B-225519.4, JUN 5, 1987, 87-1 CPD 572

B-225519.4: Jun 5, 1987

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PROTEST THAT THE CONTRACTING OFFICER CANCELED A NEGOTIATED PROCUREMENT IN BAD FAITH IS DENIED. THERE IS NO INDICATION OF ANY BAD FAITH ACTIONS IN THE RECORD. PROTESTER'S CLAIM FOR DAMAGES IS DENIED WHERE THE CONTRACTING OFFICER HAD A REASONABLE BASIS TO CANCEL A NEGOTIATED PROCUREMENT. UNION CONTENDS THAT THE CONTRACTING OFFICER'S DECISION TO CANCEL THE SOLICITATION AFTER INITIAL PROPOSALS HAD BEEN SUBMITTED WAS MADE IN BAD FAITH. THE RFP WAS ISSUED ON SEPTEMBER 24. OFFERORS WERE REQUIRED TO SUBMIT WITH PROPOSALS "ESTIMATED MONTHLY COSTS BASED ON ESTIMATED QUANTITIES AND THE PROPOSED RATES AND CHARGES BASED THEREON.". TOTAL COST WILL BE CALCULATED USING ESTIMATED QUANTITIES OVER AN ANTICIPATED PERIOD OF SERVICE.

B-225519.4, JUN 5, 1987, 87-1 CPD 572

PROCUREMENT - COMPETITIVE NEGOTIATION - REQUESTS FOR PROPOSALS - CANCELLATION - JUSTIFICATION - GAO REVIEW DIGEST: 1. CONTRACTING OFFICER HAS A REASONABLE BASIS TO CANCEL A NEGOTIATED PROCUREMENT AFTER INITIAL PROPOSALS HAD BEEN SUBMITTED, WHERE REQUEST FOR PROPOSALS (RFP) TO FULFILL AGENCY'S NATURAL GAS REQUIREMENTS AT MILITARY BASE FOR A 2-YEAR PERIOD REQUIRED OFFERORS TO PROVIDE MONTHLY COST ESTIMATES BUT DID NOT CONTAIN MONTHLY GAS CONSUMPTION ESTIMATES AND THE RFP DID NOT CORRECTLY STATE HOW PROPOSED COSTS WOULD BE EVALUATED. PROCUREMENT - COMPETITIVE NEGOTIATION - REQUESTS FOR PROPOSALS - CANCELLATION - BAD FAITH - ALLEGATION SUBSTANTIATION 2. PROTEST THAT THE CONTRACTING OFFICER CANCELED A NEGOTIATED PROCUREMENT IN BAD FAITH IS DENIED, WHERE THE PROTESTER HAD PROVIDED NO EVIDENCE TO SUPPORT ITS ALLEGATION, THERE IS NO INDICATION OF ANY BAD FAITH ACTIONS IN THE RECORD, AND THE CANCELLATION, IN FACT, HAD A REASONABLE BASIS. PROCUREMENT - BID PROTESTS - GAO PROCEDURES - PREPARATION COSTS PROCUREMENT - COMPETITIVE NEGOTIATION - OFFERS - PREPARATION COSTS 3. PROTESTER'S CLAIM FOR DAMAGES IS DENIED WHERE THE CONTRACTING OFFICER HAD A REASONABLE BASIS TO CANCEL A NEGOTIATED PROCUREMENT.

UNION NATURAL GAS COMPANY:

UNION NATURAL GAS COMPANY PROTESTS THE ARMY'S CANCELLATION OF REQUEST FOR PROPOSALS (RFP) NO. DABT39-85-R-0203, TO PROVIDE NATURAL GAS TO FORT SILL, OKLAHOMA. UNION CONTENDS THAT THE CONTRACTING OFFICER'S DECISION TO CANCEL THE SOLICITATION AFTER INITIAL PROPOSALS HAD BEEN SUBMITTED WAS MADE IN BAD FAITH, THEREFORE, UNION SHOULD BE AWARDED THE CONTRACT ON THE BASIS OF ITS INITIAL PROPOSAL "AS THE LOW BIDDER MEETING ALL REQUIREMENTS OF THE RFP." UNION ALSO REQUESTS THAT OUR OFFICE AWARD IT COSTS IN ACCORD WITH SECTION 21.6(D) OF OUR BID PROTEST REGULATIONS, 4 C.F.R. PART 21 (1986).

WE DENY THE PROTEST AND THE CLAIM.

