B-168972, APR. 14, 1970

B-168972: Apr 14, 1970

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UNSUCCESSFUL RESPONSIVE BIDDER WHO CONTENDS CANCELLATION OF ORIGINAL INVITATION WAS IMPROPER AND THAT ITS PRICE WAS REASONABLE. OFFERS NO BASIS FOR OBJECTION SINCE IT WAS NOT ARBITRARY OR CAPRICIOUS FOR CONTRACTING OFFICER. PROTESTANT'S BID WAS OVER $1 MILLION IN EXCESS OF AND DOUBLE LOW BIDDER'S ALLEGED INTENDED BID PRICE WHICH COULD NOT BE ESTABLISHED PRECISELY. TO MATZKIN AND DAY LAW OFFICES: REFERENCE IS MADE TO YOUR LETTERS OF FEBRUARY 24. IFB 0211 WAS THE SECOND STEP OF AN ADVERTISED TWO STEP PROCUREMENT. WAS ISSUED DECEMBER 1. TO THREE SOURCES WHICH WERE TECHNICALLY ACCEPTABLE AFTER COMPLETION OF THE FIRST STEP OF THIS PROCUREMENT. THE SOLICITATION WAS FOR THE PURCHASE OF 164 EACH TACAN AN/ARM-135 TEST SETS.

B-168972, APR. 14, 1970

BIDS--DISCARDING ALL BIDS--PRICES EXCESSIVE UNDER INVITATION, REPRESENTING SECOND STEP OF ADVERTISED 2-STEP PROCUREMENT, FOR TACAN TEST SETS (AN/ARM-135), INITIAL PROCUREMENT WITH COST COMPARISONS OF PREVIOUS GENERATOR SETS UNREALISTIC, UNSUCCESSFUL RESPONSIVE BIDDER WHO CONTENDS CANCELLATION OF ORIGINAL INVITATION WAS IMPROPER AND THAT ITS PRICE WAS REASONABLE, OFFERS NO BASIS FOR OBJECTION SINCE IT WAS NOT ARBITRARY OR CAPRICIOUS FOR CONTRACTING OFFICER, ON NOTICE OF IMBALANCE IN PRICING, TO REJECT ALL BIDS AND RESOLICIT. PROTESTANT'S BID WAS OVER $1 MILLION IN EXCESS OF AND DOUBLE LOW BIDDER'S ALLEGED INTENDED BID PRICE WHICH COULD NOT BE ESTABLISHED PRECISELY. SEE COMP. GEN. DECS. CITED.

TO MATZKIN AND DAY LAW OFFICES:

REFERENCE IS MADE TO YOUR LETTERS OF FEBRUARY 24, 1970, AND APRIL 1, 1970, PROTESTING ON BEHALF OF HOFFMAN ELECTRONICS CORPORATION (HOFFMAN), THE CANCELLATION OF INVITATION FOR BIDS NO. F33657-70-B-0211 (IFB 0211) AND RESOLICITATION UNDER INVITATION FOR BIDS NO. F33657-70-B 0685 (IFB 0685) ISSUED BY HEADQUARTERS AERONAUTICAL SYSTEMS DIVISION, AIR FORCE SYSTEMS COMMAND, WRIGHT-PATTERSON AIR FORCE BASE, OHIO.

IFB 0211 WAS THE SECOND STEP OF AN ADVERTISED TWO STEP PROCUREMENT, AND WAS ISSUED DECEMBER 1, 1969, TO THREE SOURCES WHICH WERE TECHNICALLY ACCEPTABLE AFTER COMPLETION OF THE FIRST STEP OF THIS PROCUREMENT. THE SOLICITATION WAS FOR THE PURCHASE OF 164 EACH TACAN AN/ARM-135 TEST SETS. IFB 0211 WAS OPENED ON DECEMBER 16, 1969, WITH BID PRICES SUMMARIZED AS FOLLOWS:

REPUBLIC ELECTRONIC INDUSTRIES, INC. (REPUBLIC)

