[Protest of Army Contract Award]

B-208660: Sep 8, 1982

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A firm protested the award of a contract for electrical equipment repair shop trailers under an invitation for bids issued by the Army. The protester contended that the contract was invalid because the contracting officer was on notice of a possible mistake in the awardee's bid and failed to verify the bid prior to making the award. It asserted that the contracting officer had reason to believe that a mistake had been made due to: (1) an alleged disparity in bid prices; and (2) the alleged notification of the contracting officer by five suppliers of critical components that the awardee did not seek price quotations from them for the trailers' necessary components. According to the record, the awardee's low bid price was not disparate in comparison to the range of bids received or the procurement history. GAO believed that the bid should not have raised the question of possible error in the contracting officer's mind and that the awardee could base its bid on its own estimates of component part costs without consulting suppliers for quotations. GAO held that how a bidder arrives at its bid price is a matter of business judgment which is not subject to question by the contracting officer. Accordingly, the protest was denied.

B-208660, SEP 8, 1982

DIGEST: 1. PROTESTER'S ALLEGATION THAT DISPARITY IN BID PRICES PLACED THE CONTRACTING OFFICER ON NOTICE OF POSSIBLE ERROR IN LOW BID REQUIRING BID VERIFICATION IS NOT SUPPORTED BY FACTS SHOWING THAT LOW BID WAS NOT DISPARATE WITH REGARD TO RANGE OF BIDS RECEIVED OR PROCUREMENT HISTORY. 2. PROTESTER'S ALLEGATION THAT CERTAIN SUPPLIERS OF CRITICAL COMPONENT PARTS OF ITEM TO BE PROCURED NOTIFIED THE CONTRACTING OFFICER THAT LOW BIDDER HAD NOT SOUGHT PRICE QUOTATIONS FROM THEM DOES NOT SUPPORT PROTESTER'S CONCLUSION THAT LOW BIDDER FAILED TO CONSIDER THE COST OF THOSE COMPONENTS IN ARRIVING AT ITS BID PRICE.

SOUTHWEST TRUCK BODY COMPANY:

SOUTHWEST TRUCK BODY COMPANY PROTESTS THE AWARD OF A CONTRACT TO DAVEY COMPRESSOR COMPANY UNDER INVITATION FOR BIDS (IFB) NO. DAAA09-82 B-5556 ISSUED BY THE DEPARTMENT OF THE ARMY. THE IFB CONCERNED THE PROCUREMENT OF 19 ELECTRICAL EQUIPMENT REPAIR SHOP TRAILERS. SOUTHWEST, THE SECOND LOW BIDDER, CONTENDS THAT THE CONTRACT BETWEEN THE ARMY AND DAVEY IS INVALID BECAUSE THE ARMY'S CONTRACTING OFFICER WAS ON NOTICE OF A POSSIBLE MISTAKE IN DAVEY'S LOW BID, YET FAILED TO VERIFY THE BID PRIOR TO MAKING AWARD. WE DENY THE PROTEST.

SINCE WE BELIEVE IT IS CLEAR FROM SOUTHWEST'S SUBMISSION THAT THE PROTEST IS WITHOUT LEGAL MERIT, WE ARE DECIDING THE MATTER WITHOUT FURTHER CASE DEVELOPMENT. SHIPCO GENERAL, INC., B-204259, AUGUST 20, 1981, 81-2 CPD 161.

IN ARGUING THAT THE ARMY HAD A DUTY, BUT FAILED TO VERIFY DAVEY'S BID, SOUTHWEST MAINTAINS THAT THE CONTRACTING OFFICER VIOLATED DEFENSE ACQUISITION REGULATION SEC. 2-406.1 WHICH STATES, IN PERTINENT PART:

"AFTER THE OPENING OF BIDS, CONTRACTING OFFICERS SHALL EXAMINE ALL BIDS FOR MISTAKES. *** IN CASES WHERE THE CONTRACTING OFFICER HAS REASON TO BELIEVE THAT A MISTAKE HAS BEEN MADE, HE SHALL REQUEST FROM THE BIDDER A VERFICATION OF THE BID, CALLING ATTENTION TO THE SUSPECTED MISTAKE."

