B-174817, APR 6, 1972

B-174817: Apr 6, 1972

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MUST CONCLUDE THAT THE CONTRACTING OFFICER'S CANCELLATION OF THE SOLICITATION WAS PROPERLY MADE UPON HIS DETERMINATION THAT PROTESTANT'S BID PRICE WAS UNREASONABLY EXCESSIVE. THERE IS NO EVIDENCE TO INDICATE THAT THE AGENCY REISSUED THE PROCUREMENT IN ORDER TO ENABLE THE LOW BIDDER TO SUBMIT A RESPONSIVE OFFER. WITH REGARD TO CADRE'S CONTENTION THAT OTHER BIDDERS WERE TOLD HOW THEIR BIDS COULD BE MADE RESPONSIVE. IT WAS EMPHASIZED THAT EXCESSIVELY HIGH BIDS SHOULD BE REJECTED. BIDS WERE FIRST SUBMITTED ON THE PROJECT UNDER IFB NO. CADRE'S BID WAS REJECTED UNDER PARAGRAPH 2 404.1(B)(VI) OF THE ARMED SERVICES PROCUREMENT REGULATIONS (ASPR) BECAUSE THE CONTRACTING OFFICER CONSIDERED ITS BID PRICE TO BE UNREASONABLE.

B-174817, APR 6, 1972

BID PROTEST - UNREASONABLE BID PRICE - PROPRIETY OF RESOLICITATION DECISION DENYING PROTEST OF THE CADRE CORPORATION AGAINST AWARD OF A CONTRACT TO ANY OTHER BIDDER UNDER AN IFB ISSUED BY THE LOUISVILLE DISTRICT CORPS OF ENGINEERS FOR FURNISHING AND INSTALLING A REMOTE CONTROL SYSTEM FOR DAM GATES OF THE MCALPINE LOCKS AND DAM ON THE OHIO RIVER. IN VIEW OF THE GOVERNMENT'S ESTIMATE FOR THE PROJECT AND THE AMOUNT OF BIDS SUBMITTED UNDER THE ORIGINAL IFB, THE COMP. GEN. MUST CONCLUDE THAT THE CONTRACTING OFFICER'S CANCELLATION OF THE SOLICITATION WAS PROPERLY MADE UPON HIS DETERMINATION THAT PROTESTANT'S BID PRICE WAS UNREASONABLY EXCESSIVE. ASPR 2-404.1(B)(VI). IN ADDITION, THERE IS NO EVIDENCE TO INDICATE THAT THE AGENCY REISSUED THE PROCUREMENT IN ORDER TO ENABLE THE LOW BIDDER TO SUBMIT A RESPONSIVE OFFER. FINALLY, WITH REGARD TO CADRE'S CONTENTION THAT OTHER BIDDERS WERE TOLD HOW THEIR BIDS COULD BE MADE RESPONSIVE, IT SHOULD BE NOTED THAT UNDER ASPR 2 404.3, A NONRESPONSIVE BIDDER MAY BE ADVISED OF THE REASONS FOR BID REJECTION. FOR THE FOREGOING REASONS, THE PROTEST MUST BE DENIED.

TO THE CADRE CORPORATION:

WE REFER TO YOUR LETTERS OF DECEMBER 21, 1971, AND MARCH 28, 1972, IN WHICH YOU PROTEST AGAINST THE AWARD OF A CONTRACT TO ANY OTHER BIDDER UNDER INVITATION FOR BIDS (IFB) NO. DACW27-72-B-0040, ISSUED NOVEMBER 2, 1971, BY THE UNITED STATES ARMY CORPS OF ENGINEERS, LOUISVILLE DISTRICT, FOR FURNISHING AND INSTALLING A REMOTE CONTROL SYSTEM FOR DAM GATES OF THE MCALPINE LOCKS AND DAM ON THE OHIO RIVER.