UNIT PRICE AMT TOTAL AMT

FOR 164 UNITS ITEM 1, 8 FIRST ARTICLES

$3,623 $ 28,984 ITEM 2, INCREMENT 1-91 3,623 329,693

INCREMENT 2-156 3,623 565,188 ITEM 3, DATA NO CHARGE NO CHARGE $ 594,172

HOFFMAN ELECTRONICS CORPORATION (HOFFMAN) ITEM 1, 8 FIRST ARTICLES $62,500 $ 500,000 ITEM 2, INCREMENT 1-91 11,909 1,803,719

INCREMENT 2-156 11,118 1,734,408 ITEM 3, DATA LOT

112,253 $2,346,661

GENERAL DYNAMICS WAS ALSO ELIGIBLE TO SUBMIT A BID BUT DID NOT DO SO.

DUE TO THE GREAT VARIANCE IN THE BIDS, REPUBLIC WAS REQUESTED TO VERIFY ITS BID. REPUBLIC THEN ALLEGED A MISTAKE IN BID AND REQUESTED PERMISSION TO INCREASE ITS BID TO $1,188,344. PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2-406.3 (A) (3) IT WAS DETERMINED BY THE ACTING STAFF JUDGE ADVOCATE, HQ.AFLC, THAT ALTHOUGH CLEAR AND CONVINCING EVIDENCE WAS PRESENTED THAT REPUBLIC MADE A BONA FIDE MISTAKE IN ITS BID, CLEAR AND CONVINCING EVIDENCE WAS NOT PRESENTED AS TO THE BID ACTUALLY INTENDED, AND THEREFORE REPUBLIC SHOULD BE PERMITTED TO WITHDRAW BUT NOT TO CORRECT ITS BID. THE CONTRACTING OFFICER ADVISED REPUBLIC THAT ITS BID WOULD BE CONSIDERED TO HAVE BEEN WITHDRAWN UNLESS IT WAS WILLING TO ACCEPT AN AWARD BASED ON THE PRICES ORIGINALLY SUBMITTED. ON FEBRUARY 2, 1970, REPUBLIC PROTESTED THIS DETERMINATION TO THIS OFFICE.

THE CONTRACTING OFFICER THEN DETERMINED THAT THE PRICE SUBMITTED BY HOFFMAN, THE ONLY REMAINING BIDDER, WAS UNREASONABLY HIGH, AND THAT AN AWARD AT THAT PRICE WOULD NOT BE IN THE GOVERNMENT'S BEST INTEREST. THEREFORE, IT WAS RECOMMENDED THAT IFB 0211 BE CANCELLED. ON FEBRUARY 11, 1970, THE PROCUREMENT AND PRODUCTION OFFICE (ASK) AT AERONAUTICAL SYSTEMS DIVISION AUTHORIZED CANCELLATION OF IFB 0211 PURSUANT TO THE PROVISIONS OF ASPR 2-404.1 (B) (VI) AND (VIII). THE IFB WAS CANCELLED ON FEBRUARY 13, 1970, AND THE REQUIREMENTS WERE READVERTISED UNDER IFB 0685 ON FEBRUARY 13, 1970, WITH BIDS SCHEDULED FOR OPENING ON MARCH 18, 1970. REPUBLIC THEN WITHDREW ITS PROTEST; HOWEVER, HOFFMAN NOW PROTESTS THE DECISION OF THE CONTRACTING OFFICER TO CANCEL IFB 0211 AND TO RESOLICIT UNDER IFB 0685.

YOU CONTEND THAT THE CANCELLATION OF THE ORIGINAL INVITATION WAS IMPROPER AND THAT HOFFMAN'S BID PRICE UNDER IFB 0211 WAS FAIR AND REASONABLE; THAT THERE WAS NO COGENT REASON FOR CANCELLATION OF THE ORIGINAL INVITATION SINCE THE ONLY BASIS FOR DETERMINING THAT HOFFMAN'S BID WAS UNREASONABLE WAS THE COMPARISON OF HOFFMAN'S OFFERED PRICE WITH REPUBLIC'S OFFERED CORRECTED PRICE WHICH THE AIR FORCE HAD PREVIOUSLY REFUSED TO ACCEPT; THAT THE NOTICE OF CANCELLATION OF FEBRUARY 13, 1970, DID NOT SPECIFY THE BASIS FOR THE CANCELLATION. IT IS FURTHER CONTENDED THAT THE OBJECTIVE OF THE GOVERNMENT IN REJECTING THE HOFFMAN BID AS UNREASONABLE AND RESOLICITING THIS PROCUREMENT WAS TO GIVE REPUBLIC A SECOND OPPORTUNITY TO BID.

