B-175055, MAR 28, 1972

B-175055, MAR 28, 1972

BID PROTEST - SMALL BUSINESS SET-ASIDE - RESPONSIVENESS - METHOD OF PRICE ENTRY DECISION DENYING THE PROTEST OF WILLIAM MCINTOSH AND SON AGAINST AWARD OF A SMALL BUSINESS SET-ASIDE TO THORNTON CONSTRUCTION COMPANY UNDER AN IFB ISSUED BY THE PALO ALTO VETERANS ADMINISTRATION (VA) HOSPITAL. THE VA AGREES THAT THORNTON'S PRICE ENTRIES MIGHT MORE PROPERLY HAVE BEEN REGARDED AS ERRORS IN BID UNDER FPR 1-2.406-3, RATHER THAN AS APPARENT CLERICAL ERRORS PURSUANT TO FPR 1-2.406-2. HOWEVER, THE ISSUE IS ACADEMIC SINCE THE IFB PROVISION REQUIRING ITEMIZED PRICES WAS SOLELY FOR THE GOVERNMENT'S BENEFIT AND DID NOT PRECLUDE THE SUBMISSION OF A SINGLE AGGREGATE BID. IT IS THE OPINION OF THE COMP. GEN. THAT THE CONTRACTING OFFICER'S DETERMINATION WAS MADE IN GOOD FAITH, WAS REASONABLE UNDER THE CIRCUMSTANCES, AND DOES NOT REQUIRE CANCELLATION OF THE SOLICITATION. ACCORDINGLY, THE PROTEST MUST BE DENIED. BID PROTEST - SMALL BUSINESS SET -ASIDE - RESPONSIVENESS - METHOD OF PRICE ENTRY CONCERNING THE DENIAL OF A PROTEST OF WILLIAM MCINTOSH AND SON AGAINST AWARD OF A CONTRACT TO THORNTON CONSTRUCTION COMPANY UNDER AN IFB ISSUED BY THE PALO ALTO VETERANS ADMINISTRATION HOSPITAL. IT IS RECOMMENDED THAT APPROPRIATE ACTION BE TAKEN TO INSURE THAT THE CONTRACTING OFFICER APPLIES THE PROPER REGULATIONS TO ERRORS IN BID IN FUTURE PROCUREMENTS.

TO WILLIAM MCINTOSH & SON:

REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 28, 1971, TO THE VETERANS ADMINISTRATION HOSPITAL, PALO ALTO, CALIFORNIA, WHICH WAS FORWARDED TO OUR OFFICE ON JANUARY 24, 1972, PROTESTING THE AWARD OF A CONTRACT, V640C-493, ON DECEMBER 22, 1971, TO THORNTON CONSTRUCTION COMPANY (THORNTON), UNDER INVITATION FOR BIDS (IFB) NO. 640-26-72-PA, ISSUED NOVEMBER 19, 1971, BY THE PALO ALTO VETERANS ADMINISTRATION HOSPITAL.

THE IFB, A SMALL BUSINESS SET-ASIDE, INVITED BIDS ON MODIFYING SPACE AND PROVIDING FACILITIES FOR AN ORTHOPEDIC SHOP, COMPLETE AND READY FOR USE, IN BUILDING NO. 7 AT THE PALO ALTO VETERANS ADMINISTRATION HOSPITAL. THE BIDDING SCHEDULE DIVIDED THE WORK INTO TWO ITEMS, AS FOLLOWS:

"ITEM NO. 1 - GENERAL CONSTRUCTION: FURNISH ALL LABOR, MATERIALS, TRANSPORTATION, TOOLS AND EQUIPMENT NECESSARY FOR MODIFYING SPACE AND PROVIDE FACILITIES FOR AN ORTHOPEDIC SHOP COMPLETE AND READY FOR USE IN ACCORDANCE WITH SPECIFICATIONS, GENERAL REQUIREMENTS AND DRAWING NO. 514 (SHEET 2 OF 2). ALL WORK SHALL BE ACCOMPLISHED IN BUILDING NO. 7 AT THE PALO ALTO DIVISION OF THE VETERANS ADMINISTRATION HOSPITAL, PALO ALTO, CALIFORNIA.

