B-169600, JUL. 20, 1970

B-169600, JUL. 20, 1970

BID PROTEST -- CANCELLATION & READVERTISEMENT DECISION TO ACME RUBBER STAMP CO. DENYING PROTEST AGAINST ACTION OF INTERNAL REVENUE SERVICE IN CANCELLING AN INVITATION FOR NUMBERING MACHINES AND READVERTISING BECAUSE OF DEFICIENT SPECIFICATIONS AND UNREASONABLE PRICES. CANCELLATION OF AN INVITATION AFTER OPENING OF BIDS WHEN IT WAS FOUND THAT THERE WERE INCONSISTENT PROVISIONS IN THE SPECIFICATIONS WAS PROPER. ALSO, FACT THAT PROTESTANT'S BID PRICE WAS 24% OVER PRICE PAID FOR SIMILAR ARTICLE IN A RECENT PREVIOUS PROCUREMENT MUST BE HELD TO BE PROPER REASON FOR CANCELLATION OF INVITATION. FURTHER THE FACT THAT A DEALER CANNOT BE COMPETITIVE IN PRICE WITH HIS MANUFACTURER IS NOT A MATTER TO BE QUESTIONED SINCE INVITATION WAS OPEN TO ALL WHO COULD MEET SPECIFICATIONS FACT THAT THREE MANUFACTURERS SUBMITTED BIDS SUPPORTS ADVERTISING RATHER THAN NEGOTIATING PROCUREMENT.

TO ACME RUBBER STAMP COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED APRIL 16, 1970, WITH ENCLOSURES, PROTESTING THE ACTION OF THE UNITED STATES TREASURY DEPARTMENT, INTERNAL REVENUE SERVICE FACILITIES MANAGEMENT BRANCH, ATLANTA, GEORGIA, IN CANCELLING INVITATION FOR BIDS (IFB) NO. SE-70-I 11 AND READVERTISING THE PROCUREMENT UNDER INVITATION FOR BIDS NO. SE 70-I- 12.

THE ORIGINAL INVITATION FOR BIDS NO. SE-70-I-11, REQUESTED BIDS FOR FURNISHING 40 EACH "NUMBERING MACHINES, OFFICE TYPE, BATES TYPE 13/D OR EQUAL, THIRTEEN BANDS ALL NUMERIC WITH BAND NUMBERED (0) THROUGH (9) HAND OPERATED. FIVE WHEELS ON RIGHT TO OPERATE AUTOMATICALLY, CONSECUTIVE, DUPLICATE AND REPEAT. EIGHT WHEELS ON LEFT TO BE NON AUTOMATIC. TYPE STYLE DIGITS 1 & 2, 6, 7, & 8, 12 & 13 TO 'STAND OUT' AS LARGER NUMBERS. (FIRST FIVE WHEELS AUTOMATIC; LAST EIGHT WHEELS NON AUTOMATIC). (FIRST DIGIT NOT DEPRESSABLE - ALL OTHERS DEPRESSABLE)."

BIDS WERE SOLICITED FROM 7 FIRMS, INCLUDING 3 MANUFACTURERS. YOUR BID, IN THE AMOUNT OF $130 PER UNIT, WAS THE ONLY RESPONSIVE BID RECEIVED AND OPENED AT THE SCHEDULED TIME ON FEBRUARY 16, 1970.

