B-132730, AUG. 14, 1957

B-132730: Aug 14, 1957

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BIDS RECEIVED PURSUANT TO THAT INVITATION WERE OPENED AS SCHEDULED ON APRIL 30. THE FOUR LOW BIDS WERE SUBMITTED BY JOWIL ELECTRONICS. IT WAS DETERMINED BY THE CONTRACTING OFFICER THAT THE OMISSION OF A PROVISION FOR FINANCIAL ASSISTANCE WAS PREJUDICIAL TO AT LEAST ONE BIDDER AND THAT POTENTIAL SUPPLIERS WERE PROBABLY PRECLUDED FROM BIDDING DUE TO THE LACK OF SUCH PROVISION. IT WAS DETERMINED TO BE IN THE BEST INTERESTS OF THE GOVERNMENT TO CANCEL THE FIRST INVITATION AND NOTICE THEREOF WAS ISSUED ON JULY 2. THE PROCUREMENT WAS READVERTISED UNDER THE SECOND INVITATION ISSUED ON JULY 15. IF SUCH A REQUEST IS CONTAINED IN THE SUCCESSFUL BID THE CLAUSE "PROGRESS PAYMENTS" (TOTAL COSTS) SET FORTH IN NPD-31-001 SHALL BE A PART OF THE CONTRACT.

B-132730, AUG. 14, 1957

TO REPUBLIC ELECTRONIC INDUSTRIES CORP.:

YOUR LETTERS OF JULY 26, 1957, WITH ENCLOSURES, AND AUGUST 7, 1957, PROTEST THE REJECTION OF ALL BIDS SUBMITTED PURSUANT TO INVITATION FOR BIDS NO. 600-1522-57 AND THE SUBSEQUENT READVERTISEMENT OF THE SAME PROCUREMENT UNDER INVITATION FOR BIDS NO. 600-49-58.

THE REPORT RECEIVED FROM THE DEPARTMENT OF THE NAVY INDICATES THAT THE FIRST INVITATION ISSUED MARCH 15, 1957, PROVIDED FOR THE PURCHASE OF SIGNAL GENERATORS, SPARE PARTS AND RELATED DOCUMENTS. BIDS RECEIVED PURSUANT TO THAT INVITATION WERE OPENED AS SCHEDULED ON APRIL 30, 1957. THE FOUR LOW BIDS WERE SUBMITTED BY JOWIL ELECTRONICS, MUNSTON MANUFACTURING AND SERVICE CORPORATION, GILLILAND INSTRUMENT COMPANY AND YOUR FIRM IN THAT ORDER. EXAMINATION OF THE BIDS REVEALED THAT GILLILAND HAD QUALIFIED ITS BID UPON ITS RECEIVING PROGRESS PAYMENTS AND MUNSTON AND JOWIL ALLEGED MISTAKES IN THEIR BIDS. SUBSEQUENTLY, IT WAS DETERMINED BY THE CONTRACTING OFFICER THAT THE OMISSION OF A PROVISION FOR FINANCIAL ASSISTANCE WAS PREJUDICIAL TO AT LEAST ONE BIDDER AND THAT POTENTIAL SUPPLIERS WERE PROBABLY PRECLUDED FROM BIDDING DUE TO THE LACK OF SUCH PROVISION. THEREFORE, IT WAS DETERMINED TO BE IN THE BEST INTERESTS OF THE GOVERNMENT TO CANCEL THE FIRST INVITATION AND NOTICE THEREOF WAS ISSUED ON JULY 2, 1957. THE PROCUREMENT WAS READVERTISED UNDER THE SECOND INVITATION ISSUED ON JULY 15, 1957, WHICH CONTAINED THE FOLLOWING PROVISION NOT INCLUDED IN THE FIRST INVITATION:

"NEED FOR FINANCING

"1. A BIDDER'S NEED FOR PROGRESS OR ADVANCE PAYMENTS CONFORMING TO APPLICABLE REGULATIONS SHALL NOT BE CONSIDERED AS A HANDICAP OR ADVERSE FACTOR IN THE AWARD OF CONTRACTS.

