B-157227, AUGUST 18, 1965

B-157227, AUGUST 18, 1965

TO MR. FRANK A. PALMIERI:

REFERENCE IS MADE TO TELEGRAM OF JULY 13, 1965, FROM YOUR CLIENT, CAULDWELL-WINGATE COMPANY, INC., AND B. J. LUCARELLI AND CO., INC., AND TO YOUR TELEGRAM AND LETTER OF JULY 15 AND 27, 1965, RESPECTIVELY, PROTESTING THE AWARD BY THE GENERAL SERVICES ADMINISTRATION (GSA) OF A CONTRACT FOR CONSTRUCTION OF A FEDERAL OFFICE BUILDING IN NEWARK, NEW JERSEY, DESIGNATED AS PROJECT 28900, TO THE TERMINAL CONSTRUCTION CORPORATION.

THE INVITATION TO BID ON THIS PROJECT REQUIRED BIDDERS TO SUBMIT BASE BIDS TOGETHER WITH BIDS ON "ADD" ALTERNATES "A," "B," "C," AND "D" AND ON "DEDUCT" ALTERNATE "E.' SIX BIDS WERE OPENED ON JUNE 15, 1965. CAULDWELL -WINGATE AND LUCARELLI, AS A JOINT VENTURE, SUBMITTED THE LOW BASE BID OF $12,140,000 AND TERMINAL CONSTRUCTION CORPORATION SUBMITTED THE NEXT LOWEST BID OF $12,177,000, WHILE THE REMAINING BASE BIDS RANGED ON UP TO $12,980,000. BECAUSE THE BASE BIDS WERE SUFFICIENTLY LOW TO PERMIT ACCEPTANCE OF ALL OF THE DESIRED STRUCTURAL FEATURES WHICH WERE REPRESENTED BY THE ADD ALTERNATES, IT WAS DETERMINED TO BE IN THE BEST INTERESTS OF THE GOVERNMENT TO MAKE AN AWARD ON THE BASIS OF THE LOWEST AGGREGATE BID COMPRISED OF BASE BID AND ALL ADD ALTERNATES. ON THIS BASIS, TERMINAL'S AGGREGATE BID OF $12,402,000 WAS THE LOWEST WHILE THE AGGREGATE BID OF $12,410,000 SUBMITTED BY CAULDWELL-WINGATE AND LUCARELLI WAS THE SECOND LOWEST. THEREFORE, AWARD WAS MADE TO TERMINAL ON JULY 12, 1965.

IT IS CONTENDED THAT AN AWARD SHOULD NOT BE MADE TO TERMINAL BECAUSE YOUR CLIENT'S BID OF $12,140,000 IS THE LOW BASE BID WITHIN THE $12,230,200 LIMITATION STIPULATED FOR THE CONSTRUCTION OF THE BUILDING IN THE INDEPENDENT OFFICES APPROPRIATION ACT OF 1965, PUB.L. 88-507, 78 STAT. 640, 651, AND YOU URGE THE IMPROPRIETY OF EVALUATION ON THE BASIS OF THE BASE BID PLUS ALL FOUR ADDITIVE ALTERNATES INCLUDED IN THE INVITATION FOR BIDS. AS ABOVE INDICATED, ON THIS BASIS TERMINAL'S AGGREGATE BID OF $12,402,000 IS LOWER THAN YOUR CLIENT'S AGGREGATE BID OF $12,410,000, AND BOTH AGGREGATE BIDS EXCEED THE STATUTORY LIMITATION. YOU THEREFORE CONTEND THAT AWARD MUST BE MADE TO THE BIDDER SUBMITTING THE LOWEST BASE BID SINCE THE PROVISO IN THE LAW AT 78 STAT. 1,"THAT THE FOREGOING LIMITS OF COSTS MAY BE EXCEEDED TO THE EXTENT THAT SAVINGS ARE EFFECTED IN OTHER PROJECTS, BUT BY NOT TO EXCEED 10 PERCENTUM," MAY ONLY BE INVOKED BY THE ISSUANCE OF CHANGE ORDERS DURING PERFORMANCE OF THE PROJECT, IN VIEW OF THE FACT THAT THE $12,230,200 LIMITATION AND THE LIMITATIONS FOR THE OTHER PROJECTS ITEMIZED IN THE LAW ARE LABELED AS "MAXIMUM CONSTRUCTION IMPROVEMENT COSTS.'

