B-146213, SEP. 8, 1961

B-146213, SEP. 8, 1961

TO RENAH F. CAMALIER, ESQUIRE:

ON AUGUST 11, 1961, YOU SUBMITTED A BRIEF REQUESTING RECONSIDERATION OF OUR DECISION TO THE SECRETARY OF THE NAVY, B-146213 OF JULY 26, 1961, WHEREIN IT WAS CONCLUDED THAT IFB-191-142-61, CANCELED BY THE CONTRACTING OFFICER AND READVERTISED UNDER IFB-191-153-61, SHOULD BE REINSTATED AND AWARD MADE TO REGIS MILK COMPANY THEREUNDER.

THE FIRST POINT IN YOUR BRIEF IS THAT THE CONTRACTING OFFICER HAD COGENT AND COMPELLING REASONS TO CANCEL ALL BIDS AND TO READVERTISE IN VIEW OF THE PRICES BID AND OTHER FACTORS AND THE PROVISION IN THE ORIGINAL INVITATION PROVIDING THAT "AWARD WILL GENERALLY BE MADE TO A SINGLE BIDDER ON EACH ENTIRE LOT.'

ASPR 2-404.1 (B) REQUIRES THAT THE CONTRACTING OFFICER "SHALL STATE THE REASONS" IN WRITING FOR CANCELLATION OF AN INVITATION FOR BIDS. PURSUANT TO THE DIRECTIVE, THE CONTRACTING OFFICER PREPARED SUCH A STATEMENT FOR THE CANCELLATION OF IFB-191-142-61. THE SOLE REASON ASCRIBED FOR THE CANCELLATION IN THE STATEMENT WAS THAT IT COULD NOT BE ESTABLISHED CLEARLY THAT AN AWARD TO REGIS WOULD BE IN THE BEST INTERESTS OF THE GOVERNMENT IN VIEW OF FOREMOST'S OFFER SOME $6,200 LOWER ON THE FIRST TWO OF THE FOUR ITEMS ON WHICH BIDS WERE INVITED. THEREFORE,WHILE YOU SUGGEST THAT "PERHAPS" THERE WERE MANY OTHER FACTORS THAT ACTIVATED THE CONTRACTING OFFICER TO TAKE THE CANCELLATION ACTION, THERE IS FOR CONSIDERATION THE ONLY REASON RECITED BY HIM IN HIS STATEMENT. IN THE ABSENCE OF HIS STATING ANY OTHER REASONS, IT IS ONLY REASONABLE TO CONCLUDE THAT NO OTHERS EXISTED OR HE DID NOT CONSIDER THEM TO BE SUFFICIENTLY COMPELLING SINCE THE REFERENCED REGULATION MAKES MANDATORY RECITATION OF THE REASONS.

AS INDICATED IN OUR DECISION OF JULY 26, THE REJECTION OF ALL BIDS MUST BE BASED UPON COGENT OR COMPELLING REASONS. WE DO NOT BELIEVE THAT THE REASON THE CONTRACTING OFFICER ADVANCED CAME WITHIN EITHER CATEGORY. WHEN A CONTRACTING OFFICER CANNOT DETERMINE BY A COMPARISON OF BIDS WHETHER THE PRICE OFFERED BY THE ONLY BIDDER MEETING ALL OF THE GOVERNMENT'S NEEDS IS THE BEST PRICE, WE BELIEVE THAT THE CIRCUMSTANCES REQUIRE HIM TO ASCERTAIN BY OTHER MEANS THAT THE OVER ALL BID PRICE IS UNREASONABLE BEFORE CASTING ASIDE ALL DISCLOSED BIDS AND READVERTISING. THIS IS ALSO THE TENOR OF ASPR 2-404.1 WHICH SUGGESTS TO CONTRACTING OFFICERS THAT ONE OF THE REASONS THEY MAY RELY UPON IN THEIR DETERMINATION TO CANCEL IS THAT "ALL OTHERWISE ACCEPTABLE BIDS RECEIVED ARE AT UNREASONABLE PRICES.'

