B-161681, AUG. 11, 1967

B-161681, AUG. 11, 1967

BIDS - FEDERAL AID, GRANTS, LOAN, ETC. FUNDS - BID ON PORTION OF WORK DECISION ON BEHALF OF DILLER PLANK, INC., AGAINST AWARD BY COATESVILLE HOSPITAL TO L. F. DRISCOLL CO. FOR CONSTRUCTION OF HOSPITAL USING HILL- BURTON ACT FUNDS. SECOND LOW BIDDER WHO FAILED TO INCLUDE COST OF ONE ITEM OF WORK IN PARTIAL BIDS AND WHO CONTENDS THAT PRICES ON PARTS WERE FOR INFORMATIONAL PURPOSES ONLY MUST HAVE PROTEST DENIED SINCE NOTHING IN INVITATION STATES THAT BIDS FOR PARTS WERE FOR INFORMATIONAL PURPOSED ONLY AND IT APPEARS THAT OWNER RESERVED RIGHT TO MAKE AWARD ON LESS THAN ENTIRE JOB. HEW REPORTS NO EVIDENCE OF FAILURE OF CONTRACT SPONSOR TO COMPLY SO THERE IS NO JUSTIFICATION FOR WITHHOLDING FEDERAL FUNDS.

TO WINDOLPH, BURKHOLDER AND HARTMAN, ATTORNEYS AT LAW:

REFERENCE IS MADE TO YOUR LETTER OF MAY 31, 1967, PROTESTING ON BEHALF OF DILLER PLANK, INC., THE AWARD OF A CONTRACT BY THE COATESVILLE HOSPITAL, COATESVILLE, PENNSYLVANIA, TO THE L. F. DRISCOLL COMPANY FOR CONSTRUCTION AT THE HOSPITAL.

THE COATESVILLE HOSPITAL, WHICH IS OWNED AND OPERATED BY A NON PROFIT ORGANIZATION, RECEIVED INITIAL APPROVAL FOR A GRANT OF FEDERAL ASSISTANCE FOR CONSTRUCTION IN FEBRUARY 1967 UNDER THE PROVISIONS OF TITLE VI OF THE PUBLIC HEALTH SERVICE ACT, AS AMENDED (POPULARLY KNOWN AS THE HILL-BURTON ACT), 42 U.S.C. 291, ET SEQ. WHILE THE ACT ITSELF CONTAINS NO LIMITATION WITH RESPECT TO THE MANNER OF AWARD OF CONTRACTS FOR PROJECTS GRANTED FEDERAL ASSISTANCE THEREUNDER, SECTION 53.128/C) OF THE PUBLIC HEALTH SERVICE REGULATIONS, 42 CFR 53.128/C), REQUIRES THAT THE APPLICANT FOR A CONSTRUCTION GRANT PROVIDE ASSURANCE:

"/C)THAT APPLICANT WILL PERFORM ACTUAL CONSTRUCTION WORK BY THE LUMP SUM (FIXED PRICE) CONTRACT METHOD; EMPLOY ADEQUATE METHODS OF OBTAINING COMPETITIVE BIDDING PRIOR TO AWARDING THE CONSTRUCTION CONTRACT, EITHER BY PUBLIC ADVERTISING OR CIRCULARIZING THREE OR MORE BIDDERS; AND AWARD THE CONTRACT TO THE RESPONSIBLE BIDDER SUBMITTING THE LOWEST ACCEPTABLE BID *

IN ACCORDANCE WITH THE SELECTIVE BIDDING TECHNIQUE PERMITTED BY THE ABOVE REGULATIONS, THE L. F. DRISCOLL COMPANY AND DILLER PLANK, INC. SUBMITTED BIDS. A THIRD BIDDER FAILED TO SUBMIT ITS BID WITHIN THE TIME SPECIFIED AND IT WAS RETURNED UNOPENED AS A LATE BID. THE BID PROPOSAL CALLED FOR A "BASE BID PRICE" FOR THE COMPLETE "GENERAL CONTRACT" INCLUDING DEMOLITION; IT ALSO CALLED FOR THE COST OF CONSTRUCTING THAT PORTION OF THE GENERAL CONTRACT (BASE BID PRICE) WHICH REPRESENTED WORK WHICH WOULD RECEIVE FEDERAL AID. IN ADDITION, BIDS WERE REQUESTED ON FOUR ALTERNATES, BUT NO AWARD WILL BE MADE ON THE ALTERNATES SO THEY ARE NOT INVOLVED IN THE PRESENT ISSUE. THE BID TABULATION, LESS THE BIDS FOR THE ALTERNATES, WAS AS FOLLOWS:

BASE BID PARTIAL BID

INCLUDING PARTIAL BID PRIVATE FUNDS

ELEVATOR FEDERAL AID WING B

--------- ----------- --------- --- L. F. DRISCOLL COMPANY

$1,559,000 $1,445,300 $113,700 DILLER PLANK, INC. 1,550,900 1,475,900 74,500

APPARENTLY THE DILLER PLANK BID FAILED TO INCLUDE THE COST OF THE ELEVATOR IN ITS "PARTIAL" BIDS, SINCE THE SUM OF THE PARTIAL BIDS IS $500 LESS THAN THE BASE BID.

