[Protest of Air Force Bid Rejection]

B-153004, APR. 1, 1964

TO GAHAGAN DREDGING CORPORATION:

REFERENCE IS MADE TO YOUR TELEGRAM DATED DECEMBER 3, 1963, PROTESTING AGAINST THE AWARD OF A CONTRACT FOR DREDGING TO THE LOW RESPONSIVE BIDDER UNDER INVITATION FOR BIDS NO. CIVENG-30-075-64-18, ISSUED OCTOBER 21, 1963, BY THE DEPARTMENT OF THE ARMY, U.S. ARMY ENGINEER DISTRICT, NEW YORK.

THE INVITATION SOLICITED BIDS FOR THE REMOVAL AND SATISFACTORY DISPOSAL IN A DISTANT AREA AT SEA OF ALL MATERIAL EXCEPT LEDGE ROCK LYING ABOVE THE PLANE OF 35 FEET BELOW MEAN LOW WATER IN THE CHANNEL NORTH OF SHOOTERS ISLAND, NEW YORK AND NEW JERSEY CHANNELS. PARAGRAPH TP-4A (TECHNICAL PROVISIONS) OF THE SPECIFICATIONS PROVIDES AS FOLLOWS:

"TP-4 DISPOSAL OF EXCAVATED MATERIAL.

A. THE MATERIAL EXCAVATED SHALL BE TRANSPORTED AND DEPOSITED IN THE DISPOSAL AREA AT SEA. THE DISPOSAL AREA AT SEA FOR ALL MATERIAL REMOVED UNDER THIS CONTRACT IS PRESENTLY LOCATED 4 NAUTICAL MILES SE BY S (MAG) FROM SCOTLAND LIGHTSHIP. THE AVERAGE DISTANCE TO WHICH MATERIAL WILL HAVE TO BE TRANSPORTED TO THE DISPOSAL AREA AT SEA WILL NOT EXCEED 28 MILES. BIDS RECEIVED WILL BE BASED ON USING ONLY THE ABOVE DESCRIBED AREA. ALTERNATE AREAS WILL NOT BE CONSIDERED UNTIL AFTER AWARD OF THE CONTRACT.'

THE UNIT PRICE SCHEDULE (ENG FORM 1618) OF THE INVITATION PROVIDES THAT THE AMOUNT BID THEREON IS BASED ON USE OF THE DISPOSAL AREA INDICATED IN THE SPECIFICATIONS FOR THE WORK AND FURTHER STATES "ANY BID SUBMITTED BASED ON USE OF ALTERNATE AREAS SHALL RESULT IN REJECTION OF THE BID AS NONRESPONSIVE.'

AS A PART OF YOUR BID, YOU SUBMITTED A QUALIFYING LETTER DATED NOVEMBER 20, 1963, TO THE DISTRICT ENGINEER STATING AS FOLLOWS:

"WE QUALIFY OUR BID UNDER THE FOLLOWING CONDITIONS:

1. THE WORK IS TO BE DONE HYDRAULICALLY BY THE DREDGE NO. 5.

2. DISPOSAL OF THE DREDGED MATERIAL WILL BE ON THE PROPERTY OF THE CENTRAL RAILROAD OF NEW JERSEY, JUST NORTH OF THEIR YARD AT ELIZABETH PORT, APPROXIMATELY 84 ACRES.

"ENCLOSED FIND COPY OF PERMIT FROM THE CENTRAL RAILROAD OF NEW JERSEY FOR THE USE OF THEIR PROPERTY.

"THIS BID PRICE IS BASED ON DOING THE JOB BY THIS METHOD.'

INASMUCH AS YOU THEREBY BASED YOUR BID ON THE USE OF A DISPOSAL AREA DIFFERENT THAN THAT SPECIFIED IN THE INVITATION, YOUR BID WAS REJECTED AS NONRESPONSIVE BY THE CONTRACTING OFFICER IN ACCORDANCE WITH THE ABOVE- QUOTED PROVISIONS OF THE INVITATION.

