B-171472, MAY 11, 1971

B-171472: May 11, 1971

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ALTHOUGH THE ORIGINAL IFB WAS CANCELLED FOR REVISION IN SPECIFICATIONS BASED IN PART UPON THE CONTRACTING OFFICER'S ERRONEOUS BELIEF THAT AN OUTER CASE WAS NOT A SEPARATE ITEM WHICH COULD BE PROCURRED INDEPENDENTLY. THE BIDS ON THE IFB WERE ALSO UNREASONABLY HIGH AND 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. ASPR 2- 404.1(B)(VI) STATES THAT CANCELLATION AFTER BID OPENING BUT PRIOR TO AWARD IS JUSTIFIED WHERE "ALL OTHERWISE ACCEPTABLE BIDS RECEIVED ARE AT UNREASONABLE PRICES". TO NELSON ELECTRIC: FURTHER REFERENCE IS MADE TO YOUR LETTER DATED DECEMBER 1. THE INVITATION WAS ISSUED SEPTEMBER 24.

B-171472, MAY 11, 1971

BID PROTEST - CANCELLED IFB - UNREASONABLE PRICES DECISION DENYING PROTEST BY SECOND LOW BIDDER AGAINST THE CANCELLATION OF AN IFB ISSUED BY THE NAVAL AIR ENGINEERING CENTER, PHILADELPHIA, PA., FOR PROCUREMENT OF 24 PANEL ASSEMBLIES FOR AIRPORT CONTROL LIGHTING. ALTHOUGH THE ORIGINAL IFB WAS CANCELLED FOR REVISION IN SPECIFICATIONS BASED IN PART UPON THE CONTRACTING OFFICER'S ERRONEOUS BELIEF THAT AN OUTER CASE WAS NOT A SEPARATE ITEM WHICH COULD BE PROCURRED INDEPENDENTLY, THE BIDS ON THE IFB WERE ALSO UNREASONABLY HIGH AND 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, ASPR 2- 404.1(B)(VI) STATES THAT CANCELLATION AFTER BID OPENING BUT PRIOR TO AWARD IS JUSTIFIED WHERE "ALL OTHERWISE ACCEPTABLE BIDS RECEIVED ARE AT UNREASONABLE PRICES". ACCORDINGLY, THE PROTEST MUST BE DENIED.

TO NELSON ELECTRIC:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED DECEMBER 1, 1970, PROTESTING THE CANCELLATION OF INVITATION FOR BIDS (IFB) N00156-71-B 0028, ISSUED BY THE NAVAL AIR ENGINEERING CENTER, PHILADELPHIA, PENNSYLVANIA.

THE INVITATION WAS ISSUED SEPTEMBER 24, 1970, AND REQUESTED OFFERS FOR THE PROPOSED PROCUREMENT OF 24 PANEL ASSEMBLIES FOR AIRPORT CONTROL LIGHTING, MILITARY STANDARD (MS) PART NO. MS23007-33, TOGETHER WITH 1 LOT OF DATA THEREFORE. BIDS WERE OPENED ON OCTOBER 24, 1970, AND NEO FLASHER ELECTRONICS, INC., WAS THE LOW BIDDER AND YOUR COMPANY WAS SECOND LOW BIDDER. DURING CONSIDERATION AND EVALUATION OF THE BIDS THE REQUIRING ACTIVITY ADVISED THE PROCURING OFFICE THAT THE REQUIREMENT WAS FOR MS PART NO. 23007-3, A PANEL ASSEMBLY WITH OUTER COVER, IN LIEU OF NO. 23007-33, WITHOUT THE OUTER COVER. THE CONTRACT REVIEW BOARD AUTHORIZED CANCELLATION OF IFB-0028 ON GROUNDS OF FAILURE TO STATE MINIMUM GOVERNMENT REQUIREMENTS, AND THE RESULTING NECESSITY FOR A CHANGE IN SPECIFICATIONS. THE IFB WAS CANCELLED, CITING REVISION IN SPECIFICATIONS AS THE REASON FOR CANCELLATION. THE REVISED REQUIREMENT WAS READVERTISED UNDER IFB NUMBER N00156-71-B-0146. TEN BIDS WERE RECEIVED AND OPENED ON DECEMBER 15, 1970. THE LOW BIDDER WAS AUDIO EQUIPMENT CO., INC. YOUR BID WAS FIFTH LOWEST.

