B-168878, APR. 27, 1970

B-168878: Apr 27, 1970

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RESTRICTIVE WHERE 6 FIRMS SUBMITTED "NO BID" RESPONSES AND ONLY PROTESTANT WAS RESPONSIVE. BIDS HAVING BEEN OPENED AFTER PROTEST THAT 32-INCH WHEEL REQUIREMENT WAS UNDULY RESTRICTIVE. RESPONSIVE BIDDER'S PROTEST TO CANCELLATION IS DENIED SINCE READVERTISEMENT IS PROPER WHERE SPECIFICATIONS ARE UNDULY RESTRICTIVE OF COMPETITION. NEITHER EXPOSURE OF BID PRICE NOR POSSIBLY HIGHER BID PRICES ON RESOLICITATION WOULD EITHER REQUIRE OR JUSTIFY AWARD UPON RESTRICTIVE SPECIFICATIONS IF RESOLICITATION IS BASED ON SPECIFICATIONS WHICH ARE MATERIALLY DIFFERENT FROM THOSE ON WHICH EXPOSED BID PRICE WAS COMPUTED. TO VAN NORMAN MACHINE COMPANY: REFERENCE IS MADE TO YOUR LETTER. BIDS WERE ORIGINALLY SCHEDULED FOR OPENING ON JULY 15.

B-168878, APR. 27, 1970

BIDS--DISCARDING ALL BIDS--SPECIFICATIONS DEFECTIVE--RESTRICTIVE WHERE 6 FIRMS SUBMITTED "NO BID" RESPONSES AND ONLY PROTESTANT WAS RESPONSIVE, BIDS HAVING BEEN OPENED AFTER PROTEST THAT 32-INCH WHEEL REQUIREMENT WAS UNDULY RESTRICTIVE, RESPONSIVE BIDDER'S PROTEST TO CANCELLATION IS DENIED SINCE READVERTISEMENT IS PROPER WHERE SPECIFICATIONS ARE UNDULY RESTRICTIVE OF COMPETITION. MOREOVER, NEITHER EXPOSURE OF BID PRICE NOR POSSIBLY HIGHER BID PRICES ON RESOLICITATION WOULD EITHER REQUIRE OR JUSTIFY AWARD UPON RESTRICTIVE SPECIFICATIONS IF RESOLICITATION IS BASED ON SPECIFICATIONS WHICH ARE MATERIALLY DIFFERENT FROM THOSE ON WHICH EXPOSED BID PRICE WAS COMPUTED. SEE COMP. GEN. DECS. CITED.

TO VAN NORMAN MACHINE COMPANY:

REFERENCE IS MADE TO YOUR LETTER, WITH ENCLOSURES, OF JANUARY 19, 1970, TO THIS OFFICE, AND TO YOUR LETTER, WITH ENCLOSURES OF FEBRUARY 18, 1970, TO THE HONORABLE EDWARD P. BOLAND, ALLEGING THE UNJUSTIFIED CANCELLATION OF INVITATION FOR BIDS (IFB) NO. DAAF01-69-B-0900, BY THE ROCK ISLAND ARSENAL, ROCK ISLAND, ILLINOIS.

THE ABOVE REFERENCED INVITATION SOLICITED BIDS FROM NINE PROSPECTIVE BIDDERS FOR EIGHT CRANKSHAFT GRINDING MACHINES IN ACCORDANCE WITH MILITARY SPECIFICATION MIL-G-450060C. BIDS WERE ORIGINALLY SCHEDULED FOR OPENING ON JULY 15, 1969, BUT AS A RESULT OF THE NEED TO CLARIFY SEVERAL OF THE SPECIFICATION REQUIREMENTS FIVE AMENDMENTS TO THE IFB WERE ISSUED, AND BIDS WERE SUBSEQUENTLY RESCHEDULED FOR OPENING ON SEPTEMBER 19, 1969. ORIGINALLY ISSUED THE INVITATION AND APPLICABLE SPECIFICATIONS REQUIRED A SIZE 1 GRINDING WHEEL WITH AN OUTSIDE DIAMETER OF 30 INCHES, BUT THIS WAS LATER CHANGED TO A 25 INCH WHEEL AND FINALLY TO A SIZE 2 WHEEL WITH A 32 INCH OUTSIDE DIAMETER. ON SEPTEMBER 19, 1969, THE DATE OF BID OPENING, STORM VULCAN, INC. (STORM VULCAN) SUBMITTED A TELETYPE TRANSMISSION, WHICH WAS RECEIVED BY THE ROCK ISLAND ARSENAL ONE HOUR PRIOR TO BID OPENING, PROTESTING AGAINST ANY AWARD WHICH MIGHT BE MADE UNDER IFB NO. DAAF01-69-B -0900 ON THE GROUND THAT THE REQUIREMENT OF A NOT LESS THAN 32 INCH GRINDING WHEEL WAS RESTRICTIVE TO ONE MANUFACTURER.

