B-214699.2, FEB 12, 1985, 85-1 CPD 183

B-214699.2: Feb 12, 1985

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WAS PASSED IN ORDER TO PROTECT LABORERS AND SUPPLIERS WHERE A PRIME CONTRACTOR FAILS TO MEET ITS OBLIGATIONS TO THEM. PROTESTER HAS NOT SHOWN THAT IT WAS UNREASONABLE FOR THE AGENCY. SOME COURTS HAVE INDICATED THAT IN CERTAIN CIRCUMSTANCES THE CLAIMS OF UNPAID SUBCONTRACTORS MAY BE SATISFIED AT THE EXPENSE OF THE GOVERNMENT. WHERE A PARTY SUBMITS IN ITS REQUEST FOR RECONSIDERATION AN ARGUMENT THAT IT COULD HAVE PRESENTED AT THE TIME OF THE PROTEST BUT DID NOT. NOT LIMITED TO" THE FURNISHING OF SATISFACTORY EVIDENCE THAT THE CONTRACTOR POSSESSES TITLE AND THAT THE MATERIAL OR EQUIPMENT WILL BE UTILIZED ON WORK COVERED BY THE CONTRACT. WE AGREED WITH THE VA THAT THE ONLY REASONABLE INTERPRETATION OF THESE PROVISIONS WAS THAT SATISFACTORY EVIDENCE OF TITLE WAS REQUIRED FOR MATERIAL STORED ON-SITE AS WELL AS ELSEWHERE BEFORE ITS VALUE COULD BE CONSIDERED IN CALCULATING PROGRESS PAYMENTS.

B-214699.2, FEB 12, 1985, 85-1 CPD 183

CONTRACTS - PROTESTS - GENERAL ACCOUNTING OFFICE PROCEDURES - RECONSIDERATION REQUESTS - ERROR OF FACT OR LAW - NOT ESTABLISHED DIGEST: 1. ARGUMENTS WHICH AMOUNT TO A REITERATION OF THOSE PREVIOUSLY CONSIDERED IN DECIDING THE INITIAL PROTEST TO GAO DO NOT PROVIDE A BASIS FOR RECONSIDERATION. BONDS - PAYMENT - MILLER ACT COVERAGE - SUBCONTRACTORS, ETC. 2. IN RECOGNITION OF THEIR OTHERWISE LIMITED REMEDIES, THE MILLER ACT, 40 U.S.C. SEC. 270A-270F (1982), WAS PASSED IN ORDER TO PROTECT LABORERS AND SUPPLIERS WHERE A PRIME CONTRACTOR FAILS TO MEET ITS OBLIGATIONS TO THEM. CONTRACTS - PAYMENTS - PROGRESS - TITLE PASSAGE 3. PROTESTER HAS NOT SHOWN THAT IT WAS UNREASONABLE FOR THE AGENCY, IN ORDER TO PROTECT THE GOVERNMENT FROM THE LIENS OF UNPAID SUBCONTRACTORS OR FROM OTHER ENCUMBRANCES, TO REQUIRE A PRIME CONTRACTOR TO PROVIDE SATISFACTORY EVIDENCE OF TITLE TO MATERIAL STORED ON-SITE BEFORE IT CAN BE CONSIDERED IN CALCULATING PROGRESS PAYMENTS. ALTHOUGH LIENS CANNOT ATTACH TO THE PROPERTY OF THE UNITED STATES AND A CONTRACTOR, IN PRIVITY ONLY WITH THE PRIME CONTRACTOR, NORMALLY CANNOT RECOVER DIRECTLY FROM THE UNITED STATES FOR AMOUNTS OWNED IT BY THE PRIME, SOME COURTS HAVE INDICATED THAT IN CERTAIN CIRCUMSTANCES THE CLAIMS OF UNPAID SUBCONTRACTORS MAY BE SATISFIED AT THE EXPENSE OF THE GOVERNMENT. CONTRACTS - PROTESTS - GENERAL ACCOUNTING OFFICE PROCEDURES - RECONSIDERATION REQUESTS - ADDITIONAL EVIDENCE SUBMITTED - AVAILABLE BUT NOT PREVIOUSLY PROVIDED TO GAO 4. GAO'S BID PROTEST PROCEDURES, 4 C.F.R. PART 21 (1984), DO NOT PERMIT A PIECEMEAL PRESENTATION OF EVIDENCE, INFORMATION OR ANALYSES. WHERE A PARTY SUBMITS IN ITS REQUEST FOR RECONSIDERATION AN ARGUMENT THAT IT COULD HAVE PRESENTED AT THE TIME OF THE PROTEST BUT DID NOT, THIS ARGUMENT DOES NOT PROVIDE A BASIS FOR RECONSIDERATION.