THE ENGINEERING DIVISION OF THE LOUISVILLE DISTRICT HAD ESTIMATED THE COST OF THE SYSTEM TO BE $65,000. FURTHER, WHEN THE OFFICE OF THE CHIEF OF ENGINEERS APPROVED THE PROJECT PLANS, IT WAS EMPHASIZED THAT EXCESSIVELY HIGH BIDS SHOULD BE REJECTED. BIDS WERE FIRST SUBMITTED ON THE PROJECT UNDER IFB NO. DACW27-72-B-0007, ISSUED JULY 28, 1971, AS FOLLOWS:

1. WISMER & BECKER CONTRACTING ENGINEERS (WISMER) $86,853

2. THE CADRE CORPORATION (CADRE) 88,721

3. UNITED POWER & CONTROL SYSTEMS, INC. (UNITED) 52,000

AFTER EVALUATING THE BIDS, THE CONTRACTING OFFICER REJECTED THOSE OF WISMER AND UNITED AS NOT RESPONSIVE TO THE DESCRIPTIVE LITERATURE REQUIREMENTS OF THE IFB. CADRE'S BID WAS REJECTED UNDER PARAGRAPH 2 404.1(B)(VI) OF THE ARMED SERVICES PROCUREMENT REGULATIONS (ASPR) BECAUSE THE CONTRACTING OFFICER CONSIDERED ITS BID PRICE TO BE UNREASONABLE.

BECAUSE ALL BIDS UNDER IFB -0007 WERE REJECTED, THE PROJECT WAS READVERTISED UNDER IFB -0040, NOVEMBER 2, 1971, WITH THE ADDITION OF CLARIFYING TECHNICAL REQUIREMENTS FOR THE DESCRIPTIVE LITERATURE ON THE MONITORING SYSTEM. IN A LETTER OF NOVEMBER 12, 1971, TO THE CORPS OF ENGINEERS, YOU ALLEGED THAT THERE WAS NO BASIS FOR THE DETERMINATION THAT YOUR BID PRICE WAS UNREASONABLE. YOU ALSO ALLEGED THAT BOTH YOUR BID PRICE AND TECHNICAL ANALYSIS HAD BEEN IMPROPERLY REVEALED TO COMPETITORS AND YOU REQUESTED THAT A CONTRACT UNDER IFB -0007 BE AWARDED TO YOUR FIRM AS THE ONLY RESPONSIVE BIDDER THEREUNDER. IN A LETTER OF NOVEMBER 23, 1971, THE CORPS OF ENGINEERS ADVISED CADRE THAT NO AWARD COULD BE MADE UNDER IFB -0007 AND DENIED THE ALLEGATION THAT CADRE'S TECHNICAL INFORMATION HAD BEEN REVEALED TO OTHER BIDDERS.

THE FOLLOWING BIDS WERE SUBMITTED UNDER IFB -0040, OPENED DECEMBER 9, 1971:

1. UNITED POWER & CONTROL SYSTEMS, INC. $62,000

2. THE CADRE CORPORATION 69,700

3. MOTOROLA, INC. APPLIED SYSTEMS 78,955

4. T & E ELECTRICAL CONTRACTORS 82,000

5. WISMER & BECKER CONTRACTING ENGINEERS 84,350

6. GENERAL ELECTRIC COMPANY 85,411

ON DECEMBER 14, 1971, THE CORPS OF ENGINEERS RECEIVED TWO LETTERS FROM YOUR FIRM. IN ONE LETTER, DATED NOVEMBER 30, 1971, YOU EXPLAINED THAT, ALTHOUGH YOU STILL CONSIDERED THAT YOUR FIRM SHOULD RECEIVE AN AWARD UNDER IFB -0007, YOUR LOWER BID PRICE UNDER IFB -0040 WAS SUBMITTED TO PROTECT YOUR INTERESTS AND TO ATTEMPT TO OBTAIN SOME RETURN ON UNRECOVERABLE COSTS OF BID PREPARATION. YOU EXPLAINED FURTHER THAT THE LOWER PRICE REFLECTED DECREASED COSTS OF SOME EQUIPMENT AND WAS MADE TO COMPENSATE FOR THE TENDENCY OF ALL BID PRICES ON THE SECOND IFB TO BE LOWER THAN THOSE IN RESPONSE TO THE ORIGINAL IFB. IN THE SECOND LETTER, DATED DECEMBER 13, 1971, YOU AGAIN REQUESTED AWARD UNDER IFB -0007, ARGUING THE REASONABLENESS OF YOUR BID PRICE IN VIEW OF THE RANGE OF THE BIDS SUBSEQUENTLY RECEIVED UNDER IFB 0040.

