B-155071, JAN. 19, 1965

B-155071, JAN. 19, 1965

TO AIR FLORIDA, INC.:

REFERENCE IS MADE TO YOUR LETTER DATED AUGUST 25, 1961, AND LETTER OF NOVEMBER 25, 1964, FROM YOUR ATTORNEYS PROTESTING THE ACTION TAKEN BY NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA), JOHN F. KENNEDY SPACE CENTER, COCOA BEACH, FLORIDA, IN REJECTING ALL BIDS AND CANCELING INVITATION FOR BIDS NO. CC-326-4.

INVITATION FOR BIDS NO. CC-326-4, COVERING A REQUEST FOR HELICOPTER SERVICES FOR A ONE-YEAR PERIOD BEGINNING MAY 1, 1964, WAS ISSUED TO 17 POTENTIAL SOURCES ON APRIL 13, 1964, BY THE PROCUREMENT AND CONTRACTS OFFICE, LAUNCH OPERATIONS CENTER, NATIONAL AERONAUTICS AND SPACE ADMINISTRATION, COCOA BEACH, FLORIDA. BIDS WERE OPENED ON THE SCHEDULED DATE OF APRIL 27, 1964, AND TWO BIDS WERE RECEIVED, ONE FROM AIR FLORIDA, INC., THE OTHER FROM CAPE KENNEDY HELICOPTERS, THE LATTER BIDDER BEING LOW AS TO PRICE.

IT IS REPORTED THAT BY UNDATED LETTER, CONFIRMING A TELEPHONE CALL OF MAY 1, 1964, TO THE CONTRACTING AGENCY, YOUR COMPANY PROTESTED ANY AWARD TO CAPE KENNEDY HELICOPTERS. BY SUBSEQUENT LETTER OF MAY 6, 1964, YOUR COMPANY SUBMITTED ITS PROTEST IN DETAIL, ALLEGING PRINCIPALLY THAT CAPE KENNEDY HELICOPTERS LACKED QUALIFICATIONS TO PERFORM THE REQUIRED SERVICES. IN VIEW OF THE CONTENTIONS IN YOUR PROTEST ALL THE TERMS AND CONDITIONS OF THE INVITATION WERE ADMINISTRATIVELY REVIEWED, RESULTING IN A DETERMINATION THAT THE INVITATION WAS DEFECTIVE DUE TO THE OMISSION OF A PROPER "INDEFINITE QUANTITIES" CLAUSE. THE DEFECTIVE CLAUSE FAILED TO STIPULATE ANY GOVERNMENT OBLIGATION TO ORDER ANY SERVICES AT ALL. IT WAS ADMINISTRATIVELY DETERMINED THAT NO VALID, ENFORCEABLE CONTRACT COULD BE AWARDED, SINCE THERE WOULD BE NO CONSIDERATION TO SUPPORT A CONTRACT. LETTER OF JUNE 5, 1964, BOTH BIDDERS WERE SO NOTIFIED AND ADVISED THAT INVITATION NO. CC-326-4 HAD BEEN CANCELED.

IT IS FURTHER REPORTED THAT THE NEED FOR HELICOPTER SERVICES SINCE MAY 7, 1964, HAS BEEN MET BY THE ISSUANCE OF PURCHASE ORDERS WITH ORAL BID QUOTATIONS BEING SOLICITED PRIOR THERETO, THIS METHOD BEING USED SINCE THERE WAS NO FIRM ESTIMATE OF REQUIREMENTS. ACTION IS BEING TAKEN TO DEVELOP SUCH ESTIMATE BASED ON EXPERIENCE SINCE MAY 7 AND RELIABLE PROJECTIONS.

THE RECORD DISCLOSES YOU WERE ADVISED BY THE DEPUTY PROCUREMENT OFFICER'S LETTER OF AUGUST 7, 1964, THAT IN ADDITION TO THE DEFECTIVE INDEFINITE QUANTITIES CLAUSE OF THE INVITATION, THE CANCELLATION OF THE INVITATION WAS SUPPORTED BY THE "AREA OF OPERATIONS" CLAUSE BEING FOUND UNDULY RESTRICTIVE OF COMPETITION UNDER THE CIRCUMSTANCES THAT DEVELOPED PRIOR TO BID OPENING. FURTHER, THE ESTIMATED REQUIREMENTS OF THE GOVERNMENT FOR HELICOPTER SERVICES CHANGED SUBSTANTIALLY AFTER OPENING OF BIDS AND PRIOR TO CANCELLATION OF THE INVITATION, THE TIME FOR ACCEPTANCE OF BIDS EXPIRED PRIOR TO AWARD TO ANY BIDDER AND IT WAS DECIDED THAT HELICOPTER SERVICES WOULD BE OBTAINED AS REQUIREMENTS AROSE ON AN INFORMAL COMPETITIVE BID BASIS IN ACCORDANCE WITH ESTABLISHED GOVERNMENT POLICY AND NATIONAL AERONAUTICS AND SPACE ADMINISTRATION PROCUREMENT REGULATIONS.

