B-144218, DEC. 22, 1960

B-144218, DEC. 22, 1960

TO ALLIS-CHALMERS MANUFACTURING COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 18, 1960, AND TELEGRAM OF OCTOBER 24, 1960, CONCERNING YOUR PROTEST AGAINST THE REJECTION OF ALL BIDS UNDER INVITATION NO. ENG-36-109-61-1, DATED AUGUST 26, 1960, AS AMENDED ON SEPTEMBER 9, 1960, COVERING A PROPOSED PROCUREMENT BY THE DEPARTMENT OF THE ARMY OF ONE HUNDRED AND SIXTEEN 150-KW. GENERATOR SETS AND RELATED SERVICES, MAINTENANCE LISTS, ETC.

AFTER OPENING OF BIDS, IT WAS DETERMINED THAT ALL BIDS SHOULD BE REJECTED AND THAT THERE SHOULD BE A READVERTISEMENT ON THE PROPOSED PROCUREMENT. THE NEW INVITATION ADOPTED MOST OF THE REQUIREMENTS OF THE ORIGINAL INVITATION. AMONG THE CHANGES WHICH WERE MADE, THE NEW INVITATION PROVIDED FOR THE DELETION OF THAT PART OF AMENDMENT NO. 1 TO THE ORIGINAL INVITATION WHICH STATED THAT BIDS WOULD BE EVALUATED ON THE BASIS OF ITEMS NOS. 1-1 THROUGH 1-39 AND ITEM NO. 2. IN ITS PLACE, THE NEW INVITATION SUBSTITUTED A PROVISION THAT BIDS WOULD BE EVALUATED ON THE BASIS OF THE OVER-ALL LOW BID FOR ALL ITEMS. 1 THROUGH 6.

FIVE BIDS WERE RECEIVED IN RESPONSE TO THE NEW INVITATION AND THE SECRETARY OF THE ARMY APPROVED AN AWARD TO THE WAUKESHA MOTOR COMPANY, WAUKESHA, WISCONSIN, THE TOTAL BID PRICE OF THAT COMPANY WAS $1,564,643, AS COMPARED WITH YOUR PREVIOUS OVER-ALL PRICE OF $1,743,994.37 AND YOUR SECOND BID WHICH QUOTED PRICES AGGREGATING THE AMOUNT OF $1,680,553.92.

YOU WERE NOT THE LOW BIDDER UNDER THE ORIGINAL INVITATION FOR ITEMS NOS. 1 AND 2, BUT YOUR TOTAL PRICE OF $1,743,994.37 ON ALL SIX ITEMS WAS APPROXIMATELY $3,000 LESS THAN THAT OF CATERPILLAR TRACTOR COMPANY, WHICH FIRM WAS THE LOW BIDDER ON ITEMS NOS. 1 AND 2. THAT COMPANY CONTENDED THAT IT WAS ENTITLED TO THE AWARD ON THE BASIS OF THE METHOD PRESCRIBED IN AMENDMENT NO. 1 TO THE ORIGINAL INVITATION FOR EVALUATING BIDS.

IN YOUR LETTER OF OCTOBER 18, 1960, IT WAS STATED AS YOUR INTERPRETATION OF THE INVITATION THAT THE AWARD OF CONTRACT WOULD BE MADE IN ACCORDANCE WITH PARAGRAPH 8 (A) OF THE TERMS AND CONDITIONS AS OUTLINED ON STANDARD FORMS 30 AND 33, WHICH PARAGRAPH PROVIDES, IN PART, THAT "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.'

REFERENCE WAS MADE TO VARIOUS PARTS OF THE INVITATION IN AN EFFORT TO SHOW THAT THE SUCCESSFUL BIDDER WOULD BE REQUIRED TO FURNISH ALL SIX ITEMS AND IT IS OUR VIEW THAT THERE COULD BE NO REASONABLE DISPUTE ON THAT POINT. YOU ALSO CONTENDED THAT NOWHERE IN THE INVITATION IS THERE A STATEMENT CONCERNING AN AWARD BEING MADE ON THE BASIS OF EVALUATION OF ITEMS NOS. 1-1 THROUGH 1-39 AND ITEM NO. 2 ONLY. WHILE IT IS TRUE THAT THE INVITATION DOES NOT SPECIFICALLY STATE THAT AWARD WILL BE MADE TO THE BIDDER DETERMINED TO BE LOW ON THE BASIS OF THE ITEMS SPECIFIED FOR EVALUATION, WE ARE OF THE OPINION THAT THE ONLY PURPOSE OF STATING THAT BIDS WOULD BE EVALUATED ON THE BASIS OF SUCH ITEMS WAS TO INFORM BIDDERS THAT ONLY THE PRICES QUOTED THEREON WOULD BE CONSIDERED IN DETERMINING WHICH BIDDER HAD SUBMITTED THE LOWEST RESPONSIVE BID FOR ALL OF THE SIX BASIC ITEMS OF THE INVITATION. IN THAT CONNECTION, WE CANNOT AGREE WITH THE SUGGESTION MADE IN YOUR TELEGRAM OF OCTOBER 24, 1960, THAT THE BID EVALUATION PROVISION WAS MEANT TO SHOW THAT THE SUCCESSFUL BIDDER MUST MEET THE SPECIFICATIONS OF THE END ITEMS. OBVIOUSLY, IF A BIDDER OFFERED EQUIPMENT NOT MEETING SPECIFICATIONS, IT WOULD NOT HAVE BEEN ENTITLED TO AN AWARD UNDER THE INVITATION AND A BID EVALUATION PROVISION MUST BE REGARDED AS RELATING ONLY TO BID PRICES.