OUR OFFICE SEES NO JUSTIFICATION FOR INTERPRETING THE PROVISO AS BEING LIMITED IN ITS APPLICATION TO THE ISSUANCE OF CHANGE ORDERS AFTER COMMENCEMENT OF THE PROJECT. RATHER THE PROVISO INDICATES, IN PLAIN TERMS, THAT ANY SPECIFIC DOLLAR LIMITATIONS MAY BE EXCEEDED UP TO 10 PERCENT PROVIDED THAT IT IS OFFSET BY A COMPARABLE SAVINGS IN OTHER PROJECTS OF WHICH THERE ARE SOME 150 ITEMIZED IN THE ACT. WHERE THE STATUTORY LIMITATION FOR A PARTICULAR PROJECT IS THUS TO BE EXCEEDED, WE KNOW OF NO LEGAL REQUIREMENT WHICH COMPELS THE EVALUATION OF BIDS ONLY ON THE BASIS OF THE LIMITATION WITHOUT REGARD TO THE PROVISO. AS THE PROVISO INDICATES, THE "MAXIMUM CONSTRUCTION IMPROVEMENT COSTS" ARE NOT THE ABSOLUTE CEILING IN ALL CASES, BUT MAY BE EXCEEDED BY 10 PERCENT UNDER CERTAIN CIRCUMSTANCES. ACCORDINGLY, IT DOES NOT APPEAR THAT THE DOLLAR LIMITATION WAS DISREGARDED BY GSA, BUT RATHER THAT IT WAS CONSIDERED BY THE AGENCY AND INCREASED AS AUTHORIZED BY THE PROVISO.

ADDITIONALLY, IT IS TO BE OBSERVED THAT SECTION 10 (C) OF THE INSTRUCTIONS TO BIDDERS PROVIDED THAT THE GOVERNMENT MAY ACCEPT ANY ITEM OR COMBINATION OF ITEMS OF A BID UNLESS PRECLUDED BY THE INVITATION FOR BIDS AND THAT SECTION 2-08B OF THE SPECIAL CONDITIONS IN THE INVITATION FOR BIDS SPECIFICALLY PROVIDED THAT:

"THE LUMP SUM BID REFLECTS THE DESIRED REQUIREMENTS FOR THE PROJECT AS SHOWN AND SPECIFIED. ALTERNATES PROVIDE FOR CERTAIN ADDITIONS, OMISSIONS AND SUBSTITUTIONS AT THE OPTION OF THE GOVERNMENT. ANY AWARD WHICH INCLUDES ALTERNATES WILL BE MADE ON THE BASIS OF THE LOWEST AGGREGATE BID RESULTING FROM THE AMOUNT OF THE LUMP SUM BID PLUS OR LESS THE AMOUNT OF THE ALTERNATE OR ALTERNATES AS MAY BE ACCEPTED BY THE GOVERNMENT.'

ALL BIDDERS THUS WERE SPECIFICALLY INFORMED THAT BIDS MIGHT BE EVALUATED ON THE BASIS OF THE FOUR ADDITIVE ALTERNATES OR ONE DEDUCTIVE ALTERNATE IN DETERMINING THE SUCCESSFUL BIDDER.

OUR OFFICE HAS UPHELD THE EVALUATION OF BIDS ON THE BASIS OF ADDITIVE ALTERNATES UNDER CIRCUMSTANCES SIMILAR TO THOSE HERE INVOLVED. DECISION OF APRIL 9, 1962, B-148333, THE PROCEDURE WAS PROTESTED ON THE BASIS THAT IT PERMITTED SELECTION OF THE LOW BIDDER TO BE CONTROLLED BY MANIPULATING THE SELECTION OF ALTERNATES AFTER THE OPENING OF BIDS. THE CITED DECISION, AFTER OUR OFFICE OBSERVED THAT THE INVITATION RESERVED AN OPTION TO THE GOVERNMENT TO MAKE THE AWARD FOR SUCH ITEMS AS IT MIGHT CHOOSE AFTER THE OPENING OF BIDS, IT WAS STATED:

