BNUMBER: B-277477.2
DATE: March 27, 1998
TITLE: Booth & Associates, Inc.--Advisory Opinion, B-277477.2, March
27, 1998
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Matter of:Booth & Associates, Inc.--Advisory Opinion
File: B-277477.2
Date:March 27, 1998
Lynn B. Larsen, Esq., McKay, Burton & Thurman, for Booth & Associates,
Inc.
Marian E. Sullivan, Esq., Department of the Air Force, for the agency.
Ralph O. White, Esq., and Christine S. Melody, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Agency properly reinstated a bid, previously rejected as
nonresponsive, which failed to include a completed supplemental
schedule of individual hourly rates where the schedule was not used in
the evaluation of bid prices, and its omission did not affect the
bidder's promise to perform as specified.
2. Agency decision to cancel and revise an invitation for bids (IFB),
after bid opening, was proper where the record shows that the IFB
contained a material defect--an ambiguity in how to complete the
pricing schedule--that resulted in competition on an unequal basis.
DECISION
The United States District Court for the District of Utah requests an
advisory opinion from the General Accounting Office (GAO) with respect
to the complaint of Booth & Associates, Inc. Booth is seeking
injunctive relief to prevent the Department of the Air Force from
revising invitation for bids (IFB) No. F42650-97-B-0034 and soliciting
bids on that revised solicitation. The Air Force elected to revise
the IFB after reviewing a protest filed at GAO by Redcon, Inc. (file
number B-277477), challenging a decision by the Air Force to reject
Redcon's bid under the IFB as nonresponsive. Upon review, the Air
Force concluded that Redcon's bid was improperly rejected, and that
the solicitation was ambiguous and should be revised and reissued.
When notified of the Air Force decision, Redcon withdrew its protest
to our Office.
After Booth asked the court to bar the Air Force from revising the
solicitation, both parties agreed to a stay in the proceedings pending
receipt of a decision from GAO. By order dated November 13, 1997, the
court asked GAO to consider the following questions: (1) would Redcon
have prevailed on its protest? and (2) was the United States justified
in deciding to revise the solicitation and resolicit bids from the
technically acceptable bidders?
In accordance with the court's request for an advisory opinion, the
parties provided us with a copy of the briefs filed at the court, and
the administrative record, which includes the filings made to our
Office. No further pleadings were requested or received.
As described below, we conclude that the Air Force acted properly in
deciding to revise the solicitation in this procurement, and resolicit
for bids. Underlying this decision, we agree with the Air Force's
assessment that the Redcon protest would have been sustained if GAO
had reached a decision on the merits.
BACKGROUND
On July 29, 1996, the Air Force issued request for proposals (RFP) No.
F42650-96-R-0042, as the first part of a two-step procurement for
design and drafting services in support of weapons modification
programs at Ogden Air Logistics Center, Hill Air Force Base, Utah.
The solicitation anticipated award of an indefinite quantity,
indefinite delivery contract covering a 1-year base period, followed
by four 1-year options, with delivery orders to be issued to the
successful offeror as requirements were identified.
Upon receipt and evaluation of unpriced technical proposals, the
agency concluded that the proposals submitted by Booth, Redcon, and
Mesa Associates were technically acceptable. The agency then issued
IFB No. F42650-97-B-0034 to the three acceptable offerors, and
requested submission of sealed bids by 2 p.m. on March 20, 1997.
The IFB required bidders to complete a pricing schedule using a
composite hourly rate for the design and drafting services, which was
multiplied by a government-provided estimate of staff-hours to obtain
a price. Separate entries were to be made for the base year and for
each of the 4 option years, at contract line item numbers (CLIN) 0001,
0101, 0201, 0301, and 0401, respectively. Immediately following each
of these entries were separate CLINs (CLINs 0002, 0102, 0202, 0302,
and 0402) for data and drawings which were not priced separately. At
the end of each of the CLINs related to a performance period, the
pricing schedule included a summary line for the bidder to enter the
total cost for that performance period. IFB at 3, 5, 6, 7, and 9.
Only one CLIN was different from the recurring CLINs described above.
At CLIN 0003, bidders were required to enter a price for the first
delivery order during the base year. (The effort for the first
delivery order had been identified in the initial statement of work
included in the RFP.) The line where bidders entered their total
price for the base year was found after CLINs 0001, 0002, and 0003,
but there were no instructions about whether the price for CLIN 0003
was to be added to the price for CLIN 0001--which purported to be the
price for all needed effort during the base period--or included within
it. IFB at 3.
