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HomeMy WebLinkAbout081225-6.6 BID PROTESTFROM: TO: RE: "Small Town Atmosphere Outstanding Quality of Life" City Attorney Town Council Bid Protest on CIP Project C-055 Diablo Road Trail -Agenda Item 6.6 As described in the staff report for agenda item 6.6, a bid protest was filed by Bay Cities Paving & Grading, LLC ("Bay Cities") challenging the proposed award of the contract for CIP Project C-055. The staff report recommends that the protest be rejected and that the contract be awarded to the apparent low bidder, Goodfellow Bros. California, LLC ("Goodfellow"). Subsequent to the staff report being prepared and provided to both Bay Cities and Goodfellow, the attorney representing Bay Cities submitted a letter providing further argument as to why the Bay Cities protest should be granted. (Letter attached as Exhibit 1) While that letter does not change the conclusion of Town staff, this memo is intended to provide a detailed legal and factual response in order to create a clear record of the basis for the Town staff recommendation. Factual Background This summary is limited to facts relevant to the bid protest. As stated in the staff report, Goodfellow was the apparent low bidder while Bay Cities was the second low bidder. As part of the required bid submittal, each bidder was required to include the list of all subcontractors (see copy of form attached hereto as Exhibit 1). The form has spaces to fill in the name and other relevant information regarding each subcontractor as required by Public Contract Code Section 4104. Of relevance to the protest, the form also requires the bidder to list the "Bid Item No(s)." and "percentage" for each subcontractor. Both of these lines include the direction to "See Note Above." That Note reads, in relevant part, as follows: "On the Subcontractor List you may either submit the bid item numbers, and the percentage of each item subcontracted with your bid or email the information to eng ineering@danville.ca. gov„ Goodfellows bid submittal fully complied with all subcontractor information with the exception of the percentage of work to be done (sample page attached as Exhibit 2). Rather than list the percentage of each bid item to be performed by each subcontractor 500 LA GONDA WAY, DANVILLE, CALIFORNIA 94526 Administration Building Engineering & Planning Transportation Maintenance Police Parks and Recreation (925) 314-3388 (925) 314-3330 (925) 314-3310 (925) 314-3310 (925) 314-3450 (925) 314-3700 (925) 314-3400 August 12, 2025 Page 2 (for example, to indicate that a subcontractor would be performing 80% of the work on a specific bid item), they used the percentage each subcontractor would be performing of the entire bid amount (for example, in Exhibit 2, you will see that Evergreen Engineering would be performing work equaling 1.64% of the entire bid amount). It should be noted that Goodfellow was one of two bidders to complete the form in this manner. After the bid protest was received from Bay Cities, Town staff forwarded a copy of the protest to Goodfellow, a necessity to allow them the opportunity to respond and defend themselves. The Town's Transportation Manager, Allan Shields, received a subsequent phone call from a representative of Goodfellow who had questions regarding the protest. Mr. Shields declined to answer questions in order to remain neutral, but did provide Goodfellow with the bids from all bidders at thei request. The following day, Goodfellow submitted a list of all subcontractors pursuant to the Note 011 the Town form allowing bidders to email the information to the Town specifying the percentage of work to be done for each bid item. (See Attachment E to staff report, attached here also as Exhibit 3). Legal Framework Public Contract Code Section 4104 requires all bidders on public works contracts in California to list the following information for each subcontractor that will be performing more than 0.5% of the total bid amount: • Name of subcontractor • Location of their business • California contractors license number • California DIR registration number • The "portion" of the work to be done by that subcontractor With regard to the last point, the court of appeal in the case of Valley Crest Landscape v. City Council (1996) 41 Cal.App.4th 1432, 1439, ruled that the requirement to state the "portion" of work is satisfied by describing the type of work, it does not need to be quantified as a percentage. Nonetheless, the Town and many other agencies require percentages to be listed even though not required by state law. The reason for this is simple: almost all public works contracts require the prime contractor (the bidder) to