B-180796, MAY 31, 1974

B-180796: May 31, 1974

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WHERE GOVERNMENT ESTIMATE FOR PROCUREMENT WAS $4. 300 AND LOW RESPONSIVE BID WAS $123. CANCELLATION OF SOLICITATION AND RESOLICITATION PURSUANT TO ASPR 2-401.1 WAS PROPER BECAUSE OF UNREASONABLE PRICES. DETERMINATION TO CANCEL SHOULD HAVE BEEN MADE BEFORE SUBJECTING BIDDER TO PREAWARD SURVEY. THE TOTAL ESTIMATED COST OF THE PROCUREMENT WAS $4. AMENDMENT NO. 0001 WAS ISSUED ON NOVEMBER 23. THE FOLLOWING BIDS WERE RECEIVED AND OPENED ON DECEMBER 23. 200 THE THREE LOWEST BIDDERS WERE DETERMINED TO BE NONRESPONSIVE BECAUSE OF THEIR FAILURE TO ACKNOWLEDGE AND RETURN AMENDMENT NO. 0001. A PREAWARD SURVEY WAS REQUESTED BY THE CONTRACTING OFFICER ON CONTAINER SERVICE. AN AFFIRMATIVE RECOMMENDATION FOR AWARD TO CSI WAS MADE BY THE PREAWARD SURVEY TEAM.

B-180796, MAY 31, 1974

WHERE GOVERNMENT ESTIMATE FOR PROCUREMENT WAS $4,300 AND LOW RESPONSIVE BID WAS $123,200, CANCELLATION OF SOLICITATION AND RESOLICITATION PURSUANT TO ASPR 2-401.1 WAS PROPER BECAUSE OF UNREASONABLE PRICES; HOWEVER, DETERMINATION TO CANCEL SHOULD HAVE BEEN MADE BEFORE SUBJECTING BIDDER TO PREAWARD SURVEY.

TO CONTAINER SERVICE, INC.:

ON NOVEMBER 2, 1973, THE UNITED STATES NAVY SHIPS PARTS CONTROL CENTER, MECHANICSBURG, PENNSYLVANIA ISSUED SOLICITATION NO. N00104-74-B 0536 FOR 16 TRAY ASSEMBLIES TO BE USED IN CONNECTION WITH THE SPARROW MISSILE. THE TOTAL ESTIMATED COST OF THE PROCUREMENT WAS $4,300.

AMENDMENT NO. 0001 WAS ISSUED ON NOVEMBER 23, 1973, WHICH DELETED THE DRAWINGS AND SPECIFICATIONS CONTAINED IN THE ORIGINAL SOLICITATION AND SUBSTITUTED REVISED DRAWINGS AND SPECIFICATIONS.

IN RESPONSE TO THE SOLICITATION, THE FOLLOWING BIDS WERE RECEIVED AND OPENED ON DECEMBER 23, 1973:

FORWAY INDUSTRIES $ 38,400

G. S. E. DYNAMICS 54,080

EMERSON-SACK-WARNER CORP. 117,888

CONTAINER SERVICE, INC. 123,200

THE THREE LOWEST BIDDERS WERE DETERMINED TO BE NONRESPONSIVE BECAUSE OF THEIR FAILURE TO ACKNOWLEDGE AND RETURN AMENDMENT NO. 0001. ON JANUARY 8, 1974, A PREAWARD SURVEY WAS REQUESTED BY THE CONTRACTING OFFICER ON CONTAINER SERVICE, INC. (CSI) AND ON JANUARY 30, 1974, AN AFFIRMATIVE RECOMMENDATION FOR AWARD TO CSI WAS MADE BY THE PREAWARD SURVEY TEAM.

ON MARCH 1, 1974, THE CONTRACTING OFFICER, PURSUANT TO SECTION 2 401.1 OF THE ARMED SERVICES PROCUREMENT REGULATION, MADE A DETERMINATION TO CANCEL THE ABOVE SOLICITATION BECAUSE THE AMOUNT OF THE LOW RESPONSIVE BID WAS CONSIDERED UNREASONABLE.

