B-152428, DEC. 10, 1963

B-152428, DEC. 10, 1963

TO THE COOPER-BESSEMER CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE REJECTION OF ALL BIDS RECEIVED IN RESPONSE TO INVITATION FOR BIDS NO. ENG/NASA/-01 076-64-1 ISSUED BY THE UNITED STATES ARMY CORPS OF ENGINEERS, MOBILE DISTRICT, ON JULY 2, 1963 FOR HIGH-PRESSURE INDUSTRIAL WATER PUMPS FOR THE MISSISSIPPI TEST FACILITY, MISSISSIPPI. THE INVITATION PERMITTED ALTERNATE DRIVERS, EITHER DIESEL ENGINES OR GAS TURBINES.

IT IS STATED THAT FOR NEARLY THREE YEARS, COOPER-BESSEMER FOLLOWED THE DEVELOPMENT OF THIS PROCUREMENT WITH SPECIAL REGARD FOR GAS TURBINE DRIVERS, AND THAT AS A RESULT OF ITS EXPERIENCE ON A SIMILAR PROCUREMENT WHEREIN GAS TURBINES WERE NOT INCLUDED FOR SPECIFIC REASONS, COOPER- BESSEMER WENT TO CONSIDERABLE EFFORT TO ASCERTAIN AS BEST IT COULD THAT THERE WAS A BONA FIDE INTEREST IN GAS TURBINES. IT IS FURTHER STATED THAT WHILE IT WAS KNOWN FROM THE OUTSET THAT GAS TURBINES WOULD HAVE A HIGHER INITIAL COST AND WOULD BE MORE EXPENSIVE TO OPERATE THAN DIESEL ENGINES, A GREAT DEAL OF TIME, EFFORT AND MONEY WAS EXPENDED AS A RESULT OF RECEIVING ASSURANCES THAT AN INTEREST DID EXIST IN GAS TURBINES. IT IS ALSO STATED, THAT WHILE COOPER-BESSEMER MANUFACTURES DIESEL ENGINES AS WELL AS GAS TURBINES, ITS ENGINEERING EVALUATION OF THE TECHNICAL REQUIREMENTS STIPULATED IN THE INVITATION INDICATED THAT GAS TURBINES WOULD READILY CONFORM TO THE REQUIREMENTS, WHEREAS THERE WAS CONSIDERABLE DOUBT THAT DIESEL ENGINES WOULD COMPLY, AND THAT FOR THIS REASON COOPER-BESSEMER EFFORTS WERE CONCENTRATED ON GAS TURBINES AND IT DID NOT SUBMIT A BID ON DIESEL ENGINES.

THE RECORD SHOWS THAT UNDER INVITATION FOR BIDS NO. ENG/NASA/-01-076 64-1 BIDS WERE RECEIVED FROM EIGHT FIRMS, WITH ONE FIRM BIDDING AN ALTERNATE. THE BIDS RECEIVED FALL INTO TWO GROUPS, ONE GROUP CONSISTING OF BIDS OFFERING DIESEL ENGINES, AND THE SECOND GROUP CONSISTING OF BIDS OFFERING GAS TURBINES. THE BIDS UNDER THE FIRST GROUP (DIESELS) RANGED FROM $2,575,000 TO $3,814,260.00, WHICH AFTER EVALUATION WERE $7,978,491.00 TO $8,315,504.50. THE BIDS UNDER THE SECOND GROUP (GAS TURBINES) RANGED FROM $4,195,298.00 (COOPER-BESSEMER) TO $5,256,900.00, WHICH AFTER EVALUATION WERE $9,930,492.50 TO $12,184,227.35.

IT WAS DETERMINED THAT ALL BIDS IN THE FIRST GROUP (DIESELS) WERE IN VARIOUS TECHNICAL DETAILS NONRESPONSIVE TO THE REQUIREMENTS OF THE INVITATION. THIS LEFT THE GAS TURBINE BIDS OF WHICH COOPER-BESSEMER'S WAS THE LOWEST. HOWEVER, IT WAS DETERMINED THAT ALL OF THE GAS TURBINE BIDS WERE UNREASONABLE AS TO PRICE AND THEY WERE REJECTED. COOPER-BESSEMER WAS NOTIFIED OF SUCH ACTION BY LETTER DATED AUGUST 22, 1963. THE PROCUREMENT WAS READVERTISED UNDER INVITATION FOR BIDS NO. ENG/NASA/-01-076-64-13 WHICH APPARENTLY MODIFIED THE REQUIREMENTS IN CERTAIN RESPECTS AS TO THE DIESEL ENGINES. IT IS ALLEGED THAT THERE WERE NO MATERIAL CHANGES OR REDEFINITION OF REQUIREMENTS WITH RESPECT TO GAS TURBINE ENGINES.

