B-164676, MAR. 7, 1969

B-164676, MAR. 7, 1969

TO BREZINA CONSTRUCTION COMPANY, INCORPORATED:

REFERENCE IS MADE TO THE LETTERS OF JUNE 21 AND 24, 1968, JULY 3, 1968, AND JANUARY 23, 1969, IN CONNECTION WITH THE PROTEST BY BREZINA CONSTRUCTION COMPANY, INCORPORATED, AGAINST THE AWARD OF CONTRACT TO ANOTHER CONCERN FOR THE CONSTRUCTION OF THE TUNDUMA-IYAYI SECTION OF THE GREAT NORTH ROAD (GNR) WHICH IS TO BE PARTIALLY FINANCED BY AGENCY FOR INTERNATIONAL DEVELOPMENT (AID) LOAN NO. 698-H-005, FROM AID TO THE GOVERNMENT OF THE UNITED REPUBLIC OF TANZANIA (GURT).

AID HAS FURNISHED OUR OFFICE WITH THE FOLLOWING INFORMATION REGARDING THIS PROCUREMENT: ,EXPRESSIONS OF INTEREST IN THE WORK WERE SOLICITED. THE REQUESTS FOR EXPRESSIONS OF INTEREST APPEARED IN THE COMMERCE BUSINESS DAILY ON FEBRUARY 2, 1968 TO DETERMINE THE EXTENT OF INTEREST BY U.S. CONSTRUCTION FIRMS. THE DEADLINE FOR SUBMISSION OF PREQUALIFICATION QUESTIONNAIRES WAS FEBRUARY 21, 1968. FOURTEEN FIRMS RESPONDED AND COMPLETED PREQUALIFICATION QUESTIONNAIRES. IN MARCH * * * THE CONSULTANTS TO THE GURT -- AND THE GURT FOUND ALL FOURTEEN FIRMS TO BE QUALIFIED ON THE BASIS OF THE INFORMATION IN THE QUESTIONNAIRES. (1) ONE OF THE FIRMS WAS BREZINA. "A.I.D. WAS NOTIFIED OF THE PREQUALIFICATION LIST, BUT DID NOT INDICATE TO GURT EITHER APPROVAL OR DISAPPROVAL OF THE QUALIFICATIONS OF THE FIRMS LISTED AS A.I.D. INTENDED AT THAT TIME TO PASS ONLY UPON THE QUALIFICATIONS OF THE LOW BIDDER. THIS WILL BE DISCUSSED IN GREATER DETAIL, INFRA. ,THE GURT SUBSEQUENTLY INFORMED THE FIRMS ON THE LIST THAT IT CONSIDERED THEM TO BE QUALIFIED; HOWEVER, THE GURT DID NOT TELL THE FIRMS THAT A.I.D. HAD APPROVED THEIR QUALIFICATIONS, WHICH IT HAD NOT. "THE INVITATION FOR BIDS ("IFB") WAS SUBSEQUENTLY RELEASED TO BIDDERS ON APRIL 1, 1968. THE IFB INDICATED THAT ANY BID IN EXCESS OF THE EQUIVALENT OF $15 MILLION WOULD BE CONSIDERED UNRESPONSIVE. PURSUANT TO THE TERMS OF THE IFB, THE BIDS WERE OPENED PUBLICLY ON MAY 24, 1968. THREE FIRMS SUBMITTED BIDS, ALL OF WHICH WERE IN EXCESS OF $15,000,000. BREZINA DID NOT SUBMIT A BID, BUT DELIVERED A LETTER STATING THAT IT WAS INTERESTED IN THE CONTRACT BUT COULD NOT BID LESS THAN $15 MILLION. "HAVING FAILED TO RECEIVE A RESPONSIVE BID, THE GURT CONSULTED WITH A.I.D. AS TO THE ACTION THEN TO BE TAKEN. IT WAS AGREED THAT THE BEST COURSE WOULD BE FOR THE GURT TO ATTEMPT TO LET THE CONTRACT THROUGH A NEGOTIATED PROCUREMENT (TAB B). IN EARLY JUNE, A REQUEST FOR PROPOSALS ("RFP") WAS ISSUED BY THE GURT TO THE FIRMS ON ITS PREQUALIFIED LIST WITH PROPOSALS TO BE SUBMITTED BY JUNE 25, 1968. "A.I.D., WHICH, AS STATED, SUPRA, HAD PLANNED TO PASS UPON THE QUALIFICATION OF ONLY THE LOW BIDDER HAD THE CONTRACT BEEN LET THROUGH SEALED BIDS, DECIDED THAT, IN VIEW OF THE NATURE OF THE NEGOTIATION PROCESS, IT WOULD BE APPROPRIATE FOR IT TO PASS ON THE QUALIFICATIONS OF ALL FIRMS ON THE GURT LIST PRIOR TO THE INITIATION OF ANY DISCUSSIONS. THE GURT WAS SO ADVISED, AND THE PREQUALIFICATION QUESTIONNAIRES WERE TRANSMITTED TO A.I.D. IN WASHINGTON. AFTER REVIEWING THE QUESTIONNAIRES AND ADDITIONAL INFORMATION AVAILABLE TO IT CONCERNING THE FIRMS ON THE LIST, A.I.D. CONCLUDED THAT ALL BUT TWO FIRMS -- * * * AND BREZINA -- WERE QUALIFIED (TAB C). "BREZINA WAS HELD NOT QUALIFIED PRINCIPALLY BECAUSE OF LACK OF EXPERIENCE WITH ROAD PROJECTS OF THE SIZE INVOLVED HERE AND SECONDARILY BECAUSE OF LACK OF ADEQUATE FINANCING. THIS WILL BE DISCUSSED IN GREATER DETAIL, INFRA. "ON JUNE 17, 1968, A.I.D. INFORMED THE GURT THAT IT WOULD NOT CONSIDER A CONSTRUCTION CONTRACT WITH BREZINA TO BE ELIGIBLE FOR A.I.D. FINANCING, AND THIS INFORMATION WAS TRANSMITTED TO BREZINA (TAB D). THIS WAS EIGHT DAYS PRIOR TO JUNE 25, THE DATE BY WHICH PROPOSALS HAD TO BE SUBMITTED. "PROPOSALS WERE SUBSEQUENTLY SUBMITTED BY TWO OF THE FIRMS PREVIOUSLY QUALIFIED. (2) THE PROPOSALS WERE OPENED IN CLOSED PROCEEDINGS. THIS PROCEDURE IS THE SAME AS THAT PRESCRIBED IN THE FEDERAL PROCUREMENT REGULATIONS ("FPR"), THAT IN A NEGOTIATED PROCUREMENT THE COST AND PROFIT FIGURES OF COMPETING FIRMS SHALL NOT BE DISCLOSED. (3) SUBSEQUENTLY, THE CONTRACT WAS AWARDED TO THE NELLO L. TEER COMPANY.

