B-159354, AUG. 3, 1966

B-159354: Aug 3, 1966

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

INCORPORATED: REFERENCE IS MADE TO YOUR LETTERS DATED JUNE 2 AND JUNE 11. 002 WAS ISSUED ON APRIL 15. HAD EXPRESSED AN INTEREST IN THE ANNOUNCEMENTS WHICH HAD BEEN ISSUED CONCERNING THE INVITATION FOR BIDS AND WERE FURNISHED THE INVITATION WITH COMPLETE SPECIFICATIONS AND DRAWINGS. BIDS WERE OPENED ON MAY 17. WAS THE ONLY BIDDER ON THE SUBJECT INVITATION FOR BIDS. A SEALED GOVERNMENT ESTIMATE OF THE COST OF THE PROJECT HAD BEEN PREPARED BY THE FAA BOSTON OFFICE AND WAS RECEIVED BY THE CONTRACTING OFFICER ON MAY 16. THE ESTIMATE WAS OPENED ALONG WITH THE BID ON MAY 17 AND IT WAS DISCLOSED THAT THE COST OF THE PROJECT HAD BEEN ESTIMATED AT $21. A REEVALUATION OF THE GOVERNMENT ESTIMATE WAS IMMEDIATELY REQUESTED BY THE CONTRACTING OFFICER AS YOUR BID EXCEEDED THE ESTIMATE BY MORE THAN 15 PERCENT.

B-159354, AUG. 3, 1966

TO MARGOLD ELECTRIC COMPANY, INCORPORATED:

REFERENCE IS MADE TO YOUR LETTERS DATED JUNE 2 AND JUNE 11, 1966, PROTESTING THE CANCELLATION OF INVITATION FOR BIDS NO. EA-6-40,002, ISSUED BY THE EASTERN REGION OF THE FEDERAL AVIATION AGENCY, JAMAICA, NEW YORK.

ON AUGUST 29, 1963, THE NIAGARA FRONTIER PORT AUTHORITY ENTERED INTO A REIMBURSABLE AGREEMENT WITH THE FEDERAL AVIATION AGENCY (HEREAFTER FAA) FOR THE RELOCATION OF FAA FACILITIES LOCATED ON OR IN THE VICINITY OF THE GREATER BUFFALO INTERNATIONAL AIRPORT, BUFFALO, NEW YORK. PURSUANT TO THIS AGREEMENT INVITATION FOR BIDS EA-6-40,002 WAS ISSUED ON APRIL 15, 1966, FOR THE CONSTRUCTION OF GLIDE SLOPE, MIDDLE MARKER, AND OUTER MARKER FACILITIES TO SERVE RUNWAY 23 OF THE GREATER BUFFALO AIRPORT. EIGHT COMPANIES, INCLUDING MARGOLD, HAD EXPRESSED AN INTEREST IN THE ANNOUNCEMENTS WHICH HAD BEEN ISSUED CONCERNING THE INVITATION FOR BIDS AND WERE FURNISHED THE INVITATION WITH COMPLETE SPECIFICATIONS AND DRAWINGS. BIDS WERE OPENED ON MAY 17, 1966, AT 2:00 P.M., EASTERN DAYLIGHT SAVING TIME. YOUR CORPORATION, MARGOLD, WITH A BID PRICE OF $33,222, WAS THE ONLY BIDDER ON THE SUBJECT INVITATION FOR BIDS.

A SEALED GOVERNMENT ESTIMATE OF THE COST OF THE PROJECT HAD BEEN PREPARED BY THE FAA BOSTON OFFICE AND WAS RECEIVED BY THE CONTRACTING OFFICER ON MAY 16, 1966. THE ESTIMATE WAS OPENED ALONG WITH THE BID ON MAY 17 AND IT WAS DISCLOSED THAT THE COST OF THE PROJECT HAD BEEN ESTIMATED AT $21,726. A REEVALUATION OF THE GOVERNMENT ESTIMATE WAS IMMEDIATELY REQUESTED BY THE CONTRACTING OFFICER AS YOUR BID EXCEEDED THE ESTIMATE BY MORE THAN 15 PERCENT. IN THE REVIEW AN ARITHMETICAL ERROR WAS DISCLOSED, AND AS A RESULT THE ESTIMATE WAS REVISED UPWARD TO $25,773. THE REVISED ESTIMATE WAS REVIEWED BY HIGHER AUTHORITY AT THE REGIONAL HEADQUARTERS AND WAS APPROVED AS REASONABLE. IT WAS RECOMMENDED BY THE BOSTON OFFICE THAT AS YOUR PRICE WAS CONSIDERED EXCESSIVE YOUR BID SHOULD BE REJECTED, AND YOU WERE THEREAFTER NOTIFIED ON JUNE 1, 1966, THAT YOUR BID HAD BEEN REJECTED AS BEING UNREASONABLE AS TO PRICE AND THAT THE INVITATION HAD BEEN CANCELLED. AN ADMINISTRATIVE DETERMINATION WAS THEN MADE BY THE FAA TO ACCOMPLISH THE RELOCATION OF THE FACILITIES WITH THEIR OWN WORK FORCE TO AVOID FURTHER DELAY IN THEIR COMMITMENT FOR THE PROJECT, AND TO BE ABLE TO COMPLETE THE PROJECT AT A COST NOT TO EXCEED THE GOVERNMENT ESTIMATE.

