B-161331, MAY 15, 1967

B-161331: May 15, 1967

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TO THE GARRETT CORPORATION: REFERENCE IS MADE TO YOUR TELEGRAMS OF APRIL 21. AN OPTION QUANTITY WAS ALSO INCLUDED IN THE INVITATION. AWARD THEREUNDER WAS REQUIRED TO BE MADE WITHIN 60 DAYS AFTER DATE OF BID OPENING. INITIAL DELIVERIES WERE TO COMMENCE IN AUGUST 1967. THE INVITATION WAS LIMITED TO QUALIFIED PRODUCERS OF THE ITEM. IT IS REPORTED THAT THERE ARE THREE QUALIFIED PRODUCERS OF THE TURBINE STARTER. ADVISED THE PROCUREMENT AGENCY THAT BECAUSE THE PRODUCTION TOOLING FOR THE MODIFIED VERSION OF THE STARTER WAS NOT CURRENTLY AVAILABLE. IF THE DELIVERY SCHEDULE REQUIREMENTS WERE CHANGED TO ALLOW FOR LATER INITIAL DELIVERIES. 903.56 FOR THE 644 STARTERS WITH THE FOLLOWING QUALIFICATION: "REFERENCE IS MADE TO THE DELIVERY REQUIREMENTS ESTABLISHED BY THE SUBJECT INVITATION.

B-161331, MAY 15, 1967

TO THE GARRETT CORPORATION:

REFERENCE IS MADE TO YOUR TELEGRAMS OF APRIL 21, APRIL 27, AND MAY 1, 1967, PROTESTING, ON BEHALF OF THE AIRESEARCH MANUFACTURING COMPANY OF ARIZONA, A DIVISION OF THE GARRETT CORPORATION, AGAINST THE CANCELLATION OF DEPARTMENT OF THE NAVY INVITATION FOR BIDS NO. N00019 67-B-0021 ISSUED ON JANUARY 12, 1967, BY THE NAVAL AIR SYSTEMS COMMAND.

THE INVITATION, AS AMENDED, REQUESTED BIDS--- TO BE OPENED ON FEBRUARY 21, 1967--- FOR A FIRM QUANTITY OF 644 MODEL A-24-1 TURBINE STARTERS FOR INSTALLATION IN P-3B AIRCRAFT, TOGETHER WITH SPARES, ANCILLARY EQUIPMENT AND DATA. AN OPTION QUANTITY WAS ALSO INCLUDED IN THE INVITATION. AWARD THEREUNDER WAS REQUIRED TO BE MADE WITHIN 60 DAYS AFTER DATE OF BID OPENING, AND INITIAL DELIVERIES WERE TO COMMENCE IN AUGUST 1967. THE INVITATION WAS LIMITED TO QUALIFIED PRODUCERS OF THE ITEM.

IT IS REPORTED THAT THERE ARE THREE QUALIFIED PRODUCERS OF THE TURBINE STARTER, YOUR FIRM, THE HAMILTON STANDARD, DIVISION OF UNITED AIRCRAFT CORPORATION, AND THE BENDIX CORPORATION, UTICA DIVISION. HOWEVER, HAMILTON STANDARD DECLINED TO BID, AND ADVISED THE PROCUREMENT AGENCY THAT BECAUSE THE PRODUCTION TOOLING FOR THE MODIFIED VERSION OF THE STARTER WAS NOT CURRENTLY AVAILABLE, IT WOULD BE UNABLE TO MEET THE INITIAL DELIVERIES SPECIFIED IN THE INVITATION FOR BIDS. BUT IF THE DELIVERY SCHEDULE REQUIREMENTS WERE CHANGED TO ALLOW FOR LATER INITIAL DELIVERIES, HAMILTON STANDARD REQUESTED AN OPPORTUNITY TO SUBMIT A BID ON SUCH A DELIVERY SCHEDULE. THE BENDIX CORPORATION DID SUBMIT A BID TOTALLING $1,015,903.56 FOR THE 644 STARTERS WITH THE FOLLOWING QUALIFICATION:

