B-147411, NOV. 24, 1961

B-147411, NOV. 24, 1961

TO HENRY G. BEAUREGARD, ESQUIRE:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 16, 1961, CONCERNING THE CANCELLATION BY THE NAVY PURCHASING OFFICE, LOS ANGELES, CALIFORNIA, OF CONTRACT N123-/61756/28667A WITH LAVOIE LABORATORIES, INC.

ON OCTOBER 10, 1961, EIGHTEEN DAYS AFTER THE CONTRACT WAS AWARDED TO LAVOIE LABORATORIES, INC., IT CAME TO THE ATTENTION OF NAVY PURCHASING OFFICE PERSONNEL THAT ANOTHER FIRM ACTUALLY HAD BEEN THE LOWEST BIDDER FOR THE CONTRACT. THROUGH AN OVERSIGHT AT THE TIME OF AWARD, THE DISCOUNT OFFERED BY THE OTHER FIRM HAD NOT BEEN CONSIDERED IN THE EVALUATION OF BIDS AS IT WAS REQUIRED TO BE BY THE TERMS OF THE INVITATION FOR BIDS AND ARMED SERVICES PROCUREMENT REGULATION 2-407.3 (B).

ON OCTOBER 11, 1961, A REPRESENTATIVE OF THE NAVY PURCHASING OFFICE TELEPHONED LAVOIE LABORATORIES, INC., ADVISED THAT ONE UNIT HAD BEEN SHIPPED AND THAT THE REMAINING THREE WERE SCHEDULED FOR SHIPMENT THAT DAY. HE WAS TOLD TO DISCONTINUE PERFORMANCE UNDER THE CONTRACT UNTIL FURTHER NOTICE. THE FOLLOWING DAY A TELEGRAM WAS SENT TO LAVOIE LABORATORIES, INC., ADVISING THAT THE AWARD TO IT WAS INVALID BY REASON OF THERE HAVING BEEN A LOWER RESPONSIVE BIDDER AND THAT ANY DELIVERIES WOULD BE REFUSED. PRIOR TO THE TIME THE TELEGRAM WAS SENT, NO UNIT HAD ARRIVED AT THE DESTINATION SPECIFIED IN THE CONTRACT.

ON OCTOBER 13, 1961, THE NAVY PURCHASING OFFICE PLACED THE AWARD FOR THE UNITS INVOLVED WITH THE BIDDER WHOSE LOW BID PREVIOUSLY HAD BEEN OVERLOOKED.

THE CONTRACTING OFFICER'S DECISION TO CANCEL THE LAVOIE LABORATORIES, INC., CONTRACT WAS MOTIVATED BY THE REQUIREMENT IN 10 U.S.C. 2305 (C) AND SECTION 623 OF THE DEPARTMENT OF DEFENSE APPROPRIATION ACT FOR FISCAL YEAR 1962, PUBLIC LAW 87-144, THAT THE AWARD OF GOVERNMENT CONTRACTS BE MADE TO THE LOWEST RESPONSIBLE BIDDER, AND ALSO BY DECISIONS OF OUR OFFICE WHEREIN IT HAS BEEN HELD THAT CONTRACTS AWARDED CONTRARY TO STATUTE OR REGULATION ARE INVALID.

ALTHOUGH IT IS TRUE THAT OUR OFFICE GENERALLY HAS CONSIDERED AS TECHNICALLY ILLEGAL CONTRACTS AWARDED CONTRARY TO STATUTE AND REGULATION, WHEN CASES INVOLVING SUCH IMPROPER AWARDS HAVE BEEN RULED UPON BY US PRIOR TO CANCELLATION WE CONSISTENTLY HAVE TAKEN INTO CONSIDERATION THE EXTENT OF THE CONTRACTOR'S PERFORMANCE IN DECIDING WHETHER THE CONTRACTOR SHOULD BE PRECLUDED FROM FURTHER PERFORMANCE. HOWEVER, THE ADMINISTRATIVE AGENCY DID NOT PRESENT THIS CASE TO US BEFORE THE ACTION TO CANCEL AND RELET WAS TAKEN AND THE CASE IS NOW COMPLICATED BY THE FACT THAT THE REPLACEMENT CONTRACT AWARDED TO THE ACTUAL LOW BIDDER IS A LEGALLY VALID CONTRACT. THEREFORE, IN VIEW OF THE PRESENT POSTURE OF THE CASE, WE FEEL REQUIRED TO PERMIT THE ADMINISTRATIVE ACTION TO STAND.