B-170842, NOV. 30, 1970

B-170842: Nov 30, 1970

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846.25 ARE RECEIVED MAKING THEM $1. THIS DIFFERENCE IS A COMPELLING REASON FOR CANCELLATION OF THE INVITATION. THE FACT THAT THERE WAS ONLY A $222.23 DIFFERENCE IN PRICES BID OR THAT BID PRICE IS COMPARABLE TO PRICE ESTIMATED BY GSA IN DETROIT DOES NOT ESTABLISH THAT CONTRACTING OFFICER ACTED IMPROPERLY. HE HAS BROAD DISCRETION AND IN THE ABSENCE OF BAD FAITH OR ARBITRARY ACTION THE GAO WILL NOT QUESTION HIS DECISION. INC.: REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 17. BOTH SOLICITATIONS WERE ISSUED BY THE GENERAL SERVICES ADMINISTRATION (GSA). WE ARE ADVISED HOWEVER. THAT THIS LATE BID WAS SENT BY REGISTERED MAIL AND THAT IT WAS SUBSEQUENTLY DETERMINED THAT THE LATE RECEIPT WAS DUE TO A DELAY IN THE MAILS FOR WHICH THE BIDDER WAS NOT RESPONSIBLE.

B-170842, NOV. 30, 1970

BID PROTEST - CANCELLATION OF INVITATION - RENEGOTIATION DENIAL OF PROTEST BY VENTILATION CLEANING ENGINEERS, INC., AGAINST THE CANCELLATION OF IFB AND AWARD OF CONTRACT FOR THE RELAMPING AND CLEANING OF LIGHT FIXTURES IN FEDERAL BUILDINGS AND U.S. COURTHOUSE, LAS VEGAS, NEVADA, TO ANOTHER FIRM BY THE GENERAL SERVICES ADMINISTRATION (GSA). WHEN BIDS OF $7,068.48 AND $6,846.25 ARE RECEIVED MAKING THEM $1,500 ABOVE CONTRACTING OFFICER'S ESTIMATED COST OF PERFORMANCE, THIS DIFFERENCE IS A COMPELLING REASON FOR CANCELLATION OF THE INVITATION. THE FACT THAT THERE WAS ONLY A $222.23 DIFFERENCE IN PRICES BID OR THAT BID PRICE IS COMPARABLE TO PRICE ESTIMATED BY GSA IN DETROIT DOES NOT ESTABLISH THAT CONTRACTING OFFICER ACTED IMPROPERLY. HE HAS BROAD DISCRETION AND IN THE ABSENCE OF BAD FAITH OR ARBITRARY ACTION THE GAO WILL NOT QUESTION HIS DECISION.

TO VENTILATION CLEANING ENGINEERS, INC.:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 17, 1970, WITH ENCLOSURES, PROTESTING AGAINST THE CANCELLATION OF INVITATION FOR BIDS (IFB) NO. PBS- BMD-70-40, AND AGAINST THE AWARD OF A CONTRACT TO ANOTHER FIRM UNDER INVITATION FOR PROPOSALS (IFP) NO. PBS-BMD-71-2(N). BOTH SOLICITATIONS WERE ISSUED BY THE GENERAL SERVICES ADMINISTRATION (GSA).

THE IFB, ISSUED ON MAY 19, 1970, COVERED THE RELAMPING AND CLEANING OF LIGHT FIXTURES IN THE FEDERAL BUILDING AND U.S. COURTHOUSE, LAS VEGAS, NEVADA. IN RESPONSE TO THE IFB, YOUR FIRM SUBMITTED A BID IN THE AMOUNT OF $7,068.48 AND GUARANTEED LIGHTING MAINTENANCE CO. SUBMITTED A BID IN THE AMOUNT OF $6,846.25, WHICH ARRIVED LATE. WE ARE ADVISED HOWEVER, THAT THIS LATE BID WAS SENT BY REGISTERED MAIL AND THAT IT WAS SUBSEQUENTLY DETERMINED THAT THE LATE RECEIPT WAS DUE TO A DELAY IN THE MAILS FOR WHICH THE BIDDER WAS NOT RESPONSIBLE. ACCORDINGLY, THIS BID WAS CONSIDERED. THIRD BID, FROM DIVERSIFIED LIGHTING, WAS RECEIVED LATE AND RETURNED UNOPENED TO THAT BIDDER AS AN UNACCEPTABLE LATE BID.