"REFERENCE IS MADE TO THE DELIVERY REQUIREMENTS ESTABLISHED BY THE SUBJECT INVITATION. THIS CONTRACTOR, IN ACCORDANCE WITH THE REQUIREMENTS OF DPC NO. 51 HAS CAREFULLY REVIEWED THE SCHEDULE STATED BY THE GOVERNMENT. WE CANNOT START DELIVERIES IN AUGUST 1967 BECAUSE OF THE LEAD TIME REQUIREMENT IN THE MARKET FOR THE BASIC CASTINGS, FORGINGS AND OTHER RAW MATERIALS REQUIRED FOR THIS ITEM. WE CAN, HOWEVER, START DELIVERIES IN OCTOBER OR SIX (6) MONTHS AFTER RECEIPT OF ORDER WHICHEVER IS THE LATER. THE SLIPPAGE ON ITEM IAA WILL BE MADE UP WITHIN NINETY (90) DAYS THEREAFTER SO THAT DELIVERIES CAN BE COMPLETED WITHIN THE PERIOD REQUIRED BY THE GOVERNMENT.'

SINCE BENDIX MODIFIED THE DELIVERY TERMS SPECIFIED IN THE INVITATION FOR BIDS, ITS BID WAS DETERMINED TO BE NONRESPONSIVE. THE ONLY RESPONSIVE BID WAS SUBMITTED BY YOUR FIRM WHEREIN A TOTAL PRICE OF $1,157,268 WAS QUOTED FOR THE 644 STARTERS. HOWEVER, THE INVITATION WAS CANCELLED PURSUANT TO PARAGRAPH 8 (B) OF THE BIDDING INSTRUCTIONS, ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2-404.1 (B) (VIII), AND 10 U.S.C. 2305 (C). WITH RESPECT TO THE FOREGOING, THE PROCUREMENT AGENCY REPORTED AS FOLLOWS:

"IT IS SIGNIFICANT THAT THE ONLY RESPONSIVE BID PRICE ($1797.00 TIMES 644 EQUALS $1,157,268) IS 13.9 PERCENT HIGHER THAN THE NON RESPONSIVE BID OF BENDIX ($1577.49 TIMES 644 EQUALS $1,015,903.56). THE DOLLAR AMOUNT DIFFERENCE ($141,364.44) WOULD BE INCREASED IF OPTIONS WERE EXERCISED.

"SUBSEQUENT TO THE BID OPENING, A RE-EVALUATION OF THE IFB WAS CONDUCTED. DURING THE RE-EVALUATION, IT WAS DETERMINED THAT THE NEEDS OF NAVAIR COULD BE SATISFIED BY RECEIPT OF THE INSTALLATION STARTERS (ITEM IAA) BEGINNING IN DECEMBER 1967, AND BY RECEIPT OF SPARES (ITEMS IBB, ICC, IDD) BEGINNING IN JANUARY 1968. AS A RESULT, THE DELIVERIES IN AUGUST, SEPTEMBER, OCTOBER AND NOVEMBER WERE NO LONGER REQUIRED. ASSUMING AWARD OF THE NEW IFB BY 15 MAY 1967, SEVEN AND ONE-HALF MONTHS' PRODUCTION LEAD TIME WILL BE AVAILABLE AND SIX MONTHS' INSTALLATION LEAD TIME WILL BE ALLOWED FOR INSTALLATION INTO THE JUNE 1968, AND SUBSEQUENT AIRCRAFT.

