B-168396, AUG. 18, 1970

B-168396, AUG. 18, 1970

CONTRACTS -- CANCELLATION -- MEASURE OF DAMAGE CONTRACTOR (FAIRBANKS AND HUFFAKER) WHOSE CONTRACT WAS CANCELLED PURSUANT TO DECISION OF THE COMP. GEN. WHEN IT WAS DETERMINED THAT LOW BID SHOULD NOT HAVE BEEN REJECTED AS NONRESPONSIVE MAY HAVE CLAIM SETTLED ON BASIS OF TERMINATION FOR CONVENIENCE AND BE ALLOWED AMOUNT IN ADDITION TO AMOUNT PAID FOR WORK PRIOR TO CANCELLATION.

TO MR. SECRETARY:

REFERENCE IS MADE TO OUR DECISION OF FEBRUARY 2, 1970, B-168396, ADVISING YOU THAT THE CONTRACT AWARDED TO FAIRBANKS AND HUFFAKER BY THE FOREST SERVICE PURSUANT TO SOLICITATION NO. R6-70-43 SHOULD BE CANCELLED AND AWARD MADE TO THE LOW BIDDER, E. W. ELDRIDGE, INCORPORATED, UPON AN AFFIRMATIVE DETERMINATION OF THE LATTER'S RESPONSIBILITY. BY LETTER DATED JUNE 11, 1970, THE CONTRACTING OFFICER ADVISED THE CONTRACTOR OF CANCELLATION OF THE CONTRACT AND REQUESTED REFUND OF A PORTION OF THE PAYMENTS MADE PRIOR THERETO.

SENATOR WARREN G. MAGNUSON HAS FORWARDED TO OUR OFFICE A LETTER DATED JUNE 26, 1970, FROM SCHWEPPE, DOOLITTLE, KRUG & TAUSEND, ATTORNEYS FOR FAIRBANKS AND HUFFAKER, REQUESTING REVERSAL OF OUR DECISION OR, IN THE ALTERNATIVE, SETTLEMENT OF THE CONTRACTOR'S CLAIM ON THE BASIS OF A TERMINATION FOR CONVENIENCE. ALTHOUGH WE HAVE NOT BEEN FURNISHED THE DETAILS OF THE CONTRACTOR'S CLAIM, IT APPEARS THAT IT IS FOR PAYMENT OF $5,430.40, IN ADDITION TO THE AMOUNT PAID FOR WORK UNDER THE CONTRACT PRIOR TO CANCELLATION.

IT IS THE CONTRACTOR'S POSITION THAT THE AWARD TO IT AS THE SECOND LOW RESPONSIVE AND RESPONSIBLE BIDDER WAS VALID BECAUSE ELDRIDGE'S LOW BID WAS PROPERLY REJECTED AS NONRESPONSIVE FOR FAILING TO INCLUDE THE INFORMATION REQUIRED BY THE FOLLOWING PROVISION OF THE INVITATION:

"PRE-AWARD REQUIREMENTS. EACH BIDDER MUST SUBMIT THE FOLLOWING WITH HIS BID: A PLAN OF CONSTRUCTION CONSISTING OF A TIME CHART OR SCHEDULE OF PROPOSED PROGRESS, THE PROSED DETAILED METHOD OF CARRYING ON THE WORK, A FULL STATEMENT AS TO MEN, EQUIPMENT AND SUPERVISION TO BE UTILIZED ON THE PROJECT. EACH BIDDER, MUST ALSO COMPLETE AND SUBMIT WITH HIS BID THE ATTACHED EXPERIENCE QUESTIONNAIRE AND FINANCIAL STATEMENT.

"FAILURE TO FURNISH ALL OF THE ABOVE MENTIONED REQUIREMENTS PRIOR TO THE TIME SET FOR OPENING OF BIDS WILL RESULT IN THE REJECTION OF THE BID AS BEING NONRESPONSIVE."