WHILE YOU DO NOT QUESTION THE CONTRACTING OFFICER'S DETERMINATION THAT YOUR BID WAS NONRESPONSIVE TO THE INVITATION, IT IS YOUR CONTENTION THAT THE INVITATION WAS UNDULY RESTRICTIVE AND SHOULD HAVE BEEN DRAWN TO ALLOW BIDDERS TO SELECT ALTERNATE APPROVED DISPOSAL AREAS ON LAND THUS PERMITTING LOWER BIDS BASED ON THE USE OF HYDRAULIC DREDGES. YOU REQUEST THAT ALL BIDS BE REJECTED AND NEW SPECIFICATIONS ISSUED.

THE CORPS OF ENGINEERS REPORTS THAT A DISPOSAL AREA AT SEA WAS SPECIFIED IN THE INVITATION BECAUSE NO ALTERNATE DISPOSAL AREA WAS KNOWN TO BE AVAILABLE AT THE TIME BIDS WERE INVITED. THE CORPS ALSO REPORTS THAT THE CENTRAL RAILROAD COMPANY OF NEW JERSEY, WHICH AUTHORIZED YOU TO USE ITS PROPERTY FOR DISPOSAL PURPOSES, HAD PREVIOUSLY INDICATED TO THE CORPS OF ENGINEERS THAT IT HAD NO LAND DISPOSAL AREAS AVAILABLE, AND NO OTHER UPLAND AREAS HAVE BEEN AVAILABLE FREE OF COST IN THE VICINITY OF THE PROJECT FOR SEVERAL YEARS.

THE RECORDS SUBMITTED TO THIS OFFICE INDICATE THAT THE DREDGING WAS ADMINISTRATIVELY CONSIDERED TO BE URGENTLY NEEDED, AND THE CONTRACTING OFFICER WAS NOT AWARE OF THE EXISTENCE OF A POSSIBLE LAND DISPOSAL SITE UNTIL CONTACTED BY YOUR FIRM NEAR THE CLOSE OF BUSINESS ON THE DAY BEFORE BID OPENING. INCIDENTS INVOLVING STRIKING THE BOTTOM OF THE CHANNEL BY LARGE OIL TANKERS AND OTHER VESSELS USING THE WATERWAY REQUIRED THE EARLIEST POSSIBLE ACTION TO REMOVE THE SHOALING, AND AS FURTHER DELAY WOULD RESULT IN ADDITIONAL SHOALING AND WORSENING OF THE CONDITION, IT WAS DECIDED NOT TO CANCEL THE INVITATION. A CONTRACT WAS THEREAFTER AWARDED TO THE ARUNDEL CORPORATION, BALTIMORE, MARYLAND, AS THE LOWEST RESPONSIVE AND RESPONSIBLE BIDDER.

