B-158459, APR. 14, 1966

B-158459, APR. 14, 1966

TO DIRECTOR, DEFENSE SUPPLY AGENCY:

ENCLOSED IS A COPY OF OUR DECISION OF TODAY TO INDUSTRIAL ENGINEERING AND EQUIPMENT CO. (INDUSTRIAL), DENYING ITS PROTEST AGAINST REJECTION OF ITS BID AND AWARD TO VULCAN ELECTRIC COMPANY (VULCAN) UNDER INVITATION FOR BIDS NO. DSA-700-66-2913, ISSUED FEBRUARY 2, 1966, BY THE DEFENSE CONSTRUCTION SUPPLY CENTER, COLUMBUS, OHIO.

CONCERNING THE CONTRACTING OFFICER'S DETERMINATION THAT THE UNIT PRICES RANGING FROM $72.02 TO $73.40 QUOTED BY VULCAN, THE SECOND LOW BIDDER, ARE FAIR AND REASONABLE, WE HAVE TAKEN NOTE OF THE BASES FOR SUCH DETERMINATION--- (1) THAT VULCAN'S PRICES COMPARE FAVORABLY WITH PRICES QUOTED IN THE PAST IN SIMILAR COMPETITIVE PROCUREMENTS OF THE SAME ITEM; (2) THAT INDUSTRIAL'S BID PRICE OF $49.20 PER UNIT MAY BE THE RESULT OF A MISTAKE IN BID; AND (3) THAT THERE IS NO ASSURANCE THE UNIT PRICE OF $49.20 QUOTED BY INDUSTRIAL, A FIRM WITH WHOM THE CONTRACTING OFFICER HAS HAD NO PRIOR EXPERIENCE, IS A VALID PRICE FROM A RESPONSIBLE BIDDER, AND SUCH PRICE THEREFORE IS NOT CONSIDERED A SUFFICIENT INDICATION THAT VULCAN'S PRICES ARE UNREASONABLE OR THAT LOWER PRICES COULD BE ANTICIPATED UNDER A READVERTISEMENT. IT IS OUR VIEW, HOWEVER, THAT THE DIFFERENTIAL OF MORE THAN 46 PERCENT BETWEEN VULCAN'S PRICE AND INDUSTRIAL'S PRICE RAISES A SERIOUS QUESTION WHETHER VULCAN'S PRICE IS NOT EXCESSIVE. FURTHER IT IS OUR BELIEF THAT INDUSTRIAL'S PROTEST AGAINST REJECTION OF ITS BID, WITH KNOWLEDGE OF THE HIGHER BID PRICES RECEIVED, PRECLUDES THE ASSUMPTION OF A MISTAKE IN ITS BID PRICE. THE ONLY REMAINING QUESTION IS WHETHER INDUSTRIAL CAN BE CONSIDERED A RESPONSIBLE BIDDER. IN VIEW OF THE BASIS FOR REJECTION OF INDUSTRIAL'S BID, IT IS OUR OPINION THAT A REASONABLE EFFORT SHOULD BE MADE TO DECIDE THE QUESTION OF INDUSTRIAL'S RESPONSIBILITY BEFORE A DETERMINATION IS MADE THAT A PRICE 46 PERCENT HIGHER IS REASONABLE. FURTHER, IN THE EVENT YOUR AGENCY IS UNABLE TO CONCLUDE THAT INDUSTRIAL COULD NOT REASONABLY BE EXPECTED TO PERFORM THE CONTRACT AT ITS BID PRICE, IT IS OUR OPINION THAT INDUSTRIAL'S BID OF $49.20 SHOULD BE A CONSIDERED FACTOR IN DETERMINING THE REASONABLENESS OF VULCAN'S BID PRICE. SEE 16 COMP. GEN. 986.

THE MATTER WAS THE SUBJECT OF REPORTS DATED MARCH 28 AND APRIL 4, 1966, FROM YOUR ASSISTANT COUNSEL. THE FILE FORWARDED WITH THE REPORT OF MARCH 28 IS RETURNED.