B-167299, AUG. 11, 1969

B-167299: Aug 11, 1969

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CANCELLATION OF INVITATION BECAUSE BID PRICES WERE UNREASONABLY HIGH MAY NOT BE REGARDED AS AN ABUSE OF ADMINISTRATIVE DISCRETION WHERE RECORD SHOWS THAT PROTESTANT'S BID WAS SUBSTANTIALLY OVER GOVERNMENT ESTIMATE. A BIDDER WHO OFFERS TO REDUCE HIS BID PRICE AFTER CONTRACTING OFFICER DETERMINED PRICES WERE UNREASONABLY HIGH AND CANCELED INVITATION MAY NOT BE REGARDED AS AN "OTHERWISE SUCCESSFUL" OFFEROR UNDER ASPR 2-305 WHICH CONTEMPLATES MODIFICATIONS BY OFFERORS WHO ARE OTHERWISE IN LINE FOR AWARD BEFORE THE MODIFICATION IS RECEIVED. TO METALS AND CONTROLS INC.: REFERENCE IS MADE TO YOUR TELEGRAMS DATED JUNE 23 AND 24. WAS THE SECOND INVITATION ISSUED FOR THE REQUIREMENT. THE FIRST INVITATION HAVING BEEN CANCELED ON THE BASIS THAT THE ONLY RESPONSIVE BID RECEIVED WAS EXCESSIVE IN PRICE.

B-167299, AUG. 11, 1969

BID PROTEST - INVITATION CANCELLATION DECISION TO METALS AND CONTROLS, INC., DENYING PROTEST AGAINST CANCELLATION OF INVITATION FOR METAL BULLET JACKET CUPS FOR ARMY PROCUREMENT AGENCY. CANCELLATION OF INVITATION BECAUSE BID PRICES WERE UNREASONABLY HIGH MAY NOT BE REGARDED AS AN ABUSE OF ADMINISTRATIVE DISCRETION WHERE RECORD SHOWS THAT PROTESTANT'S BID WAS SUBSTANTIALLY OVER GOVERNMENT ESTIMATE. A BIDDER WHO OFFERS TO REDUCE HIS BID PRICE AFTER CONTRACTING OFFICER DETERMINED PRICES WERE UNREASONABLY HIGH AND CANCELED INVITATION MAY NOT BE REGARDED AS AN "OTHERWISE SUCCESSFUL" OFFEROR UNDER ASPR 2-305 WHICH CONTEMPLATES MODIFICATIONS BY OFFERORS WHO ARE OTHERWISE IN LINE FOR AWARD BEFORE THE MODIFICATION IS RECEIVED. A BID DETERMINED TO BE UNREASONABLY HIGH AND FOR REJECTION CANNOT BE A BID OF AN "OTHERWISE SUCCESSFUL OFFEROR.'

TO METALS AND CONTROLS INC.:

REFERENCE IS MADE TO YOUR TELEGRAMS DATED JUNE 23 AND 24, 1969, AND TO YOUR LETTER DATED JUNE 23, 1969, PROTESTING THE CANCELLATION OF INVITATION FOR BIDS DAAG31-69-B-0201, ISSUED BY THE UNITED STATES ARMY CINCINNATI PROCUREMENT AGENCY.

