B-169942, JUL. 27, 1970

B-169942, JUL. 27, 1970

BID PROTEST -- ADDENDUM ACKNOWLEDGMENT DECISION TO CHAIRMAN, ATOMIC ENERGY COMMISSION CONCERNING PROTEST OF NORGE ASSOCIATES, INC., AND LOVISA CONSTRUCTION CO., INC., AGAINST PROPOSED AWARD OF CONTRACT FOR CONSTRUCTION OF EXPERIMENTAL FACILITY AT BROOKHAVEN NATIONAL LABORATORY WHICH IS OPERATED BY INDEPENDENT CONTRACTOR. LOW BIDDER WHO FAILED TO ACKNOWLEDGE RECEIPT OF ADDENDUM CONTAINING WAGE DETERMINATION WAS PROPERLY DETERMINED TO HAVE SUBMITTED A NONRESPONSIVE BID. FAILURE OF SECOND LOW BIDDER TO FURNISH INFORMATION CONCERNING HIS ORGANIZATION AND PERSONNEL, WHICH INFORMATION WAS TO BE USED FOR ACCOUNTING PURPOSES ONLY, MAY HAVE SUCH DEFECT WAIVED AND BID CONSIDERED RESPONSIVE.

TO DR. SEABORG:

THIS IS IN REFERENCE TO THE LETTER OF JUNE 22, 1970, FROM THE DIRECTOR, DIVISION OF CONTRACTS, ATOMIC ENERGY COMMISSION (AEC), AND THE LETTER OF JULY 17, 1970, WITH ATTACHMENTS, FROM THE ACTING DIRECTOR, FORWARDING TO OUR OFFICE, THE REPORTS ON THE PROTESTS BY THE TWO LOW BIDDERS AGAINST THE PROPOSED AWARD OF A CONTRACT FOR THE CONSTRUCTION OF THE NORTH EXPERIMENTAL FACILITY FOR A.G.S. CONVERSION PROJECT FOR BROOKHAVEN NATIONAL LABORATORY.

THE BROOKHAVEN NATIONAL LABORATORY, UPTON, LONG ISLAND, NEW YORK, IS OPERATED BY ASSOCIATED UNIVERSITIES, INCORPORATED (AUI), FOR THE AEC PURSUANT TO CONTRACT NO. AT (30-2)-GEN-16. THE SECTION RELATING TO SUBCONTRACTS IN THIS CONTRACT IS ARTICLE XIX - "SUBCONTRACTS AND OTHER CONTRACTUAL COMMITMENTS." THIS SECTION REQUIRES THAT FOR CERTAIN SUBCONTRACTS OR MODIFICATIONS THEREOF, THE PRIME CONTRACTOR SHALL OBTAIN PRIOR WRITTEN APPROVAL FROM AEC.

COMPETITIVE BIDS WERE REQUESTED BY AUI FOR THE "GENERAL CONSTRUCTION OF THE NORTH EXPERIMENTAL FACILITY FOR AGS CONVERSION PROJECT, BROOKHAVEN NATIONAL LABORATORY, ASSOCIATED UNIVERSITIES, INCORPORATED, UPTON, NEW YORK." SPACES WERE PROVIDED ON PAGE P-1 OF THE SOLICITATION FOR BIDDERS TO INSERT PRICES FOR A BASE BID PLUS TEN ALTERNATES.

BIDS WERE OPENED AS SCHEDULED AT 3:00 P.M., ON MAY 20, 1970, AND FIVE BIDS WERE RECEIVED. FOLLOWING THE BID OPENING A MEETING WAS HELD AT BROOKHAVEN AND IT WAS DETERMINED THAT OF THE TEN ALTERNATES SOLICITED, ALTERNATES NOS. 1, 3, 4, 8 AND 9 SHOULD BE INCLUDED IN THE CONTRACT. THE BASIS OF THE ALTERNATES SELECTED, THE BID FROM NORGE ASSOCIATES, INCORPORATED (NORGE), WAS LOW AT $1,133,000 AND THE BID FROM THE LOVISA CONSTRUCTION COMPANY, INCORPORATED (LOVISA), AT $1,150,238 WAS SECOND LOW. WE ARE ADVISED THAT AN AWARD WILL NOT BE MADE UNTIL WE HAVE RENDERED OUR DECISION ON THE MATTER.

