B-180615, AUG 15, 1974

B-180615, AUG 15, 1974

WHERE SPECIFICATIONS CALLED FOR BIDS ON BASIC ITEM PLUS SPECIFIED ADDITIVES, BUT ADDITIVES COULD NOT BE AWARDED DUE TO INSUFFICIENT FUNDS, FACT THAT SUCCESSFUL BIDDER LATER PERFORMED ONE OF ADDITIVES GRATUITOUSLY IN INTERESTS OF GOOD WORKMANSHIP WILL NOT SUPPORT CLAIM FOR BID PREPARATION COSTS BY PROTESTER, WHO WOULD HAVE BEEN LOW ON BASIC ITEM PLUS ADDITIVE, BECAUSE NO ARBITRARY OR CAPRICIOUS ACTION IS SHOWN. FURTHERMORE, CLAIM FOR RECOVERY OF ANTICIPATED PROFITS BY ONE NOT A PARTY TO CONTRACT MAY NOT BE ALLOWED. SEE COURT CASES CITED.

ROY MCGINNIS AND COMAPNY:

THE PROTESTER HAS SUBMITTED A CLAIM FOR RECOVERY OF ANTICIPATED PROFITS IN THE AMOUNT OF $4,962.00, AND BID PREPARATION COSTS IN THE SUM OF $500.00, CONTENDING THAT IT WAS ARBITRARILY AND CAPRICIOUSLY DENIED AN AWARD UNDER INVITATION FOR BIDS (IFB) NO. F41699-74-B-0089, ISSUED SEPTEMBER 10, 1973, BY KELLY AIR FORCE BASE, TEXAS.

THE SUBJECT IFB CONTEMPLATED A CONSTRUCTION CONTRACT FOR THE CONVERSION OF WAREHOUSE SPACE INTO AN ADMINISTRATIVE AREA AT BUILDING 43. SCHEDULE C, SPECIFIED A "BASIC BID", REQUIRING THE PERFORMANCE OF ALL ARCHITECTURAL, MECHANICAL AND ELECTRICAL WORK NECESSARY TO EFFECT THE CONVERSION. FURTHERMORE, THREE ADDITIVES, DESIGNATED "A", "B", AND "C" CALLED FOR THE TAPING AND FLOATING OF APPROXIMATELY 1200 SQUARE FEET (S.F.) OF GYPSUM BOARD, THE INSTALLATION OF APPROXIMATLEY 7200 S.F. OF ACOUSTICAL CEILING, AND THE INSTALLATION OF APPROXIMATELY 7200 S.F. OF VINYL ASBESTOS FLOORING, RESPECTIVELY. A BID OF A SINGLE LUMP SUM WAS REQUESTED FOR THE BASIC BID AND EACH OF THE ADDITIVES. ALL WORK CALLED FOR UNDER THE IFB WAS EXPRESSLY MADE SUBJECT TO A STATUTORY COST LIMITATION OF $50,000. THE GOVERNMENT RESERVED THE RIGHT TO MAKE THE AWARD ON THE BASIS OF THE LOW RESPONSIVE BID FOR THE BASIC BID ALONE, OR THE BASIC BID PLUS ADDITIVE ITEMS AS CONTEMPLATED BY THE PROVISIONS SET FORTH IN PARAGRAPH 11, "ADDITIVE OR DEDUCTIVE ITEMS", OF THE CONTINUATION SHEET TO STANDARD FORM 20, INVITATION FOR BIDS (CONSTRUCTION CONTRACT). THAT CLAUSE PROVIDED FOR AWARD TO THE CONFORMING RESPONSIBLE BIDDER OFFERING THE LOW AGGREGATE AMOUNT FOR THE FIRST OR BASE BID ITEM, PLUS OR MINUM (IN THE ORDER OF PRIORITY LISTED IN THE SCHEDULE) THOSE ADDITIVE OR DEDUCTIVE BID ITEMS PROVIDING THE MOST FEATURES OF THE WORK WITHIN THE FUNDS DETERMINED BY THE GOVERNMENT TO BE AVAILABLE BEFORE BIDS ARE OPENED. THE CONTRACTING OFFICER FORMALLY ANNOUNCED, PRIOR TO THE 2:00 P.M. OCTOBER 1, 1973, BID OPENING, THAT THE AMOUNT OF FUNDS AVAILABLE AT THE TIME OF BID OPENING WAS $49,400.00.

