B-157951, FEB. 1, 1966

B-157951: Feb 1, 1966

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C. SWAN WEBER: FURTHER REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 28. THE SUBJECT INVITATION WAS PRECEDED BY TWO OTHER INVITATIONS WHICH WERE CANCELED. THESE PARTICULAR POSTS ARE OF A RATHER ORNATE CAST IRON. 3 PIECE CONSTRUCTION AS BEFITS WHAT IS TERMED . THE MONUMENTAL AND RESIDENTIAL AREA" OF THE DISTRICT AND ARE NO LONGER BEING PRODUCED DUE TO ADVANCEMENTS AND IMPROVEMENTS IN MANUFACTURING METHODS. THEY WERE REJECTED AS NONRESPONSIVE. FOUR BIDS WERE RECEIVED UNDER THIS INVITATION WITH ALL BIDS. THE BIDS WERE REJECTED AS NONRESPONSIVE. AN IRON AND ALUMINUM 3-PIECE LAMP POST WHICH MET THE 1923 DESIGN SPECIFICATIONS WAS OFFERED AS AN ALTERNATIVE BY WESTINGHOUSE. THE SCHEDULE OF DELIVERY WAS LATER THAN THAT OF THE INVITATION.

B-157951, FEB. 1, 1966

TO MR. C. SWAN WEBER:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 28, 1965, PROTESTING THE GOVERNMENT OF THE DISTRICT OF COLUMBIA'S PROPOSED CANCELLATION AND REISSUANCE OF REQUIREMENTS UNDER ITEM NO. 1 OF THE INVITATION FOR BIDS NO. 62-250-6-0014-G, ISSUED SEPTEMBER 2, 1965.

THE SUBJECT INVITATION WAS PRECEDED BY TWO OTHER INVITATIONS WHICH WERE CANCELED. THE FIRST OF THESE, INVITATION FOR BIDS NO. 62-250-5 0566-G, OPENED ON APRIL 9, 1965, REQUESTED BIDS ON 500 CAST IRON LAMP POSTS OF D.C. DESIGN LAMP POST NO. 16, HEREINAFTER CALLED THE 1923 DESIGN. THESE PARTICULAR POSTS ARE OF A RATHER ORNATE CAST IRON, 3 PIECE CONSTRUCTION AS BEFITS WHAT IS TERMED ,THE MONUMENTAL AND RESIDENTIAL AREA" OF THE DISTRICT AND ARE NO LONGER BEING PRODUCED DUE TO ADVANCEMENTS AND IMPROVEMENTS IN MANUFACTURING METHODS, METALLURGY AND LIGHTING TECHNOLOGY. SINCE BOTH BIDDERS WHO REPLIED OFFERED A SUBSTITUTE LAMP POST OF 1-PIECE CONSTRUCTION, A UNION METAL DESIGN, THEY WERE REJECTED AS NONRESPONSIVE.

UPON REVISING ITS NEEDS UPWARDS TO 2,150 LAMP POSTS TO INCLUDE THE NEXT FISCAL YEAR'S NEEDS, THE DISTRICT GOVERNMENT ISSUED A SECOND INVITATION FOR BIDS, 62-250-5-0566-G/1, OPENED MAY 21, 1965, WHICH ALLOWED SUBSTITUTION OF STEEL, ALUMINUM, OR ANY OTHER METAL FOUND TO BE EQUAL TO THE ORIGINAL CAST IRON CONSTRUCTION. FOUR BIDS WERE RECEIVED UNDER THIS INVITATION WITH ALL BIDS, INCLUDING THE BID OF YOUR COMPANY, AGAIN OFFERING THE UNION METAL DESIGN AS A SUBSTITUTE. THE BIDS WERE REJECTED AS NONRESPONSIVE. IN ADDITION, AN IRON AND ALUMINUM 3-PIECE LAMP POST WHICH MET THE 1923 DESIGN SPECIFICATIONS WAS OFFERED AS AN ALTERNATIVE BY WESTINGHOUSE, BUT THE SCHEDULE OF DELIVERY WAS LATER THAN THAT OF THE INVITATION, RENDERING THE ALTERNATIVE ALSO NONRESPONSIVE.

