B-173391, NOV 19, 1971

B-173391: Nov 19, 1971

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

ASPR 2-404.1 ALLOWS REJECTION AFTER OPENING WHERE CANCELLATION IS IN THE BEST INTERESTS OF THE GOVERNMENT. THE AUTHORITY OF THE CONTRACTING OFFICER IS VERY BROAD. GAO WILL NOT QUESTION HIS DECISION WHERE THAT DISCRETION WAS NOT ABUSED. TO GARDNER CONSTRUCTION COMPANY: THIS IS IN REPLY TO THE PROTEST. IT IS REPORTED THAT THE CORPS OF ENGINEERS ORIGINALLY HAD PLANNED TO ISSUE ONE BIDDING PACKAGE COVERING FOUNDATION. IT WAS DECIDED TO ISSUE A SEPARATE INVITATION FOR THE STRUCTURAL STEEL WORK IN THE HOPE THAT THE STEEL COULD BE OBTAINED FROM THE JULY 1971. DACW23-71-B-9001 WAS ISSUED ON MAY 27. WHEN THE BIDS WERE OPENED. 500 WAS FOUND TO BE LOW. PROTESTED AWARD TO GARDNER ON THE GROUNDS THAT GARDNER WAS NOT CAPABLE OF PERFORMING THE CONTRACT.

B-173391, NOV 19, 1971

BID PROTEST - REJECTION OF BIDS DENIAL OF PROTEST AGAINST THE REJECTION OF ALL BIDS UNDER AN IFB ISSUED BY THE ARMY CORPS OF ENGINEERS, CHICAGO DISTRICT, FOR STRUCTURAL STEEL FOR THE CHICAGO NONPREFERENTIAL MAIL FACILITY. ASPR 2-404.1 ALLOWS REJECTION AFTER OPENING WHERE CANCELLATION IS IN THE BEST INTERESTS OF THE GOVERNMENT. THE AUTHORITY OF THE CONTRACTING OFFICER IS VERY BROAD, AND GAO WILL NOT QUESTION HIS DECISION WHERE THAT DISCRETION WAS NOT ABUSED. THE CIRCUMSTANCES OF THIS CASE DO NOT SHOW SUCH AN ABUSE OF DISCRETION.

TO GARDNER CONSTRUCTION COMPANY:

THIS IS IN REPLY TO THE PROTEST, FILED IN YOUR BEHALF, AGAINST THE REJECTION OF ALL BIDS UNDER INVITATION FOR BIDS NO. DACW23-71-B-9001, ISSUED MAY 27, 1971, BY THE ARMY CORPS OF ENGINEERS, CHICAGO DISTRICT, FOR STRUCTURAL STEEL FOR THE CHICAGO NONPREFERENTIAL MAIL FACILITY.

IT IS REPORTED THAT THE CORPS OF ENGINEERS ORIGINALLY HAD PLANNED TO ISSUE ONE BIDDING PACKAGE COVERING FOUNDATION, STRUCTURAL STEEL, DEMOLITION, AND OTHER FACETS OF EARLY CONSTRUCTION FOR THE PROJECT. HOWEVER, WHEN IT BECAME APPARENT THAT THE BIDDING PACKAGE COULD NOT BE PREPARED IN TIME TO AVOID THE EFFECTS OF A STEEL STRIKE ANTICIPATED FOR AUGUST 1, 1971, IT WAS DECIDED TO ISSUE A SEPARATE INVITATION FOR THE STRUCTURAL STEEL WORK IN THE HOPE THAT THE STEEL COULD BE OBTAINED FROM THE JULY 1971, ROLLING BY THE STEEL MILLS PRIOR TO THE EXPECTED STRIKE DATE. AS A RESULT, INVITATION FOR BIDS NO. DACW23-71-B-9001 WAS ISSUED ON MAY 27, 1971, WITH A CLOSING DATE OF JUNE 10, 1971. WHEN THE BIDS WERE OPENED, THE GARDNER CONSTRUCTION COMPANY BID OF $1,817,500 WAS FOUND TO BE LOW. THE CORPS REPORTS THAT ON JUNE 11, 1971, PRIOR TO AWARD, THE SECOND LOW BIDDER, INGALLS IRON WORKS COMPANY, PROTESTED AWARD TO GARDNER ON THE GROUNDS THAT GARDNER WAS NOT CAPABLE OF PERFORMING THE CONTRACT. INGALLS CLAIMED THAT GARDNER COULD NOT COMPLY WITH THE REQUIREMENT IN THE INVITATION THAT AT LEAST 50 PERCENT OF THE WORK BE PERFORMED BY THE GARDNER ORGANIZATION ITSELF, AND THAT GARDNER, AS A GENERAL CONTRACTOR, WAS NOT QUALIFIED TO FABRICATE AND ERECT THE STRUCTURAL STEEL.

