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B-190605, JUN 12, 1978

B-190605 Jun 12, 1978
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DIGEST: FACT THAT THREE ELIGIBLE BIDS WERE SUBSTANTIALLY HIGHER THAN GOVERNMENT ESTIMATE. DOES NOT ALONE ESTABLISH THAT ESTIMATE WAS UNREASONABLY LOW. REJECTION OF BIDS AND CANCELLATION OF IFB WERE NOT ABUSE OF DISCRETION OR WITHOUT COMPELLING REASON. WHICH WAS FOR THE RENOVATION OF ELEVATORS IN BUILDING 2 OF GPO'S CENTRAL OFFICE. FREE STATE'S WAS LOW AT $248. 091 WAS SECOND LOW. THE REMAINING TWO BIDS RECEIVED WERE $465. THE GOVERNMENT ESTIMATE FOR THE WORK WAS $246. SINCE FREE STATE'S BID WAS APPROXIMATELY 59 PERCENT OF THE NEXT LOW BID. FREE STATE WAS PERMITTED TO WITHDRAW ITS BID PURSUANT TO FEDERAL PROCUREMENT REGULATIONS (FPR) SEC. 1-2.406-3 (1964 ED. FPR SEC. 1-2.404 1(A) PROVIDES THAT AFTER BIDS HAVE BEEN OPENED AWARD MUST BE MADE TO THE LOW RESPONSIVE.

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B-190605, JUN 12, 1978

DIGEST: FACT THAT THREE ELIGIBLE BIDS WERE SUBSTANTIALLY HIGHER THAN GOVERNMENT ESTIMATE, WITH LOW BID EXCEEDING ESTIMATE BY 70 PERCENT, DOES NOT ALONE ESTABLISH THAT ESTIMATE WAS UNREASONABLY LOW, BUT PUTS AGENCY ON NOTICE THAT ESTIMATE SHOULD BE REVIEWED. SUCH REVIEW RESULTED IN ONLY MINOR UPWARD REVISION OF ESTIMATE. UNDER CIRCUMSTANCES, REJECTION OF BIDS AND CANCELLATION OF IFB WERE NOT ABUSE OF DISCRETION OR WITHOUT COMPELLING REASON.

GENERAL ELEVATOR COMPANY, INC.:

IN GENERAL ELEVATOR COMPANY, INC., 57 COMP.GEN. 257 (1978), 78-1 CPD 81, WE CONSIDERED A PROTEST BY GENERAL ELEVATOR COMPANY, INC. (GENERAL), AGAINST THE DECISION BY THE GOVERNMENT PRINTING OFFICE (GPO), TO PERMIT FREE STATE BUILDERS, INC. (FREE STATE), TO CORRECT A MISTAKE IN ITS BID UNDER INVITATION FOR BIDS (IFB) NO. 14120.

OF THE FOUR BIDS RECEIVED IN RESPONSE TO THE IFB, WHICH WAS FOR THE RENOVATION OF ELEVATORS IN BUILDING 2 OF GPO'S CENTRAL OFFICE, FREE STATE'S WAS LOW AT $248,608. GENERAL'S BID OF $421,091 WAS SECOND LOW, AND THE REMAINING TWO BIDS RECEIVED WERE $465,236 AND $558,276. THE GOVERNMENT ESTIMATE FOR THE WORK WAS $246,000.

SINCE FREE STATE'S BID WAS APPROXIMATELY 59 PERCENT OF THE NEXT LOW BID, GPO REQUESTED VERIFICATION. FREE STATE THEREUPON ALLEGED THAT IT MISTAKENLY FAILED TO INCLUDE IN ITS BID PRICES FOR CERTAIN WORK REQUIRED BY THE IFB, AND REQUESTED CORRECTION TO INCREASE ITS BID BY $16,402, AN AMOUNT FOR THE OMITTED WORK CALCULATED AFTER BID OPENING.

WE SUSTAINED GENERAL'S PROTEST AGAINST GPO'S APPROVAL OF THE BID CORRECTION. WE STATED THAT THE RULE ALLOWING BID CORRECTION UPON THE ESTABLISHMENT OF MISTAKE AND THE INTENDED BID DOES NOT EXTEND TO A SITUATION WHERE A BIDDER DISCOVERS OMITTED FACTORS AFTER BID OPENING AND THEN RECALCULATES ITS BID TO INCLUDE SUCH FACTORS.

