B-229549, Mar 17, 1988, 67 Comp.Gen. 339

B-229549, Mar 17, 1988, 67 Comp.Gen. 339

Procurement - Sealed Bidding - Invitations for Bids - Cancellation - - Resolicitation - Propriety DIGEST: After only bid submitted under invitation for bids is determined to be unreasonable as to price and contracting officer reasonably determines that additional competition is needed, contracting officer cannot complete acquisition by conversion to negotiation and selectively soliciting another firm to compete. Rather, solicitation must be canceled and all potential offerors solicited.

Harwell Construction Company, Inc.:

Harwell Construction Company, Inc. protests the determination of the National Guard Bureau not to award it a contract for the construction of a record fire range. The National Guard Bureau initially issued an invitation for bids (IFB) and subsequently converted it to a request for proposals (RFP) after receiving only one bid, offering an unreasonable price, in response to the IFB. After inviting the protester to participate in negotiations for award of the contract and finding Harwell to be the apparent low responsible offeror, the agency notified the protester that it could not be awarded the contract since Harwell did not submit a bid under the original IFB.

We sustain the protest.

The National Guard Bureau issued the IFB, No. DAHA12-87-B-0004, to all interested bidders, including the protester, on March 6, 1987. Jud Construction Company, Inc. submitted the only bid. Jud's bid of $527,239, however, was determined to be unreasonable because it exceeded the independent government estimate by nearly 60 percent and substantially exceeded the available funding for the project. The agency then canceled the IFB in accordance with Federal Acquisition Regulation (FAR) Sec. 14.404-1(c)(6) on the basis that the sole responsible bidder submitted a bid containing an unreasonable price, and converted it to a request for proposals, RFP No. DAHA 12-87-R 0005.

The contracting officer, in an attempt to increase competition and obtain a lower price, invited Harwell, one of 17 firms on the original bidders' mailing list, to participate in this RFP. None of the other firms were invited to participate. Harwell submitted a proposal and was the low offeror. The contracting officer was prepared to award the contract to Harwell, but the National Guard Bureau's Office of the Legal Advisor determined that an award could not be made to Harwell because the protester had not submitted a bid in response to the IFB. The contracting officer now proposes that award be made to Jud at a higher price than Harwell offered.

Harwell first asserts that its offer can be considered because it submitted a proposal in response to a newly issued solicitation. It is clear from the record, however, that the RFP was only a converted solicitation to the canceled IFB, an approach permitted by FAR 15.103 under specific conditions. In this respect, the agency did not take the procedural steps, such as publication of the procurement action in the Commerce Business Daily (CBD), which would ordinarily have occurred if this were a new acquisition rather than a conversion of a sealed bid procurement to a negotiated one.

Harwell next asserts that when a sealed bid acquisition is converted to a negotiated one, the FAR does not preclude the contracting officer, in an attempt to increase competition, from selectively soliciting additional sources such as Harwell, which did not submit bids under the original IFB. We cannot agree.

FAR Sec. 15.103 mandates that when the agency properly determines that:

"use of negotiation is appropriate to complete the acquisition, the contracting officer may negotiate without using a new solicitation subject to the following conditions--

(a) Prior notice of intention to negotiate and a reasonable opportunity to negotiate have been given by the contracting officer to each responsible bidder that submitted a bid in response to the invitation for bids; (b) The negotiated price is the lowest negotiated price offered by any responsible bidder; and

(c) The negotiated price is lower than the lowest rejected bid price of a responsible bidder that submitted a bid in response to the invitation for bids."

Prior to enactment of the Competition in Contracting Act of 1984 (CICA), Pub. L. 98-577, 98 Stat. 3066 (1984), the procurement statutes provided that a formally advertised (i.e. sealed bid) procurement could be completed through negotiations if certain conditions were met, one of which was that "the negotiated price is the lowest negotiated price offered by any responsible supplier." See 10 U.S.C. Sec. 2304(a)(15)(C) (1982) and 41 U.S.C. Sec. 252(c) (1982). These statutory provisions were implemented originally by Federal Procurement Regulations (FPR) Section 1- 3.214(b)(2) (1964 ed.) and Armed Services Procurement Regulation (ASPR) Sec. 3-215.2 (iii) (1976 ed.), and later by FAR Sec. 15.214. See 48 C.F.R. Sec. 15.214 (1984). This original FAR section, consistent with the predecessor FPR and ASPR sections, required that the negotiated price be the lowest offered "by any responsible supplier." However, when the FAR was revised to reflect CICA, the provision dealing with the use of negotiation after sealed bidding was moved to section 15.103 and the word "supplier" was changed to "bidder."

The National Guard Bureau's Office of the Legal Advisor believes that this change precludes award to the protester because the protester was not a bidder under the IFB. The agency states that "the term 'responsible bidder'in FAR Sec. 159103(b) limits the potential awardee to those who responded to the original invitation for bids." The agency states that this position is consistent with CICA since CICA, in the agency's view, does not allow an agency "in the midst of the procurement to choose additional vendors to participate *** who had not responded to any fully competitive solicitation *** in the absence of a justification and approval for other than full and open competition. *** We think the approach taken by the contracting officer to enhance competition was inappropriate here.

FAR permits completion of a procurement by negotiation where all bids submitted under the IFB are unreasonable as to price. FAR Sec. 14.404- 1(c)(6) and (e)(1). In our view, this provision generally contemplates that conversion to a negotiated acquisition be limited to those firms which submitted bids under the IFB. Here, however, given that only one bid was submitted which was unreasonable as to price, the contracting officer was faced with the possibility of holding negotiations with one firm which was aware of its sole-source status. In these circumstances, we think the contracting officer reasonably sought to obtain additional competition. Nevertheless, where, as here, the contracting officer reasonably determines that additional competition is warranted, the contracting officer must obtain such competition consistent with CICA requirements for full and open competition. See Trans World Maintenance, Inc., 65 Comp.Gen. 401 (1986), 86-1 CPD para. 239.

The record indicates that the contracting officer selectively solicited Harwell, but did not notify any other potential offerors that the requirement was being opened for competition to additional sources. Of 17 firms on the original bidders' mailing list, only Harwell, for unexplained reasons, was solicited and none of the other firms were afforded the opportunity to compete. We think it is fundamental that the selection of additional sources cannot be made on an arbitrary basis, but, rather, the mandate for full and open competition must be complied with. Thus, we agree with the agency that a contracting officer cannot "pick and choose" which firms should compete, and, in effect, thereby exclude others from the competition. To meet CICA's requirements for full and open competition here, we conclude that cancellation and resolicitation was required to provide all potential offerors notice of what was a new solicitation in view of the fact that the contracting officer had established a new field of competition. 10 U.S.C. Sec. 2305 et seq. (Supp. III 1985); FAR Sec. 5.201 et seq . (FAC 84-28).

Accordingly, Harwell's protest is sustained to the extent that the solicitation should be canceled and resolicited based on full and open competition. By letter of today to the Secretary of the Army, we are so recommending.