B-223527.4, MAY 21, 1987, OFFICE OF GENERAL COUNSEL
Highlights
THE EXERCISE OF SUCH JUDGMENT IS NOT SUBJECT TO LEGAL OBJECTION UNLESS IT IS CLEARLY UNREASONABLE OR THERE IS A SHOWING OF BAD FAITH OR FRAUD. LATTA: THIS IS IN RESPONSE TO YOUR LETTER OF MARCH 19. THE SOLICITATION WAS ISSUED BY THE DEPARTMENT OF THE ARMY. GENERAL CUTLERY POINTS OUT THAT ITS PROPOSAL WAS REJECTED BECAUSE IT INCLUDED ONLY ONE SAMPLE OF ITS PROPOSED BAYONET SYSTEM. THE EXERCISE OF SUCH JUDGMENT IS NOT SUBJECT TO LEGAL OBJECTION UNLESS IT IS CLEARLY UNREASONABLE OR THERE IS A SHOWING OF BAD FAITH OR FRAUD. WE HAVE PREVIOUSLY CONSIDERED THE QUESTION OF THE CONTRACTING OFFICER'S EVALUATION OF PHROBIS' PROPOSED PRICE. HOPE THIS WILL BE HELPFUL TO YOU.
B-223527.4, MAY 21, 1987, OFFICE OF GENERAL COUNSEL
PROCUREMENT - COMPETITIVE NEGOTIATION - PRICE REASONABLENESS DIGEST: THE DETERMINATION OF PRICE REASONABLENESS INVOLVES THE EXERCISE OF BUSINESS JUDGMENT BY THE CONTRACTING OFFICER; THE EXERCISE OF SUCH JUDGMENT IS NOT SUBJECT TO LEGAL OBJECTION UNLESS IT IS CLEARLY UNREASONABLE OR THERE IS A SHOWING OF BAD FAITH OR FRAUD.
THE HONORABLE DELBERT L. LATTA:
THIS IS IN RESPONSE TO YOUR LETTER OF MARCH 19, 1987, ON BEHALF OF GENERAL CUTLERY, AN UNSUCCESSFUL OFFEROR UNDER REQUEST FOR PROPOSALS NO. DAAA21-86-R-0155. THE SOLICITATION WAS ISSUED BY THE DEPARTMENT OF THE ARMY, ARMAMENT, MUNITIONS AND CHEMICAL COMMAND, FOR THE PROCUREMENT OF A MULTIPURPOSE BAYONET SYSTEM. ON OCTOBER 6, 1986, THE AGENCY AWARDED A CONTRACT FOR 315,600 BAYONETS TO PHROBIS III LTD. AT A TOTAL PRICE OF $15,640,820.
GENERAL CUTLERY POINTS OUT THAT ITS PROPOSAL WAS REJECTED BECAUSE IT INCLUDED ONLY ONE SAMPLE OF ITS PROPOSED BAYONET SYSTEM. WE NOTE IN THIS REGARD THAT THE ARMY, BASED UPON A PRIOR MARKET SURVEY WHICH INDICATED THAT THE ARMY'S NEEDS COULD BE MET BY SUPPLIERS WITH COMMERCIALLY AVAILABLE ITEMS, SOLICITED PROPOSALS ON A NON DEVELOPMENTAL OR "OFF-THE- SHELF" BASIS. THE SOLICITATION REQUIRED OFFERORS TO PROVIDE WITH THEIR OFFERS 55 SAMPLES OF THE PROPOSED BAYONET SYSTEMS FOR FIELD TESTING BY POTENTIAL USERS. SINCE GENERAL CUTLERY NEITHER PROTESTED THE REQUIREMENT FOR SAMPLES NOR COMPLIED WITH THE REQUIREMENT, WE FIND NOTHING IMPROPER IN THE REJECTION OF ITS PROPOSAL.
GENERAL CUTLERY PRIMARILY QUESTIONS THE REASONABLENESS OF THE CONTRACT PRICE OF $49.56 PER UNIT, ALLEGING THAT THE COST OF THE PROPOSED BAYONET SYSTEM SHOULD NOT EXCEED $25 PER UNIT.
THE CONTRACTING OFFICER FOUND PHROBIS' PROPOSED PRICE TO BE FAIR AND REASONABLE, BASED ON A DETAILED PRICE/COST ANALYSIS OF PHROBIS' PROPOSAL. THE THREE BAYONET SYSTEMS RECEIVING THE HIGHEST OVERALL USER PREFERENCE RATINGS DURING THE FIELD TESTS COST SUBSTANTIALLY MORE THAN $25, WITH BEST AND FINAL PRICES RANGING FROM $39.85 TO $49.56.
A DETERMINATION CONCERNING PRICE REASONABLENESS INVOLVES THE EXERCISE OF BUSINESS JUDGMENT BY THE CONTRACTING OFFICER. THE EXERCISE OF SUCH JUDGMENT IS NOT SUBJECT TO LEGAL OBJECTION UNLESS IT IS CLEARLY UNREASONABLE OR THERE IS A SHOWING OF BAD FAITH OR FRAUD. SEE ALAN SCOTT INDUSTRIES ET AL., B-212703.2 ET AL., SEPT. 25, 1984, 84-2 CPD PARA. 349. WE HAVE PREVIOUSLY CONSIDERED THE QUESTION OF THE CONTRACTING OFFICER'S EVALUATION OF PHROBIS' PROPOSED PRICE, AS WELL AS OTHER ISSUES RELATING TO THE SELECTION OF THAT FIRM, AND WE FOUND NO BASIS TO OBJECT TO THE AWARD. IMPERIAL SCHRADE CORP., B-223527.2, MAR. 6, 1987, 87-1 CPD PARA. ***.
WE ENCLOSE A COPY OF OUR DECISION ON THE SCHRADE PROTEST THAT DISCUSSES THIS AND OTHER ASPECTS OF THE PROCUREMENT THAT GENERAL CUTLERY HAS HIGHLIGHTED IN THE NEWSPAPER ARTICLES ATTACHED TO ITS LETTER TO YOU. HOPE THIS WILL BE HELPFUL TO YOU.