BNUMBER: B-277069
DATE: August 29, 1997
TITLE: Crawford Laboratories, B-277069, August 29, 1997
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Matter of:Crawford Laboratories
File: B-277069
Date:August 29, 1997
David Schmetterer for the protester.
Marie Adamson Collins, Esq., General Services Administration, for the
agency.
Wm. David Hasfurther, Esq., and Michael R. Golden, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Protest is sustained where agency provides no rational basis for its
determination of price reasonableness of contract awards for primer
coatings at prices more than double the award prices under the prior
procurement for the same items.
DECISION
Crawford Laboratories protests the award of contracts under invitation
for bids (IFB) No. TFTP-96-DJ-8009, issued by the General Services
Administration (GSA) for primer coatings. Crawford contends that it
was improperly not given the opportunity to compete for these items,
that the award prices were unreasonable, and that the procurement
should be recompeted.
We sustain the protest because the agency has provided no rational
basis for its price reasonableness determination.
An October 23, 1996, Commerce Business Daily (CBD) synopsis of the
procurement advised that the IFB would be issued on or about November
1, 1996, and that the contract performance period was January 1, 1997,
through December 31, 1998. The IFB was issued on November 8,
soliciting prices on four items covering GSA's estimated requirements
for the period of January 1, 1997 (or the date of award if later)
through July 31, 1998. By facsimile of October 30, Crawford requested
a copy of the IFB. While GSA states that a copy of the IFB was "most
likely" sent to Crawford, it has no proof that it was sent. Crawford
was not on the bidder's list for the IFB--even though it was the
incumbent contractor on three of the four items.
On December 11, four bids were submitted on items 2 through 4, the
only items relevant to this protest. Line items 2 and 3 each included
two subline items: subline item (a) for five gallon cans and subline
item (b) for one gallon cans; line item 4 covered only one gallon
cans. One of the offerors requested withdrawal of its bid, which
subsequently expired and was not further considered. The remaining
three bids were as follows:
Item 2 Item 3 Item 4
Griggs Paint a. $244.70
b. 49.60 a. $241.80
b. 48.75 $49.60
Hanley Paint a. 185.00
b. 39.00 a. 185.00
b. 39.00 39.00
Durant Paints a. 185.75
b. 37.55 a. 190.75
b. 38.55 38.05
On March 18, Crawford telephoned GSA to inquire as to the status of
the procurement and upon learning the status to ask why it had not
been provided with a copy of the IFB. By letter of that date,
Crawford also reminded the agency that it had been the awardee on
items 2 through 4 under the prior IFB (issued in late 1994) for these
requirements and alleged that the prices bid on the current IFB were
more than double the prior award prices. Specifically, Crawford's
prices under its 1994 contract were $86.20 for item 2(a), $17.57 for
item 2(b), $86.89 for item 3(a), $17.38 for item 3(b), and $17.74 for
item 4. GSA advised Crawford that no award decisions had been made.
Prior to the awards, the contracting officer determined that Hanley's
and Durant's prices were reasonable. The contracting officer's
price analysis recognized that the prices bid on the two subitems of
item 3 were "substantially higher" than the prices that the agency had
paid for those items on the prior contract. In fact, the bids were
more than double the prices that the agency had paid previously. The
record shows that the award prices for item 2 and item 4 also were
more than double the prices for those items on the prior contract. To
support the determination of price reasonableness, the contracting
officer noted that there had been competition, with three bids "within
a competitive range of each other" and that the Price Producers Index
(PPI) for 1994-1997 showed the cost of the ingredients used to
manufacture the primers had increased by 13.5 percent during that
period.
On May 8, awards were made to Hanley on item 3 and Durant on items 2
and 4. Crawford learned of the awards on May 20 and protested on May
21.
Crawford's protest that the agency failed to solicit Crawford is
untimely. Under our Bid Protest Regulations, this allegation was
required to be filed not later than
10 days after the basis for protest was known, or should have been
known.
4 C.F.R. sec. 21.2(a)(2) (1997). It is the duty of a protester to
diligently pursue the information necessary to determine its basis of
protest. Douglas Glass Co.,
B-237752, Feb. 9, 1990, 90-1 CPD para. 175 at 2. The record shows that
the CBD synopsis which Crawford read advised that the solicitation
would be issued on or about November 1. Although Crawford promptly
requested a copy of the solicitation, the firm waited until March 18
to inquire further about the procurement. We note that as the
incumbent, Crawford knew that its contract expired at the end of 1996.
In our view, it was not reasonable for the protester to wait 4-1/2
months before inquiring about the procurement. We have held in
similar circumstances that delays of 3 and 4 months do not satisfy the
requirement of diligent pursuit. Id.
Crawford also argues that the award prices were unreasonable.
Although Crawford is untimely in protesting the failure to provide it
with a copy of the IFB, its challenge to the reasonableness of the
award prices is timely and we conclude that it is an interested party
to raise that issue. An interested party is defined as "an actual or
prospective bidder or offeror whose direct economic interest would be
affected by the award of a contract or the failure to award a
contract." 31 U.S.C. sec. 3551(2) (1994); 4 C.F.R. sec. 21.0(a).
Determining whether a party is interested involves consideration of a
variety of factors, including the nature of the issues raised, the
benefit or relief sought by the protester, and the party's status in
relation to the procurement. Black Hills Refuse Serv., 67 Comp. Gen.
