY TELEGRAM AND LETTER DATED NOVEMBER 16 AND 17, 1973, RESPECTIVELY, THE F. J. BUSSE COMPANY, INC. (BUSSE), PROTESTED TO OUR OFFICE AGAINST THE ACTION OF CARNEGIE-MELLON UNIVERSITY IN MAKING AGGREGATE AWARDS UNDER A SOLICITATION FOR CONSTRUCTION OF THE UNIVERSITY'S FINE ARTS EXPANSION PROJECT. BUSSE'S CONTENTION, DESCRIBED IN DETAIL INFRA, IS THAT MULTIPLE INDIVIDUAL ITEM AWARDS, OR A COMBINATION OF AGGREGATE AND INDIVIDUAL ITEM AWARDS, WOULD HAVE RESULTED IN A LOWER PRICE.

THE FEDERAL GOVERNMENT IS NOT A PARTY TO THE CONTRACTS. HOWEVER, A PORTION OF THE PROJECT'S COSTS ARE COVERED BY A GRANT TO THE UNIVERSITY FROM THE DEPARTMENT OF HEALTH, EDUCATION AND WELFARE (HEW) UNDER THE HIGHER EDUCATION FACILITIES ACT. 20 U.S.C. 1132A, ET SEQ. THE ACT ITSELF DOES NOT SPECIFY ANY COMPETITIVE BIDDING PRINCIPLES TO BE FOLLOWED IN PROCUREMENTS CONDUCTED BY GRANTEES; HEW HAS ISSUED GRANT REGULATIONS WHICH PROVIDE THAT CONSTRUCTION CONTRACTS SHALL BE AWARDED ON THE BASIS OF OPEN COMPETITIVE BIDDING AND SHALL BE MADE TO THE LOWEST QUALIFIED BIDDER WHOSE BID IS RESPONSIVE TO THE BID INVITATION. SEE 38 FEDERAL REGISTER 10495, 10497, MAY 29, 1973.

IN THE ADMINISTRATIVE REPORT DATED JANUARY 3, 1974, THE DIRECTOR, OFFICE OF FACILITIES ENGINEERING AND PROPERTY MANAGEMENT STATES THAT IN HEW'S VIEW ITS ROLE WITH RESPECT TO THE AWARD OF A CONTRACT BY A GRANTEE IS A LIMITED ONE UNDER THE ACT AND THE REGULATIONS, AND THAT IT IS NOT THE FUNCTION OF THE DEPARTMENT TO SELECT THE CONTRACTORS FOR THE PROJECT. IS STATED THAT THE AGENCY'S RESPONSIBILITY IS TO DETERMINE WHETHER THERE HAS BEEN SUCH A FAILURE ON THE PART OF THE GRANTEE TO COMPLY WITH THE ASSURANCES GIVEN (INCLUDING THOSE OF COMPETITIVE BIDDING) AS WOULD WARRANT DISAPPROVAL OF THE GRANT APPLICATION OR WITHHOLDING OF FUNDS.

IN THIS REGARD, WE HAVE RECOGNIZED THE AGENCY'S PRIMARY AUTHORITY TO DETERMINE WHETHER THERE HAS BEEN COMPLIANCE WITH ITS GRANT REGULATIONS PROMULGATED UNDER THE HIGHER EDUCATION FACILITIES ACT. SEE B-161570, JANUARY 29, 1968. THE SAME RULE HAS BEEN APPLIED IN OUR OFFICE'S REVIEW OF COMPLIANCE WITH PROCUREMENT STANDARDS UNDER OTHER TYPES OF GRANTS, SUCH AS GRANTS MADE UNDER THE HILL-BURTON ACT, 42 U.S.C. 291, ET SEQ. SEE 52 COMP. GEN. 874 (1973). SEE, ALSO, B-163094, JULY 25, 1968, WHICH RECOGNIZED THE PRIMARY AUTHORITY OF THE HEW COMMISSIONER OF EDUCATION TO DETERMINE COMPLIANCE WHERE, AS HERE, THE GRANT REGULATIONS IN QUESTION CALLED FOR "OPEN COMPETITIVE BIDDING" AND AWARD TO THE "LOWEST QUALIFIED BIDDER." IT IS WITHIN THIS FRAMEWORK THAT WE WILL REVIEW THE AGENCY'S EXERCISE OF JUDGMENT IN REGARD TO DETERMINING THE GRANTEE'S COMPLIANCE WITH THE APPLICABLE GRANT REGULATIONS.

