B-157615, DEC. 13, 1965, 45 COMP. GEN. 325

B-157615, DEC. 13, 1965, 45 COMP. GEN. 325

CONTRACTS - LABOR STIPULATIONS - DAVIS-BACON ACT - MINIMUM WAGE DETERMINATIONS - EXPIRATION DATE EXCEPTIONS THE REJECTION OF ALL BIDS FOR THE CONSTRUCTION OF A TRANSMISSION LINE AND READVERTISING THE SPECIFICATIONS TO INCLUDE, PURSUANT TO THE DAVIS-BACON ACT, 40 U.S.C. 276A, THE MODIFIED WAGE RATES OF A NEW DETERMINATION CONTAINING RATES IDENTICAL TO THE EXPIRED WAGE RATES INCORPORATED IN THE INITIAL SPECIFICATIONS--- A CONTRACT AWARD HAVING BEEN DELAYED TO SECURE A CERTIFICATE OF COMPETENCY ON THE LOW BIDDER--- WAS JUSTIFIED ABSENT A REQUEST TO AND GRANT BY THE SECRETARY OF LABOR FOR THE EXTENSION OF THE EXPIRED WAGE RATE DETERMINATION IN ACCORDANCE WITH DEPARTMENT OF LABOR REGULATIONS INCREASING THE EFFECTIVENESS OF WAGE RATE DETERMINATIONS AND ESTABLISHING PROCEDURE FOR THE EXTENSION OF A DETERMINATION AFTER EXPIRATION, AND THE AUTOMATIC ISSUANCE OF A NEW WAGE RATE DETERMINATION EMBODYING WAGES IDENTICAL TO THE EXPIRED RATES THAT HAD BEEN INCLUDED IN THE INITIALLY ADVERTISED SPECIFICATIONS, HAVING NEITHER REVIVED NOR EXTENDED THE EXPIRED WAGE RATES, AN AWARD ON THE BASIS OF SPECIFICATIONS INCORPORATING THOSE RATES WOULD BE IMPROPER.

TO ABBETT ELECTRIC CORPORATION, DECEMBER 13, 1965:

FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE ACTION OF THE DEPARTMENT OF THE INTERIOR, BUREAU OF RECLAMATION, DENVER OFFICE, IN REJECTING ALL BIDS UNDER SPECIFICATIONS NO. DC-6300, AND READVERTISING FOR CONSTRUCTION AND COMPLETION OF THE MALIN-ROUND MOUNTAIN 500 KILOVOLT TRANSMISSION LINE NO. 2 MALIN-ROUND MOUNTAIN SECTION, PACIFIC NORTHWEST- PACIFIC SOUTHWEST INTERTIE, CALIFORNIA. OPENING OF THE BIDS RECEIVED IN RESPONSE TO THE READVERTISEMENT HAS BEEN DELAYED PENDING OUR DECISION ON YOUR PROTEST.

FIVE BIDS WERE RECEIVED IN RESPONSE TO THE SUBJECT INVITATION AND OPENED ON JULY 22, 1965. THE TWO LOW BIDS, AND THE GOVERNMENT ENGINEER'S ESTIMATE, ARE AS FOLLOWS:

TABLE

SCHEDULE NO. 1 SCHEDULE NO. 2 TOTAL ABBETT ELECTRICAL CORP. $4,607,669.04 $4,743,072.13 $9,350,741.22 ELECTRICAL CONSTRUCTORS 4,639,652.84 5,097,175.10 9,736,827.94 ENGINEER'S ESTIMATE 3,910,078.00 3,988,091.00 7,898,169.00 ABBETT'S BID IS $1,452,572.22 OR 18 PERCENT ABOVE THE ENGINEER'S ESTIMATE AND $386,086.72 BELOW THE SECOND LOW BIDDER. THE EXTENT TO WHICH THE ABBETT BID EXCEEDS THE GOVERNMENT ESTIMATE IS ATTRIBUTED BY THE BUREAU TO THE LIMIT TIME OF 500 DAYS FOR COMPLETION OF THE WORK, AND TO POSSIBLE DIFFICULTY IN OBTAINING SOME OF THE MATERIALS NEEDED FOR THE JOB.