THE PROCUREMENT OFFICE OF THE DISTRICT OF COLUMBIA IN ITS PROCESSING REPORT OF JUNE 15, 1965, FOUND THE BID PRICES TO BE EXCESSIVE, SAYING:

"THE LOWEST ACCEPTABLE BID IS $460.00 (ALUMINUM). THIS IS TWICE THE $154.00 PAID FOR THE ORIGINAL 1923 POLES FROM LORTON AND THREE OR FOUR TIMES HIGHER THAN THE PRICE OF A COMPARABLE RLA POLE.'

THIS SAME REPORT STATED THAT THE CAST IRON FOUNDRIES CAPABLE OF HANDLING THE 1923 METHODS OF PRODUCTION HAVE PRACTICALLY ALL CLOSED DOWN, AND THAT THOSE REMAINING ARE FORCED TO USE COSTLY METHODS DUE TO THE ORNAMENTATION AND TO THE MACHINING TO OBTAIN INTERCHANGEABILITY OF PARTS NECESSARY WITH THE 3-PIECE CONSTRUCTION. THIS REPORT CONCLUDED THAT THE $154 ORIGINAL COST OF THE 1923 DESIGN LAMP POSTS WAS LOWER THAN THAT OBTAINABLE TODAY, AND SUGGESTED THAT "IF AND WHEN THE ELEMENT OF EXCESSIVE COST IS RESTUDIED, AN EQUALLY ADEQUATE, BUT LESS EXPENSIVE POLE, MAY BE SELECTED.'

NEVERTHELESS, THE GOVERNMENT OF THE DISTRICT OF COLUMBIA REISSUED THE INVITATION AS 62-250-6-0114-G, OPENED SEPTEMBER 23, 1965, FOR 2,150 LAMP POSTS OF THE 1923 DESIGN, AGAIN PERMITTING SUBSTITUTION OF METALS FOR THE CAST IRON, PROVIDED THE END RESULT WAS "EQUAL IN EVERY RESPECT TO THAT LAMP POST RESULTING FROM * * * (THE 1923 DESIGN).'

OF THE FIVE BIDDERS WHO BID ON THIS PARTICULAR ITEM, FOUR BID THE 1 PIECE UNION METAL DESIGN WHICH WAS FOUND TO BE NONRESPONSIVE FOR THE THIRD TIME, AND IN ADDITION OFFERED LATE, NONRESPONSIVE, DELIVERY SCHEDULES.

WESTINGHOUSE, HOWEVER, SUBMITTED TWELVE SEPARATE PROPOSALS ON THIS ITEM, STARTING WITH IA WHICH WAS DETERMINED BY THE PROCUREMENT OFFICE TO MEET THE 1923 DESIGN SPECIFICATION WITH A RESPONSIVE DELIVERY SCHEDULE AT A UNIT PRICE OF $482 PER LAMP POST. THE ELEVEN ALTERNATES WERE THE SAME POST WITH SUGGESTED SUBSTITUTIONS OF LESS EXPENSIVE METHODS OR EXTENDED DELIVERY SCHEDULES AT DECREASING PRICES DOWN TO IVD, AT $362 PER POST. THESE ELEVEN ALTERNATES WERE FOUND TO BE NONRESPONSIVE. THE FIRST ALTERNATE OF THE WESTINGHOUSE BID, IA, WAS ALSO REJECTED AS BEING EXCESSIVE, FOR IT WOULD HAVE COST $1,036,300. THIS EXCEEDED THE DISTRICT'S TOTAL BUDGETED AMOUNT FOR LIGHTING STANDARDS BY $448,165, AND THE 1923 ORIGINAL COST OF $154 PER UNIT BY $705,200. THIS REJECTION WAS MADE IN ACCORDANCE WITH THE RECOMMENDATION OF THE DEPARTMENT OF HIGHWAYS AND TRAFFIC DATED NOVEMBER 5, 1965, AND THE PROCUREMENT OFFICE AWARD ACTION DATED NOVEMBER 12, 1965.

