B-133915, DEC. 9, 1957

B-133915: Dec 9, 1957

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INC.: FURTHER REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 25. REGARDING THE REJECTION OF ALL BIDS AFTER OPENING WHEN DEFICIENCIES IN THE INVITATIONS ARE BROUGHT TO THE ATTENTION OF THE CONTRACTING AGENCY PRIOR TO THAT TIME. YOU STATE THAT AFTER READING THE INVITATION YOU COULD NOT DETERMINE THE BASIS FOR AWARD AND NOTED THAT NO EVALUATION FACTORS WERE INCLUDED FOR ANY OF THE ITEMS. IT WAS APPARENTLY DECIDED WITHIN THE COAST GUARD THAT THE BIDS WOULD BE EVALUATED ON THE BASIS OF THE SUM OF THE UNIT PRICES FOR EACH ITEM. AFTER BIDS WERE OPENED. IT WAS DETERMINED THAT YOUR BID WAS LOW. YOU WERE ADVISED BY THE COAST GUARD THAT ALL BIDS WOULD BE REJECTED AND THE PROCUREMENT READVERTISED BECAUSE THE BIDS PROPERLY SHOULD HAVE BEEN EVALUATED ON THE ANTICIPATED QUANTITATIVE REQUIREMENTS FOR EACH ITEM DURING THE PERIOD OF THE CONTRACT.

B-133915, DEC. 9, 1957

TO BYRON MOTION PICTURES, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 25, 1957, REGARDING THE REJECTION OF ALL BIDS AFTER OPENING WHEN DEFICIENCIES IN THE INVITATIONS ARE BROUGHT TO THE ATTENTION OF THE CONTRACTING AGENCY PRIOR TO THAT TIME. YOU CITE, AS A SPECIFIC INSTANCE, THE REJECTION OF ALL BIDS UNDER INVITATION FOR BIDS NO. CS-40,852-A ISSUED BY THE COAST GUARD ON AUGUST 5, 1957, FOR THE FURNISHING OF TECHNICAL AND PROFESSIONAL SERVICES AND MATERIALS NECESSARY FOR THE PRODUCTION OF OFFICIAL MOTION PICTURES.

YOU STATE THAT AFTER READING THE INVITATION YOU COULD NOT DETERMINE THE BASIS FOR AWARD AND NOTED THAT NO EVALUATION FACTORS WERE INCLUDED FOR ANY OF THE ITEMS, CONTRARY TO CUSTOMARY PROCEDURES. YOU FURTHER STATE THAT YOU CALLED THESE FACTS TO THE ATTENTION OF COAST GUARD PERSONNEL ON AUGUST 7, WELL IN ADVANCE OF BID OPENING SCHEDULED FOR SEPTEMBER 3. ON OR ABOUT AUGUST 13, IT WAS APPARENTLY DECIDED WITHIN THE COAST GUARD THAT THE BIDS WOULD BE EVALUATED ON THE BASIS OF THE SUM OF THE UNIT PRICES FOR EACH ITEM. AFTER BIDS WERE OPENED, IT WAS DETERMINED THAT YOUR BID WAS LOW. YOU WERE ADVISED BY THE COAST GUARD THAT ALL BIDS WOULD BE REJECTED AND THE PROCUREMENT READVERTISED BECAUSE THE BIDS PROPERLY SHOULD HAVE BEEN EVALUATED ON THE ANTICIPATED QUANTITATIVE REQUIREMENTS FOR EACH ITEM DURING THE PERIOD OF THE CONTRACT. YOU STATE FURTHER:

"THE ABOVE FACTS BRING ME TO THE POINT OF THIS LETTER. WE RECEIVE MANY INVITATIONS EACH YEAR FROM GOVERNMENT AGENCIES TO BID ON MOTION PICTURE SERVICES. DURING THE PAST YEARS WE HAVE HAD TO SUBMIT A SECOND BID ON MANY OF THESE INVITATIONS BECAUSE THE PARTICULAR AGENCY'S PROCUREMENT OFFICE HAS DISCOVERED SOME ERROR AFTER THE BIDS HAVE BEEN OPENED. WE FEEL IT IS GROSSLY UNFAIR TO ALL BIDDERS TO BE ASKED TO RE-BID AFTER THEIR PRICES HAVE BEEN MADE PUBLIC. THIS DESTROYS THE WHOLE CONCEPT OF SEALED BIDDING. NATURALLY, WE ARE FORCED TO SUBMIT LOWER PRICES IN AN ATTEMPT TO BE SUCCESSFUL BIDDER. OF COURSE, THIS SAVES THE GOVERNMENT MONEY, BUT WE DO NOT FEEL IT IS THE INTENTION OF THE FEDERAL GOVERNMENT TO FORCE BUSINESS FIRMS TO SUBMIT TO THIS TYPE OF UNFAIR COMPETITION.'

