B-158289, MAR. 17, 1966

B-158289, MAR. 17, 1966

TO ADMINISTRATOR, GENERAL SERVICES:

REFERENCE IS MADE TO LETTERS DATED DECEMBER 28, 1965, AND JANUARY 19, 1966, FROM YOUR ASSISTANT GENERAL COUNSEL, REGULATIONS AND GENERAL LAW DIVISION, TRANSMITTING FOR OUR COMMENTS A SERIES OF CONSOLIDATED CONTRACT FORMS DEVELOPED BY THE DEPARTMENT OF DEFENSE AND A PROPOSED COMBINATION CONTRACT FORM FOR USE IN CONSTRUCTION CONTRACTS DEVELOPED BY YOUR ADMINISTRATION.

THE ASSISTANT GENERAL COUNSEL'S LETTER OF DECEMBER 28 REQUESTS COMMENTS, BASED UPON OUR EXPERIENCE, ON (1) THE DESIRABILITY OF DEVELOPING CONSOLIDATED STANDARD FORMS FOR USE IN SUPPLY, SERVICE AND CONSTRUCTION CONTRACTS, AND (2) THE PROPOSED COMBINATION-TYPE CONSTRUCTION CONTRACT FORM WHICH IS DESIGNED FOR USE IN LIEU OF STANDARD FORMS 19, 20, 21 AND 23, AND WHICH IS ALSO DESIGNED FOR CONTRACTS MADE EITHER BY FORMAL ADVERTISING OR NEGOTIATION.

AS A GENERAL PROPOSITION WE BELIEVE THAT WHEREVER IT IS FEASIBLE AND ECONOMICAL IT IS ALWAYS DESIRABLE TO CONSOLIDATE FORMS SUCH AS THE PROPOSED CONSOLIDATION OF THE FORMS USED IN CONTRACTING FOR SUPPLIES, SERVICES AND CONSTRUCTION. HOWEVER, IN REGARD TO THE SPECIFIC CONSOLIDATIONS HERE PROPOSED, IT SHOULD BE NOTED THAT THE NATURE OF THE WORK ACCOMPLISHED BY THE GENERAL ACCOUNTING OFFICE GENERATES VERY FEW INDEPENDENT PROCUREMENT ACTIONS. VIRTUALLY ALL OF OUR SUPPLY AND EQUIPMENT NEEDS ARE SATISFIED FROM THE FEDERAL SUPPLY SCHEDULES OR FROM GSA STORE STOCK. ACCORDINGLY, WE ARE NOT IN A POSITION TO OFFER SPECIFIC COMMENTS AS TO THE FEASIBILITY OF THE CONSOLIDATIONS SINCE WE HAVE VIRTUALLY NO PRACTICAL OR OPERATIONAL EXPERIENCE IN THE USE OF THE VARIOUS FORMS PROPOSED FOR CONSOLIDATION.

WE DO, HOWEVER, HAVE SEVERAL RECOMMENDATIONS TO MAKE WITH RESPECT TO THE SUBSTANTIVE TERMS OF THE CLAUSES INCORPORATED IN DD FORM 1490R (TAB-A-6). DD FORM 1490R ENTITLED "INSTRUCTIONS AND CONDITIONS - SOLICITATION AND OFFER FORM" IS INTENDED, ACCORDING TO TAB-A-1, TO SERVE FOR BOTH SUPPLY AND CONSTRUCTION CONTRACTS AND REPLACES, AMONG OTHERS, STANDARD FORMS 22, AND FORMER 30 AND 33 (NOW 33 AND 33A). IN OUR OPINION THE TERMS OF DD FORM 1490R DO NOT, IN THREE INSTANCES, AFFORD TO THE GOVERNMENT THE BROAD PROTECTION AND BENEFITS PRESENTLY AFFORDED BY THE TERMS OF STANDARD FORMS 22, 33 AND 33A.

