B-167972, OCT. 31, 1969

B-167972: Oct 31, 1969

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PROTEST AGAINST NEGOTIATION PROCEDURES UTILIZED IS DENIED. 41 U.S.C. 252 (C) (14) PROVIDING THAT CONTRACTS FOR SERVICES MAY BE NEGOTIATED WITHOUT ADVERTISING IF BID PRICES AFTER ADVERTISING ARE NOT REASONABLE AND NO LEGAL BASIS EXISTS FOR OBJECTION EITHER TO SUBSEQUENT NEGOTIATION PROCEDURES OR TO REJECTION OF BID WHEN IT IS IN PUBLIC INTEREST TO DO SO. INC.: REFERENCE IS MADE TO YOUR TELEGRAM OF SEPTEMBER 19. WHICH WAS ISSUED ON JUNE 30. YOUR COMPANY WAS ADVISED THAT ITS BID HAD BEEN REJECTED BECAUSE IT WAS CONSIDERED TO BE EXCESSIVE. NEGOTIATIONS WERE CONDUCTED INITIALLY WITH YOUR COMPANY. REPRESENTATIVES OF YOUR COMPANY WERE ADVISED THAT THE OFFERED PRICE REMAINED EXCESSIVE AND UNREASONABLE.

B-167972, OCT. 31, 1969

NEGOTIATION--PROPRIETY UPON RECEIPT OF ONLY ONE BID FOR CONSTRUCTION OF BALLOON INFLATION BUILDING WHICH EXCEEDED GOVERNMENT'S ESTIMATE BY 72 PERCENT AND BY 45 PERCENT AFTER NEGOTIATED REDUCTION IN PRICE AND WHERE ATTEMPTS TO NEGOTIATE WITH OTHER FIRMS FAILED TO ACHIEVE RESULTS, PROTEST AGAINST NEGOTIATION PROCEDURES UTILIZED IS DENIED, 41 U.S.C. 252 (C) (14) PROVIDING THAT CONTRACTS FOR SERVICES MAY BE NEGOTIATED WITHOUT ADVERTISING IF BID PRICES AFTER ADVERTISING ARE NOT REASONABLE AND NO LEGAL BASIS EXISTS FOR OBJECTION EITHER TO SUBSEQUENT NEGOTIATION PROCEDURES OR TO REJECTION OF BID WHEN IT IS IN PUBLIC INTEREST TO DO SO, ABSENT BAD FAITH OR ARBITRARY ACTION OF ADMINISTRATIVE AGENCY.

TO TECTONICS, INC.:

REFERENCE IS MADE TO YOUR TELEGRAM OF SEPTEMBER 19, 1969, FORWARDED TO OUR OFFICE BY SENATOR HUGH SCOTT, PROTESTING AGAINST THE NEGOTIATION PROCEDURES UTILIZED BY THE DEPARTMENT OF COMMERCE, WEATHER BUREAU, FORT WORTH, TEXAS, SUBSEQUENT TO THE ISSUANCE OF INVITATION FOR BIDS NO. 6WBS69, INVOLVING THE CONSTRUCTION OF A BALLOON INFLATION BUILDING AT INTERNATIONAL AIRPORT, SAN JUAN, PUERTO RICO.

OF THE 12 FIRMS SOLICITED, ONLY YOUR COMPANY SUBMITTED A BID IN RESPONSE TO THE INVITATION, WHICH WAS ISSUED ON JUNE 30, 1969. THE $100,000 BID EXCEEDED THE GOVERNMENT ESTIMATE OF $58,000 BY APPROXIMATELY 72 PERCENT. IN LIGHT THEREOF, YOUR COMPANY WAS ADVISED THAT ITS BID HAD BEEN REJECTED BECAUSE IT WAS CONSIDERED TO BE EXCESSIVE. THEREAFTER, NEGOTIATIONS WERE CONDUCTED INITIALLY WITH YOUR COMPANY, RESULTING IN A NEGOTIATED REDUCTION OF YOUR BID PRICE TO $85,000, APPROXIMATELY 45 PERCENT IN EXCESS OF THE GOVERNMENT ESTIMATE. REPRESENTATIVES OF YOUR COMPANY WERE ADVISED THAT THE OFFERED PRICE REMAINED EXCESSIVE AND UNREASONABLE, AND, THEREFORE, FURTHER NEGOTIATIONS WOULD BE NECESSARY. APPARENTLY, AT THIS POINT, NEGOTIATIONS BROKE DOWN. ATTEMPTS TO NEGOTIATE WITH OTHER FIRMS ACHIEVED NO RESULTS AND, AT PRESENT, WE ARE ADVISED THAT DUE TO CERTAIN OPERATIONAL PROBLEMS THAT HAVE SINCE COME TO LIGHT THE PROJECT WILL BE DELAYED AND NO CONTRACT AWARD IS CONTEMPLATED AT THIS TIME.

YOUR COMPANY CONTENDS THAT ITS INITIAL, LOW AND SOLE BID WAS NOT UNREASONABLE IN VIEW OF THE $86,000 GOVERNMENT ESTIMATE. IN ADDITION, YOU ALLEGE THAT, AFTER SUBMITTING A REDUCED NEGOTIATED PRICE, THE NEGOTIATION BY THE CONTRACTING OFFICER WITH OTHER COMPANIES USING YOUR PRICE AS A BASE WAS "PROBABLY ILLEGAL.'