THE PROCURING ACTIVITY REPORTS THAT THE PROXIMITY OF THE BID OPENING, THE ALLEGATION OF RESTRICTIVE SPECIFICATIONS, AND THE FACT THAT SEVEN BID ENVELOPES WERE ON HAND AT BID OPENING TIME, GUIDED THE CONTRACTING OFFICER IN MAKING THE DECISION TO PROCEED WITH THE BID OPENING, SINCE THE RECEIPT OF COMPETITIVE RESPONSIVE BIDS WOULD REFUTE THE PROTEST BY STORM VULCAN. HOWEVER, UPON OPENING THE SEVEN BID ENVELOPES IT WAS FOUND THAT ONLY YOUR COMPANY HAD SUBMITTED A RESPONSIVE BID, WHILE "NO BID" RESPONSES HAD BEEN SUBMITTED BY SIX COMPANIES, FIVE OF WHICH INDICATED THAT THEY COULD NOT MEET THE SPECIFICATIONS AND ONE OF WHICH INDICATED THAT IT DID NOT MANUFACTURE CRANKSHAFT GRINDERS. SINCE ONLY ONE RESPONSIVE BID HAD BEEN RECEIVED, FURTHER CONSIDERATION WAS GIVEN TO STORM VULCAN'S PROTEST, AND IT WAS THEN DETERMINED THAT THE SPECIFICATIONS CALLING FOR A 32 INCH GRINDING WHEEL WERE RESTRICTIVE, SINCE THERE WAS NO DECISIVE EVIDENCE THAT THE 32 INCH WHEEL WAS A MINIMUM, AS OPPOSED TO A DESIRED, REQUIREMENT. THUS ON JANUARY 6, 1970, YOU WERE NOTIFIED THAT THE INVITATION WAS BEING CANCELLED.

YOU CONTEND (1) THAT UPON RECEIPT OF STORM VULCAN'S PROTEST ANOTHER AMENDMENT EXTENDING THE OPENING DATE SHOULD HAVE BEEN ISSUED, SO AS TO PERMIT ADDITIONAL STUDY OF THE PROTEST; (2) THAT YOUR BID SHOULD NOT HAVE BEEN OPENED UNTIL THE PROTEST WAS RESOLVED, SINCE OPENING PRIOR TO RESOLUTION OF THE PROTEST HAS EXPOSED YOUR BID PRICE; (3) THAT THE STORM VULCAN PROTEST WAS UNTIMELY AND SUBMITTED ONLY TO CREATE DELAY AND TO CAUSE A RELAXATION OF THE SPECIFICATIONS ALLOWING A MACHINE WITH LESS CAPACITY TO BE CONSIDERED; AND (4) THAT CANCELLATION OF THE INVITATION IS CONTRARY TO MAINTAINING FAIR AND SOUND BUSINESS AND GOVERNMENT RELATIONSHIP, AND A RESOLICITATION WOULD GREATLY INCREASE THE COST TO THE GOVERNMENT.

CONCERNING YOUR CONTENTIONS THAT THE BID OPENING DATE SHOULD HAVE BEEN EXTENDED SO AS TO PERMIT RESOLUTION OF STORM VULCAN'S PROTEST, AND THAT YOUR BID SHOULD NOT HAVE BEEN OPENED UNTIL THE PROTEST WAS RESOLVED, THERE CAN BE NO DOUBT THAT SUCH A PROCEDURE SHOULD BE FOLLOWED AS A MATTER OF GOOD PROCUREMENT PRACTICE IN ANY CASE WHERE A PROTEST IS RECEIVED BEFORE BID OPENING AND THE AGENCY'S NEEDS ARE NOT SO URGENT AS TO PRECLUDE POSTPONING BID OPENING UNTIL THE MERITS OF THE PROTEST CAN BE DECIDED. HOWEVER, WE ARE AWARE OF NO STATUTORY OR REGULATORY REQUIREMENT FOR SUCH POSTPONEMENT. ADDITIONALLY, IT WOULD APPEAR THAT A NUMBER OF CIRCUMSTANCES INFLUENCED THE CONTRACTING OFFICER IN DECIDING THAT SUCH POSTPONEMENT WOULD NOT BE NECESSARY FOR PURPOSES OF RESOLVING STORM VULCAN'S PROTEST. THUS, THE RECORD INDICATES THE FOLLOWING OCCURRED AFTER ISSUANCE OF AMENDMENT 0003 ON AUGUST 5, 1969, WHICH SUBSTITUTED A REQUIREMENT FOR A 32 INCH WHEEL:

"5. THEREAFTER, BY LETTER DATED 13 AUGUST 1969 (INCL 10) STORM VULCAN, INC. ADVISED THAT ITS CRANKSHAFT GRINDER OTHERWISE MEETING THE STATED REQUIREMENTS COULD NOT ACCOMMODATE LARGER THAN A 28 INCH GRINDING WHEEL. IN ANTICIPATION OF THE TIME NECESSARY TO REVIEW THE REFERENCED LETTER, AMENDMENT 0004 (INCL 11) WAS ISSUED ON 19 AUGUST 1969 EXTENDING THE OPENING DATE TO 15 SEPTEMBER 1969. BY AMSWE-SMM-TE 1ST IND DATED 22 AUGUST 1969 (INCL 12) ROCK ISLAND ARSENAL WAS ADVISED:

'1. REQUIREMENTS AND ADVANTAGES OF THE MINIMUM 32 IN. OD WHEEL HAVE BEEN REVIEWED.

'2. CHANGES AND DEVIATIONS FROM THE CURRENT CAPACITIES ARE NOT RECOMMENDED.'

"BY LETTER DATED 4 SEPTEMBER 1969 (INCL 13), STORM VULCAN, INC. SUBMITTED 'ADDITIONAL COMMENTS' WHICH ALSO WERE FORWARDED TO THE TOOLS & EQUIPMENT DIVISION, NATIONAL MAINTENANCE POINT, WHO, BY AMSWE-SMM-TE 1ST IND DATED 17 SEPTEMBER 1969 (INCL 14) CONCLUDED:

'4. THIS DIVISION DOES NOT CONCUR IN THE REQUESTED CHANGE.'"

APPARENTLY IN THE BELIEF THAT THE FOREGOING REQUIRED A CONCLUSION THE PROTEST LACKED MERIT, AND SINCE THE RECEIPT OF SEVEN BID ENVELOPES AT BID OPENING TIME ALSO APPEARED TO BE INCONSISTENT WITH STORM VULCAN'S CONTENTION THAT THE SPECIFICATIONS WERE RESTRICTIVE OF COMPETITION, THE CONTRACTING OFFICER PROCEEDED WITH THE BID OPENING. WHILE SUBSEQUENT DEVELOPMENTS SHOWED THAT HIS BELIEFS WERE IN ERROR, WE ARE UNABLE TO CONCLUDE THAT HIS ACTION WAS WITHOUT REASONABLE FOUNDATION, OR WAS TAKEN IN OTHER THAN GOOD FAITH.

REGARDING YOUR CONTENTION THAT STORM VULCAN'S PROTEST WAS UNTIMELY AND SUBMITTED ONLY TO DELAY THE PROCUREMENT, THE RECORD QUOTED ABOVE INDICATES THAT STORM VULCAN HAD PREVIOUSLY ALLEGED BY LETTERS DATED AUGUST 13, 1969, AND SEPTEMBER 4, 1969, THAT THE SPECIFICATIONS WERE RESTRICTIVE AND THESE ALLEGATIONS HAD BEEN REJECTED, BY THE TOOLS AND EQUIPMENT DIVISION, NATIONAL MAINTENANCE POINT, WHO ON SEPTEMBER 17, 1969, NOTIFIED THE CONTRACTING OFFICER THAT THEY DID NOT CONCUR IN STORM VULCAN'S PROPOSED CHANGES. HOWEVER, STORM VULCAN NEVER RECEIVED A SPECIFIC ANSWER TO ITS LETTERS OF AUGUST 13 AND SEPTEMBER 4, 1969. THEREFORE, IT APPEARS THAT STORM VULCAN'S DELAY IN SUBMITTING A FORMAL PROTEST UNTIL IMMEDIATELY PRIOR TO BID OPENING MAY BE ATTRIBUTED TO A LACK OF ANSWER TO ITS PREVIOUS LETTERS, RATHER THAN TO A DELIBERATE ATTEMPT TO DELAY THE PROCUREMENT.