YOU HAVE SUGGESTED THAT, SINCE THE INVITATION PROVIDED THAT "AWARD WILL GENERALLY BE MADE TO A SINGLE BIDDER ON SUCH ENTIRE LOT" AND FOREMOST WAS LOW ON ITEMS 1 AND 2 COMPRISING LOT I, THE CONTRACTING OFFICER COULD HAVE MADE AN AWARD TO FOREMOST ON THAT BASIS. YOU ALSO STATE THAT THIS PROVISION WAS MISLEADING TO FOREMOST IN THAT IT CAUSED THE COMPANY TO BELIEVE AWARDS WOULD BE MADE ONLY ON A ONE-LOT BASIS. HOWEVER, WE DO NOT CONSTRUE THAT PROVISION AS REQUIRING AWARD ONLY ON THE BASIS OF SEPARATE LOTS TO SINGLE BIDDERS OR AS PRECLUDING "ALL OR NONE" BIDS. WHILE THE PROVISION DOES PERMIT AWARD ON A LOT BASIS, IT DOES NOT MAKE SUCH ACTION MANDATORY. ON THE CONTRARY, THE USE OF THE WORD "GENERALLY" IN THE PROVISION IS SUFFICIENT TO PERMIT AN EXCEPTION AND OTHER LANGUAGE OF THE PROVISION SPECIFICALLY AUTHORIZES AWARDS TO BE MADE ON OTHER BASES. FURTHERMORE, THE PROVISION STATES THAT IT IS SUBJECT TO THE PROVISIONS OF PARAGRAPH 8 OF THE TERMS AND CONDITIONS OF THE INVITATION FOR BIDS, WHICH PROVIDES THAT THE GOVERNMENT MAY ACCEPT ANY ,GROUP OF ITEMS.' THEREFORE, ONLY THROUGH AN UNDULY RESTRICTIVE CONSTRUCTION OF THE LANGUAGE CITED BY YOU FROM THE INVITATION CAN A CONCLUSION THAT AWARDS WOULD ONLY BE MADE ON A LOT BASIS BE SUPPORTED. IT SHOULD BE NOTED TOO THAT ASPR 2-404.5, TITLED "ALL OR NONE QUALIFICATIONS," DIRECTS CONTRACTING OFFICERS THAT "UNLESS THE INVITATION FOR BIDS SO PROVIDES, A BID IS NOT RENDERED NONRESPONSIVE BY THE FACT THAT THE BIDDER SPECIFIES THAT AWARD WILL BE ACCEPTED ONLY ON ALL, OR A SPECIFIED GROUP, OF THE ITEMS INCLUDED IN THE INVITATION FOR BIDS.'

IT IS FURTHER CONTENDED THAT THE CITATIONS INCLUDED IN OUR JULY 26 DECISION HAVE NO RELATION TO THE INSTANT MATTER IN FACT OR LAW. OUR PURPOSE IN REFERRING TO 39 COMP. GEN. 396 AND 36 ID. 62 WAS TO SHOW THAT IN CIRCUMSTANCES IN WHICH NO COGENT OR COMPELLING REASON EXISTED FOR REJECTING ALL BIDS WE HAVE HELD SUCH ACTION TO BE IMPROPER AND HAVE DIRECTED CANCELLATION OF AWARDS MADE AFTER READVERTISING. SINCE WE DETERMINED THAT THE CONTRACTING OFFICER HAD NO COGENT OR COMPELLING REASON FOR HIS ACTION IN THE IMMEDIATE CASE, SUPPORT FOR REQUIRING THE CONTRACTING OFFICER TO REINSTATE THE ORIGINAL INVITATION AND TO MAKE AN AWARD THEREUNDER WAS ESTABLISHED BY THE CITED DECISIONS.

