B-157419, OCT. 18, 1965

B-157419: Oct 18, 1965

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TO SUN SHIPBUILDING AND DRY DOCK CO: REFERENCE IS MADE TO YOUR TELEGRAMS OF AUGUST 6 AND OCTOBER 5. THE RECORD SHOWS THAT THE SUBJECT SOLICITATION FOR BIDS WAS ISSUED BY THE CHESAPEAKE DIVISION. FOUR MODIFICATIONS TO THE SPECIFICATIONS WERE ISSUED AND THE BID OPENING DATE WAS POSTPONED UNTIL JUNE 9. BIDS WERE OPENED ON JUNE 9. TWO BIDS WERE RECEIVED. THE OTHER BID WAS BY THE PITTSBURGH-DES MOINES STEEL COMPANY IN THE AMOUNT OF $3. THE GOVERNMENT ESTIMATE FOR THE WORK WAS $2. IT IS FURTHER REPORTED THAT THE FUNDS AVAILABLE FOR THE AWARD WERE $2. AN EXTENSIVE EFFORT WAS MADE TO OBTAIN ADDITIONAL FUNDS OR TO ESTABLISH JUSTIFICATION WHICH WOULD PERMIT NEGOTIATION WITH YOUR FIRM. IT WAS DETERMINED THAT THE BIDS WOULD BE REJECTED AND THE SPECIFICATIONS REVISED IN AN EFFORT TO LOWER THE COSTS OF THE WORK TO BE PERFORMED AND TO ENHANCE THE CAPABILITIES OF THE CHAMBER DESIGN.

B-157419, OCT. 18, 1965

TO SUN SHIPBUILDING AND DRY DOCK CO:

REFERENCE IS MADE TO YOUR TELEGRAMS OF AUGUST 6 AND OCTOBER 5, 1965, YOUR LETTER OF AUGUST 10, 1965, AND YOUR ATTORNEY'S LETTER OF AUGUST 31, 1965, PROTESTING AGAINST THE REJECTION OF BIDS AND CANCELLATION OF SOLICITATION FOR BIDS NO. NBY-66317 FOR THE DEEP SUBMERGENCE RESEARCH COMPLEX, CHAMBER "A," AT THE UNITED STATES NAVAL MARINE ENGINEERING LABORATORY, ANNAPOLIS, MARYLAND.

THE RECORD SHOWS THAT THE SUBJECT SOLICITATION FOR BIDS WAS ISSUED BY THE CHESAPEAKE DIVISION, BUREAU OF YARDS AND DOCKS, ON APRIL 5, 1965, WITH BID OPENING SCHEDULED FOR MAY 26, 1965. SUBSEQUENTLY, FOUR MODIFICATIONS TO THE SPECIFICATIONS WERE ISSUED AND THE BID OPENING DATE WAS POSTPONED UNTIL JUNE 9, 1965. BIDS WERE OPENED ON JUNE 9, 1965, AND TWO BIDS WERE RECEIVED, THE LOW BID BEING SUBMITTED BY YOUR COMPANY IN THE AMOUNT OF $3,540,000. THE OTHER BID WAS BY THE PITTSBURGH-DES MOINES STEEL COMPANY IN THE AMOUNT OF $3,950,000. THE GOVERNMENT ESTIMATE FOR THE WORK WAS $2,570,000. IT IS FURTHER REPORTED THAT THE FUNDS AVAILABLE FOR THE AWARD WERE $2,600,000, AND INASMUCH AS YOUR LOW BID EXCEEDED THE AVAILABLE FUNDS, AN EXTENSIVE EFFORT WAS MADE TO OBTAIN ADDITIONAL FUNDS OR TO ESTABLISH JUSTIFICATION WHICH WOULD PERMIT NEGOTIATION WITH YOUR FIRM. NEITHER OF THESE EFFORTS BEING SUCCESSFUL, IT WAS DETERMINED THAT THE BIDS WOULD BE REJECTED AND THE SPECIFICATIONS REVISED IN AN EFFORT TO LOWER THE COSTS OF THE WORK TO BE PERFORMED AND TO ENHANCE THE CAPABILITIES OF THE CHAMBER DESIGN, WHICH COULD THEREBY MAKE ADDITIONAL FUNDS AVAILABLE. BOTH YOUR COMPANY AND PITTSBURGH-DES MOINES STEEL COMPANY WERE ADVISED OF THIS DECISION BY REPRESENTATIVES OF THE CHESAPEAKE DIVISION AND BUREAU OF YARDS AND DOCKS HEADQUARTERS AND THEREAFTER NOTICE NO. 1 TO THE SPECIFICATIONS WAS ISSUED AUGUST 6, 1965, OFFICIALLY ADVISING BIDDERS THAT THE BIDS WERE REJECTED AND THAT THE SUBJECT SOLICITATION WOULD BE REVISED AND READVERTISED AT A LATER DATE.