SINCE THE CONTRACTING ACTIVITY WAS NOT IN POSSESSION OF SUFFICIENT INFORMATION TO DETERMINE THE CAPABILITY OF YOUR FIRM TO PERFORM UNDER THE SUBJECT SPECIFICATIONS, YOU WERE REQUESTED BY TELEGRAM DATED JULY 27, 1965, TO FURNISH INFORMATION RELATIVE TO THE FIRM'S EXPERIENCE, EQUIPMENT, AND FINANCIAL CONDITION. BECAUSE IT WAS FELT THE INFORMATION RECEIVED IN RESPONSE THERETO INDICATED A LACK OF THE NECESSARY QUALIFICATIONS TO PERFORM AND BECAUSE YOUR FIRM WAS REPRESENTED TO BE SMALL BUSINESS, THE QUESTION OF YOUR COMPETENCY TO PERFORM THE CONTRACT WORK WAS REFERRED TO THE SMALL BUSINESS ADMINISTRATION (SBA) ON JULY 30, 1965, PURSUANT TO THE REQUIREMENT OF FEDERAL PROCUREMENT REGULATIONS 1-1.708-2.

ON AUGUST 2, 1965, THE DATE THE WAGE DETERMINATION INCLUDED IN THE SPECIFICATIONS PURSUANT TO THE REQUIREMENT OF THE DAVIS-BACON ACT, 40 U.S.C. 276A, WAS TO EXPIRE, IT WAS LEARNED THAT A NEW AREA WAGE RATE DETERMINATION, EFFECTIVE AUGUST 3, HAD BEEN ISSUED BY THE DEPARTMENT OF LABOR. IT WAS ALSO LEARNED THAT THE AUGUST 3 DETERMINATION CONTAINED WAGE RATES IDENTICAL TO THOSE INCLUDED IN THE ADVERTISED SPECIFICATIONS FOR ALL CRAFTS WHICH WOULD BE EMPLOYED IN THE TRANSMISSION LINE CONSTRUCTION. VIEW OF THIS DEVELOPMENT, AND BECAUSE DEPARTMENT OF LABOR REGULATION 5.4 (A) PROVIDES THAT WAGE DETERMINATIONS NOT USED IN THE PERIOD OF THEIR EFFECTIVENESS ARE VOID, CONSIDERATION WAS GIVEN TO WHETHER THE BIDS COULD STILL PROPERLY BE ACCEPTED. IT WAS CONCLUDED THAT SINCE THE PURPOSE OF THE REGULATION WAS TO INSURE THAT THE PREVAILING WAGE RATES WOULD BE INCLUDED IN ANY CONTRACT AWARDED AS REQUIRED BY THE DAVIS-BACON ACT, AND BECAUSE THE WAGE RATES OF THE AUGUST 3 DETERMINATION WERE THE SAME AS THOSE OF THE EXPIRED DETERMINATION, A VALID AND BINDING AWARD COULD BE MADE ON THE BIDS AS SUBMITTED.

ON AUGUST 24, 1965, SBA ADVISED THE BUREAU BY TELEPHONE THAT IT WAS ISSUING A CERTIFICATE OF COMPETENCY (COC) TO YOUR FIRM. THE CERTIFICATE WAS RECEIVED BY THE BUREAU ON AUGUST 27, 1965. BECAUSE THE CONTRACTING OFFICER STILL HAD SUBSTANTIAL DOUBT AS TO YOUR ABILITY TO PERFORM, HE INITIATED PROCEDURES PURSUANT TO FPR 1-1.708-3 TO HAVE HIGHER AUTHORITY IN THE BUREAU REQUEST THAT SBA WITHDRAW THE COC. THE BASIS FOR THE REQUEST WAS FORWARDED TO THE COMMISSIONER OF RECLAMATION IN A REPORT DATED AUGUST 27, 1965.

