B-157055, JUN. 21, 1966

B-157055, JUN. 21, 1966

TO THE SECRETARY OF THE ARMY:

ENCLOSED IS A COPY OF OUR DECISION OF TODAY TO FREQUENCY ENGINEERING LABORATORIES (FEL) CONCERNING ITS PROTEST AGAINST AWARD TO CALIFORNIA COMPUTER PRODUCTS INC. UNDER INVITATION FOR BIDS (IFB) NO. AMC/A/-36 038- 65-1033 (WEI), ISSUED MAY 3, 1965, BY FRANKFORD ARSENAL, PHILADELPHIA, PENNSYLVANIA. THE MATTER HAS BEEN THE SUBJECT OF REPORTS DATED APRIL 28 AND MAY 31, 1966, FROM THE DIRECTOR OF PROCUREMENT AND PRODUCTION, HEADQUARTERS, ARMY MATERIEL COMMAND.

THE PROCUREMENT WAS RESTRICTED TO SMALL BUSINESS CONCERNS, AND FIVE BIDS WERE RECEIVED. THE THREE LOWEST BIDS, INCLUDING FEL'S BID, RANGING FROM $677,309 TO $788,562 FOR THE FIRM QUANTITY OF 49 UNITS ON WHICH BIDS WERE EVALUATED, HAVE BEEN ELIMINATED FROM CONSIDERATION FOR THE REASONS SET FORTH IN OUR DECISION TO FEL. THE FOURTH BID, SUBMITTED BY CALIFORNIA COMPUTER PRODUCTS INC. (CALIFORNIA COMPUTER), WAS IN THE AMOUNT OF $1,107,748, AND THE FIFTH AND HIGHEST BID WAS $1,444,312.

ALTHOUGH THE CONTRACTING OFFICER CONSIDERS THAT AWARD TO CALIFORNIA COMPUTER AT ITS ORIGINAL BID PRICE WOULD NOT BE IN THE BEST INTERESTS OF THE GOVERNMENT, THE DIFFERENCE BETWEEN FEL'S BID AND CALIFORNIA COMPUTER'S BID AMOUNTING TO 63.5 PERCENT, IT IS THE POSITION OF THE CONTRACTING OFFICER, WITH WHICH HEADQUARTERS, ARMY MATERIEL COMMAND, CONCURS, THAT AWARD MAY BE MADE TO CALIFORNIA COMPUTER AT A VOLUNTARILY REDUCED BID PRICE WHICH COMPARES FAVORABLY WITH PRIOR PROCUREMENT PRICES FOR THE SAME ITEM AND IS THUS REGARDED BY THE CONTRACTING OFFICER AS REASONABLE. THE BASIS FOR SUCH POSITION IS STATED TO BE THE APPLICATION OF THE RULE SET FORTH IN B-74013, MARCH 9, 1948, AND IN VARIOUS OTHER DECISIONS OF OUR OFFICE, BASED UPON ALECH LEITMAN V. UNITED STATES, 104 CT.CL. 324, THAT THE GOVERNMENT MAY ACCEPT A VOLUNTARY REDUCTION OFFERED BY THE LOWEST RESPONSIBLE AND RESPONSIVE BIDDER.

IN B-157411, NOVEMBER 4, 1965, 45 COMP. GEN.----, WE HELD THAT WHERE ONLY ONE SMALL BUSINESS BIDDER SUBMITTED A BID IN RESPONSE TO A SMALL BUSINESS RESTRICTED INVITATION, AND THE PRICE QUOTED WAS UNREASONABLE, IT WAS IMPROPER TO NEGOTIATE WITH THAT BIDDER ALONE TO OBTAIN A REASONABLE PRICE. THAT DECISION WAS BASED IN PART UPON DOUBT EXPRESSED AS TO THE PROPRIETY OF THE SMALL BUSINESS RESTRICTION, BUT SOME OF THE REASONING FOLLOWED IN THE DECISION AND THE DISCUSSION OF THE APPLICABILITY OF LEITMAN, SUPRA, CONTAINED THEREIN, CREATES DOUBT AS TO THE PROPRIETY (AT LEAST IN A SMALL BUSINESS RESTRICTED PROCUREMENT) OF CONSIDERING EVEN A VOLUNTARY OFFER OF A PRICE REDUCTION BY A LOW BIDDER WHERE IT APPEARS THAT IN THE ABSENCE OF SUCH REDUCTION ALL BIDS WOULD BE REJECTED AS UNREASONABLE.

HOWEVER, IN VIEW OF THE FACT THAT WE ARE NOW ADVISED THAT THE FIFTH BIDDER ON THE SUBJECT PROCUREMENT, CHRISTIAN PRECISION MANUFACTURING COMPANY, IS CONSIDERED NONRESPONSIBLE FOR THE FALT EQUIPMENT, LEAVING CALIFORNIA COMPUTER AS THE ONLY ONE OF THE FIVE BIDDERS NOW REGARDED AS A RESPONSIBLE SOURCE, AND SINCE IT APPEARS THAT THE PRICE REDUCTION OFFERED WAS ENTIRELY VOLUNTARY AND UNSOLICITED, WE WILL INTERPOSE NO OBJECTION TO AWARD OF A CONTRACT TO CALIFORNIA COMPUTER ON ITS BID AS REDUCED, IF IT BE DETERMINED BY YOUR AGENCY THAT SUCH ACTION WOULD BE IN THE BEST INTEREST OF THE GOVERNMENT, IN THE LIGHT OF THE REPORTED URGENCY OF THE NEED FOR THE ITEMS INVOLVED.

THE FILE FORWARDED WITH THE REPORT FROM HEADQUARTERS, ARMY MATERIEL COMMAND, IS RETURNED.