CONTRACTS-Continued
Architect, engineering, etc., services—Continued
Fee limitation-Continued
fore, all architectural and engineering contracts executed by military
departments regardless of type are subject to 6-percent limitation on
fees...
Under "plain meaning" rule of statutory construction, although in
absence of ambiguity in statutory provision, examination of prior statutes
is precluded, when literal interpretation of unambiguous statute leads to
unreasonable, unjust, or impracticable result, legislative history of
statute may be examined. As 6-percent fee limitation in 10 U.S.C.
2306(d), restricted to cost-plus-a-fixed-fee architectural and engineering
contracts could be avoided by contracting on fixed-price basis, resort to
legislative history of sec. 4(b) of Armed Services Procurement Act of
1947, codified in sec. 2306(d), is permitted, and sec. 4(b) intended to
accomplish same purpose as acts of Apr. 25 and Aug. 7, 1939, imposing
6-percent fee limitation on all architectural and engineering contracts,
omission of reference to fixed-price contracts in sec. 2306(d) is considered
inadvertent error; therefore, fee limitation is not restricted to cost-
plus-a-fixed-fee contracts.......
Although exclusion of certain costs that do not relate to furnishing
of designs, plans, drawings, etc., has been permitted in computation of
6-percent fee limitation imposed by acts of Apr. 25 and Aug. 7, 1939,
on architectural and engineering contracts, there is no justification for
excluding such costs from operation of fee limitation prescribed by 10
U.S.C. 2306(d), in view of fact that sec. 4(b) of Armed Services Procure-
ment Act of 1947, codified in 10 U.S.C. 2306(d), fixes maximum fee
payable, whereas 1939 statutes relate to cost of professional services in-
volved in furnishing designs, plans, etc. However, while sec. 2306(d)
permits no exclusion of costs from application of 6-percent fee limita-
tion, no action will be taken on exclusion of costs pending conclusion of
Govt-wide review of architect-engineer contracting procedures----
Six-percent fee limitation prescribed for architect-engineer (A-E)
contracts executed by General Services Admin. not only applies to all
types of contracts, but includes all costs incurred in performance of
A-E contracts, and 41 U.S.C. 254(b) not limiting costs to professional
services required in preparation of designs, plans, drawings and speci-
fications, or any costs categorized as engineering services, but imposing
limitation on total compensation payable for all services performed under
A-E contracts, regardless of whether cost represents travel expenses,
consultant fees, reproduction expenses, supervision of construction,
preliminary engineering effort, or like, no cost exclusions may be per-
mitted in complying with fee limitation in sec. 254(b).......
Architectural and engineering contracts authorized by acts of Apr.
25 and Aug. 7, 1939, codified at 10 U.S.C. 4540, 7212, and 9540, are for
negotiation under 10 U.S.C. 2304 (a) (17) as "otherwise authorized by
law," upon determination, in accordance with 1939 statutes, that pro-
curement is advantageous to national defense and that existing military
facilities are inadequate, as negotiation authority in 10 U.S.C. 2304(a)
(4), which relates to personal or professional services, is limited to sit-
uations where no other exemption is available, and permissive exclusions
of costs from fee limitation imposed on architectural and engineering
CONTRACTS-Continued
Architect, engineering, etc.-Continued
Negotiation authority-Continued
contracts may be reflected in contracts negotiated under 1939 acts,
but not in contracts negotiated under 10 U.S.C. 2304(a) (4) and subject
to fee limitation of 10 U.S.C. 2306 (d) ___--
Longstanding administrative practice of selecting architect and en-
gineer contractors on basis of ability as standards of professional practice
do not permit price competition contemplated by negotiation authority
in 10 U.S.C. 2304(g), will not be questioned, but Congress will be in-
formed of practice in report on Govt-wide review of interpretations and
applications of statutory 6-percent fee limitation imposed on architect-
engineer contracts, with recognition given in report to fact that cost or
pricing and certification requirements of 10 U.S.C. 2306(b) are being
followed..
