B-221277, MAR 27, 1986, 86-1 CPD 294

B-221277: Mar 27, 1986

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THE PRICE OF THE ONLY RESPONSIBLE BIDDER IS IN EXCESS OF AVAILABLE FUNDS. THE AGENCY IS NOT REQUIRED TO AWARD A CONTRACT FOR ONE OR TWO ITEMS SINCE IT HAS NO ASSURANCE THAT SUFFICIENT FUNDS WOULD REMAIN TO PROCURE THE REMAINING ITEMS UPON RESOLICITATION. ASSUMING THAT AN ORIGINAL BASIS FOR CANCELLATION OF AN INVITATION FOR BIDS WAS ERRONEOUS OR INADEQUATE. THE CANCELLATION IS NOT LEGALLY OBJECTIONABLE IF A SUBSEQUENTLY ENUNCIATED BASIS SUPPORTS THE ACTION. DEPENDING UPON WHICH WAS MOST ADVANTAGEOUS TO THE GOVERNMENT. THREE BIDS WERE RECEIVED AT THE OPENING ON SEPTEMBER 23. MID ATLANTIC SUBMITTED THE THIRD-LOW BID AND APPEARED TO BE IN LINE FOR AWARD WHEN THE TWO LOWER BIDDERS WERE FOUND UNABLE TO MEET A REQUIRED 4 HOUR RESPONSE TIME.

B-221277, MAR 27, 1986, 86-1 CPD 294

BIDS - INVITATION FOR BIDS - CANCELLATION - AFTER BID OPENING - ADMINISTRATIVE DETERMINATION DIGEST: 1. AN INVITATION FOR BIDS MAY BE CANCELED AFTER BID OPENING WHERE THE AGENCY REASONABLY DETERMINES THAT, DUE TO CHANGED REQUIREMENTS, IT DOES NOT REFLECT THE AGENCY'S ACTUAL NEEDS AND, IN ADDITION, THE PRICE OF THE ONLY RESPONSIBLE BIDDER IS IN EXCESS OF AVAILABLE FUNDS. CONTRACTS - AWARDS - SEPARABLE OR AGGREGATE - BEST INTERESTS OF GOVERNMENT 2. WHERE A SOLICITATION PROVIDES FOR AN AGGREGATE AWARD OR SEPARATE AWARDS FOR THREE LINE ITEMS, AND THE ONLY RESPONSIBLE BIDDER'S PRICE EXCEEDS, IN THE AGGREGATE AND FOR ONE OF THE THREE, THE FUNDS AVAILABLE FOR ALL ITEMS, THE AGENCY IS NOT REQUIRED TO AWARD A CONTRACT FOR ONE OR TWO ITEMS SINCE IT HAS NO ASSURANCE THAT SUFFICIENT FUNDS WOULD REMAIN TO PROCURE THE REMAINING ITEMS UPON RESOLICITATION. BIDS - INVITATION FOR BIDS - CANCELLATION - AFTER BID OPENING - ADMINISTRATIVE DETERMINATION 3. ASSUMING THAT AN ORIGINAL BASIS FOR CANCELLATION OF AN INVITATION FOR BIDS WAS ERRONEOUS OR INADEQUATE, THE CANCELLATION IS NOT LEGALLY OBJECTIONABLE IF A SUBSEQUENTLY ENUNCIATED BASIS SUPPORTS THE ACTION.

MID ATLANTIC COMMUNICATIONS:

MID ATLANTIC COMMUNICATIONS PROTESTS THE DEPARTMENT OF THE ARMY'S DECISION TO CANCEL INVITATION FOR BIDS (IFB) NO. DABT59-85-B-0111 AFTER THE OPENING OF BIDS.

WE DENY THE PROTEST.

THE IFB, ISSUED AUGUST 23, 1985 AS A 100 PERCENT SMALL BUSINESS SET ASIDE, COVERED MAINTENANCE, INSTALLATION, REMOVAL, AND RELOCATION OF NARROW BAND FM FIXED PLANT RADIO EQUIPMENT AT FORTS LEE, PICKETT, AND A. P. HILL IN VIRGINIA. IT SPECIFICALLY STATED THAT SEPARATE AWARDS MIGHT BE MADE FOR THE LINE ITEMS COVERING EACH INSTALLATION OR THAT AN AGGREGATE AWARD MIGHT BE MADE, DEPENDING UPON WHICH WAS MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED.

