B-156522, MAY 20, 1965

B-156522, MAY 20, 1965

TO THE HONORABLE SECRETARY OF THE AIR FORCE:

REFERENCE IS MADE TO LETTER AFSPPCA OF APRIL 12, 1965, FROM THE CHIEF, PROCUREMENT OPERATIONS DIVISION, DIRECTORATE, PROCUREMENT POLICY, DEPUTY CHIEF OF STAFF, SYSTEMS AND LOGISTICS, PRESENTING FOR DECISION THE PROTEST OF THE JOINT VENTURE OF NOMELLINI CONSTRUCTION CO. AND F.L.O.E. INC. AGAINST AN AWARD TO EITHER OF THE TWO LOW BIDDERS ON THAT PHASE OF THE PROCUREMENT IN INVITATION FOR BIDS IFB 04 666-65-40 DEALING WITH THE CONSTRUCTION OF 337 FAMILY HOUSING UNITS AT BEALE AIR FORCE BASE AND THE PROTEST OF UNITED NATIONS CONSTRUCTORS, INC., AGAINST AN AWARD TO THE LOW BIDDER ON THE PHASE OF THE INVITATION DEALING WITH THE CONSTRUCTION OF OFFSITE SANITARY SEWER AND WATER DISTRIBUTION SYSTEMS FOR THE HOUSING PROJECT.

IN ADDITION TO THE FOREGOING PROTESTS WHICH WERE MADE TO YOUR DEPARTMENT, F. D. RICH CO., INCORPORATED, THE SECOND LOW BIDDER FOR THE CONSTRUCTION OF THE FAMILY HOUSING, HAS PROTESTED DIRECTLY TO OUR OFFICE AGAINST AN AWARD BEING MADE TO THE LOW BIDDER FOR THAT PART OF THE WORK.

THE BASIS FOR THE PROTEST AGAINST THE LOW BIDDER, A JOINT VENTURE MADE UP OF MURRAY J. SHIFF CONSTRUCTION CO., INC., RPR CONSTRUCTION CO., INC., AND HARRY M. RUBENSTEIN, IS THAT ITS BID EXCEEDED THE UNIT AWARD LIMITATION SPECIFIED IN THE INVITATION FOR BIDS. THE AWARD LIMITATION IN THE INVITATION FOR BIDS IS AN ADMINISTRATIVE LIMITATION WHICH IS LESS THAN THE STATUTORY COST LIMITATION AND IS ESTABLISHED TO PROVIDE FUNDS FOR CONTINGENCIES ARISING DURING PERFORMANCE OF THE CONTRACT WORK.

IN THE INVITATION THERE WERE FIVE DIFFERENT TYPES OF HOUSING UNITS. THE LOW BIDDER EXCEEDED THE UNIT AWARD LIMITATION ON TWO TYPES OF HOUSING UNITS. ON TYPES A-4 AND A-2, IT BID $13,300 AND $11,300, RESPECTIVELY, WHEREAS THE RESPECTIVE UNIT AWARD LIMITATIONS ON THOSE UNITS WERE $12,472 AND $11,166.

SECTION 13C OF THE TERMS AND CONDITIONS OF THE INVITATION FOR BIDS PROVIDES THAT NO CONTRACT WILL BE AWARDED WHICH INCLUDES INDIVIDUAL HOUSING UNITS COSTING MORE THAN THE UNIT AWARD LIMITATIONS IN THE INVITATION. HOWEVER, DESPITE THIS PROVISION, IT IS RECOMMENDED THAT OUR OFFICE AUTHORIZE AN AWARD TO THE LOW BIDDER. THE RECOMMENDATION IS BASED ON THE FACT THAT WHILE THE AWARD LIMITATIONS ON CERTAIN TYPES OF UNITS HAVE BEEN EXCEEDED, THE STATUTORY LIMITS HAVE NOT BEEN EXCEEDED; THAT OUR OFFICE IN B-153613, MAY 6, 1964, PERMITTED AN AWARD TO BE MADE TO A LOW BIDDER WHO EXCEEDED AN AWARD LIMITATION STATED IN AN INVITATION FOR BIDS; THAT NO BIDDER WOULD BE PREJUDICED SINCE IF THEY KNEW HIGHER LIMITATIONS WOULD APPLY THEY WOULD NOT BE LIKELY TO SUBMIT LOWER PRICES; AND THAT AN ERROR WAS MADE IN FIXING THE AWARD LIMITATION IN THAT A $1,540 ITEM PER UNIT WAS DEDUCTED FROM THE STATUTORY LIMIT AS A RESULT OF A MISTAKE BY THE AIR FORCE PERSONNEL.

