Skip to Highlights
Highlights

BID SUBMITTED WITH STATEMENT REQUESTING USE OF GOVERNMENT FURNISHED EQUIPMENT THAT WAS NEITHER IN THE OFFEROR'S POSSESSION NOR OFFERED FOR USE UNDER IFB WAS PROPERLY REJECTED AS NONRESPONSIVE TO THE IFB. PRICE REASONABLENESS IS MATTER WITHIN DISCRETION OF CONTRACTING OFFICER AND OUR OFFICE WILL NOT INTERFERE ABSENT SHOWING OF ABUSE OF DISCRETION. AWARD TO BIDDER WHOSE PRICE WAS SUBSTANTIALLY HIGHER THAN THAT OFFERED BY BIDDER WHOSE BID WAS PROPERLY REJECTED AS NONRESPONSIVE DOES NOT CONSTITUTE SHOWING OF ABUSE OF DISCRETION. DAAA09-77-B-2001 WAS ISSUED ON FEBRUARY 1. THE FOLLOWING BIDS WERE RECEIVED IN RESPONSE TO THE IFB: BIDDER . . . (KAISER'S PRICE IS ITS FINAL PRICE. THE ARMY INFORMED KAISER THAT IT WAS THE APPARENT LOW BIDDER.

View Decision

B-189326, AUGUST 2, 1977

1. BID SUBMITTED WITH STATEMENT REQUESTING USE OF GOVERNMENT FURNISHED EQUIPMENT THAT WAS NEITHER IN THE OFFEROR'S POSSESSION NOR OFFERED FOR USE UNDER IFB WAS PROPERLY REJECTED AS NONRESPONSIVE TO THE IFB, 2. PRICE REASONABLENESS IS MATTER WITHIN DISCRETION OF CONTRACTING OFFICER AND OUR OFFICE WILL NOT INTERFERE ABSENT SHOWING OF ABUSE OF DISCRETION. AWARD TO BIDDER WHOSE PRICE WAS SUBSTANTIALLY HIGHER THAN THAT OFFERED BY BIDDER WHOSE BID WAS PROPERLY REJECTED AS NONRESPONSIVE DOES NOT CONSTITUTE SHOWING OF ABUSE OF DISCRETION.

KAISER AEROSPACE & ELECTRONICS CORPORATION:

INVITATION FOR BIDS (IFB) NO. DAAA09-77-B-2001 WAS ISSUED ON FEBRUARY 1, 1977, BY THE UNITED STATES ARMY ARMAMENT COMMAND (ARMY), ROCK ISLAND, ILLINOIS, FOR TESTING AND PRODUCTION OF 292 M89E1 GUNFEEDERS, A CLUTCHING DEVICE USED TO FEED AMMUNITION TO THE M-197 GUN. THE FOLLOWING BIDS WERE RECEIVED IN RESPONSE TO THE IFB:

BIDDER . . . BID PRICE PER UNIT . . . TOTAL PRICE

GENERAL ELECTRIC . . . $5,364.00 . . . $1,566.288.00 PRECISION PRODUCTS, N. HAVEN, CONN. . . 5,100.00 . . . 1,489,200.00 SOLAREX, DEERPARK, N.Y. . . 4,235.00 . . . 1,236,620.00 KAISER AEROSPACE & ELECTRONICS CORP. (KAISER) . 3,576.43 . 1,044,317.

(KAISER'S PRICE IS ITS FINAL PRICE, REVISED IN RESPONSE TO ARMY INQUIRIES REGARDING CORRECTNESS OF INITIAL PRICE)

ON APRIL 5, 1977, THE ARMY INFORMED KAISER THAT IT WAS THE APPARENT LOW BIDDER, AND REQUESTED KAISER TO REVIEW ITS BID FOR POSSIBLE ERRORS. KAISER REQUESTED PERMISSION TO CORRECT ITS BID BY LETTER OF APRIL 22, 1977, AND SUBMITTED A CORRECTED BID. ON MAY 11, 1977, KAISER WITHDREW A REQUEST IT HAD MADE IN ITS BID FOR THE USE OF GOVERNMENT FURNISHED EQUIPMENT (GFE) (A MARK 8-MOD 1 BELTING MACHINE) THAT WAS NEITHER IN ITS POSSESSION NOR OFFERED FOR USE UNDER THE SOLICITATION, AND FURTHER REVISED ITS PRICE.

THE ARMY AWARDED THE CONTRACT TO PRECISTON PRODUCTS ON JUNE 3, 1977, AFTER FINDING THAT KAISER'S BID WAS NONRESPONSIVE TO THE IFB, AND THAT SOLAREX WAS "NOT-RESPONSIBLE." THE ARMY FOUND KAISER'S BID NONRESPONSIVE DUE TO KAISER'S REQUEST FOR THE USE OF THE SUPPLEMENTAL GFE.

