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SINCE ADMINISTRATIVE AGENCY IS RESPONSIBLE FOR DETERMINING WHETHER LOWEST ACCEPTABLE BID IS IN EXCESS OF AMOUNT THAT GOVERNMENT SHOULD PAY AND SINCE THERE IS NO SHOWING OF BAD FAITH. INC.: REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 13. THE USE OF GOVERNMENT-OWNED EQUIPMENT FACILITIES IN YOUR POSSESSION WAS REQUIRED TO MEET THE SPECIFIED DELIVERY SCHEDULE FOR ITEMS 1. BEFORE THE QUESTION OF YOUR RESPONSIBILITY WAS RESOLVED. 2 AND 3 WAS NECESSARY BECAUSE THE LOW BID PRICE WAS UNREASONABLE. 2 AND 3 WAS DETERMINED BY THE CONTRACTING OFFICER TO BE EXCESSIVE. YOU PRESENT THE QUESTION AS TO WHY YOU WERE NOT ADVISED OF THE EXCESSIVE PRICE UNTIL AFTER YOUR WRITTEN PROTEST OF SEPTEMBER 12. YOU ASK WHY ITEMS 4 AND 5 WERE PURCHASED FROM YOU AT A PRICE 64 PERCENT HIGHER THAN THAT NOTED IN THE PRICE ANALYSIS.

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B-162914, MAR. 7, 1968

BIDS REJECTION AND READVERTISEMENT - PRICE REASONABLENESS DECISION TO OHIO TOOL AND MANUFACTURING CO. AFFIRMING DECISION OF JANUARY 30, 1968, WHICH DENIED PROTEST AGAINST CANCELLATION OF INVITATION BY DEPARTMENT OF ARMY. SINCE ADMINISTRATIVE AGENCY IS RESPONSIBLE FOR DETERMINING WHETHER LOWEST ACCEPTABLE BID IS IN EXCESS OF AMOUNT THAT GOVERNMENT SHOULD PAY AND SINCE THERE IS NO SHOWING OF BAD FAITH, OR ARBITRARY OR CAPRICIOUS ACTION IN DETERMINATION, REJECTION OF ALL BIDS BECAUSE OF PRICE MUST BE UPHELD.

TO OHIO TOOL AND MANUFACTURING COMPANY, INC.:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 13, 1968, REQUESTING, IN EFFECT, RECONSIDERATION OF OUR DECISION OF JANUARY 30, 1968, B 162914.

IN YOUR LETTER YOU RAISE SEVERAL QUESTIONS REGARDING PARAGRAPHS ONE AND TWO ON PAGE 2 OF OUR DECISION. IN PARAGRAPH ONE, WE STATED THAT THE ADMINISTRATIVE AGENCY REPORTED THAT, IN DETERMINING YOUR RESPONSIBILITY, THE USE OF GOVERNMENT-OWNED EQUIPMENT FACILITIES IN YOUR POSSESSION WAS REQUIRED TO MEET THE SPECIFIED DELIVERY SCHEDULE FOR ITEMS 1, 2 AND 3 UNDER INVITATION NO. DAAE07-67-B-0420. HOWEVER, BEFORE THE QUESTION OF YOUR RESPONSIBILITY WAS RESOLVED, THE CONTRACTING OFFICER DETERMINED THAT THE CANCELLATION OF ITEMS 1, 2 AND 3 WAS NECESSARY BECAUSE THE LOW BID PRICE WAS UNREASONABLE. HENCE, SINCE THE QUESTION AS TO THE USE OF GOVERNMENT FACILITIES HAD NO BEARING ON THE PARTIAL CANCELLATION OF THE INVITATION, WE SEE NO BASIS FOR ANY FURTHER DISCUSSION IN THAT REGARD.

REGARDING PARAGRAPH TWO ON PAGE 2 OF OUR DECISION, WE STATED THEREIN THAT BASED ON A PRICE ANALYSIS REPORT YOUR LOW BID FOR ITEMS 1, 2 AND 3 WAS DETERMINED BY THE CONTRACTING OFFICER TO BE EXCESSIVE. YOU PRESENT THE QUESTION AS TO WHY YOU WERE NOT ADVISED OF THE EXCESSIVE PRICE UNTIL AFTER YOUR WRITTEN PROTEST OF SEPTEMBER 12, 1967. YOU ALSO ASK WHY IT TOOK A YEAR FOR THE CONTRACTING OFFICER TO CANCEL THE INVITATION. ALSO, YOU ASK WHY ITEMS 4 AND 5 WERE PURCHASED FROM YOU AT A PRICE 64 PERCENT HIGHER THAN THAT NOTED IN THE PRICE ANALYSIS, WHILE ITEMS 1, 2 AND 3 WERE CANCELED ALTHOUGH THE PRICES WERE ONLY 55 PERCENT HIGHER THAN THE PRICES SHOWN IN THE PRICE ANALYSIS. IN ADDITION, YOU REQUEST INFORMATION AS TO WHEN THE PRICE ANALYSIS WAS MADE AND WHEN WAS IT DECIDED THAT "UNREASONABLE PRICE" WAS TO BE THE REASON FOR CANCELLATION. ALSO, YOU ASK WHAT FACTORS WERE CONSIDERED IN PREPARING THE PRICE ANALYSIS REPORT.

