B-170420, FEB 12, 1971

B-170420, FEB 12, 1971

BID PROTEST - CHANGED REQUIREMENTS AFFIRMING PRIOR DECISION DENYING PROTEST BY KENTRON HAWAII, LTD., AGAINST CANCELLATION OF AN IFB ISSUED BY THE U.S. ARMY MISSILE COMMAND. THE REMOVAL OF GOVERNMENT FURNISHED EQUIPMENT AND THE INCREASE IN WORKLOAD COULD HAVE HAD A SUBSTANTIAL EFFECT UPON THE BID PRICES SUBMITTED BY THE VARIOUS BIDDERS AND BECAUSE THE GOVERNMENT WAS OBLIGATED UNDER THE SUBJECT IFB TO ORDER FROM THE CONTRACTOR ALL SERVICES SET FORTH IN THE SCHEDULE REQUIRED BY THE U.S. ARMY MISSILE COMMAND AND ADDITIONAL REQUIREMENTS COULD NOT BE PROCURED BY MEANS OF ANOTHER INVITATION COVERING THE SAME PERIOD (SEE JOHNSON COAL & COKE CO. V U.S., 66 CT. CL. 616, 621 (1929), THE CANCELLATION OF THE IFB IS PROPER AND CANNOT BE AFFECTED BY THE COMPETITIVE RESULTS OF THE RESOLICITATION.

TO KENTRON HAWAII, LTD.:

REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 24, 1970, REQUESTING RECONSIDERATION OF OUR DECISION OF NOVEMBER 16, 1970, DENYING YOUR PROTEST AGAINST THE CANCELLATION OF INVITATION FOR BIDS (IFB) NO. DAAN03-70-B- 0166, ISSUED BY THE UNITED STATES ARMY MISSILE COMMAND. THE CIRCUMSTANCES INVOLVED IN THE CANCELLATION OF THE IFB WERE FULLY STATED IN OUR DECISION AND WILL NOT BE REPEATED HERE EXCEPT AS SET OUT BELOW.

YOU OBSERVE THAT OUR REASON FOR CANCELLATION OF THE IFB WAS AS FOLLOWS (QUOTING FROM THE NOVEMBER 16 DECISION):

"HOWEVER, ON JULY 6, 1970, IT WAS ASCERTAINED THAT BECAUSE OF THE TRANSFER OF THE APC WORKLOAD TO REDSTONE ARSENAL THE ACTUAL REQUIREMENTS WOULD BE CONSIDERABLY MORE THAN THOSE CONTEMPLATED BY THE INVITATION. FURTHER, IT WAS DETERMINED THAT ONE CONTRACTOR COULD NOT MEET ALL THE THEN CONTEMPLATED REQUIREMENTS WITHIN REQUIRED TIME FRAMES. BY DEPARTMENTAL TELETYPE DATED JULY 13, 1970, 140 ITEMS OF EQUIPMENT LOCATED AT APC, WHICH HAD BEEN INCLUDED IN THE INVITATION LISTING AS GOVERNMENT-FURNISHED PROPERTY, WERE WITHDRAWN FROM AVAILABILITY FOR USE BY PROSPECTIVE BIDDERS."

YOU CONTEND THAT THE ABOVE SITUATION IS COVERED BY PARAGRAPH 2 404.1(A) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) AND BY GENERAL PROVISION NO. 39, GOVERNMENT PROPERTY (FIXED PRICE), ASPR 13 702(A), AS REVISED BY DEFENSE PROCUREMENT CIRCULARS 63 AND 64.

OUR DECISION OF NOVEMBER 16, 1970, CONSIDERED NOT ONLY THE PROBLEM OF INCREASE IN REQUIREMENTS DUE TO THE CLOSING OF THE ARMY PICTORIAL CENTER (APC), BUT ALSO, AND MORE IMPORTANTLY, THE WITHDRAWAL FROM CONTRACTOR USE OF 140 OF THE 238 ITEMS OF GOVERNMENT-OWNED MOTION PICTURE PRODUCTION EQUIPMENT WHICH ITEMS, WE ARE INFORMED, ARE VALUED AT MORE THAN $500,000. THE REMOVAL FROM USE OF THIS EQUIPMENT COULD HAVE HAD A SUBSTANTIAL EFFECT UPON THE BID PRICES SUBMITTED BY THE VARIOUS BIDDERS WHO APPARENTLY BASED THEIR PRICES UPON THE AVAILABILITY FOR USE OF ALL OF THE LISTED GOVERNMENT PROPERTY. AFTER THE REMOVAL OF THE GOVERNMENT-FURNISHED EQUIPMENT AND THE INCREASE IN WORKLOAD DUE TO THE TRANSFER OF THE APC WORKLOAD TO REDSTONE ARSENAL, IT WAS CONCLUDED THAT THE IFB SHOULD BE CANCELED.

