BNUMBER:  B-277735.2 
DATE:  November 21, 1997
TITLE: Howard W. Pence, Inc., B-277735.2, November 21, 1997
**********************************************************************

Matter of:Howard W. Pence, Inc.

File:     B-277735.2

Date:November 21, 1997

Lawrence W. Luecking for the protester.
Robert W. Pessolano, Esq., Department of the Army, for the agency.
Christine F. Davis, Esq., and Guy R. Pietrovito, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Agency properly canceled a solicitation after bid opening based upon 
the unreasonableness of the bid prices, where the bid in line for 
award exceeded the government estimate by 43 percent and there is no 
showing that the government estimate was in error or that the decision 
to cancel was made in bad faith.

DECISION

Howard W. Pence, Inc. protests the cancellation of invitation for bids 
(IFB) No. DACA27-97-B-0025, issued by the United States Army Corps of 
Engineers, Louisville District, for renovation of barracks at Fort 
Campbell, Kentucky.

We deny the protest.

The IFB provided for the award of an indefinite delivery, indefinite 
quantity contract for renovation of up to seven barracks buildings, 
i.e., two buildings each in the base and first option year, and three 
buildings in the second option year.  The contractor will demolish 
existing, interior partitions and install new ones; upgrade the 
electrical and heating, ventilation and air conditioning systems; 
renovate mini-kitchens; replace windows, doors, and roof; and repair, 
clean, and seal the building's exterior facade.  The IFB bidding 
schedule requested unit and extended prices for 57 contract line items 
(CLIN), which covered the various work requirements for the buildings 
to be renovated in the base and option years.

The agency received five bids on the July 29, 1997, bid opening.  A 
comparison of the bids and the government estimate for the required 
work, including options, follows:

        Bidder A                   $14,454,016
        Pence                      $27,809,919
        Bidder C                   $28,735,460
        Bidder D                   $35,008,666
        Bidder E                   $55,164,000

        Government Estimate        $19,474,209

The apparent low bid included a defective bid bond and was rejected.  
Because the bid prices varied widely and, except for Bidder A's 
rejected bid, far exceeded the government estimate, the contracting 
officer asked the Corps' Cost Engineering Branch to review the 
accuracy of the government estimate.

An architect/engineering firm prepared the government estimate for 
each CLIN on the IFB bidding schedule; the firm also generated back-up 
documentation showing how it arrived at the unit and extended CLIN 
prices.  Before the IFB was issued, the Cost Engineering Branch 
verified that the estimate was supported by standard estimating 
procedures, was generated from standard cost engineering software, was 
based upon all cost elements of the required work, and was reasonable.  
At the contracting officer's request after bid opening, the Branch 
checked for any errors or omissions in the estimate and found none.  
Also, the Branch asked four bidders, including Pence, whether there 
were any problems in the IFB specifications that may have contributed 
to the wide variance in the bids; none of the bidders identified any 
solicitation defects.  Finally, the Branch obtained statistical 
information showing that the average bid price in similar procurements 
was within a very narrow range of the government estimate.  The Branch 
confirmed the estimate's accuracy.

The contracting officer concluded that the prices of all the otherwise 
acceptable bids, including Pence's, were unreasonably high and 
canceled the IFB.  This protest followed.

An IFB may be canceled after bid opening if the prices of all 
otherwise acceptable bids are unreasonable.  Federal Acquisition 
Regulation  sec.  14.404-1(c)(6).  The determination that prices are 
unreasonable is a matter of administrative discretion, which we will 
not disturb unless the determination is unsupported or there is a 
showing of fraud or bad faith on the part of contracting officials.  
G. Marine Diesel Corp., B-238703, B-238704, May 31, 1990, 90-1 CPD  para.  
515 at 3.  A determination that a price is unreasonable may be based 
upon a comparison with the government estimate.  Hawkins Builders, 
Inc., B-237680, Feb. 5, 1990, 90-1 CPD  para.  154 at 2.  Here, Pence's 
apparent next-low bid was 43 percent higher than the government 
estimate.  Cancellation has been found to be justified where the low 
responsive bid exceeded the government estimate by 10 percent.  See 
Metric Constructors, Inc.; H.B. Zachry Co., B-229947, B-229947.2, Mar. 
25, 1988, 88-1 CPD  para.  311 at 2-3.

Pence argues that its bid price was not unreasonably high, but that 
the government estimate was unreasonably low.  Pence asserts that "the 
bare costs" to perform the contract, subtracting profit and general 
and administrative expenses, is $23,527,191 and that the "required 
work cannot be completed for less than this amount."  Pence, however, 
submitted no bid worksheets or other back-up data to substantiate this 
"bare cost" figure.  Further, although Pence's copy of the agency 
report contained the government estimate, which disclosed the 
estimated unit and extended CLIN prices for each item on the IFB 
bidding schedule, Pence did not identify a single CLIN where the 
government estimate appeared to be understated.  Pence instead claimed 
that it could not judge whether the estimate was understated, unless 
it obtained the back-up documentation supporting the estimate; the 
back-up documentation is source selection sensitive information to 
which Pence was not entitled, because it was not represented by 
counsel admitted to a protective order.  See 4 C.F.R.  sec.  21.4 (1997).

We find, contrary to the protester's allegation, that Pence had enough 
information to judge whether any of the estimated CLIN prices in the 
government estimate was understated.  Because the protester failed to 
do so, we have no basis to question the agency's conclusion that the 
estimate was reasonable and that the bids received were not.  See 
Harrison Western Corp., B-225581, May 1, 1987, 87-1 CPD  para.  457 at 4.  
In addition, we reviewed in camera the back-up documentation 
supporting the government estimate and find that it confirms the 
estimate's accuracy.  Specifically, the back-up documentation shows 
that the estimators accurately described all work to be performed, 
accounted for all costs associated with each item of work, localized 
labor and material costs to the Ft. Campbell area, and developed 
estimated prices for the various CLINs, which match the estimated 
prices on the bidding schedule.

Noting that its bid price was in line with the third and fourth low 
bid prices, while the government estimate was not, Pence contends that 
this establishes that the government estimate is unreasonable.  The 
mere fact that the prices bid are substantially higher than the 
government estimate does not, in and of itself, demonstrate that the 
government estimate is unreasonably low.  RNJ Interstate Corp., 
B-241946, Feb. 26, 1991, 91-1 CPD  para.  219 at 3.  Because Pence has 
presented no evidence (other than the bids) showing that the 
government estimate is unreasonable or that the agency acted in bad 
faith, we find that the contracting officer properly determined that 
the bidders' prices were unreasonable and that cancellation was 
justified.  See J. Morris & Assocs., Inc., B-256840, July 27, 1994, 
94-2 CPD  para.  47 at 2.

The protest is denied.

Comptroller General
of the United States