"2. A BIDDER DESIRING PROGRESS PAYMENTS MUST MAKE A WRITTEN REQUEST THEREFOR IN HIS BID. IF SUCH A REQUEST IS CONTAINED IN THE SUCCESSFUL BID THE CLAUSE "PROGRESS PAYMENTS" (TOTAL COSTS) SET FORTH IN NPD-31-001 SHALL BE A PART OF THE CONTRACT. IF THE SUCCESSFUL BID DOES NOT REQUEST PROGRESS PAYMENTS, THE CLAUSE "PROGRESS PAYMENTS" WILL NOT BE A PART OF THE CONTRACT. COPIES OF THIS CLAUSE MAY BE OBTAINED BY REQUEST TO NAVY PURCHASING OFFICE, WASHINGTON, D.C., CODE SPF.

"3. BIDS INCLUDING REQUEST FOR PROGRESS PAYMENTS WILL BE EVALUATED ON AN EQUAL BASIS WITH THOSE NOT INCLUDING REQUESTS FOR PROGRESS PAYMENTS.'

YOU PROTEST THE WITHDRAWAL OF THE FIRST INVITATION ON THE GROUNDS THAT SUCH ACTION WAS IMPROPER, UNAUTHORIZED AND UNJUSTIFIED, PREJUDICIAL TO THE RIGHTS OF YOUR COMPANY AND WOULD IMPROPERLY GIVE A NONRESPONSIVE BIDDER AN OPPORTUNITY TO REBID ON THE SAME PROCUREMENT WITH KNOWLEDGE OF THE COMPETITIVE BIDS. YOU ALSO CONTEND THAT THE ACTION "IMPAIRED THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM.' YOU REQUEST, THEREFORE, THAT THE SECOND INVITATION BE CANCELLED AND THAT AWARD BE MADE TO THE "LOWEST RESPONSIVE QUALIFIED BIDDER" UNDER THE FIRST INVITATION.

IT HAS LONG BEEN RECOGNIZED IN CONNECTION WITH GOVERNMENT CONTRACTS THAT NO BIDDER HAS AN ABSOLUTE RIGHT TO PUBLIC BUSINESS, BUT RATHER, THAT THE PUBLIC INTEREST IS FOR PRIMARY CONSIDERATION IN MAKING AN AWARD. FURTHER, IT HAS CONSISTENTLY BEEN HELD THAT AN INVITATION FOR BIDS DOES NOT IMPORT OBLIGATION TO ACCEPT ANY OF THE OFFERS RECEIVED AND, CONSEQUENTLY, A PUBLIC OFFICER ACTING FOR THE GENERAL WELFARE IS NOT BOUND TO ACCEPT A BID WHERE HE DETERMINES THAT THE PUBLIC INTEREST WOULD BEST BE SERVED BY A REJECTION OF ALL BIDS AND A READVERTISEMENT OF THE NEEDS OF THE GOVERNMENT. SEE O-BRIEN V. CARNEY, 6 F.SUPP. 761; SCOTT V. UNITED SATES, 44 C.CLS. 524; COLORADO PAVING CO. V. MURPHY, 78 F.28; 26 COMP. GEN. 49; 17 COMP. GEN. 554. HOWEVER, IT MUST BE RECOGNIZED THAT, CONTRARY TO THE PURPOSE FOR WHICH THE PUBLIC PROCUREMENT STATUTES WERE ENACTED, THE REJECTION OF ALL BIDS--- WITHOUT ABANDONMENT OF THE PROPOSED PROCUREMENT-- - TENDS TO DISCOURAGE COMPETITION BECAUSE IT RESULTS IN MAKING ALL BIDS PUBLIC WITHOUT AWARD, WHICH IS CONTRARY TO THE INTEREST OF THE LOW BIDDER, AND BECAUSE THE REJECTION OF ALL BIDS MEANS THAT BIDDERS HAVE EXPENDED MANPOWER AND MONEY ON THE PREPARATION OF THEIR BIDS WITHOUT ANY POSSIBILITY OF ACCEPTANCE. THEREFORE, THE AUTHORITY TO REJECT ALL BIDS MUST BE EXERCISED WITH CARE AND ONLY WITH A BONA FIDE DETERMINATION THAT THE PUBLIC INTEREST WOULD THEREBY BE SERVED. B 132120, JULY 8, 1957 (37 COMP. GEN. 12).