"THE DISQUALIFICATION "THE CONTRACTOR'S PRE QUALIFICATION FORM SUBMITTED BY BREZINA IS ATTACHED (TAB E). A READING OF IT REVEALS, WHEN PLACED IN CONTEXT WITH OTHER INFORMATION IN A.I.D.'S POSSESSION, (4) THAT BREZINA DID NOT HAVE THE EXPERIENCE RECORD REQUIRED TO CONSTRUCT THE PROJECT. NOR DID IT HAVE ADEQUATE FINANCING FOR A CONTRACT IN EXCESS OF $15,000,000. "AS STATED SUPRA, WE ARE TALKING ABOUT A CONTRACT IN EXCESS OF $15,000,000. (5) THUS IT WAS IMPORTANT TO DETERMINE WHAT COMPARABLE EXPERIENCE BREZINA HAD TO UNDERTAKE A PROJECT OF THIS MAGNITUDE IN EAST AFRICA. "BREZINA'S PERFORMANCE RECORD FOR THE PAST 2 YEARS (PAGE 4 OF TAB E) REVEALS SIX PROJECTS FOR WHICH IT WAS AWARDED CONTRACTS. IT IS READILY APPARENT THAT FIVE OF THEM AFFORD NO BASIS FOR COMPARISON TO THE INSTANT PROJECT BEING ALL LESS THAN $3,000,000. ,BREZINA DOES LIST IN ITS SWORN QUALIFYING STATEMENT THAT IT COMPLETED THE CALABAR-IKOM ROAD PROJECT IN NIGERIA. IT IS FURTHER STATED THAT THE CONTRACT PRICE WAS $15,034,005.35, IT WAS COMPLETED ON TIME, NO STOP NOTICES WERE FILED AGAINST THE PROJECT, AND THE ENGINEER IN CHARGE OF THE PROJECT WAS MR. ELZIE M. MOORE, THE SAME MAN NOTED FURTHER BY BREZINA AS THE PERSON WHO WOULD BE THE PROJECT SUPERINTENDENT IF AWARDED THE GNR CONTRACT. "THE FACT OF THE MATTER IS THAT THE CALABAR-IKOM ROAD PROJECT WAS NOT COMPLETED. BECAUSE OF THE NIGERIAN CIVIL WAR, WORK WAS SUSPENDED BY THE CONTRACTOR WHEN THE PROJECT WAS UNDER 20 PERCENT COMPLETED. MOREOVER, BREZINA WAS NOT THE CONTRACTOR OF RECORD BUT ONLY A 20 PERCENT MEMBER OF THE JOINT VENTURE OF REYNOLDS- BROWN-BREZINA (AGAIN PUTTING BREZINA IN THE $3,000,000 RANGE OF OPERATION). ITS RESPONSIBILITY WAS FOR -CRUSHING THE STONE AGGREGATE AND ASSISTING IN THE PLACING OF THE CRUSHED STONE BASE COURSE- AND IT HAD HARDLY EVEN GOTTEN STARTED ON ITS PORTION OF THE WORK. "THIS FACTOR OF EXPERIENCE, OF COURSE, IS ALL CRUCIAL TO AN UNDERSTANDING OF WHY * * * (CONSULTING ENGINEERS) ORIGINALLY PREQUALIFIED BREZINA (IT SUBSEQUENTLY NOTIFIED BREZINA IT WAS NOT QUALIFIED - TAB F). * * * EXECUTIVE VICE PRESIDENT OF (CONSULTING ENGINEERS) HAS ADVISED A.I.D. (* * * CHIEF ENGINEER, OFFICE OF CAPITAL DEVELOPMENT AND FINANCE, BUREAU FOR AFRICA - BY PHONE ON JULY 3, 1968) THAT THE SWORN STATEMENT OF BREZINA'S EXPERIENCE ON THE CALABAR-IKOM ROAD IN NIGERIA WAS THE EXPERIENCE FACTOR WHICH HE USED TO SUPPORT THE PREQUALIFICATION OF BREZINA TO BID ON THE GNR AND THAT WITHOUT THAT STATED EXPERIENCE HE WOULD NOT HAVE PREQUALIFIED THE FIRM. FURTHER, MR. ELZIE MOORE WAS NOT IN CHARGE OF THE NIGERIA PROJECT BUT WAS NOTED IN OFFICIAL REPORTS AS ONE OF THE TWO GRADING SUPERVISORS ON THE PROJECT. * * * "BREZINA ALSO LISTED EQUIPMENT OWNED BY THE REYNOLDS-BROWN -BREZINA JOINT VENTURE, STORED FOR THE CALABAR-IKOM ROAD PROJECT, AS 100 PERCENT AVAILABLE FOR THE GNR. THIS COULD NOT HAVE BEEN CORRECT. AT THE TIME THE STATEMENT WAS MADE, FEBRUARY OF 1968, THE EQUIPMENT WAS LOCATED IN A MILITARILY DISPUTED AREA (NIGERIAN CIVIL WAR) TO WHICH THE CONSTRUCTION JOINT VENTURE DID NOT HAVE ACCESS. IT WAS ASSUMED AT THE TIME THAT MANY OF THE LARGER ITEMS OF EQUIPMENT HAD BEEN EITHER DAMAGED, DESTROYED OR CONFISCATED FOR MILITARY USE AND, INDEED, THIS WAS LATER CONFIRMED. THE JOINT VENTURE HAS SUBMITTED A CLAIM TO THE GOVERNMENT OF NIGERIA FOR $1.5 MILLION FOR THE MISSING EQUIPMENT. MOREOVER, THE JOINT VENTURE OF REYNOLDS-BROWN-BREZINA IS PRESENTLY PREPARING TO RESUME CONSTRUCTION OPERATIONS ON THAT PROJECT AND MOST OF THE EQUIPMENT STILL THERE