B-242973, May 21, 1991, 91-1 CPD 498

B-242973, May 21, 1991, 91-1 CPD 498

PROCUREMENT - Sealed Bidding - Invitations for bids - Cancellation - Justification - Price reasonableness DIGEST: Agency properly canceled solicitation for harbor dredging where lowest bid was more than 25 percent above government estimate and government estimate was reasonably based on costs for similar work under prior contracts.

Attorneys

Cottrell Engineering Corporation:

Cottrell Engineering Corporation protests the cancellation of invitation for bids (IFB) No. DACW54-91-B-0025, issued as a small business set-aside by the United States Army Corps of Engineers for maintenance dredging in Silver Lake Harbor and Rollison Channel, North Carolina. The Army canceled the solicitation because it determined that all bids received were unreasonably high and because sufficient funds were not available for this contract. Cottrell contends that the government estimate was unreasonably low and asserts that the agency was obligated to reallocate other appropriated funds to permit performance of the requirements under this solicitation.

We deny the protest.

The IFB was issued on December 17, 1990, and sought bids for three line items: (1) mobilization/demobilization; (2) dredging (Silver Lake Harbor); and (3) dredging (Rollison Channel). The government estimate of the cost to perform the requirements under the IFB was $472,800 and the agency had determined to allocate a maximum of $650,000 for performance of this requirement. At the January 16, 1991, bid opening, the Army received three bids of which Cottrell's $696,000 bid was low. A comparison of Cottrell's bid and the government's estimate, broken down by line item, revealed the following:

TABLE OMITTED

The Army concluded that all bids received were unreasonably high and that there were insufficient funds available to perform the contract. Accordingly, the Army canceled the solicitation.

As shown above, Cottrell's bid exceeded the government estimate only with regard to line item 1, "Mobilization and Demobilization." /1/ The difference between Cottrell's bid and the government's estimate for this line item is primarily attributable to Cottrell's assertion that the agency should have included an additional $150,000 to $200,000 for the cost of a "standby" tugboat. Cottrell asserts that this was a necessity due to "the exposed area of the dredging which create s a serious risk to the men and equipment performing the work."

The Army disagrees with Cottrell's characterization of the risk involved and states that an 18-inch dredge has performed the contract work in this area without using a standby tug "four out of the last five times such dredging has been accomplished." The Army also has provided examples of historical mobilization costs associated with dredging at Silver Lake Harbor and Rollison Channel that were incurred between 1986 and 1990, the highest such cost being $171,000. Cottrell has not submitted any evidence that the agency's assertions regarding prior mobilization efforts and costs are inaccurate. /2/

In establishing a government estimate for anticipated contract costs, an agency may reasonably consider historical costs for similar work previously performed. See, e.g., U.S. Elevator Corp., B-224237, Feb. 4, 1987, 87-1 CPD Para. 110. Based on the information the agency submitted regarding prior mobilization costs for dredging in this area, and in the absence of any evidence that the agency's information is inaccurate, we find the government's estimate of costs reasonable. See Groathouse Constr., B-235236; B-235250, July 13, 1989, 89-2 CPD Para. 44.

An IFB may be canceled after bid opening if the prices of all otherwise acceptable bids are unreasonable. Federal Acquisition Regulation Sec. 14.404-1(c)(6). A determination that a bid is unreasonably high may properly be based on comparisons with government estimates, past procurement history, current market conditions, or any other relevant factors. Missouri Forge, Inc., B-234741.2, July 14, 1989, 89-2 CPD Para. 48; Building Maintenance Specialists, Inc., B-186441, Sept. 10, 1976, 76-2 CPD Para. 233. Here, the agency considered the prices bid in the context of the government's estimate, past procurement history, and legislation which limits the Army Corps of Engineers' contracting authority with respect to contracts for river or harbor improvement where the contract price would exceed the government's estimate by more than 25 percent. U.S.C. Sec. 624(a)(2) (1988). Since all bids received were more than 25 percent above the government's estimate, the contracting officer properly canceled the solicitation.

Cottrell initially asserted that prior to the bid opening date, the Army was using one of its own dredges to perform the work advertised under this IFB. Cottrell asserted that this demonstrates bad faith on the part of the Army in that the Army had no intention of awarding a contract under this solicitation. Cottrell asked for recovery of the bid preparation costs it asserts it was improperly induced to incur. The Army denied Cottrell's allegation that it was performing work advertised under this IFB prior to bid opening. The Army stated that the dredging area covered by this IFB is an extremely high shoaling area and that the government- owned dredge began work 10 days prior to the bid opening date in an attempt to sustain conditions to assure a safe navigation channel until a contract dredge arrived. The Army added that its use of the government- owned dredge did not change the quantity or the character of dredging work advertised since a survey conducted 2 weeks after the bid opening date revealed an increase of 17,000 cubic yards of material to be dredged over the amount existing when the solicitation was issued.

Cottrell has not rebutted the Army's assertions. Instead, Cottrell argues that the Army's statements regarding the high level of shoaling in this area support its contention that the government's estimate was unreasonably low. Since Cottrell has not rebutted the Army's response to its allegation of bad faith, we deem Cottrell to have abandoned that issue. See TM Sys., Inc., B-228220, Dec. 10, 1987, 87-2 CPD Para. 573.

The protest is denied.

/1/ Cottrell's protest challenges various aspects of the Government's calculation of estimated costs for the dredging itself (line items 1 and 2). In light of the fact that Cottrell's bid for dredging is less than the government's estimate, we find no factual basis for Cottrell's protest to the extent it asserts the government estimate for dredging is unreasonably low.

/2/ In commenting on the agency report, Cottrell refers to recent dredging work performed by another company (Atkinson Dredging Company) and asserts that, "contrary to the assertions made in the agency's protest report," Atkinson recently performed dredging in this area accompanied by a standby tug. Cottrell's statement regarding Atkinson does not call into question the accuracy of the information presented by the Army, since the Army acknowledged that a standby tug was used once during the last five times dredging has been performed in this area.