"ITEM NO. 2 - GENERAL CONSTRUCTION: REMOVE THE EXISTING METAL ACOUSTICAL CEILING AND INSTALL NEW ACOUSTICAL AND NEW T-BAR GRID SYSTEM INCLUDING DROP IN 2 FOOT X 4 FOOT LIGHTING FIXTURES AS SPECIFIED."

EACH ITEM PROVIDED A LINE FOR INSERTION OF A TOTAL PRICE FOR THE ITEM, AND FOLLOWING THE ITEMS THERE WAS A LINE FOR ENTERING AN "AGGREGATE TOTAL," AND THEREAFTER WAS THE STATEMENT:

"AGGREGATE AWARD: EACH BIDDER SHOULD QUOTE A UNIT PRICE ON EACH ITEM LISTED. A SINGLE AWARD WILL BE MADE TO THE LOWEST RESPONSIBLE BIDDER WITHIN AVAILABLE FUNDS. ITEMS ARE LISTED IN THEIR PRIORITY SEQUENCE, AND MAY BE AWARDED IN THIS ORDER."

SIX BIDS WERE RECEIVED AND OPENED ON THE SCHEDULED OPENING DATE, DECEMBER 8, 1971. THE BIDS WERE AS FOLLOWS:

ITEM 1 ITEM 2 AGGREGATE TOTAL

THORNTON CONSTRUCTION CO. $17,240 $18,330

WILLIAM MCINTOSH & SON $19,372 -300 19,072

PETE HODGSEN 20,550 0 20,550

GARY THOMPSON 21,000 0 21,000

R. C. BENSON CONSTRUCTION

CO., INC. 21,000 -391 20,609

SORENSON & MARSH, INC. 24,475 22,439

WE HAVE BEEN ADVISED THAT THE SORENSON & MARSH, INC. BID WAS VERIFIED AS $24,475 FOR ITEM 1; $-2,036 FOR ITEM 2; AND AN AGGREGATE TOTAL OF $22,439. IT IS REPORTED THAT THE DEDUCT AND NO-CHARGE BIDS ON ITEM 2 WERE OCCASIONED BY ANTICIPATED SAVINGS IN JOURNEYMAN LABOR WHICH COULD BE EFFECTED IF THE CEILING WORK WAS PERFORMED UNDER ITEM 2 INSTEAD OF UNDER ITEM 1.

THE CONTRACTING OFFICER, NOTING PENCILED X'S IN THORNTON'S BID AT THE END OF THE TOTAL PRICE LINES FOR ITEMS 1 AND 2 AND THE AGGREGATE TOTAL, HANDLED THE BID AS ONE CONTAINING AN APPARENT CLERICAL MISTAKE UNDER FEDERAL PROCUREMENT REGULATIONS (FPR) 1-2.406-2. WE ALSO NOTE THAT THE FIGURE OF 1090 APPEARS TO HAVE BEEN INSERTED ON THE AGGREGATE TOTAL LINE AND THEREAFTER PARTIALLY ERASED AND OVERWRITTEN WITH THE FIGURE OF 18330. ACCORDINGLY, THE CONTRACTING OFFICER DETERMINED THAT THE AGGREGATE TOTAL FIGURE OF $18,330 REPRESENTED THE PRICE FOR THE COMPLETE REQUIREMENT OF ITEMS 1 AND 2 AND $17,240 REPRESENTED THE PRICE FOR ITEM 1. IN A TELEPHONE CONVERSATION, CONFIRMED BY A JANUARY 4, 1972, LETTER, THORNTON STATED THAT ITS INTENDED BID WAS $17,240 FOR ITEM 1, $1,090 FOR ITEM 2 AND AN AGGREGATE TOTAL, AS CORRECTLY SHOWN IN THE BID OF $18,330.

ADEQUATE FUNDS WERE AVAILABLE TO AWARD BOTH ITEMS 1 AND 2. AS A RESULT, THE CONTRACTING OFFICER AWARDED THE CONTRACT TO THORNTON ON DECEMBER 22, 1971, BASED ON HIS BELIEF THAT THE INTENDED BID FOR ITEM 1 WAS $17,240, AND THAT THE AGGREGATE TOTAL OF THE BID WAS CORRECT AS SHOWN IN THORNTON'S BID AT $18,330.