Awards
Cancellation
Erroneous awards
Cancellation not required
Although award to low bidder offering delivery within 90 to 120
days after receipt of order under invitation which, ambiguous as to
whether maximum delivery schedule of 90 days was desired or whether
offer of later delivery date would be without prejudice to evaluation of
bid, inadequately informed bidders of standards their bids had to
satisfy will not be disturbed as cancellation of award made to lowest
bidder in good faith would not be in best interests of Govt., future
invitations, when early delivery is not essential, should provide desired
delivery date and later cutoff date____.
Under invitation soliciting bids on both 1-year and 3-year procure-
ment basis to furnish guard services by personnel cleared for security,
although rejection of low single year procurement bid for failure to
obtain security clearances within week between initiation of preaward
survey and contract date was unreasonable in view of time element,
uncertainty that clearances were required by contract date, and need
for security clearance actions to await facility clearance, award of con-
tract on 3-year basis will not be canceled, protest to award having been
untimely delayed, and preparation and clarification of unsuccessful bid
having contributed to its rejection. However, future procurements will
clarify security obligations of prospective contractors- -
Time and materials contract
Award of cost-plus-a-percentage-of-cost time and materials purchase
order—a contracting basis violating 41 U.S.C. 254 (b)—after disclosure
of competitor's quotation-procedure contrary to sec. 1–3.805–1(b) of
Federal Procurement Regs.-and permitting revision downward of
price by bidder, should be canceled and procurement made in accordance
with sec. 1-3.406-1 of regulations, providing methods to be employed in
procurements to be made on time and materials basis_
Under invitation for bids to furnish equipment in accordance with
detailed specifications and including descriptive literature clause pre-
scribed by sec. 2.202.5(b) of Armed Services Procurement Reg., but
failing to state descriptive requirement for technical evaluation, upon
cancellation of award, reevaluation of bid indicating insufficiency of
CONTRACTS—Continued
Awards-Continued
Cancellation-Continued
Invitation defective-Continued
descriptive literature furnished to determine specification compliance,
deviation not considered clerical error, or overcome by subsequent
offer of compliance, award may not be made to any other bidder and
procurement should be readvertised, descriptive literature requirement
not establishing common base for bid evaluation and detailed specifica-
tions leaving nothing to describe in way of performance characteristics,
descriptive literature clause was improperly included and it would be
prejudicial to bidders to reject their bids for failure to supply sufficient
information to prove compliance......-
Premiums paid by contractor for performance and payment bonds
furnished under contract subsequently canceled on ground it was not
awarded to lowest responsive bidder as required by 41 U.S.C. 253(b)
are not reimbursable to contractor, Govt. having received no benefits
under invalid contract prior to cancellation, no right to payment of
costs was created. While right to payment on quantum valebat or quantum
meruit basis is recognized, right predicated on theory it would be in-
equitable for Govt. to retain benefit of labor of another without rec-
ompense, Govt. not having received any benefits under canceled contract,
no recovery of bond premiums by contractor is in order___
Award to bidder who before bid opening was given permission to use
other equipment than that specified in invitation is award under changed
specifications in favor of one bidder in contravention of competitive
bidding system giving all persons right to compete on common basis
and, therefore, such award cannot result in valid and enforceable con-
tract and transaction should be canceled____
Although correction of erroneous freight rates used by contracting
officer displaces low bidder, contracting officer having in good faith
relied upon transportation experts in his evaluation, and low bidder
having no knowledge of error, contract voidable at option of Govt.
need not be canceled due to high priority rating assigned to procurement.
Notice
Even though notice of award of contract was not issued with prompt-
ness contemplated by par. 3-508.3 of Armed Services Procurement
Reg., absent finding of bad faith on part of either using activity or pro-
curing activity in conduct of negotiated procurement under authority
of 10 U.S.C. 2304(a)(10), propriety of award, which on basis of price
and other factors is responsive to needs of Govt., is not subject to
question....
CONTRACTS—Continued
Awards-Continued
Small business concerns
Rejection of low bid without referral to Small Business Admin.
