B-154476, SEP. 18, 1964

B-154476, SEP. 18, 1964

TO L. B. SAMFORD, INC.:

REFERENCE IS MADE TO YOUR TELEGRAM OF JUNE 17, AND YOUR LETTER OF JUNE 20, 1964, PROTESTING THE CANCELLATION AND READVERTISING OF INVITATION FOR BIDS NO. SFW4-40 BY THE DEPARTMENT OF THE INTERIOR.

THE SUBJECT INVITATION WAS ISSUED BY THE BUREAU OF SPORT FISHERIES AND WILDLIFE, ATLANTA REGIONAL OFFICE, ON MARCH 16, 1964, WITH THE BIDS TO BE OPENED ON MAY 14, 1964. THE INVITATION COVERED THE CONSTRUCTION OF A FISH HATCHERY BUILDING, EQUIPMENT BUILDING, OIL AND PAINT HOUSE, AERATOR BUILDING, TWO RESIDENCES WITH GARAGES, 8 REARING PONDS, A NURSERY POND, AND OTHER ALLIED ITEMS OF WORK AT THE GREERS FERRY NATIONAL FISH HATCHERY, NEAR HEBER SPRINGS, ARKANSAS. THE BIDDING SCHEDULE CONTAINED 61 ITEMS AND REQUESTED A TOTAL BID FOR ITEMS NOS. 1 THROUGH 60 AND A TOTAL BID FOR ITEMS NOS. 1 THROUGH 61 (ITEMS NOS. 1 - 60 INCLUSIVE RELATED TO FISH HATCHERY FACILITIES, AS DISTINGUISHED FROM ITEM NO. 61 WHICH COVERS THE CONSTRUCTION OF TWO RESIDENCES WITH ATTACHED GARAGES). THE FOLLOWING LANGUAGE WAS ALSO CONTAINED IN THE BIDDING SCHEDULE:

"DUE TO A BUDGETARY LIMITATION ON THE CONSTRUCTION OF RESIDENCES, THE GOVERNMENT RESERVES THE RIGHT TO AWARD OR NOT TO AWARD ITEM 61, DEPENDING UPON THE AMOUNT BID FOR THAT ITEM IF IT EXCEEDS THE BUDGETARY LIMITATION.

"AWARD WILL BE MADE ON THE BASIS OF THE LOWEST AGGREGATE TOTAL BID FOR ITEMS 1 THROUGH 60, IF THE RESIDENCE EXCEEDS THE LIMITATION REFERRED TO ABOVE, OR ON ITEMS 1 THROUGH 61, IF THE RESIDENCE IS BELOW THE LIMITATION REFERRED TO ABOVE.

"BIDDERS MUST QUOTE ON ALL ITEMS; INCOMPLETE BIDS WILL NOT BE CONSIDERED.'

THE INVITATION DID NOT SPECIFY OR IN ANY MANNER DEFINE THE TERM "BUDGETARY LIMITATION ON THE CONSTRUCTION OF RESIDENCES.'

AN ABSTRACT OF THE SIX BIDS RECEIVED IS AS FOLLOWS:

CHART

AMOUNT OF BID

CONTRACTOR ITEMS 1 - 60 ITEMS 1 - 61 BULLOCK CONSTRUCTION COMPANY $560,956.50$608,696.50 P.O. BOX 4634 JACKSON, MISSISSIPPI B. L. JOHNSTON, CONTRACTOR

519,311.38 555,251.38 P.O. BOX 590 HERBER SPRINGS, ARKANSAS FORCUM- LANNOM, INC.

578,938.10 612,372.10 P.O. BOX 3351 LITTLE ROCK, ARKANSAS NABHOLZ CONSTRUCTION CORP. 498,265.00 548,685.00 CONWAY, ARKANSAS CRAWFORD CONSTRUCTION COMPANY 511,552.30 550,552.30 P.O. BOX 112 PUDUCAH, KENTUCKY L. B. SAMFORD, INC. 499,104.00 538,704.00 8247 SOUTH DIXIE HIGHWAY MIAMI, FLORIDA

IN THIS CONNECTION, IT IS NOTED THAT NABHOLZ CONSTRUCTION CORPORATION BID $498,265 FOR ITEMS NOS. 1 - 60, AND $50,420 FOR ITEM NO. 61, A TOTAL OF $548,685, AND YOU BID $499,104 FOR ITEMS NOS. 1 - 60, AND $39,600 FOR ITEM NO. 61, A TOTAL OF $538,704. THUS, THE BID OF NABHOLZ WAS LOW ON ITEMS NOS. 1 - 60, BUT EXCEEDED THE BUDGETARY LIMITATION OF $20,000 PER RESIDENCE, WHEREAS YOUR BID WAS SECOND LOW ON ITEMS NOS. 1 - 60, AND LOW ON ITEMS NOS. 1 - 61 AND WITHIN THE BUDGETARY LIMITATION ON THE RESIDENCES.