ON AUGUST 30, THE DENVER OFFICE OF THE BUREAU RECEIVED A MODIFICATION DATED AUGUST 23 OF THE AUGUST 3 WAGE RATE DETERMINATION. THIS MODIFICATION INCREASED THE WAGE RATES APPLICABLE TO SEVERAL CLASSIFICATIONS OF LABOR TO BE EMPLOYED ON THE SUBJECT JOB BY AMOUNTS EQUAL TO SOME 3 OR 4 PERCENT. SINCE THE WAGE RATE DETERMINATION INCORPORATED IN THE SPECIFICATIONS NO LONGER REFLECTED THE PREVAILING WAGE RATES BY REASON OF THE MODIFICATION OF AUGUST 23, IT WAS CONCLUDED THAT A VALID AND BINDING CONTRACT COULD NOT BE CONSUMMATED BY ACCEPTANCE OF A BID SUBMITTED IN RESPONSE TO SAID SPECIFICATIONS. THE DECISION WAS THEREFORE MADE TO REJECT ALL BIDS AND READVERTISE, INCLUDING THE AUGUST 3 WAGE RATE DETERMINATION, AS MODIFIED, IN THE SPECIFICATIONS.

YOU HAVE SUBMITTED THREE LETTERS SETTING FORTH VARIOUS CONTENTIONS AS THE BASIS OF THIS PROTEST. YOUR ARGUMENTS ESSENTIALLY RELATE TO (1) THE CONCLUSIVENESS OF THE AFFIRMATIVE DETERMINATION BY SBA OF ABBETT'S COMPETENCY, (2) THE EFFECT OF THE EXPIRATION OF THE ORIGINAL WAGE RATE DETERMINATION ON AUGUST 2 AND ISSUANCE OF A NEW WAGE RATE DETERMINATION ON AUGUST 3 CONTAINING IDENTICAL RATES, AND (3) THE EFFECT OF THE MODIFICATION OF THE LATTER WAGE DETERMINATION ON AUGUST 23. SINCE WE BELIEVE THE QUESTION OF THE PROPRIETY OF THE ADMINISTRATIVE ACTION IN REJECTING ALL BIDS AND READVERTISING TURNS ON THE EFFECT OF THE EXPIRATION OF THE WAGE RATE DETERMINATION ON AUGUST 2, WE WILL FIRST CONSIDER THE VALIDITY OF YOUR ARGUMENTS ON THAT POINT.

BASICALLY, YOUR ARGUMENT ON THIS POINT IS TO THE EFFECT THAT SINCE THE EXPIRATION OF THE WAGE RATE DETERMINATION ON AUGUST 2 WAS FOLLOWED BY ISSUANCE OF A NEW DETERMINATION ON AUGUST 3 CONTAINING IDENTICAL WAGES, BIDDERS WERE BOUND BY THE TERMS OF THE INVITATION TO PAY THE MINIMUM WAGE RATES INCLUDED IN THE SPECIFICATIONS FOR A PERIOD OF 60 DAYS FROM THE DATE OF OPENING, AND THE ADMINISTRATIVE AGENCY CONCLUDED IT COULD MAKE A VALID AWARD UNDER THE NEW BUT IDENTICAL DETERMINATION, AWARD SHOULD HAVE BEEN MADE TO YOUR FIRM WHEN SBA ISSUED THE COC. FURTHERMORE, YOU POINT OUT THAT REJECTION OF BIDS IS NOT REQUIRED BY REASON OF THE EXPIRATION OF THE WAGE DETERMINATION BECAUSE SECTION 5.4 (A) OF THE DEPARTMENT OF LABOR REGULATIONS PROVIDES THAT THE SOLICITOR OF LABOR MAY EXTEND THE EXPIRATION DATE OF A DETERMINATION UPON A REQUEST FROM THE HEAD OF A FEDERAL AGENCY WHERE UNAVOIDABLE CIRCUMSTANCES RESULT IN THE DETERMINATION EXPIRING AFTER BID OPENING AND BEFORE AWARD, AND THAT SUCH REQUEST SHOULD NOW BE MADE. IN ADDITION, IT IS YOUR CONTENTION THAT TO REJECT BIDS IN THE CIRCUMSTANCES HERE PRESENT WOULD VIOLATE THE FUNDAMENTAL RULE OF COMPETITIVE BIDDING THAT ONCE BIDS ARE OPENED THEY SHOULD NOT BE REJECTED EXCEPT FOR COMPELLING OR COGENT REASONS. IN FACT, IT IS YOUR VIEW THAT NOT ONLY ARE THERE NO COMPELLING OR COGENT REASONS FOR REJECTING BIDS, BUT COMPELLING REASONS EXIST FOR ACCEPTING ABBETT'S BID BECAUSE IT HAS OFFERED TO ACCEPT THE MODIFIED RATES WITHOUT CHANGING ITS BID PRICE, THE COST TO THE GOVERNMENT WILL BE LESS THAN ON A CONTRACT INCLUDING THE HIGHER WAGES, AND NO OTHER BIDDER WILL BE PREJUDICED SINCE THEY WOULD NOT HAVE SUBMITTED A LOWER BID BASED UPON THE MODIFIED WAGE RATES. YOU ALSO CONTEND THAT THE INCREASED WAGE RATES HAVE NO ECONOMIC IMPACT OR SIGNIFICANCE BECAUSE THE MINIMUM WAGES REQUIRED TO BE PAID BY YOU AND ALL OTHER BIDDERS UNDER UNION CONTRACTS ARE HIGHER THAN THE PREVAILING MINIMUM WAGE RATES AS DETERMINED BY THE DEPARTMENT OF LABOR.