THE PRESCRIBED METHOD FOR EVALUATION OF BIDS MIGHT HAVE BEEN CONSISTENT WITH THE PROVISIONS OF PARAGRAPH 8 (A) OF THE PRINTED TERMS AND CONDITIONS OF THE INVITATION, PROVIDED THAT THERE WAS A VALID REASON FOR EXCLUDING THE PRICES QUOTED ON ITEMS NOS. 3, 4, 5 AND 6 IN COMPARING BIDS. SINCE NO VALID REASONS HAVE BEEN SHOWN FOR EXCLUDING SUCH ITEMS IN DETERMINING THE LOW BIDDER WE CONSIDER THE PRESCRIBED METHOD TO HAVE BEEN LEGALLY OBJECTIONABLE ON THE BASIS THAT IT IS CONTRARY TO THE PRINCIPLE THAT FREE AND OPEN COMPETITION SHOULD BE SECURED ON ALL FORMALLY ADVERTISED GOVERNMENT PROCUREMENTS.

UNDER PARAGRAPH 8 OF THE TERMS AND CONDITIONS OF THE INVITATION THE GOVERNMENT EXPRESSLY RESERVED THE RIGHT TO REJECT ANY OR ALL BIDS RECEIVED UNDER THE INVITATION. IN ADDITION TO SUCH RESERVATION, IT CONSISTENTLY HAS BEEN HELD BY THE ACCOUNTING OFFICERS OF THE GOVERNMENT AND BY THE COURTS THAT THE QUESTION OF REJECTING ALL BIDS AND READVERTISING IS PRIMARILY A METTER OF ADMINISTRATIVE DISCRETION. ALSO, IT HAS BEEN HELD THAT A REQUEST FOR BIDS DOES NOT IMPORT ANY OBLIGATION TO ACCEPT ANY OF THE BIDS RECEIVED, INCLUDING THE LOWEST CORRECT BID. 17 COMP. GEN. 554, 26 ID. 49; PERKINS V. LUKENS STEEL CO., 310 U.S. 113; O-BRIEN V. CARNEY, 6 F.SUPP. 761; COLORADO PAVING CO. V. MURPHY, 78 F. 28.

SINCE THE DUTY OF MAKING A DETERMINATION TO REJECT ALL BIDS LIES WITH THE ADMINISTRATIVE OFFICERS OF THE PURCHASING AGENCY, IN THE ABSENCE OF CLEAR PROOF OF ABUSE OF THEIR DISCRETIONARY POWERS IN THAT REGARD, THIS OFFICE WILL NOT OBJECT TO SUCH ACTION PARTICULARLY WHERE, AS HERE, THE PURPOSE THEREOF IS TO CORRECT DEFICIENCIES IN THE INVITATION. OF COURSE, WE ARE FULLY AWARE THAT THE REJECTION OF BIDS AFTER THEY ARE OPENED AND EACH BIDDER HAS LEARNED HIS COMPETITOR'S PRICE IS A SERIOUS MATTER AND SHOULD NOT BE DONE EXCEPT FOR COGENT REASONS. HOWEVER, WE THINK THERE WAS A PROPER BASIS FOR THE ADMINISTRATIVE DETERMINATIONS THAT NO COMPETITION WAS SECURED FOR ITEMS NOS. 3, 4, 5 AND 6, AND OF THE INSUFFICIENCY OF THE ORIGINAL INVITATION AND, SUCH BEING THE CASE, WE WOULD NOT BE JUSTIFIED IN OBJECTING TO THE ADMINISTRATIVE ACTION TAKEN IN THIS CASE.