CONCERNING THE ACTION WHICH SHOULD HAVE BEEN TAKEN FOLLOWING BID OPENING, IT IS YOUR CONTENTION THAT AN AWARD SHOULD HAVE BEEN MADE TO YOUR COMPANY, SINCE YOUR BID PRICE WAS EXPOSED BY THE BID OPENING, AND THAT CANCELLATION OF THE SOLICITATION FOLLOWING SUCH EXPOSURE WAS CONTRARY TO MAINTENANCE OF A FAIR AND SOUND BUSINESS-GOVERNMENT RELATIONSHIP. IN THIS CONNECTION, IT IS CERTAINLY TRUE THAT ANY TIME A SOLICITATION IS CANCELLED, SUCH ACTION MAY BE CONTRARY TO MAINTAINING A GOOD BUSINESS RELATIONSHIP WITH THOSE COMPANIES WHO SUBMITTED A BID THEREUNDER. CONVERSELY, ANY TIME AN AWARD IS MADE PURSUANT TO A RESTRICTIVE SOLICITATION, SUCH ACTION MAY BE CONTRARY TO MAINTAINING A GOOD BUSINESS RELATIONSHIP WITH THOSE COMPANIES WHICH WERE PRECLUDED FROM SUBMITTING A RESPONSIVE BID THEREUNDER BECAUSE OF THE RESTRICTIVE NATURE OF THE SOLICITATION. THE PRIMARY QUESTION THEREFORE IS WHAT CRITERIA SHOULD BE APPLIED IN DETERMINING WHETHER A GIVEN SOLICITATION SHOULD, OR SHOULD NOT, BE CANCELLED AFTER BID OPENING. IN LINE WITH THIS, ASPR 2-404.1 PROVIDES IN PERTINENT PART:

"(A) THE PRESERVATION OF THE INTEGRITY OF THE COMPETITIVE BID SYSTEM DICTATES THAT AFTER BIDS HAVE BEEN OPENED, AWARD MUST BE MADE TO THAT RESPONSIBLE BIDDER WHO SUBMITTED THE LOWEST RESPONSIVE BID, UNLESS THERE IS A COMPELLING REASON TO REJECT ALL BIDS AND CANCEL THE INVITATION * * *.

"(B) * * * INVITATIONS FOR BIDS MAY BE CANCELLED AFTER OPENING BUT PRIOR TO AWARD WHERE SUCH ACTION IS CONSISTENT WITH (A) ABOVE AND THE CONTRACTING OFFICER DETERMINES IN WRITING THAT--

(II) SPECIFICATIONS HAVE BEEN REVISED.

(EMPHASIS SUPPLIED.)

IN THE INSTANT CASE, THE RECORD INDICATES THAT FOLLOWING RECEIPT OF ONLY ONE RESPONSIVE BID, THE SPECIFICATIONS WERE AGAIN REVIEWED AND IT WAS CONCLUDED THAT THE NEEDS OF THE GOVERNMENT COULD BE MET BY A GRINDER WITH A 28 INCH WHEEL.

IN 41 COMP. GEN. 348, 351 (1961) WE STATED:

"THE ADVERTISING STATUTES HAVE CONSISTENTLY BEEN HELD TO REQUIRE THAT EVERY EFFORT SHOULD BE MADE BY THE PROCUREMENT AGENCIES * * * TO STATE SPECIFICATIONS IN TERMS THAT WILL PERMIT THE BROADEST FIELD OF COMPETITION WITHIN THE NEEDS REASONABLY REQUIRED, NOT THE MAXIMUM DESIRED. * * *"

IT FOLLOWS THAT SPECIFICATIONS WHICH ARE FOUND TO BE UNDULY RESTRICTIVE OF COMPETITION, ARE LEGALLY DEFECTIVE, AND THE PROPER COURSE TO FOLLOW IN THIS TYPE OF CASE IS TO READVERTISE ON THE BASIS OF SPECIFICATIONS WHICH SET OUT ONLY THE ACTUAL NEEDS OF THE GOVERNMENT, AND WHICH WILL THEREFORE PERMIT THE BROADEST FIELD OF COMPETITION. 33 COMP. GEN. 567 (1954). IS OUR OPINION THAT, UNDER THE FACTS IN THIS CASE, THE CONTRACTING OFFICER CORRECTLY DETERMINED THAT NO AWARD SHOULD BE MADE AND THAT BIDS SHOULD BE RESOLICITED UNDER REVISED SPECIFICATIONS.

WHILE IT IS REGRETTABLE THAT YOUR BID PRICE WAS EXPOSED, IT HAS BEEN OUR CONSISTENT POSITION THAT NEITHER SUCH EXPOSURE, NOR THE POSSIBILITY OF HIGHER BID PRICES ON THE RESOLICITATION, WOULD EITHER REQUIRE OR JUSTIFY AN AWARD BASED UPON RESTRICTIVE SPECIFICATIONS IF THE RESOLICITATION IS TO BE ACCOMPLISHED ON THE BASIS OF SPECIFICATIONS WHICH ARE DIFFERENT IN ANY MATERIAL RESPECT FROM THE SPECIFICATIONS ON WHICH THE EXPOSED BID PRICE WAS COMPUTED. SEE 41 COMP. GEN. 76 (1961); ID. 593 (1962); 46 COMP. GEN. 825 (1967).

FOR THE REASONS STATED, WE ARE UNABLE TO CONCLUDE THAT THE REJECTION OF YOUR BID OR THE SUBSEQUENT RESOLICITATION WAS IMPROPER. ACCORDINGLY, YOUR PROTEST MUST BE DENIED.