ADDENDUM NO. 1 TO THE INVITATION WAS ISSUED ON MAY 11, 1970. THE ADDENDUM STATED THAT BIDDERS SHOULD ACKNOWLEDGE RECEIPT OF THIS ADDENDUM ON THEIR PROPOSAL FORM. ITEM NO. 3 OF ADDENDUM NO. 1 STATED THAT THE TWO MODIFICATIONS TO THE DEPARTMENT OF LABOR'S WAGE RATES ATTACHED TO THE ADDENDUM DATED APRIL 6, 1970, AND APRIL 17, 1970, WERE MADE A PORTION OF THE SPECIFICATIONS.

ARTICLE 9 (A) ON PAGE GC-6, OF THE GENERAL CONDITIONS OF THE SOLICITATION PROVIDED THAT:

"(A) IN ACCORDANCE WITH THE 'DAVIS-BACON ACT' CLAUSE OF THE CONTRACT, THE MINIMUM WAGES TO BE PAID LABORERS AND MECHANICS ON THIS PROJECT, AS DETERMINED BY THE SECRETARY OF LABOR TO BE PREVAILING FOR THE CORRESPONDING CLASSES OF LABORERS AND MECHANICS EMPLOYED ON SIMILAR PROJECTS IN THE PERTINENT LOCALITY ARE LISTED UNDER SECTION 1B OF THE SPECIFICATIONS. *** "

IT SEEMS THAT AUI IS AN INDEPENDENT CONTRACTOR AND NOT A PURCHASING AGENT OF THE UNITED STATES. IN VIEW OF THIS STATUS WE HAVE RECOGNIZED THAT THE CONTRACTING PRACTICES AND PROCEDURES EMPLOYED BY PRIME CONTRACTORS OF THE UNITED STATES IN THE AWARD OF SUBCONTRACTS ARE GENERALLY NOT SUBJECT TO THE STATUTORY AND REGULATORY REQUIREMENTS WHICH WOULD GOVERN DIRECT PROCUREMENT BY THE UNITED STATES. SEE B 166532, APRIL 7, 1970, 49 COMP. GEN. --, AND CASES CITED THEREIN. AUI'S STATUS MUST BE CONSIDERED IN LIGHT OF THE PROVISIONS OF THE CONTRACT AND IN THIS REGARD ARTICLE XIX OF AUI'S CONTRACT WITH AEC REQUIRES GOVERNMENT APPROVAL PRIOR TO AUI'S AWARD OF A CONTRACT OF THE MAGNITUDE INVOLVED IN THIS PROCUREMENT. ATOMIC ENERGY COMMISSION PROCUREMENT REGULATIONS (AECPR) 9-59.003, ENTITLED "POLICIES FOR COST TYPE CONTRACTOR PROCUREMENT" PUBLISHED IN VOLUME 34 OF THE FEDERAL REGISTER PAGE 15237, SEPTEMBER 27, 1969, NUMBER 186 (PARTII), PROVIDES IN SUBPARAGRAPH (B)(IV) THAT ONE OF THE BASIC STEPS IN THE COMPETITIVE BID METHOD OF PROCUREMENT IS THE MAKING OF AN AWARD TO THE PROSPECTIVE CONTRACTOR WHOSE BID OR QUOTATION, CONFORMING TO THE INVITATION OR REQUEST, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED.

