B-163030, FEB. 8, 1968

B-163030, FEB. 8, 1968

BIDS - REJECTION AND READVERTISEMENT - JUSTIFICATION DECISION TO ZARING INDUSTRIES, INC., CONCERNING PROTEST AGAINST CANCELLATION OF TWO INVITATIONS BY NAVAL AVIONICS FACILITY FOR FURNISHING MAGNETIC AMPLIFIERS AND SWITCH MODULE ASSEMBLIES. CANCELLATION OF INVITATION AFTER OPENING BECAUSE GOVT.-OWNED TEST EQUIPMENT COULD NOT BE FURNISHED NOR COMMERCIALLY MANUFACTURED WITHIN TIME FRAME REQUIRED AND NEGOTIATION WITH ONLY KNOWN USER OF THE SPECIFIED TEST EQUIPMENT ON BASIS THAT IT WAS IMPRACTICABLE TO OBTAIN COMPETITION, 10 U.S.C. 2304 (A) (10) WAS NOT ARBITRARY OR CAPRICIOUS AND THEREFORE PROTEST MUST BE DENIED. THE CANCELLATION OF AN INVITATION BECAUSE OF AMBIGUIOUS SPECIFICATIONS WAS PROPER AND THERE IS NO LEGAL BASIS FOR OBJECTION ON BASIS OF RECORD. B-159287, JULY 26, 1966, B-160513, JAN. 31, 1967.

TO ZARING INDUSTRIES, INC.:

REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 30, 1967, WITH ENCLOSURES, PROTESTING AGAINST THE CANCELLATION OF INVITATIONS FOR BIDS NOS. N00163-68 -B-0008 AND N00163-68-B-0258, ISSUED BY THE NAVAL AVIONICS FACILITY, INDIANAPOLIS, INDIANA (NAFI).

INVITATION FOR BIDS (IFB) N00163-68-B-0008 WAS ISSUED ON JULY 20, 1967, AND CALLED FOR THE FURNISHING OF 667 SUMMING MAGNETIC AMPLIFIERS TO BE MANUFACTURED IN ACCORDANCE WITH BUORD DRAWING 1347270, REVISION K. IFB'S WERE MAILED TO 38 PROSPECTIVE SUPPLIERS AND ELEVEN BIDS WERE RECEIVED. BIDS WERE OPENED ON AUGUST 7, 1967, AND YOUR FIRM WAS THE LOW BIDDER. HOWEVER, A LATE BID RECEIVED FROM DIETZ DESIGN INC. (DIETZ), WAS LOWER AND IT WAS SUBSEQUENTLY DETERMINED THAT THE LATE ARRIVAL OF DIETZ'S BID WAS DUE TO A DELAY IN THE MAIL.

THE PROCURING AGENCY REPORTS THAT DURING THE EVALUATION OF BIDS IT WAS DISCOVERED THAT NO PROVISION HAD BEEN MADE FOR THE FURNISHING TO THE SUCCESSFUL BIDDER OF GOVERNMENT-OWNED CORE TEST EQUIPMENT, SA 2271389, REQUIRED FOR TESTING AS SPECIFIED BY NOTE 7 ON DRAWING 1347288. THE ONLY PIECE OF THE TEST EQUIPMENT IN EXISTENCE WAS IN USE BY DIETZ DESIGN UNDER CONTRACT N00163-67-C-0562 AND WOULD NOT BE AVAILABLE FOR USE BY ANOTHER CONTRACTOR UNTIL FEBRUARY 1968. WITHOUT THE TEST EQUIPMENT PERFORMANCE OF THE CONTRACT WOULD BE IMPOSSIBLE, SINCE IT IS REQUIRED IN THE MANUFACTURE OF THE SUMMING MAGNETIC AMPLIFIERS. THE SA 2271389 DRAWING IS NOT ADEQUATE FOR THE MANUFACTURE OF THE CORE TEST EQUIPMENT BY A COMMERCIAL CONCERN, AND THERE WAS INSUFFICIENT TIME FOR NAFI TO MANUFACTURE THIS EQUIPMENT AND PROVIDE IT TO ANOTHER CONTRACTOR WITHIN THE TIME REQUIRED FOR PERFORMANCE OF THE PROPOSED CONTRACT, IT BEING ESTIMATED THAT IT WOULD TAKE AT LEAST SIX MONTHS FOR NAFI TO MANUFACTURE THE CORE TEST EQUIPMENT.

