B-158749, APR. 21, 1966

B-158749, APR. 21, 1966

TO PAGE AIRWAYS, INC.:

REFERENCE IS MADE TO YOUR TELEGRAM OF MARCH 20, 1966, AND LETTER DATED MARCH 21, 1966, WITH ENCLOSURES, PROTESTING AGAINST THE ALLEGEDLY UNAUTHORIZED METHODS AND PROCEDURES USED BY THE UNITED STATES ARMY ENGINEER DISTRICT, BALTIMORE, CORPS OF ENGINEERS, BALTIMORE, MARYLAND, IN THE ISSUING, PROCESSING AND EVALUATION OF INVITATION FOR BIDS (IFB) NO. ENG-18-020-66-17 (LINE ITEM NO. 40) ISSUED ON NOVEMBER 17, 1965. THE WORK CONSISTED OF THE CONVERSION OF GOVERNMENT-FURNISHED DEHUMIDIFICATION UNITS FROM ELECTRICITY TO STEAM AND INSTALLATION OF THESE UNITS IN FOUR 1-STORY WAREHOUSES TOTALING APPROXIMATELY 960,000 SQUARE FEET. THE IFB ALSO CALLED FOR THE REPLACEMENT OF STEEL ROLLUP CARGO AND PERSONNEL DOORS WITH MASONRY UNITS, SEALING AND PAINTING CLERESTORY WINDOWS, AND SEALING ALL EXPANSION JOINTS. THE WORK WAS TO BE PERFORMED AT THE WAREHOUSES LOCATED AT TOBYHANNA ARMY DEPOT, PENNSYLVANIA. BID OPENING WAS SET FOR DECEMBER 9, 1965, IN THE BALTIMORE DISTRICT OFFICE.

UPON THE OPENING OF BIDS ON DECEMBER 9, 1965, IT WAS DETERMINED THAT THE LUMP-SUM BID OF $283,690 SUBMITTED BY PAGE AIRWAYS, INC., WAS THE LOW BID. THE LOW BID RECEIVED UNDER THIS IFB EXCEEDED THE GOVERNMENT ESTIMATE OF $172,634 BY 64.33 PERCENT. THE CONTRACTING OFFICER THEREFORE DETERMINED THAT ALL BIDS RECEIVED WERE AT UNREASONABLE PRICES, AND ALL BIDS WERE REJECTED PURSUANT TO THE ARMED SERVICES PROCUREMENT REGULATION 2 -404.1/B//VI) WHICH PROVIDES THAT INVITATIONS FOR BIDS MAY BE CANCELED AFTER OPENING BUT PRIOR TO AWARD WHERE THE CONTRACTING OFFICER DETERMINES IN WRITING THAT ALL OTHERWISE ACCEPTABLE BIDS RECEIVED ARE AT UNREASONABLE PRICES.

ON FEBRUARY 14, 1966, THE CORPS OF ENGINEERS, BALTIMORE, MARYLAND, READVERTISED THE WORK UNDER IFB NO. ENG-18-020-66-25 (LINE ITEM NO. 40). ALTHOUGH THE WORK INVOLVED WAS SUBSTANTIALLY THE SAME AS THAT CALLED FOR UNDER THE EARLIER IFB, THE BID PRICE SCHEDULE FOR THIS INVITATION DIFFERED FROM THAT ENCLOSED WITH IFB NO. ENG-18-020-66-17. THE ORIGINAL INVITATION PROVIDED FOR A LUMP-SUM BID FOR THE WORK ON ALL FOUR WAREHOUSES. THE PRICE SCHEDULE IN THE SECOND INVITATION PROVIDED FOR A PRICE FOR A BASE BID (WORK ON THREE WAREHOUSES) AND A SEPARATE PRICE FOR AN ADDITIVE ITEM (WORK ON THE FOURTH WAREHOUSE).

