B-158814, JUN. 20, 1966

B-158814: Jun 20, 1966

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INC.: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF MARCH 28. THE SUBJECT INVITATION WAS ISSUED ON JANUARY 31. BIDS WERE OPENED ON FEBRUARY 21. YOUR FIRM WAS THE APPARENT LOW BIDDER FOR THE COLORADO SPRINGS AREA. YOU WERE ADVISED BY TELEPHONE ON MARCH 16. THAT ALL BIDS FOR THE COLORADO SPRINGS AND DENVER AREAS WERE REJECTED AND THE REQUIREMENT WOULD BE READVERTISED. CONTRACTS WERE AWARDED IN THE OTHER AREAS OF REGION 8. THAT ALL BIDS WERE REJECTED "BECAUSE OF (1) ERRONEOUS SPECIFICATIONS. BIDS UNDER THE READVERTISEMENT WERE OPENED ON APRIL 4. YOU WERE AWARDED THE CONTRACT FOR THE COLORADO SPRINGS AREA. THE PRIMARY QUESTION PRESENTED BY YOUR PROTEST IS WHETHER GSA WAS JUSTIFIED IN REJECTING BIDS AND READVERTISING THE REQUIREMENT FOR THE TWO AREAS INVOLVED.

B-158814, JUN. 20, 1966

TO WESTERN SERVICES, INC.:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF MARCH 28, 1966, AND TO YOUR LETTER OF APRIL 1, 1966, AND ENCLOSURES, PROTESTING AGAINST CANCELLATION OF INVITATION FOR BIDS (IFB) NO. GS-08-996, AND READVERTISEMENT OF THE REQUIREMENT UNDER IFB NO. GS-08-996A, BY THE GENERAL SERVICES ADMINISTRATION (GSA).

THE SUBJECT INVITATION WAS ISSUED ON JANUARY 31, 1966, AND CALLED FOR BIDS ON FURNISHING THE GOVERNMENT'S REQUIREMENTS FOR REHABILITATION OF METAL, WOOD, AND UPHOLSTERED OFFICE, QUARTERS, HOSPITAL, AND INSTITUTIONAL FURNITURE IN THE REGION 8 AREA, WHICH ENCOMPASSES COLORADO SPRINGS AND DENVER, COLORADO, FOR A SPECIFIC PERIOD OF TIME. THE INVITATION PROVIDED THAT AWARD WOULD BE MADE IN THE AGGREGATE FOR SCHEDULES A, B, AND C, INCLUDING THE SUPPLEMENTS TO SCHEDULES B AND C IN THE COLORADO SPRINGS AREA, FOR EACH LOCATION, AND THAT THE LOW AGGREGATE BID WOULD BE DETERMINED BY MULTIPLYING THE WEIGHT FACTORS SHOWN BY THE UNIT PRICES BID AND SUBTRACTING TIME DISCOUNTS, IF ANY. BIDS WERE OPENED ON FEBRUARY 21, 1966, AND YOUR FIRM WAS THE APPARENT LOW BIDDER FOR THE COLORADO SPRINGS AREA. HOWEVER, YOU WERE ADVISED BY TELEPHONE ON MARCH 16, 1966, THAT ALL BIDS FOR THE COLORADO SPRINGS AND DENVER AREAS WERE REJECTED AND THE REQUIREMENT WOULD BE READVERTISED. CONTRACTS WERE AWARDED IN THE OTHER AREAS OF REGION 8.

IN REPLY TO YOUR LETTER OF MARCH 16 PROTESTING THE ACTION TAKEN, THE REGIONAL ADMINISTRATOR ADVISED YOU BY LETTER DATED MARCH 24, 1966, THAT ALL BIDS WERE REJECTED "BECAUSE OF (1) ERRONEOUS SPECIFICATIONS, INCLUDING INCORRECT WEIGHTING OF ITEMS INVOLVED IN AGGREGATE AWARDS AND DEMONSTRATED FAULTY GROUPING OF ITEMS (2) UNREASONABLE PRICES (3) UNSATISFACTORY COMPETITIVE RESPONSE.' BIDS UNDER THE READVERTISEMENT WERE OPENED ON APRIL 4, 1966, AND YOU WERE AWARDED THE CONTRACT FOR THE COLORADO SPRINGS AREA.

