B-169912, JUL. 21, 1970

B-169912, JUL. 21, 1970

BID PROTEST -- BIDDER RESPONSIBILITY -- "AGGREGATE OR ITEM BID" DECISION DENYING PROTEST OF DIVISION LAUNDRY AND CLEANERS, INC. AGAINST AWARD TO AMERICAN AND SNOW, INC. FOR CLEANING SERVICES FOR LACKLAND AIR FORCE BASE. LOW BIDDER FOR SMALL BUSINESS SET ASIDE PROCUREMENT WHO, AFTER PREAWARD SURVEY, WAS DETERMINED TO BE CAPABLE OF PERFORMING AND WOULD PERFORM AT PLANT LOCATED IN HARDCORE UNEMPLOYMENT AREA WAS PROPERLY DETERMINED TO BE LOWEST RESPONSIBLE BIDDER AND IN ABSENCE OF EVIDENCE THAT ACTION WAS ARBITRARY, CAPRICIOUS, OR FRAUDULENT SUCH DETERMINATION IS NOT SUBJECT TO QUESTION. IN ABSENCE OF PROVISION IN INVITATION SPECIFYING "ALL OR NONE" BIDS, BIDDER MAY CONDITION BID ON ALL OR ANY SPECIFIED GROUP OF ITEMS. DETERMINATION TO CANCEL ONE ITEM BECAUSE SERVICES UNDER ANOTHER ITEM WOULD BE LESS EXPENSIVE WAS PROPER.

TO MR. JAMES F. GARDNER:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM DATED MAY 26, 1970, AND LETTER DATED JUNE 22, 1970, WITH ENCLOSURES, PROTESTING ON BEHALF OF DIVISION LAUNDRY AND CLEANERS, INCORPORATED, (DIVISION) AGAINST THE AWARD OF CONTRACT FOR LOT A UNDER INVITATION FOR BIDS NO. F41615-70-B 0895, ISSUED BY THE BASE PROCUREMENT OFFICE, LACKLAND AIR FORCE BASE, TEXAS.

THE INVITATION, A 100 PERCENT SET-ASIDE FOR SMALL BUSINESS, WAS ISSUED MARCH 13, 1970, COVERING 89 LINE ITEMS OF LAUNDRY AND DRY CLEANING SERVICES REQUIRED BY WILFORD HALL UNITED STATES MEDICAL CENTER, LACKLAND AIR FORCE BASE, DURING THE PERIOD JULY 1, 1970 THROUGH JUNE 30, 1971. THE 89 LINE ITEMS WERE DIVIDED INTO LOTS A THROUGH G, ACCORDING TO THE TYPES OF GARMENTS, LINENS, AND PROCESSING REQUIRED. SCHEDULE PROVISION C, PAGE 13 OF THE INVITATION PROVIDED THAT AWARD WOULD BE MADE TO THE LOWEST AGGREGATE BIDDER ON EACH LOT. SIX BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION, AS AMENDED, AND WERE OPENED ON APRIL 16, 1970.

DIVISION SUBMITTED THE LOW RESPONSIVE BIDS ON LOTS C, D, E, AND G. LOT E WAS CANCELLED AND THE CONTRACTING OFFICER CONTEMPLATES AWARD TO DIVISION ON THE REMAINING LOTS. PRICES BID ON LOT A, LESS APPLICABLE DISCOUNT BY THE THREE LOW BIDDERS, ARE AS FOLLOWS:

DIVISION $264,768

AMERICAN LAUNDRY & CLEANERS-(AMERICAN) $214,182

SNOW WHITE LAUNDRY & CLEANERS-(SNOW) $248,616 THE CONTRACTING OFFICER CONTEMPLATES AWARD TO AMERICAN AS THE LOW RESPONSIVE BIDDER ON LOT A.