IT IS ADMINISTRATIVELY REPORTED THAT THE SOLICITATION FOR THE PROJECT CONSTRUCTION INVOLVED FOUR MAJOR AREAS OF WORK. EACH AREA, IN TURN, ENCOMPASSED SEVERAL SEPARATE ITEMS. THE "GENERAL CONTRACTS" WORK CONSISTED OF FIVE ITEMS; THE "ELECTRICAL" WORK, FIVE ITEMS; THE "HVAC" (HEATING, VENTILATION, AND AIR CONDITIONING) WORK, FOUR ITEMS; AND THE "PLUMBING" WORK, FOUR ITEMS. IN THIS REGARD, ADDENDUM NO. 2 TO THE SOLICITATION, DATED SEPTEMBER 21, 1973, CONTAINED AT PAGE 3 THE FOLLOWING INSTRUCTIONS TO BIDDERS:

"1. THE PROPOSALS ARE SET-UP TO REQUIRE ALL BIDDERS TO BID EACH PROJECT INDIVIDUALLY AS LISTED AND IF HE SO CHOOSES TO BID ALL PARTS WITH A LUMP SUM BID FOR ALL WORK DESCRIBED IN THE PROPOSAL FORMS. BIDDERS CANNOT BID JUST THE TOTAL LUMP SUM ALONE. INDIVIDUAL BIDS ARE REQUIRED. IT IS RECOGNIZED THAT THE TOTAL LUMP SUM BID MAY BE LOWER THAN THE TOTAL SUM OF THE INDIVIDUAL BIDS.

"2. THE AWARD WILL BE MADE TO THE LOWEST RESPONSIBLE BIDDER AS DETERMINED BY THE UNIVERSITY AND HEW.

"3. BIDDERS SHALL BE AWARE THAT IT IS POSSIBLE THAT AN AWARD MAY BE MADE FOR ONLY ONE PORTION OF THE ENTIRE PROJECT; THEREFORE, BID BONDS AND AFFIRMATIVE ACTION STATEMENTS MUST BE SUBMITTED FOR THE INDIVIDUAL BIDS AND THE TOTAL LUMP SUM COMBINED BID."

THE RESULTS OF THE BIDDING ON THE GENERAL CONTRACTS WORK WERE AS FOLLOWS:

ITEM 1 ITEM 9 ITEM 15

CFA ITEM 5 STUDIO CFA ITEM 17

BASEMENT DOHERTY THEATRE THEATRE MEZZ.

BUSSE $154,600* $284,300 $123,700 $235,900* $55,900

COCO BROS. 279,000 475,000 119,000 418,000 78,000

JOHN DEKLEWA 183,600 432,200 77,800 311,800 60,400

HARRY DUNN CO. 156,000 262,000* 98,000 262,000 52,500*

MOSITES CONSTR. 199,340 400,700 72,900* 336,900 70,600

AGGREGATE

BID

BUSSE $ 824,700

COCO BROS. 1,369,000

JOHN DEKLEWA 1,050,000

HARRY DUNN CO. 815,000*

MOSITES CONSTR. 1,070,400

*INDICATES LOW BID

IN ADDITION, ALL BIDDERS ON THE OTHER THREE WORK AREAS SUBMITTED BIDS ON ALL INDIVIDUAL ITEMS AS WELL AS "LUMP-SUM" (AGGREGATE) BIDS. AFTER THREE BIDS ON INDIVIDUAL ITEMS IN THE PLUMBING AND ELECTRICAL AREAS WERE REJECTED AS NONRESPONSIVE, THE TOTALS OF THE LOW RESPONSIVE INDIVIDUAL ITEM BIDS FOR THE FOUR WORK AREAS WERE CALCULATED AND COMPARED WITH THE LOW AGGREGATE BIDS:

LOW INDIVIDUAL LOW AGGREGATE

BIDS TOTAL BID

GENERAL CONTRACTS $777,900 $815,000

ELECTRICAL 473,790 468,140

HVAC 565,920 534,500

PLUMBING 155,582 151,900

IN EARLY NOVEMBER 1973, THE GRANTEE DECIDED TO AWARD CONTRACTS FOR THE GENERAL CONTRACTS, ELECTRICAL, HVAC AND PLUMBING WORK TO THE FOUR LOW AGGREGATE BIDDERS, RATHER THAN TO MAKE 18 AWARDS TO THE LOW INDIVIDUAL ITEM BIDDERS OR SOME COMBINATION OF AGGREGATE AND INDIVIDUAL ITEM AWARDS. HEW CONCURRED IN THIS DECISION.

