B-245958, Jan 6, 1992

B-245958: Jan 6, 1992

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Thirty- five bids were submitted by the August 21. After the apparent low bidder alleged a mistake in its bid and was allowed to withdraw. A preaward survey of D'Wiley's was subsequently conducted. The planned replacement of Navy personnel was due to a reduction in the agency's projected number of recruits. The Navy determined that it was not feasible to have two separate contractors operate the kitchens. D'Wiley's contends that the cancellation was improper because Federal Acquisition Regulation (FAR) Sec. 14.404-1 (a)(3) specifically provides that increased requirements may not be used as a basis for canceling a solicitation after bids have been opened. D'Wiley's maintains that since bids were opened and a preaward survey conducted.

B-245958, Jan 6, 1992

DIGEST: Contracting agency had compelling reason to cancel solicitation after bid opening where agency reasonably concluded that solicitation for mess attendant services did not reflect significant change in requirements and that award under the solicitation would no longer meet the government's actual needs.

Attorneys

D'Wiley's Services, Inc.:

D'Wiley's Services, Inc. protests the cancellation after bid opening of invitation for bids (IFB) No. N00128-B-0076, issued by the Naval Training Center, Great Lakes, Illinois, for mess attendant services for its service school dining facility. D'Wiley's, the low bidder, contends that no compelling reason existed for the cancellation and that, consequently, it should receive the award. We deny the protest.

The IFB called for the contractor to operate the Training Center's service school kitchen, with service school students performing some kitchen tasks. The solicitation contemplated the award of a requirements type contract for a 1-year base period, with four 1-year options. Thirty- five bids were submitted by the August 21, 1991, bid opening date. After the apparent low bidder alleged a mistake in its bid and was allowed to withdraw, D'Wiley's became the low bidder. A preaward survey of D'Wiley's was subsequently conducted.

On September 3, the Chief of Naval Technical Training asked the Center to prepare a draft statement of work for additional services. The additional services included mess attendant services currently performed by service school command students in the service school kitchen and the services performed by naval recruits in the Center's recruit training kitchen. The planned replacement of Navy personnel was due to a reduction in the agency's projected number of recruits. After further consideration, the Navy determined that it was not feasible to have two separate contractors operate the kitchens. The agency also decided that any modification of a contract awarded under the existing IFB to include the additional work required would be beyond the scope of the contract and therefore impermissible. The Navy concluded that it should issue a solicitation encompassing both the service school and the recruit training kitchens, with contractor performance of all services previously performed by naval students and recruits. Accordingly, the agency determined that award under the current IFB would no longer meet its actual needs and canceled the solicitation.

D'Wiley's contends that the cancellation was improper because Federal Acquisition Regulation (FAR) Sec. 14.404-1 (a)(3) specifically provides that increased requirements may not be used as a basis for canceling a solicitation after bids have been opened. The protester also argues that the Navy had ample time to extend the bid opening date and amend the IFB as demonstrated by the agency's four previous amendments to the solicitation. D'Wiley's maintains that since bids were opened and a preaward survey conducted, in order to maintain the integrity of the procurement, as the low responsible bidder, D'Wiley's must receive the award.

As a preliminary matter, the regulation D'Wiley's cites, FAR Sec. 14.404- 1 (a)(3), which generally precludes an agency from canceling an IFB after bid opening due to increased requirements, applies where an agency is procuring the supply of items and not where, as here, the agency is procuring services needed to perform specified work. Bangar Contractors Corp., B-240071, Oct. 16, 1990, 90-2 CPD Para. 295. Thus, that regulation is inapplicable to this procurement.

The applicable regulation, FAR Sec. 14.401 (a)(1), provides that after 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 invitation. See Bill McCann, B-234199.2; B-234856, June 13, 1989, 89-1 CPD Para. 554. The determination as to whether a compelling reason exists is an administrative one that we will not disturb absent a showing that it was unreasonable. Independent Gas Producers Corp., B-229487, Mar. 2, 1988, 88-1 CPD Para. 217. In this regard, we generally consider cancellation after bid opening to be appropriate when an award under the solicitation would not serve the actual minimum needs of the government. Instrument & Controls Serv. Co., B-231934, Oct. 12, 1988, 88-2 CPD Para. 345, aff'd, Instrument & Controls Serv. Co.-- Recon., B-231934.2, Nov. 4, 1988, 88-2 CPD Para. 441.

Under the circumstances, we find the Navy's decision to cancel the solicitation to have been reasonable. The record shows that the agency's needs have changed since the IFB was first issued. Based on a change in the projected number of recruits, the Navy needed to have the contractor operate the entire service school kitchen. Since this change also affected the Center's recruit training kitchen, the Navy determined that the solicitations for both facilities should be combined. We agree with the Navy that these substantially changed and increased requirements were sufficiently material to warrant cancellation of the solicitation. Further, the Navy could not have awarded the contract to D'Wiley's and then modified it to incorporate the changes. As a general rule, it is impermissible to modify a contract if the contract as modified would be materially different from, and therefore beyond the scope of, the original contract for which a competition was held. The changes required here would have a significant cost impact and would amount to a material change in the contract. See Holk Development, Inc., B-236765.2, Jan. 18, 1990, 90-1 CPD Para. 65.

With respect to the protester's contention that the agency should simply have extended the bid opening date and amended the solicitation, the record shows that the Navy did not become aware of the need to replace Navy labor with contractor labor at both kitchens until September 3, approximately 2 weeks after the bid opening date had passed. While it may be true that the Center should have been aware of the change in the agency's requirements at an earlier date, information justifying the cancellation of a solicitation can be considered no matter when the information first surfaces or should have been known. Zwick Energy Research Organization, Inc., B-237520.3, Jan. 25, 1991, 91-1 CPD Para. 72.

The protester suggests that it should be awarded the contract because it expended time and money to make information available to the agency for the preaward survey. The action necessary to bind the government to a contract is its acceptance of an offer, and the acceptance must be clear, unequivocal, and unconditional. J.P. Sulzbach, Inc., B-234004, Mar. 14, 1989, 89-1 CPD Para. 271. The Navy's request for information in support of a preaward survey was simply a step taken by the agency in anticipation of awarding a contract. Such action does not create any implied contract or require the government to award a contract which would not meet its minimum needs. See Environmental Safety Consultants, Inc., B-241714, Feb. 26, 1991, 91-1 CPD Para. 213.

The protest is denied.