THE PRIMARY QUESTION PRESENTED BY YOUR PROTEST IS WHETHER GSA WAS JUSTIFIED IN REJECTING BIDS AND READVERTISING THE REQUIREMENT FOR THE TWO AREAS INVOLVED. THE REGIONAL ADMINISTRATOR'S LETTER OF MARCH 24 SET FORTH THREE REASONS FOR SUCH ACTION, WHICH YOU HAVE CHALLENGED, AND WHICH GSA HAS EXPLAINED IN GREATER DETAIL IN A REPORT DATED JUNE 6, 1966, TO OUR OFFICE. WITH REGARD TO THE MATTER OF ERRONEOUS WEIGHTING OF ITEMS, GSA INFORMS US THAT THIS WAS NOT DETECTED UNTIL AFTER BIDS WERE OPENED AND EXAMINATION OF YOUR METHOD OF BIDDING DISCLOSED IT. APPARENTLY THE METHOD OF EVALUATION SPECIFIED IN THE INVITATION WOULD HAVE BEEN ADEQUATE PROVIDED BIDDERS HAD QUOTED REALISTIC UNIT PRICES FOR THE ITEMS WITHIN EACH SCHEDULE. HOWEVER, THE EVALUATION FORMULA MADE POSSIBLE A SITUATION WHEREBY BIDDERS COULD BID LOW ON ITEMS WHICH FROM PAST EXPERIENCE, OR ON SPECULATION, THEY CONSIDERED UNLIKELY TO COME UP TO THE STATED WEIGHT FACTORS, AND BID HIGH ON ITEMS LIKELY TO MEET OR EXCEED THE STATED WEIGHT FACTOR. AFTER OPENING OF THE BIDS, IT WAS FELT THAT YOUR BID TOOK ADVANTAGE OF THE SITUATION MADE POSSIBLE BY THE EVALUATION FORMULA BY SUBMITTING UNBALANCED PRICES ON ITEMS WITHIN THE SCHEDULES. FOR EXAMPLE, WE QUOTE THE FOLLOWING FROM THE ADMINISTRATIVE REPORT:

"WE FEEL THAT THE PROTESTANT'S BID ON THE ORIGINAL INVITATION DID TAKE ADVANTAGE OF THE IMPROPER WEIGHTS IN THAT INVITATION. FOR EXAMPLE,ON SCHEDULE A, ITEM 14, THE BIDDER OFFERED TO REHABILITATE A 5 DRAWER FILING CABINET FOR $25 LESS THAN HIS PRICE FOR REHABILITATING A 4 DRAWER CABINET OF THE SAME TYPE. ON ITEM 22, ON SCHEDULE A, THE BIDDER OFFERED TO REFINISH A 45 INCH BY 34 INCH TABLE AT THE SAME PRICE WHICH HE OFFERED ON ITEM 21, A TABLE WITH APPROXIMATELY ONE-HALF THE SURFACE AREA. YET ON ITEM 23, THE COST OF REFINISHING A 60 INCH BY 34 INCH TABLE WAS OVER DOUBLE THE COST OF ITEM 22. ON ITEM 28 OF SCHEDULE A, THE BIDDER OFFERED TO REFINISH A DESK AND PROVIDE A NEW PLASTIC TOP AT THE SAME PRICE AS REFINISHING ALONE. SIMILARLY, ON ITEM 10 OF SCHEDULE B, THE BIDDER OFFERED TO REUPHOLSTER AN ENTIRE CHAIR AT THE SAME PRICE OFFERED FOR REUPHOLSTERING THE BACK ONLY OR THE SEAT ONLY.'

FACED WITH THIS SITUATION, THE CONTRACTING OFFICER REVIEWED THE EVALUATION FORMULA, AND DETERMINED THAT THE WEIGHT FACTORS FOR THE TWO AREAS IN QUESTION DID NOT ACCURATELY REFLECT THE POTENTIAL REQUIREMENTS FOR THE ITEMS. ALTHOUGH THE WEIGHT FACTORS MAY ALSO HAVE BEEN ERRONEOUS IN OTHER AREAS, THERE DID NOT APPEAR TO BE ANY UNBALANCING OF ITEM BID PRICES AND THEREFORE NO PREJUDICE TO THE BIDDERS OR TO THE GOVERNMENT.

