B-171965, MAY 20, 1971

B-171965: May 20, 1971

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WHERE BIDS WERE TO BE EVALUATED ON THE UNITS OF PRODUCTION WHICH REPRESENTED THE ESTIMATED REQUIREMENTS FOR ONE MONTH AND IT WAS DISCOVERED AFTER BID OPENING THAT THE ESTIMATE OF 675. 500 WHICH WAS SUBSEQUENTLY REDUCED TO 9. 000 THE LAW REQUIRES ADVERTISING THE ACTUAL WORK TO BE PERFORMED AND CANCELLATION OF THE INVITATION IS THEREFORE PROPER. TO FEDERAL LITHOGRAPH COMPANY: FURTHER REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 19. IT WAS DIVIDED INTO THREE CATEGORIES OF WORK TO BE PERFORMED DURING THE PERIOD FROM FEBRUARY 1. THE INVITATION FURTHER PROVIDED FOR MULTIPLE AWARDS IN EACH CATEGORY OF THE PROGRAM SINCE IT WAS ANTICIPATED THAT ONE FIRM MIGHT NOT BE ABLE TO MEET ALL THE REQUIREMENTS.

B-171965, MAY 20, 1971

BID PROTEST - CANCELLED IFB - REDUCED REQUIREMENTS DECISION DENYING PROTEST AGAINST THE REJECTION OF BIDS CANCELLATION OF THE SOLICITATION AND SUBSEQUENT READVERTISEMENT BY THE GOVERNMENT PRINTING OFFICE FOR ORDERS OF PUBLICATIONS REQUIRING LOOSELEAF OR SIDE STITCHING. WHERE BIDS WERE TO BE EVALUATED ON THE UNITS OF PRODUCTION WHICH REPRESENTED THE ESTIMATED REQUIREMENTS FOR ONE MONTH AND IT WAS DISCOVERED AFTER BID OPENING THAT THE ESTIMATE OF 675,000 HAD BEEN ACTUALLY ESTIMATED AT 67,500 WHICH WAS SUBSEQUENTLY REDUCED TO 9,000 THE LAW REQUIRES ADVERTISING THE ACTUAL WORK TO BE PERFORMED AND CANCELLATION OF THE INVITATION IS THEREFORE PROPER.

TO FEDERAL LITHOGRAPH COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 19, 1971, WITH ENCLOSURES, PROTESTING THE REJECTION OF ALL BIDS AND CANCELLATION OF THE SOLICITATION FOR TECHNICAL PUBLICATIONS, PROGRAM 66-M, CATEGORY 3, AND THE SUBSEQUENT READVERTISEMENT OF THAT CATEGORY BY THE GOVERNMENT PRINTING OFFICE (GPO).

THE INVITATION REQUESTED PROPOSALS FOR THE PRINTING AND BINDING OF TECHNICAL PUBLICATIONS AS REQUISITIONED FROM THE GPO BY THE DEPARTMENT OF THE NAVY. IT WAS DIVIDED INTO THREE CATEGORIES OF WORK TO BE PERFORMED DURING THE PERIOD FROM FEBRUARY 1, 1971, THROUGH JANUARY 31, 1972. CATEGORY 3, IN ISSUE HERE, PROVIDED FOR ORDERS OF PUBLICATIONS UP TO 500 PAGES, IN QUANTITIES OF 500 TO 5000 COPIES, REQUIRING LOOSELEAF OR SIDE STITCHING. THE INVITATION FURTHER PROVIDED FOR MULTIPLE AWARDS IN EACH CATEGORY OF THE PROGRAM SINCE IT WAS ANTICIPATED THAT ONE FIRM MIGHT NOT BE ABLE TO MEET ALL THE REQUIREMENTS. UNDER THIS PROCEDURE THE GOVERNMENT IS OBLIGATED TO OFFER EACH ORDER TO THE LOW OFFEROR IN THE CORRESPONDING CATEGORY FIRST, THE NEXT LOW OFFEROR SECOND, AND SO ON UNTIL THE ORDER IS ACCEPTED. THE ONLY VALID REASON FOR DECLINING AN OFFER IS THE CONTRACTOR'S INABILITY TO MEET THE SHIPPING SCHEDULE. BIDS WERE TO BE EVALUATED UPON THE UNITS OF PRODUCTION SET OUT IN THE PROVISION ENTITLED "METHOD OF DETERMINING AWARD - BASIS OF AWARD" WHICH REPRESENTED THE ESTIMATED REQUIREMENTS FOR ONE MONTH.

