B-167733, FEB. 9, 1970

B-167733: Feb 9, 1970

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BIDDER WHO WAS LOW ON SINGLE YEAR PORTION OF MULTIYEAR PROCUREMENT AND WHO WAS DETERMINED TO LACK PRODUCTION CAPABILITY TO MANUFACTURE ITEM WITHIN TIME TO GUARANTEE DELIVERY MAY NOT HAVE DETERMINATION REGARDED AS ARBITRARY OR CAPRICIOUS OR NOT SUPPORTED BY SUBSTANTIAL EVIDENCE. DETERMINATION IN THIS INSTANCE IS NOT A REFLECTION ON OVERALL BUSINESS REPUTATION OR ABILITY TO PERFORM FUTURE GOVERNMENT WORK. ORIGINAL MULTIYEAR INVITATION WAS CANCELED AND INVITATION REISSUED ON SINGLE-YEAR BASIS. DETERMINATION THAT CANCELLATION IS WARRANTED IS. WITHIN THE RANGE OF DISCRETION RESERVED TO ADMINISTRATIVE AGENCIES AND IS NOT SUBJECT TO QUESTION BY COMPTROLLER GENERAL UNLESS THERE IS CLEAR SHOWING OF ARBITRARY ACTION.

B-167733, FEB. 9, 1970

BID PROTEST--BIDDER RESPONSIBILITY--CANCELLATION OF MULTIYEAR PROCUREMENT DECISION DENYING PROTEST OF CTL-DIXIE, INC; AGAINST AWARD TO ANY OTHER BIDDER FOR FURNISHING PLASTIC WEATHERSHIELDS UNDER A TWO-STEP MULTIYEAR PROCUREMENT FOR NAVAL ORDNANCE STATION. BIDDER WHO WAS LOW ON SINGLE YEAR PORTION OF MULTIYEAR PROCUREMENT AND WHO WAS DETERMINED TO LACK PRODUCTION CAPABILITY TO MANUFACTURE ITEM WITHIN TIME TO GUARANTEE DELIVERY MAY NOT HAVE DETERMINATION REGARDED AS ARBITRARY OR CAPRICIOUS OR NOT SUPPORTED BY SUBSTANTIAL EVIDENCE. DETERMINATION IN THIS INSTANCE IS NOT A REFLECTION ON OVERALL BUSINESS REPUTATION OR ABILITY TO PERFORM FUTURE GOVERNMENT WORK. IN THIS PROCUREMENT, ORIGINAL MULTIYEAR INVITATION WAS CANCELED AND INVITATION REISSUED ON SINGLE-YEAR BASIS. DETERMINATION THAT CANCELLATION IS WARRANTED IS, LIKE DETERMINATION AFFECTING RESPONSIBILITY, WITHIN THE RANGE OF DISCRETION RESERVED TO ADMINISTRATIVE AGENCIES AND IS NOT SUBJECT TO QUESTION BY COMPTROLLER GENERAL UNLESS THERE IS CLEAR SHOWING OF ARBITRARY ACTION.

TO CTL-DIXIE, INC.:

YOUR TELEGRAM OF AUGUST 18, 1969, AND SUBSEQUENT CORRESPONDENCE PROTESTED AGAINST THE AWARD OF A CONTRACT TO ANY OTHER BIDDER UNDER INVITATION FOR BIDS (IFB) NO. N00197-70-B-0001, ISSUED BY THE UNITED STATES NAVAL ORDNANCE STATION, LOUISVILLE, KENTUCKY.

THE SUBJECT INVITATION WAS THE SECOND STEP OF A PROPOSED TWO-STEP MULTIYEAR PROCUREMENT FOR PLASTIC WEATHERSHIELDS. SIX TECHNICAL PROPOSALS WERE RATED ACCEPTABLE UNDER STEP ONE OF THE PROCUREMENT AND FIVE PROSPECTIVE CONTRACTORS SUBMITTED BIDS UNDER STEP TWO. THE STEP TWO INVITATION CONSISTED OF TWO ALTERNATIVE LOTS -- ONE ON A SINGLE YEAR BASIS AND ONE ON A MULTIYEAR BASIS -- AND PROVIDED IN ACCORDANCE WITH PARAGRAPH 1-322 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) THAT AWARD WOULD BE MADE ON EITHER A SINGLE YEAR OR A MULTIYEAR BASIS, DEPENDING ON WHICH METHOD WAS MOST ADVANTAGEOUS TO THE GOVERNMENT FROM THE STANDPOINT OF PRICE. THE INVITATION DELIVERY SCHEDULE REQUIRED COMMENCEMENT IN APRIL 1970 AND COMPLETION IN DECEMBER 1970. AFTER BIDS WERE OPENED UNDER STEP TWO, HOWEVER, BUT BEFORE BIDS WERE EVALUATED OR ANY AWARD WAS MADE, THE SECOND AND THIRD PROGRAM YEARS OF THE PROPOSED THREE-YEAR CONTRACT WERE WITHDRAWN BY THE NAVAL ORDNANCE SYSTEMS COMMAND, LEAVING ONLY THE ONE-YEAR REQUIREMENT FOR PROCUREMENT UNDER THE SUBJECT IFB.