UPON THE OPENING OF BIDS, ONLY TWO FIRMS, WALTER BUCHHORN, GENERAL CONTRACTOR AND THE PROTESTER, SET FORTH PRICES FOR THE "BASIC BID" WITHIN THE $49,400 CEILING STIPULATED:

BASIC BID ADDITIVE

A B C

WALTER

BUCHHORN $48,989.00 700.00 5,709.00 2,130.00

ROY

MCGINNIS 49,270.00 350.00 4,800.00 2,500.00

CONSISTENT WITH THE PROVISIONS OF THE "ADDITIVE OR DEDUCTIVE" CLAUSE, AND THE SPECIFIED $49,400 LIMIT ON FUNDS, IT WAS DETERMINED THAT AN AWARD COULD BE MADE ONLY ON THE BASIS OF THE LOW BID FOR THE "BASIC BID" INASMUCH AS THE PRICES WHICH EACH FIRM SUBMITTED FOR ADDITIVE A WOULD PUSH THE AGGREGATE BID OF EACH ABOVE THE $49,400 LIMITATION. ACCORDINGLY, AN AWARD WAS CONSUMMATED WITH BUCHHORN ON OCTOBER 19, 1973, FOR THE BASIC BID ONLY.

BY TELEGRAM OF DECEMBER 22, 1973, THE PROTESTER NOTIFIED THE CONTRACTING OFFICER THAT ADDITIVE A WAS BEING PERFORMED UNDER THE CONTRACT AND, AS A CONSEQUENCE, IT WAS CONTENDED THAT THIS HAD THE EFFECT OF DISPLACING MCGINNIS AS THE LOW RESPONSIVE BIDDER BECAUSE MCGINNIS' BID WAS LOW IF BIDS WERE CONSIDERED ON THE BASIS OF BOTH THE BASIC BID PLUS ADDITIVE A. THE CONTRACTING OFFICER WAS ADVISED THAT SINCE THE PROJECT WAS SUBSTANTIALLY COMPLETED, THE PROTESTER WAS ENTITLED TO RECOVER THE ENTIRE CONTRACT PRICE.

ON THE BASIS OF THE FOREGOING TELEGRAM, AN INQUIRY INTO THE MATTER WAS CONDUCTED. A SITE VISIT VERIFIED THAT THE WORK SET FORTH IN ADDITIVE A HAD, IN FACT, BEEN PERFORMED. HOWEVER, THE PROJECT ENGINEER CERTIFIED HE HAD NOT AUTHORIZED PERFORMANCE OF THAT WORK. AN EFFORT WAS THEN UNDERTAKEN TO DETERMINE THE CIRCUMSTANCES UNDER WHICH ADDITIVE A WORK HAD BEEN ACCOMPLISHED. BY LETTER OF JANUARY 17, 1974, THE GENERAL CONTRACTOR ADVISED THAT THE WORK WAS NOT PERFORMED AT THE REQUEST OF THE CONTRACTING AGENCY BUT WAS DONE VOLUNTARILY AND GRATUITOUSLY BY THE CONTRACTOR SO AS TO COMPLETE THE JOB "USING GOOD CONSTRUCTION PRACTICES". BY LETTER OF THE SAME DATE, THE GENERAL CONTRACTOR'S PAINTING SUBCONTRACTOR REPRESENTED THAT, BY MUTUAL AGREEMENT BETWEEN ITSELF AND THE GENERAL CONTRACTOR, IT WAS AGREED TO COMPLETE ALL TAPING AND FLOATING OF GYPSUM WALLBOARD AT NO ADDITIONAL COST TO THE GOVERNMENT, EVEN THOUGH THE CONTRACTING AGENCY HAD NOT SO REQUESTED. THE CONTRACTING AGENCY HAS STATED THAT ADDITIVE A WAS NOT ACCEPTED UNDER THE BASIC CONTRACT AWARD; THAT NO PAYMENT WAS MADE THEREFOR; AND THAT THE WORK WAS NOT SUBSEQUENTLY INCORPORATED INTO THE CONTRACT. FINAL ACCEPTANCE AND BENEFICIAL OCCUPANY WAS TAKEN BY THE GOVERNMENT ON JANUARY 25, 1974.

