B-181470, NOV 6, 1974, 54 COMP GEN 345

B-181470, NOV 6, 1974, 54 COMP GEN 345

CONTRACTS - TERMINATION - CONVENIENCE OF GOVERNMENT - ERRONEOUS AWARDS LOW BIDDER WHO INSERTED DASHES RATHER THAN PRICES FOR SOME OF THE DINING FACILITIES TO BE PRICED FOR KITCHEN POLICE SERVICES BUT WHO ALSO BID A HIGH PER MEAL PRICE FOR AN ESTIMATED 10 MILLION PLUS MEALS HAS SUBMITTED A RESPONSIVE BID SINCE THE DASHES WERE, IN EFFECT, "NO CHARGE" BIDS COVERING UNPRICED DINING FACILITIES WHERE ONLY THE HIGH PER MEAL PRICE WOULD BE PAYABLE BY GOVERNMENT. CONTRACT AWARDED TO HIGHER BIDDER SHOULD BE TERMINATED FOR CONVENIENCE OF GOVERNMENT. BONDS - BID - SURETY - UNDERWRITING LIMITATION ALLEGATION THAT BID BOND IS INVALID BECAUSE BONDING COMPANY EXCEEDED UNDERWRITING LIMITATION IS UNSUPPORTED SINCE TREASURY DEPARTMENT CIRCULAR SHOWS UNDERWRITING LIMIT OF $3,547,000 PER RISK FOR BONDING COMPANY AND BID BOND WAS FOR $462,036.

IN THE MATTER OF DYNETERIA, INC.; JETS SERVICES, INC., NOVEMBER 6, 1974:

THIS CONCERNS THE PROTESTS OF DYNETERIA, INC. (DYNETERIA), AND JETS SERVICES, INC. (JETS), UNDER INVITATION FOR BIDS (IFB) NO. DAKF48-74-B 0102, ISSUED AT FORT HOOD, TEXAS, FOR KITCHEN POLICE SERVICES AT 56 DINING FACILITIES FROM JULY 1, 1974, OR DATE OF AWARD, TO JUNE 30, 1975. UNDER THE BIDDING SCHEDULE, BIDS WERE REQUESTED UNDER ITEM I FOR EACH CALENDAR DAY OF KITCHEN POLICE SERVICE AT 56 DINING FACILITIES. ITEM II CALLED FOR BIDS ON A PER-MEAL BASIS. THE IFB CONTAINED NO PROVISION ADVISING BIDDERS THAT FAILURE TO INSERT A DOLLAR FIGURE FOR ALL ITEMS WOULD RENDER A BID NONRESPONSIVE.

DYNETERIA WAS LOW TOTAL BIDDER AT $2,194,799.33; SOUTHEASTERN SERVICES INC. (SOUTHEASTERN) BID A TOTAL OF $2,473,071.16; AND JETS $2,521,746.69. MAINTENANCE, INC., AT $2,180,630.31, WAS PERMITTED TO WITHDRAW ITS BID BECAUSE OF ERROR. BECAUSE OF THE PENDENCY OF THESE PROTESTS AND BECAUSE JETS PROTESTED THE SMALL BUSINESS STATUS OF THE THREE LOW BIDDERS TO THE SMALL BUSINESS ADMINISTRATION, THE THEN CURRENT CONTRACT WITH JETS WAS EXTENDED AFTER NEGOTIATIONS FOR 90 DAYS UNTIL THESE MATTERS WERE RESOLVED. HOWEVER, ON AUGUST 12, 1974, THE CONTRACTING OFFICER, PURSUANT TO SECTION 2-407.8(B)(3)(III) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), DETERMINED THAT A PROMPT AWARD PRIOR TO THE RESOLUTION OF THE PROTEST WOULD BE MOST ADVANTAGEOUS TO THE GOVERNMENT. THE INTERIM CONTRACT WITH JETS WAS TERMINATED FOR THE CONVENIENCE OF THE GOVERNMENT AFTER 60 DAYS AND THEREAFTER AWARD WAS MADE TO SOUTHEASTERN SERVICES AS THE LOWEST RESPONSIVE AND RESPONSIBLE BIDDER. SOUTHEASTERN COMMENCED PERFORMANCE ON SEPTEMBER 1, 1974.

