Protest challenging an agency’s decision to cancel a sealed bid procurement and convert to negotiations is denied where the bids received exceeded the government estimate by more than 23 percent.
The Army issued an invitation for bids for construction of an access point at Fort Meade, Maryland. Three bidders responded, but their prices exceeded the government estimate by about 23.5%. The Army found all the bids unreasonable, cancelled the invitation, and told the offerors that it was going to complete the procurement through negotiations. One of the bidders, Perimeter Security Partners filed a GAO protest, alleging the Army wrongly found the prices unreasonable and thus should not have cancelled the bid.
Perimeter noted that the cancellation letter stated that the agency was cancelling the because the bids exceeded the government estimate by more than 25%. But Perimeter’s bid had only exceeded the estimate by 23.5%. GAO did not believe the discrepancy was a problem; it was most likely a clerical error that did not impact the substantive validity of the reasonableness evaluation.
As to the evaluation itself, under FAR 14.404-1(e)(1), an agency may cancel a sealed bid and complete an acquisition through negotiation when the bids are unreasonable. GAO found no basis to disturb the Army’s decision to reject the bids and convert to negotiations. GAO had previously found that an agency may reject a bid as unreasonable when it exceeds the government estimate by as little as 7.2%. Thus, the Army did not act inappropriately or in bad faith when it found a bid that exceeded the estimate by 23.5% unreasonable.
Perimeter is represented by David A. Rose. The government is represented by Maureen A. McAndrew and Raymond Schlee of the U.S. Army. GAO attorneys Christopher Atwood, Evan D. Wesser and Edward Goldstein participated in the preparation of the decision.
