B-182147, DEC 13, 1974

B-182147, DEC 13, 1974

PROCURING ACTIVITY'S CANCELLATION OF INVITATION WAS PROPER BECAUSE INVITATION PERMITTED BIDDERS TO SUBMIT UNBALANCED BIDS BY QUOTING NOMINAL PRICES FOR EVALUATED CATEGORIES AND EXORBITANT PRICES FOR NONEVALUATED CATEGORIES. IN SUCH CASE THERE IS NO ASSURANCE THAT AWARD TO LOW EVALUATED BIDDER WOULD RESULT IN LOWEST COST TO GOVERNMENT.

LOW ENTERPRISES:

SUBSEQUENT TO THE OPENING OF BIDS FOR A MANNED ON-SITE CONTINUOUS COPY DUPLICATING SERVICE UNDER ENVIRONMENTAL PROTECTION AGENCY INVITATION NO. WA-75-E015, THE PROCUREMENT OFFICE CANCELED THE REQUIREMENTS-TYPE SOLICITATION BECAUSE OF DEFICIENCIES RELATING TO THE METHOD OF EVALUATION AND ANOTHER REASON NOT PROTESTED. THE AGENCY PROPOSES TO READVERTISE ITS NEEDS UNDER A REVISED IFB WHICH WILL ELIMINATE THE DEFICIENCIES.

LOW ENTERPRISES PROTESTS THE CANCELLATION ACTION AS LOW APPARENT BIDDER BECAUSE IT DOES NOT AGREE THAT THE BID EVALUATION STATEMENT IN THE IFB WAS UNCLEAR. ARTICLE II OF THE SCHEDULE CALLED FOR PER COPY (UNIT) PRICE BIDS FOR QUANTITIES OF 0-250,000, 250,001-400,000, AND 400,001 AND UP COPIES MONTHLY. IDENTICAL PRICE SCHEDULES FOR THESE QUANTITY RANGES PROVIDE FOR "PRINT ONE SIDE ONLY" AND FOR "PRINT FACE AND BACK (SAME SHEET)." METHOD OF BID EVALUATION WAS STATED AS FOLLOWS:

"AWARD SHALL BE MADE TO THAT RESPONSIBLE BIDDER WITH THE LOW EVALUATED PRICE. BID PRICES WILL BE EVALUATED FOR AWARD PURPOSES BY THE FOLLOWING FORMULA:

(ONE SIDE ONLY)

MONTHLY QUANTITY RANGE PRICE (FROM ARTICLE II)

0-250,000 $ X 500,00 $

250,001 - 400,000 $ X 1,200,000 $

EVALUATED PRICE $ "

THE 10 BIDS RECEIVED WERE EVALUATED UNDER THIS FORMULA AND RANGED FROM $220 (LOW ENTERPRISES) TO A HIGH OF $38,830. HOWEVER, FOR THE UNEVALUATED QUANTITY OF $400,001 AND ABOVE LOW ENTERPRISES BID 10 CENTS PER COPY; OTHER BIDS FOR THIS QUANTITY RANGED FROM $0.0045 TO $0.1225 PER COPY.

THE QUESTION FOR RESOLUTION IS WHETHER THE EVALUATION METHOD USED IN THE INVITATION COMPORTS WITH THE STATUTORY AND REGULATORY REQUIREMENT FOR FREE AND OPEN COMPETITION. IN THIS REGARD 41 U.S.C. SEC. 253(A) (1970) REQUIRES THAT "SPECIFICATIONS AND INVITATIONS FOR BIDS SHALL PERMIT SUCH FREE AND FULL COMPETITION AS IS CONSISTENT WITH THE PROCUREMENT OF THE PROPERTY AND SERVICES NEEDED BY THE AGENCY CONCERNED." IMPLICIT IN THIS STATUTORY PROVISION IS, WE THINK, THE REQUIREMENT THAT IN THIS TYPE OF PROCUREMENT CARE BE TAKEN TO ASSURE THAT ANY BID EVALUATION BASIS BE DESIGNED SO AS TO ASSURE THAT A REASONABLE EXPECTATION EXISTS THAT AN AWARD TO THE LOWEST EVALUATED BIDDER WILL RESULT IN THE LOWEST COST TO THE GOVERNMENT IN ACTUAL PERFORMANCE.

