B-157418, NOV. 10, 1965

B-157418: Nov 10, 1965

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INC: FURTHER REFERENCE IS MADE TO YOUR LETTER DATED AUGUST 4. BIDS WERE SOLICITED FOR A TOTAL ESTIMATED QUANTITY OF 1. THIS PROCUREMENT WAS A 100 PERCENT SET-ASIDE FOR SMALL BUSINESS CONCERNS. BIDS WERE OPENED ON JUNE 7. THE FOLLOWING BIDS WERE RECEIVED FROM SMALL BUSINESS CONCERNS: CHART BIDDER UNIT PRICE GLOBE INDUSTRIES. THE FOLLOWING BIDS WERE RECEIVED: VARO. THAT THE PRICES OFFERED BY ELIGIBLE SMALL BUSINESS CONCERNS WERE UNREASONABLE AND. THIS DETERMINATION WAS BASED UPON THE FOLLOWING FACTORS: A. THE UNIT PRICE WAS $21.50 FOR 1. THIS CONTRACT WAS AWARDED PURSUANT TO COMPETITIVE SEALED BIDDING RESTRICTED TO SMALL BUSINESS CONCERNS. AMC (A) 36-038-65-1218 (WKI) WAS ISSUED FOR THE REQUIRED MOTORS WITHOUT THE SMALL BUSINESS SET-ASIDE LIMITATION.

B-157418, NOV. 10, 1965

TO ROTATING COMPONENTS, INC:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED AUGUST 4, 1965, WITH ENCLOSURES, PROTESTING THE CANCELLATION OF INVITATION FOR BIDS NO. AMC (A) 36-038-65-1073 (WKI) (IFB 1073) AND THE READVERTISING OF THE SAME ITEM ON INVITATION NO AMC (A) 36-038-65-1218 (WKI) BY THE FRANKFORD ARSENAL.

UNDER INVITATION FOR BIDS NO. AMC (A) 36-038-65-1073 (WKI), ISSUED MAY 7, 1965, BIDS WERE SOLICITED FOR A TOTAL ESTIMATED QUANTITY OF 1,500 ALTERNATING CURRENT MOTORS, DRAWING NO. D7599786. THIS PROCUREMENT WAS A 100 PERCENT SET-ASIDE FOR SMALL BUSINESS CONCERNS.

BIDS WERE OPENED ON JUNE 7, 1965, AND THE FOLLOWING BIDS WERE RECEIVED FROM SMALL BUSINESS CONCERNS:

CHART

BIDDER UNIT PRICE

GLOBE INDUSTRIES, INC. $25.00

SKURKA-LANGDON ENGINEERING CO. 43.95

ROTATING COMPONENTS, INC. 23.45

IN ADDITION, THE FOLLOWING BIDS WERE RECEIVED:

VARO, INC., ELECTROKINETICS DIVISION

(EMPLOYED MORE THAN 500 PERSONNEL) $21.00

EASTERN AIR DEVICES, INC. (LARGE

BUSINESS) 19.45

ON JUNE 8, 1965, THE CONTRACTING OFFICER DETERMINED, PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-706.3, THAT THE PRICES OFFERED BY ELIGIBLE SMALL BUSINESS CONCERNS WERE UNREASONABLE AND, THEREFORE, THAT IFB 1073 SHOULD BE CANCELED AND THE REQUIREMENT FOR THE MOTORS READVERTISED WITHOUT RESTRICTION. THIS DETERMINATION WAS BASED UPON THE FOLLOWING FACTORS:

A. UNDER A CURRENT CONTRACT, NO. DA-36-038-AMC-2413 (W) WITH YOUR COMPANY, DATED MARCH 5, 1965, THE UNIT PRICE WAS $21.50 FOR 1,500 MAXIMUM ESTIMATED QUANTITY OF THE SAME MOTORS. THIS CONTRACT WAS AWARDED PURSUANT TO COMPETITIVE SEALED BIDDING RESTRICTED TO SMALL BUSINESS CONCERNS.