perform a minimum percentage of the work themselves. Listing of percentages of subcontractors allows this requirement to be easily and accurately verified. On this contract, the Town required the prime contractor to perform a minimum of 30% of the work. The second part of the legal framework that is necessary to evaluate the bid protest is how to review a bid that contains a mistake or error. While the results in different cases will vary depending on the facts of the case, the following is a standard explanation of how this type of situation is evaluated by the courts: August 12, 2025 Page 3 "A basic rule of competitive bidding is that bids must conform to specifications, and that if a bid does not so conform, it may not be accepted. [Citations.] However, it is further well established that a bid which substantially conforms to a call for bids may, though it is not strictly responsive, be accepted if the variance cannot have affected the amount of the bid or given a bidder an advantage or benefit not allowed other bidders or, in other words, if the variance is inconsequential. Ghilotti Construction v. City of Richmond (1996) 45 Cal.App.4th 897, 904. Legal Analysis Within this framework, Town staff analyzed the Goodfellow bid and the Bay Cities bid protest in the following manner. First, the Town believes that the Goodfellow bid does meet the specifications in the request for bids. Referring back to the directions found in the "Note" on the Subcontractor List, those directions read: "On the Subcontractor List you may either submit the bid item numbers, and the percentage of each item subcontracted with your bid or email the information to engineering@idanville.ca.gov" (italics added). This language clearly gives the bidder two choices of how to provide the percentages of work for each bid item. More importantly, the Note does not specify that if a bidder elects the second option (emailing the information) when they must do so. If the Note gave a specific deadline for that option, it might lead to a different conclusion. As an example of this, in the case of DeSilva Gates Construction, LP v. Department of Transportation (2015) 242 Cal.App.4th 1409, 1413 (a case cited by the Bay Cities attorney), the court noted that the Caltrans form for subcontractors included the following language: "On the Subcontractor List you may either submit each subcontracted bid item number and corresponding percentage with your bid or fax these numbers and percentages to (916) 227- 6282 within 24 hours after bid opening. Failure to do so results in a nonresponsive bid. (italics included in original)" The Caltrans wording differs from the Town's in two ways: 1) there is a specific deadline to submit; and 2) failure to do so is specifically called out as making the bid nonresponsive. Finally, as stated above, the reason to require percentages of work to be performed by subcontractors is to allow the Town to determine if the prime contractor will be performing at least 30% of the overall bid. That could be determined by the original submittal without reference to the additional percentage breakdown provided by Goodfellow. Second, assuming the manner in which Goodfellow submitted their bid did not comply with the required specifications, it is then necessary to turn to the question of whether the mistake was consequential. The courts look to the following factors: August 12, 2025 Page 4 • Did the error affect the amount of the bid? No, it did not. The total Goodfellow bid did not change based on the additional information submitted. • Did it give Goodfellow an advantage or benefit not allowed other bidders? No, it did not. As stated previously, the reason for this information is to determine that the prime bidder is performing the required minimum amount of work. They are doing so and Town staff was able to determine that on July 15, the date the bids were opened. In addition, as stated above, Goodfellow was not the only bidder to complete the form in this manner. Finally, unlike the Valley Crest case discussed in more detail below, the Goodfellow bid did not provide a basis for Goodfellow to seek relief from their bid under Public Contract Code Section 5103. The legal argument submitted by Bay Cities relies on two cases, neither of which is parallel to our current bid. The first case is the Valley Crest case, cited above. In that case, the apparent low bidder listed subcontractors doing a total of 83% of the total job. This presented a problem because the contract specifications called for the prime contractor to perform a minimum of 50% of the work. After the second low bidder (Valley Crest) pointed this out, the low bidder resubmitted their list of