THE WEIGHT FACTORS FOR THE SUPPLEMENTS TO SCHEDULES B AND C, WHICH AS YOU STATE COMPRISE A LARGE PERCENT OF THE WORK IN THE COLORADO SPRINGS AREA, WERE NOT CHANGED BECAUSE THEY WERE NOT CONSIDERED ERRONEOUS. HOWEVER, SINCE THE AWARD WAS TO BE MADE IN THE AGGREGATE FOR ALL SCHEDULES AND SUPPLEMENTS, THE ERRONEOUS WEIGHT FACTORS WOULD HAVE DISTORTED THE OVERALL EVALUATION. THE EXAMPLES YOU HAVE CITED TO SUBSTANTIATE YOUR ALLEGATION THAT THERE ARE AS MANY ERRONEOUS WEIGHT FACTORS IN THE SECOND IFB AS IN THE FIRST ARE NOT CONSIDERED SIGNIFICANT SINCE IT WOULD BE EXPECTED THAT WHERE A LARGE NUMBER OF A PARTICULAR ITEM HAD BEEN REPAIRED IN ONE YEAR THE REQUIREMENT FOR REPAIRS IN THE SUCCEEDING YEAR WOULD BE LESS AND, CONVERSLY, A LARGER NUMBER WULD REQUIRE REPAIRING WHERE THE NUMBER REPAIRED IN THE PRECEDING YEAR HAD BEEN SMALL. MOREOVER, SINCE THE ESTABLISHMENT OF WEIGHT FACTORS IS LARGELY A MATTER OF JUDGMENT WE WOULD NOT BE JUSTIFIED IN SUBSTITUTING OUR JUDGMENT FOR THAT OF THE PROCURING ACTIVITY PERSONNEL IN THE ABSENCE OF A CLEAR INDICATION THAT SUCH FACTOR WAS NOT ARRIVED AT IN GOOD FAITH.

THE REFERENCE TO "FAULTY GROUPING OF ITEMS" IN THE REGIONAL ADMINISTRATOR'S LETTER WAS DIRECTED TO THE REQUIREMENT THAT AWARD WOULD BE MADE IN THE AGGREGATE FOR ALL THREE SCHEDULES FOR EACH AREA. IT WAS FELT THAT THIS HAD THE EFFECT OF LIMITING COMPETITION SINCE SOME FIRMS MAY NOT HAVE THE CAPACITY TO PERFORM ALL OF THE SERVICES REQUIRED UNDER ALL THREE SCHEDULES, BUT MAY WELL BE ABLE TO PERFORM THE SERVICES REQUIRED BY ONE OR EVEN TWO OF THE SCHEDULES. THEREFORE, UNDER THE READVERTISEMENT BIDDERS WERE ALLOWED TO BID ON ONLY ONE SCHEDULE IF THEY SO DESIRED AND STILL BE ELIGIBLE FOR AWARD. APPARENTLY AS A RESULT OF THIS CHANGE TWO ADDITIONAL BIDS WERE RECEIVED ON SCHEDULE B AND A THIRD BID ON ALL THREE SCHEDULES. IT IS, OF COURSE, A BASIC TENET OF FORMAL ADVERTISING THAT THE SPECIFICATIONS AND INVITATIONS FOR BIDS SHALL PERMIT SUCH FREE AND FULL COMPETITION AS IS CONSISTENT WITH THE NEEDS OF THE AGENCY, WHICH WAS THE AIM OF THIS CHANGE.

WITH RESPECT TO THE ADMINISTRATIVE POSITION THAT YOUR PRICES WERE UNREASONABLE, WE HAVE BEEN FURNISHED A SCHEDULE COMPARING YOUR BID PRICES FOR MANY OF THE ITEMS WITH THE PRICES FOR THE SAME ITEMS UNDER YOUR PREVIOUS CONTRACT. ALL OF THE BID PRICES SHOW AN INCREASE, WITH MANY OF THEM EXCEEDING 100 PERCENT AND ONE INCREASE OF 500 PERCENT. WITHOUT SOME EXPLANATION AS TO THE REASON FOR SUCH DRAMATIC INCREASES, WHICH HAS NOT BEEN FURNISHED, THE ONLY CONCLUSION THAT CAN BE REACHED IS THAT MANY OF YOUR BID PRICES WERE UNREASONABLE. AS FURTHER PROOF OF THE VALIDITY OF THIS CONCLUSION, IT IS REPORTED THAT YOUR AGGREGATE BID PRICE FOR THE COLORADO SPRINGS AREA UNDER THE READVERTISEMENT WAS APPROXIMATELY 18 PERCENT BELOW THAT UNDER THE SUBJECT IFB, AND THAT AN AWARD HAS BEEN MADE TO YOUR COMPANY AT SUCH BID PRICE.

