B-181607, MAR 18, 1975

B-181607: Mar 18, 1975

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REJECTION OF BIDS AND CANCELLATION OF IFB DUE TO EXCESSIVE BID PRICES WAS PROPER UNDER APPLICABLE PROVISION OF ASPR SINCE LOW RESPONSIVE BID PRICE WAS 19 PERCENT ABOVE GOVERNMENT ESTIMATE AND 22.3 PERCENT HIGHER THAN LOW NONRESPONSIVE BID. WAS REASONABLE. 2. GAO IS NOT AUTHORIZED TO GRANT A PROTESTER'S REQUEST THAT ITS BID PROTEST BE HEARD BY THE ARMED SERVICES BOARD OF CONTRACT APPEALS UNDER THE DISPUTES PROCEDURE IF AWARD IS NOT MADE TO IT. SINCE THE DISPUTES PROCEDURE IS NOT APPLICABLE TO BID PROTESTS BEFORE GAO. THE PROCUREMENT WAS TOTALLY SET ASIDE FOR SMALL BUSINESS FIRMS. BIDS WERE ALSO SOLICITED FOR THE IDENTICAL SERVICES TO BE PERFORMED DURING TWO ADDITIONAL ONE-YEAR OPTION PERIODS.

B-181607, MAR 18, 1975

1. REJECTION OF BIDS AND CANCELLATION OF IFB DUE TO EXCESSIVE BID PRICES WAS PROPER UNDER APPLICABLE PROVISION OF ASPR SINCE LOW RESPONSIVE BID PRICE WAS 19 PERCENT ABOVE GOVERNMENT ESTIMATE AND 22.3 PERCENT HIGHER THAN LOW NONRESPONSIVE BID. MOREOVER, GOVERNMENT ESTIMATE BASED UPON PRIOR CONTRACT'S AVERAGE HOURLY WAGE RATE, AS ADJUSTED, WAS REASONABLE. 2. GAO IS NOT AUTHORIZED TO GRANT A PROTESTER'S REQUEST THAT ITS BID PROTEST BE HEARD BY THE ARMED SERVICES BOARD OF CONTRACT APPEALS UNDER THE DISPUTES PROCEDURE IF AWARD IS NOT MADE TO IT, SINCE THE DISPUTES PROCEDURE IS NOT APPLICABLE TO BID PROTESTS BEFORE GAO.

SUPPORT CONTRACTORS, INC.:

SUPPORT CONTRACTORS, INC. (SUPPORT) PROTESTS THE CANCELLATION OF INVITATION FOR BIDS (IFB) NO. DSA 700-74-B-0458, ISSUED ON APRIL 30, 1974, BY THE BASE PROCUREMENT OFFICE, WILLIAMS AIR FORCE BASE, ARIZONA. THE IFB REQUESTED BIDS TO PROVIDE BASE HOUSING SERVICES, INCLUDING FAMILY HOUSING, BILLETING ADMINISTRATION, HOUSING SUPPLY, AND APPLIANCE MAINTENANCE AND REPAIR, DURING THE BASIC CONTRACT PERIOD OF JULY 1, 1974, THROUGH JUNE 30, 1975. THE PROCUREMENT WAS TOTALLY SET ASIDE FOR SMALL BUSINESS FIRMS. BIDS WERE ALSO SOLICITED FOR THE IDENTICAL SERVICES TO BE PERFORMED DURING TWO ADDITIONAL ONE-YEAR OPTION PERIODS.

THREE BIDS WERE RECEIVED AS FOLLOWS:

BASIC YEAR 1ST OPTION 2ND OPTION TOTAL

YEAR YEAR

RELIABLE MAINTENANCE 158,465.66 158,465.66 158,465.66475,396.98

SERVICES, INC.

(RELIABLE)

SUPPORT CONTRACTORS, 203,758.68 193,749.93 183,742.18 581,249.79

INC. (SUPPORT)

CUSTODIAL SERVICES 199,372.79 199,372.79 199,372.79 598,118.37

(CUSTODIAL)

THE GOVERNMENT ESTIMATE, FOR THE BASIC YEAR PLUS THE TWO OPTION YEARS, WAS $490,224.30. THE LOW BID OF RELIABLE MAINTENANCE SERVICES, INC., WAS REJECTED AS NONRESPONSIVE BECAUSE THE COMPANY DID NOT QUALIFY AS A SMALL BUSINESS. SUBSEQUENTLY, THE IFB WAS CANCELLED ON THE BASIS THAT THE TWO REMAINING BIDS OFFERED PRICES WHICH WERE EXCESSIVE AND UNREASONABLE.

