B-162726, FEB. 7, 1968

B-162726, FEB. 7, 1968

BIDDERS - RESPONSIBILITY - SMALL BUSINESS DECISION TO ALLIED-WEBB, A JOINT VENTURE, DENYING PROTEST AGAINST REJECTION OF BID FOR REPAIR OF GASEOUS HYDROGEN VESSELS AT MISSISSIPPI TEST FACILITY BY ARMY ENGINEERS. PROTESTANT A JOINT VENTURE WAS DETERMINED TO LACK QUALIFICATION AS SMALL BUSINESS CONCERN AND SUCH DETERMINATION WAS SUSTAINED BY SBA SIZE APPEALS BOARD. SINCE SUCH DETERMINATIONS ARE CONCLUSIVE ON CONTRACTING AGENCIES AND SUCH DETERMINATION WAS MADE IN ACCORDANCE WITH REGULATIONS THERE IS NO BASIS TO QUESTION DETERMINATION. UNDER AN INVITATION WHICH LIMITED THE RIGHT OF THE GOVERNMENT TO MAKE AN AWARD ON AN ITEM BASIS AN AWARD ON AN ITEM BASIS TO THE PROTESTANT WOULD NOT BE PROPER UNDER 10 U.S.C. 2305 (C).

TO ALLIED-WEBB, A JOINT VENTURE:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF OCTOBER 17, 1967, AND SUBSEQUENT COMMUNICATIONS OF OCTOBER 20 AND DECEMBER 19, 1967, PROTESTING AGAINST AN AWARD TO OTHER THAN YOUR FIRM UNDER INVITATION FOR BIDS NO. DACA01-68-B-9001, ISSUED BY THE UNITED STATES ARMY ENGINEER DISTRICT, MOBILE, ALABAMA, FOR THE REPAIR OF GASEOUS HYDROGEN VESSELS AT THE MISSISSIPPI TEST FACILITY.

THE THREE LOW BIDS RECEIVED UNDER THIS PROCUREMENT, A ONE HUNDRED PERCENT SMALL BUSINESS SET-ASIDE, AND THE GOVERNMENT ESTIMATE WERE AS FOLLOWS:

ALLIED-WEBB, A JOINT VENTURE$149,800

CARPENTER BROTHERS, INC.198,980

TERRY FEENEY, INC. 222,000

GOVERNMENT ESTIMATE198,437 CARPENTER BROTHERS AND TERRY FEENEY QUESTIONED THE SMALL BUSINESS STATUS OF THE LOW BIDDER AND THEIR PROTESTS IN ACCORDANCE WITH ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-703 (B) (1) (I) WERE SUBMITTED TO THE SMALL BUSINESS ADMINISTRATION (SBA) REGIONAL OFFICE AT JACKSON, MISSISSIPPI. THE SBA REGIONAL OFFICE ISSUED A DETERMINATION THAT THE JOINT VENTURE OF ALLIED-WEBB WAS NOT A SMALL BUSINESS CONCERN. THIS DETERMINATION WAS SUSTAINED BY THE SIZE APPEALS BOARD OF SBA, AND ON OCTOBER 10, 1967, THE ADMINISTRATOR, SBA, DENIED THAT APPEAL BY ADOPTING THE RECOMMENDED DECISION OF THE SIZE APPEALS BOARD. YOUR FIRM, THE JOINT VENTURE OF ALLIED-WEBB, PROTESTS THIS NEGATIVE DETERMINATION OF YOUR SMALL BUSINESS STATUS AND FURTHER CONTENDS THAT EVEN IF THE ABOVE DECISION BY SBA BE SUSTAINED BY OUR OFFICE THE SUBJECT PROCUREMENT SHOULD BE CANCELLED AND READVERTISED. THE TWO-FOLD BASIS FOR YOUR SECOND CONTENTION IS THE NONRESPONSIVENESS OF THE SECOND LOW BID DUE TO FAILURE OF THAT BIDDER TO INSERT A UNIT PRICE FOR ITEM 14, AND THE ASSERTION THAT THE THIRD BID WAS UNREASONABLE IN THAT THE AMOUNT EXCEEDED YOUR BID BY MORE THAN 50 PERCENT.

THE SBA DECISION THAT ALLIED-WEBB WAS NOT A SMALL BUSINESS CONCERN RESTS ON THE DETERMINATION THAT THE JOINT VENTURE WAS AFFILIATED WITH THE LARGE BUSINESS OF DEL E. WEBB CORPORATION. THE ABOVE DETERMINATION WAS BASED UPON SECTION 121.3-14 (C) (7) (III) (32 F.R. 9218) AND SECTION 121.3-2 (A) (32 F.R. 6175) OF THE SMALL BUSINESS SIZE STANDARDS REGULATIONS.