SOVEREIGN ELECTRIC COMPANY - REQUEST FOR RECONSIDERATION:

SOVEREIGN ELECTRIC COMPANY REQUESTS THAT WE RECONSIDER OUR DECISION IN SOVEREIGN ELECTRIC COMPANY, B-214699, SEPT. 18, 1984, 84-2 CPD PARA. 315, WHEREIN WE DENIED SOVEREIGN'S PROTEST AGAINST THE TERMS AND CONDITIONS OF INVITATION FOR BIDS NO. 620-25-84, ISSUED BY THE VETERANS ADMINISTRATION FOR THE REPLACEMENT OF A HIGH VOLTAGE ELECTRICAL DISTRIBUTION SYSTEM AT THE FRANKLIN DELANO ROOSEVELT HOSPITAL IN MONTROSE, NEW YORK. WE AFFIRM THE DECISION.

THE SOLICITATION IN QUESTION CONTAINED TWO SEPARATE PROVISIONS REGARDING PROGRESS PAYMENTS. ONE PROVISION, THE STANDARD FEDERAL PROCUREMENT REGULATIONS (FPR) CLAUSE, 41 C.F.R. SEC. 1-7.602-7(B) (1983), PERMITTED THE CONTRACTING OFFICER, "AT HIS DISCRETION," TO AUTHORIZE MATERIAL DELIVERED ON THE SITE AND PREPARATORY WORK DONE TO BE TAKEN INTO CONSIDERATION IN CALCULATING PROGRESS PAYMENTS. THE SECOND PROVISION, APPEARING IN THE GENERAL CONDITIONS PORTION OF THE SOLICITATION, SUPPLEMENTED THE FIRST PROVISION, STATING THAT THE CONTRACTING OFFICER WOULD CONSIDER FOR PROGRESS PAYMENTS MATERIAL OR EQUIPMENT "STORED ON THE CONSTRUCTION SITE ... OR AT A LOCAL APPROVED LOCATION OFF THE SITE UNDER SUCH TERMS AND CONDITIONS AS SUCH OFFICER APPROVES, INCLUDING, BUT NOT LIMITED TO" THE FURNISHING OF SATISFACTORY EVIDENCE THAT THE CONTRACTOR POSSESSES TITLE AND THAT THE MATERIAL OR EQUIPMENT WILL BE UTILIZED ON WORK COVERED BY THE CONTRACT.

IN OUR PRIOR DECISION, WE AGREED WITH THE VA THAT THE ONLY REASONABLE INTERPRETATION OF THESE PROVISIONS WAS THAT SATISFACTORY EVIDENCE OF TITLE WAS REQUIRED FOR MATERIAL STORED ON-SITE AS WELL AS ELSEWHERE BEFORE ITS VALUE COULD BE CONSIDERED IN CALCULATING PROGRESS PAYMENTS. IN ADDITION, WE FOUND THAT SOVEREIGN HAD FAILED TO DEMONSTRATE THAT THE VA WAS UNREASONABLE IN REQUIRING EVIDENCE OF TITLE IN ORDER TO PROTECT THE GOVERNMENT FROM LIENS HELD BY THIRD PARTIES, SUCH AS UNPAID SUPPLIERS TO THE PRIME CONTRACTOR, OR FROM OTHER ENCUMBRANCES ON PROPERTY WHICH WAS COVERED BY PROGRESS PAYMENTS.

IN ITS REQUEST FOR RECONSIDERATION, SOVEREIGN RESTATES ITS ARGUMENTS THAT THE FPR STANDARD CLAUSED PROVIDES FOR PROGRESS PAYMENTS FOR MATERIAL STORED ON-SITE WITHOUT PROOF OF TITLE, THAT THE GENERAL CONDITIONS PROVISION REQUIRES PROOF OF TITLE ONLY FOR MATERIAL OR EQUIPMENT STORED OFF-SITE, AND THAT ANY OTHER INTERPRETATION WOULD RENDER THE SOLICITATION AMBIGUOUS.

