B-146086, AUG. 24, 1961

B-146086, AUG. 24, 1961

TO FARMERS DAIRIES:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAMS OF MAY 28 AND JUNE 9, 1961, AND SUBSEQUENT CORRESPONDENCE, PROTESTING AGAINST THE REJECTION OF ALL BIDS SUBMITTED IN RESPONSE TO INVITATION FOR BIDS NO. AIV-41 014-61-147, COVERING THE PROCUREMENT OF MILK AND MILK PRODUCTS FOR THE PERIOD JULY 1 THROUGH DECEMBER 31, 1961.

IT APPEARS THAT, AS A RESULT OF A PROTEST BY YOUR COMPANY, A PRIOR UNRESTRICTED INVITATION FOR DAIRY PRODUCTS WAS CANCELED AND INVITATION NO. 147 WAS ISSUED ON APRIL 12, 1961, TO COVER THE PROCUREMENT OF MILK, CREAM, ETC., ON A 100 PERCENT SMALL BUSINESS SET-ASIDE BASIS. BIDS WERE RECEIVED FROM FOUR SMALL BUSINESS FIRMS INCLUDING YOUR COMPANY AND WERE OPENED ON MAY 2, 1961. UPON AN ANALYSIS OF BID PRICES RECEIVED IN COMPARISON WITH THOSE BEING PAID UNDER CONTRACTS FOR THE PERIOD JANUARY 1 THROUGH JUNE 30, 1961, IT WAS DETERMINED BY THE CONTRACTING OFFICER THAT THE BID PRICES WERE EXCESSIVE. ACCORDINGLY, THE CONTRACTING OFFICER REJECTED ALL BIDS CITING SECTION 2-404.2 (E), ASPR. THEREAFTER, ON MAY 19, 1961, INVITATION NO. AIV-41-014-61-184 WAS ISSUED TO COVER THE PROCUREMENT REQUIREMENT ON A NONRESTRICTED BASIS. HOWEVER, BY AMENDMENT NO. 1, DATED MAY 25, 1961, THE INVITATION WAS AMENDED TO PROVIDE FOR A 50 PERCENT SET-ASIDE FOR SMALL BUSINESS. BIDS WERE RECEIVED AND OPENED ON MAY 31, 1961, FROM FOUR SMALL BUSINESS FIRMS, INCLUDING YOUR COMPANY, AND FROM TWO LARGE BUSINESS FIRMS. IT IS REPORTED THAT ESTIMATED SAVINGS OF OVER $65,000 WOULD RESULT IF AWARDS WERE MADE UNDER INVITATION NO. 184 AS OPPOSED TO AWARDS UNDER THE CANCELED 100 PERCENT SET-ASIDE INVITATION.

SECTION 2-404.1, ASPR, READS IN PERTINENT PART:

"/A) THE PRESERVATION OF THE INTEGRITY OF THE COMPETITIVE BID SYSTEM DICTATES THAT AFTER BIDS HAVE BEEN OPENED, AWARD MUST BE MADE TO THAT RESPONSIBLE BIDDER WHO SUBMITTED THE LOWEST RESPONSIVE BID, UNLESS THERE IS A COMPELLING REASON TO REJECT ALL BIDS AND CANCEL THE INVITATION. * *

"/B) * * * INVITATIONS FOR BIDS MAY BE CANCELED AFTER OPENING BUT PRIOR TO AWARD WHERE SUCH ACTION IS CONSISTENT WITH (A) ABOVE AND THE CONTRACTING OFFICER DETERMINES IN WRITING THAT---

"/VI) ALL OTHERWISE ACCEPTABLE BIDS RECEIVED ARE AT UNREASONABLE PRICES;

"DETERMINATIONS TO CANCEL INVITATIONS FOR BIDS SHALL STATE THE REASONS THEREFOR.'

