B-175936, JUN 20, 1972

B-175936, JUN 20, 1972

BID PROTEST - NONRESPONSIVE - DAVIS-BACON ACT AMENDMENT - FAILURE TO ACKNOWLEDGE - ALLEGED UNBALANCED COST APPORTIONMENT DATA CONCERNING THE PROTESTS OF AMERICAN CONSTRUCTION COMPANY, INC; BLAKE CONSTRUCTION COMPANY, INC; AND THE GEORGE HYMAN CONSTRUCTION COMPANY AGAINST AWARD TO ANY OTHER BIDDER UNDER AN IFB ISSUED BY THE NAVAL FACILITIES ENGINEERING COMMAND. AMERICAN'S FAILURE TO LEGALLY BIND ITSELF BY ACKNOWLEDGING A DAVIS BACON AMENDMENT RENDERED ITS BID NONRESPONSIVE. NO EXTENSION OF THE BID OPENING DATE WAS REQUIRED AND THE IFB ADEQUATELY APPRISED ALL BIDDERS OF THE INFORMATION SUPPLIED ALONE TO AMERICAN IN EXPLANATION OF BUILDING PERMIT REQUIREMENTS. HYMAN'S BID WAS ADMITTEDLY QUALIFIED. HOWEVER, IT CONTENDS THAT THE UNREALISTIC 52 PERCENT ALLOCATION FOR WORK UNDER INCREMENT 1 AND THE ALLEGED EXCESSIVE BID PRICE OF THE PROPOSED AWARDEE, JUSTIFY CANCELLATION. ABSENT A CLEAR ABUSE OF DISCRETION, AND SINCE HYMAN'S UNSUPPORTED CONTENTION WOULD MORE PROPERLY HAVE BEEN RAISED PRIOR TO BID OPENING, THE AGENCY'S JUDGMENT WILL NOT BE DISTURBED. MATERIALLY UNBALANCED COST APPORTIONMENT DATA FOR THE PURPOSE OF CIRCUMVENTING STATUTORY COST LIMITATIONS MAY RENDER A BID NONRESPONSIVE. HOWEVER, THERE IS NO INDICATION THAT BLAKE'S ESTIMATE WAS MADE IN OTHER THAN GOOD FAITH. FOR THE FOREGOING REASONS, THE COMP. GEN. MUST CONCLUDE THAT BLAKE SUBMITTED THE LOW, RESPONSIVE BID. ACCORDINGLY, THE PROTESTS OF AMERICAN AND HYMAN ARE DENIED.

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER (09CA/WHS:HJ) DATED MAY 12, 1972, WITH ENCLOSURES, FROM THE COUNSEL FOR THE NAVAL FACILITIES ENGINEERING COMMAND, REPORTING ON THE PROTESTS OF AMERICAN CONSTRUCTION COMPANY, INC. (AMERICAN), BLAKE CONSTRUCTION CO; INC. (BLAKE), AND THE GEORGE HYMAN CONSTRUCTION COMPANY (HYMAN) AGAINST AN AWARD OF A CONTRACT TO ANY OTHER BIDDER UNDER INVITATION FOR BIDS (IFB) NO. N62477-71-B-0846, ISSUED BY THE NAVAL FACILITIES ENGINEERING COMMAND (NFEC), CHESAPEAKE DIVISION, WASHINGTON NAVY YARD, FOR THE CONSTRUCTION OF BACHELOR ENLISTED QUARTERS AND PERSONNEL SUPPORT FACILITIES, MARINE BARRACKS, WASHINGTON, D.C.

NFEC PROPOSES TO REJECT AS NONRESPONSIVE THE QUALIFIED LOW BID SUBMITTED BY HYMAN. THAT FIRM ADMITS THAT ITS BID WAS QUALIFIED AND, THEREFORE, NONRESPONSIVE. HOWEVER, IT IS ARGUED THAT THE IFB SHOULD BE CANCELED AND EITHER NEGOTIATED WITH HYMAN OR READVERTISED. WE DO NOT AGREE AND WILL ADDRESS OURSELVES TO THIS ARGUMENT IN MORE DETAIL BELOW. WITH RESPECT TO THE SECOND LOW BID OF AMERICAN IN THE AMOUNT OF $7,593,000, NFEC PROPOSES TO REJECT ITS BID AS NONRESPONSIVE. WE CONCUR FOR THE REASONS HEREINAFTER STATED THAT THE AMERICAN BID SHOULD BE REJECTED AS NONRESPONSIVE. MOREOVER, WE FIND THAT THE THIRD LOW BID SUBMITTED BY BLAKE REPRESENTS THE LOWEST RESPONSIVE BID UNDER THE IFB.

