B-181414, AUG 26, 1974, 54 COMP GEN 145

B-181414: Aug 26, 1974

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BIDS - DISCARDING ALL BIDS - REINSTATEMENT - CANCELLATION OF INVITATION UNJUSTIFIED REINSTATEMENT OF CANCELED INVITATION IS PROPER COURSE OF ACTION WHEN TO DO SO IS NOT PREJUDICIAL TO ANY BIDDER. NO COGENT OR COMPELLING REASON EXISTS TO HAVE WARRANTED INITIAL CANCELLATION. REINSTATEMENT IS FAVORED WHEN NEEDS OF GOVERNMENT CAN BE SERVED UNDER ORIGINAL INVITATION FOR BIDS. INVITATION FOR BIDS (IFB) DACW31-74-B-0053 WAS ISSUED BY THE CORPS OF ENGINEERS. THE IFB WAS A 100-PERCENT SMALL BUSINESS SET-ASIDE FOR DREDGING WORK TO BE PERFORMED IN THE TRED AVON RIVER. THREE SEPARATE SCHEDULES WERE SET FORTH. FOUR BIDS WERE RECEIVED IN A TIMELY FASHION AND OPENED ON APRIL 3. ALL BIDS RECEIVED WERE DETERMINED BY THE CONTRACTING OFFICER TO BE BEYOND THE AMOUNT OF FUNDS AVAILABLE FOR THE WORK.

B-181414, AUG 26, 1974, 54 COMP GEN 145

BIDS - DISCARDING ALL BIDS - REINSTATEMENT - CANCELLATION OF INVITATION UNJUSTIFIED REINSTATEMENT OF CANCELED INVITATION IS PROPER COURSE OF ACTION WHEN TO DO SO IS NOT PREJUDICIAL TO ANY BIDDER, AND NO COGENT OR COMPELLING REASON EXISTS TO HAVE WARRANTED INITIAL CANCELLATION. MOREOVER, REINSTATEMENT IS FAVORED WHEN NEEDS OF GOVERNMENT CAN BE SERVED UNDER ORIGINAL INVITATION FOR BIDS.

IN THE MATTER OF SPICKARD ENTERPRISES, INC.; COTTRELL ENGINEERING CORPORATION, AUGUST 26, 1974:

ON MARCH 1, 1974, INVITATION FOR BIDS (IFB) DACW31-74-B-0053 WAS ISSUED BY THE CORPS OF ENGINEERS, UNITED STATES ARMY. THE IFB WAS A 100-PERCENT SMALL BUSINESS SET-ASIDE FOR DREDGING WORK TO BE PERFORMED IN THE TRED AVON RIVER, TALBOT COUNTY, MARYLAND. THREE SEPARATE SCHEDULES WERE SET FORTH, PROVIDING FOR THE DREDGING OF VARYING AMOUNTS OF YARDAGE WITH SCHEDULE "A," THE LEAST AMOUNT; SCHEDULE "B," THE NEXT LEAST AMOUNT; AND SCHEDULE "C," THE GREATEST AMOUNT. THE IFB PROVIDED THAT AWARD WOULD BE MADE TO THE LOW BIDDER ON THAT SCHEDULE OFFERING THE MAXIMUM AMOUNT OF DREDGING WITHIN THE LIMIT OF FUNDS AVAILABLE TO THE GOVERNMENT.

FOUR BIDS WERE RECEIVED IN A TIMELY FASHION AND OPENED ON APRIL 3, 1974. WITH THE EXCEPTION OF THE LOW BIDDER (EAST COAST DREDGING, INC. $435,420 FOR SCHEDULE "B"), ALL BIDS RECEIVED WERE DETERMINED BY THE CONTRACTING OFFICER TO BE BEYOND THE AMOUNT OF FUNDS AVAILABLE FOR THE WORK. THE BID SUBMITTED BY SPICKARD ENTERPRISES, INC. (SPICKARD) OFFERED THE LOWEST PRICE FOR SCHEDULE "A" AT $472,320 AND THE SECOND LOWEST PRICE FOR SCHEDULE "B" AT $553,660. COTTRELL ENGINEERING CORPORATION (COTTRELL) SUBMITTED THE LOW BID OF $690,400 FOR SCHEDULE "C."

