B-167594, SEP 5, 1969

B-167594: Sep 5, 1969

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DETERMINATION AFTER OPENING THAT SPECIFICATIONS CALLED FOR EQUIPMENT THAT WAS NOT SUITABLE TO USE AND WOULD INCREASE THE COST TO THE GOVERNMENT MUST BE REGARDED AS PROPER IN ABSENCE OF ANY INDICATION THAT REJECTION OF BIDS AND REVISION OF SPECIFICATIONS RESULTED IN DISCRIMINATION. INC.: REFERENCE IS MADE TO YOUR LETTER OF JULY 28. YOUR PROTEST IS BASED ON THE CONTENTION THAT THERE IS NO JUSTIFICATION FOR THE CANCELLATION OF THE IFB AND. THE IFB NO. 1505 WAS ISSUED ON MARCH 4. THE TRANSFER SWITCH SHALL REMAIN IN THE 'NORMAL' POSITION AS LONG AS STATION SERVICE IS MAINTAINED AND SHALL TRANSFER THE LOAD TO THE ENGINE GENERATOR UPON FAILURE OF ANY PHASE OF THE NORMAL STATION SERVICE. "E. THE TRANSFER SWITCH SHALL HAVE CONTRACTORS OF ADEQUATE CURRENT CARRYING CAPACITY AT THE SPECIFIED VOLTAGE.

B-167594, SEP 5, 1969

BID PROTEST - CANCELLATION AND READVERTISEMENT - SPECIFICATIONS REVISION DECISION TO POWERPLANT SYSTEMS, INC., LOW BIDDER, DENYING PROTEST AGAINST CANCELLATION OF INVITATION FOR BIDS FOR GENERATOR WITH AUTOMATIC TRANSFER SWITCH FOR BONNEVILLE POWER ADMINISTRATION. DETERMINATION AFTER OPENING THAT SPECIFICATIONS CALLED FOR EQUIPMENT THAT WAS NOT SUITABLE TO USE AND WOULD INCREASE THE COST TO THE GOVERNMENT MUST BE REGARDED AS PROPER IN ABSENCE OF ANY INDICATION THAT REJECTION OF BIDS AND REVISION OF SPECIFICATIONS RESULTED IN DISCRIMINATION.

TO POWERPLANT SYSTEMS, INC.:

REFERENCE IS MADE TO YOUR LETTER OF JULY 28, 1969, WITH ENCLOSURES, PROTESTING AGAINST THE CANCELLATION OF INVITATION FOR BIDS (IFB) NO. 1505, AND READVERTISEMENT OF THE REQUIREMENT UNDER IFB NO. 9145, BY THE BONNEVILLE POWER ADMINISTRATION (BPA). YOUR PROTEST IS BASED ON THE CONTENTION THAT THERE IS NO JUSTIFICATION FOR THE CANCELLATION OF THE IFB AND, THEREFORE, AWARD SHOULD BE MADE TO YOU, AS THE LOW RESPONSIVE AND RESPONSIBLE BIDDER.

THE IFB NO. 1505 WAS ISSUED ON MARCH 4, 1969, AND CALLED FOR BIDS FOR FURNISHING A 175 KVA DIESEL ENGINE GENERATOR SET, MANUFACTURED IN ACCORDANCE WITH BPA SPECIFICATION NO. ED566-01.2-03-69; WHICH INCLUDED A REQUIREMENT FOR AN AUTOMATIC TRANSFER SWITCH.

SECTION 215 SET FORTH A DESCRIPTION OF THE SALIENT FEATURES OF THIS SWITCH, INCLUDING THE FOLLOWING:

"D. THE TRANSFER SWITCH SHALL REMAIN IN THE 'NORMAL' POSITION AS LONG AS STATION SERVICE IS MAINTAINED AND SHALL TRANSFER THE LOAD TO THE ENGINE GENERATOR UPON FAILURE OF ANY PHASE OF THE NORMAL STATION SERVICE. UPON RESTORATION OF STATION SERVICE, THE TRANSFER SWITCH SHALL AGAIN TRANSFER THE LOAD TO THE 'NORMAL' POSITION.

