B-180696, JUN 17, 1974

B-180696: Jun 17, 1974

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SINCE DETERMINATION OF PROPOSED CONTRACTOR'S RESPONSIBILITY IS MATTER LARGELY WITHIN DISCRETION OF CONTRACTING OFFICER. WILL NOT BE OVERTURNED BY GAO IN THE ABSENCE OF FRAUD. THE FOLLOWING BIDS WERE RECEIVED: EAST BAY AUTO SUPPLY INC. $2. 821.00 AWARD WAS MADE TO EAST BAY ON MARCH 18. THE ESSENCE OF SEAL BOND'S PROTEST IS FOUND IN ITS RESPONSE TO THE ADMINISTRATIVE REPORT. 184.62 WAS THE LOWEST RESPONSIVE BID. THE CONTRACTING OFFICER HAS DETERMINED THAT EAST BAY'S BID IS ALSO A RESPONSIBLE ONE. FEELS THAT THE BID TOTAL SUBMITTED BY EAST BAY WILL NOT SUPPORT OVERHEAD AND COST OF GOODS TO SERVICE THE CONTRACT. IF THE OPERATION IS REGULATED BY CONTRACT STIPULATIONS AND REQUIREMENTS. ***" OUR OFFICE HAS HELD ON MANY OCCASIONS THAT WHERE A BIDDER SUBMITS A LOW PRICE.

B-180696, JUN 17, 1974

1. SINCE DETERMINATION OF PROPOSED CONTRACTOR'S RESPONSIBILITY IS MATTER LARGELY WITHIN DISCRETION OF CONTRACTING OFFICER, AFFIRMATIVE DETERMINATION OF BIDDER'S RESPONSIBILITY, PURSUANT TO APPLICABLE REGULATION, WILL NOT BE OVERTURNED BY GAO IN THE ABSENCE OF FRAUD. FRAUD HAVING BEEN ALLEGED OR DEMONSTRATED, GAO DECLINES TO FURTHER CONSIDER THIS MATTER. 2. IF PROTESTER CAN SUBSTANTIATE ITS ALLEGATIONS OF PRICE COLLABORATION AND/OR KICKBACKS, GAO SUGGESTS THAT MATTER BE BROUGHT TO ATTENTION OF APPROPRIATE AGENCY OFFICIALS SO THAT IT MAY BE REPORTED TO DEPARTMENT OF JUSTICE UNDER ASPR 1-111.

TO SEAL BOND INC.:

ON JANUARY 11, 1974, THE NAVAL SUPPLY CENTER, PEARL HARBOR, HAWAII, ISSUED INVITATION FOR BIDS (IFB) NO. N00604-74-B-0270, WHICH REQUESTED BIDS FOR FURNISHING MOTOR VEHICLE PARTS THROUGH CONTRACTOR-OPERATED PARTS STORES (COPARS) AT VARIOUS NAVAL FACILITIES IN HAWAII. THE IFB CONTEMPLATED THE AWARD OF A REQUIREMENTS-TYPE CONTRACT.

IN RESPONSE TO THE SOLICITATION, THE FOLLOWING BIDS WERE RECEIVED:

EAST BAY AUTO SUPPLY INC. $2,489,184.62

SEAL BOND INC. 2,538,392.26

NAPA 2,675,460.00

KENTRON AUTOMOTIVE 2,708,821.00

AWARD WAS MADE TO EAST BAY ON MARCH 18, 1974.

THE ESSENCE OF SEAL BOND'S PROTEST IS FOUND IN ITS RESPONSE TO THE ADMINISTRATIVE REPORT, WHERE IT STATES:

"*** THE BID SUBMITTED IN RESPONSE TO IFB N00604-74-B-0270 BY EAST BAY AUTO SUPPLY, INC. OF $2,489,184.62 WAS THE LOWEST RESPONSIVE BID. THE CONTRACTING OFFICER HAS DETERMINED THAT EAST BAY'S BID IS ALSO A RESPONSIBLE ONE. SEAL BOND, HOWEVER, FEELS THAT THE BID TOTAL SUBMITTED BY EAST BAY WILL NOT SUPPORT OVERHEAD AND COST OF GOODS TO SERVICE THE CONTRACT, IF THE OPERATION IS REGULATED BY CONTRACT STIPULATIONS AND REQUIREMENTS. ***"

