B-151276, MAY 28, 1963

B-151276, MAY 28, 1963

TO MR. JOSEPH N. FUTOWSKY:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 9, 1963, AND ENCLOSURE, PROTESTING ON BEHALF OF YOUR CLIENT, C. G. SCHMIDT, INC., AGAINST THE PROPOSED AWARD OF A CONTRACT TO AKWA CONSTRUCTION CO., INC., UNDER INVITATION FOR BIDS NO. ENG-11-132-63-30.

THE SUBJECT INVITATION FOR BIDS WAS ISSUED ON JANUARY 31, 1963, BY THE UNITED STATES ARMY CORPS OF ENGINEERS AND CALLED FOR BIDS ON CONSTRUCTION OF IMPROVED NIKE-HERCULES FACILITIES AT THE MILWAUKEE, ST. LOUIS AND MINNEAPOLIS-ST. PAUL DEFENSE AREAS. THE INVITATION REQUESTED BIDS ON VARIOUS WORK ITEMS UNDER SIX SCHEDULES DESIGNATED "A" THROUGH "F.' YOUR PROTEST CONCERNS ONLY SCHEDULES "A" AND "B" INVOLVING THE MILWAUKEE DEFENSE AREA.

PARAGRAPHS 5 (B) AND 10 (B) OF STANDARD FORM 22 (JANUARY 1961 EDITION) ENTITLED "INSTRUCTIONS TO BIDDERS," WHICH WAS MADE A PART OF THE INVITATION, PROVIDE AS FOLLOWS:

"/5) (B) THE BID FORM MAY PROVIDE FOR SUBMISSION OF A PRICE OR PRICES FOR ONE OR MORE ITEMS, WHICH MAY BE LUMP SUM BIDS, ALTERNATE PRICES, SCHEDULED ITEMS RESULTING IN A BID ON A UNIT OF CONSTRUCTION OR A COMBINATION THEREOF, ETC. WHERE THE BID FORM EXPLICITLY REQUIRES THAT THE BIDDER BID ON ALL ITEMS, FAILURE TO DO SO WILL DISQUALIFY THE BID. WHEN SUBMISSION OF A PRICE ON ALL ITEMS IS NOT REQUIRED, BIDDERS SHOULD INSERT THE WORDS "NO BID" IN THE SPACE PROVIDED FOR ANY ITEM ON WHICH NO PRICE IS SUBMITTED.'

"/10) (B) THE GOVERNMENT MAY, WHEN IN ITS INTEREST, REJECT ANY OR ALL BIDS OR WAIVE ANY INFORMALITY IN BIDS RECEIVED.'

IN ADDITION, NOTE 2 ON PAGE B-7 OF THE INVITATION CONTAINS THE FOLLOWING LANGUAGE:

"2. BIDS MUST INCLUDE A PRICE FOR EACH ITEM IN ANY SCHEDULE, INCLUDING ALL SUBITEMS LISTED THEREUNDER. FAILURE TO DO SO FOR SCHEDULE "F" (WHICH IS SUBJECT TO UNIT PRICES) WILL CONSTITUTE AN INCOMPLETE BID WHICH WILL BE REJECTED.'

SCHEDULE "A," SITE M-02 (MILWAUKEE DEFENSE AREA) , REQUESTED LUMP SUM BIDS ON THREE ITEMS. ITEM 1 CALLED FOR CONSTRUCTION OF ONE GENERATOR BUILDING; ITEM 2 FOR CONSTRUCTION OF ONE HIPAR BUILDING; AND ITEM 3 FOR CONSTRUCTION OF EXTERIOR UTILITIES FOR ITEMS 1 AND 2. AT THE BOTTOM OF THE SCHEDULE APPEARED THE FOLLOWING NOTATION: "TOTAL BID PRICE SCHEDULE "A" $ ---------- .' SCHEDULE "B," SITE M-74 (MILWAUKEE DEFENSE AREA), ALSO CALLED FOR LUMP-SUM BIDS ON THREE ITEMS DESCRIBED EXACTLY AS THOSE IN SCHEDULE "A" WITH A SPACE AT THE BOTTOM OF THE SCHEDULE FOR ENTRY OF A TOTAL BID PRICE FOR THE SCHEDULE. THE LOW BIDDER, AKWA CONSTRUCTION CO., INC., DID NOT INSERT SEPARATE PRICES FOR LUMP-SUM ITEMS 1, 2 AND 3 OF EACH RESPECTIVE SCHEDULE BUT INSTEAD INSERTED A TOTAL PRICE OF $170,000 ON SCHEDULE "A" AND A TOTAL PRICE OF $174,007 ON SCHEDULE "B.' IN ADDITION, AKWA OFFERED A TOTAL DISCOUNT OF $3,500 ON SCHEDULES "A" AND "B.' C. G. SCHMIDT'S BID, ON THE OTHER HAND, INCLUDED SEPARATE PRICES FOR EACH ITEM UNDER SCHEDULES "A" AND "B.' SCHMIDT'S TOTAL PRICE WAS $178,116 ON SCHEDULE "A" AND $180,249 ON SCHEDULE "B" WITH A TOTAL DISCOUNT ON BOTH SCHEDULES OF $4,000.