ON THE ABOVE FACTS, THE CONTRACTING OFFICER DETERMINED THAT ALL BIDS SHOULD BE REJECTED. THE IFB WAS CANCELLED ON SEPTEMBER 15, 1967, AND ALL BIDDERS WERE PROMPTLY NOTIFIED OF SUCH ACTION. CONTRACT N00163-68-C-0063 FOR FURNISHING THE AMPLIFIERS WAS NEGOTIATED WITH DIETZ AT A UNIT PRICE OF $22.35, UNDER 10 U.S.C. 2304 (A) (10) (PROPERTY OR SERVICES FOR WHICH IT IS IMPRACTICAL TO OBTAIN COMPETITION) AND AUTHORIZED THE RENT FREE USE OF THE TEST EQUIPMENT WHICH WAS IN POSSESSION OF DIETZ UNDER CONTRACT N00163- 67-C-0562.

WE ARE AWARE THAT THE REJECTION OF ALL BIDS AFTER THEY ARE OPENED AND EACH BIDDER HAS LEARNED HIS COMPETITOR'S PRICES IS A SERIOUS MATTER AND SHOULD NOT BE DONE EXCEPT FOR COGENT REASONS. HOWEVER, THE PRINCIPAL EVIL OF SUCH ACTION DOES NOT RESULT WHERE THE PROCUREMENT IS NOT READVERTISED FOR COMPETITION, SINCE THERE IS THEN NO OPPORTUNITY FOR BIDDERS TO CHANGE THEIR PRICES IN THE LIGHT OF QUOTATIONS PREVIOUSLY SUBMITTED BY THEIR COMPETITORS. IN THIS CASE, SECTION 10 (B) OF THE SOLICITATION INSTRUCTIONS AND CONDITIONS SPECIFICALLY RESERVED TO THE GOVERNMENT THE RIGHT TO REJECT ANY AND 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 THE GOVERNMENT. THAT AUTHORITY HAS BEEN DELEGATED TO THE CONTRACTING OFFICER BY THE TERMS OF ASPR 2-404.1 (B) (VIII), WHICH PROVIDES FOR CANCELLATION OF AN IFB WHERE SUCH ACTION IS DETERMINED TO BE IN THE BEST INTEREST OF THE GOVERNMENT. SUCH AUTHORITY TO REJECT ANY AND 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 THAT SINCE CONTRACTING OFFICERS ARE AGENTS OF AND ARE REQUIRED TO WORK IN THE BEST INTERESTS OF THE GOVERNMENT, THEIR ACTIONS IN REJECTING ALL BIDS MAY NOT BE CONSIDERED IMPROPER WHEN BASED ON SUBSTANTIAL REASONS LEADING TO A BONA FIDE BELIEF THAT THE INTEREST OF THE GOVERNMENT WILL BE SERVED THEREBY. B-156956, JUNE 22, 1965. ALSO SEE 38 COMP. GEN. 235; 39 COMP. GEN. 86, 88 AND B- 160513, JANUARY 31, 1967.

IN THE PRESENT CASE IT IS APPARENT THAT IT WOULD NOT HAVE BEEN POSSIBLE FOR THE GOVERNMENT TO FURNISH THE CORE TEST EQUIPMENT REQUIRED FOR THE MANUFACTURE OF THE AMPLIFIERS UNTIL COMPLETION OF THEIR USE UNDER THE EARLIER CONTRACT, NOR WOULD IT HAVE BEEN POSSIBLE FOR THE EQUIPMENT TO HAVE BEEN MANUFACTURED BY A COMMERCIAL CONCERN. CONSEQUENTLY, EFFECTIVE COMPETITION WITHIN THE DESIRED TIME FRAME WAS IMPOSSIBLE, AND SINCE THE PROCURING ACTIVITY WOULD BE FACED WITH THE SAME SITUATION ON A READVERTISEMENT AND THE ADMINISTRATIVE AGENCIES DO HAVE BROAD DISCRETION IN SUCH MATTERS, WE CANNOT CONCLUDE THAT THE REJECTION OF ALL BIDS UNDER IFB N00163-68-B-0008 AND THE NEGOTIATION OF A CONTRACT WITH DIETZ PURSUANT TO 10 U.S.C. 2304 (A) (10), WAS ARBITRARY OR CAPRICIOUS.