UNDER PARAGRAPH XV(1), CATEGORY 3, THE INVITATION REQUESTED PRICES FOR "BANDING: INDIVIDUAL BOOKS - PER 100 BOOKS - $ ." YOUR FIRM SUBMITTED A BID FOR THIS ITEM OF 5 CENTS PER HUNDRED BOOKS. ON THE PRICING SCHEDULE THE BIDS FOR THIS ITEM RANGED FROM A UNIT RATE OF $10.00 TO $3.00 PER HUNDRED WITH THE EXCEPTION OF TWO BIDS, YOURS AT 5 CENTS AND ONE OTHER AT 10 CENTS PER HUNDRED BOOKS. THESE BIDS WERE BASED UPON THE BANDING OF 6,750 HUNDREDS, OR 675,000 BOOKS. HOWEVER, IMMEDIATELY AFTER BID OPENING ON JANUARY 25, 1971, IT WAS DISCOVERED THAT THE SPECIFIED QUANTITY OF 6,750 HUNDREDS, WHICH WAS USED IN THE BIDDING WAS IN ERROR AND THAT THIS QUANTITY HAD BEEN ACTUALLY ESTIMATED AS 675 HUNDREDS OR 67,500. AT THIS TIME IT WAS ALSO DETERMINED THAT THE REQUIREMENT FOR STITCHING HAD BEEN OMITTED UNDER ITEM XV WHICH SHOULD HAVE BEEN STATED AS FOLLOWS:

"8(A). 2 SIDE WIRE STITCHES - PER 100 BOOKS $

(B). 1 STITCH UPPER LEFT CORNER - PER 100 BOOKS $ ."

DUE TO THE ABOVE ERRORS IT WAS DETERMINED THAT ALL BIDS AS TO CATEGORY 3 WOULD BE REJECTED, AND THAT CORRECTIONS SHOULD BE MADE IN A RESOLICITATION OF BIDS ON THAT CATEGORY. IT WAS ALSO SUBSEQUENTLY DETERMINED THAT THE ORIGINAL ESTIMATE OF 67,500 BOOKS REQUIRING BANDING WAS TOO HIGH AND THAT THE ESTIMATE SHOULD BE REDUCED TO 90 HUNDREDS OR 9,000 BOOKS. ACCORDINGLY, THE READVERTISEMENT FOR BIDS WAS ANNOUNCED ON FEBRUARY 16, 1971, AND INVITATIONS FOR BIDS WERE ISSUED TO ALL PRIOR BIDDERS.

YOU PROTESTED THE REJECTION OF ALL BIDS FOR CATEGORY 3, AND READVERTISING OF A NEW PROCUREMENT OF THIS CATEGORY. YOU STATE THAT " *** ONCE THIS COMPANY'S PRICES ARE MADE PUBLIC INFORMATION WE FEEL THAT A REBID OF THIS NATURE IS UNFAIR TO US SINCE THERE WAS ONLY ONE CHANGE AND TWO ADDITIONAL PRICES REQUESTED." YOU ASK " *** WOULD IT NOT SEEM REASONABLE TO LET ALL OF THE OTHER PRICES STAND AS IN THE ORIGINAL BID OPENING AND ONLY ASK FOR A REBID OF THE ONE ITEM OF BANDING WITH A NEW BASIS OF AWARD AND NEW PRICES FOR THE TWO SMALL ITEMS OF STAPLING *** ."