IN RESPONSE TO YOUR VARIOUS QUESTIONS, THE RECORD SHOWS THAT A PREAWARD SURVEY DATED OCTOBER 6, 1966, RECOMMENDED AWARD TO YOU PROVIDED THAT YOU WERE PERMITTED TO USE GOVERNMENT-OWNED FACILITIES IN YOUR POSSESSION, THE USE OF WHICH WAS BELIEVED NECESSARY IN ORDER FOR YOU TO MEET THE DELIVERY SCHEDULE SPECIFIED FOR ITEMS 1, 2 AND 3. UNDER DATE OF OCTOBER 18, 1966, A PRICE ANALYSIS WAS PREPARED INDICATING THAT THE PRICES OF YOUR BID WERE EXCESSIVE. IT APPEARS THAT INSTEAD OF MAKING A PROMPT EVALUATION AND DETERMINATION CONCERNING THE REASONABLENESS OF THE PRICES, THE CONTRACTING OFFICER BECAME INVOLVED IN THE QUESTION OF YOUR USE OF GOVERNMENT FACILITIES. IT WAS NOT UNTIL AUGUST 15, 1967, THAT THE CONTRACTING OFFICE DETERMINED THE PRICES BID TO BE UNREASONABLE. AFTER MAKING THAT DETERMINATION, THE CONTRACTING OFFICER ADVISED YOU BY LETTER DATED AUGUST 17, 1967, THAT THE INVITATION WAS CANCELED AS BEING IN THE BEST INTEREST OF THE GOVERNMENT. IN VIEW OF THESE FACTS, IT IS CLEAR THAT THE DETERMINATION THAT THE BID PRICES WERE EXCESSIVE WAS MADE BEFORE YOUR PROTEST AND APPARENTLY THERE WAS NO OCCASION FOR ADVISING YOU THAT THE PRICES WERE CONSIDERED TO BE EXCESSIVE UNTIL YOUR LETTER OF PROTEST OF SEPTEMBER 12, 1967. ALSO, THE TIME SPENT IN CONSIDERING THE FEASIBILITY OF USING GOVERNMENT PROPERTY SIGNIFICANTLY CONTRIBUTED TO THE DELAY IN PARTIALLY CANCELING THE INVITATION FOR BIDS. THE RECORD INDICATES THAT THE CONTRACTING OFFICER ONLY DETERMINED THE PRICES OF ITEMS 1, 2 AND 3 TO BE EXCESSIVE. WE, OF COURSE, ARE NOT AWARE OF ALL THE FACTORS CONSIDERED BY THE CONTRACTING OFFICER IN MAKING HIS DETERMINATION; HOWEVER, THE PRICE ANALYSIS REPORT FURNISHED TO HIM WAS UNDOUBTEDLY RELIED UPON. WE HAVE NO INFORMATION AS TO WHY HE DID NOT DETERMINE THE PRICES OF ITEMS 4 AND 5 TO BE EXCESSIVE. IN THAT CONNECTION, IT IS OUR VIEW THAT THE ADMINISTRATIVE AGENCY IS RESPONSIBLE FOR DETERMINING WHETHER THE LOWEST ACCEPTABLE BID IS IN EXCESS OF THE AMOUNT FOR WHICH THE GOVERNMENT SHOULD BE ABLE TO OBTAIN THE SUPPLIES SOUGHT AND, IN THE ABSENCE OF A SHOWING OF BAD FAITH, OR ARBITRARY OR CAPRICIOUS ACTION, WE WOULD NOT QUESTION THE REJECTION OF ALL BIDS BECAUSE THE PRICES WERE CONSIDERED EXCESSIVE. 36 COMP. GEN. 364; 39ID. 396.

REGARDING YOUR QUESTION AS TO WHY AN AWARD WAS MADE TO A NEW CONTRACTOR UNDER INVITATION FOR BIDS NO. DAAE07-68-B-0270 AT AN EXCESSIVE PRICE, WE CAN ONLY STATE THAT THE LOW BIDDER WAS DETERMINED TO BE A RESPONSIBLE BIDDER AND WAS ENTITLED TO THE AWARD UNLESS THE PRICE WAS DETERMINED TO BE UNREASONABLE. NO SUCH DETERMINATION WAS MADE. IF, AS YOU STATE, THE LOW BID PRICE WAS UNREASONABLE, IT WOULD THEN FOLLOW THAT YOUR HIGHER BID PRICE WAS EVEN MORE UNREASONABLE.

IN VIEW OF THE FOREGOING, WE SEE NO LEGAL BASIS FOR QUESTIONING THE ADMINISTRATIVE ACTIONS TAKEN. ACCORDINGLY, OUR DECISION OF JANUARY 30, 1968, IS AFFIRMED.

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