THE RFP WAS ISSUED ON SEPTEMBER 24, 1985, AND, AS AMENDED, REQUIRED INITIAL PROPOSALS TO BE SUBMITTED BY JUNE 13, 1986. THE RFP CONTEMPLATED AWARD OF A CONTRACT TO SUPPLY FORT SILL'S NATURAL GAS REQUIREMENTS OVER A 2-YEAR PERIOD BEGINNING OCTOBER 1, 1986. THE SOLICITATION RESERVED TO THE ARMY THE RIGHT TO MAKE AWARD ON THE BASIS OF INITIAL PROPOSALS AND STATED THAT AN INITIAL OFFER SHOULD, THEREFORE, CONTAIN THE OFFEROR'S BEST TERMS FROM A COST OR PRICE AND TECHNICAL STANDPOINT. OFFERORS WERE REQUIRED TO SUBMIT WITH PROPOSALS "ESTIMATED MONTHLY COSTS BASED ON ESTIMATED QUANTITIES AND THE PROPOSED RATES AND CHARGES BASED THEREON." CONCERNING EVALUATION OF PROPOSALS, THE RFP PROVIDED:

"PROPOSALS SHALL BE EVALUATED ON TOTAL COST WITH THE ABILITY TO PERFORM. TOTAL COST WILL BE CALCULATED USING ESTIMATED QUANTITIES OVER AN ANTICIPATED PERIOD OF SERVICE. ABILITY TO PERFORM WILL BE EVALUATED ON ADEQUACY AND RELIABILITY OF SUPPLY FACILITIES AND SOURCE."

FOUR PROPOSALS WERE RECEIVED BY THE CLOSING DATE. ON THE BASIS OF THE INITIAL PROPOSALS, WITHOUT HOLDING DISCUSSIONS, THE CONTRACTING OFFICER SELECTED ARKLA, INC., FOR AWARD BECAUSE ITS PROPOSAL WAS ACCEPTABLE AND REPRESENTED THE LOWEST TOTAL COST TO THE GOVERNMENT. THE CONTRACTING OFFICER SENT HIS AWARD RECOMMENDATION AND A PROPOSED CONTRACT WITH ARKLA TO THE DEPUTY ARMY POWER PROCUREMENT OFFICER FOR APPROVAL ON SEPTEMBER 2, 1986. IN A TELEPHONE CONVERSATION ON SEPTEMBER 5, THE CONTRACTING OFFICER TOLD UNION THAT ARKLA WAS THE PROPOSED AWARDEE AND REVEALED ARKLA'S PROPOSED RATES TO UNION. BY LETTER OF THE SAME DATE, UNION PROTESTED TO THE ARMY AGAINST THE PROPOSED AWARD TO ARKLA, BASED ON NUMEROUS ALLEGED PROCUREMENT IRREGULARITIES. BY LETTER OF NOVEMBER 21, UNION PROTESTED ON THE SAME BASES TO OUR OFFICE.

ULTIMATELY, ON FEBRUARY 2, 1987, THE DEPUTY ARMY POWER PROCUREMENT OFFICER DISAPPROVED THE PROPOSED CONTRACT WITH ARKLA, IN PART BECAUSE ARKLA'S PROPOSAL AND ITS RATES WERE CONDITIONED UPON OBTAINING THE OKLAHOMA CORPORATION COMMISSION'S APPROVAL OF A SPECIAL CONTRACT BETWEEN ARKLA AND A SUBCONTRACTOR THAT WOULD TRANSPORT THE GAS THROUGH THE ARKLA SYSTEM/FACILITIES. THIS OFFICIAL ALSO DETERMINED THAT THE RFP WAS DEFICIENT BECAUSE IT DID NOT CONTAIN ANY ESTIMATES OF FORT SILL'S ANTICIPATED MONTHLY GAS CONSUMPTION AND DID NOT STATE HOW PROPOSAL PRICES WOULD BE EVALUATED, AND BECAUSE THE CONTRACTING OFFICER'S REVIEW OF PROPOSALS SHOWED THAT ALL PROPOSALS CONTAINED DEFICIENCIES. IN VIEW OF THE FACT THAT ARKLA'S RATES HAD BEEN REVEALED, HE DETERMINED THAT THE REQUIREMENT SHOULD BE RESOLICITED. ACCORDINGLY, ON MARCH 20, THE ARMY CANCELED THE RFP WITH THE INTENTION OF ISSUING A NEW SOLICITATION THAT STATES HOW THE PROPOSALS WILL BE EVALUATED. BECAUSE THE RFP WAS CANCELED, OUR OFFICE DISMISSED UNION'S PROTEST OF THE PROPOSED AWARD TO ARKLA AS ACADEMIC ON MARCH 23.

UNION NOW PROTESTS THAT THE CONTRACTING OFFICER CANCELED THE SOLICITATION IN BAD FAITH TO KEEP FROM ANSWERING THE CHARGES MADE BY UNION IN ITS PROTEST TO THE ARMY. UNION ALSO ALLEGES THAT THE CONTRACTING OFFICER HAS ENGAGED IN NUMEROUS OTHER BAD FAITH PRACTICES, AND REQUESTS THAT OUR OFFICE INVESTIGATE TO ASCERTAIN WHAT OTHER VIOLATIONS OF PROCUREMENT LAW MAY HAVE TAKEN PLACE IN OTHER UNRELATED PROCUREMENTS.

