B-152948, MAR. 25, 1965

B-152948, MAR. 25, 1965

TO MOORE, VIRGADAMO, BOYLE AND LYNCH:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 15, 1964, AND SUBSEQUENT CORRESPONDENCE, PROTESTING ON BEHALF OF AMERICAN SALVAGE CORPORATION, AGAINST AWARD OF A CONTRACT TO ROCKAWAY BOULEVARD WRECKING AND LUMBER COMPANY, INC., BY THE REDEVELOPMENT AGENCY OF NEWPORT, RHODE ISLAND, IN CONNECTION WITH URBAN RENEWAL PROJECT NO. R.I. R-9, COMMONLY REFERRED TO AS THE GOAT ISLAND PROJECT.

THE INVITATION PURSUANT TO WHICH THIS CONTRACT WAS AWARDED CALLED FOR BIDS FOR THE DEMOLITION AND SITE CLEARANCE OF THE AREA ENCOMPASSED IN THE GOAT ISLAND PROJECT. THE INVITATION, AS AMENDED, WAS ISSUED, RECEIVED, AND OPENED BY THE REDEVELOPMENT AGENCY OF NEWPORT, RHODE ISLAND. SIXTEEN BIDS WERE RECEIVED, RANGING FROM $290,763 (AMERICAN SALVAGE CORPORATION) TO $1,168,000. THE SECOND LOW BID WAS THAT OF ROCKAWAY IN THE AMOUNT OF $308,000. AS THE RESULT OF AN INVESTIGATION OF THE QUALIFICATIONS OF AMERICAN AND ROCKAWAY, RESPECTIVELY, UNDER THE DIRECTION OF THE EXECUTIVE DIRECTOR OF THE REDEVELOPMENT AGENCY, THE MEMBERS OF THE REDEVELOPMENT AGENCY RESOLVED AT A MEETING ON DECEMBER 9, 1964, TO REJECT AMERICAN'S BID BECAUSE OF ITS OPINION THAT ,SAID CORPORATION LACKS THE NECESSARY OVERALL SKILL, EXPERIENCE AND FACILITIES FOR CARRYING OUT A DEMOLITION CONTRACT OF THIS MAGNITUDE," AND TO AWARD THE CONTRACT TO ROCKAWAY, SUBJECT TO CONCURRENCE OF THE HOUSING AND HOME FINANCE AGENCY (HHFA). BECAUSE THE AMERICAN SALVAGE CORPORATION HAD BEEN FORMED ONLY A FEW DAYS BEFORE SUBMISSION OF ITS BID AND HAD NOT THEREFORE PREVIOUSLY ENGAGED IN DEMOLITION WORK, ITS CAPABILITY TO PERFORM THE WORK CALLED FOR BY THE SUBJECT CONTRACT NECESSARILY INVOLVED A DETERMINATION OF THE CAPABILITIES OF THE THREE STOCKHOLDERS OF SUCH CORPORATION TO PERFORM THE WORK. SINCE ONLY ONE OF THESE THREE HAD DEMOLITION EXPERIENCE, HIS PRIOR RECORD OF PERFORMANCE WAS OF PRIMARY CONCERN. THE SOURCES CONTACTED IN THE COURSE OF INVESTIGATING HIS QUALIFICATIONS WERE PEOPLE, INCLUDING TWO LOCAL GOVERNMENT OFFICIALS, WHO HAD KNOWLEDGE OF HIS PERFORMANCE UNDER PREVIOUS DEMOLITION CONTRACTS. ADVERSE REPORTS AND RECOMMENDATIONS WERE RECEIVED FROM SEVERAL OF THESE. THE ADVERSE REPORTS INCLUDED STATEMENTS REFERRING TO HIS FAILURE TO TAKE NECESSARY PRECAUTIONARY MEASURES WITH REGARD TO SAFETY OF BOTH MEN AND PROPERTY, FAILURE TO OBTAIN AND USE PROPER EQUIPMENT, LACK OF TECHNICAL KNOWLEDGE AND SKILL, AND LABOR DIFFICULTIES. IT SHOULD ALSO BE NOTED THAT ON DECEMBER 16, 1964, THE REDEVELOPMENT AGENCY SUBMITTED COPIES OF THE LETTERS OF RECOMMENDATION WHICH YOU HAVE ALSO FURNISHED HHFA AND OUR OFFICE TO THE HHFA REGIONAL OFFICE WITH THE STATEMENT THAT "THESE LETTERS WERE REVIEWED AND CONSIDERED BY THE AGENCY BEFORE FINAL ACTION WAS TAKEN TO REJECT THE BID OF AMERICAN SALVAGE CORP.' SUBSEQUENTLY, CONCURRENCE OF HHFA IN THE ACTION PROPOSED WAS RECEIVED AND AWARD MADE TO ROCKAWAY.

