B-156956, JUNE 22, 1965

B-156956, JUNE 22, 1965

TO HARVEY DAIRY, INC.:

REFERENCE IS MADE TO YOUR LETTER DATED JUNE 7, 1965, WITH ENCLOSURES, PROTESTING AGAINST THE CANCELLATION OF ALL BIDS SUBMITTED UNDER DEFENSE SUPPLY AGENCY IFB NO. DSA-38-65-94 AND THE READVERTISEMENT OF SUCH PROCUREMENT FOR FURNISHING MILK AND RELATED ITEMS TO THE NAVAL HOSPITAL, BETHESDA, MARYLAND, DURING THE PERIOD JULY 1 THROUGH DECEMBER 31, 1965.

THE INVITATION, WHICH WAS RESTRICTED TO SMALL BUSINESS PARTICIPATION, PROVIDED FOR DELIVERIES TO BE MADE "ONCE DAILY EXCLUDING SUNDAYS AND NATIONAL LEGAL HOLIDAYS.' FIVE BIDS WERE RECEIVED AND OPENED AS SCHEDULED ON MAY 18, 1965. THE LOW BID OF $52,455 WAS SUBMITTED BY HADLEY FARMS DAIRY, INC., HOWEVER, IT CONTAINED THE QUALIFICATION "DELIVERIES TO BE MADE SUNDAY THRU FRIDAY FOR RELIGIOUS REASONS.' YOUR BID OF $53,809 WAS SECOND LOW.

WHILE THE CONTRACTING OFFICER DETERMINED THAT HADLEY'S BID SHOULD BE REJECTED AS NONRESPONSIVE PURSUANT TO THE PROVISIONS OF PARAGRAPH 2 404.2C OF THE ARMED SERVICES PROCUREMENT REGULATION, WHICH REQUIRE REJECTION OF BIDS THAT FAIL TO CONFORM TO THE DELIVERY SCHEDULE SPECIFIED IN AN INVITATION, A SUBSEQUENT INQUIRY ON OPENING DATE TO THE BETHESDA NAVAL HOSPITAL DISCLOSED THAT THERE WAS NO REQUIREMENT OR DELIVERIES WERE ACCEPTABLE SO LONG AS SIX DELIVERIES WERE MADE EACH WEEK. SINCE IT WAS THUS APPARENT THAT THE INVITATION IMPOSED A NEEDLESSLY RESTRICTIVE DELIVERY SCHEDULE THAT LIMITED COMPETITION, AND WAS PARTICULARLY PREJUDICIAL TO HADLEY, THE CONTRACTING OFFICER DETERMINED THAT CANCELLATION OF THE IFB WOULD BE IN THE BEST INTERESTS OF THE GOVERNMENT. THE BIDDERS WERE NOTIFIED BY LETTER DATED JUNE 4, 1965, OF THE REJECTION OF ALL BIDS AND THAT THE REQUIREMENTS WOULD BE READVERTISED WITH A REVISED DELIVERY SCHEDULE. THE NEW SCHEDULE PROVIDES FOR DELIVERY SCHEDULE. THE NEW SCHEDULE PROVIDES FOR DELIVERY "ONCE DAILY--- SIX DAYS PER WEEK, SUNDAY THROUGH FRIDAY OR MONDAY THROUGH SATURDAY, NATIONAL LEGAL HOLIDAYS EXCLUDED.' BIDS UNDER THE READVERTISEMENT ARE SCHEDULED FOR OPENING ON JUNE 24, 1965.

ESSENTIALLY, YOU PROTEST AGAINST THE READVERTISEMENT ON THE BASIS THAT THERE WAS ADEQUATE COMPETITION UNDER THE FIRST INVITATION; THE OTHER BIDS SUBMITTED THEREUNDER WERE RESPONSIVE; THE PRICES BID WERE NOT EXCESSIVELY HIGH; AND AWARD THEREFORE SHOULD HAVE BEEN MADE TO THE LOW RESPONSIVE AND RESPONSIBLE BIDDER. YOU POINT OUT FURTHER, THAT THE INVITATION SPECIFICALLY SOLICITED QUESTIONS BY THE STATEMENT ON THE FACE SHEET THEREOF "SUBMIT INQUIRIES BY WRITING OR CALLING (COLLECT CALLS NOT ACCEPTED) MR. RICHARD E. CROSS, 1722 ARLINGTON R., AREA CODE 703, EL 9- 5021-EXT. 28 OR 29," AND STATE THAT YOU UNDERSTAND THAT HADLEY MADE NO REQUEST FOR A CHANGE IN THE DELIVERY SCHEDULE PRIOR TO BID OPENING ALTHOUGH IT HAD AMPLE OPPORTUNITY TO DO SO AND HAD ALSO PREVIOUSLY ENCOUNTERED THE SAME PROBLEM ON CONTRACTS AWARDED UNDER SIMILAR INVITATIONS.

