B-165283, NOV. 22, 1968

B-165283, NOV. 22, 1968

TO PAUL AND GORDON:

FURTHER REFERENCE IS MADE TO YOUR PROTEST ON BEHALF OF CANON CONSTRUCTION CORPORATION AGAINST THE AWARD OF A CONTRACT TO R. G. WEBB AND COMPAC CONSTRUCTION COMPANY BY THE NAVAL FACILITIES ENGINEERING COMMAND, SAN DIEGO, CALIFORNIA, UNDER INVITATION FOR BIDS NO. N62473 67-C-3175.

THE SUBJECT INVITATION, FOR CONSTRUCTION OF FAMILY HOUSING AT THE NAVAL STATION, LONG BEACH, CALIFORNIA, WAS OPENED ON JULY 30, 1968. THE INVITATION FOR BIDS CONSISTS OF FIVE ITEMS, WITH ITEM 1 BEING FOR THE ENTIRE WORK AND EACH ITEM THEREAFTER DEDUCTING PROGRESSIVELY MORE WORK. THE BIDS RECEIVED ON THE TWO LOWEST BID ITEMS WERE:

BID ITEM 4 BID ITEM 5

CANON CONSTRUCTION CORP. $4,199,000 $4,023,700

R. G. WEBB AND COMPAC CONST. CO. $4,290,000 $4,230,000

GREYNALD CONST. CO., INC. $4,352,000 $4,308,000

STEED BROS. CONST. CO. $4,686,000 $4,536,000 SINCE ALL BIDS WERE IN EXCESS OF THE FUNDS AVAILABLE, ADDENDA WERE ISSUED WHEREBY ITEMS 6 AND 7 WERE ADDED REDUCING THE WORK UNDER ITEMS 4 AND 5, RESPECTIVELY, AND ESTABLISHING A BID OPENING DATE OF SEPTEMBER 17, 1968. THE FOLLOWING BIDS UNDER ITEMS 6 AND 7 WERE RECEIVED:

BID ITEM 6 BID ITEM 7

CANON CONSTRUCTION CORP. $4,099,000 $3,949,000

R. G. WEBB AND COMPAC CONST. CO. $4,040,000 $3,880,000

GREYNALD CONST. CO., INC. $4,040,000 $3,900,000

STEED BROS. CONST. CO. NO BID NO BID

ALTHOUGH CANON LODGED A PROTEST IMMEDIATELY AFTER BIDS WERE OPENED, AWARD OF ITEM 7 WAS MADE TO R. G. WEBB AND COMPAC CONSTRUCTION COMPANY SHORTLY THEREAFTER. THE DECISION TO MAKE AN IMMEDIATE AWARD WAS PROMPTED BY THE COST TO THE GOVERNMENT OF FURTHER DELAY IN MAKING AWARD. THE CONTRACT CALLS FOR THE CONSTRUCTION OF 230 UNITS IN AN AREA IN WHICH A CRITICAL HOUSING SHORTAGE EXISTS. THESE UNITS WILL BE USED TO HOUSE APPROXIMATELY 900 ENLISTED AND OFFICER PERSONNEL AND THEIR FAMILIES WHO ARE PRESENTLY IN OFF-BASE HOUSING. WITH AN AVERAGE MONTHLY HOUSING ALLOWANCE OF $130 PER FAMILY, THESE FAMILIES ARE PAYING APPROXIMATELY $30,000 PER MONTH IN RENT. THUS, ANY DELAY IN COMPLETION OF THE PROJECT BEYOND THE SCHEDULED TIME WOULD RESULT IN A SIGNIFICANT LOSS OF RENTAL INCOME TO THE GOVERNMENT.