B. THE UNSOLICITED OFFER BY EASTERN AIR DEVICES, INC., OF $19.45 EACH.

ON JUNE 11, 1965, INVITATION NO. AMC (A) 36-038-65-1218 (WKI) WAS ISSUED FOR THE REQUIRED MOTORS WITHOUT THE SMALL BUSINESS SET-ASIDE LIMITATION. BIDS WERE OPENED ON JULY 1, 1965, AND THIS TIME SIX BIDS WERE RECEIVED AS FOLLOWS:

CHART

BIDDER UNIT PRICE

EASTERN AIR DEVICES, INC. $18.74

LAMB ELECTRIC, A DIVISION OF AMETEK, INC. 19.40

VARO, INC., ELECTROKINETICS DIVISION 21.00

IMC MAGNETIC CORP. 22.75

ROTATING COMPONENTS, INC. 23.45

GLOBE INDUSTRIES, INC. 25.00

ON JULY 28, 1965, AWARD UNDER THIS INVITATION WAS MADE TO THE LOW BIDDER- -- EASTERN AIR DEVICES, INC., AT THE UNIT PRICE OF $18.74--- AS CONTRACT NO. DA-36-038-AMC-2999W.

YOU PROTEST AGAINST THE CANCELLATION OF THE ORIGINAL INVITATION, STATING THAT:

"* * * IFB 1073 WAS A 100 PERCENT SMALL BUSINESS SET-ASIDE FOR COMPANIES UNDER 500 EMPLOYEES. ON PAGE 2 OF THIS IFB, UNDER NOTICE OF TOTAL SMALL BUSINESS SET-ASIDE, THE LAST SENTENCE SPECIFICALLY STATES,"BIDS OR PROPOSALS RECEIVED FROM FIRMS WHICH ARE NOT SMALL BUSINESS CONCERNS SHALL BE CONSIDERED NONRESPONSIVE AND SHALL BE REJECTED.' WE WERE THE LOWEST RESPONSIBLE BIDDER. THE AWARD SHOULD HAVE BEEN PLACED WITH US. HOWEVER, THERE WERE TWO BIDS WHICH WERE LOWER THAN OURS PLACED BY EASTERN AIR DEVICES AND VARO. BOTH OF THESE COMPANIES ARE LARGE BUSINESS. THEIR BIDS WERE ACCEPTED AND CONSIDERED AND DUE TO THE FACT THAT THESE TWO BIDDERS HAD QUOTED LOWER THAN WE, THE IFB WAS CANCELLED. THERE IS NO QUESTION IN OUR MINDS, THAT THIS ACTION WAS CONTRARY TO THE SMALL BUSINESS REGULATIONS.'

ASPR 1-706.3 (A) PROVIDES FOR THE WITHDRAWAL OF A SMALL BUSINESS SET- ASIDE WHEN IT IS CONSIDERED THAT AWARD UNDER THE SET-ASIDE "WOULD BE DETRIMENTAL TO THE PUBLIC INTEREST (E.G., BECAUSE OF UNREASONABLE PRICE); " AND WE HAVE RECOGNIZED THAT THE DETERMINATION TO WITHDRAW A SMALL BUSINESS SET-ASIDE BECAUSE OF UNREASONABLE PRICE IS A MATTER WHICH RESTS WITHIN ADMINISTRATIVE DISCRETION, AND WHERE IT IS SHOWN THAT THE PURPOSE OF SUCH ACTION IS TO OBTAIN FOR THE GOVERNMENT THE ADVANTAGE OF MORE COMPETITIVE AND REALISTIC BIDDING AS DETERMINED BY THE GOVERNMENT'S DULY CONSTITUTED AGENTS, WE WILL NOT OBJECT TO SUCH ACTION. B-149889, NOVEMBER 2, 1962; B-145376, AUGUST 11, 1961; SEE 37 COMP. GEN. 147.

