B-173446, DEC 10, 1971

B-173446, DEC 10, 1971

BID PROTEST - PRIOR KNOWLEDGE OF PROTOTYPE COSTS BY A BIDDER DECISION DENYING PROTEST OF DOUGLAS CONSTRUCTION COMPANY, INC., AGAINST AWARD OF A CONTRACT BY THE LOS ANGELES REGIONAL OFFICE OF THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT TO SUBSIDIZED HOUSING COMPANY FOR 451 TURNKEY HOUSING UNITS. CONCERNING PROTESTANT'S ALLEGATION THAT SUBSIDIZED HOUSING HAD KNOWLEDGE OF THE NEW PROTOTYPE COSTS, IT IS REPORTED BY THE PROCURING AGENCY THAT INFORMATION KNOWN TO THEM WAS PUBLIC AND OF LITTLE VALUE BECAUSE SO MUCH REMAINED TO BE DONE IN THE WAY OF INTERNAL ANALYSIS AND INTERPRETATION. UPON THIS, NO BASIS FOR QUESTIONING THE ADMINISTRATIVE DETERMINATION EXISTS.

TO DOUGLAS CONSTRUCTION COMPANY, INCORPORATED:

YOUR PROTEST OF THE ALLEGED ACTION OF THE LOS ANGELES REGIONAL OFFICE OF THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT IN SELECTING THE SUBSIDIZED HOUSING COMPANY TO CONSTRUCT 451 TURNKEY HOUSING UNITS FOR THE ALL INDIAN PUEBLO HOUSING AUTHORITY, ALBUQUERQUE, NEW MEXICO, WAS FORWARDED FOR OUR CONSIDERATION.

YOU STATE THAT YOU BID THIS PROJECT ON THE BASIS OF A SOLICITATION WHICH STIPULATED THAT THE DEVELOPER MUST HAVE A NEW MEXICO CONTRACTOR'S LICENSE; THAT IT BE CAPABLE OF FINANCING THE ENTIRE PROJECT; AND THAT THE LOCAL HOUSING AUTHORITY HAD THE RIGHT TO SELECT THE DEVELOPER CONSIDERED CAPABLE OF SERVING THE BEST INTERESTS OF THE PROJECT. YOU FURTHER STATE THAT YOU MET ALL BID REQUIREMENTS; THAT YOUR PROPOSAL WAS ACCEPTED BY THE LOCAL (ALL INDIAN PUEBLO) HOUSING AUTHORITY; THAT YOU ARE A LOCAL BUSINESS CONCERN EMPLOYING 100 PERCENT NEW MEXICO PERSONNEL; AND THAT ALL MATERIAL SUPPLIERS AND SUBCONTRACTORS ARE NEW MEXICO FIRMS.

YOU ALLEGE THAT SUBSIDIZED HOUSING COMPANY, THE FIRM RECOMMENDED BY THE LOS ANGELES REGIONAL AUTHORITY, IS AN OUT-OF-STATE COMPANY AND DOES NOT POSSESS A NEW MEXICO CONTRACTOR'S LICENSE. IT IS FURTHER ALLEGED THAT THE OUT-OF-STATE COMPANY FURNISHED NO EVIDENCE OF ITS FINANCIAL RESPONSIBILITY OR HAD EVER PREVIOUSLY UNDERTAKEN A PROJECT OF THIS SIZE.

IN ITS LETTER OF JUNE 7, 1971, THE LOCAL HOUSING AUTHORITY RECOMMENDED DOUGLAS AS CONTRACTOR FOR THE PROJECT, AND REQUESTED THE CONCURRENCE AND APPROVAL OF THE REGIONAL OFFICE. BY LETTER DATED JUNE 14, 1971, THE REGIONAL OFFICE REFUSED CONCURRENCE PRINCIPALLY BECAUSE AS A RESULT OF A MANDATE FROM CONGRESS NEW LIMITATIONS HAD BEEN SET ON DEVELOPMENT COSTS. SUBSIDIZED HOUSING WAS THE ONLY PROPOSER MEETING THE NEW (PROTOTYPE) COSTS SET FOR THE AREA UNDER CONSIDERATION. DOUGLAS WAS ADVISED THAT ITS PROPOSAL COULD BE BROUGHT WITHIN THE LIMITS ONLY BY ELIMINATING MANY ITEMS THAT COMPRISE THE UNIT AND SUBSTANTIALLY REDUCE THE QUALITY OF THE HOUSING.

