B-169712, AUG. 11, 1970

B-169712: Aug 11, 1970

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REJECTION ON BASIS OF EXCESSIVE PRICE WAS PROPER. INC.: FURTHER REFERENCE IS MADE TO YOUR LETTER OF APRIL 28. THE ADVERTISED SOLICITATION FPNGG-W-70774-A-12-4-69 WAS ISSUED NOVEMBER 14. WHICHEVER WAS LATER. THREE OFFERS WERE RECEIVED AND OPENED ON DECEMBER 4. YOUR BID WAS THE HIGHEST OF THE THREE RECEIVED. THE LOW BIDDER WAS DETERMINED TO BE NONRESPONSIVE BECAUSE IT OFFERED A PRODUCT OTHER THAN THAT SPECIFIED. WAS ALSO FOUND TO BE NONRESPONSIVE BECAUSE OF AN EXCEPTION IT TOOK TO A PACKAGING REQUIREMENT SET FORTH IN THE SPECIFICATIONS. THE OFFER OF YOUR FIRM WAS THE ONLY RESPONSIVE OFFER RECEIVED FOR ITEMS 74 THROUGH 83. THE CONTRACTING OFFICER FOUND THE PRICES BID BY YOUR FIRM TO BE EXCESSIVE AND DETERMINED THAT IT WAS IN THE BEST INTEREST OF THE GOVERNMENT TO CANCEL THE PROCUREMENT AND PROCURE ITEMS 74 THROUGH 83 THROUGH NEGOTIATION.

B-169712, AUG. 11, 1970

BID PROTEST -- CANCELLATION OF INVITATION AND REPROCUREMENT ON NEGOTIATED BASIS DENIAL OF PROTEST OF LINCOLN WATER CONDITIONING AGAINST CANCELLATION OF INVITATION FOR REQUIREMENTS TYPE CONTRACT FOR FURNISHING SOAP TO FEDERAL SUPPLY SERVICE, GSA. WHERE ONLY RESPONSIVE BID AVERAGED 11 PER CENT HIGHER THAN FOR SUPPLIES OFFERED BY SAME BIDDER UNDER RECENT CONTRACT, REJECTION ON BASIS OF EXCESSIVE PRICE WAS PROPER.

TO LINCOLN WATER CONDITIONING COLBY ENTERPRISES, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF APRIL 28, 1970, PROTESTING THE AWARD OF CONTRACT UNDER TELEGRAPHIC SOLICITATION NO. FPNGG-W-70774-N, ISSUED BY THE PROCUREMENT OPERATIONS DIVISION, FEDERAL SUPPLY SERVICE, GENERAL SERVICES ADMINISTRATION, WASHINGTON, D.C.

THE ADVERTISED SOLICITATION FPNGG-W-70774-A-12-4-69 WAS ISSUED NOVEMBER 14, 1969, AND INVOLVED A REQUIREMENTS CONTRACT FOR 109 ITEMS OF LAUNDRY AND TOILET SOAP FOR A PERIOD COMMENCING APRIL 1, 1970, OR DATE OF AWARD, WHICHEVER WAS LATER, THROUGH MARCH 31, 1971. THREE OFFERS WERE RECEIVED AND OPENED ON DECEMBER 4, 1969, FOR ITEMS 74 THROUGH 83 COVERING TOILET SOAP. YOUR BID WAS THE HIGHEST OF THE THREE RECEIVED. HOWEVER, THE LOW BIDDER WAS DETERMINED TO BE NONRESPONSIVE BECAUSE IT OFFERED A PRODUCT OTHER THAN THAT SPECIFIED. THE SECOND LOW BID, THAT OF THE PROCTER & GAMBLE DISTRIBUTING COMPANY (P&G), WAS ALSO FOUND TO BE NONRESPONSIVE BECAUSE OF AN EXCEPTION IT TOOK TO A PACKAGING REQUIREMENT SET FORTH IN THE SPECIFICATIONS.

THE OFFER OF YOUR FIRM WAS THE ONLY RESPONSIVE OFFER RECEIVED FOR ITEMS 74 THROUGH 83. HOWEVER, THE PRICES OFFERED BY YOUR FIRM AVERAGED 11 PERCENT HIGHER THAN THOSE FOR COMPARABLE DESTINATIONS FOR THE SAME SUPPLIES UNDER THE MOST RECENT DEFINITE QUANTITY CONTRACT AWARDED TO YOUR FIRM IN OCTOBER 1969. THE CONTRACTING OFFICER FOUND THE PRICES BID BY YOUR FIRM TO BE EXCESSIVE AND DETERMINED THAT IT WAS IN THE BEST INTEREST OF THE GOVERNMENT TO CANCEL THE PROCUREMENT AND PROCURE ITEMS 74 THROUGH 83 THROUGH NEGOTIATION.