IN YOUR JUNE 2, 1966, LETTER OF PROTEST AGAINST THE ACTION TAKEN BY THE FAA, YOUR STATE:

"IF * * * THE CONTRACTING OFFICER, HAS COME TO THE CONCLUSION THAT OUR BID WAS EXCESSIVE, BASED UPON HIS ENGINEER'S ESTIMATE, THEN WE BELIEVE THAT THE ENGINEER'S ESTIMATE MUST HAVE BEEN GROSSLY INCORRECT. UNDERSTAND THAT THIS IS THE FIRST TIME THAT THIS KIND OF JOB IS BEING DONE IN THIS REGION AND IT MAY VERY WELL BE THAT A LACK OF EXPERIENCE OF THE ENGINEERING DEPARTMENT RESULTED IN AN IMPROPER ESTIMATE.

"IT APPEARS TO US THAT THE CONTRACTING OFFICER NOW PROPOSES DOING THE SAME THING THAT WAS DONE WITH THE JOB THAT WE FORMERLY BID AT ROCHESTER, N.Y. AFTER BIDS WERE ACCEPTED AT THE ROCHESTER, N.Y. JOB, APPARENTLY THE EASTERN REGION DECIDED TO REJECT ALL OF THE BIDS AND TO PROCEED TO DO THE WORK WITH GOVERNMENT PERSONNEL. THE SAME THING NOW SEEMS TO BE HAPPENING ON THE CURRENT BUFFALO JOB, ON WHICH OUR BID HAS JUST BEEN REJECTED. BELIEVE THAT UNDER SUCH CIRCUMSTANCES THE GOVERNMENT TAKES UNFAIR ADVANTAGE OF CONTRACTORS BIDDING ON THIS TYPE OF WORK.

"* * * AFTER WE HAVE GONE TO ALL OF THE CONSIDERABLE TROUBLE AND EXPENSE NECESSARY TO PREPARE A BID AND ARE THEN THE SUCCESSFUL BIDDERS WITH A REALISTIC AND REASONABLY PRICED BID, IT SHOULD NOT BE REJECTED FOR SOME ARBITRARY REASON. * * *.'

WHEN THE EASTERN REGION WAS NOTIFIED OF YOUR PROTEST BEFORE OUR OFFICE A SECOND REVIEW WAS MADE OF THE GOVERNMENT ESTIMATE. THIS REVIEW CONCLUDED THAT IT WOULD NOT COST MORE THAN $25,720.29 TO ACCOMPLISH THE WORK BY AVAILABLE GOVERNMENT PERSONNEL.

THE DIRECTOR OF THE EASTERN REGION HAS INFORMED US, IN REGARD TO YOUR BASIC CONTENTION THAT THE GOVERNMENT ESTIMATE IS GROSSLY INCORRECT BECAUSE THIS IS THE FIRST TIME THAT THIS KIND OF JOB IS BEING DONE IN THE BUFFALO AREA, THAT WHILE IT IS TRUE THAT A NEWLY DEVELOPED WAVEGUIDE ANTENNA IS BEING UTILIZED, THE METHOD ADOPTED IN ATTACHING THE ANTENNA TO A STEEL SUPPORTING STRUCTURE IS NOT NEW, UNIQUE, NOR COMPLEX, AND DOES NOT SUBSTANTIALLY VARY FROM THE PREVIOUS METHOD USED EXTENSIVELY IN ERECTING OTHER TYPES OF ANTENNA IN THE REGION. IT IS THE ADMINISTRATIVE OPINION THAT THERE IS NO LACK OF ENGINEERING EXPERIENCE IN ESTIMATING THE COSTS OF THIS TYPE OF CONSTRUCTION.

YOUR FURTHER CONTENTION THAT THE CONTRACTING OFFICER IN THE PRESENT CASE HAS DONE THE SAME THING THAT WAS DONE WITH A JOB YOU ALLEGE YOU FORMERLY BID AT ROCHESTER, NEW YORK, HAS BEEN SPECIFICALLY REPLIED TO BY THE DIRECTOR OF THE EASTERN REGION. IN HIS REPORT TO OUR OFFICE HE STATES:

"* * * FIRST, THE SITUATIONS BETWEEN THE ROCHESTER AND BUFFALO IFB'S ARE NOT ANALOGOUS. THE ANNOUNCEMENTS FOR THE ROCHESTER JOB WERE ISSUED ON TUESDAY, JANUARY 4, 1966. PLANS AND SPECIFICATIONS WERE SENT TO 24 FIRMS ON THURSDAY, JANUARY 6, 1966. BY TELEGRAM ON THE FOLLOWING MONDAY, JANUARY 10, 1966, THE 24 COMPANIES WERE NOTIFIED THAT IFB EA-6-21B1 WAS CANCELLED DUE TO CHANGED REQUIREMENTS. SINCE THE CANCELLATION WAS MADE WITHIN FOUR DAYS FROM THE ISSUANCE OF THE PLANS, AND NO BIDS WERE SUBSEQUENTLY RECEIVED, IT IS QUITE OBVIOUS THAT NONE OF THE PLAN HOLDERS IN FACT BID THE JOB * * *.'