"* * * SUCH AN ELECTION BY THE CONTRACTING AGENCY IS NOT IMPROPER. REQUIREMENTS THAT CONTRACTS FOR PUBLIC WORK BE LET TO THE LOWEST BIDDER ARE NOT VIOLATED WHEN SPECIFICATIONS ARE DRAWN FOR DIFFERENT WORK, BIDS ARE SOUGHT ON DIFFERENT BASES, AND A CHOICE IS NOT MADE BY THE CONTRACTING OFFICIALS UNTIL AFTER ALL THE BIDS ARE OPENED. 43 AM.JUR., PUBLIC WORKS AND CONTRACTS, SECTION 7; 10 MCQUILLIN, MUNICIPAL CORPORATIONS SECTION 29.55 (3RD ED.); COHEN, PUBLIC CONSTRUCTION CONTRACTS AND THE LAWS SECTION 2.14.'

THE AWARD TO TERMINAL ALSO IS PROTESTED ON THE BASIS THAT ITS BID IS DEFECTIVE BECAUSE ON THE FORM REQUIRING A LIST OF PROPOSED SUBCONTRACTORS FOR DIFFERENT CATEGORIES OF WORK, TERMINAL LISTED ITSELF FOR PLASTERING, MILLWORK AND MASONRY, WHEREAS YOU STATE THAT TERMINAL IS IN NEITHER OF THOSE THREE TRADES AND MUST SUBCONTRACT THE WORK TO SUBCONTRACTORS WHO SHOULD HAVE BEEN INDIVIDUALLY LISTED. HOWEVER, SECTION 2-09C OF THE SPECIAL CONDITIONS PERMITS A BIDDER TO LIST ITSELF TO PERFORM ONE OR MORE LISTED CATEGORIES OF WORK IF THAT IS ITS INTENTION. THEREFORE, THE DESIGNATION OF ITSELF TO PERFORM THE ITEMS OF WORK LISTED WAS NOT IMPROPER.

YOU FURTHER PROTEST THE AWARD TO TERMINAL ON THE GROUND THAT IT HAS HAD LIMITED EXPERIENCE IN CONSTRUCTING OFFICE BUILDINGS, THAT IT HAS ENGAGED IN EXCESSIVE LITIGATION OVER THE YEARS, THAT IT WAS DETERMINED NOT TO BE RESPONSIBLE TO CONSTRUCT A PROJECT FOR GSA IN 1963, AND THAT IT CONSTRUCTED A PUBLIC GARAGE, A LARGE SECTION OF WHICH COLLAPSED AND FOR WHICH IT WAS HELD RESPONSIBLE IN A COURT OF LAW. FOR THESE REASONS IT IS CONTENDED THAT TERMINAL IS NOT A RESPONSIBLE BIDDER TO WHOM AN AWARD SHOULD BE MADE.

HOWEVER, GSA HAD ADVISED THAT IT CONSIDERS TERMINAL RESPONSIBLE BASED UPON AN INVESTIGATION OF PROJECTS CONSTRUCTED BY THE COMPANY. IT IS REPORTED THAT IT HAS ASCERTAINED THAT TERMINAL HAS BUILT MULTIMILLION DOLLAR HOUSING, SCHOOL AND OFFICE BUILDINGS FOR VARIOUS GOVERNMENTAL INSTRUMENTALITIES SUCH AS NEW YORK CITY HOUSING AUTHORITY, THE ARMY CORPS OF ENGINEERS, THE COUNTY OF HUDSON, NEW JERSEY, THE UNITED STATES AIR FORCE AND THE NEWARK, NEW JERSEY, BOARD OF EDUCATION, AND HAS RECEIVED FAVORABLE RECOMMENDATIONS FROM ALL OF THEM INCLUDING RATINGS OF "SATISFACTORY," ,ABOVE AVERAGE," AND "EXCELLENT.' IN THIS CONNECTION, GSA POINTS OUT, FOR EXAMPLE, THAT TERMINAL CONSTRUCTED A $7,000,000 PROJECT FOR THE CORPS OF ENGINEERS IN 1964 AND IS NOW COMPLETING A $9,000,000 PROJECT FOR THAT AGENCY NOW AND THE WORK ON BOTH PROJECTS IS SATISFACTORY. IN ADDITION, GSA HAS ASCERTAINED THAT TERMINAL HAS A SUBSTANTIAL NET WORTH AND HAS BEEN LISTED AS ONE OF THE TOP TEN CONTRACTORS IN THE NATION SEVERAL TIMES IN A PERIOD OF TEN YEARS. FURTHER, IT IS STATED THAT EIGHT OF THE LARGEST GOVERNMENT JOBS COMPLETED OR IN PROGRESS OVER THE PAST FIVE YEARS EXCEED $100,000,000.