YOU PROTEST THAT YOUR CLIENT IS QUALIFIED TO PERFORM THIS CONTRACT AND HAS BEEN "ARBITRARILY AND UNJUSTLY DENIED THE CONTRACT," AND THAT ROCKAWAY IS NOT QUALIFIED AND DOES NOT HAVE THE EQUIPMENT NECESSARY TO PERFORM.

THE INTEREST OF THE GOVERNMENT IN THIS CONTRACT ARISES FROM THE FACT THAT THE COST OF THE GOAT ISLAND PROJECT WILL LARGELY BE MET FROM A CAPITAL GRANT TO THE LPA BY THE HHFA PURSUANT TO THE HOUSING ACT OF 1949, AS AMENDED, 42 U.S.C. 1453. THE ADMINISTRATOR OF HHFA IS AUTHORIZED, SUBJECT TO CERTAIN LIMITATIONS, TO MAKE GRANTS TO LOCAL PUBLIC AGENCIES (LPA) FOR URBAN RENEWAL PROJECTS. TO CARRY OUT THE PURPOSES OF THE ACT, REGULATIONS SETTING FORTH THE REQUIREMENTS AND PROCEDURES APPLICABLE TO BIDDING AND CONTRACT AWARDS BY THE LPA HAVE BEEN PROMULGATED BY THE ADMINISTRATOR, SECTION 11-3-3, URBAN RENEWAL MANUAL, PROVIDES, IN PERTINENT PART, AS FOLLOWS:

"THE LPA SHALL GIVE FULL OPPORTUNITY FOR FREE, OPEN, AND COMPETITIVE BIDDING FOR EACH PROJECT IMPROVEMENT OF SITE PREPARATION CONTRACT, * *

IN ADDITION, THE GRANT AGREEMENT BETWEEN THE HHFA AND THE NEWPORT REDEVELOPMENT AGENCY PROVIDES IN SECTION 107 (F) AS FOLLOWS:

"/F) COMPETITIVE BIDDING.--- THE LOCAL PUBLIC AGENCY WILL GIVE FULL OPPORTUNITY FOR FREE, OPEN, AND COMPETITIVE BIDDING FOR EACH CONTRACT TO BE LET BY IT CALLING FOR INSTALLATION, CONSTRUCTION, RECONSTRUCTION, DEMOLITION, REMOVAL, OR SITE IMPROVEMENT WORK, OR OTHER SIMILAR WORK, AS A PART OF THE PROJECT, OR FOR THE FURNISHING OF ANY MATERIALS, SUPPLIES, OR EQUIPMENT FOR, OR FOR USE ON, THE PROJECT; WILL GIVE SUCH PUBLICITY TO ITS ADVERTISEMENTS OR CALLS FOR BIDS FOR EACH SUCH CONTRACT AS WILL PROVIDE ADEQUATE COMPETITION; AND THE AWARD OF EACH SUCH CONTRACT, WHEN MADE, WILL BE MADE BY IT AS SOON AS PRACTICABLE TO THE LOWEST RESPONSIBLE BIDDER: * *