YOUR BID WAS LOW ON THE SINGLE YEAR PORTION OF THE IFB, THE ONLY PORTION OF THE PROCUREMENT REMAINING, BUT A JOINT PREAWARD SURVEY BY THE NAVAL ORDNANCE STATION, LOUISVILLE, KENTUCKY, AND THE DEFENSE CONTRACT ADMINISTRATION SERVICES DISTRICT, CINCINNATI, OHIO, RESULTED IN A RECOMMENDATION THAT NO AWARD BE MADE TO YOUR FIRM ON THE BASIS THAT YOUR FIRM DID NOT PRESENTLY HAVE THE PRODUCTION CAPABILITY TO MANUFACTURE AN ITEM OF THE SIZE AND COMPLEXITY OF THE ONE HERE INVOLVED AND THAT YOUR ABILITY TO DEVELOP SUCH CAPABILITY WITHIN THE TIME REQUIRED BY THE IFB WOULD BE DIFFICULT IF NOT IMPOSSIBLE.

THEREAFTER, A DETERMINATION WAS MADE THAT THE REMOVAL OF THE MULTIYEAR PORTION OF THE IFB SUFFICIENTLY CHANGED THE GOVERNMENT'S REQUIREMENTS SO AS TO WARRANT CANCELLATION OF THE SUBJECT IFB AND ISSUANCE OF A NEW IFB ON A SINGLE YEAR BASIS WITH A SHORTENED BID SUBMISSION TIME IN ORDER TO RETAIN THE DELIVERY SCHEDULE ORIGINALLY CONTEMPLATED. THIS WAS DONE AND BIDS WERE SUBMITTED UNDER THE REISSUED INVITATION (NO. N00197-70-B-0045) BY THREE OF THE ORIGINAL FIVE BIDDERS, THE LOWEST BID BEING SUBMITTED BY EFMC CORPORATION. AWARD ACCORDINGLY WAS MADE TO EFMC CORPORATION NOTWITHSTANDING YOUR PROTEST AFTER NOTICE TO OUR OFFICE ON OR ABOUT SEPTEMBER 22, 1969. SEE ASPR 2-407.8 (B)(3).

YOU PROTEST THE REJECTION OF YOUR BID UNDER THE ORIGINAL INVITATION AS NONRESPONSIBLE AND YOU ALSO "QUESTION THE LEGALITY OF CHANGING FROM A MULTI-YEAR TO A SINGLE YEAR PROCUREMENT AFTER THE BID OPENING." ALSO YOU MAINTAIN THAT EFMC CORPORATION WAS NOT THE LOW EVALUATED BIDDER UNDER THE CANCELED INVITATION AS THE VALUE OF GOVERNMENT FURNISHED TOOLING WAS NOT ADDED TO THE EFMC BID AS REQUIRED BY THE INVITATION. FINALLY, YOU REQUEST REIMBURSEMENT OF THE COSTS INCURRED IN THE PREPARATION OF YOUR PROPOSAL.

FOR REASONS SET OUT BELOW, WE MUST CONCLUDE THAT THE ACTIONS TAKEN BY THE PROCUREMENT ACTIVITY ARE NOT SUBJECT TO QUESTION BY OUR OFFICE.