GSA HAS RESPONDED TO THE CHARGES OF NONRESPONSIBILITY BY STATING THAT TERMINAL HAS HAD ADEQUATE GENERAL CONSTRUCTION EXPERIENCE TO QUALIFY AS A RESPONSIBLE BIDDER FOR THE CONSTRUCTION OF AN OFFICE BUILDING. FURTHER, IT INDICATES THAT IT DOES NOT CONSIDER THE NUMBER OF LAWSUITS THAT TERMINAL HAS ENGAGED IN AS PARTICULARLY SIGNIFICANT. MOREOVER, IT REPORTS THAT THE CONVICTION WHICH RESULTED IN A DETERMINATION OF NONRESPONSIBILITY IN 1963, WHICH DETERMINATION WAS UPHELD IN OUR DECISION B-150791 OF APRIL 25, 1963, WAS SUBSEQUENTLY REVERSED ON APPEAL WITH AN ACQUITTAL BEING ENTERED AGAINST TERMINAL. IN THAT CONNECTION, SEE 43 COMP. GEN. 140, WHEREIN OUR OFFICE INDICATED THAT A PRIOR DETERMINATION OF NONRESPONSIBILITY FOR A PARTICULAR PROCUREMENT BASED UPON CONVICTION FOR A CRIMINAL OFFENSE IS NOT A DEBARMENT FROM FUTURE CONTRACTS. SEE ALSO B- 132311, JANUARY 3, 1958, CITED THEREIN WHEREIN AN AGENCY DISQUALIFIED A BIDDER BECAUSE AMONG OTHER REASONS OUR OFFICE HAD PREVIOUSLY SUSTAINED A DETERMINATION OF NONRESPONSIBILITY IN A PRIOR PROCUREMENT. IN THAT DECISION IT WAS STATED:

"* * * THE RESPONSIBILITY OF A BIDDER IS TO BE DETERMINED AT THE TIME OF EACH AWARD. A PRIOR DETERMINATION OF NONRESPONSIBILITY IS NOT DETERMINATIVE OF A SUBSEQUENT QUESTION OF PONSIBILITY.'

WITH RESPECT TO THE TERMINAL-CONSTRUCTED GARAGE WHICH COLLAPSED, GSA BELIEVES THAT WHILE THE DECISION OF THE COURT INDICATES THAT TERMINAL WAS LEGALLY RESPONSIBLE FOR THE COLLAPSE OF THE STRUCTURE, THERE ARE MITIGATING FACTORS IN TERMINAL'S FAVOR IN THAT THE COLLAPSE MAY HAVE BEEN PARTIALLY THE FAULT OF A SUBCONTRACTOR AND A TESTING LABORATORY. MOREOVER, GSA DOES NOT BELIEVE THAT THE CIRCUMSTANCES WHICH CREATED THE SITUATION ARE LIKELY TO RECUR.

OUR OFFICE IS NOT REQUIRED TO DETERMINE WHETHER OR NOT TERMINAL IS RESPONSIBLE. THE DETERMINATION OF BIDDER RESPONSIBILITY IS A MATTER OF JUDGMENT LEFT LARGELY TO THE SOUND ADMINISTRATIVE DISCRETION OF THE PROCUREMENT OFFICERS OF THE GOVERNMENT, SINCE THEY ARE IN THE BEST POSITION TO ASSESS RESPONSIBILITY. 39 COMP. GEN. 705, 711. IT IS OUR FUNCTION TO ASCERTAIN WHETHER THE INFORMATION THE CONTRACTING AGENCY RELIED UPON REASONABLY SUPPORTS THE CONCLUSION REACHED. IN OUR OPINION, THE INFORMATION THE AGENCY HAD BEFORE IT IN THIS CASE WAS SUFFICIENT TO SUPPORT THE CONCLUSION REACHED. ACCORDINGLY, THE ADMINISTRATIVE DETERMINATION WILL NOT BE DISTURBED.