ANOTHER CONTENTION IS THAT 35 COMP. GEN. 383 IS DISTINGUISHABLE SINCE IN THAT CASE THE CONTRACTING OFFICER MADE A DETERMINATION THAT THE AWARD MADE WAS IN THE BEST INTEREST OF THE GOVERNMENT WHEREAS IT IS ALLEGED THE CONTRACTING OFFICER IN THE PRESENT CASE NEVER MADE SUCH A DECISION. HOWEVER, AGAIN REFERRING TO THE CONTRACTING OFFICER'S DETERMINATION QUOTED IN OUR DECISION OF JULY 26, IT WILL BE NOTED THAT HE "WAS CONSIDERING AWARDING TO REGIS IN THE AGGREGATE AS IN THE BEST INTEREST OF THE GOVERNMENT.' IT WAS ONLY BECAUSE HE WAS ADVISED BY COUNSEL THAT SOMETHING MORE THAN THE EVIDENCE HE HAD WAS NECESSARY THAT HE CHANGED HIS POSITION. SINCE AT THE TIME THE MATTER WAS REFERRED TO US THE ADMINISTRATIVE OFFICE WAS HOLDING UP ANY ACTION PENDING OUR DECISION, WE FELT IT INCUMBENT UPON US TO DETERMINE THE ISSUES INVOLVED IN THE PROTEST UPON THE BASIS OF THE APPLICABLE LAW AND PRECEDENTS AND TO REQUIRE THE AWARD AS THE CONTRACTING OFFICER ORIGINALLY CONTEMPLATED.

ALSO, THE FACT THAT IN THAT DECISION (35 COMP. GEN. 383) THE DETERMINATION THAT THE LANGUAGE IN THE INVITATION PERMITTED "ALL OR NONE" BIDDING WAS MADE UNDER SLIGHTLY DIFFERENT CIRCUMSTANCES DOES NOT IN ANYWAY ALTER THE VALIDITY OF THAT DETERMINATION. CONFINING OURSELVES TO THE INVITATION LANGUAGE, WHICH WAS THE SAME AS THE LANGUAGE IN THE IMMEDIATE CASE, WE SAID:

"THERE IS NOTHING IN THE ABOVE-QUOTED PARAGRAPHS FROM WHICH IT MAY BE INFERRED THAT SEPARATE CONTRACTS WERE NECESSARILY TO BE AWARDED ON EACH LOT. ALSO, THERE IS NOTHING IN THOSE PARAGRAPHS THAT PROHIBITS "ALL OR NONE" BIDS. THE FIRST QUOTED PROVISION WAS EXPRESSLY "SUBJECT TO THE PROVISIONS OF PARAGRAPH ONE (PARAGRAPH 8 IN THE IMMEDIATE INVITATION)," WHICH SPECIFICALLY LIMITED THE GOVERNMENT'S RIGHT TO ACCEPT ANY ITEM OF ANY BID BY THE EXCEPTION "UNLESS QUALIFIED BY SPECIFIC LIMITATION OF THE BIDDER.' AN "ALL OR NONE" BID, IN THE ABSENCE OF A SPECIFIC PROVISION TO THE CONTRARY, HAS NEVER BEEN CONSIDERED AS AN ALTERNATE BID. IT HAS ALWAYS BEEN HELD THAT "ALL OR NONE" BIDS SUBMITTED IN RESPONSE TO INVITATIONS FOR BIDS FOR DEFINITE QUANTITIES ARE FOR CONSIDERATION EVEN IF THERE IS NO PROVISION THEREFOR IN THE INVITATION FOR BIDS. SEE B-124981, DATED AUGUST 18, 1955; B-66858, DATED JUNE 16, 1947; AND A-97645, DATED APRIL 6, 1939. ALSO, AN AWARD OF ALL LOTS TO ONE BIDDER, WHERE NO MORE ADVANTAGEOUS PRICE MAY BE OBTAINED OTHERWISE, DOES NOT APPEAR OBJECTIONABLE. CF. B 104782, DATED OCTOBER 22, 1951.' 35 COMP. GEN. 383, 385.

THE CONCLUSION OF 35 COMP. GEN. 383 WAS THAT SINCE THERE WERE NO AVAILABLE BIDS ON LOTS FIVE THROUGH EIGHT WHICH IN COMBINATION WITH THE LOWER BID ON LOTS ONE THROUGH FOUR WOULD RESULT IN A LOWER OVER-ALL PRICE THEN THE "ALL OR NONE" BID ON LOTS ONE THROUGH EIGHT, THE LETTER SHOULD BE ACCEPTED. WE BELIEVE THAT THIS REASONING IS APPLICABLE WITH EQUAL FORCE TO THE PRESENT CASE.