THE CONTRACTING OFFICER REPORTS THAT THIS WAS THE INITIAL PROCUREMENT OF THE TACAN TEST SET (AN/ARM-135) AND THUS COST COMPARISONS WITH PREVIOUS GENERATION TACAN TEST SETS WERE UNREALISTIC. IT IS FURTHER REPORTED THAT THE GOVERNMENT TECHNICAL AGENCY RECEIVED AND REVIEWED FINANCIAL INFORMATION FROM REPUBLIC AND CONCLUDED THAT $7,000 TO $9,000 IS A FAIR UNIT PRICE RANGE FOR THE ARM 135 FOR THE QUANTITY TO BE PROCURED UNDER THIS PROCUREMENT. THE CONTRACTING OFFICER RELIED UPON THIS INFORMATION AS A BASIS TO SEEK CANCELLATION OF THE IFB FOR UNREASONABLE PRICE.

THE ISSUE TO BE RESOLVED IS WHETHER THE CONTRACTING OFFICER'S DETERMINATION, THAT HOFFMAN'S BID PRICE ON IFB 0211 WAS SO UNREASONABLE AS TO JUSTIFY CANCELLATION OF THE INVITATION, SHOULD BE SET ASIDE BY THIS OFFICE.

THE RIGHT TO REJECT ALL BIDS IS RESERVED TO THE GOVERNMENT UNDER PARAGRAPH 10 (B) OF STANDARD FORM 33A, WHICH IS PART OF THE SOLICITATION. IN ADDITION, THE HEAD OF THE AGENCY IS GIVEN THE RIGHT UNDER 10 U.S.C. 2305 (C) TO REJECT ALL BIDS WHEN HE DEEMS THAT ACTION TO BE IN THE PUBLIC INTEREST. IT HAS LONG BEEN HELD THAT THE ADVERTISING STATUTES WERE ENACTED FOR THE PROTECTION OF THE GOVERNMENT AND THE ISSUANCE OF AN INVITATION FOR BIDS DOES NOT CARRY WITH IT ANY ABSOLUTE OBLIGATION TO ACCEPT ANY OF THE BIDS RECEIVED, INCLUDING THE LOWEST RESPONSIBLE BID. SEE 37 COMP. GEN. 760 (1958). THE AUTHORITY TO REJECT ALL BIDS IS NOT ORDINARILY SUBJECT TO REVIEW BY THE COURTS OR OUR OFFICE. 39 COMP. GEN. 86 (1959).

THIS OFFICE HAS HELD THAT:

"WHEN IN THE LIGHT OF ALL THE FACTS, INCLUDING THOSE DISCLOSED BY THE BIDDING, IT IS ADMINISTRATIVELY DETERMINED THAT THE LOWEST ACCEPTABLE BID IS IN EXCESS OF THE AMOUNT FOR WHICH THE GOVERNMENT SHOULD BE ABLE TO OBTAIN THE SUPPLIES OR SERVICES SOUGHT, WE BELIEVE THAT THE REJECTION OF ALL BIDS AND READVERTISING OF THE CONTRACT IS A PROPER EXERCISE OF THE ADMINISTRATIVE DISCRETION, IN CONFORMITY WITH THE DUTY OF THE ADMINISTRATIVE OFFICIALS TO ACT IN THE BEST INTEREST OF THE GOVERNMENT. * * IT IS NO DOUBT REGRETTABLE THAT ALL BIDDERS ARE AWARE OF THE AMOUNTS ORIGINALLY QUOTED BY THEIR COMPETITORS, BUT THEY ALSO ARE BETTER ADVISED AS TO WHAT PRICE RANGE IS CONSIDERED REASONABLE BY THE GOVERNMENT'S REPRESENTATIVES, AND ALL HAVE EQUAL OPPORTUNITIES TO SUBMIT SUCH NEW BIDS AS THEY WILL." (EMPHASIS SUPPLIED.) 36 COMP. GEN. 364 AT 365, 366 (1956).