subcontractors, now showing only 44.65% of the work being subcontracted. The court of appeal found that percentages of subcontractors was a material element of the bid and that the numbers could not be changed after the fact. The court also based its decision on the fact that because the low bidder said their initial bid was a "mistake" they could have sought relief from the bid pursuant to Public Contract Code Section 5103, thereby giving that bidder an advantage over other bidders. In our situation, Goodfellow did not change contractors or the bid items on which subcontractors will work, did not claim that they had made a mistake and certainly made no material changes in work as occurred in Valley Crest. All they did with their July 22 submittal (Exbibit 4) was to provide a different manner of looking at the numbers -a percentage of the overall job or a percentage of each bid item to be subcontracted. The table contained on page 4 of the letter from Bay Cities' attorney is a clear misstatement of the facts. It implies that subcontractors who were listed in the bid at 1 or 2% of the work are now doing 100% of the work. This is simply not the case and is thus fundamentally different than the situation in the Valley Crest case. The second case relied upon by Bay Cities is DeSilva Gates Construction, LP v. Department of Transportation (2015) 242 Cal.App.4th 1409, but again that case factually has no bearing on the Goodfellow bid. In DeSilva, the issue arose from DeSilva submitting a second list of subcontractors within 24 hours after bids were opened and that list containing a subcontractor that had not appeared on the initial list in the bid packet. That additional subcontractor was not listed on the initial submittal because the amount of work they were doing fell below the legal threshold. The court of appeal found that this was not a legally adequate basis to disqualify the DeSilva bid. August 12, 2025 Page 5 To summarize, the mistake in the Goodfellow bid, if any, was that in their bid submittal they listed subcontractor percentages as a percent of the total bid rather than per bid item. This did not provide them with any advantage over other bidders nor did it change the amount of their bid nor prejudice any other bidder. Given all of that, Town staff concludes that it is within the Town Council's discretion to reject the Bay Cities protest and award the contract to Goodfellow. The Town staffs analysis can be summed up by the following statement from the case of Judson Pacific -Murphy Corp. v. Durkee (1956) 144 Cal.App. 2d 377, 383, a statement which is still frequently cited in these types of cases: "It certainly would amount to a disservice to the public if a losing bidder were to be permitted to comb through the bid proposal or license application of the low bidder after the fact, [and] cancel the low bid on minor technicalities, with the hope of securing acceptance of his, a higher bid. Such construction would be adverse to the best interests of the public and contrary to public policy." Exhibits: 1. Letter from Copeland Law Firm received 8/5/25 2. Subcontractor List (blank) 3. Subcontractor List submitted by Goodfellows with bid (page 1) 4. Subcontractor List submitted by Goodfellows 7/22/25 COPELAND LAW FIRM, APC 19201 Sonoma Hwy.. Suite 106 Sonoma. California 95476 August 5, 2025 Via Email & US Mail Mr. Allan Shields Town of Danville 500 La Gonda Way Danville, CA 94526 ashields 4111111 \ ille.ca.aov Dear Mr. Shields: ofc: 424/234-9701 email: sbc@copelandlawpc.com RE: Bay Cities Paving & Grading, Inc.'s Protest of Goofellow Bros. of California, LLC's Bid on Contract C055 Please be advised this firm generally represents Bay Cities Paving & Grading, LLC. ("Bay Cities") and has been forwarded the communications related to Bay Cities protest of Goodfellow Bros. California, Inc.'s ("Goodfellow") bid on Contract C055 ("Project"). This letter serves as Bay Cities' response to your email dated August 5, 2025. There is no doubt that Goodfellow's bid was non-compliant with the Project bid requirements insofar as Goodfellow's bid failed to accurately or compliantly list subcontractor percentages as required in the bid documentation. Bay Cities' position in that regard is best set forth in Mr. Manqueros' letter dated July 21, 2025, which I incorporate herein without the need to reassert those contentions. What is now more concerning to me are the two City of Danville ("City") actions since receiving Bay Cities' protest, both of which evidence further proof that Goodfellow's bid was non-responsive and that since receiving that bid, the City has now granted favoritism to Goodfellow which constitutes an unwaivable aspect of the non-responsive