[Protests of Army Cancellation of Solicitation for Dining Facilities]

B-256280.2,B-256280.4: Aug 19, 1994

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Two firms protested the Army's cancellation of a solicitation for dining facilities services, contending that the: (1) Army unreasonably cancelled the solicitation in favor of novating the existing contract and exercising the first contract option; (2) bidders' prices under the solicitation were lower than the option prices; (3) Army could have made award to a new contractor without the consequences of default; and (4) Army improperly issued the solicitation, since it was contemplating novating the contract to another contractor. GAO held that the: (1) incumbent contractor notified the Army that it did not have sufficient funds to pay its year-end employee payment obligations and would repudiate the contract unless the government approved the novation; (2) Army reasonably novated the contract to avoid service disruption; (3) Army reasonably cancelled the solicitation, since it could fulfill its requirements through the incumbent contract; and (4) Army was unaware of the possibility of novation when it issued the solicitation. Accordingly, the protests were denied in part and dismissed in part.

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