YOU PROTEST THE ACTION TAKEN BY THE CONTRACTING OFFICER ON THE BASIS THAT COOPER-BESSEMER'S BID WAS ENTIRELY REASONABLE IN VIEW OF THE INVITATION REQUIREMENTS AS EVIDENCED BY THE FACT THAT IT WAS THE LOWEST OF THE GAS TURBINE BIDS AND THEREFORE THAT THE DETERMINATION THAT THE PRICE QUOTED WAS "UNREASONABLE" IS WITHOUT JUSTIFICATION.

IT IS REPORTED THAT THE PRELIMINARY COST ESTIMATED WAS $2,394,000.00 WITH DIESEL ENGINE DRIVERS AND $2,902,500.00 WITH GAS TURBINES. IN VIEW THEREOF AND OF THE DIFFERENCE BETWEEN THE PRICES QUOTED FOR DIESELS AND GAS TURBINES, THE CONTRACTING OFFICER'S DETERMINATION WAS BASED ON THE FACT THAT THE GOVERNMENT DID NOT WANT TO PAY THE DIFFERENCE BETWEEN THE COST OF THE DIESELS AND THE GAS TURBINES UNDER THE BIDS RECEIVED. THIS DOES NOT MEAN THAT THE BID PRICES FOR THE GAS TURBINES WERE NECESSARILY UNREASONABLE IN THEMSELVES, BUT ONLY THAT THE DIFFERENCE IN COST BETWEEN DIESEL AND GAS ENGINES WAS MORE THAN THE GOVERNMENT WAS WILLING TO PAY. WHILE IT IS REPORTED THAT COOPER BESSEMER BID WAS NONRESPONSIVE TO THE REQUIREMENTS OF THE INVITATION DUE TO REASONS AS TO WHICH YOU HAVE BEEN ADVISED, THE PRIMARY REASON FOR THE REJECTION OF THE GAS TURBINE BIDS WAS THAT THEY WERE TOO HIGH AS COMPARED WITH THE DIESELS. APPARENTLY THIS WAS RECOGNIZED BY COOPER-BESSEMER AND AT LEAST ONE OTHER GAS TURBINE BIDDER SINCE NEITHER BOTHERED TO BID IN RESPONSE TO THE READVERTISEMENT UNDER INVITATION FOR BIDS NO. ENG/NASA/-01-076-64-13.

IT CONSISTENTLY HAS BEEN HELD THAT THE ISSUANCE OF AN INVITATION FOR BIDS DOES NOT IMPOSE ANY OBLIGATION UPON THE GOVERNMENT TO ACCEPT ANY OF THE BIDS RECEIVED AND THAT ALL BIDS MAY BE REJECTED WHERE IT IS DETERMINED TO BE IN THE INTEREST OF THE GOVERNMENT TO DO SO. 37 COMP. GEN. 760. HOWEVER, IT HAS ALSO BEEN HELD THAT THE DETERMINATION TO REJECT ALL BIDS MUST NOT BE ARBITRARY. 36 COMP. GEN. 62, 39 ID. 396.

THE FACTS SET FORTH ABOVE CLEARLY SHOW THAT THE DETERMINATION BY THE CONTRACTING OFFICER TO REJECT ALL OF THE GAS TURBINE BIDS AS BEING IN EXCESS OF THE AMOUNT THAT THE GOVERNMENT WAS WILLING TO PAY WAS NOT AN ARBITRARY DETERMINATION. THIS IS SUPPORTED BY THE FACT THAT UNDER THE READVERTISEMENT IT IS PROPOSED TO MAKE AN AWARD FOR DIESEL ENGINE DRIVERS, AT A PRICE VERY SUBSTANTIALLY LOWER THAN ANY BID ON GAS TURBINES. ACCORDINGLY YOUR PROTEST MUST BE DENIED.