B-166679, JUN. 10, 1969

B-166679, JUN. 10, 1969

TO THE BENDIX CORPORATION:

REFERENCE IS MADE TO YOUR TELEGRAM DATED APRIL 15, 1969, AND YOUR LETTER DATED APRIL 25, 1969, PROTESTING CANCELLATION OF INVITATION FOR BIDS NO. DSA 900-69-B-3062 (IFB 3062) AND THE RESOLICITATION UNDER INVITATION FOR BIDS NO. DSA 900-69-B-4002, BY THE DEFENSE ELECTRONICS SUPPLY CENTER, DAYTON, OHIO.

IFB 3062 WAS ISSUED ON FEBRUARY 7, 1969, INVITING BIDS ON TYPE 23TR4 SYNCHRO RECEIVERS IN ACCORDANCE WITH CERTAIN CITED SPECIFICATIONS FOR THE PURPOSE OF AWARDING A REQUIREMENTS CONTRACT AGAINST WHICH ORDERS COULD BE ISSUED BY THE GOVERNMENT DURING THE PERIOD FROM MARCH 31, 1969 THROUGH MARCH 31, 1970. THE DESCRIBED ITEM IS A QUALIFIED PRODUCT AND THERE WERE ONLY TWO FIRMS WHOSE PRODUCT HAD BEEN QUALIFIED, BENDIX AND VERNITRON CORPORATION. IFB 3062 REQUIRED BIDDERS TO SUBMIT UNIT PRICE BIDS ON FIVE INCREMENTAL QUANTITIES (100 THROUGH 999, AND 1000 THROUGH 1499) AND PROVIDED THAT BIDS WOULD BE EVALUATED ON THE BASIS OF A WEIGHTED AVERAGE PRICE DETERMINED IN ACCORDANCE WITH A SPECIFIED FORMULA.

PRIOR TO BID OPENING, VERNITRON REQUESTED CLARIFICATION OF FORM DESC-P-71 -501 REFERENCED IN THE INVITATION FOR BIDS BUT NOT PHYSICALLY ATTACHED TO THE INVITATION FOR BIDS. VERNITRON WAS ADVISED THAT THE FORM SHOULD HAVE BEEN ATTACHED TO THE INVITATION FOR BIDS AND THAT THE FORM WOULD BE ATTACHED TO AN AMENDMENT TO THE INVITATION FOR BIDS WHICH WOULD ALSO EXTEND THE DATE FOR OPENING OF BIDS. THIS WAS ACCOMPLISHED BY AMENDMENT NO. 1 TO THE INVITATION FOR BIDS DATED MARCH 10, 1969.

AT THE TIME BIDS WERE OPENED ON MARCH 17, 1969, THE BENDIX BID WAS THE ONLY ONE RECEIVED. THE DAY AFTER BID OPENING AN INQUIRY WAS MADE AS TO WHY VERNITRON DID NOT BID, AND VERNITRON ADVISED IT HAD NOT RECEIVED AMENDMENT NO. 1 TO THE INVITATION FOR BIDS UNTIL MARCH 17, 1969, THE DATE OF BID OPENING, AND FOR THAT REASON DID NOT SUBMIT A BID.