THE SUBJECT INVITATION, FOR 462,000 POUNDS OF METAL BULLET JACKET CUPS, WAS THE SECOND INVITATION ISSUED FOR THE REQUIREMENT, THE FIRST INVITATION HAVING BEEN CANCELED ON THE BASIS THAT THE ONLY RESPONSIVE BID RECEIVED WAS EXCESSIVE IN PRICE. THE BID OF METALS AND CONTROLS INC., UNDER THE FIRST INVITATION WAS IN THE TOTAL AMOUNT OF $353,476.20, BUT THIS BID WAS REJECTED AS NONRESPONSIVE TO THE INVITATION PACKAGING REQUIREMENTS. THE FOUR BIDS RECEIVED IN RESPONSE TO THE SECOND INVITATION BY THE BID OPENING DATE OF JUNE 13, 1969, THE TWO LOWER BIDS, IN THE TOTAL AMOUNTS OF $351,951.80 AND $362,993.40, WERE REJECTED AS NONRESPONSIVE BECAUSE THE BIDDERS TOOK EXCEPTION TO THE INVITATION DELIVERY REQUIREMENTS CALLING FOR DELIVERY OF THE ENTIRE INVITATION QUANTITY WITHIN 120 DAYS OF THE AWARD. THE BID OF METALS AND CONTROLS INC., IN THE TOTAL AMOUNT OF $373,342.20, WAS THE LOWEST RESPONSIVE BID AND THE OTHER RESPONSIVE BID RECEIVED WAS IN THE TOTAL AMOUNT OF $447,216.

BECAUSE THE METALS AND CONTROLS BID WAS $21,390.40 MORE THAN THE LOW NONRESPONSIVE BID AND $51,142.20 IN EXCESS OF THE GOVERNMENT ESTIMATE, B- 167299 IT WAS DETERMINED IN ACCORDANCE WITH ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2-404.1 (B) (VI) THAT THE TWO RESPONSIVE BIDS SHOULD BE REJECTED ON THE BASIS OF UNREASONABLE PRICE. ACCORDINGLY, AFTER A DETERMINATION WAS MADE THAT SO LONG AS INITIAL DELIVERIES COULD BE MADE IN SEPTEMBER 1969, A STAGGERED DELIVERY SCHEDULE, AS OPPOSED TO THE PREVIOUS REQUIREMENT OF DELIVERY OF ALL UNITS WITHIN 120 DAYS, WOULD BE PERMISSIBLE. THEREAFTER, THE SECOND INVITATION WAS CANCELED AND NEGOTIATIONS WERE INSTITUTED PURSUANT TO ASPR 3-202.2, THE PUBLIC EXIGENCY EXCEPTION TO THE FORMAL ADVERTISING REQUIREMENT, WITH THE FOUR BIDDERS WHO RESPONDED TO THE SECOND INVITATION. JUNE 26, 1969, WAS ESTABLISHED AS THE CUTOFF DATE FOR THE SUBMISSION OF BEST AND FINAL OFFERS UNDER REQUEST FOR PROPOSALS (RFP) DAAG31-69-R-0953, WHEREUNDER ORAL QUOTATIONS WERE REQUESTED ON OR ABOUT JUNE 19, 1969. AWARD UNDER THE RFP HAS BEEN SUSPENDED PENDING RESOLUTION OF YOUR PROTEST.

YOUR PROTEST IS TO THE EFFECT THAT THE DIFFERENCE BETWEEN THE METALS AND CONTROLS BID AND THE TWO LOWER, NONRESPONSIVE BIDS UNDER THE SECOND INVITATION WAS NOT SO GREAT AS TO REQUIRE THE CONCLUSION THAT YOUR BID WAS "UNREASONABLE" AS TO PRICE, PARTICULARLY IN VIEW OF THE FACT THAT THE TWO LOWER BIDS DID NOT PROPOSE TO MEET THE DELIVERY REQUIREMENT. ADDITIONALLY, BY YOUR TELEGRAM DATED JUNE 23, 1969, YOU OFFERED TO REDUCE YOUR BID PRICE TO $349,687.80, IN ACCORDANCE WITH THE PROVISION CONTAINED IN PARAGRAPH 8 (A) OF THE SOLICITATION INSTRUCTIONS AND CONDITIONS THAT,"A MODIFICATION OF AN OFFER WHICH MAKES THE TERMS OF THE OTHERWISE SUCCESSFUL OFFER MORE FAVORABLE TO THE GOVERNMENT WILL BE CONSIDERED AT ANY TIME IT IS RECEIVED AND MAY THEREAFTER BE ACCEPTED.' YOU ALSO SUBMITTED THE SAME PRICE IN RESPONSE TO THE RFP.

