The low bidder responded in a reasonable fashion to the information requirements of the invitation. The fact that this reasonable response was not in conformity with the expectations of the contracting agency provides no basis for rejecting such bid as unresponsive since the agency bears the burden of setting out the requirements with sufficient clarity to avoid situations of this kind.

Under ordinary circumstances, the invitation might properly be regarded as so defective as to require readvertising. However, where competition has not been adversely affected, where the agency by award would enter into a binding contract for what it wanted, and where no bidder obtained an option or other undue advantage because of the defect in the invitation, we have, instead of requiring that the procurement be readvertised, permitted award under the invitation with the omission or correction of the provision which would otherwise render the award invalid. 40 Comp. Gen. 561, 563; 39 Comp. Gen. 834; id. 563; B-147370, March 28, 1962.

Clearly, in this case, no bidder was discouraged from bidding by the ambiguity with respect to the "components" to be included in the weight inserted in the blank for item No. 13, and we do not believe that aspect requires further consideration. A significant question has been raised, however, as to whether the low bidder could be required to furnish a crane which with payload would not exceed 236,000 pounds or whether he could successfully contend that under his bid the maximum limitation was 250,000 pounds. If the low bidder could successfully maintain this contention, or if he could now decide whether or not to accept the lower maximum weight, readvertising would be required.

As noted previously, the specifications made it clear that the weight of the crane and payload could not exceed 236,000 pounds. It is also reasonable to conclude that the estimated weight to be furnished under paragraph 2-28 was to be inserted at item No. 13 as modified by amendment No. 4. The term "estimated" particularly as used in such context refers to a rough or approximate calculation derived from incomplete or imperfect data. Beeler v. Miller (Mo. 1953), 254 S.W. 2d 986, 990; State Highway Commission v. Board of Councilmen (Ky. 1932), 54 S.W. 2d 315, 319. Further, an estimate included in a contract is not a warranty or a material representation of fact, and so long as it is made in good faith does not render the maker liable if it should prove faulty. Middlesex County Sewer Auth. v. Middlesex Borough (N.J. 1962), 181 A. 2d 818; Indiana Gas & Water Co. v. Williams (Ind. 1961), 175 N.E. 2d 31. In the last two cases cited the actions were brought to require the estimator to comply with his estimate. As indicated, the actions did not succeed. If the person making

the estimate is not bound thereby, a fortiori such person cannot assert that his own estimate binds the other party.

On the basis of the foregoing, we conclude that the insertion of the 250,000 pound figure in item No. 13, would not justify a contention by Ingalls that it would not upon award be bound by the 236,000 pound maximum for crane and payload. Therefore, it cannot be said that Ingalls would receive any option or other undue advantage; nor can it be said that NASA would under the contract be required to accept something other than it intended to obtain under the invitation and specifications. Accordingly, award may be made to the low responsive and responsible bidder under the invitation and the Ingalls bid should not be regarded as unresponsive because of the inclusion of the 250,000-pound figure in item No. 13.

The enclosures to your letter are returned as requested.

[B-151776]

Contracts-Awards-Labor Surplus AreasQualification

A bidder who, for the purpose of establishing eligibility for the labor surplus area set-aside portion of a procurement of aluminum sheets, and because it is against its trade practice to release cost data on primary aluminum, states that the price charged its finishing plant for aluminum ingots manufactured at the bidder's plant in a persistent labor surplus area is in excess of 50 percent of the cost of the aluminum ingot on the basis that the transaction between the ingot plant and the finishing plant constitutes a subcontract under paragraph 3-902.1(a) of the Armed Services Procurement Regulation relating to "Make or Buy Programs" or comes under examples "C" and "A" in paragraph 1-801.1, Armed Services Procurement Regulation, relating to labor surplus areas may not have the regulation applicable to the "Make or Buy" program extended to a different program on distressed labor areas, nor may the examples involving vendor purchases of raw materials in paragraph 1-801.1 be considered the same as the production of materials at its own facility; therefore, the evidence submitted by the bidder does not establish that costs of manufacturing in the labor surplus area plant are in excess of 50 percent of the contract price for furnishing the end product.