IT IS REPORTED THAT AFTER BID OPENING THE CONTRACTING OFFICER EXAMINED THE PRICES OFFERED BY BENDIX TO DETERMINE IF THEY WERE REASONABLE AND ASCERTAIN THAT THE LOWEST INCREMENT PRICE OFFERED BY BENDIX, FOR THE MAXIMUM ORDER QUANTITY OF 1,000 THROUGH 1,499, WAS $54.39 AND THE BENDIX PRICE FOR THE INCREMENT OF 400 THROUGH 699 WAS $57.25 COMPARED WITH A UNIT PRICE OF $44.00 PAID TO VERNITRON ON CONTRACT DSA 900-68-C-4753, AWARDED IN JUNE 1968 FOR 677 UNITS, AND WITH A UNIT PRICE OF $46.50 PAID TO VERNITRON ON CONTRACT DSA 900-69-C 3785, AWARDED IN OCTOBER 1968 FOR 481 UNITS. UPON THIS PROCUREMENT HISTORY, THE CONTRACTING OFFICER DETERMINED THAT THE BENDIX BID PRICES WERE UNREASONABLE AND CONSIDERED THE UNREASONABLE PRICES AS A COMPELLING REASON TO CANCEL IFB 3062. BENDIX WAS NOTIFIED OF THE CANCELLATION BY LETTER DATED APRIL 10, 1969. ON THE SAME DAY, APRIL 10, 1969, INVITATION FOR BIDS DSA 900-69-B-4002 (IFB 4002) WAS ISSUED BY DEFENSE ELECTRONICS SUPPLY CENTER FOR THE SAME ITEM, IN THE SAME INCREMENTAL QUANTITIES AND CONTAINING SUBSTANTIALLY THE SAME TERMS AS THE CANCELLED SOLICITATION. BIDS ON IFB 4002 WERE OPENED ON APRIL 30, 1969, WITH VERNITRON BEING THE ONLY FIRM SUBMITTING A BID, WHICH WAS AS FOLLOWS:

"INCREMENT QUANTITY UNIT PRICE

100 THRU 199 $51.00

200 THRU 399 50.00

400 THRU 699 49.00

700 THRU 999 45.00

1,000 THRU 1,499 45.00" VERNITRON'S BID PRICES ON IFB 4002 ARE SUBSTANTIALLY LESS THAN THOSE OF BENDIX PRICES BID ON IFB 3062, AND COMPARE FAVORABLY WITH ITS PRICES ON THE TWO PRIOR CONTRACTS.

YOU CONTEND THAT THE CANCELLATION OF THE ORIGINAL INVITATION WAS IMPROPER AND THAT YOUR BID PRICES UNDER THE ORIGINAL INVITATION WERE FAIR AND REASONABLE; THAT THE NOTICE OF CANCELLATION OF APRIL 10, 1969, DID NOT SPECIFY THE BASIS FOR THE CANCELLATION, CITING ONLY ASPR 2-404.1; THAT BENDIX WAS VERBALLY INFORMED AT A LATER DATE OF THE BASIS. IT IS FURTHER CONTENDED THAT THE OBJECTIVE OF THE GOVERNMENT IN REJECTING THE BENDIX BID AS UNREASONABLE AND RESOLICITING THIS PROCUREMENT WAS TO GIVE VERNITRON A SECOND OPPORTUNITY TO BID. COMMENT IS MADE THAT "A DETERMINATION THAT THE BENDIX PRICES UNDER INVITATION FOR BIDS DSA 900-69-B-3062 ARE UNREASONABLE BY A COMPARISON OF SUCH PRICES WITH PRIOR VERNITRON PRICES IS INCONSISTENT WITH THE GOVERNMENT'S POSTURE TOWARD BENDIX BIDS ON THE SAME ITEM UNDER PRIOR SOLICITATIONS AND UNDER THE CURRENT RESOLICITATION.'

ASPR 2-404.1 (A) PROVIDES IN EFFECT THAT AFTER BIDS HAVE BEEN OPENED AWARD MUST BE MADE TO THE LOWEST RESPONSIBLE BIDDER UNLESS THERE IS A COMPELLING REASON TO REJECT ALL BIDS AND READVERTISE. BOTH THE COURT OF CLAIMS IN MASSMAN CONSTRUCTION CO. V. UNITED STATES, 102 CT. CL. 699, AND OUR OFFICE IN NUMEROUS DECISIONS HAVE TAKEN THE SAME POSITION. ONE OF THE REASONS LISTED IN ASPR 2-404.1 (B) AS JUSTIFYING CANCELLATION OF THE INVITATION AFTER OPENING IS THAT ALL OTHERWISE ACCEPTABLE BIDS RECEIVED ARE AT UNREASONABLE PRICES. THE ISSUE HERE IS WHETHER THE CONTRACTING OFFICER'S DETERMINATION THAT YOUR BID PRICE ON IFB 3062 IS UNREASONABLE, AND THEREFORE THAT CANCELLATION OF THE INVITATION IS PROPER UNDER THE REGULATION, SHOULD BE UPHELD.