IN OUR DECISION WE CONCLUDED THAT SINCE THE INFORMATION CALLED FOR UNDER THE ABOVE-QUOTED PROVISION WAS REQUIRED FOR THE PURPOSE OF DETERMINING THE RESPONSIBILITY OF PROSPECTIVE BIDDERS, ELDRIDGE'S BID SHOULD NOT HAVE BEEN REJECTED AS NONRESPONSIVE IN THE ABSENCE OF A DEFINITIVE DETERMINATION OF NONRESPONSIBILITY. IN SUPPORT OF THIS POSITION WE CITED SEVERAL DECISIONS OF OUR OFFICE, INCLUDING 39 COMP. GEN. 173 (1959), FROM WHICH WE QUOTE THE FOLLOWING:

"THE PERTINENT STATUTORY PROVISION FOR APPLICATION IS THAT 'AWARD SHALL BE MADE *** TO THAT RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED.' (SECTION 303, FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, 41 U.S.C. 253.)

"UNDER SIMILAR STATE STATUTES REQUIRING AWARDS TO THE LOWEST RESPONSIBLE BIDDER, IT IS HELD THAT RESPONSIBILITY IS A QUESTION OF FACT, AND THAT REJECTION OF THE LOWEST BIDDER ON THE GROUND OF LACK OF RESPONSIBILITY MUST BE BASED UPON A FULL AND HONEST INVESTIGATION OF THE QUALIFICATIONS OF THE BIDDER (PEARLMAN V CITY OF PITTSBURGH, 304 PA. 24, 155 A. 118); ***

"RECOGNIZING THE DESIRABILITY, BOTH FROM THE STANDPOINT OF ADMINISTRATIVE CONVENIENCE AND FROM THAT OF PROSPECTIVE BIDDERS WHO MAY BE SAVED USELESS EXPENSE AND EFFORT, OF INCLUDING IN INVITATIONS FOR BIDS SOME NOTICE TO BIDDERS OF MINIMUM STANDARDS TO BE APPLIED IN DETERMINING THE QUALIFICATIONS OF BIDDERS, WE FEEL NEVERTHELESS THAT THE STATEMENT OF SUCH QUALIFICATIONS SHOULD NOT BE CONSIDERED AS HAVING THE EFFECT OF TRANSFORMING THE PURELY FACTUAL QUESTION OF RESPONSIBILITY INTO A LEGAL QUESTION OF CONFORMITY TO THE INVITATION."

HOWEVER, WE RECOGNIZE THE DISTINCT POSSIBILITY THAT A COURT MIGHT DISAGREE WITH OUR CONCLUSION CONCERNING THE VALIDITY OF THE AWARD, PARTICULARLY IN VIEW OF THE CONCLUDING PARAGRAPH OF THE PROVISION OF THE INVITATION QUOTED ABOVE. IN JOHN REINER & COMPANY V UNITED STATES, 325 F. 2D 438 (1963), THE COURT OF CLAIMS SAID:

"IN TESTING THE ENFORCEABILITY OF AN AWARD MADE BY THE GOVERNMENT, WHERE A PROBLEM OF THE VALIDITY OF THE INVITATION OR THE RESPONSIVENESS OF THE ACCEPTED BID ARISES AFTER THE AWARD, THE COURT SHOULD ORDINARILY IMPOSE THE BINDING STAMP OF NULLITY ONLY WHEN THE ILLEGALITY IS PLAIN." ALSO, SEE BROWN & SON ELECTRIC COMPANY V UNITED STATES, 325 F. 2D 446 (1963).

IN THE CITED CASES THE COURT CONCLUDED THAT SINCE THE CANCELLED CONTRACTS WERE NOT CLEARLY INVALID THE AWARDS SHOULD BE UPHELD. FURTHER, THE COURT HELD THAT THE CONTRACTORS' RECOVERY SHOULD BE THE MONEY TO WHICH THEY WOULD BE ENTITLED ON A TERMINATION OF THE CONTRACT FOR THE GOVERNMENT'S CONVENIENCE.

IN VIEW THEREOF, THE CONTRACTOR'S CLAIM SHOULD BE SETTLED IN ACCORDANCE WITH THE POLICIES AND PROCEDURES SET FORTH IN PART 1-8, FEDERAL PROCUREMENT REGULATIONS.