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B-153159, APR. 3, 1964

B-153159 Apr 03, 1964
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INC.: WE HAVE RECEIVED YOUR LETTER OF DECEMBER 27. AWARD WAS TO BE MADE TO THE RESPONSIBLE BIDDER OFFERING THE HIGHEST DOLLAR DISCOUNT FROM THE VEHICLE PARTS AND VEHICLE MANUFACTURERS' LIST PRICES FOR ESTIMATED QUANTITIES OF COMMON REPLACEMENT PARTS (ITEM A) AND SOLE SOURCE OR "CAPTIVE" REPLACEMENT PARTS (ITEM B) FOR THE VARIOUS VEHICLES AT THE BASE. THE LOW BIDDER ON THE FIRST INVITATION WAS EAST BAY AUTO SUPPLY. EAST BAY'S BID WAS DECLARED NONRESPONSIVE FOR FAILURE TO FURNISH A LIST OF COMMON AUTOMOTIVE ITEMS BY BRAND AND MANUFACTURER'S NAME WAS REQUIRED BY PARAGRAPH C-2 ON PAGE 4 OF THE INVITATION. YOU WERE ADVISED THAT THE INVITATION. WAS CANCELLED IN THE BEST INTERESTS OF THE GOVERNMENT.

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B-153159, APR. 3, 1964

TO ALLIANCE PROPERTIES, INC.:

WE HAVE RECEIVED YOUR LETTER OF DECEMBER 27, 1963, IN WHICH YOU PROTEST THE CANCELLATION OF INVITATION FOR BIDS NO. 04-602-64-30, AND READVERTISEMENT UNDER INVITATION FOR BIDS NO. 04-602-64-68, BY HAMILTON AIR FORCE BASE IN CALIFORNIA.

THE RECORD ESTABLISHES THAT THE TWO INVITATIONS, ISSUED SEPTEMBER 25, AND NOVEMBER 26, 1963, RESPECTIVELY, ASKED FOR BIDS FOR MAINTAINING A VEHICLE PARTS REPLACEMENT STORE AT HAMILTON AIR FORCE BASE. AWARD WAS TO BE MADE TO THE RESPONSIBLE BIDDER OFFERING THE HIGHEST DOLLAR DISCOUNT FROM THE VEHICLE PARTS AND VEHICLE MANUFACTURERS' LIST PRICES FOR ESTIMATED QUANTITIES OF COMMON REPLACEMENT PARTS (ITEM A) AND SOLE SOURCE OR "CAPTIVE" REPLACEMENT PARTS (ITEM B) FOR THE VARIOUS VEHICLES AT THE BASE. THE LOW BIDDER ON THE FIRST INVITATION WAS EAST BAY AUTO SUPPLY, INC., WHO OFFERED A 40 PERCENT TRADE DISCOUNT ON COMMON AUTOMOTIVE ITEMS AND A 15 PERCENT TRADE DISCOUNT ON CAPTIVE AUTOMOTIVE ITEMS, PLUS A 2 PERCENT/30 DAYS PROMPT PAYMENT DISCOUNT. HOWEVER, EAST BAY'S BID WAS DECLARED NONRESPONSIVE FOR FAILURE TO FURNISH A LIST OF COMMON AUTOMOTIVE ITEMS BY BRAND AND MANUFACTURER'S NAME WAS REQUIRED BY PARAGRAPH C-2 ON PAGE 4 OF THE INVITATION. YOUR COMPANY, THE ONLY OTHER BIDDER, OFFERED A 5 PERCENT TRADE DISCOUNT FOR BOTH COMMON AND CAPTIVE AUTOMOTIVE PARTS, PLUS A 1 PERCENT/20 DAYS PROMPT PAYMENT DISCOUNT. ON NOVEMBER 22, 1963, YOU WERE ADVISED THAT THE INVITATION, PURSUANT TO WHICH YOU HAD SUBMITTED THE LOW BID, WAS CANCELLED IN THE BEST INTERESTS OF THE GOVERNMENT, AND THAT REQUIREMENTS THEREUNDER WERE TO BE REVISED AND READVERTISED.

YOU OBJECT TO THE CANCELLATION OF THE FIRST INVITATION, AND CONTEND THAT A REVISION OF ESTIMATED REQUIREMENTS TO BE PROCURED UNDER AN INITIAL INVITATION DOES NOT ORDINARILY CONSTITUTE ADEQUATE JUSTIFICATION FOR THE CANCELLATION OF THAT INVITATION. SEE 39 COMP. GEN. 396. THE ADMINISTRATIVE AGENCY REPORTS, HOWEVER, THAT THE INITIAL INVITATION WAS NOT CANCELLED BECAUSE OF THE REVISION IN ESTIMATED QUANTITIES, BUT RATHER BECAUSE THE CONTRACTING OFFICER DETERMINED THAT YOUR BID WAS IN EXCESS OF THE AMOUNT FOR WHICH THE GOVERNMENT SHOULD HAVE BEEN ABLE TO OBTAIN THE ADVERTISED SUPPLIES AND SERVICES. THE CONTRACTING OFFICER BASED THIS DETERMINATION UPON THE CONSIDERABLE DIFFERENCE BETWEEN THE TRADE DISCOUNTS OFFERED BY THE TWO BIDDERS, AND THE FACT THAT PRICES PAID BY THE ACTIVITY FOR VARIOUS PARTS OFFERED ON THE OPEN MARKET AT DISCOUNTS UP TO 40 PERCENT, AND FOR FORD, CHEVROLET, INTERNATIONAL HARVESTER AND CATERPILLAR PARTS PROCURED UNDER THE FEDERAL SUPPLY SCHEDULE, INDICATED CLEARLY THAT YOUR PRICES WERE UNREASONABLY HIGH. SEE ARMED SERVICES PROCUREMENT REGULATION 2 404.1 (B) (VI). HE DECIDED THAT IT WAS REASONABLE TO ASSUME THAT UPON READVERTISEMENT HE WOULD RECEIVE RESPONSIVE BIDS OFFERING PRICES IN THE RANGE OF THE ONE OFFERED UNDER THE FIRST INVITATION BY THE NONRESPONSIVE BIDDER.