THE ADMINISTRATIVE REPORT INDICATES THAT PRIOR TO THE ISSUANCE OF THE SECOND INVITATION, THE GOVERNMENT ESTIMATE HAD BEEN REVIEWED AND SOME RATHER SUBSTANTIAL ERRORS HAD BEEN DISCOVERED THEREIN. A CORRECTED ESTIMATE WAS THEREFORE PREPARED IN THE INCREASED AMOUNT OF $181,831 FOR THE BASE BID, PLUS $65,863 FOR THE ADDITIVE OR A TOTAL OF $247,694 FOR THE FOUR WAREHOUSES.

IN OUR OPINION, THE ACTION TAKEN BY THE CONTRACTING OFFICER IN REJECTING ALL BIDS RECEIVED UNDER IFB ENG-18-020-66-17 (LINE ITEM NO. 40) WAS A PROPER EXERCISE OF ADMINISTRATIVE DISCRETION UNDER 10 U.S.C. 2305/C), WHICH PROVIDES FOR REJECTION OF ALL BIDS WHEN SUCH ACTION IS DETERMINED TO BE IN THE GOVERNMENT'S INTEREST, AND UNDER APPLICABLE REGULATIONS WHICH PROVIDE THAT INVITATIONS FOR BIDS MAY BE CANCELED AFTER OPENING BUT PRIOR TO AWARD WHEN THE CONTRACTING OFFICER DETERMINES IN WRITING THAT ALL OTHERWISE ACCEPTABLE BIDS RECEIVED ARE AT UNREASONABLE PRICES. IN THIS CONNECTION, THE DECISIONS OF THIS OFFICE HAVE CONSISTENTLY HELD THAT AN INVITATION FOR BIDS DOES NOT IMPORT ANY OBLIGATION TO ACCEPT ANY OF THE BIDS RECEIVED AND ALL BIDS MAY BE REJECTED WHERE IT IS DETERMINED TO BE IN THE GOVERNMENT'S INTEREST TO DO SO. SEE 36 COMP. GEN. 364, 37 ID. 760 AND 39 ID. 86.

IN ADDITION, WE NOTE THAT SECTIONS 3679 AND 3732, REVISED STATUTES, 31 U.S.C. 665/A) AND 41 ID. 11, PROHIBIT THE MAKING OF CONTRACTS UNLESS THE SAME IS AUTHORIZED BY LAW OR IS UNDER AN APPROPRIATION ADEQUATE TO ITS FULFILLMENT. SEE 42 COMP. GEN. 81. THE ADMINISTRATIVE REPORT STATES THAT THE MILITARY CONSTRUCTION AUTHORIZATION ACT FOR FISCAL YEAR 1966 (PUBLIC LAW 89-188) AUTHORIZED THE EXPENDITURE OF ONLY $199,000 FOR THIS PROJECT AT TOBYHANNA ARMY DEPOT. AN AWARD TO PAGE AIRWAYS, INC., FOR $283,690 UNDER THE EARLIER INVITATION WOULD HAVE EXCEEDED THIS CONGRESSIONAL AUTHORIZATION. FOR THE SAME REASON THE ADMINISTRATIVE OFFICE HAS PROPOSED TO MAKE AN AWARD TO THE LAM BUILDING CORPORATION FOR ONLY THE BASE BID SUBMITTED UNDER THE PRESENT INVITATION.

WE FULLY APPRECIATE YOUR VIEWS WITH RESPECT TO THE CONSEQUENCES RESULTING FROM THE REJECTION OF ALL BIDS AFTER BID OPENING AND REALIZE THAT IT MAY OPERATE TO THE DISADVANTAGE OF SOME OR ALL OF THE BIDDERS WHOSE BIDS HAVE BEEN EXPOSED. IT IS FOR EXACTLY THAT REASON THAT THIS OFFICE HAS CONSISTENTLY EXPRESSED SERIOUS CONCERN IN ALL CASES INVOLVING THE REJECTION OF BIDS AFTER OPENING.

HOWEVER, FOR THE REASONS STATED ABOVE, WE FIND NO LEGAL BASIS FOR OBJECTION TO THE ADMINISTRATIVE ACTION IN THIS CASE AND YOUR PROTEST IS DENIED.