TURNING OUR ATTENTION TO IFB N00163-68-B-0258, WE FIND THAT IT WAS ISSUED ON SEPTEMBER 28, 1967, AND CALLED FOR THE DELIVERY OF 92 SWITCH MODULE ASSEMBLIES TO BE MANUFACTURED IN ACCORDANCE WITH BUWEPS DRAWING 62A30F243, REVISION Y, AND ADDITIONAL SPECIFICATIONS LISTED IN SECTION 2.0 THEREOF. THESE ASSEMBLIES ARE REQUIRED IN THE MANUFACTURE OF COMPUTER CP/741 (V) (A) BEING MANUFACTURED BY NAFI. OF THE 12 BIDS RECEIVED IN RESPONSE TO THE INVITATION, YOUR FIRM SUBMITTED THE LOWEST BID. A PRE-AWARD SURVEY OF YOUR FIRM WAS CONDUCTED BY DCASD, INDIANAPOLIS, AND IT WAS RECOMMENDED THAT AWARD BE MADE TO YOUR FIRM.

HOWEVER, THE CONTRACTING OFFICER STATES THAT PRIOR TO AWARD IT WAS DETERMINED AND REPORTED TO HIM BY THE COGNIZANT TECHNICAL PERSONNEL THAT THE SPECIFICATIONS REQUIRED A SIGNIFICANT REVISION IN ORDER TO INCORPORATE A DESIRED IMPROVEMENT IN THE PERFORMANCE OF THE UNITS. THIS REVISION INVOLVED AN EXTENSIVE DESIGN CHANGE WHICH WOULD ELIMINATE EXCESSIVE BACK LASH OF THE POTENTIOMETER GEARS, AND ENVIRONMENTAL RETESTING BY THE GOVERNMENT WAS NECESSARY TO INSURE ADEQUACY OF SUCH CHANGE. WE ARE ADVISED THAT THE REQUIRED DELIVERY TIME OF THESE ASSEMBLIES DID NOT ALLOW SUFFICIENT TIME FOR COMMERCIAL PROCUREMENT AFTER THE DESIGN CHANGE WAS DETERMINED AND PROVEN. CONSEQUENTLY, IN ORDER TO COME AS CLOSE AS POSSIBLE TO MEETING THE DELIVERY SCHEDULE, IT WAS NECESSARY THAT PRODUCTION OF UNCHANGED PARTS AND DESIGN CHANGE ENGINEERING BE ACCOMPLISHED SIMULTANOUSLY. THUS, IT WAS DECIDED THAT THE ASSEMBLIES SHOULD BE MANUFACTURED BY NAFI IN-HOUSE.

SECTION 10 (B) OF THE SOLICITATION INSTRUCTIONS AND CONDITIONS OF THIS SOLICITATION ALSO RESERVED TO THE GOVERNMENT THE RIGHT TO REJECT ANY AND ALL BIDS. UNDER ASPR 2-404.1 (B) (I) THIS AUTHORITY IS VESTED IN THE CONTRACTING OFFICER WHERE AFTER OPENING AND PRIOR TO AWARD HE DETERMINES THAT THE PARTICULAR INVITATION INCLUDES INADEQUATE OR AMBIGUOUS SPECIFICATIONS. IN THE LIGHT OF THE APPLICABLE PRINCIPLES STATED ABOVE, WE MUST CONCLUDE THAT THERE WAS A PROPER BASIS FOR THE CONTRACTING OFFICER'S DETERMINATION THAT THE SPECIFICATIONS WERE INADEQUATE THAT THERE IS NO LEGAL BASIS ON WHICH WE MAY OBJECT TO THE ACTION TAKEN IN THE MATTER. SEE B-159287, JULY 26, 1966 AND B 160513, JANUARY 31, 1967.