"E. THE TRANSFER SWITCH SHALL HAVE CONTRACTORS OF ADEQUATE CURRENT CARRYING CAPACITY AT THE SPECIFIED VOLTAGE. THE CONTACTS SHALL BE CAPABLE OF CARRYING TWENTY (20) TIMES THE CONTINUOUS RATED CURRENT FOR ONE SECOND WITHOUT MECHANICAL DISTORTION OF CONTACT POLES OR SUPPORTS AND SHALL BE CAPABLE OF INTERRUPTING FIFTEEN (15) TIMES THE CONTINUOUS RATED CURRENT. LOAD CONTACTS SHALL BE SILVER SURFACED AND RATED FOR TWENTY-FOUR (24) HOUR CONTINUOUS DUTY SERVICE AT FULL RATED CURRENT IN AN UNVENTILATED ENCLOSURE. THE LOAD CONTACTS SHALL BE SUITABLE FOR OPERATION WHEN THE LOAD IS AT LEAST 50 PERCENT INDUCTIVE."

IT IS STATED IN THE REPORT OF THE PROCURING AGENCY THAT THESE SPECIFICATIONS WERE PRESCRIBED AS A RESULT OF NUMEROUS COMPLAINTS CONCERNING THE DEFICIENCIES OF A CERTAIN TYPE OF TRANSFER SWITCH FOUND IN THE EXISTING ENGINE GENERATOR UNITS. THESE DEFICIENCIES WERE DESCRIBED IN A MEMORANDUM DATED FEBRUARY 27, 1969, FROM THE ASSISTANT SUBSTATION MAINTENANCE SUPERINTENDENT, WHEREIN IT WAS STATED THAT THE TRANSFER SWITCH IN QUESTION SOMETIMES FAILED TO RETURN TO THE NORMAL POSITION AFTER THE EMERGENCY POWER SHUT OFF. THE TRANSFER SWITCH WOULD TRY TO TRANSFER BUT WOULD HANG UP IN A POSITION MIDWAY BETWEEN EMERGENCY AND NORMAL, WITH RESULTANT BURNED CONTACTS AND A STATION SERVICE OUTAGE.

BIDS WERE OPENED ON APRIL 3, 1969, AND IT APPEARED THAT YOURS WAS THE LOWEST OF THE SEVEN OFFERS RECEIVED. HOWEVER, THE HEAD OF SPECIFICATIONS FOR THE SUBSTATION DESIGN SECTION ADVISED THAT NONE OF THE FIRST FOUR LOW BIDDERS WERE RESPONSIVE TO THE TECHNICAL REQUIREMENTS OF THE INVITATION. THREE OF THESE BIDS, INCLUDING YOURS, WERE FOUND NOT RESPONSIVE BECAUSE OF DEFICIENCIES IN THE AUTOMATIC TRANSFER SWITCHES. THE TRANSFER SWITCH PROPOSED BY YOU WAS THE SAME TYPE AS THOSE FOUND DEFECTIVE IN THE EXISTING ENGINE GENERATORS, AS DESCRIBED IN THE MEMORANDUM OF FEBRUARY 27.

IT IS FURTHER REPORTED THAT BEFORE THE ACCEPTANCE OF THE FIFTH LOWEST BID, WHICH WAS MADE BY A LOCAL FIRM, THE CONTRACTING OFFICER CONCLUDED THAT THE INVITATION INADEQUATELY STATED THE MINIMUM REQUIREMENTS OF THE GOVERNMENT AND CONCLUDED THAT IFB NO. 1505 SHOULD BE CANCELLED AND THE REQUIREMENT READVERTIZED. BPA REPORTS THAT BIDDERS WERE ADVISED OF THIS CANCELLATION AND THE REASONS FOR IT ON MAY 21, 1969.

ON MAY 29, 1969, THE REQUIREMENT WAS READVERTISED UNDER IFB NO. 9145. CONTAINED REVISED SPECIFICATIONS THAT SUBSTANTIALLY CHANGED SECTION 218 OF THE CANCELLED INVITATION, BY REQUIRING THAT TRANSFER SWITCHES PASS ENDURANCE, TEMPERATURE, AND STABILITY TESTS PERFORMED BY A NATIONALLY RECOGNIZED AND INDEPENDENT TEST LABORATORY. THE REASONS ADVANCED FOR THIS DETERMINATION ARE AS FOLLOWS:

