Objection to Decision To Withhold Funding of Contract

B-200647: Oct 19, 1981

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Ralph O. White
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Kenneth E. Patton
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A firm objected to the decision by the Urban Mass Transportation Administration (UTMA) to withhold funding of a contract awarded to it by the Memphis Area Transit Authority. The project was to have been 80-percent funded by UTMA. The firm maintained that UTMA improperly overruled the Transit Authority's determination that its bid was responsive to a solicitation for a transit radio communication system. The Transit Authority had issued the solicitation for a communications system to be installed in city buses. Three companies, including the protester, submitted proposals at bid opening. Following the opening, one of the bidders filed a protest with the Transit Authority alleging that the protester's bid was nonresponsive because its radio did not comply with the solicitation specifications. The Transit Authority replied that it considered the firm's bid to be responsive. Later, both of the other companies involved in the bidding sent protests to UTMA challenging the responsiveness of the protester's bid. UTMA conducted an examination of the radios proposed by each company and advised the Transit Authority that the selected firm's bid did not comply with certain solicitation specifications. UTMA also advised the Transit Authority that it would not fund the contract awarded to the firm. The firm then filed its complaint with GAO challenging the UTMA involvement and its determination not to fund the contract. GAO stated that it would not consider the allegations of the grantor agency's handling of the protest, but would consider whether the grantor had ensured that the grantee's proposed award complied with requirements made applicable by law, regulation, or grant terms. GAO reviewed the record and concluded that the proposed awardee's radio did not meet the literal requirements of the solicitation specifications. Nevertheless, GAO did not believe that the procurement should be resolicited or that the proposed award should be disturbed. Although a nonresponsive bid must usually be rejected, such a bid can be accepted when the awarded contract will serve the purchaser's actual needs and no bidder is prejudiced in the process. GAO concluded that acceptance of a nonresponsive bid under the above circumstances is preferred over cancellation and resolicitation, since resolicitation would result in an auction, thereby compromising the integrity of the competitive bidding system. Accordingly, the complaint was dismissed in part and sustained in part.

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