B-167194, AUGUST 29, 1969, 49 COMP. GEN. 135

B-167194: Aug 29, 1969

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OR RENTAL OF MICROFICHE READER-PRINTER UNITS TO PROVIDE FOR THE EVALUATION OF AND REQUEST A DELIVERY DATE FOR COPY PAPER NEEDED FOR THE UNITS ON WHICH INFORMATION AND PRICES WERE SOLICITED. IS THE "COMPELLING" REASON CONTEMPLATED BY SECTION 1-2.404-1 OF THE FEDERAL PROCUREMENT REGULATIONS FOR THE CANCELLATION OF AN INVITATION AFTER BID OPENING. ALTHOUGH THE CANCELLATION OF THE INVITATION AFTER THE DISCLOSURE OF BID PRICES IS REGRETTABLE. THE INVITATION IN NOT PROVIDING FOR CONSIDERATION OF ALL FACTORS OF COST WAS A DEFECTIVE INVITATION. 1969: FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST CANCELLATION OF INVITATION FOR BIDS NO. THE CANCELED INVITATION WAS ISSUED ON JANUARY 8. SINCE THE SOCIAL SECURITY ADMINISTRATION PERSONNEL WHO WERE TO USE THE EQUIPMENT AND WHO EVALUATED THE BIDS CONSIDERED THE COST OF THE COPY PAPER A VERY SIGNIFICANT FACTOR IN SELECTION OF THE EQUIPMENT BECAUSE THE TOTAL COST WOULD INCLUDE THE COST OF THE COPY PAPER AND SINCE THIS FACTOR COULD NOT BE CONSIDERED UNDER THE INVITATION AS DRAWN.

B-167194, AUGUST 29, 1969, 49 COMP. GEN. 135

BIDS -- DISCARDING ALL BIDS -- COMPELLING REASONS ONLY THE FAILURE OF THE INVITATION FOR THE PURCHASE, LEASE-PURCHASE, OR RENTAL OF MICROFICHE READER-PRINTER UNITS TO PROVIDE FOR THE EVALUATION OF AND REQUEST A DELIVERY DATE FOR COPY PAPER NEEDED FOR THE UNITS ON WHICH INFORMATION AND PRICES WERE SOLICITED, OR TO ESTABLISH A LEASE PERIOD, IS THE "COMPELLING" REASON CONTEMPLATED BY SECTION 1-2.404-1 OF THE FEDERAL PROCUREMENT REGULATIONS FOR THE CANCELLATION OF AN INVITATION AFTER BID OPENING. ALTHOUGH THE CANCELLATION OF THE INVITATION AFTER THE DISCLOSURE OF BID PRICES IS REGRETTABLE, THE INVITATION IN NOT PROVIDING FOR CONSIDERATION OF ALL FACTORS OF COST WAS A DEFECTIVE INVITATION, AND TO AWARD A CONTRACT FOR THE READER PRINTER UNITS WITHOUT REGARD TO THE COST OF THE PAPER WOULD NOT BE IN THE BEST INTERESTS OF THE GOVERNMENT.

TO THE MINNESOTA MINING AND MANUFACTURING COMPANY, AUGUST 29, 1969:

FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST CANCELLATION OF INVITATION FOR BIDS NO. SSP69-17, ISSUED BY THE SOCIAL SECURITY ADMINISTRATION FOR THE PROCUREMENT OF 1,000 MICROFICHE READER-PRINTER UNITS.