At the end of the IFB's pricing schedule was a block of instructions
followed by two additional one-line schedules, called schedule 1 and
schedule 2. IFB at 9. The instructions and one-line schedules are
set forth below:
The hourly calendar year (CY) labor rates listed below in
schedules 1 and 2 will be used to price all labor required to
perform within the scope of the basic contract. Either the
offeror's composite rates or individual rates, at the discretion
of the administrative contracting officer (ACO), may be used for
pricing the contractor effort for each delivery order. All rates
shall include any teaming or subcontractor arrangements, and
shall be fully burdened to include all applicable overhead, G&A
and profit.
Schedule 1 and 2 applies to the following contract line items:
0001, 0101, 0201, 0301, and 0401.
Schedule 1 (FFP)
OFFEROR'S COMPOSITE LABOR RATES
CY97 CY98 CY99 CYOO CYO1 CY02
Design/Drafting Services
Schedule 2 (FFP)
OFFEROR'S INDIVIDUAL LABOR RATES
CY97 CY98 CY99 CYOO CYO1 CY02
*Description/Code
*Job classifications are by company description including an
applicable labor codes used for payroll records.
In addition to the language quoted above, CLINs 0001, 0101, 0201,
0301, and 0401 (IFB at 2, and 4-8) include the following language:
For the purposes of evaluation, amounts applicable to this
line item are determined by multiplying the offeror's proposed
composite labor rates, under schedule I below, by the
government's estimated man-hours. The amount of labor hours
and associated rates for subsequent delivery orders issued
against the basic contract may be negotiated based on either
the offeror's proposed rates established under schedule I or
schedule II at the discretion of the administrative
contracting officer (ACO).
Essentially the same information is set forth in the IFB at clause
L-900(c). IFB at 27. The solicitation also advised at clause M-16C
that the composite hourly rate would be used for evaluation purposes,
and "the amount proposed for the first delivery order (CLIN 0003) will
be used in conjunction with all other line items in evaluating the
offeror's total proposed price." Id.
Upon receipt of bids from Booth, Redcon, and Mesa, the Air Force
noticed two problems. First, the bids seemed to show that the
companies had two different interpretations of the impact of CLIN 0003
on the total price for the base year. Redcon and Mesa had added the
prices for CLIN 0003 and CLIN 0001 together to compute their total
base year price. In contrast, Booth's total price was the same as its
CLIN 0001 price. Second, the Air Force noticed that Redcon had not
entered individual labor rates on schedule 2. Instead, Redcon had
typed "N/A" on schedule 2, apparently indicating that Redcon did not
believe the information was needed by the Air Force.
In response to the discrepancy in the treatment of CLIN 0003, the
contracting officer asked each bidder to clarify its bid for the base
year. At that time, Booth confirmed that its price for CLIN 0003 was
included in its price for CLIN 0001; therefore, the total price was
the same as the CLIN 0001 price. As a result of Redcon's failure to
provide individual labor rates under schedule 2, the contracting
officer concluded that the bid was nonresponsive. At the conclusion
of the agency's review, the final bid amounts were calculated as
follows:
Booth $ 2,468,100
Redcon $ 2,517,150
Mesa $ 2,807,372
After determining that Booth was the lowest-priced, responsive and
responsible bidder, the Air Force awarded the contract to Booth on
June 26, 1997.
On July 11, Redcon filed a protest with our Office arguing that its
bid was wrongly rejected as nonresponsive, and that Booth was
improperly allowed to include its CLIN 0003 price within its price for
CLIN 0001. Since Booth's CLIN 0003 price was $76,696.66, Redcon
correctly pointed out that if Booth had been required to add its CLIN
0003 price to its CLIN 0001 price--as did Redcon and Mesa--Redcon
would have been the lowest-priced bidder.[1]
By letter dated August 13, the Air Force advised our Office that it
was taking corrective action in response to the protest by revising
its solicitation, and requesting new bids from all bidders, including
Redcon. Underlying this decision, the record shows that the Air Force
concluded that it had improperly rejected Redcon's bid for failing to
complete schedule 2. Administrative Record (Admin. Rec.) at 110421.
In addition, the Air Force concluded that the IFB should be revised to
clearly state whether the price for CLIN 0003 was to be included
within the basic performance period price. Id. In response to these
actions, Booth filed its request for injunctive relief with the court
on September 11.
ANALYSIS
With respect to the first question put to our Office by the court,
regarding the likelihood of Redcon's success in its protest
challenging the rejection of its bid as nonresponsive, we conclude
that a decision on the merits would have upheld Redcon's contention.
