B-158524, JUN. 30, 1966

B-158524, JUN. 30, 1966

TO THE DAMIANO BROTHERS WELDING COMPANY, INCORPORATED:

REFERENCE IS MADE TO A TELEGRAM DATED MAY 27, 1966, TO OUR OFFICE FROM THE HONORABLE CLAIBORNE PELL, UNITED STATES SENATOR FROM RHODE ISLAND, PROTESTING ON YOUR BEHALF THE HANDLING OF A PROCUREMENT OF ONE HUNDRED CORE UNITS FOR PORTABLE POST OFFICES BY THE BUREAU OF FACILITIES, POST OFFICE DEPARTMENT. WE HAVE INQUIRED INTO THE MATTER AND HAVE DISCOVERED THAT THIS IS THE FIRST VOLUME PURCHASE OF THE SELF-SERVICE POSTAL UNITS AND IT INVOLVES THE FABRICATION OF COMPONENT PARTS, DELIVERY TO AND ASSEMBLY AT SELECTED SITES IN LOCATIONS THROUGHOUT THE UNITED STATES.

THREE ATTEMPTS HAVE NOW BEEN MADE TO EFFECTUATE THE PROCUREMENT. INVITATION FOR BIDS NO. 1261, ISSUED ON MARCH 11, 1966, AND OPENED ON APRIL 28, 1966, RESULTED IN FIVE BIDS RANGING FROM $12,100 EACH TO $16,729.36. THE TWO LOWEST BIDS OF $12,100.00 AND $12,155.00 WERE DISREGARDED AS NONRESPONSIVE AND THE THIRD LOWEST BID, THAT OF YOUR COMPANY IN THE AMOUNT OF $15,500, WAS CONSIDERED UNREASONABLY HIGH. INDEPENDENT GOVERNMENT ESTIMATE OF THE COST OF PERFORMANCE RANGED FROM $7,500 TO $8,000 EACH AND ALL BIDS WERE CONSEQUENTLY REJECTED AS EXCESSIVE.

EACH BIDDER WHO HAD BID ON THE INVITATION WAS SENT A COPY OF REQUEST FOR PROPOSALS NO. NC-37-66 ISSUED ON MAY 2 COVERING THE SAME REQUIREMENT. A HEDGE AGAINST THE POSSIBILITY OF UNREASONABLE PRICES SIMPLER DRAWINGS AND SPECIFICATIONS WERE PREPARED AFTER ISSUANCE OF THE SOLICITATION AND PRIOR TO RECEIPT OF PROPOSALS. THE FIVE OFFERS RECEIVED RANGED UPWARD FROM THE PRICE SUBMITTED BY YOUR COMPANY. NEGOTIATIONS WERE UNDERTAKEN WITH YOU, AND A PRE-AWARD SURVEY TEAM VISITED YOUR COMPANY ON MAY 20, THE DAY AFTER THE CLOSING DATE FOR RECEIPT OF THE OFFERS. THE TEAM CONCLUDED THAT THE PRICE WAS STILL UNREASONABLY HIGH AND THE COST BREAKDOWN WHICH YOU FURNISHED INDICATED THAT IT WOULD BE IMPOSSIBLE TO INDUCE YOU TO REDUCE YOUR PRICE TO AN AMOUNT CONSIDERED REASONABLE.

INVITATION FOR BIDS NO. 1357, BASED ON FURTHER REVISED SPECIFICATIONS AND DRAWINGS, WAS ISSUED ON MAY 24 WITH AN OPENING DATE OF JUNE 20. THE DEPARTMENT ADVISES US THAT LOWER PRICES ARE EXPECTED TO RESULT FROM THE THIRD SOLICITATION BECAUSE OF THE SIMPLER REQUIREMENTS AND BECAUSE BIDDERS ARE NOW PERMITTED TO BID ON A REGIONAL BASIS AS WELL AS ON AN AGGREGATE BASIS. ECONOMIES ARE SAID TO BE LIKELY TO FLOW FROM LOCAL FABRICATION.