THE DAVIS-BACON ACT, AS AMENDED, SUPRA, REQUIRES ADVERTISED SPECIFICATIONS FOR CONTRACTS IN EXCESS OF $2,000 FOR CONSTRUCTION, ALTERATION OR REPAIR OF PUBLIC WORKS TO SET OUT MINIMUM WAGES TO BE PAID LABORERS AND MECHANICS BASED UPON WAGES "THAT WILL BE DETERMINED BY THE SECRETARY OF LABOR TO BE PREVAILING" IN THE AREA. WE HAVE HELD THAT, AS A GENERAL RULE, THE MINIMUM WAGE RATES SO REQUIRED CANNOT BE INCORPORATED IN A CONTRACT IN ANY WAY OTHER THAN AS SPECIFIED IN THE ACT--- THAT IS BY INCLUSION IN THE SPECIFICATIONS UPON WHICH BIDS LEADING TO THE CONTRACT WERE INVITED. SEE 40 COMP. GEN. 565; 42 ID. 410.

IN IMPLEMENTING THE MANDATE OF THE ACT THE SECRETARY OF LABOR HAS PROMULGATED REGULATIONS WITH RESPECT TO SUCH DETERMINATIONS. AMONG OTHER THINGS, SECTION 5.4 (A) OF THE DEPARTMENT OF LABOR REGULATIONS PROVIDES THE FOLLOWING:

(A) WAGE DETERMINATIONS INITIALLY ISSUED SHALL BE EFFECTIVE FOR120 CALENDAR DAYS FROM THE DATE OF SUCH DETERMINATIONS. IF SUCH A WAGE DETERMINATION IS NOT USED IN THE PERIOD OF ITS EFFECTIVENESS, IT IS VOID.

WE BELIEVE THAT, IMPLICIT IN THE STATUTORY REQUIREMENT THAT THE SECRETARY MAKE SUCH DETERMINATIONS, IS THE AUTHORIZATION TO IMPOSE REASONABLE LIMITATIONS ON THE TIME WITHIN WHICH HIS WAGE DETERMINATIONS MAY BECOME EFFECTIVE AS CONTRACT CONDITIONS. AS A GENERAL RULE, IF A WAGE DETERMINATION BECOMES VOID BY VIRTUE OF THE ABOVE REGULATION NO VALID CONTRACT AWARD CAN BE MADE ON BIDS SUBMITTED ON ADVERTISED SPECIFICATIONS CONTAINING THE VOID DETERMINATION. 41 COMP. GEN. 593. THIS IS BECAUSE THE CONTRACT WOULD BE AWARDED ON THE BASIS OF EITHER NO WAGE DETERMINATION, OR A WAGE DETERMINATION OTHER THAN THE ONE ADVERTISED IN THE BID INVITATION, AND IN EITHER CASE, NOT IN ACCORDANCE WITH THE DAVIS- BACON ACT.

