B-172959(2), SEP 10, 1971

B-172959(2), SEP 10, 1971

BID PROTEST - CANCELLATION AND RESOLICITATION - "AUCTION TECHNIQUE" DENIAL OF PROTEST BY LILIE-HOFFMANN COOLING TOWERS, INC., AGAINST THE AWARD OF A CONTRACT TO ANOTHER FIRM BY UNION CARBIDE CORPORATION, ACTING UNDER A PRIME CONTRACT WITH THE ATOMIC ENERGY COMMISSION. THE ORIGINAL SOLICITATION WAS CANCELLED, AND THE PROCUREMENT READVERTISED, WHEN IT WAS DETERMINED THAT THE SPECIFICATIONS WERE INADEQUATE. SECTION 1-2.404-1(B) OF THE FEDERAL PROCUREMENT REGULATIONS PERMITS CANCELLATION OF AN INVITATION SUBSEQUENT TO BID OPENING WHERE IT IS DETERMINED PRIOR TO AWARD THAT INADEQUATE, AMBIGUOUS, OR OTHERWISE DEFICIENT SPECIFICATIONS WERE CITED IN THE IFB. IT IS THE COMP. GEN.'S OPINION THAT THE PROCEDURE FOLLOWED HERE WAS PROPER, AND DID NOT, AS PROTESTANT CONTENDS, CONSTITUTE AN "AUCTION."

TO LILIE-HOFFMANN COOLING TOWERS, INC.:

THIS IS IN REPLY TO YOUR LETTER DATED JULY 9, 1971, WITH ENCLOSURE, PROTESTING THE AWARD OF A CONTRACT TO ANOTHER FIRM BY UNION CARBIDE CORPORATION (CARBIDE) ACTING UNDER PRIME CONTRACT W-7405-ENG-26, WITH THE U.S. ATOMIC ENERGY COMMISSION (AEC).

THE RECORD SHOWS THAT ON MARCH 30, 1971, CARBIDE ISSUED INVITATION NO. 6079 FOR RECIRCULATING WATER COOLING TOWER RESTORATION AND TOWER PERFORMANCE UP-RATING, C-633. THE BIDS WERE PUBLICLY OPENED ON APRIL 28, 1971, AND UPON EVALUATION IT WAS DISCOVERED THAT THE APPARENT LOW BIDDER PROPOSED TO USE BURNABLE OR NONSELF-EXISTINGUISHING FILL MATERIAL FOR THE COOLING TOWER. WHILE THE SPECIFICATIONS DID NOT SPECIFY THE REQUIRED CHARACTERISTICS OF THE FILL MATERIAL WITH RESPECT TO ITS FLAMMABILITY, THE USE OF THE FILL MATERIAL PROPOSED IN THE APPARENT LOW BIDDER'S BID WAS CONSIDERED TO BE UNACCEPTABLE, WHEREAS THE MATERIAL SPECIFIED IN YOUR BID WOULD HAVE BEEN ACCEPTABLE. ALSO, THE RECORD SHOWS THAT THE ORIGINAL SPECIFICATIONS REPRESENTED THAT THE EXISTING COOLING TOWER FANS HAD CERTAIN PERFORMANCE CHARACTERISTICS (SEE PAGES TS15-17 OF THE TECHNICAL SPECIFICATION), HOWEVER, TESTS OF THE FANS AT THEIR MAXIMUM MOTOR HORSEPOWER INDICATED THAT THE FANS WERE DELIVERING AIR AT A RATE THAT WAS APPROXIMATELY 92 PERCENT OF THE RATES INDICATED IN THE ABOVE-REFERENCED TECHNICAL SPECIFICATIONS. CARBIDE NOW FEELS THAT THE ONLY GUARANTEE WHICH CAN BE MADE IS WITH RESPECT TO THE INPUT HORSEPOWER TO THE MOTORS. THUS, IT WAS DECIDED TO CANCEL THE INVITATION AND REVISE THE SPECIFICATIONS FOR THE FILL MATERIAL, TO POINT OUT THE INACCURATE REPRESENTATIONS REGARDING THE PERFORMANCE CHARACTERISTICS OF THE FANS, AND TO GUARANTEE ONLY THE INPUT HORSEPOWER TO THE MOTORS.

THE RECORD SHOWS THAT UPON RESOLICITATION THE LOW BID WAS SUBMITTED BY TOWER PERFORMANCE INC., AT $337,000.00, AND THAT YOUR BID REMAINED UNCHANGED AT $358,280.00, AND BECAME THE THIRD LOW BID.