DIVISION'S PROTEST IS PREDICATED ON THE GROUNDS THAT AMERICAN AND SNOW ARE NOT RESPONSIBLE BIDDERS, AND ARE INCAPABLE OF COMPLYING WITH THE RESULTANT CONTRACT FOR LOT A BECAUSE OF THEIR INADEQUATE FACILITIES, SHORTAGE OF LAUNDRY MACHINERY AND THE LAYOUT OF THEIR PLANTS. THE CONTRACTING OFFICER REQUESTED THE DEFENSE CONTRACT ADMINISTRATION SERVICES OFFICE (DCASO) TO PERFORM A PRE-AWARD SURVEY (PAS) ON AMERICAN TO ASSURE THE PROPER EVALUATION OF THESE FACTORS AS WELL AS OTHER INFORMATION CONCERNING AMERICAN'S CAPACITY TO PERFORM UNDER THIS CONTRACT.

BASED ON THE FINDINGS OF THE PAS AND RECORDS MAINTAINED BY THE BASE PROCUREMENT DIVISION IN CONNECTION WITH PREVIOUS CONTRACTS PERFORMED BY AMERICAN, THE CONTRACTING OFFICER DETERMINED THAT AMERICAN'S PRESENT PLANT LAYOUT, EQUIPMENT, FACILITIES, FINANCES AND ALL PERTINENT FACTORS APPLICABLE TO THIS CONTRACT ARE ADEQUATE TO PERFORM THE PROPOSED CONTRACT FOR LOT A, EXCLUSIVE OF ADDITIONAL SPACE AND EQUIPMENT PROGRAMMED BY AMERICAN FOR THE IMPROVEMENT OF ITS PLANT.

IN ADDITION, THE CONTRACTING OFFICER DETERMINED THAT THE PLANT OF AMERICAN IS PHYSICALLY LOCATED WITHIN THE BOUNDARIES OF THE AREA DESIGNATED BY THE DEPARTMENT OF LABOR AS A HARDCORE UNEMPLOYMENT AREA. PURSUANT TO HEADQUARTERS, UNITED STATES AIR FORCE, ARMED SERVICES PROCUREMENT REGULATION (ASPR) SUPPLEMENT 1-803, CONSIDERATION WAS GIVEN TO A PARTIAL SET-ASIDE FOR LABOR SURPLUS AREA CONCERNS. IT WAS FOUND, HOWEVER, THAT IT WOULD BE NEITHER PRACTICABLE NOR DESIRABLE TO ATTEMPT TO SEPARATE QUANTITIES OF THE DIRTY LINENS INTO "TWO OR MORE ECONOMIC PRODUCTION RUNS OR REASONABLE LOTS" AS CONTEMPLATED BY ASPR 1 804.1(A)(1)(I) FOR LABOR SURPLUS AREA SET-ASIDE CONTRACTS.

WITH REGARD TO THE DETERMINATION OF THE RESPONSIBILITY OF A PROSPECTIVE CONTRACTOR, THE AUTHORITIES ARE IN AGREEMENT THAT THE OFFICERS IN WHOM THE POWER IS VESTED TO DETERMINE RESPONSIBILITY MUST DETERMINE THE FACTS AND SUCH DETERMINATION CANNOT BE SET ASIDE UNLESS THE ACTION WAS ARBITRARY, CAPRICIOUS OR FRAUDULANT. DETERMINATION OF THE LOWEST RESPONSIBLE BIDDER IS TO BE MADE BY THE AUTHORIZED OFFICIAL OF THE CONTRACTING AGENCY, WHO IS REQUIRED TO ACT FAIRLY UPON REASONABLE INFORMATION WHICH SUPPORTS THE DETERMINATION MADE. WHEN SUCH OFFICIAL DETERMINES THE RESPONSIBILITY OF A BIDDER, SUCH DETERMINATION CANNOT BE OVERTHROWN BY THE COURTS OR OUR OFFICE UNLESS IT CAN BE HELD THAT THE DETERMINATION WAS ARBITRARY, CAPRICIOUS OR FRAUDULENT. SEE MCQUILLIN, MUNICIPAL CORPORATIONS, 3D ED., VOL. 10, SEC. 29.73, AND THE CASES THEREIN CITED; 38 COMP. GEN. 131; 33 ID. 549; BROWN V CITY OF PHOENIX, 272 P. 2D 358; MCNICHOLS V CITY AND COUNTY OF DENVER, 274 P. 2D 317.