ON FEBRUARY 6, 1970, TELEGRAPHIC SOLICITATION NO. FPNGG-W-70774-N WAS SENT OUT TO YOUR FIRM AND P&G.THE SUBJECT SOLICITATION INCORPORATED BY REFERENCE ALL THE TERMS AND CONDITIONS OF THE PREVIOUS ADVERTISED SOLICITATION. BY LETTER DATED FEBRUARY 27, 1970, P&G SUBMITTED ITS FINAL OFFER ON ALL OF THE ITEMS INVOLVED, OFFERING, HOWEVER, ONLY ITEM 83 IN ACCORDANCE WITH SPECIFICATION REQUIREMENTS AND WITHOUT EXCEPTION THERETO AT $0.4089 PER POUND. YOUR FINAL OFFER FOR ITEM 83 WAS $0.4582 PER POUND. IT IS ADMINISTRATIVELY REPORTED THAT YOUR OFFER WAS 5 TO 9 PERCENT HIGHER THAN THOSE FOR THE SAME SUPPLIES UNDER THE MOST RECENT DEFINITE QUANTITY CONTRACT AWARDED TO YOUR FIRM IN OCTOBER 1969. AWARD OF ITEM 83 WAS MADE TO P&G AS LOWEST RESPONSIVE OFFEROR ON MARCH 11, 1970. IT IS ADMINISTRATIVELY REPORTED THAT NO AWARDS HAVE BEEN MADE ON ITEMS 74 THROUGH 82.

SECTION 1-2.404-1(A) OF THE FEDERAL PROCUREMENT REGULATIONS (FPR) PROVIDES, IN EFFECT, THAT AFTER BIDS HAVE BEEN OPENED AWARD MUST BE MADE TO THE LOWEST RESPONSIBLE BIDDER UNLESS THERE IS A COMPELLING REASON TO REJECT ALL THE BIDS AND READVERTISE. ONE OF THE REASONS LISTED IN FPR SEC. 1-2.404-1(B)(5) AS JUSTIFYING CANCELLATION OF THE INVITATION AFTER OPENING IS THAT ALL OTHERWISE ACCEPTABLE BIDS RECEIVED ARE AT UNREASONABLE PRICES. THE ISSUE HERE IS WHETHER THE ACTION OF THE CONTRACTING OFFICER IN DETERMINING YOUR BID PRICE TO BE EXCESSIVE AND IN CANCELING THE IFB REPRESENTED AN ABUSE OF DISCRETION.

THE RIGHT TO REJECT ALL BIDS IS RESERVED TO THE GOVERNMENT UNDER PARAGRAPH 10(B) OF STANDARD FORM 33A, WHICH WAS PART OF THE SOLICITATION. CONTRACTING OFFICERS ARE CLOTHED WITH A BROAD POWER OF DISCRETION IN DECIDING WHETHER AN INVITATION FOR BIDS SHOULD OR SHOULD NOT BE CANCELED AND OUR OFFICE WILL NOT INTERFERE WITH SUCH A DETERMINATION UNLESS IT WAS ARBITRARY OR CAPRICIOUS AND NOT BASED ON SUBSTANTIAL EVIDENCE. 39 COMP. GEN. 396 (1959). IN 36 COMP. GEN. 364, 365-366 (1956) WE 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 ***

UPON REVIEW OF THE RECORD BEFORE US, WE CANNOT CONCLUDE THE CONTRACTING OFFICER ABUSED HIS DISCRETION IN REJECTING YOUR EXCESSIVELY HIGH BID AND IN CANCELING THE IFB.

IN RESPONSE TO YOUR ALLEGATION THAT IT WAS UNFAIR TO MAKE THE AWARD TO P&G BECAUSE IT IS A "BIG BUSINESS FIRM," IT SHOULD BE NOTED THAT NEITHER THE ADVERTISED PROCUREMENT NOR THE NEGOTIATED SOLICITATION WAS RESTRICTED TO SMALL BUSINESS FIRMS.

WHILE WE REGRET THAT YOU MADE AN INVESTMENT IN ADDITIONAL FACILITIES IN ANTICIPATION OF BEING AWARDED THE CONTRACT, NO LEGAL BASIS EXISTS FOR AWARDING OF THE CONTRACT TO YOU OR FOR REIMBURSEMENT OF THE EXPENDITURES YOU MAY HAVE MADE IN ACQUIRING ADDITIONAL FACILITIES.

ACCORDINGLY, FOR THE REASONS SET FORTH ABOVE, YOUR PROTEST MUST BE DENIED.