Redcon's bid was initially rejected by the Air Force as nonresponsive
to the IFB because it failed to include an entry under schedule 2 at
the end of the price schedule. Under schedule 2, bidders were to
identify the individual labor categories and hourly rates to be paid
by the bidder for calendar years 1997 through 2002. Ultimately,
however, the Air Force concluded that Redcon's failure to complete
schedule 2 was not a matter of responsiveness.
The test for responsiveness is whether the bid as submitted is an
offer to perform, without exception, the exact thing called for in the
solicitation, so that upon acceptance the contractor will be bound to
perform in accordance with all of the IFB's material terms and
conditions. Mike Johnson, Inc., B-271943, Aug. 14, 1996, 96-2 CPD para.
66 at 2. Material terms of a solicitation are those which affect the
price, quantity, quality, or delivery of the goods or services
offered, Seaboard Elecs. Co., B-237352, Jan. 26, 1990, 90-1 CPD para. 115
at 4, and the Federal Acquisition Regulation (FAR) authorizes
rejection of any bid that fails to conform to them. FAR sec. 14.404-2.
A solicitation requirement is not material, however, if the government
does not need the information in order to evaluate bids or the
information otherwise does not have an impact on the bidder's promise
to perform as specified. American Spare Parts, Inc., B-224745, Jan.
2, 1987, 87-1 CPD para. 4 at 3.
We think Redcon's failure to complete schedule 2 at the end of the
price schedule was not a material omission from its bid. First, the
individual labor rates and categories in schedule 2 were not used to
determine a bidder's price. Rather, the schedule 2 rates were
requested to permit the agency to price future delivery orders if the
use of such rates would lead to a lower overall price for the delivery
order than the composite rate. To evaluate bid prices, the IFB
clearly advised that the agency would use the bidder's composite
hourly rate. IFB, clause M-16C. Since Redcon provided its composite
rate for each performance period, the agency had no difficulty
determining Redcon's bid price.
As an example of the immaterial nature of this omission on the
evaluation of bid prices, the Air Force's brief considers a
hypothetical bidder who completes schedule 2 using individual rates
far in excess of the average composite rates of approximately $25 per
hour. Air Force Memorandum of Law, Nov. 13, 1997, at 12 n.6. Even if
we assume this bidder entered rates of $1,000 per hour on schedule 2,
it would still be evaluated as the low bidder and receive award if its
composite rates (together with its price for the first delivery order)
were the lowest received. In addition, the agency would be in no
different a position in the circumstance where the low bidder inserts
very high individual rates in schedule 2 than it is in the situation
here--where a bidder has failed to complete schedule 2. Either way,
the bidder receives the award, and the contract price will never be
higher than the composite rate identified for each CLIN (and for the
first delivery order).
Redcon's failure to complete schedule 2 also had no impact on its
obligation to perform the drafting services required here. Redcon's
bid appropriately promised to provide all the drafting services
ordered during the base year and each of the option years at its
composite hourly rate. Since Redcon's failure to complete schedule 2
had no impact on bid evaluation or on Redcon's promise to perform as
offered, we conclude that the Air Force properly decided that Redcon's
bid was, in fact, responsive. See American Spare Parts, Inc., supra,
at 4.
Nonetheless, the initial review of bids led the Air Force to conclude
that Redcon's bid was not the lowest received, and thus, even though
its bid was ultimately viewed as responsive, Redcon would not be in
line for award. As discussed below, however, an ambiguity in the bid
schedule made it impossible to determine which bid offered the lowest
price to the government. At this juncture the Air Force elected to
cancel the solicitation and begin anew.
With respect to the court's second question--whether the agency
appropriately decided to cancel and resolicit bids in this
procurement--we conclude that the agency's actions were proper.
Because of the potential adverse impact on the competitive bidding
system of cancellation after bid prices have been exposed, a
contracting agency must have a compelling reason to cancel an IFB
after bid opening. FAR sec. 14.404-1(a)(1); Days Inn Marina, B-254913,
Jan. 18, 1994, 94-1 CPD para. 23 at 2. A compelling reason to cancel a
solicitation exists where material solicitation terms are ambiguous or
in conflict. P.J. Dick, Inc., B-259166, B-260333, Mar. 6, 1995, 95-1
CPD para. 131 at 4. Contracting officials have broad discretion to
determine whether a compelling reason to cancel exists, and our review
is limited to considering the reasonableness of that decision. H.
Angelo & Co., Inc., B-260680.2, Aug. 21, 1995, 95-2 CPD para. 74 at 3.
In its brief detailing the decision to revise the pricing schedule in
this IFB and resolicit, the Air Force claims that either of the
problems identified in the pricing schedule--the uncertainty about
whether CLINs 0001 and 0003 were additive, or the uncertainty about
completing schedule 2--would have formed a valid basis for the
agency's actions. We conclude that the CLINs 0001 and 0003 ambiguity
was sufficient to support the cancellation decision.