bid. Under both circumstances, the City is obligated to either award the Project bid to Bay Cities or, alternatively, to throw out all bids. Controlling Law Holds Goodfellow's Bid Non -Responsive, and the City May Not Waive the Mistake Your email attached an undated Administrative Staff Report which claimed, among other things, that Goodfellow's error was inconsequential and thus waivable by the City, despite Mr. Manqueros' July 21, 2025 letter proving Goodfellow's bid was unwaivably non-responsive. The City's Staff Report is absolutely an incorrect interpretation of both the law and the facts. Public Contract Code §4104 expressly requires each trade of work subcontracted by Goodfellow to have been listed in detail in its bid. And as if Section 4104 was not specific enough, the City added requirements in Section 2-1.10 of the Project bid documents mandating all bidders list their subcontractor's name, address, license number, public contracting registration number, and for the portion of work each subcontractor was performing, to list the "Bid item numbers for the subcontracted work ... [the] Percentage of the subcontracted work for each bid item listed ... [and a] Description of the subcontracted work if the percentage of the bid item listed is less than 100 percent." California courts have consistently thrown -out contracts issued by azencies to bidders who have failed to list both the amount or the proper scope of a subcontractor, since both are violations of the listing laws. As the court explained in Valley Crest Landscape, Inc. v. City Council, (1996) 41 Cal.App.4th 1432, "listing the subcontractor percentages is a material element of the bid" which cannot be waived by the owner. And in the that case, the court found the agencv's award of the contract to the low bidder to be illegal where the agency allowed the low bidder. "to correct the mistake in stating the [subcontractor] percentages," as allowing that action gave the low bidder an unfair advantage not allowed of the other bidders. Again, in DeSilva Gates Construction, LP v. Department of Transportation, (2015) 242 Cal.App.4th 1409, the court specifically held, "As part of a responsive bid, bidders on public construction contracts must list subcontractors who will provide work above a certain threshold amount ... deceptive [bids are ones which] indicated [a] ... shift of work from a subcontractor to [a different contractor or a second-tier contractorl." Under both Valley Crest Landscape, Inc. and under DeSilva Gates Construction, LP, Goodfellow's failure to list the percentages according to the instructions makes Goodfellow's bid de -facto and de jure non-responsive. Moreover, despite the City's requirement for contractors to issue a, "Description of the subcontracted work if the percentage of the bid item listed is less than 100 percent," Goodfellow did not do so with its July 22, 2025 email. This is not a waivable bid irregularity. If the City awards the contract to Goodfellow, the City is ignoring controlling caselaw and a court will be called upon to throw out such an illegal award. The City's decision to rely on the case of Ghilotti Construction v. City of Richmond, (1996) 45 Cal.App.4th 897 is evidence the City does not understand the controlling law cited above. The issue in the Ghilotti case was whether the City of Richmond's specifications allowing for a higher percentage of DBE subcontracting was in conflict with the incorporated Caltrans specifications on the same issue and thus, whether the low bid which exceeded Caltrans' limits but not the City's rendered the bid non-responsive. Those facts and the resulting holding are inconsequential to the issue with Goodfellow's bid on this project. The case the City relies on is actually inapposite to the facts here, which are instead controlled by the Valley Crest Landscape, Inc. and DeSilva Gates Construction, LP cases whose facts and law are directly on point. Goodfellow's mistake is not inconsequential and is not waivable as a matter of law. Moreover, the mistake of failing to list the specific "Description of the subcontracted work if the percentage of the bid item listed is less than 100 percent" has not been addressed by Goodfellow's July 22, 2025 email and cannot be corrected post -bid -deadline in any event. Controlling Law Renders the City's Post -Bid Actions Illegal Favoritism Granted to Goodfellow As required by law, the bid gave all bidders a deadline to turn in all bid documentation — here, the deadline was listed as July 15, 2025 by 2:00 pm. Despite this legal cutoff, a day after receiving Bay Cities' protest letter, and undoubtedly as a result of that letter, the City then immediately contacted Goodfellow