THE SPONSOR OF THE PROJECT HAS ADVISED THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE THAT ONLY THE WORK WHICH IS TO RECEIVE FEDERAL AID IS TO BE PERFORMED AT THIS TIME AND THAT THE AWARD WILL THEREFORE BE MADE TO L. F. DRISCOLL COMPANY IN THE AMOUNT OF $1,445,300, THE LOW BID ON THAT PORTION OF THE WORK. IT IS FURTHER REPORTED THAT BECAUSE OF THE LIMITED AMOUNT OF FEDERAL FUNDS IN THE STATE ALLOTMENT THE FULL FEDERAL SHARE OF 33-1/3 PERCENT CANNOT BE GRANTED FOR THE CONSTRUCTION OF THE ENTIRE FACILITY, AND, ACCORDINGLY, THE FEDERAL PROJECT HAS BEEN REDUCED TO THAT PORTION OF THE BUILDING COSTING $1,338,000, THE FEDERAL SHAR (33-1/3 PERCENT) AMOUNTING TO $446,000.

THE CONSTRUCTION SPECIFICATIONS, INSOFAR AS PERTINENT, PROVIDE:

PAGE B-2, PROPOSAL FORM

"* * * IN SUBMITTING THE PROPOSAL, THE BLANK SPACES IN THE FORM MUST STATE THE PRICES (WRITTEN IN INK, IN WORDS AND NUMBERALS) FOR WHICH THE BIDDER PROPOSES TO DO EACH PART OF THE WORK CONTEMPLATED, AND THE TOTAL AMOUNT FOR ALL OF THE PARTS INCLUDED IN ANY OR ALL OF THE COMBINATION OF THE WORK.'

PAGE B-5, AWARD OF CONTRACT

"* * * THE OWNER RESERVES THE RIGHT TO REJECT ANY OR ALL PROPOSALS, OR ANY PARTS THEREOF, OR ITEMS THEREIN, AND TO WAIVE INFORMALITIES AS IT MAY DEEM BEST TO PROTECT THE INTEREST OF THE ER.'

DILLER PLANK APPARENTLY CONTENDS THAT THE PRICES ON THE PARTS OF THE BASE BID WERE FOR INFORMATIONAL PURPOSES ONLY AND SHOULD NOT HAVE BEEN REGARDED AS OFFERS TO PERFORM ONLY A PORTION OF THE WORK. HOWEVER, THERE IS NOTHING IN THE FOREGOING PROVISIONS WHICH STATES THAT THE BIDS FOR PARTS OF THE WORK WERE FOR INFORMATIONAL PURPOSES ONLY AND IT APPEARS THAT THE OWNER SPECIFICALLY HAD RESERVED THE RIGHT TO MAKE AN AWARD FOR LESS THAN THE WHOLE JOB.

IN ANY EVENT, THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE HAS ADVISED THAT THE AWARD OF THE CONTRACT BY THE SPONSOR HAS BEEN REVIEWED AND THERE HAS NOT BEEN FOUND SUCH A SUBSTANTIAL FAILURE TO COMPLY WITH THE REQUIRED ASSURANCES AS WOULD JUSTIFY DISAPPROVAL OF THE APPLICATION FOR A GRANT OR WITHHOLDING OF FEDERAL FUNDS FROM THE PROJECT. THE DEPARTMENT HAS REPORTED THAT THE SPONSOR HAS BEEN ADVISED ACCORDINGLY.

OUR OFFICE HAS HELD THAT THE WITHHOLDING OF CERTIFYING ACTION IS DISCRETIONARY WITH THE SURGEON GENERAL AND THAT SUCH ACTION IS NOT REQUIRED EVEN IF IT IS FOUND THAT THE REGULATIONS HAVE BEEN BREACHED. 151187, JULY 11, 1963, AND B-141932, MAY 2, 1960. SEE ALSO CLEMENT MARTIN, INC. V. DICK CORP., 97 F. SUPP. 961, 964.