THE NFEC BASIS FOR THE PROPOSED REJECTION OF THE AMERICAN BID AS NONRESPONSIVE CONCERNS THAT FIRM'S ADMITTED FAILURE TO ACKNOWLEDGE, PRIOR TO BID OPENING, AMENDMENT 5 DATED 5 DAYS BEFORE BID OPENING, AND RECEIVED BY AMERICAN THE DAY BEFORE BID OPENING. THAT AMENDMENT CONTAINED A WAGE RATE MODIFICATION INCREASING BY $1 PER HOUR THE MINIMUM WAGE RATES PRESCRIBED BY THE SECRETARY OF LABOR TO BE PAID BY THE CONTRACTOR TO ONE PARTICULAR CLASS OF LABORERS DURING THE PERFORMANCE OF THE CONTRACT. THE SPECIAL INSTRUCTIONS TO BIDDERS OF THE IFB ADVISE THAT "EACH BIDDER SHALL REFER IN HIS BID TO AMENDMENTS TO THIS SPECIFICATION; FAILURE TO DO SO MAY CONSTITUTE AN INFORMALITY IN THE BID." ALSO, AMENDMENT 5 WARNED BIDDERS THAT THE FAILURE TO ACKNOWLEDGE RECEIPT OF THE AMENDMENT PRIOR TO BID OPENING "MAY RESULT IN REJECTION OF YOUR OFFER." NFEC HAS ESTIMATED THE COST IMPACT OF AMENDMENT 5 TO BE $8,365.

CITING THE PROVISIONS OF PARAGRAPH 2-405 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), AMERICAN CONTENDS THAT THE COST EFFECT OF AMENDMENT 5, WHICH IT ESTIMATES TO BE $992.55, IS SO NEGLIGIBLE IN RELATION TO ITS OR ANY OTHER BID THAT THE FAILURE TO ACKNOWLEDGE THE AMENDMENT MAY BE WAIVED. MOREOVER, AMERICAN POINTS TO ITS CONTRACTUAL OBLIGATIONS TO PAY THE PREVAILING UNION WAGE RATE IN THE SAME CATEGORY WHICH WAS THE SUBJECT OF AMENDMENT 5 AS ESTABLISHING ITS CONFORMANCE TO THE IFB AS AMENDED.

THE FAILURE OF A BIDDER TO ACKNOWLEDGE, PRIOR TO BID OPENING, RECEIPT OF AN AMENDMENT WHICH COULD AFFECT THE PRICE, QUALITY OR QUANTITY OF THE PROCUREMENT RENDERS THE BID NONRESPONSIVE. THE BASIS FOR THIS RULE IS THAT GENERALLY THE BIDDER WOULD HAVE AN OPTION TO DECIDE SUBSEQUENT TO BID OPENING TO BECOME ELIGIBLE FOR AWARD BY FURNISHING EXTRANEOUS EVIDENCE THAT THE ADDENDUM HAD BEEN CONSIDERED OR TO AVOID AWARD BY REMAINING SILENT. IN VIEW OF THE FACT THAT AMENDMENT 5 INCREASED THE WAGE RATES PAYABLE UNDER ANY RESULTING CONTRACT WHICH DIRECTLY AFFECTS THE PRICE OF THE CONTRACT, WE FIND THAT THE IFB PROVISION REQUIRING THE PAYMENT OF MINIMUM WAGE RATES PRESCRIBED BY THE SECRETARY OF LABOR WAS A MATERIAL REQUIREMENT. AS WE HAVE STATED BEFORE -

"IT IS OUR VIEW THAT A BIDDER WHO FAILED TO INDICATE BY ACKNOWLEDGMENT OF THE AMENDMENT OR OTHERWISE THAT HE HAD CONSIDERED THE WAGE SCHEDULE COULD NOT, WITHOUT HIS CONSENT, BE REQUIRED TO PAY THE WAGE RATES WHICH WERE PRESCRIBED THEREIN BUT WHICH WERE NOT SPECIFIED IN THE ORIGINAL IFB, NOTWITHSTANDING THAT IT IS ALLEGED THAT HE ALREADY IS PAYING THE SAME OR HIGHER WAGE RATES UNDER AGREEMENTS WITH LABOR UNIONS OR OTHER ARRANGEMENTS. SEE B-160257, DECEMBER 15, 1966." B 171062, DECEMBER 17, 1970.

SEE, ALSO, 51 COMP. GEN. (B-174647, FEBRUARY 10, 1972) AND B 169581, MAY 8, 1970. CONTINUING IN THIS VEIN, SEE OUR DECISION B 171062, SUPRA, WHEREIN WE QUOTED WITH APPROVAL THE FOLLOWING LANGUAGE OF OUR DECISION IN B-160257, DECEMBER 15, 1966, AS FOLLOWS:

"' *** THE CONTROLLING CONSIDERATION IN CASES OF THIS TYPE IS WHETHER, UNDER THE CIRCUMSTANCES PRESENTED, IT CAN BE CONCLUDED THAT THE BIDDER HAS, AT THE TIME OF BID OPENING, LEGALLY BOUND ITSELF TO THE TERMS AND CONDITIONS SET FORTH IN THE ADDENDUM. IT IS NOT ENOUGH THAT THE BIDDER MAY BE AWARE OF THE PREVAILING WAGE RATES OR WHATEVER OTHER TERMS MAY BE SET FORTH IN THE ADDENDUM. THE QUESTION, RATHER, IS WHETHER THE BIDDER HAS MANIFESTED HIS ASSENT TO THE TERMS OF THE ADDENDUM PRIOR TO BID OPENING OR, UNDER THE CIRCUMSTANCES, CAN LEGALLY BE HELD BOUND TO THE TERMS IN THE ADDENDUM ON THE BASIS OF HIS BID AS SUBMITTED. *** '"