YOU DISAGREE WITH THE NAVY'S POSITION THAT THE PROCEDURE FOLLOWED HERE WAS IN EFFECT A ,RE-BIDDING OF THE REQUIREMENTS" , AND STATE THAT IT WAS "IN FACT THE AMENDMENT OF AN INVITATION FOR BIDS AFTER THE BID OPENING" CONTRARY TO THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) AND DECISIONS OF OUR OFFICE. YOU CONTEND THAT EVEN ASSUMING THE PROCEDURE FOLLOWED AMOUNTED TO A CANCELLATION AND READVERTISEMENT, IT WAS CONTRARY TO ASPR 2- 404.1 AND CITED DECISIONS OF OUR OFFICE WHICH ADMONISH AGAINST SUCH ACTION EXCEPT FOR COMPELLING REASONS. IN THIS CONNECTION, YOU STATE THAT THE REGULATION AND OUR DECISIONS DO NOT RECOGNIZE A POSSIBLE MONETARY SAVINGS AS A COMPELLING REASON. ON THE OTHER HAND, YOU CONTEND THAT THE WEBB AND GREYNALD BIDS WERE NONRESPONSIVE TO THE ADDENDA OR, IN THE ALTERNATIVE, THE ADDENDA WERE "FATALLY AMBIGUOUS" BECAUSE THEY DID NOT PROPERLY INSTRUCT BIDDERS AS TO WHETHER TO REBID THE ENTIRE JOB OR MERELY REDUCE THEIR ORIGINAL BIDS BY THE AMOUNT OF THE NEW DEDUCTIVE ITEMS. WITH REGARD TO THE FORMER ARGUMENT, IT IS YOUR POSITION THAT THE ADDENDA SHOULD PROPERLY BE INTERPRETED AS REQUIRING THE BIDDERS TO REDUCE THEIR BID PRICES BY THE AMOUNT WHICH COULD BE ASCRIBED TO THE NEW DEDUCTIVE ITEMS. FURTHER, YOU CONTEND THAT WEBB AND GREYNALD DID NOT FOLLOW THIS PROCEDURE, AS EVIDENCED BY THE UNREALISTICALLY LARGE REDUCTIONS IN THEIR RESPECTIVE ORIGINAL BID PRICES. AS FURTHER EVIDENCE OF YOUR POSITION IN THIS REGARD, YOU CONTEND THAT WHEREAS THE REDUCTION UNDER ITEM 6 SHOULD HAVE BEEN LARGER THAN THAT UNDER ITEM 7, THE OPPOSITE IS TRUE WITH RESPECT TO THE WEBB AND GREYNALD BIDS. FINALLY, YOU CONTEND THAT SINCE THEIR BIDS UNDER ITEMS 6 AND 7 WERE "MERELY ATTEMPTS TO COUNTERBALANCE THEIR HIGH BIDS UNDER ITEMS 4 AND 5 OF THE ORIGINAL IFB, AND WERE EXCESSIVE WHEN COMPARED TO THE TRUE DEDUCTIVE VALUE OF THE WORK UNDER ITEMS 6 AND 7 OF THE DDENDA" , THE BIDS WERE UNBALANCED AND A VALID CONTRACT CANNOT BE AWARDED TO EITHER OF THEM. IN VIEW OF YOUR POSITION, YOU ARGUE THAT THE CONTRACT AWARDED TO WEBB AND COMPAC SHOULD BE CANCELLED AND AWARD MADE TO CANON, OR, IN THE ALTERNATIVE, ALL BIDS SHOULD BE REJECTED AND THE REQUIREMENT READVERTISED.

ALTHOUGH YOU HAVE CORRECTLY STATED OUR POSITION TO THE EFFECT THAT THE PRESERVATION OF THE COMPETITIVE BIDDING SYSTEM IS MORE BENEFICIAL TO THE GOVERNMENT FROM A LONG-RANGE STANDPOINT THAN THE PECUNIARY SAVINGS WHICH MIGHT BE REALIZED IN AN INDIVIDUAL CASE, THAT PRINCIPLE IS NOT APPLICABLE TO ISSUANCE OF THE ADDENDA IN THIS CASE. THE ADDENDA WERE ISSUED BECAUSE THE BIDS AS ORIGINALLY SUBMITTED EXCEEDED THE MONEY AVAILABLE FOR EXPENDITURE AND NOT FOR THE PURPOSE OF EFFECTING A MONEY SAVINGS. SINCE NO EMPLOYEE OF THE GOVERNMENT WOULD HAVE THE AUTHORITY TO OBLIGATE THE GOVERNMENT TO PAY FUNDS BEYOND THOSE AVAILABLE FOR EXPENDITURE, 43 COMP. GEN. 657, 660, THE LACK OF SUCH FUNDS WOULD BE A COMPELLING REASON JUSTIFYING CANCELLATION AND READVERTISEMENT. HOWEVER, THE INVITATION WAS NOT IN FACT CANCELLED AND, THEREFORE, THE QUESTION IS WHETHER THE PROCEDURE FOLLOWED WAS PROPER IN LIEU OF CANCELLATION AND READVERTISEMENT.