AS TO YOUR STATEMENT CONCERNING THE DIFFERENCE IN THE ESTIMATED DOLLAR VOLUME IN THE TWO IFBS, IT IS STATED IN THE IFB PARAGRAPH INCLUDING SUCH INFORMATION THAT THE NEED FOR THE SERVICES IS NOT PRECISELY KNOWN AND THAT NO GUARANTEE IS MADE AS TO THE FIGURES STATED. FURTHERMORE, IT IS STATED THAT THE FIGURES ARE ESTIMATED ON THE BASIS OF THE VOLUME UNDER THE PRECEDING CONTRACT, AND IN THE SECOND IFB,"AND/OR BEST ESTIMATE AVAILABLE.' SINCE THESE FIGURES ARE CLEARLY ESTIMATES, EVEN IF THEY SHOULD PROVE TO BE INCORRECT, WE FAIL TO SEE HOW THEY CAN BE RELIED UPON TO FORM THE BASIS OF A PROTEST.

SINCE YOU HAVE PRESENTED NO EVIDENCE IN SUPPORT OF YOUR ALLEGATION THAT YOUR BID WAS REJECTED AND THE REQUIREMENT READVERTISED FOR THE PURPOSE OF FAVORING SOME UNKNOWN PERSON OR PERSONS, WE HAVE NOT INVESTIGATED OR INQUIRED FURTHER INTO THIS MATTER.

SECTION 253 (B) OF TITLE 41, U.S.C. AUTHORIZES THE REJECTION OF ALL BIDS WHEN SUCH ACTION IS DETERMINED TO BE IN THE PUBLIC INTEREST. ALSO, UNDER SECTION 8/B) OF THE TERMS AND CONDITIONS OF THE IFB, THE GOVERNMENT RESERVES THE RIGHT TO REJECT ANY OR ALL BIDS. THE AUTHORITY TO REJECT BIDS IS NOT ORDINARILY SUBJECT TO REVIEW BY THIS OFFICE, AND WE HAVE SPECIFICALLY HELD THAT WHEN IT IS ADMINISTRATIVELY DETERMINED THAT THE LOWEST ACCEPTABLE BID IS IN EXCESS OF THE AMOUNT FOR WHICH THE GOVERNMENT SHOULD BE ABLE TO PROCURE THE PARTICULAR SERVICE, A REJECTION OF ALL BIDS IS A PROPER EXERCISE OF ADMINISTRATIVE DISCRETION. 36 COMP. GEN. 364. WAS SAID IN THAT DECISION:

"* * * WE HAVE, NEVERTHELESS, CONSISTENTLY 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 BIDDER WITHOUT REGARD TO THE REASONABLENESS OF HIS PRICE OR TO OTHER ATTEMPTED BIDS WHICH CANNOT FOR TECHNICAL REASONS BE ACCEPTED. WHEN IN THE LIGHT OF ALL THE FACTS, INCLUDING THOSE DISCLOSED BY THE BIDDING, IT IS ADMINISTRATIVELY DETERMINED THAT TH LOWEST ACCEPTABLE BID IS IN EXCESS OF THE AMOUNT FOR WHICH THE GOVERNMENT SHOULD BE ABLE TO OBTAIN THE SUPPLIES OR SERVICES SOUGHT, WE BELIEVE THAT THE REJECTION OF ALL BIDS AND READVERTISING OF THE CONTRACT IS A PROPER EXERCISE OF THE ADMINISTRATIVE DISCRETION, IN CONFORMITY WITH THE DUTY OF THE ADMINISTRATIVE OFFICIALS TO ACT IN THE BEST INTEREST OF THE GOVERNMENT.'

SINCE THE FACTS, AS OUTLINED ABOVE, APPEAR TO SUPPORT THE ADMINISTRATIVE DECISION TO REJECT ALL BIDS FOR THE TWO AREAS CONCERNED AND READVERTISE THE REQUIREMENT, WE MUST CONCLUDE THAT SUCH ACTION WAS JUSTIFIED.