ARTICLE 8 (B) OF THE TERMS AND CONDITIONS OF THE INVITATION SPECIFICALLY RESERVED TO THE GOVERNMENT THE RIGHT TO REJECT ANY AND ALL BIDS. ADDITION, 10 U.S.C. 2405 (C) PROVIDES THAT ALL BIDS MAY BE REJECTED WHENEVER IT IS DETERMINED THAT SUCH ACTION IS IN THE PUBLIC INTEREST. FURTHER, IT HAS CONSISTENTLY BEEN HELD THAT AN INVITATION FOR BIDS DOES NOT IMPORT AN OBLIGATION TO ACCEPT ANY OF THE OFFERS RECEIVED INCLUDING THE LOWEST RESPONSIVE BID. O-BRIEN V. CARNEY (1934), 6 F.SUPP. 761; COLORADO PAVING COMPANY V. MURPHY (1897), 78 F. 28. ALSO, IT 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 MATTER OF ADMINISTRATIVE DISCRETION AND WHERE, AS HERE, IT IS SHOWN THAT THE PURPOSE OF SUCH ACTION IS TO CLARIFY SPECIFICATIONS IN THE BEST INTERESTS OF THE GOVERNMENT, WE PERCEIVE NO OBJECTION TO SUCH ACTION. 17 COMP. GEN. 554.

WE ARE AWARE THAT THE REJECTION OF BIDS AFTER THEY ARE OPENED AND SUCH BIDDER HAS LEARNED HIS COMPETITOR'S PRICES IS A SERIOUS MATTER AND SHOULD NOT BE DONE EXCEPT FOR COGENT REASONS. NEVERTHELESS, WE HAVE RECOGNIZED THAT SINCE CONTRACTING OFFICERS ARE AGENTS OF, AND ARE REQUIRED TO WORK IN THE BEST INTERESTS OF THE GOVERNMENT, THEIR ACTIONS IN REJECTING BIDS AND READVERTISING MAY NOT BE CONSIDERED IMPROPER WHEN BASED UPON SUBSTANTIAL REASONS LEADING TO A BONA FIDE BELIEF THAT THE INTERESTS OF THE GOVERNMENT WILL BE BEST SERVED THEREBY.

IN THIS INSTANCE THE CONTRACTING AGENCY DETERMINED AFTER DUE CONSIDERATION OF THE MATTER THAT THE SPECIFICATIONS WERE NOT SET FORTH SO CLEARLY AND ACCURATELY AS TO INSURE COMPETITION ON AN UNRESTRICTED BASIS AND IT WAS OF THE BELIEF THAT A CONTRACT WOULD RESULT UNDER WHICH THE GOVERNMENT'S INTERESTS COULD NOT READILY BE ENFORCED. SEE 17 COMP. GEN. 789. SPECIFICATIONS AND INVITATIONS FOR BIDS ARE REQUIRED UNDER 10 U.S.C. 2305 (A) TO BE STATED AS TO "PERMIT SUCH FREE AND FULL COMPETITION AS IS CONSISTENT WITH THE PROCUREMENT OF THE PROPERTY.'

BASED ON THE RESTRICTIVE NATURE OF THE AREA OF OPERATIONS CLAUSE AND THE CHANGING NEEDS AND REQUIREMENTS OF THE GOVERNMENT, IT CANNOT BE DETERMINED THAT THE ACTION TAKEN BY NASA IS LEGALLY OBJECTIONABLE. IN VIEW THEREOF AND OF THE DISCRETION VESTED IN THE CONTRACTING AGENCY WITH RESPECT TO SUCH MATTERS, WE FIND NO BASIS TO QUESTION THE LEGALITY OF THE ACTION TAKEN.