AS NOTED ABOVE, THE INVITATION IN PLAIN AND UNCOMPROMISING TERMS PROVIDES THAT "NO CONTRACT WILL BE AWARDED" WHICH INCLUDES UNITS EXCEEDING THE AWARD LIMITATIONS IN THE INVITATION. MOREOVER, SECTION 13D OF THE TERMS AND CONDITIONS OF THE INVITATION IS EQUALLY SPECIFIC THAT BIDS ARE TO BE EVALUATED WITHOUT CAUSING THE AWARD LIMITATIONS IN THE INVITATION TO BE EXCEEDED. HENCE, TO CHANGE THE LIMITATIONS NOW WOULD BE TANTAMOUNT TO WAIVING THE LIMITATIONS IN THE INVITATION. IT IS A FUNDAMENTAL RULE THAT AFTER BID OPENING ONLY MATTERS OF FORM AND NOT OF SUBSTANCE MAY BE WAIVED. MATTERS OF SUBSTANCE INCLUDE THOSE MATTERS WHICH AFFECT PRICE. 30 COMP. GEN. 179. IN OUR VIEW THE PRESENT CASE FALLS IN THE LATTER CATEGORY AND WAIVER OF THE AWARD LIMITATION WOULD NOT BE ACCEPTABLE FOR THAT REASON.

THE DECISION OF MAY 6, 1964, B-153613, IS DISTINGUISHABLE ON THE FACTS FROM THE IMMEDIATE SITUATION. IN THAT CASE ALL THE BIDDERS EXCEEDED EITHER THE ADMINISTRATIVE OR STATUTORY LIMITATIONS AND AN AWARD TO THE LOW BIDDER IN THOSE CIRCUMSTANCES WAS NOT THOUGHT TO PREJUDICE THE RIGHTS OF OTHER BIDDERS SINCE THEY HAD DISQUALIFIED THEMSELVES FROM CONSIDERATION BY VIRTUE OF THEIR BIDS EXCEEDING THE LIMITATIONS. IN THIS CASE, HOWEVER, THERE ARE BIDDERS WHO HAVE NOT EXCEEDED THE LIMITATIONS. WHILE IT IS SUGGESTED THAT THERE IS NO PREJUDICE TO THEM, WE BELIEVE THAT THE PREJUDICE LIES IN THE FACT THAT THE ADVERTISING STATUTES REQUIRE AWARDS TO BE MADE TO BIDDERS CONFORMING TO THE INVITATION FOR BIDS AND THERE ARE RESPONSIVE BIDDERS WHO WOULD BE DEPRIVED OF AN AWARD IF IT WERE MADE TO A NONRESPONSIVE BIDDER. MOREOVER, THE DECISION OF MAY 6, 1964, IS FURTHER DISTINGUISHABLE IN THAT THERE THE LOW BIDDER EXCEEDED THE ADMINISTRATIVE LIMITATION BY A NEGLIGIBLE AMOUNT ($1,020), WHEREAS HERE THE LOW BIDDER HAS EXCEEDED THE ADMINISTRATIVE LIMITATIONS BY A TOTAL OF MORE THAN $80,000. ALSO, WHILE THE LOW BIDDER IN THE CITED CASE REMAINED WITHIN THE TOTAL AWARD LIMITATION DESPITE ITS BID ON ONE TYPE OF UNIT ABOVE THE UNIT LIMITATION, THE LOW BIDDER IN THIS CASE HAS EXCEEDED THE TOTAL AWARD LIMITATION IN ADDITION TO EXCEEDING THE UNIT AWARD LIMITATION.

WITH RESPECT TO THE FACT THAT THE LOW BIDDER HERE HAS NOT EXCEEDED THE STATUTORY LIMITATION, WE BELIEVE IT IS SUFFICIENT TO OBSERVE, AS NOTED ABOVE, THAT THE INVITATION FOR BIDS, WHICH SETS OUT THE GROUND RULES FOR ACCEPTABILITY OF BIDS, PROVIDES FOR MEASURING THE ACCEPTABILITY OF BIDS IN TERMS OF THE ADMINISTRATIVE LIMITATIONS AND NOT THE STATUTORY LIMITATIONS.