YOUR PROTEST AGAINST THE CANCELLATION OF THE SUBJECT SOLICITATION AND READVERTISEMENT IS CENTERED ON YOUR CONTENTION THAT THE ADMINISTRATIVE NOTICE OF REJECTION OF ALL BIDS DATED AUGUST 6, 1965, DID NOT STATE IN WRITING THE REASON FOR THE CONTRACTING OFFICER'S DETERMINATION TO REJECT ALL BIDS AS PROVIDED FOR BY THE TERMS OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2-404.1 (B). ON SUCH BASIS, YOU CONTEND THAT SINCE THE CONTRACTING OFFICER FAILED TO INFORM YOU IN WRITING OF THE REASON FOR THE REJECTION OF BIDS, THIS RESULTED IN AN ARBITRARY VIOLATION OF ASPR AND NECESSITATES THE AWARD OF THIS CONTRACT TO YOUR FIRM. MOREOVER, YOU STATE THAT IT IS NOT IN THE BEST INTEREST OF THE GOVERNMENT FOR THE BIDS TO BE REJECTED AND THE CONTRACT TO BE REBID, AS TO DO SO WOULD SERIOUSLY WEAKEN THE INTEGRITY OF THE COMPETITIVE BID SYSTEM. YOUR ATTORNEY HAS CITED OUR DECISIONS IN 36 COMP. GEN. 62; 39 ID. 396; 40 ID. 671, IN SUPPORT OF THE CONTENTIONS PRESENTED IN YOUR PROTEST.

UNDER THE AUTHORITY OF 10 U.S.C. 2305/C), ALL BIDS MAY BE REJECTED IF THE HEAD OF THE AGENCY DETERMINES THAT REJECTION IS IN THE PUBLIC INTEREST, AND UNDER 10 U.S.C. 2311, THE AUTHORITY TO MAKE SUCH DETERMINATION MAY BE DELEGATED TO ANY OTHER OFFICER OR OFFICIAL OF THAT AGENCY. PURSUANT TO THE FOREGOING, THE PROVISIONS OF ASPR 2-404.1 (B) (VIII) HAVE DELEGATED TO THE CONTRACTING OFFICER THE AUTHORITY TO CANCEL AN INVITATION WHERE SUCH ACTION IS DETERMINED TO BE IN THE BEST INTEREST OF THE GOVERNMENT. BUT HERE THERE WAS NOT INVOLVED THE EXERCISE OF A CONTRACTING OFFICER'S DISCRETION. SINCE IT IS ADMINISTRATIVELY REPORTED THAT FUNDS AVAILABLE FOR AWARD IN THE INSTANT CASE WERE AVAILABLE ONLY IN THE AMOUNT OF $2,600,000 AND INASMUCH AS YOUR LOW BID EXCEEDED SUCH AVAILABLE FUNDS, HE HAD NO CHOICE IN THE MATTER AND WAS PRECLUDED FROM MAKING AN AWARD TO YOU UNDER SUCH CIRCUMSTANCES. INDEED, THE CONTRACTING OFFICER WOULD BE ACTING BEYOND HIS AUTHORITY IF HE WERE TO HAVE ACCEPTED YOUR BID. WHILE THE CONTENTS OF THE DETERMINATION TO REJECT ALL BIDS UNDER THIS INVITATION MIGHT HAVE BEEN MORE DETAILED AND FORMAL, SUCH DEFICIENCY, IN OUR OPINION, DID NOT AFFECT THE PROPRIETY OF THE DETERMINATION TO REJECT ALL BIDS. SEE 17 COMP. GEN. 554; 36 ID. 364. MOREOVER, IT SHOULD BE POINTED OUT THAT THE COURTS HAVE CONSISTENTLY HELD THAT A REQUEST FOR BIDS BY THE GOVERNMENT DOES NOT IMPORT ANY OBLIGATION TO ACCEPT ANY OF THE OFFERS RECEIVED, INCLUDING THE LOWEST CORRECT BID. O-BRIEN V. CARNEY, 6 F.SUPP. 761, AND COLORADO PAV.CO. V. MURPHY, 78 F. 28.

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 BID OPENING AND HAS INDICATED THAT SUCH ACTION SHOULD NOT BE TAKEN EXCEPT FOR THE MOST COGENT AND COMPELLING REASONS. SEE 39 COMP. GEN. 396. THE PRINCIPLE OF THOSE CASES WAS APPLIED IN THE DECISIONS OF THIS OFFICE CITED BY YOUR ATTORNEY WHEREIN IT WAS CONCLUDED THAT THE REJECTION OF BIDS WAS ERRONEOUS. HOWEVER, UNLIKE THE DECISIONS IN THOSE CASES, COMPELLING REASONS HERE REQUIRED THE REJECTION OF BIDS.

UNDER THE CIRCUMSTANCES, WE CANNOT CONCLUDE THAT THE ACTION TAKEN IN REJECTING BIDS WAS IMPROPER, AND YOUR PROTEST IS DENIED.