WE ARE ADVISED THAT PRIOR TO ISSUING THE IFB, A SURVEY WAS CONDUCTED LOCALLY IN LAS VEGAS TO DETERMINE WHAT THE PROBABLE COST WOULD BE FOR THE WORK INVOLVED. INDICATIONS WERE RECEIVED THAT THE WORK COULD BE PERFORMED AT A COST RANGING FROM $4,500 TO $5,300. IN VIEW OF THIS ESTIMATE AND THE BIDS RECEIVED, THE CONTRACTING OFFICER DETERMINED THAT ALL BIDS WERE UNREASONABLY PRICED AND SHOULD BE REJECTED PURSUANT TO SECTION 1-2.404- 1(B)(5) OF THE FEDERAL PROCUREMENT REGULATIONS (FPR) WHICH, IN PERTINENT PART, STATES:

"(B) INVITATIONS FOR BIDS MAY BE CANCELLED AFTER OPENING BUT PRIOR TO AWARD, AND ALL BIDS REJECTED, WHERE SUCH ACTION IS CONSISTENT WITH SEC. 1- 2.404-1(A) AND THE CONTRACTING OFFICER DETERMINES IN WRITING THAT CANCELLATION IS IN THE BEST INTEREST OF THE GOVERNMENT FOR REASONS SUCH AS THE FOLLOWING:

"(5) ALL OTHERWISE ACCEPTABLE BIDS RECEIVED ARE AT UNREASONABLE PRICES. (SEE SEC. 1-3.214 CONCERNING AUTHORITY TO NEGOTIATE IN SUCH SITUATIONS.)"

NOTICE OF THE REJECTION WAS SENT TO ALL BIDDERS ON SEPTEMBER 8, 1970. THE FOLLOWING DAY, AN IFP FOR THE SAME SERVICES WAS ISSUED UNDER AUTHORITY OF 41 U.S.C. 252(C)(14), WHICH ALLOWS CONTRACTS FOR PROPERTY AND SERVICES TO BE NEGOTIATED WITHOUT ADVERTISEMENT IN CASES WHERE THE AGENCY HEAD DETERMINES THAT BID PRICES AFTER ADVERTISING THEREFOR ARE NOT REASONABLE. IN RESPONSE TO THE IFP, YOUR FIRM SUBMITTED A PROPOSAL STATING THE SAME PRICE AS IN YOUR ORIGINAL BID. A SECOND FIRM SUBMITTED A LOWER PRICE, BUT ONE STILL IN EXCESS OF THE GSA ESTIMATE, AND A THIRD FIRM SUBMITTED AN OFFER STATING AN EVEN LOWER PRICE WHICH WAS WITHIN THE GSA ESTIMATE. AWARD IS PRESENTLY PENDING OUR DECISION IN THE MATTER.

WITH RESPECT TO YOUR BELIEF THAT THE REJECTION OF YOUR ORIGINAL BID WAS IMPROPER, YOU FIRST CONTEND THAT 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. WE ARE IN AGREEMENT WITH THIS PROPOSITION WHICH, WE NOTE, IS A VERBATIM PARTIAL RESTATEMENT OF FPR SEC. 1-2.404- 1(A). WE ALSO NOTE, HOWEVER, THAT SUBPARAGRAPH (B) OF THAT SAME FPR PROVISION, WHICH WE HAVE SET OUT IN PART ABOVE, ALLOWS FOR THE REJECTION OF ALL BIDS AND CANCELLATION OF AN IFB WHEN CONSISTENT WITH SUBPARAGRAPH (A); THAT IS, FOR "A COMPELLING REASON." SINCE AN UNREASONABLE BID PRICE IS "A COMPELLING REASON" UNDER THE REGULATIONS FOR REJECTING ALL BIDS AND CANCELING AN IFB, WE CONCLUDE THAT THE REJECTION AND CANCELLATION ACTIONS WERE PROPER. 36 COMP. GEN. 364 (1956).

YOU NEXT CONTEND THAT GOVERNMENT PROCUREMENT REGULATIONS DO NOT DELEGATE AUTHORITY TO THE CONTRACTING OFFICER TO MAKE A DETERMINATION OF UNREASONABLE PRICE. IN A SOMEWHAT RELATED CONTENTION, YOU STATE THAT BID REJECTION AND NEGOTIATION AFTER ADVERTISING IS ONLY PERMISSIBLE AFTER THE BID PRICE HAS BEEN DETERMINED BY OUR OFFICE TO BE UNREASONABLE. WE DO NOT BELIEVE THESE CONTENTIONS TO BE CORRECT.