OUR OFFICE HAS NEVER CONDONED THE INDISCRIMINATE ISSUANCE OF INVITATIONS AND THEIR CANCELLATION AFTER BID OPENING BECAUSE OF THE DELETERIOUS EFFECT SUCH PROCEDURES ARE BOUND TO HAVE UPON THE MORALE OF BIDDERS AND THE FAIRNESS OF THE COMPETITIVE BIDDING SYSTEM. AS THE COURT OBSERVED IN THE MASSMAN CONSTRUCTION COMPANY V. UNITED STATES, 102 CT.CL. 699, AT PAGE 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.'

ALTHOUGH THE SAME REASONS DID NOT APPLY WITH EQUAL FORCE TO NEGOTIATED PROCUREMENTS, WE THINK THE PRINCIPLE IS EQUALLY FOR APPLICATION.

NEVERTHELESS CONGRESS HAS SEEN FIT TO EMPOWER AGENCY HEADS WITH AUTHORITY TO REJECT ALL BIDS AND CANCEL INVITATIONS WHEN IT IS IN THE PUBLIC INTEREST TO DO SO. CF. 41 U.S.C. 253 (B) STATING THAT "* * * ALL BIDS MAY BE REJECTED WHEN THE AGENCY HEAD DETERMINES THAT IT IS IN THE PUBLIC INTEREST SO TO DO.' , WHICH HAS EQUAL, IF NOT GREATER, APPLICATION TO NEGOTIATED PROCUREMENTS. IT HAS FREQUENTLY BEEN HELD THAT A SOLICITATION OF OFFERS DOES NOT IMPORT ANY OBLIGATION TO ACCEPT ANY OF THE PROPOSALS RECEIVED, INCLUDING THE LOWEST RESPONSIVE BID. PERKINS V. LUKENS STEEL CO., 310 U.S. 113; O-BRIEN V. CARNEY, ET AL., 6 F.SUPP. 761; 42 COMP. GEN. 604, 606; 41 ID. 709. THE REGULATIONS PERMIT THE CANCELLATION OF INVITATIONS WHEN ALL BIDS RECEIVED ARE AT UNREASONABLE PRICES OR WHEN IT APPEARS THAT THE NEEDS OF THE GOVERNMENT CAN BE SATISFIED BY A LESS EXPENSIVE ARTICLE DIFFERING FROM THAT ON WHICH BIDS WERE INVITED. FEDERAL PROCUREMENT REGULATIONS 1 2.404-1 (4) AND (5). FURTHERMORE THE THREE SOLICITATIONS ISSUED IN THIS CASE EXPRESSLY RESERVED TO THE GOVERNMENT THE RIGHT TO REJECT ALL BIDS OR OFFERS.

ALTHOUGH IT IS REGRETTABLE THAT THE SAME REQUIREMENT HAD TO BE RESTATED AND RESUBMITTED TO COMPETITION THREE TIMES IT APPEARS FROM THE RECORD THAT THE PROCEDURE WAS UNAVOIDABLE AND NOT ATTRIBUTABLE TO ANY NEGLIGENCE ON THE PART OF GOVERNMENT OFFICIALS. WE ARE UNAWARE OF ANY SOUND BASIS UPON WHICH WE WOULD BE JUSTIFIED IN QUESTIONING THE LEGALITY OF THE AWARD OF AWARDS PROPOSED TO BE MADE UNDER THE MOST RECENT INVITATION NOR WOULD WE BE AUTHORIZED TO DIRECT ITS CANCELLATION AND THE CONSUMMATION OF A CONTRACT WITH YOUR COMPANY PURSUANT TO REQUEST FOR PROPOSALS NO. NC-37- 66. WE MUST THEREFORE ADVISE YOU THAT WE INTEND TO TAKE NO FURTHER ACTION ON THE MATTER.