YOUR PROTEST, IN EFFECT, IS BASED PRIMARILY UPON THE CONTENTION THAT THE BIDS OF OTHER THAN SMALL BUSINESS CONCERNS SHOULD NOT HAVE BEEN RECEIVED AND THAT THE SOLE PURPOSE OF SUCH BIDS WAS TO UPSET THE INVITATION AND INDUCE THE GOVERNMENT TO CANCEL IT, AND THAT WITH THE PUBLICATION OF ALL OTHER BIDDERS' PRICES, THE LARGE BUSINESS CONCERNS COULD RAISE THEIR PRICES AND STILL GET AN AWARD. IN OTHER WORDS, YOU CONTEND THAT THE BIDS OF LARGE BUSINESS WERE NOT FIRM IN THE FIRST INSTANCE. YOU STATE YOUR BELIEF THAT IT WAS THE INTENTION OF THE SMALL BUSINESS ACT TO PROTECT SMALL COMPANIES AGAINST THIS TYPE OF BIDDING.

WHILE THERE IS NO DOUBT THAT THE PROVISIONS OF THE SMALL BUSINESS ACT AUTHORIZE THE AWARD OF CONTRACTS TO SMALL BUSINESS CONCERNS AT PRICES WHICH MAY BE HIGHER THAN THOSE OBTAINABLE BY UNRESTRICTED COMPETITION, WE ARE AWARE OF NO VALID BASIS UPON WHICH IT MAY BE CONCLUDED THAT THIS ACT WAS INTENDED TO REQUIRE THE AWARD OF CONTRACTS TO SMALL BUSINESS CONCERNS AT PRICES CONSIDERED UNREASONABLE BY THE CONTRACTING AGENCY, OR THAT THE CONTRACTING AGENCY WOULD BE PROHIBITED FROM WITHDRAWING A SET-ASIDE DETERMINATION WHERE THE BIDS SUBMITTED BY SMALL BUSINESS CONCERNS WERE CONSIDERED UNREASONABLE.

UNDER THE STATED TERMS OF THE INVITATION BIDS FROM LARGE BUSINESS CONCERNS WERE TO BE CONSIDERED AS NONRESPONSIVE AND WERE TO BE REJECTED AND NOT CONSIDERED FOR AWARD. SUCH BIDS, WHILE NONRESPONSIVE, ARE REGARDED AS COURTESY BIDS AND, AS SUCH, APPLICABLE REGULATIONS HAVE, IN THE PAST, AFFIRMATIVELY PROVIDED FOR THEIR RECORDATION FOR USE IN DETERMINING THE PROPRIETY OF EXECUTING DETERMINATIONS IN CONNECTION WITH FUTURE PROCUREMENT OF THE SAME OR SIMILAR ITEMS. IN THE PRESENT CASE, WHETHER OR NOT EASTERN AIR DEVICES' BID WAS PROPERLY FOR CONSIDERATION IN DETERMINING TO WITHDRAW THE SET-ASIDE IS NOT CONTROLLING SINCE THERE WAS A VALID REASON OTHERWISE FOR THE CANCELLATION, NAMELY, THE SUBSTANTIAL DIFFERENCE BETWEEN THE LOW RESPONSIVE BID AND THE PRICE PAID FOR THE MATERIAL UNDER A PRIOR PROCUREMENT. 37 COMP. GEN. 147.

IN ANY EVENT, IT IS NOTED THAT UPON RESOLICITATION YOUR BID WAS THE FIFTH HIGHEST OUT OF SIX RECEIVED AND EASTERN DEVICES' BID WAS LOWER THAN THAT SUBMITTED UNDER THE PREVIOUS INVITATION. THUS, THERE WAS A SOUND BASIS FOR ASSUMING THAT RESOLICITATION WOULD RESULT IN THE SUBMISSION OF BID PRICES SUBSTANTIALLY LOWER THAN THOSE RECEIVED UNDER THE CANCELED INVITATION. IT WOULD APPEAR THAT THE DECISION TO REJECT ALL BIDS AND READVERTISE THE PROCUREMENT WAS JUSTIFIED AS BEING IN THE BEST INTERESTS OF THE GOVERNMENT.

ACCORDINGLY, WE FIND NO LEGAL BASIS TO OBJECT TO THE AWARD OF A CONTRACT UNDER INVITATION AMC (A) 36-038-65-1218 (WKI) TO EASTERN DEVICES, INC., AND YOUR PROTEST IS DENIED.