B-150804, JUN. 10, 1963

B-150804, JUN. 10, 1963

TO THE PALMER ASPHALT COMPANY:

IN YOUR LETTERS OF MARCH 22, 1963, YOU ASK US TO RECONSIDER OUR DECISION OF MARCH 19, 1963, AND CONTEND THAT INVITATION FOR BIDS (IFB) 62204-0559- 63/GS-3) SHOULD NOT HAVE BEEN CANCELLED BECAUSE AWARD COULD HAVE BEEN MADE TO YOU AS LOW BIDDER, WITH A REDUCED QUANTITY OF ITEM 1 (A) CORRESPONDING TO THE AGENCY'S ACTUAL NEEDS. THE MARINE CORPS REPORT ON YOUR PRESENT CONTENTION SHOWS THAT REPUBLIC POWERED METALS COMPANY WOULD HAVE BEEN DECLARED LOW BIDDER, IF THE QUANTITY OF ITEM 1 (A) HAD BEEN REDUCED, ON THE BASIS THAT IT HAD AGREED TO FURNISH ITEM 1 (B) FREE IF AWARDED ITEMS 1, 1 (A) AND 2. HOWEVER, WE ARE ADVISED INFORMALLY BY THE MARINE CORPS THAT YOU ARE CORRECT IN ALLEGING THAT REPUBLIC BID ON ITEM 1 (B) ?40 EACH ORIGIN AND ?45 EACH DESTINATION.

IN VIEW OF THE FACTS THAT THE IFB REQUIRED THAT AWARD, IF MADE, BE MADE FOR ALL 4 ITEMS, AND THAT REPUBLIC SUBMITTED A CHARGE FOR EACH ITEM, WE BELIEVE A REASONABLE INTERPRETATION OF THE APPARENTLY CONTRADICTORY OFFER TO FURNISH ONE OF THE ITEMS WITHOUT CHARGE WOULD BE THAT THE OFFER WAS CONDITIONED ON AWARD BEING MADE FOR THE FULL QUANTITIES. IT WOULD FOLLOW THAT IF AWARD HAD BEEN MADE FOR LESS THAN THE QUANTITY ADVERTISED, REPUBLIC COULD HAVE ASSERTED THAT ITS BID EVIDENCED A CLEAR INTENT TO CHARGE ?40 OR ?45 EACH ON ITEM 1 (B). THEREFORE, YOUR COMPANY RATHER THAN REPUBLIC SHOULD HAVE BEEN CONSIDERED THE LOW BIDDER ON THE REDUCED QUANTITY.

HOWEVER, OUR CONCLUSION AS TO THE PROPRIETY OF CANCELLING THE IFB RATHER THAN AWARDING REDUCED QUANTITIES REMAINS UNCHANGED REGARDLESS OF WHICH COMPANY WOULD HAVE BEEN THE LOW BIDDER. OF COURSE, THE AGENCY HAD THE PRIVILEGE UNDER CLAUSE 8 (C) OF THE TERMS AND CONDITIONS OF THE IFB TO AWARD A QUANTITY LESS THAN THAT BID UPON UNLESS THE BIDDER HAD SPECIFIED OTHERWISE. B-150197, DATED NOVEMBER 14, 1962. HOWEVER, WE DO NOT THINK THAT THE AGENCY'S DETERMINATION TO USE ITS RIGHT UNDER CLAUSE 8 (B) TO REJECT ALL BIDS SHOULD BE CONSIDERED AN IMPROPER EXERCISE OF ITS DISCRETION WHERE ITS MINIMUM NEEDS HAVE BEEN SUBSTANTIALLY OVERSTATED. SEE B-134424, DATED DECEMBER 19, 1957. FURTHERMORE, 10 U.S.C. 2305 (C) PROVIDES FOR THE REJECTION OF ALL BIDS WHEN SUCH ACTION IS DETERMINED TO BE IN THE GOVERNMENT'S INTEREST. IN ADDITION TO THE POSSIBLE HARDSHIP ON THE LOW BIDDER, AN AWARD OF A CONTRACT FOR ITEMS, ONE OR MORE OF WHICH HAVE BEEN SUBSTANTIALLY REDUCED IN QUANTITY, MAY EFFECTIVELY PRECLUDE THE CONSIDERATION OF BIDS WHICH WOULD HAVE BEEN SUBMITTED IF THE AGENCY NEEDS FOR CERTAIN ITEMS HAD BEEN CORRECTLY STATED. THIS POSSIBILITY SEEMS ESPECIALLY LIKELY WHERE, AS HERE, THE ITEM REDUCED IN AN "OR EQUAL" ITEM, AND MAY EXPLAIN IN PART WHY 4 OF THE 9 RESPONSIVE BIDDERS ON THE REVISED AND CORRECTED INVITATION DID NOT SUBMIT BIDS ON THE FIRST INVITATION. IS POSSIBLE THAT A COMPANY NOT MANUFACTURING ONE OF THE "OR EQUAL" ITEMS CAN BE COMPETITIVE UNDER A GIVEN INVITATION FOR AWARD BY LOT ONLY IF THAT ITEM DOES NOT CONSTITUTE A SUBSTANTIAL PORTION OF THE PROCUREMENT. IN ANY EVENT, WE NOTE THAT ONE OF THE 4 NEW BIDDERS WAS AWARDED THE CONTRACT ON THE REVISED AND CORRECTED INVITATION, FOR SLIGHTLY INCREASED NEEDS, AT A LOWER PRICE THAN THAT AT WHICH A CONTRACT COULD ORIGINALLY HAVE BEEN LET FOR THE CORRECT QUANTITY OF ITEM 1 (B). ACCORDINGLY, WE MUST CONCLUDE THAT WHERE TIME PERMITS THE READVERTISEMENT OF AN IFB WHICH OVERSTATED AGENCY NEEDS, CONSIDERATIONS OF FAIRNESS TO BIDDERS BOTH ACTUAL AND POTENTIAL MAY JUSTIFY THE REJECTION OF ALL BIDS.