SINCE ACCEPTANCE OF THE AMERICAN BID IN ITS FORM AT THE TIME OF BID OPENING WOULD NOT RESULT IN A CONTRACT CONTAINING A STATEMENT OF THE MINIMUM WAGE RATES REQUIRED TO BE PAID BY THE DAVIS-BACON ACT, 40 U.S.C. 276A, THE BID IS NONRESPONSIVE TO THE TERMS OF THE IFB. SEE B 160176, OCTOBER 11, 1966; AND B-169581, SUPRA, WHERE WE DID NOT PERMIT THE WAIVER OF THE FAILURE OF A BIDDER TO ACKNOWLEDGE A WAGE RATE INCREASE HAVING AN ESTIMATED COST OF ONLY $692.

AMERICAN CONTENDS, IN THE ALTERNATIVE, THAT NFEC UNFAIRLY DISRUPTED ITS BID PREPARATION PROCESS AND FAILED TO EXTEND THE TIME FOR BIDDING RESULTING IN ITS FAILURE TO ADEQUATELY CONSIDER AND ACKNOWLEDGE AMENDMENT 5. IN SUPPORT THEREOF, AMERICAN POINTS OUT THAT IT DID NOT RECEIVE AMENDMENT 5 UNTIL THE DAY BEFORE BID OPENING. IN ADDITION, THE FIRM RELATES THAT 1 HOUR BEFORE BID OPENING, IT RECEIVED A LETTER RESPONSE TO A CLARIFICATION REQUEST BY THE FIRM ON CERTAIN PERMIT SPECIFICATIONS IN THE IFB TO NFEC 10 DAYS BEFORE BID OPENING. THE FIRM CITES ASPR 2-202, 208 AND 18-206, ALL RELATING IN PART TO PROCEDURES AVAILABLE TO A CONTRACTING AGENCY FOR THE PURPOSE OF EXTENDING BID OPENING DATES WHERE NECESSARY TO ALLOW BIDDERS SUFFICIENT TIME TO INTELLIGENTLY CONSIDER AND ACKNOWLEDGE THE SUBJECTS OF IFB AMENDMENTS.

WE CANNOT CONCLUDE FROM OUR REVIEW OF THE RECORD THAT AMERICAN'S CONTENTIONS HAVE MERIT. THE ATTORNEY FOR AMERICAN IN A LETTER TO OUR OFFICE STATES THAT "BOTH THE ROOFING SUBCONTRACTOR OF AMERICAN AND AMERICAN INCLUDED SUCH (MINIMUM WAGE) RATES APPEARING IN AMENDMENT NO. 5 IN THEIR BID FIGURES, WHICH ARE PART OF AMERICAN'S BID TO THE NAVY." SUCH BEING THE CASE, AND SINCE AMERICAN DID RECEIVE THE AMENDMENT 1 DAY BEFORE BID OPENING, WE FIND IT DIFFICULT TO PERCEIVE ANY PREJUDICIAL INABILITY OF THE FIRM TO EFFECT THE SIMPLE ACT OF AMENDMENT ACKNOWLEDGMENT. MOREOVER, ALL OF THE OTHER BIDDERS TIMELY ACKNOWLEDGED RECEIPT OF THE AMENDMENT, AND NO BIDDER, INCLUDING OF PARTICULAR SIGNIFICANCE, AMERICAN, COMPLAINED TO NFEC PRIOR TO BID OPENING THAT THE TIME FOR ACKNOWLEDGMENT AND CONSIDERATION OF THE AMENDMENT WAS INADEQUATE. ALTHOUGH WE BELIEVE IT PERTINENT TO POINT OUT THAT THE ABOVE-CITED REGULATIONS CLOTHE THE CONTRACTING AGENCY WITH A CONSIDERABLE AMOUNT OF DISCRETION IN DEALING WITH THE CONSIDERATION OF THE POSSIBILITY OF EXTENDING BID OPENING DATES, THE FACT THAT ONLY ONE OF THE BIDDERS FAILED TO TIMELY ACKNOWLEDGE THE AMENDMENT, IN THESE CIRCUMSTANCES, WE BELIEVE, AFFIRMS THE NONNECESSITY FOR A BID OPENING DATE EXTENSION. SEE 50 COMP. GEN. 648 (1971); 47 ID. 611 (1968); AND B 169581, SUPRA.