As discussed above, the record here shows that the IFB was ambiguous
because it provided no explanation about whether CLINs 0001 and 0003
were additive in determining the total price for the base year. The
ambiguous nature of the IFB is highlighted by the fact that the
bidders took differing approaches to completing the price schedule.
Booth concluded that the IFB's base year staff-hour estimate included
the effort for the first delivery order. Hence, Booth's CLIN 0001
price and its total price for the base year were the same.[2] The
other two bidders, Redcon and Mesa, concluded that the base year
staff-hour estimate did not include the effort for the first delivery
order. These bidders added their prices for CLINs 0001 and 0003 to
calculate the total price for the base year.
Since the ambiguity in the IFB about the relationship between CLINs
0001 and 0003 caused the bidders to use different approaches in
completing the price schedule, the agency could not tell from the face
of the bids which bid offered the lowest price to the government.
Specifically, the record shows that Booth's bid was low only if the
bid's base year total included the price for CLIN 0003 (an
interpretation of the schedule inconsistent with its interpretation by
the other bidders, and apparently inconsistent with the agency's
interpretation). If Booth's base year total failed to include the
price for CLIN 0003 (and thus the total needed to be adjusted upward),
Booth's bid would have been second low.[3] Rather than permit Booth,
or any other bidder, to choose which reading of the schedule should
prevail, we believe the agency reasonably concluded that the
solicitation was ambiguous, that it misled bidders into competing on
an unequal basis, and that it should be revised. P.J. Dick, supra, at
4 (IFB properly canceled where solicitation was ambiguous about
whether state sales taxes should be included in bid prices and the
record showed that bidders had differing approaches to including such
taxes in their bids); see Temps & Co., 65 Comp. Gen. 640, 643 (1986),
86-1 CPD para. 535 at 4 (IFB that failed to advise bidders whether option
prices would be evaluated in determining the successful bid was
defective).
As a final matter, we note that Booth argues that there was no
compelling reason for the Air Force to cancel this invitation and
resolicit because Redcon's assertion that the IFB was ambiguous was
untimely, and this portion of the protest should therefore have been
dismissed on procedural grounds. Booth points out that under our Bid
Protest Regulations, a protest based upon an alleged impropriety in a
solicitation which is apparent prior to bid opening, must be filed
prior to bid opening. 4 C.F.R. sec. 21.2(a)(1) (1997). In Booth's view,
the ambiguity in the IFB was an obvious defect in the IFB and any
challenge to it was therefore untimely. Thus, Booth contends that
since Redcon could not have prevailed at GAO, the Air Force could have
ignored Redcon's complaints and proceeded with award to Booth.
In our view, the propriety of the Air Force's actions is unrelated to
whether Redcon's challenge to the rejection of its bid raises a
question that could have been asked prior to bid opening. As the
discussion above illustrates, the agency had no basis for selecting
one method of bid evaluation over the other to determine the total
price for the base performance year, as either approach appears
equally reasonable. Thus, with or without a protest from Redcon, or
any other bidder, the Air Force could reasonably conclude--at any
time--that the material flaw in the IFB's pricing schedule provided a
compelling basis for canceling this solicitation, and beginning anew.
See Earthworks of Sumter, Inc., B-232067.2, Jan. 5, 1989, 89-1 CPD para. 9
at 4.
Comptroller General
of the United States
1. With the addition of the $76,696.66 bid for CLIN 0003, Booth's
total bid would have risen to $2,544,796.66.
2. As also explained above, the contracting officer asked Booth to
verify its bid for the base year, and whether the base year bid
included the price for CLIN 0003. Booth verified that the bid was
correct, and that the price for CLIN 0003 was included within its base
year total. Admin. Rec. at 110009-10.
3. While Booth purported to "verify" its bid after bid opening,
nothing on the face of the bid indicated which reading of the bid was
intended at the time the bid was submitted. Thus, Booth's ambiguous
bid could not be accepted here because the bid was low under only one
reading of the bid; under the other reasonable reading, Booth's bid
was not low. A low bid with an ambiguity in its price may be accepted
if the ambiguity in the bid does not affect the evaluation, the bid is
low under either interpretation of the ambiguity, and the low bidder
agrees to accept the interpretation which is more favorable to the
government. Grove Roofing, Inc., B-233747, Feb. 23, 1989, 89-1 CPD para.
196 at 3. However, if the bid is low under only one of the two
reasonable interpretations, the bid must be rejected. Id. There is
no basis to allow a bidder, after bid opening, to decide which
interpretation should be applied.