IT IS REPORTED THAT ON THE DAY OF BID OPENING THE BATES MANUFACTURING COMPANY (BATES) SUBMITTED A LETTER QUOTATION ON THE SOLICITATION, WHICH WAS NOT RECEIVED UNTIL AFTER TIME OF OPENING, OFFERING A UNIT PRICE OF $113.82 FOR A BATES STYLE C & W MACHINE. INCLUDED IN THE LETTER WAS THE FOLLOWING STATEMENT: "BATES TYPE 13/D DOES NOT HAVE ANY 'STAND OUT' FIGURES. IN STYLE D TYPE, ALL FIGURE WHEELS ARE THE SAME SIZE, 3/16" IN HEIGHT. THE STYLE C & W TYPE HAS THE STYLE W TYPE, LARGER NUMBERS, ON WHEELS 1 & 2, 6, 7, & 8, 12 & 13, PER YOUR SPECIFICATIONS." ON FEBRUARY 18, 1970, THE CONTRACTING OFFICER DETERMINED THAT THE INVITATION SHOULD BE CANCELED AND RESOLICITED UNDER CORRECTED SPECIFICATIONS. IN ADDITION, IT WAS DETERMINED THAT YOUR UNIT PRICE OF $130 WAS UNREASONABLE BASED ON A RECENT PURCHASE OF A LIKE QUANTITY OF NUMBERING MACHINES BY THE SOUTHEAST REGION AT $104.87 PER UNIT. ON FEBRUARY 20, 1970, YOU WERE NOTIFIED BY LETTER OF THE CANCELLATION OF INVITATION FOR BIDS SE-70-I-11, FOR THE STATED REASON THAT THE SPECIFICATIONS WERE DEFICIENT AND THAT BIDS RECEIVED WERE AT UNREASONABLE PRICES.

ON FEBRUARY 20, 1970, THE PROCUREMENT WAS READVERTISED UNDER IFB SE 70-I- 12 WITH THE CORRECTED SPECIFICATIONS REFLECTING THE BATES STYLE C&W OR EQUAL MACHINE. NOTWITHSTANDING THE NOTICE TO YOU THAT YOUR BID PRICE UNDER THE PREVIOUS INVITATION WAS CONSIDERED TO BE UNREASONABLE, YOU SUBMITTED THE SAME UNIT PRICE OF $130. THE LOWEST BID IN THE AMOUNT OF $113.82 PER UNIT WAS SUBMITTED BY BATES. ON MARCH 16, 1970, AWARD WAS MADE TO BATES AT $113.82 PER UNIT.

THE PRINCIPAL ARGUMENT ADVANCED BY YOU IN SUPPORT OF YOUR PROTEST AGAINST CANCELLATION OF THE INVITATION FOR BIDS IS THAT INSOFAR AS YOU ARE CONCERNED THE SPECIFICATIONS WERE SUFFICIENT AS EVIDENCED BY THE SAMPLE IMPRESSION YOU INCLUDED IN YOUR BID. YOU ALSO STATE THAT YOU FAIL TO UNDERSTAND HOW YOUR BID PRICE COULD BE UNREASONABLE, WHEN THE PROCURING ACTIVITY WAS USING ONE MANUFACTURER'S PRICE. LASTLY, YOU CONCLUDE THAT THE GOVERNMENT COULD SAVE DOLLARS BY NEGOTIATING WITH MANUFACTURERS RATHER THAN USING FORMAL ADVERTISING BECAUSE AS A DEALER IT IS IMPOSSIBLE TO COMPETE WITH THE MANUFACTURER.

SUBPARAGRAPH (B) OF 41 U.S.C. 253, THE STATUTORY AUTHORITY GOVERNING FORMALLY ADVERTISED PROCUREMENT BY THE CIVILIAN AGENCIES OF THE GOVERNMENT, PERMITS THE REJECTION OF ALL BIDS WHEN IT IS DETERMINED THAT REJECTION IS IN THE PUBLIC INTEREST. SECTION 1-2.404-1(B) OF THE FEDERAL PROCUREMENT REGULATIONS (FPR), IMPLEMENTING THE ADVERTISING STATUTE, SETS FORTH SEVEN EXAMPLES OF PUBLIC INTEREST JUSTIFYING THE CANCELLATION OF AN INVITATION. THE CONTRACTING OFFICER RELIED UPON THREE APPLICABLE EXAMPLES SET FORTH THEREUNDER, (1) INADEQUATE, AMBIGUOUS, OR OTHERWISE DEFICIENT SPECIFICATIONS WERE CITED IN THE INVITATION FOR BIDS. (5) ALL OTHERWISE ACCEPTABLE BIDS RECEIVED ARE AT UNREASONABLE PRICES. (7) THE BIDS RECEIVED DID NOT PROVIDE COMPETITION WHICH WAS ADEQUATE TO INSURE REASONABLE PRICES.