"THE PURPOSE OF A TRANSFER SWITCH IS TO AUTOMATICALLY AND RELIABLY CONNECT SUBSTATION EQUIPMENT TO AN EMERGENCY POWER SOURCE (ENGINE GENERATOR) WHEN NORMAL STATION SERVICE POWER IS INTERRUPTED AND TO RECONNECT IT TO ITS NORMAL POWER SOURCES WHEN THE EMERGENCY HAS PASSED. THE ENGINE GENERATOR AND TRANSFER SWITCH WE ARE NOW PROCURING WILL BE USED TO SUPPLY POWER TO ONE OF OUR 500 KV SUBSTATIONS CONTAINING OVER ONE MILLION DOLLARS WORTH OF EXTRA HIGH VOLTAGE EQUIPMENT, ALL OF WHICH IS DEPENDENT ON RELIABLE CONTROL AND OPERATING POWER FOR PROPER PERFORMANCE. IF THE SWITCH DOES NOT WORK PROPERLY, HIGH VOLTAGE EQUIPMENT WILL NOT OPERATE, OR MAY EVEN MISOPERATE, UNDER EMERGENCY CONDITIONS. THUS, WHILE THE PURCHASE PRICE OF A TRANSFER SWITCH IS RELATIVELY SMALL, IT SERVES A FUNCTION WHICH IS CRITICAL TO THE RELIABILITY OF OUR EHV POWER TRANSMISSION NETWORK."

YOUR PROTEST WAS RECEIVED BY BPA ON JUNE 17 AND RESULTED IN RESCHEDULING THE BID OPENING DATE FROM JUNE 20 TO JULY 7, 1969. EIGHT BIDS WERE RECEIVED ON THE RESCHEDULED BID OPENING DATE. YOU DID NOT BID. BPA ADVISED THAT AWARD WILL BE WITHHELD PENDING OUR DECISION.

THE PRINCIPAL ARGUMENT ADVANCED BY YOU IN SUPPORT OF YOUR PROTEST AGAINST CANCELLATION OF THE IFB IS THAT THIS CANCELLATION DUE TO THE DEFECTIVE TRANSFER SWITCH SPECIFICATIONS IS "SIMILAR TO REJECTING APPROVAL OF AN AUTOMOBILE PURCHASE BECAUSE THE REAR VIEW MIRROR BRAND NAME IS NOT DESIRED." YOU MAINTAINED THAT THE TYPE OF TRANSFER SWITCH PROPOSED IN YOUR OFFER MEETS THE SPECIFICATIONS AND THAT YOU EXPERIENCED NO DIFFICULTY WITH THEM. TO CHANGE THE SPECIFICATIONS COVERING ONLY THIS MINOR ITEM OF THE BID, AFTER ALL THE BID PRICES ARE DISCLOSED, PRESENTS AN INVITATION TO "WHO EVER WANTS TO CUT THEIR ORIGINAL BID PRICE BELOW THE DISCLOSED ORIGINAL POWERPLANT SYSTEMS PRICE IN ORDER TO GET THE ORDER."

YOU ALSO IMPLY THAT BPA PREFERS TO AWARD GOVERNMENT CONTRACTS TO LOCAL FIRMS ONLY. YOU CALL OUR ATTENTION TO THE ALLEGED DELAY OF BPA IN ADVISING YOU ABOUT THE STATUS OF YOUR BID, IN THAT FOR SIX WEEKS AFTER THE BID OPENING YOU HAVE RECEIVED NO RESPONSE FROM THE AGENCY, EXCEPT THE ABSTRACT OF BIDS SUBMITTED PURSUANT TO YOUR REQUEST. LASTLY, YOU CONCLUDE THAT BPA ACTION WILL RESULT IN ADDITIONAL COST TO THE GOVERNMENT.

