B-154899, JAN. 25, 1965

B-154899: Jan 25, 1965

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TO THE HONORABLE SECRETARY OF THE ARMY: REFERENCE IS MADE TO LETTER DATED JANUARY 11. WHICH WAS ISSUED ON JUNE 22. THE INVITATION IN QUESTION IS THE SECOND STEP OF A TWO-STEP. THE BID OPENING UNDER STEP II WAS HELD ON JULY 22. THUS THE BID OF ITT ON ALTERNATE A WAS $474. RATHER THAN BY THE MULTI-YEAR ARRANGEMENT ON WHICH THE PREVIOUS BIDS WERE BASED. UNDER WHICH THE QUANTITY WAS TO BE DIVIDED INTO TWO INSTALLMENTS WITH THE SECOND YEAR'S INSTALLMENT SUBJECT TO CANCELLATION AND PAYMENT OF A CANCELLATION CHARGE IN THE EVENT OF NONAVAILABILITY OF FUNDS. IN VIEW OF THE FACT THAT THE SINGLE PROCUREMENT WHICH IS NOW POSSIBLE APPEARS TO OFFER DEFINITE ADVANTAGES TO PROSPECTIVE CONTRACTORS OVER THE MULTI-YEAR METHOD (OR THE ALTERNATIVE METHOD OF CONTRACTING ONLY FOR THE FIRST YEAR'S INSTALLMENT).

B-154899, JAN. 25, 1965

TO THE HONORABLE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO LETTER DATED JANUARY 11, 1965, FROM THE DIRECTOR OF PROCUREMENT AND PRODUCTION, UNITED STATES ARMY MATERIEL COMMAND, TRANSMITTING THE CONTRACTING OFFICER'S ADMINISTRATIVE REPORT TOGETHER WITH ENCLOSURES, CONCERNING THE PROTEST OF THE BENDIX CORPORATION, BENDIX RADIO DIVISION (BENDIX), AGAINST THE PROPOSED REJECTION OF THEIR BID UNDER INVITATION FOR BIDS NO. AMC/E/-36-039-64 598-U (STEP II), COVERING RADIO SETS AN-GRC 66 AND 68, WHICH WAS ISSUED ON JUNE 22, 1964, BY THE PHILADELPHIA PROCUREMENT DIVISION OF THE UNITED STATES ARMY ELECTRONICS COMMAND.

THE INVITATION IN QUESTION IS THE SECOND STEP OF A TWO-STEP, FORMALLY ADVERTISED, MULTI-YEAR PROCUREMENT AND PURSUANT TO ASPR 1 322.2 REQUESTS BIDS FOR BOTH A SINGLE-YEAR PROGRAM QUANTITY AND A TWO YEAR PROGRAM QUANTITY, WITH THE REQUIREMENT THAT BIDDERS WHICH SUBMIT A BID ON ALTERNATE A (THE TWO-YEAR PROGRAM QUANTITY) MUST SUBMIT AN ACCOMPANYING BID ON ALTERNATE B (THE SINGLE-YEAR PROGRAM QUANTITY). ALSO PART C OF PROVISION Z OF THE INVITATION REQUESTS THE SUBMISSION OF CERTAIN ELECTRON TUBE INFORMATION.

TWO FIRMS QUALIFIED UNDER STEP I, BENDIX AND THE INTERNATIONAL TELEPHONE AND TELEGRAPH CORPORATION, FEDERAL LABORATORIES DIVISION (ITT). THE BID OPENING UNDER STEP II WAS HELD ON JULY 22, 1964. BENDIX BID $4,985,146 ON ALTERNATE B (THE ONE-YEAR QUANTITY) AND $7,471,106 ($4,304,047, THE FIRST- YEAR QUANTITY, PLUS $3,167,059, THE SECOND-YEAR QUANTITY) ON ALTERNATE A. ITT DID NOT BID ON ALTERNATE B, AND IT DID NOT SUBMIT THE REQUESTED ELECTRON TUBE INFORMATION. THE ITT BID ON ALTERNATE A TOTALS $6,966,999 ($4,057,409, THE FIRST-YEAR QUANTITY PLUS $2,939,590, THE SECOND-YEAR QUANTITY). THUS THE BID OF ITT ON ALTERNATE A WAS $474,107 (6.3 PERCENT) LOWER THAN THAT OF BENDIX.

WE HELD IN OUR DECISION DATED DECEMBER 22, 1964, B-154899, THAT THE BID OF ITT SHOULD BE REJECTED AS NONRESPONSIVE BECAUSE THAT FIRM HAD NOT SUBMITTED A BID ON THE SINGLE-YEAR PROGRAM QUANTITY AS ORDERED BY ASPR 1- 322.2/II) AND THE INVITATION. THIS MADE IT UNNECESSARY FOR US TO RULE ON THE EFFECT OF ITT'S FAILURE TO PROVIDE THE ELECTRON TUBE INFORMATION REQUESTED BY PROVISION Z.

IN THAT DECISION WE NOTED, WITHOUT COMMENT, THE STATEMENT CONTAINED IN LETTER DATED OCTOBER 7, 1964, TO US, FROM THE ACTING DIRECTOR, PROCUREMENT AND PRODUCTION, ARMY MATERIEL COMMAND, THAT SINCE THE PRICE SUBMITTED BY BENDIX COULD NOT BE JUSTIFIED AS FAIR AND REASONABLE, IF THE BENDIX PROTEST SHOULD BE SUSTAINED PROCUREMENT OF THE ITEMS IN QUESTION WOULD BE ACCOMPLISHED BY SOME OTHER MEANS.

