B-154057, JUL. 10, 1964

TO GIBBS SHIPYARDS, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MARCH 9, 1964, WHEREIN YOU CLAIM THE SUM OF $14,200 REPRESENTING THE COSTS INCURRED BY YOU IN PREPARING A REJECTED BID SUBMITTED UNDER INVITATION NO. CF 3-55 COVERING CONSTRUCTION OF AN EXPLORATORY VESSEL AS A REPLACEMENT OF THE DELAWARE II FOR THE BUREAU OF COMMERCIAL FISHERIES, FISH AND WILDLIFE SERVICE, DEPARTMENT OF THE INTERIOR.

BY LETTER DATED FEBRUARY 5, 1964, TO THE SECRETARY OF THE INTERIOR, YOU PROTESTED REJECTION OF YOUR BID AND CLAIMED REIMBURSEMENT OF YOUR BID PREPARATION COSTS IN THE SUM OF $14,200, WHICH CLAIM WAS DENIED BY THE ASSISTANT SECRETARY OF THE INTERIOR IN HIS LETTER TO YOU DATED FEBRUARY 8, 1964. YOU URGE THAT THE GOVERNMENT IS LIABLE ON THE GROUND THE ADMINISTRATIVE ACTIONS IN REJECTING YOUR BID WERE IRREGULAR AND IMPROPER.

THE INVITATION WAS OPENED ON JANUARY 21, 1964, SUBJECT TO AWARD WITHIN 60 DAYS. FIVE BIDS WERE RECEIVED, RANGING FROM A LOW OF $1,300,000, THE BID OF YOUR FIRM, TO A HIGH OF $2,150,000. ALL THE BIDS SUBSTANTIALLY EXCEEDED THE ESTIMATE OF $1,074,000 MADE BY THE GOVERNMENT'S ARCHITECT ON WHICH THE INVITATION WAS PREDICATED. IN VIEW THEREOF, AN ADMINISTRATIVE DETERMINATION WAS MADE TO RECONSIDER THE PLANS AND SPECIFICATIONS SO AS TO REDUCE THE REQUIREMENTS WITHIN THE ESTIMATED AMOUNT AND READVERTISE. ANOTHER FACTOR CONSIDERED IN MAKING THIS DETERMINATION WAS THE WIDE RANGE OF THE QUOTED PRICES COMPARED WITH THE COST OF SEVERAL VESSELS PREVIOUSLY CONSTRUCTED FOR THE BUREAU WHICH INDICATED THE POSSIBILITY OF ERROR IN THE BIDS AND THAT THE BIDS MIGHT BE EXCESSIVE.

IN ACCORDANCE WITH A TELEGRAPHIC NOTICE DATED JANUARY 24, 1964, ADDRESSED TO YOUR FIRM, AS WELL AS THE OTHER FIRMS WHICH HAD RECEIVED THE INVITATION, A MEETING WAS HELD ON JANUARY 29, 1964,"TO REVIEW PLANS AND ANSWER ANY QUESTIONS WHICH MAY HAVE BEEN RESPONSIBLE FOR YOUR NOT BIDDING OR FOR YOUR EXCESSIVE BID.' THE INTERESTED PARTIES WERE ALSO INFORMED THEREBY THAT READVERTISING WAS CONTEMPLATED AS "ALL BIDS EXCEEDED AVAILABLE FUNDS.' AFTER THIS MEETING THE FOLLOWING WIRE DATED FEBRUARY 4, 1964, WAS DISPATCHED TO THE FIVE BIDDERS UNDER INVITATION CF 3-55:

"REFERENCE BIDS INVITATION CF-3-55 OPENED JANUARY 21, 1964, GLOUCESTER, MASSACHUSETTS FOR FISHERIES RESEARCH VESSEL ALL BIDS ARE HEREBY REJECTED BECAUSE THEY WERE IN EXCESS OF AVAILABLE FUNDS FOR THIS PURPOSE. EXPECT TO READVERTISE FOR BIDS IN NEAR FUTURE. WILL NOTIFY YOU OF FURTHER DETAILS.'