WE REMAIN UNCONVINCED BY THESE ARGUMENTS. WE CONTINUE TO BELIEVE THAT THE FPR CLAUSE IS MERELY A STANDARD CLAUSE PERMITTING THE CONTRACTING OFFICER, "AT HIS DISCRETION," TO CONSIDER MATERIAL STORED ON-SITE AND THAT THE GENERAL CONDITIONS CLAUSE SUPPLEMENTS THE FPR CLAUSE BY SETTING FORTH WHAT THE VA CONTRACTING OFFICER, IN THE EXERCISE OF HIS DISCRETION, HAS DETERMINED IS A NECESSARY PRECONDITION TO THE CALCULATION OF PROGRESS PAYMENTS FOR THIS PARTICULAR PROCUREMENT. SEE ALSO DEVELOPMENT ASSOCIATES, INC.-- RECONSIDERATION, B-205380.2, B-205380.3, MAR. 28, 1983, 83-1 CPD PARA. 313 (ARGUMENTS WHICH AMOUNT TO A REITERATION OF THOSE PREVIOUSLY CONSIDERED DO NOT PROVIDE A BASIS FOR RECONSIDERATION).

SOVEREIGN ALSO QUESTIONS OUR CONCLUSION THAT THERE HAD BEEN NO SHOWING THAT THE VA LACKED A REASONABLE BASIS FOR REQUIRING TITLE IN ORDER TO PROTECT THE GOVERNMENT AGAINST LIENS OR OTHER ENCUMBRANCES. SOVEREIGN DENIES THAT THE GOVERNMENT COULD BE SUBJECT TO THIRD PARTY LIENS AND REFERS US TO THE MILLER ACT, 40 U.S.C. SEC. 270A-270F (1982).

THE MILLER ACT REQUIRES THAT BEFORE CERTAIN CONTRACTS FOR THE CONSTRUCTION OF PUBLIC BUILDINGS OR WORKS ARE AWARDED TO A PERSON, THAT PERSON SHALL FURNISH A PERFORMANCE BOND FOR THE PROTECTION OF ALL PERSONS SUPPLYING LABOR AND MATERIAL UNDER THE CONTRACT. PURSUANT TO THE MILLER ACT, THE SOLICITATION INCLUDED A REQUIREMENT FOR SUBMISSION OF A PAYMENT BOND.

THE COURTS HAVE RECOGNIZED THAT THE MILLER ACT IS A RESPONSE TO THE LIMITED REMEDIES AVAILABLE TO LABORERS AND SUPPLIERS WHERE THE PRIME FAILS TO MEET ITS OBLIGATIONS TO THEM. F.D. RICH CO. V. UNITED STATES, 417 U.S. 116, 122 (1974); UNITED STATES FIDELITY AND GUARANTY CO. V. UNITED STATES, 475 F.2D 1377, 1381 (CT.CL. 1973). IN PARTICULAR, A LIEN CANNOT ATTACH TO THE PROPERTY OF THE UNITED STATES. SEE F.D. RICH CO. V. UNITED STATES, 417 U.S. AT 122; UNITED STATES V. JOHNSON CONTROLS, INC., 713 F.2D 1541, 1554 (F. CIR. 1983). MOREOVER, PRIVITY OF CONTRACT NORMALLY DOES NOT EXIST BETWEEN THE GOVERNMENT AND SUBCONTRACTORS; THUS A SUBCONTRACTOR, IN PRIVITY ONLY WITH THE PRIME, CANNOT RECOVER DIRECTLY FROM THE UNITED STATES FOR AMOUNTS OWED IT BY THE PRIME. SEE UNITED STATES V. JOHNSON CONTROLS, INC., 713 F.2D AT 1550-1554; UNITED ELECTRIC CORPORATION V. UNITED STATES, 647 F.2D 1082 (CT.CL. 1981), CERT. DENIED 454 U.S. 863 (1981); BAUDIER MARINE ELECTRONICS V. UNITED STATES, 6 CL.CT. 246 (1984); DEPARTMENT OF THE ARMY-- REQUEST FOR ADVANCE DECISION, B-216209, SEPT. 24, 1984, 63 COMP.GEN. ---, 84-2 CPD PARA. 335; GENERAL SERVICES ADMINISTRATION- REQUEST FOR ADVANCE DECISION, 62 COMP.GEN. 633 (1983), 83-2 CPD PARA. 402.

