B-146213, JUL. 26, 1961

B-146213, JUL. 26, 1961

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO LETTER R11.1 OF JULY 5, 1961, FROM THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, REPORTING ON THE PROTEST OF REGIS MILK COMPANY AGAINST THE REJECTION OF BIDS UNDER IFB-191- 142-61 AND THE READVERTISEMENT UNDER IFB-191-153 61.

THE ORIGINAL INVITATION WAS DIVIDED INTO TWO LOTS. EACH LOT WAS BROKEN DOWN INTO TWO ITEMS SO THAT LOT I INCLUDED ITEMS 1 AND 2 AND LOT II INCLUDED ITEMS 3 AND 4. THE TERM "ITEMS" WAS USED TO DISTINGUISH DELIVERY DESTINATIONS. UNDER EACH ITEM THERE WERE GROUPED VARIOUS NUMBERS OF SUBITEMS, THIRTY-THREE IN ALL, WHICH DESCRIBED THE DAIRY PRODUCTS TO BE PROCURED.

AS TO THE METHOD OF AWARD, THE INVITATION SPECIFIED:

"AWARD BY LOT:

SUBJECT TO THE PROVISIONS OF PARAGRAPH EIGHT OF THE TERMS AND CONDITIONS OF THE INVITATION FOR BIDS, AWARD WILL GENERALLY BE MADE TO A SINGLE BIDDER ON EACH ENTIRE LOT. HOWEVER, THE GOVERNMENT RESERVES THE RIGHT TO AWARD BY ITEM WHEN THE CONTRACTING OFFICER DETERMINES THAT IS ADVANTAGEOUS TO THE GOVERNMENT. AWARD WILL NOT BE MADE BY SUBITEM.'

PARAGRAPH EIGHT OF THE TERMS AND CONDITIONS OF THE INVITATION FOR BIDS STATED:

"AWARD OF CONTRACT.--- (A) THE CONTRACT WILL BE AWARDED TO THAT RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED.

"/B) THE GOVERNMENT RESERVES THE RIGHT TO REJECT ANY OR ALL BIDS AND TO WAIVE INFORMALITIES AND MINOR IRREGULARITIES IN BIDS RECEIVED.

"/C) THE GOVERNMENT MAY ACCEPT ANY ITEM OR GROUP OF ITEMS OF ANY BID, UNLESS THE BIDDER QUALIFIES HIS BID BY SPECIFIC LIMITATIONS. UNLESS OTHERWISE PROVIDED IN THE SCHEDULE, BIDS MAY BE SUBMITTED FOR ANY QUANTITIES LESS THAN THOSE SPECIFIED; AND THE GOVERNMENT RESERVES THE RIGHT TO MAKE AN AWARD ON ANY ITEM FOR A QUANTITY LESS THAN THE QUANTITY BID UPON AT THE UNIT PRICES OFFERED UNLESS THE BIDDER SPECIFIES OTHERWISE IN HIS BID.

"/D) A WRITTEN AWARD MAILED (OR OTHERWISE FURNISHED) TO THE SUCCESSFUL BIDDER WITHIN THE TIME FOR ACCEPTANCE SPECIFIED IN THE BID SHALL BE DEEMED TO RESULT IN A BINDING CONTRACT WITHOUT FURTHER ACTION BY EITHER PARTY.'

THE QUOTED TERMS ARE CONSIDERED TO PERMIT "ALL OR NONE" BIDS. 35 COMP. GEN. 383. THEREFORE, THE INVITATION IN THIS CASE CAN BE CONSTRUED AS AUTHORIZING AWARD ON AN ITEM, ON A LOT OR ON AN ,ALL OR NONE" BASIS DEPENDING UPON WHICH IS IN THE BEST INTERESTS OF THE GOVERNMENT.

FOUR BIDS WERE RECEIVED UNDER THE INVITATION. EACH WAS AN "ALL OR NONE" BID. COBURG DAIRY BID ON ITEM 1. FOREMOST DAIRIES BID ON ITEMS 1 AND 2. BENTON DAIRY BID ON ITEMS 1, 2 AND 3. REGIS MILK COMPANY BID ON ITEMS 1 THROUGH 4.

FOREMOST'S TOTAL BID OF $292,678.80 ON ITEMS 1 AND 2 WAS $6,212.13 LESS THAN REGIS' BID OF $298,890.93 FOR THOSE TWO ITEMS. REGIS' OVERALL BID OF $694.227.45 WAS LOWER THAN BENTON'S BID OF $709,065.02 FOR ONLY THREE ITEMS OF THE PROCUREMENT.

