B-180676, MAY 9, 1974

B-180676: May 9, 1974

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ACCEPTANCE IS PROPER. AS FACT THAT BID MAY BE UNBALANCED DOES NOT RENDER IT NONRESPONSIVE NOR OF ITSELF INVALIDATE AWARD OF CONTRACT TO LOW BIDDER IN ABSENCE OF EVIDENCE OF IRREGULARITY AFFECTING COMPETITIVE BIDDING SYSTEM OR SUBSTANTIAL DOUBT THAT AWARD WILL IN FACT RESULT IN LOWEST COST. 2. GAO IS NOT AWARE OF ANY PROVISION OF LAW PREVENTING AWARD TO LOW BIDDER EVEN THOUGH BID PRICE MAY BE UNREALISTICALLY LOW OR RESULT IN UNPROFITABLE CONTRACT. WAS ISSUED BY THE OFFICER IN CHARGE OF CONSTRUCTION. BIDS WERE OPENED ON FEBRUARY 7. THE 3 LOWEST BIDS WERE AS FOLLOWS: 1A 1B 1C 1D ITEM 1 THE PENETRYN SYSTEM INC. $10. ON THE GROUNDS THAT ITS BID WAS UNBALANCED AND THE CLEANING. OSWALD CONTENDS THAT MUNICIPAL'S BID OF $74.99 FOR THE REQUIRED SERVICES OF ITEM 1A WAS IMPROPER IN THAT IT WAS DISPROPORTIONATE WITH RESPECT TO THE PRICES SUBMITTED BY THE OTHER BIDDERS ON THE SAME ITEM.

B-180676, MAY 9, 1974

1. UPON CONFIRMATION OF APPARENTLY UNBALANCED BID FOR CLEANING, INSPECTION, REPAIRS AND ALTERATIONS OF SEWER SYSTEM, ACCEPTANCE IS PROPER, AS FACT THAT BID MAY BE UNBALANCED DOES NOT RENDER IT NONRESPONSIVE NOR OF ITSELF INVALIDATE AWARD OF CONTRACT TO LOW BIDDER IN ABSENCE OF EVIDENCE OF IRREGULARITY AFFECTING COMPETITIVE BIDDING SYSTEM OR SUBSTANTIAL DOUBT THAT AWARD WILL IN FACT RESULT IN LOWEST COST. 2. GAO IS NOT AWARE OF ANY PROVISION OF LAW PREVENTING AWARD TO LOW BIDDER EVEN THOUGH BID PRICE MAY BE UNREALISTICALLY LOW OR RESULT IN UNPROFITABLE CONTRACT.

TO OSWALD BROTHERS ENTERPRISES, INCORPORATED:

ON JANUARY 7, 1974, INVITATION FOR BIDS (IFB) NO. N62472-74-B-1718, WAS ISSUED BY THE OFFICER IN CHARGE OF CONSTRUCTION, PUBLIC WORKS CENTER, NEWPORT, RHODE ISLAND. THE IFB SOLICITED BIDS FOR CLEANING, INSPECTION, REPAIRS AND ALTERATIONS TO THE NORTH PUMPING STATION SEWER, NORTHEAST AND NORTHWEST INTERCEPTORS, NEWPORT, RHODE ISLAND.

PARAGRAPH 1C.3 OF THE INVITATION, ENTITLED "ITEMS OF BID," REQUIRED EACH BIDDER TO SUBMIT ITS BID UPON THE FOLLOWING ITEMS:

ESTIMATED UNIT ESTIMATED

QUANTITY PRICE AMOUNT

1A PRICE FOR CLEANING, INSPECTING

AND TESTING 4900 LINEAL FEET

OF SEWER, ETC.JOB LUMP SUM

1B PRICE FOR SEALING JOINTS IN

8 & 10 INCH SEWER LINES 125 $ $

1C PRICE FOR SEALING JOINTS IN

12 & 15 INCH SEWER LINES 550 $ $

1D PRICE FOR WATERPROOFING MANHOLES 10 $ $

ITEM 1 TOTAL ESTIMATED AMOUNT

(AGGREGATE BID) $

IN ADDITION, THE SOLICITATION ADVISED PROSPECTIVE BIDDERS THAT THE WORK DESCRIBED IN ITEM 1 WOULD BE AWARDED TO ONE BIDDER AND WOULD BE BASED ON THE "TOTAL ESTIMATED AMOUNT (AGGREGATE BID)" FOR THE ENTIRE ITEM. MOREOVER, THE SOLICITATION PROVIDED THAT IN CASE THE ACTUAL QUANTITY OF WORK PERFORMED VARIED FROM THE ESTIMATED QUANTITIES, THE CONTRACT PRICE WOULD BE COMPUTED OR ADJUSTED IN ACCORDANCE WITH THE UNIT PRICE OR PRICES BID AND THE ACTUAL QUANTITIES, PROVIDED THAT IF THE ACTUAL QUANTITIES VARIED FROM THE ESTIMATED QUANTITIES BY A STATED PERCENTAGE, THE CONTRACT CHANGES PROVISIONS WOULD APPLY.

BIDS WERE OPENED ON FEBRUARY 7, 1974, AND THE 3 LOWEST BIDS WERE AS FOLLOWS:

1A 1B 1C 1D ITEM 1

THE PENETRYN

SYSTEM INC. $10,380.00 $ 325.00 $ 3,575.00 $ 10.00 $14,290.00

OSWALD BROS.

ENTERPRISES INC. 10,442.00 500.00 2,750.00 490.00 14,182.00

MUNICIPAL & INDUSTRIAL

PIPE SERV. LTD. 74.99 1,375.00 10,450.00 100.00 11,999.99

BY TELEFAX AND LETTER OF FEBRUARY 19, 1974, OSWALD BROTHERS ENTERPRISES, INCORPORATED (OSWALD), THE SECOND LOW BIDDER, PROTESTED AGAINST THE AWARD OF THE CONTRACT TO MUNICIPAL AND INDUSTRIAL PIPE SERVICES, LTD. (MUNICIPAL), ON THE GROUNDS THAT ITS BID WAS UNBALANCED AND THE CLEANING, INSPECTION, AND TESTING OF 4900 LINEAL FEET OF SANITARY SEWER SYSTEM (ITEM 1A) COULD NOT BE ACCOMPLISHED FOR THE SUM OF $74.99. OSWALD CONTENDS THAT MUNICIPAL'S BID OF $74.99 FOR THE REQUIRED SERVICES OF ITEM 1A WAS IMPROPER IN THAT IT WAS DISPROPORTIONATE WITH RESPECT TO THE PRICES SUBMITTED BY THE OTHER BIDDERS ON THE SAME ITEM, AS WELL AS BEING $8,425.01 BELOW THE GOVERNMENT ESTIMATE FOR THE ITEM.

IN RESPONSE TO OSWALD'S PROTEST, IT IS THE ADMINISTRATIVE POSITION THAT IT WAS ENTIRELY PROPER FOR MUNICIPAL TO BID A COMPARATIVELY NOMINAL SUM FOR ITEM 1A AND PUT THE BULK OF ITS PRICE IN SEALING OF JOINTS, THE WORK RESULTING FROM THE INSPECTION AND TESTING, IN VIEW OF THE BID FORM PROVIDING THAT AWARD WOULD BE MADE UPON THE "TOTAL ESTIMATED AMOUNT (AGGREGATE BID)." FURTHERMORE, IT IS THE NAVY'S POSITION THAT THE LOW BID WOULD NOT BE DISADVANTAGEOUS TO THE GOVERNMENT AND SHOULD NOT BE REJECTED AS UNBALANCED BECAUSE THE ULTIMATE COST OF THE WORK TO THE GOVERNMENT WILL DEPEND UPON THE NUMBER OF JOINTS ACTUALLY REQUIRED TO BE SEALED AND THE GOVERNMENT CONTROLS THE REPAIRS REQUIRED BY INSPECTION AND PAYMENT THEREFOR. MOREOVER, IT IS REPORTED THAT THE ESTIMATES STATED FOR EVALUATION PURPOSES ARE A REASONABLE FORECAST. IN ADDITION, IN A LETTER DATED FEBRUARY 11, 1974, TO THE AGENCY MUNICIPAL CONFIRMED THE PRICES SUBMITTED IN ITS BID AS BEING CORRECT.