WE CONCUR WITH THE CONTRACTING OFFICER THAT THE SPECIFICATIONS CALLING FOR A BATES TYPE 13/D NUMBERING MACHINE, WHICH DOES NOT HAVE "STAND OUT" NUMBERS, WITH THE BALANCE OF THE SPECIFICATIONS REQUIRING CERTAIN BANDS TO HAVE LARGER NUMBERS BUT WITHOUT SPECIFYING THAT THE LARGER NUMBERS WERE TO BE OF THE "TYPE W STYLE", CREATED AN AMBIGUITY AS TO THE EXACT SIZE AND STYLE OF THE LARGER NUMBER DESIRED. WE FURTHER CONCUR THAT YOUR BID PRICE, REPRESENTING A 24 PER CENT INCREASE OVER A PRICE PAID FOR LIKE MACHINES A SHORT TIME EARLIER, IS A BASIS FOR CANCELLATION OF THE INVITATION FOR BIDS FOR UNREASONABLE PRICE.

IT HAS BEEN CONSISTENTLY HELD THAT AN INVITATION FOR BIDS DOES NOT IMPORT ANY OBLIGATION ON THE GOVERNMENT TO ACCEPT ANY OF THE OFFERS SUBMITTED IN RESPONSE THERETO, AND THAT ALL BIDS MAY BE REJECTED WHERE IT IS DETERMINED TO BE IN THE BEST INTERESTS OF THE GOVERNMENT TO DO SO. 17 COMP. GEN. 554 (1938); 26 ID. 49 (1946); 37 ID. 760 (1958); 41 ID. 709, 711 (1962).

LASTLY, IT IS YOUR POSITION THAT THE NUMBERING MACHINES SHOULD BE PROCURED BY NEGOTIATION, SINCE THAT METHOD WOULD RESULT IN A SUBSTANTIAL SAVING TO THE GOVERNMENT. WHILE THIS CONCLUSION MIGHT BE PROPER IF THE SPECIFICATIONS HAD IN FACT PRECLUDED ALL BUT ONE MANUFACTURER OR HIS DEALER FROM BIDDING, THE FACT THAT THERE ARE THREE OTHER AMERICAN MANUFACTURERS WHO ARE COMPARABLE TO BATES AND CAPABLE OF MANUFACTURING THIS NUMBERING MACHINE WOULD APPEAR TO INDICATE AN ADEQUATE POSSIBILITY OF COMPETITION. UNDER THE CIRCUMSTANCES, AND SINCE THE PROVISIONS OF 41 U.S.C. 253, SUPRA, REQUIRE THE USE OF FORMAL ADVERTISING WHEN FEASIBLE, WE MUST CONCLUDE THAT ITS USE HERE WAS PROPER. THE FACT THAT A DEALER CANNOT BE COMPETITIVE IN PRICE WITH HIS MANUFACTURER IS NOT A MATTER TO BE QUESTIONED BY THIS OFFICE, SINCE THE INVITATION FOR BIDS WAS OPEN TO ALL TO BID WHO COULD MEET THE STATED SPECIFICATIONS.

ACCORDINGLY, YOUR PROTEST MUST BE DENIED. HOWEVER, WE ARE SUGGESTING TO THE PROCURING ACTIVITY, FOR FUTURE PROCUREMENTS OF THE NUMBERING MACHINES, THAT A BROADER BASIS OF COMPETITION BE SOUGHT IN ADVERTISING THE NEXT PROCUREMENT.