JETS ARGUES THAT DYNETERIA'S BID WAS NONRESPONSIVE - AND THE PROCUREMENT ACTIVITY AGREES - BECAUSE IT FAILED TO BID A PRICE FOR 45 OF THE 56 DINING FACILITIES LISTED IN THE SCHEDULE AS ITEM I. JETS ALSO CONTENDS THAT DYNETERIA'S BID BOND WAS DEFICIENT IN THAT ITS SURETY EXCEEDED ITS UNDERWRITING LIMITATION IN ISSUING THE BOND.

CONCERNING THE FIRST ARGUMENT, IT IS UNCONTROVERTED THAT DYNETERIA BID A PRICE FOR FURNISHING KITCHEN POLICE SERVICE AT 11 OF THE FACILITIES AND INSERTED A DASH IN THE UNIT PRICE COLUMNS FOR THE REMAINING 45 DINING FACILITIES. HOWEVER, DYNETERIA BID 22 CENTS PER MEAL SERVICE (ITEM II) FOR AN ESTIMATED 10,038,264 MEALS OVER THE CONTRACT PERIOD.

ITEM I COVERED KITCHEN POLICE SERVICES FOR MISCELLANEOUS DINING FACILITIES "IN STRICT ACCORDANCE WITH ATTACHED SPECIFICATIONS SCHEDULED AS FOLLOWS:." THEN FOLLOWED A LIST OF 56 BUILDINGS IDENTIFIED BY NUMBER AND GROUPED INTO 13 ALPHABETICAL CATEGORIES. BUILDINGS LISTED UNDER A CATEGORY HAD CERTAIN STATED CHARACTERISTICS: TEMPORARY OR PERMANENT CONSTRUCTION; SQUARE FOOTAGE WITHIN A RANGE; AND RATED CAPACITY PER MEAL FEEDING PERIOD. AN ESTIMATED NUMBER OF SERVICE DAYS WAS STATED FOR EACH LISTED BUILDING AND A SPACE FOR BIDDING A PER CALENDAR-DAY PRICE WAS PROVIDED AS WELL AS A SPACE FOR A TOTAL PRICE BASED ON THE ESTIMATED NUMBER OF SERVICE DAYS.

ITEM II REQUESTED A PRICE PER MEAL "IN ADDITION TO A BID PRICE PER CALENDAR DAY FOR EACH DINING FACILITY," FOR AN ESTIMATED 10,038,264 MEALS PER YEAR. ITEMS I AND II WERE TOTALED TO ARRIVE AT AN AGGREGATE BID PRICE.

IT IS SIGNIFICANT TO NOTE THAT THE IFB SPECIFICATIONS IN SECTION "F" DO NOT DEAL SEPARATELY WITH, OR DIFFERENTIATE BETWEEN, KITCHEN POLICE AND MEAL SERVICES. AND WE CANNOT ASCERTAIN FROM THE RECORD WHY IT WAS FELT NECESSARY TO CALL FOR SEPARATE BIDS FOR KITCHEN POLICE AND MEAL SERVICES. IN ANY EVENT, SECTION 2 OF THE SPECIFICATIONS PROVIDED:

GENERAL.

A. WORK REQUIRED UNDER THIS CONTRACT CONSISTS OF FURNISHING ALL PERSONNEL NECESSARY TO PERFORM NON-PERSONAL KITCHEN POLICE SERVICES IN STRICT COMPLIANCE WITH THE TERMS AND CONDITIONS OF THIS CONTRACT. IN GENERAL, THE SERVICES REQUIRED UNDER THIS CONTRACT INCLUDE, BUT ARE NOT LIMITED TO, PREPARATION AND SERVING OF FOOD (WITHIN THE LIMITS STATED HEREIN) AND CLEANING DISHES, GLASSES, POTS, PANS, UTENSILS, TABLEWARE, FOOD CONTAINERS, KITCHENS, DINING AREAS, TABLES, CHAIRS, CABINETS, SERVING COUNTERS, SHELVES, STOREROOMS, REFRIGERATORS, FREEZERS, STOVES, OVENS, VEGETABLE AND FRUIT BINS, DISHWASHING EQUIPMENT, WALLS, WINDOWS, SCREENS, EQUIPMENT STORAGE RACKS, LIGHT FIXTURES, ETC.

