B-178089, JUN 26, 1973

B-178089: Jun 26, 1973

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THE PROCUREMENT WAS A 100 PERCENT SMALL BUSINESS SET-ASIDE. IT WAS NOT SYNOPSIZED IN THE COMMERCE BUSINESS DAILY BECAUSE THE COST WAS ESTIMATED TO BE ONLY $6. TWO BIDS WERE OPENED ON NOVEMBER 29. THE LOW BID WAS SUBMITTED BY MKB MANUFACTURING CORPORATION (MKB) AT $.78 EACH. MKB WAS REQUESTED TO VERIFY ITS BID FOR POSSIBLE ERROR. THIS REQUEST WAS MADE BY LETTER OF DECEMBER 8. SINCE THE PROCURING ACTIVITY HAD NO PRIOR PROCUREMENT EXPERIENCE WITH YOUR FIRM A PRE-AWARD SURVEY WAS REQUESTED. THAT INTEGRAL'S BID WAS UNREASONABLE IN VIEW OF THE MOST RECENT PROCUREMENT AND CONSIDERING THE COST OF THE SUBJECT ITEM IF PURCHASED AS A COMPONENT OF THE M16A RIFLE FROM THE CURRENT RIFLE MANUFACTURER.

B-178089, JUN 26, 1973

DENIAL OF BID PROTEST MADE AGAINST CANCELLATION OF IFB NO. DAAF03-73 B- 1253, ISSUED BY U.S. ARMY WEAPONS COMMAND, ROCK ISLAND, ILLINOIS.

TO INTEGRAL CORPORATION:

BY TELEFAX DATED FEBRUARY 26, 1973 AND LETTER DATED MARCH 5, 1973, YOU PROTESTED AGAINST CANCELLATION OF INVITATION FOR BIDS (IFB) NO. DAAF03-73- B-1253, ISSUED OCTOBER 30, 1972, BY THE UNITED STATES ARMY WEAPONS COMMAND, ROCK ISLAND, ILLINOIS.

THE INVITATION INVITED BIDS ON A QUANTITY OF 13,960 EACH, SEAR, FOR END USE IN THE M16A RIFLE. THE PROCUREMENT WAS A 100 PERCENT SMALL BUSINESS SET-ASIDE. HOWEVER, IT WAS NOT SYNOPSIZED IN THE COMMERCE BUSINESS DAILY BECAUSE THE COST WAS ESTIMATED TO BE ONLY $6,282 (ASPR 1 1003.1(A)). TWO BIDS WERE OPENED ON NOVEMBER 29, 1972, AND THE LOW BID WAS SUBMITTED BY MKB MANUFACTURING CORPORATION (MKB) AT $.78 EACH, WHILE YOUR FIRM BID $.96 EACH. DUE TO THE VARIANCE IN THESE BIDS, MKB WAS REQUESTED TO VERIFY ITS BID FOR POSSIBLE ERROR. THIS REQUEST WAS MADE BY LETTER OF DECEMBER 8, 1972. MKB FAILED TO RESPOND TO THIS REQUEST, AND ITS BID EXPIRED ON DECEMBER 29, 1972.

SINCE THE PROCURING ACTIVITY HAD NO PRIOR PROCUREMENT EXPERIENCE WITH YOUR FIRM A PRE-AWARD SURVEY WAS REQUESTED, WHICH RESULTED IN A RECOMMENDATION OF COMPLETE AWARD ON JANUARY 23, 1973. DUE TO THE LACK OF COMPETITION THE CONTRACTING OFFICER HAD ALSO REQUESTED A PRICE ANALYSIS ON YOUR PRICE. THIS ANALYSIS CONCLUDED ON FEBRUARY 12, 1973, THAT INTEGRAL'S BID WAS UNREASONABLE IN VIEW OF THE MOST RECENT PROCUREMENT AND CONSIDERING THE COST OF THE SUBJECT ITEM IF PURCHASED AS A COMPONENT OF THE M16A RIFLE FROM THE CURRENT RIFLE MANUFACTURER. BASED ON THIS INFORMATION THE CONTRACTING OFFICER DECIDED TO CANCEL THE IFB AND ISSUE A NEW SOLICITATION WITHOUT A SMALL BUSINESS RESTRICTION. YOU WERE ADVISED OF THIS DETERMINATION AND YOUR PROTEST FOLLOWED. SUBSEQUENTLY, IFB NO. DAAF03-73-B-1747 WAS ISSUED AND BID OPENING WAS HELD ON MAY 4, 1973. THE LOW BID IN THE RESOLICITATION IS $.59 EACH AND YOUR BID FOR THE ITEM AT $.75 EACH WAS SECOND LOW.