"THE IFB WAS CANCELLED BECAUSE IT CONTAINED AN UNNECESSARILY RESTRICTIVE DELIVERY SCHEDULE WHICH PRECLUDED COMPETITION. IN ADDITION, IT IS LIKELY THAT THE DELIVERY SCHEDULE INCREASED THE PRICES QUOTED TO THE GOVERNMENT. SINCE THE DELIVERY REQUIREMENTS OF THE GOVERNMENT HAD CHANGED, IT WAS LEFT IN THE POSITION UNDER THE IFB OF PAYING A 13.9 PER CENT PREMIUM FOR AN UNNECESSARY DELIVERY REQUIREMENT. ON RESOLICITATION, THE GOVERNMENT CAN EXPECT AT LEAST AIRESEARCH AND BENDIX, AND PROBABLY HAMILTON STANDARD ALSO, TO COMPETE FOR THE CONTRACT. IT IS THEREFORE CLEARLY IN THE "BEST INTEREST" OF THE GOVERNMENT TO CANCEL AND RESOLICIT. (SEE ASPR 2-404.1 (B) (VIII) (" THE PROCUREMENT OF THE TURBINE STARTERS WAS READVERTISED UNDER INVITATION FOR BIDS NO. N00019-67-B-0348 DATED APRIL 28, 1967, WITH A BID OPENING DATE OF MAY 8, 1967.

ESSENTIALLY, YOU PROTEST AGAINST THE CANCELLATION OF THE FIRST INVITATION ON THE BASIS THAT IT IS DETRIMENTAL TO AND UNDERMINES THE FOUNDATION OF THE COMPETITIVE BID SYSTEM IN THAT THE COMPETITION UNDER THIS INVITATION WAS BASED UPON PRICE AND DELIVERY; AND THAT THE CANCELLATION OF THE INVITATION WAS PARTICULARLY DETRIMENTAL TO AIRESEARCH BECAUSE IT HAD DISCLOSED ITS PRICE ON THE REQUIRED DELIVERY SCHEDULE. YOU CONTEND ALSO THAT THE CANCELLATION ACTION WAS TAKEN WITH THE KNOWLEDGE THAT AIRESEARCH HAD ISSUED OR "PRE-RELEASED" SHOP ORDERS FOR CERTAIN ITEMS BEFORE AWARD OF THE PRIME CONTRACT TO IT IN ORDER TO COMPLY WITH THE SHORT DELIVERY SCHEDULE. THIS, YOU OBSERVE, WAS OBVIOUSLY INEQUITABLE TO AIRESEARCH. FURTHER, YOU STATE THAT THE NAVAL AIR SYSTEMS COMMAND HAS ADVISED THAT THE REISSUANCE OF THE INVITATION FOR BIDS WAS BASED ON A CHANGE IN THE REQUIREMENTS OF THE NAVY, AND THAT SUCH CHANGE--- AN INCREASE IN QUANTITY- -- IS FICTITIOUS SINCE THE NEW REQUIREMENTS COULD HAVE BEEN MET UNDER THE CANCELLED INVITATION.

THE ORIGINAL INVITATION FOR BIDS CALLED FOR A FIRM QUANTITY OF 644 AIR TURBINE STARTERS, WITH AN ADDITIONAL OPTION QUANTITY OF 450. THE NEW INVITATION FOR BIDS CALLS FOR A FIRM QUANTITY OF 879 AIR TURBINE STARTERS, PLUS AN OPTION QUANTITY OF 240. UNDER BOTH INVITATIONS, BID EVALUATION WAS AND WILL BE EXCLUSIVE OF THE OPTION QUANTITY. HENCE, THE READVERTISEMENT COVERS A REAL, NOT A FICTIONAL, INCREASE OF 235 UNITS OVER THE CANCELLED INVITATION REQUIREMENTS. IT IS EVIDENT THAT SUCH INCREASE COULD NOT HAVE BEEN POSSIBLY MET UNDER THE FIRM QUANTITIES COVERED BY THE CANCELLED INVITATION.

