B-162235, DEC. 5, 1967

B-162235, DEC. 5, 1967

BIDS - DEVIATIONS - PRICE MODIFICATION DECISION TO APACHE FLOORING CO. DENYING PROTEST THAT AWARD TO FREDERICK C. SCHEVEN FOR REPAIRING FLOORS AT FORT RUCKER, ALA. WAS IMPROPER. A DETERMINATION THAT A BID WAS LOW BASED ON PRICE REDUCTION MODIFICATIONS SUBMITTED IN PERCENTAGES RATHER THAN IN DOLLAR AMOUNTS AS REQUIRED BY INVITATION WAS PROPER. SINCE DOLLAR AMOUNT REQUIREMENT WAS DESIGNED TO PREVENT UNBALANCED BIDS AND SUCCESSFUL BIDDER'S INTERPRETATION WAS PERMISSIBLE BID WAS RESPONSIVE AND PROPERLY AWARDED DEPT. WILL NOT INCLUDE QUESTIONABLE PROVISION IN FUTURE INVITATIONS. FAILURE OF BIDDER TO SIGN A SF 23 PRIOR TO EXPIRATION OF WAGE RATE WAS NOT LEGALLY SIGNIFICANT.

TO APACHE FLOORING COMPANY:

REFERENCE IS MADE TO YOUR TELEGRAM OF AUGUST 9, 1967, AND SUBSEQUENT CORRESPONDENCE IN WHICH YOU PROTEST AN AWARD MADE TO FREDERICK C. SCHEVEN UNDER INVITATION FOR BIDS (IFB) DABC01-67-B-0081, ISSUED BY THE PURCHASING AND CONTRACTING OFFICE, FORT RUCKER, ALABAMA, ON APRIL 25, 1967, FOR THE REPAIRING AND REPLACING OF FLOOR COVERINGS IN VARIOUS BUILDINGS AT THE INSTALLATION. A NOTICE OF AWARD WAS MAILED TO MR. SCHEVEN ON JUNE 14, 1967, PURSUANT TO THE CONTRACTING OFFICER'S DETERMINATION THAT HIS BID WAS THE LOWEST SUBMITTED AFTER IT WAS ADJUSTED BY THE CONSIDERATION OF TWO PRICE MODIFICATIONS SENT BY TELEGRAM TO THE PURCHASING AND CONTRACTING OFFICE ON MAY 25 AND JUNE 5, 1967. THE MAY 25 MODIFICATION LISTED AN ITEMIZED, REVISED SCHEDULE OF ITEM BID PRICES; THE JUNE 5 SUBMISSION INSTRUCTED THE CONTRACTING OFFICER TO REDUCE "ALL BID ITEMS AN ADDITIONAL FIVE PERCENT.' BECAUSE OF YOUR PROTEST THE CONTRACTING OFFICER CONTACTED MR. SCHEVEN ON JUNE 19, 1967, IN AN UNSUCCESSFUL ATTEMPT TO RECALL THE NOTICE OF AWARD.

YOU CONTEND THAT THE FIVE PERCENT REDUCTION SHOULD NOT HAVE BEEN CONSIDERED IN VIEW OF THE REQUIREMENT LISTED IN NOTE 3 TO BIDDERS, QUOTED AS FOLLOWS:

"ANY CHANGES IN BID PRICE SUBMITTED BY ANY BIDDER AFTER HIS BID IS SUBMITTED AND BEFORE BIDS ARE OPENED SHALL BE STATED IN DOLLAR AMOUNT FOR EACH ITEM WHICH THE BIDDER DESIRES TO CHANGE. SUCH INCREASE STATED IN TERMS OF PERCENTAGE OF ITEM BID PRICE, OR PERCENTAGE OR AMOUNT OF TOTAL BID PRICE ONLY WILL NOT BE ACCEPTED.' FOCUSING ON THE PHRASE "ANY CHANGES" AS USED IN THE FIRST SENTENCE, YOU CONTEND THAT IT PROHIBITS THE CONSIDERATION OF PERCENTAGE REVISIONS OF ANY KIND AND THAT THE USE OF THE WORD "INCREASE" WITHOUT MENTIONING "DECREASE" IN THE SECOND SENTENCE WAS MERELY AN OMISSION. TO SUPPORT YOUR VIEW THAT THIS INTERPRETATION IS THE ONLY PERMISSIBLE ONE YOU CONTEND THAT NOTE 5 TO BIDDERS AND THE CERTIFICATE ON PAGE ONE OF THE BIDDING SCHEDULE, QUOTED BELOW, PREVENT THE CONSIDERATION OF ALL PERCENTAGE REVISIONS:

"5. THE GOVERNMENT FURTHER RESERVES THE RIGHT TO INCREASE THE SCOPE OF THE WORK BY UP TO 50 PERCENT, AND TO DECREASE THE SCOPE OF THE WORK BY UP TO 25 PERCENT OF THE MONETARY VALUE OF THE TOTAL BID PRICE. DECREASES OR INCREASES WILL BE MADE BY DECREASING BID ITEMS, ADDING BUILDINGS OR PARTS OF BUILDINGS OF SIMILAR CONSTRUCTION, AND ADJUSTING THE CORRESPONDING BID PRICES ACCORDINGLY.

"CERTIFICATE

"THE UNDERSIGNED HEREBY CERTIFIES THAT PRICES APPEARING HEREON INCLUDE AN APPROXIMATE APPORTIONMENT OF ALL ESTIMATED APPLICABLE COSTS, DIRECT OR INDIRECT, AS WELL AS OVERHEAD AND PROFIT.' REGARDING NOTE 5 TO BIDDERS YOU MAINTAIN A "BLANKET PERCENTAGE DECREASE FOR ALL BUILDINGS IS NOT REALISTIC" BECAUSE OF THE VARYING WORK REQUIREMENTS INVOLVED. WHETHER SUCH A DECREASE IS REALISTIC OR NOT IS A MATTER WITHIN THE JUDGMENT OF THE BIDDER AND NOT A FACTOR FOR OUR CONSIDERATION. CONCERNING THE CERTIFICATE YOU ALLEGE THAT PERCENTAGE BID CHANGES WOULD NOT ACCURATELY REFLECT A TRUE APPORTIONMENT OF COSTS AS REQUIRED. AS WE READ THE REQUIRED CERTIFICATE, IT IS INTENDED TO PRECLUDE UNBALANCED BIDS BY WHICH BIDDERS WOULD QUOTE EXCESSIVELY HIGH PRICES ON SOME ITEMS AND LOW PRICES ON OTHERS IN AN EFFORT TO OBTAIN HIGHER PROFITS IF THEY CORRECTLY GUESSED WHICH ITEMS WOULD BE INCREASED AND WHICH DECREASED. ASSUMING THAT THE INITIAL PRICES BID BY MR. SCHEVEN COMPLIED WITH THE REQUIREMENTS OF THE QUOTED CERTIFICATE, WE FAIL TO SEE HOW A DECREASE, WHETHER EXPRESSED IN A SPECIFIC DOLLAR AMOUNT OR A PERCENTAGE EQUIVALENT, WOULD RESULT IN NON COMPLIANCE.

SO FAR AS NOTE 3 IS CONCERNED, WE CANNOT ACCEPT YOUR INTERPRETATION AS THE ONLY PERMISSIBLE ONE. THE DEPARTMENT OF THE ARMY STATES THAT THE SUCCESSFUL CONTRACTOR INTERPRETED THE SECOND SENTENCE OF NOTE 3 AS MODIFYING THE FIRST; THEREFORE, HE CONCLUDED THAT ONLY MODIFICATIONS INCREASING BID PRICES HAD TO BE STATED IN DOLLAR AMOUNTS BUT THAT DECREASES COULD BE EFFECTED BY PERCENTAGE REVISIONS. THE DEPARTMENT ADMITS THE CLAUSE COULD BE INTERPRETED IN THE MANNER YOU SUGGEST, BUT MAINTAINS THE CONTRACTOR'S INTERPRETATION WAS REASONABLE UNDER A LITERAL READING OF THE PROVISION IN QUESTION--A VIEW IN WHICH WE CONCUR. EVEN IF WE WERE TO AGREE THAT YOUR INTERPRETATION OF THE CLAUSE WAS CONTROLLING, WE WOULD HAVE TO CONSIDER THE FAILURE TO COMPLY WITH IT AS A MINOR INFORMALITY WHICH COULD PROPERLY BE WAIVED PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2-405, SINCE IT DID NOT AFFECT THE PRICE, QUALITY, QUANTITY, OR DELIVERY OF THE REQUIRED SERVICES. THE PROVISION AFFECTS THE MODE OF EXPRESSING PRICE MODIFICATIONS AND NOT THE PRICES THEMSELVES, FOR WHETHER THE MODIFICATIONS ARE STATED IN SPECIFIC DOLLAR AMOUNTS OR THEIR PERCENTAGE EQUIVALENTS IS IMMATERIAL IN DETERMINING THE REVISED BIDS. THE DEPARTMENT ADVISES THAT THE PROVISION WAS INSERTED FOR THE BENEFIT OF THE GOVERNMENT IN PERMITTING EASIER COMPUTATION OF REVISED PRICES, AND NOT FOR THE PROTECTION OF INDIVIDUAL BIDDERS; CONSEQUENTLY, A BIDDER MAY NOT INSIST UPON STRICT ENFORCEMENT OF THE PROVISION. 40 COMP. GEN. 321. WE ARE ADVISED BY THE DEPARTMENT OF THE ARMY THAT BECAUSE OF ITS AMBIGUOUS MEANING, IT WILL BE DELETED IN FUTURE INVITATIONS, AND WE ARE INCLINED TO DOUBT THAT THERE WAS SUCH VALID JUSTIFICATION FOR ITS USE IN THIS INSTANCE AS TO REQUIRE LITERAL OBSERVANCE.

