Court Opinion

ID: 2961442
Source: CourtListenerOpinion
Date Created: 2015-09-21 20:43:25.797424+00
Date Added: 2024-06-11T12:09:40.867713
License: Public Domain

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,                                        _____                                    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]                                             ___________________                                 ____________________                                        Before                                 Selya, Circuit Judge,                                        _____________                            Roney,* Senior Circuit Judge,                                    ____________________                            and Pieras,** District Judge.                                          ______________                                 ____________________            David M.  Campbell with  whom Girard  R. Visconti  and Visconti  &            __________________            ___________________      ___________        Petrocelli Ltd. were on brief for Professional Building Concepts, Inc.        _______________            Charles S.  Kirwan with whom  Lovett, Schefrin, Gallogly,  Harnett            __________________            ____________________________________        was on brief for Promac, Inc.            Michael F. Horan, with whom  Everett C. Sammartino, Sr., Assistant            ________________             __________________________        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            ___________________            ________________        Maron Construction Company, Inc.                                 ____________________                                 ____________________        _____________________        *  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                                      _________               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 . . .                                           3               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.                                          4               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,                                          5          except in certain  limited situations which are not applicable to          this  case.   See  RADVA Corp.  v. United  States, 17  Cl.Ct. 812                        ___  ______________________________          (1989)  (quoting 48 C.F.R.   28.101-4), aff'd, 914 F.2d 271 (Fed.                                                  _____          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.                       ___  ________________________________          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                                                              _____________          of  Departments, Independent  Establishments, Agencies,  & Others          _________________________________________________________________          Concerned,  38  Comp. Gen.  532 (1959);  see  In re  Castle Floor          _________                                ___  ___________________          Covering, 70 Comp. Gen. 530 (1991); In re Hudgins & Co., Inc., 56          ________                            ________________________          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).                     ___________________________               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.                                      ___ ____ ____________________________          United States, 494 F.2d 1289, 1293 (Ct. Cl. 1974).  The defect in          _____________          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                        ___   ________________________________________                                          8          F.2d 1052, 1054 (1st Cir. 1987); Smith & Wesson v. United States,                                           _______________________________          782 F.2d 1074, 1078 (1st Cir. 1986).                                      Maron's Bid                                     ___________               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                                                                        ___          Ulstein, 833 F.2d at 1054.          _______               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                                          11          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               ________                                          12