B-165463, MAR. 13, 1969

B-165463, MAR. 13, 1969

TO ORCO MANUFACTURING COMPANY, INC.:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 10, 1968, ADDRESSED TO THE HONORABLE JAMES B. UTT, HOUSE OF REPRESENTATIVES, AND FORWARDED BY HIM FOR OUR CONSIDERATION ON OCTOBER 15, 1968. YOU PROTEST AGAINST THE CANCELLATION OF INVITATION FOR BIDS NO. F42600-69-B-0013 ISSUED BY THE DIRECTORATE OF PROCUREMENT AND PRODUCTION, OGDEN AIR MATERIEL AREA, HILL AIR FORCE BASE, UTAH, FOR QUANTITIES OF BLU-27/B, 750 LB. NAPALM BOMBS UNDER WHICH YOUR FIRM WAS THE LOW BIDDER, AND THE AWARD TO AMERICAN ELECTRIC, INC., OF LA MIRANDA, CALIFORNIA, FOR THE SAME REQUIREMENT UNDER REQUEST FOR PROPOSALS NO. F42600-69-R-0015.

THE RECORD OF THE DEPARTMENT OF THE AIR FORCE SHOWS THAT IN JULY 1968 IT ESTIMATED THAT 12,000 BLU-27/B FIRE BOMBS WOULD BE REQUIRED MONTHLY BEGINNING JANUARY 1, 1969, FOR THE ENSUING 12 ONTHS; THAT SINCE FUNDS WERE THEN AVAILABLE FOR ONLY 100,095 BOMBS AND AN URGENT REQUIREMENT EXISTED FOR 60,000, AND IT WAS CONSIDERED THAT ONLY A PRIOR PRODUCER, OF WHICH THERE WERE TWO, WOULD BE ABLE TO MEET THE DELIVERY SCHEDULE FOR THE FIRST 60,000, IT WAS DECIDED TO PROCURE THE 60,000 BOMBS BY COMPETITIVE NEGOTIATION WITH THE PREVIOUSLY QUALIFIED SOURCES AND TO ISSUE AN IFB FOR 40,095 BOMBS ON WHICH BIDS COULD BE SUBMITTED BY ANY FIRM WISHING TO DO SO. IN ORDER TO ALLOW MAXIMUM FLEXIBILITY AND TO COVER ANY EVENTUALITY (SUCH AS AVAILABILITY OF ADDITIONAL FUNDS) THE TWO INSTRUMENTS CONTAINED ALTERNATE AND OPTION PROVISIONS FOR ADDITIONAL QUANTITIES. THESE ACTIONS WERE CONSIDERED APPROPRIATE DUE TO THE FUNDING PROBLEMS EXPERIENCED AND THE IMPORTANCE OF MEETING SOUTHEAST ASIA REQUIREMENTS.

THE RECORD SHOWS THAT ON AUGUST 6, 1968, THE RFP WAS ISSUED TO THE ONLY TWO FIRMS WHOM IT IS REPORTED PREVIOUSLY MANUFACTURED IDENTICAL OR SIMILAR ITEMS (AMERICAN ELECTRIC, INC., AND SERGEANT FLETCHER COMPANY), COVERING A FIVE MONTH REQUIREMENT OF 60,000 BOMBS, PLUS SUPPORTING DATA (30,000 NON- SET-ASIDE AND 30,000 LABOR SURPLUS AREA SET-ASIDE) WITH ALTERNATE AND OPTION PROVISIONS FOR THE ADDITIONAL QUANTITY OF 84,000 BOMBS. ON AUGUST 9, 1968, THE IFB WAS ISSUED TO ALL POTENTIAL SUPPLIERS, INCLUDING ORCO, FOR 40,095 BOMBS PLUS SUPPORTING DATA (20,048 NON-SET-ASIDE AND 20,047 LABOR SURPLUS SET-ASIDE) WITH OPTION AND ALTERNATE BID PROVISIONS FOR ADDITIONAL QUANTITIES UP TO 84,000. OPENING DATES FOR PROPOSALS AND BIDS WERE SET FOR AUGUST 27, 1968, AND SEPTEMBER 6, 1968, RESPECTIVELY, FOR THE RFP AND THE IFB.