SUBSEQUENT TO OUR DECISION, FREE STATE WAS PERMITTED TO WITHDRAW ITS BID PURSUANT TO FEDERAL PROCUREMENT REGULATIONS (FPR) SEC. 1-2.406-3 (1964 ED. CIRC. 1). THE CONTRACTING OFFICER THEN REVIEWED THE REMAINING BIDS AND DETERMINED THE NEXT LOW BID, GENERAL'S, UNREASONABLE IN PRICE, SINCE IT EXCEEDED THE GOVERNMENT ESTIMATE OF $246,000 BY MORE THAN 70 PERCENT, AS WELL AS FREE STATE'S CORRECTED BID BY 59 PERCENT. ON THAT BASIS, THE CONTRACTING OFFICER CANCELED THE IFB PURSUANT TO FPR SEC. 1-2.404-1(A) AND (B)(5) (1964 ED. AMEND. 121). FPR SEC. 1-2.404 1(A) PROVIDES THAT AFTER BIDS HAVE BEEN OPENED AWARD MUST BE MADE TO THE LOW RESPONSIVE, RESPONSIBLE BIDDER UNLESS THERE IS A "COMPELLING REASON" TO REJECT ALL BIDS AND CANCEL THE INVITATION. UNDER FPR SEC. 1 2.404-1(B)(5), AN IFB MAY BE CANCELED IF PRICES OF ALL OTHERWISE ACCEPTABLE BIDS ARE UNREASONABLE.

GENERAL HAS PROTESTED THE CANCELLATION, ALLEGING THAT ITS BID OF $421,091 WAS IN FACT A REASONABLE PRICE. TO SUPPORT ITS POSITION, GENERAL POINTS OUT THAT BEFORE FREE STATE WITHDREW ITS BID GPO NEVER QUESTIONED THE REASONABLENESS OF GENERAL'S BID, AND IN FACT DURING THE COURSE OF GENERAL'S EARLIER PROTEST GPO REQUESTED GENERAL AND THE OTHER BIDDERS TO EXTEND THEIR BIDS, WHICH GENERAL ALLEGES IMPLIES THE BIDS WERE CONSIDERED AT THAT TIME TO BE REASONABLE. IN ADDITION, GENERAL CONTENDS THAT THE FACT THAT THE THREE REMAINING BIDS ARE FAIRLY CLOSE INDICATES THAT THEY ACCURATELY REFLECT THE COST OF THE WORK REQUIRED UNDER THE IFB. FINALLY, GENERAL POINTS OUT THAT IN RESPONSE TO A READVERTISEMENT BY GPO FOR THE ELEVATOR RENOVATION, WITH MINOR CHANGES REDUCING THE AMOUNT OF WORK NECESSARY, ONLY ONE BID HAS BEEN RECEIVED, AND IT IS IN THE AMOUNT OF $487,128, OR $66,037 MORE THAN GENERAL'S BID UNDER THE CANCELED IFB.

IN VIEW OF FPR SEC. 1-2-404-1(A) AND (B)(5), THE PRINCIPAL ISSUE BEFORE OUR OFFICE IS WHETHER THE CONTRACTING OFFICER'S DETERMINATION THAT GENERAL'S PRICE WAS UNREASONABLE, AND THAT CANCELLATION OF THE IFB PURSUANT TO THE CITED REGULATIONS WAS PROPER, SHOULD BE DISTURBED. CONTRACTING OFFICERS HAVE BROAD POWERS OF DISCRETION IN DECIDING WHETHER A SOLICITATION SHOULD BE CANCELED, AND OUR OFFICE WILL NOT INTERFERE WITH SUCH DETERMINATION ABSENT A LACK OF REASONABLENESS. HERCULES DEMOLITION CORPORATION, B-186411, AUGUST 18, 1976, 76-2 CPD 173; SUPPORT CONTRACTORS, INC., B-181607, MARCH 18, 1975, 75-1 CPD 160; 39 COMP.GEN. 396 (1959).

WE DO NOT CONSIDER GPO'S EARLIER FAILURE TO QUESTION GENERAL'S BID OR ITS REQUEST FOR BID EXTENSIONS RELEVANT TO THE ISSUE OF THE REASONABLENESS OF GENERAL'S BID, SINCE UNTIL FREE STATE WITHDREW ITS BID AS A RESULT OF OUR JANUARY 31 DECISION, GPO NEVER HAD REASON TO CONSIDER WHETHER ANY OTHER BID WAS ACCEPTABLE.