IN A NEGOTIATED PROCUREMENT, THE CONTRACTING OFFICER HAS BROAD DISCRETION IN DECIDING WHETHER TO CANCEL A SOLICITATION. THE CONTRACTING OFFICER NEED ONLY HAVE A REASONABLE BASIS TO DO SO, AS OPPOSED TO THE COGENT AND COMPELLING REASON REQUIRED FOR CANCELLATION OF A SOLICITATION AFTER SEALED BIDS HAVE BEEN OPENED. TECHNOLOGY DYNAMICS, INC., B-225386, DEC. 11, 1986, 86-2 CPD PARA. 669. WE HAVE RECOGNIZED THAT A SOLICITATION PROPERLY MAY BY CANCELED WHERE THE RECORD SHOWS THAT THE SOLICITATION SPECIFICATIONS MAY RESTRICT COMPETITION OR ARE OTHERWISE DEFICIENT. ID. AT 3. WE HAVE ALSO RECOGNIZED THAT A SOLICITATION THAT DOES NOT SET FORTH A COMMON BASIS FOR EVALUATING OFFERS, WHICH ENSURES THAT ALL FIRMS ARE ON NOTICE OF THE FACTORS FOR AWARD AND CAN COMPETE ON AN EQUAL BASIS, IS MATERIALLY DEFICIENT AND PROPERLY MAY BE CANCELED. SEE NORTH-EAST IMAGING, INC., B-216734, AUG. 28, 1985, 85-2 CPD PARA. 237, AND HONEYWELL, INC., B-210000, APR. 22, 1983, 83-1 CPD PARA. 445, BOTH OF WHICH DEMONSTRATE THAT A FLAWED EVALUATION SCHEME AMOUNTS TO A COGENT AND COMPELLING REASON-- A MORE STRINGENT STANDARD THAN IS APPLICABLE TO THE PRESENT NEGOTIATED PROCUREMENT-- TO CANCEL AN INVITATION FOR BIDS AFTER BIDS HAVE BEEN OPENED.

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

MOREOVER, THE RFP DID NOT EVEN REFLECT HOW OFFERS ACTUALLY WERE EVALUATED. THE RECORD SHOWS THAT THE ARMY EVALUATED PROPOSALS BY USING FISCAL YEAR 1986 MONTHLY REQUIREMENTS BUT, AS INDICATED ABOVE, THESE WERE NOT MENTIONED ANYWHERE IN THE SOLICITATION. IT IS FUNDAMENTAL THAT OFFERORS SHOULD BE ADVISED OF THE BASIS ON WHICH THEIR PROPOSALS WILL BE EVALUATED. SEE TIDEWATER HEALTH EVALUATION CENTER, INC., B-223635.3, NOV. 17, 1986, 86-2 CPD PARA. 563.

ACCORDINGLY, THE RFP CLEARLY WAS DEFICIENT IN THE ABOVE RESPECTS. THE PROTEST OF THE ARMY'S DECISION TO CANCEL IT THEREFORE IS DENIED.

A PROTESTER WHO ALLEGES BAD FAITH ON THE PART OF A PROCUREMENT OFFICIAL BEARS A HEAVY BURDEN OF PROOF. SEAWARD INTERNATIONAL, INC., B-224497, OCT. 31, 1986, 66 COMP.GEN. ***, 86-2 CPD PARA. 507 AT 3. HERE, UNION HAS PROVIDED NO EVIDENCE TO SUPPORT ITS ALLEGATION AND THERE IS NO INDICATION OF ANY ACTIONS SHOWING BAD FAITH BY THE CONTRACTING OFFICER IN THE RECORD. IN VIEW OF OUR FINDING THAT THE CONTRACTING OFFICER HAD A REASONABLE BASIS TO CANCEL THIS RFP, THE PROTEST IS DENIED ON THIS ISSUE. TECHNOLOGY DYNAMICS, INC., B-225386, SUPRA.

CONCERNING THE REQUEST THAT WE INVESTIGATE OTHER UNRELATED PROCUREMENTS TO ASCERTAIN WHETHER OTHER VIOLATIONS OF PROCUREMENT LAW TOOK PLACE, WE POINT OUT THAT WE DO NOT CONDUCT INVESTIGATIONS AS PART OF OUR BID PROTEST FUNCTION IN RESPONSE TO A PROTESTER'S SPECULATIVE ASSERTIONS. TODD LOGISTICS, INC., B-203808, AUG. 19, 1982, CPD PARA. 157 AT 8.

THE PROTEST IS DENIED, AND AS THE PROTEST IS WITHOUT MERIT, THE CLAIM FOR COSTS ALSO IS DENIED. COMSAT INTERNATIONAL COMMUNICATIONS, INC., B-223953, NOV. 7, 1986, 86-2 CPD PARA. 532 AT 6.