HOUSING AND URBAN DEVELOPMENT HAS ADVISED US THAT THE FACTS IN THE MATTER ARE ESSENTIALLY AS STATED IN THE ABOVE-MENTIONED EXCHANGE OF LETTERS. FOLLOWING THE NONCONCURRENCE ON THE PROPOSED AWARD TO DOUGLAS, THE LOCAL HOUSING AUTHORITY HAD TENTATIVELY SELECTED THE PROPOSAL OF SUBSIDIZED HOUSING. HOWEVER, BECAUSE SUBSIDIZED HOUSING SUBSEQUENTLY FAILED TO PRODUCE A NEW MEXICO CONTRACTOR'S LICENSE OR JOINT VENTURE ARRANGEMENT, AND ALSO FAILED TO DEMONSTRATE ADEQUATE FINANCIAL RESOURCES TO PERFORM THE CONTRACT AND PROVIDE SOME FORM OF GUARANTEE OF COMPLETION, THE REGIONAL OFFICE APPROVED THE LOCAL HOUSING AUTHORITY'S INTENTION TO RESOLICIT THE PROJECT IN THE FORM OF AN INVITATION FOR BIDS LEADING TO AWARD TO THE LOWEST RESPONSIBLE BIDDER. SUCH PROCEDURE CONTEMPLATES A FORMALLY ADVERTISED SOLICITATION FOR BIDS ON A SINGLE SET OF SPECIFICATIONS PREPARED BY THE SOLICITING AGENCY, NOT SUBJECT TO CHANGE BY ANY BIDDER, WITH AWARD TO BE MADE TO THAT RESPONSIBLE BIDDER SUBMITTING THE LOWEST RESPONSIVE BID. NO CONFERENCES OR NEGOTIATIONS ARE CONDUCTED FOLLOWING THE CLOSING DATE FOR SUBMISSION OF BIDS.

RELATIVE TO YOUR ASSERTION THAT SUBSIDIZED HOUSING HAD KNOWLEDGE OF THE NEW PROTOTYPE COSTS WHICH ARE NOT AVAILABLE TO NEW MEXICO DEVELOPERS, HUD STATES THAT:

" *** PROTOTYPE COST LIMITATIONS ON THE COST OF DWELLING CONSTRUCTION AND EQUIPMENT ARE ESTABLISHED BY SECTION 15(5) OF THE UNITED STATES HOUSING ACT, AS AMENDED BY SECTION 209(A) OF THE HOUSING AND URBAN DEVELOPMENT ACT OF 1970. SUCH COST LIMITS, WHICH REPLACED STATUTORY ROOM COST LIMITATIONS ARE REQUIRED TO BE PUBLISHED IN THE FEDERAL REGISTER IN ORDER TO BE EFFECTIVE. INITIAL PUBLICATION OF SUCH PROTOTYPE COST FOR VARIOUS LOCALITIES THROUGHOUT THE COUNTRY WAS MADE IN THE FEDERAL REGISTER OF MAY 1, 1971.

"THE AREA OFFICE ADVISES WITH RESPECT TO THIS ALLEGATION THAT WHEN THE INVITATION FOR PROPOSALS WAS ADVERTISED IT WAS KNOWN THAT PROTOTYPE COST LIMITATIONS WOULD NECESSARILY APPLY TO THE PROJECT BUT THAT THE SPECIFIC FIGURES WERE NOT AVAILABLE, OF COURSE, UNTIL AFTER THEIR PUBLICATION IN THE FEDERAL REGISTER. ALSO, BECAUSE THIS WAS THE INITIAL APPLICATION OF THE AMENDED STATUTE, OTHER QUESTIONS WERE REQUIRED TO BE RESOLVED BEFORE IT COULD BE DETERMINED WHICH PROTOTYPE COSTS WOULD APPLY TO THE PUEBLOS INVOLVED IN THE PROJECT, AND HOW SUCH COST WOULD APPLY TO THE SEPARATE INCREMENTS. THUS, THE AREA OFFICE FEELS THAT IT IS NECESSARILY A COINCIDENCE THAT SUBSIDIZED HOUSING'S PROPOSAL PRICE WAS APPROXIMATELY 105% OF THE PROTOTYPE EVENTUALLY DETERMINED TO BE APPLICABLE, AND THUS WITHIN THE STATUTORY LIMITATION, WHICH WAS NOT THE CASE WITH THE DOUGLAS PROPOSAL. THE AREA OFFICE ALSO INDICATES THAT ANY INFORMATION SUBSIDIZED HOUSING MAY HAVE OBTAINED PRIOR TO THE SUBMISSION OF BIDS WAS PUBLIC INFORMATION BUT WAS OF VERY LITTLE VALUE BECAUSE SO MUCH REMAINED TO BE DONE IN THE WAY OF INTERNAL ANALYSIS AND INTERPRETATION AS TO APPLICABLE PROTOTYPE COSTS. WE HAVE NO REASON TO DISAGREE WITH THIS POSITION OF THE AREA OFFICE."

IN VIEW OF THE FOREGOING WE CAN FIND NO BASIS TO QUESTION THE ADMINISTRATIVE ACTION IN THE MATTER.