B-172476, JUL 14, 1971

B-172476, JUL 14, 1971

BID PROTEST - CANCELLATION OF PROCUREMENT - PUBLIC INTEREST DECISION DENYING PROTEST, ADDRESSED TO CONGRESSMAN JOHN G. SCHMITZ, AGAINST CANCELLATION BY THE NAVY OF A PROCUREMENT OF NR-2B AIR CONDITIONERS AFTER BID OPENING. UNDER PARAGRAPH 10(B) OF STANDARD FORM 33A, INCORPORATED IN THE IFB ISSUED BY THE NAVAL AIR ENGINEERING CENTER, PHILADELPHIA, PA., THE GOVERNMENT RESERVES THE RIGHT TO REJECT ANY AND ALL OFFERS. THE INSTANT CANCELLATION WAS BASED ON A BONA FIDE DETERMINATION THAT THE PUBLIC INTEREST WOULD THEREBY BE SERVED BECAUSE THE SUPPLIES WERE NO LONGER REQUIRED. THE PROTEST IS THEREFORE DENIED.

TO KECO INDUSTRIES, INC.:

WE REFER TO YOUR PROTEST, BY LETTER OF MARCH 5, 1971, ADDRESSED TO CONGRESSMAN JOHN G. SCHMITZ, AGAINST CANCELLATION BY THE DEPARTMENT OF THE NAVY OF A PROCUREMENT OF NR-2B AIR CONDITIONERS. THE PROCUREMENT WAS ADVERTISED UNDER INVITATION FOR BIDS (IFB) N00156-71-B-0125, ISSUED OCTOBER 30, 1970, BY THE NAVAL AIR ENGINEERING CENTER, PHILADELPHIA, PENNSYLVANIA.

THE IFB INCORPORATED IN ITS TERMS STANDARD FORM 33A, "SOLICITATION INSTRUCTIONS AND CONDITIONS," PARAGRAPH 10(B) OF WHICH RESERVES TO THE GOVERNMENT THE RIGHT TO REJECT ANY OR ALL OFFERS. BIDS WERE OPENED ON JANUARY 8, 1971, AND YOU WERE THE LOWEST BIDDER; HOWEVER, ON MARCH 9, 1971, THE PROCUREMENT WAS CANCELLED BY THE NAVY ON THE BASIS THAT THERE WAS NO LONGER A NEED FOR THE AIR CONDITIONERS.

YOU SUGGEST THAT THE BASIS FOR CANCELLATION WAS THE RELUCTANCE OF THE GOVERNMENT TO START A PRODUCTION CONTRACT FOR THE AIR CONDITIONERS WITH A NEW CONTRACTOR. IN THIS REGARD, YOU STATE THAT THE NR-2B AIR CONDITIONERS ARE CURRENTLY, OR WERE RECENTLY, IN PRODUCTION AT ACME INDUSTRIES, INC. (ACME); THAT THE NAVY FULLY EXPECTED THAT ACME WOULD BE THE SUCCESSFUL BIDDER ON THIS PROCUREMENT; AND THAT IT IS YOUR BELIEF THAT, UNLESS THE PROCUREMENT IS REACTIVATED AND AWARD MADE TO YOU, THERE WILL BE A SOLE SOURCE NEGOTIATION FOR PURCHASE OF THE AIR CONDITIONERS FROM ACME.

THE NAVAL AIR SYSTEMS COMMAND (NASC), WHICH HAS COGNIZANCE OVER THE CANCELLATION OF THE PROCUREMENT AND THE DETERMINATION OF REQUIREMENTS FOR THE NR-2B AIR CONDITIONERS, HAS ADVISED OUR OFFICE THAT THE CANCELLATION WAS BASED UPON THE RESULTS OF TWO SEPARATE STUDIES BY THE NAVY, BOTH OF WHICH INDICATED THAT THERE IS NO NEED FOR ADDITIONAL NR 2B OR SIMILAR AIR CONDITIONERS. IN THIS CONNECTION, NASC EXPLAINS THAT THE NR-2B AIR CONDITIONER IS DESIGNED FOR COOLING AIRCRAFT SYSTEMS DURING MAINTENANCE PERIODS AND HAS AN OUTPUT OF 32 POUNDS PER MINUTE OF CONDITIONED AIR AT 3 PSI, WHICH IS NOT ADEQUATE TO SUPPLY THE COOLING REQUIREMENTS OF LARGER AIRCRAFT SUCH AS THE E-2, F3C OR THE F-14.