IN THE LETTER OF DECEMBER 21, 1971, TO OUR OFFICE, YOU PROTESTED AGAINST THE "CAPRICIOUS MANNER" IN WHICH THE CORPS OF ENGINEERS ISSUED A NEW IFB FOR THE IDENTICAL PROJECT AFTER RECEIVING A RESPONSIVE BID "WITHIN A PRICE RANGE WHICH THEY COULD AFFORD *** IN HOPE THAT THE NON-RESPONSIVE BIDDER COULD RESUBMIT A RESPONSIVE BID AT THE SAME LOW PRICE." HOWEVER, UNDER ASPR 2-404.1(B)(VI) AND PARAGRAPH 10(B) OF THE IFB INSTRUCTIONS AND CONDITIONS, A CONTRACTING OFFICER MAY CANCEL AN IFB WHEN HE DETERMINES THAT AN OTHERWISE ACCEPTABLE BID IS UNREASONABLE IN PRICE. SEE 50 COMP. GEN. 177, 179 (1970). IN THE PRESENT CASE, THE CONTRACTING OFFICER'S DECISION TO REJECT CADRE'S BID, WHICH WAS MORE THAN 36 PERCENT ABOVE THE HIGHEST GOVERNMENT ESTIMATE MADE BEFORE THE IFB WAS ISSUED, DOES NOT APPEAR UNREASONABLE.

YOU ALSO ARGUE THAT IN RELATION TO THE BIDS SUBMITTED UNDER IFB 0040, YOUR BID UNDER IFB -0007 WAS REASONABLE IN AMOUNT. HOWEVER, THE CONTRACTING OFFICER COULD MAKE HIS DETERMINATION OF UNREASONABLENESS ONLY ON THE BASIS OF THE ORIGINAL BIDS AND, OF COURSE, DID NOT HAVE THE BENEFIT OF THE PRICES BID UNDER IFB -0040. FURTHERMORE, THE LOW BID UNDER IFB - 0040 IS BELOW THE CORPS OF ENGINEERS ESTIMATE OF $65,000.

WE THINK THAT YOUR ALLEGATION THAT THE CONTRACTING OFFICER SHOWED A "WILLINGNESS TO OVERLOOK AREAS OF NON-COMPLIANCE" IN THE BIDS SUBMITTED UNDER IFB -0007 IS SATISFACTORILY ANSWERED BY THE FACT THAT THE BIDS OF BOTH OTHER BIDDERS WERE REJECTED BECAUSE THEY WERE MATERIALLY NONRESPONSIVE TO THE DESCRIPTIVE LITERATURE REQUIREMENTS OF THE IFB. YOU ALSO ALLEGE THAT THE CORPS OF ENGINEERS DECIDED TO REISSUE THE PROCUREMENT IN ORDER TO GIVE THE LOW BIDDER AN OPPORTUNITY TO MAKE ITS BID RESPONSIVE AT ITS BID PRICE, FURTHER STATING THAT AN OFFICIAL OF THE CORPS OF ENGINEERS EXPLAINED TO A REPRESENTATIVE OF YOUR FIRM THAT THIS WAS THE REASON FOR THE REJECTION OF THE CADRE BID. HOWEVER, THAT OFFICIAL CATEGORICALLY DENIES THAT HE MADE THE STATEMENT ATTRIBUTED TO HIM. FINALLY, YOU ALLEGE THAT YOU WERE TOLD BY THE SAME OFFICIAL THAT DURING THE TIME BETWEEN THE CANCELLATION OF IFB -0007 AND THE ISSUANCE OF IFB - 0040, THE NONRESPONSIVE BIDDERS, IN PARTICULAR, THE LOW BIDDER, WERE TOLD IN WHAT AREAS THEY WERE NONRESPONSIVE AND HOW THEIR BIDS COULD BE MADE RESPONSIVE. IN ITSELF, THERE IS NO IMPROPRIETY IN SUCH AN ACTION BECAUSE UNDER ASPR 2-404.3 A NONRESPONSIVE BIDDER MAY BE ADVISED OF THE REASONS FOR BID REJECTION.

BASED UPON OUR REVIEW OF THE RECORD, WE CONCLUDE THAT YOUR PROTEST MUST BE DENIED.