B-173334, AUG 19, 1971

B-173334, AUG 19, 1971

BID PROTEST - CANCELLATION OF SOLICITATION - NONRESPONSIVE AND UNREASONABLE BIDS DENIAL OF PROTEST BY SILENT HOIST AND CRANE COMPANY, INC. AGAINST THE CANCELLATION OF AN IFB ISSUED BY THE DEFENSE CONSTRUCTION SUPPLY CENTER, SEEKING THE PROCUREMENT OF A QUANTITY OF FORKLIFT TRUCKS, REPAIR PARTS AND CERTAIN DOCUMENTATION. THE IFB WAS CANCELLED AFTER THE CONTRACTING OFFICER DETERMINED THAT THREE OF THE BIDS WERE NONRESPONSIVE, AND THAT PROTESTANT'S BID WAS UNREASONABLE AS TO PRICE. REJECTION OF BIDS IS A MATTER OF ADMINISTRATIVE DETERMINATION, AND A REQUEST FOR BIDS DOES NOT IMPART AN OBLIGATION TO ACCEPT ANY OF THE BIDS RECEIVED. GAO WILL NOT QUESTION THE CONTRACTING OFFICER'S ACTION IN THIS REGARD WITHOUT A SHOWING THAT THERE WAS AN ARBITRARY EXERCISE OF DISCRETION, AND SUCH HAS NOT BEEN MADE HERE.

TO SILENT HOIST AND CRANE COMPANY, INC.:

FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE CANCELLATION OF INVITATION FOR BIDS NO. DSA700-71-B-1314, ISSUED BY THE DEFENSE CONSTRUCTION SUPPLY CENTER, COLUMBUS, OHIO.

THE SUBJECT INVITATION WAS ISSUED ON JANUARY 18, 1971, FOR THE PROCUREMENT OF A TOTAL QUANTITY OF 13 FORKLIFT TRUCKS, REPAIR PARTS, AND CERTAIN DOCUMENTATION. BIDS WERE REQUIRED ON AN "ALL OR NONE" BASIS FOR ALL ITEMS. FOUR BIDS WERE RECEIVED AND OPENED ON APRIL 13, 1971.

TOWMOTOR CORPORATION SUBMITTED THE LOWEST BID OF $275,820 FOR ALL ITEMS. HOWEVER, BECAUSE OF MISTAKES IN BID PRICES ON CERTAIN ITEMS IT WAS PERMITTED TO WITHDRAW ITS BID. HYSTER COMPANY WAS THE SECOND LOW BIDDER, BUT ITS BID WAS REJECTED AS NONRESPONSIVE FOR FAILURE TO BID ON ALL ITEMS. THE NEXT LOWEST BID, SUBMITTED BY FULGHUM ENTERPRISES, INC., WAS REJECTED AS NONRESPONSIVE AS THE BID PRICE ON CERTAIN OF THE DOCUMENTATION WAS NOT CLEAR. YOUR BID OF APPROXIMATELY $340,000 WAS RESPONSIVE. HOWEVER, THE CONTRACTING OFFICER DETERMINED YOUR BID PRICE UNREASONABLE ON THE BASIS OF COMPARISON WITH OTHER BIDS AND CANCELLED THE INVITATION PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2-404.1.

IT IS YOUR CONTENTION THAT YOUR BID PRICE WAS REASONABLE AND AS THE ONLY RESPONSIVE BIDDER YOU SHOULD HAVE RECEIVED THE AWARD. FURTHERMORE, YOU CONTEND THAT THE CONTRACTING OFFICER'S DETERMINATION OF UNREASONABLENESS BASED UPON A COMPARISON OF LINE ITEM PRICES FROM NONRESPONSIVE BIDDERS IS FALLACIOUS AND ARBITRARY. THEREFORE, YOU REQUEST THAT OUR OFFICE DIRECT REINSTATEMENT OF THE INVITATION AND AWARD TO YOUR FIRM.

ASPR 2-404.1(A) PROVIDES, IN SUBSTANCE, THAT AFTER BIDS HAVE BEEN OPENED AWARD MUST BE MADE TO THE LOWEST RESPONSIBLE BIDDER UNLESS THERE IS A COMPELLING REASON TO REJECT ALL BIDS AND READVERTISE. HOWEVER, UNDER ASPR 2-404.1(B) THE INVITATION MAY BE CANCELLED AFTER OPENING IF THE PRICES ON ALL OTHERWISE ACCEPTABLE BIDS ARE UNREASONABLE. THE ISSUE HERE IS WHETHER THE CONTRACTING OFFICER'S DETERMINATION THAT YOUR BID PRICE IS UNREASONABLE, AND THEREFORE THAT CANCELLATION OF THE INVITATION IS PROPER UNDER THE REGULATION, SHOULD BE DISTURBED.

