B-168697, MARCH 16, 1970, 49 COMP. GEN 584

B-168697: Mar 16, 1970

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THE READVERTISEMENT OF THE PROCUREMENT WITH AN AWARD TO THE SECOND LOW BIDDER UNDER THE FIRST INVITATION WAS IN THE BEST INTEREST OF THE GOVERNMENT AND IS A PROPER ACTION UNDER SECTION 1-2.404-1(B) OF THE FEDERAL PROCUREMENT REGULATIONS. EVEN THOUGH THE REVISION OF SPECIFICATIONS IS NOT ONE OF THE EXAMPLES CITED IN THE SECTION FOR CANCELING AN INVITATION. THE EXAMPLES CITED ARE NOT INTENDED TO BE ALL INCLUSIVE. 1970: FURTHER REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 24. THREE BIDS WERE RECEIVED AND OPENED ON SEPTEMBER 25. 752.15 WAS SUBMITTED BY YOUR FIRM. 848.53 WAS SUBMITTED BY THE GORDON SHEET METAL COMPANY. 000 WAS SUBMITTED BY ELECTRICAL MECHANICAL SPECIALISTS CO. IT IS REPORTED THAT ON SEPTEMBER 26.

B-168697, MARCH 16, 1970, 49 COMP. GEN 584

BIDS -- DISCARDING ALL BIDS -- CHANGED CONDITIONS, ETC. -- AFFECTING PRICE, QUANTITY, OR QUALITY THE CANCELLATION OF AN INVITATION FOR BIDS BASED ON THE DETERMINATION THE CHANGES IN THE SCOPE OF THE WORK AND EQUIPMENT TO BE FURNISHED CONSTITUTED A SUBSTANTIAL DEVIATION FROM THE ORIGINAL SPECIFICATIONS THAT AFFECTED PRICE, QUANTITY, OR QUALITY OF THE PROCUREMENT, AND THE READVERTISEMENT OF THE PROCUREMENT WITH AN AWARD TO THE SECOND LOW BIDDER UNDER THE FIRST INVITATION WAS IN THE BEST INTEREST OF THE GOVERNMENT AND IS A PROPER ACTION UNDER SECTION 1-2.404-1(B) OF THE FEDERAL PROCUREMENT REGULATIONS, EVEN THOUGH THE REVISION OF SPECIFICATIONS IS NOT ONE OF THE EXAMPLES CITED IN THE SECTION FOR CANCELING AN INVITATION. THE EXAMPLES CITED ARE NOT INTENDED TO BE ALL INCLUSIVE, BUT TO BE INDICATIVE OF THE TYPE OF CIRCUMSTANCE THAT JUSTIFIES CANCELLATION AND, THEREFORE, THE CONTRACTING OFFICER'S DETERMINATION TO CANCEL THE INVITATION PREVAILS IN THE ABSENCE OF A SHOWING OF ABUSE OF ADMINISTRATIVE DISCRETION.

TO SEASONAIR OF VIRGINIA, INC., MARCH 16, 1970:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 24, 1969, PROTESTING THE ACTION OF THE DEPARTMENT OF TRANSPORTATION, UNITED STATES COAST GUARD AIRCRAFT REPAIR & SUPPLY CENTER, ELIZABETH CITY, NORTH CAROLINA, IN CANCELING INVITATION FOR BIDS (IFB) NO. 95-70 AND READVERTISING THE PROCUREMENT UNDER IFB NO. 219-70.

THE ORIGINAL INVITATION, IFB NO. 95-70, REQUESTED BIDS FOR FURNISHING AND INSTALLING A HEAT PUMP AND AIR-CONDITIONING UNITS IN SHOP 211, HANGAR 2, AT THE COAST GUARD AIR BASE, ELIZABETH CITY, NORTH CAROLINA, IN ACCORDANCE WITH THE GOVERNMENT'S SPECIFICATIONS AND DRAWING.

THREE BIDS WERE RECEIVED AND OPENED ON SEPTEMBER 25, 1969. THE LOWEST BID IN THE AMOUNT OF $14,752.15 WAS SUBMITTED BY YOUR FIRM; THE SECOND LOWEST BID IN THE AMOUNT OF $16,848.53 WAS SUBMITTED BY THE GORDON SHEET METAL COMPANY; AND THE THIRD BID IN THE AMOUNT OF $18,000 WAS SUBMITTED BY ELECTRICAL MECHANICAL SPECIALISTS CO.