THE FOLLOWING STATEMENTS REGARDING THE VIEWS OF THIS OFFICE ON APPROVAL DETERMINATIONS BY ADMINISTRATIVE OFFICIALS AS SET FORTH IN B 166532, APRIL 7, 1970, 49 COMP. GEN. --, ARE ALSO APPLICABLE TO THIS CASE:

"WE HAVE EXPRESSED THE VIEW THAT APPROVAL SHOULD NOT BE GRANTED IF THE AWARD WOULD BE PREJUDICIAL TO THE INTERESTS OF THE UNITED STATES, PARTICULARLY SINCE THE COST OF THE PROCUREMENT WILL ULTIMATELY BE BORNE BY THE UNITED STATES. 37 COMP. GEN. 315 (1957); 36 ID. 311 (1956). SUCH DETERMINATION WILL NOT BE QUESTIONED BY OUR OFFICE IN THE ABSENCE OF ILLEGALITY OR A SHOWING THAT A PROPOSED AWARD IS DEFINITELY AGAINST THE INTERESTS OF THE UNITED STATES, 37 COMP. GEN., SUPRA, AT PAGE 318.

"THE QUESTION OF WHETHER SUBCONTRACT APPROVAL WOULD BE PREJUDICIAL TO THE INTERESTS OF THE UNITED STATES IS ONE THAT MUST BE RESOLVED BY THE RESPONSIBLE CONTRACTING OFFICIALS OF THE GOVERNMENT AFTER A THOROUGH CONSIDERATION OF THE PARTICULAR FACTS AND CIRCUMSTANCES OF EACH PROCUREMENT. 46 COMP. GEN. 142 (1966). GENERALLY, WE BELIEVE THAT THE FRAME OF REFERENCE GUIDING SUCH DETERMINATION SHOULD BE THE FEDERAL NORM THAT IS EMBODIED IN THE PROCUREMENT STATUTES AND IMPLEMENTING REGULATIONS. CF. ASPR 23-202. NEVERTHELESS, IT IS EVIDENT FROM THE EXISTENCE OF PERMISSIBLE VARIATIONS IN PRIME CONTRACTING PRACTICES AND PROCEDURES THAT EVERY DETAIL OF THE FEDERAL NORM IS NOT FOR APPLICATION. (THIS IS NOT TO SAY, HOWEVER, THAT WHERE, AS A RESULT OF GOVERNMENT INTERVENTION, THE PRIME CONTRACTOR'S PROCUREMENT PRACTICES AND PROCEDURES MIRROR FEDERAL PROCUREMENT PROCEDURES, THE FEDERAL NORM SHOULD NOT BE APPLIED (CF. 36 COMP. GEN., SUPRA), OR, FOR THAT MATTER, THAT THIS NORM SHOULD NOT BE ADOPTED AND APPLIED WHEREVER FEASIBLE AND PRACTICABLE UNDER THE CIRCUMSTANCES AND CONDITIONS OF THE PRIME CONTRACT.)"

THE SUPPLEMENTAL REPORT FROM AEC DATED JULY 17, 1970, STATES THAT THE LOW BIDDER, NORGE, DID NOT, IN ITS BID SUBMISSION, ACKNOWLEDGE RECEIPT OF ADDENDUM NO. 1, MAY 11, 1970, DESCRIBED ABOVE. WE ARE ADVISED THAT DURING A MEETING AT BROOKHAVEN ON JUNE 3, 1970, NORGE WAS ORALLY ADVISED OF THE FAILURE TO ACKNOWLEDGE RECEIPT OF THE ADDENDUM AND BY LETTER DATED JUNE 4, 1970, NORGE ACKNOWLEDGED RECEIPT OF ADDENDUM NO. 1. AEC ADVISED BROOKHAVEN ON JUNE 29, 1970, THAT IT WOULD BE UNABLE TO APPROVE AWARD OF A CONTRACT TO NORGE BECAUSE OF ITS FAILURE TO ACKNOWLEDGE ADDENDUM NO. 1 IN A TIMELY AND APPROPRIATE MANNER. THIS RESULTED IN THE PROTEST TO OUR OFFICE FROM NORGE'S ATTORNEY.