IT IS YOUR POSITION THAT CARBIDE'S ACTION OF REJECTING ALL BIDS AND READVERTISING THE PROJECT CONSTITUTED AN AUCTION TECHNIQUE AND THAT A SECOND BID AGAINST THE SAME JOB AFTER PUBLIC DISCLOSURE OF PRICES SHOULD NOT BE ALLOWED. YOU BELIEVE YOU WERE THE LOWEST RESPONSIVE BIDDER UNDER THE ORIGINAL INVITATION AND THAT AN AWARD SHOULD HAVE BEEN MADE TO YOUR FIRM.

WE ARE ADVISED BY AEC THAT GOVERNMENT APPROVAL PRIOR TO AWARD OF THIS SUBCONTRACT IS REQUIRED UNDER THE TERMS OF CARBIDE'S PRIME COST TYPE CONTRACT WITH THE GOVERNMENT. IN A PRIOR CASE OF THIS NATURE WE EXPRESSED THE VIEW THAT GOVERNMENT APPROVAL SHOULD NOT BE GRANTED IF THE AWARD WOULD BE PREJUDICIAL TO THE INTERESTS OF THE UNITED STATES, PARTICULARLY SINCE THE COST OF THE PROCUREMENT WILL ULTIMATELY BE BORNE BY THE UNITED STATES. SEE 37 COMP. GEN. 315 (1957). WE HAVE ALSO STATED THAT THE FRAME OF REFERENCE GUIDING SUCH DETERMINATIONS SHOULD BE THE FEDERAL NORM THAT IS EMBODIED IN THE PROCUREMENT STATUTES AND IMPLEMENTING REGULATIONS. SEE 49 COMP. GEN. 668 (1970).

IN CONSIDERING WHETHER CANCELLATION AND READVERTISEMENT WAS JUSTIFIED, IT SHOULD BE NOTED THAT THE INVITATION SPECIFICALLY RESERVED TO THE COMPANY THE RIGHT TO REJECT ALL BIDS RECEIVED, WHEN IT WAS DETERMINED TO BE IN THE INTEREST OF THE GOVERNMENT TO DO SO. THIS PROVISION IS IN CONFORMITY WITH 41 U.S.C. 253(B). ALSO, SECTION 1 2.404-1(B)(1) OF THE FEDERAL PROCUREMENT REGULATIONS PERMITS CANCELLATION OF AN INVITATION SUBSEQUENT TO BID OPENING WHERE IT IS DETERMINED PRIOR TO AWARD THAT INADEQUATE, AMBIGUOUS, OR OTHERWISE DEFICIENT SPECIFICATIONS WERE CITED IN THE INVITATION FOR BIDS.

WE DO NOT AGREE WITH YOUR CONTENTION THAT CARBIDE SHOULD NOT HAVE READVERTISED ITS REQUIREMENTS BUT SHOULD HAVE ACCEPTED YOUR BID, WHICH OFFERED ACCEPTABLE FILL MATERIAL, ON THE FIRST SOLICITATION. EVEN IF WE ASSUME THAT YOUR FIRST BID WAS THE LOWEST WHICH OFFERED ACCEPTABLE FILL MATERIAL, IT IS OUR OPINION THAT THE APPARENT LOW BIDDER WHO OFFERED FLAMMABLE FILL MATERIAL WAS ENTITLED TO COMPETE ON THE BASIS OF THE MORE STRINGENT SPECIFICATIONS STATING CARBIDE'S ACTUAL REQUIREMENTS. WE DO NOT BELIEVE THAT OBTAINING COMPETITION BY READVERTISING ON THE BASIS OF SUBSTANTIALLY REVISED SPECIFICATIONS CONSTITUTES AN AUCTION TECHNIQUE, AND UNDER THE PRESENT CIRCUMSTANCES WE FEEL SUCH ACTION IS IN THE GOVERNMENT'S BEST INTERESTS. MOREOVER, WE FEEL THAT NO BID PROPERLY COULD HAVE BEEN ACCEPTED UNDER THE INVITATION AS INITIALLY ISSUED SINCE THE ORIGINAL SPECIFICATIONS CITED ERRONEOUS PERFORMANCE CHARACTERISTICS FOR THE FANS, AND IT MUST BE ASSUMED THAT THE ORIGINAL BIDS WERE BASED UPON SUCH ERRONEOUS SPECIFICATIONS. NOTWITHSTANDING THE EXPOSURE OF THE ORIGINAL BID PRICES, WE BELIEVE THESE INADEQUACIES IN THE SPECIFICATION WERE SO SIGNIFICANT AS TO JUSTIFY CANCELLATION AND RESOLICITATION AS CONTEMPLATED IN THE ABOVE-CITED REGULATIONS.

FOR THE FOREGOING REASONS, YOUR PROTEST IS DENIED.