Overstreet Electric Company, Inc., B-284691, May 12, 2000

B-284691 May 12, 2000 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights DIGEST Agency's cancellation of solicitation after bid opening on the basis that all bids received are unreasonable in price is proper where the protester's low bid exceeded the government estimate by 32 percent and the protester has not shown that the government estimate was materially understated. The Army canceled the IFB because it determined that the bids received were unreasonably high as compared to the government estimate. Overstreet contends that the government estimate was unreasonably low. Were as follows: Overstreet $4. The contracting officer determined that all bids received were at unreasonably high prices as compared to the government estimate. Once bids have been opened. View Decision Matter of: Overstreet Electric Company, Inc. File: B-284691 Date: May 12, 2000 DIGEST Attorneys DECISION Overstreet Electric Company, Inc. protests the cancellation of invitation for bids (IFB) No. DACW27-00-B-0002, issued by the United States Army Corps of Engineers. The Army canceled the IFB because it determined that the bids received were unreasonably high as compared to the government estimate. Overstreet contends that the government estimate was unreasonably low. We deny the protest. The Army issued the IFB on December 6, 1999 for the rehabilitation of the Little Calumet River pump stations. At the January 5, 2000 bid opening, the Army received three bids. The three bids and the government estimate, without profit, were as follows: Overstreet $4,638,400 Bidder A $4,773,545 Bidder B $4,827,770 Government Estimate $2,915,265 Agency Report at 2. After bid opening, the agency reviewed the government estimate and revised it to $3,510,910. Id. Overstreet's bid exceeds the revised government estimate by 32.1 percent, Bidder A's bid exceeds the revised government estimate by 36 percent, and Bidder B's bid exceeds the revised government estimate by 37.5 percent. The contracting officer determined that all bids received were at unreasonably high prices as compared to the government estimate, pursuant to Federal Acquisition Regulation (FAR) Secs. 14.404-1(c)(6), 14.404-1(e)(1), 14.404-1(f), cancelled the IFB and proposed to complete the acquisition by negotiation. Agency Report, Tab 10, Contracting Agency Findings and Determination; Tab 11, RFP amend. No. 3. This protest of the cancellation followed. Once bids have been opened, award must be made to that responsible bidder who submitted the lowest responsive bid, unless there is a compelling reason to reject all bids and cancel the IFB. FAR Sec. 14.404-1(a)(1). A compelling reason to cancel the IFB exists when it is determined that all otherwise acceptable bids are at unreasonable prices. FAR Sec. 14.404-1(c)(6). Overstreet argues that the revised government estimate was unreasonably low because it failed to include or understated various necessary elements of costs of this project in a manner inconsistent with applicable Corps regulations regarding the development of government estimates. As a result of these alleged cost understatements and omissions, Overstreet argues that the government estimate should be upwardly revised to a range of $3.9 million to $4.3 million. Overstreet further argues that since its bid was within 25 percent of a proper government estimate (i.e., $3.9 million to $4.3 million), it is entitled to award under 33 U.S.C. Sec. 624 (1994), which states: No works of river and harbor improvement shall be done by private contract . . . [where] the contract price is more than 25 per centum in excess of what [the Chief of Engineers] determines to be a fair and reasonable estimated cost of a well-equipped contractor doing the work. Citing Bean Dredging Corp. v. U. S., 19 Cl. Ct. 561 (1990), the protester asserts that under this statute if its price is within 25 percent of a fair and reasonable government estimate, the agency is mandated to award it, the low responsive bidder, the contract. Protester's Comments, Mar. 31, 2000, at 8-10. In Atkinson Dredging Co., Inc.--Recon. B-250965.2, B-250967.2, July 19, 1993, 93-2 CPD Para. 31 at 3-4, we found that, while 33 U.S.C. Sec. 624 clearly prohibits the Corps from awarding a dredging contract to a bidder whose bid price exceeds a fair and reasonable government estimate by more than 25 percent, it does not mandate that the Corps award a dredging contract to a bidder whose price is within 25 percent of that government estimate where the agency does not believe the bid price is fair and reasonable. We expressly discussed the court's holding in Bean and found that if the court held that the Corps could not reject bids within 25 percent of the government estimate as unreasonably high where 33 U.S.C. Sec.