THE PROTESTER CONTENDS THAT 18 INDIVIDUAL ITEM CONTRACTS COULD HAVE BEEN AWARDED AT A TOTAL PRICE OF $1,961,441, AN AMOUNT $8,099 LESS THAN THE TOTAL PRICE OF THE FOUR AGGREGATE AWARDS. BUSSE ALSO CONTENDS THAT AN EVEN GREATER SAVINGS ($40,500) COULD HAVE BEEN ACCOMPLISHED BY MAKING INDIVIDUAL ITEM AWARDS FOR THE GENERAL CONTRACTS AND ELECTRICAL WORK AND MAKING AGGREGATE AWARDS FOR THE HVAC AND PLUMBING WORK. BUSSE ALSO POINTS OUT THAT IT WOULD HAVE BEEN APPROPRIATE TO MAKE INDIVIDUAL ITEM AWARDS FOR THE GENERAL CONTRACTS WORK, SINCE THE WORK INVOLVED IN THE FIVE SEPARATE ITEMS FOR THIS CATEGORY WILL TAKE PLACE AT DIFFERENT TIMES IN THREE DIFFERENT BUILDINGS. HAD AWARDS BEEN MADE FOR INDIVIDUAL GENERAL CONTRACTS ITEMS, IT APPEARS THAT BUSSE WOULD HAVE RECEIVED AWARDS OF $154,600 FOR ITEM 1 AND $235,900 FOR ITEM 15. INSTEAD, AN AGGREGATE AWARD OF $815,000 WAS MADE TO THE HARRY DUNN COMPANY.

BUSSE'S CONTENTION THAT SAVINGS OF $8,099 OR $40,500 COULD HAVE BEEN REALIZED BY INDIVIDUAL ITEM AWARDS OR A COMBINATION OF INDIVIDUAL AND AGGREGATE AWARDS IS BASED ON A CALCULATION WHICH INCLUDED THE LOW BIDS OF ARSENAL CONSTRUCTION COMPANY ON ITEM 16 OF THE ELECTRICAL WORK AND THE LOW BIDS OF PLUMBERS, INC., ON ITEMS 3 AND 10 OF THE PLUMBING WORK. HOWEVER, IT IS REPORTED THAT ARSENAL'S BID WAS FOUND NONRESPONSIVE FOR FAILURE TO FILE AN AFFIRMATIVE ACTION STATEMENT, ONE OF THE BID BONDS, AND A CONTRACTOR'S QUALIFYING STATEMENT, AND THAT THE PLUMBERS, INC., BIDS WERE NONRESPONSIVE BECAUSE OF FAILURE TO ACKNOWLEDGE RECEIPT OF ALL ADDENDA. NO EVIDENCE HAS BEEN PRESENTED ON THE RECORD TO FURNISH A BASIS FOR QUESTIONING THESE DETERMINATIONS OF NONRESPONSIVENESS. WITH THE NEXT LOW BIDS FOR THESE ITEMS CONSIDERED, THE RECORD SHOWS THAT THE TOTAL PRICE FOR 18 INDIVIDUAL ITEM AWARDS WOULD HAVE BEEN $1,973,192, NOT $1,961,441 AS CONTENDED BY BUSSE. THIS AMOUNT IS $3,652 GREATER THAN THE TOTAL PRICE OF THE FOUR AGGREGATE AWARDS ($1,969,540).

HOWEVER, BUSSE'S CONTENTION THAT A LOWER PRICE WOULD HAVE RESULTED FROM INDIVIDUAL ITEM AWARDS FOR THE GENERAL CONTRACTS AND ELECTRICAL WORK AND AGGREGATE AWARDS FOR THE HVAC AND PLUMBING WORK IS CORRECT.