IT IS ADMINISTRATIVELY REPORTED THAT THE REQUIREMENT FOR BANDING IS CONSIDERED TO BE AN INSEPARABLE PART OF THE WORK REQUIRED IN CATEGORY 3. FURTHER, CANCELLATION OF THE INVITATION FOR CATEGORY 3 IS REQUIRED BECAUSE THE ESTIMATE SHOWN IN THE INVITATION FOR BANDING HAD NO RELATIONSHIP TO THE ACTUAL WORK EXPECTED TO BE AWARDED, AND AN EVALUATION ON THE CURRENT BEST ESTIMATE IN ACCORDANCE WITH THE BASIS OF AWARD WOULD CHANGE THE RELATIVE STANDING OF THE BIDS. ADDITIONALLY, GPO ADVISES THAT TO NEGOTIATE OR ADVERTISE FOR PRICES FOR BANDING AND STITCHING ALONE, WITH THE PRICES ON OTHER ITEMS IN CATEGORY 3 HAVING BEEN MADE PUBLIC, WOULD ONLY RESULT IN UNBALANCED PRICES ON THESE ITEMS TO CHANGE THE BIDDERS' OVERALL EVALUATED POSITIONS FOR CATEGORY 3. IT IS THE FURTHER CONCLUSION OF THE GPO THAT IT COULD NOT CONSIDER A REAFFIRMATION OF YOUR PRICE FOR THE ITEM OF BANDING UNDER THE REVISED ESTIMATE BECAUSE (1) THE PRICES OFFERED BY ALL BIDDERS WERE BASED UPON A REQUIREMENT NEVER INTENDED OR POSSIBLE OF FULFILLMENT AND (2) TO DO SO WOULD REQUIRE NEGOTIATIONS WITH THE OTHER BIDDERS UPON THE BASIS OF THE BEST ESTIMATE OF THE NUMBER OF BOOKS TO BE BANDED.

INFORMATION AS TO ESTIMATED TOTAL QUANTITIES OF WORK IS IMPORTANT FOR A PROPER EVALUATION OF BIDS. BY USING ESTIMATED QUANTITIES FOR BID EVALUATION WHICH ARE DIFFERENT FROM ACTUAL ANTICIPATED NEEDS, THE POSSIBILITY ARISES THAT A BIDDER MAY BE FOUND LOW ON EVALUATION WHO IS NOT THE LOWEST BIDDER ON THE REAL REQUIREMENTS, OR THE BEST ESTIMATE THEREOF. 42 COMP. GEN. 257, 260 (1962). WHERE A REQUIREMENTS TYPE CONTRACT IS CONTEMPLATED BY AN AGENCY, THE COURTS AND OUR OFFICE HAVE HELD THAT SUCH CONTRACTS ARE VALID PROVIDED THAT THE ESTIMATE OF THE PROBABLE AMOUNT OF GOODS OR SERVICES TO BE GENERATED WAS DETERMINED IN GOOD FAITH. SEE 47 COMP. GEN. 365 (1968) AND 37 ID. 688 (1958).

THE SITUATION HEREIN BEARS SOME ANALOGY TO THAT IN OUR DECISION B 145109, MAY 1, 1961, WHERE AFTER BID OPENING BUT BEFORE AWARD, THE PROCURING ACTIVITY PROPOSED THREE SIGNIFICANT CHANGES IN THE CONTRACT SPECIFICATIONS. THE PROCURING ACTIVITY REQUESTED OUR ADVICE AS TO WHETHER AWARD COULD BE MADE TO THE LOW BIDDER UNDER THE ADVERTISED SPECIFICATIONS AND THE CHANGES NEGOTIATED AFTER AWARD, OR WHETHER THE PROCUREMENT SHOULD BE READVERTISED UNDER SPECIFICATIONS INCORPORATING THE THREE PROPOSED CHANGES. IN HOLDING THAT READVERTISEMENT WAS REQUIRED, WE SAID:

"THE RULE, WHICH IS EQUALLY APPLICABLE TO COMPETITIVE PROCUREMENTS UNDER 10 U.S.C. 2304(A), HAS BEEN CONSISTENTLY FOLLOWED. SEE 39 COMP. GEN. 566 (1960), AND 30 COMP. GEN. 34 (1950). THE RULE APPLIES WHETHER THE WORK IS TO BE INCREASED OR DECREASED. ***

" *** WHERE A CONTRACT IS REQUIRED TO BE AWARDED PURSUANT TO COMPETITIVE BIDDING, THE LOW BID MUST BE DETERMINED ON THE BASIS OF BIDS ON THE WORK ACTUALLY TO BE PERFORMED, NOT ON THE BASIS OF BIDS ON SPECIFICATIONS KNOWN TO CALL FOR MORE OR LESS WORK, OR WORK OF A DIFFERENT TYPE. THE ONLY PROPER WAY TO DETERMINE THE LOWEST BIDDER IS BY ADVERTISING THE ACTUAL WORK TO BE PERFORMED, AND THIS, IN OUR OPINION, IS WHAT THE LAW REQUIRES. 17 COMP. GEN. 427, 430 (1937); 15 ID. 573, 576 (1935). SEE ALSO 11 COMP. GEN. 183, 184, (1931). THE ADOPTION OF ANY OTHER VIEW WOULD PERMIT CIRCUMVENTION OF THE COMPETITIVE BID REQUIREMENT AND WOULD BE CONTRARY TO THE INTENT OF THE PROCUREMENT STATUTES."

THE PRIMARY PURPOSE OF PROCUREMENT THROUGH FORMAL ADVERTISING BY GOVERNMENT AGENCIES IS TO GIVE ALL BIDDERS AN EQUAL OPPORTUNITY TO COMPETE FOR GOVERNMENT BUSINESS AND TO SECURE TO THE UNITED STATES THE BENEFIT OF FREE AND OPEN COMPETITION. REJECTION OF ALL BIDS IS APPROPRIATE WHERE IT IS DETERMINED THAT REJECTION IS IN THE PUBLIC INTEREST. OUR OFFICE HAS CONSISTENTLY HELD THAT, WHILE THE INTEREST OF THE GOVERNMENT AND THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM REQUIRE THAT INVITATIONS BE CANCELLED ONLY FOR THE MOST COGENT REASONS, THERE NECESSARILY IS RESERVED IN THE CONTRACTING OFFICIALS A SUBSTANTIAL AMOUNT OF DISCRETION ON DETERMINING WHETHER OR NOT AN INVITATION SHOULD BE CANCELLED. WE WILL, THEREFORE, NOT OBJECT TO THE CANCELLATION OF AN INVITATION UNLESS THERE HAS BEEN A CLEAR SHOWING OF ABUSE OF ADMINISTRATIVE DISCRETION. SEE B- 165206, JANUARY 8, 1969, B 164520, SEPTEMBER 24, 1968, B-162382, MAY 17, 1968, B-159287, JULY 26, 1966.

ON THE PRESENT RECORD WE MUST CONCLUDE THAT THERE HAS BEEN NO SUCH ABUSE OF DISCRETION IN THE INSTANT CASE. IT IS A WELL-ESTABLISHED PRINCIPLE OF PROCUREMENT BY FORMAL ADVERTISING THAT A CONTRACT SHOULD BE AWARDED TO THAT RESPONSIVE, RESPONSIBLE BIDDER OFFERING THE MOST ADVANTAGEOUS BID, PRICE AND OTHER FACTORS CONSIDERED. IT IS AXIOMATIC THAT IN ORDER TO OBSERVE THIS BASIC PRINCIPLE, BIDS BE EVALUATED AS NEARLY AS POSSIBLE IN LIGHT OF THE ANTICIPATED NEEDS AND THE COSTS ULTIMATELY TO BE BORNE BY THE PROCURING ACTIVITY.

ACCORDINGLY, IT IS OUR OPINION THAT CANCELLATION OF THE ORIGINAL INVITATION FOR CATEGORY 3 WAS PROPER, AND YOUR PROTEST IS THEREFORE DENIED.