IN VIEW OF HARDLEY'S PAST EXPERIENCE WITH SIMILAR DELIVERY PROVISIONS, AND IN KEEPING WITH GOOD FAITH AND OBSERVANCE OF THE SPIRIT OF COMPETITIVE SOLICITATION, IT WOULD APPEAR THAT HADLEY SHOULD HAVE QUESTIONED THE PROPRIETY OF THE DELIVERY SCHEDULE PRIOR TO BID OPENING. HOWEVER, WE SEE NO BASIS UPON WHICH ITS FAILURE TO DO SO IS DISPOSITIVE OF THE QUESTION OF WHETHER IT WAS PROPER TO REJECT ALL BIDS, AS PRESENTED BY YOUR PROTEST.

IT IS RECOGNIZED THAT, CONTRARY TO THE PURPOSES FOR WHICH THE PUBLIC PROCUREMENT STATUTES WERE ENACTED, THE REJECTION OF ALL BIDS, WITHOUT ABANDONMENT OF THE PROPOSED PROCUREMENT, TENDS TO DISCOURAGE COMPETITION BECAUSE IT RESULTS IN MAKING ALL BIDS PUBLIC WITHOUT AWARD. AS WAS STATED BY THE COURT OF CLAIMS IN MASSMAN CONSTRUCTION COMPANY V. UNITED STATES, 102 CT.CL. 699, 719,"TO HAVE A SET OF BIDS DISCARDED AFTER THEY ARE OPENED AND EACH BIDDER HAS LEARNED HIS COMPETITOR'S PRICE IS A SERIOUS MATTER, AND IT SHOULD NOT BE PERMITTED EXCEPT FOR COGENT REASONS.'

HOWEVER, ARTICLE 8 (B) OF THE TERMS AND CONDITIONS OF THE INVITATION SPECIFICALLY RESERVED TO THE GOVERNMENT THE RIGHT TO REJECT ANY OR ALL BIDS. THIS PROVISION IS IN CONFORMITY WITH 10 U.S.C. 2305 (C) WHICH PROVIDES THAT ALL BIDS MAY BE REJECTED IF THE HEAD OF THE AGENCY DETERMINES THAT REJECTION IS IN THE PUBLIC INTEREST. UNDER 10 U.S.C. 2311 THE HEAD OF THE AGENCY MAY DELEGATE THE AUTHORITY TO MAKE SUCH DETERMINATION TO ANY OTHER OFFICER OR OFFICIAL OF THAT AGENCY. THAT AUTHORITY HAS BEEN DELEGATED TO THE CONTRACTING OFFICER BY THE TERMS OF ASPR 2-404.1 (B) (VIII), WHICH PROVIDES FOR CANCELLATION OF ANY IFB WHERE SUCH ACTION IS DETERMINED TO BE IN THE BEST INTEREST OF THE GOVERNMENT. SUCH AUTHORITY TO REJECT ANY OR ALL BIDS IS EXTREMELY BROAD, INVOLVING PRIMARILY A MATTER OF ADMINISTRATIVE JUDGMENT, AND WE WILL NOT ORDINARILY UNDERTAKE TO QUESTION ITS EXERCISE IN THE ABSENCE OF A CLEAR SHOWING OF ABUSE OF DISCRETION. WE HAVE RECOGNIZED IN THE BEST INTERESTS OF GOVERNMENT, THEIR ACTIONS IN REJECTING BIDS AND READVERTISING MAY NOT BE CONSIDERED IMPROPER WHEN BASED ON SUBSTANTIAL REASONS LEADING TO A BONA FIDE BELIEF THAT THE INTERESTS OF THE GOVERNMENT WILL BE SERVED THEREBY.

IN THE PRESENT CASE IT IS UNCONTRADICTED THAT THE ORIGINAL INVITATION'S SPECIFIED DELIVERY SCHEDULE UNNECESSARILY RESTRICTED COMPETITION AND TENDED TO DEPRIVE THE GOVERNMENT OF THE OPPORTUNITY TO OBTAIN ITS ACTUAL REQUIREMENTS AT THE LOWEST BID PRICE. THE PROVISIONS OF THE NEW INVITATION BROADEN THE FIELD OF COMPETITION AND WILL PERMIT THE PREVIOUSLY LOW BIDDER TO SUBMIT A RESPONSIVE BID ON SUPPLYING THE ITEMS INVOLVED. THESE CIRCUMSTANCES, AND IN VIEW OF THE BOARD DISCRETION PLACED WITH THE ADMINISTRATIVE AGENCIES IN SUCH MATTERS, WE CANNOT CONCLUDE THAT THE REJECTION OF ALL BIDS UNDER THE ORIGINAL INVITATION WAS ARBITRARY OR CAPRICIOUS, OR THAT A CONTRACT AWARDED UNDER THE NEW INVITATION WILL BE INVALID, EVEN THOUGH AN AWARD OF A CONTRACT TO THE LOW RESPONSIVE AND RESPONSIBLE BIDDER UNDER THE ORIGINAL INVITATION MIGHT HAVE BEEN FOUND PROPER.