B-174168, JAN 17, 1972

B-174168, JAN 17, 1972

BID PROTEST - CANCELLATION OF IFB - RECOVERY OF BID PREPARATION COSTS DENIAL OF PROTEST AGAINST THE CANCELLATION OF AN IFB ISSUED BY THE PROCUREMENT DIVISION, FORT BELVOIR, VA., FOR THE SUMMER OVERHAUL OF FAMILY HOUSING FURNACES AT THAT FACILITY. WHILE IT IS UNFORTUNATE THAT THE NEEDS AND PRIORITIES OF THE INSTALLATION WERE NOT DETERMINED PRIOR TO THE ISSUANCE OF THIS IFB, THIS RECORD WILL NOT SUPPORT A FINDING THAT THE ACTIONS OF THE CONTRACTING OFFICER WERE ARBITRARY OR IN SUCH BAD FAITH AS WOULD CONSTITUTE AN ABUSE OF THE DISCRETION ALLOWED FOR CANCELLATION UNDER 10 U.S.C. 2305(C). FURTHER, BID PREPARATION COSTS MAY ONLY BE RECOVERED IN THOSE CASES WHERE IT CAN BE SHOWN BY CLEAR AND CONVINCING PROOF THAT BIDS WERE NOT INVITED IN GOOD FAITH, BUT RATHER AS A PRETENSE TO CONCEAL THE INTENT TO AWARD A CONTRACT TO A FAVORED BIDDER AND TO WILLFULLY DISREGARD THE BID MOST ADVANTAGEOUS TO THE GOVERNMENT.

TO M. E. FLOW, INC.:

REFERENCE IS MADE TO YOUR LETTER DATED SEPTEMBER 21, 1971, TO THE HONORABLE JOEL T. BROYHILL, PROTESTING THE CANCELLATION OF INVITATION FOR BIDS (IFB) DABB19-72-B-0001 ISSUED AUGUST 5, 1971, BY THE DEPARTMENT OF THE ARMY, PROCUREMENT DIVISION, FORT BELVOIR, VIRGINIA.

THE SUBJECT IFB WAS ISSUED FOR THE SUMMER OVERHAUL, FURNACES, FAMILY HOUSING, AT THAT FACILITY.

BID OPENING, AUGUST 23, 1971, REVEALED THE RECEIPT OF BIDS FROM THREE FIRMS, WITH YOUR FIRM THE LOW BIDDER AT $41,342.00, WHICH WAS MORE THAN $7,000 BELOW THE GOVERNMENT ESTIMATE FOR THE REFERENCED PROJECT.

BEFORE THE PROSPECTIVE AWARD COULD BE CONSUMMATED, THE DIRECTOR OF FACILITIES ENGINEERING REQUESTED THAT CONTRACT ACTION ON THE SUBJECT PROJECT BE CANCELLED IN THE BEST INTERESTS OF THE GOVERNMENT IN ORDER TO RELEASE FUNDS TO COVER UNFORESEEN EMERGENCY REPAIRS IN THE FORM OF REPLACEMENT OF FIRE BRICK IN FOUR BOILERS AT LEWIS HEIGHTS, AND REPLACEMENT OF NUMEROUS FLOORS IN THE CAPEHART HOUSING. IT WAS FURTHER DECIDED TO PERFORM THE OVERHAUL REQUIREMENTS OF THE SUBJECT IFB THROUGH IN -HOUSE CAPABILITY ON A REDUCED SCALE.

ON SEPTEMBER 13, 1971, THE CONTRACTING OFFICER CANCELLED THE SUBJECT IFB, DETERMINING SUCH ACTION TO BE IN THE BEST INTEREST OF THE GOVERNMENT, AND ALL BIDDERS, INCLUDING YOUR FIRM, WERE ADVISED BY LETTERS DATED SEPTEMBER 14, 1971, OF THE CANCELLATION AND THE REASONS THEREFOR.

YOU CONTEND THAT IF THE PROCURING ACTIVITY KNEW THAT IT LACKED FUNDS FOR THE SUBJECT PROJECT, THE IFB SHOULD HAVE BEEN CANCELLED PRIOR TO BID OPENING.

IT IS FURTHER ALLEGED THAT YOU DID NOT RECEIVE AN IFB IN 1970, EVEN THOUGH ON THE PROCURING ACTIVITY'S MAILING LIST. YOU RELATE THAT THE ACTIVITY'S EXPLANATION WAS THAT IT WAS UNABLE TO LOCATE YOUR CARD IN ITS FILES, BUT THAT YOU WERE APPRISED SEVERAL DAYS LATER THAT THE CARD HAD BEEN LOCATED.

