B-159002, JUN. 27, 1966

B-159002, JUN. 27, 1966

TO MR. JOSEPH SACHTER:

FURTHER REFERENCE IS MADE TO YOUR LETTERS DATED MAY 2 AND 10, 1966, PROTESTING, IN BEHALF OF A AND M INSTRUMENT, INC., THE CANCELLATION AND REISSUANCE OF INVITATION FOR BIDS NO. N0016366B0157 BY THE UNITED STATES NAVAL AVIONICS FACILITY, INDIANAPOLIS, INDIANA.

THE INVITATION WAS ISSUED ON JANUARY 24, 1966, REQUESTING BIDS ON METERS, MILITARY STANDARD DRAWING MS17322-5, REVISION "C," WITH DELIVERY REQUIREMENTS AS FOLLOWS:

"DESIRED 10 EACH 90 DAYS AFTER DATE OF CONTRACT AND CONTINUING AT THE RATE OF 20 EACH EVERY 30 DAYS UNTIL DELIVERIES ARE COMPLETE.

"MAXIMUM ACCEPTABLE 10 EACH 180 DAYS AFTER DATE OF CONTRACT AND CONTINUING AT THE RATE OF 20 EACH EVERY 30 DAYS UNTIL DELIVERIES ARE COMPLETE.'

THE BIDS WERE OPENED ON FEBRUARY 14, 1966, THE THREE BIDS RECEIVED BEING AS FOLLOWS:

CHART

UNIT

PRICE DISCOUNT EXTENSION A AND M INSTRUMENT, INC. $48.32 1 PERCENT - 30 $4,590.40 THE A. W. HAYDON CO. 48.75 1/2 PERCENT - 10

4,631.25 GENERAL TIME CORP. 51.00 - 4,845.00

YOUR CLIENT'S BID INDICATED THAT IT INTENDED TO SUPPLY A PRODUCT OF HAYDON'S MANUFACTURE. WHILE THESE BIDS WERE ALL CONSIDERED RESPONSIVE UPON REVIEW SHORTLY AFTER OPENING, FURTHER EXAMINATION OF A AND M'S BID DURING CONSIDERATION OF ITS PROTEST REVEALED THAT IT WAS NONRESPONSIVE DUE TO THE FACT THAT ON PAGE THREE OF THE INVITATION SCHEDULE IT PROPOSED A DELIVERY FOR 10 UNITS ONLY OF THE REQUIRED ITEMS 90 DAYS AFTER DATE OF CONTRACT WITH NO SCHEDULE INDICATED FOR THE DELIVERY OF THE REMAINING 85 UNITS OF THE PROCUREMENT. ATTACHED TO THE BID OF THE A. W. HAYDON CO. WAS ITS COVERING LETTER DATED JANUARY 31, 1966, WHICH STATED, IN PART,"THE NEXT PRICE BREAK OCCURS AT 100 UNITS. DELIVERED PRICE FOR 100 UNITS IS $34.25 EACH, * * * WITHIN 90 DAYS.' THIS STATEMENT LED THE CONTRACTING OFFICER TO BELIEVE THAT THE PRICES WERE UNREASONABLE BECAUSE IF THE QUANTITY WAS INCREASED TO 100, OR JUST 5 UNITS MORE, THE SUPPLIES COULD BE PURCHASED FOR LESS BY SOME $1,119.50, BASED UPON THE BID OF A AND M, AND $1,206.25 BASED UPON THE BID OF HAYDON, OR APPROXIMATELY 25 PERCENT LESS PER ITEM. THUS, THERE WAS AN INDICATION THAT THE PRICING RANGE WAS OUT OF BALANCE, SINCE 100 UNITS COULD BE PURCHASED FOR CONSIDERABLY LESS THAN THE AMOUNTS BID FOR 95 UNITS. FROM THE INFORMATION REVEALED BY ALL THE BIDS CONSIDERED TOGETHER THE CONTRACTING OFFICER WAS PUT ON NOTICE OF PROBABLE PRICING DISCREPANCIES FOR THE ITEM. UPON CONFIRMATION OF THE INFORMATION CONTAINED IN THE HAYDON LETTER THE CONTRACTING OFFICER DETERMINED TO REJECT ALL BIDS AND CANCEL THE INVITATION BECAUSE ALL BIDS WERE UNREASONABLE AND TO REISSUE IT. ALL BIDDERS WERE SO ADVISED.