WE BELIEVE THIS QUESTION SHOULD BE ANSWERED IN THE AFFIRMATIVE, SINCE WE FAIL TO SEE HOW ANY OF THE BIDDERS WAS THEREBY PREJUDICED OR HOW THE RESULT WOULD HAVE BEEN DIFFERENT HAD THERE BEEN A CANCELLATION AND READVERTISEMENT. ASSUMING ANY READVERTISEMENT WOULD HAVE BEEN ON THE SAME TERMS, ALL BIDDERS ON THE ORIGINAL SOLICITATION WOULD HAVE BEEN BIDDING ON THE SAME BASIS AS THEY DID BY RESPONDING TO THE ADDENDA. THAT IS, ALL THE BIDDERS WERE AWARE OF EACH OTHERS BID PRICES AND WERE FREE TO SUBMIT A BONA FIDE PRICE FOR WHICH THEY WERE WILLING TO DO THE JOB. WHILE IT IS UNFORTUNATE THAT THE BIDDERS HAD IN GOOD FAITH SUBMITTED BIDS WHICH WERE EXPOSED, IT DOES NOT APPEAR THAT IT COULD HAVE BEEN AVOIDED OR THAT IT WOULD HAVE BEEN ANY LESS UNFORTUNATE HAD THERE BEEN A CANCELLATION AND READVERTISEMENT. ON THE OTHER HAND, CANCELLATION AND READVERTISEMENT WOULD HAVE BEEN CONTRARY TO THE GOVERNMENT'S BEST INTEREST SINCE THE DELAY IN AWARD OCCASIONED THEREBY WOULD HAVE RESULTED IN ADDITIONAL RENTAL PAYMENTS.

WE DO NOT AGREE THAT THE ONLY REASONABLE AND FAIR INTERPRETATION TO BE ASCRIBED TO THE INSTRUCTIONS FOR BIDDING ON ITEMS 6 AND 7 IS THAT ADVOCATED BY YOU. WE BELIEVE THE LANGUAGE CLEARLY STATES THAT THE BASIS FOR THE BID ON ITEMS 6 AND 7, RESPECTIVELY, SHALL BE THE ENTIRE WORK AS REQUIRED UNDER ITEMS 4 AND 5, RESPECTIVELY, EXCEPT THAT THE "SCOPE OF WORK" SHALL BE REDUCED AS PROVIDED IN THE ADDENDA. THIS DOES NOT, IN OUR VIEW, LIMIT THE BIDDERS TO ANY PARTICULAR METHOD IN COMPUTING THEIR BIDS. WE CANNOT, THEREFORE, AGREE WITH YOUR ARGUMENT THAT THE WEBB AND GREYNALD BIDS SHOULD BE CONSIDERED NONRESPONSIVE BECAUSE THE PRICES BID ON ITEMS 6 AND 7 DO NOT APPEAR TO HAVE BEEN COMPUTED AS YOU CONTEND THEY SHOULD HAVE BEEN. THE SAME RATIONALE IS APPLICABLE TO YOUR ARGUMENT THAT THEIR BIDS ARE UNBALANCED. WE HAVE CONSIDERED THE AUTHORITIES CONCERNING UNBALANCED BIDS CITED BY YOU AND DO NOT BELIEVE THEY ARE APPLICABLE TO THE INSTANT CASE.

ACCORDINGLY, WE FIND NO BASIS UPON WHICH OUR OFFICE MAY PROPERLY DISTURB THE AWARD MADE.