Professional Building Concepts, Inc. v. City of Central Falls
974 F.2d 1 | 1st Cir. | 1992
USCA1 Opinion
August 26, 1992
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 92-1313
PROFESSIONAL BUILDING CONCEPTS, INC.,
Plaintiff, Appellant,
v.
THE CITY OF CENTRAL FALLS, ET AL.,
Defendants, Appellees.
_____________________
No. 92-1314
PROFESSIONAL BUILDING CONCEPTS, INC.,
Plaintiff, Appellee,
v.
THE CITY OF CENTRAL FALLS, ET AL.,
Defendants, Appellees,
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PROMAC, INC.,
Plaintiff-Intervenor, Appellant.
____________________
ERRATA SHEET
Please make the following corrections in the opinion in the above
case released on August 14, 1992:
Page 9, line 13: change "damages" to "damaged".
Page 10, line 3: change "damage" to "damaged".
Page 11, line 19: insert space between "," and "1991".
August 14, 1992
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 92-1313
PROFESSIONAL BUILDING CONCEPTS, INC.,
Plaintiff, Appellant,
v.
THE CITY OF CENTRAL FALLS, ET AL.,
Defendants, Appellees.
_____________________
No. 92-1314
PROFESSIONAL BUILDING CONCEPTS, INC.,
Plaintiff, Appellee,
v.
THE CITY OF CENTRAL FALLS, ET AL.,
Defendants, Appellees,
_____
PROMAC, INC.,
Plaintiff-Intervenor, Appellant.
____________________
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Francis J. Boyle, U.S. District Judge]
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Before
Selya, Circuit Judge,
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Roney,* Senior Circuit Judge,
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and Pieras,** District Judge.
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David M. Campbell with whom Girard R. Visconti and Visconti &
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Petrocelli Ltd. were on brief for Professional Building Concepts, Inc.
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Charles S. Kirwan with whom Lovett, Schefrin, Gallogly, Harnett
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was on brief for Promac, Inc.
Michael F. Horan, with whom Everett C. Sammartino, Sr., Assistant
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United States Attorney, was on brief for The City of Central Falls
Housing Authority and U.S. Department of Housing and Urban
Development.
Albert A. DiFiore with whom Beals & DiFiore was on brief for
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Maron Construction Company, Inc.
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____________________
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* Of the Eleventh Circuit, sitting by designation.
** Of the District of Puerto Rico, sitting by designation.
PER CURIAM: Two disappointed bidders sought an injunction
against the award by a public housing authority of a construction
contract on two housing projects. The lowest bid was rejected
because no certified check or other guarantee was submitted with
the bid. Contrary to the arguments of that bidder, the district
court held this was not arbitrary, capricious or in violation of
law. The third lowest bidder argues the district court erred in
approving the contract award on a bid that it contends was
unresponsive because it contained an additional line item of cost
not contemplated by the invitation to bid. We affirm.
At dispute is a contract funded by the United States
Department of Housing and Urban Development (HUD) for general
improvements to two housing projects in Central Falls, Rhode
Island. In February 1991, the City of Central Falls Housing
Authority (the Authority) issued an invitation for bids,
requiring the submission of firm, fixed-price, sealed bids prior
to 2:00 p.m. on March 19, 1991.
PBC's Bid
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The bid invitation required submission of a bid guarantee
with each bid. The bid guarantee was to be either
[a] certified check or bank draft, payable to the
Central Falls Housing Authority, U.S. Government Bonds,
or a satisfactory bid bond executed by the bidder and
acceptable sureties in an amount equal to five percent
of the bid . . .
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Professional Building Concepts, Inc. (PBC) submitted a non-
certified corporate check. At the March 19, 1991 bid opening,
the Authority and HUD officials recognized the deficiency in
PBC's guarantee. After a review of HUD's manual and
specifications, it was determined that the Authority could allow
PBC to submit a proper security within three days. The next day,
PBC substituted a certified check in the required amount for its
company check. Present at the bid opening were the three lowest
bidders, PBC, Maron Construction Company, Inc. (Maron), and
Promac, Inc. (Promac). The minutes of the meeting indicate that
no other variance in the bidding process was observed.
On March 27, the Authority determined that PBC was the low
bidder. On April 4, the three lowest bidders met separately with
the Authority. Following the conferences, Promac asserted that
PBC had improperly contacted its subcontractors and engaged in
"bid shopping." Promac's protest was subsequently rejected in an
informal hearing held by the Authority on April 19.
By letter dated April 4, the Authority's architect
recommended that the Authority award PBC the contract. On April
19, HUD informed the Authority by letter that it could award the
contract to PBC. On April 23, Promac learned that the Authority
had permitted PBC to substitute a certified check for its company
check after the bid opening. Promac filed a new bid protest,
contending that PBC's bid must be rejected as nonresponsive.