THE REQUIREMENT WAS READVERTISED BY INVITATION FOR BIDS NO. N00 16366B0157, DATED APRIL 5, 1966, WHICH OPENED ON APRIL 27, 1966. THE INVITATION WAS DISTRIBUTED TO SEVEN PROSPECTIVE BIDDERS. THE TIME OF DELIVERY STATED IN THIS INVITATION IS AS FOLLOWS:

CHART

CALENDAR DAYS AFTER DATE OF AWARD 90 120 150 180 210 240

QUANTITY 10 20 20 20 20 5

ONE BID WAS RECEIVED, THAT OF THE A. W. HAYDON COMPANY WHOSE LOT PRICE WAS $3,425, DISCOUNT 1/2 PERCENT--- 10 DAYS. YOUR PROTEST CITES 2-404.1 (A) OF THE ARMED SERVICES PROCUREMENT REGULATION AND STATES THAT THE CHARACTERIZATION OF A AND M'S BID AS BEING "UNREASONABLE" BEARS NO RELATIONSHIP TO THE FACTS, THE DIFFERENCE BETWEEN THE HIGHEST AND LOWEST BID BEING LESS THAN 6 PERCENT. IT IS SHOWN TO BE YOUR VIEW THAT "WHERE A SOLICITATION RESULTS IN WIDELY VARYING BIDS THOSE BIDS AT EITHER END OF THE SPECTRUM MAY NOT SATISFY THE CRITERION OF REASONABLENESS. THIS, HOWEVER, HARDLY SEEMS TO FIT THE SITUATION HERE.' THUS, YOU INDICATE A VIEW THAT SUBMITTED BIDS MAY ONLY BE CONSIDERED UNREASONABLE IN RELATION TO EACH OTHER. THE PROTEST FURTHER STATES THAT A AND M WAS LED TO BELIEVE THAT THE QUANTITY OF ITEMS SOUGHT TO BE PROCURED WAS TO BE CHANGED IN THE REISSUED INVITATION, THAT IT WAS NOT, AND THAT TO SANCTION THE PRACTICE OF CANCELLATION AND REISSUANCE IN THESE CIRCUMSTANCES WOULD VIOLATE THE TENETS AND PROSCRIPTIONS OF THIS OFFICE IN SEEKING TO MAINTAIN THE CONFIDENCE AND INTEGRITY ATTACHED TO THE COMPETITIVE BIDDING SYSTEM, CITING, AMONG OTHERS, OUR DECISION AT 36 COMP. GEN. 364. YOU ASK THAT AWARD BE MADE TO THE PROTESTING CONTRACTOR AS THE "LOW RESPONSIVE BIDDER" IN THESE CIRCUMSTANCES.

THE DEPARTMENT OF THE NAVY REPORTS THAT, CONTRARY TO STATEMENTS MADE IN YOUR MEMORANDUM OF LAW SUBMITTED WITH YOUR MAY 10 LETTER, THEA AND M COMPANY WAS NEVER ADVISED THE PROCUREMENT WOULD BE NEGOTIATED OR THAT THE REQUIREMENT HAD BEEN INCREASED BUT WAS ADVISED THAT THE REASON FOR CANCELLATION WAS UNREASONABLENESS OF PRICE. THE COMPANY WAS ALSO ADVISED THAT ITS BID WAS CONSIDERED NONRESPONSIVE BECAUSE OF ITS FAILURE TO OFFER A DELIVERY SCHEDULE FOR 85 DAYS OF THE UNITS BEING PROCURED.