AMERICAN ALSO ARGUES THAT THE LETTER RESPONSE RECEIVED BY IT 1 HOUR BEFORE BID OPENING, AND APPARENTLY NOT FORWARDED TO OTHER BIDDERS, SHOULD HAVE BEEN GIVEN TO ALL BIDDERS IN THE FORM OF A FORMAL AMENDMENT TO THE IFB ALONG WITH AN APPROPRIATE BID OPENING DATE EXTENSION. WHILE WE AGREE THAT THE PROVISIONS OF THE IFB AND ASPR 2-208(C) DO REQUIRE THAT SUCH INFORMATION BE DISSEMINATED TO ALL BIDDERS AS AN AMENDMENT, IN THE SITUATION HERE, WE ATTACH NO SIGNIFICANCE TO THE NFEC FAILURE TO SO ACT. THE LETTER RESPONSE REQUESTED A CLARIFICATION ON THE OWNERSHIP OF THE PROPERTY UPON WHICH THE CONSTRUCTION WAS TO TAKE PLACE AND INQUIRED AS TO WHETHER OR NOT A BUILDING PERMIT FROM THE DISTRICT OF COLUMBIA GOVERNMENT WOULD BE REQUIRED. THE LETTER RESPONSE ADVISED AMERICAN THAT, SINCE THE PROPERTY ADJACENT TO THE CONSTRUCTION WAS UNDER THE CONTROL OF THE DISTRICT OF COLUMBIA GOVERNMENT, VARIOUS PERMITS WOULD BE REQUIRED. ADDITION, NFEC ADVISED AMERICAN THE REASON WHY THE PROJECT SPECIFICATIONS CONTAINED A REQUIREMENT FOR A CONTRACTOR'S BOND TO COVER REPAIR OF ANY DAMAGE TO ADJACENT PROPERTY CAUSED BY THE CONTRACTOR. AMERICAN ESTIMATES THAT THE AMOUNT INVOLVED IN THE SECURING OF THE PERMITS REPRESENTS A SUBSTANTIAL INCREASE ($5,000) IN ITS BID PRICE. THEREFORE, IT IS IMPLIEDLY ARGUED THAT THE FAILURE OF OTHER BIDDERS TO TAKE THIS INFORMATION INTO ACCOUNT RESULTED IN COMPETITIVE PREJUDICE TO AMERICAN.

IN OUR OPINION, THE IFB CLEARLY APPRISED ALL BIDDERS OF THE ESSENTIAL AND GENERAL NATURE OF THAT INFORMATION SUPPLIED ALONE TO AMERICAN IN THE LETTER RESPONSE ON THE BID OPENING DATE, I.E; (1) THE OWNERSHIP OF A PORTION OF THE CONSTRUCTION SITE PROPERTY BY THE DISTRICT OF COLUMBIA AND (2) THE NECESSITY FOR THE ACQUISITION OF CERTAIN PERMITS. IN THIS REGARD, PARAGRAPH 1A.29 OF THE GENERAL REQUIREMENTS OF THE IFB SPECIFICATION, ENTITLED "PERMITS AND REGULATIONS," READS, IN PERTINENT PART, AS FOLLOWS:

"1A.29.1 THE CONTRACTOR SHALL COMPLY WITH ALL LAWS, ORDINANCES, RULES, ORDERS AND REGULATIONS RELATING TO THE PERFORMANCE OF THE WORK, THE PROTECTION OF ADJACENT PROPERTY, AND THE MAINTENANCE OF PASSAGEWAYS, GUARD FENCES OR OTHER PROTECTIVE FACILITIES.

"1A.29.2 THE CONTRACTOR SHALL SECURE AND PAY FOR ALL PERMITS AND LICENSES NECESSARY, INCLUDING, BUT NOT LIMITED TO PERMITS FOR USE OF AREAS OTHER THAN THE PROPERTY FOR OCCUPYING PUBLIC SPACES, CONSTRUCTION OF PROJECT, VAULTS, DRIVEWAYS, SIDEWALKS, CURBS, PLANTING AND MOVING EQUIPMENT OVER HIGHWAYS, STREETS AND RAILROADS, CONNECTIONS TO EXISTING STORM AND SANITARY SEWERS AND OTHER UTILITIES, AND PERMITS FOR STORM SEWER RELOCATION, WATER LINE SERVICE AND STORM AND SANITARY SEWER SERVICES."

MOREOVER, AMENDMENT 4 TO THE IFB DATED APRIL 24, 1972, ADDED THE FOLLOWING SENTENCE TO SUBPARAGRAPH 1A.29.1, QUOTED ABOVE:

"'THIS (COMPLIANCE WITH LOCAL LAWS, ETC.) SHALL INCLUDE THE PREPARATION, SUBMISSION, AND SECURING APPROVAL OF PLANS AND/OR SPECIFICATIONS AS MAY BE REQUIRED BY THE DISTRICT OF COLUMBIA TO INDICATE WORK TO BE DONE ON DISTRICT OF COLUMBIA PROPERTY, INCLUDING BUT NOT LIMITED TO SHEETING, SHORING, DEWATERING, AND TRAFFIC CONTROL.'"