with the content of Bay Cities' protest, with the City allowing Goodfellow to then submit an email listing the correct information related to subcontracting percentages, apparently still not complying with Section 2-1.10 as at no point did the email nor bid describe the work being performed by the subcontractors for subcontracted work for any bid item less than 100 percent. Yet by allowing for the attempted correction in the first place, the City absolutely granted Goodfellow favoritism by allowing Goodfellow to correct its bid mistake ex post facto over a week after the mandatory bidding deadline. In Goodfellow's July 22, 2025 email, it cited to "Section 2- 1.33A" as allowing for the submission of subcontractor percentages by email. That Section of the Bid Documents does not allow for such submission after the mandatory bid cutoff, and the City's allowance for Goodfellow to do so coupled with the City relying on that correction to determine the bid is now responsive is illegal. Under California law, a bid is non-responsive as a matter of law when either of the following is present: 1. The irregularity in a bid gives that bidder an unfair advantage over other bids or if it gives that bidder a last look at the other bids after the bid closing date in deciding whether to honor the bid; or 2. Given that there is an irregularity in the low bid, waiving the irregularity would constitute favoritism to the non-responsive bidder. See, Valley Crest Landscape, Inc. v. City Council, (1996) 41 Cal.App.4th 1432; MCM Constr. v. City & County of San Francisco, (1998) 66 Cal.App.4th 359; Ghilotti Constr. Co. v. City of Richmond, (1996) 45 Cal.App.4th 897; Monterey Mechanical Co. v. Sacramento Reg'l County Sanitation Dist., (1996) 44 Ca1.App.4th 1391. It is in those second series of cases that the City's post bid conduct falls. As the court explained in Valley Crest Landscape, Inc., a bid is non-responsive when it has "given the bidder an advantage or benefit not allowed other bidders," and the court found the agency's award of the contract to the low bidder to be illegal where the agency allowed the low bidder, "to correct the mistake" as allowing that action gave the low bidder an unfair advantage not allowed of the other bidders. Here, the City has admitted to allowing Goodfellow to correct its mistakes. The following is a table showing the percentages subcontracted as listed in the bid versus the percentages listed in the post -bid closing July 22, 2025 email: SUBCONTRACTOR NAME BID ITEM PERCENTAGE LISTED IN BID PERCENTAGE LISTED IN EMAIL All Commercial Fence Inc. 9a 2.44% 69.30% 9b 2.44% 100% Case Pacific 18a 16.92% 33.70% 19 16.92% 27.70% Dirt & Aggregate Interchange, Inc. 20 1% 100% Evergreen Engineering & Excavation 6 1.64% 100% 9a 1.64% 15.80% 7a 1.64% 77.60% Farwest Safety 33 0.42% 100% Golden Bay Fence 34 4.51% 100% McGuire & Hester, Inc. 16 2.54% 41.80% 26a 2.54% 100% 26b 2.54% 100% 26c 2.54% 100% 26d 2.54% 100% 27 2.54% 100% 31 2.54% 100% 37 2.54% 100% Pacific Northwest Oil 25a 1.88% 100% Retainning Wall Co. 17 1.66% 100% SSEC 8 0.15% 60% 28 0.15% 100% 29 0.15% 100% TDW Construction Inc. 1 9.93% 6.40% 12a 9.93% 100% 12b 9.93% 85% 13a 9.93% 100% 13b 9.93% 100% 14a 9.93% l00% 14b 9.93% 100% 15 9.93% 2.50% 21 9.93% 68.20% 30 9.93% 100% Very clearly, Goodfellow, with the City's blessing, changed the percentage of each and every item of work for each and every listed subcontractor — a material change and one which the City has granted as a favor to Goodfellow to determine the bid to be responsive. This is a clear violation ofthe law and will not pass court muster. And yet even with that correction, there are 11 categories where less than 100% of the work of a bid item is being performed by the listed subcontractor and no description of the work being performed by those subcontractors is provided by Goodfellow in its July 22, 2025 email, keeping its illegally corrected bid non-responsive. Goodfellow's bid must be held non-responsive, and the correction of the mistakes therein may not be accepted by the City post bid submission deadline. Bay Cities' bid is the lowest responsive bid as Bay Cities stands by its commitment to perform the Project work once the contract is awarded to Bay Cities. Best regards, COPELAND L By. Steven B. ". - an. Subcontractor List The Bidder shall list the name and address of each subcontractor to whom the Bidder proposes to subcontract portions of the work in an amount in excess of one-half of one percent of the total bid or $10,000, whichever is greater, in accordance with the Subletting and Subcontracting Fair Practices Act, commencing with Section 4100 of the Public Contract Code, and as required by the