NASC FURTHER ADVISES THAT THROUGH PROJECT OFFLOAD, A PROGRAM DESIGNED TO IDENTIFY GROUND SUPPORT EQUIPMENT (GSE) WHICH MAY BE REMOVED FROM THE INCREASINGLY HARD PRESSED CARRIER MAINTENANCE SPACES, DATA WAS GENERATED BY THE NAVY IN JANUARY 1971 WHICH INDICATED THAT THE NUMBER OF NR-2B UNITS ABOARD EACH CVA COULD BE REDUCED BY TWO, OR A REDUCTION OF 20 UNITS IN THE TOTAL NR-2B REQUIREMENT FOR THE CARRIERS. IN ADDITION, A STUDY GROUP FORMED BY THE COMMANDER, NAVAL AIR FORCE, ATLANTIC FLEET, TO INVESTIGATE AND IMPROVE FLEET READINESS THROUGH BETTER MANAGEMENT AND INVENTORY CONTROL OF GSE, CONCLUDED, AFTER REVIEW OF NR-2B REQUIREMENTS AT EAST COAST NAVAL AIR STATIONS IN EARLY FEBRUARY 1971, THAT UTILIZATION OF THE UNIT WAS LOWER THAN PLANNED AT SUCH STATIONS AND IN ATLANTIC FLEET CARRIERS, AND REPORTED THAT 10 UNITS WERE RETAINED IN STOCK IN A READY FOR ISSUE STATUS AGAINST FUTURE DEMANDS.

IN LIGHT OF THE FOREGOING, NASC STATES, IT WAS DETERMINED THAT THE PROCUREMENT OF THE ADDITIONAL 15 UNITS COVERED BY THE IFB COULD NO LONGER BE JUSTIFIED, AND THE PROCUREMENT WAS THEREFORE CANCELLED PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2 404.1(B)(III) RELATING TO CANCELLATION OF INVITATIONS FOR BIDS AFTER BID OPENING, BUT PRIOR TO AWARD, WHERE THE SUPPLIES OR SERVICES BEING PROCURED ARE NO LONGER REQUIRED.

UNDER 10 U.S.C. 2305(B), THE CONTRACTING AGENCY HAS THE AUTHORITY TO REJECT ALL BIDS IF THE HEAD OF THE AGENCY DETERMINES THAT REJECTION IS IN THE PUBLIC INTEREST. PARAGRAPH 10(B) OF STANDARD FORM 33A IS CONSISTENT WITH THIS PROVISION. WE HAVE STATED, HOWEVER, THAT THE REJECTION OF BIDS UNDER SUCH AUTHORITY MUST BE BASED UPON A BONA FIDE DETERMINATION THAT THE PUBLIC INTEREST WOULD THEREBY BE SERVED. 37 COMP. GEN. 760 (1958).

THE REPORTED FACTS EVIDENCE THAT IT WAS NOT UNTIL AFTER THE BIDS HAD BEEN OPENED UNDER THE IFB IN QUESTION THAT THE PROCURING ACTIVITY BECAME AWARE THAT, DUE TO THE REASSESSMENT BY THE NAVY OF ITS GSE REQUIREMENTS, THERE WAS NO NEED FOR ACQUISITION OF ANY OF THE 15 UNITS COVERED BY THE IFB. ADDITION, SINCE THE NAVY NOW HAS 10 UNITS IN STOCK FROM WHICH FUTURE DEMANDS MAY BE SUPPLIED, IT WOULD NOT APPEAR THAT ANY PROCUREMENT OF THE UNITS IS CONTEMPLATED IN THE NEAR FUTURE.

WHILE IT IS REGRETTABLE THAT THE INFORMATION PERTAINING TO THE NAVY'S ACTUAL REQUIREMENTS DID NOT COME TO LIGHT UNTIL AFTER THE BIDS UNDER THE IFB IN QUESTION HAD BEEN OPENED, WE ARE, NEVERTHELESS, UNABLE TO CONCLUDE THAT THE DECISION BY NASC TO DISCARD ALL BIDS AND TO CANCEL THE PROCUREMENT WAS NOT IN THE PUBLIC INTEREST AS CONTEMPLATED BY THE PROCUREMENT STATUTE AND REGULATIONS.

ACCORDINGLY, YOUR PROTEST IS DENIED.