B-158789, MAY 19, 1966

B-158789, MAY 19, 1966

TO PRIME BATTERY CORPORATION:

WE AGAIN REFER TO YOUR TELEGRAM OF MARCH 24, 1966, IN WHICH YOU PROTEST AWARD TO ANY OTHER BIDDER UNDER INVITATION FOR BIDS NO. AMC 20-113-66- 0463/T) ISSUED BY THE UNITED STATES ARMY TANK AUTOMOTIVE CENTER, WARREN, MICHIGAN. THAT INVITATION WAS ISSUED FEBRUARY 9, 1966, AND SOLICITED PRICES FOR THE FURNISHING OF 8,599, 12-VOLT, TYPE 4D STORAGE BATTERIES, F.O.B. ORIGIN.

PRICE BATTERY COMPANY SUBMITTED THE LOW BID OF $21.82; HOWEVER, THEY INDICATED IN THEIR BID THAT THEY WERE A LARGE BUSINESS CONCERN, AND, INASMUCH AS THE PROCUREMENT WAS SET ASIDE FOR SMALL BUSINESS, THE PRICE COMPANY BID WAS DETERMINED TO BE NONRESPONSIVE. YOUR COMPANY WAS SECOND LOW WITH A BID OF $24.70.

IN EVALUATING THE BIDS, THE AGENCY REVIEWED THE CONTRACT PRICES OF THE TWO PRIOR PROCUREMENTS OF THIS ITEM WHICH WERE $21.37 UNDER CONTRACT NO. 06642 (T), DATED JUNE 8, 1965, AND $20.40 UNDER CONTRACT NO. 08151 (T), DATED SEPTEMBER, 1965. BEGINNING WITH THE PRICE OF $20.40 OF THE MOST RECENT CONTRACT, THE AGENCY ADDED 75 CENTS PER UNIT TO OFFSET QUANTITY DIFFERENTIAL AND ANOTHER 75 CENTS TO COVER UPGRADING OF PACKAGING REQUIREMENT FROM LEVEL C (STANDARD COMMERCIAL) TO LEVEL A (OVERSEAS). THIS RESULTED IN A REASONABLE AND REALISTIC PRICE RANGE OF $21.50 TO $22.00 PER UNIT. YOUR BID WAS MORE THAN 12 PERCENT HIGHER THAN THE REASONABLE PRICE RANGE AS COMPUTED BY THE AGENCY AND MORE THAN 13 PERCENT HIGHER THAN THE BID OF PRICE BATTERY COMPANY. ALTHOUGH THE DIFFERENCE IN ORIGIN POINTS WOULD RESULT IN A FREIGHT SAVING OF APPROXIMATELY $815.63 IF THE CONTRACT WERE AWARDED TO YOUR COMPANY, THIS IS NOT COMPARABLE TO THE EXCESS CONTRACT COST OF OVER $23,000, WHICH WOULD RESULT FROM AWARD TO YOUR COMPANY. AFTER RECEIVING THE CONCURRENCE OF THE SMALL BUSINESS SPECIALIST ASSIGNED TO THE CENTER, THE CONTRACTING OFFICER DECIDED TO REJECT ALL BIDS, CANCEL THE INVITATION AND READVERTISE THE PROCUREMENT WITHOUT THE SMALL BUSINESS RESTRICTION.

THIS ACTION APPEARS PROPER IN VIEW OF SECTION 2-404.1 (B) (VI) OF THE ARMED SERVICES PROCUREMENT REGULATION, WHICH PROVIDES THAT BIDS MAY BE CANCELLED WHERE ALL OTHERWISE ACCEPTABLE BIDS ARE AT UNREASONABLE PRICES AND SECTION 1-706.3 (A) OF THE ASPR, PROVIDING FOR THE WITHDRAWAL, PRIOR TO AWARD, OF A SET-ASIDE DETERMINATION WHERE IT IS DETERMINED THAT PROCUREMENT FROM A SMALL BUSINESS CONCERN WOULD BE DETRIMENTAL TO THE PUBLIC INTEREST, AN EXAMPLE OF WHICH IS UNREASONABLE PRICE.

IN YOUR PROTEST, YOU CONTEND THAT THE MEDIAN PRICE OF THIS PROCUREMENT, $26.70, COMPARES FAVORABLY WITH THE MEDIANS OF THE PAST TWO PROCUREMENTS, $23.75 AND $25.10 (INCREASES OF 12.4 PERCENT AND 6 PERCENT, RESPECTIVELY). SINCE THE CONTRACTING OFFICER, IN AN EFFORT TO EFFECT SAVINGS ON GOVERNMENT PROCUREMENT, IS INTERESTED IN THE LOWEST ACCEPTABLE BID, WE CANNOT SEE THE RELEVANCE OF A COMPARISON OF MEDIAN PRICES.

IN 37 COMP. GEN. 147, WE HELD THAT THE READVERTISEMENT OF A PROCUREMENT AND WITHDRAWAL OF A SMALL BUSINESS RESTRICTION WAS PROPER WHERE THE LOW SMALL BUSINESS BID WAS APPROXIMATELY 10 PERCENT HIGHER THAN THE PRICE PAID FOR THE ITEM IN PRIOR PROCUREMENTS AS INCREASED BY APPROPRIATE ADJUSTMENTS, AND THE INCREASED COST TO THE GOVERNMENT WOULD BE APPROXIMATELY $25,000 ON A PROCUREMENT OF $282,372. IN THIS CASE THE PERCENTAGE OF INCREASE IS OVER 12 PERCENT FOR AN INCREASE OF OVER $23,000 ON A PROCUREMENT OF $212,395. SEE ALSO OUR DECISIONS IN B 148803, MAY 29, 1962, AND B-151741, JULY 30, 1963. WE FEEL THAT THE SAME PRINCIPLE APPLIES HERE.

THE CONTRACTING OFFICER HAS DETERMINED THAT AN AWARD UNDER THIS INVITATION WOULD RESULT IN AN UNREASONABLE COST TO THE GOVERNMENT AND WOULD THUS BE DETRIMENTAL TO THE PUBLIC INTEREST. THE ACTIONS TAKEN BY HIM ARE IN CONFORMITY WITH THE APPROPRIATE PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATION, AND WE FIND NO LEGAL BASIS TO OBJECT THERETO.