provisions in Section 2.1.01, "General," of the Special Provisions. In accordance with California Public Contract Code Section 4104, State contractor licenses shall be listed for all subcontractors. Note: Replace the second paragraph of Section 2-1.33A "General" of the Standard Specifications with the following: "On the Subcontractor List you may either submit the bid item numbers, and the percentage of each item subcontracted with your bid or email the information to engineering@danville.ca.gov". Subcontractor Business Name Subcontractor Business Name Email address: Email address: Street Address Street Address City County City County State Zip State Zip Description of Work to be Subcontracted Description of Work to be Subcontracted California State Contractor License No(s). California State Contractor License No(s). DIR Registration No. DIR Registration No. °/U Bid Item No(s). Percentage Bid Item No(s). (See Note Above) (See Note Above) (See Note Above) Percentage (See Note Above) Subcontractor Business Name Subcontractor Business Name Email address: Email address: Street Address Street Address City County City County State Zip State Zip Description of Work to be Subcontracted Description of Work to be Subcontracted California State Contractor License No(s). California State Contractor License No(s). DIR Registration No. DIR Registration No. % Bid Item No(s). Percentage Bid Item No(s). Percentage (See Note Above) (See Note Above) (See Note Above) (See Note Above) (Attach additional sheets if needed) P-5 ,,e L: Ia.•-1— 2 EXHIBIT A Subcontractor List The Bidder shall list the name and address of each subcontractor to whom the Bidder proposes to subcontract portions of the work in an amount in excess of one-half of one percent of the total bid or $10,000, whichever is greater, in accordance with the Subletting and Subcontracting Fair Practices Act, commencing with Section 4100 of the Public Contract Code, and as required by the provisions in Section 2.1.01, "General," of the Special Provisions. In accordance with California Public Contract Code Section 4104, State contractor licenses shall be listed for all subcontractors. Note: Replace the second paragraph of Section 2-1.33A "General" of the Standard Specifications with the following: "On the Subcontractor List you may either submit the bid item numbers, and the percentage of each item subcontracted with your bid or email the information to engineering a@danville.ca.gov". We.V i`%('r fir)-1ireet2 (r<i y Cwvat-i On 1DvJ NIngizIAC-Vi On MC Subcontractor Business Name Subcontractor Business Name Email address:-� -S F Q,Vtt-oveel) - IAS PGi1. C'Itmail address: Liti i(t -{tr'VtltHOn 211- fa f-Oc(d Street Address than J oact i Cq 5to State Zip r)faAo u+on (P) Description of Work to be Subcontracted VAPID -4 IP Street Address C County C1465 D California State Contractor License No(s). ISM 043 -134 -- LIR Rcyistratiun NO. `• Bid Item I.1o(s). Percentage (See Note Above) (See Note Above) CrILAWA2Lf.C1I fella. Inc Subcontractor Business Name Email address: Po Boy, lnG et Address f0E-d l:i(y State Ct iniV(A VIC County Zip Description of Work to be Subcontracted co o3b California State Contractor License No(s). 1o1)DC7-44`?-:? t9 DIR Registration No. CIA-, 8 Bid Item No(s). (See Note Above) (Attach additional sheets Percentage (See Note Above) if needed) P-5 State Zip 1kndet ‘2ouhd Description of Work to be Subcontracted 444 14 California State Contractor License No(s), ‘cO00Q5lP00 DIR Registration No. I I l ISO, 1.93 % Bid Item No(sF. YtA,t4%)IS. Percentage (See Mk Above) LI, SD (See Note Above) cGui 40142 - Subcontractor Business Name Email address: cioo9 12Aii42oadROL S6714;11;7 treet Addres cxT s n klmmda city` County eFilo03 State Zip LrA Cori, oi) Work to be Subcontracted q57-3-9 California State Contractor License No(s). 100000005'5 DIR_Registration No. l Lf;']] ►'� �a — 21713, Bid Item No(s). (See Note Above) SI 2.5`j' % Percentage (See Note Above) •COM C-055 DIABLO ROAD PEDESTRIAN TRAIL AND DRAINAGE IMPROVEMENTS PROJECT Goodfellow Bros. California LLC SUBCONTRACTOR LIST SUBCONTRACTOR BID ITEMS % OF ITEMS SUBCONTRACTED All Commercial Fence Inc. 9a, 9b 139.3, 100 Case Pacific 18a, 19 33.7, 27.7 Dirt & Aggregate Interchange Inc. 20 100 Evergreen Engineering & Excavation 6, 9a, 7a 100, 15.8, 77.6 Farwest Safety 33 100 Golden Bay Fence 34 100 McGuire & Hester 16, 26a, 26b, 26c, 26d, 27, 37, 31 41.8, 100, 100, 100, 100, 100, 100 Murga, Strange & Chalmers Inc 12b, 15, 35, 36 1.4, 59.9, 33.8, 100 Pacific Northwest Oil 25a 100 Retaining Walls Co 17 100 SSEC 8, 28, 29 60, 100, 100 TDW Construction Inc. 1, 12a, 12b, 13a, 13b, 14a. 14b, 15, 21, 30 6.4, 100, 85, 100, 100, 100, 100, 2.5, 68.2, 100 1/00;4