GENERAL CONTRACTS - 5 AWARDS $ 777,900

ELECTRICAL - 5 AWARDS 473,790

HVAC - AGGREGATE AWARD 534,500

PLUMBING - AGGREGATE AWARD 151,900

TOTAL $1,938,090

ACTUAL AGGREGATE AWARDS $1,969,540

POTENTIAL SAVINGS $ 31,450

MOREOVER, AN EVEN LOWER PRICE WOULD HAVE BEEN POSSIBLE BY MAKING INDIVIDUAL ITEMS AWARDS FOR THE GENERAL CONTRACTS WORK AND AGGREGATE AWARDS FOR THE ELECTRICAL, PLUMBING AND HVAC WORK.

GENERAL CONTRACTS - 5 AWARDS $ 777,900

ELECTRICAL - AGGREGATE AWARD 468,140

HVAC - AGGREGATE AWARD 534,500

PLUMBING - AGGREGATE AWARD 151,900

TOTAL$1,932,440

ACTUAL AGGREGATE AWARDS $1,969,540

POTENTIAL SAVINGS $37,100

NOTWITHSTANDING THE ACCURACY OF BUSSE'S CONTENTION THAT A COST SAVINGS COULD HAVE BEEN ACHIEVED BY MAKING A COMBINATION OF INDIVIDUAL ITEM AND AGGREGATE AWARDS, HEW, AS NOTED PREVIOUSLY, CONCURRED IN THE GRANTEE'S DECISION TO MAKE AGGREGATE AWARDS. HEW'S VIEW IS ESSENTIALLY THAT ALTHOUGH THE INSTRUCTIONS TO BIDDERS DID NOT CLEARLY STATE WHETHER THE LOW BIDDER WOULD BE DETERMINED ON THE BASIS OF BIDS ON THE INDIVIDUAL ITEMS OR ON THE BASIS OF AGGREGATE BIDS, THE MORE REASONABLE READING OF THE INSTRUCTIONS TO BIDDERS IS THAT IF AWARDS WERE TO BE MADE COVERING ALL OF THE GENERAL, ELECTRICAL, HVAC AND PLUMBING WORK FOR WHICH AGGREGATE BIDS WERE PERMITTED, THE AWARDS WOULD BE MADE ON THE BASIS OF THE LOWEST AGGREGATE BIDS. THUS, AGGREGATE AWARDS AT A HIGHER PRICE WOULD NOT BE IMPROPER.

IT IS TO BE NOTED THAT COUNSEL FOR THE GRANTEE HAS ADVANCED AN ALTERNATIVE INTERPRETATION OF THE INSTRUCTIONS TO BIDDERS AND A JUSTIFICATION FOR AGGREGATE AWARDS BASED ON THAT INTERPRETATION. COUNSEL VIEWS THE INSTRUCTIONS AS RESERVING THE RIGHT TO THE GRANTEE AND HEW TO DETERMINE WHETHER AWARDS WOULD BE MADE ON AN AGGREGATE BASIS OR ON AN INDIVIDUAL BASIS.

IN THIS REGARD, COUNSEL CONTENDS THAT IN DETERMINING THE LOWEST QUALIFIED BIDDER, IT WAS PROPER TO CONSIDER CERTAIN FACTORS OTHER THAN PRICE. COUNSEL STATES THAT THESE FACTORS INCLUDE SCHEDULING AND COORDINATING THE CONTRACT WORK; CONTRACT ADMINISTRATION CONSIDERATIONS; AND DISRUPTION OF THE UNIVERSITY'S SCHEDULES, ACTIVITIES, AND CLASSES. IT IS STATED THAT AFTER CONSIDERATION OF SUCH FACTORS, THE GRANTEE DETERMINED THAT AGGREGATE AWARDS WERE MORE ADVANTAGEOUS, AND THAT THE SAVINGS THAT MIGHT BE REALIZED BY AWARDING CONTRACTS OTHER THAN ON AN AGGREGATE BID BASIS WOULD BE MORE THAN COMPENSATED FOR BY REDUCED COSTS AND OTHER ADVANTAGES. IN SUPPORT OF THIS POSITION, COUNSEL CITES SEVERAL DECISIONS OF OUR OFFICE, INCLUDING B- 168004, DECEMBER 29, 1969, AND B-158382, MARCH 11, 1966.