YOUR LETTER ALSO CHARGES THAT IN THE COURSE OF A PREVIOUS PROCUREMENT FOR THE REPLACEMENT OF 23 HOT WATER BOILERS, THE SUCCESSFUL BIDDER'S PRICE WAS LESS THAN THE COST OF THE EQUIPMENT ALONE, AND THAT THE CONTRACTOR (V. L. FREDERICK) "RECEIVED AN EXTRA FOR MORE THAN THE HIGHEST BID."

IN CONCLUSION, YOU SUBMIT THAT SINCE YOU WERE REQUIRED TO POST A BID BOND IN THE AMOUNT OF 20 PERCENT OF THE BID PRICE, THE GOVERNMENT SHOULD TENDER RESTITUTION IN A CORRESPONDING SUM BECAUSE IT WAS DERELICT IN ITS PURPORTED OBLIGATION TO AWARD A CONTRACT TO THE LOW BIDDER.

ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2-404.1(B)(VIII) PERMITS THE CANCELLATION OF AN INVITATION WHEN IT IS DETERMINED THAT SUCH ACTION IS CLEARLY IN THE BEST INTERESTS OF THE GOVERNMENT FOR REASONS OTHER THAN THOSE ENUMERATED IN ASPR 2-404.1(B)(I-VII). PARAGRAPH 10(B) OF STANDARD FORM 22, INSTRUCTIONS TO BIDDERS, WHICH WAS INCORPORATED INTO THE BID PACKAGE FURNISHED TO PROSPECTIVE BIDDERS, RESERVES TO THE GOVERNMENT THE RIGHT TO REJECT ANY OR ALL BIDS WHEN DETERMINED IN ITS INTEREST. FURTHERMORE, OUR OFFICE HAS CONSISTENTLY ACKNOWLEDGED THE STATUTORY RIGHT UNDER 10 U.S.C. 2305(C) TO REJECT ALL BIDS WHEN SUCH ACTION IS DETERMINED TO BE IN THE PUBLIC INTEREST. B-173015, AUGUST 18, 1971. IN RENDERING A DETERMINATION TO CANCEL ALL INVITATIONS, THERE IS NECESSARILY RESERVED FOR THE CONTRACTING OFFICIALS A SUBSTANTIAL AMOUNT OF DISCRETION. 47 COMP. GEN. 748, 751 (1968). SUCH DISCRETION IS EXTREMELY BROAD AND IS NOT SUBJECT TO QUESTION BY OUR OFFICE UNLESS ABUSED THROUGH ARBITRARY ACTION. 39 COMP. GEN. 396, 399 (1959).

THE DOCUMENTED REPORT FURNISHED TO OUR OFFICE BY THE DEPARTMENT OF THE ARMY REVEALS THAT THE PROCURING ACTIVITY DID HAVE SOME KNOWLEDGE OF THE FLOORING PROBLEM IN THE FAMILY HOUSING UNITS PRIOR TO ISSUANCE OF THE SUBJECT IFB. HOWEVER, THE RECORD ALSO INDICATES THAT IT WAS NOT UNTIL SEPTEMBER 1971 THAT THE URGENCY OF THE PROBLEM BECAME MANIFEST, AND IT WAS NOT UNTIL AFTER BID OPENING THAT THE ACTIVITY REALIZED A SHIFT IN PRIORITIES IN THE LIGHT OF AVAILABLE FUNDS WAS ESSENTIAL TO THE CONTINUED OCCUPANCY OF SOME QUARTERS. THE DETERMINATION TO CANCEL THE PROJECT OF THE SUBJECT IFB APPEARS TO HAVE BEEN MADE ONLY AFTER A CAREFUL ASSESSMENT THAT THE WORK COULD BE ACCOMPLISHED BY UTILIZATION OF IN-HOUSE CAPABILITY AT A REDUCED LEVEL, AND THAT SUCH A COURSE OF ACTION WOULD NOT ENTAIL AN UNDUE RISK.

