Howard W. Pence, Inc., B-277735.2, November 21, 1997

B-277735.2 Nov 21, 1997 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights 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. The contractor will demolish existing. 209 The apparent low bid included a defective bid bond and was rejected. 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. Was reasonable. Whether there were any problems in the IFB specifications that may have contributed to the wide variance in the bids. The Branch obtained statistical information showing that the average bid price in similar procurements was within a very narrow range of the government estimate. View Decision Matter of: Howard W. Pence, Inc. File: B-277735.2 Date: November 21, 1997 DIGEST Attorneys 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.