ATTEMPTS TO RESOLVE THE PROTEST, INCLUDING A MEETING IN THE CHICAGO DISTRICT OFFICE ON JUNE 18, 1971, WERE UNSUCCESSFUL AND ON JUNE 24, 1971, INGALLS REQUESTED THAT ITS PROTEST BE SUBMITTED TO THIS OFFICE.

ON JUNE 25, 1971, THE CONTRACTING OFFICER MADE CERTAIN FINDINGS AND, BASED THEREON, DETERMINED THAT IT WAS IN THE BEST INTEREST OF THE GOVERNMENT TO REJECT ALL BIDS. THE FOLLOWING REASONS WERE GIVEN:

"1. THE ANTICIPATED ADVANTAGE IN PROCURING THE STRUCTURAL STEEL AS A SEPARATE ITEM HAS BEEN LOST DUE TO UNEXPECTED DELAYS.

"2. CONTRACT REQUIREMENT FOR THE SUCCESSFUL CONTRACTOR TO PERFORM 50 PERCENT OF THE ENTIRE WORK ON THE SITE IS A NULLITY AND CANNOT BE ACCOMPLISHED UNDER THE CONTRACT PROVISIONS.

"3. INCORPORATION OF THE STRUCTURAL STEEL INTO THE PROJECT WORK FOR THE ENTIRE STRUCTURE WILL ELIMINATE CONTRACTOR INTERFERENCE AT THE WORK SITE."

ALSO, ON JUNE 25, INVITATION FOR BIDS NO. DACW23-71-B-9002, ISSUED ON JUNE 7, 1971, FOR SITE PREPARATION, FOUNDATIONS, AND BUILDING ENCLOSURE, WAS AMENDED TO INCORPORATE INTO IT THE STRUCTURAL STEEL REQUIREMENT FOR THE PROJECT. NEITHER GARDNER NOR INGALLS SUBMITTED A BID UNDER INVITATION FOR BIDS NO. DACW23-71-B-9002.

10 U.S.C. 2305(C) PERMITS REJECTION OF ALL BIDS WHEN IN THE PUBLIC INTEREST, AND ASPR 2-404-1 ALLOWS REJECTION AFTER OPENING WHEN, FOR COMPELLING REASONS "CANCELLATION IS CLEARLY IN THE BEST INTEREST OF THE GOVERNMENT." ALL BIDDERS WERE INFORMED OF THIS POSSIBILITY BY PARAGRAPH 10(B) OF STANDARD FORM 22, INSTRUCTIONS TO BIDDERS, INCLUDED WITH THE IFB, WHICH STATED THAT "THE GOVERNMENT MAY, WHEN IN ITS INTEREST, REJECT ANY OR ALL BIDS. *** "

WE HAVE RECOGNIZED THAT THE AUTHORITY OF A CONTRACTING OFFICER TO REJECT ALL BIDS "IS EXTREMELY BROAD." 39 COMP. GEN. 396, 399 (1959). ALSO IN 47 COMP. GEN. 748, 751 (1968), WE STATED:

"WHILE THE INTEREST OF THE GOVERNMENT AND THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM REQUIRE THAT INVITATIONS BE CANCELLED ONLY FOR COGENT AND COMPELLING REASONS, THERE NECESSARILY IS RESERVED IN THE CONTRACTING OFFICIALS A SUBSTANTIAL AMOUNT OF DISCRETION IN DETERMINING WHETHER OR NOT AN INVITATION SHOULD BE CANCELLED."

