B-130713, APR. 9, 1957

B-130713, APR. 9, 1957

TO JOHN R. HOLLINGSWORTH CORPORATION:

REFERENCE IS MADE TO YOUR LETTERS OF FEBRUARY 12, AND MARCH 1 AND 5, 1957, PROTESTING THE ACTION OF THE GENERAL SERVICES ADMINISTRATION IN REJECTING ALL BIDS RECEIVED IN RESPONSE TO INVITATION NO. FN-3J-5210 N-12- 14-56, WHICH INVITED BIDS FOR FURNISHING 1,000 GENERATOR SETS FOR THE FEDERAL CIVIL DEFENSE ADMINISTRATION.

IN THE LETTER OF FEBRUARY 12, YOU REQUESTED A DECISION BY OUR OFFICE BEFORE THE AWARD OF ANY CONTRACT AND BEFORE THE ISSUANCE OF AN INVITATION FOR NEW BIDS. IN THE LETTER OF MARCH 1, YOU SET FORTH IN DETAIL A CHRONOLOGICAL RECORD OF THE EVENTS WHICH TRANSPIRED IN CONNECTION WITH THE SUBMISSION IN CONSIDERATION OF YOUR BID, AND ON THE BASIS OF THAT RECORD, WHICH YOU CLAIM ESTABLISHES A PURPOSE ON THE PART OF THE ADMINISTRATIVE AGENCY TO DISREGARD YOUR BID, REQUESTED THAT WE DIRECT THE GENERAL SERVICES ADMINISTRATION TO AWARD YOU THE CONTRACT ON THE BASIS OF YOUR ORIGINAL BID. IT APPEARS FROM YOUR LETTER OF MARCH 5 AND THE ABSTRACT OF BIDS ATTACHED THERETO THAT NEW BIDS WERE INVITED UNDER INVITATION NO. FN- 3J-5210-A-3-4-57 FOR FURNISHING 1,002 GENERATOR SETS AND IT WAS POINTED OUT IN THAT LETTER THAT YOU WERE UNDERBID BY THE WINPOWER MANUFACTURING COMPANY. YOU URGE, AS YOU HAD PREVIOUSLY URGED, THAT YOU DID NOT RECEIVE THE AWARD PURSUANT TO THE FIRST INVITATION SOLELY BECAUSE OF THE DESIRE OF THE GENERAL SERVICES ADMINISTRATION TO ACCEPT THE LATE BID OF THAT COMPANY. ALSO, YOU CONTEND THAT THE INVITATION FOR NEW BIDS HAS OPERATED TO DEPRESS THE PRICE OF THE EQUIPMENT TO THE POINT THAT SMALL BUSINESS IS COMPELLED TO SELL SUCH EQUIPMENT TO THE GOVERNMENT WITHOUT PROFIT.

THE VARIOUS CONTENTIONS URGED IN YOUR LETTERS HAVE BEEN INVESTIGATED BY THE GENERAL SERVICES ADMINISTRATION AND WE HAVE BEEN ADVISED BY THAT ADMINISTRATION THAT THE ACTION OF THE CONTRACTING OFFICIALS IN REJECTING ALL BIDS RECEIVED IN RESPONSE TO THE FIRST INVITATION WAS BASED UPON THEIR DETERMINATION, CONCURRED IN BY THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION, THAT SUFFICIENT TIME HAD NOT BEEN ALLOWED BIDDERS IN WHICH TO EVALUATE THEIR COSTS OF PRODUCTION IN THE LIGHT OF THE LAST CHANGE IN THE SPECIFICATIONS. IN VIEW OF THE MAXIMUM REDUCTION OF $36,000 OFFERED BY ONE OF THE FIVE BIDDERS WHO REDUCED THEIR BIDS AS A RESULT OF THE TELEGRAPHIC CHANGE IN SPECIFICATIONS OF DECEMBER 13, 1956, IT WAS BELIEVED BY THE CONTRACTING OFFICIALS THAT CONSIDERABLE SAVINGS TO THE GOVERNMENT COULD BE REALIZED IF ALL BIDDERS HAD BEEN GIVEN MORE TIME TO RECOMPUTE THEIR PRICES.