THREE BIDS WERE RECEIVED AT THE OPENING ON SEPTEMBER 23. MID ATLANTIC SUBMITTED THE THIRD-LOW BID AND APPEARED TO BE IN LINE FOR AWARD WHEN THE TWO LOWER BIDDERS WERE FOUND UNABLE TO MEET A REQUIRED 4 HOUR RESPONSE TIME. THE CONTRACTING OFFICER, HOWEVER, CANCELED THE IFB ON OCTOBER 29, ADVISING BIDDERS THAT SUCH ACTION WAS IN THE BEST INTEREST OF THE GOVERNMENT "DUE TO INCOMPLETE SPECIFICATIONS AND BASED ON INFORMATION FROM THE NATIONAL SECURITY AGENCY (NSA)."

THE PROTESTER CONTENDS THAT THERE WAS NO COMPELLING REASON TO CANCEL THE IFB AND, THEREFORE, SUCH ACTION WAS IN VIOLATION OF THE FEDERAL ACQUISITION REGULATION (FAR), 48 C.F.R. SEC. 14.404-1(A)(1) (1984).

THE PROCURING ACTIVITY RESPONDS THAT AFTER BID OPENING IT WAS INFORMED BY THE U.S. ARMY INFORMATION SYSTEMS COMMAND THAT THE NON TACTICAL RADIO EQUIPMENT LISTED IN THE IFB AS REQUIRING SERVICES AT FORT PICKETT HAD BEEN CHANGED. MOREOVER, ACCORDING TO THE INFORMATION SYSTEMS COMMAND, THE NEW EQUIPMENT WAS REQUIRED TO BE SECURE OR SECURABLE AND MEET DATA ENCRYPTION STANDARDS (DES). AS A RESULT, THE ARMY CONTENDS THAT THERE WAS A NEED TO CHANGE THE BID SCHEDULE AS WELL AS THE SPECIFICATIONS FOR SERVICES AT THAT INSTALLATION. AFTER REVISION, THE ARMY PLANS TO RESOLICIT.

THE ARMY FURTHER STATES THAT IT CONSIDERS MID ATLANTIC'S BID, $69,689 FOR SERVICES AT ALL THREE INSTALLATIONS, UNREASONABLE WHEN COMPARED WITH THE GOVERNMENT ESTIMATE OF $40,000. IT ALSO STATES THAT FUNDS ARE NOT AVAILABLE FOR MORE THAN THE ESTIMATED AMOUNT.

IN ITS COMMENTS ON THE AGENCY REPORT, MID ATLANTIC ARGUES THAT SINCE THE IFB CONTAINS ONLY ESTIMATED QUANTITIES AND PERMITS THE ARMY TO INCREASE OR DECREASE THESE QUANTITIES, IT CAN DECREASE THE ORIGINAL LINE ITEMS COVERING SERVICES AT FORT PICKETT TO ZERO. THE PROTESTER FURTHER ARGUES THAT SINCE THE IFB ALREADY REQUIRES THE CONTRACTOR TO PROVIDE TEST EQUIPMENT AND PERSONNEL TRAINED TO REPAIR RADIO EQUIPMENT WITH DIGITAL VOICE PROTECTION AND DES CIRCUITS, THE ARMY CAN SIMPLY ADD SERVICES FOR THE NEW EQUIPMENT TO THAT LISTED IN THE ORIGINAL IFB. ALTERNATIVELY, THE PROTESTER ARGUES THAT THE ARMY SHOULD CONDUCT A NEW PROCUREMENT FOR FORT PICKETT AND AWARD MID ATLANTIC A CONTRACT FOR THE SERVICES REQUIRED AT THE OTHER TWO INSTALLATIONS. THE PROTESTER ALSO ARGUES THAT ITS PRICE IS REASONABLE, AND THAT THE GOVERNMENT'S ESTIMATE IS UNREASONABLE. ACCORDING TO THE PROTESTER, THE ARMY IS CURRENTLY OBTAINING SIMILAR SERVICES FROM MOTOROLA UNDER A GENERAL SERVICES ADMINISTRATION SCHEDULE CONTRACT AND FOR THE SERVICES DESCRIBED IN THE IFB, THE PROTESTER CONTENDS, MOTOROLA'S PRICE WOULD BE $82,609.40. FINALLY, MID ATLANTIC STATES THAT THE ARMY ERRONEOUSLY RELIED ON THE INFORMATION IT RECEIVED FROM NSA.