SECTION 2305(C) OF TITLE 10, U.S.C. PROVIDES THAT ALL BIDS MAY BE REJECTED, IF THE HEAD OF THE AGENCY DETERMINES THAT REJECTION IS IN THE PUBLIC INTEREST, AND SUCH RIGHT IS ALSO RESERVED IN PARAGRAPH 10(B) OF THE INVITATION INSTRUCTIONS AND CONDITIONS. ASPR 2-404.2(E), IMPLEMENTING THE AUTHORITY TO REJECT BIDS, PROVIDES THAT ANY BID MAY BE REJECTED IF THE CONTRACTING OFFICER DETERMINES IN WRITING THAT IT IS UNREASONABLE AS TO PRICE. OUR OFFICE AND THE COURTS HAVE HELD THAT THE REJECTION OF BIDS IS A MATTER OF ADMINISTRATIVE DISCRETION AND THAT A REQUEST FOR BIDS DOES NOT IMPART AN OBLIGATION TO ACCEPT ANY OF THE BIDS RECEIVED, INCLUDING THE LOWEST CONFORMING ONE. SEE 36 COMP. GEN. 364 (1956).

CONSISTENT WITH THE FOREGOING WE STATED IN 36 COMP. GEN. 364, 365:

" *** WE CANNOT, HOWEVER, CONSIDER THE MATTER OF COMPETITIVE BIDDING FOR GOVERNMENT CONTRACTS SOLELY AS A GAME, IN WHICH THE CONTRACT MUST AUTOMATICALLY GO TO THE LOWEST BIDDER WITHOUT REGARD TO THE REASONABLENESS OF HIS PRICE OR TO OTHER ATTEMPTED BIDS WHICH CANNOT FOR TECHNICAL REASONS BE ACCEPTED. WHEN IN THE LIGHT OF ALL THE FACTS, INCLUDING THOSE DISCLOSED BY THE BIDDING, IT IS ADMINISTRATIVELY DETERMINED THAT THE LOWEST ACCEPTABLE BID IS IN EXCESS OF THE AMOUNT FOR WHICH THE GOVERNMENT SHOULD BE ABLE TO OBTAIN THE SUPPLIES OR SERVICES SOUGHT, WE BELIEVE THAT THE REJECTION OF ALL BIDS AND READVERTISING OF THE CONTRACT IS A PROPER EXERCISE OF THE ADMINISTRATIVE DISCRETION, IN CONFORMITY WITH THE DUTY OF THE ADMINISTRATIVE OFFICIALS TO ACT IN THE BEST INTEREST OF THE GOVERNMENT. UPON SUCH REJECTION AND READVERTISING THE ORIGINAL BIDS ARE NO LONGER MATERIAL OR EFFECTIVE FOR ANY PURPOSE WHATSOEVER. IT IS NO DOUBT REGRETTABLE THAT ALL BIDDERS ARE AWARE OF THE AMOUNTS ORIGINALLY QUOTED BY THEIR COMPETITORS, BUT THEY ALSO ARE BETTER ADVISED AS TO WHAT PRICE RANGE IS CONSIDERED REASONABLE BY THE GOVERNMENT'S REPRESENTATIVES, AND ALL HAVE EQUAL OPPORTUNITIES TO SUBMIT SUCH NEW BIDS AS THEY WILL.

AS STATED ABOVE, CONTRACTING OFFICERS ARE CLOTHED WITH BROAD POWERS OF DISCRETION IN DECIDING WHETHER AN INVITATION SHOULD BE CANCELLED AND OUR OFFICE WILL NOT INTERFERE WITH SUCH DETERMINATION UNLESS IT IS ARBITRARY OR CAPRICIOUS. 39 COMP. GEN. 396 (1959).

WE HAVE HELD THAT THE BID OF A NONRESPONSIVE BIDDER IS RELEVANT TO THE DETERMINATION OF WHAT IS A REASONABLE BID PRICE. B-168972, APRIL 14, 1970. WE HAVE EXAMINED THE ABSTRACT OF BIDS IN THE PRESENT CASE AND, IN VIEW OF THE WIDE DIFFERENCE BETWEEN YOUR BID PRICES AND THOSE OF THE LOW AND SECOND LOW BIDS ON THE VARIOUS FORKLIFTS, WE ARE UNABLE TO CONCLUDE THAT THE CONTRACTING OFFICER'S DETERMINATION WAS ARBITRARY OR CAPRICIOUS.

ACCORDINGLY, YOUR PROTEST IS DENIED.