B-153522, JUN. 12, 1964

B-153522: Jun 12, 1964

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TO ALVEY FERGUSON COMPANY: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM DATED FEBRUARY 17. WHICH WAS ISSUED ON NOVEMBER 27. REQUIRING THE SPARE PARTS NECESSARY TO MAINTAIN FOR 1 YEAR THE MATERIALS HANDLING SYSTEM THAT WAS ACCEPTED. IT WAS PROVIDED IN PERTINENT PART AS FOLLOWS: "A SINGLE AWARD WILL BE MADE ON THE ITEMS IN THE FOLLOWING PREFERENCE DEPENDING UPON THE AVAILABILITY OF FUNDS. THE DEPARTMENT OF THE AIR FORCE REPORTS THAT THE THREE LOWEST OF THE SIX BIDS RECEIVED WERE AS FOLLOWS: TABLE BIDDER ITEM 1 ITEM 3 ITEM 4 TOTAL MID-WEST CONVEYOR CO. OHIO THE AIR FORCE CONTRACTING OFFICER WAS CONSIDERING AN AWARD OF THE CONTRACT TO THE MID-WEST CONVEYOR COMPANY INC. THE DEPARTMENT DETERMINED THAT THE SPECIFICATIONS WERE AMBIGUOUS AND.

B-153522, JUN. 12, 1964

TO ALVEY FERGUSON COMPANY:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM DATED FEBRUARY 17, 1964, AND TO YOUR LETTER DATED FEBRUARY 18, 1964, PROTESTING THE CANCELLATION OF DEPARTMENT OF THE AIR FORCE INVITATION NO. 34-601-64 148.

THE INVITATION, WHICH WAS ISSUED ON NOVEMBER 27, 1963, BY THE OKLAHOMA CITY AIR MATERIEL AREA, TINKER AIR FORCE BASE, OKLAHOMA, SOLICITED BIDS UNDER ITEMS NOS. 1 AND 2, CALLING FOR THE FURNISHING AND INSTALLATION OF A MATERIALS HANDLING SYSTEM, ITEM NO. 3 FOR THE INSTALLATION OF A PNEUMATIC TUBE SYSTEM, ITEM NO. 4, REQUIRING THE SPARE PARTS NECESSARY TO MAINTAIN FOR 1 YEAR THE MATERIALS HANDLING SYSTEM THAT WAS ACCEPTED. ON PAGE 3 OF THE SCHEDULE, WHICH FORMS A PART OF THE INVITATION, IT WAS PROVIDED IN PERTINENT PART AS FOLLOWS:

"A SINGLE AWARD WILL BE MADE ON THE ITEMS IN THE FOLLOWING PREFERENCE DEPENDING UPON THE AVAILABILITY OF FUNDS. ITEMS 1, 3, AND 4; ITEMS 2, 3, AND 4.'

THE DEPARTMENT OF THE AIR FORCE REPORTS THAT THE THREE LOWEST OF THE SIX BIDS RECEIVED WERE AS FOLLOWS:

TABLE

BIDDER ITEM 1 ITEM 3 ITEM 4 TOTAL

MID-WEST CONVEYOR CO., INC. 130,520 11,395 1,734 143,649 LESS KANSAS CITY, KANSAS

1/2 PERCENT

$142,930 C. F. BUTZ ENG. 130,739 12,748 110143,327

AZUSA, CALIFORNIA

THE ALVEY-FERGUSON CO. 127,495 13,670 3,288 144,453

CINCINNATI, OHIO

THE AIR FORCE CONTRACTING OFFICER WAS CONSIDERING AN AWARD OF THE CONTRACT TO THE MID-WEST CONVEYOR COMPANY INC., ON THE BASIS OF ITS LOW NET BID FOR THE FOREGOING THREE ITEMS. HOWEVER, BEFORE TAKING SUCH ACTION, THE DEPARTMENT DETERMINED THAT THE SPECIFICATIONS WERE AMBIGUOUS AND, THEREFORE, CANCELED THE INVITATION.