IT IS PROVIDED IN 10 U.S.C. 2305 (C) THAT ALL BIDS MAY BE REJECTED IF THE HEAD OF THE AGENCY DETERMINES THAT REJECTION IS IN THE PUBLIC INTEREST. THE HEAD OF THE AGENCY MAY, UNDER 10 U.S.C. 2311, DELEGATE THE AUTHORITY TO MAKE DETERMINATIONS IN SUCH MATTERS TO ANY OTHER OFFICER OR OFFICIAL OF THAT AGENCY. THAT AUTHORITY HAS BEEN DELEGATED TO THE CONTRACTING OFFICER BY THE TERMS OF PARAGRAPH 2-404.3 OF THE ARMED SERVICES PROCUREMENT REGULATION. SINCE THE QUESTION WHETHER ALL BIDS SHOULD BE REJECTED IN A GIVEN CASE IS PRIMARILY A MATTER FOR ADMINISTRATIVE DETERMINATION, IT APPEARS THAT THE CONTRACTING OFFICER WAS ACTING CLEARLY WITHIN THE SCOPE OF HIS AUTHORITY WHEN HE DECIDED NOT TO REJECT ALL BIDS, AS REQUESTED BY YOU. OUR OFFICE HAS GENERALLY CONSIDERED SUCH ADMINISTRATIVE AUTHORITY TO BE EXTREMELY BROAD AND WE DO NOT QUESTION DETERMINATIONS IN CONNECTION THEREWITH EXCEPT WHEN REQUIRED TO DO SO BY COGENT OR COMPELLING REASONS. ALSO, IT IS NOT WITHIN THE PROVINCE OF OUR OFFICE TO DRAFT SPECIFICATIONS FOR THE CONTRACTUAL NEEDS OF DEPARTMENTS AND AGENCIES OF THE GOVERNMENT OR TO PRESCRIBE THE TERMS AND CONDITIONS UNDER WHICH BIDS WILL BE SOLICITED AND CONTRACTS AWARDED. THESE MATTERS FALL SQUARELY WITHIN THE FUNCTIONS OF THE DEPARTMENTS AND AGENCIES CONCERNED AND WHEN A SPECIFICATION LENDS ITSELF TO OPEN COMPETITION, AS REQUIRED BY APPLICABLE STATUTES, AND IT IS SHOWN BY ALL THE FACTS AND CIRCUMSTANCES THAT THE GOVERNMENT'S INTERESTS HAVE BEEN FULLY CONSIDERED AND THAT BIDDERS HAVE RECEIVED FAIR AND IMPARTIAL TREATMENT, OUR OFFICE WILL NOT INTERVENE. THE FACT THAT A BIDDER MAY BE UNABLE OR UNWILLING TO SUBMIT A BID CONFORMING TO THE TERMS OF THE INVITATION IS NOT SUFFICIENT TO WARRANT A CONCLUSION THAT THE SPECIFICATIONS ARE UNDULY RESTRICTIVE, NOR DOES A SHOWING THAT, BY REASON OF FACTORS NOT KNOWN TO THE GOVERNMENT AT THE TIME A PROCUREMENT WAS UNDERTAKEN, IT MIGHT HAVE BEEN MORE ADVANTAGEOUS TO THE GOVERNMENT TO PROCEED IN A DIFFERENT MANNER, NECESSARILY REQUIRE A CANCELLATION OF THE PROCUREMENT AND NEW START.

SINCE TWO OTHER RESPONSIVE BIDS WERE RECEIVED IN ADDITION TO THAT OF THE ARUNDEL CORPORATION, IT DOES NOT APPEAR THAT COMPETITION WAS UNDULY RESTRICTED BY THE FACT THAT THE SPECIFICATIONS DEALT MOST PRECISELY WITH THE AREA FOR DISPOSING OF THE DREDGED MATERIAL, OR, WHEN VIEWED IN THE LIGHT OF ALL THE FACTS AND CIRCUMSTANCES, THAT THE CONTRACTING OFFICER'S DECISION TO AWARD A CONTRACT UNDER THE INVITATION WAS CONTRARY TO THE PUBLIC INTEREST OR IN VIOLATION OF LAW.

WHILE IT WOULD APPEAR, AS YOU CONTEND, THAT SAVINGS WOULD HAVE ACCRUED TO THE GOVERNMENT BY EITHER PERMITTING BIDS BASED UPON USE OF ALTERNATE DISPOSAL AREAS, OR BY THE REJECTION OF ALL BIDS AND READVERTISEMENT OF THE WORK, IN VIEW OF THE CONTRACTING AGENCY'S DETERMINATION THAT REMOVAL OF THE SHOALING AT THE EARLIEST POSSIBLE DATE WAS ESSENTIAL, TOGETHER WITH THE FACT THAT YOU DID NOT ADVISE OF THE AVAILABILITY OF A LAND DISPOSAL AREA UNTIL THE DAY BEFORE BID OPENING, WE ARE UNABLE TO CONCLUDE THAT AN AWARD TO THE LOW RESPONSIVE BIDDER IN THIS PROCUREMENT WAS IMPROPER.

WHILE YOUR PROTEST MUST THEREFORE BE DENIED, WE ARE TODAY RECOMMENDING TO THE SECRETARY OF THE ARMY THAT A REVIEW OF PROCUREMENT PROCEDURES BE INSTITUTED WITH A VIEW TO SOLICITING BIDS BASED UPON USE OF ALTERNATE DISPOSAL AREAS WHENEVER PRACTICABLE IN FUTURE PROCUREMENTS OF THIS NATURE.