PURSUANT TO A SUBSEQUENT REQUEST OF THE PROCURING ACTIVITY, THORNTON FURNISHED ITS WORKSHEETS FOR THE SUBJECT SOLICITATION. THE SUBMITTED DOCUMENTATION SHOWS THAT THORNTON HAD LISTED MATERIAL, LABOR AND EQUIPMENT COSTS SEPARATELY FOR ITEMS 1 AND 2. THE WORKSHEETS SHOW AN AMOUNT OF $17,240 FOR ITEM 1; $1,090 FOR ITEM 2; AND AN ADDITION OF THESE TWO AMOUNTS FOR THE TOTAL OF $18,330.

IN YOUR LETTER OF DECEMBER 28, YOU PROTEST THE AWARD ON THE BASIS THAT THORNTON'S BID WAS INCOMPLETE, IRREGULAR AND NONRESPONSIVE TO THE BIDDING REQUIREMENTS. PENDING A DECISION ON THE PROTEST, THE VETERANS ADMINISTRATION HAS WITHHELD THE NOTICE TO PROCEED.

THE FAILURE OF A BIDDER TO RESPOND TO A REQUEST FOR PRICES ON ALL ALTERNATES CONSTITUTES NO BASIS, SUFFICIENT IN ITSELF, TO REQUIRE REJECTION OF THE BID. SUCH AN OMISSION CAN ONLY OPERATE TO THE ADVANTAGE OF OTHER BIDDERS RATHER THAN TO THEIR DISADVANTAGE SINCE THE BIDDER THEREBY ELIMINATES ITSELF FROM COMPETITION WITH THE OTHER BIDDERS INSOFAR AS THE ALTERNATE WORK IS CONCERNED. FURTHER, THE REQUEST FOR ALTERNATE BIDS IS SOLELY FOR THE BENEFIT OF THE GOVERNMENT, AND WHERE A BID AS MADE COVERS THE ENTIRE WORK CONTEMPLATED UNDER ONE ALTERNATE, THE FAILURE TO BID ON ANOTHER ALTERNATE DOES NOT PRECLUDE ACCEPTANCE OF A BID WHICH COVERS THE ALTERNATE SELECTED FOR AWARD BY THE GOVERNMENT. IN SUCH A CASE, HOWEVER, THE BIDDER DOES RUN THE RISK THAT SHOULD THE GOVERNMENT ELECT TO ACCEPT AN ALTERNATE NOT BID UPON HIS BID WOULD THEN BE NONRESPONSIVE TO THAT ALTERNATE. 49 COMP. GEN. 639 (1970); 42 ID. 61 (1962); B-168298, DECEMBER 22, 1969. THIS RULE APPLIES EVEN THOUGH BIDS ON ALTERNATES ARE REQUIRED BY THE CLEAR LANGUAGE OF THE INVITATION, SO LONG AS IT IS ADMINISTRATIVELY DETERMINED THAT THE GOVERNMENT'S BEST INTEREST WOULD BE SERVED BY MAKING AN AWARD ON THE ITEM BID UPON RATHER THAN THE OMITTED ALTERNATE. 45 COMP. GEN. 682 (1966).

