B-169503, JUN. 19, 1970

B-169503: Jun 19, 1970

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

DETERMINED NONRESPONSIBLE BY PREAWARD SURVEY DUE TO UNSATISFACTORY PERFORMANCE RECORD BUT CERTIFICATE OF COMPETENCY WAS ISSUED BY SMALL BUSINESS ADMINISTRATION. IS DENIED PROTEST TO CANCELLATION OF INVITATION AND ORAL RESOLICITATION OF REQUIREMENT AS RESULT OF UNREASONABLY HIGH PRICE COMPARED WITH PRICE RECEIVED AND VERIFIED UNDER URGENT REQUIREMENT SOLICITATION AWARDED PENDING DETERMINATION OF BIDDER'S RESPONSIBILITY. SINCE 10 U.S.C. 2305(C) PROVIDES THAT ALL BIDS SOLICITED IN RESPONSE TO ADVERTISED SOLICITATION MAY BE REJECTED WHEN IN GOVERNMENT'S BEST INTEREST AND NO PROPER BASIS IS FOUND TO QUESTION DETERMINATION THAT BIDDER'S PRICE WAS UNREASONABLE AND EXCESSIVE IN AMOUNT. INC.: REFERENCE IS MADE TO YOUR TELEGRAM DATED APRIL 6.

B-169503, JUN. 19, 1970

BIDDERS--QUALIFICATIONS--PREAWARD SURVEYS--PERFORMANCE RECORD UNSATISFACTORY UNSUCCESSFUL BIDDER, DETERMINED NONRESPONSIBLE BY PREAWARD SURVEY DUE TO UNSATISFACTORY PERFORMANCE RECORD BUT CERTIFICATE OF COMPETENCY WAS ISSUED BY SMALL BUSINESS ADMINISTRATION, IS DENIED PROTEST TO CANCELLATION OF INVITATION AND ORAL RESOLICITATION OF REQUIREMENT AS RESULT OF UNREASONABLY HIGH PRICE COMPARED WITH PRICE RECEIVED AND VERIFIED UNDER URGENT REQUIREMENT SOLICITATION AWARDED PENDING DETERMINATION OF BIDDER'S RESPONSIBILITY, SINCE 10 U.S.C. 2305(C) PROVIDES THAT ALL BIDS SOLICITED IN RESPONSE TO ADVERTISED SOLICITATION MAY BE REJECTED WHEN IN GOVERNMENT'S BEST INTEREST AND NO PROPER BASIS IS FOUND TO QUESTION DETERMINATION THAT BIDDER'S PRICE WAS UNREASONABLE AND EXCESSIVE IN AMOUNT. SEE COMP. GEN. DECS. CITED.

TO IMCO PRECISION PRODUCTS, INC.:

REFERENCE IS MADE TO YOUR TELEGRAM DATED APRIL 6, 1970, AND LETTERS OF APRIL 7 AND MAY 6, 1970, PROTESTING THE AWARD OF A CONTRACT TO ANY OTHER BIDDER, UNDER ORAL SOLICITATION (RFQ) NO. DAAF01-70-Q-3409, ISSUED SUBSEQUENT TO THE CANCELLATION OF FORMALLY ADVERTISED SOLICITATION NO. DAAF01-70-B-0126, BY THE ARMY MATERIAL COMMAND, ROCK ISLAND ARSENAL (RIA), ILLINOIS.

SOLICITATION -0126, ISSUED ON AUGUST 22, 1969, FOR 268 EACH, SHAFT, CAM, IN ACCORDANCE WITH ARMY DRAWING F11699882. THREE BIDS WERE RECEIVED AND OPENED ON SEPTEMBER 5, 1969, AS FOLLOWS:

UNIT PRICE

SPEEDRING CORPORATION $265.00

IMCO PRECISION PRODUCTS, INC. (IMCO) 298.00

CAM TECHNOLOGY, INC. 366.02

YOUR COMPANY BECAME THE LOW RESPONSIVE BIDDER WHEN SPEEDRING CORPORATION'S BID WAS REJECTED AS NONRESPONSIVE. ON SEPTEMBER 16, 1969, THE CONTRACTING OFFICER REQUESTED THAT A PREAWARD SURVEY BE PERFORMED ON YOUR COMPANY BY THE DEFENSE SUPPLY AGENCY, DEFENSE CONTRACT ADMINISTRATION SERVICES DISTRICT, GARDER CITY, NEW YORK (DCASD). THE PREAWARD SURVEY DATED SEPTEMBER 25, 1969, RECOMMENDED AWARD TO YOUR COMPANY, "NOTWITHSTANDING THE CONTRACTOR'S UNSATISFACTORY PERFORMANCE RECORD, *** ." IN VIEW OF THE PERFORMANCE DEFICIENCIES CITED IN THE SURVEY REPORT INVOLVING CONTRACTS ADMINISTERED BY RIA, THE CONTRACTING OFFICER REQUESTED A RESURVEY BY DCASD. THE RESULTANT RESURVEY, DATED OCTOBER 20, 1969, RECOMMENDED "NO AWARD" TO YOUR CORPORATION FOR THE FOLLOWING REASON:

"DUE TO THE CONTRACTOR'S LACK OF APPROPRIATE MACHINE TOOLS, IT IS APPARENT THAT THE TIME PHASES AS REFLECTED IN THE PRODUCTION PHASE PLANNING CHART ARE CONSIDERED UNREALISTIC AND THEREFORE CANNOT BE ACCEPTED AS VALID."

ON DECEMBER 4, 1969, THE CONTRACTING OFFICER DETERMINED THAT YOUR CORPORATION WAS NONRESPONSIBLE WITHIN THE MEANING OF ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-902 AND 1-903, "BASED ON PRE-AWARD SURVEY *** WHICH RECOMMENDS 'NO AWARD' AND IN THE FACE OF THE CONTRACTOR'S PAST AND CURRENT DELINQUENCY RECORD, *** ." THEREAFTER, ON DECEMBER 9, 1969, THE CONTRACTING OFFICER TRANSMITTED HIS DOCUMENTED FINDINGS TO THE SMALL BUSINESS ADMINISTRATION (SBA), NEW YORK, FOR CERTIFICATE OF COMPETENCY (COC) CONSIDERATION. SBA ISSUED A COC, AND NOTIFIED RIA OF SUCH ISSUANCE BY LETTER OF JANUARY 2, 1970, CERTIFYING THAT "THE SUBJECT SMALL BUSINESS FIRM IS COMPETENT AS TO CAPACITY AND CREDIT, TO PERFORM THE PROPOSED PROCUREMENT *** ."

IN THE INTERIM, HOWEVER, DUE TO AN URGENT PURCHASE REQUEST FROM THE USING ACTIVITY, WHICH CITED CRITICAL SUPPLY REQUIREMENTS FOR SOUTHEAST ASIA, SOLICITATION NO. DAAF01-70-R-0405 WAS ISSUED ON DECEMBER 23, 1969, PURSUANT TO THE NATIONAL EMERGENCY EXCEPTION IN 10 U.S.C. 2304(A)(1) FOR THE PURCHASE OF AN ADDITIONAL 127 UNITS. FIVE OFFERS WERE RECEIVED PRIOR TO THE JANUARY 6, 1970, CLOSING DATE, RANGING FROM $102.23 TO $587 PER UNIT. A CONTRACT WAS AWARDED TO THE PROPOSER OFFERING THE LOW UNIT PRICE OF $102.23 SUBSEQUENT TO A DETAILED PRICE VERIFICATION AND ANALYSIS OF THE LOW OFFER.

THE CONTRACTING OFFICER REPORTS THAT DURING THE PERIOD IN WHICH THE DETERMINATION OF THE VALIDITY (ABSENCE OF ERROR) OF THE $102.23 OFFER ON NEGOTIATED SOLICITATION -0405 OCCURRED, ACTION ON ADVERTISED SOLICITATION -0126 WAS HELD IN ABEYANCE. AFTER ESTABLISHING THE VALIDITY AND BONA FIDES OF THE $102.23 OFFER, THE CONTRACTING OFFICER ON MARCH 19, 1970, " *** CONCLUDED THAT THE $298.00 UNIT PRICE BID BY IMCO WAS UNREASONABLE AND THAT AN AWARD AT SUCH PRICE WOULD NOT BE IN THE BEST INTEREST OF THE GOVERNMENT." FOR THAT REASON, THE CONTRACTING OFFICER CANCELLED SOLICITATION -0126 IN ACCORDANCE WITH ASPR 2 404.1(B)(VI).