BOTH SPICKARD AND COTTRELL, BY TELEGRAMS OF APRIL 5, 1974, PROTESTED THE SMALL BUSINESS STATUS OF EAST COAST DREDGING, INC. (EAST COAST). LETTER DATED APRIL 16, 1974, THE SMALL BUSINESS ADMINISTRATION ADVISED THAT EAST COAST WAS OTHER THAN A SMALL BUSINESS CONCERN FOR GOVERNMENT PROCUREMENTS HAVING A SIZE STANDARD OF $5,000,000.

THEREFORE, SINCE THE LOWEST BID RECEIVED WAS FROM AN INELIGIBLE BIDDER AND SINCE ALL OTHER BIDS EXCEEDED THE AMOUNT OF FUNDS BELIEVED TO HAVE BEEN AVAILABLE AT THE DISTRICT LEVEL, THE CONTRACTING OFFICER MADE THE DETERMINATION TO REJECT ALL BIDS AND CANCEL THE INVITATION. HOWEVER, THE LETTER DATED APRIL 30, 1974, CONVEYING THIS DETERMINATION ERRONEOUSLY STATED THAT ALL BIDS WERE BEING REJECTED BECAUSE THEY WERE AT AN UNREASONABLE PRICE. THE ACTUAL REASON FOR THE REJECTIONS WAS THAT IT WAS THOUGHT THAT NONE OF THE ELIGIBLE BIDS RECEIVED WERE WITHIN THE FUNDING LIMITATIONS FOR THIS PROJECT.

THE PROJECT IN QUESTION WAS SUBSEQUENTLY READVERTISED ON MAY 16, 1974, WITH THE SMALL BUSINESS SET-ASIDE REMOVED.

THE ABOVE-MENTIONED CHAIN OF EVENTS RESULTED IN PROTESTS BEING FILED WITH OUR OFFICE BY BOTH SPICKARD AND COTTRELL. SPICKARD CONTENDS THAT THE ORIGINAL IFB WAS IMPROPERLY CANCELED, AS SUFFICIENT FUNDS WERE AVAILABLE TO HAVE ALLOWED AN AWARD TO ITS FIRM. COTTRELL CONTENDS THAT (1) A RESOLICITATION IS PREJUDICIAL TO ALL BIDDERS AS PRICES HAVE BEEN DISCLOSED, (2) THE CONTRACTING OFFICER ACTED WITHOUT PROPER AUTHORITY IN REMOVING THE SMALL BUSINESS SET-ASIDES IN THE RESOLICITATION, AND (3) AWARD SHOULD BE MADE TO IT UNDER SCHEDULE "C" OF THE INITIAL IFB, SUCH AWARD BEING IN THE BEST INTERESTS OF THE GOVERNMENT.

THE DEPARTMENT OF THE ARMY, AFTER A THOROUGH REVIEW OF THE ENTIRE PROCUREMENT HISTORY, HAS TAKEN THE FOLLOWING POSITION:

THE DETERMINATION OF THE CONTRACTING OFFICER THAT THE BIDS OF THE SUBJECT PROTESTORS WERE IN EXCESS OF FUNDS AVAILABLE TO ACCOMPLISH THE WORK, ALTHOUGH MADE IN GOOD FAITH AND TECHNICALLY CORRECT AT THE TIME SO MADE, DID NOT TAKE INTO ACCOUNT THE AUTHORITY OF THE CHIEF OF ENGINEERS TO TRANSFER FUNDS AMONGST PROJECTS. IN THIS CASE, THE AMOUNT AVAILABLE AT THE START OF THE FISCAL YEAR WAS LESS THAN $500,000 AND ACCORDINGLY THE CHIEF OF ENGINEERS IS AUTHORIZED TO TRANSFER UP TO 25 PERCENT OF THE AMOUNT AVAILABLE FOR THE PROJECT AT THE BEGINNING OF THE FISCAL YEAR (PARAGRAPH 4, ER 11-2-102). OF THIS 25 PERCENT, THE CHIEF OF ENGINEERS HAS DELEGATED AUTHORITY TO DISTRICT ENGINEERS TO TRANSFER FROM ONE PROJECT TO ANOTHER WITHIN THE DISTRICT UP TO 10 PERCENT OF THE AMOUNT AVAILABLE FOR THE PROJECT AT THE BEGINNING OF THE FISCAL YEAR (PARAGRAPH 10, CHAPTER 3, ER 11-2-101). IN POINT OF FACT, THE TRANSFER AUTHORITY OF DISTRICT ENGINEER (10 PERCENT) AND THE CHIEF OF ENGINEERS (15 PERCENT) HAS BEEN ACCOMPLISHED SUBSEQUENT TO THE CANCELLATION OF SUBJECT IFB (IN CONTEMPLATION OF HAVING SUFFICIENT FUNDS AVAILABLE FOR THE READVERTISEMENT) SUCH THAT THE CONTRACTING OFFICER CURRENTLY HAS AVAILABLE THE SUM OF $484,000.00 FOR THIS PROJECT. ON THIS BASIS THE BID OF SPICKARD (SCHEDULE A, $472,000.00) IS NOW WITHIN THE FUNDS AVAILABLE FOR ACCOMPLISHMENT OF THE WORK. THE BID OF COTTRELL ON SCHEDULES A, B AND C STILL REMAINS IN EXCESS OF AVAILABLE FUNDS.

IN VIEW OF THE ABOVE CIRCUMSTANCES, IT IS THE OPINION OF THIS OFFICE THAT THE PROTEST OF SPICKARD SHOULD BE UPHELD ON THE BASIS THAT DUE TO ADDITIONAL FUNDS BEING MADE AVAILABLE TO THE PROJECT, ITS BID IS NOW WITHIN THE FUNDING LIMITATION SET FORTH IN SUBJECT IFB AND IS OTHERWISE THE LOWEST RESPONSIVE BID. IT IS ALSO THE OPINION OF THIS OFFICE THAT THE CONTRACTING OFFICER IS AUTHORIZED TO REINSTATE SUBJECT IFB IN ORDER TO MAKE AWARD THEREUNDER TO SPICKARD. SUCH ACTION IS CONSIDERED TO BE IN THE BEST INTEREST OF THE GOVERNMENT.

THEREFORE, THE PRIMARY ISSUE FOR RESOLUTION BY OUR OFFICE IS WHETHER REINSTATEMENT OF THE CANCELED IFB WOULD BE APPROPRIATE.

OUR OFFICE HAS SANCTIONED THE REINSTATEMENT OF A CANCELED IFB IN THE PAST WHEN TO DO SO WOULD WORK NO PREJUDICE ON THE RIGHTS OF OTHERS AND WOULD, IN FACT, PROMOTE THE INTEGRITY OF THE PUBLIC BIDDING SYSTEM. 39 COMP. GEN. 834 (1960). THE CIRCUMSTANCES OF THIS PROCUREMENT APPEAR TO LEND THEMSELVES TO SUCH A REINSTATEMENT.