AN INTERPRETATION THAT EITHER AGGREGATE OR INDIVIDUAL AWARDS WERE PERMISSIBLE DOES NOT AFFECT HEW'S ULTIMATE CONCLUSION - THAT IT COULD NOT FIND THAT THERE WAS SUCH A FAILURE ON THE PART OF THE GRANTEE TO COMPLY WITH COMPETITIVE BIDDING PRINCIPLES AS WOULD JUSTIFY DISAPPROVAL OF THE GRANT APPLICATION OR WITHHOLDING OF FUNDS. IN THIS REGARD, THE AGENCY HAS NOTED THAT THE AMOUNT OF THE FEDERAL GRANT IS UNAFFECTED REGARDLESS OF THE MANNER IN WHICH THE CONTRACTS WERE AWARDED, SINCE THE GRANT IS LIMITED TO ONE-THIRD OF THE ELIGIBLE PROJECT COSTS OF $2,790,000, OR A MAXIMUM OF $730,122, WHICHEVER IS LESS, AND THAT THE ELIGIBLE PROJECT COST INCLUDES ARCHITECT AND ENGINEER FEES IN ADDITION TO CONSTRUCTION COSTS.

RECOGNIZING THE PRIMACY OF THE AGENCY'S AUTHORITY TO DECIDE WHETHER A GRANTEE HAS COMPLIED WITH THE GRANT REGULATIONS, WE SEE NO BASIS TO OBJECT TO HEW'S DECISION IN THIS MATTER REGARDLESS OF WHICH INTERPRETATION OF THE INSTRUCTIONS TO BIDDER IS FOLLOWED. IF THE SOLICITATION CONTEMPLATED THAT AGGREGATE AWARDS WERE PREFERRED, GIVEN THE EXISTENCE OF CIRCUMSTANCES PERMITTING SUCH AWARDS, THE GRANTEE'S ACTION WAS OBVIOUSLY PROPER. EITHER MULTIPLE OR AGGREGATE AWARDS WERE PERMITTED, WE BELIEVE THAT HEW'S DECISION NOT TO RAISE ANY OBJECTION, THE AMOUNT OF FEDERAL EXPENDITURES BEING UNAFFECTED, CANNOT BE REGARDED AS UNREASONABLE. ACCORDINGLY, THE PROTEST IS DENIED.

AS A MATTER OF INFORMATION WE NOTE THAT, BASED ON OUR READING OF THE INSTRUCTIONS TO BIDDERS, THE APPLICATION OF FEDERAL COMPETITIVE BIDDING PRINCIPLES WOULD HAVE REQUIRED AWARDS TO BE MADE FOR THE GENERAL CONTRACTS WORK ON AN INDIVIDUAL ITEM BASIS. AS WE READ THE INSTRUCTIONS, AWARDS ON EITHER BASIS, OR A COMBINATION THEREOF, WERE PERMISSIBLE DEPENDING ON WHAT BASIS AFFORDED THE MOST ADVANTAGEOUS PRICE. PARAGRAPHS 1 AND 3 OF THE INSTRUCTIONS TO BIDDERS INDICATE THAT BIDS FOR THE VARIOUS WORK AREAS WERE SOLICITED ON TWO BASES. INDIVIDUAL ITEM BIDS WERE REQUIRED, AND BIDDERS WERE ALSO GIVEN THE OPTION TO SUBMIT LUMP-SUM OR AGGREGATE BIDS. BIDDERS WERE CAUTIONED TO SUBMIT BID BONDS AND AFFIRMATIVE ACTION STATEMENTS FOR BOTH THE INDIVIDUAL ITEM AND AGGREGATE BIDS. IN THIS CONTEXT, WE BELIEVE THAT THE STATEMENT IN PARAGRAPH 2 THAT "THE AWARD WILL BE MADE TO THE LOWEST RESPONSIBLE BIDDER***" MEANT THAT IF BOTH INDIVIDUAL AND AGGREGATE BIDS WERE RECEIVED FOR A PARTICULAR WORK AREA, BOTH WOULD BE EVALUATED TO DETERMINE WHICH AWARD BASIS OFFERED THE MOST ADVANTAGEOUS PRICE FOR THAT WORK AREA. IF INDIVIDUAL ITEM AWARDS WERE MOST ADVANTAGEOUS, THE AWARD WOULD BE MADE TO THE LOWEST RESPONSIBLE BIDDER ON EACH INDIVIDUAL ITEM; IF THE AGGREGATE AWARD WOULD RESULT IN A PRICE LOWER THAN THE MULTIPLE INDIVIDUAL AWARDS PRICES, THE AWARD WOULD BE MADE TO THE LOWEST RESPONSIBLE AGGREGATE BIDDER. GIVEN THE FOREGOING INTERPRETATION OF THE SOLICITATION TERMS, THE APPLICATION OF FEDERAL COMPETITIVE BIDDING PRINCIPLES IN THE PRESENT CASE WOULD HAVE LED TO AWARDS FOR THE GENERAL CONTRACTS WORK ON AN INDIVIDUAL ITEM BASIS. THIS IS BECAUSE WE HAVE HELD THAT WHERE THE SOLICITATION RESERVES THE RIGHT TO AWARD ITEMS SEPARATELY OR IN THE AGGREGATE, ADMINISTRATIVE COSTS ASSOCIATED WITH MULTIPLE AWARDS, SUCH AS THOSE MENTIONED BY THE GRANTEE, MAY BE CONSIDERED IN THE EVALUATION OF BIDS ONLY WHEN THEY HAVE BEEN SPECIFICALLY INCLUDED IN THE SOLICITATION AS AN EVALUATION FACTOR. THE RULE WAS STATED AS FOLLOWS IN B -172107(1), JULY 19, 1971:

