Protest of IFB Cancellation

B-201195: Mar 18, 1981

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A company protested the cancellation and subsequent readvertisement of a portion of an invitation for bids (IFB) issued by the Federal Supply Service. Certain items in the IFB had been restricted for award to small businesses located in labor surplus areas (LSA); however, the agency determined that the low prices received from bidders eligible for award on these items were unreasonable. The items were canceled and readvertised with the LSA restriction removed. The company argued that the cancellation and readvertisement were based on lower bids from non-LSA firms with which LSA firms could not compete. GAO has held that the receipt of excessive prices for small business or LSA set-asides is a proper basis for the cancellation of restricted items and the readvertisement of the solicitation on an unrestricted basis. Further, the determination that a bid price is unreasonable is a matter of administrative discretion which is not questioned by GAO unless there is a showing of fraud or bad faith. Therefore, the agency's determination to cancel the items and to readvertise the solicitation after deleting the LSA restriction was proper. Accordingly, the protest was denied.