THE CANCELED INVITATION WAS ISSUED ON JANUARY 8, 1969, WITH A CLOSING DATE OF JANUARY 23, 1969, AND PROVIDED THAT THE RESULTING CONTRACT WOULD BE FOR THE PURCHASE, LEASE-PURCHASE, OR RENTAL OF THE MACHINES. THE INVITATION INCLUDED SPECIFICATIONS FOR THE COPY PAPER AND RELATED SUPPLIES TO BE USED WITH THE MACHINES AND ESTIMATED THAT APPROXIMATELY 15 MILLION SHEETS OF COPY PAPER WOULD BE REQUIRED ANNUALLY FOR OPERATION OF THE 1,000 MACHINES. THE INVITATION ALSO REQUESTED THE COST AND SHELF LIFE OF THE COPY PAPER. HOWEVER, PARAGRAPH X, BASIS OF AWARD, OF THE INVITATION DID NOT PROVIDE FOR AWARD OF A CONTRACT FOR THE COPY PAPER AND IT DID NOT PROVIDE FOR CONSIDERATION OF THE COST OF COPY PAPER AS A FACTOR IN EVALUATING BIDS.

THE COMMITTEE EVALUATING THE BIDS CONSIDERED THE COST OF THE COPY PAPER IN ITS EVALUATION. HOWEVER, THE OFFICE OF THE GENERAL COUNSEL, DEPARTMENT OF HEALTH, EDUCATION AND WELFARE, ADVISED THE CONTRACTING OFFICER THAT THIS FACTOR COULD NOT BE CONSIDERED IN THE EVALUATION BECAUSE THE INVITATION DID NOT SO PROVIDE. SINCE THE SOCIAL SECURITY ADMINISTRATION PERSONNEL WHO WERE TO USE THE EQUIPMENT AND WHO EVALUATED THE BIDS CONSIDERED THE COST OF THE COPY PAPER A VERY SIGNIFICANT FACTOR IN SELECTION OF THE EQUIPMENT BECAUSE THE TOTAL COST WOULD INCLUDE THE COST OF THE COPY PAPER AND SINCE THIS FACTOR COULD NOT BE CONSIDERED UNDER THE INVITATION AS DRAWN, THE CONTRACTING OFFICER CANCELED THE INVITATION ON MAY 15, 1969. IN ADDITION TO THIS DEFICIENCY, THE CONTRACTING OFFICER IS OF THE OPINION THAT THE DELIVERY CLAUSE WAS DEFICIENT BECAUSE IT PERMITTED BIDDERS TO SPECIFY AN UNLIMITED DELIVERY PERIOD. HE ALSO STATES HIS VIEW THAT THE CLAUSE CONCERNING RENTAL IS AMBIGUOUS BECAUSE IT DOES NOT SPECIFY THE LEASE PERIOD. A NEW INVITATION WAS ISSUED ON JUNE 2, 1969, CORRECTING THESE DEFICIENCIES. THE NEW INVITATION SETS FORTH A METHOD OF EVALUATING BIDS ON THE BASIS OF OVERALL COST, INCLUDING COST OF THE EQUIPMENT AND SUPPLIES. IT ALSO PROVIDES FOR THE SUBMISSION OF BIDS AND THE AWARD OF A CONTRACT FOR SUPPLIES. ALTHOUGH BIDS HAVE BEEN OPENED AND EVALUATED, NO AWARD HAS YET BEEN MADE.

IT IS YOUR PRIMARY CONTENTION THAT THE FACTS DO NOT SUPPORT THE CONTRACTING OFFICER'S POSITION THAT THERE WAS A NEED TO "RECONSIDER ALL COST FACTORS." IN THIS CONNECTION, YOU PRESENTED STATISTICAL DATA TO AGENCY PERSONNEL ILLUSTRATING THAT UNDER ANY OF THE PROPOSED METHODS OF PROCUREMENT YOUR BID PRICES FOR THE EQUIPMENT AND SUPPLIES ARE LOWER THAN THE OTHER BIDS SUBMITTED. YOU HAVE SUBMITTED THIS DATA TO OUR OFFICE. USING THE BID PRICES FOR YOUR EQUIPMENT AND SUPPLIES AS COMPARED TO BELL & HOWELL'S BID PRICES FOR ITS EQUIPMENT AND SUPPLIES, PROJECTED FOR 5 YEARS, YOU DEMONSTRATE THAT UNDER EITHER METHOD OF PROCUREMENT THE TOTAL COST TO THE GOVERNMENT OF YOUR EQUIPMENT AND SUPPLIES IS MORE THAN $400,000 LOWER. YOU CONTEND THAT IN THESE CIRCUMSTANCES, CANCELLATION AND READVERTISEMENT WAS NOT CONSISTENT WITH FEDERAL PROCUREMENT REGULATION 1- 2.404-1(A), WHICH REQUIRES A COMPELLING REASON AS JUSTIFICATION FOR CANCELLATION. IN THIS CONNECTION, YOU CONTEND THAT IT WAS IMPLIED THROUGHOUT THE INVITATION THAT SUPPLY COSTS WERE AN IMPORTANT FACTOR AND WOULD BE GIVEN WEIGHT IN THE EVALUATION.