YOU CONTEND THAT THE CANCELLATION OF INVITATION NO. 34-601-64-148, WHICH WOULD BE THE SECOND CANCELLATION OF THE PROCUREMENT, OBVIOUSLY CAN NOT BE IN THE BEST INTEREST OF BIDDERS AND, THEREFORE, THE BEST INTERESTS OF THE AIR FORCE ALSO CANNOT BE SERVED. MOREOVER, YOU TAKE THE POSITION THAT THE PROCUREMENT IS BECOMING NOTHING MORE THAN AN AUCTION AND THAT NO AMBIGUITIES OR ESSENTIAL CHANGES ARE INVOLVED IN THE SPECIFICATIONS. YOU ALSO ALLEGE THAT THE BID SUBMITTED BY YOU IN RESPONSE TO THE INVITATION WAS THE LOW RESPONSIVE AND RESPONSIBLE BID AND, THEREFORE, THAT THE CONTRACT SHOULD BE AWARDED TO YOU.

IT IS IMPORTANT TO NOTE AT THE OUTSET THAT THE DEPARTMENT REPORTS THAT SINCE FUNDS ARE AVAILABLE FOR AN AGGREGATE AWARD OF ITEMS NOS. 1, 3 AND 4, IF AN AWARD HAD BEEN MADE UNDER THE INVITATION THE AIR FORCE WOULD HAVE BEEN REQUIRED BY THE TERMS OF THE INVITATION TO MAKE SUCH AN AWARD TO THE RESPONSIBLE FIRM SUBMITTING THE LOW RESPONSIVE AGGREGATE BID FOR ITEMS NOS. 1, 3 AND 4. SINCE BOTH THE MID-WEST CONVEYER COMPANY, INC., AND C. F. BUTZ ENGINEERING SUBMITTED BIDS WHICH WERE LOWER THAN YOUR BID, NO CONSIDERATION COULD HAVE BEEN GIVEN TO YOUR BID UNLESS FOR OTHER REASONS IT HAD BEEN NECESSARY TO REJECT THE TWO LOWER BIDS.

HOWEVER, THE DEPARTMENT OF THE AIR FORCE FURTHER REPORTS THAT IT WAS NECESSARY TO CANCEL INVITATION NO. 34-601-64-148 BECAUSE THE APPLICABLE SPECIFICATIONS WERE AMBIGUOUS. IT WAS FOUND THAT PARAGRAPH 1.I OF THE INVITATION REQUIRED DELIVERY OF SHOP DRAWINGS PRIOR TO AWARD WHEREAS PART III OF THE INVITATION REQUIRED DELIVERY OF SUCH DRAWINGS 30 DAYS AFTER AWARD. IN ADDITION TO THESE CONFLICTING PROVISIONS, PARAGRAPHS 3Q (7) AND 3Q (8) (D) 5 REQUIRED THE SUBMISSION OF DRAWINGS OF THE COMPLETE PNEUMATIC TUBE SYSTEM AND THE CENTRAL TUBE STATION WITH THE BID. IN THIS REGARD, NO BIDDER SUBMITTED SUCH DRAWINGS PRIOR TO THE OPENING OF THE BIDS AND, TO THIS EXTENT, ALL OF THE BIDS WERE NONRESPONSIVE TO THIS REQUIREMENT. ALSO ITEM 4 REQUIRED BIDDERS TO QUOTE PRICES ON THEIR ESTIMATE OF THE TYPE AND QUANTITY OF SPARE PARTS NECESSARY TO MAINTAIN THE SYSTEM FOR 1 YEAR AND THE INVITATION CLEARLY INDICATED THAT AWARD WOULD BE BASED IN PART ON THIS BID. HERE AGAIN THE AIR FORCE ADVANCES THE OPINION THAT THIS ITEM WAS SO VAGUE AS TO BE INCOMPATIBLE WITH THE PRINCIPLES OF PRICE COMPETITION UNDER FORMAL ADVERTISING. FURTHER, THE PROCURING ACTIVITY HAS NO SPECIFICATION DETAILING OR ESTABLISHING A DEFINITIVE STANDARD FOR SUPPLYING THE GOVERNMENT'S REQUIREMENTS FOR SPARE PARTS BUT RATHER IT REQUIRED THE BIDDERS NOT ONLY TO BID ON A BASIS OF PRICE, BUT TO DETERMINE AS WELL WHAT THE GOVERNMENT'S SPARE PARTS REQUIREMENT WOULD BE. FOR THIS REASON, IT WAS CONCLUDED THAT SUCH A REQUIREMENT IS UNFAIR TO ALL THE BIDDERS AND IS OF QUESTIONABLE BENEFIT TO THE GOVERNMENT SINCE A SUCCESSFUL BIDDER WILL BE OBLIGED TO FURNISH ONLY THOSE SPARE PARTS HE LISTED IN THE INVITATION FOR BIDS NOT THE ACTUAL YEAR'S REQUIREMENT OF THE GOVERNMENT. WE THINK THE VIEWS THUS EXPRESSED BY THE DEPARTMENT ARE VALID, AND WE THEREFORE CANNOT AGREE WITH YOUR CONTENTION THAT NO AMBIGUITIES, AS SUCH, EXISTED IN THE APPLICABLE SPECIFICATION.