UNDER EXISTING STATUTORY PROVISIONS GENERALLY FOR APPLICATION, OFFICERS AND AGENTS OF THE GOVERNMENT MAY NOT BIND THE UNITED STATES BY CONTRACT UNLESS THEY ARE AUTHORIZED BY LAW TO DO SO AND AN APPROPRIATION ADEQUATE TO THE FULFILLMENT OF SUCH CONTRACT HAS BEEN MADE. SEE 31 U.S.C. 627; ID. 628 AND ID. 665. AND IT IS PROVIDED BY SECTION 303 OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, 41 U.S.C. 253, AS FOLLOWS:

"SEC. 303. WHENEVER ADVERTISING IS REQUIRED---

"/A) THE ADVERTISEMENT FOR BIDS SHALL BE MADE A SUFFICIENT TIME PREVIOUS TO THE PURCHASE OR CONTRACT, AND SPECIFICATIONS AND INVITATIONS FOR BIDS SHALL PERMIT SUCH FULL AND FREE COMPETITION AS IS CONSISTENT WITH THE PROCUREMENT OF TYPES OF PROPERTY AND SERVICES NECESSARY TO MEET THE REQUIREMENTS OF THE AGENCY CONCERNED.

"/B) ALL BIDS SHALL BE PUBLICLY OPENED AT THE TIME AND PLACE STATED IN THE ADVERTISEMENT. AWARD SHALL BE MADE WITH REASONABLE PROMPTNESS BY WRITTEN NOTICE TO THAT RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED: PROVIDED, THAT ALL BIDS MAY BE REJECTED WHEN THE AGENCY HEAD DETERMINES THAT IT IS IN THE PUBLIC INTEREST SO TO DO.'

YOU STATE IN YOUR LETTER THAT MR. K. SMITH OF THE BUREAU'S OFFICE AT GLOUCESTER, MASSACHUSETTS, INFORMED YOU BY TELEPHONE THAT ALTHOUGH YOU WERE THE LOW BIDDER YOUR BID EXCEEDED THE DEPARTMENT'S ESTIMATE; THAT, IN HIS OPINION, A CONTRACT POSSIBLY MIGHT BE NEGOTIATED WITH YOU, BUT IF A WAY COULD NOT BE FOUND TO REDUCE THE OVER-ALL COST THEY WOULD HAVE TO REBID THE CONTRACT; THAT PRIOR TO ANY ACTION TAKEN IN REGARD TO THIS TELEPHONE CONVERSATION YOU RECEIVED THE TELEGRAM OF JANUARY 24, 1964, HEREINBEFORE MENTIONED; AND THAT YOU PROMPTLY REPLIED BY TELEGRAM REQUESTING THAT NO OTHER SHIPYARDS BE PERMITTED TO ATTEND A MEETING ON JANUARY 29, 1964,"THEREBY PROTECTING OUR RIGHTS AS LOW BIDDER.' YOU ALSO STATE THAT A REPLY WAS RECEIVED TWO DAYS LATER INFORMING YOU THAT THE MEETING WOULD BE OPEN TO ALL PROSPECTIVE BIDDERS "THEREBY DENYING US ANY PROTECTION AS THE LOW BIDDER ON THE ORIGINAL INVITATION.' YOU CONTEND THAT SINCE YOUR BID BOND WAS STILL IN FORCE AND YOU WOULD THEREFORE HAVE HAD TO ACCEPT THE CONTRACT HAD THE DECISION BEEN MADE TO AWARD IT TO YOU AFTER THE MEETING WAS CONCLUDED, THE HOLDING OF SUCH MEETING "PRIOR TO OUR BID BEING REJECTED AND THE RELEASING OF OUR BID BOND AFFORDED US NO PROTECTION AS THE LOW RESPONSIBLE BIDDER AND WAS ENTIRELY IRREGULAR AND UNETHICAL.'