BY TELEGRAM DATED MARCH 7, 1974, CSI PROTESTED TO OUR OFFICE THE CANCELLATION OF THE SOLICITATION AND SUBSEQUENT RESOLICITATION, AND ALSO THE FACT THAT IT WAS SUBJECTED TO A PREAWARD SURVEY AT CONSIDERABLE EXPENSE TO THE FIRM.

IN HER STATEMENT OF THE FACTS RESPONSIVE TO THE PROTEST, THE CONTRACTING OFFICER STATED THAT:

"5. ON 8 JANUARY 1974, DCASR BOSTON WAS REQUESTED TO PERFORM A PRE AWARD SURVEY ON CONTAINER SERVICE. BY ATTACHMENT (1), DCASR BOSTON ADVISED SPCC OF AFFIRMATIVE FINDINGS ON CONTAINER SERVICE, INC. AND RECOMMENDED AWARD. HOWEVER, DURING THE TIME THAT THE PRE-AWARD SURVEY WAS BEING PERFORMED, EFFORTS WERE BEING MADE TO DETERMINE WHY A PROCUREMENT ESTIMATED AT $4300.00 SHOULD ESCALATE TO OVER $100,000.00 FOLLOWING FORMAL ADVERTISING FOR BIDS.

"6. THIS REVIEW CONCLUDED THAT SPACO, INC., 3022 UNIVERSITY DRIVE, HUNTSVILLE, ALABAMA, A PRIME CONTRACTOR OF THE MISSILE CONTAINERS, WAS CURRENTLY MANUFACTURING THE TRAY ASSEMBLIES AS A COMPONENT PART OF THE CONTAINER. ADDITIONALLY, IT WAS DETERMINED THAT THE TRAY ASSEMBLIES COULD BE PROCURED AT A PRICE ESTIMATED BETWEEN $200.00 AND $250.00 A UNIT, SUBSTANTIALLY LESS THAN THE $7700.00 UNIT PRICE BID BY CONTAINER SERVICE, INC. IN CONSONANCE WITH ASPR 2-401.1, IT WAS DETERMINED THAT THE OTHERWISE ACCEPTABLE BID RECEIVED FROM CONTAINER SERVICE, INC. IN THE AMOUNT OF $123,200.00 WAS UNREASONABLE PRICE WHEN COMPARED WITH THE EXPECTED PRICE OF $4,300.00, IF THE REQUIREMENT WERE READVERTISED. ACCORDINGLY, THE INVITATION FOR BIDS WAS CANCELLED."

REGARDING THE CANCELLATION OF THE SOLICITATION AND RESOLICITATION, 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 ABSENT A SHOWING THAT THE DETERMINATION WAS ARBITRARY. 50 COMP. GEN. 177 (1970) AND B-178089, JUNE 26, 1973. IN THE INSTANT CASE, WHERE THE LOW ACCEPTABLE BID WAS ALMOST $119,000 OVER THE AMOUNT OF THE GOVERNMENT ESTIMATE, WE BELIEVE THE CANCELLATION OF THE SOLICITATION WAS REASONABLE AND PROPER.

ACCORDINGLY, THE PROTEST IS DENIED. HOWEVER, WE AGREE THAT IN THE CIRCUMSTANCES, NO PREAWARD SURVEY SHOULD HAVE BEEN UNDERTAKEN. DETERMINATION TO REJECT ALL BIDS AND TO ISSUE A RESOLICITATION BASED ON UNREASONABLE PRICES SHOULD BE MADE AS SOON AS POSSIBLE AFTER BID OPENING. B-178089, JUNE 26, 1973. TO HAVE CONDUCTED A PREAWARD SURVEY IN THIS SITUATION WAS NOT ONLY MISLEADING BUT INEFFICIENT. WE ARE BRINGING THE MATTER TO THE ATTENTION OF THE SECRETARY OF THE NAVY BY SEPARATE LETTER OF TODAY WITH A VIEW TOWARD PREVENTING A RECURRENCE.