APPARENTLY THROUGH INADVERTENCE, THE CONTRACTING OFFICER CITED AS A BASIS FOR THE REJECTION OF THE BIDS SECTION 2-404.2 (E), ASPR, RESPECTING THE REJECTION OF INDIVIDUAL BIDS BECAUSE OF PRICE UNREASONABLENESS, RATHER THAN SECTION 2-404.1 (B) (VI), ASPR, QUOTED ABOVE. WE ALSO NOTE THAT BIDDERS WERE NOT FORMALLY NOTIFIED UNTIL MAY 22, 1961, OR THREE DAYS AFTER INVITATION NO. 184 WAS ISSUED THAT NO AWARDS WOULD BE MADE UNDER INVITATION NO. 147 AND THAT THE REQUIREMENT WOULD BE READVERTISED. THIS CONNECTION, SECTION 2-404.3, ASPR, PROVIDES:

"WHEN HE DETERMINED TO REJECT ALL BIDS, THE CONTRACTING OFFICER SHALL NOTIFY EACH BIDDER THAT ALL BIDS HAVE BEEN REJECTED STATING THE REASON FOR SUCH ACTION.'

ALTHOUGH IT APPEARS THAT THE PERTINENT PROVISIONS OF THE ASPR WERE NOT STRICTLY FOLLOWED HERE, WE DO NOT VIEW SUCH DEFICIENCY AS AFFECTING THE LEGALITY OF THE ACTION TAKEN. THAT IS SO BECAUSE THE CONTRACTING OFFICER IS REQUIRED, NOT ONLY BY LAW (10 U.S.C. 2305 (C) ( AND THE TERMS OF THE INVITATION, BUT ALSO BY SECTION 2-404.1, ASPR, TO REJECT ALL BIDS WHEN UNREASONABLE PRICES ARE QUOTED. IN VIEW OF THE CONSIDERABLE INCREASE IN BID PRICES OVER THOSE PAID FOR THE IMMEDIATELY PRIOR CONTRACT PERIOD, THE CONTRACTING OFFICER HAD A VALID BASIS FOR BELIEVING THAT HE WOULD BE REMISS IN HIS DUTY IF HE SHOULD IGNORE SUCH FACT AND AWARD A CONTRACT RESULTING IN EXCESSIVE COSTS TO THE GOVERNMENT. THE POSITION OF OUR OFFICE IN THIS RESPECT HAS BEEN STATED IN 36 COMP. GEN. 364, 365-366, AS FOLLOWS:

"WHILE YOUR VIEWS IN THIS MATTER ARE APPRECIATED, YOUR ATTENTION IS INVITED TO THE FACT THAT THE BIDS SUBMITTED BY BOYLES BROS. AND BY MINERALS ENGINEERING COMPANY UNDER THE ORIGINAL INVITATION WERE REJECTED BECAUSE THEY WERE CONSIDERED EXCESSIVE, AND BIDS WERE SOLICITED UNDER A NEW INVITATION TO INSURE THAT THE UNITED STATES WOULD RECEIVE THE BENEFIT OF THE FULL AND OPEN COMPETITION WHICH WAS CONTEMPLATED BY THE ADVERTISING STATUTES. SUCH STATUTES WERE ENACTED FOR THE PROTECTION OF THE INTERESTS OF THE UNITED STATES AND NOT FOR THE BENEFIT OF PROTECTION OF BIDDERS. PERKINS V. LUKENS STEEL COMPANY, 310 U.S. 113, 126; AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75, 78. WE HAVE NEVERTHELESS CONSTANTLY SOUGHT TO PROTECT AND MAINTAIN THE PRINCIPLES OF IMPARTIALITY AND FAIR PLAY UPON WHICH THE COMPETITIVE BIDDING SYSTEM DEPENDS, AND HAVE NEVER COUNTENANCED THE REJECTION OF BIDS MERELY FOR THE PURPOSE OF AFFORDING THE BIDDERS AN OPPORTUNITY TO BETTER THE PRICES OF THEIR COMPETITORS. WE CANNOT, HOWEVER, CONSIDER ..END :