IN YOUR LETTER OF MARCH 29, 1963, TO THE UNITED STATES ARMY ENGINEER, CHICAGO DISTRICT, A COPY OF WHICH YOU FORWARDED TO OUR OFFICE, YOU CONTEND THAT IN VIEW OF PARAGRAPH 5 (B) OF "INSTRUCTIONS TO BIDDERS" AKWA'S BID WAS NONRESPONSIVE AND SHOULD BE REJECTED FOR FAILURE TO INCLUDE A SEPARATE PRICE ON EACH ITEM OF SCHEDULES "A" AND "B.'

VARIOUS PROVISIONS OF THE INVITATION CLEARLY INDICATE THAT AWARD OF A CONTRACT, OR CONTRACTS, FOR THE WORK REQUIRED IS TO BE MADE BY SCHEDULES AND NOT ON THE BASIS OF SEPARATE ITEMS UNDER A PARTICULAR SCHEDULE. FOR INSTANCE, PARAGRAPH "G" ENTITLED "MISCELLANEOUS DATA" ON PAGE IB-2 OF THE INVITATION PROVIDES, IN PERTINENT PART, THAT "THE WORK WILL BE DIVIDED INTO SIX SEPARATE SCHEDULES AS ABOVE WITH BIDS ACCEPTED ON ANY OR ALL.' IN ADDITION, NOTES 1 AND 6 ON PAGE B-7 OF THE INVITATION PROVIDE THAT:

"1. BIDS MAY BE SUBMITTED ON ANY OR ALL SCHEDULES AT THE BIDDERS OPTION.

"6. IF A BIDDER IS LOW ON MORE THAN ONE SCHEDULE, THE GOVERNMENT RESERVES THE RIGHT TO ENTER INTO SEPARATE CONTRACTS FOR EACH SUCH SCHEDULE.'

ALTHOUGH PRICES WERE REQUESTED ON AN ITEM BASIS UNDER EACH SCHEDULE, WE DO NOT THINK, IN VIEW OF THE BASIS UPON WHICH EVALUATION OF THE BIDS AND AWARD OF CONTRACTS IS TO BE MADE, THAT THE FAILURE OF AKWA TO ENTER ITEM PRICES UNDER SCHEDULES "A" AND "B" PRECLUDES CONSIDERATION OF ITS BID. THE CONTRACTING OFFICER STATES THAT ALTHOUGH A PRICE BREAKDOWN MIGHT HAVE BEEN DESIRED FOR ADMINISTRATIVE PURPOSES, IT IS NOT OF ANY SIGNIFICANCE IN DETERMINING THE LOW BIDDER AND THAT THE FAILURE TO FURNISH SEPARATE PRICES FOR EACH ITEM DID NOT GIVE AKWA ANY ADVANTAGE OVER OTHER BIDDERS. THINK THE RECORD SUBSTANTIATES THIS STATEMENT.

MOREOVER, IN VIEW OF THE PROVISIONS OF NOTE 2, QUOTED ABOVE, THERE IS SOME QUESTION AS TO THE LEGAL EFFECT THAT SHOULD BE GIVEN THE PROVISION IN PARAGRAPH 5 (B) OF STANDARD FORM 22 THAT FAILURE TO BID ON ALL ITEMS WHERE REQUIRED WILL DISQUALIFY THE BID. THE CONTRACTING OFFICER TAKES THE POSITION THAT PARAGRAPH 5 (B) OF STANDARD FORM 22 IS AMENDED BY NOTE 2 AND SINCE NOTE 2 PROVIDES THAT ONLY THOSE BIDS WHICH FAIL TO INCLUDE ITEM PRICES FOR SCHEDULE "F" WOULD BE REJECTED, FAILURE TO DO SO ON ANY OTHER SCHEDULE WOULD NOT REQUIRE REJECTION. WHILE WE THINK THAT THE CONTRACTING OFFICER'S POSITION HAS MERIT WE NEED NOT, AND DO NOT, REACH OUR DECISION ON THIS BASIS. AT THE VERY LEAST IT CAN BE SAID THAT THE PROVISIONS OF NOTE 2 ARE IN CONFLICT WITH THE PROVISIONS OF PARAGRAPH 5 (B) OF STANDARD FORM 22 IN REGARD TO THE EFFECT TO BE GIVEN THE FAILURE OF A BIDDER TO SUBMIT A PRICE ON ALL ITEMS. EVEN THOUGH WE HAVE NO DIRECT EVIDENCE ON THIS POINT, SUCH CONFLICT MAY HAVE BEEN, AT LEAST, PARTIALLY RESPONSIBLE FOR AKWA'S FAILURE TO SUBMIT ITEM PRICES ON SCHEDULES "A" AND "B.'