IN ADDITION, YOU CONTEND THAT THE REQUIREMENT OF FPR 1-2.404-1(A) THAT EVERY EFFORT BE MADE TO ANTICIPATE CHANGES IN THE INVITATION PRIOR TO OPENING WAS NOT COMPLIED WITH SINCE THE INVITATION CLEARLY INDICATED THAT THE COST OF SUPPLIES WAS AN ANTICIPATED REQUIREMENT AND, THEREFORE, THE INVITATION SHOULD HAVE PROVIDED FOR THEIR CONSIDERATION AND EVALUATION. THE AGENCY'S FAILURE IN THIS REGARD HAS, YOU ARGUE, RESULTED IN EXPOSURE OF YOUR BID PRICE AND SHOULD NOT BE ALLOWED AS JUSTIFICATION FOR CANCELLATION. IN THIS REGARD, YOU CONTEND THAT CANCELING THE INVITATION AFTER EXPOSURE OF YOUR PRICES WOULD BE CONTRARY TO THE PRINCIPLES OF IMPARTIALITY AND FAIR PLAY IMPLICIT IN THE COMPETITIVE BIDDING SYSTEM AS ENUNCIATED IN 36 COMP. GEN. 364 (1956).

THE AUTHORITY FOR CANCELLATION IN THE CIRCUMSTANCES PRESENTED HERE IS FPR 1-2.404-1, WHICH PERMITS CANCELLATION OF AN INVITATION AFTER BID OPENING ONLY FOR "COMPELLING" REASONS SUCH AS THOSE NOTED IN SUBSECTION (B) THEREOF. SUBSECTION (B)(3) PROVIDES THAT CANCELLATION IS IN THE BEST INTEREST OF THE GOVERNMENT WHERE--

THE INVITATION FOR BIDS DID NOT PROVIDE FOR CONSIDERATION OF ALL FACTORS OF COST TO THE GOVERNMENT *** CONTRACTING OFFICERS ARE CLOTHED WITH BROAD POWERS OF DISCRETION IN DECIDING WHETHER AN INVITATION SHOULD OR SHOULD NOT BE CANCELED AND THIS OFFICE WILL NOT INTERFERE WITH SUCH DETERMINATION UNLESS IT IS ARBITRARY OR CAPRICIOUS OR NOT BASED UPON SUBSTANTIAL EVIDENCE. 39 COMP. GEN. 396,399 (1959).

IN THE INSTANT CASE, THE CONTRACTING OFFICER BASED HIS DECISION ON THE ADVICE OF THE AGENCY PERSONNEL WHO WILL USE THE EQUIPMENT AND WHO WERE RESPONSIBLE FOR EVALUATING THE BIDS AND ON THE OPINION OF THE OFFICE OF THE GENERAL COUNSEL, DEPARTMENT OF HEALTH, EDUCATION AND WELFARE. THE FORMER ADVISED HIM THAT BECAUSE THE COST OF COPY PAPER WAS SIGNIFICANT AND HAD A BEARING ON THE TOTAL COST TO THE GOVERNMENT IT SHOULD BE CONSIDERED IN DETERMINING THE EQUIPMENT TO PROCURE. THE OFFICE OF THE GENERAL COUNSEL ADVISED HIM THAT IT COULD NOT BE TAKEN INTO ACCOUNT UNDER THE SUBJECT INVITATION. THEREFORE, HE DETERMINED THAT THE INVITATION SHOULD BE CANCELED IN THE BEST INTEREST OF THE GOVERNMENT AND SO NOTIFIED THE BIDDERS.