WILL NOT BE AVAILABLE FOR OTHER PROJECTS FOR ABOUT TWO YEARS. "BY WAY OF FURTHER BACKGROUND ON THE CALABAR-IKOM ROAD PROJECT, THE ORIGINAL JOINT VENTURE OF REYNOLDS-BREZINA WAS NOT APPROVED BY A.I.D. TO BID ON IT BECAUSE IT LACKED SUITABLE HIGHWAY CONSTRUCTION EXPERIENCE. IT WAS ONLY WITH THE ADDITION OF BROWN ENGINEERING CO. THAT THE JOINT VENTURE OF REYNOLDS-BROWN-BREZINA WAS APPROVED AS QUALIFIED TO BUILD THE ROAD. LOOK AT THE -STATUS OF CONTRACTS ON HAND,- (PAGE 11 OF TAB E) ALSO FAILS TO REVEAL ANY ROADBUILDING PROJECTS (AND THAT IS WHAT WE ARE LOOKING FOR TO JUDGE PAST EXPERIENCE) OR RELATED EXPERIENCE ON PROJECTS APPROACHING THE MORE THAN $15,000,000 MAGNITUDE OF THE GNR. THE LARGEST LISTED IS THE NIGER RIVER BRIDGE, $2,299,940.70, A FAR CRY FROM THE SIZE OF THE GNR. BUT LET US EVEN LOOK AT THAT PROJECT, WHICH IS ALSO A.I.D. FINANCED (A.I.D. LOAN NO. 683-H-002). "IN JUNE OF 1966 BREZINA WAS APPROVED AS QUALIFIED TO BID FOR THIS PROJECT. (IN THE PREQUALIFICATION QUESTIONNAIRE (TAB G) IT IS NOTED THAT EVEN IN ITS HOME STATE OF SOUTH DAKOTA, BREZINA IS ONLY QUALIFIED TO BID ON HIGHWAY CONSTRUCTION PROJECTS, INCLUDING BRIDGES, UP TO $7,769,000.) IT WAS SUBSEQUENTLY AWARDED THE CONTRACT BUT WAS UNABLE TO OBTAIN THE REQUIRED PERFORMANCE BOND. BREZINA WAS THEN ALLOWED TO SUBSTITUTE A CLEAN LETTER OF CREDIT FOR A PERFORMANCE BOND WITH THE FIRST NATIONAL CITY BANK OF NEW YORK. A GREAT DEAL OF DIFFICULTY WAS ENCOUNTERED BY THIS ARRANGEMENT AND RESULTED IN THE DELAY OF THE PROJECT BY MANY MONTHS. IN FACT, BREZINA WAS ONLY GIVEN THE FORMAL ORDER TO PROCEED IN LATE JULY OF THIS YEAR. "ANOTHER PROJECT LISTED IS AN A.I.D. FINANCED CONTRACT FOR THE CONSTRUCTION OF THE CENTRAL VETERINARY LABORATORY, PURSUANT TO A LOAN AGREEMENT (A.I.D. LOAN NO. 688-H-003) BETWEEN THE GOVERNMENT OF THE REPUBLIC OF MALI (GOM) AND THE UNITED STATES OF AMERICA. A PERFORMANCE BOND IS REQUIRED UNDER THE TERMS OF THE CONTRACT AND WAS TO HAVE BEEN SUBMITTED TO THE GOM IN APRIL OF 1968. OF SEPTEMBER 24, 1968, IT HAD NOT BEEN SUBMITTED. AND THIS IS LESS THAN A $1.5 MILLION CONTRACT. "WITH THIS TYPE OF FINANCIAL DIFFICULTY ENCOUNTERED OVER $2.3 AND $1.5 MILLION PROJECTS COMPOUNDED BY ONLY A $400,000 LINE OF CREDIT AS EVIDENCED IN THE PRE-QUALIFICATION FORM, IT WAS CONCLUDED THAT BREZINA WAS NOT FINANCIALLY QUALIFIED TO UNDERTAKE THE GNR. WHEN QUERIED BY A.I.D. WHETHER OR NOT THE BANKERS TRUST COMPANY HAD AGREED TO PROVIDE A PERFORMANCE BOND FOR THE GNR, * * * (PRESIDENT, BREZINA CONSTRUCTION COMPANY) CONVEYED HIS BELIEF THAT A BANK PREPARED TO PUT UP A BID BOND ($1.7 MILLION) WOULD BE WILLING TO PUT UP A PERFORMANCE BOND (ABOUT $8,000,000). (6) THIS BELIEF ON THE PART OF * * * SURELY CANNOT BE HELD TO BE SYNONYMOUS, IN VIEW OF THE NIGER AND MALI EXPERIENCES, WITH AN AGREEMENT WITH THE BANK. "IT SHOULD BE NOTED AT THIS TIME THAT THE GNR IS ONE OF THE MOST IMPORTANT DEVELOPMENT PROJECTS A.I.D. IS FINANCING IN AFRICA (TAB H) AND DELAYS OF THE ABOVE TYPE (NIGER-MALI) COULD BE FATAL IN HAVING IT COMPLETED WITHIN THE PRESENT 30 MONTH ESTIMATED TIME PERIOD. IN SHORT, A DELAY IN THE GNR AS OCCURRED IN THE NIGER RIVER BRIDGE AND MALI CASES COULD PUSH FINAL CONSTRUCTION INTO THE RAINY SEASON AND POSSIBLY ADD ANOTHER YEAR TO THE PROJECT, THUS CAUSING ADDITIONAL EXPENSES AND DEPRIVING THE ECONOMIES OF BOTH ZAMBIA AND TANZANIA USE OF THE ROAD. "FURTHER SIGNIFICANT INFORMATION REVEALED FROM BREZINA'S PREQUALIFICATION QUESTIONNAIRE (TAB G) IN THE NIGER RIVER BRIDGE, STATED BRIEFLY, IS AS FOLLOWS:

A. BREZINA HAS PERFORMED ONLY A TOTAL OF $663,018.67 ON FOUR HIGHWAY PROJECTS SINCE JUNE OF 1961.

B. THE MAJORITY OF EXPERIENCE HAS BEEN IN BUILDING CONSTRUCTION, ALTHOUGH A RAILROAD BALLAST CRUSHING PROJECT OF $2,200,000 THAT IS RELATED TO HIGHWAY CONSTRUCTION WAS PERFORMED IN NIGERIA. ,A WORD MIGHT BE APPROPRIATE AT THIS TIME IN REFERENCE TO THE REPRESENTATION THAT BREZINA HAD BEEN FOUND QUALIFIED BY THE CONSULTING FIRM OF * * * TO BID ON A $7.5 MILLION AFRICAN ROAD PROJECT TO BE FINANCED BY A.I.D. THIS IS TRUE AS FAR AS IT GOES. "THE PROJECT IS THE LAKESHORE ROAD IN MALAWI, A.I.D. LOAN NO. 612-H-001. A.I.D., HOWEVER, DID NOT OFFICIALLY REVIEW NOR PASS ON THE QUALIFICATIONS OF ANY PROSPECTIVE BIDDERS, INCLUDING BREZINA. MOREOVER, AN EXAMINATION OF THE PERTINENT PREQUALIFICATION QUESTIONNAIRE AGAIN REVEALED THE INACCURATE STATEMENTS WITH RESPECT TO THE CALABAR-IKOM ROAD PROJECT (TAB I). A.I.D. WAS IN THE PROCESS OF ADVISING * * * OF THESE INACCURACIES, WHEN THE GOVERNMENT OF MALAWI DECIDED TO PROCEED ON THE BASIS OF -FORCE ACCOUNT CONSTRUCTION-, WISHING TO ASSUME RESPONSIBILITY FOR THE CONSTRUCTION OF THE PROJECT ITSELF, THUS OBVIATING THE NEED TO PURSUE A CONSTRUCTION CONTRACT WITH A U.S. FIRM. THEREFORE * * * DID NOT PROCEED FURTHER WITH THE BREZINA QUALIFICATION. IT IS CLEAR, HOWEVER, THAT * * * RELIED ON THE SWORN STATEMENTS CONTAINED IN THE PREQUALIFICATION FORM AND DID NOT GO BEHIND THEM AS DID A.I.D. IN FULFILLING ITS OBLIGATION AS REQUIRED IN SECTION 112 OF THE 1968 APPROPRIATION ACT, SUPRA. (81 STAT. 940). MOREOVER, IF * * * HAD KNOWN THE FACTS AS KNOWN BY A.I.D. WITH RESPECT TO THE CALABAR-IKOM ROAD PROJECT, BREZINA MAY VERY WELL HAVE BEEN DISQUALIFIED BY * * *. * * * FINALLY, EVEN HAD BREZINA BEEN FOUND QUALIFIED BY A.I.D. TO BID ON THE LAKESHORE ROAD AND EVEN PERFORMING ITS CONTRACT, THESE FACTS WOULD NOT HAVE BEEN CONTROLLING IN DETERMINING ITS QUALIFICATION FOR THE GNR. * * * "TO SUM UP THEN, FROM 1961 - TO DATE, THE CALABAR PROJECT PROPERLY ASIDE, OUR INFORMATION DOES NOT INDICATE THAT BREZINA HAS BEEN AWARDED ANY TYPE OF CONSTRUCTION CONTRACT OVER $3,000,000 AND ONLY $663,018.67 ON FOUR HIGHWAY PROJECTS. THIS IS CERTAINLY NOT THE EXPERIENCE OF A FIRM QUALIFIED TO UNDERTAKE OVER NINE THOUSAND MILES AWAY FROM HOME, A PROJECT OF THE MAGNITUDE OF THE GNR. "COUPLING BREZINA'S LACK OF EXPERIENCE WITH ROAD PROJECTS OF THE SIZE INVOLVED HERE WITH ITS LACK OF ADEQUATE FINANCING, AS DISCUSSED ABOVE (UNABLE TO OBTAIN A PERFORMANCE BOND ON TIME FOR EVEN $2.3 AND $1.4 MILLION FOR NIGER RIVER BRIDGE AND CENTRAL VETERINARY LABORATORY) A.I.D. MOST CERTAINLY MADE THE APPROPRIATE JUDGMENT IN REFUSING TO QUALIFY BREZINA. (7)

THE CONTENTIONS RAISED BY COUNSEL FOR BREZINA CAN BE SEPARATED INTO TWO CATEGORIES. THE FIRST SET OF CONTENTIONS RELATE TO WHETHER THERE WAS AN ADEQUATE FACTUAL BASIS FOR THE DETERMINATION THAT BREZINA WAS NOT A QUALIFIED CONTRACTOR. THE SECOND SET OF CONTENTIONS CONCERN WHETHER AID VIOLATED ITS OWN PROCEDURES IN THIS PROCUREMENT.

THE LETTER DATED JANUARY 23, 1969, MAKES THE FOLLOWING CONTENTIONS WITH RESPECT TO THE FACTUAL MATTERS IN AID'S REPORT:

(1) THE CONSULTING ENGINEERING FIRM WAS FULLY AWARE OF THE THEN CURRENT STATUS OF THE CALABAR-IKOM ROAD PROJECT AT THE TIME IT GAVE ITS PREQUALIFICATION APPROVAL TO BREZINA. IN THIS CONNECTION COUNSEL FOR BREZINA HAS FORWARDED A LETTER DATED MARCH 5, 1968, FROM THE CONSULTING ENGINEERS TO BREZINA REQUESTING CLARIFICATION IN REGARD TO WHETHER THE CALABAR-IKOM ROAD WAS ONLY 20 PERCENT COMPLETED.

(2) THAT BREZINA NEVER STATED THAT THE INDIVIDUAL LISTED ON PAGE 4 OF THE PREQUALIFICATION FORM WAS IN CHARGE OF THE CALABAR-IKOM ROAD BUT "THAT HE WAS BREZINA'S FIELD REPRESENTATIVE AND WAS IN CHARGE OF BREZINA'S PORTION OF THE PROJECT. THIS TOO WAS FULLY EXPLORED WITH * * * (CONSULTING ENGINEERS) ON MARCH 11, 1968 AND, IS CLEAR FROM A READING OF THE PREQUALIFICATION QUESTIONNAIRE.'

(3) WITH RESPECT TO THE AVAILABILITY OF EQUIPMENT THE LETTER OF JANUARY 23, 1969, STATES AS FOLLOWS: "* * * THE GREAT BULK OF SUCH EQUIPMENT WAS IMMEDIATELY AVAILABLE AT THE TIME THE PREQUALIFICATION QUESTIONNAIRE WAS FILED. BREZINA THEN BELIEVED THAT EVEN THAT PORTION WHICH WAS IN THE MILITARILY DISPUTED AREA OF NIGERIA, WOULD BE AVAILABLE BY THE TIME THE PROJECT IN TANZANIA WAS TO BEGIN. IN ANY CASE, THE MATTER IS HARDLY ONE OF CONSEQUENCE. EVEN IF SOME PORTION (INDEED ALL) OF THE NIGERIAN EQUIPMENT WAS NOT AVAILABLE, IT WOULD HAVE MADE NO DIFFERENCE TO BREZINA. THE TANZANIA PROJECT INCLUDED A $5,000,000 ADVANCE TO THE CONTRACTOR TO PURCHASE EQUIPMENT. THIS ADVANCE ELIMINATED ANY POSSIBLE SIGNIFICANCE OF THE AVAILABILITY OR UNAVAILABILITY OF THE CALABAR-IKOM EQUIPMENT.'

(4) COUNSEL FOR BREZINA ADVISES THAT BREZINA IS QUALIFIED TO BID ON $7.7 MILLION CONTRACTS IN APPROXIMATELY SIX STATES IN ADDITION TO SOUTH DAKOTA.

(5) THAT BREZINA WAS ABLE TO FURNISH A PERFORMANCE BOND ON THE NIGER RIVER BRIDGE PROJECT AND THAT EITHER AID OR THE GOVERNMENT OF NIGERIA, NOT BREZINA, DECIDED TO SUBSTITUTE A LETTER OF CREDIT FOR THE PERFORMANCE BOND.

(6) THAT AID'S REPORT IS INACCURATE WITH REGARD TO THE STATEMENT THAT A PERFORMANCE BOND WAS REQUIRED IN APRIL 1968 ON THE MALI PROJECT. IT IS URGED THAT THE PERFORMANCE BOND WAS NOT REQUIRED UNTIL NEGOTIATIONS ON THE PROJECT WERE COMPLETED IN LATE SEPTEMBER 1968 AND THAT BREZINA FURNISHED THE BOND WHEN IT WAS REQUESTED TO DO SO.