YOU CONTEND THAT THE CANCELLATION WAS UNFAIR BECAUSE YOUR PRICE WAS REASONABLE AND YOUR FIRM HAS BEEN PLACED IN AN UNFAVORABLE COMPETITIVE POSITION DUE TO THE DISCLOSURE OF YOUR BID PRICE. FURTHERMORE, YOU ASSERT THAT YOUR FIRM WAS FINANCIALLY INJURED BECAUSE IT WAS LED TO BELIEVE BY THE CONTRACTING OFFICER THAT IT WOULD RECEIVE THE AWARD, AND THEREFORE, DID NOT PURSUE OTHER BUSINESS WHICH WOULD CONFLICT WITH PRODUCTION ON THE "FORTHCOMING" CONTRACT DURING THE PERIOD IN QUESTION.

WE HAVE RECOGNIZED THAT THE REJECTION OF BIDS BASED UPON A DETERMINATION OF UNREASONABLENESS OF BID PRICES IS A MATTER OF ADMINISTRATIVE DISCRETION, AND OUR OFFICE WILL NOT INTERFERE WITH SUCH A DETERMINATION IN THE ABSENCE OF A SHOWING THAT THE DETERMINATION IS ARBITRARY. 36 COMP. GEN. 364 (1956); 50 COMP. GEN. 177 (1970). MOREOVER, IN THE CASE OF A SMALL BUSINESS SET-ASIDE, ASPR 1-706.3(A) PERMITS THE WITHDRAWAL OF THE SET-ASIDE IF THE CONTRACTING OFFICER DETERMINES THAT THE AWARD UNDER THE SET-ASIDE "WOULD BE DETRIMENTAL TO THE PUBLIC INTEREST (E.G., BECAUSE OF UNREASONABLE PRICE)." 49 COMP. GEN. 740 (1970). IN THIS CASE THE DETERMINATION TO CANCEL THE INVITATION BECAUSE OF UNREASONABLE PRICE WAS BASED ON THE FACT THAT THE ITEM HAD BEEN PROCURED IN LATE 1968 AT A UNIT PRICE OF $.488 AND THE BELIEF THAT A SUBSTANTIALLY LOWER PRICE THAN $.96 PER UNIT COULD BE OBTAINED IF THE PROCUREMENT WERE RESOLICITED WITHOUT THE SMALL BUSINESS RESTRICTION. ALTHOUGH THE PRIOR PROCUREMENT WAS MADE A FEW YEARS AGO (LATE 1968) AND INVOLVED 48,000 UNITS RATHER THAN 13,960 UNITS, WE BELIEVE THE ARMY HAD A REASONABLE BASIS FOR CONCLUDING THAT YOUR BID PRICE WAS UNREASONABLY HIGH AND THAT THE PROCUREMENT SHOULD BE RESOLICITED.

ACCORDINGLY, WE FIND THAT AWARD MAY PROPERLY BE MADE UNDER THE NEW SOLICITATION, AND YOUR PROTEST IS DENIED.

HOWEVER, WE FIND NO JUSTIFICATION FOR THE CONTRACTING OFFICER'S DELAY IN REACHING THE CONCLUSION THAT YOUR BID WAS UNREASONABLE AS TO PRICE, AND WE ARE ADVISING THE SECRETARY OF THE ARMY OF OUR OPINION ON THIS MATTER BY LETTER OF TODAY, COPY ENCLOSED.