IN YOUR LETTER OF JUNE 22, 1970, YOU OBJECT TO THE CANCELLATION OF LOT E, THE DIAPER SERVICE PIECE WORK. IT IS YOUR CONTENTION THAT WHILE THE CONTRACTING OFFICER HAS THE RIGHT TO CANCEL ALL BIDS AND RE-SOLICIT IF HE DESIRES, THE CANCELLATION OF LOT E ALONE IS INVALID AND THWARTS THE COMPETITIVE BID SYSTEM AND ADVANTAGES GAINED BY THE GOVERNMENT THROUGH USE OF THE COMPETITIVE BID. IT IS YOUR RATIONALE THAT A CONTRACTING OFFICER COULD BY CANCELLATION OF ONLY ONE LOT UNDER A MULTIPLE AWARDS TYPE CONTRACT SELECT THE BIDDER HE WISHED TO DO BUSINESS WITH REGARDLESS OF THE PRICE. IN THIS REGARD, YOU POINT OUT THAT "ALL OR NONE" BIDDERS WOULD BE ELIMINATED AS WELL AS THOSE BIDDERS WHO OFFERED BIDS ON CERTAIN LOTS ONLY IF THEY WERE AWARDED CERTAIN OTHER LOTS.

IN THE INSTANT CASE THE LOW BIDDER ON LOT E CONDITIONED THAT PRICE ON AWARD OF LOT B, ON WHICH HE WAS NOT THE LOW BIDDER. DIVISION THEREBY BECAME THE LOW RESPONSIVE BIDDER ON LOT E. ALL OTHER LOTS ARE BEING AWARDED TO THE LOW RESPONSIVE BIDDERS, NONE OF WHOM QUALIFIED THEIR BIDS. ASPR 2-404.5 RELATING TO "ALL OR NONE QUALIFICATIONS" PROVIDES THAT "UNLESS THE INVITATION FOR BIDS SO PROVIDES, A BID IS NOT RENDERED NONRESPONSIVE BY THE FACT THAT THE BIDDER SPECIFIES THAT AWARD WILL BE ACCEPTED ONLY ON ALL, OR A SPECIFIED GROUP, OF THE ITEMS INCLUDED IN THE INVITATION FOR BIDS." NO SUCH PROHIBITION WAS INCLUDED IN THIS INVITATION FOR BIDS.

IT IS REPORTED BY THE PROCURING ACTIVITY THAT AFTER BID OPENING BUT PRIOR TO AWARD, THE USING ACTIVITY DETERMINED THAT THE USE OF DISPOSABLE DIAPERS WOULD BE LESS EXPENSIVE THAN THE COST OF THE DIAPER SERVICE UNDER LOT E. IN VIEW OF THIS DECISION, LOT E WAS CANCELLED PURSUANT TO ASPR 2-404.1(B) (V) WHICH PROVIDES AS FOLLOWS:

" *** INVITATIONS FOR BIDS MAY BE CANCELED AFTER OPENING BUT PRIOR TO AWARD WHERE SUCH ACTION IS CONSISTENT WITH (A) ABOVE AND THE CONTRACTING OFFICER DETERMINES IN WRITING THAT --

"(V) BIDS RECEIVED INDICATE THAT THE NEEDS OF THE GOVERNMENT CAN BE SATISFIED BY A LESS EXPENSIVE ARTICLE DIFFERING FROM THAT ON WHICH THE BIDS WERE INVITED;

FOR THE REASONS DISCUSSED, WE ARE UNABLE TO AGREE THAT THE ADMINISTRATIVE ACTIONS TAKEN WERE IMPROPER. YOUR PROTEST THEREFORE MUST BE DENIED.