B-161647, JUN. 23, 1967

B-161647, JUN. 23, 1967

TO SMITH, CURRIE AND HANCOCK:

REFERENCE IS MADE TO YOUR LETTER DATE MAY 30, 1967, CONCERNING THE READVERTISEMENT BY THE DEPARTMENT OF THE INTERIOR OF THE UNFINISHED PORTION OF NATIONAL PARK SERVICE NATCHEZ TRACE PARKWAY PROJECT 3-0-7, MADISON COUNTY, MISSISSIPPI, INCIDENT TO TERMINATION FOR DEFAULT ON MARCH 1, 1967, OF CONTRACT NO. NPS-WASO-NATR-V-63/28 WITH YOUR CLIENT, H. W. CALDWELL AND SON, INC. (CALDWELL). YOU STATE THAT CALDWELL IS CURRENTLY PURSUING A PROTEST AGAINST THE TERMINATION AND THE ASSESSMENT OF EXCESS COSTS, AND THE PURPOSE OF YOUR LETTER IS TO PROTEST TO OUR OFFICE ON BEHALF OF CALDWELL AGAINST THE PROCEDURES EMPLOYED IN THE READVERTISEMENT AND ANY AWARD THEREUNDER WITHOUT WAIVER OF ANY OTHER GROUNDS FOR PROTEST INCIDENT TO SUCH ACTIONS.

YOU CONTEND THAT BIDDING UNDER THE READVERTISEMENT WAS UNDULY RESTRICTED, FOR TWO REASONS, WITH THE RESULT THAT ONLY ONE BID WAS RECEIVED FOR THE COMPLETION OF THE PROJECT. FIRST, YOU STATE THAT MAY 23, THE DATE FIXED BY THE READVERTISEMENT FOR OPENING OF BIDS AT FLORENCE, ALABAMA, WAS THE SAME DATE WHICH THE STATE HIGHWAY DEPARTMENT OF MISSISSIPPI HAD SET FOR OPENING OF BIDS AT JACKSON, MISSISSIPPI, FOR EXTENSIVE HIGHWAY WORK, A FACTOR WHICH YOU CLAIM SEVERELY RESTRICTED THE COMPETITION UNDER THE READVERTISEMENT. SECOND, YOU ALLEGE THAT CALDWELL WAS WRONGFULLY DENIED THE RIGHT TO QUOTE AS SUBCONTRACTOR TO OTHER QUALIFIED CONTRACTORS WHO DESIRED TO SUBMIT BIDS UNDER THE READVERTISEMENT BECAUSE SUCH CONTRACTORS WERE PREVENTED FROM SUBMITTING BIDS BASED ON USING CALDWELL AS A SUBCONTRACTOR. BECAUSE OF THESE DEFICIENCIES YOU REQUEST THAT OUR OFFICE REQUIRE CANCELLATION OF THE READVERTISEMENT AND ISSUANCE OF A NEW ADVERTISEMENT ALLOWING COMPETITIVE BIDDING.

WE ARE ADVISED BY THE DEPARTMENT OF THE INTERIOR THAT THE CALDWELL CONTRACT, WHICH WAS DATED OCTOBER 2, 1963, PROVIDED FOR A BASE PRICE OF $1,816,424.15, WHICH WAS SUBSEQUENTLY INCREASED TO $1,839,527.55 INCIDENT TO CHANGES IN THE CONTRACT WORK. PAYMENTS UNDER THE CONTRACT TOTAL $1,159,302.90, LEAVING A BALANCE OF $680,224.65.

IT IS FURTHER REPORTED THAT IN RESPONSE TO THE READVERTISEMENT TWO BIDS WERE RECEIVED FROM JACKSON, MISSISSIPPI, FIRMS, ONE FROM THE COOK CONSTRUCTION COMPANY (COOK), WHICH WAS TIMELY, AND THE OTHER FROM THE DELTA CONSTRUCTION COMPANY (DELTA), WHICH WAS LATE. THE COOK BID WAS IN THE AMOUNT OF $855,560.50. THE DELTA BID WAS RETURNED TO DELTA UNOPENED, BUT A TELEGRAPHIC MODIFICATION SHOWS THAT DELTA'S REVISED BID PRICE WAS $892,889. THE GOVERNMENT COST ESTIMATE FOR THE COMPLETION PROJECT WAS $737,300, BUT REVIEW OF THE ENGINEER'S COMPUTATION AFTER THE OPENING OF THE COOK BID INDICATES THAT USE OF A MORE REALISTIC FIGURE ON ONE OF THE COST ITEMS (ITEM (2) GRAVEL BASE COURSE) WARRANTS AN INCREASE OF $55,000, OR A REVISED ESTIMATE OF $792,000. ACCORDINGLY, IT IS THE VIEW OF THE DEPARTMENT THAT COOK'S BID IS REASONABLE.