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The Authority met on April 23 and unanimously voted to award
the contract to PBC. Although the minutes of the meeting are not
completely clear, it appears that the Authority voted that notice
of award would not be signed until the Authority's legal counsel
further reviewed the situation and issues involved.
The Authority's legal counsel later advised the Authority
that, although the situation was borderline, PBC's failure to
file a qualified bid guarantee was a material defect requiring
rejection of its bid. The Authority rescinded its April 23 vote
and elected to award the contract to Maron.
PBC brought suit challenging the award of the contract to
Maron and seeking an injunction. The district court rejected
PBC's claim for injunctive relief, holding that the Authority's
decision to reject PBC's bid was correct and, therefore, PBC has
no basis for injunctive relief.
The question in PBC's appeal is whether the submission of a
corporate check, rather than a certified check as required by the
invitation of bids, constitutes a material noncompliance in the
bidding process.
The materiality of a bid guarantee requirement is governed
by HUD procurement regulations which must be read in conjunction
with the Federal Acquisition Regulations System. See 48 C.F.R.
___
1.101 (1991). The Federal Acquisition Regulation (FAR) provides
that, in sealed bidding, noncompliance with a solicitation
requirement for a bid guarantee requires rejection of a bid,
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except in certain limited situations which are not applicable to
this case. See RADVA Corp. v. United States, 17 Cl.Ct. 812
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(1989) (quoting 48 C.F.R. 28.101-4), aff'd, 914 F.2d 271 (Fed.
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Cir. 1990).
No controlling cases have been called to our attention, and
we have not located any interpreting FAR or HUD regulations with
respect to the significance of a bid guarantee. Decisions of the
Comptroller General, although not controlling, are instructive on
this issue. See Keco Industries, Inc. v. Laird, 318 F. Supp.
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1361, 1363 (D.D.C. 1970). Beginning in 1959, the approach of the
Comptroller General has been that "where an invitation for bids
requires a bid to be supported by a bid guarantee and
noncompliance occurs, the bid shall be rejected." To the Heads
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of Departments, Independent Establishments, Agencies, & Others
_________________________________________________________________
Concerned, 38 Comp. Gen. 532 (1959); see In re Castle Floor
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Covering, 70 Comp. Gen. 530 (1991); In re Hudgins & Co., Inc., 56
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Comp. Gen. 43 (1976). The Comptroller reasons that "the
submission of a binding bid guarantee is a material condition of
responsiveness with which a bid must comply at the time of bid
opening." In re Castle Floor Covering, 70 Comp. Gen. 530 (1991).
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The Authority could reasonably hold PBC's noncompliance was
not a minor informality which could be sufficiently corrected
after opening. PBC could have chosen not to comply with the bid
guarantee requirement after the bid opening by stopping payment
6
on its corporate check. The Authority would have been left then
with no security whatsoever. Allowing PBC to submit a proper bid
guarantee after the bid opening gave it the unfair opportunity to
view the bids of the other competitors before making a firm
commitment to perform the contract. The purpose of a bid
guarantee is to provide assurances in the form of a firm
commitment, that the bidder will, if successful, perform the
contract. PBC's uncertified company check was not such a firm
commitment.
PBC argues that there was no defect in its bid guarantee
since HUD regulations, 24 C.F.R. 85.36(h)(1) (1991), specify
that in addition to a bid bond or a certified check a bid
guarantee may take the form of any other negotiable instrument.
PBC maintains that its company check satisfies the "other
negotiable instrument" requirement. The invitation to bid for
this contract, however, called for submission of, at least, a
certified check as a bid guarantee.
The district court correctly determined that PBC's failure
to comply with the bid guarantee requirement is not an
informality which was waived by the Authority. According to the
FAR, "[a] minor informality or irregularity is one that is merely
a matter of form and not of substance. It also pertains to some
immaterial defect in a bid or variation of a bid from the exact
requirements of the invitation that can be corrected or waived
without being prejudicial to other bidders." 48 C.F.R. 14.405
7
(1991). Typically, defects in bid reply documents, such as
failure to sign the bid under some circumstances, failure to
execute certain certificates, and failure to return the required
number of copies, have been classified as minor informalities.
48 C.F.R. 14.405 (1991); see also Excavation Const., Inc. v.
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United States, 494 F.2d 1289, 1293 (Ct. Cl. 1974). The defect in
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this instance goes beyond a mere informality, so it is of no
consequence here that the Authority delayed several weeks before
rejecting PBC's bid.