THE CONTRACTING OFFICER DETERMINED THAT THE CIRCUMSTANCES WARRANTED CANCELLATION OF THE INVITATION. THE DETERMINATION WAS AS FOLLOWS:

"IN EVALUATING THE BIDS RECEIVED, THE CONTRACTING OFFICER WAS CONSIDERING AWARDING TO REGIS IN THE AGGREGATE AS IN THE BEST INTEREST OF THE GOVERNMENT SINCE IT WAS REASONABLE TO ASSUME THAT IF WE READVERTISED FOR LOT II ONLY, REGIS'S PRICE WOULD INCREASE MORE THAN THE $6,212.13 WHICH SEPARATED HIM FROM THE LOW BIDDER ON LOT I, AND THE ONLY OTHER BIDDER WAS OVER $28,000 HIGHER FOR ITEM 3. HOWEVER, WHEN FOREMOST DAIRIES RAISED A QUESTION AS TO THE PROPRIETY OF THIS IN VIEW OF THE LANGUAGE SET FORTH IN THE "AWARD BY LOT" CLAUSE, THE CONTRACTING OFFICER SOUGHT THE ADVICE OF COUNSEL. AFTER DUE CONSIDERATION COUNSEL ADVISED THAT THE ONLY BASIS FOR AWARD TO REGIS IN THE AGGREGATE WOULD BE IF IT WAS CLEARLY IN THE BEST INTEREST OF THE GOVERNMENT AND IN VIEW OF THE $6200 DIFFERENCE IN LOT I, COUNSEL DID NOT FEEL THIS COULD BE CLEARLY ESTABLISHED. THE CONTRACTING OFFICER HAS ONLY TWO ALTERNATIVES. AWARD MAY BE MADE ON LOT I, AND LOT II MUST THEN BE READVERTISED; OR THE ENTIRE INVITATION MAY BE CANCELLED AND READVERTISED.

"IT IS REGRETTED THAT THE INTERESTED BIDDERS HAVE HAD TO EXPOSE THEIR PRICES AND POSITIONS, HOWEVER, THE RESULT OF THE INVITATION FOR BIDS NECESSITATES READVERTISEMENT AND, BECAUSE OF THE NATURE OF THE PROCUREMENT, THE CONTRACTING OFFICER HAS DETERMINED IT WOULD BE TO THE BEST INTERESTS OF THE GOVERNMENT AND FAIRER TO ALL PARTIES CONCERNED TO CANCEL THE ENTIRE INVITATION AND READVERTISE ON AN AGGREGATE BASIS ONLY. THIS DETERMINATION IS MADE IN ACCORDANCE WITH ASPR 2-404.1.'

ASPR 2-404.1 PROVIDES:

"THE PRESERVATION OF THE INTEGRITY OF THE COMPETITIVE BID SYSTEM DICTATES THAT AFTER BIDS HAVE BEEN OPENED, AWARD MUST BE MADE TO THAT RESPONSIBLE BIDDER WHO SUBMITTED THE LOWEST RESPONSIVE BID, UNLESS THERE IS A COMPELLING REASON TO REJECT ALL BIDS AND CANCEL THE INVITATION.'

THIS IS CONSISTENT WITH MASSMAN CONSTRUCTION COMPANY V. UNITED STATES, 102 CT.CL. 699, 719, WHEREIN IT WAS STATED:

"TO HAVE A SET OF BIDS DISCARDED AFTER THEY ARE OPENED AND EACH BIDDER HAS LEARNED HIS COMPETITOR'S PRICE IS A SERIOUS MATTER, AND IT SHOULD NOT BE PERMITTED EXCEPT FOR COGENT REASONS.'

OUR OFFICE HAS RECOGNIZED THAT THE ADMINISTRATIVE AUTHORITY TO REJECT ANY OR ALL BIDS AND TO READVERTISE IS EXTREMELY BROAD AND ORDINARILY WE WILL NOT QUESTION SUCH ACTION. HOWEVER, IN CIRCUMSTANCES IN WHICH NO COGENT OR COMPELLING REASON EXISTED FOR REJECTING ALL BIDS WE HAVE HELD SUCH REJECTION TO BE IMPROPER AND HAVE DIRECTED CANCELLATION OF AWARDS MADE AFTER READVERTISING. 39 COMP. GEN. 396 AND 36 ID. 62.