YOU ALSO CONTEND THAT NO AWARD WAS MADE UNDER THE SUBJECT INVITATION PRIOR TO THE EXPIRATION OF THE APPLICABLE WAGE DETERMINATION FOR THE PROCUREMENT ON JULY 19, 1967, CONSEQUENTLY, YOU REQUEST THAT THE INSTANT INVITATION SHOULD BE CANCELLED AND READVERTISED IN ACCORD WITH THE REASONING OF TWO OF OUR DECISIONS, I.E., 45 COMP. GEN. 325. B 161790 JULY 26, 1967. YOU APPARENTLY ASSUME THAT THE NOTICE OF AWARD MAILED TO MR. SCHEVEN ON JUNE 14, 1967, DID NOT CONSTITUTE AN EFFECTIVE AWARD FOR THE PURPOSES OF THE REGULATIONS ISSUED BY THE DEPARTMENT OF LABOR REGARDING THE USE OF WAGE DETERMINATIONS, QUOTED BELOW:"SEC. 5.4 USE AND EFFECTIVENESS OF WAGE DETERMINATIONS.

"/A) WAGE DETERMINATIONS INITIALLY ISSUED SHALL BE EFFECTIVE FOR 120 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. IF IT APPEARS THAT A WAGE DETERMINATION MAY EXPIRE BETWEEN BID OPENING AND AWARD, THE AGENCY SHOULD REQUEST A NEW WAGE DETERMINATION SUFFICIENTLY IN ADVANCE OF THE BID OPENING TO ASSURE RECEIPT PRIOR THERETO. HOWEVER, WHEN DUE TO UNAVOIDABLE CIRCUMSTANCES A DETERMINATION EXPIRES BEFORE AWARD AND AFTER BID OPENING, THE SOLICITOR UPON A WRITTEN FINDING TO THAT EFFECT BY THE HEAD OF THE FEDERAL AGENCY IN INDIVIDUAL CASES MAY EXTEND THE EXPIRATION DATE OF A DETERMINATION WHENEVER HE FINDS IT NECESSARY AND PROPER IN THE PUBLIC INTEREST TO PREVENT INJUSTICE OR UNDUE HARDSHIP OR TO AVOID SERIOUS IMPAIRMENT IN THE CONDUCT OF GOVERNMENT BUSINESS.' SEE 29 FED. REG. 100, JANUARY 4, 1964, AS AMENDED AT 29 FED. REG. 13463, SEPTEMBER 30, 1964.

"18-704.2 WAGE DETERMINATIONS.

"/A) IN GENERAL.

"/1) WAGE DETERMINATIONS REFLECTING THE PREVAILING WAGES, INCLUDING FRINGE BENEFITS, FOR LABORERS AND MECHANICS IN A PARTICULAR AREA ARE ISSUED BY THE SECRETARY OF LABOR. DETERMINATIONS ARE EFFECTIVE FOR 120 CALENDAR DAYS FROM THE DATE OF INITIAL ISSUE AND ARE VOID FOR INCORPORATION INTO CONTRACTS AWARDED AFTER THAT PERIOD.