WHILE IT IS UNFORTUNATE THAT THE NEEDS AND PRIORITIES OF THE PROCURING ACTIVITY WERE NOT RECOGNIZED AND ESTABLISHED PRIOR TO THE SOLICITATION OF BIDS, THE RECORD IS DEVOID OF ANY EVIDENCE OF ARBITRARINESS OR BAD FAITH SUCH AS WOULD CONSTITUTE AN ABUSE OF THE DISCRETION ACCORDED, BY VIRTUE OF THE AUTHORITIES CITED ABOVE, TO AGENCIES IN MAKING DETERMINATIONS TO CANCEL SOLICITATIONS.

WITH REGARD TO YOUR FAILURE TO RECEIVE AN IFB ON A SIMILAR PROJECT IN 1970, THE AGENCY REPORTS THAT YOUR FIRM CHANGED ITS BUSINESS ADDRESS FROM SCHOOL STREET, ALEXANDRIA, TO RICHMOND HIGHWAY WITHOUT PROPER NOTIFICATION, SO THAT IFB'S WERE NOT CORRECTLY ROUTED UNTIL THE CORRESPONDING CHANGES WERE EFFECTED ON THE MAILING LISTS. CONSISTENT WITH THIS ADVICE IS A COPY OF THE MAILING LIST FOR THAT IFB SHOWING YOUR FIRM LISTED AT THE SCHOOL STREET ADDRESS WITH THE HANDWRITTEN NOTATION "NO RESPONSE", TENDING TO INDICATE THAT THE PROCUREMENT ACTIVITY HAD IN FACT DISPATCHED AN IFB TO THAT ADDRESS.

WITH REGARD TO THE MATTER OF THE AWARD TO V. L. FREDERICK COMPANY, THE RECORD INCLUDES AN ABSTRACT OF BIDS EVIDENCING BIDS FROM THREE BIDDERS PURSUANT TO IFB DABB19-70-B-0008, WITH FREDERICK LOW AT $16,790.00, FOLLOWED BY E. E. COUSINS, INC., AT $18,400.00, AND YOUR FIRM AT $26,496.00. MODIFICATION P001 TO THE CONTRACT AWARDED FREDERICK REQUIRED ADDITIONAL WORK WITHIN THE SCOPE OF THE CONTRACT DUE TO A CHANGE IN SPECIFICATIONS. SUCH MODIFICATION WAS NEGOTIATED WITH THE CONTRACTOR IN THE SUM OF $2,990.00, A FIGURE DETERMINED TO BE FAIR AND REASONABLE BY THE DIRECTOR OF FACILITIES ENGINEERING. IT IS REPORTED THAT THE GOVERNMENT ESTIMATE FOR THE MODIFICATION WAS $3,219.42. FROM THE FOREGOING, IT IS APPARENT THAT THE INCREASED CONTRACT PRICE DID NOT EXCEED THE HIGH BID. FURTHER, HAD THE REQUIREMENT COMPRISING THE SUBJECT OF THE MODIFICATION BEEN INCLUDED IN THE ORIGINAL SPECIFICATIONS OF THE IFB WITH OFFERORS BIDDING ACCORDINGLY, IT APPEARS DOUBTFUL THAT THE RELATIVE STANDING OF THE BIDDERS WOULD HAVE BEEN ALTERED.

WITH RESPECT TO YOUR REQUEST FOR REMITTANCE OF AN AMOUNT EQUAL TO YOUR BID BOND, IT IS WELL ESTABLISHED THAT AN UNSUCCESSFUL BIDDER MAY RECOVER BID PREPARATION COSTS ONLY IN THOSE CASES WHERE IT CAN BE SHOWN BY CLEAR AND CONVINCING PROOF THAT BIDS WERE NOT INVITED IN GOOD FAITH, BUT RATHER AS A PRETENSE TO CONCEAL THE PURPOSE TO AWARD A CONTRACT TO A FAVORED BIDDER WITH THE INTENT TO WILLFULLY DISREGARD THAT BID MOST ADVANTAGEOUS TO THE GOVERNMENT. HEYER PRODUCTS COMPANY, INC. V UNITED STATES, 135 CT. CL. 63, 71 (1956). FROM OUR REVIEW OF THE RECORD IN THE INSTANT CASE, WE FIND NO EVIDENCE OF SUCH CIRCUMSTANCES.

IN VIEW OF THE FOREGOING, WE SEE NO BASIS UPON WHICH OUR OFFICE MAY PROVIDE RELIEF FOR THE MATTERS ENUMERATED IN YOUR LETTER OF SEPTEMBER 21, 1971.