RESPECTING THE ACTION OF AIRESEARCH IN ISSUING OR PRERELEASING SHOP ORDERS IN CONTEMPLATION OF AN AWARD UNDER THE ORIGINAL INVITATION, IT APPEARS THAT THIS ACTION WAS TAKEN AT ITS OWN RISK TO SHORTEN THE PRODUCTION PERIOD. WE FIND NOTHING IN THE RECORD WHICH WOULD INDICATE THAT ANY GOVERNMENT REPRESENTATIVE AUTHORIZED OR INDUCED AIRESEARCH TO TAKE SUCH ACTION. IN ANY EVENT, EVEN IF SUCH PRELIMINARY STEPS WERE KNOWN TO THE PROCUREMENT AGENCY, IT WOULD NOT HAVE HAD ANY EFFECT TO INFLUENCE AN AWARD TO AIRESEARCH UNDER THE CIRCUMSTANCES OF THIS PROCUREMENT.

ARTICLE 8 (B) OF THE BIDDING INSTRUCTIONS, TERMS, AND CONDITIONS OF THE INVITATION SPECIFICALLY RESERVED TO THE GOVERNMENT TO THE RIGHT TO REJECT ANY OR ALL BIDS. THIS PROVISION IS IN CONFORMITY WITH 10 U.S.C. 2305 (C) WHICH PROVIDES THAT ALL BIDS MAY BE REJECTED IF THE HEAD OF THE AGENCY DETERMINES THAT REJECTION IS IN THE PUBLIC INTEREST. UNDER 10 U.S.C. 2311 THE HEAD OF THE AGENCY MAY DELEGATE THE AUTHORITY TO MAKE SUCH DETERMINATION TO ANY OTHER OFFICER OR OFFICIAL OF THAT AGENCY. THAT AUTHORITY HAS BEEN DELEGATED TO THE CONTRACTING OFFICER BY THE TERMS OF ASPR 2-404.1 (B) (VIII), WHICH PROVIDES FOR CANCELLATION OF AN INVITATION WHERE SUCH ACTION IS DETERMINED TO BE IN THE BEST INTEREST OF THE GOVERNMENT. SUCH AUTHORITY TO REJECT ANY OR ALL BIDS IS EXTREMELY BROAD, INVOLVING PRIMARILY A MATTER OF ADMINISTRATIVE JUDGMENT, AND WE WILL NOT UNDERTAKE TO QUESTION ITS EXERCISE IN THE ABSENCE OF A CLEAR SHOWING OF ABUSE OF DISCRETION. 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 AND READVERTISING MAY NOT BE CONSIDERED IMPROPER WHEN BASED ON SUBSTANTIAL REASONS LEADING TO A BONA FIDE BELIEF THAT THE INTERESTS OF THE GOVERNMENT WILL BE SERVED THEREBY. CF. 38 COMP. GEN. 235 AND 39 ID. 86.

IT HAS CONSISTENTLY BEEN HELD THAT AN INVITATION FOR BIDS DOES NOT IMPORT ANY OBLIGATION ON THE GOVERNMENT TO ACCEPT ONE OF THE OFFERS RECEIVED, AND THAT ALL BIDS MAY BE REJECTED WHERE IT IS DETERMINED TO BE IN THE BEST INTEREST OF THE GOVERNMENT TO DO SO. 37 COMP. GEN. 760, 761. IN THE PRESENT CASE IT IS UNCONTRADICTED THAT THE ORIGINAL INVITATION'S SPECIFIED DELIVERY SCHEDULE UNNECESSARILY RESTRICTED COMPETITION AND TENDED TO DEPRIVE THE GOVERNMENT OF THE OPPORTUNITY TO OBTAIN ITS ACTUAL REQUIREMENTS AT THE LOWEST BID PRICE. THE PROVISIONS OF THE NEW INVITATION BROADEN THE FIELD OF COMPETITION AND WILL PERMIT THE PREVIOUSLY LOW BIDDER TO SUBMIT A RESPONSIVE BID ON SUPPLYING THE ITEMS INVOLVED. THESE CIRCUMSTANCES, AND IN VIEW OF THE BROAD DISCRETION PLACED WITH THE ADMINISTRATIVE AGENCIES IN SUCH MATTERS, WE CANNOT CONCLUDE THAT THE REJECTION OF ALL BIDS UNDER THE ORIGINAL INVITATION WAS ARBITRARY OR CAPRICIOUS.