B-143804, NOV. 15, 1960

B-143804: Nov 15, 1960

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

UNDER THE INVITATION A SERIES OF PRICES WAS SOLICITED FROM EACH BIDDER. BIDS WERE TO BE EVALUATED IN ACCORDANCE WITH PARAGRAPH A. AS FOLLOWS: "DETERMINATION OF AWARD: HIGH BID WILL BE DETERMINED ON AN AVERAGE OF THAT PORTION OF THE PRICE SCALE (AS SET FORTH ON THE BID SHEET) EXPECTED TO PREVAIL DURING THE PERIOD OF THE CONTRACT/S). WILL PROVIDE THE BASIS FOR EVALUATION OF BIDS. (IF NO CHICAGO PRICES ARE AVAILABLE. LOUIS PRICE WILL BE USED AS AN ALTERNATE.). FIVE (5) PRICES UP AND FIVE (5) PRICES DOWN ARE TAKEN FROM A REALISTIC SCALE OF PRICES SUBMITTED BY BIDDERS. AWARD IS THEREFORE DETERMINED BY AVERAGING THE ELEVEN QUOTATIONS FURNISHED AND COMPUTING THE AVERAGE BIDS.'. THE AMENDMENTS WERE NOT RECEIVED BY THE BIDDERS UNTIL MAY 17.

B-143804, NOV. 15, 1960

TO GAMM AND GREENBERG:

BY LETTER OF AUGUST 17, 1960, YOU PROTESTED ON BEHALF OF THE SHREVEPORT IRON AND SUPPLY COMPANY THE DETERMINATION TO REJECT ALL BIDS RECEIVED UNDER INVITATION NO. 16-602-S-60-3 ISSUED APRIL 19, 1960, BY THE BASE PROCUREMENT OFFICE, BARKSDALE AIR FORCE BASE, LOUISIANA, FOR THE SALE OF THE IRON AND STEEL SCRAP GENERATED DURING THE PERIOD JUNE 1, 1960, TO MAY 31, 1961, INCLUSIVE.

UNDER THE INVITATION A SERIES OF PRICES WAS SOLICITED FROM EACH BIDDER, BASED ON POSSIBLE PRICE VARIATIONS ON THE CHICAGO MARKET. BIDS WERE TO BE EVALUATED IN ACCORDANCE WITH PARAGRAPH A. OF THE PROVISIONS OF SALE, AS FOLLOWS:

"DETERMINATION OF AWARD: HIGH BID WILL BE DETERMINED ON AN AVERAGE OF THAT PORTION OF THE PRICE SCALE (AS SET FORTH ON THE BID SHEET) EXPECTED TO PREVAIL DURING THE PERIOD OF THE CONTRACT/S). THE MARKET PRICE OF IRON AND STEEL SCRAP, LIGHT AND HEAVY, TAKEN FROM THE AMERICAN METAL MARKET ON THE DATE OF BID OPENING, WILL PROVIDE THE BASIS FOR EVALUATION OF BIDS. (IF NO CHICAGO PRICES ARE AVAILABLE, THE ST. LOUIS PRICE WILL BE USED AS AN ALTERNATE.) FIVE (5) PRICES UP AND FIVE (5) PRICES DOWN ARE TAKEN FROM A REALISTIC SCALE OF PRICES SUBMITTED BY BIDDERS. AWARD IS THEREFORE DETERMINED BY AVERAGING THE ELEVEN QUOTATIONS FURNISHED AND COMPUTING THE AVERAGE BIDS.'

THE INVITATION ALSO REQUIRED THE SUBMISSION WITH EACH BID OF A BID DEPOSIT IN AN AMOUNT EQUAL TO 20 PERCENT OF THE TOTAL SUM OF THE BID. MAY 5, 1960, THE CONTRACTING OFFICER DIRECTED THAT AN AMENDMENT TO THE INVITATION BE DISTRIBUTED TO ALL BIDDERS WHICH WOULD REDUCE THE BID DEPOSIT REQUIRED FROM 20 PERCENT TO 5 PERCENT. BECAUSE OF SOME ADMINISTRATIVE DIFFICULTY, THE AMENDMENTS WERE NOT RECEIVED BY THE BIDDERS UNTIL MAY 17, 1960, THE DAY AFTER BID OPENING. THE REPORT RECEIVED FROM THE DEPARTMENT OF THE AIR FORCE INDICATES THAT THE HIGH BIDDER HAD BEEN ADVISED OF THE INTENDED CHANGE ORALLY PRIOR TO THE SUBMISSION OF HIS BID. HOWEVER, HIS BID AS SUBMITTED, BECAUSE OF AN ALLEGED MATHEMATICAL ERROR, WAS ACCOMPANIED BY A DEPOSIT WHICH AMOUNTED TO $5 LESS THAN THE FULL 5 PERCENT.

