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B-169843, DEC 7, 1970, 50 COMP GEN 382

B-169843 Dec 07, 1970
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SALES - BIDS - IDENTICAL THE AWARDS MADE UNDER A SALES INVITATION FOR BIDS ON THE BASIS OF LOTS DRAWN BY THE THREE BIDDERS WHO HAD SUBMITTED IDENTICAL BIDS BECAUSE THERE WAS NO OTHER EVIDENCE OF COLLUSIVE BIDDING. THE BID PRICES SUBMITTED WERE REASONABLE. WERE NOT PROPER. EVEN THOUGH THE PROVISIONS OF DOD MANUAL 4160.21-M WERE FOLLOWED. ALTHOUGH THE AWARDS WILL NOT BE DISTURBED. IF CIRCUMSTANCES DO NOT PERMIT A REASONABLE DETERMINATION THAT PRICE COMPETITION WAS ADEQUATE. 1970: ENCLOSED IS A COPY OF OUR LETTER OF TODAY TO THE ATTORNEY FOR THE PETROF TRADING COMPANY IN RESPONSE TO THAT FIRM'S PROTEST AGAINST AWARDS MADE UNDER SALES INVITATION FOR BIDS NO. 21-0144 ISSUED BY THE DSSO. THE MATTER WAS THE SUBJECT OF A LETTER DATED JUNE 11.

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B-169843, DEC 7, 1970, 50 COMP GEN 382

SALES - BIDS - IDENTICAL THE AWARDS MADE UNDER A SALES INVITATION FOR BIDS ON THE BASIS OF LOTS DRAWN BY THE THREE BIDDERS WHO HAD SUBMITTED IDENTICAL BIDS BECAUSE THERE WAS NO OTHER EVIDENCE OF COLLUSIVE BIDDING, WHERE THE JUSTICE DEPARTMENT HAD TAKEN NO ACTION ON THE REPORT OF THE RECEIPT OF THE IDENTICAL BIDS, AND THE BID PRICES SUBMITTED WERE REASONABLE, WERE NOT PROPER, EVEN THOUGH THE PROVISIONS OF DOD MANUAL 4160.21-M WERE FOLLOWED. ALTHOUGH THE AWARDS WILL NOT BE DISTURBED, STEPS SHOULD BE TAKEN TO OBTAIN IN FUTURE SURPLUS SALES THE FULL AND UNRESTRICTED COMPETITION CONTEMPLATED BY THE COMPETITIVE BIDDING SYSTEM AND TO AVOID THE ACCEPTANCE OF REASONABLE BID PRICES AS A SUBSTITUTE FOR ADEQUATE COMPETITION; AND IF CIRCUMSTANCES DO NOT PERMIT A REASONABLE DETERMINATION THAT PRICE COMPETITION WAS ADEQUATE, THE SALE SHOULD BE RESOLICITED.

TO THE DIRECTOR, DEFENSE SUPPLY AGENCY, DECEMBER 7, 1970:

ENCLOSED IS A COPY OF OUR LETTER OF TODAY TO THE ATTORNEY FOR THE PETROF TRADING COMPANY IN RESPONSE TO THAT FIRM'S PROTEST AGAINST AWARDS MADE UNDER SALES INVITATION FOR BIDS NO. 21-0144 ISSUED BY THE DSSO, ATLANTA ARMY DEPOT. THE MATTER WAS THE SUBJECT OF A LETTER DATED JUNE 11, 1970, YOUR REFERENCE DSAH-G.

AS INDICATED IN THE ENCLOSURE, THREE BIDS WERE SUBMITTED ON SIX OF THE ITEMS IN THE BID SCHEDULE; IN EACH CASE THE THREE BIDS WERE IDENTICAL. APPEARS TO BE THE POSITION OF THE CONTRACTING ACTIVITY THAT AWARD ON EACH OF THESE ITEMS BY DRAWING LOTS WAS PROPER BECAUSE (1) THE RECEIPT OF IDENTICAL BIDS WAS REPORTED TO THE JUSTICE DEPARTMENT, WHICH TOOK NO FURTHER ACTION AND (2) THE PRICES BID WERE REASONABLE. THE ADMINISTRATIVE REPORT ON THE MATTER, DATED JUNE 9, 1970, CONTINUES:

*** THERE IS NO REQUIREMENT OR JUSTIFICATION FOR THE REJECTION OF SUCH BIDS IN THE ABSENCE OF OTHER EVIDENCE WHICH MIGHT TEND TO ESTABLISH COLLUSIVE BIDDING. TO THE CONTRARY, THE REGULATIONS ARE VERY CLEAR AS TO HOW THE AWARDS ARE TO BE MADE AND THE REQUIRED PROCEDURE WAS FOLLOWED IN THIS INSTANCE.

WE AGREE THAT THE PROVISIONS OF THE DEPARTMENT OF DEFENSE MANUAL 4160.21- M WERE IN FACT FOLLOWED; WE DO NOT AGREE, HOWEVER, THAT AWARD IS PROPER SIMPLY BECAUSE THERE IS NO OTHER EVIDENCE OF COLLUSIVE BIDDING.

ONE OF THE CHIEF PURPOSES OF THE COMPETITIVE BID SYSTEM IS TO OBTAIN FOR THE GOVERNMENT THE BENEFITS OF FREE AND UNRESTRICTED COMPETITION. UNITED STATES V BROOKRIDGE FARM, 111 F. 2D 461, 463 (CCA 10, 1940). WE RECOGNIZE THAT WHETHER THE REQUIRED DEGREE OF COMPETITION HAS BEEN OBTAINED IN A GIVEN SITUATION IS SUBSTANTIALLY A SUBJECTIVE DETERMINATION TO WHICH A REASONABLE DEGREE OF ADMINISTRATIVE DISCRETION MUST INHERE. CF. B-145959, AUGUST 29, 1961. NEVERTHELESS, IN THE PRESENT CASE WE FIND IT DIFFICULT TO CONCLUDE THAT THE FACTS PERMIT ANY REASONABLE CONCLUSION THAT ADEQUATE COMPETITION WAS OBTAINED.

NOR DO WE BELIEVE THAT THE AWARDS MAY BE JUSTIFIED ON THE BASIS OF REASONABLE PRICE. THE CONTRACTING OFFICER'S JUDGMENT, HOWEVER VALID, THAT A PRICE MAY BE REGARDED AS REASONABLE, IS NOT AN ACCEPTABLE SUBSTITUTE FOR ADEQUATE COMPETITION. CF. 23 COMP. GEN. 395 (1943); 16 COMP. GEN. 318 (1936).

WE DO NOT BELIEVE IT WOULD BE APPROPRIATE TO TAKE ANY REMEDIAL ACTION WITH RESPECT TO THE INSTANT SALES. HOWEVER, WE RECOMMEND THAT CONTRACTING OFFICERS ON SURPLUS SALES BE INSTRUCTED WITH RESPECT TO FUTURE PROCUREMENTS THAT, WHERE IDENTICAL PRICES ARE RECEIVED, CONSIDERATION SHOULD BE GIVEN NOT ONLY TO WHETHER THERE IS OTHER EVIDENCE OF COLLUSION BUT ALSO TO WHETHER ADEQUATE COMPETITION WAS OBTAINED. IF THE CIRCUMSTANCES DO NOT PERMIT A REASONABLE DETERMINATION THAT THE PRICE COMPETITION WAS ADEQUATE, THE SALE SHOULD BE RESOLICITED.

PLEASE ADVISE US OF THE STEPS BEING TAKEN TO IMPLEMENT OUR RECOMMENDATION.

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