B-151575, SEP. 18, 1963, 43 COMP. GEN. 279

B-151575, SEP. 18, 1963, 43 COMP. GEN. 279

BIDS - DISCARDING ALL BIDS - READVERTISEMENT JUSTIFICATION - ADEQUATE COMPETITION ALTHOUGH THE AMENDMENT TO AN INVITATION FOR 120 ELECTRON TUBES, WHICH REQUESTED BID PRICES ON ALTERNATE QUANTITIES OF 180 AND 240 TUBES, WAS RECEIVED ONLY BY THE LOW BIDDER ON THE BASIC 120 UNITS AND NOT BY THE FIRM SUBMITTING THE ONLY OTHER BID RECEIVED, CANCELLATION AND READVERTISEMENT OF THE PROCUREMENT AFTER AN ADMINISTRATIVE DETERMINATION TO LIMIT THE PROCUREMENT TO 120 TUBES WAS NOT JUSTIFIED ON THE BASIS THAT FULL COMPETITION HAD NOT BEEN SECURED, AND THAT THE ONLY OTHER BIDDER MIGHT HAVE SUBMITTED A LOWER PRICE ON THE BASIC QUANTITY AND OTHER BIDDERS MIGHT HAVE RESPONDED TO THE INVITATION HAD THE INCREASED QUANTITIES SOLICITED BEEN KNOWN, THE PRIMARY OBJECTIVE OF ADEQUATE COMPETITION BEING TO SECURE REASONABLE PRICES, THE READVERTISING RATHER THAN THE NEGOTIATION OF THE PROCUREMENT UNDER 10 U.S.C. 2304 (A) (15) INDICATING THE UNIT BID PRICES ON THE BASIC REQUIREMENT WERE REASONABLE, BIDS RECEIVED UNDER THE READVERTISED INVITATION SHOULD BE RETURNED UNOPENED AND THE PROCUREMENT ACCOMPLISHED UNDER THE INITIAL INVITATION.

TO THE SECRETARY OF THE NAVY, SEPTEMBER 18, 1963:

REFERENCE IS MADE TO A PROTEST FILED WITH THIS OFFICE BY EDGERTON,GERMESHAUSEN AND GRIER (EG AND G) AGAINST THE ACTION OF YOUR DEPARTMENT IN CANCELING IFB-126-1121-63 AND READVERTISING FOR BIDS UNDER IFB-126-1485-63.

THE ORIGINAL INVITATION WAS ISSUED ON MARCH 8, 1963, AND REQUESTED BIDS ON 120 ELECTRON TUBES, TYPE JAN-7322M. ON MARCH 14, 1963, AMENDMENT NO. 1 TO THE INVITATION REQUESTED ADDITIONAL BID PRICES ON ALTERNATE QUANTITIES OF 180 AND 240 TUBES. TWO BIDS WERE RECEIVED AND OPENED ON APRIL 8, 1963. THE BID SUBMITTED BY EG AND G OFFERED PRICES OF $346 EACH ON 120 UNITS; $336 EACH ON 180 UNITS; AND $334 EACH ON 240 UNITS. THE BID SUBMITTED BY KUTHE LABORATORIES, INC. (A SUBSIDIARY OF INTERNATIONAL TELEPHONE AND TELEGRAPH CORPORATION) OFFERED A PRICE OF $385 EACH ON 120 UNITS. NO BID PRICES WERE SUBMITTED ON 180 OR 240 UNITS.

UNDER DATE OF APRIL 22, 1963, ITT SUBMITTED A FORMAL PROTEST, ALLEGING THAT NEITHER ITT OR KUTHE HAD RECEIVED A COPY OF AMENDMENT NO. 1 OR ANY INDICATION THAT AN AMENDMENT HAD BEEN ISSUED. THIS PROTEST FURTHER ADVISED AS FOLLOWS:

IF WE HAD RECEIVED NOTICE OF THE AMENDMENT WHICH REQUESTED BIDS FOR INCREASED QUANTITIES OF 180 AND 240, WE COULD HAVE QUOTED SUBSTANTIALLY LOWER PRICES FOR THE LARGER QUANTITIES AND MIGHT HAVE DECIDED TO RUN A LARGE QUANTITY FOR STOCK FOR SALES TO OTHER CUSTOMERS THUS PERMITTING SAVINGS TO BE PASSED ON TO THE CUSTOMERS.

OUR COMMUNICATIONS IN CONTRACT NO. N126-05292A CONSTITUTE A RECORD OF EVIDENCE THAT IN THE PAST WE HAVE MADE VERY SUBSTANTIAL REDUCTIONS FOR LARGER QUANTITIES. IN THAT CONTRACT, AFTER WE HAD BEEN AWARDED AN ORDER FOR 120 UNITS OF THE SAME TUBE TYPE 7322M AT $453 EACH, OUR LETTER DATED JANUARY 18, 1963, VOLUNTARILY OFFERED TO REDUCE THE PRICE TO AN AVERAGE OF $397 FOR A TOTAL QUANTITY OF 240 ON THE SAME ORDER, WHICH IN EFFECT WOULD HAVE REDUCED THE PRICE OF THE SECOND QUANTITY OF 120 TO ONLY $341.

FROM THE EXAMPLE ABOVE IT IS CLEAR THAT KNOWLEDGE OF A CONTEMPLATED INCREASE IN QUANTITY HAS A DECIDED EFFECT ON BOTH THE BASIC AND INCREASED QUANTITIES INVOLVED.