WE BELIEVE THAT IT IS REASONABLE TO ASSUME THAT ALL BIDDERS, INCLUDING AMERICAN, COULD OR SHOULD HAVE TAKEN THESE SPECIFICATION PROVISIONS INTO ACCOUNT WHILE PREPARING THEIR BIDS, INCLUDING THE COST CONSEQUENCES OF SUCH PROVISIONS. SINCE THE BOND REQUIREMENT WAS ALSO INCLUDED IN THE IFB, WE CAN SEE NO BASIS UPON WHICH AN AMENDMENT TO THE IFB SHOULD HAVE BEEN ISSUED FOR THE PURPOSE OF MERELY EXPLAINING THE RATIONALE BEHIND THE INCLUSION OF SUCH REQUIREMENT. SEE ASPR 2-208(C) WHICH REQUIRES SUCH AN AMENDMENT ONLY IF THE INFORMATION IS NECESSARY TO THE BIDDERS TO SUBMIT BIDS OR IF THE LACK OF SAME WOULD BE PREJUDICIAL TO UNINFORMED BIDDERS. IN VIEW OF THESE FINDINGS, WE DO NOT FEEL THAT A BID OPENING EXTENSION WAS REQUIRED IN THE CIRCUMSTANCES, PARTICULARLY SINCE AMERICAN HAD ADMITTED THAT ITS BID PRICE REFLECTED THE CONTENTS OF THE LETTER RESPONSE. HOWEVER, WE BELIEVE THAT, IN THE FUTURE, SUCH INFORMATION AS THAT CONTAINED IN THE LETTER RESPONSE SHOULD BE SUPPLIED SUBSTANTIALLY WELL IN ADVANCE OF THE TIME IN WHICH IT WAS SUPPLIED IN THIS CASE.

SINCE WE HAVE FOUND THAT THE AMERICAN BID IS NONRESPONSIVE FOR FAILURE TO ACKNOWLEDGE RECEIPT OF AMENDMENT 5, IT IS NOT NECESSARY TO CONSIDER THE BLAKE CONTENTION THAT THE AMERICAN BID FAILED TO COMPLY WITH THE AFFIRMATIVE ACTION "WASHINGTON PLAN" CLAUSE OF THE CONTRACT. WITH REGARD TO THAT PLAN, UPON OUR REVIEW OF THE RECORD WE DO NOT AGREE WITH AMERICAN'S ASSERTION THAT THE BLAKE BID FAILS TO COMPLY WITH THE REQUIREMENTS OF THE PLAN INASMUCH AS THE PERCENTAGE GOALS STATED FOR EACH TRADE CATEGORY ARE WITHIN THE REQUIRED RANGES AND COMPLIANCE WITH THE GOALS IS A MATTER OF CONTRACT ADMINISTRATION AND NOT RESPONSIVENESS.

AT THIS JUNCTURE, WE BELIEVE THAT IT IS PERTINENT TO HIGHLIGHT CERTAIN OTHER PROVISIONS OF THE IFB, WITH WHICH THE REMAINING GROUNDS OF PROTEST DEAL. THE SPECIAL INSTRUCTIONS TO BIDDERS ADVISED THAT BIDS MUST BE BASED UPON AND AWARD MADE IN CONSIDERATION OF THE ENTIRE WORK FOR THE PROJECT. HOWEVER, IT IS REPORTED BY NFEC THAT SINCE FUNDS FOR ALL THE WORK WERE NOT AUTHORIZED AND AVAILABLE, THE WORK WAS DIVIDED INTO TWO INCREMENTS AND, ON THIS POINT, BIDDERS WERE INFORMED THAT:

"1C.5.1 INCREMENTS. - THE ENTIRE WORK, AS DESCRIBED ABOVE, IS CONSIDERED TO BE MADE UP OF TWO INCREMENTS, 'ONE' AND 'TWO,' AS FOLLOWS: "A. INCREMENT ONE SHALL BE ALL WORK INDICATED AND SPECIFIED WITHIN THE DEFINED INCREMENT-ONE LIMITS, EXCEPT THAT THE TUNNEL TO THE EXISTING BARRACKS SHALL NOT BE INCLUDED.

"B. INCREMENT TWO SHALL BE ALL REMAINING WORK INDICATED AND SPECIFIED NOT INCLUDED IN INCREMENT ONE.

"1C.5.2 THE WORK INCLUDED IN INCREMENT ONE SHALL BE CONSIDERED TO REPRESENT 52 PERCENT OF THE ENTIRE SCOPE OF THE WORK AND INCREMENT TWO SHALL BE CONSIDERED TO REPRESENT 48 PERCENT OF THE WORK.

"1C.5.3 THE ISSUANCE OF A NOTICE TO PROCEED, WITH RESPECT TO THE WORK IN INCREMENT TWO, IS EXPRESSLY SUBJECT TO THE AVAILABILITY OF APPROPRIATIONS THEREFOR. NO WORK SHALL BE COMMENCED BY THE CONTRACTOR ON INCREMENT TWO UNTIL THE CONTRACTOR HAS BEEN SPECIFICALLY DIRECTED BY THE OFFICER IN CHARGE OF CONSTRUCTION TO PROCEED THEREON.