WE HAVE HELD THAT THE FAILURE TO ACKNOWLEDGE AN AMENDMENT SETTING FORTH WAGE RATES CANNOT BE CONSIDERED AS A MINOR INFORMALITY AND REQUIRES REJECTION OF THE BID AS NONRESPONSIVE. SEE B-160257, DECEMBER 15, 1966, AND B-164437, JUNE 26, 1968. SINCE NORGE FAILED TO ACKNOWLEDGE ADDENDUM NO. 1, WHICH SET FORTH THE DEPARTMENT OF LABOR'S WAGE RATES, WE AGREE THAT NORGE'S BID SHOULD BE CONSIDERED AS BEING NONRESPONSIVE; THEREFORE, WE FIND NO BASIS TO OBJECT TO AEC'S DETERMINATION THAT IT WOULD BE UNABLE TO APPROVE AN AWARD TO NORGE.

THE LETTER FROM COUNSEL FOR NORGE DATED JULY 1, 1970, ARGUES THAT THE BID FROM LOVISA SHOULD BE REJECTED SINCE THIS BID DID NOT FURNISH INFORMATION ON ITS PROPOSED ORGANIZATION AND PERSONNEL AND ALSO THIS BID DID NOT FURNISH CERTAIN INFORMATION WHICH WAS TO BE USED FOR ACCOUNTING PURPOSES ONLY.

PARAGRAPH 17 ON PAGE 1A-5 OF THE "SPECIAL CONDITIONS OF THE SPECIFICATIONS" PROVIDES AS FOLLOWS:

"17. CONTRACTOR'S ORGANIZATION. THE REQUIREMENTS OF ARTICLE 26 OF THE GENERAL CONDITIONS, ARE HEREBY MODIFIED TO INCLUDE THE FOLLOWING: 'THE CONTRACTOR SHALL AT ALL TIMES MAINTAIN ON THE JOB SITE A WIDELY EXPERIENCED GENERAL SUPERINTENDENT AND OTHERS TO FORM A STAFF ACCEPTABLE TO THE OWNERS AND ENGINEER. THIS STAFF SHALL INCLUDE AN EXPERIENCED CONCRETE SUPERVISOR WHO HAS THE ABILITY TO INSURE RAPID AND EFFICIENT COMPLETION OF THE CONCRETE WORK, AND EXPERIENCED CONSTRUCTION SURVEYOR FOR LAYOUT WORK, AT LEAST TWO GENERAL AREA FOREMEN, AND ONE ELECTRICAL AND ONE MECHANICAL FOREMEN. THE CONTRACTOR SHALL FURNISH WITH HIS BID PROPOSAL, INFORMATION ON HIS PROPOSED ORGANIZATION AND PERSONNEL RESUMES TO BE ASSIGNED TO THE PROJECT."

THE INFORMATION REQUESTED BY THE ABOVE PARAGRAPH RELATES TO THE PERFORMANCE CAPABILITY OF THE CONTRACTOR AND TO THE DETERMINATION OF HIS RESPONSIBILITY. THE FAILURE TO FURNISH SUCH INFORMATION IS NOT CONSIDERED A MATTER OF SUBSTANCE; THEREFORE, THIS DEFECT WOULD NOT RENDER LOVISA'S BID NONRESPONSIVE. CF. B-166580, JUNE 3, 1969.

A REVIEW OF NORGE'S BID AND LOVISA'S BID INDICATES THAT NORGE'S BID DOES NOT INCLUDE THE BREAKDOWN OF THE BASE BID PRICE TO BE USED FOR ACCOUNTING PURPOSES ONLY AND THAT LOVISA'S BID DOES INCLUDE SUCH A BREAKDOWN. THE CONTENTION IN THE LETTER OF JULY 1 FROM NORGE'S ATTORNEY ON THIS POINT APPEARS TO BE IN ERROR.