"FPR SEC. 1-2.407-5 MENTIONS SEVERAL FACTORS, IN ADDITION TO PRICE, WHICH MAY BE CONSIDERED IN EVALUATING BIDS. ONE OF THESE FACTORS IS 'ADVANTAGES OR DISADVANTAGES TO THE GOVERNMENT THAT MIGHT RESULT FROM MAKING MORE THAN ONE AWARD.' UNDER THIS AUTHORIZATION, IT IS SOMETIMES PROVIDED IN INVITATIONS FOR BIDS THAT THE ADDED COST OF ADMINISTRATION OF ADDITIONAL CONTRACTS, IN A STATED DOLLAR AMOUNT, WILL BE CONSIDERED IN DETERMINING WHETHER TO MAKE SEPARATE CONTRACTS FOR DIFFERENT ITEMS. HOWEVER, NO SUCH PROVISION WAS INCLUDED IN THE SUBJECT INVITATION. FPR SEC. 1-2.201(20) PROVIDES AS FOLLOWS: 'IF GOVERNMENT COSTS OR EXPENDITURES OTHER THAN BID PRICES ARE TO BE CONSIDERED IN THE EVALUATION OF BIDS, SUCH FACTORS MUST BE IDENTIFIED AND INCLUDED.'

"CONSIDERATIONS OF CENTRALIZED MANAGEMENT AND ADMINISTRATION JUSTIFY AN AGGREGATE AWARD AT A HIGHER PRICE ONLY WHEN THE HIGHER COST IS OFFSET BY ADMINISTRATIVE SAVINGS. HOWEVER, IN THOSE CIRCUMSTANCES, THE INVITATION MUST PROVIDE FOR SUCH AWARD AND ESTABLISH THE ADMINISTRATIVE COST SAVING TO BE USED IN BID EVALUATION. SEE 47 COMP. GEN. 233, 234 (1967). THAT WAS NOT DONE IN THIS CASE AND IT WAS THEREFORE INAPPROPRIATE TO CONSIDER THE ADMINISTRATIVE COSTS IN THE EVALUATION OF BIDS FOR AWARD."

IT MAY BE NOTED THAT THE DECISIONS OF OUR OFFICE CITED BY THE GRANTEE ARE DISTINGUISHABLE SINCE THEY INVOLVED SOLICITATIONS WHICH SPECIFICALLY PROVIDED THAT AWARD WOULD BE MADE ON AN AGGREGATE BASIS. UNDER THESE CIRCUMSTANCES, THE FACT THAT A PARTICULAR BIDDER'S PRICE ON ONE ITEM OR SUBITEM IS LOWEST DOES NOT FURNISH A BASIS FOR OBJECTION TO AN AGGREGATE AWARD. SEE 48 COMP. GEN. 381 (1968).