B-188912, JULY 29, 1977

B-188912, JULY 29, 1977

WHERE ONE BIDDER OBTAINS PRE-BID OPENING INFORMATION WHICH MIGHT HAVE GIVEN THAT BIDDER COMPETITIVE ADVANTAGE, AND WHERE USE OF AN ERRONEOUS QUANTITY ESTIMATE AND EVALUATION SCHEME CREATE DOUBT AS TO WHETHER ACCEPTANCE OF LOW BID WOULD ACTUALLY RESULT IN LOWEST OVERALL COST TO GOVERNMENT, COGENT REASON EXISTS TO REJECT ALL BIDS, CANCEL AND RESOLICIT.

PHOTO DATA, INC.:

PHOTO DATA, INC. PROTESTS THE DECISION BY THE GOVERNMENT PRINTING OFFICE (GPO) TO REJECT ALL BIDS RECEIVED IN RESPONSE TO A SOLICITATION DATED MARCH 22, 1977, SEEKING BIDS FOR THE PRINTING AND BINDING OF TELEPHONE DIRECTORIES FOR USE BY THE DEPARTMENT OF DEFENSE (DOD) UNDER GPO PROGRAM 230-S. GPO CANCELED THE SOLICITATION AFTER IT LEARNED THAT PHOTO DATA, ONE OF TWO COMPETING BIDDERS, HAD RECEIVED CERTAIN INFORMATION, PRIOR TO BID SUBMISSION, FROM DOD WHICH, IN GPO'S VIEW, GAVE PHOTO DATA AN UNFAIR COMPETITIVE ADVANTAGE.

THE INFORMATION CONCERNED ITEM II. A. OF THE SCHEDULE, WHICH CALLED FOR PRINTING AND BINDING OF DAILY ADDENDUMS, SUPPLEMENTAL DAILY ADDENDUMS AND CERTAIN OTHER LISTINGS AND ADDENDUMS. FOR MOST OF THE ITEMS, INCLUDING THE DAILY ADDENDUMS, THE SOLICITATION SET FORTH AN APPROXIMATE QUANTITY OF 100, SUBJECT TO THE CAVEAT THAT:

" * * * PROJECTED QUANTITIES FOR THE 'DAILY ADDENDUM', 'INTERCEPT', 'SUPPLEMENT TO DAILY ADDENDUM' * * * MAY DECREASE BY AS MUCH AS 50 COPIES EACH DURING THE TERM OF THIS CONTRACT."

THE SOLICITATION FURTHER PROVIDED THAT AWARD WAS TO BE MADE FOR THESE PROJECTED QUANTITIES ON THE FOLLOWING BASIS:

"(A) AWARD WILL BE MADE TO THE RESPONSIBLE BIDDER WHOSE TOTAL AGGREGATE COST RESULTS IN THE LOWEST BID. THE GOVERNMENT WILL DETERMINE THE TOTAL AGGREGATE COST BY APPLYING THE PRICES QUOTED IN THE 'SCHEDULE OF PRICES' TO THE FOLLOWING LISTED PRODUCTION UNITS WHICH ARE THE ESTIMATED REQUIREMENTS FOR 4 MONTHS' PRODUCTION UNDER THIS CONTRACT. THESE UNITS DO NOT CONSTITUTE, NOR ARE THEY TO BE CONSTRUED AS, A GUARANTEE OF THE VOLUME OF WORK WHICH MAY BE ORDERED UNDER THIS CONTRACT FOR A LIKE PERIOD OF TIME."

THE ESTIMATED PRODUCTION UNITS FOR ITEM II. A. WERE 2,221 FOR THE FIRST 50 COPIES OR LESS AND 113,450 FOR EACH ADDITIONAL COPY.

