B-131556, MAY 27, 1957

B-131556, MAY 27, 1957

TO DWIGHT, ROYALL, HARRIS, KOEGEL AND CASKEY:

REFERENCE IS MADE TO YOUR LETTERS OF MAY 10 AND 21, 1957, PROTESTING ON BEHALF OF THE GRESHAM-ALCAN COMPANY THE MAKING OF AN AWARD TO THE JOINT VENTURE OF SUN GOLD, INC., AND INLAND EMPIRE BUILDERS, INC., UNDER INVITATION NO. 04-626-57-75 ISSUED BY THE AIR FORCE FOR CONSTRUCTION OF A CAPEHART ARMED SERVICES HOUSING PROJECT AT TRAVIS AIR FORCE BASE, CALIFORNIA. BID, WHICH READS AS FOLLOWS:

"34. BIDDERS ARE ADVISED THAT IF THE STATE HAS A STATUTE REQUIRING BIDDERS TO BE IN POSSESSION OF A LICENSE TO BE QUALIFIED TO DO BUSINESS OR TO BID OR TO ENTER INTO A CONSTRUCTION CONTRACT, IT IS THE RESPONSIBILITY OF THE BIDDER TO COMPLY WITH THE STATUTE, IF THE STATUTE IS APPLICABLE TO THIS PROJECT, AND FURTHER, TO FURNISH PROOF THAT HE CAN COMPLY IF SUBSEQUENTLY REQUIRED TO DO .'

SECTION 7029 OF THE CALIFORNIA BUSINESS AND PROFESSIONS CODE MAKES IT UNLAWFUL FOR A JOINT VENTURE TO SUBMIT A BID OR OTHERWISE ACT IN THE CAPACITY OF A CONSTRUCTION CONTRACTOR WITHOUT HAVING FIRST SECURED A JOINT VENTURE LICENSE. YOU STATE THAT SINCE THE JOINT VENTURE OF SUN GOLD, INC., AND INLAND EMPIRE BUILDERS, INC., DID NOT HAVE SUCH A LICENSE AT THE TIME IT BID, ITS BID DID NOT CONFORM TO THE REQUIREMENTS OF PARAGRAPH 34 OF THE INVITATION AND THEREFORE MAY NOT BE ACCEPTED.

WE CANNOT AGREE WITH YOUR CONCLUSION THAT THE BID OF THE JOINT VENTURE IS UNACCEPTABLE FOR THIS REASON. IN THE FIRST PLACE, IT SHOULD BE NOTED THAT PARAGRAPH 34 OF THE INVITATION MUST BE READ IN CONNECTION WITH THE PROVISIONS OF THE CONTRACT ITSELF UNDER WHICH THE WORK IS TO BE PERFORMED. SEE PARAGRAPH 30 OF THE INVITATION. PARAGRAPH 5 OF THE GENERAL PROVISIONS OF THAT CONTRACT PROVIDES IN PERTINENT PART AS FOLLOWS:

"/A) THE ELIGIBLE BUILDER SHALL, WITHOUT ADDITIONAL EXPENSE TO THE MORTGAGOR-BUILDER AND THE DEPARTMENT, OBTAIN SUCH LICENSES AND PERMITS AS MAY BE REQUIRED FOR THE PROSECUTION OF THE WORK. * * *"

THE FOREGOING CONTRACT PROVISION CLEARLY LEAVES THE QUESTION OF THE NECESSITY FOR A STATE LICENSE UP TO THE CONTRACTOR, TO BE SETTLED BETWEEN HIM AND THE LOCAL AUTHORITIES WITHOUT INVOLVING THE GOVERNMENT. IN OUR OPINION, THIS IS AS IT SHOULD BE, AND WE DO NOT BELIEVE THAT PARAGRAPH 34 OF THE INVITATION WAS INTENDED TO HAVE ANY DIFFERENT EFFECT. PARAGRAPH 34 STATES THAT COMPLIANCE WITH STATE LICENSING LAWS IS THE RESPONSIBILITY--- NOT THE DUTY--- OF THE BIDDER, AND THEN ONLY IF SUCH LAWS ARE APPLICABLE TO THE PROJECT.

IT SEEMS TO BE CONCEDED IN YOUR LETTER OF MAY 10, 1957, THAT UNDER THE RATIONALE OF THE DECISION IN MILLER V. ARKANSAS, 352 U.S. 187, NO CALIFORNIA LICENSE IS REQUIRED FOR THE PROJECT. WE ARE INFORMED THAT THE REGISTRAR OF CONTRACTORS FOR THE CALIFORNIA CONTRACTORS STATE LICENSE BOARD IS OF THE SAME OPINION. IF NO LICENSE LEGALLY IS REQUIRED, THERE WOULD BE NO JUSTIFICATION OR AUTHORITY FOR THE INCLUSION IN THE CONTRACT OR BID INVITATION OF A PROVISION REQUIRING BIDDERS TO SECURE SUCH A LICENSE. SUCH A PROVISION WOULD BE RESTRICTIVE, AND ITS INCLUSION IN AN INVITATION WELL MIGHT NECESSITATE THE REJECTION OF ALL BIDS. YOU CONTEND, HOWEVER, THAT PARAGRAPH 34 MUST BE TAKEN TO REFLECT AN INTENT ON THE PART OF THE CONTRACTING AGENCY TO COMPEL THE SECURING OF A STATE LICENSE IN SPITE OF THE MILLER DECISION, FOR THE REASON THAT THE INVITATION WAS ISSUED SOME TWO AND A HALF MONTHS AFTER THAT DECISION. YOUR REASONING ON THIS POINT IS THAT IF THE CONTRACTING AGENCY HAD THOUGHT THE MILLER CASE MADE THE CALIFORNIA STATUTE INAPPLICABLE, THE INVITATION WOULD HAVE OMITTED ANY REFERENCE TO COMPLIANCE WITH THAT STATUTE.