THE SECOND POINT IN YOUR BRIEF IS THAT OUR OFFICE ERRED IN CONCLUDING THAT THE ORIGINAL BID SUBMITTED BY REGIS WAS REASONABLE. YOU POINT OUT THAT OUR CONCLUSION WAS BASED UPON A COMPARISON OF THAT BID WITH THE HIGHER BID SUBMITTED BY BENTON DAIRY. IT IS YOUR CONTENTION THAT THE BENTON BID WAS UNREALISTIC AND THAT THIS WAS PROBABLY REALIZED BY THE CONTRACTING OFFICER IN DETERMINING TO REJECT ALL BIDS. ON THE CONTRARY, IN HIS DETERMINATION TO CANCEL THE FIRST INVITATION THE CONTRACTING OFFICER DID NOT INDICATE THAT BENTON'S BID WAS UNREALISTIC AND THE NECESSITY FOR INCLUDING REASONS FOR REJECTION IN THE WRITTEN DETERMINATION HAS HEREINBEFORE BEEN DISCUSSED. IN FACT, IN AT FIRST CONSIDERING TO MAKE THE AWARD TO REGIS THE CONTRACTING OFFICER CONSIDERED IT SIGNIFICANT THAT BENTON WAS HIGHER THAN REGIS BY MORE THAN $8,000. BUT NONETHELESS, IT IS NOT DENIED THAT REGIS' PRICES WERE BELOW THE PRICES PAID ON THE PREVIOUS PROCUREMENT AND WERE IN LINE OR BELOW THE PRICES BEING PAID BY MILITARY INSTALLATIONS WITHIN THE STATE. THEREFORE, WE BELIEVE THERE WAS AN ADEQUATE BASIS FOR THE CONCLUSION THAT THE REGIS BID WAS REASONABLE. AND THE FACT THAT THE CONTRACTING OFFICER WAS PREPARED TO MAKE AN AWARD TO THAT BIDDER UNTIL HE WAS OTHERWISE ADVISED BEARS OUT OUR BELIEF THAT THE CONTRACTING OFFICER MUST HAVE BEEN OF A SIMILAR VIEW.

THE THIRD POINT IN YOUR BELIEF IS THAT THE CONTRACTING OFFICER IS BETTER QUALIFIED THAN THIS OFFICE TO DETERMINE WHAT ACTION IS IN THE BEST INTEREST OF THE GOVERNMENT. AS WE POINTED OUT IN THE JULY 26 DECISION, WE RECOGNIZE THAT THE ADMINISTRATIVE AUTHORITY TO REJECT BIDS IS BROAD AND NOT ORDINARILY SUBJECT TO QUESTION BUT THAT WHEN NO COGENT OR COMPELLING REASON EXISTS FOR THE REJECTION WE CAN DIRECT THAT PROPER ACTION BE TAKEN. IN THIS CONNECTION, IT IS THE LONG ESTABLISHED AUTHORITY OF THE ACCOUNTING OFFICERS OF THE GOVERNMENT (VESTED IN THIS OFFICE BY SECTION 304 OF THE BUDGET AND ACCOUNTING ACT OF JUNE 10, 1921, 31 U.S.C. 44) TO SETTLE THE ACCOUNTS OF DISBURSEMENTS OF PUBLIC MONEYS BY EXECUTIVE DEPARTMENTS AND AGENCIES OF THE GOVERNMENT (SEE 31 U.S.C. 72). IN THE EXERCISE OF THIS AUTHORITY IT HAS HISTORICALLY BEEN THE PRACTICE OF THE ACCOUNTING OFFICERS TO DISALLOW CREDIT FOR DISBURSEMENTS MADE UNDER CONTRACTS WHICH THEY HAVE CONSIDERED TO HAVE BEEN AWARDED CONTRARY TO THE PROVISIONS OF THE LAWS GOVERNING THE LETTING OF GOVERNMENT CONTRACTS. ORDER TO FURNISH PROTECTION TO ADMINISTRATIVE OFFICIALS AGAINST THIS CONSEQUENCE OF ERRONEOUS ACTION IN DOUBTFUL CASES, IT WAS PROVIDED IN SECTION 8 OF THE DOCKERY ACT OF JULY 31, 1894, 31 U.S.C. 74, THAT DISBURSING OFFICERS OR DEPARTMENT OR AGENCY HEADS COULD APPLY TO THE COMPTROLLER GENERAL FOR A DECISION UPON "ANY QUESTION INVOLVING A PAYMENT TO BE MADE BY THEM OR UNDER THEM," WHICH DECISION, WHEN MADE, SHOULD GOVERN IN PASSING UPON THE ACCOUNT CONTAINING SUCH DISBURSEMENT. IT HAS LONG BEEN HELD THAT THE AUTHORITY CONFERRED BY THIS STATUTE UPON THE COMPTROLLER GENERAL WAS NOT MERELY MINISTERIAL BUT ADMINISTRATIVE AND QUASI-JUDICIAL. SEE BRUNSWICK V. ELLIOTT, 103 F.2D 746. THE EXERCISE OF THIS AUTHORITY IN THE DETERMINATION OF DISPUTES AS TO THE LEGALITY OF AWARDS OR PROPOSED AWARDS OF PUBLIC CONTRACTS HAS FOR MANY YEARS BEEN RECOGNIZED AND ACQUIESCED IN BY THE EXECUTIVE AGENCIES OF THE GOVERNMENT AND BY THE CONGRESS AND ITS COMMITTEES.