ON OPENING OF THE PROPOSALS AND BIDS IT WAS FOUND THAT AMERICAN ELECTRIC HAD SUBMITTED THE LOWEST PROPOSAL ON THE RFP FOR ALL THE ITEMS OF BOMBS AT $179.77 EACH, EXCEPT FOR ONE ITEM WHICH IT BID AT $181.77 EACH. ORCO WAS THE LOW BIDDER UNDER THE IFB FOR ALL ITEMS AT $183.45 EACH. AMERICAN ELECTRIC WAS THE NEXT LOW BIDDER UNDER THE IFB AT $184.77 PER UNIT. BOTH AMERICAN ELECTRIC AND ORCO QUALIFIED FOR THE LABOR SURPLUS SET-ASIDE. BASED ON THE PRICES RECEIVED, THE ADDITIONAL COST TO THE GOVERNMENT WHICH WOULD RESULT FROM MAKING A SPLIT AWARD WAS CALCULATED AT $147,549.60 AS FOLLOWS:

60,000 AMERICAN ELECTRIC $179.77 EQUALS $10,786,200.00

DATA 1,000.00

$10,787,200.00 40,095 ORCO $183.45 EQUALS $ 7,355,427.75

TOTAL $18,142,627.75 100,095 AMERICAN ELECTRIC $179.77 EQUALS $17,994,078.15 DATA 1,000.00

TOTAL

$17,995,078.15

SAVING$ 147,549.60 AS A RESULT OF THE ABOVE SAVING ACTION WAS TAKEN TO CANCEL THE IFB AND MAKE AWARD TO AMERICAN ELECTRIC.

SUBSEQUENT TO OPENING OF THE IFB, ADDITIONAL FUNDS WERE MADE AVAILABLE FOR THE TOTAL YEARLY BUY PROGRAM OF 144,000 BOMBS; BY WAIVING FIRST ARTICLE TESTING REQUIREMENTS FOR AMERICAN ELECTRIC, BY REASON OF THE FACT THAT THEY WERE CURRENTLY IN PRODUCTION ON THE ITEM, ITS UNIT PRICE WAS NEGOTIATED DOWN TO $179.54 FOR THE 144,000 QUANTITY. TOTAL AWARD TO AMERICAN ELECTRIC FOR 144,000 RESULTED IN AN AGGREGATE COST TO THE GOVERNMENT FOR 144,000 BOMBS MORE THAN $300,000 LESS THAN IF ONLY THE 60,000 QUANTITY HAD BEEN AWARDED TO AMERICAN UNDER THE RFP AND THE REMAINING 84,000 UNITS AWARDED TO ORCO UNDER THE IFB. CONSEQUENTLY CONTRACT NO. F42600-69-C-2205 WAS AWARDED ON OCTOBER 22, 1968, TO AMERICAN ELECTRIC FOR A TOTAL CONTRACT AMOUNT OF $25,854,760. DELIVERY OF THESE BOMBS IS AT THE RATE OF 12,000 PER MONTH, JANUARY THROUGH DECEMBER 1969, AS REQUIRED TO MEET HQ USAF DIRECTED P-21 SEA REQUIREMENTS. THE REQUIREMENT WAS ASSIGNED A UMMIPS NO. 2 PRIORITY.

UNDER 10 U.S.C. 2304 (A) (2) SUPPLIES MAY BE PURCHASED BY NEGOTIATION WHEN THE PUBLIC EXIGENCY WILL NOT PERMIT THE DELAY INCIDENT TO ADVERTISING. AS NOTED ABOVE, THE REQUIREMENT IN QUESTION WAS ASSIGNED AN ISSUE PRIORITY DESIGNATOR 2 UNDER THE UNIFORM MATERIEL MOVEMENT AND ISSUE PRIORITY SYSTEM. ARMED SERVICES PROCUREMENT REGULATION 3-202.2 (VI) PROVIDES THAT THE "PUBLIC EXIGENCY" EXCEPTION TO FORMAL ADVERTISING MAY BE USED FOR PROCURING ANY SUPPLIES ASSIGNED A PRIORITY FROM 1 TO 6 WITHOUT FURTHER JUSTIFICATION. IN THE CIRCUMSTANCES AND IN VIEW OF THE CONSIDERABLE SAVINGS EFFECTED, WE DO NOT QUESTION THE ADMINISTRATIVE DETERMINATION TO NEGOTIATE FOR THE ENTIRE 144,000 NEED OF THE AIR FORCE.