BASED UPON THE FOREGOING, YOUR DEPARTMENT CONCLUDED THAT KUTHE MIGHT HAVE BID A LOWER PRICE ON THE BASIC QUANTITY IF IT HAD BEEN AWARE OF THE AMENDMENT; THAT OTHER BIDDERS MIGHT HAVE RESPONDED TO THE INVITATION HAD THEY BEEN AWARE OF THE INCREASED QUANTITIES; AND THAT THE COMPLETE PROCUREMENT THEREFORE WAS NOT PROPERLY SUBMITTED TO FULL COMPETITION. NOTWITHSTANDING THE FACT THAT ON APRIL 11, 1963, AN ADMINISTRATIVE DETERMINATION HAD BEEN MADE THAT PROCUREMENT WOULD BE LIMITED TO 120 TUBES UNDER IFB-126-1121-63, THE INVITATION WAS CANCELED ON MAY 13, 1963. MAY 22, 1963, NEW BIDS, AGAIN ON A QUANTITY OF ONLY 120 TUBES, WERE SOLICITED UNDER IFB-126-1485-63. BIDS RECEIVED UNDER THIS INVITATION REMAIN UNOPENED PENDING RESOLUTION OF EG AND G'S PROTEST AGAINST CANCELLATION OF THE ORIGINAL INVITATION.

IT IS EG AND G'S POSITION THAT KNOWLEDGE OF THE POSSIBLE PROCUREMENT OF 180 OR 240 UNITS WOULD NOT NORMALLY AFFECT THE UNIT PRICE ON THE BASIC QUANTITY OF 120 UNITS, AND IN SUPPORT OF THIS POSITION EG AND G CALLS ATTENTION TO THE FACT THAT ITT'S LETTER OF APRIL 22 ONLY INDICATED THAT KUTHE MIGHT HAVE REDUCED UNIT PRICES ON THE BASIC QUANTITY IF IT HAD BEEN AWARE OF AMENDMENT NO. 1. ADDITIONALLY, EG AND G CONTENDS THAT KUTHE WAS NOT PREJUDICED BY ITS FAILURE TO BID ON QUANTITIES OF 180 AND 240 SINCE IT WAS ADMINISTRATIVELY DETERMINED PRIOR TO THE DATE OF ITT'S PROTEST, THAT ONLY 120 TUBES WOULD BE PURCHASED. EG AND G THEREFORE CONTENDS THAT THERE IS NO EVIDENCE OF PREJUDICE, TO THE GOVERNMENT OR TO OTHER BIDDERS, WHICH JUSTIFIED REJECTION OF ALL BIDS AFTER THEY HAD BEEN OPENED, AND THAT RESOLICITATION OF BIDS AFTER EG AND G'S LOW BID PRICE HAD BEEN REVEALED IN CONTRARY TO THE ESTABLISHED CONCEPTS OF COMPETITIVE BIDDING.

IN OUR DECISION OF JANUARY 12, 1962, B-147515 (3), COPY ENCLOSED, WE HELD AS FOLLOWS:

IT IS OF COURSE TO BE REGRETTED THAT YOU WERE NOT IN A POSITION TO SUBMIT A RESPONSIVE BID AS A RESULT OF THE FAILURE OF THE CONTRACTING OFFICE TO FURNISH AMENDMENTS. WHILE THE GOVERNMENT SHOULD MAKE EVERY EFFORT TO INSURE THAT INTERESTED BIDDERS RECEIVE TIMELY COPIES OF INVITATIONS FOR BIDS AND AMENDMENTS THERETO, THE FACT THAT THERE WAS A FAILURE TO DO SO IN A PARTICULAR CASE DOES NOT WARRANT CANCELLATION OF THE INVITATION FOR BIDS. THIS IS PARTICULARLY TRUE WHERE, AS HERE, ADEQUATE COMPETITION HAS BEEN OBTAINED AND FAIR PRICES HAVE BEEN QUOTED.

THE PRIMARY OBJECTIVE OF OBTAINING ADEQUATE COMPETITION IS TO ASSURE THE RECEIPT OF REASONABLE PRICES, AND WHERE THE PRICES OBTAINED UNDER A FORMALLY ADVERTISED PROCUREMENT ARE CONSIDERED UNREASONABLE, 10 U.S.C. 2304 (A) (15) AUTHORIZES THE REJECTION OF ALL BIDS AND THE CONDUCT OF NEGOTIATIONS WITH ALL RESPONSIBLE BIDDERS. YOUR DEPARTMENT'S REPORT TO THIS OFFICE CONTAINS NO EVIDENCE THAT THE UNIT BID PRICES RECEIVED ON THE 120 UNIT REQUIREMENT WERE CONSIDERED UNREASONABLE, AND THE FACT THAT THIS REQUIREMENT WAS SUBSEQUENTLY READVERTISED, RATHER THAN NEGOTIATED UNDER 10 U.S.C. 2304 (A) (15), WOULD INDICATE THAT SUCH WAS NOT THE CASE.

IN VIEW THEREOF, AND SINCE IFB-126-1485-63 REQUESTED BIDS ON ONLY 120 TUBES, WE SEE NO VALID BASIS ON WHICH THE CANCELLATION OF IFB-126 1121-63 MAY BE JUSTIFIED. THE BIDS RECEIVED UNDER IFB-126-1485-63 SHOULD THEREFORE BE RETURNED UNOPENED. IN THE EVENT A REQUIREMENT FOR THESE ITEMS STILL EXISTS, AND EG AND G IS WILLING TO FURNISH ALL OR ANY PART THEREOF AT ITS UNIT BID PRICE UNDER IFB-126-1121-63, THE PROCUREMENT SHOULD BE ACCOMPLISHED THEREUNDER.

THE ENCLOSURES RECEIVED WITH THE REPORT DATED JUNE 17, 1963, FROM THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, ARE RETURNED.