IT WAS FOUND AFTER BID OPENING THAT, BECAUSE OF THE DEPRESSED STATE OF THE MARKET AT THE TIME, THE INVITATION DID NOT PROVIDE FIVE STEPS BELOW THE CURRENT PRICE UPON WHICH BIDS COULD BE EVALUATED IN ACCORDANCE WITH PARAGRAPH A. QUOTED ABOVE. SINCE THE STATED BASIS FOR EVALUATION COULD NOT BE EMPLOYED, IT WAS DECIDED TO REJECT ALL BIDS AND READVERTISE. A NEW INVITATION COVERING THE SAME ITEMS WAS ISSUED ON JULY 28, 1960, IMPOSING A 15 PERCENT BID DEPOSIT REQUIREMENT AND PROVIDING A MORE FLEXIBLE EVALUATION FORMULA THAN WAS CONTAINED IN THE ORIGINAL INVITATION. AWARD UNDER THE NEW INVITATION HAS BEEN HELD UP PENDING OUR DECISION.

YOU CONTEND THAT SHREVEPORT IRON AND SUPPLY COMPANY, AS HIGHEST RESPONSIVE BIDDER UNDER THE FIRST INVITATION, SHOULD HAVE RECEIVED AN AWARD. YOU STATE THAT AN OFFER WAS MADE TO YOUR CLIENT ON CERTAIN TERMS AND CONDITIONS (PRESUMABLY THOSE CONTAINED IN THE INVITATION) WHICH WERE ACCEPTED IN ACCORDANCE WITH GOVERNMENT REGULATIONS, AND THAT OFFER, AS THE HIGHEST VALID BID, SHOULD HAVE BEEN THE SUBJECT OF AWARD. YOU ALSO NOTE THAT READVERTISEMENT PUTS YOUR CLIENT AT A DISADVANTAGE, SINCE ITS BID HAS BEEN DISCLOSED. FINALLY, YOU CONTEND THAT FAILURE TO MAKE AN AWARD TO YOUR CLIENT IS CONTRARY TO REGULATIONS, GOOD BUSINESS PRACTICE, AND THE LAW.

THE DISPOSITION OF GOVERNMENT SURPLUS PROPERTY IS GOVERNED BY THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949. SECTION 203 (E) (2), AS AMENDED, 40 U.S.C. 484, PROVIDES:

"WHENEVER PUBLIC ADVERTISING FOR BIDS IS REQUIRED UNDER PARAGRAPH (1) OF THIS SUBSECTION---

"/A) THE ADVERTISEMENT FOR BIDS SHALL BE MADE AT SUCH TIME PREVIOUS TO THE DISPOSAL OF CONTRACT, THROUGH SUCH METHODS, AND ON SUCH TERMS AND CONDITIONS AS SHALL PERMIT THAT FULL AND FREE COMPETITION WHICH IS CONSISTENT WITH THE VALUE AND NATURE OF THE PROPERTY INVOLVED;

"/B) ALL BIDS SHALL BE PUBLICLY DISCLOSED AT THE TIME AND PLACE STATED IN THE ADVERTISEMENT;

"/C) AWARD SHALL BE MADE WITH REASONABLE PROMPTNESS BY NOTICE TO THE RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED: PROVIDED, THAT ALL BIDS MAY BE REJECTED WHEN IT IS IN THE PUBLIC INTEREST TO DO SO.'

THE RIGHT TO REJECT ALL BIDS IS ALSO RESERVED BY THE TERMS OF PARAGRAPH 3 OF THE GENERAL SALE TERMS AND CONDITIONS. AS WAS STATED IN 17 COMP. GEN. 554, 559:

"* * * 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 * * *.'

IT IS WELL ESTABLISHED THAT BIDS MUST BE EVALUATED IN ACCORDANCE WITH THE TERMS OF THE INVITATION. 39 COMP. GEN. 282. IN THIS CASE, FOR THE REASONS STATED ABOVE, SUCH EVALUATION WAS NOT POSSIBLE. IN VIEW OF THE POSSIBLE EFFECT UPON THE EVALUATION OF BIDS, SUCH FACTOR ALONE COULD WELL BE CONSIDERED TO REQUIRE REJECTION OF ALL BIDS. IN ADDITION, THE HIGH BIDDER WAS GIVEN ERRONEOUS ADVICE AS TO THE PERCENTAGE OF BID BOND WHICH WOULD BE REQUIRED.

FOR THESE REASONS, AND IN VIEW OF THE BROAD DISCRETION WHICH THE CONTRACTING OFFICER HAS IN DECIDING WHETHER READVERTISEMENT IS PROPER, WE CAN FIND NO LEGAL OBJECTION TO THE WITHDRAWAL OF THE INVITATION AND THE READVERTISEMENT OF THE SALE.

IT IS ALSO ALLEGED THAT YOUR CLIENT WAS PREJUDICED BECAUSE HE WAS NOT PROMPTLY ADVISED IN DETAIL OF HIS RIGHT TO PROTEST THE ADMINISTRATIVE DECISION TO REJECT ALL BIDS AND READVERTISE. SUCH A PROTEST, REGARDLESS OF WHEN MADE, WOULD NOT NECESSARILY HAVE PREVENTED THE REJECTION AND READVERTISEMENT, AND SINCE AWARD ON THE SECOND INVITATION HAS BEEN WITHHELD PENDING OUR DECISION ON THE MATTER, WE CONCLUDE THAT YOUR CLIENT WAS NOT PREJUDICED ON THIS ACCOUNT.