UPON THE READVERTISEMENT UNDER INVITATION FOR BIDS NO. 04-602-64-68, YOUR BID, IDENTICAL TO THE ONE OFFERED PURSUANT TO THE FIRST INVITATION, OFFERED THE LOWEST DISCOUNT, AND THEREFORE THE HIGHEST PRICE OF THE FIVE BIDS RECEIVED. EAST BAY AUTO SUPPLY, INC., AGAIN OFFERED DISCOUNTS OF 40 PERCENT AND 15 PERCENT, AS DID A-1 AUTO PARTS, WHICH LOST THE DRAWING OF LOTS PROVIDED FOR IN ASPR 2-407.6.

IN OUR DECISION REPORTED AT 36 COMP. GEN. 364 WE CONSIDERED THE PROPRIETY OF CANCELLING AN INVITATION FOR BIDS, AFTER BID OPENING BUT PRIOR TO AWARD, WHERE IT HAD BEEN ADMINISTRATIVELY DETERMINED THAT THE LOW RESPONSIVE BID WAS UNREASONABLY HIGH. IN THAT DECISION, THE LOW BIDDER WAS CONSIDERED NONRESPONSIVE BECAUSE OF AN ERRONEOUSLY UNDERSTATED BID PRICE IN REGARD TO WHICH THERE WAS INSUFFICIENT EVIDENCE TO PERMIT CORRECTION. UPON READVERTISEMENT, AWARD WAS MADE TO THE COMPANY WHICH WAS THE LOW BUT NONRESPONSIVE BIDDER UNDER THE INITIAL INVITATION, ALTHOUGH THAT COMPANY HAD NOT ONLY CORRECTED ITS ERROR, BUT APPARENTLY HAD ALSO INCREASED ITS ENTIRE BID SCHEDULE. IN ANSWER TO THE CONTENTION THAT THE SUCCESSFUL COMPANY HAD BEEN PERMITTED IN EFFECT TO CHANGE ITS BID AFTER ALL BIDS HAD BEEN OPENED, WE OBSERVED:

"* * * WE CANNOT, HOWEVER, CONSIDER THE MATTER OF COMPETITIVE BIDDING FOR GOVERNMENT CONTRACTS SOLELY AS A GAME, IN WHICH THE CONTRACT MUST AUTOMATICALLY GO TO THE LOWEST BIDDER WITHOUT REGARD TO THE REASONABLENESS OF HIS PRICE OR TO OTHER ATTEMPTED BIDS WHICH CANNOT FOR TECHNICAL REASONS BE ACCEPTED. WHEN IN THE LIGHT OF ALL THE FACTS, INCLUDING THOSE DISCLOSED BY THE BIDDING, IT IS ADMINISTRATIVELY DETERMINED THAT THE LOWEST ACCEPTABLE BID IS IN EXCESS OF THE AMOUNT FOR WHICH THE GOVERNMENT SHOULD BE ABLE TO OBTAIN THE SUPPLIES OR SERVICES SOUGHT, WE BELIEVE THAT THE REJECTION OF ALL BIDS AND READVERTISING OF THE CONTRACT IS A PROPER EXERCISE OF THE ADMINISTRATIVE DISCRETION, IN CONFORMITY WITH THE DUTY OF THE ADMINISTRATIVE OFFICIALS TO ACT IN THE BEST INTEREST OF THE GOVERNMENT. UPON SUCH REJECTION AND READVERTISING THE ORIGINAL BIDS ARE NO LONGER MATERIAL OR EFFECTIVE FOR ANY PURPOSE WHATSOEVER. IT IS NO DOUBT REGRETTABLE THAT ALL BIDDERS ARE AWARE OF THE AMOUNTS ORIGINALLY QUOTED BY THEIR COMPETITORS, BUT THEY ALSO ARE BETTER ADVISED AS TO WHAT PRICE RANGE IS CONSIDERED REASONABLE BY THE GOVERNMENT'S REPRESENTATIVES, AND ALL HAVE EQUAL OPPORTUNITIES TO SUBMIT SUCH NEW BIDS AS THEY WILL.'

IN THE INSTANT CASE ALL BIDDERS UNDER THE ORIGINAL INVITATION HAD EQUAL OPPORTUNITY TO BE APPRISED OF THE BIDS SUBMITTED BY THEIR COMPETITORS, AND ALL BIDDERS UNDER THE READVERTISED INVITATION HAD EQUAL AND UNRESTRICTED OPPORTUNITY TO SUBMIT COMPETITIVE PROPOSALS WITHOUT REGARD TO THE ORIGINAL BID PRICES. IN VIEW OF THE FACT THAT THE CONTRACT HAS BEEN AWARDED TO THE LOWEST BIDDER AT A PRICE WHICH IS SUBSTANTIALLY LOWER THAN THE LOWEST BID PRICE WHICH COULD HAVE BEEN ACCEPTED UNDER THE ORIGINAL INVITATION, IT WOULD APPEAR THAT THE DECISION OF THE CONTRACTING OFFICER TO READVERTISE WAS IN THE BEST INTEREST OF THE GOVERNMENT. IN THE CIRCUMSTANCES, THERE IS NO LEGAL BASIS ON WHICH THIS OFFICE MAY QUESTION THE ADMINISTRATIVE ACTION TAKEN IN THE MATTER.

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