WITH RESPECT TO THE MATTER OF COMPETITION ON THE READVERTISEMENT, THE DEPARTMENT POINTS OUT THAT THE FACT THAT POTENTIAL BIDDERS DOUBTLESS KNEW OF CALDWELL'S DEFAULT AND CONTRACT TERMINATION, AND OF THE NEED FOR THE SUCCESSOR CONTRACTOR TO TAKE OVER THE UNFINISHED PART OF THE PROJECT, COULD EASILY HAVE AFFECTED THE DEGREE OF BIDDER INTEREST; ALSO THAT WHILE ONE BID, UNFORTUNATELY, WAS LATE THERE NEVERTHELESS WAS COMPETITION. ADDITION, THE DEPARTMENT ADVISES THAT THE READVERTISEMENT WAS PREPARED FOR THE MOST PART BY PERSONNEL OF THE BUREAU OF PUBLIC ROADS OF THE UNITED STATES DEPARTMENT OF COMMERCE IN WASHINGTON, D.C., AND THAT THE DATE OF BID OPENING WAS FIXED WITHOUT KNOWLEDGE BY SUCH PERSONNEL THAT THE STATE OF MISSISSIPPI HAD SELECTED THE SAME DATE FOR THE OPENING OF BIDS IN MISSISSIPPI ON STATE HIGHWAY PROJECTS. IN THIS CONNECTION, IT IS STATED THAT CONSIDERATION HAD BEEN GIVEN TO SPECIFYING MAY 22, A MONDAY, FOR BID OPENING, BUT A DETERMINATION WAS MADE THAT BIDS SHOULD BE OPENED ON A TUESDAY IN ORDER TO AVOID THE NEED FOR BIDDERS TO PREPARE BIDS ON SUNDAY; HENCE, MAY 23 WAS SPECIFIED. ACCORDINGLY, THE DEPARTMENT OF THE INTERIOR ASSERTS THAT THE SELECTION OF THE SAME DATE FOR BID OPENING ON THE FEDERAL AND STATE PROJECTS WAS A MERE COINCIDENCE AND THAT TAKING INTO ACCOUNT THE NATURE AND BACKGROUND OF THE PROJECT, THERE WAS ADEQUATE COMPETITION.

CONCERNING YOUR ALLEGATION THAT QUALIFIED CONTRACTORS WHO DESIRED TO USE CALDWELL AS A SUBCONTRACTOR WERE PREVENTED FROM BIDDING ON SUCH BASIS, THE DEPARTMENT OF THE INTERIOR REPORTS THERE THERE IS NO EVIDENCE OF PROOF TO SUBSTANTIATE SUCH CHARGE. CONVERSELY, IT IS STATED, THE INVITATION FOR BIDS CONTAINED NO REQUIREMENT THAT SUBCONTRACTORS BE LISTED IN THE BIDS, AND OF THE 11 PROSPECTIVE BIDDERS WHO REQUESTED AND WERE FURNISHED COPIES OF THE INVITATION, NONE EITHER MADE INQUIRY ABOUT THE ACCEPTABILITY OF CALDWELL AS A SUBCONTRACTOR OR WAS INFORMED THAT CALDWELL WOULD NOT BE ACCEPTABLE IN SUCH CAPACITY. FURTHER, WHILE IT IS REPORTED THAT A BUREAU OF PUBLIC ROADS (UNITED STATES DEPARTMENT OF COMMERCE) ENGINEER AT FLORENCE MADE A GRATUITOUS REMARK TO A REPRESENTATIVE OF CALDWELL THAT HE (THE ENGINEER) WOULD NOT APPROVE CALDWELL AS A GRADING SUBCONTRACTOR ON THE COMPLETION PROJECT, SUCH REMARK WAS NEITHER AUTHORIZED BY, NOR REPRESENTATIVE OF THE POSITION OF, EITHER THE NATIONAL PARK SERVICE OR THE DEPARTMENT OF THE INTERIOR AND THEREFORE DOES NOT MERIT SERIOUS CONSIDERATION.