SUPPORT PROTESTS THE CANCELLATION ON THE GROUNDS THAT SINCE ITS BID WAS COMPETITIVE WITH THAT OF THE NEXT HIGH BIDDER AND SINCE THE WAGE DETERMINATION PREPARED BY THE PROCUREMENT OFFICE DID NOT COVER THE LABOR CATEGORIES INVOLVED IN THE JOB, THE GOVERNMENT'S COST ESTIMATE WAS ERRONEOUS. FURTHERMORE, SUPPORT ALLEGES THAT THE PROCUREMENT OFFICE INDICATED TO IT DURING A TELEPHONE CONVERSATION THAT "UNION PROBLEMS" CONTRIBUTED TO THE CANCELLATION OF THE SOLICITATION. THEREFORE, SUPPORTS ASKS THAT THE INVITATION BE REINSTATED AND THAT AWARD BE MADE TO IT AS LOW BIDDER.

ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2-404.1(A) (1974 ED.) PROVIDES, IN SUBSTANCE, THAT AFTER BIDS HAVE BEEN OPENED AWARD MUST BE MADE TO THE LOWEST RESPONSIBLE BIDDER UNLESS THERE IS A COMPELLING REASON TO REJECT ALL BIDS AND READVERTISE. HOWEVER, UNDER ASPR 2 404.1(B)(VI) (1974 ED.) THE INVITATION MAY BE CANCELLED AFTER OPENING IF THE PRICES ON ALL OTHERWISE ACCEPTABLE BIDS ARE UNREASONABLE. THE ISSUE HERE IS WHETHER THE CONTRACTING OFFICER'S DETERMINATION THAT SUPPORT'S BID PRICE IS UNREASONABLE, AND THEREFORE THAT CANCELLATION OF THE INVITATION IS PROPER UNDER THE REGULATION, SHOULD BE DISTURBED. CONTRACTING OFFICERS ARE CLOTHED WITH BROAD POWERS OF DISCRETION IN DECIDING WHETHER AN INVITATION SHOULD BE CANCELLED, AND OUR OFFICE WILL NOT INTERFERE WITH SUCH DETERMINATION UNLESS IT IS UNREASONABLE. B 169503, JUNE 19, 1970, 39 COMP. GEN. 396 (1959).

THE AIR FORCE REPORTS THAT THE SOLE REASON FOR CANCELLATION OF THE IFB WAS THE LARGE DISPARITY BETWEEN ITS ESTIMATE AND RELIABLE'S BID AND THE BID PRICES SUBMITTED BY SUPPORT AND CUSTODIAL. THE AIR FORCE POINTS OUT THAT ALTHOUGH EMPLOYEES UNDER THE 1973-74 HOUSING ADMINISTRATION CONTRACTOR ELECTED TO AFFILIATE WITH A UNION, UNION PROBLEMS WERE NOT ENCOUNTERED AND DID NOT CONTRIBUTE TO CANCELLATION OF THE SUBJECT IFB. IS CONCEDED THAT AT THE TIME OF THE SOLICITATION NO WAGE DETERMINATION FOR MARICOPA COUNTY WAS AVAILABLE TO COVER ALL THE LABOR CATEGORIES INVOLVED IN THE CANCELLED IFB. HOWEVER, THE GOVERNMENT COST ESTIMATE WAS DEVELOPED ON THE BASIS OF THE AVERAGE HOURLY WAGE RATE OF THE 1973-74 CONTRACT WHICH, EXCEPT FOR APPLIANCE MAINTENANCE AND REPAIR WORK, PROVIDED FOR SUBSTANTIALLY THE SAME SERVICES AS REQUIRED UNDER THE CANCELLED IFB. THE AIR FORCE EXPLAINS THAT UNDER THE PRIOR CONTRACT THE PRICE FOR DIRECT LABOR WAS $3.397 PER MAN HOUR. IN ORDER TO PREPARE ITS ESTIMATE THIS AVERAGE HOURLY RATE WAS INCREASED BY 20 PERCENT, REPRESENTING INCREASED COSTS FOR DIRECT LABOR AND SUCH INDIRECT EXPENSES AS PAYROLL TAXES, OVERHEAD AND PROFIT. THE AIR FORCE THEN MULTIPLIED THIS NEW AVERAGE HOURLY WAGE RATE BY THE NUMBER OF MAN HOURS INVOLVED IN THE CONTRACT, TO ARRIVE AT AN ANNUAL AVERAGE ESTIMATE OF $163,408.10 OR $490,224.30 FOR THE THREE YEAR REQUIREMENT. WE HAVE NO BASIS TO CONCLUDE THAT SUCH AN ESTIMATE WAS UNREASONABLE OR THAT THE ABSENCE OF A COMPLETE WAGE DETERMINATION COVERING ALL JOB CATEGORIES INVALIDATED THE ESTIMATE.