"1C.5.4 APPROPRIATION AVAILABILITY. - IT IS ANTICIPATED THAT THE NECESSARY APPROPRIATION WILL BE OBTAINED IN TIME TO ENABLE THE OFFICER IN CHARGE OF CONSTRUCTION TO ISSUE A NOTICE TO PROCEED WITH THE INCREMENT TWO WORK BY 31 JANUARY 1973, IN WHICH EVENT THE CONTRACTOR SHALL BE OBLIGED TO COMPLETE THE ENTIRE WORK FOR HIS BID PRICE. HOWEVER, IN THE EVENT THAT SUCH NOTICE TO PROCEED IS NOT ISSUED BY THAT DATE, THE CONTRACTOR WILL NOT BE BOUND TO PERFORM THE SAID INCREMENT TWO WORK. IN THAT EVENT THE TOTAL PRICE TO BE PAID TO THE CONTRACTOR WILL BE LIMITED TO AN AMOUNT EQUAL TO 52 PERCENT OF HIS TOTAL BID, BEING THE PRICE FOR THE ENTIRE WORK COVERED BY INCREMENT ONE AS HEREINABOVE DESCRIBED."

IN ADDITION, SECTION 1A.16X OF THE GENERAL REQUIREMENTS OF THE IFB ADVISED BIDDERS AS FOLLOWS:

"1A.16X BIDDERS ARE ADVISED THAT A STATUTORY LIMIT EXISTS FOR THE BEQ PORTION OF THIS CONTRACT IN THE AMOUNT OF $1,243,000. THE ELEMENTS OF CONSTRUCTION COST ASSOCIATED WITH THE BEDROOMS, BEDROOM TOILETS, CORRIDORS AND STAIRWELLS IN THE BEDROOM AREAS, WASHER-DRYER SPACES, CLOSETS, DUTY NCO ROOMS AND WARDROBE UNITS ARE INCLUDED IN THIS STATUTORY LIMIT. BIDDERS ARE REQUIRED TO SUBMIT A STATEMENT OF COST APPLICABLE TO THE STATUTORY LIMIT. THIS STATEMENT SHALL BE SUBMITTED WITH THE BID ON THE FORMS ATTACHED TO THE BID (STANDARD FORM 21).

"1A.16X.1 ALTHOUGH THE WORK IS SUBJECT TO A STATUTORY LIMITATION FOR COST OF WORK AS DEFINED ABOVE, SUCH LIMITATIONS MAY BE WAIVED BY THE SECRETARY OF DEFENSE. IN THE EVENT THE BREAKDOWN OF COST IS IN EXCESS OF THE STATUTORY LIMITATION, THE OICC MAY, AT HIS DISCRETION, PROCESS A WAIVER OF SUCH LIMITATION TO THE SECRETARY OF DEFENSE FOR APPROVAL."

THE FORM REFERENCED ABOVE, AS SUBMITTED BY BLAKE, READS, IN PERTINENT PART, AS FOLLOWS:

"1. THE ATTACHED BID (STANDARD FORM 21) SUBMITTED UNDER IFB N62477 71-B- 0846, SPECIFICATION NO. 21-71-0846, IS BROKEN-DOWN HEREIN TO REFLECT THE ELEMENTS OF CONSTRUCTION COSTS ASSOCIATED WITH THE STATUTORY LIMITS, AS DEFINED IN PARAGRAPH 1A.16X, CITED IN AMENDMENT NO. 1 TO SPECIFICATION NO. 21-71-0846.

"COSTS APPLICABLE TO TOTAL

STATUTORY LIMIT ALL OTHER WORK AMOUNT BID

ITEM 1 $1,000,000 $6,639,000 XX $7,639,000 XX

00 00

CERTIFICATION

THE UNDERSIGNED BIDDER HEREBY CERTIFIES THAT EACH PRICE ABOVE INCLUDES AN APPROXIMATE APPORTIONMENT OF ALL ESTIMATED APPLICABLE COSTS, DIRECT AND INDIRECT, AS WELL AS OVERHEAD AND PROFIT."

AMERICAN INVITES OUR ATTENTION TO THE FACT THAT, WHILE THAT FIRM AND HYMAN INSERTED THE STATUTORY LIMIT OF $1,243,000 ON THEIR FORMS, BLAKE DEVIATED FROM THE STATUTORY LIMITS BY INSERTING A FIGURE LESS THAN SUCH LIMIT. AMERICAN ARGUES -

" *** BY REDUCING THE STATUTORY LIMITS TO $1,000,000.00, BLAKE IS INCREASING ALL OTHER WORK BY $243,000.00. THIS IN EFFECT INCREASED ITS COST FOR INCREMENT NO. 1 SHOULD THE APPLICATION OF 52% BE APPLIED TO 'ALL OTHER WORK' BID. THEN, FOR EXAMPLE, THERE WOULD BE THE FOLLOWING DIFFERENCE IN BLAKE'S BID:

52% BLAKE'S $6,639,000.00 'ALL OTHER WORK' WITH

ARBITRARY $1,000,000.00 STATUTORY BID $3,452,280.00

52% BLAKE'S $6,639,000.00 'ALL OTHER WORK' WITH

THE MINIMUM STATUTORY $1,243,000.00 BID 3,325,920.00

$ 126,360.00

BLAKE WOULD HAVE A $126,360.00 ADVANTAGE FOR INCREMENT NO. 1 FROM THIS DEVIATION FROM THE STATUTORY LIMITS REQUIREMENT."