MOREOVER, IT SHOULD BE NOTED THAT UNDER PARAGRAPH 10 (B) OF THE TERMS AND CONDITIONS OF THE INVITATION FOR BIDS, THE GOVERNMENT EXPRESSLY RESERVED THE RIGHT TO REJECT ANY OR ALL BIDS RECEIVED UNDER THE INVITATION. THIS IS IN ACCORDANCE WITH THE PROVISION IN 10 U.S.C. 2305, WHICH AUTHORIZES THE REJECTION OF ALL BIDS IF THE HEAD OF THE AGENCY DETERMINES SUCH ACTION TO BE IN THE PUBLIC INTEREST. IT CONSISTENTLY HAS BEEN 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. ALSO, IT HAS BEEN HELD THAT A REQUEST FOR BIDS DOES NOT IMPORT ANY OBLIGATION TO ACCEPT ANY OF THE BIDS RECEIVED, INCLUDING THE LOWEST CORRECT BID. 17 COMP. GEN. 554; 26 ID. 49; PERKINS V. LUKENS STEEL CO., 310 U.S. 113; O-BRIEN V. CARNEY, 6 F.SUPP. 761; COLORADO PAVING CO. V. MURPHY, 78 F. 28.

SINCE THE RESPONSIBILITY OF MAKING A DETERMINATION TO REJECT ALL BIDS LIES WITH THE ADMINISTRATIVE OFFICERS OF THE PURCHASING AGENCY, IN THE ABSENCE OF CLEAR PROOF OF ABUSE OF THEIR DISCRETIONARY POWERS IN THAT REGARD, THIS OFFICE WILL NOT OBJECT TO SUCH ACTION. THIS IS ESPECIALLY TRUE WHERE, AS HERE, THE PURPOSE IS TO CORRECT A DEFICIENCY IN THE INVITATION. OF COURSE, WE ARE FULLY AWARE THAT THE REJECTION OF BIDS AFTER THEY ARE OPENED AND EACH BIDDER OR SUBSEQUENT PROSPECTIVE BIDDER HAS LEARNED HIS COMPETITOR'S PRICES IS A SERIOUS MATTER AND SUCH ACTION SHOULD NOT BE TAKEN EXCEPT FOR COGENT REASONS. HOWEVER, FOR THE REASONS EXPLAINED ABOVE, WE THINK THERE WAS A PROPER BASIS FOR THE ADMINISTRATIVE DETERMINATION OF THE INSUFFICIENCY OF THE ORIGINAL INVITATION AND, THAT BEING THE CASE, WE WOULD NOT BE JUSTIFIED IN OBJECTING TO THE ADMINISTRATIVE ACTION TAKEN IN THE MATTER.