REGARDING ITS RESPONSIVE ALTERNATIVE BID, IA, WESTINGHOUSE WROTE TO THE PROCUREMENT OFFICE ON SEPTEMBER 12, 1965, STATING THAT "AS THE ONLY LEGITIMATE AND QUALIFIED BIDDER OFFERING EQUIPMENT IN LINE WITH YOUR DRAWING AND SPECIFICATIONS," AN AWARD TO OTHER THAN WESTINGHOUSE WOULD BE PROTESTED. THIS DEMAND WAS FULLY OUTLINED BY WESTINGHOUSE'S MEMORANDUM OF OCTOBER 28, 1965, WHICH BASED ITS ARGUMENT ON THE PREMISE THAT "TO HAVE A SET OF BIDS DISCARDED AFTER THEY ARE OPENED AND EACH BIDDER HAS LEARNED HIS COMPETITOR'S PRICE IS A SERIOUS MATTER, AND IT SHOULD NOT BE PERMITTED EXCEPT FOR COGENT REASONS.' AS QUOTED FROM MASSMAN CONSTRUCTION COMPANY V. UNITED STATES, 102 CT.CL. 699.

THIS OFFICE CAN SEE NO LEGAL OBJECTION TO THE REJECTION OF ALL BIDS UNDER INVITATION 62-250-6-0114-G AS EITHER NONRESPONSIVE OR, IN THE CASE OF WESTINGHOUSE'S FIRST ALTERNATIVE BID ON ITEM ONE, AS EXCESSIVE. THE DISTRICT'S ACTION WAS CONSISTENT WITH ITS AUTHORITY AND THE TERMS OF THE INVITATION.

PAGE THREE OF THE BID INVITATION, PARAGRAPH 12, BY ITS TERMS, GAVE THE DISTRICT THE RIGHT TO REJECT ALL BIDS WHENEVER SUCH REJECTION IS IN THE INTEREST OF THE DISTRICT. OF COURSE, WE RECOGNIZE THAT LIMITATIONS ARE IMPOSED ON EVERY RIGHT OR POWER EXERCISED IN BEHALF OF THE GOVERNMENT, AND THAT, AS A GENERAL MATTER, GOVERNMENT OFFICIALS CANNOT ACT IN AN ARBITRARY OR CAPRICIOUS MANNER, PARTICULARLY INSOFAR AS THEIR ACTIONS AFFECT INDIVIDUAL PRIVATE CITIZENS. BUT WHATEVER THE LIMITATION, IT IS NOT TO BE FOUND WITHIN THE APPLICABLE SECTION OF THE D.C. CODE ON PROCUREMENT BY ADVERTISING, D.C. CODE 1961, SECTION 1-808, WHICH PROVIDES THAT:

"* * * IF ANY OR ALL OF SUCH PROPOSALS SHALL BE REJECTED, ADVERTISEMENTS FOR PROPOSALS SHALL AGAIN BE INVITED AND PROCEEDED WITH IN THE SAME MANNER: * * *.'

WHILE THERE IS NO STATUTORY LIMITATION ON THE RIGHT OF THE DISTRICT GOVERNMENT TO REJECT BIDS AND READVERTISE, A WELL DEFINED STANDARD IS FOUND IN FEDERAL PROCUREMENT STATUTES. THE STATUTE GOVERNING DEFENSE PROCUREMENT ADVERTISEMENT GIVES THE CONTRACTING OFFICER THE RIGHT TO REJECT ALL BIDS WHEN IT IS FOUND TO BE IN THE PUBLIC INTEREST. EVEN MORE PERTINENT, THE COMPARABLE STATUTE GOVERNING NONDEFENSE PROCUREMENT, 41 U.S.C. 253, AN ACT OF JUNE 30, 1949, CH. 288, TITLE 303, 63 STAT.393, PROVIDES:

"WHENEVER ADVERTISING IS REQUIRED---

"* * * AWARD SHALL BE MADE WITH REASONABLE PROMPTNESS BY WRITTEN NOTICE TO THAT RESPONSIVE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED: PROVIDED, THAT ALL BIDS MAY BE REJECTED WHEN THE AGENCY HEAD DETERMINES THAT IT IS IN THE PUBLIC INTEREST TO DO SO.'

