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 ab

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:

August 14, 1992

insert space between "," and "1991".

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, I
_______________
Charles S. Kirwan with whom Lovett, Schefrin, Gallogly, Harn
__________________
_________________________________
was on brief for Promac, Inc.
Michael F. Horan, with whom Everett C. Sammartino, Sr., Assist
________________
__________________________
United States Attorney, was on brief for The City of Central Fa

Housing
Authority and
U.S. Department
of Housing
and Ur
Development.
Albert A. DiFiore with whom Beals & DiFiore was on brief
___________________
________________
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.

because no certified check or

the bid.

Contrary to the

The lowest

bid was rejected

other guarantee was submitted with

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.
At

dispute

Department

Authority

of Housing

improvements to
Island.

is

In

contract
and Urban

We affirm.

funded by

the

United

Development (HUD)

States

for general

two housing

projects

in Central

Falls,

February 1991,

the City

of Central

Falls Housing

(the

Authority)

issued

an

invitation

Rhode

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
with each bid.

required submission of

a bid

The bid guarantee was to be either

guarantee

[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
certified

corporate check.

the Authority
PBC's

and HUD

guarantee.

Concepts, Inc. (PBC) submitted a nonAt

officials
After

the March 19,

1991 bid opening,

recognized the
review

of

HUD's

deficiency

in

manual

and

specifications, it was determined that the Authority could

PBC to submit a proper security within three days.
PBC

allow

The next day,

substituted a certified check in the required amount for its

company check.

Present at the bid opening were

bidders,

Maron

Promac,

PBC,

Inc. (Promac).

Construction Company,

the three lowest

Inc.

(Maron),

and

The minutes of the meeting indicate that

no other variance in the bidding process was observed.

On March 27, the
bidder.

Authority determined that PBC was

the low

On April 4, the three lowest bidders met separately with

the Authority.

Following the conferences,

PBC had improperly

Promac asserted that

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

recommended
19, HUD

dated

April

4,

the

Authority's

architect

that the Authority award PBC the contract.

On April

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.

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
that,
file a

although the

legal counsel later

situation was

qualified bid guarantee

advised the

borderline, PBC's

was a material

Authority

failure to

defect requiring

rejection of

its bid.

The Authority rescinded its April 23 vote

and elected to award the contract to Maron.

PBC
Maron

brought suit challenging

and seeking

PBC's claim
decision

an injunction.

the award of

the contract to

The district

for injunctive relief, holding

court rejected

that the Authority's

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
by HUD

of a bid guarantee

requirement is governed

procurement regulations which must be read in conjunction

with the Federal Acquisition Regulations System.

1.101 (1991).
that,

in

See 48 C.F.R.
___

The Federal Acquisition Regulation (FAR)

sealed

requirement for

bidding,
a bid

noncompliance

guarantee

with

requires rejection

provides

solicitation
of a

bid,

except in certain

limited situations which are not applicable to

this

case.

(1989)

See
___

RADVA Corp. v. United States, 17

______________________________

(quoting 48 C.F.R.

Cl.Ct. 812

28.101-4), aff'd, 914 F.2d 271 (Fed.

_____

Cir. 1990).
No
we

controlling cases have been called to our attention, and

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

________________________________

1361, 1363 (D.D.C. 1970).

Beginning in 1959, the approach of the

Comptroller General has been that

requires

bid

to

be

F. Supp.

"where an invitation for

supported

noncompliance occurs, the bid

by

bid

guarantee

shall be rejected."

bids

and

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

submission

(1976).

reasons

that

"the

which a bid

must comply at the

time of bid

In re Castle Floor Covering, 70 Comp. Gen. 530 (1991).

___________________________

The Authority
not

Comptroller

of a binding bid guarantee is a material condition of

responsiveness with
opening."

The

a minor

after opening.

could reasonably hold PBC's noncompliance was

informality which
PBC could have

could be

sufficiently corrected

chosen not to comply with the bid

guarantee requirement

after the bid opening

by stopping payment

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

commitment

to

guarantee

is to

perform

competitors

the contract.

provide

commitment, that
contract.

the other

assurances

the bidder

will,

before making
The

in

the

purpose
form

if successful,

PBC's uncertified company

a firm

of a

bid

firm

of

perform

check was not

the

such a firm

commitment.
PBC argues that

there was

since HUD regulations,

that

in addition

to

24 C.F.R.
a bid

guarantee may take the

PBC

maintains

that

no defect in

bond

company

negotiable instrument" requirement.

this

contract, however,

or a

check

certified

specify

check a

bid

negotiable instrument.
satisfies

The invitation

called for submission

certified check as a bid guarantee.

guarantee

85.36(h)(1) (1991),

form of any other

its

its bid

the

"other

to bid

of, at

for

least, a

The district court

to

comply

with

informality

the

correctly determined that PBC's

bid

guarantee

requirement

which was waived by the Authority.

failure

is

not

an

According to the

FAR, "[a] minor informality or irregularity is one that is merely

a matter of form and not of
immaterial defect in a bid
requirements of
without

substance.