OUR OFFICE HAS HELD ON MANY OCCASIONS THAT WHERE A BIDDER SUBMITS A LOW PRICE, WHETHER OR NOT THE BIDDER CAN PERFORM AT THAT PRICE IS A QUESTION OF RESPONSIBILITY. B-180393, APRIL 10, 1974; B-179002, DECEMBER 18, 1973, AND CASES CITED THEREIN. MOREOVER, EVEN IF THE CONTRACTOR WERE TO TAKE A LOSS ON THE CONTRACT, THIS DOES NOT REQUIRE THE REJECTION OF AN OTHERWISE ACCEPTABLE BID. B-180393, SUPRA; B 179002, SUPRA.

IN THE INSTANT CASE, THE CONTRACTING OFFICER HAS FOUND EAST BAY RESPONSIBLE. THE DETERMINATION OF A PROPOSED CONTRACTOR'S RESPONSIBILITY IS, INDEED, LARGELY WITHIN THE DISCRETION OF THE CONTRACTING OFFICER. IF, PURSUANT TO THE APPLICABLE REGULATIONS, THE CONTRACTING OFFICER DOES DECLARE A BIDDER RESPONSIBLE, WE DO NOT BELIEVE THAT THAT DETERMINATION SHOULD BE OVERTURNED IN THE ABSENCE OF FRAUD. B-181076, JUNE 5, 1974. FRAUD HAVING BEEN ALLEGED OR DEMONSTRATED, WE MUST DECLINE TO FURTHER CONSIDER THE MATTER.

SEAL BOND ALSO ALLEGES "THE POSSIBILITY OF COLLABORATION TO ELIMINATE FAIR COMPETITION AND/OR THE POSSIBILITY OF CONTRACT VIOLATIONS."

AS TO SUCH ALLEGATIONS, WE WOULD SUGGEST THAT SEAL BOND SPECIFICALLY IDENTIFY THE AREAS OF POSSIBLE VIOLATIONS TO THE PROPER AGENCY OFFICIALS WHO ARE RESPONSIBLE FOR ADMINISTRATION OF THE CONTRACT.

MOREOVER, WITH REGARD TO THE ALLEGATION OF PROBABLE COLLABORATION, WHICH WE ASSUME THE PROTESTER ASSERTS IS IN VIOLATION OF THE CERTIFICATION OF INDEPENDENT PRICE DETERMINATION, ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2-404.1(B)(VII) ALLOWS FOR THE CANCELLATION OF A SOLICITATION AFTER OPENING WHERE SUCH CONTRACTING OFFICE DETERMINES THAT SUCH A VIOLATION HAS OCCURRED.

SIMILARLY, ASPR 3-215.1 ALLOWS FOR NEGOTIATION AFTER ADVERTISING WHERE THE SECRETARY DETERMINES THAT BID PRICES WERE NOT INDEPENDENTLY REACHED.

HOWEVER, IN THE INSTANT CASE, ABSENT ANYTHING MORE THAN SEAL BOND'S UNSUPPORTED REFERENCES TO A CONSPIRATORIAL SCHEME, WE SEE NO BASIS UPON WHICH THE AGENCY COULD HAVE TAKEN EITHER OF THE ABOVE-NOTED STEPS. SEAL BOND CAN SUBSTANTIATE ITS ALLEGATIONS, WE WOULD SUGGEST THAT THE MATTER BE BROUGHT TO THE NAVY'S ATTENTION SO THAT APPROPRIATE REPORTING, PURSUANT TO ASPR 1-111, CAN BE MADE TO THE DEPARTMENT OF JUSTICE.

WE WOULD ALSO SUGGEST SIMILAR HANDLING OF INFORMATION RELATIVE TO ANY ALLEGATIONS OF KICKBACKS.

FOR THE REASONS NOTED ABOVE, SEAL BOND'S PROTEST IS DENIED.