THE BASIS FOR THE CONTRACTING OFFICER'S CANCELLATION AND READVERTISEMENT WAS THAT IT COULD NOT BE ESTABLISHED CLEARLY THAT AN AWARD TO REGIS WOULD BE IN THE BEST INTERESTS OF THE GOVERNMENT IN VIEW OF FOREMOST'S OFFER SOME $6,200 LOWER ON THE FIRST TWO ITEMS. HOWEVER, WHILE FOREMOST OFFERED THOSE TWO ITEMS AT A LOWER COST, THERE WERE NO UNQUALIFIED BIDS ON ITEMS 3 AND 4 THAT COULD HAVE BEEN COMBINED WITH THE BID OF FOREMOST ON ITEMS 1 AND 2 TO RESULT IN A COMBINATION OF PRICES THAT WOULD HAVE BEEN LESS THAN THE OVER-ALL PRICE QUOTED BY REGIS. THE ONLY BIDDER THAT OFFERED TO FURNISH THE GOVERNMENT EVERYTHING IT DESIRED TO OBTAIN IN THE PROCUREMENT WAS REGIS. WHILE A PARTIAL AWARD ON ITEMS 1 AND 2 COULD HAVE BEEN MADE TO FOREMOST AT A LOWER UNIT COST, THE OBVIOUS PURPOSE OF THE INVITATION WAS TO CONSUMMATE AN AWARD OR AWARDS FOR THE ENTIRE PROCUREMENT. SINCE REGIS WAS THE ONLY BIDDER PERMITTING THAT RESULT TO BE ACCOMPLISHED, THE CONTRACTING OFFICER ONLY HAD TO SATISFY HIMSELF THAT THE PRICES QUOTED BY REGIS WERE REASONABLE. REGIS HAS STATED THAT THE UNIT PRICES IT QUOTED WERE CONSIDERABLY BELOW THE PRICES PAID ON THE PREVIOUS PROCUREMENT AND WERE IN LINE OR BELOW PRICES BEING PAID BY MILITARY INSTALLATIONS WITHIN THE STATE. APPARENTLY, THIS IS NOT DENIED BY THE PROCURING FACILITY. THEREFORE, SINCE REGIS WAS THE ONLY BIDDER CONFORMING TO ALL OF THE GOVERNMENT'S NEEDS, WE BELIEVE THAT THE CONTRACTING OFFICER HAD ONLY TO ASCERTAIN BY A COMPARISON WITH OTHER PROCUREMENTS WHETHER THE PRICES QUOTED BY IT WERE REASONABLE IN THE CIRCUMSTANCES.

ALSO, IT SEEMS THAT AT THE TIME IT WOULD HAVE BEEN FAIR TO ASSUME THAT SINCE NO OTHER BIDDER HAD OFFERED TO FURNISH ALL OF THE ITEMS ON WHICH PRICES WERE SOLICITED AND PARTICULARLY SINCE NO BIDDER QUOTED PRICES ON ITEMS 3 AND 4 ALONE, THAT BIDDERS DID NOT GENERALLY DESIRE TO MEET THOSE NEEDS. THIS FACT WOULD LEND SUPPORT TO THE VIEW THAT IT WAS IN THE GOVERNMENT'S INTEREST TO MAKE AN AWARD TO ANY BIDDER THAT WAS WILLING TO UNDERTAKE THE ENTIRE RESPONSIBILITY, SINCE IT MIGHT REASONABLY BE PRESUMED THAT IF BIDDERS WERE REQUIRED TO INCLUDE THESE ITEMS WITHIN THEIR BIDS THEY WOULD AUGMENT THEIR PRICES APPRECIABLY TO OFFSET THE UNDESIRABLE FEATURE IN THESE ITEMS. FURTHER, THE REASONABLENESS OF REGIS' BID WAS EVIDENT SINCE THE ONLY OTHER BIDDER, BENTON, WHOSE BID WAS CLOSELY IN LINE WITH REGIS' ON THE FIRST TWO ITEMS, QUOTED A PRICE ON ITEM 3 WHICH EXCEEDED THE BID OF REGIS FOR THAT ITEM BY MORE THAN $28,000 AND AN OVER- ALL PRICE THROUGH ITEM 3 THAT WAS MORE THAN REGIS' OVER-ALL BID WHICH INCLUDED ITEM 4.

IT CANNOT BE OVERLOOKED THAT THE RESULTING LOW BID SUBMITTED BY FOREMOST UNDER THE READVERTISEMENT, WHICH APPARENTLY WAS THE SAME IN ALL RESPECTS AS THE ORIGINAL INVITATION EXCEPT THAT IT MADE MANDATORY A BID ON THE ENTIRE PROCUREMENT--- THE METHOD THAT WAS PERMITTED AND WAS EMPLOYED BY REGIS IN THE ORIGINAL INVITATION--- WAS APPROXIMATELY $34,000 LESS THAN REGIS' BID UNDER THE FIRST INVITATION, BUT THIS REDUCTION IN PRICE IS A NORMAL CONSEQUENCE FOLLOWING A DISCLOSURE OF BIDS UNDER AN EARLIER INVITATION. WE HAVE GENERALLY OBJECTED TO PROCEDURES THAT PROVIDE BIDDERS A SECOND CHANCE TO CONSIDER THEIR BIDS AFTER THE COMPETITION HAS BEEN DISCLOSED AND HAVE FOLLOWED THE VIEW THAT THE RULES OF FAIR PLAY IN THE COMPETITIVE BIDDING SYSTEM ARE CONSIDERABLY MORE IN THE PUBLIC INTEREST THAN OBTAINING A PECUNIARY ADVANTAGE IN A PARTICULAR CASE.

IN THE CIRCUMSTANCES OF THIS CASE, WE MUST THEREFORE CONCLUDE THAT THE CONTRACTING OFFICER LACKED COGENT OR COMPELLING REASONS FOR THE CANCELLATION OF THE ORIGINAL INVITATION. ACCORDINGLY THE ORIGINAL INVITATION SHOULD BE REINSTATED AND THE AWARD MADE TO REGIS THEREUNDER.

AS REQUESTED, ENCLOSURES (2) AND (3) THAT ACCOMPANIED THE LETTER OF JULY 5, 1961, ARE RETURNED.