THE RECORD DISCLOSES THAT YOUR COMPANY WAS UNDER THE MISTAKEN IMPRESSION THAT THE GOVERNMENT ESTIMATE FOR THE BUILDING WAS $86,000, WHEN, IN FACT, THE ESTIMATE TOTALED $58,000. WHILE THIS MISUNDERSTANDING IS REGRETTABLE, WE FIND NO EVIDENCE OF IMPROPER CONDUCT ON THE PART OF WEATHER BUREAU CONTRACTING OFFICIALS IN THIS REGARD.

41 U.S.C. 253 (B) PROVIDES THAT ALL BIDS SUBMITTED IN RESPONSE TO AN ADVERTISED SOLICITATION MAY BE REJECTED WHEN A DETERMINATION IS MADE THAT IT IS IN THE PUBLIC INTEREST TO DO SO. AS A COROLLARY TO THIS AUTHORITY, YOUR COMPANY'S BID WAS SUBJECT TO PARAGRAPH 10 (B) OF THE INSTRUCTIONS TO BIDDERS WHICH PROVIDES THAT THE GOVERNMENT MAY, WHEN IN ITS INTEREST, REJECT ANY AND ALL BIDS. SEE ALSO FEDERAL PROCUREMENT REGULATIONS 1-2.404 -2 (C); 1-2.404-1 (B) (5) AND 1-3.214; B-159354, AUGUST 3, 1966; B-166621, JULY 10, 1969.

41 U.S.C. 252 (C) (14) PROVIDES THAT ALL CONTRACTS FOR SERVICES SHALL BE MADE BY ADVERTISING EXCEPT THAT SUCH CONTRACTS MAY BE NEGOTIATED WITHOUT ADVERTISING IF IT IS DETERMINED THAT BID PRICES AFTER ADVERTISING ARE NOT REASONABLE. IN THE CASE OF BOTH YOUR INITIAL AND NEGOTIATED BIDS, THE CONTRACTING OFFICER DETERMINED THAT YOUR PRICES WERE UNREASONABLE AND EXCESSIVE, BASED UPON THE GOVERNMENT ENGINEERS' ESTIMATE AND THE COST OF SIMILAR BUILDINGS CONSTRUCTED AT OTHER SITES. THE FACTS REVEAL THAT THE CONTRACTING OFFICER COMPLIED WITH STATUTORY AND REGULATORY REQUIREMENTS BY NOTIFYING YOUR COMPANY OF HIS INTENTION TO NEGOTIATE AND BY AFFORDING YOUR COMPANY A REASONABLE OPPORTUNITY TO NEGOTIATE. SEE 41 U.S.C. 252 (C) (14) (A). WITH RESPECT TO YOUR COMPANY'S CONCERN AS TO THE DISCLOSURE OF ITS NEGOTIATED BID PRICE, WE HAVE BEEN ADVISED BY THE CONTRACTING OFFICIALS THAT IN THE NEGOTIATIONS WITH OTHER PROSPECTIVE CONTRACTORS, ONLY YOUR $100,000 BID PREVIOUSLY REVEALED AT PUBLIC OPENING WAS MADE AVAILABLE. CONSIDER THIS TO BE PROPER UNDER THE CIRCUMSTANCES. AS WE HELD IN B 159354, SUPRA:

"WE ARE WELL AWARE THAT THE REJECTION OF BIDS AFTER THEY ARE OPENED IS A SERIOUS MATTER AND SHOULD NOT BE DONE EXCEPT FOR COGENT REASONS. HOWEVER, THERE IS LESS REASON FOR APPLICATION OF THE RULE WHEN ONLY ONE BID IS RECEIVED. FURTHERMORE, WE HAVE RECOGNIZED THAT SINCE CONTRACTING OFFICERS ARE AGENTS OF, AND ARE REQUIRED TO WORK IN THE BEST INTERESTS OF THE GOVERNMENT, THEIR ACTIONS IN REJECTING BIDS MAY NOT BE CONSIDERED IMPROPER WHEN BASED UPON SUBSTANTIAL REASONS LEADING TO A BONA FIDE BELIEF THAT THE INTEREST OF THE GOVERNMENT WILL BE BEST SERVED THEREBY. SEE 38 COMP. GEN. 235, 39 COMP. GEN. 86.'

IT IS THE FUNCTION OF THE ADMINISTRATIVE AGENCY TO DETERMINE WHETHER A LOW ACCEPTABLE BID IS IN EXCESS OF THE AMOUNT FOR WHICH THE GOVERNMENT SHOULD BE ABLE TO OBTAIN THE SERVICES SOUGHT AND, IN THE ABSENCE OF BAD FAITH, OR ARBITRARY OR CAPRICIOUS ACTION, WE CANNOT QUESTION THE REJECTION OF A BID BECAUSE THE PRICE WAS CONSIDERED EXCESSIVE. 36 COMP. GEN. 364 (1956); 39 COMP. GEN. 396 1959); B 164523, AUGUST 28, 1968. THE AUTHORITY TO REJECT ANY OR ALL BIDS IS EXTREMELY BROAD, INVOLVING PRIMARILY A MATTER OF ADMINISTRATIVE JUDGMENT, AND WE WILL NOT QUESTION ITS EXERCISE IN THE ABSENCE OF A CLEAR SHOWING OF ABUSE OF DISCRETION. B-159865, OCTOBER 6, 1966; B 161797, SEPTEMBER 6, 1967; B-161331, MAY 15, 1967; B-166679, JUNE 10, 1969.

IN VIEW OF THE AFORE GOING, WE SEE NO LEGAL BASIS FOR OBJECTION BY OUR OFFICE EITHER TO THE REJECTION OF YOUR BID OR TO THE SUBSEQUENT NEGOTIATION PROCEDURES.