CONCERNING THE EFFECT OF THE REMAINING BIDS, WHICH WERE SUBSTANTIALLY HIGHER THAN THE GOVERNMENT ESTIMATE, WE HAVE HELD IN SIMILAR CASES THAT SUCH A FACT ALONE IS INSUFFICIENT EVIDENCE TO ESTABLISH THE REASONABLENESS OF THE BIDDERS' PRICES AND THE UNREASONABLENESS OF THE GOVERNMENT ESTIMATE. W.G. CONSTRUCTION CORPORATION, B-188837, AUGUST 9, 1977, 77-2 CPD 100; C.J. COAKLEY COMPANY, INC., B-181057, JULY 23, 1974, 74-2 CPD 51. TO RULE OTHERWISE WOULD PERMIT A GOVERNMENT ESTIMATE TO BE NEGATED ANY TIME A BIDDER'S PRICE IS NOT IN LINE WITH THE ESTIMATE, MERELY BY EVOLVING A POSSIBLE HYPOTHESIS WHICH MIGHT EXPLAIN THE HIGHER BID. HOWEVER, WHEN SUCH CIRCUMSTANCES DO OCCUR THE CONTRACTING AGENCY SHOULD BE ON NOTICE OF A POSSIBLE ERROR IN ITS ESTIMATE AND SHOULD CAREFULLY REVIEW THE ESTIMATE.

WE BELIEVE THAT GPO FULFILLED ITS OBLIGATION IN THAT REGARD. THE RECORD DISCLOSES THAT THE ORIGINAL GOVERNMENT ESTIMATE OF $230,000 WAS PREPARED BY THE GPO ENGINEERING SERVICE IN OCTOBER 1976. AFTER BIDS WERE OPENED UNDER IFB NO. 14120 ON AUGUST 22, 1977, THE CONTRACTING OFFICER REQUESTED THAT THE ESTIMATE BE REVIEWED. AS A RESULT, ON OCTOBER 5 THE ESTIMATE WAS REVISED UPWARDS TO $246,000 TO REFLECT COST ESCALATION AT A RATE OF 10 PERCENT PER YEAR. THE ENGINEERING SERVICE ALSO INDICATED THAT EVEN THAT FIGURE MIGHT BE LOW, SINCE MOST OF THE WORK WOULD NOT BE DONE UNTIL 1978. IN THIS CONNECTION, WE NOTE THAT, USING GPO'S CALCULATIONS, THE ESTIMATED COST OF THE PROJECT WOULD HAVE RISEN TO APPROXIMATELY $260,000 BY THE TIME THE SOLICITATION WAS CANCELED. IN ANY EVENT, WE HAVE RECOGNIZED THE INEXACT NATURE OF A GOVERNMENT ESTIMATE. SEE W.G. CONSTRUCTION CORPORATION, SUPRA.

IN REGARD TO THE READVERTISEMENT, UNDER WHICH THE ONLY BID RECEIVED WAS $487,128, WE HAVE BEEN ADVISED BY GPO THAT, CONSISTENT WITH ITS DETERMINATION UNDER THE INITIAL IFB, THE BID IS BEING REJECTED AND THE SOLICITATION CANCELED.

IN VIEW OF THE DIFFERENCE BETWEEN THE GOVERNMENT ESTIMATE AND GENERAL'S BID, AND THE REVIEW AND REVISION OF THE ESTIMATE BY GPO, WE ARE UNABLE TO CONCLUDE THAT THE CONTRACTING OFFICER'S DETERMINATION THAT GENERAL'S BID WAS EXCESSIVE AND THE IFB SHOULD BE CANCELED WAS AN ABUSE OF HIS BROAD DISCRETION OR WITHOUT A COGENT AND COMPELLING REASON. C.J. COAKLEY COMPANY, INC., SUPRA. IN THIS CONNECTION, WE HAVE UPHELD THE REJECTION OF BIDS WHERE THE LOWEST ELIGIBLE BID EXCEEDED THE GOVERNMENT ESTIMATE BY AS LITTLE AS 7.2 PERCENT. SEE BUILDING MAINTENANCE SPECIALISTS, INC., B-186441, SEPTEMBER 10, 1976, 76-2 CPD 233.

THE PROTEST IS DENIED.

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