YOU PROTEST THE CANCELLATION OF IFB-0028 ON THE BASIS THAT THE CHANGE IN PANEL ASSEMBLIES WAS NOT A REVISION IN SPECIFICATIONS, BUT RATHER THE ADDITION OF A NEW ITEM. YOU THEREFORE REQUEST THAT THE PROCUREMENT AGENCY BE DIRECTED TO MAKE AN AWARD FOR THE 24 PANELS TO THE "LOW, RESPONSIVE AND RESPONSIBLE BIDDER," AND THAT THE OUTER CASE BE PROCURED ON A SEPARATE SOLICITATION. YOU STATE ALSO THAT YOU ATTEMPTED TO MEET WITH THE CONTRACTING OFFICER OR HIS LEGAL COUNSEL TO DISCUSS THE ISSUE BUT WERE PREVENTED FROM DOING SO BY THE BUYER ON THE BASIS THAT THERE WAS NO OBLIGATION TO MEET WITH YOU.

RESPONDING TO THE LATTER ALLEGATION FIRST, THE PROCURING AGENCY STATES THAT YOUR PERSONNEL WERE NEVER PREVENTED FROM MEETING WITH THE NAVAIR ENG CEN CONTRACTING OFFICER AND COUNSEL, AND THAT NO SUCH MEETING WAS EVER REQUESTED BY YOU. SINCE YOU HAVE SUBMITTED NO EVIDENCE TO SUBSTANTIATE YOUR ALLEGATION, WE MUST ACCEPT THE REPORT OF THE PROCURING AGENCY AS BEING CORRECT.

WITH RESPECT TO CANCELLATION OF THE IFB, REPORTS FROM THE DEPARTMENT OF THE NAVY ADVISE THAT SUCH ACTION WAS BASED IN PART UPON THE CONTRACTING OFFICER'S ERRONEOUS BELIEF THAT THE OUTER CASE IS NOT A SEPARATE ITEM OR SPARE PART WHICH CAN BE PROCURED INDEPENDENTLY, AND THAT THE SPECIFICATION THEREFORE DID NOT REFLECT THE GOVERNMENT'S MINIMUM REQUIREMENTS AND HAD TO BE CHANGED. IT IS ALSO REPORTED THAT THE CONTRACTING OFFICER WAS PROMPTED TO CANCEL IFB-0028 AND READVERTISE BECAUSE A CURSORY EXAMINATION INDICATED THAT THE BIDS RECEIVED UNDER THE INITIAL IFB WERE UNREASONABLY HIGH BECAUSE LOWER PRICES HAD BEEN RECENTLY OBTAINED IN OTHER PROCUREMENTS FOR THE PANEL ASSEMBLY WITH THE OUTER CASE.

THE CONCLUSION THAT BIDS WERE UNREASONABLY HIGH IS SUBSTANTIATED BY THE BIDS ON THE READVERTISEMENT (IFB N00156-71-B-0146) COVERING PROCUREMENT OF THE PANEL ASSEMBLY WITH OUTER CASE, WHICH ARE SIGNIFICANTLY LOWER THAN THOSE RECEIVED UNDER THE FIRST IFB. THUS, NEO FLASHER, WHO WAS LOW BID UNDER THE FIRST SOLICITATION AT $485 PER UNIT, LATER CLAIMED A MISTAKE IN BID AND REQUESTED A PRICE INCREASE TO $585.00 PER UNIT PLUS $300.00 FOR DATA. YOUR BID THEREON (WITHOUT OUTER COVER) WAS $779.00 PER UNIT PLUS $500.00 FOR DATA. IN THIS CONNECTION, THE CONTRACTING OFFICER FOUND THAT NEO FLASHER HAD PRESENTED SUFFICIENT EVIDENCE OF ITS MISTAKE AND OF THE BID ACTUALLY INTENDED. THUS, IF THE ORIGINAL SOLICITATION HAD NOT BEEN CANCELLED, NEO FLASHER, IF DETERMINED TO BE A RESPONSIBLE BIDDER, WOULD HAVE BEEN AWARDED THE CONTRACT AT $585.00 PER UNIT.