DEPARTMENT OF DEFENSE DIRECTIVE NO. 7800.4 PROVIDES IN PARAGRAPH IIIC THAT:

"REQUESTS FOR PROPOSALS AND INVITATIONS FOR BIDS SHALL SPECIFY THAT THE NEED FOR ADVANCE OR PROGRESS PAYMENTS CONFORMING TO REGULATIONS WILL NOT BE CONSIDERED AS A HANDICAP OR ADVERSE FACTOR IN AWARD OF THE CONTRACTS *

IT IS FURTHER PROVIDED AT PARAGRAPH IIID THAT:

"WHENEVER, INCIDENT TO FORMAL ADVERTISING, THE CONTRACTING OFFICER CONSIDERS * * * THAT PROGRESS PAYMENTS WILL BE USEFUL OR NECESSARY BY REASON OF UNUSUAL CIRCUMSTANCES THAT WILL INVOLVE SUBSTANTIAL ACCUMULATION OF PRE-DELIVERY COSTS THAT MAY HAVE A MATERIAL IMPACT UPON A CONTRACTOR'S WORKING FUNDS * * * THE INVITATION FOR BIDS SHALL STATE THAT UPON WRITTEN REQUEST BY THE PROSPECTIVE CONTRACTOR A PROGRESS PAYMENT CLAUSE * * * WILL BE INCLUDED IN THE CONTRACT AT THE TIME OF AWARD. THESE INVITATIONS FOR BIDS PROVIDING FOR PROGRESS PAYMENTS SHALL ALSO STATE THAT BIDS INCLUDING REQUESTS FOR PROGRESS PAYMENTS WILL BE EVALUATED ON AN EQUAL BASIS WITH THOSE NOT INCLUDING REQUESTS FOR PROGRESS PAYMENTS.'

SINCE THE CONTRACTING OFFICER APPARENTLY HAS DETERMINED THAT CONDITIONS EXISTS TO WARRANT INVOKING THE PROVISIONS OF PARAGRAPH IIID OF THE DEPARTMENT OF DEFENSE DIRECTIVE, THE FIRST INVITATION WAS DEFECTIVE IN THAT IT DID NOT INCLUDE THE PROVISION RELATING TO PROGRESS PAYMENTS QUOTED ABOVE WHICH WAS CONTAINED IN THE SECOND INVITATION. SUCH FAILURE TO ABIDE BY PROPERLY PROMULGATED REGULATIONS IS DEEMED SUFFICIENT TO WARRANT WITHDRAWAL OF THE INVITATION AND READVERTISING IN ACCORDANCE WITH REGULATIONS. FURTHER, THE DETERMINATION OF THE CONTRACTING OFFICER, WHICH APPEARS TO BE REASONABLE UNDER THE CIRCUMSTANCES, INDICATES THAT THE EXCLUSION OF THE PROVISION WOULD UNNECESSARILY TEND TO RESTRICT COMPETITION CONTRARY TO THE PURPOSES FOR WHICH THE STATUTES GOVERNING PUBLIC PROCUREMENT WERE ENACTED. UNITED STATES V. BROOKRIDGE FARM, 111 F.2D 461.

THEREFORE, WE FIND NO LEGAL BASIS UPON WHICH WE COULD OBJECT TO THE WITHDRAWAL OF THE FIRST INVITATION AND THE READVERTISEMENT OF THE SAME PROCUREMENT UNDER THE SECOND INVITATION.