AFTER BID OPENING, THE NABHOLZ CONSTRUCTION CORPORATION ADVANCED THE VIEW THAT SINCE IT WAS LOW BIDDER ON ITEMS 1 - 60, AWARD SHOULD BE MADE ON THOSE ITEMS TO NABHOLZ. YOUR FIRM CONTENDED THAT ALTHOUGH HIGH ON ITEMS 1 - 60, YOU CONFORMED TO THE UNSPECIFIED BUDGETARY LIMITATION ON ITEM 61, AND HENCE WERE ENTITLED TO THE AWARD. UPON CONSIDERATION OF ALL THE BIDS SUBMITTED, A DETERMINATION WAS MADE BY THE DEPARTMENT OF THE INTERIOR THAT THE ADVICES GIVEN TO BIDDERS AS TO THE BASES UPON WHICH AN AWARD WOULD BE MADE WERE AMBIGUOUS AND SUSCEPTIBLE OF DIFFERENT AND CONFLICTING INTERPRETATIONS. FOR EXAMPLE, IF A BIDDER QUOTED THE LOWEST PRICE FOR ITEMS NOS. 1 - 60 BUT EXCEEDED THE BUDGETARY LIMITATION FOR THE RESIDENCES IN THE PRICE QUOTED FOR ITEMS 61 THE INVITATION PROVIDED THAT "AWARD WILL BE MADE ON THE BASIS OF THE LOWEST AGGREGATE TOTAL BID FOR ITEMS 1 - 60....' IF ANOTHER BIDDER SUBMITTED A HIGHER BID FOR ITEMS NOS. 1 - 60 BUT THE LOWEST AGGREGATE BID FOR ITEMS NOS. 1 - 61 AND DID NOT EXCEED THE RESIDENCE LIMITATION, THE AWARD MIGHT BE MADE ON ITEMS NOS. 1 - 61, IRRESPECTIVE OF WHETHER THAT BIDDER WAS OR WAS NOT LOW AS TO ITEMS NOS. 1 - 60. IN THIS RESPECT, FOUR OF THE SIX BIDDERS DID EXCEED THE RESIDENCE BUDGETARY LIMITATION. THE RECORD SHOWED A MISINTERPRETATION OF THE INVITATION LANGUAGE AS TO BASIS FOR AWARD, AND THE PATTERN OF BIDDING ALSO SUGGESTS A MISUNDERSTANDING OF SUCH LANGUAGE WITH REGARD TO ITEM NO. 61, STEMMING PRIMARILY FROM THE UNEXPLAINED ADMINISTRATIVE REFERENCE TO A BUDGETARY LIMITATION. ACCORDINGLY, IT WAS DECIDED THAT ALL BIDS SHOULD BE REJECTED AND THE PROJECT READVERTISED. THESE STEPS WERE TAKEN BY THE DEPARTMENT OF THE INTERIOR, AND THE NEW INVITATION, CONTAINING THE SAME SCHEDULED ITEMS AS THE ORIGINAL, SPECIFIED AS FOLLOWS:

"AWARD WILL BE MADE ON THE LOWEST AGGREGATE TOTAL BID FOR ITEMS NOS. 1 THROUGH 61; PROVIDED, HOWEVER, THAT ANY BID WHICH AS TO ITEM NO. 61 EXCEEDS $38,500 FOR THE ENTIRE ITEM OR $19,250 FOR EACH UNIT (FOR CONFORMITY WITH BUDGETARY LIMITATION) WILL BE CONSIDERED TO BE COMPLETELY NONRESPONSIVE AND WILL BE REJECTED.'

IT IS REPORTED THAT SINCE READVERTISEMENT OF THE PROJECT INVOLVED CONTAINING NEW, EXPLICIT LANGUAGE REGARDING ITEM NO. 61, FOUR BIDS WERE RECEIVED, INCLUDING THOSE FROM YOUR CORPORATION AND NABHOLZ. UPON OPENING OF BIDS YOUR FIRM WAS DETERMINED TO HAVE SUBMITTED THE LOW RESPONSIVE BID, $511,532, AND IT IS REPORTED THAT AWARD HAS SINCE BEEN MADE TO YOU, AND A CONTRACT EXECUTED BETWEEN YOU AND THE DEPARTMENT OF THE INTERIOR. HOWEVER, YOUR PROTEST AGAINST THE CANCELLATION AND READVERTISEMENT OF INVITATION FOR BIDS NO. SFW4-40 WAS NOT WITHDRAWN, AND IS THE SUBJECT OF THIS DECISION.