THE LOW BIDDER UNDER THE RESOLICITATION WAS AUDIO EQUIPMENT CO., WITH A BID OF $302.51 PER UNIT WITH NO CHARGE FOR DATA, AND THE SECOND LOW BIDDER WAS PALMER ELECTRIC MANUFACTURING CO., WITH A BID OF $398.27 PER UNIT AND NO CHARGE FOR DATA. WHILE THE TWO LOW BIDDERS ON THE RESOLICITATION, AUDIO AND PALMER, HAVE CLAIMED MISTAKES IN THEIR BIDS AND HAVE REQUESTED UPWARD PRICE ADJUSTMENTS, (AUDIO FROM $302.51 TO $502.51 PER UNIT, AND PALMER FROM $389.27 PER UNIT TO $509.59 PER UNIT WITH NO CHARGE FOR THE DATA PACKAGE IN EACH INSTANCE) ONLY AUDIO'S UNIT PRICE HAS BEEN CORRECTED TO $502.51, WHILE PALMER'S CLAIMED MISTAKE HAS BEEN DISALLOWED.

A COMPARISON OF THE LOW BIDS UNDER EACH SOLICITATION REVEALING THE DISPARITY IN PRICES AND ILLUSTRATING THE UNREASONABLENESS OF THE PRICES OBTAINED UNDER THE CANCELLED IFB FOLLOWS:

IFB N00156-71-B-0028

(PANEL ASSY. WITHOUT OUTER CASE)

NEO FLASHER ELECTRONICS - $585.00 PER UNIT (AS CORRECTED X TWENTY FOUR (24) UNITS $14,040.00 PLUS COST OF 24 OUTER CASES (PROCURED SEPARATELY)

NELSON ELECTRIC - $779.00 PER UNIT X TWENTY-FOUR (24) UNITS $18,696.00 PLUS $500.00 (DATA) $19,196.00 PLUS COST OF 24 OUTER CASES (PROCURED SEPARATELY)

IFB N00156-71-B-0146

(PANEL ASSY. WITH OTHER CASE)

AUDIO EQUIPMENT CO. - $502.51 PER UNIT (AS CORRECTED) X TWENTY-FOUR (24) UNITS (WITH OUTER CASE)

$12,060.24

THE ABOVE FIGURES SHOW THAT IF THE RESOLICITATION IS CANCELLED AND THE ORIGINAL SOLICITATION IS RESTORED, THE TOTAL COST TO THE GOVERNMENT WOULD BE $14,040.00, PLUS COST OF 24 OUTER CASES (NEO FLASHER) OR $19,196.00 PLUS COST OF 24 OUTER CASES (NELSON). UNDER THE RESOLICITATION (PANEL ASSEMBLIES WITH OUTER CASES), THE GOVERNMENT'S TOTAL COST WOULD BE $12,060.24 (AUDIO).

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."

THE DETERMINATION OF WHETHER 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, OR ARBITRARY OR CAPRICIOUS ACTION BY CONTRACTING OFFICIALS, WE WILL NOT QUESTION THE REJECTION OF A LOW BID IF THE BID 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.

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.

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 *** ."

ON THE RECORD, WE FIND NO PROPER BASIS TO QUESTION THE DETERMINATION OF THE CONTRACTING OFFICER THAT THE PRICES BID UNDER IFB-6028 WERE UNREASONABLE AND EXCESSIVE IN AMOUNT.

ACCORDINGLY, YOUR PROTEST IS DENIED.