BY LETTER FILED IN OUR OFFICE ON JUNE 13, 1977, KAISER PROTESTS THE ARMY'S FINDING OF NONRESPONSIVENESS AND THE RESULTANT AWARD TO PRECISION INSTRUMENTS, CONTENDING THAT ITS REQUEST FOR THE BELTING MACHINE WAS INCONSEQUENTIAL AND INSIGNIFICANT. KAISER STATES THAT IT UNDERSTOOD THAT UNDER BID OPENING PROCEDURES THE PROCURING ACTIVITY HAS THE OPTION OF MAKING AWARD TO THE LOW BIDDER WHILE DENYING ITS REQUEST FOR SUPPLEMENTAL GFE, OR OF ASKING THE BIDDER TO DELETE ITS REQUEST BEFORE MAKING AWARD, KAISER ARGUES THAT SINCE IT WAS NOT ASKED TO WITHDRAW ITS REQUEST FOR THE SUPPLEMENTAL GFE SOON AFTER BID OPENING, ITS REQUEST WAS INCONSEQUENTIAL. ADDITIONALLY, KAISER CONTENDS THAT THE PRICE OF THE SUPPLEMENTAL GFE ($7,000), IN COMPARISON WITH THE TOTAL COST OF THE PROCUREMENT, RENDERS ITS REQUEST INSIGNIFICANT. KAISER ARGUES ALTERNATIVELY THAT THE PRICE DIFFERENCE BETWEEN ITS BID AND THAT OF THE AWARDEE IS SO GREAT THAT THE GOVERNMENT IS NOT OBTAINING THE ITEMS AT A REASONABLE PRICE AND, CONSEQUENTLY, SHOULD CANCEL THE IFB AND RESOLICIT.

PARAGRAPH 2-404.2(D) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) (1976) PROVIDES IN PART AS FOLLOWS:

"ORDINARILY, A BID SHOULD BE REJECTED WHEN THE BIDDER ATTEMPTS TO IMPOSE CONDITIONS WHICH WOULD MODIFY REQUIREMENTS OF THE INVITATION FOR BIDS OR LIMIT HIS LIABILITY TO THE GOVERNMENT, SINCE TO ALLOW THE BIDDER TO IMPOSE SUCH CONDITIONS WOULD BE PREJUDICIAL TO OTHER BIDDERS.

"A LOW BIDDER MAY BE REQUESTED TO DELETE OBJECTIONABLE CONDITIONS FROM HIS BID PROVIDED THESE CONDITIONS DO NOT GO TO THE SUBSTANCE, AS DISTINGUISHED FROM THE FORM, OF THE BID, OR WORK AN INJUSTICE ON OTHER BIDDERS. A CONDITION GOES TO THE SUBSTANCE OF A BID WHERE IT AFFECTS PRICE, QUANTITY, QUALITY OR DELIVERY OF THE ITEMS OFFERED."

KAISER'S REQUEST FOR THE USE OF THE SUPPLEMENTAL GFE WAS AN ATTEMPT TO IMPOSE A CONDITION WHICH WOULD MODIFY THE REQUIREMENTS OF THE IFB, AND WHICH COULD BE PREJUDICIAL TO OTHER BIDDERS. SEE B-172439, AUGUST 2, 1971. SINCE THE REQUESTED BELTING MACHINE HAS AN ESTIMATED COST OF $7,000, IT AFFECTS THE PRICE OF THE ITEMS OFFERED AND, THEREFORE, IS A QUALIFICATION OF SUBSTANCE RATHER THAN OF FORM. SEE 44 COMP.GEN. 753, 756 (1956). CONSEQUENTLY, THE ARMY COULD NOT HAVE REQUESTED KAISER TO DELETE THE REQUEST FOR SUPPLEMENTAL GFE, AND KAISER'S BID WAS PROPERLY REJECTED AS NONRESPONSIVE.

AS STATED ABOVE, KAISER ARGUES ALTERNATIVELY THAT THE IFB SHOULD BE CANCELED AND RESOLICITED BECAUSE THE AWARDEE'S PRICE IS UNREASONABLE. THIS REGARD, ASPR SEC 2-404.1 PROVIDES, IN PERTINENT PART, THAT:

"(A) THE PRESERVATION OF THE INTEGRITY OF THE COMPETITIVE BID SYSTEM DICTATES THAT AFTER BIDS HAVE BEEN OPENED, AWARD MUST BE MADE TO THAT RESPONSIBLE BIDDER WHO SUBMITTED THE LOWEST RESPONSIVE BID, UNLESS THERE IS A COMPELLING REASON TO REJECT ALL BIDS AND CANCEL THE INVITATION.

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

"(VI) AL OTHERWISE ACCEPTABLE BIDS RECEIVED ARE AT UNREASONALBE PRICES;"

THE DETERMINATION OF PRICE REASONABLENESS IS BASICALLY A BUSINESS JUDGMENT REQUIRING THE EXERCISE OF BROAD DISCRETION. SEE PARK MANUFACTURING COMPANY; CENTURY TOOL COMPANY, B-185330, B-185331, B-185776, APRIL 16, 1976, 76-1 CPD 260. THIS DETERMINATION IS TO BE MADE BY THE CONTRACTING OFFICER AND OUR OFFICE WILL NOT INTERFERE ABSENT A SHOWING OF AN ABUSE OF DISCRETION. SEE J. H. RUTTER REX MANUFACTURING COMPANY, INC., B-184157, FEBRUARY 23, 1976, 76-1 CPD 122; PARK MANUFACTURING COMPANY; CENTURY TOOL COMPANY, SUPRA.

WHILE THERE IS A LARGE PRICE DIFFERENCE BETWEEN KAISER'S BID AND PRECISION PRODUCT'S BID, IN OUR OPINION THAT ALONE DOES NOT CONSTITUTE A SHOWING OF ABUSE OF DISCRETION ON THE CONTRACTING OFFICER'S PART.

ACCORDINGLY, KAISER'S PROTEST IS DENIED.

GAO Contacts