IT IS WELL SETTLED THAT AN INVITATION FOR BIDS DOES NOT IMPORT ANY OBLIGATION ON THE GOVERNMENT TO ACCEPT ANY OF THE OFFERS RECEIVED, AND THAT ALL BIDS MAY BE REJECTED WHERE IT IS DETERMINED TO BE IN THE BEST INTEREST OF THE GOVERNMENT TO SO DO. 17 COMP. GEN. 554; 26 ID. 49; 37 ID. 760; PERKINS V LUKENS STEEL CO., 310 U.S. 113. MOREOVER BY PARAGRAPH 10 (B) OF THE SOLICITATION, INSTRUCTIONS AND CONDITIONS OF THE INVITATION, STANDARD FORM 33-A, THE GOVERNMENT EXPRESSLY RESERVED THE RIGHT TO REJECT ANY AND ALL OFFERS RECEIVED UNDER THE INVITATION, WHICH AUTHORITY IS IN ACCORDANCE WITH THE PROVISIONS OF 10 U.S.C. 2305 (C). FROM THE FOREGOING, IT IS CLEAR THAT THE QUESTION OF WHETHER TO MAKE AN AWARD OR REJECT ALL BIDS IS PRIMARILY A MATTER OF ADMINISTRATIVE DISCRETION. IN THE ABSENCE OF CLEAR PROOF OF THE ABUSE OF SUCH DISCRETIONARY POWER, THIS OFFICE WILL NOT OBJECT TO SUCH ACTION. THIS IS ESPECIALLY TRUE WHERE, AS HERE, THE ACTION RESULTED IN CONSIDERABLE SAVINGS.

WE DO NOT CONSIDER THE EXACT PROCEDURE ADOPTED BY THE CONTRACTING OFFICER IN THIS CASE TO BE DESIRABLE, SINCE THERE IS CLEARLY SOME INCONSISTENCY IN HAVING TWO SOLICITATIONS OUTSTANDING AT THE SAME TIME COVERING SOME OR ALL OF THE SAME REQUIREMENT. WE SEE NO REASON WHY THE RFP COULD NOT HAVE BEEN OPENED UP TO PERMIT PROPOSALS BY NON-PRIOR PRODUCERS ON ANY QUANTITIES OVER THE FIRST 60,000. AT THE LEAST, THE RFP AND IFB COULD HAVE BEEN CROSS-REFERENCED TO EACH OTHER SO THAT THERE WOULD HAVE BEEN NO MISUNDERSTANDING OF THE EXACT METHOD OF AWARD INTENDED. HOWEVER, THERE IS NO REASON TO BELIEVE THAT THE RESULTS WOULD HAVE BEEN DIFFERENT, AND YOU WOULD PRESUMABLY HAVE INCURRED THE SAME BIDDING EXPENSE. AS TO BID PREPARATION COSTS, IT HAS REPEATEDLY BEEN HELD BOTH BY THIS OFFICE AND BY THE COURTS THAT THE ADVERTISING STATUTES WERE ENACTED FOR THE BENEFIT OF THE GOVERNMENT RATHER THAN THE BIDDER, AND UNLESS IT CAN BE SHOWN THAT HIS BID WAS SOLICITED WITHOUT ANY INTENTION THAT IT SHOULD BE HONESTLY CONSIDERED, AN UNSUCCESSFUL BIDDER HAS NO ENFORCEABLE CLAIM FOR BID PREPARATION COSTS. SEE HEYER PRODUCTS COMPANY, INC. V THE UNITED STATES, 147 CT. CL. (1959). IN THE INSTANT CASE THERE IS NO INDICATION THAT THE CONTRACTING OFFICER DID NOT ISSUE THE IFB IN GOOD FAITH AND HONESTLY CONSIDER YOUR BID.

FOR THE REASONS STATED, WE SEE NO BASIS TO DISTURB THE ACTION TAKEN AND YOUR PROTEST MUST BE DENIED.