PHOTO DATA'S TOTAL BID EVALUATED ON A FOUR-MONTH BASIS WAS $85,027.83 LESS A 1/4 PERCENT PROMPT PAYMENT DISCOUNT. THE OTHER BID, FROM DATACOMP CORPORATION, WAS FOR $85,161.08. ON ITEM II. A., THE TWO FIRMS BID:

FIRST 50 COPIES OR LESS EACH ADD'L COPY

(1) (2)

PHOTO DATA $6.50 $.001 DATACOMP $3.50 .04

IT WAS DISCOVERED AFTER BID OPENING THAT PHOTO DATA, THE INCUMBENT CONTRACTOR, HAD CONTACTED THE ORDERING AGENCY (DOD) ABOUT THE POSSIBLE DECREASE IN THE QUANTITIES AND HAD BEEN INFORMED THAT DAILY ADDENDUMS WERE EXPECTED TO INCREASE TO 100 BY JUNE, 1977, THE FIRST MONTH OF CONTRACT PERFORMANCE, AND THEN GRADUALLY DECREASE TO APPROXIMATELY 60 BY OCTOBER, 1977. THE CONTRACTING OFFICER ALSO DISCOVERED THAT THE ITEM II. A. ESTIMATED PRODUCTION UNIT FIGURE OF 113,450 FOR 4 MONTHS (OR 340,350 FOR THE YEAR) WAS IN ERROR SINCE THE PROPER ESTIMATED REQUIREMENT FOR THE YEAR WAS 157.690. AS A RESULT OF THESE DISCOVERIES, ALL BIDS WERE REJECTED, THE SOLICITATION WAS CANCELED AND A DECISION WAS MADE TO READVERTISE BASED ON A CORRECTED ANNUAL ESTIMATE.

PHOTO DATA ARGUES THAT THE CANCELLATION WAS IMPROPER BECAUSE THE INFORMATION IT WAS FURNISHED MERELY CONFIRMED THE ADVICE GIVEN TO BIDDERS IN THE SOLICITATION THAT "PROJECTED QUANTITIES * * * MAY DECREASE BY AS MUCH AS 50 COPIES EACH DURING THE TERM OF THIS CONTRACT" AND IN ANY EVENT WAS ONLY AN ESTIMATE RATHER THAN ANYTHING DEFINITIVE. WITH RESPECT TO THE ERRONEOUS PRODUCTION UNIT FIGURE, PHOTO DATA ASSERTS THAT SUCH AN ERROR ALSO DID NOT WARRANT CANCELLATION BECAUSE THE FIGURE DID NOT PURPORT TO REPRESENT REQUIREMENTS FOR THE TERM OF THE CONTRACT AND BECAUSE BIDDERS WERE ADVISED THAT THEY SHOULD NOT RELY ON THE FIGURES. PHOTO DATA FURTHER STATES THAT SINCE THE SAME FIGURE WAS USED TO EVALUATE ALL BIDS "THERE COULD BE NO PREJUDICE TO ANY BIDDER EVEN IF THE ESTIMATED FIGURES WERE ERRONEOUS."

THIS OFFICE HAS OFTEN STATED THAT A SOLICITATION MAY BE CANCELLED AFTER BID OPENING ONLY WHEN A COGENT AND COMPELLING REASON FOR CANCELINGS EXISTS. SEE, E.G., 52 COMP.GEN.285 (1972); 49 ID. 671 (1969). DETERMINING WHETHER SUCH A REASON EXISTS, TWO FACTORS MUST BE CONSIDERED; (1) WHETHER THE BEST INTEREST OF THE GOVERNMENT WOULD BE SERVED BY MAKING AN AWARD UNDER THE SOLICITATION WHOSE CANCELLATION IS QUESTIONED, AND (2) WHETHER BIDDERS WOULD BE TREATED IN AN UNFAIR AND UNEQUAL MANNER IF SUCH AN AWARD WERE TO BE MADE. HAUGHTON ELEVATOR DIVISION, RELIANCE ELECTRIC COMPANY, 55 COMP.GEN. 1051 (1976), 76-1 CPD 294; EDWARD B. FRIEL, INC., 55 COMP.GEN. 231 (1975), 75-2 CPD 164. APPLYING THESE FACTORS TO THIS CASE, WE FIND THAT A COMPELLING REASON EXISTED TO REJECT ALL BIDS AND RESOLICIT.