THE FEDERAL PROCUREMENT REGULATIONS DEFINE WHAT IS TO BE CONSIDERED THE PUBLIC INTEREST IN THIS REGARD AT 1-2.404-1/B) (5) AS FOLLOWS:

"/B) INVITATIONS FOR BIDS MAY BE CANCELLED AFTER OPENING BUT PRIOR TO AWARD, AND ALL BIDS REJECTED, WHERE SUCH ACTION IS CONSISTENT WITH SEC. 1- 2.404-1 (A) AND THE CONTRACTING OFFICER DETERMINES IN WRITING THAT CANCELLATION IS IN THE BEST INTEREST OF THE GOVERNMENT FOR REASONS SUCH AS THE FOLLOWING:

(5) ALL OTHERWISE ACCEPTABLE BIDS RECEIVED ARE AT UNREASONABLE PRICES. (SEE SEC. 1-3.214 CONCERNING AUTHORITY TO NEGOTIATE IN SUCH SITUATIONS.)"

WHILE WE THINK IT APPROPRIATE TO IMPOSE RESTRICTIONS UPON THE DISCRETION OF DISTRICT PROCUREMENT OFFICERS COMPARABLE TO THOSE BINDING THE FEDERAL PROCUREMENT OFFICERS, THERE SEEMS TO BE NO GOOD REASON TO VARY A DISTRICT OFFICIAL'S POWERS FROM THE GENERAL FEDERAL STANDARD IN THIS MATTER. THEREFORE, A BID OF $1,036,300 CAN BE REJECTED AS EXCESSIVE WHEN IT IS COMPARED TO THE DISTRICT'S ESTIMATE FOR THE ITEM, $331,100, OR WITH THE DISTRICT'S TOTAL BUDGET OF $588,135 FOR LAMP POSTS.

CONCERNING YOUR CONTENTION BASED UPON THE MASSMAN CASE STATEMENT THAT BIDS SHOULD NOT BE REJECTED EXCEPT FOR COGENT REASONS, IN OUR OPINION EXCESSIVE COST AS INDICATED BY THE FACTS OF THIS CASE CONSTITUTES SUCH A COGENT REASON WHICH PERMITS A CONTRACTING OFFICER TO REJECT ALL BIDS. FURTHER, THE MASSMAN PRINCIPLE HAS INHERENT LIMITATIONS, AS SHOWN IN OUR FULLER EXPLANATION OF THIS TOPIC ON PAGE 2 OF B-154483 OF OCTOBER 30, 1964, A CASE WHERE WE AFFIRMED THE DEPARTMENT OF THE INTERIOR'S REJECTION OF ALL BIDS THUSLY:

"* * * 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 COMPETITION. 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. * * *"

SEE ALSO 39 COMP. GEN. 86, AND CASES CITED THEREIN.

APART FROM THE QUESTION OF EXCESSIVE PRICE, SINCE IT IS ADMINISTRATIVELY REPORTED THAT YOUR PROPOSAL FOR ITEM 1A EXCEEDS THE DISTRICT'S TOTAL BUDGETED AMOUNT FOR LIGHTING STANDARDS BY $448,165, THE CONTRACTING OFFICER WAS PRECLUDED FROM MAKING AN AWARD TO YOU. SEE B-157419, OCTOBER 18, 1965, WHEREIN WE HELD THAT THE CONTRACTING OFFICER WOULD HAVE EXCEEDED HIS AUTHORITY IF HE HAD MADE AN AWARD OF A CONTRACT UNDER CIRCUMSTANCES SIMILAR TO THOSE HERE INVOLVED.

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