COUNSEL FOR THE PROTESTER CONTENDS THAT THE INCLUSION OF THE WORK AT ISSUE AFTER AWARD HAD THE EFFECT OF DISPLACING THE PROTESTER AS THE LOWEST QUALIFIED BIDDER ON THE COMBINATION OF THE BASE BID AND ADDITIVE A. IT IS FURTHER ALLEGED THAT THE PROCURING AGENCY KNEW OR SHOULD HAVE KNOWN THAT THE TAPING AND FLOATING WAS REQUIRED IN THE INTEREST OF GOOD WORKMANSHIP, AND THAT THE AWARD FOR THE BASIC WORK ONLY WAS IN EFFECT A MERE SHAM TO PROVIDE THE GOVERNMENT WITH THE MEANS OF SECURING THE WORK "AT NO ADDITIONAL COST", EVEN THOUGH FUNDS SUBSEQUENTLY BECAME AVAILABLE. THIS REGARD, IT IS NOTED THAT OTHER "REPAIR" ITEMS WERE LATER PERFORMED PURSUANT TO CONTRACT MODIFICATIONS FOR WHICH THE GOVERNMENT PAID ADDITIONAL MONEY.

AS THE PROTESTER INDICATES, TWO SUBSEQUENT MODIFICATIONS TO THE CONTRACT WERE MADE: REPAIR OF THE EXISTING COLUMNS FOR $2,025, AND EXTENSION OF THE WALL HEIGHT TO OVERCOME HEATING, COOLING AND VENTILATION PROBLEMS FOR $964.00. ONLY THE LATTER WAS MADE WITH "ALTERATION" FUNDS, AND WHEN ADDED TO THE CONTRACT PRICE, THE TOTAL FUNDS WERE STILL WITHIN THE $50,000 STATUTORY LIMITATION. THERE IS NO EVIDENCE THAT THIS LATTER MONEY WAS AVAILABLE AT TIME OF BID OPENING, AS IT WAS SPECIFICALLY ANNOUNCED THAT AVAILABLE FUNDS AT THAT TIME WERE ONLY $49,400.00. NIEHTER OF THESE SUBSEQUENT PAID MODIFICATIONS INVOLVED ANY OF THE WORK DESCRIBED IN THE SOLICITATION UNDER THE BASIC BID OR THE ADDITIVES.

THE PROTESTER HAS SUBMITTED AN AFFIDAVIT STATING THAT IT WAS REPRESENTED BY THE CONTRACTING OFFICER, SUBSEQUENT TO BID OPENING, THAT THE WORK REQUIRED BY ADDITIVE A SHOULD BE DONE BUT THAT AWARD WOULD BE MADE ON THE BASIC BID ONLY DUE TO THE INSUFFICIENCY OF FUNDS. THE AFFIDAVIT STATES THAT THE CONTRACTING OFFICER STATED THAT THE TAPING AND FLOATING OF GYPSUM BOARD "WOULD NOT BE DONE UNDER THIS CONTRACT BECAUSE TO DO SO WOULD RESULT IN DISPLACING THE LOW RESPONSIVE BIDDER ***." THE AFFIDAVIT STATES THAT THE AFFIANT DOES NOT CLAIM ADDITIONAL MONEY WAS PAID FOR THE SUBJECT WORK, BUT THAT IN HIS OPINION, THE SUBSEQUENT PERFORMANCE OF THAT WORK RENDERED THE AWARD OF THE CONTRACT ON THE BASIC BID ONLY ARBITRARY AND ERRONEOUS.

WITH REGARD TO THE REQUEST FOR RECOVERY OF ANTICIPATED PROFITS, THE COURT OF CLAIMS HAS STATED THAT THERE IS NO BASIS FOR THE RECOVERY THERE OF BY A CLAIMANT WHO IS NOT A PARTY TO A GOVERNMENT CONTRACT. HEYER PRODUCTS COMPANY, INC. V. UNITED STATES, 135 CT. CL. 63 (1956), AND KECO INDUSTRIES, INC. V. UNITED STATES, 428 F2D. 1233 (CT. CL. 1970); SEE ALSO B-179719, B-179720, JANUARY 29, 1974. SINCE NO CONTRACT WITH MCGINNIS EVER CAME INTO EXISTENCE, THERE IS NO LEGAL BASIS TO ALLOW RECOVERY FOR LOSS OF ANTICIPATED PROFITS.

