B-142144, APR. 1, 1960

B-142144, APR. 1, 1960

TO STANFORD PAPER SALES CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 26, 1960, PROTESTING AGAINST THE REJECTION OF ALL BIDS RECEIVED UNDER INVITATION FOR BIDS NO. 414 ISSUED BY THE POST OFFICE DEPARTMENT ON JANUARY 29, 1960, FOR 16 CARLOADS OF PLAIN WHITE FACING SLIPS IDENTIFIED AS LOTS 1 THROUGH 5, AND THE READVERTISING OF NEW REQUIREMENTS UNDER INVITATION FOR BIDS NO. 436 ISSUED ON FEBRUARY 19, 1960.

THE THREE BIDS RECEIVED IN RESPONSE TO INVITATION NO. 414 WERE OPENED AS SCHEDULED ON FEBRUARY 15, 1960. YOUR BID AND THAT OF HELLER AND USDAN, INC., WERE THE LOWEST RECEIVED, YOU BEING LOW ON LOTS 1 AND 2 AND HELLER AND USDAN, INC., BEING LOW ON LOTS 3, 4 AND 5. ON FEBRUARY 23, 1960, ALL BIDS UNDER THE INVITATION WERE REJECTED IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH 8 (B) OF THE TERMS AND CONDITIONS OF THE INVITATION, AND YOU WERE ADVISED ACCORDINGLY BY LETTER DATED THE SAME DAY. THE INCREASED REQUIREMENTS WERE READVERTISED UNDER INVITATION NO. 436, AND AN EXAMINATION OF THE ABSTRACT OF BIDS RECEIVED AND OPENED ON FEBRUARY 26, 1960, REVEALS THAT LOWER UNIT PRICES WERE RECEIVED FROM ONE OF THE THREE BIDDERS RESPONDING TO THE INVITATION AND THAT YOU BID THE SAME PRICES AS FORMERLY.

YOU CONTEND THAT THE DEPARTMENT'S INCREASED REQUIREMENTS COULD BE MET, AS IN THE PAST, BY A NEW INVITATION FOR BIDS AT SOME FUTURE DATE IF THE 25 PERCENT INCREASE OPTION WOULD NOT SUFFICE, AND THAT WHILE READVERTISEMENT NOW WILL RESULT IN LOWER UNIT PRICES, SUCH INCREASE IN QUANTITY WILL NOT RESULT IN LOWER PRODUCTION COSTS AND FOR THAT REASON YOU BID THE IDENTICAL PRICES ON THE TWO INVITATIONS. YOU ALSO POINT OUT THAT YOU HAVE BEEN PUT IN AN UNFAIR POSITION BY THE PREVIOUS PUBLIC DISCLOSURE OF YOUR BID PRICES.

WE HAVE REVIEWED THE BASIS FOR THE REJECTION OF ALL BIDS AND THE READVERTISEMENT OF INCREASED REQUIREMENTS AND, IN OUR VIEW, THE ACTIONS TAKEN BY THE DEPARTMENT ARE NOT SUBJECT TO QUESTION BY OUR OFFICE.

THESE FACING SHEETS ARE PROCURED FOR USE ON A "TICKOMETER" MACHINE AND IT WAS DETERMINED SHORTLY AFTER OPENING OF THE EARLIER INVITATION TO PLACE MORE OF SUCH MACHINES IN SERVICE WITHIN A SHORT TIME. HENCE, THE QUANTITY OF FACING SLIPS FOR WHICH THE DEPARTMENT HAD ADVERTISED WOULD BE INADEQUATE FOR ITS COMPLETE NEEDS AND IT WAS BELIEVED THAT IT WOULD BE TO THE ADVANTAGE OF THE GOVERNMENT TO REJECT ALL BIDS UNDER INVITATION NO. 414 AND TO READVERTISE ITS COMPLETE REQUIREMENTS RATHER THAN TO MAKE AN AWARD AND MAKE A SEPARATE PURCHASE FOR SMALLER QUANTITIES AT A LATER DATE. EVEN BY EXERCISING THE 25 PERCENT ADDITIONAL QUANTITY OPTION IN THE ORIGINAL INVITATION, IT WOULD BE NECESSARY TO ADVERTISE AT A LATER DATE FOR THE REMAINING QUANTITY NEEDED AND, AS TO THIS AMOUNT, THE DEPARTMENT WOULD BE AT A DISADVANTAGE IN OBTAINING THE BEST POSSIBLE PRICE. THE REDUCED PRICES WHICH HAVE BEEN RECEIVED ON THE READVERTISEMENT CONFIRM THIS FACT. ALSO, ONE OF THE BIDDERS NOTED ON ITS BID UNDER INVITATION NO. 414 THAT FOR LESS THAN THE FULL QUANTITY ITS PRICE WOULD BE $0.005 HIGHER. THIS INDICATED THAT PRICES MIGHT VARY SUBSTANTIALLY ACCORDING TO THE QUANTITY PURCHASED.