261, 262 (1988), 88-1 CPD para. 151 at 2-3. Although Crawford did not
submit a bid since it was not provided a copy of the IFB, despite its
request and its status as the incumbent, based on the circumstances of
this case, we conclude that Crawford has asserted sufficient interest
in competing for a contract to warrant consideration of its challenge
to the reasonableness of the award prices. See Singleton Contracting
Corp., B-211259, Aug. 29, 1983, 83-2 CPD para. 270 at 2 (firm is
interested party to protest award, because firm demonstrated its
interest in competing by submitting a bid, albeit late, and would be a
prospective bidder if protest is sustained and agency resolicits); cf.
Loral Fairchild Corp., B-242957.2, Aug. 29, 1991, 91-2 CPD para. 218 at 5
(protester is not interested party where it chose not to submit a
proposal); Roy's Rabbitry, B-196452.2, May 9, 1980, 80-1 CPD para. 334 at
2-3 (protester is not interested party to challenge the reasonableness
of the award price where protester received a copy of the solicitation
but voluntarily chose not to submit a bid).
The Federal Acquisition Regulation (FAR) provides that the contracting
officer is responsible for selecting and using the price analysis
techniques that will ensure a fair and reasonable price. FAR sec.
14.408-2, 15.805-2. The determination of price reasonableness
involves the exercise of discretion on the part of the contracting
officer, which our Office will not question unless it is clearly
unreasonable or there is a showing of fraud or bad faith on the part
of contracting officials. California Shorthand Reporting, B-250302.2,
Mar. 4, 1993, 93-1 CPD para. 202 at 2. Notwithstanding our reluctance
to reverse such determinations, we conclude here that the
determination of reasonableness of the award prices for items 2
through 4 is not supported by the record.
The contracting officer compared Hanley's and Durant's bids to the
prices previously paid (including those from Crawford's prior
contract) for these items and concluded that the difference between
the bids received here and the prices on the prior contract is
explained by the 13.5-percent increase in cost of the ingredients used
to manufacture the primers--as set forth in the 1994-97 PPI. Crawford
argues, and we agree, that the PPI for 1994-1997 does not support the
price reasonableness determination. Even assuming the 13.5-percent
increase used by the contracting officer is correct,[1] that increase
in material costs does not explain the dramatic increase in prices.
Absent any explanation from the contracting officer, we cannot see how
the PPI increase shows the award prices here are reasonable. Further,
the fact that these prices were the result of competition does not
alter our conclusion that the price reasonableness determination is
defective. While comparison of prices obtained competitively
ordinarily may provide a basis for determining the reasonableness of
prices, here, where all prices are significantly higher (at least
double) than the prior contract prices, we think without some analysis
or explanation for the higher current prices, the comparison of the
bids alone is insufficient to support the determination. For example,
FAR sec. 15.805-2 identifies a number of price analysis techniques--such
as comparison of the prices received with the published price lists or
market prices, an independent government estimate, or prices obtained
through market research--which a contracting officer may use to ensure
a fair and reasonable price.
In a supplemental explanation filed after submission of the agency
report on the protest, the agency argues for the first time that the
current solicitation represents reductions--in some cases of as much
as 50 percent--in the estimated quantities compared with those under
the prior contract, and that these reductions explain the higher
prices bid under the current solicitation. The record includes no
indication that this was a factor in the contracting officer's price
reasonableness determination. Further, while the contracting officer
now asserts "that the method of production for small quantities is
often different and more expensive than the method of production [of]
large quantities," there is no evidence in the record that the reduced
estimated quantities were the reason for the increased prices.[2] The
contracting officer made no attempt to verify that this was the case
at the time of her price reasonableness determination (or afterward).
Indeed, the record shows that the single bidder--Griggs--that bid on
both this IFB and the previous IFB reduced its prices for all the
items at issue here.
Although, in its supplemental explanation, GSA also suggests that
Crawford's prices must be based on a noncompliant product, Crawford's
lower prices on the prior contract apparently were based on a less
expensive alternative formulation for the product which has been
approved by the agency with authority to approve the product. In
spite of the agency's after-the-fact explanation, other than the
comparison of prices received under the current solicitation, the
contracting officer apparently did not use any of the other price
analysis techniques identified under FAR sec. 15.805-2. In short, the
record lacks any meaningful support for the price reasonableness
decision, and we conclude that the contracting officer failed to
satisfy her obligation under FAR sec. 14.408-2 to determine that the
award prices were reasonable.
Accordingly, we sustain the protest and recommend that the contracting
officer reexamine the reasonableness of Hanley's and Durant's prices.
Unless the contracting officer can adequately justify the
reasonableness of those prices in accordance with FAR sec. 14.408-2 and
15.805-2, we recommend that the contracts on items 2 through 4 be
terminated for the convenience of the government and be recompeted.
Further, we recommend that Crawford be reimbursed its costs of filing
and pursuing the protest, including reasonable attorneys' fees. 4
C.F.R. sec. 21.8(d)(1). Crawford's certified claim for such costs,
detailing the time expended and costs incurred, should be submitted
directly to the agency within 60 days after receipt of this decision.
4 C.F.R. sec. 21.8(f)(1).
The protest is sustained.
Comptroller General
of the United States
1. The PPI referenced by the contracting officer covers January 1994
through February 1997. Since the previous IFB was issued in late
1996, the award prices on the previous contract may very well have
included that portion of the 13.5-percent price increase which was
attributable to increases in ingredient costs which occurred in 1994.
2. We note that Durant, one of the awardees, in a letter to GSA more
than 2 months after the award, does not argue that it bid higher than
Crawford's previous prices because it planned to use a different
method of production than Crawford had used on the previous contract.