IN ADDITION, SUPPORT CONTENDS THAT SINCE ITS BID WAS CLOSE TO THAT OF CUSTODIAL AND SINCE BOTH BIDS WERE SUBSTANTIALLY HIGHER THAN THE GOVERNMENT ESTIMATE, THE ESTIMATE WAS UNREASONABLY LOW. WE HAVE HELD THAT THE FACT THAT ALL RESPONSIVE BIDS EXCEED THE GOVERNMENT ESTIMATE IS NOT SUFFICIENT, STANDING ALONE, TO ESTABLISH THE REASONABLENESS OF THE BIDDERS' PRICES AND THE UNREASONABLENESS OF THE GOVERNMENT'S ESTIMATE. HOLD OTHERWISE WOULD PERMIT GOVERNMENT ESTIMATES TO BE INVALIDATED WHENEVER A BIDDER'S PRICE WAS NOT IN LINE WITH THE ESTIMATE MERELY BY EVOLVING A POSSIBLE HYPOTHESIS WHICH MIGHT EXPLAIN ITS HIGHER BID. MATTER OF C.J. COAKLEY CO., INC., B-181057, JULY 23, 1974. MOREOVER, WE HAVE RECOGNIZED THE BID PRICE OF A NONRESPONSIVE BIDDER MAY BE RELEVANT TO THE DETERMINATION OF WHAT IS A REASONABLE PRICE. B 173334, AUGUST 19, 1971; B -168972, APRIL 14, 1970. IN THIS CONNECTION, IT IS NOTED THAT RELIABLE'S BID OF $475,396.98 WAS $14,827.32 OR APPROXIMATELY 3.3 PERCENT LESS THAN THE GOVERNMENT ESTIMATE. WE ALSO NOTE THAT SUPPORT'S BID WAS 22.3 PERCENT HIGHER THAN THE REJECTED LOW BID, AND EXCEEDED THE GOVERNMENT ESTIMATE BY 19 PERCENT OR $91,225.49. WE BELIEVE THAT THESE FACTS TOGETHER WITH THE AIR FORCE'S EXPLANATION OF HOW IT ARRIVED AT ITS ESTIMATE, SUBSTANTIATES THE ESTIMATE'S REASONABLENESS. IN THESE CIRCUMSTANCES, WE ARE UNABLE TO CONCLUDE THAT THE CONTRACTING OFFICER'S DETERMINATION THAT THE PRICES RECEIVED WERE EXCESSIVE AND THAT THE BIDS THEREFORE SHOULD BE REJECTED WAS AN ABUSE OF HIS BROAD DISCRETION.

AS PART OF ITS ARGUMENT CONCERNING THE REASONABLENESS OF THE GOVERNMENT ESTIMATE, SUPPORT HAS ASKED THAT THE DEPARTMENT OF DEFENSE AUDIT THE PRIOR CONTRACT UNDER ASPR 7-104.11(A) (1974 ED.) IN ORDER TO DETERMINE WHETHER THAT CONTRACT RESULTED IN A LOSS TO THE PRIOR CONTRACTOR. THE AUTHORITY TO CALL FOR SUCH AN AUDIT LIES ENTIRELY WITHIN THE DISCRETION OF THE CONTRACTING OFFICER OR HIS REPRESENTATIVE AND THIS OFFICE IS WITHOUT AUTHORITY TO REQUIRE SUCH ACTION. IN ANY EVENT, IT IS OUR OPINION THAT UNDER THESE CIRCUMSTANCES AND FOR THE PURPOSES OF THIS PROTEST, SUCH AN AUDIT WOULD PROVE INCONCLUSIVE IN SUPPORTING THE PROTESTER'S CONTENTIONS.

FINALLY, SUPPORT ASKS THAT IF AWARD IS NOT MADE TO IT THAT THE CASE BE HEARD BY THE ARMED SERVICES BOARD OF CONTRACT APPEALS UNDER ASPR 7 103.12(A) (1974 ED.). THAT PROVISION OF ASPR PRESCRIBES THE DISPUTES CLAUSE TO BE INCLUDED IN CONTRACTS SETTING FORTH THE PROCEDURE UNDER WHICH AN APPEAL TO THE BOARD MAY BE MADE BY A CONTRACTOR. THIS PROCEDURE IS NOT APPLICABLE TO BID PROTESTS BEFORE OUR OFFICE. THEREFORE, WE HAVE NO AUTHORITY TO GRANT SUCH A REQUEST.

FOR THE FOREGOING REASONS, THE PROTEST IS DENIED.