(SBA) as prescribed by par. 1-705.4, Armed Services Procurement Reg.
because of urgency of procurement does not affect legality of award to
next low responsive, responsible offeror, matter coming within purview
of par. 1-705.4(c) (iv) permitting exception to SBA certificate of com-
petency procedures, notwithstanding contracting officer delayed approxi-
mately 1 month after receiving adverse preaward survey on low bidder
before issuing written determination of non responsibility and written
nonreferral certificate required by par. 1-705.4(c) (iv), regulation impos-
ing no time limitation on contracting officer for arriving at determination
of bidder nonresponsibility. However, to avoid possible circumvention
of Small Business Act, amendment of regulation is desirable--
When proposal of small business concern on research and development
weapons system is found technically deficient, matter of concern's
capacity and credit is not required to be referred to Small Business
Admin. (SBA) for determination under certificate of competency pro-
cedure, par. 1-705.4 (c) of Armed Services Procurement Reg. (ASPR)
although recognizing SBA authority prescribed by 15 U.S.C. 637 (b) (7),
contemplating referral only of those bids or proposals of small business
concerns found nonresponsible as to capacity and credit, and ASPR
1-705.4(b) providing that in negotiating research and development
contract for highly complex equipment, or personal or professional
services, certificate of competency procedure is applicable not to selec-
tion of contractor, but to capacity and credit of small business concern
selected on basis of highest competency and best scientific approach___
Change in status
Low bid of small business concern that prior to award of contract
became large business concern by acquisition of another company may
not be considered under rule bidder's size status is determinative at
time of award, notwithstanding status of low bidder was questioned
under par 1-703(b)(1)(ii) of Armed Services Procurement Reg. which
provides for forwarding an untimely protest to Small Business Admin.
(SBA) only for purpose of future procurement actions, and certifying
officer unaware of size change until result of preaward survey and,
therefore, unable to exercise judgment as to acceptance of small business
self-certification of low bidder was not required to resubmit size question
under par. 1-703(b)(2), and large business size determination by SBA
is conclusive__
Under invitation soliciting bids on two bases, one mandatory for
single years' procurement, other optional for 3-program years, where
CONTRACTS-Continued
Awards-Continued
Small business concerns-Continued
Multi-year procurements-Continued
price escalation clause for labor increases, cancellation charges in event
funds are not available for procurement on multi-year basis, and option
to Govt. to increase procurement requirements are not considered in
evaluation of bids, award on multi-year basis that is determined to be
lower than cost of award for total requirements based on lowest single-
year price is not prejudicial to small business concerns, nor detrimental
to competitive bidding system, small business concerns having sub-
mitted multi-year as well as single-year bids at competitive prices......
Award of multi-year contract to large business concern where small
business concern was low bidder on single-year procurement require-
ments under invitation soliciting bids on both bases was not prejudicial
to small business concern, nor did award subvert integrity of procure-
ment process, submission by small business concerns of both multi-year
and single-year bids evidencing multi-year procedure encouraged small
business concerns to compete with large business concerns for items on
which high start-up costs might normally keep small business concern
from bidding on single-year basis..
Contract award on basis that unit prices of low bidder under small
business set-aside were no higher, in fact lower overall, than prices
accepted on previous contracts satisfies reasonable price criteria of par.
1-706.3(a) of Armed Services Procurement Reg. providing that "an
award should not be made under a small business set-aside if it will
result in the payment of an unreasonable price by the Government.".
Qualifications. (See Bidders, qualifications, small business con-
cerns)
Self-certifications
Information known to other bidders
Where bidders have information relative to another bidder's small
business status that is not known to contracting officer, and which is
sufficient to raise reasonable doubt as to accuracy of self-certification
appearing in bid, burden of questioning self-certification falls upon
bidders__
A written protest against award of contract to firm certifying itself
as small business, not received by contracting officer within 5 working
days after bid opening or closing date for receipt of proposals and prior
to award, does not comply with requirements of par. 1-703(b)(1) of
Armed Services Procurement Reg. and, therefore, need not be submitted
to Small Business Admin. (SBA), contracting officer having authority
to accept at face value representation by bidder or offeror that it is small
business concern, unless status is timely questioned, otherwise, bidder
could never be sure award would be sustained. However, in accordance
with par. 1-703(b)(1)(iii), protest received after contract award will
be referred to SBA regional office for consideration in future actions..
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