CONCERNING THE RECOVERY OF BID PREPARATION COSTS, IN A RECENT RECONSIDERATION OF THE KECO CASE, CITED ABOVE, THE COURT OF CLAIMS DISCUSSED AND REAFFIRMED THE REQUIREMENT SET FORTH IN HEYER AND KECO, SUPRA, THAT THE UNSUCCESSFUL BIDDER MUST DEMONSTRATE THE EXISTENCE OF A PREDETERMINATION OF THE EVENTUAL CONTRACTOR SO AS TO RENDER THE SUBSEQUENT BIDDING PROCEDURE A MERE SHAM TO CONCEAL THE INTENTION TO LET THE CONTRACT TO SOME FAVORED BIDDER, OR THE FAILURE BY THE GOVERNMENT TO OTHERWISE HONESTLY AND FAIRLY CONSIDER EACH BID. KECO INDUSTRIES, INC. V. UNITED STATES, DECIDED FEBRUARY 20, 1974, CT. CLS. NO. 173-69. SEE ALSO EXCAVATION CONSTRUCTION, INC. V. UNITED STATES, NO. 408-71, CT. CLS., APRIL 17, 1974, WHERE THE COURT STATED THAT THE RECOVERY OF BID PREPARATION COSTS IS DEPENDENT UPON THE UNSUCCESSFUL BIDDER SHOWING ARBITRARY AND CAPRICIOUS ACTION BY THE GOVERNMENT IN AWARDING THE CONTRACT TO ANOTHER AND THUS FAILING TO GIVE HONEST CONSIDERATION TO THE UNSUCCESSFUL BIDDER'S BID. THE COURT ALSO NOTED THAT THE STANDARD OF PROOF TO BE APPLIED IN ORDER TO ESTABLISH ARBITRARY AND CAPRICIOUS ACTION IS A HIGH ONE AND MUST SHOW THAT THERE WAS NO REASONABLE BASIS FOR THE DECISION TO AWARD THE CONTRACT TO OTHER THAN THE UNSUCCESSFUL BIDDER.

THE STATUTE GOVERNING THIS PROCUREMENT, 10 U.S.C. 2305(C), REQUIRED THAT AWARD BE MADE TO THE LOW RESPONSIBLE BIDDER WHOSE BID CONFORMED TO THE SOLICITATION, SUBJECT ONLY TO THE FUNDING LIMITATION ANNOUNCED PRIOR TO BID OPENING. SINCE BUCHHORN'S BASIC BID WAS THE LOW CONFORMING BID WITHIN THE MONETARY LIMITATION, AWARD WAS PROPERLY MADE TO BUCHHORN. FURTHERMORE, THERE IS NO ALLEGATION OR INDICATION IN THE RECORD THAT BIDS ON THE PROJECT WERE INVITED AS A MERE SHAM TO CONCEAL THE INTENTION TO LET THE CONTRACT TO BUCHHORN, OR THAT THERE WAS ANY COMMUNICATION OR AGREEMENT BETWEEN THE CONTRACTING OFFICER AND BUCHHORN PRIOR TO AWARD THAT THE WORK DELINEATED BY ADDITIVE A WOULD LATER BE PERFORMED, EITHER UPON THE AVAILABILITY OF ADDITIONAL FUNDS OR GRATUITOUSLY. MOREOVER, WHEN THAT WORK WAS LATER PERFORMED, THERE IS NO INDICATION IN THE RECORD THAT IT WAS AT THE REQUEST OF THE CONTRACTING AGENCY OR THAT IT WAS EITHER PAID FOR OR INCORPORATED INTO THE CONTRACT BY MODIFICATION. IN THESE CIRCUMSTANCES, THERE IS CLEARLY NO EVIDENCE THAT THE AWARD RESULTED FROM ARBITRARY AND CAPRICIOUS ACTION, OR THAT MCGINNIS' BID FAILED TO RECEIVE HONEST CONSIDERATION. MOREOVER, WE FAIL TO SEE ANY BASIS FOR CONCLUDING THAT THE EVENTS WHICH OCCURRED SUBSEQUENT TO THE AWARD AFFECTED ITS VALIDITY OR SUPPORT A CLAIM FOR BID PREPARATION COSTS.

SINCE THERE HAS NOT BEEN A SHOWING OF ARBITRARY OR CAPRICIOUS ACTION GIVING "RISE TO A RIGHT TO BE COMPENSATED" FOR BID PREPARATION COSTS UNDER THE STANDARDS ENUNCIATED IN THE KECO AND EXCAVATION CONSTRUCTION CASES, SUPRA, THIS CLAIM IS ALSO DENIED.