THUS, OUR OFFICE HAS HELD THAT AN EVALUATION BASIS WHICH ENCOURAGES THE SUBMISSION OF UNBALANCED BIDS, I.E. "BIDS BASED ON SPECULATION AS TO WHICH ITEMS ARE PURCHASED MORE FREQUENTLY OR IN GREATER QUANTITY THAN OTHERS," IS INAPPROPRIATE. 44 COMP. GEN. 392, 396 (1965). IN THIS VEIN, WE HAVE SUSTAINED THE CANCELLATION OF AN INVITATION WHERE THE EVALUATION BASIS EMPLOYED WOULD HAVE RESULTED IN PAYING HIGHER PRICES TO THE LOW BIDDER AS EVALUATED THAN WOULD HAVE BEEN SECURED FROM THE EVALUATED SECOND LOW BIDDER. B-162389, DECEMBER 19, 1967. 44 COMP. GEN. 392, CITED ABOVE, INVOLVED A CONTRACT FOR VARIOUS PRINTING SERVICES IN WHICH PRICES WERE REQUIRED FOR 328 BID ITEMS BUT INSTEAD OF STATING ESTIMATED QUANTITIES FOR THOSE ITEMS, IN INVITATION ADVISED BIDDERS THAT A MODEL PRINTING JOB COMPRISED OF ONLY A FEW OF THE PRICED ITEMS AND NOT PROVIDED TO BIDDERS WOULD BE USED FOR EVALUATION. WHILE THE PRIMARY REASON FOR FINDING THE INVITATION FAULTY IN THAT CASE WAS THE FACT THAT BIDDERS WERE NOT SUFFICIENTLY ADVISED OF THE EVALUATION BASES, A SECONDARY, AND IN OUR OPINION EQUALLY IMPORTANT, REASON FOR DIRECTING THAT THE INVITATION BE CANCELED WAS THAT "THERE WOULD BE NO ASSURANCE THAT AWARD WOULD BE MADE TO THE LOWEST AGGREGATE BIDDER SINCE A BIDDER COULD BE LOW ON THE BASIS OF THE 'MODEL JOB' EVALUATION AND YET BE HIGH ON THE AGGREGATE."

WE AGREE WITH THE PROCUREMENT AGENCY THAT THE EVALUATION FORMULA PERMITTED THE UNBALANCING OF BIDS TO THE EXTENT THAT THERE IS DOUBT THAT AN AWARD TO THE APPARENT LOW BIDDER WOULD RESULT IN THE LOWEST ULTIMATE COST TO THE GOVERNMENT.

THE PROCUREMENT ACTIVITY ADVISES IN ITS DOCUMENTED REPORT THAT BASED ON EXPERIENCE WITH THE PRIOR YEAR CONTRACT, IT IS ANTICIPATED THAT THE NUMBER OF COPIES REPRODUCED WILL BE WELL OVER 400,000 EACH MONTH. SINCE ANY COPIES IN EXCESS OF 400,000 WOULD COST $0.10 PER COPY, IT IS CONCEIVABLE THAT LOW ENTERPRISES' BID, IF ACCEPTED, DEPENDING ON THE NUMBER OF COPIES ORDERED, MIGHT NOT RESULT IN THE LOWEST COST TO THE GOVERNMENT SINCE OTHER BIDDERS BID A MUCH LOWER PRICE PER COPY FOR AMOUNTS IN EXCESS OF 400,000 COPIES. THE PROCURING ACTIVITY STATES THAT BASED ON THE ESTIMATED NUMBER OF COPIES IT COULD COST THE GOVERNMENT IN EXCESS OF $40,000 PER MONTH.

IN VIEW OF THE FOREGOING, THE CANCELLATION OF THE INVITATION AS IN THE BEST INTERESTS OF THE GOVERNMENT UNDER FEDERAL PROCUREMENT REGULATIONS SEC. 1-2.404.1(B) (1964 ED. CIRC. 1) BECAUSE OF "INADEQUATE METHOD OF EVALUATION" WAS A PROPER PROCUREMENT ACTION REFLECTING THE MANDATE IN 41 U.S.C. SEC. 253(A) (1970) AND THE ADMINISTRATIVE DISCRETION IN SUBSECTION (B) OF THAT SECTION. SEE 49 COMP. GEN. 787 (1970).

THE PROTEST IS DENIED.