WHILE THE LANGUAGE QUOTED ABOVE CONCERNING AN AGGREGATE AWARD ADVISED BIDDERS THAT THEY SHOULD ENTER A PRICE FOR EACH ITEM, IT CLEARLY SHOWS THAT THE ONLY PURPOSE FOR WHICH SEPARATE PRICES ON ITEMS 1 AND 2 WERE REQUESTED WAS TO MAKE IT POSSIBLE FOR THE GOVERNMENT TO AWARD A CONTRACT FOR LESS THAN ALL OF THE WORK WITHOUT THE NECESSITY FOR READVERTISING IN THE EVENT THE BIDS ON THE AGGREGATE TOTAL OF ITEMS 1 AND 2 WERE IN EXCESS OF THE AVAILABLE FUNDS. WE DO NOT CONSIDER THIS TO BE A CLEAR RESTRICTION AGAINST THE SUBMISSION OF BIDS BASED SOLELY ON PERFORMANCE OF ALL THE WORK, AND WE NOTE THAT THE IFB DOES NOT INFORM BIDDERS THAT BIDS SUBMITTED ON ONLY THE AGGREGATE TOTAL OF ITEMS 1 AND 2 WILL BE REJECTED AS NONRESPONSIVE. IN THIS CONNECTION, IT MAY BE OBSERVED THAT PARAGRAPH 5(B) OF THE STANDARD FORM 22, PROVIDING THAT WHERE THE BID FORM EXPLICITLY REQUIRES THAT THE BIDDER BID ON ALL ITEMS, FAILURE TO DO SO WILL DISQUALIFY THE BID, HAS REFERENCE TO ITEMS ON WHICH THE GOVERNMENT INTENDS TO MAKE AWARD, NOT TO ALTERNATES WHICH MAY OR MAY NOT BE SELECTED BY THE GOVERNMENT AT ITS OPTION AFTER BID OPENING. IN THE CIRCUMSTANCES, IT IS OUR VIEW THAT THE THORNTON BID MAY NOT BE REGARDED AS NONRESPONSIVE FOR THE TOTAL WORK INVOLVED, AND WAS PROPERLY CONSIDERED FOR AWARD FOR THAT WORK ON THE BASIS OF THE AMOUNT SHOWN AS ITS AGGREGATE TOTAL BID.

WITH REGARD TO THE CONTRACTING OFFICER'S HANDLING OF THE INDIVIDUAL PRICE ENTRIES FOR ITEMS 1 AND 2 AS APPARENT CLERICAL ERRORS UNDER FPR 1 2.406-2, THE VETERANS ADMINISTRATION HAS EXPRESSED THE VIEW THAT THE ERRORS CONCERNING THOSE ENTRIES MORE PROPERLY FALL INTO THE CATEGORY OF ERRORS IN BID TO BE PROCESSED UNDER FPR 1-2.406-3, WHICH PERMITS CORRECTION AT THE REQUEST OF THE BIDDER UNDER CERTAIN CIRCUMSTANCES. WHILE WE AGREE WITH THE OPINION OF THE VETERANS ADMINISTRATION IN THIS RESPECT, WE CONSIDER THE QUESTION TO BE ACADEMIC, SINCE THE AWARD WAS MADE ON THE BASIS OF THE TOTAL WORK COVERED BY BOTH ITEMS, FOR WHICH THORNTON'S BID WAS CORRECT AS SUBMITTED, AND THE CORRECTION OF THE ERRORS IN THE INDIVIDUAL WORK ITEMS DOES NOT SEEM ESSENTIAL TO A BINDING CONTRACT FOR THE TOTAL WORK INVOLVED. THE COURT OF CLAIMS HAS HELD THAT THE AWARD OF A CONTRACT SHOULD BE UPHELD IF THE CONTRACTING OFFICER HAS ACTED IN GOOD FAITH AND IF SUCH ACTION IS REASONABLE UNDER THE LAW AND REGULATIONS; AND THAT A CONTRACT SHOULD BE CANCELLED AS VOID AB INITIO ONLY IF ITS ILLEGALITY IS CLEAR AND PALPABLE. BROWN & SON ELECTRICAL CO. V UNITED STATES, 163 CT. CL. 465, 325 F.2D 446 (1963); JOHN REINER & CO. V UNITED STATES, 163 CT. CL. 381, 325 F.2D 438 (1963), CERT. DENIED, 377 U.S. 931 (1964). FOR THE REASONS STATED ABOVE WE CANNOT CONCLUDE THAT THE CONTRACTING OFFICER ACTED IN BAD FAITH IN MAKING THE AWARD TO THORNTON, OR THAT THE CONTRACT IS CLEARLY AND PALPABLY ILLEGAL, SO AS TO REQUIRE ITS CANCELLATION.

ACCORDINGLY, YOUR PROTEST IS DENIED.