YOU STATE FURTHER IN YOUR LETTER THAT QUESTIONS BY MR. K. A. LAWRENCE OF THE DEPARTMENT OF THE INTERIOR AT THE MEETING OF JANUARY 29, 1964, BROUGHT DISCUSSIONS ON SOME INDIVIDUAL MATERIAL COSTS, INCLUDING A STATEMENT FROM THE THIRD LOWEST BIDDER AS TO ITS MATERIAL COSTS ON THIS INVITATION, WHICH CONFIRMED THE FIGURES YOU HAD GIVEN MR. LAWRENCE AT A MEETING WITH HIM ON THE PREVIOUS DAY. THE DISCUSSION OF THE DETAILS OF THE MATERIAL COSTS, YOU ASSERT,"IN FRONT OF AND/OR WITH CONTRACTORS WHO HAD NOT SUBMITTED BIDS ON THE ORIGINAL INVITATION, WAS ENTIRELY IRREGULAR" AND THAT IT "DOES NOT CONFORM WITH THE ETHICS AND MORAL INTENT OF GOVERNMENT PROCUREMENT.' YOU ALLEGE THIS INFORMATION WHICH HAD COST YOU SEVERAL THOUSAND DOLLARS TO ASSEMBLE WAS BEING PRESENTED AS A GIFT TO CONTRACTORS WHO HAD NOT SUBMITTED BIDS ON THE ORIGINAL INVITATION; THAT A REPRESENTATIVE OF JACOBSON SHIPYARDS, INC., WHO DID NOT SUBMIT A BID ON THE ORIGINAL INVITATION AND THEREFORE WAS NOT UNDER BOND, WAS ASKING NUMEROUS QUESTIONS AND TAKING NOTES, AND WAS BEING PRESENTED WITH INFORMATION YOU HAD SPENT THOUSANDS OF DOLLARS TO OBTAIN, WHEREUPON YOU "REALIZED THAT THE MEETING WAS HIGHLY IRREGULAR AND UNETHICAL.' YOU ALSO ALLEGE THAT FOLLOWING REPEATED REQUESTS WHICH WERE IGNORED BY MR. LAWRENCE THAT HE RELEASE YOUR CORPORATION FROM YOUR BOND, YOU PROMPTLY LEFT THE MEETING; AND THAT YOU WERE NOT OFFICIALLY RELIEVED FROM YOUR BOND UNTIL FEBRUARY 10, 1964. YOU URGE THAT YOUR INABILITY TO OBTAIN THIS RELEASE "PROHIBITED US FROM SUBMITTING BIDS ON OTHER INVITATIONS, SOME OF WHICH WOULD HAVE MEANT ADDITIONAL WORK FOR OUR SHIPYARD; " THAT YOU "HAVE MILLIONS OF DOLLARS WORTH OF WORK ON HAND WHICH IS UNDER BOND" AND THEREFORE "THE BOND POSTED ON THIS INVITATION PUT US IN A POSITION THAT WAS NEAR THE OVER-ALL LIMITS OF OUR ABILITY TO OBTAIN BONDS.'

YOU ASSERT FURTHER THAT HAD YOU BEEN AWARDED THE CONTRACT AFTER THE JANUARY 29TH MEETING, YOU ,WOULD HAVE BEEN IN AN EXTREMELY POOR POSITION TO NEGOTIATE MATERIAL COSTS, FOR IT WAS WITHOUT DOUBT THAT THE VENDORS WERE WELL APPRAISED OF THE FACT THAT THE TOTAL MATERIAL COSTS WERE APPROXIMATELY $900,000.00; " THAT FOR A MODEST EXPENDITURE, A MAJOR VENDOR COULD WORK THE COSTS OUT AND HAVE A GOOD IDEA AS TO WHAT THE BIDDER ALLOWED IN HIS ESTIMATE FOR A MAJOR ITEM, AND IT ,IS THEREFORE EVIDENT THAT A MEETING OPEN TO ALL, EVEN THOSE SHIPYARDS WHO HAD NOT SUBMITTED A BID IS HIGHLY OUT OF LINE AND WE, THEREFORE, FEEL ENTIRELY JUSTIFIED IN REQUESTING REIMBURSEMENT.'

FROM A REVIEW OF THE AVAILABLE RECORD IN THIS CASE IN THE LIGHT OF THE STATUTORY PROVISIONS REFERRED TO ABOVE, IT SEEMS CLEAR THAT THE DETERMINATION TO REJECT ALL BIDS AND READVERTISE WAS WITHIN THE AUTHORITY OF THE RESPONSIBLE ADMINISTRATIVE OFFICIALS, AND SUCH ACTION IS NOT ORDINARILY SUBJECT TO REVIEW BY THE COURTS OR OUR OFFICE. SEE 39 COMP. GEN. 86 AND THE AUTHORITIES REFERRED TO THEREIN. IT IS WELL SETTLED, MOREOVER, THAT A CLAIM FOR REIMBURSEMENT OF EXPENSES INCURRED BY A BIDDER IN PREPARING A BID MAY NOT BE ALLOWED FOR THE REASON THAT STATUTES WHICH REQUIRE PURCHASES TO BE MADE AFTER ADVERTISING FOR BIDS WERE ENACTED FOR THE BENEFIT OF THE UNITED STATES AND NOT FOR THE BIDDERS, AND THE COURTS HAVE CONSISTENTLY HELD THAT BIDDERS HAVE NO ENFORCEABLE RIGHTS IN THE EVENT THEIR BIDS ARE NOT ACCEPTED. SEE PERKINS V. LUKENS STEEL COMPANY, 310 U.S. 113; COLORADO PAVING COMPANY V. MURPHY, 78 F. 28; AND HEYER PRODUCTS COMPANY V. UNITED STATES, 177 F.SUPP. 251 (1959). WHILE IN THE LAST-CITED CASE THE COURT HELD THAT SUCH EXPENSES ARE RECOVERABLE WHERE A CONTRACT IS AWARDED TO OTHER THAN THE BIDDER LEGALLY ENTITLED THERETO, BECAUSE OF LACK OF GOOD FAITH OR ARBITRARY OR CAPRICIOUS ACTION ON THE PART OF GOVERNMENT OFFICIALS, IT DID NOT, EXPRESSLY OR BY INFERENCE, EXTEND THAT PRINCIPLE TO SITUATIONS WHERE ALL BIDS ARE REJECTED PURSUANT TO THE AUTHORITY VESTED IN THE PROCUREMENT AGENCY BY LAW AND REGULATION.