BY AMENDMENT NO. 6 DATED FEBRUARY 9, 1965, YOUR ADMINISTRATION AMENDED THE FEDERAL PROCUREMENT REGULATIONS TO DELETE STANDARD FORMS 30 AND 31 AND TO PRESCRIBE IN PLACE THEREOF A REVISED EDITION OF STANDARD FORM 33 AND A NEW STANDARD FORM 33A. PRIOR TO THAT AMENDMENT, BY LETTER TO YOUR PREDECESSOR DATED JUNE 25, 1963, OUR OFFICE RECOMMENDED THAT CONSIDERATION BE GIVEN TO REVISING STANDARD FORMS 30 AND 33 TO INCORPORATE ADVICE TO BIDDERS SUBSTANTIALLY IN ACCORD WITH PARAGRAPH 1 OF STANDARD FORM 22. OUR LETTER OF JUNE 25 ADVISED THAT IT WAS OUR BELIEF, BASED IN PART ON DECISIONS DATED JUNE 25, 1963, (B 151335) AND MAY 24, 1963 (B-151155), THAT A SUBSTANTIAL PORTION OF NONRESPONSIVE BIDS OF THE TYPE SET FORTH IN THOSE DECISIONS MAY HAVE BEEN ATTRIBUTABLE TO THE BIDDER'S LACK OF KNOWLEDGE AS TO THE PROCEDURES WHICH ARE AVAILABLE AND SHOULD BE FOLLOWED WHEN THE INVITATION IS AMBIGUOUS, OR WHEN IT IS BELIEVED THAT THE SPECIFICATION REQUIREMENTS ARE TOO RESTRICTIVE OR ARE IN ERROR. AMENDMENT NO. 6 TO THE FPR'S ADDED A CLAUSE TO NEW STANDARD FORM 33A (PARAGRAPH 2, "EXPLANATIONS TO BIDDERS") IN ACCORDANCE WITH OUR RECOMMENDATION OF JUNE 25, 1963, WHICH AMONG OTHER THINGS REQUIRES THAT EXPLANATIONS AND INTERPRETATIONS OF INVITATIONS FOR BIDS MUST BE REQUESTED AND FURNISHED IN WRITING AND WITH SUFFICIENT TIME ALLOWED FOR A REPLY TO REACH BIDDERS BEFORE THE SUBMISSION OF THEIR BIDS.

WE NOTE THAT THE INSTRUCTIONS AND CONDITIONS OF DD FORM 1490R DO NOT CONTAIN THE PROVISIONS PRESENTLY FOUND IN PARAGRAPH 1 OF STANDARD FORM 22 AND IN PARAGRAPH 2 OF STANDARD FORM 33A. THESE PROVISIONS, WE BELIEVE, ARE OF SUBSTANTIAL BENEFIT IN REDUCING THE NUMBER OF NONRESPONSIVE BIDS AND THEREBY BROADENING THE BASE OF COMPETITION FOR GOVERNMENT CONTRACTS. ACCORDINGLY, WE RECOMMEND THAT DD FORM 1490R BE REVISED TO INCLUDE THE PROVISIONS OF PARAGRAPH 2 OF STANDARD FORM 33A.

PARAGRAPH 2 OF STANDARD FORM 22 ENTITLED "CONDITIONS AFFECTING THE WORK" PROVIDES, IN PART, THAT:

"* * * THE GOVERNMENT WILL ASSUME NO RESPONSIBILITY FOR ANY UNDERSTANDING OR REPRESENTATIONS CONCERNING CONDITIONS MADE BY ANY OF ITS OFFICERS OR AGENTS PRIOR TO THE EXECUTION OF THE CONTRACT, UNLESS INCLUDED IN THE INVITATION FOR BIDS, THE SPECIFICATIONS, OR RELATED DOCUMENTS.'

THE INSTRUCTIONS AND CONDITIONS OF DD FORM 1490R DO NOT CONTAIN ANY DISCLAIMER OF RESPONSIBILITY PROVISIONS COMPARABLE TO THOSE QUOTED ABOVE. WE BELIEVE THAT A DISCLAIMER OF RESPONSIBILITY FOR REPRESENTATIONS CONCERNING CONDITIONS MADE BY GOVERNMENT OFFICERS AND AGENTS PRIOR TO EXECUTION OF A CONTRACT IS A NECESSARY AND DESIRABLE PROVISION TO BE INCLUDED IN ANY STANDARD SOLICITATION FORM. SUCH A DISCLAIMER SERVES NOT ONLY TO PROTECT THE GOVERNMENT AGAINST UNAUTHORIZED REPRESENTATIONS BY ITS AGENTS BUT ALSO SERVES TO PUT BIDDERS ON NOTICE THAT THEIR BIDS SHOULD BE BASED SOLELY UPON THE SPECIFIC TERMS OF THE BID SOLICITATION DOCUMENTS, THEREBY FORECLOSING LATER CONTROVERSIES OVER WHAT MAY, OR MAY NOT, HAVE BEEN SAID BY A GOVERNMENT AGENT PRIOR TO CONTRACT AWARD. WE THEREFORE RECOMMEND THAT DD FORM 1490R BE REVISED TO INCLUDE THE DISCLAIMER PROVISION QUOTED ABOVE.