INITIALLY, WE MUST RECOGNIZE THAT OUR OFFICE HAS PREVIOUSLY ACQUIESCED IN THE CANCELLATION OF SOLICITATIONS, BUT ONLY WHEN A "COGENT OR COMPELLING REASON" TO DO SO EXISTED. IN ACTUALITY, THE ORIGINAL IFB WAS CANCELED AS A RESULT OF AN ERRONEOUS, ALBEIT HONEST, DETERMINATION. FROM OUR POINT OF VIEW, NO "COGENT OR COMPELLING REASON" PRESENTLY EXISTS TO ALLOW THE CANCELLATION TO STAND. AS WAS STATED IN THE MASSMAN CONSTRUCTION CO. V. UNITED STATES, 102 CT. CL. 699, 719 (1945):

TO HAVE A SET OF BIDS DISCARDED AFTER THEY ARE OPENED AND EACH BIDDER HAS LEARNED HIS COMPETITOR'S PRICE IS A SERIOUS MATTER, AND IT SHOULD NOT BE PERMITTED EXCEPT FOR COGENT REASONS.

THE REJECTION OF ALL BIDS AFTER THEY HAVE BEEN OPENED TENDS TO DISCOURAGE COMPETITION BECAUSE IT RESULTS IN MAKING ALL BIDS PUBLIC WITHOUT AWARD, WHICH IS CONTRARY TO THE INTERESTS OF THE LOW BIDDER, AND BECAUSE REJECTION OF ALL BIDS MEANS THAT BIDDERS HAVE EXTENDED MANPOWER AND MONEY IN PREPARATION OF THEIR BIDS WITHOUT THE POSSIBILITY OF ACCEPTANCE. COMP. GEN. 285 (1972). AS A GENERAL PROPOSITION, IT IS OUR VIEW THAT THE CANCELLATION AFTER BIDS ARE OPENED IS INAPPROPRIATE WHEN AN OTHERWISE PROPER AWARD UNDER A SOLICITATION WOULD SERVE THE ACTUAL NEEDS OF THE GOVERNMENT. 53 COMP. GEN. 586 (1974); 49 ID. 211 (1969); 48 ID. 731 (1969).

IN THE CIRCUMSTANCES, REINSTATEMENT OF IFB DACW31-74-B-0053 AND AWARD ON THE BASIS OF THE LOW BID WOULD BE PROPER.

IN VIEW OF OUR CONCLUSIONS, THE REQUESTS OF THE ARMY ARE GRANTED, AND THE PROTEST OF SPICKARD IS SUSTAINED. COTTRELL'S FIRST CONTENTION, THAT A RESOLICITATION WOULD BE PREJUDICIAL, IS UPHELD; AND ITS SECOND CONTENTION, THAT THE SMALL BUSINESS SET-ASIDE WAS IMPROPERLY ELIMINATED FROM THE RESOLICITATION, IS NOW MOOT.

THE REMAINING CONTENTION OF COTTRELL, THAT AWARD TO IT UNDER SCHEDULE "C" WOULD BE IN THE BEST INTERESTS OF THE GOVERNMENT, IS WITHOUT MERIT. WHILE IT MAY BE CORRECT THAT CERTAIN COSTS WILL BE INCREASED AS A RESULT OF AN AWARD UNDER SCHEDULE "A" AS OPPOSED TO SCHEDULE "C," THE SPECIFIC LANGUAGE OF THE SOLICITATION IS CONTROLLING. ON PAGE 4 OF THE IFB, "NOTES TO BIDDERS," IT IS CLEARLY INDICATED THAT AWARD WILL BE MADE TO THE LOWEST BIDDER ON THE GREATEST AMOUNT OF WORK, BUT ONLY IF THE BID IS WITHIN THE FUNDS AVAILABLE TO THE GOVERNMENT. AS COTTRELL'S BID ON SCHEDULE "C" AND SCHEDULE "B" EXCEEDS THE AMOUNT OF FUNDS AVAILABLE, AWARD TO IT ON EITHER SCHEDULE IS PRECLUDED BY THE IFB. COTTRELL'S BID ON SCHEDULE "A," BEING GREATER THAN SPICKARD'S, IS NOT PROPERLY FOR CONSIDERATION.