WE SEE NO BASIS FOR QUESTIONING THE CONTRACTING OFFICER'S DECISION. ALTHOUGH THE INVITATION REQUESTED CERTAIN INFORMATION CONCERNING THE COPY PAPER, INCLUDING THE BIDDER'S PRICE, PARAGRAPH X, BASIS OF AWARD, SPECIFICALLY STATED THE FACTORS TO BE CONSIDERED IN EVALUATING THE BIDS AND COST OF THE COPY PAPER WAS NOT ONE OF THEM. THEREFORE, DETERMINATION OF THE LOW BIDDER UNDER THE INVITATION WOULD HAVE BEEN REQUIRED TO BE DETERMINED WITHOUT REGARD TO THE COST OF COPY PAPER. WITH REGARD TO THE EFFECT THE COST OF COPY PAPER COULD HAVE ON THE TOTAL COST TO THE GOVERNMENT, THE CONTRACTING OFFICER HAS FURNISHED US INFORMATION WHICH INDICATES THAT COPY PAPER COMPATIBLE WITH OTHER BIDDERS' EQUIPMENT CAN BE PURCHASED IN THE QUANTITIES ESTIMATED IN THE INVITATION FOR MORE THAN $220,000 LESS PER YEAR THAN THE AMOUNT QUOTED IN YOUR BID. FURTHERMORE, THERE WAS NO LEGAL OBLIGATION ON THE PART OF BIDDERS TO SELL ANY PAPER AT THE PRICES QUOTED. IN THESE CIRCUMSTANCES, WE AGREE WITH THE DETERMINATION THAT THERE WAS A "COMPELLING" REASON FOR CANCELLATION AND READVERTISEMENT.

ALTHOUGH IT IS REGRETTABLE THAT THE INVITATION WAS DEFECTIVE IN THIS RESPECT, AND THE BID PRICES WERE DISCLOSED, THIS DOES NOT REQUIRE AWARD WHERE IT WOULD BE CONTRARY TO THE GOVERNMENT'S BEST INTEREST. IT HAS BEEN HELD THAT AN INVITATION FOR BIDS DOES NOT IMPORT ANY OBLIGATION TO ACCEPT ANY OF THE BIDS RECEIVED. 41 COMP. GEN. 709, 711 (1962). MOREOVER, UNDER PARAGRAPH 10 OF THE SOLICITATION INSTRUCTIONS AND CONDITIONS, THE GOVERNMENT SPECIFICALLY RESERVED THE RIGHT TO REJECT ANY AND ALL BIDS. WHILE WE SUBSCRIBE TO THE "PRINCIPLES OF IMPARTIALITY AND FAIR PLAY" AS STATED IN 36 COMP. GEN. 364, IT SHOULD ALSO BE NOTED THAT WE STATED 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 *** "

IN VIEW OF OUR CONCLUSION THAT THE INVITATION WAS DEFECTIVE FOR THE FOREGOING REASON, IT IS NOT NECESSARY THAT WE MAKE A DECISION AS TO THE SUFFICIENCY OF THE DELIVERY AND RENTAL PROVISIONS.

ACCORDINGLY, WE FIND NO BAISS UPON WHICH OUR OFFICE MAY PROPERLY OBJECT TO CANCELLATION OF THE INVITATION AND READVERTISEMENT OF THE PROCUREMENT.