THE FOURTH POINT IN YOUR BRIEF IS THAT THE MERE FACT THAT REGIS BID ON ALL LOTS IS NOT A SUFFICIENT REASON TO MAKE AN AWARD TO IT. WE AGREE THAT THE FACT THAT A BIDDER IS RESPONSIVE TO ALL OF THE GOVERNMENT'S NEEDS IS NOT BY ITSELF A SUFFICIENT REASON TO MAKE AN AWARD TO SUCH BIDDER. HOWEVER, WHEN, AS IN THIS CASE, THERE IS NO OTHER COMBINATION OF BIDS FOR ALL THE ITEMS THAT WOULD RESULT IN A LOWER PRICE THAN THE AGGREGATE BIDDER'S PRICE AND THE LATTER IS NOT SHOWN TO BE UNREASONABLE, WE SEE NO REASON WHY AWARD SHOULD NOT BE MADE ON THE OVER-ALL BASIS. TO DO OTHERWISE WOULD PREJUDICE THE INTERESTS OF THE BIDDER WHO OFFERED TO FURNISH THE GOVERNMENT ALL OF ITS NEEDS AND WHO IN SO DOING HAD DISCLOSED ITS PRICES TO THE COMPETITION. TO REJECT ALL BIDS AND CHANGE THE ADVERTISED INVITATION IN NO RESPECT OTHER THAN TO MAKE AGGREGATE BIDDING MANDATORY WHEN IT WAS PERMISSIVE BEFORE IS HARDLY FAIR TREATMENT TO THE BIDDER WHO HAD REVEALED HIS COMPLETE POSITION AS THE ORIGINAL INVITATION PERMITTED HIM TO DO.

YOU CONTEND THAT SINCE THE CONTRACTING OFFICER COULD HAVE SAVED $6,212 ON LOT I IN THE ORIGINAL INVITATION BY MAKING THE AWARD TO FOREMOST NO EXCEPTION COULD HAVE BEEN TAKEN IF THAT WERE DONE INSTEAD OF MAKING THE AWARD TO REGIS. HOWEVER, THIS CONTENTION OVERLOOKS THE APPARENT FACT THAT II WAS THE LEAST DESIRABLE OF THE TWO LOTS INVOLVED AND THAT THEREFORE ANY DETERMINATION THAT AN OVER-ALL SAVING OF ANY SUBSTANTIAL AMOUNT WOULD RESULT BY ACCEPTANCE OF FOREMOST'S BID ON LOT I AND READVERTISEMENT OF LOT II ALONE WOULD HAVE BEEN PURELY SPECULATIVE.