ON THE QUESTION OF YOUR RESPONSIBILITY, A COPY OF THE PREAWARD SURVEY REPORT WAS FURNISHED YOU PURSUANT TO YOUR REQUEST. THAT REPORT STATED GENERALLY THAT WHILE YOUR FIRM HAS A SATISFACTORY RECORD OF PERFORMANCE IN THE PRODUCTION OF SMALLER PLASTIC LAMINATE PRODUCTS THAN INVOLVED IN THE INSTANT PROCUREMENT, YOU HAVE NEVER MANUFACTURED AN ITEM AS LARGE OR COMPLEX AS THE SUBJECT WEATHERSHIELDS AND THAT YOU DID NOT PRESENTLY HAVE A MANUFACTURING FACILITY OR THE NECESSARY SKILLED PERSONNEL TO DO SO. ALTHOUGH IT IS RECOGNIZED IN THE SURVEY REPORT THAT YOU HAVE AN OPTION ON THE LEASE OF A PLANT ADEQUATE FOR PRODUCTION UPON COMPLETION OF SOME RELATIVELY MINOR MODIFICATIONS AND THAT YOU WOULD HAVE ACCESS TO AN UNSKILLED MANPOWER POOL FOR ACQUISITION OF NEEDED ADDITIONAL PERSONNEL, THE CONCLUSION WAS REACHED THAT THESE ACTIONS COULD NOT BE ACCOMPLISHED IN TIME TO GUARANTEE DELIVERIES IN ACCORDANCE WITH THE APRIL-DECEMBER 1970 IFB SCHEDULE.

THE ROLE PLAYED BY OUR OFFICE IN THE MATTER OF THE DETERMINATION OF A BIDDER'S RESPONSIBILITY IS THAT SUCH A DETERMINATION IS PRIMARILY A MATTER OF ADMINISTRATIVE DISCRETION, SUBJECT TO QUESTION BY US ONLY WHERE ARBITRARY OR CAPRICIOUS OR NOT SUPPORTED BY SUBSTANTIAL EVIDENCE. COMP. GEN. 430, 435 (1957). ON THE BASIS OF THE FACTS AS SET OUT IN THE PREAWARD SURVEY REPORT AND SUMMARIZED ABOVE, WE SEE NO INDICATION THAT SUCH WAS THE CASE HERE. OF COURSE, THE FACT THAT YOUR FIRM WAS DETERMINED TO BE NONRESPONSIBLE IN THIS INSTANCE, OR MORE PROPERLY TO BE LACKING THE CAPACITY TO PERFORM THE PARTICULAR JOB HERE INVOLVED, IS NOT A REFLECTION ON YOUR OVERALL BUSINESS REPUTATION OR YOUR ABILITY TO PERFORM FUTURE GOVERNMENT WORK.

ON THE QUESTION OF THE CHANGE FROM MULTIYEAR TO SINGLE YEAR PROCUREMENT YOU CITE PROVISIONS OF THE IFB AND DEFENSE PROCUREMENT CIRCULAR (DPC) NO. 64, DEALING WITH THE AWARD AND FUNDING OF MULTIYEAR CONTRACTS, AND YOU MAINTAIN THAT THOSE PROVISIONS PRECLUDE SUCH A CHANGE AFTER BID OPENING SINCE THE MULTIYEAR BIDS CLEARLY OFFERED THE GOVERNMENT A LOWER PRICE THAN DID THOSE ON A SINGLE YEAR BASIS, AS CONTEMPLATED BY THE IFB AND THE DPC. WHILE MULTIYEAR PROCUREMENT IS GOVERNED BY ASPR AS AMENDED BY DPC NO. 64 AND WHILE PROVISIONS IN CONSONANCE WITH SUCH REGULATORY PROVISIONS WERE CONTAINED IN IFB-0001, THOSE PROVISIONS HAVE EFFECT ONLY SO LONG AS THE QUANTITY AND DELIVERY REQUIREMENTS ORIGINALLY CONTEMPLATED REMAIN UNCHANGED. IN THE INSTANT CASE, HOWEVER, THE ORIGINALLY CONTEMPLATED SECOND AND THIRD PROGRAM YEAR REQUIREMENTS WERE WITHDRAWN SO THAT THE ONLY WEATHERSHIELDS REMAINING TO BE PROCURED WERE THOSE INITIALLY COVERED IN THE SINGLE YEAR PORTION OF THE IFB. IN 48 COMP. GEN. 103 (1968), WHICH DEALT WITH THE WITHDRAWAL OF MULTIYEAR REQUIREMENTS AND A SUBSEQUENT AWARD ON A SINGLE YEAR BASIS, WE STATED AT PAGE 105 THAT:

"* * * WE CONSIDER IT TO BE A FUNDAMENTAL PRINCIPLE OF GOOD PROCUREMENT PRACTICE THAT CONTRACTS SHOULD NOT BE AWARDED FOR ITEMS IN AMOUNTS THAT MATERIALLY EXCEED AN AGENCY'S NEEDS OR PLANNED REQUIREMENTS AS DETERMINED BY THE BEST JUDGMENT OF THE ADMINISTRATIVE OFFICIALS CONCERNED. * * *"

CONCERNING THE DETERMINATION TO CANCEL THE MULTIYEAR IFB AFTER OPENING, THE ADMINISTRATIVE REPORT POINTS OUT THAT WHILE THE ABOVE CITED CASE SANCTIONED AWARD ONLY OF THE SINGLE YEAR REQUIREMENT OF A MULTIYEAR IFB WITHOUT THE NECESSITY OF INVITATION CANCELLATION AND REISSUANCE, IT WAS NEVERTHELESS FELT IN THE CASE AT HAND "THAT A NEW SINGLE YEAR ONLY IFB WOULD DIFFER SUFFICIENTLY FROM THE CANCELLED SOLICITATION THAT IT WOULD OUTWEIGH THE PREJUDICE OF REQUIRING SUPPLIERS TO BID AGAIN IN THE LIGHT OF THEIR COMPETITIVE POSITIONS." THE AUTHORITY TO CANCEL AN INVITATION AFTER BID OPENING IS PROVIDED FOR BY 10 U.S.C. 2305 AND ASPR 2-404.1, AS IMPLEMENTED BY PARAGRAPH 10 OF STANDARD FORM 33A, SOLICITATION INSTRUCTIONS AND CONDITIONS, WHICH WAS INCLUDED IN THE SUBJECT INVITATION. WHILE INVITATIONS SHOULD BE CANCELED AFTER OPENING ONLY FOR COGENT REASONS, THE DETERMINATION THAT CANCELLATION IS WARRANTED IS, LIKE DETERMINATIONS AFFECTING RESPONSIBILITY, WITHIN THE RANGE OF DISCRETION RESERVED TO THE ADMINISTRATIVE AGENCIES AND IS NOT SUBJECT TO QUESTION BY US UNLESS THERE IS A CLEAR SHOWING OF ARBITRARY ACTION. SEE B-164528, SEPTEMBER 10, 1968; B-164721, NOVEMBER 21, 1968. WE FIND NO EVIDENCE OF SUCH ARBITRARY ACTION HERE. THE BID ABSTRACT RELATING TO REISSUED INVITATION -0045 REVEALS THAT A SIGNIFICANT REDUCTION IN THE AMOUNT OF THE LOW BID WAS ACHIEVED ON RESOLICITATION. IN OUR OPINION, THIS FACT VINDICATES THE CONTRACTING OFFICER'S JUDGMENT THAT CANCELLATION AND REISSUANCE ON A SINGLE YEAR BASIS WAS PREFERABLE TO AN AWARD OF THE SINGLE YEAR PORTION UNDER THE ORIGINAL INVITATION.

CONCERNING YOUR QUESTIONS WITH REGARD TO RENTAL CHARGES FOR GOVERNMENT- FURNISHED TOOLING UNDER THE ORIGINAL INVITATION, THE DEPARTMENT OF THE NAVY HAS ADVISED US THAT EVALUATION DID NOT REACH THAT MATTER IN VIEW OF THE CANCELLATION OF THE INVITATION.

THE COSTS OF PROPOSAL AND/OR BID PREPARATION BY UNSUCCESSFUL OFFERORS ARE NOT ORDINARILY RECOVERABLE UNLESS IT CAN BE SHOWN THAT THE OFFER OR BID IN QUESTION WAS NOT HONESTLY CONSIDERED. THE REASON FOR THIS RULE IS THAT THE PROCUREMENT STATUTES WERE ENACTED FOR THE BENEFIT OF THE GOVERNMENT AND EXCEPT FOR THE EXPECTATION THAT BIDS WILL BE HONESTLY CONSIDERED UNSUCCESSFUL OFFERORS HAVE NO ENFORCEABLE RIGHTS AGAINST THE GOVERNMENT. HEYER PRODUCTS COMPANY, INC. V. UNITED STATES, 147 CT. CL. 256 (1959). CANNOT CONCLUDE, ON THE BASIS OF THE PRESENT RECORD, THAT YOUR BID WAS NOT GIVEN HONEST AND FAIR CONSIDERATION.

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