IN ITS LETTER OF PROTEST DATED DECEMBER 30, 1964, BENDIX CALLED OUR ATTENTION TO THE FACT THAT AS A RESULT OF THAT STATEMENT IT HAD, BY LETTER DATED AND DELIVERED DECEMBER 29, 1964, TO THE CONTRACTING OFFICER, OFFERED TO PERFORM THE WORK AT A PRICE NO GREATER THAN THAT QUOTED BY ITT, I.E., $6,996,999. ON THE BASIS OF CERTAIN PRIOR DECISION OF OUR OFFICE, BENDIX CONTENDS THAT THE CONTRACTING OFFICER MUST RECOGNIZE IT AS THE ONLY RESPONSIVE BIDDER UNDER THE INVITATION, AND THAT BY OFFERING TO MEET THE PRICE QUOTED IN THE NONRESPONSIVE BID OF ITT IT HAS ELIMINATED THE ONLY OBSTACLE TO ACCEPTANCE OF ITS BID.

THE REPORT BY THE CONTRACTING OFFICER TO OUR OFFICE, WHILE DISAGREEING WITH THE CONTENTIONS OF BENDIX, ALSO DISCLOSES THAT, SINCE ISSUANCE OF THE PRIOR INVITATION AND RECEIPT OF BIDS THEREON, FUNDING HAS BEEN RECEIVED FOR PROCUREMENT OF THE TOTAL DESIRED QUANTITY OF THE RADIO SETS BY A SINGLE FIXED PRICE CONTRACT, RATHER THAN BY THE MULTI-YEAR ARRANGEMENT ON WHICH THE PREVIOUS BIDS WERE BASED, AND UNDER WHICH THE QUANTITY WAS TO BE DIVIDED INTO TWO INSTALLMENTS WITH THE SECOND YEAR'S INSTALLMENT SUBJECT TO CANCELLATION AND PAYMENT OF A CANCELLATION CHARGE IN THE EVENT OF NONAVAILABILITY OF FUNDS. THE REPORT THEREFORE RECOMMENDS THAT THE REVISED BID PRICE SUBMITTED BY BENDIX BE REJECTED AND THAT STEP II BIDS BE RESOLICITED FROM BOTH BENDIX AND ITT FOR A SINGLE FIXED PRICE CONTRACT COVERING THE TOTAL REQUIREMENTS.

IN VIEW OF THE FACT THAT THE SINGLE PROCUREMENT WHICH IS NOW POSSIBLE APPEARS TO OFFER DEFINITE ADVANTAGES TO PROSPECTIVE CONTRACTORS OVER THE MULTI-YEAR METHOD (OR THE ALTERNATIVE METHOD OF CONTRACTING ONLY FOR THE FIRST YEAR'S INSTALLMENT), WE BELIEVE THERE IS AMPLE REASON TO ANTICIPATE THAT MORE FAVORABLE PRICES SHOULD BE OFFERED ON THIS BASIS. THIS APPEARS TO BE BORNE OUT BY THE STATEMENT IN BENDIX'S ORIGINAL LETTER OF PROTEST DATED AUGUST 5, 1964, TO THE EFFECT THAT ITS BID WOULD HAVE BEEN COMPETITIVE IF IT HAD KNOWN THAT THE ARMY INTENDED TO PROCURE THE FULL QUANTITY.

WHILE WE HAVE NEVER COUNTENANCED THE REJECTION OF BIDS MERELY FOR THE PURPOSE OF AFFORDING ONE OR MORE BIDDERS AN OPPORTUNITY TO BETTER THE PRICES OF THEIR COMPETITORS (SEE 36 COMP. GEN. 364), WE HAVE CONSISTENTLY MAINTAINED THAT THE PUBLIC INTEREST IS FOR PRIMARY CONSIDERATION IN AWARDING CONTRACT--- A PRINCIPLE EXPRESSLY EMBODIED IN 10 U.S.C. 2305/C) WHICH AUTHORIZED REJECTION OF ALL BIDS UPON DETERMINATION THAT SUCH ACTION IS IN THE PUBLIC INTEREST. WE HAVE THUS RECOGNIZED THE PROPRIETY OF SUCH ACTION IN NUMEROUS INSTANCES, INCLUDING THOSE IN WHICH IT IS DESIRED TO PROCURE UNDER DIFFERENT TERMS THAN THOSE ON WHICH BIDS WERE ORIGINALLY SOLICITED. SEE 37 COMP. GEN. 12; ID. 760; 40 COMP. GEN. 352.

IN THE PRESENT SITUATION, WE BELIEVE THAT CANCELLATION OF THE PRIOR INVITATION FOR BIDS AND READVERTISING ON THE BASIS OF A SINGLE CONTRACT FOR THE ENTIRE QUANTITY WOULD DEFINITELY BE IN THE INTEREST OF THE GOVERNMENT, WITHOUT REGARD TO THE ACCEPTABILITY OF THE BENDIX BID EITHER AS ORIGINAL SUBMITTED OR AS PROPOSED TO BE MODIFIED BY THE PRICE REDUCTION OFFER, AND THAT AN AWARD UNDER THE ORIGINAL INVITATION WITHOUT REFERENCE TO THE CHANGED CONDITIONS WOULD BE IMPROPER.

WE THEREFORE CONCUR IN THE ADMINISTRATIVE RECOMMENDATION THAT THE PROCUREMENT BE READVERTISED ON THE BASIS OF THE CHANGED CONDITIONS.

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