PURSUANT TO SECTIONS 3 AND 8 (B) (6) OF THE SMALL BUSINESS ACT OF 1958, 15 U.S.C. 632 AND 637 (B) (6), RESPECTIVELY, THE SBA PRESCRIBES SIZE STANDARDS FOR INDUSTRY AND DETERMINES WHICH ENTERPRISES QUALIFY UNDER THOSE STANDARDS AS SMALL BUSINESS CONCERNS. SUCH DETERMINATIONS ARE CONCLUSIVE BY LAW UPON PROCURING ACTIVITIES. 46 COMP. GEN. 102; 44 ID. 271, AND 41 ID. 649. IN VIEW THEREOF AND SINCE THE SBA DETERMINATION WAS MADE UNDER PRESCRIBED PROCEDURES AND IN ACCORDANCE WITH THE PUBLISHED SIZE STANDARD REGULATIONS, WE FIND NO BASIS TO QUESTION THE SBA SIZE DETERMINATION.

THE SECOND PART OF YOUR PROTEST INVOLVES THE FAILURE OF CARPENTER BROTHERS TO QUOTE A PRICE FOR ITEM 14. THAT ITEM WAS ON A LUMP-SUM BASIS FOR PAINTING THE VESSELS COVERED BY THIS PROCUREMENT. AFTER BID OPENING, CARPENTER BROTHERS INFORMED THE CONTRACTING OFFICER BY TELEGRAM THAT THE PRICE FOR ITEM 14 WAS INCLUDED IN ITS TOTAL BID.

THIS OFFICE HAS STATED THAT THE OMISSION OF A PRICE IN A BID FOR AN ITEM WHICH BIDDERS WERE ADVISED WOULD BE INCLUDED IN THE AWARDED CONTRACT CANNOT BE CONSIDERED A MINOR INFORMALITY WHICH MAY BE WAIVED BECAUSE IT GOES TO THE SUBSTANCE OF THE CONTRACT TO BE AWARDED. 41 COMP. GEN. 412, B -146329, AUGUST 28, 1961, AND B-141395, DECEMBER 19, 1959. PARAGRAPH 5 (B) OF STANDARD FORM 22, ENTITLED "INSTRUCTIONS TO BIDDERS" , WHICH WAS MADE A PART OF THE INVITATION, PROVIDES:

"/5) (B) THE BID FORM MAY PROVIDE FOR SUBMISSION OF A PRICE OR PRICES FOR ONE OR MORE ITEMS, WHICH MAY BE LUMP SUM BIDS, ALTERNATE PRICES, SCHEDULED ITEMS RESULTING IN A BID ON A UNIT OF CONSTRUCTION OR A COMBINATION THEREOF, ETC. WHERE THE BID FORM EXPLICITLY REQUIRES THAT THE BIDDER BID ON ALL ITEMS, FAILURE TO DO SO WILL DISQUALIFY THE BID. WHEN SUBMISSION OF A PRICE ON ALL ITEMS IS NOT REQUIRED, BIDDERS SHOULD INSERT THE WORDS - NO BID- IN THE SPACE PROVIDED FOR ANY ITEM ON WHICH NO PRICE IS SUBMITTED.' THIS INVITATION DID NOT CONTAIN ANY EXPLICIT REQUIREMENT THAT A FAILURE TO QUOTE PRICES ON ALL ITEMS WOULD RENDER A BID NONRESPONSIVE. HOWEVER, PARAGRAPH 4, STANDARD FORM 20 OF THE INVITATION FOR BIDS, PROVIDED: "4. GOVERNMENT'S PRIVILEGE IN MAKING AWARDS. THE GOVERNMENT FURTHER RESERVES THE RIGHT TO MAKE AWARD OF ANY OR ALL SCHEDULES OF ANY BID, UNLESS THE BIDDER QUALIFIED SUCH BID BY SPECIFIC LIMITATION; ALSO TO MAKE AWARD TO THE BIDDER WHOSE AGGREGATE BID ON ANY COMBINATION OF BID SCHEDULES IS LOW. FOR THE PURPOSE OF THIS INVITATION FOR BIDS, THE WORD - ITEM- AS USED IN PARAGRAPH 10 (C) OF STANDARD FORM 22 SHALL BE CONSIDERED TO MEAN SCHEDULE.' THIS LANGUAGE EXPRESSLY RESERVED TO THE GOVERNMENT THE RIGHT TO MAKE AWARD ON A SCHEDULE BASIS OR COMBINATION OF SCHEDULES. ALSO PARAGRAPH 10 (C) OF STANDARD FORM 22 WAS MODIFIED SO THAT THE LANGUAGE NO LONGER RESERVED TO THE GOVERNMENT THE RIGHT TO MAKE AWARD ON AN ITEM BASIS OR COMBINATION OF ITEMS. THE CLOSE RELATIONSHIP OF THE UNIT ITEMS OF THE SUBJECT MATTER OF THIS PROCUREMENT TOGETHER WITH THE INTENTIONAL USE OF THE WORD "SCHEDULE" IN PARAGRAPHS 4 AND 10 (C) OF STANDARD FORMS 20 AND 22, RESPECTIVELY, CLEARLY INDICATES THAT, WHEN AS HERE ONLY ONE BID SCHEDULE IS INVOLVED, AWARD WILL BE MADE FOR THE WHOLE SCHEDULE AND NOT INDIVIDUAL ITEMS OF THAT SCHEDULE. THIS MODIFICATION OF THE RIGHT TO MAKE AWARD BY ITEMS DISTINGUISHES THE INSTANT QUESTION FROM THAT IN OUR DECISION, 41 COMP. GEN. 721. IN THAT CASE THE GOVERNMENT RETAINED THE RIGHT TO MAKE AN AWARD ON THE ITEM BASIS UNDER STANDARD FORM 22.

