B-230659.3, Aug 8, 1988, Office of General Counsel
Highlights
We have no basis to object to rejection of the protester's bid as unreasonably high based on a comparison with award prices for similar items for the prior year. We concluded that the contracting agency acted properly in rejecting Achievement's bid on the basis that its prices were unreasonably high. Because the only other two bids received were found to be nonresponsive. The procurement was to be resolicited. Achievement suggests that it was difficult for the agency to determine whether Achievement's prices were reasonable and that in such a situation the integrity of the bidding system dictates that award be made under the initial solicitation. The fact that the agency may have had difficulty in making its determination of unreasonableness does not make that determination any less valid.
B-230659.3, Aug 8, 1988, Office of General Counsel
PROCUREMENT - Sealed Bidding - Bids - Evaluation - Price reasonableness - Administrative discretion PROCUREMENT - Sealed Bidding - Contract awards - Propriety - Price reasonableness DIGEST: Since regulations require that low responsive bidder's price must be considered reasonable before award can be made, we have no basis to object to rejection of the protester's bid as unreasonably high based on a comparison with award prices for similar items for the prior year.
The Honorable Frank R. Lautenberg
United States Senator
By letter of June 17, 1988, you transmitted a letter from Achievement Products, Inc., concerning our decision Achievement Products, Inc., B-230659, May 23, 1988, 88-1 CPD Para. 488, denying that firm's protest of the rejection by the United States Military Academy of its bid for cadet insignia under invitation for bids (IFB) No. DAAG60-87-B-8617. In that decision, we concluded that the contracting agency acted properly in rejecting Achievement's bid on the basis that its prices were unreasonably high. Because the only other two bids received were found to be nonresponsive, the procurement was to be resolicited.
Achievement suggests that it was difficult for the agency to determine whether Achievement's prices were reasonable and that in such a situation the integrity of the bidding system dictates that award be made under the initial solicitation.
The fact that the agency may have had difficulty in making its determination of unreasonableness does not make that determination any less valid. The regulations require the contracting officer to determine that the prices offered by the prospective contractor are reasonable before she can make award. Federal Acquisition Regulation (FAR) Sec. 14.407-2. Based on the record before her which showed that Achievement's prices were as much as 95 percent higher than prices paid for similar items during 1987, the contracting officer determined that Achievement's prices were too high. There is nothing in the record before our Office to indicate that the contracting officer's decision was unreasonable. While it is true, as Achievement points out, that the two firms whose bids were rejected as nonresponsive will have the opportunity to compete under a resolicitation, Achievement will have the same opportunity.
I trust this is responsive to your inquiry.