PARAGRAPH 6 OF DD FORM 1490R ENTITLED "GUARANTEE OF OFFER" PROVIDES IN PART THAT:

"* * * WITHDRAWAL OF OFFER OR FAILURE TO ENTER INTO A CONTRACT AND GIVE BONDS WITHIN TIME SPECIFIED SHALL CAUSE THE GUARANTEE TO BE FORFEITED (SIC) TO THE EXTENT REQUIRED TO OFFSET ANY DIFFERENCE BY WHICH THE COST OF PROCURING THE SUPPLIES OR SERVICES EXCEEDS THE AMOUNT OF THE OFFER.'

ON THE OTHER HAND, PARAGRAPH 4 ENTITLED "BID GUARANTEE" OF STANDARD FORM 22 PROVIDES, IN PART, THAT:

"IF THE SUCCESSFUL BIDDER, UPON ACCEPTANCE OF HIS BID BY THE GOVERNMENT WITHIN THE PERIOD SPECIFIED THEREIN FOR ACCEPTANCE * * * FAILS TO EXECUTE SUCH FURTHER CONTRACTUAL DOCUMENTS, IF ANY, AND GIVE SUCH BONDS AS MAY BE REQUIRED BY THE TERMS OF THE BID AS ACCEPTED WITHIN THE TIME SPECIFIED * * * AFTER THE RECEIPT OF THE FORMS BY HIM, HIS CONTRACT MAY BE TERMINATED FOR DEFAULT. IN SUCH EVENT HE SHALL BE LIABLE FOR ANY COST OF PROCURING THE WORK WHICH EXCEEDS THE AMOUNT OF HIS BID, AND THE BID GUARANTEE SHALL BE AVAILABLE TOWARD OFF-SETTING SUCH DIFFERENCE.'

WE HAVE HELD THAT A BIDDER WHO FAILS TO PERFORM THE WORK BID UPON AFTER ACCEPTANCE OF HIS BID IS LIABLE FOR THE FULL COST IN EXCESS OF HIS BID PRICE OF PROCURING THE WORK, EVEN THOUGH SUCH COST MAY EXCEED THE AMOUNT OF THE BID BOND. 17 COMP. GEN. 815. IN OTHER WORDS, IF THE BID BOND IS NOT SUFFICIENT TO COVER THE COST OF REPROCUREMENT, THE BIDDER MUST ANSWER IN DAMAGES FOR ANY DEFICIENCY NOT COVERED BY THE BOND. IT IS CLEAR THAT THE PROVISIONS OF PARAGRAPH 4 OF STANDARD FORM 22 ARE IN HARMONY WITH OUR DECISION IN 17 COMP. GEN. 815, SINCE IT EXPLICITY INFORMS THE BIDDER THAT UPON DEFAULT HE SHALL BE LIABLE FOR "ANY COST OF PROCURING THE WORK WHICH EXCEEDS THE AMOUNT OF HIS BID" AND THAT THE BID GUARANTEE "SHALL BE AVAILABLE TOWARD OFF-SETTING SUCH DIFFERENCE.' CONVERSELY, THE PROVISIONS OF PARAGRAPH 6 OF DD FORM 1490R APPEAR, BY IMPLICATION, TO LIMIT THE GOVERNMENT'S REPROCUREMENT COSTS SOLELY TO THE AMOUNT OF THE BID GUARANTEE. IN VIEW OF THE LANGUAGE USED IN DD FORM 1490R, WE ARE CONCERNED THAT IF THIS MATTER IS RAISED IN LITIGATION A COURT MIGHT WELL HOLD THAT THE GOVERNMENT'S RECOVERY IS LIMITED TO THE AMOUNT OF THE BID GUARANTEE EVEN THOUGH IT COULD BE DEMONSTRATED THAT THE GOVERNMENT ACTUALLY SUFFERED DAMAGES IN EXCESS OF THAT AMOUNT. WE SEE NO SOUND BASIS FOR SO LIMITING THE GOVERNMENT'S RIGHT TO RECOVER ITS TOTAL REPROCUREMENT COSTS AND, THEREFORE, RECOMMEND THAT DD FORM 1490R BE AMENDED TO INCORPORATE THE ABOVE QUOTED PROVISIONS OF STANDARD FORM 22.

WE APPRECIATE THE OPPORTUNITY TO COMMENT ON THE PROPOSED CONSOLIDATION OF STANDARD CONTRACT FORMS. IF THE PROPOSED CONSOLIDATIONS ARE ADOPTED AND OUR WORK INDICATES A NEED FOR ADDITIONAL REVISION, YOU WILL, OF COURSE, BE ADVISED OF OUR FINDINGS AND RECOMMENDATIONS.