OUR OFFICE DOES NOT MAKE INITIAL DETERMINATIONS AS TO THE UNREASONABLENESS OF BID PRICES. DETERMINATIONS OF THIS TYPE ARE WITHIN THE COGNIZANCE OF THE CONTRACTING OFFICER AND OUR OFFICE HAS NEVER QUESTIONED A CONTRACTING OFFICER'S AUTHORITY IN THIS MATTER. B-164284, JULY 16, 1968; B-169712, AUGUST 11, 1970; B-167972, OCTOBER 31, 1969. WHILE NO DELEGATION OF AUTHORITY MAY EXIST IN THE FPR SPECIFICALLY ALLOWING A CONTRACTING OFFICER TO MAKE A DETERMINATION THAT PRICES ARE UNREASONABLE, WE FIND NOTHING IN THOSE REGULATIONS WHICH PRECLUDE SUCH A DETERMINATION ON HIS PART. ON THE CONTRARY, THE VERY DEFINITION OF "CONTRACTING OFFICER," FOUND IN FPR SEC. 1-1.207, AS "AN OFFICIAL DESIGNATED TO ENTER INTO OR ADMINISTER CONTRACTS AND MAKE RELATED DETERMINATIONS AND FINDINGS," AND THE FACT THAT THE CONTRACTING OFFICER IS REQUIRED TO DETERMINE IN WRITING THAT CANCELLATION IS IN THE BEST INTEREST OF THE GOVERNMENT (FPR SEC. 1-2.404-1(B)), INDICATE THAT THE AUTHORITY YOU QUESTION IS VESTED IN THE CONTRACTING OFFICER. MOREOVER, THE ADMINISTRATOR OF GENERAL SERVICES HAS THE AUTHORITY TO MAKE THE DETERMINATION IN QUESTION AND WE ARE ADVISED THAT THE ADMINISTRATOR HAS, IN FACT, DELEGATED THIS AUTHORITY THROUGH THE GSA REGIONAL ADMINISTRATORS TO THAT AGENCY'S CONTRACTING OFFICERS. WHILE NOTHING MORE IS NECESSARY TO CONCLUDE THAT YOUR CONTENTION IS WITHOUT MERIT, WE NOTE IN PASSING THAT ACCEPTANCE OF YOUR POSITION MEANS THAT THE CONTRACTING OFFICER IS IN THE INCONGRUOUS POSITION OF BEING ABLE TO REJECT ALL BIDS AND CANCEL AN IFB FOR GOOD REASON BUT NOT BEING ABLE TO DETERMINE IF THE REASON EXISTS. LOGIC ALONE COMPELS A DIFFERENT RESULT.

WE ARE NOT SURE WHAT WAS INTENDED BY YOUR CONTENTION THAT AN ACTUAL DETERMINATION OF PRICE UNREASONABLENESS HAS NOT BEEN MADE. AS PREVIOUSLY STATED, GSA OBTAINED ESTIMATES ON THE WORK PRIOR TO ISSUANCE OF THE IFB. IN ADDITION, THE CONTRACTING OFFICER ON SEPTEMBER 8, 1970, FOUND YOUR BID AND THAT OF GUARANTEE LIGHTING MAINTENANCE CO. TO BE UNREASONABLE WHEN COMPARED WITH THAT ESTIMATE. IT APPEARS, THEREFORE, THAT A DETERMINATION OF PRICE UNREASONABLENESS WAS IN FACT MADE.

THE FACT THAT THERE WAS, IN THIS INSTANCE, ONLY A $222.23 DIFFERENCE IN THE PRICES ORIGINALLY BID BY YOUR FIRM AND THE OTHER TIMELY BIDDER, OR THAT GSA IN THE DETROIT, MICHIGAN, AREA OVERESTIMATED THE COST OF WORK TO BE PERFORMED THERE ON A PRIOR CONTRACT, OR THAT THE PRICE YOU ORIGINALLY BID FOR THE LAS VEGAS WORK IS COMPARABLE WITH YOUR PRICE FOR THE DETROIT WORK, DOES NOT ESTABLISH THAT THE CONTRACTING OFFICER ACTED IMPROPERLY IN THIS INSTANCE. IN THE FIRST PLACE, IT WAS NOT A COMPARISON OF THE TWO TIMELY BIDS WHICH LED TO THE CONCLUSION THAT BOTH OFFERED UNREASONABLE PRICES. THAT CONCLUSION WAS REACHED AFTER A COMPARISON OF BOTH BIDS AND THE GSA-OBTAINED LOCAL ESTIMATE. IN THIS CONTEXT, THE SMALL MONETARY DIFFERENCE SEPARATING THE TWO BIDS IS UNIMPORTANT.

FOR THIS SAME REASON, WE DO NOT BELIEVE THAT YOUR EXPERIENCE IN THE DETROIT AREA FOR SIMILAR WORK NECESSARILY SHOWS THAT THE CONTRACTING OFFICER'S DECISION IN THIS MATTER WAS ERRONEOUS. IF VALID, THE BEST THAT EXPERIENCE CAN DO IS TO GIVE THE CONTRACTING OFFICER ONE MORE FACTOR TO EVALUATE, IF SUCH KNOWLEDGE CAN BE IMPUTED TO HIM IN THE FIRST PLACE. CONTRACTING OFFICER HAS, HOWEVER, BROAD DISCRETION IN DETERMINING THAT A BID IS UNREASONABLY PRICED AND SHOULD BE REJECTED, AND IN THE ABSENCE OF BAD FAITH, OR ARBITRARY OR CAPRICIOUS ACTION, OUR OFFICE WILL NOT QUESTION HIS DECISION IN THE MATTER. B-167972, SUPRA. IN THIS INSTANCE, INTERVENTION BY OUR OFFICE IS NOT JUSTIFIED. NOT ONLY DID GSA OBTAIN A LOCAL ESTIMATE OF THE COST OF THE WORK BUT, ON RESOLICITATION, THE PRICE OF THE LOW OFFEROR FELL WITHIN THAT ESTIMATE AND WAS $2,000 LESS THAN THE PRICE YOU OFFERED IN EITHER YOUR BID OR PROPOSAL. THIS SAVINGS IS SUFFICIENT, WE BELIEVE, TO JUSTIFY THE CONTRACTING OFFICER'S ACTIONS.

ACCORDINGLY, YOUR PROTEST IS DENIED.