B-154483, OCT. 30, 1964

B-154483: Oct 30, 1964

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TO THE GENERAL ELECTRIC COMPANY: REFERENCE IS MADE TO YOUR LETTERS OF JUNE 16 AND AUGUST 26. THE GOVERNMENT ESTIMATE WHICH WAS PREPARED BY A PRIVATE FIRM. WAS IN THE AMOUNT OF $266. IT IS REPORTED THAT BECAUSE OF THE GREAT DISPARITY BETWEEN THE TWO BIDS RECEIVED AND THE ENGINEER'S ESTIMATE ($127. BOTH THE BID OF YOUR FIRM AND THE BID OF MOTOROLA WERE CONSIDERED TO BE UNREASONABLY HIGH AND WERE REJECTED BY THE CONTRACTING OFFICER. YOUR FIRM AND MOTOROLA WERE NOTIFIED THAT YOUR BIDS WERE BEING REJECTED BECAUSE THEY WERE CONSIDERABLY HIGHER THAN THE AMOUNT OF THE ENGINEER'S ESTIMATE. REPRESENTATIVES OF YOUR FIRM MET WITH REPRESENTATIVES OF THE GOVERNMENT AND THAT AT SUCH MEETING YOUR REPRESENTATIVES WERE INFORMED THAT THE BIDS HAD BEEN REJECTED AS BEING UNREASONABLY HIGH BECAUSE THE LOW BID OF YOUR FIRM EXCEEDED THE APPROPRIATED FUNDS AVAILABLE TO THE GOVERNMENT FOR THIS PROCUREMENT AND FOR THE FURTHER REASON THAT YOUR LOW BID EXCEEDED BY APPROXIMATELY 25 PERCENT THE ESTIMATED COST OF THE PROCUREMENT AS DETERMINED BY GOVERNMENT CONSULTANTS.

B-154483, OCT. 30, 1964

TO THE GENERAL ELECTRIC COMPANY:

REFERENCE IS MADE TO YOUR LETTERS OF JUNE 16 AND AUGUST 26, 1964, PROTESTING AGAINST THE REJECTION OF ALL BIDS RECEIVED IN RESPONSE TO INVITATION FOR BIDS NO. GRSM-15, ISSUED BY THE DEPARTMENT OF INTERIOR, NATIONAL PARK SERVICE, GREAT SMOKY MOUNTAINS, GATLINBURG, TENNESSEE.

THE INVITATION REQUESTED BIDS FOR THE FURNISHING, INSTALLING, MAINTAINING AND LEASING OF A RADIO SYSTEM FOR THE GREAT SMOKY MOUNTAINS NATIONAL PARK. YOU SUBMITTED A BID IN THE AMOUNT OF $394,123.77 AND MOTOROLA COMMUNICATIONS AND ELECTRONICS, INC., SUBMITTED THE ONLY OTHER BID IN THE AMOUNT OF $419,548. THE GOVERNMENT ESTIMATE WHICH WAS PREPARED BY A PRIVATE FIRM, GAUTNEY AND JONES, COMMUNICATIONS ENGINEERS, WASHINGTON, D.C., WAS IN THE AMOUNT OF $266,348.25. IT IS REPORTED THAT BECAUSE OF THE GREAT DISPARITY BETWEEN THE TWO BIDS RECEIVED AND THE ENGINEER'S ESTIMATE ($127,775.52 OR 47 PERCENT IN THE CASE OF YOUR FIRM, AND $153,199.75 OR 57 PERCENT IN THE CASE OF MOTOROLA), AND ALSO BECAUSE YOUR LOW BID EXCEEDED THE AMOUNT OF GOVERNMENT FUNDS AVAILABLE FOR THE PROJECT, BOTH THE BID OF YOUR FIRM AND THE BID OF MOTOROLA WERE CONSIDERED TO BE UNREASONABLY HIGH AND WERE REJECTED BY THE CONTRACTING OFFICER. TELEGRAMS DATED JUNE 11, 1964, YOUR FIRM AND MOTOROLA WERE NOTIFIED THAT YOUR BIDS WERE BEING REJECTED BECAUSE THEY WERE CONSIDERABLY HIGHER THAN THE AMOUNT OF THE ENGINEER'S ESTIMATE. THE TELEGRAMS ALSO INCLUDED A NOTICE OF AN INTENT TO NEGOTIATE A PRICE MORE IN LINE WITH THE ESTIMATE, SUCH ACTION TO BE TAKEN UNDER C.F.R. TITLE 41, SECTION 1 3.214 (MISQUOTED IN THE TELEGRAM AS SECTION 13.214) AND SECTION 302 (C) (14) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED.