ASPR 2-404.1(A) STATES THE GENERAL RULE APPLICABLE TO THE REJECTION OF ALL BIDS AND CANCELLATION OF AN INVITATION AS FOLLOWS:

"(A) THE PRESERVATION OF THE INTEGRITY OF THE COMPETITIVE BID SYSTEM DICTATES THAT AFTER BIDS HAVE BEEN OPENED, AWARD MUST BE MADE TO THAT RESPONSIBLE BIDDER WHO SUBMITTED THE LOWEST RESPONSIVE BID, UNLESS THERE IS A COMPELLING REASON TO REJECT ALL BIDS AND CANCEL THE INVITATION. EVERY EFFORT SHALL BE MADE TO ANTICIPATE CHANGES IN A REQUIREMENT PRIOR TO THE DATE OF OPENING AND TO NOTIFY ALL PROSPECTIVE BIDDERS OF ANY RESULTING MODIFICATION OR CANCELLATION, THEREBY PERMITTING BIDDERS TO CHANGE THEIR BIDS AND PREVENTING THE UNNECESSARY EXPOSURE OF BID PRICES. AS A GENERAL RULE, AFTER OPENING, AN INVITATION FOR BIDS SHOULD NOT BE CANCELED AND READVERTISED DUE SOLELY TO INCREASED REQUIREMENTS FOR THE ITEMS BEING PROCURED; AWARD SHOULD BE MADE ON THE INITIAL INVITATION FOR BIDS AND THE ADDITIONAL QUANTITY REQUIRED SHOULD BE TREATED AS A NEW PROCUREMENT."

UNDER THE IFB, THE GOVERNMENT WAS OBLIGATED TO ORDER FROM THE CONTRACTOR ALL THE SERVICES SET FORTH IN THE SCHEDULE REQUIRED BY THE UNITED STATES ARMY MISSILE COMMAND THROUGH JUNE 30, 1971. HENCE, ADDITIONAL REQUIREMENTS FOR THE SAME SERVICES COULD NOT BE PROCURED BY MEANS OF ANOTHER INVITATION COVERING THE SAME PERIOD. CF. JOHNSON COAL & COKE CO. V UNITED STATES, 66 CT. CL. 616, 621 (1929).

WITH REFERENCE TO YOUR VIEW THAT THE GOVERNMENT PROPERTY CLAUSE REFERENCED IN THE IFB COULD HAVE BEEN INVOKED TO REMEDY THE WITHDRAWAL OF A PORTION OF THE GOVERNMENT PROPERTY LISTED IN THE IFB, IT SHOULD BE NOTED THAT THIS CLAUSE AND ITS ADJUSTMENT PROVISIONS BECOME OPERATIVE ONLY AFTER A CONTRACT HAS BEEN AWARDED UNDER THE IFB. SINCE NO AWARD COULD HAVE BEEN MADE, THE CLAUSE COULD NOT HAVE BEEN USED TO CURE THE PROPERTY DEFECT IN THE IFB.

WE HAVE CONSIDERED YOUR COMMENT THAT THE RESOLICITATION FOR "HIGHER" REQUIREMENTS WITH "LESS" GOVERNMENT PROPERTY RESULTED IN SIGNIFICANTLY LOWER BIDS THAN THOSE RECEIVED UNDER THE CANCELED SOLICITATION. YOU EMPHASIZE THE FACT THAT THE SUCCESSFUL BIDDER "WAS SOME 20% BELOW THE ORIGINAL LOW BID AND 26% BELOW HIS OWN BID ON THE FIRST SOLICITATION." ASSUMING THESE FACTS TO BE CORRECT, THEY DO NOT SERVE TO ESTABLISH ANY IMPROPRIETY IN CONNECTION WITH THE RESOLICITATION. WHERE, AS SHOWN ABOVE, THE CANCELLATION OF A SOLICITATION WAS PROPER UNDER THE CIRCUMSTANCES, THE COMPETITIVE RESULTS OF THE RESOLICITATION CAN HAVE NO EFFECT TO DISTURB THE PROPRIETY OF THE CANCELLATION ACTION PREVIOUSLY TAKEN.

ACCORDINGLY, THE DECISION OF NOVEMBER 16, 1970, IS AFFIRMED.