WE DO NOT THINK THAT THE CIRCUMSTANCES IN THIS CASE WARRANT A CONCLUSION THAT THE CONTRACTING OFFICER ABUSED HIS DISCRETION IN CANCELLING THE IFB. THE SOLE REASON FOR ISSUING A SEPARATE IFB FOR STRUCTURAL STEEL WAS THE URGENT NEED TO OBTAIN THE STEEL PRIOR TO AN ANTICIPATED STRIKE; BEFORE AWARD WAS MADE, IT BECAME EVIDENT THAT THE NEEDED STEEL COULD NOT BE OBTAINED PRIOR TO THE EXPECTED STRIKE DATE. IN ADDITION, THE CONTRACTING OFFICER DETERMINED THAT PROCEEDING WITH TWO IFB'S RESULTING IN AWARDS TO TWO DIFFERENT CONTRACTORS INVOLVED INHERENT PROBLEMS WHICH COULD HAVE AN ADVERSE EFFECT ON PROJECT COMPLETION. WE FIND NOTHING ARBITRARY OR UNREASONABLE IN SUCH A DETERMINATION.

IT IS REPORTED THAT 13 BIDS WERE RECEIVED UNDER IFB 9002 AND THAT ON JULY 16, 1971, AN AWARD UNDER THAT SOLICITATION WAS MADE TO THE CARL W. LINDER COMPANY IN THE AMOUNT OF $4,874,673. THE CONTRACTOR HAS ADVISED THAT A SUBCONTRACT FOR THE STRUCTURAL STEEL WORK HAS BEEN LET TO MESKER STEEL, INCORPORATED OF EVANSVILLE, INDIANA.

APPARENTLY, LINDER'S BID ITEM PRICE FOR STEEL WAS $114,000 MORE THAN THE GARDNER BID PRICE FOR STEEL ERECTION. THE CORPS MAINTAINS, HOWEVER, THAT THIS DOES NOT MEAN THAT SEPARATE AWARDS TO GARDNER AND LINDER WOULD HAVE RESULTED IN A $114,000 SAVING. IT POINTS OUT THAT MANY OTHER FACTORS HAVE TO BE TAKEN INTO CONSIDERATION, SUCH AS THE REQUIRED ADDITIONAL COST FOR COORDINATION OF THE PROJECT WORK AND COMPLETION THEREOF WITH THE COMPLETION SCHEDULE OF ONE OTHER CONTRACTOR AND THE CONTINGENCY COSTS NECESSITATED BY CONTRACTOR INTERFERENCE AND DELAYS DUE TO TWO PRIMES AND THEIR SUBCONTRACTORS ERECTING ONE BUILDING AT THE SAME TIME. IN THE OPINION OF THE CORPS, IF THE STEEL ERECTION WORK WERE TO BE PERFORMED BY A SEPARATE PRIME CONTRACTOR WORKING SIMULTANEOUSLY AT THE SITE, THE TOTAL CONSTRUCTION PRICE, TAKING INTO ACCOUNT COSTS FOR CONTRACTOR INTERFERENCE AND DELAYS, MIGHT WELL HAVE BEEN ABOVE THE CURRENT CONTRACT PRICE.

WE FIND NO REASON TO OBJECT TO THE ADMINISTRATIVE ACTION IN THIS CASE. ACCORDINGLY, WE ARE COMPELLED TO DENY THE PROTEST.