THE GENERAL REQUIREMENT FOR THE FORMATION OF A CONTRACT IS THAT THE TERMS OF ACCEPTANCE BY THE OFFEREE BE MATERIALLY CONSISTENT WITH THE TERMS OF THE OFFER BY THE OFFEROR. A MATERIAL VARIANCE PRECLUDES A MEETING OF THE MINDS AND CONSTITUTES A COUNTER-OFFER WHICH MUST BE ACCEPTED BY THE ORIGINAL OFFEROR. HOWEVER, TO SECURE FOR THE GOVERNMENT THE BENEFITS OF COMPETITION AN ADDITIONAL REQUIREMENT IS IMPOSED IN GOVERNMENT CONTRACTS BY SECTION 2305 (C), TITLE 10, UNITED STATES CODE. THAT SECTION REQUIRES AWARD TO BE MADE TO THE LOW RESPONSIBLE BIDDER WHOSE BID CONFORMS TO THE INVITATION OR IN EFFECT IT REQUIRES ACCEPTANCE OF THE LOW OFFER CONFORMING TO THE INVITATION FOR OFFERS. THIS OFFICE HAS UNDERSTOOD THAT REQUIREMENT TO MEAN THAT THE CONTRACT TO BE AWARDED MUST BE THE CONTRACT SUBMITTED TO ALL BIDDERS. 38 COMP. GEN. 131. INASMUCH AS PARAGRAPH 4, STANDARD FORM 20 ELIMINATED THE RESERVATION IN PARAGRAPH 10 (C) OF STANDARD FORM 22 OF THE RIGHT TO MAKE AWARD ON AN ITEM BASIS, WE MUST CONCLUDE THAT AWARD TO CARPENTER BROTHERS ON AN ITEM BASIS WOULD BE INCONSISTENT WITH THE REQUIREMENTS OF 10 U.S.C. 2305 (C). ACCORDINGLY, THE BID BY CARPENTER BROTHERS MUST BE REJECTED AS UNRESPONSIVE, FOR ALTHOUGH A BID ON AN ITEM BASIS WAS NOT SPECIFICALLY PRECLUDED, AWARD ON SUCH A BASIS WAS PRECLUDED BY PARAGRAPH 4. FURTHER, IT IS WELL ESTABLISHED THAT AN UNRESPONSIVE BID CANNOT BE MADE RESPONSIVE BY CHANGING OR ADDING TO THE BID AFTER OPENING. SEE 38 COMP. GEN. 819.

IT IS ALSO YOUR CONTENTION THAT THE BID OF THE THIRD BIDDER, TERRY FEENEY, WAS UNREASONABLE AND SHOULD BE REJECTED IN THAT IT WAS IN EXCESS OF YOUR BID BY FIFTY PERCENT. THIS OFFICE HAS CONSISTENTLY RECOGNIZED THE DISCRETION OF THE PROCURING ACTIVITY TO REJECT BIDS AS UNREASONABLE AND NORMALLY SUCH ACTION IS NOT SUBJECT TO OUR REVIEW. SEE 39 COMP. GEN. 86.