IN JUSTIFICATION OF THE CANCELLATION OF THE SECOND INVITATION, THE REPORT SUBMITTED TO OUR OFFICE BY THE DEPARTMENT OF THE ARMY POINTS OUT THAT THE METALS AND CONTROLS BID UNDER INVITATION FOR BIDS DAAG31-69-B 0116, THE ORIGINAL INVITATION FOR THE SUBJECT REQUIREMENT, WAS $353,476.20 OR $19,866 LOWER THAN THE METALS AND CONTROLS BID UNDER THE SECOND INVITATION. WE NOTE, IN THIS REGARD, THAT THE REQUIREMENTS, INCLUDING THE DELIVERY REQUIREMENTS, UNDER BOTH INVITATIONS WERE SUBSTANTIALLY THE SAME. THE REPORT ALSO MENTIONS THE REDUCTION ($23,654.40) IN THE METALS AND CONTROLS PRICE WHICH WAS THE SUBJECT OF THE JUNE 23 TELEGRAM, MENTIONED ABOVE, AS AN INDICATION THAT THE PRICE ORIGINALLY OFFERED BY IT UNDER THE SECOND INVITATION WAS UNREASONABLY HIGH. FINALLY, THE REPORT STATES THAT CANCELLATION OF THE SECOND INVITATION WAS NOT ACCOMPLISHED UNTIL IT WAS DETERMINED THAT A STAGGERED DELIVERY SCHEDULE WOULD SATISFY THE URGENT DELIVERY REQUIREMENT. THE DETERMINATION SUPPORTING THE CANCELLATION READS AS FOLLOWS: "1. IT HAS BEEN DETERMINED THAT IT IS TO THE BEST INTEREST OF THE GOVERNMENT THAT SUBJECT IFB BE CANCELLED.'2. THE IFB FOR 462,000 POUNDS OF CUP, BULLET JACKET OPENED 13 JUNE 1969 WITH FOUR BIDDERS. THE TWO LOW BIDDERS, REVERE COPPER AND BRASS, INC., AT $0.7857 PER LB, AND ANACONDA AMERICAN BRASS CO., AT $0.7618 PER POUND WERE BOTH NON RESPONSIVE IN ACCORDANCE WITH ASPR 2-404.2 (C), BOTH COMPANIES HAVING TAKEN EXCEPTION TO THE DELIVERY SCHEDULE. THE TWO HIGHER BIDDERS, METALS AND CONTROLS, INC., AT $0.8081, AND WHALEY MACHINE PRODUCTS CO., INC., AT $0.0968 PER LB., WERE NOT ACCEPTED IN ACCORDANCE WITH ASPR 2 404.1 (B) (VI), INASMUCH AS THEIR PRICES WERE CONSIDERED EXCESSIVE. THE DIFFERENCE IN TOTAL COST BETWEEN THE LOW BIDDERS AND THE THIRD LOW BIDDER AMOUNTED TO $21,390.60.'3. AFTER CANCELLATION, IT IS ANTICIPATED THAT THE REQUIREMENT WILL BE NEGOTIATED IN ACCORDANCE WITH ASPR 3-202.2 (VI), INASMUCH AS TIME REMAINING IS NOT SUFFICIENT TO GET SHIPMENT TO THE DESTINATION BY THE REQUIRED DATE IF FORMAL ADVERTISING IS USED. * * *"

WHILE IT IS THE GENERAL RULE, AS STATED IN ASPR 2-404.1, THAT INVITATIONS SHOULD BE CANCELED AFTER OPENING ONLY FOR COGENT AND COMPELLING REASONS, THERE NECESSARILY IS RESERVED IN THE CONTRACTING OFFICIALS A SUBSTANTIAL AMOUNT OF DISCRETION IN DETERMINING WHETHER OR NOT AN INVITATION SHOULD BE CANCELED. IN THIS REGARD, OUR OFFICE HAS CONSISTENTLY HELD THAT A DETERMINATION TO CANCEL AN INVITATION IS SUBJECT TO QUESTION ONLY WHERE SUCH DETERMINATION IS ARBITRARY OR CAPRICIOUS AND NOT BASED ON SUBSTANTIAL EVIDENCE. 39 COMP. GEN. 396. THAT SUCH DETERMINATION IS NOT OPEN TO OBJECTION BY OUR OFFICE IS EVIDENCED BY THE FOLLOWING EXTRACTS TAKEN FROM THE ARMY REPORT:

"B. THE HISTORY OF THE PROCUREMENT INDICATES THAT PROTESTOR ALONE OF THE OFFERORS INVOLVED IN THE THREE SOLICITATIONS, SUBMITTED OFFERS IN EACH INSTANCE, AND WAS BY ITS OWN INDIVIDUAL BIDS INSTRUMENTAL IN ESTABLISHING PRICES BOTH FOR COMPARISON AS WELL AS COMPETITIVE PURPOSES. AT THE OUTSET UNDER IFB NO. 69-B-0116, IN WHICH THE PROTESTOR WAS DECLARED NONRESPONSIVE, ITS TOTAL BID WAS $353,476.50. * * * ON IFB NO. 69-B-0201, WHICH THE CANCELLATION THEREOF IT PROTESTS, ITS BID WAS $373,342.20. * * * FURTHER AFTER THE CANCELLATION OF THE IFB NO. 69-B-0201 ON 19 JUNE 1969, THE PROTESTOR ON 24 JUNE 1969 REDUCED ITS TOTAL BID PRICE TO $349,687.80 ON SAID CANCELLED INVITATION FOR BID. * * * THE DIFFERENCE BETWEEN THE PROTESTOR'S LOW AND HIGH OFFERS ON THE THREE SOLICITATIONS IS $23,654.40. CONSIDERING ONLY IFB NO. 69-B-0116 IN WHICH PROTESTOR ITSELF WAS NONRESPONSIVE, AND IFB NO. 69-B-0201, WHICH CANCELLATION METALS AND CONTROLS INC. NOW PROTESTS, THE TOTAL PRICE OFFERED ON THE FIRST GO-AROUND WAS $20,866.00 LESS THAN ON IFB NO. 69-B-0201. PROTESTOR'S WILLINGNESS TO VOLUNTARILY REDUCE ITS OFFER TO $349,687.80 ON CANCELLED IFB NO. 69-B-0201 FURTHER EVIDENCES THAT PROTESTOR'S OWN ACTIONS SUPPORTS THE CONTRACTING OFFICER'S JUDGMENT IN CANCELLING IFB NO. 69-B-0201 BASED ON UNREASONABLE PRICES OF THE OTHER RESPONSIVE OFFERORS.

"C. ASIDE FROM THE PROTESTOR'S OWN PRICING ACTION ON THE THREE SOLICITATIONS, THE RECORD IN THE ABSENCE OF AVAILABLE PRIOR PROCUREMENT HISTORY INDICATES A GOVERNMENT ESTIMATE OF $322,200.00 B-167299 * * * AND THE BID PRICES OF TWO NONRESPONSIVE BIDDERS UNDER IFB NO.69-B-0201, ANACONDA AMERICAN BRASS COMPANY AT $351,951.80 * * * AND REVERE COPPER AND BRASS INC. * * * TO GUIDE THE CONTRACTING OFFICER IN HIS DETERMINATION OF REASONABLENESS OF PRICE. HERE AGAIN A DIFFERENCE OF $51,142.20 EXISTS BETWEEN PROTESTOR'S OFFER AND THE GOVERNMENT ESTIMATE UNDER IFB NO.69-B- 0201, AND A DIFFERENCE OF $21,390.40 EXISTS BETWEEN PROTESTOR'S OFFER AND THE LOWEST PRICE OFFERED BY ANACONDA AMERICAN BRASS UNDER THE SAME INVITATION FOR BID. THUS A PRICE COMPARISON OF BIDS FOSTERED BY COMPETITION INDICATE THE SAME DISPARITY IN PRICE OFFERED BY PROTESTOR AND ITS COMPETITORS. THIS DISPARITY IS FURTHER AGGRAVATED IF COMPARISON BE MADE BETWEEN PROTESTOR'S BID AND THE GOVERNMENT ESTIMATE. NOTHING IN PROCUREMENT REGULATIONS REQUIRE THE CONTRACTING OFFICER TO CLOSE HIS EYES TO PRICES OFFERED IN TIMELY NONRESPONSIVE BIDS OR PREVENTS HIM FROM USING SUCH COMPARISON IN DETERMINING REASONABLENESS OF PRICE.