YOU HAVE FURNISHED NO EVIDENCE TO SUBSTANTIATE YOUR ALLEGATIONS AND CONTENTIONS. IT IS ADMINISTRATIVELY REPORTED THAT THE ONLY MATERIAL DISTRIBUTED AT THE JANUARY 29TH MEETING WAS AN ABSTRACT OF BIDS RECEIVED, AND IT SEEMS CLEAR THAT ALL BIDDERS RECEIVED THE SAME CONSIDERATIONS AND AN EQUAL OPPORTUNITY TO OBTAIN THE CONTRACT UNDER THE FACTS AND CIRCUMSTANCES INVOLVED IN THIS CASE.

THE APPLICABLE STATUTORY PROVISIONS QUOTED ABOVE REQUIRED THE BIDS TO BE "PUBLICLY OPENED" AND, OF COURSE, AFTER OPENING THERE MAY BE DISCLOSURE OF SUFFICIENT INFORMATION TO PERMIT COMPETING BIDDERS TO KNOW THOSE ELEMENTS OF THE BIDS RELATING TO QUANTITY, PRICE AND DELIVERY TERMS. THERE IS NO EVIDENCE INDICATING BAD FAITH AND YOU DO NOT ALLEGE THAT YOUR BID CONTAINED ANY CONFIDENTIAL DATA OR RESTRICTIONS ON THE USE OF ANY INFORMATION SUBMITTED THEREWITH WHICH WOULD NOT BE SUBJECT TO PUBLIC INSPECTION. SEE SECTION 1.2-404.4 OF THE REGULATIONS, SUPRA.

WITH RESPECT TO YOUR ALLEGATIONS CONCERNING THE DELAY IN OFFICIALLY RELEASING YOU FROM YOUR BOND SINCE THE INVITATION GAVE THE GOVERNMENT AN OPTION OF 60 DAYS, OR UNTIL APRIL 21, IN WHICH TO MAKE AN AWARD, WE DO NOT BELIEVE IT REASONABLY MAY BE SAID THAT YOUR COMPANY WAS IN ANY WORSE POSITION THAN YOU WOULD HAVE BEEN IF A DETERMINATION HAD FINALLY BEEN MADE TO ACCEPT YOUR BID AT ANY TIME PRIOR TO APRIL 21, WHICH THE GOVERNMENT HAD A RIGHT TO DO UNDER THE OPTION.

AS A MATTER OF FACT, WE HAVE BEEN INFORMED THAT YOUR COMPANY FAILED TO ACKNOWLEDGE THE RECEIPT OF TWO ADDENDA TO THE INVITATION. HOWEVER, IT APPEARS THAT HAD THE PROCUREMENT BEEN MADE UNDER THE IFB THIS FAILURE ON YOUR PART WOULD HAVE REQUIRED A FINDING THAT YOUR BID WAS NONRESPONSIVE. SEE 37 COMP. GEN. 785.

ACCORDINGLY, FROM A CAREFUL REVIEW OF ALL THE INFORMATION AND EVIDENCE OF RECORD WE ARE UNABLE TO FIND ANY REASONABLE BASIS ON WHICH WE WOULD BE JUSTIFIED IN CERTIFYING THE PAYMENT OF YOUR CLAIM FROM APPROPRIATED FUNDS AND IT IS THEREFORE DENIED.