IT CONSISTENTLY HAS BEEN HELD BY THE ACCOUNTING OFFICERS OF THE GOVERNMENT AND BY THE COURTS THAT THE QUESTION OF REJECTING ALL BIDS AND READVERTISEMENT IS PRIMARILY A MATTER OF ADMINISTRATIVE DISCRETION. ALSO, IT HAS BEEN HELD THAT A REQUEST FOR BIDS DOES NOT IMPLY ANY OBLIGATION TO ACCEPT ANY OF THE BIDS RECEIVED, INCLUDING THE LOWEST CORRECT BID. COMP. GEN. 554; 26 ID. 49; PERKINS V. LUKENS STEEL CO. 310 U.S. 113; O- BRIEN V. CARNEY, 6 F.SUPP. 761; COLORADO PAVING CO. V. MURPHY, 78 F.28.

WHILE YOUR BID ON THE RESIDENCES UNDER ITEM NO. 61 OF THE CANCELLED INVITATION WAS $19,800 PER UNIT IN RELATION TO THE UNDISCLOSED BUDGETARY LIMITATION OF $20,000 PER UNIT, IT IS REPORTED THAT THE CONTRACTING AGENCY HAS ONLY A $200 MARGIN WITHIN WHICH TO COMPUTE THE NET EFFECT OF NONCONTRACT RESIDENCE COSTS SUCH AS INSPECTION, DESIGN, SITE DEVELOPMENT, ETC., AND CREDITS FOR STORM WINDOWS AND VENETIAN BLINDS TREATED AS DEDUCTIONS IN RELATION TO THE BUDGETARY LIMITATIONS. IT APPEARS THAT AN AWARD TO YOU UNDER THESE CIRCUMSTANCES WOULD HAVE BEEN QUESTIONABLE SINCE IT IS OBVIOUS THAT THE SMALL MARGIN OF $200 WOULD BE INSUFFICIENT TO COVER THE NONCONTRACT COSTS AND THEREFORE WOULD BE CONTRARY TO THE INTENT OF CONGRESS AS EVIDENCED IN HOUSE REPORT NO. 177, 88TH CONGRESS, 1ST SESSION, DEPARTMENT OF THE INTERIOR AND RELATED AGENCIES APPROPRIATION BILL, 1964, WHEREIN IT WAS STATED THAT:

"THE COMMITTEE IS CONTINUING IN FISCAL YEAR 1964 ITS POLICY OF LIMITING THE UNIT COST OF EMPLOYEE HOUSING (REGARDLESS OF THE SOURCE OF FINANCING) IN THE UNITED STATES, INCLUDING ALASKA AND HAWAII AND THE TERRITORIES TO $20,000. THE LIMITATION INCLUDES ENGINEERING AND DESIGN COSTS, BUT EXCLUDES PROVISION OF UTILITIES TO THE LOT LINE.'

BASED ON THE FOREGOING, AND SINCE THE RESPONSIBILITY FOR MAKING A DETERMINATION TO REJECT ALL BIDS AND READVERTISE LIES WITH THE ADMINISTRATIVE OFFICERS OF THE PURCHASING AGENCY, IN THE ABSENCE OF CLEAR PROOF OF ABUSE OF THEIR DISCRETIONARY POWERS IN THAT REGARD, THIS OFFICE WILL NOT OBJECT TO SUCH ACTION. THIS IS ESPECIALLY TRUE WHERE, AS HERE, THE PURPOSE IS TO CORRECT A DEFICIENCY IN THE INVITATION, WHICH IF GIVEN EFFECT AND ACCEPTED MIGHT CONTRAVENE CONGRESSIONAL INTENT. OF COURSE, WE ARE FULLY AWARE THAT THE REJECTION OF BIDS AFTER THEY ARE OPENED AND EACH BIDDER OR SUBSEQUENT PROSPECTIVE BIDDER HAS LEARNED HIS COMPETITOR'S PRICES IS A SERIOUS MATTER AND SUCH ACTION SHOULD NOT BE TAKEN EXCEPT FOR COGENT REASONS. HOWEVER, WE FIND NO LEGAL BASIS FOR OBJECTING TO THE ADMINISTRATIVE DETERMINATION OF THE INSUFFICIENCY OF THE ORIGINAL INVITATION AND, THAT BEING THE CASE, WE WOULD NOT BE JUSTIFIED IN OBJECTING TO THE ADMINISTRATIVE ACTION ..END :