THIS STATEMENT IS CONTRARY TO YOUR ALLEGATION THAT THE ROCHESTER INVITATION WAS CANCELLED AFTER BIDS WERE RECEIVED. THE RECORD OF THE 24 COMPANIES RECEIVING THE INVITATIONS INDICATES THAT YOU DID NOT RECEIVE AN INVITATION FOR BIDS FOR THE ROCHESTER JOB. WE DO NOTE, HOWEVER, THAT THE COMPANY YOU HAVE TERMED YOUR AFFILIATE, SHERKADE CONSTRUCTION COMPANY, DID RECEIVE THE PLANS AND WAS NOTIFIED OF THE INVITATION'S REJECTION JANUARY 10, 1966.

THE GENERAL LAW CONTROLLING ADMINISTRATIVE ACTION IN REJECTING BIDS BECAUSE THEY ARE DETERMINED EXCESSIVE IS FOUND IN SECTION 303 (B) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT, 41 U.S.C. 253. THIS PROVIDES THAT ALL BIDS MAY BE REJECTED IF IT IS DETERMINED THAT SUCH ACTION IS IN THE PUBLIC INTEREST. SECTION 302 (C) (4) OF THE SAME ACT, 41 U.S.C. 252 (C) (14), PROVIDES, IN EFFECT, THAT IF IT IS DETERMINED AFTER ADVERTISING FOR PROPERTY OR SERVICES THAT THE BIDS RECEIVED ARE NOT REASONABLE THEY MAY BE REJECTED AND A CONTRACT MAY BE NEGOTIATED. WHERE POSSIBLE, NEGOTIATIONS ARE UNDERTAKEN UNLESS, AS IN THIS CASE, THE AGENCY DECIDES TO PERFORM THE WORK WITH ITS OWN PERSONNEL. IN ADDITION TO THE STATUTORY LAW INVITATION FOR BIDS NO. EA-6-40,002 SPECIFICALLY RESERVED TO THE GOVERNMENT THE RIGHT TO REJECT ANY AND ALL BIDS WHEN SUCH REJECTION WAS IN THE PUBLIC INTEREST. SEE, ALSO, PARAGRAPH 1-2, 404-1 (B) (5) OF THE FEDERAL PROCUREMENT REGULATIONS.

WE ARE WELL AWARE THAT THE REJECTION OF BIDS AFTER THEY ARE OPENED IS A SERIOUS MATTER AND SHOULD NOT BE DONE EXCEPT FOR COGENT REASONS. HOWEVER, THERE IS LESS REASON FOR APPLICATION OF THE RULE WHEN ONLY ONE BID IS RECEIVED. FURTHERMORE, WE HAVE RECOGNIZED THAT SINCE CONTRACTING OFFICERS ARE AGENTS OF, AND ARE REQUIRED TO WORK IN THE BEST INTERESTS OF THE GOVERNMENT, THEIR ACTIONS IN REJECTING BIDS MAY NOT BE CONSIDERED IMPROPER WHEN BASED UPON SUBSTANTIAL REASONS LEADING TO A BONA FIDE BELIEF THAT THE INTEREST OF THE GOVERNMENT WILL BE BEST SERVED THEREBY. SEE 38 COMP. GEN. 235, 39 COMP. GEN. 86.

IN THIS INSTANCE THE CONTRACTING AGENCY HAS DETERMINED AFTER DUE CONSIDERATION THAT THE PRICE WHICH YOU SUBMITTED WAS EXCESSIVE. WHILE YOU BELIEVE THAT YOUR BID WAS REALISTIC AND REASONABLY PRICED, THE AGENCY HAS A BONA FIDE BELIEF THAT THEIR OWN PERSONNEL CAN PERFORM THE PROJECT AT A COST NOT TO EXCEED THEIR ESTIMATE. THE REJECTION OF YOUR BID WAS NOT AN ARBITRARY ACTION BUT WAS BASED UPON A CAREFUL AND DETAILED ANALYSIS AND REVIEW OF THE COSTS OF THE PROJECT. IN VIEW THEREOF AND IN VIEW OF THE DISCRETION VESTED IN THE CONTRACTING AGENCY WITH RESPECT TO SUCH MATTERS, WE FIND NO BASIS TO QUESTION THE LEGALITY OF THE ACTION TAKEN BY THE AGENCY AND YOUR PROTEST IS DENIED.