ALSO, THE IFB CONTAINED THE STANDARD "SITE VISIT" CLAUSE FOUND IN ASPR 2- 201(A) SEC. CXI) URGING BIDDERS TO INSPECT THE SITE OF PERFORMANCE TO ASCERTAIN LOCAL CONDITIONS WHICH MAY AFFECT THE COST OF PERFORMANCE. THE BID SCHEDULE CONTAINED A PROVISION READING AS FOLLOWS:

ESTIMATED NUMBER OF MEALS. THE CONTRACTOR MAY OBTAIN FROM RESPONSIBLE PERSONNEL AT EACH DINING FACILITY, E.G., DINING OFFICER, DINING FACILITY MANAGER, AN ESTIMATE OF THE NUMBER OF PERSONNEL EXPECTED TO BE FED DURING EACH FEEDING PERIOD. HOWEVER, SITUATIONS MUST BE ANTICIPATED WHEREIN, DUE TO REASONS BEYOND CONTROL OF THE GOVERNMENT OR THE CONTRACTOR, THE NUMBER OF PERSONS ACTUALLY SERVED WILL VARY FROM THE ESTIMATE. IN SUCH EVENT THE ESTIMATE IS CONSIDERED AS A PLANNING GUIDE ONLY AND IS NOT BINDING. THE AMOUNT PAYABLE TO THE CONTRACTOR WILL BE FOR THOSE MEALS ACTUALLY SERVED.

IN ACCORDANCE WITH GAO'S BID PROTEST PROCEDURES, A CONFERENCE WITH INTERESTED PARTIES TO THE PROTEST WAS HELD ON AUGUST 28, 1974. AT THAT TIME DYNETERIA STATED THAT AS A RESULT OF DISCUSSIONS WITH ARMY FOOD SERVICE PERSONNEL, DYNETERIA SELECTED THOSE BUILDINGS WHERE THE VOLUME OF MEAL SERVICES WOULD BE SUCH THAT ITS 22 CENT PER MEAL PRICE WOULD ALSO COVER THE KITCHEN POLICE SERVICES REQUIRED AT THOSE BUILDINGS. IN THIS CASE, IT INSERTED DASHES IN THE APPLICABLE UNIT PRICE AND TOTAL AMOUNT COLUMNS. WHEN DYNETERIA FELT THAT CERTAIN OTHER BUILDINGS WOULD NOT PROVIDE SUFFICIENT MEAL SERVICE VOLUME, IT PROVIDED A BID PRICE FOR THOSE BUILDINGS TO COVER THE NECESSARY KITCHEN POLICE SERVICES.

IN OUR OPINION, THE ONLY REASONABLE CONCLUSION TO BE DRAWN FROM THE RECORD IS THAT DYNETERIA INTENDED TO BID "NO CHARGE" AS TO THE 45 DINING FACILITIES EVIDENCING A DASH ENTRY AND THAT AS TO THOSE DINING FACILITIES ONLY MEAL SERVICE PRICES WOULD BE PAYABLE FOR ITEM I AND ITEM II WORK. WOULD BE UNREASONABLE TO SAY THAT ITS 22 CENT PER MEAL BID FOR AN ESTIMATED 10,038,264 MEALS OBLIGATED IT TO PROVIDE SERVICE IN ONLY THE 11 DINING FACILITIES AS TO WHICH IT TENDERED A DEFINITE DOLLAR AMOUNT SINCE THE ESTIMATED NUMBER OF MEALS COULD NOT BE SERVED IN THE 11 FACILITIES FOR WHICH PRICES WERE STATED. WE FEEL THAT THE AFFIRMATIVE ACT OF PLACING DASHES IN LIEU OF PRICES FOR 45 DINING FACILITIES EVIDENCED DYNETERIA'S INTENT TO PROVIDE KITCHEN POLICE SERVICES AT THE FACILITIES SO MARKED AT THE COST OF 22 CENTS PER MEAL SERVED AT THOSE FACILITIES. JETS' PROTEST ON THIS POINT IS DENIED.