WE DO NOT AGREE THAT THE INCLUSION OF PARAGRAPH 34 IN THE INVITATION JUSTIFIES SUCH A CONCLUSION. IN THE FIRST PLACE, WE UNDERSTAND THAT THE LANGUAGE OF PARAGRAPH 34 WAS INCLUDED IN SIMILAR INVITATION ISSUED BEFORE THE MILLER DECISION, AND COULD NOT HAVE BEEN DRAFTED WITH THAT DECISION IN MIND. FURTHERMORE, THE MILLER CASE DID NOT IN FACT DETERMINE THE APPLICABILITY OF THE CALIFORNIA STATUTE, AND WHILE WE AGREE WITH YOU THAT THE CASE PROBABLY WOULD BE CONTROLLING IN THE EVENT OF A SUIT INVOLVING THE CALIFORNIA LAW, WE DO NOT BELIEVE THAT THE CONTRACTING AGENCY SHOULD OR DID INTEND TO DETERMINE THAT QUESTION. IT MIGHT AS LOGICALLY BE INFERRED THAT PARAGRAPH 34 OF THE INVITATION AND THE QUOTED PORTION OF PARAGRAPH 5/A) OF THE CONTRACT PROVISIONS (WHICH IS THE SAME AS CONTAINED IN PARAGRAPH 11 OF THE STANDARD FORM 23A FOR FEDERAL CONSTRUCTION CONTRACTS) WERE INCLUDED OUT OF AN ABUNDANCE OF CAUTION TO COVER THE SITUATION WHICH WOULD ARISE IF THE CALIFORNIA STATUTE SHOULD LATER BE HELD APPLICABLE.

IN YOUR LETTER OF MAY 21, 1957, YOU DISCUSS THE MEANING AND EFFECT OF THAT PART OF PARAGRAPH 34 WHICH MAKES IT THE RESPONSIBILITY OF A BIDDER, IF STATE LICENSING STATUTES ARE APPLICABLE TO A PROJECT, TO COMPLY WITH SUCH STATUTES, AND "* * * TO FURNISH PROOF THAT HE CAN COMPLY IF SUBSEQUENTLY REQUIRED TO DO SO.' YOU CONTEND THAT THE PHRASE "IF SUBSEQUENTLY REQUIRED TO DO SO" MEANS "IF SUBSEQUENTLY REQUIRED TO FURNISH SUCH PROOF.' WE AGREE THAT THE PHRASE IS SUSCEPTIBLE OF SUCH AN INTERPRETATION. IT MAY BE POINTED OUT, HOWEVER, THAT IF THIS HAD BEEN THE INTENDED MEANING IT WOULD HAVE BEEN CLEARER TO HAVE STATED "* * * TO FURNISH PROOF THAT HE HAS COMPLIED IF SUBSEQUENTLY REQUIRED TO DO SO.' THE PHRASE "IF SUBSEQUENTLY REQUIRED TO DO SO" MAY ALSO BE INTERPRETED AS MEANING "IF SUBSEQUENTLY REQUIRED TO COMPLY WITH THE STATE STATUTE.' AGREE THAT SUBSEQUENT COMPLIANCE WITH A STATE STATUTE REQUIRING POSSESSION OF A LICENSE BEFORE BIDDING WOULD BE IMPOSSIBLE FOR A BIDDER WHO HAD BID WITHOUT A LICENSE. HOWEVER, IT STILL WOULD BE POSSIBLE FOR SUCH A BIDDER TO OBTAIN A STATE LICENSE DURING OR PRIOR TO ACTUAL CONSTRUCTION OF THE PROJECT. IN THE PRESENT CASE, THIS IS THE COURSE FOLLOWED BY THE LOW BIDDER. THE JOINT VENTURE DID NOT HAVE A CALIFORNIA LICENSE AT THE TIME IT BID, BUT IT APPLIED FOR AND SECURED SUCH A LICENSE THE FIFTH DAY AFTER BID OPENING, EVEN THOUGH, AS STATED ABOVE, THE CALIFORNIA LICENSING AUTHORITIES APPARENTLY DO NOT BELIEVE THE LICENSE IS REQUIRED.

IN OUR OPINION, PARAGRAPH 34 OF THE INVITATION REQUIRES THE SECURING OF A STATE LICENSE IF THE STATE STATUTE IS LEGALLY EFFECTIVE AS APPLIED TO FEDERAL WORK. THIS SEEMS MOST UNLIKELY IN THE PRESENT CASE. FURTHERMORE, EVEN IF IT SHOULD BE DETERMINED BY COMPETENT JUDICIAL AUTHORITY TO BE APPLICABLE, WE BELIEVE THAT PARAGRAPH 34 MAY BE CONSTRUED TO PERMIT THE SECURING OF A LICENSE AFTER SUCH JUDICIAL DETERMINATION. FOR THESE REASONS, AND SINCE THE JOINT VENTURE NOW HAS A LICENSE, WE WOULD NOT BE JUSTIFIED IN OBJECTING TO AN AWARD TO IT. ..END :