B-176762, APR 13, 1973

B-176762, APR 13, 1973

DENIAL OF PROTEST FILED ON BEHALF OF ITASCA ENGINEERING INC., AGAINST AN AWARD TO UNITED STATES GEOLOGICAL SURVEY BY THE FEDERAL INSURANCE ADMINISTRATION, FOR AN IDENTIFICATION OF FLOOD-PRONE AREAS AND ESTIMATES OF PREMIUM RATES.

TO JUERGENSMEYER LAW OFFICES:

THIS IS IN REFERENCE TO YOUR LETTER OF AUGUST 1, 1972, TRANSMITTED TO OUR OFFICE RELATIVE TO A FLOOD INSURANCE STUDIES CONTRACT AWARDED TO THE UNITED STATES GEOLOGICAL SURVEY BY THE FEDERAL INSURANCE ADMINISTRATION (FIA), DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD). THE CONTRACT REQUIRES AN IDENTIFICATION OF FLOOD-PRONE AREAS AND ESTIMATES OF PREMIUM RATES.

YOU REPORT THAT MR. LAWRENCE SAMSTAD AND ITASCA ENGINEERING, INCORPORATED, SUBMITTED A PROPOSAL FOR THE SUBJECT CONTRACT AFTER MR. SAMSTAD ATTENDED A CONFERENCE ON SEPTEMBER 14, 1971, AT THE FIA, AT WHICH TIME HE REPORTS IT WAS ANNOUNCED THAT PROPOSALS SHOULD BE SUBMITTED WITHIN 2 WEEKS. IT IS YOUR CONTENTION THAT ITASCA'S PROPOSAL SHOULD HAVE BEEN CONSIDERED AND ACCEPTED AS IT OFFERED THE GOVERNMENT THE MOST ADVANTAGEOUS CONTRACT FROM BOTH A PRICE AND TECHNICAL STANDPOINT. YOU STATE THAT THE CONTRACT WAS AWARDED AT A PRICE OF $115,000, WHEREAS ITASCA OFFERED A PRICE OF $60,000. FURTHERMORE, IT IS CONTENDED THAT ITASCA'S PROPOSAL WAS SUBSTANTIALLY BETTER IN ENGINEERING ACCURACY AND DETAIL BECAUSE OF MR. SAMSTAD'S 12 YEARS OF EXPERIENCE AS THE PERMANENT ENGINEER FOR THE LOWER MINNESOTA RIVER WATERSHED DISTRICT AND BECAUSE OF EXTENSIVE DATA ON THE RIVER IN ITASCA'S FILES.

THE FEDERAL INSURANCE ADMINISTRATOR HAS INFORMED OUR OFFICE THAT THE SUBJECT CONTRACT WITH THE UNITED STATES GEOLOGICAL SURVEY WAS ENTERED INTO UNDER THE FOLLOWING CIRCUMSTANCES:

*** THE FEDERAL INSURANCE ADMINISTRATION SENT A REQUEST IN THE SPRING OF 1971 FOR A TIME AND COST ESTIMATE IN CONNECTION WITH THE SUBJECT CONTRACT TO ALL FEDERAL AGENCIES WITH WHOM WE HAD AGREEMENTS TO PERFORM FLOOD INSURANCE STUDIES. ON SEPTEMBER 22, 1971, THE ADMINISTRATION COMPLETED NEGOTIATIONS WITH UNITED STATES GEOLOGICAL SURVEY FOR THE AGREEMENT FOLLOWING ITS SUBMISSION OF ACCEPTABLE TIME AND COST ESTIMATES. IN THE MEANTIME, HUD HAD SPONSORED A SEMINAR ON SEPTEMBER 14, 1971, FOR ENGINEERING FIRMS WHICH HAD BEEN SELECTED BY A SELECTION BOARD TO PERFORM FLOOD INSURANCE STUDIES FOR IDENTIFIED COMMUNITIES. THE PURPOSE OF THAT MEETING WAS TO EXPLAIN HUD REQUIREMENTS FOR FLOOD INSURANCE STUDIES. THE MEETING THE FIRMS WERE REQUESTED TO SUBMIT AN INDICATION OF INTEREST AND THE LEVEL OF EFFORT REQUIRED TO MAKE SUCH STUDIES; HOWEVER, NO FORMAL PROPOSALS WERE REQUESTED AT THAT TIME. SOMEONE ATTENDING THE MEETING OTHER THAN THE SELECTED CONTRACTORS ASKED IF HIS FIRM COULD SUBMIT A PROPOSAL. THE CHAIRMAN REPLIED THAT HE COULD NOT PREVENT ANY FIRM FROM SUBMITTING A PROPOSAL BUT EMPHASIZED THAT FIA WAS NOT ASKING FOR FORMAL PROPOSALS AT THAT TIME.