THE STATEMENT BY THE CONTRACTING OFFICER ENCLOSED WITH THE REPORT ON THE MATTER FROM THE ACTING SECRETARY OF THE TREASURY INDICATES THAT THE CITED INVITATION FOR BIDS WAS ISSUED WITHOUT INDICATING ESTIMATED QUANTITATIVE REQUIREMENTS. IT IS EXPLAINED THAT THE INQUIRIES MADE BY YOU CONCERNING THE BASIS FOR EVALUATION WERE NOT BROUGHT TO THE ATTENTION OF THE CONTRACTING OFFICER. IT IS ALSO INDICATED THAT NOT UNTIL BIDS HAD BEEN OPENED WAS IT RECOGNIZED THAT EVALUATION OF THE BIDS WITHOUT CONSIDERATION OF PROBABLE QUANTITIES FOR EACH ITEM COULD RESULT IN AN AWARD NOT IN THE BEST INTERESTS OF THE GOVERNMENT. FOR EXAMPLE, YOUR BID WHICH WAS LOW UNDER THE ORIGINAL BASIS OF EVALUATION WOULD, IF ACCEPTED, RESULT IN A COST TO THE GOVERNMENT MORE THAN $7,000 IN EXCESS OF THAT UNDER ANOTHER BID BECAUSE OF THE DIFFERING QUANTITATIVE REQUIREMENTS ANTICIPATED FOR EACH ITEM. IT WAS THEREFORE DETERMINED TO BE IN THE BEST INTERESTS OF THE GOVERNMENT TO REJECT ALL BIDS UNDER THE FIRST INVITATION AND TO READVERTISE THE PROCUREMENT PROVIDING FOR EVALUATION BASED ON ESTIMATED QUANTITIES TO BE USED.

PARAGRAPH 8 (B) OF THE ORIGINAL INVITATION PROVIDES: "THE GOVERNMENT RESERVES THE RIGHT TO REJECT ANY OR ALL BIDS * * *.'

IN ADDITION TO SUCH RESERVATION, IT HAS BEEN CONSISTENTLY HELD BY THE ACCOUNTING OFFICERS OF THE GOVERNMENT AND BY THE COURTS THAT THE QUESTION OF REJECTING ALL BIDS AND READVERTISING IS PRIMARILY A MATTER OF ADMINISTRATIVE DISCRETION, AND WHERE IT IS SHOWN THAT THE PURPOSE OF SUCH ACTION IS TO CORRECT DEFICIENCIES IN THE INVITATION WE PERCEIVE NO OBJECTION TO SUCH ACTION. IN 17 COMP. GEN. 554, 559, WE STATED:

"NOT ONLY DID THE INVITATION FOR BIDS EXPRESSLY STATE A RESERVATION OF THE RIGHT TO REJECT ANY AND ALL PROPOSALS, BUT A REQUEST FOR BIDS OR OFFERS, IRRESPECTIVE OF ANY SUCH RESERVATION, DOES NOT IMPORT ANY OBLIGATION TO ACCEPT ANY OF THE OFFERS RECEIVED, AND CERTAINLY IT CANNOT BE CONCEDED THAT A PUBLIC OFFICER, ACTING FOR THE GENERAL WELFARE, IS BOUND TO ACCEPT A BID, WHERE HE DETERMINES THAT THE PUBLIC INTEREST WOULD BE SERVED BY A REJECTION OF ALL BIDS AND A READVERTISEMENT OF THE CONTRACT ON SPECIFICATIONS STATED TO REFLECT MORE ACCURATELY THE ACTUAL NEEDS TO BE MET, OR, FOR THAT MATTER, THAT DUE TO THE LAPSE OF TIME OR OTHERWISE A MORE ADVANTAGEOUS CONTRACT MIGHT BE OBTAINED. * * *"

OF COURSE, WE ARE KEENLY AWARE THAT THE REJECTION OF BIDS AFTER THEY ARE OPENED AND EACH BIDDER HAS LEARNED HIS COMPETITOR'S PRICE IS A SERIOUS MATTER AND SHOULD NOT BE DONE EXCEPT FOR COGENT REASONS. WE POINTED OUT IN OUR DECISION, B-118072, DECEMBER 18, 1953, THAT WHILE IT IS DESIRABLE THAT THE GOVERNMENT OBTAIN THE BEST POSSIBLE PRICE, IT MUST BE RECOGNIZED THAT THE REJECTION OF FULLY RESPONSIVE BIDS AND READVERTISEMENT MUST, BY DISCOURAGING BIDDERS OFFERING FULL COMPLIANCE WITH THE TERMS OF THE INVITATION, EVENTUALLY RESULT IN REDUCING COMPETITION TO THE OBVIOUS DISADVANTAGE OF THE GOVERNMENT. WE FEEL THAT THE FOREGOING IS PARTICULARLY TRUE IN INSTANCES SUCH AS HERE WHERE IT APPEARS THAT THE DEFICIENCIES SHOULD HAVE BEEN RECOGNIZED AND THE INVITATION WITHDRAWN PRIOR TO OPENING. UNFORTUNATELY, HOWEVER, NOTWITHSTANDING THE FACT THAT YOU BROUGHT THE DEFICIENCY TO THE ATTENTION OF PERSONNEL OF THE CONTRACTING AGENCY IN AMPLE TIME, THE DEFICIENCY WAS NOT RECOGNIZED BY THE PROPER AUTHORITIES PRIOR TO OPENING. SINCE CONTRACTING OFFICERS AS AGENTS OF THE GOVERNMENT ARE REQUIRED TO ACT IN ITS BEST INTEREST, A DETERMINATION TO READVERTISE WHEN SUCH ACTION MAY RESULT IN SUBSTANTIAL SAVINGS TO THE GOVERNMENT MAY NOT BE REGARDED AS ILLEGAL UNLESS MOTIVATED BY FRAUD OR BAD FAITH AND THEREFORE WE CANNOT OBJECT TO THE ACTION TAKEN IN THIS INSTANCE. WE ARE REQUESTING, HOWEVER, THAT THE SECRETARY OF THE TREASURY TAKE ACTION TO INSURE THAT IN THE FUTURE, DEFECTS IN INVITATIONS ARE DISCOVERED PRIOR TO OPENING SO THAT THEY MAY BE CANCELLED BEFORE THE BIDS ARE DISCLOSED.