B-153974, JUL. 14, 1964

B-153974, JUL. 14, 1964

TO TUNG-SOL ELECTRIC INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED APRIL 16, 1964, WITH ENCLOSURES, PROTESTING THE ISSUANCE OF INVITATION NO. DSA-9-64-1024 BY THE DEFENSE ELECTRONICS SUPPLY CENTER, DAYTON, OHIO, IN VIEW OF THE BID SUBMITTED BY YOU UNDER INVITATION NO. DSA-9-64-833.

IN RESPONSE TO INVITATION NO. DSA-9-64-833, WHICH WAS ISSUED ON FEBRUARY 4, 1964, BY THE DAYTON DEFENSE ELECTRONICS SUPPLY CENTER, YOU SUBMITTED A BID OFFERING TO FURNISH 535 OF THE SPECIFIED TYPE OF ELECTRON TUBES IN ACCORDANCE WITH THE APPLICABLE SPECIFICATIONS AT A UNIT PRICE OF $109, OR FOR A TOTAL PRICE OF $58,315. IT APPEARS THAT NO BID WAS RECEIVED FROM KUTHE LABORATORIES, C., NEWARK, NEW JERSEY, THE ONLY OTHER QUALIFIED PRODUCER OF THESE TUBES. IN THE CONSIDERATION OF YOUR BID FOR AWARD, HEADQUARTERS, DEFENSE SUPPLY AGENCY, DETERMINED THAT IT SHOULD BE REJECTED AND THE PROCUREMENT RE ADVERTISED SINCE THE PRICE THEREOF OF $109 EACH FOR THE ELECTRON TUBES WAS BELIEVED TO BE UNREASONABLE WHEN CONSIDERED IN RELATION TO THE PRICE RECENTLY PAID FOR A SIMILAR QUANTITY OF THESE TUBES. THEREFORE, INVITATION NO. DSA-9-64-833 WAS CANCELED AND ON APRIL 7, 1964, INVITATION NO. DSA-9-64-1024 WAS ISSUED COVERING THE SAME PROCUREMENT. IN RESPONSE TO THE LATTER INVITATION, KUTHE LABORATORIES, INC., SUBMITTED A BID IN THE TOTAL AMOUNT OF $45,207.50 FOR THE 535 ELECTRON TUBES REQUIRED AGAINST YOUR TOTAL BID OF $58,315- - THE SAME PRICE QUOTED BY YOU UNDER INVITATION NO. DSA-9-64-833--- FOR THE PROCUREMENT.

YOUR PROTEST OF THE CANCELLATION OF INVITATION NO. DSA-9-64-833, UNDER WHICH YOU SUBMITTED THE ONLY BID RECEIVED, IS BASED PRIMARILY ON YOUR CONTENTION THAT APPARENTLY THE CANCELLATION RESULTED FROM THE FAILURE OF YOUR COMPETITOR TO SUBMIT A BID IN RESPONSE TO THE INVITATION. ALSO, YOU REFER TO BID PRICES FOR ELECTRON TUBES ON OTHER INVITATIONS TO SUBSTANTIATE THE CONTENTION THAT YOUR UNIT PRICE OF $109 FOR THE TUBES WAS A REASONABLE PRICE.

PARAGRAPH 9 (B) OF THE TERMS AND CONDITIONS OF INVITATION NO. DSA-9 64- 833 PROVIDED THAT THE GOVERNMENT EXPRESSLY RESERVED THE RIGHT TO REJECT ANY OR ALL BIDS RECEIVED. THIS IS IN ACCORDANCE WITH THE PROVISION CONTAINED 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 AND, SECTION 2-404.1 (B) (VI) OF THE ARMED SERVICES PROCUREMENT REGULATION, WHICH IS AN IMPLEMENTATION OF THE ABOVE STATUTORY PROVISION, SPECIFICALLY REFERS TO A DETERMINATION OF UNREASONABLY PRICED BIDS AS A COMPELLING REASON FOR THE CANCELLATION OF AN INVITATION AFTER OPENING OF BIDS. IN THIS REGARD, INFORMATION AS TO SOME OF THE MORE RECENT PRICES PAID FOR THE ELECTRON TUBES WAS COMMUNICATED TO THE DEFENSE SUPPLY AGENCY BY PROCUREMENT PERSONNEL OF THE DEFENSE ELECTRONICS SUPPLY CENTER SHOWING THAT CONTRACTS WERE AWARDED IN JULY 1963, FOR A QUANTITY OF 621 TUBES AND IN DECEMBER 1963, FOR 747 TUBES AT UNIT PRICES OF $92 AND $86.25, RESPECTIVELY. SUCH INFORMATION ALSO SHOWED THAT THE BIDS SUBMITTED BY YOU FOR THESE TWO PROCUREMENTS WERE $94.40 AND $92.85, RESPECTIVELY, WHICH ARE $14.60 AND $16.15 LOWER, RESPECTIVELY, THAN YOUR BID UNDER THE SUBJECT INVITATION. THUS, ON THE BASIS OF SUCH RECENT COMPARATIVE PRICE INFORMATION, WE BELIEVE THE DEFENSE SUPPLY AGENCY WAS JUSTIFIED IN ITS DETERMINATION THAT YOUR BID, WHICH WAS THE ONLY BID RECEIVED IN RESPONSE TO THE INVITATION, WAS EXCESSIVE. A FURTHER INDICATION OF THE PROPRIETY OF THIS DETERMINATION IS THAT, WHILE THE RECORD DOES NOT SHOW THAT THE CANCELLATION OF THE INVITATION WAS BASED IN ANY WAY ON THE FACT THAT NO BID WAS RECEIVED FROM KUTHE LABORATORIES, INC., IN RESPONSE TO THE RE- ADVERTISEMENT A BID WAS RECEIVED FROM THIS CORPORATION IN THE AMOUNT OF $84.50 EACH FOR THE ELECTRON TUBES, WHICH IS $24.50 LESS THAN THE PRICE QUOTED BY YOU UNDER INVITATION NO. DSA-9 64-833. OUR OFFICE CONSISTENTLY HAS HELD, OF COURSE, THAT AN INVITATION FOR BIDS DOES NOT IMPORT ANY OBLIGATION TO ACCEPT ANY OF THE BIDS RECEIVED AND ALL BIDS MAY BE REJECTED WHERE IT IS DETERMINED TO BE IN THE GOVERNMENT'S INTEREST TO DO SO.

ACCORDINGLY, WE FIND NO LEGAL BASIS FOR OBJECTING TO THE ADMINISTRATIVE ACTION TAKEN BY THE DEFENSE SUPPLY AGENCY IN CANCELLING INVITATION NO. DSA -9-64-833.