To the Director, Defense Supply Agency, July 8, 1963:

By letter dated June 10, 1963, with enclosures, your Assistant Counsel, forwarded for our consideration the protest of the Reynolds Metals Company against a determination by the contracting officer that the company is ineligible to be considered in negotiations for the labor surplus area set-aside under invitation for bids No. DSA5-63-3266 as a persistent labor surplus area concern.

The invitation, dated March 12, 1963, requested bids on 85,008 lbs. of aluminum alloy sheet. An additional quantity of 85,680 lbs. was set aside for award to one or more labor surplus area concerns pursuant to a "Notice of Labor Surplus Area Set-Aside" contained in the invitation. Twelve bids were received and opened on April 1, 1963. Award on the non-set-aside portion was made on May 8, 1963, to Reynolds as the lowest bidder at $0.322 per lb.

Concerning the set-aside portion of the invitation, Reynolds included the following statement in its bid as required by paragraph (c) of the notice entitled "Identification of Areas of Performance."

Reynolds Metals Company proposes to perform a substantial portion of the production of the contract, if awarded, at its St. Lawrence, Massena, New York plant in the Ogdensburg-Massena-Malone labor market, presently designated as an area of Substantial and persistent labor surplus ASPR 1-801.1 (Example C) with final production at other Reynolds Metals plants, ASPR 1-801.1 (Example A).

Reynolds also stated that its principal place of manufacture would be Listerhill, Alabama, an area of substantial labor surplus.

The Olin Mathieson Chemical Corporation which bid $0.343 per lb. advised that its place of manufacture would be Hannibal, Ohio, a substantial and persistent labor surplus area, which would place this bidder in priority group 2 under the labor surplus area invitation provisions.

In order to obtain a clarification of the Reynold's statement and to ascertain whether that bidder should be considered as a persistent labor surplus area concern (priority group 2) in negotiations for the set-aside portion, Reynolds was requested to advise if the costs which it would incur on account of manufacturing or production performed in the persistent labor surplus area (by itself or its first tier subcontractor) would amount to more than 50 percent of the contract price. Reynolds advised that aluminum pig (ingot) would be made in the Massena, New York area—a substantial and persistent labor surplus area-with the finished end item (aluminum sheet) being manufactured at Listerhill, Alabama. By letter dated April 25, 1963, Reynolds advised that:

Historical accounting records for past years, as well as reasonable projec tions for the foreseeable future, clearly indicate that the Reynolds Metals Company has and will incur Direct Labor and Total Overhead Costs for each of its reduction plants (including Massena, Jones Mills, Patterson, and Listerhill) in exces of 50% of the price of aluminum pig (currently $.225 per pound for 99.5% purity pig).

It is contrary to trade practice to release cost data on primary aluminum, but the foregoing statement, we believe, provides adequate basis for our certification that pig from our reduction plants located in a “labor surplus" area qualifies as pig “substantially manufactured" in a labor surplus area. ASPR 8-101.1 (Example C).

On May 6, 1963, Reynolds was advised by the contracting officer that the notice of labor surplus set-aside defines a "Persistent labor surplus area concern" as one which agrees to perform, or cause to be performed, a substantial portion of a contract in such area if the costs that will be incurred amount to more than 50 percent of the contract price (ASPR 1–804.2 (b) (2) (i)). In view thereof, Reynolds was advised that unless information was furnished that costs in excess of 50 percent of the contract price would be incurred in persistent labor surplus areas, it could only be considered as one producing in

an area of substantial surplus labor-priority group 4. Reynolds protested against this conclusion-to place it in priority group 4and advised that it proposed manufacturing aluminum sheets at Listerhill, Alabama, using ingot manufactured at Massena, New York. It further stated that:

we wish to call your attention to ASPR 3-902.1(a) which indicates that there can be "subcontract" between a contractor and "his affiliate, subsidiary or division." A purpose of ASPR 3-902.1 (a) is the recognition of such "subcontracts" and their disqualification under "Make-or-Buy Programs." Reynolds Metals Company, for internal purposes, divides its manufacturing operations into eight "divisions": (1) alumina and reduction; (2) sheet, wire, rod, bar, powder and ACSR; (3) insulated wire and cable; (4) extrusion; (5) foil and printing; (6) architectural fabrication; (7) plastics; and (8)

cans.