WE HAVE CONSIDERED THE DECISIONS OF OUR OFFICE AND THE ARGUMENTS ADVANCED BY THE PROCUREMENT ACTIVITY IN SUPPORT OF THE NONRESPONSIVENESS DETERMINATION, BUT WE ARE NOT PERSUADED THAT THEY GOVERN THE PARTICULAR SITUATION PRESENTED BY THE DYNETERIA BID. AS WE STATED IN 51 COMP. GEN. 352, 356 (1971), "*** DASHES HAVE NO FIRM MEANING APART FROM THE CONTEXT IN WHICH THEY ARE USED - THE ENTIRE CONTEXT."

THE CONTRACTING OFFICER FURTHER STATES THAT BY DYNETERIA'S INSERTION OF A DASH FOR 45 OF THE 56 FACILITIES, THERE WOULD BE NO RESULTING SAVING TO THE GOVERNMENT IF A DETERMINATION WAS MADE TO CLOSE DOWN ANY OF THESE 45 FACILITIES. SINCE WE HAVE CONCLUDED THAT A DASH FOR EACH OF THE 45 FACILITIES WAS, IN EFFECT, A "NO CHARGE" BID, THE OPENING OR CLOSING OF ANY OF THESE FACILITIES WOULD NOT AFFECT, PER SE, THE PRICE PAID BY THE GOVERNMENT; RATHER, AS TO THESE FACILITIES, IT IS THE NUMBER OF MEALS SERVED WHICH WOULD AFFECT THE COST TO THE GOVERNMENT. PRESUMABLY THERE IS A NECESSARY RELATIONSHIP BETWEEN THE NUMBER OF FACILITIES AND THE NUMBER OF MEALS AND THE SAVINGS IN CLOSED BUILDINGS WOULD BE REFLECTED IN MEALS NOT SERVED.

THE ARMY FURTHER CONTENDS THAT DYNETERIA'S BID IS UNBALANCED AND THEREBY FRUSTRATES THE CONTRACT PROVISIONS REGARDING PAYMENT. THERE WAS NO PROVISION IN THE IFB WHICH DEALT WITH UNBALANCED BIDS AND THE EFFECT THEREOF. THE FACT THAT A BID MAY BE UNBALANCED DOES NOT RENDER IT NONRESPONSIVE WHERE, AS HERE, THERE IS NO INDICATION THE BID WAS NOT AS INTENDED. 49 COMP. GEN. 335, 343 (1969); MATTER OF R & R INVENTORY SERVICE, INC., (54 COMP. GEN. 206 (1974)), MATTER OF MOBILEASE, (54 COMP. GEN. 242 (1974)).

CONCERNING THE PAYMENT PROVISION OF THE CONTRACT, PARAGRAPH 4 OF SECTION "I," PAYMENT FACTORS, AS CHANGED BY AMENDMENT 0004 TO THE IFB, READS IN PART, AS FOLLOWS:

4. PAYMENT FACTORS. FOR EACH BUILDING SERVICED UNDER THIS CONTRACT PAYMENT WILL BE MADE ON THE FOLLOWING BASIS.

A. THE NUMBER OF DAYS ACTUALLY OPERATED WILL BE MULTIPLIED BY THE BID PRICE, SECTION E, PARAGRAPH I.

B. THE NUMBER OF MEALS ACTUALLY FED DURING THE MONTH WILL BE MULTIPLIED BY THE BID PRICE, SECTION E, PARAGRAPH II.

C. THE ADDITIONAL PAYMENT FOR SERVICES INCURRED UNDER PARA 4D, SECTION H, PAGE 59, WILL BE COMPUTED USING THE PRICE PER OPERATING HOUR AS THE BASIS. INASMUCH AS EACH DINING FACILITY'S PRICE PER OPERATING HOUR MAY BE DIFFERENT, THE ADDITIONAL PAYMENT WILL BE COMPUTED USING THE FOLLOWING FORMULA. THE TOTAL DOLLAR VALUE OF THE APPLICABLE BUILDING OF PARA 4A ABOVE WILL BE DIVIDED BY THE NORMAL HOURS OF OPERATION PRESCRIBED IN SECTION H, PARA 4C, PAGE 59, TO ARRIVE AT THE PRICE PER OPERATING HOUR. THE PRICE PER OPERATING HOUR WILL THEN BE MULTIPLIED BY THE TOTAL NUMBER OF ADDITIONAL HOURS OR ONE-HALF HOUR INCREMENTS THAT SERVICES WERE ORDERED.