"/2) WHEN IT APPEARS THAT A WAGE DETERMINATION MAY EXPIRE BEFORE AWARD, A NEW DETERMINATION SHOULD BE REQUESTED IN TIME TO ASSURE RECEIPT PRIOR TO THE BID OPENING. UPON RECEIPT, THE NEW DETERMINATION SHALL BE TREATED AS A SUPERSEDING DECISION IN ACCORDANCE WITH (G) BELOW, EXCEPT THAT THE EXPIRATION THEREOF SHALL BE CONTROLLED BY THE DATE THEREON AND NOT BY THE DATE OF THE DETERMINATION WHICH IT REPLACES.

"/3) WHEN, DUE TO UNAVOIDABLE CIRCUMSTANCES, A WAGE DETERMINATION EXPIRES AFTER BID OPENING BUT BEFORE AWARD, THE SECRETARY OR HIS DESIGNEE, AT A LEVEL NO LOWER THAN THE HEAD OF A PROCURING ACTIVITY, MAY, UPON FINDING THAT AN EXTENSION IS IN THE PUBLIC INTEREST TO PREVENT INJUSTICE, UNDUE HARDSHIP, OR SERIOUS IMPAIRMENT OF THE CONDUCT OF GOVERNMENT BUSINESS, SUBMIT A WRITTEN REQUEST TO THE SOLICITOR OF LABOR FOR AN EXTENSION OF THE EXPIRATION DATE.' SECTION 18-704.2 OF THE ARMED SERVICES PROCUREMENT REGULATION. WE NOTE THAT THE WORD "AWARD" IS NOT DEFINED ABOVE; HOWEVER, YOU MAINTAIN THAT AN EFFECTIVE AWARD COULD NOT HAVE BEEN CONSUMMATED UNTIL A FORMAL WRITTEN CONTRACT WAS SIGNED BY BOTH PARTIES IN VIEW OF THE FOLLOWING PROVISION OF THE INVITATION: "THE UNDERSIGNED AGREES THAT, UPON WRITTEN ACCEPTANCE OF THIS BID, MAILED OR OTHERWISE FURNISHED WITHIN CALENDAR DAYS (60 CALENDAR DAYS UNLESS A DIFFERENT PERIOD BE INSERTED BY THE BIDDER) AFTER THE DATE OF OPENING OF BIDS, HE WILL WITHIN 15 CALENDAR DAYS (UNLESS A LONGER PERIOD IS ALLOWED) AFTER RECEIPT OF THE PRESCRIBED FORMS, EXECUTE STANDARD FORM 23, CONSTRUCTION CONTRACT, AND GIVE PERFORMANCE AND PAYMENT BONDS ON GOVERNMENT STANDARD FORMS WITH GOOD AND SUFFICIENT SURETY.'

WHETHER A BINDING CONTRACT EXISTS DEPENDS GENERALLY UPON A VALID OFFER AND ACCEPTANCE; THE EXECUTION OF A FORMAL CONTRACT IS NOT NECESSARY IN THE ABSENCE OF AN INTENTION BY THE PARTIES THAT NO OBLIGATION SHOULD ARISE PENDING SUCH EXECUTION. 26 COMP. GEN. 365. B 125548, JULY 8, 1957. MUST THEREFORE MAINTAIN THAT A BINDING CONTRACT WAS EFFECTED UPON MAILING THE NOTICE OF AWARD TO MR. SCHEVEN UNLESS HE OR THE GOVERNMENT INTENDED THAT NO OBLIGATION WOULD ARISE UNTIL SIGNING OF THE FORMAL CONTRACT. ASCERTAIN MR. SCHEVEN'S INTENTION IN THIS MATTER WE BELIEVE THE FOLLOWING PROVISION OF THE INVITATION IS PERTINENT:

"IF THE SUCCESSFUL BIDDER, UPON ACCEPTANCE OF HIS BID BY THE GOVERNMENT WITHIN THE PERIOD SPECIFIED THEREIN FOR ACCEPTANCE (SIXTY DAYS IF NO PERIOD IS SPECIFIED) FAILS TO EXECUTE SUCH FURTHER CONTRACTUAL DOCUMENTS, IF ANY, AND GIVE SUCH BOND/S) AS MAY BE REQUIRED BY THE TERMS OF THE BID AS ACCEPTED WITHIN THE TIME SPECIFIED (TEN DAYS IF NO PERIOD IS SPECIFIED) AFTER 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 OFFSETTING SUCH DIFFERENCE.' BY THIS PROVISION EACH BIDDER AGREED THAT IF HIS BID WAS ACCEPTED A CONTRACT WOULD ARISE; THAT IF HE DID NOT EXECUTE "SUCH FURTHER CONTRACTUAL DOCUMENTS" AS WOULD BE REQUIRED, I.E., STANDARD FORM (SF) 23, CONSTRUCTION CONTRACT, HIS CONTRACT WOULD BE TERMINATED FOR DEFAULT AND HE WOULD BE LIABLE FOR DAMAGES. CLEARLY, BY SIGNING THE INVITATION WHICH CONTAINED THIS PROVISION, MR. SCHEVEN INTENDED THAT A BINDING OBLIGATION WOULD ARISE UPON THE GOVERNMENT'S ACCEPTANCE OF HIS BID AND THAT THE SIGNING OF SF23 WOULD BE A FORMALITY. THE NOTICE OF AWARD SENT TO MR. SCHEVEN ON JUNE 14, 1967, QUOTED BELOW, CONTROLLED THE GOVERNMENT'S INTENT WHEN IT ACCEPTED HIS BID:

"YOUR BID SUBMITTED IN RESPONSE TO INVITATION NO. DABC01-67-B-0081, OPENING 6 JUNE 1967, HAS BEEN ACCEPTED AND YOU HAVE BEEN AWARDED CONTRACT FOR *SEE BELOW AT FORT RUCKER, ALABAMA; COMPLETE FOR THE SUM OF $22,665.05.' THE LANGUAGE OF THE ACCEPTANCE CLEARLY AND UNEQUIVOCALLY ACCEPTED AN OFFER; THE WORDS,"YOU HAVE BEEN AWARDED CONTRACT," PERMIT NO OTHER INTERPRETATION. 35 COMP. GEN. 272. CONSEQUENTLY, A BINDING CONTRACT WAS CONSUMMATED FOR THE PURPOSES OF THE REGULATIONS PREVIOUSLY CITED BY MAILING THE NOTICE OF AWARD TO MR. SCHEVEN ON JUNE 14, 1967; THEREFORE, THE FAILURE TO EXECUTE SF23 PRIOR TO THE EXPIRATION OF THE WAGE RATE ON JULY 19, 1967, WAS NOT LEGALLY SIGNIFICANT. SEE UNITED STATES V. PURCELL ENVELOPE CO., 249 U.S. 313; UNITED STATES V. CONTI, 119 F.2D 652. WE REGARD THE CASES YOU HAVE CITED TO US IN SUPPORT OF YOUR ARGUMENT AS FACTUALLY DISTINGUISHABLE FROM THE SITUATION HERE, SINCE IN THOSE CASES A NOTICE OF AWARD HAD NOT BEEN MAILED TO THE PROSPECTIVE CONTRACTOR PRIOR TO THE EXPIRATION OF THE APPLICABLE WAGE RATE.

YOU ALSO MENTION THAT THE CONTRACTING OFFICER UNSUCCESSFULLY ATTEMPTED TO RECALL THE NOTICE OF AWARD MAILED TO MR. SCHEVEN; THEREFORE, YOU ASSUME SUCH ACTION CONSTITUTED A TERMINATION OF THE CONTRACT. WE CANNOT CONSIDER YOUR CONCLUSION JUSTIFIED SINCE THE PROCEDURES OUTLINED IN SPECIAL PROVISION NO. 12, TERMINATION FOR CONVENIENCE OF THE GOVERNMENT, WERE NOT OBSERVED; NEITHER MAY SUCH ACTION BE CONSTRUED TO BE AN IMPLIED TERMINATION BECAUSE MR. SCHEVEN DID NOT AGREE TO A RESCISSION OF THE AWARD.

CONSIDERING THESE FACTORS WE CANNOT AVOID THE CONCLUSION THAT THE BID OF MR. SCHEVEN, AS MODIFIED PRIOR TO BID OPENING, WAS RESPONSIVE TO THE MATERIAL REQUIREMENTS OF THE INVITATION, AND THAT THE NOTICE OF AWARD CREATED A VALID AND BINDING CONTRACT WHICH WE HAVE NO AUTHORITY TO DISTURB.