(7) THAT A PERFORMANCE BOND WAS NOT REQUIRED FOR THE INSTANT PROJECT AND THAT IF AID WANTED A PERFORMANCE BOND AT THE TIME THAT BIDS WERE SUBMITTED "IT SHOULD HAVE ASKED FOR SAME.' BREZINA URGES THAT ONCE A CONCERN RECEIVES A BID BOND, NO QUESTIONS SHOULD BE RAISED WHETHER THAT CONCERN WILL BE ABLE TO OBTAIN A PERFORMANCE BOND SINCE THE BANK THAT FURNISHED THE BID BOND WILL ALSO FURNISH A PERFORMANCE BOND TO PROTECT AGAINST POSSIBLE FORFEITURE OF THE BID BOND.

WITH RESPECT TO THE PROCEDURAL ASPECTS COUNSEL FOR BREZINA, IN THE LETTER OF JANUARY 23, ARGUES THAT "AID IS NOT EXPENDING FUNDS IN ACCORDANCE WITH THE APPLICABLE LAW -- I.E., THE REGULATIONS CONTAINED IN THE MANUAL CIRCULAR.' IT IS URGED THAT OUR OFFICE SHOULD THEREFORE "FORBID DISBURSEMENT OF FUNDS IN CONNECTION WITH THE RESULTING CONTRACT.'

COUNSEL FOR BREZINA URGES THAT AID'S "CAPITAL PROJECTS GUIDELINES" FOR "BORROWER PROCUREMENT OF GOODS AND SERVICES OF UNITED STATES SOURCE AND ORIGIN," HEREAFTER REFERRED TO AS GUIDELINES, ARE REGULATIONS WHICH HAVE BEEN PROMULGATED BY AID AND THEREFORE AID IS OBLIGATED TO ADHERE TO THESE RULES. THE CASE OF SERVICE V DULLES, 354 U.S. 363 (1957), HAS BEEN CITED BY COUNSEL FOR BREZINA FOR THE PROPOSITION THAT "REGULATIONS VALIDLY PRESCRIBED BY A GOVERNMENT ADMINISTRATOR ARE BINDING UPON HIM AS WELL AS THE CITIZEN.' THE CASES OF U.S. EX. RE. ACCARDI V SHAUGHNESSY, 347 U.S. 260 (1954); PACIFIC MOLASSES CO. V F.T.C., 356 F.2D 386 (5TH CIR. 1966) HAVE BEEN CITED FOR THE PROPOSITION THAT ONCE AN AGENCY EXERCISES ITS DISCRETION AND CREATES THE PROCEDURAL RULES UNDER WHICH IT DESIRES TO HAVE ITS ACTIONS JUDGED, IT DENIES ITSELF THE RIGHT TO VIOLATE THOSE RULES.

THE SPECIFIC LANGUAGE ON WHICH COUNSEL FOR BREZINA RELIES IN ADVANCING THE PROPOSITION THAT THE GUIDELINES ARE REGULATIONS WHICH HAVE THE FORCE AND EFFECT OF LAW AND THEREFORE PRECLUDE AID FROM UTILIZING ANY OTHER PROCEDURES REGARDLESS OF THE REASONABLENESS OF SUCH PROCEDURES IS CONTAINED IN MANUAL CIRCULAR NO. 1442.1 AND TRANSMITTAL LETTER NO. 13:140, WITH AN EFFECTIVE DATE OF NOVEMBER 3, 1966, AS FOLLOWS:

"EXCEPT AS PRIOR COMMITMENTS MAY PRECLUDE (INCLUDING THOSE MADE PURSUANT TO THE MAY GUIDELINES), COVERED BORROWER (AND GRANTEE) PROCEDURES AND CONTRACTS WHICH ARE NOT IN LINE WITH THESE GUIDELINES SHOULD NO LONGER BE APPROVED BY AID. REGIONAL ASSISTANT ADMINISTRATORS SHOULD CONSULT WITH THE CENTRAL OFFICE OR OFFICES APPROPRIATE TO THE MATTER AT ISSUE (E.G., DFPE, GC, MR, ENGR, CONT) BEFORE ISSUING ANY SUPPLEMENTARY GUIDANCE.' IS ALSO URGED IN THE LETTER OF JANUARY 23 IN CONNECTION WITH THIS ARGUMENT THAT "AID MANUAL ORDER 344.1 OF AUGUST 4, 1965, STATES THAT SUCH MANUAL ORDERS ARE THE -MEDIUM FOR ISSUING, REVISING AND DISSEMINATING ... REGULATIONS AND PROCEDURES FOR ... CONDUCTING ALL AID OPERATIONS-. TO DETERMINE, THEN, THE PROPRIETY OF AID'S ACTIONS IN THIS CASE, ONE MUST TURN TO THE AID REGULATIONS, I.E., THE AID MANUAL ORDERS.'

THE LETTER OF JANUARY 23 SETS FORTH FOUR INSTANCES WHERE AID PURPORTEDLY DID NOT FOLLOW THE PROCEDURES SET FORTH IN THE GUIDELINES AS FOLLOWS:

(1) IT IS URGED THAT THE PREQUALIFICATION PROCEDURES IN THE GUIDELINES REQUIRE THAT THE QUESTION OF A PROSPECTIVE OFFEROR'S QUALIFICATIONS BE RESOLVED PRIOR TO BID OPENING, WHEREAS IN THIS CASE BREZINA WAS NOT DISQUALIFIED UNTIL AFTER BID OPENING;

(2) THAT THE GUIDELINES DO NOT AUTHORIZE A NEGOTIATED PROCUREMENT OF CONSTRUCTION SERVICES AND MAJOR EQUIPMENT; THEREFORE AID WAS PRECLUDED FROM NEGOTIATING THIS PROCUREMENT EVEN IN THE CIRCUMSTANCES PRESENTED;

(3) IT IS URGED THAT A "SECRET" OPENING OF OFFERS WAS NOT PERMITTED BY EITHER THE INVITATION OR THE GUIDELINES;

(4) COUNSEL FOR BREZINA OBJECTS TO THE INCLUSION OF THE FEDERAL PROCUREMENT REGULATIONS RELATING TO THE CONDUCTING OF NEGOTIATED PROCUREMENTS IN IMPLEMENTATION NO. 1, DATED JUNE 20, 1968, FROM AID TO THE GURT. THE ARGUMENT HERE IS THE SAME AS THE ARGUMENT MADE ABOVE, THAT THE GUIDELINES DO NOT AUTHORIZE A NEGOTIATED PROCUREMENT IN THIS SET OF CIRCUMSTANCES; THEREFORE, THE FPR PROVISIONS RELATING TO THE PROCEDURES FOR NEGOTIATED PROCUREMENTS ALSO WOULD NOT BE AUTHORIZED PROCEDURES. PAGE 6 OF THE LETTER OF JANUARY 23 STATES:

"IT MAY BE THAT FOR OTHER TYPES OF PROCUREMENT ACTIVITY NOT INVOLVING LOAN FUNDS, THE AID MANUAL ORDERS PERMIT REFERENCE TO THE FEDERAL PROCUREMENT REGULATIONS. IN THE PRESENT CASE, HOWEVER, THE MANUAL CIRCULAR IS ITSELF COMPREHENSIVE AND MAKES NO REFERENCE TO THE FEDERAL PROCUREMENT REGULATIONS. IN FACT, WHEN THE MANUAL CIRCULAR STATES THAT IT -PREVAILS' OVER INCONSISTENT MATERIAL AND THAT PROCEDURES AND CONTRACTS' WHICH ARE -NOT IN LINE- WITH IT ARE NO LONGER TO BE APPROVED, IT IS PLAIN THAT NO REFERENCE TO THE FEDERAL PROCUREMENT REGULATIONS WOULD BE PERMISSIBLE, SINCE SUCH REGULATIONS ARE QUITE DIFFERENT FROM THE MANUAL CIRCULAR PROCEDURES.'