IT HAS CONSISTENTLY BEEN HELD THAT AN INVITATION FOR BIDS DOES NOT IMPART ANY OBLIGATION ON THE GOVERNMENT TO ACCEPT ANY OF THE OFFERS SUBMITTED IN RESPONSE THERETO, AND THAT ALL BIDS MAY BE REJECTED WHERE IT IS DETERMINED TO BE IN THE BEST INTEREST OF THE GOVERNMENT TO DO SO. SEE 17 COMP. GEN. 554; 26 ID. 49; 37 ID. 760; PERKINS V. LUKENS STEEL CO., 310 U.S. 113; O'BRIEN V. CARNEY, 6 F. SUPP. 761; COLORADO PAV. CO. V. MURPHY, 78 F. 28. SUBPARAGARAPH (B) OF 41 U.S.C. 253, THE STATUTORY AUTHORITY GOVERNING FORMALLY ADVERTISED PROCUREMENT BY THE CIVILIAN AGENCIES OF THE GOVERNMENT, PERMITS THE REJECTION OF ALL BIDS WHERE IT IS DETERMINED THAT REJECTION IS IN THE PUBLIC INTEREST. SECTION 1-2.404-1(B) OF THE FEDERAL PROCUREMENT REGULATIONS (FPR) IMPLEMENTING THE STATUTE SETS FORTH EXAMPLES OF PUBLIC INTEREST JUSTIFYING CANCELLATION WHERE "INADEQUATE, AMBIGUOUS OR OTHERWISE DEFICIENT SPECIFICATIONS WERE CITED IN THE INVITATION." MOREOVER, THE RIGHT TO REJECT ALL BIDS WAS SPECIFICALLY RESERVED TO THE GOVERNMENT BY PARAGRAPH 10(B) OF THE SOLICITATION INSTRUCTIONS AND CONDITIONS. FINALLY, THE RESPONSIBILITY FOR MAKING SUCH REJECTION RESTS WITH THE REQUISITIONING AGENCY, AND OUR OFFICE WILL NOT OBJECT TO SUCH ACTION UNLESS THIS DISCRETIONARY POWER HAS BEEN ABUSED. SEE B-165206, JANUARY 8, 1969, B-164520, SEPTEMBER 24, 1968, B-162382, MAY 17, 1968, B 159287, JULY 26, 1966.

WE MUST CONCLUDE THAT THERE HAS BEEN NO SUCH ABUSE OF DISCRETION. BPA DETERMINED AFTER BID OPENING THAT THE SPECIFICATIONS STATED IN THE INVITATION IN SECTION 215 CALLED FOR THE PURCHASE OF AN AUTOMATIC TRANSFER SWITCH WHICH WAS NOT SUITABLE FOR USE AND WOULD INCREASE THE ULTIMATE COST OF THE 175 KVA DIESEL ENGINE GENERATOR SET TO THE GOVERNMENT. ALTHOUGH THE SPECIFICATIONS WERE REVISED, THEY WERE STILL CONSIDERED INADEQUATE BY THE BPA ENGINEERS, WHO DETERMINED THAT TRANSFER SWITCHES MUST BE REQUIRED TO PASS ENDURANCE, TEMPERATURE AND STABILITY TESTS TO ASSURE RELIABILITY. THESE TESTS WERE REQUIRED TO INSURE THAT THE TRANSFER SWITCHES WOULD NOT STICK IN A NEUTRAL POSITION BETWEEN EMERGENCY AND NORMAL. WHEN A SWITCH IS IN A NEUTRAL POSITION, IT MUST BE RESET MANUALLY BEFORE CONTROL AND OPERATING POWER ARE RESTORED TO THE HIGH VOLTAGE EQUIPMENT. IT IS AXIOMATIC THAT WHERE, AS IN THIS CASE, THE PROCUREMENT OF AN UNSUITABLE PRODUCT WOULD RESULT, DUE TO INADEQUATE SPECIFICATIONS, THE CONTRACTING OFFICER WOULD BE DERELICT IN HIS DUTY IF HE FAILED TO CANCEL THE INVITATION. MOREOVER, YOU PROPOSED TO SUPPLY THE SAME TYPE OF TRANSFER SWITCH WHICH WAS FOUND DEFECTIVE AT SEVERAL OF THE BPA SUBSTATIONS IN THE WALLA WALLA AREA. ACCORDING TO THE CHIEF OPERATOR AT GRIZZLY SUBSTATION, THERE WAS A 40 PERCENT FAILURE OF THIS SWITCH SINCE ITS ENERGIZATION. REPROCURE THE SAME TYPE OF TRANSFER SWITCH WOULD BE CLEARLY CONTRARY TO THE BEST INTEREST OF THE GOVERNMENT. ACCORDINGLY, WE CANNOT CONSIDER THE DECISION TO CANCEL THE INVITATION IN THE SUBJECT CASE AS IMPROPER, AND THE ACCEPTANCE OF YOUR BID COULD ONLY HAVE BEEN ACCOMPLISHED BY A WAIVER OF REQUIREMENTS SET OUT IN THE INVITATION FOR BIDS.