It also pertains to some

or variation of a bid from

the invitation that

can be corrected

being prejudicial to other bidders."

the exact

or waived

48 C.F.R.

14.405

documents,

such as

(1991).
failure to

Typically, defects
sign

the bid

in

bid reply

under some

circumstances, failure

execute certain certificates, and failure to return the

number of copies,
48 C.F.R.

have been classified

14.405 (1991);

as minor

goes beyond

informalities.

a mere

informality, so

The defect in
it is

consequence here that the Authority delayed several weeks

rejecting PBC's bid.

required

see also Excavation Const., Inc. v.

___ ____ ____________________________

United States, 494 F.2d 1289, 1293 (Ct. Cl. 1974).

_____________
this instance

to

of no

before

PBC

argues that the Authority

and awarded PBC

from

the contract, thereby

later rejecting PBC's bid.

actually awarded it the

state, however, that

in

bidder."

writing

the

lowest

at the

HUD regulations specifically

a firm, fixed-price contract

to

Authority

contract, due to the vote taken,

"responsive

HUD Regulations, 24 C.F.R.

At that meeting

precluding the

PBC contends that the Authority

Authority's April 23, 1991 meeting.

made

had already accepted its bid

award will be

and

responsible

85.36(d)(2)(ii)(D) (1991).

the Authority indicated

that, before

executing

the

contract, its legal counsel should review the issues.

the

review, PBC's bid was

determined to be

nonresponsive.

After

The

contract was never awarded to PBC.

PBC

has

procurement
clear

and

regulations.

failed

to

demonstrate

that

the

challenged

action either had no rational basis or constituted a

prejudicial
See
___

violation

of

applicable

statutes

and

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

Promac, the third

would

bidder,

Maron

Construction

lowest bidder, informed the

seek judicial review of its decision.

Company,

Inc.

Authority that it

Rather than address

the merits of Promac's challenge to the responsiveness of Maron's

bid, the Authority rejected Promac's challenge as being
filed.

The

district court

untimely

rejected Promac's challenge

on the

merits.
Paragraph 7
prices for

damaged

Authority's form of

"additional or deductive work"

with respect to
additional

of the

(1) the

price per square

cracks, (2) the price

areas of

stucco

removal and replacement

bid requires

required from bidders

foot for

per square foot

finish, (3)

unit

the

of individual brick,

re-pointing

for repair of

unit price

for

and (4) the

per linear foot for the addition of new floor tile.

the

price

Of the eight

bids received, only Maron's bid included a handwritten fifth line

item in addition

to the four.

providing for a unit price of

repair work.
form

Maron added

an extra line

$100 per square foot for

item

concrete

Promac argues that Maron's modification of the bid

rendered its bid unresponsive

9

because use of

the bid form

was mandatory and because the modification was a material pricing

term.

Promac contends that the additional

bid uncertain in

item rendered Maron's

price, since Maron did not

the concrete repair

work in its

include the cost of

base bid nor

did it provide

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

"Concrete Repair," indicates

the

specifications,

how a contractor

is to

entitled

accomplish

the required concrete repair work.

The district
instruction

court, considering item

sheet

which

cautions

5 of the

bidders

to

bid package

pay

particular

attention to specifications and the special instructions of

12 of the

plans, held that

complied with
awarding the

Maron's bid was responsive

these instructions.
bid to Maron

clear violation

had a

of applicable

The Authority's
rational basis and

statutes

note

since it
action

in

was not

and regulations.

See
___

Ulstein, 833 F.2d at 1054.

_______
Although

not

Promac's protest
filed.

reflected in

the district

of Maron's bid

appears to

Apparently neither Promac

objection

or protest as

court's decision,
have been

nor any other

to Maron's written

untimely

party filed an

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

ground that it was not timely filed.

Regulations
filing

do not set

at that time

Although the

forth any fixed

on the

HUD Rules and

period of

time for the

of a protest, it would seem that protests should be filed

within a reasonable period of time.

In deciding
pointed out that

to

address

the Authority

the

merits,

the

has not adopted

district

court

any formal

bid

protest procedures as required by the HUD regulations, nor has it

provided

Promac

filing procedures.

with any

guidelines

relating

to its

protest

The bids were

right to
exercised
April

opened March 19, 1991.

inspect the bids from that day on.

its rights

23, 1991.

under the

Freedom of

On that same day,

All parties had

the

In addition, Promac
Information Act

on

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.
protests, the

There being no set time limit for

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,

act until July 1991.

days, then 90
an outside
Authority

1991.

Nevertheless,

Since bids were binding on bidders

days from the opening of the

limit for a

Promac did not

reasonable time to

for 90

bids could be deemed

protest.

Thus,

the

appears to have been acting properly when it held that

Promac failed to file a timely protest.

Affirmed.
Affirmed
________

12