SOUTHWEST ASSERTS THAT THE CONTRACTING OFFICER HAD REASON TO BELIEVE THAT A MISTAKE HAD BEEN MADE IN DAVEY'S BID FOR TWO REASONS: (1) AN ALLEGED DISPARITY IN BID PRICES; AND (2) THE ALLEGED NOTIFICATION OF THE CONTRACTING OFFICER BY FIVE SUPPLIERS OF CRITICAL COMPONENTS NECESSARY FOR USE IN THE ASSEMBLY OF THE TRAILERS THAT DAVEY DID NOT SEEK PRICE QUOTATIONS FROM THEM FOR THOSE COMPONENTS.

WITH REGARD TO ALLEGED PRICE DISPARITY, FIVE FIRMS BID THE FOLLOWING UNIT PRICES:

$ 80,973.00 - DAVEY 91,175.00 - SOUTHWEST 96,994.39 - * * * 101,300.00 - * * * 137,000.00 - * * *

ON ITS FACE, WE CANNOT SAY THAT, IN THE RANGE OF BIDS SUBMITTED, DAVEY'S LOW BID REPRESENTS A PRICE SO DISPARATE FROM THE OTHERS THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE OF A POSSIBLE ERROR. THIS REGARD, DAVEY'S LOW BID WAS ONLY APPROXIMATELY 11 PERCENT LESS THAN THE SECOND LOW BID. FURTHERMORE, THE ARMY INFORMALLY HAS ADVISED US THAT IN THE PAST FIVE PROCUREMENTS FOR THESE ITEMS, UNIT PRICES HAVE RANGED FROM APPROXIMATELY $71,000 TO $91,000. WITH THIS TYPE OF PROCUREMENT HISTORY, WE DO NOT BELIEVE THAT DAVEY'S BID OF APPROXIMATELY $81,000 REASONABLY SHOULD RAISE THE QUESTION OF POSSIBLE ERROR IN THE MIND OF THE CONTRACTING OFFICER.

SOUTHWEST ALLEGES THAT SEVERAL CRITICAL COMPONENT SUPPLIERS NOTIFIED THE CONTRACTING OFFICER THAT DAVEY HAD NOT SOUGHT QUOTATIONS FROM THEM. BASED ON THIS ALLEGED FACT, SOUTHWEST CONCLUDES THAT THE CONTRACTING OFFICER SHOULD HAVE DETERMINED THAT DAVEY FAILED TO CONSIDER THE COSTS OF THESE CRITICAL COMPONENTS IN ITS BID, AND THEREFORE THAT THE CONTRACTING OFFICER HAD REASON TO BELIEVE THAT DAVEY HAD SUBMITTED A MISTAKEN BID.

ASSUMING THAT CERTAIN SUPPLIERS OF CRITICAL COMPONENTS DID NOTIFY THE CONTRACTING OFFICER THAT DAVEY HAD NOT SOUGHT PRICES FROM THEM, THIS DOES NOT SUPPORT SOUTHWEST'S CONCLUSION THAT DAVEY FAILED TO CONSIDER THE COST OF THESE COMPONENTS IN ARRIVING AT ITS BID PRICE. CERTAINLY, DAVEY COULD HAVE BASED ITS BID ON ITS OWN ESTIMATES OF COMPONENT PART COSTS WITHOUT ACTUALLY SEEKING FIRM QUOTATIONS FROM SUPPLIERS. IN ANY EVENT, HOW A BIDDER ARRIVES AT ITS BID PRICE IS A MATTER OF BUSINESS JUDGMENT WHICH IS NOT SUBJECT TO QUESTION BY THE CONTRACTING OFFICER. THUS, EVEN IF THE CONTRACTING OFFICER HAD ACTUAL KNOWLEDGE THAT DAVEY NEVER SOUGHT QUOTATIONS FROM CERTAIN MAJOR COMPONENT SUPPLIERS, THIS KNOWLEDGE WOULD NOT NECESSARILY CREATE A REASONABLE BELIEF BY THE CONTRACTING OFFICER THAT A MISTAKE HAD BEEN MADE WHICH WOULD REQUIRE VERIFICATION OF DAVEY'S BID.

THE PROTEST IS DENIED.

 

 

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