YOU STATE THAT AFTER RECEIPT OF THE TELEGRAM ADVISING YOU OF THE REJECTION OF ALL BIDS, REPRESENTATIVES OF YOUR FIRM MET WITH REPRESENTATIVES OF THE GOVERNMENT AND THAT AT SUCH MEETING YOUR REPRESENTATIVES WERE INFORMED THAT THE BIDS HAD BEEN REJECTED AS BEING UNREASONABLY HIGH BECAUSE THE LOW BID OF YOUR FIRM EXCEEDED THE APPROPRIATED FUNDS AVAILABLE TO THE GOVERNMENT FOR THIS PROCUREMENT AND FOR THE FURTHER REASON THAT YOUR LOW BID EXCEEDED BY APPROXIMATELY 25 PERCENT THE ESTIMATED COST OF THE PROCUREMENT AS DETERMINED BY GOVERNMENT CONSULTANTS. YOU STATE THAT THE ABOVE REASONS GIVEN BY THE GOVERNMENT REPRESENTATIVES DO NOT PROVIDE A BASIS FOR DECLARING THE BID OF YOUR FIRM UNREASONABLY HIGH. YOU ALSO CONTEND THAT THE REQUIREMENT OF A DETERMINATION OR DECISION BASED UPON WRITTEN FINDINGS MADE BY THE OFFICIAL MAKING THE DETERMINATION UNDER 41 U.S.C. 257 (C) HAS NOT BEEN MET AND THAT THE REFERRED-TO TELEGRAM MAY NOT BE ACCEPTED AS MEETING THAT REQUIREMENT. IT IS ALSO STATED THAT IT WOULD BE IMPROPER AND CONTRARY TO GOVERNMENT PROCUREMENT REGULATIONS FOR THE GOVERNMENT TO NEGOTIATE WITH BOTH BIDDERS IN THIS CASE FOR THE PURPOSE OF OBTAINING A CONTRACT PRICE EQUAL TO OR BELOW THE AMOUNT OF THE APPROPRIATED FUNDS, SINCE SUCH ACTION WOULD BE PREJUDICIAL TO YOUR FIRM, THE LOW BIDDER UNDER THE INVITATION IN QUESTION. YOU REQUEST THAT A CONTRACT BE AWARDED TO YOUR FIRM AT YOUR BID PRICE AND SUGGEST THAT IF THERE ARE NOT SUFFICIENT AVAILABLE FUNDS FOR THE ENTIRE PROCUREMENT, THE GOVERNMENT COULD PROPERLY CONTRACT FOR REDUCED QUANTITIES OF EQUIPMENT AND/OR SERVICES PURSUANT TO PART I OF THE SPECIAL PROVISIONS OF THE INVITATION.

SECTION 303 (B) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT, AS AMENDED, 41 U.S.C. 253, PROVIDES THAT ALL BIDS MAY BE REJECTED IF IT IS DETERMINED THAT SUCH ACTION IS IN THE PUBLIC INTEREST. SECTION 302 (C) (14) OF THE SAME ACT, 41 U.S.C. 252 (C) (14), PROVIDES, IN EFFECT, THAT IF IT IS DETERMINED AFTER ADVERTISING FOR PROPERTY OR SERVICES THAT THE BIDS RECEIVED ARE NOT REASONABLE ALL BIDS MAY BE REJECTED AND NEGOTIATIONS UNDERTAKEN. SEE, ALSO, PARAGRAPH 1 2.404-1 (B) (5) OF THE FEDERAL PROCUREMENT REGULATIONS. IN ADDITION, THE INVITATION FOR BIDS SPECIFICALLY RESERVED TO THE GOVERNMENT THE RIGHT TO REJECT ANY AND ALL BIDS WHEN SUCH REJECTION IS IN THE INTEREST OF THE GOVERNMENT.