IT IS THE VIEW OF THE ADMINISTRATIVE OFFICE THAT THIS IS BORNE OUT BY A COMPARISON OF THE PRICES QUOTED BY THE VARIOUS BIDDERS UNDER THE TWO INVITATIONS, THEIR COMMENTS ON WHICH ARE AS FOLLOWS:

1. ALTHOUGH PROTESTING THE GOVERNMENT'S ACTION IN REJECTING ALL BIDS ON THE GROUND THAT THE TELEGRAPHIC CHANGES IN THE SPECIFICATIONS WERE NEGLIGIBLE, THUS REQUIRING NO CHANGE IN YOUR BID PRICE, YOU HAVE NOW SEEN FIT IN YOUR SECOND BID TO REDUCE YOUR UNIT PRICE BY THE SUM OF $23.02, A TOTAL OF $23,020 FOR THE 1,000 UNITS.

2. IN THE SECOND INVITATION THE WINPOWER MANUFACTURING COMPANY QUOTED A UNIT PRICE OF $1,269, WHICH IS $50 PER UNIT, NOT CONSIDERING DISCOUNT, LESS THAN THE UNIT PRICE QUOTED IN THE FIRST INVITATION. IN ALL, THIS REPRESENTS A REDUCTION IN THE TOTAL BID PRICE OF APPROXIMATELY $50,000 FROM THE FIRST BID OF THIS CONCERN.

3. IN THE CASE OF O. E. SZEKLEY THERE IS A UNIT PRICE REDUCTION IN ITS BID OPENED ON MARCH 4, 1957, FROM ITS FIRST BID OF $302.11 OR A TOTAL OF $302,110 FOR THE TOTAL CONTRACT QUANTITY. THE RECORD SHOWS THAT THIS BIDDER DID NOT RECEIVE THE DECEMBER 13 TELEGRAPHIC MODIFICATION OF THE SPECIFICATIONS BUT UPON A TELEPHONE CALL TO THE CONTRACTING OFFICER LEARNED OF THE CHANGES IN THE SPECIFICATIONS AND IMMEDIATELY SUBMITTED A $25 REDUCTION IN ITS UNIT PRICE. UPON FURTHER EXAMINATION OF THE REVISED SPECIFICATIONS, ATTACHED TO THE SECOND INVITATION, THIS BIDDER WAS ABLE TO OFFER A MUCH MORE SUBSTANTIAL REDUCTION IN ITS UNIT PRICE.

4. TOTAL REDUCTIONS IN CONTRACT PRICE UNDER THE SECOND INVITATION ALSO WERE OFFERED BY J. R. HOLLINGSWORTH OF PHOENIXVILLE, PENNSYLVANIA, ATLANTIC DIESEL, JOHN REINER, AND U.S. MOTORS CORPORATION IN THE RESPECTIVE APPROXIMATE AMOUNTS OF $95,000, $277,000, $20,640, AND $166,150.

5. AS A RESULT OF THE SECOND INVITATION THERE WILL INURE TO THE BENEFIT OF THE GOVERNMENT AN APPROXIMATE NET SAVING OF $29 PER UNIT OR $29,000 FOR THE TOTAL CONTRACT QUANTITY, LESS TIME PAYMENT DISCOUNT, AS A RESULT OF THE DIFFERENCE BETWEEN THE LOW BID OF THE JOHN R. HOLLINGSWORTH CORPORATION UNDER THE ORIGINAL INVITATION AND THE LOW BID OF THE WINPOWER MANUFACTURING COMPANY UNDER THE SECOND INVITATION.

THE COMMISSIONER, FEDERAL SUPPLY SERVICE, REPORTS WITH RESPECT TO YOUR CONTENTIONS AS FOLLOWS:

"THROUGHOUT THE COMPLAINT OF THE JOHN R. HOLLINGSWORTH CORPORATION, AS CONTAINED IN ITS LETTERS OF MARCH 1 AND MARCH 5, 1957 TO YOUR OFFICE, ARE ALLEGATIONS AND INSINUATIONS OF UNFAIR AND DISCRIMINATORY TACTICS ON THE PART OF EMPLOYEES OF THIS AGENCY INSOFAR AS THAT CORPORATION IS CONCERNED. IN THIS REGARD, ANY AND ALL SUCH ALLEGATIONS ARE HEREBY INDISPUTABLY AND UNEQUIVOCALLY DENIED.

"SPECIFICALLY, HOLLINGSWORTH ALLEGES THAT AN ATTEMPT WAS MADE TO ACCEPT THE LATE, REVISED BID OF THE WINPOWER COMPANY. WHEN CONSIDERED BY THOSE OFFICIALS HAVING CONTRACTING AUTHORITY, SUCH LATE BID WAS IMMEDIATELY DISREGARDED.