THE CONCERN OF OUR OFFICE IN SUCH MATTERS IS TO SEE THAT THE FEDERAL FUNDS INVOLVED ARE DISBURSED IN ACCORDANCE WITH THE STATUTORY AUTHORIZATION, AS IMPLEMENTED BY AUTHORIZED REGULATIONS OF THE AGENCIES CHARGED WITH ADMINISTRATION OF THE PROGRAMS. OUR AUDITING OF THE ACCOUNTS OF THE ADMINISTRATOR, HHFA, UNDER THE 1949 HOUSING ACT, IS REQUIRED TO BE CONDUCTED IN ACCORDANCE WITH PRINCIPLES AND PROCEDURES APPLICABLE TO COMMERCIAL TRANSACTIONS, AND SUCH TRANSACTIONS OF THE ADMINISTRATOR AS THE MAKING OF ADVANCES OF FUNDS OR CAPITAL GRANTS UNDER THE ACT ARE FINAL AND CONCLUSIVE UPON ALL OFFICERS OF THE GOVERNMENT. 42 U.S.C. 1456 (A) (3).

AS POINTED OUT HERETOFORE, HHFA REGULATIONS REQUIRE THAT "COMPETITIVE BIDDING" PROCEDURES BE EMPLOYED BY THE LPA IN BIDDING AND AWARD OF CONTRACTS, AND THE GRANT AGREEMENT PROVISION REGARDING "COMPETITIVE BIDDING" REQUIRES AWARD TO BE MADE TO THE "LOWEST RESPONSIBLE BIDDER.' EVEN IN DIRECT FEDERAL PROCUREMENT OUR OFFICE HAS CONSISTENTLY ADHERED TO THE RULE THAT THE DETERMINATION OF A BIDDER'S RESPONSIBILITY INVOLVES THE EXERCISE OF A CONSIDERABLE RANGE OF DISCRETION BY THE ADMINISTRATIVE AGENCY CONCERNED IN EVALUATING THE BIDDER'S OVERALL ABILITY TO PERFORM, INCLUDING SUCH FACTORS AS ORGANIZATION, TECHNICAL EXPERIENCE, KNOWLEDGE, SKILLS, EQUIPMENT AND FACILITIES, WHICH DETERMINATION MAY NOT PROPERLY BE QUESTIONED BY OUR OFFICE UNLESS ARBITRARY, CAPRICIOUS, OR WITHOUT A REASONABLE BASIS THEREFOR. 43 COMP. GEN. 257. IN VIEW OF THE STATUTORY PROVISIONS CITED ABOVE, THE INFORMATION RELIED ON AS THE BASIS FOR THE DETERMINATION OF NONRESPONSIBILITY, AND THE FACT THAT PROJECTS UNDER THE URBAN REDEVELOPMENT PROGRAM INVOLVE LOCAL INTERESTS AND FINANCES IN ADDITION TO FEDERALLY FURNISHED FUNDS, WE WOULD BE MOST RELUCTANT TO OBJECT TO ANY ACTION OF THE ADMINISTRATOR, IN CONNECTION WITH THE APPROVAL OF CONTRACTS PROPOSED TO BE ENTERED INTO BY LOCAL AGENCIES, WHICH THE ADMINISTRATOR CONSIDERED TO BE IN ACCORDANCE WITH THE REGULATIONS PROMULGATED BY HIM.

DESPITE THE INFORMATION SUBMITTED BY YOU AS TO THE QUALIFICATIONS OF THE THREE STOCKHOLDERS OF AMERICAN SALVAGE CORPORATION, WHICH ISTO SOME EXTENT IN CONFLICT WITH THE INFORMATION FURNISHED BY HHFA, WE DO NOT THINK THIS EVIDENCE IS SUFFICIENT TO JUSTIFY US IN CONCLUDING THAT THE DETERMINATION MADE BY THE LPA AND CONCURRED IN BY HHFA WAS NOT BASED UPON SUBSTANTIAL GROUNDS. THERE IS THEREFORE NO PROPER BASIS UPON WHICH WE MAY OBJECT TO REJECTION OF YOUR BID. SINCE YOU HAVE SUBMITTED NO EVIDENCE IN SUPPORT OF YOUR CONTENTION THAT ROCKAWAY IS NOT QUALIFIED AND DOES NOT HAVE THE NECESSARY EQUIPMENT FOR THE JOB, THE CONTRARY DETERMINATION MADE BY THE LPA AND CONCURRED BY HHFA MUST BE ACCEPTED AS BINDING.