IN VIEW OF THE ABOVE STATUTORY AUTHORITY, THE IMPLEMENTING REGULATIONS AND THE EXPRESS RESERVATION IN THE INVITATION FOR BIDS OF THE RIGHT TO REJECT ANY AND ALL BIDS, THERE APPEARS TO BE NO SOUND BASIS FOR YOUR CONTENTION THAT THE NATIONAL PARK SERVICE COULD NOT UNDER THE CIRCUMSTANCES REJECT ALL BIDS RECEIVED UNDER THE INVITATION, BUT WAS BOUND TO AWARD THE CONTRACT TO YOU AS THE LOWEST RESPONSIBLE BIDDER MEETING THE ADVERTISED SPECIFICATIONS. WHILE THE CONTENTS OF THE DETERMINATION TO REJECT ALL BIDS UNDER THIS INVITATION PERHAPS MIGHT HAVE BEEN MORE DETAILED AND FORMAL, SUCH DEFICIENCY, IN OUR OPINION, DOES NOT AFFECT THE AUTHORITY VESTED IN THE CONTRACTING OFFICER TO REJECT ALL BIDS IF HE DETERMINED THAT SUCH ACTION WAS IN THE PUBLIC INTEREST. SEE 17 COMP. GEN. 554;

SEE 17 COMP. GEN. 554; 36 ID. 364. THE COURTS HAVE CONSISTENTLY HELD THAT A REQUEST BY THE GOVERNMENT FOR BIDS DOES NOT IMPORT ANY OBLIGATION TO ACCEPT ANY OF THE OFFERS RECEIVED, INCLUDING THE LOWEST CORRECT BID. -BRIEN V. CARNEY, 6 F.SUPP. 761 AND COLORADO PAVING COMPANY V. MURPHY, 78 F. 28. CERTAINLY, IT CANNOT BE CONCEDED THAT A PUBLIC OFFICER, ACTING FOR THE GENERAL WELFARE, IS BOUND TO ACCEPT A BID WHERE HE DETERMINES THAT THE AMOUNT WHICH THE GOVERNMENT WOULD BE REQUIRED TO PAY THEREUNDER IS EXCESSIVE.

WE FULLY APPRECIATE YOUR VIEWS WITH RESPECT TO THE CONSEQUENCES RESULTING FROM THE REJECTION OF ALL BIDS AFTER BID OPENING AND REALIZE THAT IT MAY OPERATE TO THE DISADVANTAGE OF SOME OR ALL OF THE BIDDERS WHOSE BIDS HAVE BEEN EXPOSED. IT IS FOR EXACTLY THAT REASON THAT THIS OFFICE HAS CONSISTENTLY EXPRESSED SERIOUS CONCERN IN ALL CASES INVOLVING THE REJECTION OF BIDS AFTER OPENING AND HAS REFUSED TO APPROVE SUCH ACTION EXCEPT FOR THE MOST COGENT REASONS. SEE 39 COMP. GEN. 396. WE HAVE 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 THE MATTER OF COMPETITIVE BIDDING FOR GOVERNMENT CONTRACTS SOLELY AS A GAME IN WHICH THE CONTRACT MUST AUTOMATICALLY GO TO THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER WITHOUT REGARD TO THE REASONABLENESS OF HIS PRICE. 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 PROPERTY OR SERVICES SOUGHT, WE BELIEVE THAT THE REJECTION OF ALL BIDS AND THE NEGOTIATION OF A CONTRACT IS A PROPER EXERCISE OF ADMINISTRATIVE DISCRETION, IN CONFORMITY WITH THE DUTY OF ADMINISTRATIVE OFFICIALS TO ACT IN THE BEST INTEREST OF THE GOVERNMENT. UPON SUCH REJECTION AND NEGOTIATION THE ORIGINAL BIDS ARE NO LONGER MATERIAL OR EFFECTIVE FOR ANY PURPOSE WHATSOEVER. WHILE IT IS REGRETTABLE THAT ALL BIDDERS ARE AWARE OF THE AMOUNTS ORIGINALLY QUOTED BY THEIR COMPETITORS, 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 PROPOSALS AS THEY MAY DESIRE. MUST BE OBVIOUS THAT THE IMPOSITION OF ANY RESTRICTION ON BIDDERS WHICH WOULD REQUIRE THEM TO SUBMIT A PROPOSAL BEARING ANY PARTICULAR RELATIONSHIP TO A PREVIOUSLY REJECTED BID WOULD DEFEAT THE VERY PURPOSE INTENDED BY THE PROCUREMENT STATUTES. IN THE INSTANT MATTER IT IS CONCLUDED THAT THE ACTION OF THE PROCUREMENT OFFICE WAS IN GOOD FAITH AND IN ACCORDANCE WITH APPLICABLE LAW AND REGULATIONS.

ACCORDINGLY, THERE APPEARS NO VALID REASON FOR OUR OFFICE TO OBJECT TO THE REJECTION OF ALL BIDS UNDER THIS INVITATION AND TO THE CONTEMPLATED NEGOTIATION PROCEEDINGS WITH YOUR FIRM AND MOTOROLA.