B-238220.7, Nov 2, 1990, 90-2 CPD ***

B-238220.7, Nov 2, 1990, 90-2 CPD ***

PROCUREMENT - Bid Protests - GAO procedures - GAO decisions - Reconsideration DIGEST: Decision denying protest that agency unreasonably made award at an excessive price is affirmed, where protester produces no credible evidence that indicates the agency's decision was unreasonable.

Attorneys

Air Inc.-- Reconsideration:

Air Inc. requests reconsideration of our decision in Air Inc., B-236334.7 et al., June 11, 1990, 90-1 CPD Para. 545, in which we denied its protests of contract awards for various pneumatic power tools, under three invitations for bids (IFB), issued by the General Services Administration (GSA). Air's protests concerned its rejection as nonresponsible and its allegation that the awards were made at excessive prices.

Air's reconsideration request concerns line item Nos. 1 and 3, portable pneumatic hammers, on IFB No. FCEP-BG-J2492-S, which Air continues to assert were awarded at excessive prices. This is the second attempt to reprocure these items for which Air's contract was defaulted. /1/ The award prices for these items, which were $527.50 and $297, respectively, were higher than Air's defaulted contract prices of $207 for each item. /2/ Air contends that our prior decision erroneously states that the only evidence Air presented to support its arguments in this regard were its own prices under defaulted or improperly performed contracts. Air notes that it also submitted specific evidence that GSA did not consider the past price history of these items and that GSA's justification was otherwise flawed.

We deny the request for reconsideration.

As discussed in our prior decision, GSA determined the award prices for these items were fair and reasonable after comparing prices of the remaining higher bidders, considering the past procurement history, including performance difficulties encountered by Air in prior contracts, and considering subsequent increases in the Product Price Index and current market conditions, as well as the impact of certain other additional requirements, e.g., first article testing. Moreover, GSA noted that Air had been the prior producer of the items but that GSA did not find its prices to be a credible measure of price reasonableness because Air had a history of submitting unrealistically low prices, had experienced performance difficulties in the past procurements, and had been determined to lack capacity by the Small Business Administration. fact, these items were repurchases of quantities terminated under prior contracts, which precluded Air from bidding any higher than its previously terminated contract prices.

In its request for reconsideration, Air argues that our decision was in error because it provided, in its protest, evidence of other factors which indicated the price reasonableness determination was unreasonable. For example, Air presented evidence that the prior reprocurement solicitation for these items had been canceled without an award, after GSA had determined that bid prices were excessive. Air also argued that GSA's cost analysis was based upon a market survey performed by the awardee, rather than being an independent unbiased analysis. Finally, Air argued that GSA had improperly analyzed the cost impact of first article test requirements.

It is true that Air did submit more evidence to demonstrate price unreasonableness than its own prices and that our prior decision erroneously said otherwise. However, Air presented no evidence that would indicate GSA's price reasonableness determination was unreasonable. The record, which we reviewed during consideration of Air's original protest, shows that GSA did not merely adopt the price analyses prepared by the awardee, but performed detailed market analyses of its own for both line items.

For example, GSA reported that, before awarding line item No. 1, at a cost of $527.50, it considered the prior procurement that was canceled prior to award due to excessive pricing, wherein the prices bid were lower than the current award price. However, GSA discounted the significance of the procurement because it was based upon comparing Air's unrealistically low contract award price of $207, as discussed in the prior decision, to the other bid prices. Further, GSA reported that its survey of the competitive price list, as of January 1990, of Ingersoll-Rand, Chicago Pneumatics, and Dresser Industries, Inc., major manufacturers of this item, revealed that the awardee's price was less expensive. While Air asserts these manufacturers traditionally discount their catalog prices in their bids to GSA, the fact is they did not compete here and their catalog prices are credible evidence that the award price was reasonable.

Regarding line item No. 3, the actual award price of $297, without first article testing, was even closer to Air's $207 price. This difference does not seem significant, particularly considering that Air did not successfully deliver that item. Similarly, for this item, GSA determined that the previous procurement had been canceled due to excessive prices, after a comparison with Air's unrealistically low prices. Further, GSA's analysis revealed that the awardee's price reflected a decrease in price from recent contract and small purchase prices for the same item.

Air's argument that GSA misconstrued and exaggerated the impact of first article testing on bid prices was also misplaced. In this regard, GSA's report on the protests stated that the requirement for first article testing could partially account for higher prices. GSA has produced historical evidence to show that vendor's prices for pneumatic tools will increase drastically where first article testing is required because of the one-time testing costs. Since first article testing was not required on the Air contracts, this may in part explain the much higher prices of line item No. 1 over Air's prices. In this regard, we note that the awardee's price on line item No. 3, where the first article was waived, was not significantly higher than Air's price.

The evidence, including that offered by Air here, does not demonstrate that GSA's determination of price reasonableness was unreasonable. See Nationwide Roofing Sheet Metal Co., B-234222.2, June 22, 1989, 89-1 CPD Para. 588. The request for reconsideration is denied.

/1/ The first reprocurement was canceled because all prices were found unreasonable.

/2/ The figures for Air's price and the awardee's price for line item No. 3 ($297 and $530, respectively), as set forth in our prior decision, were erroneous and should have been $207 and $297, respectively. In any case, for the reasons discussed in this decision, the contracting officer's determination that the award prices were reasonable was rationally based.