COUNSEL FOR BREZINA URGES THAT IF OUR OFFICE SHOULD FIND THAT AID ACTED IN AN ILLEGAL MANNER IN THIS PROCUREMENT, BREZINA SHOULD BE REIMBURSED ITS OUT-OF-POCKET EXPENSES PURSUANT TO THE AUTHORITY OF HEYER PRODUCTS COMPANY, INC. V UNITED STATES, 135 CT. CL. 63, 140 F.SUPP. 409 (1956).

WE HAVE REVIEWED THE CONTRACTOR'S PREQUALIFICATION FORM SUBMITTED BY BREZINA DATED FEBRUARY 12, 1968, FOR THIS PROJECT. ON PAGE 4 OF THE FORM PROSPECTIVE OFFERORS WERE REQUESTED TO LIST ALL CONTRACTS COMPLETED BY THE ORGANIZATION DURING THE PAST TWO YEARS. ONE OF THE CONTRACTS LISTED BY BREZINA IN THIS SECTION WAS THE CALABAR-IKOM ROAD CONTRACT IN NIGERIA. ANSWER TO THE QUESTION IN THE FORM,"WAS THE CONTRACT COMPLETED ON TIME? , BREZINA INSERTED "YES". BREZINA INDICATED THAT $15,034,005.35 WAS THE PRICE FOR THIS CONTRACT. BREZINA INSERTED THE NAME "ELZIE M. MOORE" IN THE SPACE FOR THE"NAME OF THE ENGINEER IN CHARGE". BREZINA ALSO INDICATED THAT NO PENALTIES WERE IMPOSED AND THAT NO LIENS, CLAIMS AND STOP NOTICES WERE FILED AGAINST THE JOB. FIVE OTHER CONTRACTS WERE ALSO LISTED BY BREZINA ON PAGE 4 WITH CONTRACT PRICES IN THE RANGE FROM $1,211,000 TO $2,955,700.

ON PAGE 6 OF THE PREQUALIFICATION FORM BREZINA INDICATED THAT "MR. ELZIE M. MOORE, AMERICAN" WOULD HAVE PERSONAL SUPERVISION OF THE WORK. ANSWER TO QUESTION 5 ON PAGE 6 OF THE FORM,"WHAT EQUIPMENT DO YOU OWN THAT IS AVAILABLE FOR THE PROPOSED WORK? " , BREZINA ANSWERED,"SEE ATTACHED THREE LISTINGS. THE EQUIPMENT OWNED BY REYNOLDS - BREZINA - BROWN JOINT VENTURE IS PRESENTLY LOCATED IN NIGERIA AND IS 100 PERCENT AVAILABLE FOR THIS PROJECT.' THE LISTS FURNISHED BY BREZINA GAVE THE DESCRIPTION AND NUMBERS OF IMPORTED JOINT VENTURE EQUIPMENT LOCATED IN AFRICA AND IT WAS INDICATED THAT WHILE BREZINA OWNED 20 PERCENT OF THE EQUIPMENT, THE EQUIPMENT WAS 100 PERCENT AVAILABLE TO BREZINA.

PAGE 11 OF THE FORM REQUESTED THAT PROSPECTIVE OFFERORS GIVE FULL INFORMATION IN REGARD TO THE STATUS OF CONTRACTS ON HAND INCLUDING CONTRACTS IN PROCESS OR AWARDED AND NOT YET BEGUN AND THOSE CONTRACTS WHERE A PROSPECTIVE OFFEROR WAS THE LOW BIDDER PENDING THE AWARD OF A FORMAL CONTRACT. WE HAVE NOT FOUND ANY INDICATION ON PAGE 11 OR ELSEWHERE ON THE FORM, THAT THE CALABAR-IKOM PROJECT WAS ONLY 20 PERCENT COMPLETED.

IF THIS WERE A PROCUREMENT BY A DEPARTMENT OR AGENCY OF THE UNITED STATES, AND OUR OFFICE WERE REVIEWING A PROTEST BY A PROSPECTIVE CONTRACTOR AGAINST A DETERMINATION OF NONRESPONSIBILITY, OUR STANDARD OF REVIEW WOULD BE TO DECIDE WHETHER THE DETERMINATION OF THE ADMINISTRATIVE OFFICE WAS REASONABLY SUPPORTED BY THE RECORD. THE FOLLOWING STATEMENTS FROM B-161098, APRIL 17, 1968, ARE ILLUSTRATIVE OF OUR FUNCTION IN REVIEWING AN ADMINISTRATIVE DETERMINATION RELATING TO A BIDDER'S NONRESPONSIBILITY:

"WE HAVE STATED THAT IN REVIEWING THE VALIDITY OF A CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY, THE DETERMINATION MUST BE JUDGED ON THE BASIS OF INFORMATION BEFORE HIM AT THE TIME IT WAS MADE. ALSO THAT A DETERMINATION OF A PROSPECTIVE CONTRACTOR'S ABILITY TO PERFORM IS OF NECESSITY A MATTER OF JUDGMENT AND WHILE SUCH DETERMINATION SHOULD BE BASED ON FACT AND SHOULD BE ARRIVED AT IN GOOD FAITH, IT MUST PROPERLY BE LEFT LARGELY TO THE SOUND ADMINISTRATIVE DISCRETION OF THE CONTRACTING OFFICER INVOLVED. SEE B-161977, JANUARY 22, 1968, 47 COMP. GEN. -----.'

IN VIEW OF THE PORTION OF THE RECORD WHICH IS UNDISPUTED, WE DO NOT FIND IT NECESSARY TO RESOLVE ALL OF BREZINA'S FACTUAL DISPUTES WITH AID'S REPORT SINCE OUR DECISION WOULD BE THE SAME EVEN IF THESE DISPUTES WERE RESOLVED IN BREZINA'S FAVOR. THE LETTER OF JANUARY 23, 1969, HAS BEEN BROUGHT TO AID'S ATTENTION.