HOWEVER, WE NOTE THAT SEVERAL COURTS HAVE INDICATED THAT IN CERTAIN CIRCUMSTANCES THE CLAIMS OF UNPAID SUBCONTRACTORS MAY BE SATISFIED AT THE GOVERNMENT. IN ARMSTRONG V. UNITED STATES, 364 U.S. 40 (1960), UNPAID SUBCONTRACTORS, WHICH HAD FURNISHED MATERIALS TO A PRIME CONTRACTOR BUILDING SHIPS FOR THE UNITED STATES, ASSERTED THEIR RIGHTS UNDER A STATE LAW PROVIDING FOR A LIEN IN FAVOR OF WHOMEVER FURNISHED LABOR OR MATERIALS FOR THE BUILDING OF A VESSEL. THE CONTRACT BETWEEN THE GOVERNMENT AND THE PRIME PROVIDED THAT ALL PROGRESS PAYMENTS SHOULD BE SECURED BY A LIEN ON THE PROPERTY AND THAT IN THE EVENT OF DEFAULT BY THE PRIME GOVERNMENT COULD TERMINATE THE CONTRACT AND REQUIRE THE PRIME TO TRANSFER TO IT TITLE TO ALL WORK. ALTHOUGH THE COURT RECOGNIZED THAT WHEN THE UNITED STATES SUBSEQUENTLY TOOK TITLE TO THE SHIP UPON THE DEFAULT OF THE PRIME THIS RENDERED THE LIENS OF THE UNPAID SUBCONTRACTORS UNENFORCEABLE, IT HELD THAT THIS DESTRUCTION BY THE GOVERNMENT OF THE VALUE OF THE LIENS CONSTITUTED A TAKING OF PROPERTY FOR WHICH JUST COMPENSATION WAS DUE UNDER THE FIFTH AMENDMENT OF THE UNITED STATES CONSTITUTION. SEE ALSO AETNA CASUALTY AND SURETY CO. V. UNITED STATES, 655 F.2D 1047 (CT.CL. 1981).

FURTHER, IN RAMCO STEEL, INC. V. KESLER (IN RE MURDOCK MACHINE AND ENGINEERING CO. OF UTAH), 620 F.2D 767 (10TH CIR. 1980), AN UNPAID SUBCONTRACTOR WAS ALSO HELD TO BE ENTITLED TO RECOVERY EVEN THOUGH THE CONTRACT BETWEEN THE GOVERNMENT AND THE PRIME PROVIDED THAT TITLE TO ALL MATERIALS "ACQUIRED OR PRODUCED" BY THE PRIME "SHALL FORTHWITH VEST IN THE GOVERNMENT." STATE LAW APPLIED BY THE COURT GAVE AN UNPAID SELLER THE RIGHT TO STOP DELIVERY OF GOODS IN THE POSSESSION OF A CARRIER OR OTHER BAILEE UPON DISCOVERY OF THE INSOLVENCY OF A BUYER. THE COURT FOUND THAT NOT ONLY WAS THE UNPAID SUPPLIER UNAWARE OF AND THUS DID NOT ACQUIESCE IN THE TRANSFER OF THE GOODS FROM THE PRIME TO THE GOVERNMENT, BUT THAT IN FACT THERE HAD BEEN NO PHYSICAL DELIVERY OF THE GOODS TO THE GOVERNMENT. IN THESE CIRCUMSTANCES, THE COURT HELD THAT THE CLAIM OF THE UNPAID SELLER ATTACHED PRIOR TO THE UNITED STATES OBTAINING TITLE AND THAT THE SELLER THEREFORE WAS ENTITLED TO SHARE IN THE PROCEEDS FROM THE SALE OF THE STEEL.

GIVEN THE UNCERTAINTY CREATED BY THESE DECISIONS, WE REMAIN CONVINCED THAT SOVEREIGN HAS NOT DEMONSTRATED THAT THE VA WAS UNREASONABLE IN REQUIRING THE PRIME TO SUBMIT EVIDENCE OF TITLE IN ORDER TO PROTECT THE GOVERNMENT FROM THE LIENS OF UNPAID SUBCONTRACTORS OR FROM OTHER ENCUMBRANCES.