BASED ON THE FOREGOING, IT IS THE POSITION OF THE DEPARTMENT OF THE INTERIOR THAT THERE HAS BEEN NO OMISSION OR ERROR IN ITS ATTEMPT TO OBTAIN A SUCCESSOR CONTRACTOR UPON THE BEST TERMS AVAILABLE IN THE CIRCUMSTANCES. ACCORDINGLY, THE DEPARTMENT URGES THAT YOUR PROTEST BE DENIED AND THAT AWARD BE PERMITTED UNDER THE READVERTISEMENT AS EARLY AS POSSIBLE IN VIEW OF THE PRESSING NECESSITY FOR COMPLETION OF THE PROJECT, THE SERIOUS DELAY OF WHICH HAS ALREADY RESULTED IN THE DEFAULT ACTION GIVING RISE TO THE REPROCUREMENT.

WHILE THE GOVERNMENT IS UNDER OBLIGATION IN THE COMPLETION OF DEFAULTED CONTRACTS TO MITIGATE THE DAMAGES OF THE DEFAULTING CONTRACTOR WHENEVER POSSIBLE, THE BURDEN IS ON THE DEFAULTING CONTRACTOR TO SHOW THAT THE COST OF REPROCUREMENT IS UNREASONABLE. HOFFMAN V. UNITED STATES, 276 F.2D 199 (1960).

THE FACTS AS ADMINISTRATIVELY REPORTED, WHICH OUR OFFICE MUST ACCEPT AS CORRECT ABSENT EVIDENCE SUFFICIENT TO OVERCOME THE PRESUMPTION OF THEIR CORRECTNESS, INDICATE THAT THE DEPARTMENT OF THE INTERIOR MADE A REASONABLE EFFORT TO OBTAIN ADEQUATE COMPETITION ON THE READVERTISEMENT OF THE UNFINISHED WORK UNDER THE DEFAULTED CONTRACT. FURTHER, THE FACT THAT THE PRICE OFFERED BY THE ONLY ELIGIBLE BIDDER UNDER THE READVERTISEMENT IS BUT $63,260.50 MORE THAN THE GOVERNMENT'S REVISED ESTIMATE AND APPARENTLY NEARLY $40,000 LOWER THAN THE LATE BID BY DELTA SUPPORTS THE DEPARTMENT'S VIEW THAT THE PRICE IS REASONABLE, WHEREAS YOU HAVE SUBMITTED NO EVIDENCE SHOWING THAT A MORE ATTRACTIVE PRICE COULD BE REALIZED IF THE PROJECT WERE AGAIN DELAYED TO PERMIT ANOTHER SOLICITATION OF THE UNFINISHED PORTION. WHILE YOU NOW COMPLAIN THAT THE BID OPENING DATE WAS SUCH AS AUTOMATICALLY TO LESSEN COMPETITION, IT DOES NOT APPEAR THAT EITHER YOU OR ANY PROSPECTIVE BIDDER CALLED THE MATTER TO THE ATTENTION OF THE GOVERNMENT REPRESENTATIVES OR SUGGESTED A POSTPONEMENT. THERE IS NO INDICATION THAT THE MISSISSIPPI BID OPENING WAS KNOWN TO THE GOVERNMENT REPRESENTATIVES RESPONSIBLE FOR THIS PROCUREMENT EITHER WHEN THE INVITATION WAS ISSUED OR AT ANY TIME BEFORE OPENING, AND WE KNOW OF NO BASIS FOR CHARGING THEM WITH ANY LEGAL DUTY TO INVESTIGATE THE PROGRAMMING OF PROCUREMENTS OF STATE OR LOCAL HIGHWAY PROJECTS. IN THE CIRCUMSTANCES, IT IS OUR VIEW THAT THE DEPARTMENT HAS ACTED WITH PRUDENCE IN THE CONDUCT OF THE READVERTISEMENT, AND HAVING IN MIND THAT THE PROJECT HAS ALREADY BEEN UNDER WAY FOR NEARLY FOUR YEARS, WE SEE NO LEGAL BASIS FOR OBJECTION TO AN AWARD UNDER THE READVERTISEMENT, WHICH WOULD AVOID ANY FURTHER DELAY.