HOWEVER, AT THE TIME OF OUR DECISION CITED ABOVE, IT WAS RECOGNIZED THAT THE THEN APPLICABLE 90-DAY LIMIT ON WAGE RATE DETERMINATIONS SERIOUSLY BURDENED THE CONTRACTING ACTIVITIES BECAUSE OF DELAYS FREQUENTLY ENCOUNTERED IN MAKING AWARDS. TO COUNTERACT THIS PROBLEM OUR DECISION SANCTIONED AWARD OF A CONTRACT ON THE BAIS OF A WAGE DETERMINATION OTHER THAN THE ONE ADVERTISED WHERE THE INVITATION CONTAINED A PROVISION TO THIS EFFECT. SUBSEQUENT THERETO, WE APPROVED A CONTRACT PROVISION USED BY THE CORPS OF ENGINEERS WHICH RESERVED TO THE GOVERNMENT THE RIGHT TO AWARD A CONTRACT NOTWITHSTANDING THE EXPIRATION OF A WAGE RATE DETERMINATION AND TO INCORPORATE A NEW DETERMINATION IN THE CONTRACT. SEE 43 COMP. GEN. 238.

AFTER A REVISION OF THE APPLICABLE REGULATION IN JANUARY 1964, WE AGAIN HAD OCCASION TO CONSIDER A PROVISION IN AN INVITATION SIMILAR TO THAT USED BY THE CORPS OF ENGINEERS. IN OUR DECISION OF JUNE 7, 1965, 44 COMP. GEN. 776, TO THE ADMINISTRATOR OF THE VETERANS ADMINISTRATION WE STATED:

* * * IN VIEW OF THE FACT THAT THE REVISED DEPARTMENT OF LABOR REGULATION HAS INCREASED THE PERIOD OF EFFECTIVENESS OF WAGE DETERMINATIONS FROM 90 TO 120 DAYS AND ALSO NOW PROVIDES A PROCEDURE FOR EXTENDING THE PERIOD OF EFFECTIVENESS IN APPROPRIATE CIRCUMSTANCES, WE FEEL THAT THE UNDERLYING DIFFICULTIES WHICH PROMPTED THE CARVING OUT OF AN EXCEPTION TO THE GENERAL RULE TO PERMIT PROVISIONS IN BID INVITATIONS OF THE TYPE CONTAINED IN THE CORPS OF ENGINEERS CLAUSE AND IN CLAUSE 18 (C) OF THE GENERAL PROVISIONS CURRENTLY EMPLOYED BY YOUR ADMINISTRATION, HAVE BEEN AMELIORATED SUFFICIENTLY TO ELIMINATE THE NEED FOR SUCH QUESTIONABLE EXCEPTION. YOU ARE THEREFORE ADVISED THAT TO THE EXTENT 41 COMP. GEN. 593 AND 43 ID. 238 ARE INCONSISTENT WITH THIS VIEW THEY WILL NO LONGER BE FOLLOWED. * * *