IN ANY EVENT, HOWEVER, EVEN WITHOUT BENEFIT OF THE ARGUMENTS ADVANCED BY THE CONTRACTING OFFICER, WE FEEL AKWA'S BID IS PROPER FOR CONSIDERATION AND SHOULD NOT BE REJECTED AS NONRESPONSIVE. IN 40 COMP. GEN. 321, 324, WE STATED THAT:

"WHETHER CERTAIN PROVISIONS OF AN INVITATION FOR BIDS ARE TO BE CONSIDERED MANDATORY OR DISCRETIONARY DEPENDS UPON THE MATERIALITY OF SUCH PROVISIONS AND WHETHER THEY WERE INSERTED FOR THE PROTECTION OF THE INTERESTS OF THE GOVERNMENT OR FOR THE PROTECTION OF THE RIGHTS OF BIDDERS. UNDER AN ADVERTISED PROCUREMENT ALL QUALIFIED BIDDERS MUST BE GIVEN AN EQUAL OPPORTUNITY TO SUBMIT BIDS WHICH ARE BASED UPON THE SAME SPECIFICATIONS, AND TO HAVE SUCH BIDS EVALUATED ON THE SAME BASIS. TO THE EXTENT THAT WAIVER OF THE PROVISIONS OF AN INVITATION FOR BIDS MIGHT RESULT IN FAILURE OF ONE OR MORE BIDDERS TO ATTAIN THE EQUAL OPPORTUNITY TO COMPETE ON A COMMON BASIS WITH OTHER BIDDERS, SUCH PROVISION MUST BE CONSIDERED MANDATORY. HOWEVER, THE CONCEPT OF FORMALLY ADVERTISED PROCUREMENT, INSOFAR AS IT RELATES TO THE SUBMISSION AND EVALUATION OF BIDS, GOES NO FURTHER THAN TO GUARANTEE EQUAL OPPORTUNITY TO COMPETE AND EQUAL TREATMENT IN THE EVALUATION OF BIDS. IT DOES NOT CONFER UPON BIDDERS ANY RIGHT TO INSIST UPON THE ENFORCEMENT OF PROVISIONS IN AN INVITATION, THE WAIVER OF WHICH WOULD NOT RESULT IN AN UNFAIR COMPETITIVE ADVANTAGE TO OTHER BIDDERS BY PERMITTING A METHOD OF CONTRACT PERFORMANCE DIFFERENT FROM THAT CONTEMPLATED BY THE INVITATION OR BY PERMITTING THE BID PRICE TO BE EVALUATED UPON A BASIS NOT COMMON TO ALL BIDS. SUCH PROVISIONS MUST THEREFORE BE CONSTRUED TO BE SOLELY FOR THE PROTECTION OF THE INTERESTS OF THE GOVERNMENT AND THEIR ENFORCEMENT OR WAIVER CAN HAVE NO EFFECT UPON THE RIGHTS OF BIDDERS TO WHICH THE RULES AND PRINCIPLES APPLICABLE TO FORMAL ADVERTISING ARE DIRECTED. TO THIS END, THE DECISIONS OF THIS OFFICE HAVE CONSISTENTLY HELD THAT WHERE DEVIATIONS FROM, OR FAILURES TO COMPLY WITH, THE PROVISIONS OF AN INVITATION DO NOT AFFECT THE BID PRICE UPON WHICH A CONTRACT WOULD BE BASED OR THE QUANTITY OR QUALITY OF THE WORK REQUIRED OF THE BIDDER IN THE EVENT HE IS AWARDED A CONTRACT, A FAILURE TO ENFORCE SUCH PROVISION WILL NOT INFRINGE UPON THE RIGHTS OF OTHER BIDDERS AND THE FAILURE OF A BIDDER TO COMPLY WITH THE PROVISION MAY BE CONSIDERED AS A MINOR DEVIATION WHICH CAN BE WAIVED AND THE BID CONSIDERED RESPONSIVE.'

IN ACCORDANCE WITH THIS RATIONALE WE FEEL THAT THE FAILURE OF AKWA TO SUBMIT ITEM PRICES ON SCHEDULES "A" AND "B" WAS A MINOR DEVIATION NOT AFFECTING THE PRICE, QUANTITY OR QUALITY OF THE WORK SPECIFIED IN THE INVITATION AND CAN BE WAIVED. SEE B-124573, SEPTEMBER 21, 1955; AND B- 143271, OCTOBER 7, 1960. IN THE LATTER CASE, WHICH WAS AFFIRMED BY 40 COMP. GEN. 321, THE SUBJECT INVITATION FOR BIDS CONTAINED INSTRUCTIONS TO BIDDERS WHICH STATED THAT BIDS "MUST BE SUBMITTED ON ALL ITEMS" AND THAT "BIDS NOT SO SUBMITTED WILL BE CONSIDERED NON RESPONSIVE AND WILL BE REJECTED.' NEVERTHELESS, WE HELD THAT IT WAS IMPROPER TO REJECT THE BID OF THE LOW BIDDER FOR FAILING TO BID ON AN ITEM THAT WAS NOT PART OF THE EVALUATION FORMULA AND UNNECESSARY TO DETERMINE THE LOW BIDDER, SINCE THE ITEM DID NOT AFFECT THE SUBSTANCE OF THE BID.