NFEC ADVISES OUR OFFICE THAT THE STATUTORY COST LIMITATION WAS INCLUDED IN THE IFB TO COMPORT WITH THE PROVISIONS OF ASPR 18-110 WHICH REQUIRE THAT CONSTRUCTION CONTRACTS NOT BE AWARDED AT PRICES IN EXCESS OF STATUTORY COST LIMITATIONS, UNLESS WAIVED. OUR OFFICE HAS CONSIDERED THE PURPOSE AND EFFECT OF THAT ASPR SECTION. SEE 48 COMP. GEN. 34 (1968). HELD THAT THE SUBMISSION OF GROSSLY ERRONEOUS OR MATERIALLY UNBALANCED COST APPORTIONMENT DATA FOR THE PURPOSE OF CIRCUMVENTING SUCH LIMITS IS TO BE REGARDED AS A MATERIAL DISCREPANCY RENDERING THE BID NONRESPONSIVE. AMERICAN HAS SUBMITTED NO EVIDENCE UPON WHICH WE COULD BASE SUCH A FINDING OR INFORMATION SHOWING THAT THE ESTIMATE BY BLAKE WAS MADE OTHER THAN IN GOOD FAITH. MOREOVER, A BIDDER'S CERTIFICATION HAS BEEN CONSIDERED TO BE ONE TOOL AVAILABLE TO THE GOVERNMENT TO DETERMINE WHETHER OR NOT STATUTORY COST LIMITATIONS HAVE BEEN MET. SEE 48 COMP. GEN; SUPRA, AT PAGE 38. FURTHER, WE DO NOT CONSIDER THAT AMERICAN'S ALLEGATION OF A PRICE ADVANTAGE TO BLAKE, IF ONLY INCREMENT 1 AT 52 PERCENT IS AWARDED, HAS MERIT. THIS IS SO BECAUSE THE 52 PERCENT FOR AWARD PURPOSES WILL BE APPLIED AGAINST THE TOTAL BLAKE BID PRICE, NOT MERELY AGAINST THE "ALL OTHER WORK" CATEGORY.

AS MENTIONED ABOVE, HYMAN SUGGESTS THAT THE PROCUREMENT SHOULD BE READVERTISED. THE HYMAN BID CONTAINED THE FOLLOWING STATEMENT ADMITTEDLY FATAL TO THE BID'S RESPONSIVENESS: "WE CANNOT ACCEPT INCREMENT NUMBER 1 AT 52% OF THE BID." HYMAN POINTS OUT THAT, AFTER RECEIVING SUBCONTRACTOR QUOTES AS LATE AS 20 MINUTES BEFORE BID OPENING, IT DETERMINED THAT THE 52 -PERCENT FIGURE REPRESENTING THE WORK INVOLVED IN INCREMENT 1 WAS UNDERSTATED AND UNREALISTIC AND, AS A RESULT, LED TO GROSS DISTORTION IN THE BIDS. FURTHERMORE, THE FIRM NOTES THAT SUCH FACT HAS LED TO A PROPOSED AWARD TO BLAKE AT A PRICE EXCEEDING THE GOVERNMENT ESTIMATE BY $342,000 AND ITS LOW BID BY $384,000. ALSO, HYMAN SUGGESTS VARIOUS ALTERNATIVE METHODS NFEC COULD HAVE EMPLOYED TO COUNTER THE ALLEGED OCCURRENCE OF UNREALISTIC BIDDING TO COVER THE CONTINGENCY THAT ONLY INCREMENT 1 WOULD BE ORDERED - (1) REQUIRE A TOTAL BID FOR THE WORK ON BOTH INCREMENTS AND THE UTILIZATION OF THE TERMINATION FOR CONVENIENCE CLAUSE IF ANY WORK WOULD NOT BE MADE AVAILABLE OR (2) PERMIT BIDDERS TO BID SEPARATE AMOUNTS ON EACH INCREMENT. IN CONCLUSION, HYMAN STATES THAT THE UNREALISTIC 52-PERCENT ALLOCATION FOR WORK INVOLVED IN THE PERFORMANCE OF INCREMENT 1 AND THE ALLEGED EXCESSIVE BID PRICE OF THE PROPOSED AWARDEE JUSTIFIED CANCELLATION OF THE IFB AND READVERTISEMENT.

