B-209739-OM, JAN 18, 1983

B-209739-OM, JAN 18, 1983

SUBJECT: GOVERNMENT'S LIABILITY AND/OR POTENTIAL LIABILITY IN CONTRACTING-OUT SITUATIONS - B-209739

SENIOR ASSOCIATE DIRECTOR, PLRD/GP - ROBERT M. GILROY:

THIS RESPONDS TO YOUR DECEMBER 15, 1982 REQUEST FOR OUR OPINION AS TO WHETHER THE GOVERNMENT WOULD BE LIABLE FOR DAMAGES TO THE LOW BIDDER RESULTING FROM A DELAY IN THE AWARD OF A CONTRACT PURSUANT TO A SOLICITATION WHICH WAS ISSUED AS PART OF A COST COMPARISON UNDER OMB CIRCULAR A-76. THE DELAYS RESULTED FROM CONGRESSIONAL INQUIRIES INTO THE PROCUREMENT. WE DO NOT BELIEVE THE GOVERNMENT WOULD BE LIABLE FOR SUCH DAMAGES.

YOU INDICATE THAT THE AGENCY'S INITIAL EVALUATION INDICATED THAT IT WOULD BE CHEAPER TO PERFORM THE REQUIRED MAINTENANCE, WAREHOUSING AND VEHICLE OPERATIONS FUNCTIONS IN-HOUSE. THE LOW BIDDER, HOWEVER, APPEALED ALLEGING DEFICIENCIES IN THE IN-HOUSE COST ESTIMATE. THE AGENCY REVERSED ITS INITIAL EVALUATION AND DETERMINED THAT IT WOULD BE LESS EXPENSIVE TO CONTRACT OUT THE FUNCTION TO THE LOW BIDDER. THIS DETERMINATION WAS APPEALED BY THE AFFECTED EMPLOYEES, BUT THE AGENCY AFFIRMED ITS DECISION TO PROCURE THE SERVICES FROM THE LOW BIDDER. DURING AND SINCE THE APPEALS THE AGENCY HAS RECEIVED NUMEROUS CONGRESSIONAL INQUIRIES AND THE AWARD HAS BEEN DELAYED SEVERAL TIMES WHILE THE AGENCY CONSIDERED THOSE INQUIRIES.

THERE APPEARS TO EXIST NO BASIS FOR RECOVERY BY A LOW BIDDER OF DAMAGES RESULTING FROM A DELAY BY THE GOVERNMENT IN AWARDING A CONTRACT. WHERE IT IS SHOWN THAT THE GOVERNMENT ACTED ARBITRARILY OR CAPRICIOUSLY WITH RESPECT TO A BID OR PROPOSAL, AND BECAUSE OF THAT ACTION THE BIDDER OR OFFEROR WAS DENIED THE AWARD, THE BIDDER MAY RECOVER BID OR PROPOSAL PREPARATION COSTS. SEE KECO INDUSTRIES, INC. V. UNITED STATES, 428 F.2D 1233 (CT.CL. 1970); HUB TESTING LABORATORIES - CLAIM FOR COSTS, B-199368.3, JUNE 18, 1982, 82-1 CPD 602. SINCE HERE IT APPEARS THAT THE LOW BIDDER HAS OR ULTIMATELY WILL RECEIVE THE CONTRACT AWARD, THERE IS NO BASIS FOR A CLAIM FOR BID PREPARATION COSTS.

FURTHERMORE, WE DO NOT BELIEVE A SUCCESSFUL BIDDER, AFTER AWARD, IS ENTITLED TO A CONTRACT PRICE ADJUSTMENT ON THE BASIS THAT THE AWARD WAS UNDULY DELAYED AND, FOR EXAMPLE, THE COST OF PERFORMANCE INCREASED AS A RESULT. ACCEPTANCE OF THE BID WOULD BE PREDICATED ON THE EXISTENCE OF A VIABLE BID. IF, AFTER THE INITIAL BID ACCEPTANCE PERIOD, THE BIDDER EXTENDS THE BID SO THAT IT IS AVAILABLE FOR ACCEPTANCE EVEN AFTER A LONG DELAY, THE BIDDER HAS AGREED THEREBY TO PERFORM THE CONTRACT AT THE BID PRICE IF THE BID IS ACCEPTED AT ANY TIME DURING THE EXTENDED PERIOD.