PBC argues that the Authority had already accepted its bid
and awarded PBC the contract, thereby precluding the Authority
from later rejecting PBC's bid. PBC contends that the Authority
actually awarded it the contract, due to the vote taken, at the
Authority's April 23, 1991 meeting. HUD regulations specifically
state, however, that a firm, fixed-price contract award will be
made in writing to the lowest "responsive and responsible
bidder." HUD Regulations, 24 C.F.R. 85.36(d)(2)(ii)(D) (1991).
At that meeting the Authority indicated that, before executing
the contract, its legal counsel should review the issues. After
the review, PBC's bid was determined to be nonresponsive. The
contract was never awarded to PBC.
PBC has failed to demonstrate that the challenged
procurement action either had no rational basis or constituted a
clear and prejudicial violation of applicable statutes and
regulations. See Ulstein Maritime, Ltd. v. United States, 833
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8
F.2d 1052, 1054 (1st Cir. 1987); Smith & Wesson v. United States,
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782 F.2d 1074, 1078 (1st Cir. 1986).
Maron's Bid
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On May 8, 1991, the Authority voted to award the contract to
the second lowest bidder, Maron Construction Company, Inc.
Promac, the third lowest bidder, informed the Authority that it
would seek judicial review of its decision. Rather than address
the merits of Promac's challenge to the responsiveness of Maron's
bid, the Authority rejected Promac's challenge as being untimely
filed. The district court rejected Promac's challenge on the
merits.
Paragraph 7 of the Authority's form of bid requires unit
prices for "additional or deductive work" required from bidders
with respect to (1) the price per square foot for re-pointing
additional cracks, (2) the price per square foot for repair of
damaged areas of stucco finish, (3) the unit price for the
removal and replacement of individual brick, and (4) the price
per linear foot for the addition of new floor tile. Of the eight
bids received, only Maron's bid included a handwritten fifth line
item in addition to the four. Maron added an extra line item
providing for a unit price of $100 per square foot for concrete
repair work. Promac argues that Maron's modification of the bid
form rendered its bid unresponsive because use of the bid form
9
was mandatory and because the modification was a material pricing
term. Promac contends that the additional item rendered Maron's
bid uncertain in price, since Maron did not include the cost of
the concrete repair work in its base bid nor did it provide a
basis for determining this cost.
The Authority and Maron, however, agree that this addition
relates to note 12 of the plans which states:
12. Inspect entire building for damaged stucco areas.
Identify all areas requiring concrete repair. Repair
will be accomplished under square foot unit prices, see
specifications.
Additionally, section 03732 of the specifications, entitled
"Concrete Repair," indicates how a contractor is to accomplish
the required concrete repair work.
The district court, considering item 5 of the bid package
instruction sheet which cautions bidders to pay particular
attention to specifications and the special instructions of note
12 of the plans, held that Maron's bid was responsive since it
complied with these instructions. The Authority's action in
awarding the bid to Maron had a rational basis and was not a
clear violation of applicable statutes and regulations. See
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Ulstein, 833 F.2d at 1054.
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Although not reflected in the district court's decision,
Promac's protest of Maron's bid appears to have been untimely
filed. Apparently neither Promac nor any other party filed an
objection or protest as to Maron's written line item insertion
10
until early July 1991, almost four months after the date of the
bid opening and after this court case had already commenced. The
Authority summarily dismissed the protest at that time on the
ground that it was not timely filed. Although the HUD Rules and
Regulations do not set forth any fixed period of time for the
filing of a protest, it would seem that protests should be filed
within a reasonable period of time.
In deciding to address the merits, the district court
pointed out that the Authority has not adopted any formal bid
protest procedures as required by the HUD regulations, nor has it
provided Promac with any guidelines relating to its protest
filing procedures.
The bids were opened March 19, 1991. All parties had the
right to inspect the bids from that day on. In addition, Promac
exercised its rights under the Freedom of Information Act on
April 23, 1991. On that same day, Promac submitted a protest,
based on information learned concerning the bidding process, that
PBC had submitted an uncertified corporate check. Knowledge of
Maron's allegedly unresponsive bid would seem to be attributed to
Promac no later than April 23. There being no set time limit for
protests, the appropriate period would seem to be a reasonable
period of time after the alleged irregularity was known or should
have been known.
Promac should have known of the alleged nonresponsive bid at
the time of the opening of the bids on March 19, 1991, and in no
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event later than April 23, 1991. Nevertheless, Promac did not
act until July 1991. Since bids were binding on bidders for 90
days, then 90 days from the opening of the bids could be deemed
an outside limit for a reasonable time to protest. Thus, the
Authority appears to have been acting properly when it held that
Promac failed to file a timely protest.
Affirmed.
Affirmed
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