IT IS REPORTED THAT ON SEPTEMBER 26, 1969, THE BASE COMMANDER DIRECTED THE PUBLIC WORKS OFFICER TO HAVE CERTAIN CHANGES MADE IN THE CONSTRUCTION AND LOCATION OF SOME WALLS WITH THE RESULT THAT AN AREA WITHIN THE HEAT PUMP ZONE WOULD NOW BE WITHIN THE AIR-CONDITIONED ZONE. WE ARE ADVISED THAT THIS CHANGE REQUIRED THAT THE SIZE OF THE HEAT PUMP BE REDUCED, AND THAT THE HEAT PUMP DUCTING BE REDUCED IN SIZE IN ONE AREA WITH ADDITIONAL DUCTING TO BE EXTENDED FROM ONE OF THE AIR CONDITIONING UNITS. SEPTEMBER 30, 1969, THE CONTRACTING OFFICER DETERMINED THAT THE FOREGOING CHANGES DID AFFECT THE SCOPE OF THE WORK AND EQUIPMENT TO BE FURNISHED BY THE SUCCESSFUL BIDDER AND THAT SUCH CHANGES CONSTITUTED A SUBSTANTIAL DEVIATION FROM THE ORIGINAL SPECIFICATIONS. IT ALSO WAS DETERMINED BY THE CONTRACTING OFFICER THAT SUCH CHANGES WOULD AFFECT THE PRICE, QUANTITY, OR QUALITY OF THE ARTICLES OR SERVICES TO BE FURNISHED BY THE SUCCESSFUL BIDDER AND THAT, THEREFORE, THE ORIGINAL INVITATION SHOULD BE CANCELED AND BIDS RESOLICITED GIVING ALL BIDDERS AN OPPORTUNITY TO SUBMIT BIDS ON AN EQUAL BASIS FOR THE REVISED REQUIREMENTS. ON OCTOBER 3, 1969, ALL BIDDERS, INCLUDING YOUR FIRM, WERE NOTIFIED BY LETTER OF THE CANCELLATION OF IFB NO. 95-70.

ON NOVEMBER 3, 1969, THE PROCUREMENT WAS READVERTISED UNDER IFB NO. 219- 70 WITH REVISED SPECIFICATIONS AND DRAWINGS. IN RESPONSE TO THE INVITATION, THREE RESPONSIVE BIDS WERE RECEIVED. THE LOWEST BID IN THE AMOUNT OF $13,363.55 WAS SUBMITTED BY THE GORDON SHEET METAL COMPANY; THE SECOND LOWEST BID IN THE AMOUNT OF $15,582 WAS SUBMITTED BY ELECTRICAL MECHANICAL SPECIALISTS CO.; AND THE THIRD BID IN THE AMOUNT OF $15,900 WAS SUBMITTED BY YOUR FIRM. ON DECEMBER 5, 1969, CONTRACT NO. DOT-CG40-1986 WAS AWARDED TO THE GORDON SHEET METAL COMPANY. IT IS REPORTED THAT AS OF JANUARY 15, 1970, APPROXIMATELY 80 PERCENT OF THE CONTRACT WORK HAD BEEN COMPLETED BY THE GORDON SHEET METAL COMPANY.

YOU ALLEGE THAT THE ORIGINAL INVITATION WAS CANCELED AND THE PROCUREMENT READVERTISED FOR THE PURPOSE OF GIVING THE SECOND LOWEST BIDDER ON THE ORIGINAL INVITATION, GORDON SHEET METAL COMPANY, A SECOND CHANCE AT THE JOB. YOU CONTEND THAT IFB NO. 219-70 REVISED THE SPECIFICATIONS FOR THE ORIGINAL INVITATION BY REDUCING THE CAPACITY OF THE HEAT PUMP FROM 7-1/2 TONS TO 5 TONS; THAT THE HEAT PUMP IS ONLY ONE OF FOUR MAIN PIECES OF EQUIPMENT; AND THAT THE TOTAL EQUIPMENT CAPACITY FOR THE JOB WAS REDUCED FROM 30 TONS TO 27-1/2 TONS, ONLY A SMALL AMOUNT COSTWISE. YOU STATE THAT SINCE ALL PRICES HAVE BEEN REVEALED AND THE CHANGE IN THE SPECIFICATIONS ARE SO MINOR AS TO COST, IT IS OBVIOUS THAT THE PROCURING ACTIVITY WANTS TO DO BUSINESS WITH ONLY GORDON SHEET METAL COMPANY, THUS GRANTING THAT FIRM PREFERENTIAL TREATMENT.

IT HAS BEEN CONSISTENTLY HELD THAT AN INVITATION FOR BIDS DOES NOT IMPORT 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 INTERESTS OF THE GOVERNMENT TO DO SO. 17 COMP. GEN. 554 (1938); 26 ID. 49 (1946); 37 ID. 760 (1958); 41 ID. 709, 711 (1962).