SINCE IT IS REPORTED THAT THE ADMINISTRATIVE AWARD LIMITATION INCLUDED IN THE INVITATION FOR BIDS WAS INCORRECT IN THAT IT SHOULD HAVE BEEN $1,540 MORE FOR EACH UNIT, YOUR DEPARTMENT MAY WISH TO CONSIDER THE PROPRIETY OF READVERTISING FOR BIDS ON THE 337 HOUSING UNITS, FOR IF THE LIMITATIONS IN THE INVITATION HAVE IN FACT BEEN UNDERSTATED, THE GOVERNMENT POSSIBLY MIGHT HAVE BEEN DEPRIVED OF LOWER BIDS THAN THAT OF THE LOW BIDDER FROM OTHER PROSPECTIVE BIDDERS WHO MAY HAVE BEEN PRECLUDED FROM BIDDING BY REASON OF THE LIMITATIONS USED IN THE INVITATION, AND WHO MIGHT HAVE BID IF THE LIMITATIONS WERE HIGHER AS IT IS SUGGESTED THEY COULD HAVE BEEN. IN THAT CONNECTION, IN A LETTER TO OUR OFFICE FROM THE ATTORNEY FOR THE SECOND LOW BIDDER, IT IS ALLEGED THAT THE DIFFERENCE THAT REMAINS BETWEEN THE ADMINISTRATIVE AND STATUTORY LIMITATIONS AFTER THE ADDITION OF $1,540 PER UNIT TO THE ADMINISTRATIVE LIMITATION IS NOT ADEQUATE TO COVER THE CONTINGENCIES AND OTHER NONCONSTRUCTION COSTS WHICH ARE A PART OF THE LIMITATION. IN THAT RESPECT HE POINTS OUT THAT THE DEPARTMENT OF THE NAVY AND THE CORPS OF ENGINEERS PROVIDE A SPREAD OF 6 AND 8 PERCENT, RESPECTIVELY, BETWEEN THE ADMINISTRATIVE AND STATUTORY LIMITATIONS WHICH IS CONSIDERABLY MORE THAN THE APPROXIMATE 3 PERCENT WHICH WOULD BE PROVIDED IN THE IMMEDIATE SITUATION IF $1,540 WERE ADDED TO THE ADMINISTRATIVE LIMITATION.

NOT KNOWING WHAT COURSE YOUR DEPARTMENT MIGHT CHOOSE TO FOLLOW IN RESPECT TO READVERTISING FOR BIDS, AND SINCE WE ARE OF THE OPINION THAT THE LOW BID IS UNACCEPTABLE, IT IS NECESSARY TO CONSIDER THE QUESTION OF THE ACCEPTABILITY OF THE NEXT LOW BID ON THE PREMISE THAT YOUR DEPARTMENT MIGHT DECIDE TO MAKE AN AWARD UNDER THE INVITATION HERE INVOLVED.

THE THIRD LOW BIDDER HAS PROTESTED AGAINST AN AWARD TO THE SECOND LOW BIDDER WHICH SUBMITTED A SINGLE BID BOND WITH A BID ON TWO SETS OF BID SCHEDULES. ONE SET HAD BEEN DELETED BY A SUBSEQUENT AMENDMENT TO THE INVITATION AND ANOTHER HAD BEEN FURNISHED BY THE AMENDMENT DELETING THE FIRST SET. THE PROTESTANT OBJECTS TO THE BIDDER BEING CONSIDERED RESPONSIVE ON THE GROUND THAT IT CANNOT BE DETERMINED FROM THE BID BOND WHICH FORM IS SUPPORTED BY THE BOND.

THE ITEMS BID AND THE PRICES QUOTED BY THE SECOND LOW BIDDER WERE THE SAME ON BOTH FORMS. THE BIDDER DOES NOT UNDERTAKE ANY DIFFERENT RESPONSIBILITY ON ONE FORM THAT IT DOES ON ANOTHER. IT APPEARS THAT THE SITUATION IS SUCH THAT ONE BID COULD REASONABLY BE CONSIDERED A DUPLICATE OF THE OTHER RATHER THAN SEPARATE BIDS. IN THE CIRCUMSTANCES, SINCE THE SURETY'S OBLIGATION IS BASED ON 20 PERCENT OF THE BID PRICE WHICH IS THE SAME ON EITHER BID, A DENIAL BY THE SURETY OF LIABILITY ON THE BOND ON THE BASIS THAT THE BID SUBMITTED WAS NOT THE BID CONSIDERED BY IT FOR BONDING PURPOSES WOULD APPEAR TO BE WHOLLY UNSUPPORTABLE. WE, THEREFORE, CONCLUDE THAT THIS PHASE OF THE PROTEST IS WITHOUT MERIT.

IN ADDITION TO THE PROTEST MADE TO YOUR DEPARTMENT BY UNITED NATIONS CONSTRUCTORS, INC., THE ATTORNEYS FOR THAT PROTESTANT HAVE FILED A PROTEST WITH OUR OFFICE. THERE IS ENCLOSED A COPY OF OUR LETTER OF TODAY TO THE ATTORNEYS DENYING THE PROTEST IN ACCORDANCE WITH THE ADMINISTRATIVE RECOMMENDATION.