FURTHER, THE DEPARTMENT'S DECISION TO READVERTISE THIS LARGE REQUIREMENT WAS PROMPTED BY A SIMULTANEOUS INCREASE IN REQUIREMENTS FROM EACH OF THE FIVE POST OFFICE INSTALLATIONS INVOLVED. AND THIS INCREASE WAS NOT ANTICIPATED WHEN BIDS WERE OPENED PUBLICLY ON FEBRUARY 15, 1960. IF THE DEPARTMENT WERE TO MAKE AWARDS IN THE NORMAL MANNER AGAINST INVITATION NO. 414 AND EXERCISE ITS OPTION TO INCREASE EACH AWARD BY 25 PERCENT, THE GOVERNMENT WOULD BE LEFT WITH AN OPEN REQUIREMENT OF APPROXIMATELY FOUR CARLOADS OF PAPER. IT WAS BELIEVED THAT IF THESE FOUR CARLOADS OF PAPER WERE PURCHASED SEPARATELY AT A LATER DATE, THE UNIT COST TO THE GOVERNMENT ON SUCH PURCHASE WOULD BE INCREASED. ALSO, THE LOWER PRICE OF APPROXIMATELY ONE CENT PER POUND WHICH WAS REALIZED ON INVITATION NO. 436, COULD NOT HAVE BEEN REALIZED ON THE 16 CARLOADS PLUS THE 25 PERCENT OPTION PERMITTED UNDER THE EARLIER INVITATION.

WE RECOGNIZE THAT THE REJECTION OF ALL BIDS AFTER OPENING IS A SERIOUS MATTER OPERATING TO THE DETRIMENT OF ALL OR SOME OF THE BIDDERS WHO HAVE HAD THEIR BIDS EXPOSED. HOWEVER, PURSUANT TO PARAGRAPH 8 (A) OF THE TERMS AND CONDITIONS OF THE INVITATION AND 41 U.S.C. 253 (B), AWARDS OF CONTRACTS UNDER FORMALLY ADVERTISED PROCUREMENTS ARE TO BE MADE TO THE BIDDER WHOSE BID WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. SINCE IT HAS BEEN ESTABLISHED THAT ADDITIONAL QUANTITIES OF FACING SHEETS IN EXCESS OF THE 25 PERCENT OPTION INCREASE WERE REQUIRED TO MEET THE PRESENT NEEDS OF THE DEPARTMENT AND THAT LOWER PRICES COULD BE, AND WERE, OBTAINED BY READVERTISING THE ADDITIONAL QUANTITIES, AN AWARD TO YOU UNDER THE EARLIER INVITATION WOULD HAVE BEEN IMPROPER UNDER THE PROVISIONS OF THE INVITATION AND THE STATUTORY PROVISION CITED ABOVE.

ALSO, IT IS TO BE NOTED THAT THE GOVERNMENT UNDER PARAGRAPH 8 (B) OF THE TERMS AND CONDITIONS EXPRESSLY RESERVED THE RIGHT TO REJECT ANY AND ALL BIDS, AND 41 U.S.C. 253 (B) PROVIDES THAT ALL BIDS MAY BE REJECTED IF THE HEAD OF THE AGENCY DETERMINES SUCH ACTION TO BE IN THE PUBLIC INTEREST. THIS AUTHORITY TO MAKE THAT DETERMINATION IS DELEGABLE UNDER 41 U.S.C. 257 (A).

IN THE CIRCUMSTANCES HERE INVOLVED, WE CANNOT FIND THAT THE REJECTION OF ALL BIDS AND THE READVERTISEMENT REPRESENTED AN ABUSE OF THE ADMINISTRATIVE DISCRETION RESERVED IN THE INVITATION AND GRANTED BY STATUTE.