AS TO THE MATTER OF UNBALANCED BIDS GENERALLY, IT IS OUR VIEW THAT IT IS IN THE BEST INTEREST OF THE GOVERNMENT TO DISCOURAGE, THROUGH APPROPRIATE INVITATION SAFEGUARDS, THE SUBMISSION OF UNBALANCED BIDS BASED ON SPECULATION AS TO WHICH ITEMS ARE PURCHASED IN GREATER QUANTITIES. COMP. GEN. 330, 335 (1969). HOWEVER, THE FACT THAT A BID MAY BE UNBALANCED DOES NOT RENDER IT NONRESPONSIVE NOR DOES SUCH FACTOR OF ITSELF INVALIDATE AN AWARD OF A CONTRACT TO SUCH BIDDER. 49 COMP. GEN. 335, 343 (1969). AS WAS STATED BY THE COURT IN FRANK STAMATO & CO. V. CITY OF NEW BRUNSWICK, 90 A.2D 34, 36 (1952),

"THERE MUST BE PROOF OF COLLUSION OR OF FRAUDULENT CONDUCT ON THE PART OF SUCH BIDDER *** OR PROOF OF OTHER IRREGULARITY OF SUCH SUBSTANTIAL NATURE AS WILL OPERATE TO AFFECT FAIR AND COMPETITIVE BIDDING."

IN 49 COMP. GEN. 335, SUPRA, AFTER CITING THE STAMATO CASE, WE STATED AT PAGES 343, 344:

"*** WHERE A BIDDER HAS CONFIRMED A BID WHICH APPEARS TO BE UNBALANCED AND THERE IS NO INDICATION THAT THE BID IS NOT AS INTENDED OR EVIDENCE OF ANY IRREGULARITY, WE HAVE HELD THAT THE BID MAY BE ACCEPTED IF IT IS OTHERWISE THE LOWEST ACCEPTABLE BID AND THE BIDDER IS RESPONSIBLE ***."

ALTHOUGH WE HAVE HELD THAT AN UNBALANCED BID WHICH IS EVALUATED LOW SHOULD NOT BE CONSIDERED FOR AWARD WHERE THERE IS SUBSTANTIAL DOUBT THAT AWARD TO THAT BIDDER WILL RESULT IN THE LOWEST COST TO THE GOVERNMENT, B- 172789, JULY 19, 1971, WE DO NOT BELIEVE THAT SUCH DOUBT EXISTS IN THIS CASE BECAUSE THE PROCURING ACTIVITY HAS DETERMINED THAT THE ESTIMATED QUANTITIES STATED IN THE IFB FOR EVALUATION PURPOSES REPRESENT A REASONABLE FORECAST OF THE GOVERNMENT'S PROBABLE REQUIREMENTS AND THE GOVERNMENT WILL CONTROL THE REPAIRS REQUIRED BY INSPECTION AND PAYMENT THEREFOR. THEREFORE, WE DO NOT BELIEVE MUNICIPAL'S UNBALANCED BID GIVES THAT COMPANY A COMPETITIVE ADVANTAGE OVER OTHER BIDDERS OR WILL RESULT IN OTHER THAN THE LOWEST COST TO THE GOVERNMENT.

IN REGARD TO OSWALD'S CONTENTION THAT IT IS FINANCIALLY IMPOSSIBLE TO PERFORM THE REQUIRED SERVICES FOR THE $74.99 BID ON ITEM 1A BY MUNICIPAL, IT SHOULD BE NOTED THAT UNDER THE AGGREGATE AWARD PROVISION THE CONTRACTOR WILL BE PAID ON THE BASIS OF THE ACTUAL QUANTITY OF WORK PERFORMED FOR THE ENTIRE ITEM AND NOT MERELY ON THE BASIS OF ITS BID PRICE FOR ITEM 1A. ANY EVENT, WE ARE NOT AWARE OF ANY PROVISION OF LAW PREVENTING A BIDDER FROM SUBMITTING A BID WHICH WILL RESULT IN A CONTRACT BEING PERFORMED AT A PRICE WHICH OTHERS MAY CONSIDER UNREALISTICALLY LOW, OR EVEN UNPROFITABLE. 51 COMP. GEN. 792, 797 (1972). FINALLY, THE RECORD DOES NOT INDICATE THE EXISTENCE OF ANY COLLUSIVE OR FRAUDULENT CONDUCT ON THE PART OF MUNICIPAL, OR ANY OTHER IRREGULARITY WHICH WOULD COMPROMISE THE INTERESTS OF THE GOVERNMENT AND THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM.

ACCORDINGLY, THERE IS NO LEGAL BASIS TO QUESTION THE PROPOSED AWARD OF THE CONTRACT TO MUNICIPAL AND THE PROTEST OF OSWALD IS THEREFORE DENIED.