A TELEGRAM DATED JUNE 18, 1968, FROM THE CONSULTING ENGINEERS TO BREZINA STATES AS FOLLOWS: ,WE ARE RELAYING FOLLOWING MESSAGE FROM THE PRINCIPAL SECRETARY MINISTRY OF COMMUNICATIONS, LABOUR AND WORKS, TANZANIA QUOTE A RE-REVIEW OF THE QUALIFICATIONS OF BREZINA CONSTRUCTION COMPANY INDICATES THAT THIS COMPANY IS CONSIDERED AS NOT ELIGIBLE FOR SUBMITTING TENDERS FOR THE U.S. AID FINANCED CONSTRUCTION PROJECT IN TANZANIA REFERRED TO AS THE GREAT NORTH ROAD TUNDUMA TO IYAYI. TENDERS SUBMITTED BY THIS COMPANY WILL THEREFORE NOT BE CONSIDERED FOR THIS PROJECT. END QUOTE.' THE ABOVE TELEGRAM INDICATES THAT BOTH THE CONSULTING ENGINEERS AND THE GURT CONCURRED IN THE DETERMINATION THAT BREZINA WAS NOT A QUALIFIED PROSPECTIVE CONTRACTOR. IT IS UNDISPUTED THAT THE CALABAR-IKOM ROAD WAS ONLY 20 PERCENT COMPLETED AND THAT BREZINA HAS NOT BY ITSELF COMPLETED THE CONSTRUCTION OF A PROJECT OF THE MAGNITUDE OF THE PRESENT PROJECT. THE RECORD DOES NOT ESTABLISH WHAT INFORMATION BREZINA MAY HAVE GIVEN TO THE CONSULTING ENGINEERS IN RESPONSE TO THE REQUEST FOR CLARIFICATION IN THE CONSULTING ENGINEER'S LETTER OF MARCH 5, 1968. PURSUANT TO OUR REVIEW IT DOES NOT SEEM THAT AID ACTED UNREASONABLY IN ITS DETERMINATION THAT BREZINA SHOULD NOT BE APPROVED AS A QUALIFIED CONTRACTOR FOR THIS PROCUREMENT. IN CONSIDERING THE ASSERTION BY COUNSEL FOR BREZINA THAT AID VIOLATED ITS OWN REGULATIONS IN THIS PROCUREMENT WE FEEL IT IS APPROPRIATE TO QUOTE THE PARAGRAPH APPEARING IMMEDIATELY ABOVE THE ONE CITED BY COUNSEL FOR BREZINA IN MANUAL CIRCULAR NO. 1442.1, NOVEMBER 3, 1966:

"EFFECTIVE IMMEDIATELY, BOTH THESE GUIDELINES SHOULD GUIDE RELEVANT AID DECISIONS. AS SUGGESTED IN THE EARLIER M.C. 1442.1, IT IS OUR HOPE THAT THESE GUIDELINES WILL PERMIT PERSONS TO WHOM CAPITAL PROJECT APPROVAL AND IMPLEMENTATION AUTHORITIES HAVE BEEN DELEGATED TO FUNCTION MORE EFFICIENTLY AND THAT THESE GUIDELINES WILL PERMIT FURTHER DELEGATIONS OF AUTHORITY. THESE GUIDELINES ESTABLISH THE FRAMEWORK FOR THE CONSIDERATION OF CONTRACTING AND RELATED IMPLEMENTATION PROCEDURES. LETTERS OF IMPLEMENTATION MAY INCORPORATE THESE GUIDELINES BY REFERENCE OR ERWISE.'

SECTION NO. 1, ENTITLED "SCOPE" OF THE GUIDELINES PROVIDES IN PERTINENT PART AS FOLLOWS: ,THESE AID CAPITAL PROJECTS GUIDELINES SET OUT, IN THE FORM OF GUIDELINES, INFORMATION AS TO CERTAIN RULES WHICH THE AGENCY FOR INTERNATIONAL DEVELOPMENT GENERALLY APPLIES TO CAPITAL PROJECTS WHICH AID FINANCES IN WHOLE OR IN PART BY DOLLAR LOANS PURSUANT TO THE AUTHORITY OF THE FOREIGN ASSISTANCE ACT OF 1961, AS AMENDED.

* * * * * * * "THESE GUIDELINES IN AND OF THEMSELVES DO NOT BIND BORROWERS, CONTRACTORS OR OTHERS; AND BORROWERS, CONTRACTORS AND OTHERS WILL CONTINUE TO CONSULT LOAN AGREEMENTS, LETTERS OF IMPLEMENTATION AND OTHER RELATED DOCUMENTS, OR CONTRACTS AND OTHER DOCUMENTS, AS THE CASE MAY BE,TO DETERMINE THE RULES, INCLUDING THOSE WITH RESPECT TO WHICH INFORMATION IS GIVEN IN THESE GUIDELINES, APPLICABLE TO A PARTICULAR PROJECT.'

THE ARGUMENT BY COUNSEL FOR BREZINA IS THAT AID CANNOT UTILIZE ANY PROCUREMENT PROCEDURES WHICH ARE NOT SPECIFICALLY SET FORTH IN THE GUIDELINES. THE PROVISIONS FROM MANUAL CIRCULAR NO. 1442.1, NOVEMBER 3, 1966, QUOTED ABOVE, STATE THAT THE GUIDELINES SHOULD BE A GUIDE TO AID'S DECISIONS; THAT IT IS HOPED THAT THE GUIDELINES WILL PERMIT PERSONS TO WHOM CAPITAL PROJECT APPROVAL AND IMPLEMENTATION AUTHORITIES HAVE BEEN DELEGATED TO FUNCTION MORE EFFICIENTLY AND THAT THE GUIDELINES WOULD PERMIT FURTHER DELEGATIONS OF AUTHORITY. THE PROVISION CITED BY COUNSEL FOR BREZINA STATES THAT PROCEDURES AND CONTRACTS WHICH ARE NOT IN LINE WITH THE GUIDELINES SHOULD NO LONGER BE FOLLOWED. THE PROVISIONS QUOTED ABOVE IN MANUAL CIRCULAR NO. 1442.1, NOVEMBER 3, 1966, AND IN THE GUIDELINES, FALL FAR SHORT OF ESTABLISHING IT TO HAVE BEEN INTENDED THAT THE GUIDELINES SHOULD ACT AS INFLEXIBLE RULES WHICH WOULD PRECLUDE AID FROM EXERCISING ITS JUDGMENT IN DETERMINING APPROPRIATE PROCUREMENT PROCEDURES. THE CASES CITED IN THE LETTER OF JANUARY 23, SERVICE V DULLES, ACCARDI V SHAUGHNESSY AND PACIFIC MOLASSES V F.T.C., SUPRA, ALL WERE CONCERNED WITH THE VIOLATION BY AN AGENCY OF MANDATORY REGULATIONS WHICH WERE PROMULGATED WITH THE INTENT OF SAFEGUARDING RIGHTS OF THE PARTIES COVERED BY THE REGULATIONS. IT SEEMS THAT THE GUIDELINES ARE INTENDED TO BE NO MORE THAN INTERNAL GUIDES TO AID ACTIONS. THESE CASES ARE THEREFORE DISTINGUISHABLE FROM THIS SITUATION.

