[Claim for Proposal Preparation Expenses]

GAO considered a firm's claim for reimbursement of expenses incurred in preparing proposals under two requests for proposals issued by the Department of Health and Human Services. Each solicitation called for a proposal to establish a day care center and was set aside for the claimant under the Small Business Act. The claimant's first proposal was rejected as technically unacceptable; however, the agency subsequently informed the claimant that the rejection was improper and issued the second solicitation, which the agency later canceled due to lack of funds. The claimant asserted that: (1) it was entitled to proposal preparation costs under both solicitations, because the rejection of its proposal and the cancellation of the second solicitation were the result of bad faith and bias on the part of agency personnel; and (2) if the agency had not unduly delayed issuing the second solicitation, the protester would have been awarded the contract and would thus have been entitled to termination costs if the contract was later terminated due to funding problems. Alternatively, the claimant argued that, since the second solicitation was issued as a remedy for the improprieties committed under the first solicitation, the agency is estopped from denying proposal preparation costs to the claimant under the second solicitation because of its prior conduct. GAO found that: (1) the claimant failed to show that the rejection of its proposal was the result of bad faith or bias; (2) while matters which caused the agency to delay issuing the solicitation might have been accomplished more expeditiously, there was no evidence that the delay was deliberate or the result of bad faith; and (3) the agency was not required to award the contract to the claimant under the doctrine of promissory estoppel, since it was always clear that an award might not be made. Accordingly, the claims were denied.