FIRST, ALTHOUGH BOTH THE SOLICITATION LANGUAGE AND THE ADVICE GIVEN PHOTO DATA BY DOD WERE BASED ON ESTIMATES ONLY, AND WHILE THE DOD ADVICE WAS CONSISTENT WITH THE SOLICITATION STATEMENT, THE RECORD AFFORDS US NO BASIS FOR DISAGREEING WITH GPO'S JUDGMENT THAT THE ADVICE WENT FURTHER THAN THE SOLICITATION PROVISIONS AND COULD HAVE GIVEN PHOTO DATA A COMPETITIVE ADVANTAGE. IN THIS REGARD, WE THINK THERE IS A DIFFERENCE BETWEEN KNOWING MERELY THAT QUANTITIES MAY DECREASE AND KNOWING THAT QUANTITIES ARE EXPECTED TO DECREASE TO A CERTAIN LEVEL BY A CERTAIN TIME. CERTAINLY, PHOTO DATA, ONCE IT ACQUIRED THE LATTER INFORMATION, WAS IN A POSITION TO STRUCTURE ITS PRICING TO TAKE ADVANTAGE OF THAT KNOWLEDGE.

THIS CIRCUMSTANCE, WHEN COMBINED WITH THE ERRONEOUS ESTIMATE, GAVE RISE TO A SITUATION IN WHICH THE AGENCY COULD NOT BE REASONABLY CERTAIN THAT THE LOWEST EVALUATED BID WOULD IN FACT RESULT IN THE LOWEST COST TO THE GOVERNMENT. AS MENTIONED ABOVE, BIDS WERE EVALUATED IN PART ON THE BASIS OF 113,450 PRODUCTION UNITS FOR FOUR-MONTHS, BUT THE ANNUAL REQUIREMENT WAS EXPECTED TO BE SIGNIFICANTLY LESS THAN THREE TIMES THAT FIGURE. CONSEQUENTLY, THE EVALUATION SCHEME BASED ON THE FOUR-MONTH PERIOD RATHER THAN THE ENTIRE CONTRACT PERFORMANCE PERIOD OF ONE YEAR COULD HAVE PRODUCED A DISTORTED RESULT.

THAT, IN FACT, APPEARS TO HAVE HAPPENED HERE. THE DIFFERENCE BETWEEN THE TWO BIDS (AFTER APPLYING PHOTO DATA'S DISCOUNT) WAS $345.82 FOR THE FOUR- MONTH EVALUATION PERIOD. THAT DIFFERENCE COMPUTES TO $1037.46 WHEN BIDS ARE EVALUATED ON AN ANNUAL BASIS. ALTHOUGH PHOTO DATA WOULD BE THE LOW BIDDER BY THAT AMOUNT, A COMPARISON OF BIDS EVALUATED ON AN ANNUAL BASIS INDICATES THAT THE RELATIVE OVERALL POSITIONS OF THE BIDDERS CHANGES WHEN THE CORRECT ANTICIPATED ANNUAL PRODUCTION UNITS ARE CONSIDERED. WE HAVE OFTEN HELD THAT WHEN A FAULTY ESTIMATE OR EVALUATION APPROACH CONTAINED IN A SOLICITATION MIGHT PRECLUDE SELECTION OF THE BID THAT WOULD ACTUALLY RESULT IN THE LOWEST COST TO THE GOVERNMENT, THE PROPER COURSE OF ACTION FOR A CONTRACTING OFFICER IS TO CANCEL THE SOLICITATION AND RESOLICIT ON THE BASIS OF A REVISED ESTIMATE OR EVALUATION METHOD. SEE EDWARD B. FRIEL, INC., SUPRA, AND CASES CITED THEREIN.

ACCORDINGLY, WE FIND THE CANCELLATION TO HAVE BEEN PROPER AND THE PROTEST CONSEQUENTLY IS DENIED.