THE GURT INITIALLY ISSUED AN INVITATION FOR BIDS FOR THIS PROCUREMENT. THIS PROCEDURE IS SPECIFICALLY AUTHORIZED BY SECTION 3 OF THE GUIDELINES. WHEN IT WAS FOUND THAT ALL OF THE BIDS EXCEEDED THE CEILING ESTABLISHED IN THE INVITATION, THE GURT, OF COURSE, COULD HAVE READVERTISED PERHAPS WITH SOME REVISION OF THE SPECIFICATIONS OR WITH A HIGHER CEILING. CF. B- 163723, MAY 13, 1968. IT WAS FELT, HOWEVER, THAT IT WOULD BE MORE FEASIBLE TO NEGOTIATE RATHER THAN READVERTISE AND IN IMPLEMENTATION LETTER NO. 1 FROM AID TO THE GURT IT WAS PROVIDED THAT THE PROCUREMENT WOULD BE NEGOTIATED IN ACCORDANCE WITH THE PROCEDURES SET FORTH IN FPR 1-3.804 AND 1.305-1. THESE PROCEDURES PROVIDE IN PART, THAT WRITTEN OR ORAL DISCUSSIONS SHALL BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WHO SUBMITTED PROPOSALS; THAT NO INDICATIONS SHALL BE GIVEN OF A PRICE WHICH MUST BE MET TO OBTAIN FURTHER CONSIDERATION; AND THAT NO OFFEROR SHALL BE ADVISED OF HIS RELATIVE STANDING WITH OTHER OFFERORS AS TO PRICE OR BE FURNISHED INFORMATION AS TO THE PRICES OFFERED BY OTHER OFFERORS.

SECTION 3.8 OF THE GUIDELINES ENTITLED "WAIVERS" PROVIDES THAT AID WILL, IN THE SITUATIONS AND TO THE EXTENT SPECIFIED IN SECTION 4.8, CONSIDER WAIVING THE COMPETITIVE BIDDING REQUIREMENTS OF SECTION 3. SUBPARAGRAPH 4.8.3 OF SECTION 4.8 PROVIDES THAT AID WILL CONSIDER WAIVING SOME OR ALL OF THE REQUIREMENTS OF SECTIONS 4.2 THROUGH 4.7 (EXCEPT 4.2.3, RELATING TO SOURCE AND ORIGIN STATEMENTS AND THE REASONABLE PRICE REQUIREMENT OF SECTION 4.7) IN SPECIAL SITUATIONS "IF AID HAS DETERMINED THAT IT WOULD BE IMPRACTICABLE OR INCONSISTENT WITH THE PURPOSE OF THE FOREIGN ASSISTANCE ACT TO REQUIRE ADHERENCE TO THE PROCEDURES PRESCRIBED IN SECTIONS 4.2 THROUGH 4.7 ABOVE.' THE PROVISIONS WHICH MAY BE WAIVED UNDER SECTION 4.8 INCLUDE AMONG OTHERS CERTAIN STATEMENTS TO BE INCLUDED IN THE INVITATION FOR BIDS AND PROCEDURES RELATING TO THE SOLICITATION OF BIDS AND THE HANDLING OF BIDS (HEREIN APPEARS THE PROVISION REGARDING "SECRET" OPENING OF BIDS). IT COULD WELL BE ARGUED THAT THIS PROCUREMENT CONSTITUTED A "SPECIAL SITUATION" UNDER SECTION 4.8 AND THEREFORE THE WAIVER OF THE VARIOUS ADVERTISING PROVISIONS WERE AUTHORIZED EVEN BY THE TERMS OF THE GUIDELINES.

IN THE CIRCUMSTANCES WE CANNOT SAY THAT THE DETERMINATION TO NEGOTIATE THIS PROCUREMENT WAS SO OUT OF LINE WITH THE INTENT OF THE GUIDELINES AS TO BE PRECLUDED BY THE GUIDELINES. CONTENTIONS NO. 2, 3, AND 4, IN THE LETTER OF JANUARY 23 ARE ANSWERED ACCORDINGLY.

WE HAVE THE FOLLOWING COMMENTS WITH RESPECT TO THE FIRST CONTENTION IN THE LETTER OF JANUARY 23, 1969. EVEN IF AID DID NOT OBJECT TO THE APPROVAL OF BREZINA PRIOR TO THE ISSUANCE OF THE INVITATION FOR BIDS, THIS DOES NOT MEAN THAT AID WAS PRECLUDED FROM REFUSING TO APPROVE BREZINA AT SOME LATER DATE. ON THIS POINT IT IS STATED IN SUBPARAGRAPH 3.3.4 OF SECTION 3.3 ON PAGE 14 OF THE GUIDELINES AS FOLLOWS:

"AID SHALL INDICATE IN WRITING IF IT HAS NO OBJECTION TO SUCH LIST IN WHICH EVENT IT SHALL BE DEEMED APPROVED AND BORROWER MAY THEREAFTER ISSUE THE INVITATION FOR BIDS TO THE FIRMS ON THE T.' ALL THIS SEEMS TO SAY IS THAT IF AID DOES NOT OBJECT TO A PARTICULAR PROSPECTIVE OFFEROR ON THE APPROVED LIST, THE BORROWER MAY ISSUE AN INVITATION TO SUCH PROSPECTIVE OFFEROR. WE HAVE FOUND NOTHING IN SECTION 3.3 OF THE GUIDELINES TO SPECIFICALLY SUPPORT THE ARGUMENT THAT UNDER THE PREQUALIFICATION PROCEDURES AID IS REQUIRED TO DECIDE ON THE QUALIFICATIONS OF A PROSPECTIVE OFFEROR PRIOR TO BID OPENING.

THE RULE IN THE HEYER PRODUCTS CASE, SUPRA, IS THAT BID PREPARATION COSTS MAY BE RECOVERABLE WHERE THE FACTS SHOW THAT A BIDDER WAS FRAUDULENTLY INDUCED TO BID WITH THE INTENT TO DISREGARD SUCH BID IN FAVOR OF ANOTHER. THERE IS NO INDICATION THAT AID ACTED IN OTHER THAN GOOD FAITH IN THE MANNER IN WHICH IT WAS DETERMINED THAT BREZINA WAS NOT A QUALIFIED PROSPECTIVE CONTRACTOR. CONSEQUENTLY, WE FIND THAT THE HEYER PRODUCTS CASE, SUPRA, IS DISTINGUISHABLE FROM THE INSTANT SITUATION. WE THEREFORE FIND IT UNNECESSARY TO DECIDE WHETHER THE HEYER PRODUCTS CASE, SUPRA, WOULD BE APPLICABLE AS AUTHORITY TO PERMIT RECOVERY BY A BIDDER OF BID PREPARATION COSTS IN A PROCUREMENT BY A FOREIGN GOVERNMENT UNDER AN AID LOAN EVEN IF THE SITUATION ENVISIONED BY THAT CASE WERE FOUND TO EXIST.