ON MARCH 30, 1970, IN ACCORDANCE WITH THE REQUIREMENTS OF ASPR 3 501(D)(II), FOUR POTENTIAL SUPPLIERS, INCLUDING YOUR CORPORATION, WERE TELEPHONICALLY ADVISED THAT ORAL SOLICITATION (RFQ) NO. DAAF01-70-Q 3409 WAS OPEN AS OF MARCH 30 FOR THE URGENT PROCUREMENT OF THE 268 UNITS PREVIOUSLY SOLICITED UNDER SOLICITATION -0126. YOUR FIRM DID NOT RESPOND. ON APRIL 15, 1970, THE USING ACTIVITY ITERATED THE EXTREME URGENCY OF THE REQUIREMENT COVERED BY RFQ -3409, AND BASED THEREON, APPROVAL WAS REQUESTED TO PROCEED WITH AN AWARD NOTWITHSTANDING THE PROTEST BECAUSE OF THE URGENCY FOR THE CAM SHAFTS (ASPR 2 407.8(B)(3)(II)). UNTIL SUCH APPROVAL IS GRANTED OR, IF NOT GRANTED, WE ARE ADVISED THAT NO AWARD WILL BE MADE PENDING RESOLUTION OF THIS PROTEST.

IT IS CONTENDED THAT IMCO DID NOT RECEIVE WRITTEN NOTICE OF THE CANCELLATION OF ADVERTISED SOLICITATION -0126 FROM RIA. HOWEVER, IT IS ADMITTED THAT IMCO WAS ORALLY ADVISED OF SUCH CANCELLATION DUE TO EXCESSIVE PRICES ON MARCH 30, 1970, WHEN IMCO WAS INVITED TO PARTICIPATE IN ORAL SOLICITATION -3409. ALSO, IMCO ADVISED THAT SBA INFORMED IT OF THE CANCELLATION BY LETTER OF APRIL 30, 1970. ASPR 2 404.3 REQUIRES CONTRACTING OFFICERS TO NOTIFY EACH BIDDER THAT ALL BIDS HAVE BEEN REJECTED, STATING THE REASON FOR SUCH ACTION. SINCE THE CITED SECTION CONTAINS NO REQUIREMENT FOR WRITTEN NOTIFICATION, WE BELIEVE THAT THE PROCUREMENT ACTIVITY COMPLIED WITH THE NOTICE REQUIREMENT. SEE B-160899, APRIL 10, 1967. MOREOVER, IT APPEARS FROM THE RECORD THAT IMCO WAS NOTIFIED OF THE CANCELLATION ON MARCH 25, 1970, BY REGULAR MAIL.

WITHOUT DISCUSSING THE RESPONSIBILITY ASPECTS OF YOUR PROTEST, WE NOTE THAT THE CONTRACTING OFFICER DETERMINED THAT CANCELLATION OF SOLICITATION -0126 AND RESOLICITATION OF THE PROCUREMENT WOULD BE IN THE BEST INTEREST OF THE GOVERNMENT. THIS DETERMINATION WAS MADE IN THE LIGHT OF THE FACT THAT YOUR LOW UNIT BID PRICE OF $298 PER ITEM WAS EXCESSIVE WHEN COMPARED WITH THE AWARD PRICE OF $102.23 ON SOLICITATION -0405 FOR THE SAME ITEM. THE CONTRACTING OFFICER CONCLUDED THAT A PROSPECTIVE UNIT PRICE OF $102.23 FOR THE 268 UNIT REQUIREMENT WOULD RESULT IN A SAVING TO THE GOVERNMENT OF $52,466.36.

WE HAVE REVIEWED THE BID PRICE VERIFICATION PROCEDURES OF THE CONTRACTING OFFICER SUBSEQUENT TO RECEIPT OF THE $102.23 LOW OFFER RECEIVED IN RESPONSE TO NEGOTIATED SOLICITATION -0405. TO PRECLUDE A POSSIBLE LATER CLAIM OF MISTAKE, THE CONTRACTING OFFICER REQUESTED SEVERAL BID PRICE VERIFICATIONS FROM THE OFFEROR AND, IN ADDITION, RECEIVED AN INDEPENDENT COST ESTIMATE FROM A RIA INDUSTRIAL SPECIALIST BEFORE AWARD. WE ARE SATISFIED THAT "MEANINGFUL" BID PRICE VERIFICATION PROCEDURES WERE PERFORMED BY THE CONTRACTING OFFICER PRIOR TO THE AWARD MADE UNDER NEGOTIATED SOLICITATION -0405 AT THE $102.23 UNIT PRICE. SEE B-167954, OCTOBER 14, 1969, AND THE CASES CITED THEREIN.

THERE REMAINS FOR RESOLUTION THE QUESTION WHETHER THE CONTRACTING OFFICER DETERMINATION TO CANCEL SOLICITATION -0126 BECAUSE OF THE RECEIPT OF UNREASONABLE PRICES WAS JUSTIFIED UNDER THE CIRCUMSTANCES.