THE RIGHT TO REJECT ALL BIDS IS RESERVED TO THE GOVERNMENT UNDER PARAGRAPH 10 (B) OF STANDARD FORM 33A, WHICH IS PART OF THE SOLICITATION. IN ADDITION, THE HEAD OF THE AGENCY IS GIVEN THE RIGHT UNDER 10 U.S.C. 2305 (C) TO REJECT ALL BIDS WHEN HE DEEMS THAT ACTION TO BE IN THE PUBLIC INTEREST. ALSO IT HAS LONG BEEN HELD THAT THE ADVERTISING STATUTES WERE ENACTED FOR THE PROTECTION OF THE GOVERNMENT AND THE ISSUANCE OF AN INVITATION FOR BIDS DOES NOT CARRY WITH IT ANY LEGAL OBLIGATION TO ACCEPT ANY OF THE BIDS RECEIVED INCLUDING THE LOWEST RESPONSIBLE AND RESPONSIVE BID. B-126211, JANUARY 9, 1956.

WE HAVE HELD THAT:

"* * * 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. * *" (36 COMP. GEN. 364, 365)

CONTRACTING OFFICERS ARE CLOTHED WITH BROAD POWERS OF DISCRETION IN DECIDING WHETHER AN INVITATION FOR BIDS SHOULD OR SHOULD NOT BE CANCELLED AND OUR OFFICE WILL NOT INTERFERE WITH SUCH A DETERMINATION UNLESS IT IS ARBITRARY OR CAPRICIOUS AND NOT BASED ON SUBSTANTIAL EVIDENCE. 39 COMP. GEN. 396.

YOU CONTEND THAT THE GOVERNMENT UNDER PRIOR SOLICITATIONS FOR THE SAME ITEM RELIED ON THE BENDIX AND VERNITRON BIDS TO PROVIDE EFFECTIVE PRICE COMPETITION AND THAT THE BENDIX PRICES, WHICH HAVE BEEN CONSISTENT, THEREFORE, WERE NOT CONSIDERED "UNREASONABLY HIGH" . WE CANNOT AGREE WITH YOUR CONTENTION THAT THE CONTINUED SOLICITATION OF BIDS FROM BENDIX FOR THIS ITEM IMPORTS ANY DETERMINATION THAT THE PRICES BID BY BENDIX WERE REASONABLE. THE BASES FOR SOLICITING BIDS, SET OUT AT ASPR 2.205, DO NOT INCLUDE ANY CONSIDERATION OF THE REASONABLENESS OF PRICES SUBMITTED ON PRIOR SOLICITATIONS. A DETERMINATION NORMALLY NEED BE MADE ONLY AS TO THE REASONABLENESS OF THE LOW RESPONSIVE BID. IF THAT BID IS CONSIDERED REASONABLE, THE REASONABLENESS OF HIGHER BIDS IS IMMATERIAL. WHERE THERE IS BUT ONE BID, ITS REASONABLENESS, INSOFAR AS THE GOVERNMENT IS CONCERNED, MAY PROPERLY BE DETERMINED BY COMPARISON WITH PRICES PAID ON PROCUREMENTS OF THE SAME ITEM, OR ON THE CURRENT PRICE IN THE MARKET PLACE, GIVING CONSIDERATION TO THE VOLUME PURCHASED. HERE THE PRICE BID ON THE READVERTISED SOLICITATION COMPARED FAVORABLY WITH PROCUREMENTS MADE WITHIN THE IMMEDIATELY PRECEEDING TEN MONTHS.

IN THE CIRCUMSTANCES WE FIND THAT CANCELLATION OF THE INVITATION WAS A REASONABLE EXERCISE OF THE ADMINISTRATIVE DISCRETION.