THE FIFTH POINT IN YOUR BRIEF IS THAT THE JULY 26 DECISION WILL CAUSE SERIOUS FINANCIAL DISADVANTAGE TO THE UNITED STATES. IN THIS CONNECTION, YOU POINT OUT THAT REGIS BID LESS ON THE READVERTISEMENT THAN ON THE ORIGINAL INVITATION AND YOU CONTEND THAT ITS FIRST PRICE WAS THEREFORE UNREASONABLE AND YOU STATE THAT IF THIS WAS NOT THE CASE REGIS SHOULD HAVE SUBMITTED THE SAME BID TOGETHER WITH A PROTEST ON THE SECOND INVITATION RATHER THAN TO HAVE REDUCED ITS PRICE. THE FACT THAT A BIDDER QUOTES A LOWER PRICE ON READVERTISEMENT THAN IT DID ON THE ORIGINAL INVITATION DOES NOT ESTABLISH THAT ITS ORIGINAL BID WAS UNREASONABLE. AS STATED IN OUR JULY 26 DECISION, IT IS NATURAL TO EXPECT A REDUCTION IN PRICES UPON READVERTISEMENT FOLLOWING THE DISCLOSURE OF ORIGINAL PRICES. THE REASONABLENESS OF THE BID MUST BE ASCERTAINED FROM THE CIRCUMSTANCES EXISTING AT THE TIME THE ORIGINAL BIDS WERE CONSIDERED. WE BELIEVE THE FACTS AND CIRCUMSTANCES EXISTING AT THAT TIME DID NOT SHOW THAT THE REGIS BID WAS UNREASONABLE.

FURTHER, IF REGIS HAD ADHERED TO ITS ORIGINAL PRICE ON THE READVERTISEMENT, IT SHOULD HAVE BEEN GAMBLING ON THE OUTCOME OF ITS PROTEST. SINCE IT WAS DESIROUS OF OBTAINING GOVERNMENT BUSINESS IT HAD NO CHOICE BUT TO REMAIN COMPETITIVE IN THE EVENT ITS PROTEST WAS DENIED.

ALSO, YOU POINT OUT THAT THE AWARD TO REGIS UNDER THE ORIGINAL INVITATION WILL COST THE GOVERNMENT APPROXIMATELY $34,000 MORE THAN AN AWARD TO FOREMOST UNDER THE READVERTISEMENT. THIS FACTOR WAS CONSIDERED IN OUR JULY 26 DECISION. WE POINTED OUT THERE THAT FAIR PLAY WAS INFINITELY MORE IMPORTANT THAN GAINING A PECUNIARY ADVANTAGE IN A GIVEN CASE.

YOU SUGGEST ALSO THAT FOREMOST MAY HAVE A CLAIM FOR DAMAGES FOR FAILURE OF AN AWARD TO BE MADE TO IT. HOWEVER, IT IS WELL SETTLED THAT AN UNSUCCESSFUL BIDDER FOR A GOVERNMENT CONTRACT HAS NO RIGHT OF ACTION AGAINST THE UNITED STATES. UNITED STATES V. NEW YORK AND PORTO RICO STEAMSHIP ., 239 U.S. 83; AMERICAN SMELTING AND REFINING CO. V. UNITED STATES, 259 U.S. 75; PERKINS V. LUKENS STEEL CO., 310 U.S. 113.

YOUR LETTER OF AUGUST 18, 1961, REQUESTS THAT WE GIVE CONSIDERATION TO AMENDING OUR PREVIOUS DECISION SO AS TO ALLOW THE NAVY DEPARTMENT OR THE CONTRACTING OFFICER TO AWARD LOT I OF THE ORIGINAL INVITATION TO FOREMOST AND READVERTISE LOT II, OR TO TAKE SUCH OTHER ACTION AS THEY MAY ELECT IN THEIR DISCRETION UNDER THE ORIGINAL INVITATION. IN VIEW OF THE CONCLUSIONS REACHED HEREIN WE ARE, OF COURSE, UNABLE TO TAKE SUCH ACTION.