ON OCTOBER 2, 1971, EVIDENTLY AS A RESULT OF THE SEPTEMBER 14 SEMINAR, A PROPOSAL WAS RECEIVED FROM ITASCA ENGINEERING FOR A FLOOD INSURANCE STUDY OF THE AREA WHICH HAD BEEN DISCUSSED WITH UNITED STATES GEOLOGICAL SURVEY. THE PROPOSAL WAS REVIEWED NOTWITHSTANDING AND THE COMPANY WAS ADVISED THAT NEGOTIATIONS WITH UNITED STATES GEOLOGICAL SURVEY TO DO THE STUDY HAD BEEN COMPLETED.

A QUESTION HAS ALSO BEEN RAISED CONCERNING THE REQUEST MADE AT THE SEPTEMBER 14 SEMINAR THAT CONTRACTORS SUBMIT CERTAIN INFORMATION WITHIN TWO WEEKS. CONTRARY TO THE INFERENCE OF ITASCA ENGINEERING, INC. THIS WAS NOT AN INVITATION TO BID ON THE BLOOMINGTON, CHASKA, AND CARVER, MINNESOTA, STUDIES, BUT REFERRED TO PROJECTS LOCATED ELSEWHERE.

WITH REGARD TO THE CONTENTION CONCERNING THE DIFFERENCE IN THE CONTRACT PRICE AND ITASCA'S PROPOSAL PRICE, FIA ADVISES THAT IT IS APPARENT THAT THE -

*** COST DIFFERENTIAL TO FIA BETWEEN THE ITASCA PROPOSAL AND THE UNITED STATES GEOLOGICAL SURVEY CONTRACT WAS THE RESULT OF DIFFERENCES IN THE MANNER IN WHICH THE STUDY WAS TO BE UNDERTAKEN. IT WAS THE PROFESSIONAL OPINION OF THE ENGINEERS IN THE FEDERAL INSURANCE ADMINISTRATION THAT THE ITASCA PROPOSAL RELIED ON CERTAIN EXISTING DATA WHICH WAS OBSOLETE AND THAT, ACCORDINGLY, TO PROVIDE THE ADMINISTRATION WITH SATISFACTORY MATERIAL, ITASCA WOULD BE REQUIRED TO INCREASE THE COST OF ITS FEE SUBSTANTIALLY IN ORDER TO SUBMIT A REPORT AS ACCURATE AS THE ADMINISTRATOR REQUIRES.

HUD'S AUTHORITY TO AWARD A FLOOD INSURANCE STUDIES CONTRACT TO ANOTHER GOVERNMENT AGENCY DERIVES FROM THE NATIONAL FLOOD INSURANCE ACT OF 1968, AS AMENDED, PUBLIC LAW 90-448, CHAPTER 50, TITLE 42, UNITED STATES CODE. SECTION 1307(A) (42 U.S.C. 4014(A)), OF THE ACT AUTHORIZES THE SECRETARY TO UNDERTAKE AND CARRY OUT SUCH STUDIES AND INVESTIGATIONS AS MAY BE NECESSARY TO ESTIMATE RISK PREMIUM RATES FOR FLOOD INSURANCE. IN CARRYING OUT SUCH STUDIES, SUBSECTION (B) PROVIDES THAT THE SECRETARY SHALL "TO THE MAXIMUM EXTENT FEASIBLE AND ON A REIMBURSEMENT BASIS, UTILIZE THE SERVICES" OF OTHER FEDERAL DEPARTMENTS AND AGENCIES.

WE BELIEVE THAT THE ABOVE FACTS AND STATUTORY AUTHORITY ADEQUATELY EXPLAIN FIA'S FAILURE TO CONSIDER THE ITASCA PROPOSAL. THEREFORE, WE CAN FIND NO BASIS UPON WHICH TO QUESTION THE AWARD TO THE UNITED STATES GEOLOGICAL SURVEY.