SUBPARAGRAPH (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 WHEN IT IS DETERMINED THAT REJECTION IS IN THE PUBLIC INTEREST. SECTION 1-2.404-1(B) OF THE FEDERAL PROCUREMENT REGULATIONS (FPR), IMPLEMENTING THE ADVERTISING STATUTE, SETS FORTH SEVEN EXAMPLES OF PUBLIC INTEREST JUSTIFYING THE CANCELLATION OF AN INVITATION. WHILE FPR 1-2.404-1(B) DOES NOT INCLUDE AS AN EXAMPLE THE SITUATION WHERE THE SPECIFICATIONS HAVE BEEN REVISED, AS IN THE PRESENT CASE, WE BELIEVE THAT THE LISTED BASES FOR CANCELLATION ARE NOT INTENDED TO BE ALL INCLUSIVE, BUT ARE INDICATIVE OF THE TYPE OF CIRCUMSTANCE WHICH JUSTIFIES SUCH ACTION. IN THIS CONNECTION, IT IS NOTED THAT PARAGRAPH 2- 404.1(B)(II) OF THE ARMED SERVICES PROCUREMENT REGULATION, WHICH IMPLEMENTS A STATUTE SUBSTANTIALLY SIMILAR TO 41 U.S.C. 253(B), SPECIFICALLY PROVIDES FOR CANCELLATION OF AN INVITATION WHEN "SPECIFICATIONS HAVE BEEN REVISED." MOREOVER, THE RIGHT TO REJECT ALL BIDS WAS SPECIFICALLY RESERVED TO THE GOVERNMENT BY PARAGRAPH 10(B) OF THE SOLICITATION INSTRUCTIONS TO BIDDERS.

OUR OFFICE HAS CONSISTENTLY HELD THAT, WHILE THE INTEREST OF THE GOVERNMENT AND THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM REQUIRE THAT INVITATIONS BE CANCELED ONLY FOR THE MOST COGENT REASONS, THERE NECESSARILY IS RESERVED IN THE CONTRACTING OFFICIALS A SUBSTANTIAL AMOUNT OF DISCRETION IN DETERMINING WHETHER OR NOT AN INVITATION SHOULD BE CANCELED. WE WILL, THEREFORE, NOT OBJECT TO THE CANCELLATION OF AN INVITATION UNLESS THERE HAS BEEN A CLEAR SHOWING OF ABUSE OF ADMINISTRATIVE DISCRETION. 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 ABUSE OF DISCRETION HERE. THE CONTRACTING OFFICER DETERMINED AFTER BID OPENING THAT BECAUSE OF CERTAIN CHANGES IN THE CONSTRUCTION AND LOCATION OF SOME WALLS WHICH WERE REQUESTED BY THE BASE COMMANDER, THE SCOPE OF THE WORK AND EQUIPMENT WOULD BE AFFECTED AND THAT SUCH CHANGES CONSTITUTED A SUBSTANTIAL DEVIATION FROM THE ORIGINAL SPECIFICATIONS WHICH HE DETERMINED WOULD HAVE TO BE REVISED. WE BELIEVE THAT AN ATTEMPT TO NEGOTIATE THESE CHANGES WITH YOUR FIRM AS THE LOW BIDDER UNDER IFB NO. 95-70 WOULD HAVE BEEN PREJUDICIAL TO THE OTHER BIDDERS SUBMITTING RESPONSIVE BIDS UNDER THAT INVITATION SINCE THE CONTRACT AFTER NEGOTIATION OFFERED TO YOUR FIRM WOULD NOT BE THE SAME AS OFFERED THE OTHER BIDDERS UNDER THAT INVITATION. IT IS REPORTED THAT THE DIFFERENCES BETWEEN THE GOVERNMENT ESTIMATE AND THE BIDS RECEIVED IN RESPONSE TO INVITATIONS NOS. 95-70 AND 219-70 ARE AS FOLLOWS:

APPROX.

IFB 95-70 IFB 219-70 OF DIFFERENCE

GOVERNMENT ESTIMATE $16,000.00 $14,000.00 -12-1/2%

GORDON SHEET METAL

COMPANY 16,848.50 13,363.55 -20%

ELECTRICAL MECHANICAL

SPECIALISTS CO. 18,000.00 15,582.00 -13%

SEASONAIR OF VIRGINIA, INC. 14,752.15 15,900.00 3/4 OF 1%

IT IS EVIDENT FROM THE ABOVE COMPARISON TABLE THAT THE CHANGE IN THE ORIGINAL SPECIFICATIONS ORDERED BY THE BASE COMMANDER CONSTITUTED A SUBSTANTIAL CHANGE IN THE SPECIFICATIONS AND NOT A MINOR CHANGE, AS ALLEGED BY YOUR FIRM.