SINCE THE REVISED REGULATIONS OF THE DEPARTMENT OF LABOR BOTH INCREASED THE PERIOD OF EFFECTIVENESS OF WAGE RATE DETERMINATIONS AND ESTABLISHED A PROCEDURE WHEREBY THEY MAY BE EXTENDED EVEN AFTER EXPIRATION, IT IS APPARENT THAT ANY PRESENT CONSTRUCTION OF A WAGE RATE DETERMINATION WHICH OPERATED TO AUTOMATICALLY EXTEND THE PERIOD OF ITS APPLICABILITY, WITHOUT AN EXTENSION FIRST HAVING BEEN REQUESTED FROM AND GRANTED BY THE DEPARTMENT OF LABOR, WOULD OPERATE TO CIRCUMVENT THE INTENT AND PURPOSE OF THE REGULATIONS. IN VIEW OF THE FOREGOING, IT IS OUR OPINION THAT THE GENERAL RULE, AS SET OUT IN 41 COMP. GEN. 593, IS FOR APPLICATION IN THE INSTANT CASE, AND THAT AN AWARD COULD NOT PROPERLY HAVE BEEN MADE ONCE THE WAGE DETERMINATION INCLUDED IN THE SPECIFICATIONS EXPIRED, UNLESS AND UNTIL AN EXTENSION HAD BEEN PROPERLY REQUESTED AND GRANTED. WE ARE THEREFORE UNABLE TO CONCLUDE THAT THE AUTOMATIC ISSUANCE OF A NEW WAGE DETERMINATION EMBODYING IDENTICAL WAGES EITHER REVIVED THE ORIGINAL DETERMINATION OR WAS, IN EFFECT, AN EXTENSION OF SUCH DETERMINATION.

WITH RESPECT TO THE REMAINING DECISIONS CITED IN SUPPORT OF YOUR ARGUMENTS ON THIS POINT, IT IS OUR OPINION THAT THEY ARE READILY DISTINGUISHABLE FROM THE INSTANT CASE. THUS, THE DECISION OF JULY 22, 1960, 40 COMP. GEN. 48, INVOLVED THE FAILURE OF A BIDDER TO ACKNOWLEDGE AN ADDENDUM INCORPORATING A WAGE RATE DETERMINATION, RATHER THAN AN EXPIRED WAGE RATE DETERMINATION. THE UNPUBLISHED DECISION, B-154443, JUNE 29, 1964, INVOLVED CORRECTION OF CONTRACT WAGES WHERE THE ADVERTISED CONDITIONS CONTAINED AN INADVERTENT ERROR, RATHER THAN A SITUATION WHERE THE WAGE DETERMINATION HAD EXPIRED. THE DECISION OF MAY 8, 1953, B- 106987, INVOLVED THE AMENDMENT OF A CONTRACT TO INCLUDE MINIMUM WAGE RATES WHERE THE WAGE RATES INCLUDED IN THE CONTRACT WERE BASED ON A DETERMINATION WHICH HAD EXPIRED PRIOR TO ISSUANCE OF THE INVITATION UPON WHICH THE CONTRACT WAS AWARDED, AND NOT A SITUATION WHERE THE CONTRACTING AGENCY REFUSED TO AWARD A CONTRACT ON AN INVITATION CONTAINING AN EXPIRED DETERMINATION. MOREOVER, THE APPLICABILITY OF THIS DECISION WAS DISCUSSED AND LIMITED IN 42 COMP. GEN. 410. CONCERNING YOUR CONTENTIONS THAT THE COST TO THE GOVERNMENT WILL BE LESS, AND THE OTHER BIDDERS WILL NOT BE PREJUDICED, BY ACCEPTANCE OF YOUR BID, IT HAS BEEN THE POSITION OF OUR OFFICE AND THE COURTS THAT THE STRICT MAINTENANCE OF COMPETITIVE BIDDING PROCEDURES, REQUIRED BY LAW IN CONNECTION WITH THE LETTING OF PUBLIC CONTRACTS, IS INFINITELY MORE IN THE PUBLIC INTEREST THAN THE OBTAINING OF A POSSIBLE PECUNIARY ADVANTAGE IN A PARTICULAR CASE BY A VIOLATION OF THE RULES. 17 COMP. GEN. 554; 34 ID. 82; UNITED STATES V. BROOKRIDGE FARM, 111 F.2D 461,463; CITY OF CHICAGO V. MOHR, 216 ILL. 320, 74 N.E. 1056. ACCORDANCE WITH THE FOREGOING, WE FIND NO LEGAL BASIS UPON WHICH WE MAY PROPERLY OBJECT TO THE DEPARTMENT'S FAILURE TO AWARD A CONTRACT TO YOU, AND YOUR PROTEST IS THEREFORE DENIED.