ADDITIONALLY, THERE IS NO REQUIREMENT THAT THE UNITED STATES PURCHASE EQUIPMENT MERELY BECAUSE IT IS OFFERED AT A LOWER PRICE. SEE 36 COMP. GEN. 251, AT 252. IN THIS CASE, THE SPECIFICATIONS WERE CHANGED BY REVISING SECTION 218 TO INCORPORATE TEST REQUIREMENTS WHICH RESULTED IN SUBSTANTIALLY HIGHER BIDS RECEIVED UNDER IFB NO. 9145 ISSUED SUBSEQUENT TO THE CANCELLATION OF IFB 1505. THE ABSTRACT OF BIDS UNDER THE EARLIER IFB SHOWS A RANGE OF BIDS FROM $12,240 TO $17,310.06, WHILE UNDER THE NEW IFB THE RANGE WAS $14,465 TO $23,351.85. THIS LEADS TO THE CONCLUSION THAT THE SPECIFICATION CHANGE WAS NOT MINOR, AND THAT THE DISCLOSURE OF THE BID PRICES DID NOT RESULT IN AN INVITATION TO UNDERBID YOU, SINCE THE LOWEST BID UNDER IFB NO. 9145 WAS $2,225 HIGHER THAN YOUR BID. WHETHER PAYMENT OF THE HIGHER BID PRICES UNDER THE READVERTISED PROCUREMENT IS JUSTIFIED BY THE ANTICIPATED ELIMINATION OF THE MALFUNCTIONS ATTRIBUTED TO THE TRANSFER SWITCHES IN THE EXISTING DIESEL ENGINE GENERATOR UNITS IS A MATTER FOR ADMINISTRATIVE DETERMINATION, AND WE FIND NO BASIS FOR QUESTIONING THE DETERMINATION MADE.

CONCERNING YOUR ALLEGATION THAT YOU WERE NOT KEPT INFORMED ABOUT THE STATUS OF YOUR BID, BPA REPORTS THAT YOU WERE ADVISED BY TELEPHONE ON MAY 6, 1969, THREE DAYS AFTER BID OPENING, THAT THE AGENCY WAS CONSIDERING REJECTION OF ALL BIDS AND READVERTISING UNDER REVISED SPECIFICATIONS. APPEARS THAT YOU WERE ALSO FURNISHED TWO COPIES OF THE ABSTRACT OF BIDS.

BY LETTER OF MAY 21, 1969, ADDRESSED TO YOU FROM THE HEAD, PROCUREMENT SECTION, IT WAS STATED THAT "THE SPECIFICATIONS MADE A PART OF THE SOLICITATION DID NOT ADEQUATELY DEFINE THE NEEDS OF THE GOVERNMENT WITH RESPECT TO THE TRANSFER SWITCH REQUIREMENT." WE BELIEVE THAT THE ABOVE NOTICE MET THE REQUIREMENT OF SECTION 1-2.404-3 OF THE FPR WHICH STATES THAT CONTRACTING OFFICERS SHALL NOTIFY EACH BIDDER THAT ALL BIDS HAVE BEEN REJECTED, AND STATED THE REASON FOR SUCH ACTION.

WITH REGARD TO YOUR SUGGESTION THAT BPA IS FAVORABLY BIASED TOWARD LOCAL FIRMS IN AWARDING GOVERNMENT CONTRACTS, WE NOTE THAT THE CANCELLATION OF THE ORIGINAL IFB AFFECTED AT LEAST ONE LOCAL FIRM IN THE SAME WAY AS IT DID YOU. IN ANY EVENT, IT IS OUR OPINION THAT THE PRESENT RECORD DOES NOT SUPPORT YOUR CONTENTION THAT THE REJECTION OF YOUR BID AND REVISION OF THE SPECIFICATIONS RESULTED IN DISCRIMINATION AGAINST YOUR COMPANY.

FOR THE REASONS SET FORTH ABOVE, YOUR PROTEST MUST BE DENIED.