B-169813(2), SEP. 15, 1970

B-169813(2): Sep 15, 1970

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THE INCLUSION OF A "ONE RESPONSIVE BID" CLAUSE TO SUPPORT CANCELLATION OF AN INVITATION WHEN ONLY ONE BID IS RECEIVED IS QUESTIONED AND ITS ELEMINATION RECOMMENDED. SECRETARY: ENCLOSED IS A COPY OF OUR DECISION OF TODAY TO AMERICAN AIR FILTER COMPANY. THIS PROTEST WAS THE SUBJECT OF A REPORT DATED JULY 30. ONE RESPONSIVE BID: "IN THE EVENT ONLY ONE RESPONSIVE BID IS RECEIVED FROM A RESPONSIBLE BIDDER. THE GOVERNMENT RESERVES THE RIGHT TO CANCEL THIS SOLICITATION AND RESOLICIT BY WHATEVER PROCEDURES ARE THEN APPROPRIATE.". THAT: " *** THIS PROVISION WAS DEVISED BY HUNTSVILLE DIVISION FOR USE IN THE SAFEGUARD PROGRAM TO PROVIDE FOR AN AWARD UNDER COMPETITIVE CIRCUMSTANCES. THIS PROVISION IS NOT IN CONFLICT WITH ANY PROVISION OF ASPR AND NO OBJECTION WAS MADE TO THE CLAUSE BY ANY BIDDER DURING THE BIDDING PERIOD. *** " IN OUR VIEW.

B-169813(2), SEP. 15, 1970

BID PROTEST -- "ONE RESPONSIVE BID" CLAUSE IN A DECISION TO THE SECRETARY OF THE ARMY, THE INCLUSION OF A "ONE RESPONSIVE BID" CLAUSE TO SUPPORT CANCELLATION OF AN INVITATION WHEN ONLY ONE BID IS RECEIVED IS QUESTIONED AND ITS ELEMINATION RECOMMENDED.

TO MR. SECRETARY:

ENCLOSED IS A COPY OF OUR DECISION OF TODAY TO AMERICAN AIR FILTER COMPANY, INC. (AAF), DENYING ITS PROTEST AGAINST THE CANCELLATION OF INVITATION FOR BIDS NO. DACA87-70-B-0005 BY THE ARMY ENGINEER DIVISION, HUNTSVILLE, ALABAMA. THIS PROTEST WAS THE SUBJECT OF A REPORT DATED JULY 30, 1970, FROM THE GENERAL COUNSEL, OFFICE OF THE CHIEF OF ENGINEERS.

IN SUPPORT OF ITS DECISION TO CANCEL THE INVITATION, THE PROCURING ACTIVITY RELIED ON THE FOLLOWING PROVISION INCLUDED IN THE INVITATION:

"5. ONE RESPONSIVE BID:

"IN THE EVENT ONLY ONE RESPONSIVE BID IS RECEIVED FROM A RESPONSIBLE BIDDER, THE GOVERNMENT RESERVES THE RIGHT TO CANCEL THIS SOLICITATION AND RESOLICIT BY WHATEVER PROCEDURES ARE THEN APPROPRIATE."

WITH RESPECT TO THE ORIGIN, PURPOSE AND JUSTIFICATION FOR THE CLAUSE, THE CONTRACTING OFFICER ADVISED US IN HIS REPORT OF JULY 27, 1970, THAT:

" *** THIS PROVISION WAS DEVISED BY HUNTSVILLE DIVISION FOR USE IN THE SAFEGUARD PROGRAM TO PROVIDE FOR AN AWARD UNDER COMPETITIVE CIRCUMSTANCES. THIS PROVISION IS NOT IN CONFLICT WITH ANY PROVISION OF ASPR AND NO OBJECTION WAS MADE TO THE CLAUSE BY ANY BIDDER DURING THE BIDDING PERIOD. *** "

IN OUR VIEW, THE CLAUSE IS NOT ONLY SUPERFLUOUS, BUT ALSO INTRODUCES AN UNWARRANTED ELEMENT OF UNCERTAINTY IN COMMUNICATING TO BIDDERS THE REASONS FOR THE REJECTION OF ALL BIDS. PARAGRAPH 10(B) OF STANDARD FORM 33A RECOGNIZES AND REEMPHASIZES THE STATUTORY RIGHT IN 10 U.S.C. 2305(C) TO REJECT ALL BIDS WHEN SUCH ACTION IS IN THE BEST INTEREST OF THE UNITED STATES. MOREOVER, THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) PROVIDES SUFFICIENTLY EXTENSIVE AND CONTROLLING GUIDANCE WITH RESPECT TO THE EXERCISE OF THE DISCRETIONARY AUTHORITY TO REJECT ALL BIDS AND RESOLICIT. SEE ASPR 2-404.1 AND .2.

THE ONLY FEATURE ADDED BY THE CLAUSE IS THE EXISTENCE OF ONE RESPONSIVE BID AS THE OPERATIVE EVENT ENTITLING THE GOVERNMENT TO CANCEL THE INVITATION. FURTHER, IT IS TO BE NOTED THAT THE CLAUSE DOES NOT AUTOMATICALLY REQUIRE THE REJECTION OF THE ONLY RESPONSIVE BID, NOR WOULD IT BE IN THE GOVERNMENT'S BEST INTEREST TO SO CONSTRUE SUCH A PROVISION. SEE B-166679, JUNE 10, 1969 (COPY ENCLOSED).

IT APPEARS TO BE THE PRIMARY CONCERN OF THE CONTRACTING OFFICE THAT A REASONABLE PRICE MAY NOT BE OBTAINED WHERE ONLY ONE RESPONSIVE BID IS RECEIVED. IN THIS RESPECT, ASPR 2-404.2(E) PROVIDES THAT ANY BID MAY BE REJECTED IF THE PRICE IS UNREASONABLE. WE BELIEVE THAT THIS IS THE PERTINENT INQUIRY. INDEED, IN THE INSTANT PROTEST, THE PROCURING ACTIVITY IN RESPONDING TO AAF'S REQUEST FOR CLARIFICATION OF THE BASES FOR CANCELLATION ULTIMATELY ACKNOWLEDGED THAT IT CONSIDERED AAF'S PRICE TO BE UNREASONABLE. FURTHERMORE, IF IT IS TO BE SUGGESTED THAT THE CLAUSE ELIMINATES THE NEED FOR AN INQUIRY INTO THE REASONABLENESS OF THE PRICE OF THE ONE RESPONSIVE BID RECEIVED, THE FOLLOWING ASSUMPTION IS REQUIRED: THE EXISTENCE OF ONLY ONE RESPONSIVE BID DEMONSTRATES IN ALL CASES A LACK OF PRICE COMPETITION AND REQUIRES, BE AT AN UNREASONABLE PRICE. IN OUR OPINION, THIS ASSUMPTION IS NOT VALID.

WE THEREFORE RECOMMEND THAT THE CLAUSE BE ELIMINATED. WE WOULD APPRECIATE BEING ADVISED OF YOUR ULTIMATE DISPOSITION OF THIS MATTER.