INITIALLY, WE OBSERVE THAT ALL BIDDERS, BUT FOR HYMAN, SUBMITTED BIDS ON THE SAME BASIS AS PRESCRIBED BY THE IFB. WHILE HYMAN HAS ALLEGED THAT THE 52 PERCENT REPRESENTS AN UNREALISTIC FIGURE, IT HAS PROFFERED NO EXPLANATION OR EVIDENCE IN SUPPORT OF THAT BARE ALLEGATION. IT WOULD HAVE BEEN FAR MORE APPROPRIATE TO RAISE SUCH AN ISSUE PRIOR TO BIDDING AND IT IS OBSERVED THAT NO BIDDER DID. THE HYMAN ALLEGATION THAT ITS REALIZATION OF THE SUPPOSED DEFECT REPRESENTED BY THE 52 PERCENT FIGURE DID NOT OCCUR UNTIL JUST PRIOR TO BIDDING IS INCONSISTENT WITH THE RECORD. MEMORANDUM DATED APRIL 25, 1972, 15 DAYS BEFORE BID OPENING, ALL BIDDERS WERE FORWARDED QUESTIONS AND ANSWERS OF AN APRIL 17 PREBID CONFERENCE. QUESTIONS REGARDING THE ALLEGED IMPROPRIETY OF THE 52-48-PERCENT SPLIT FOR INCREMENTS 1 AND 2, WHICH, WE ARE ADVISED, WERE ASKED BY HYMAN AND AMERICAN, WERE ANSWERED AS FOLLOWS: "THE GOVERNMENT ESTIMATE FOR INCREMENT 1 IS 52% OF THE TOTAL COST OF ALL WORK DESCRIBED." ALSO, THE ANSWER TO ANOTHER QUESTION ADVISED BIDDERS THAT "THE BREAKDOWN ON INCREMENTS 1 AND 2 REMAINS 52% AND 48% RESPECTIVELY."

FURTHERMORE, NFEC ADVISES THAT THE 52-48-PERCENT FIGURE REFLECTED A ROUNDING OFF OF A DETAILED ESTIMATION ACCOMPLISHED PRIOR TO THE ISSUANCE OF THE IFB. THE ORIGINAL FIGURES, PRIOR TO ROUNDING OFF, WERE 50.777 AND 49.222 PERCENT. NFEC EXPLAINED THE UPWARD PERCENTAGE ADJUSTMENT OF THE ROUNDING OFF TO REPRESENT STARTUP COSTS EXPECTED TO BE INCURRED BY THE CONTRACTOR BEFORE COMMENCING PERFORMANCE OF INCREMENT 1 WORK. SINCE HYMAN HAS ONLY MADE AN UNSUPPORTED BARE ALLEGATION THAT THE INCREMENTAL PERCENTAGES UNREALISTICALLY REFLECTED THE WORK TO BE PERFORMED, AND, IN VIEW OF NFEC'S EXPLANATION OF SUCH PERCENTAGES, WE FIND NO BASIS TO SUGGEST OR IMPOSE ALTERNATIVE METHODS OF PROCUREMENT ON NFEC. FURTHERMORE, WE BELIEVE THAT MERELY BECAUSE THE PROPOSED AWARD PRICE EXCEEDS THE GOVERNMENT ESTIMATE IS NO SUBSTANTIATION OF ANY ADVANTAGE, OR PECUNIARY BENEFIT TO BE DERIVED FROM SUCH ALTERNATIVE METHODS.

HYMAN'S SUGGESTION OF READVERTISEMENT STEMS FROM THE HERETOFORE REJECTED PREMISE THAT THE INCREMENTAL PERCENTAGE ESTIMATES WERE UNREALISTIC AND INCORRECT, RESULTING IN INFLATED BID PRICES. ASPR 2 404.1, CITED BY HYMAN, REQUIRES THAT, AFTER BID OPENING, AWARD MUST BE MADE TO THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER UNLESS THERE IS A COMPELLING REASON TO REJECT ALL BIDS AND CANCEL THE INVITATION. THE DETERMINATION OF WHETHER OR NOT THERE EXISTS SUCH A COMPELLING OR "COGENT" REASON FOR CANCELLATION RESTS PRIMARILY WITHIN THE DISCRETION OF THE CONTRACTING AGENCY. OUR OFFICE WILL NOT DISTURB THAT DETERMINATION ABSENT CLEAR PROOF OF ABUSE OF DISCRETION. SEE 50 COMP. GEN. 50, 52 (1970). THE DECISIONS OF OUR OFFICE PRINCIPALLY RELIED UPON BY HYMAN CONCERN OUR SANCTION TO CANCELLATIONS OF SOLICITATIONS BY CONTRACTING AGENCIES WHERE, UNLIKE HERE, THE RESPONSIBLE CONTRACTING OFFICIALS HAVE MADE THE NECESSARY DETERMINATIONS TO JUSTIFY THE CANCELLATION. SEE, E.G; 50 COMP. GEN. 753 (1971); ID. 50, SUPRA, AND 49 ID. 584 (1970).