10 U.S.C. 2305(C) PROVIDES THAT ALL BIDS SOLICITED IN RESPONSE TO AN ADVERTISED SOLICITATION MAY BE REJECTED WHEN IT IS IN THE PUBLIC INTEREST TO DO SO. ALSO, PARAGRAPH 10(B) OF THE INSTRUCTIONS TO BIDDERS PROVIDES THAT THE GOVERNMENT MAY, WHEN IN ITS INTEREST, REJECT ANY OR ALL BIDS. THIS CONNECTION, ASPR 2-404.1 PROVIDES THAT AFTER BIDS HAVE BEEN OPENED, CANCELLATION OF A SOLICITATION IS PERMISSIBLE IF THERE IS A COMPELLING REASON TO REJECT ALL BIDS. ASPR 2-404.1(B)(VI) STATES THAT CANCELLATION OF A SOLICITATION AFTER BID OPENING, BUT PRIOR TO AWARD, IS JUSTIFIED WHERE "ALL OTHERWISE ACCEPTABLE BIDS RECEIVED ARE AT UNREASONABLE PRICES."

WHETHER OR NOT A LOW ACCEPTABLE BID IS IN EXCESS OF THE AMOUNT FOR WHICH THE GOVERNMENT SHOULD BE ABLE TO OBTAIN THE ITEMS OR SERVICES SOUGHT IS THE FUNCTION OF THE ADMINISTRATIVE AGENCY. IN THE ABSENCE OF BAD FAITH, ARBITRARY OR CAPRICIOUS ACTION BY CONTRACTING OFFICIALS, WE WILL NOT QUESTION THE REJECTION OF A LOW BID WHERE THE PRICE IS CONSIDERED TO BE EXCESSIVE. B-168972, APRIL 14, 1970; B-166679, JUNE 10, 1969, AND CASES CITED THEREIN; B-159865, OCTOBER 6, 1966.

MORE SPECIFICALLY, WE HELD IN B-147154, SUPRA, AS FOLLOWS:

" *** THE AUTHORITY TO REJECT BIDS IS NOT ORDINARILY SUBJECT TO REVIEW BY THIS OFFICE, AND WE HAVE SPECIFICALLY HELD THAT WHEN IT IS ADMINISTRATIVELY DETERMINED THAT THE LOWEST ACCEPTABLE BID IS IN EXCESS OF THE AMOUNT FOR WHICH THE GOVERNMENT SHOULD BE ABLE TO PROCURE THE PARTICULAR SUPPLIES, A REJECTION OF ALL BIDS AND A SOLICITATION OF NEW BIDS IS A PROPER EXERCISE OF ADMINISTRATIVE DISCRETION. *** ." MOREOVER, A CONTRACTING OFFICER'S AUTHORITY TO REJECT OR DISCARD ALL BIDS IS EXTREMELY BROAD. B-166679, SUPRA; 39 COMP. GEN. 396 (1959).

ON THE RECORD BEFORE US, WE FIND NO PROPER BASIS TO QUESTION THE DETERMINATION OF THE CONTRACTING OFFICER THAT THE PRICES BID UNDER SOLICITATION -0126 WERE UNREASONABLE AND EXCESSIVE IN AMOUNT. IN THIS REGARD, WE HAVE CONSISTENTLY HELD THAT CONTRACTING OFFICERS SHOULD REVIEW THE PROCUREMENT HISTORY OF AN ITEM BEING PROCURED TO DETERMINE WHETHER OR NOT BID PRICES RECEIVED ON A SUBSEQUENT SOLICITATION FOR THE SAME ITEM ARE UNREASONABLE AND EXCESSIVE. SEE, B-167299, AUGUST 11, 1969; B-156115, MAY 4, 1965; AND B-153974, JULY 14, 1964. MOREOVER, CONTRACTING OFFICERS NOT ONLY HAVE THE RIGHT TO REJECT A LOW BID WHICH IS UNREASONABLE AS TO PRICE, BUT, IN OUR VIEW, WOULD BE DERELICT IN THEIR DUTY IF THEY FAILED TO DO SO. SEE B-159865, SUPRA; AND B-162914, JANUARY 30, 1968.

ACCORDINGLY, YOUR PROTEST IS DENIED. THERE IS ENCLOSED A COPY OF OUR DECISION OF TODAY TO THE SECRETARY OF THE ARMY WHEREIN WE CONSIDERED THE PROTESTS AGAINST THE ACTIONS TAKEN WITH RESPECT TO PROCUREMENTS UNDER SOLICITATIONS DAAF01-70-B-0656, -0136, -0571, AND -0013.