"HOLLINGSWORTH FURTHER ALLEGES THAT OUR CHANGES IN SPECIFICATIONS ARE CLAIMED TO BE MAJOR ENGINEERING CHANGES WHEREAS THEY ARE,IN EFFECT, MAINLY CLARIFICATIONS OF SPECIFICATIONS. IN THIS REGARD THE CHANGES PERMITTED THE SUBSTITUTION OF A THERMAL PROTECTIVE DEVICE IN THE GENERATOR FIELD CIRCUIT AS AN ALTERNATE TO THE MANUAL RESET THERMAL CIRCUIT BREAKER ORIGINALLY SPECIFIED, PROVIDED THAT A MAIN FUSED DISCONNECT SWITCH WAS ALSO SUPPLIED. IN OUR OPINION, THIS CHANGE CONSTITUTED A MAJOR, TECHNICAL CHANGE IN THE ORIGINAL EQUIPMENT SPECIFIED IN THE INVITATION. ADDITION, THE REVISED SPECIFICATIONS ALSO MATERIALLY REDUCED THE AMOUNT OF TESTING REQUIRED TO BE PERFORMED BY THE CONTRACTOR WHICH UNQUESTIONABLY REDUCED THE COST OF PRODUCTION TO THE MANUFACTURER.

"AS STATED IN THE ADMINISTRATOR'S LETTER OF FEBRUARY 25, 1957 TO SENATOR MARTIN, THE ACTION TAKEN BY THIS AGENCY IN THIS CASE WAS ON THE BASIS OF CAREFUL DELIBERATION BY ALL RESPONSIBLE OFFICIALS INVOLVED AND A DETERMINATION THAT UNDER THE CIRCUMSTANCES THE BEST INTERESTS OF THE GOVERNMENT WOULD BE SERVED BY REJECTING ALL BIDS AND READVERTISING FOR THE REQUIREMENT.'

THE DUTY OF MAKING DETERMINATIONS AS TO WHETHER ALL BIDS SHOULD BE REJECTED LIES WITH THE ADMINISTRATIVE OFFICERS OF THE PURCHASING AGENCY IN THE EXERCISE OF THEIR BEST JUDGMENT IN THE INTEREST OF THE GOVERNMENT. THE ABSENCE OF CLEAR PROOF OF ABUSE OF THEIR DISCRETIONARY POWERS IN THAT REGARD, WE WOULD NOT UNDERTAKE TO INTERFERE WITH THE ACTION BASED UPON SUCH DETERMINATION. IN THIS PROCUREMENT THE CONTRACTING OFFICIALS OF THE FEDERAL SUPPLY SERVICE OF THE GENERAL SERVICES ADMINISTRATION DETERMINED THAT IT WAS IN THE BEST INTEREST OF THE GOVERNMENT TO REJECT ALL BIDS AND TO READVERTISE ON THE BASIS OF REVISED SPECIFICATIONS AND CONDITIONS SO THAT BIDDERS WOULD HAVE MORE TIME TO COMPUTE THEIR BIDS. THIS ACTION WAS IN ACCORDANCE WITH THE RIGHT EXPRESSLY RESERVED BY THE GOVERNMENT IN THE INVITATION FOR BIDS, AND THE PROVISIONS OF SECTION 3/B) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, 63 STAT. 377, 395, WHICH CONTAINS THE PROVISO "THAT ALL BIDS MAY BE REJECTED WHEN THE AGENCY HEAD DETERMINES THAT IT IS IN THE PUBLIC INTEREST SO TO DO.' WE ARE SURE THAT THE ADMINISTRATIVE OFFICIALS ARE FULLY COGNIZANT OF THE UNDESIRABLE CONSEQUENCES OF READVERTISING AFTER BIDS HAVE ONCE BEEN OPENED AND MADE UBLIC; HOWEVER, IN THE PRESENT PROCUREMENT, THE ADMINISTRATIVE ACTION APPEARS TO HAVE BEEN TAKEN IN GOOD FAITH AND ON WHAT APPEAR TO BE REASONABLE GROUNDS OTHER THAN A MERE DESIRE TO ENCOURAGE CUT-THROAT BIDDING. IN VIEW OF SUCH FACTS, WE FIND NO LEGAL BASIS FOR QUESTIONING THE ACTION TAKEN BY THE ADMINISTRATIVE AGENCY.