"D. * * * THE SUM OF $21,390.40 IN EFFECT REPRESENTS A 6.02 PERCENT PREMIUM CHARGE THE GOVERNMENT WOULD HAVE PAID HAD AN AWARD BEEN MADE TO PROTESTOR UNDER IFB NO.69-B-0201. SUCH AWARD, HAD IT BEEN MADE, WOULD ALSO HAVE BEEN 15.81 PERCENT OVER THE GOVERNMENT'S OWN ESTIMATE. CONTRACTING OFFICER'S VERY ACT OF CANCELLING IFB NO.69-B-0201 DUE TO EXCESSIVE PRICES PROMPTED PROTESTOR TO VOLUNTARILY REDUCE ITS PRICE ON SAID INVITATION FOR BID BY THE SUM OF $23,654.40. SUCH REDUCTION WOULD HAVE REPRESENTED A SAVINGS TO THE GOVERNMENT, NOT ONLY OF THE 6.02 PERCENT, BUT AN ADDITIONAL $2,310.20 TO BRING PROTESTOR'S REVISED OFFER BELOW THAT OFFERED BY THE LOWEST OFFEROR PREVIOUSLY DETERMINED TO BE NONRESPONSIVE.' WE CANNOT CONCLUDE THAT THE REASONS RELIED ON BY THE CONTRACTING OFFICER, SUMMARIZED ABOVE, IN DETERMINING THAT THE METALS AND CONTROLS BID UNDER THE SECOND INVITATION WAS UNREASONABLY HIGH WAS AN ABUSE OF ADMINISTRATIVE DISCRETION. B-167299

CONCERNING YOUR OFFER TO REDUCE YOUR BID PRICE ON THE SECOND INVITATION ON THE THEORY THAT SUCH A REDUCTION IS PERMISSIBLE BECAUSE METALS AND CONTROLS IS THE "OTHERWISE SUCCESSFUL" OFFEROR, WE MUST CONCLUDE THAT SUCH A REDUCTION IS NOT FOR CONSIDERATION BECAUSE PARAGRAPH 8 (A) OF THE SOLICITATION INSTRUCTIONS AND CONDITIONS, AS WELL AS ASPR 2-305, CONTEMPLATES MODIFICATIONS BY OFFERORS UNDER ADVERTISED SOLICITATIONS WHO ARE OTHERWISE IN LINE FOR AWARD BEFORE THE MODIFICATION IS RECEIVED. CLEARLY, A BID DETERMINED BY THE CONTRACTING OFFICER TO BE UNREASONABLY HIGH AND THEREFORE FOR REJECTION CANNOT BE SAID TO BE THAT OF THE "OTHERWISE SUCCESSFUL" OFFEROR. SEE ALECK LEITMAN V UNITED STATES, 104 CT. CL. 324; 45 COMP. GEN.228. WE ARE ADVISED, HOWEVER, THAT YOUR REDUCED PRICE IS BEING CONSIDERED AS YOUR BEST AND FINAL OFFER UNDER THE RFP ISSUED AFTER CANCELLATION OF THE INVITATION.

IN ACCORDANCE WITH THE ABOVE CONSIDERATIONS, YOUR PROTEST MUST BE DENIED.