WE NOTE THAT SOVEREIGN ARGUES ON RECONSIDERATION AND FOR THE FIRST TIME THAT THE VA'S CLAIM THAT EVIDENCE OF TITLE WAS REQUIRED IN ORDER TO PROTECT THE GOVERNMENT WAS UNDERMINED BY THE CONTRACTING OFFICER'S STATEMENT, IN A PREBID OPENING LETTER TO SOVEREIGN, THAT ONCE MATERIALS HAD BEEN "INCORPORATED INTO THE PROJECT, THERE HAS BEEN NO PROBLEM WITH CONSIDERING THEM AS PART OF THE PROGRESS PAYMENT."

OUR BID PROTEST PROCEDURES REQUIRE THAT A REQUEST FOR RECONSIDERATION CONTAIN A DETAILED STATEMENT OF A FACTUAL AND LEGAL GROUNDS FOR SUCH ACTION, SPECIFYING ANY ERRORS OF LAW OR INFORMATION NOT PREVIOUSLY CONSIDERED. 4 C.F.R. SEC. 21.9(A) (1984). OUR PROCEDURES DO NOT PERMIT A PIECEMEAL PRESENTATION OF EVIDENCE, INFORMATION OR ANALYSES. WHERE, AS HERE, A PARTY SUBMITS IN ITS REQUEST FOR RECONSIDERATION AN ARGUMENT THAT IT COULD HAVE PRESENTED AT THE TIME OF THE PROTEST BUT DID NOT, THIS ARGUMENT DOES NOT PROVIDE A BASIS FOR RECONSIDERATION. SEE GRIFFIN-SPACE SERVICES COMPANY RECONSIDERATION, B-214458.3; B-214458.4, NOV. 14, 1984, 63 COMP.GEN. - -, 84-2 CPD PARA. 528.

IN ANY CASE, WE NOTE THAT THE CONTRACTING OFFICER WENT ON TO DECLARE IN THE SAME LETTER CITED BY SOVEREIGN THAT "'TITLE' HAS GENERALLY BEEN EVIDENCE THAT THE SELLER OF THE MATERIALS HAS BEEN PAID OR HAS RELEASED ALL CLAIM TO SUCH MATERIALS." MOREOVER, INCORPORATION OF MATERIALS INTO A GOVERNMENT BUILDING COULD BE TAKEN AS CLEAR EVIDENCE OF DELIVERY TO THE GOVERNMENT, THUS APPARENTLY ENDING THE POSSIBILITY, RECOGNIZED IN RAMCO STEEL, THAT AN UNPAID SELLER COULD CREATE AN INTEREST IN THE GOODS SHOULD IT SUBSEQUENTLY DISCOVER THE INSOLVENCY OF THE PRIME. ACCORDINGLY, WE DO NOT BELIEVE THAT THE LETTER UNDERMINES THE VA'S POSITION.

IN OUR PRIOR DECISION, WE CONCLUDED THAT SOVEREIGN HAD NOT MET ITS BURDEN OF SHOWING THAT, CONTRARY TO THE VA'S DENIAL, THE VA HAD IN THE PAST CONSIDERED MATERIAL STORED ON-SITE FOR PROGRESS PAYMENTS WITHOUT REQUIRING EVIDENCE OF TITLE. WE ALSO FOUND THAT ALTHOUGH SOVEREIGN'S INITIAL PROTEST WAS TIMELY, ITS ALLEGATION THAT THE VA IMPROPERLY FAILED TO ISSUE AN AMENDMENT STATING THAT IT INTENDED TO REQUIRE SATISFACTORY EVIDENCE OF TITLE WAS UNTIMELY BECAUSE IT WAS NOT MADE UNTIL APPROXIMATELY 3 MONTHS AFTER BID OPENING. NOTHING IN SOVEREIGN'S REQUEST FOR RECONSIDERATION CONVINCES US OTHERWISE.

OUR OFFICE WILL NOT REVERSE OR MODIFY A PRIOR DECISION WHERE, AS HERE, THE PROTESTER FAILS TO PROVIDE NEW EVIDENCE OR LEGAL ARGUMENTS WHICH SHOW THAT THE DECISION WAS ERRONEOUS. KOCH CORPORATION-- RECONSIDERATION, B-212304.4, JULY 31, 1984, 84-2 CPD PARA. 132; 4 C.F.R. SEC. 21.9(A).

OUR PRIOR DECISION IS AFFIRMED.