SECTION 2305 (C) OF TITLE 10, U.S.C. PROVIDES THAT ALL BIDS MAY BE REJECTED IF IT IS DETERMINED THAT REJECTION IS IN THE PUBLIC INTEREST. ADDITION, ASPR 2-404.1 (A) AND (B) (VI) PROVIDE, IN PERTINENT PART, AS FOLLOWS:

"/A) THE PRESERVATION OF THE INTEGRITY OF THE COMPETITIVE BID SYSTEM DICTATES THAT AFTER BIDS HAVE BEEN OPENED, AWARD MUST BE MADE TO THAT RESPONSIBLE BIDDER WHO SUBMITTED THE LOWEST RESPONSIBLE BID, UNLESS THERE IS A COMPELLING REASON TO REJECT ALL BIDS AND CANCEL THE INVITATION. * *

"/B) * * * INVITATIONS FOR BIDS MAY BE CANCELED AFTER OPENING BUT PRIOR TO AWARD WHERE SUCH ACTION IS CONSISTENT WITH (A) ABOVE AND THE CONTRACTING OFFICER DETERMINES IN WRITING THAT---

"/VI) ALL OTHERWISE ACCEPTABLE BIDS RECEIVED ARE AT UNREASONABLE PRICES;

IN DECISION DATED NOVEMBER 2, 1956, B-128646, PUBLISHED AT 36 COMP. GEN. 364, WE HELD, IN PERTINENT PART, AS FOLLOWS:

"* * * BIDS * * * UNDER THE ORIGINAL INVITATION WERE REJECTED BECAUSE THEY WERE CONSIDERED EXCESSIVE, AND BIDS WERE SOLICITED UNDER A NEW INVITATION TO INSURE THAT THE UNITED STATES WOULD RECEIVE THE BENEFIT OF THE FULL AND OPEN COMPETITION WHICH WAS CONTEMPLATED BY THE ADVERTISING STATUTES. SUCH STATUTES WERE ENACTED FOR THE PROTECTION OF THE INTERESTS OF THE UNITED STATES AND NOT FOR THE BENEFIT OR PROTECTION OF BIDDERS. PERKINS V. LUKENS STEEL COMPANY, 310 U.S. 113, 126; AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75, 78. WE HAVE NEVERTHELESS 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 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 THE 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. * * *"

WE THINK THAT WHAT WAS SAID IN THAT CASE SUMMARIZES THE INSTANT SITUATION AS WELL. IN ADDITION, SECTION 8 (B) OF THE PRESENT INVITATION SPECIFICALLY RESERVED TO THE GOVERNMENT THE RIGHT TO REJECT ANY AND ALL BIDS IN THE INTEREST OF THE GOVERNMENT.

IN VIEW OF THE ABOVE STATUTORY AUTHORITY, THE IMPLEMENTING REGULATIONS, CASE AUTHORITY CITED, AND THE EXPRESS RESERVATION IN THE INVITATION FOR BIDS OF THE RIGHT TO REJECT ANY AND ALL BIDS, THERE APPEARS TO BE NO SOUND BASIS FOR YOUR CONTENTION THAT THE NAVAL AVIONICS FACILITY COULD NOT, UNDER THE CIRCUMSTANCES, BEING ON NOTICE OF THE IMBALANCE IN PRICING, REJECT ALL BIDS RECEIVED UNDER THE INVITATION, BUT WAS BOUND TO AWARD A CONTRACT TO YOU AS THE LOWEST RESPONSIVE BIDDER. IN THE INSTANT CASE ALL BIDDERS UNDER THE ORIGINAL INVITATION HAD EQUAL OPPORTUNITY TO BE APPRISED OF THE BIDS SUBMITTED BY THEIR COMPETITORS AND ALL BIDDERS UNDER THE READVERTISED INVITATION HAD EQUAL OPPORTUNITY TO SUBMIT COMPETITIVE PROPOSALS WITHOUT REGARD TO THE ORIGINAL BID PRICES. IN VIEW OF THE FACT THAT A BID HAS BEEN RECEIVED WHICH IS SUBSTANTIALLY LOWER THAN THE LOWEST BID PRICE WHICH COULD HAVE BEEN ACCEPTED UNDER THE ORIGINAL INVITATION, IT WOULD APPEAR THAT THE DECISION OF THE CONTRACTING OFFICER TO READVERTISE WAS IN THE BEST INTEREST OF THE GOVERNMENT. SEE 36 COMP. GEN. 364.

IN THE CIRCUMSTANCES, THERE IS NO LEGAL BASIS ON WHICH THIS OFFICE MAY QUESTION THE ADMINISTRATIVE ACTION PREVIOUSLY TAKEN IN THE MATTER OR AN AWARD TO THE LOW BIDDER UNDER THE READVERTISED PROCUREMENT AND YOUR PROTEST IS DENIED.