Matter of: State Management Services, Inc. File: B-250538 Date: February 5, 1993

B-250538: Feb 5, 1993

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The contracting agency may properly include in the negotiations an offer from a responsible bidder whose bid was nonresponsive to the IFB. Agency adequately apprised bidders which firms were eligible to compete in the negotiations when it provided each bidder with a copy of the bid abstract. Four of which were not SDB concerns and thus ineligible for award. Its bid was rejected as nonresponsive. The Army determined that the remaining three SDB bids offered unreasonable prices (of which State Management's bid was low at $2. Which were considerably higher than the government estimate of $1. The Army thus canceled the IFB pursuant to Federal Acquisition Regulation (FAR) Sec. 14.404-1(c)(6) and informed the bidders that it was converting the procurement to negotiation procedures pursuant to FAR Secs. 14.404-1(e)(1) and 15.103.

Matter of: State Management Services, Inc. File: B-250538 Date: February 5, 1993

PROCUREMENT Sealed Bidding Invitations for bids Cancellation Resolicitation Requests for proposals Where a canceled invitation for bids (IFB) has been converted to negotiated procedures pursuant to Federal Acquisition Regulation Sec. 15.103, the contracting agency may properly include in the negotiations an offer from a responsible bidder whose bid was nonresponsive to the IFB; agency adequately apprised bidders which firms were eligible to compete in the negotiations when it provided each bidder with a copy of the bid abstract.

Attorneys

DECISION State Management Services, Inc. protests an award to CABACO, Inc. under invitation for bids (IFB) No. DAAD01-92-B-0226 issued by the Department of the Army for housing maintenance services at Yuma Proving Ground, Yuma, Arizona.

We deny the protest.

The Army issued the solicitation as an invitation for bids (IFB), set aside for small disadvantaged business (SDB) concerns. The Army received bids from eight bidders, four of which were not SDB concerns and thus ineligible for award. Of the SDB concerns, CABACO submitted the apparent low bid of $1,839,726.90. CABACO did not provide an acceptable bid bond, however, and its bid was rejected as nonresponsive. The Army determined that the remaining three SDB bids offered unreasonable prices (of which State Management's bid was low at $2,768,952.92), which were considerably higher than the government estimate of $1,983,933.30. The Army thus canceled the IFB pursuant to Federal Acquisition Regulation (FAR) Sec. 14.404-1(c)(6) and informed the bidders that it was converting the procurement to negotiation procedures pursuant to FAR Secs. 14.404-1(e)(1) and 15.103. The Army conducted discussions with all four SDB firms who submitted bids under the IFB and requested submission of best and final offers (BAFO) by September 22, 1992. The Army received BAFOs from three offerors, including State Management and CABACO. CABACO, which submitted a bid guarantee to the Army during discussions, offered the lowest price of $2,006,443 as compared to State Management's offer of $2,485,500. On September 24, the Army awarded a contract to CABACO.

Where an IFB is canceled and negotiation procedures are then used, FAR Sec. 15.103 lists the following three requirements for completing the procurement through negotiation: (a) responsible bidders responding to the original IFB must be given prior notice of the agency's intent to negotiate and be given a reasonable opportunity to negotiate; (b) the negotiated price must be the lowest negotiated price offered by any responsible bidder; and (c) the negotiated price must be lower than the "lowest rejected bid price" of a responsible bidder under the original IFB.

State Management protested to our Office on September 28. It argues that CABACO's bid on the original IFB was nonresponsive and, thus, CABACO cannot be considered a responsible bidder eligible to participate in the negotiation process. However, FAR Sec. 15.103 only precludes nonresponsible bidders from participating in the negotiations; responsible bidders that submitted nonresponsive bids are eligible to compete in the negotiations. Air Masters Corp., B-249240, Nov. 2, 1992, 92-2 CPD Para. 299; M.C. Dean Elec. Contracting, Inc., B-228542, Dec. 21, 1987, 87-2 CPD Para. 613. Although CABACO's bid was nonresponsive, the Army found the firm to be responsible, and thus properly included it in the negotiations. Id. While State Management asserts that the agency took extraordinary steps to find CABACO responsible, the record does not support this contention, but shows that CABACO's responsibility was properly reviewed in accordance with FAR Secs. 9.105-1(a), (b)(1) to verify its eligibility to participate in the negotiations.

State Management also asserts that the Army improperly designated State Management's bid price as the lowest rejected bid price, rather than CABACO's lower nonresponsive bid, as the ceiling for negotiating the award in violation of FAR Sec. 15.103(c). The term "lowest rejected bid price" as used in FAR Sec. 15.103(c) refers to a bid price rejected as unreasonable or as not independently reached in open competition. Windsor Maintenance Co., B-235745, Oct. 4, 1989, 89-2 CPD Para. 305; Free State Reporting, Inc.; Neal R. Gross and Co., Inc., B-225531 et al., Jan. 13, 1987, 87-1 CPD Para. 54, aff'd B-225531.3; B-225532.3, Mar. 6, 1987 87-1 CPD Para. 263. Since nonresponsive bids, such as CABACO's, do not meet all material IFB requirements, the corresponding bid price may be unrealistically lower than a price which would be necessary for a responsive bidder to meet all such requirements and, therefore, should not be designated as the ceiling price under which negotiations are to be conducted pursuant to FAR Sec. 15.103. Id. Here, State Management's bid price was the lowest one rejected as unreasonable and was therefore properly designed as the "lowest rejected bid price."

State Management also asserts that the Army was required to inform all offerors that CABACO was competing in the negotiations. The Army states, and the protester does not deny, that all bidders were provided with a copy of the bid abstract of all bids submitted, which listed CABACO as an SDB concern and listed its bid price. While the Army did not specifically state that CABACO would be competing in the negotiations, State Management never asked the agency about the matter. Instead, State Management erroneously assumed that CABACO was not eligible to compete in the negotiations. State Management's erroneous belief was apparently based on the fact that the Army originally announced that CABACO's bid was the "lowest rejected bid price" under FAR Sec. 15.103(c), but corrected this mistake when it requested BAFOs. As stated earlier, the designation of the ceiling price for negotiations does not preclude lower priced nonresponsive bidders from participating in negotiations, and there is nothing in the FAR that requires bidders to be apprised which competitors are actually participating in FAR Sec. 15.103 negotiations. In sum, we think the Army's actions here were adequate to have created a level playing field among all prospective offerors. See G. Marine Diesel Corp., B-238703; B-238704, May 31, 1990, 90-1 CPD Para. 515.

Finally, State Management asserts that the solicitation misrepresented the Army's expected level of performance under this contract and the Army admitted this to State Management after the award had been made. The Army states in its report on this protest that the solicitation accurately stated the Army's requirements and that no such statement was made to State Management. State Management has not refuted in any way the agency report on this matter and we have no basis upon which to question the accuracy of the solicitation estimates.

The protest is denied.