ASPR 1-801.1 provides as follows:

1-801.1 Labor surplus area concern includes

(i) persistent labor surplus area concerns which will perform or cause to be performed any contracts awarded to them as labor surplus area concerns substantially in "Areas of Substantial and Persistent Labor Surplus"; and

(ii) substantial labor surplus area concerns which will perform or cause to be performed any contracts awarded to them as labor surplus area concerns substantially in "Areas of Substantial Labor Surplus".

A concern shall be deemed to perform a contract substantially in "Areas of Substantial and Persistent Labor Surplus" if the costs that it incurs on account of manufacturing or production (by itself or its subcontractors) in such areas amount to more than 50 percent of the contract price. A concern shall be deemed to perform a contract substantially in "Areas of Substantial Labor Surplus" if the costs that it incurs on account of manufacturing or production (by itself or its subcontractors) in such areas or in "Areas of Substantial or Persistent Labor Surplus" amount to more than 50 percent of the contract price. Example A. ABC Company, manufacturing in a full employment area, bids on a contract at $1,000. ABC Company will incur the following costs:

Direct labor__.

$200

Overhead

200

Purchase of materials from XYZ, which manufactures the materials in a labor surplus area__

510

ABC Company qualifies as a labor surplus area concern.

Example B. DEF Company, manufacturing in a labor surplus area, bids on

a contract at $1,000. DEF Company will incur the following costs: Direct labor____

Overhead

$200 200

Purchase of materials from UVW, which is located in a labor surplus area but which merely distributes the materials from stocks on hand (the materials having been manufactured by UVW's supplier)

550

DEF Company does not qualify as a labor surplus area concern regardless of whether UVW's supplier manufactures in a labor surplus area.

Example C. GHI Company, manufacturing in a labor surplus area, bids on a contract at $1,000. GHI Company will incur the following costs:

Direct labor--

Overhead

Purchase of materials from RST, which manufactures the materials

in a full employment area----

GHI Company qualifies as a labor surplus area concern.

In 41 Comp. Gen. 160, 164-165, we held:

$230

275

425

From the above examples, [ASPR 1-801.1] it is obvious that the place at which the contractor will itself perform may be wholly immaterial if more than 50 percent of the total cost of performance will be incurred for subcontracting or purchase of materials or components. The location or locations of the sources of such materials or components will, under the regulation, determine the status of the prime contractor as a labor surplus area concern.

The Reynolds' explanation above as to its eligibility appears to imply that the price of aluminum ingot produced in the Massena area should be accepted as the cost of aluminum ingot to its Listerhill plant which would produce the end item-aluminum sheets-on the basis that this constitutes a "subcontract" within the meaning of ASPR 3-902.1(a). However, this section of the Armed Services Procurement Regulation is specifically applicable to "Make-or-Buy" programs under requests for proposals which, under the general rules of contract construction, may not be extended to an entirely different contract program having for its paramount purpose an economic goal of Government assistance to distressed labor areas.

Whether a particular bidder will perform a contract substantially in "Area of Substantial and Persistent Labor Surplus" is a question of fact dependent upon information furnished with the bid which reasonably establishes that more than 50 percent of the "contract price" will be incurred in such labor areas.

While the costs that might be incurred by Reynolds in the Massena area might be in excess of 50 percent of the cost of aluminum ingot priced at $0.225 per lb., or about $0.113 per lb., the non-set-aside portion awarded to Reynolds is priced at $0.322 per lb. Hence, to determine Reynolds' eligibility under ASPR 1-801.1, an amount in excess of $0.161 per lb. of the costs of manufacturing or production in the Massena area must be established by Reynolds to entitle it to award of the set-aside portion. This was not done. Reynolds' statement relative to its direct labor and overhead costs to be incurred in the Massena area in producing aluminum ingot at $0.225 per lb. may not be accepted as evidence of an amount in excess of 50 percent of the contract price for furnishing finished aluminum sheets. Also, the price at which aluminum ingot may be charged to the Listerhill plant does not fix the costs which Reynolds will incur in producing ingot in the Massena

area.