BECAUSE OF THE POTENTIAL ADVERSE IMPACT ON THE COMPETITIVE SYSTEM OF CANCELING AN IFB AFTER BID PRICES HAVE BEEN EXPOSED, A CONTRACTING OFFICER MUST HAVE A COMPELLING REASON TO CANCEL. FAR, 48 C.F.R. SEC. 14.404-1(A)(1). A CHANGE IN AN AGENCY'S REQUIREMENTS AFTER THE OPENING OF BIDS, SO THAT THE SOLICITATION NO LONGER PROPERLY REFLECTS THE AGENCY'S MINIMUM NEEDS, CONSTITUTES SUCH A COMPELLING REASON. JOHN C. KOHLER CO., B-218133, APR. 22, 1985, 85-1 CPD PARA. 460. WE WILL NOT QUESTION A CONTRACTING OFFICER'S DECISION TO CANCEL SO LONG AS IT REFLECTS A REASONED JUDGMENT BASED UPON THE INVESTIGATION AND EVALUATION OF INFORMATION AVAILABLE AT THE TIME THE DECISION IS MADE. SEE DYNETERIA, INC., B-211525.2, OCT. 31, 1984, 84-2 CPD PARA. 484.

IN OUR VIEW, THE ARMY HAD A COMPELLING REASON TO CANCEL THE IFB. FIRST, ITS REQUIREMENTS CHANGED AFTER BIDS HAD BEEN OPENED. OUR REVIEW OF THE RECORD INDICATES THAT DIFFERENT EQUIPMENT THAN THAT ORIGINALLY CALLED FOR IS TO BE SERVICED AT FORT PICKETT. THE TYPE AND MODEL NUMBER OF EACH ITEM LISTED IN THE INFORMATION SYSTEMS COMMAND MEMORANDUM IS DIFFERENT, AND THERE IS NO ASSURANCE THAT THE UNIT AND EXTENDED PRICES ORIGINALLY BID WOULD BE THE SAME FOR THESE NEW ITEMS.

IN ADDITION, THE ARMY DID NOT HAVE SUFFICIENT FUNDS TO ACCEPT THE PROTESTER'S BID; INSUFFICIENT FUNDS CAN JUSTIFY CANCELLATION OF A SOLICITATION. MILITARY BASE MANAGEMENT, INC., B-216309, DEC. 4, 1984, 84-2 CPD PARA. 619. MID ATLANTIC'S BID PRICE FOR SERVICES AT FORT LEE ALONE, $40,512, EXCEEDED THE GOVERNMENT'S AVAILABLE FUNDS. THE FIRM'S BID FOR WORK AT FORT A. P. HILL, $18,468, WAS ALMOST ONE-HALF OF THE AMOUNT AVAILABLE FOR ALL THREE INSTALLATIONS. WITH SERVICES REQUIRED AT THREE INSTALLATIONS, IT WAS REASONABLE FOR THE ARMY NOT TO AWARD A CONTRACT FOR ONLY ONE OR TWO, SINCE UNDER THE CIRCUMSTANCES THE ARMY COULD NOT MAKE SUCH AN AWARD WITH ANY ASSURANCE THAT SUFFICIENT FUNDS WOULD REMAIN TO PROCURE THE REMAINING SERVICES UPON RESOLICITATION.

WITH REGARD TO THE NSA INFORMATION, WE HAVE PREVIOUSLY HELD THAT, TO THE EXTENT THE REASONS ORIGINALLY ADVANCED BY AN AGENCY FOR SOLICITATION CANCELLATION ARE ERRONEOUS OR INADEQUATE, THE CANCELLATION IS NOT LEGALLY OBJECTIONABLE IF A SUBSEQUENTLY ENUNCIATED BASIS SUPPORTS THE ACTION. SEE GENERAL AERO PRODUCTS CORP., B-213541, SEPT. 18, 1984, 84-2 CPD PARA. 310. THEREFORE, EVEN IF THE NSA INFORMATION WOULD NOT SUPPORT CANCELLATION, IT IS CLEAR THAT THERE WERE OTHERWISE COMPELLING REASONS FOR THE CONTRACTING OFFICER TO CANCEL THE IFB.

FINALLY, MID ATLANTIC REQUESTS REIMBURSEMENT OF COSTS INCURRED IN FILING AND PURSUING ITS PROTEST WITH OUR OFFICE. IN VIEW OF OUR DECISION, THESE COSTS ARE NOT RECOVERABLE. 4 C.F.R. SEC. 21.6(D) (1985).

WE DENY THE PROTEST AND CLAIM FOR PROTEST FILING COSTS.