PARAGRAPH "C" CONCERNS SERVICES ORDERED BY THE GOVERNMENT BEYOND THE NORMAL HOURS OF OPERATION OF A BUILDING. UNDER THIS PAYMENT FORMULA, DYNETERIA WOULD RECEIVE NO ADDITIONAL PAYMENT FOR OVERTIME WORK FOR THOSE BUILDINGS AS TO WHICH IT HAD BID A DASH. HOWEVER, DYNETERIA WOULD STILL RECEIVE $0.22 PER MEAL SERVED DURING SUCH OVERTIME WHICH IT MUST CONSIDER SUFFICIENT IN SUCH CIRCUMSTANCES DUE TO ITS BIDDING PATTERN. WE DO NOT SEE HOW THE QUOTED PROVISIONS ARE FRUSTRATED BY DYNETERIA'S BID. DYNETERIA CHOSE TO BE PAID PRINCIPALLY ON A PER MEAL RATHER THAN A PER BUILDING BASIS, AN OPTION THAT WAS THE BIDDERS' UNDER THE IFB.

FINALLY, WE FIND NO SUPPORT FOR THE ALLEGATION OF JETS THAT THE BID BOND SUBMITTED BY DYNETERIA WAS INVALID BECAUSE ITS BONDING COMPANY, UTICA MUTUAL INSURANCE COMPANY (UTICA), EXCEEDED ITS BONDING CAPACITY BY ISSUING THE BOND TO DYNETERIA. CIRCULAR 570, 1973 REVISION, ISSUED BY THE DEPARTMENT OF THE TREASURY, FISCAL SERVICE, BUREAU OF ACCOUNTS, LISTS THE SURETY COMPANIES WHICH ARE ACCEPTABLE ON FEDERAL BONDS WITH EACH COMPANY'S UNDERWRITING LIMITATION. UTICA IS LISTED WITH AN UNDERWRITING LIMITATION ON ANY ONE RISK OF $3,547,000. OUR OFFICE HAS BEEN INFORMALLY ADVISED BY THE BUREAU OF ACCOUNTS THAT RISK, AS USED IN THE CIRCULAR, REFERS TO EACH SEPARATE BOND ISSUED BY THE SURETY, NOT ALL BONDS OUTSTANDING FOR A PARTICULAR CONCERN. THEREFORE, AS THE BID BOND REQUIRED BY THE IFB WAS 20 PERCENT OF THE DYNETERIA BID OR $462,036, WE FIND NO REASON TO OBJECT TO THE VALIDITY OF THE BID BOND SUBMITTED BY DYNETERIA.

BASED ON THE FOREGOING, WE CONCLUDE THAT THE BID OF DYNETERIA WAS IMPROPERLY REJECTED. THEREFORE, WE RECOMMEND THAT THE CONTRACT WITH SOUTHEASTERN BE TERMINATED FOR THE CONVENIENCE OF THE GOVERNMENT AND THAT DYNETERIA BE CONSIDERED FOR AWARD OF THE REMAINING PORTION OF THE CONTRACT IF IT IS FOUND TO BE A RESPONSIBLE BIDDER.

AS THIS DECISION CONTAINS A RECOMMENDATION FOR CORRECTIVE ACTION TO BE TAKEN, IT IS BEING TRANSMITTED BY LETTERS OF TODAY TO THE CONGRESSIONAL COMMITTEES NAMED IN SECTION 232 OF THE LEGISLATIVE REORGANIZATION ACT OF 1970, PUBLIC LAW 91-510, 31 U.S.C. 1172.