IN ADDITION, AS STATED ABOVE, CONTRACTING OFFICERS ARE CLOTHED WITH BROAD POWERS OF DISCRETION IN DECIDING WHETHER AN INVITATION FOR BIDS SHOULD OR SHOULD NOT BE CANCELLED AND OUR OFFICE WILL NOT INTERFERE WITH SUCH A DETERMINATION UNLESS IT IS ARBITRARY OR CAPRICIOUS. 39 COMP. GEN. 396 (1959).

WE HAVE HELD THAT THE BID OF A NONRESPONSIVE BIDDER IS RELEVANT TO THE DETERMINATION OF WHAT IS A REASONABLE BID. B-161608, AUGUST 23, 1967. ANOTHER INSTANCE, WE DECIDED THAT WHERE A BIDDER COULD NOT SUBMIT SUFFICIENT EVIDENCE TO PERMIT CORRECTION, BUT THE NEXT ACCEPTABLE BID WAS $500,000 HIGHER THAN THE LOW BIDDER'S ALLEGED INTENDED BID, IT WAS NOT IMPROPER TO COMPARE THE TWO BIDS IN DETERMINING THAT THE ONLY ACCEPTABLE BID WAS UNREASONABLE. B-154449, OCTOBER 30, 1964. SEE ALSO B-165045, DECEMBER 26, 1968.

IN THE PRESENT CASE, CONSIDERING THE FACT THAT HOFFMAN'S BID WAS OVER $1 MILLION IN EXCESS OF, AND VIRTUALLY DOUBLE, REPUBLIC'S ALLEGED INTENDED BID PRICE, WE DO NOT BELIEVE THAT REPUBLIC'S INABILITY TO ESTABLISH ITS INTENDED PRICE SO PRECISELY AS TO REQUIRE ITS CORRECTION REQUIRES ANY PRESUMPTION THAT HOFFMAN'S PRICE WAS REASONABLE OR PRECLUDES CONSIDERATION OF INFORMATION FURNISHED BY REPUBLIC IN SUPPORT OF ITS ESTIMATED COSTS.

YOU ALSO ALLEGE THAT THE CANCELLATION NOTICE OF FEBRUARY 13, 1970, WAS INEFFECTIVE BECAUSE IT DID NOT SPECIFICALLY SET FORTH THE REASONS WHY THE IFB WAS CANCELLED, AS DIRECTED BY ASPR 2-404.3. WHILE THE NOTICE OF FEBRUARY 13, 1970, MAY NOT HAVE LITERALLY FOLLOWED THE ASPR GUIDELINES, WE FEEL THAT THIS IS PURELY AN ADMINISTRATIVE MATTER, WHICH DID NOT GO TO THE SUBSTANCE OF THE ACTION TAKEN, SINCE THE OMITTED INFORMATION WOULD HAVE BEEN READILY AVAILABLE TO HOFFMAN IF REQUESTED. WE FIND NO SUBSTANTIAL REASON TO QUESTION THE CANCELLATION OF THE SOLICITATION ON THIS GROUND.

FOR THE REASONS STATED, WE CONCLUDE THAT IT WAS NOT ARBITRARY OR CAPRICIOUS FOR THE CONTRACTING OFFICER, BEING ON NOTICE OF THE IMBALANCE IN PRICING, TO REJECT ALL BIDS RECEIVED AND RESOLICIT. IN THE CIRCUMSTANCES, WE FIND THAT CANCELLATION OF THE INVITATION WAS A REASONABLE EXERCISE OF THE ADMINISTRATIVE DISCRETION, AND YOUR PROTEST IS THEREFORE DENIED.