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B-151349, JUN. 13, 1963

B-151349 Jun 13, 1963
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THE AWARD OF THIS CONTRACT IS SUBJECT TO THE RULES APPLICABLE TO THE AWARD OF CONTRACTS BY FEDERAL AGENCIES ONLY TO THE EXTENT THAT SUCH RULES ARE MADE APPLICABLE BY THE TERMS OF THE LOAN AGREEMENT. WE HAVE BY LETTER OF MAY 20. BEEN ADVISED BY THE ADMINISTRATOR OF THE RURAL ELECTRIFICATION ADMINISTRATION THAT THE PERTINENT PROVISION OF THE LOAN AGREEMENT IS AS FOLLOWS: "ARTICLE III. THE BORROWER SHALL OPEN ALL BIDS PUBLICLY AT THE TIME AND PLACE WHICH SHALL HAVE BEEN SPECIFIED IN THE NOTICE TO BIDDERS. UNLESS ALL BIDS ARE REJECTED OR THE ADMINISTRATOR SHALL APPROVE THE AWARD OF THE CONTRACT TO ANOTHER RESPONSIBLE BIDDER UPON A SHOWING THAT THE AWARD OF THE CONTRACT TO SUCH BIDDER IS IN THE BEST INTERESTS OF THE BORROWER.'.

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B-151349, JUN. 13, 1963

TO THE VIRGINIA-CAROLINA ELECTRICAL WORKS, INC.:

WE REFER AGAIN TO YOUR TELEGRAM OF APRIL 22, 1963, PROTESTING AGAINST THE ALLEGED RESTRICTIVE NATURE OF THE SPECIFICATIONS EMPLOYED UNDER A CONTRACT TO BE AWARDED PURSUANT TO AN INVITATION FOR THE CONSTRUCTION OF A GENERATING PLANT ADDITION BY THE CAPE HATTERAS ELECTRIC MEMBERSHIP CORPORATION OF BUXTON, NORTH CAROLINA, WITH FINANCING IN WHOLE OR IN PART TO BE FROM A LOAN MADE BY THE RURAL ELECTRIFICATION ADMINISTRATION.

AS WE INDICATED IN OUR LETTER OF MAY 3, 1963, THE AWARD OF THIS CONTRACT IS SUBJECT TO THE RULES APPLICABLE TO THE AWARD OF CONTRACTS BY FEDERAL AGENCIES ONLY TO THE EXTENT THAT SUCH RULES ARE MADE APPLICABLE BY THE TERMS OF THE LOAN AGREEMENT. WE HAVE BY LETTER OF MAY 20, 1963, BEEN ADVISED BY THE ADMINISTRATOR OF THE RURAL ELECTRIFICATION ADMINISTRATION THAT THE PERTINENT PROVISION OF THE LOAN AGREEMENT IS AS FOLLOWS:

"ARTICLE III, SECTION 3. THE BORROWER SHALL, IF THE ADMINISTRATOR SHALL SO REQUIRE, INVITE BIDS FOR CONSTRUCTION WORK PERTAINING TO THE SYSTEM, AND FOR MATERIALS, EQUIPMENT, OR SUPPLIES TO BE USED THEREIN, AND THE BORROWER SHALL INCLUDE ALL PERSONS DESIGNATED BY THE ADMINISTRATOR AMONG THOSE INVITED TO SUBMIT BIDS. IF THE ADMINISTRATOR SHALL SO REQUIRE, THE BORROWER SHALL OPEN BIDS IN THE PRESENCE OF A REPRESENTATIVE OF THE ADMINISTRATOR AND, IN ANY EVENT, THE BORROWER SHALL OPEN ALL BIDS PUBLICLY AT THE TIME AND PLACE WHICH SHALL HAVE BEEN SPECIFIED IN THE NOTICE TO BIDDERS. THE BORROWER SHALL AWARD EACH CONTRACT TO THE LOWEST RESPONSIBLE BIDDER, UNLESS ALL BIDS ARE REJECTED OR THE ADMINISTRATOR SHALL APPROVE THE AWARD OF THE CONTRACT TO ANOTHER RESPONSIBLE BIDDER UPON A SHOWING THAT THE AWARD OF THE CONTRACT TO SUCH BIDDER IS IN THE BEST INTERESTS OF THE BORROWER.'

THE ADMINISTRATOR FURTHER ADVISED THAT THE SPECIFICATIONS USED IN THE INVITATION WERE EXAMINED BY APPROPRIATE OFFICIALS OF THE REA AND APPROVED ON MARCH 29, 1963, WITH CERTAIN RECOMMENDED CHANGES, WHICH WERE MADE. THE ADMINISTRATOR STATED THAT THE SPECIFICATIONS FOR THE UNIT ARE NOT CONSIDERED TO BE BEYOND THE CAPABILITIES OF THE FIVE DIESEL ENGINE MANUFACTURERS WHO RECEIVED INVITATIONS TO BID, AND THAT HE IS NOT AWARE OF THE REASONS WHY CERTAIN OF THESE MANUFACTURERS FAILED TO FURNISH PRICE QUOTATIONS OR TO BID THEMSELVES.

THE DRAFTING OF SPECIFICATIONS TO MEET ITS NEEDS IS THE RESPONSIBILITY OF THE CAPE HATTERAS ASSOCIATION, AND IN THIS PARTICULAR CASE IT APPEARS THAT THE SPECIFICATIONS WERE DRAFTED TO CONFORM TO SUGGESTIONS MADE BY THE RURAL ELECTRIFICATION ADMINISTRATION. THE ADMINISTRATOR HAS FURTHER STATED THAT THERE APPEARS TO BE AMPLE BASIS FOR CONCLUDING THAT THE AWARD MADE BY THE CAPE HATTERAS ASSOCIATION IS IN ITS BEST INTEREST. IN VIEW OF THE TERMS OF ARTICLE III, SECTION 3, OF THE LOAN AGREEMENT, QUOTED ABOVE, WE MUST CONCLUDE THAT THE RULES APPLICABLE TO FEDERAL PROCUREMENT ARE NOT NECESSARILY APPLICABLE TO THE INSTANT PROCUREMENT, AND IN VIEW OF THE ADMINISTRATOR'S APPROVAL OF THE AWARD, WE FIND NO BASIS TO QUESTION ITS VALIDITY.

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