OUR DECISION B-145109, MAY 1, 1961, WAS CONCERNED WITH A SITUATION ANALOGOUS TO YOURS IN THAT AFTER BID OPENING, BUT BEFORE AWARD, THE PROCURING ACTIVITY PROPOSED THREE SIGNIFICANT CHANGES IN THE CONTRACT SPECIFICATIONS. THE PROCURING ACTIVITY REQUESTED OUR ADVICE AS TO WHETHER AWARD COULD BE MADE TO THE LOW BIDDER UNDER THE ADVERTISED SPECIFICATIONS AND THE CHANGES NEGOTIATED AFTER AWARD OR WHETHER THE PROCUREMENT SHOULD BE READVERTISED UNDER SPECIFICATIONS INCORPORATING THE THREE PROPOSED CHANGES. IN HOLDING THAT READVERTISEMENT WAS REQUIRED, WE SAID:

IT IS WELL ESTABLISHED THAT THE AWARD OF A CONTRACT PURSUANT TO THE ADVERTISING STATUTES MUST BE MADE UPON THE SAME SPECIFICATIONS OFFERED TO ALL BIDDERS. 37 COMP. GEN. 524, 527 (1958), AND CASES THERE CITED. CONSIDERING WHETHER ADDITIONAL WORK REQUIRED IN CONNECTION WITH A CONTRACT COULD BE AWARDED BY NEGOTIATION TO THE CONTRACTOR, WE STATED IN 5 COMP. GEN. 508, 512 (1926):

*** IN GENERAL, AN EXISTING CONTRACT MAY NOT BE EXPANDED SO AS TO INCLUDE ADDITIONAL WORK OF ANY CONSIDERABLE MAGNITUDE, WITHOUT COMPLIANCE WITH SECTION 3709, REVISED STATUTES, UNLESS IT CLEARLY APPEARS THAT THE ADDITIONAL WORK WAS NOT IN CONTEMPLATION AT THE TIME OF THE ORIGINAL CONTRACTING AND IS SUCH AN INSEPARABLE PART OF THE WORK ORIGINALLY CONTRACTED FOR AS TO RENDER IT REASONABLY IMPOSSIBLE OF PERFORMANCE BY OTHER THAN THE ORIGINAL CONTRACTOR. THE APPARENT PROBABILITY THAT THE ADDITIONAL WORK MAY BE DONE MORE CONVENIENTLY OR EVEN AT LESS EXPENSE BY THE ORIGINAL CONTRACTOR, BECAUSE OF BEING ENGAGED UPON THE ORIGINAL WORK, OR OTHERWISE, IS NOT CONTROLLING OF THE MATTER AS TO WHETHER THE PROVISIONS OF SECTION 3709 ARE FOR APPLICATION. WHETHER THE ORIGINAL CONTRACTOR CAN DO THE WORK AT LESS EXPENSE TO THE GOVERNMENT THAN CAN ANY OTHER CONTRACTOR IS POSSIBLE OF DEFINITE DETERMINATION ONLY BY SOLICITING COMPETITIVE BIDS AS CONTEMPLATED UNDER SAID SECTION. ***

THE RULE, WHICH IS EQUALLY APPLICABLE TO COMPETITIVE PROCUREMENTS UNDER 10 U.S.C. 2304(A), HAS BEEN CONSISTENTLY FOLLOWED. SEE 39 COMP. GEN. 566 (1960), AND 30 COMP. GEN. 34 (1950). THE RULE APPLIES WHETHER THE WORK IS TO BE INCREASED OR DECREASED. ***

*** WHERE A CONTRACT IS REQUIRED TO BE AWARDED PURSUANT TO COMPETITIVE BIDDING, THE LOW BID MUST BE DETERMINED ON THE BASIS OF BIDS ON THE WORK ACTUALLY TO BE PERFORMED, NOT ON THE BASIS OF BIDS ON SPECIFICATIONS KNOWN TO CALL FOR MORE OR LESS WORK, OR WORK OF A DIFFERENT TYPE. THE ONLY PROPER WAY TO DETERMINE THE LOWEST BIDDER IS BY ADVERTISING THE ACTUAL WORK TO BE PERFORMED, AND THIS, IN OUR OPINION, IS WHAT THE LAW REQUIRES. 17 COMP. GEN. 427, 430 (1937); 15 ID. 573, 576 (1935). SEE ALSO 37 COMP. GEN. 183, 184 (1957). THE ADOPTION OF ANY OTHER VIEW WOULD PERMIT CIRCUMVENTION OF THE COMPETITIVE BID REQUIREMENT AND WOULD BE CONTRARY TO THE INTENT OF THE PROCUREMENT STATUTES. SEE ALSO B-167216, DECEMBER 9, 1969.

ACCORDINGLY, IT IS OUR OPINION THAT THE CANCELLATION OF IFB NO. 95-70 WAS PROPER. IN ADDITION, WE FIND NO BASIS TO QUESTION THE AWARD UNDER IFB NO. 219-70. ACCORDINGLY, YOUR PROTEST IS DENIED.