B-242010.2, Apr 23, 1991, 91-1 CPD 400

B-242010.2, Apr 23, 1991, 91-1 CPD 400

PROCUREMENT - Contract Management - Contract administration - Convenience termination - Resolicitation - GAO review PROCUREMENT - Specifications - Minimum needs standards - Competitive restrictions - Design specifications - Overstatement DIGEST: 1. Contracting agency's decision to resolicit its requirement for jet engine starter hoses after terminating the original contract is not objectionable where the solicitation overstated the minimum needs and the potential for increased competition under a resolicitation exists, thus providing a reasonable basis for the agency's decision not to make award to the next low offeror under the original solicitation. PROCUREMENT - Bid Protests - Bias allegation - Allegation substantiation - Burden of proof 2. Bias or improper motives will not be attributed to contracting officials on the basis of unsupported allegations, inference or speculation.

Attorneys

HBD Industries, Inc.:

HBD Industries, Inc. protests the decision of the Defense Logistics Agency to resolicit its requirement for pneumatic flexible jet starter hoses rather than to award it a contract for the hoses under request for proposals (RFP) No. DLA700-89-R-1812. The agency determined that its award of a contract to Flexfab Incorporated under that solicitation was improper and terminated the contract. HBD contends that it is entitled to award under the original solicitation as it is now the low acceptable offeror.

We deny the protest.

BACKGROUND

On September 18, 1989, DLA issued the solicitation for 3,511 pneumatic flexible hoses. These items are used in connection with starting military jet engines through a process whereby a hose is attached to the jet engine, thus allowing hot air to be forced through in order to cause the engine's turbine to rotate. The particular hoses to have been acquired under the RFP were described by military specification, MIL-D-22706E(AS). The RFP further provided that only products listed on an applicable Qualified Products List (QPL), which was based upon this specification, would be acceptable. The QPL is administered by the Naval Air Engineering Center (NAEC), which is also the activity responsible for developing the specification for the hoses. As of the time the RFP was issued, only two products were listed on this QPL, one from HBD and one from Flexfab. Each of these firms submitted an offer; Flexfab, however, did not propose its hose which was included on the QPL, but instead proposed a newly developed product. This product was tested by NAEC and included on the QPL while the proposals were under evaluation by DLA.

On October 25, 1990, DLA made award to Flexfab as the low acceptable offeror. HBD protested this award to our Office on November 8, alleging that certain of the QPL testing procedures required to have been performed by NAEC were waived for the Flexfab product, and that the product failed to comply with a mandatory provision of the governing specification. The agency responded to the protest by admitting both allegations, and notifying our Office that the Flexfab contract would be terminated for convenience and the requirement resolicited. We accordingly dismissed the protest as academic. HBD Indus., Inc., B-242010, Dec. 21, 1990. HBD subsequently filed this protest. HBD contends that it should receive the award under the original solicitation.

DISCUSSION

The agency reports that subsequent to termination of the Flexfab contract, NAEC determined that the military specification for the hoses, upon which the applicable QPL was based, contained dimensional errors and was overly restrictive in the precise area where Flexfab's proposed product was found deficient. Concluding that increased competition could be obtained if the specification were corrected and relaxed, the contracting officer decided to resolicit the requirement based upon a revised specification developed by NAEC /1/ rather than make award to the protester.

Under the circumstances here, where the contract termination was the result of the improper acceptance of a noncompliant proposal and there exists another acceptable proposal submitted in response to the original solicitation, the agency is in effect canceling the RFP by proposing to resolicit the requirement. We will therefore determine the propriety of the agency action by applying the rules pertaining to the cancellation of a solicitation. See General Projection Sys., B-241418.2, Mar. 21, 1991, 91-1 CPD Para. ***.

In a negotiated procurement, an agency must have a reasonable basis to cancel an RFP and resolicit after receipt of offers, as opposed to the requirement that an agency have a cogent and compelling reason to cancel an invitation for bids (IFB) and resolicit after receipt of sealed bids. FAR Sec. 14.404-1; Logics, Inc., B-237411, Feb. 1, 1990, 90-1 CPD Para. 140; Lucas Place, Ltd., B-235423, Aug. 30, 1989, 89-2 CPD Para. 193. The reason for this is that bids in response to an IFB are publicly exposed, and to reject them and seek new bids would discourage competition. See GAF Corp., 53 Comp.Gen. 586 (1974), 74-1 CPD Para. 68. The same governmental interest in achieving full and open competition is present, and the same justification for cancellation is applicable, where the cancellation of an RFP occurs after prices have been disclosed, as sometimes occurs during bid protest proceedings. Carson Optical Instruments, Inc., B-228040, Oct. 19, 1987, 87-2 CPD Para. 373. Under these circumstances, we believe that an agency has a reasonable basis to cancel the RFP and resolicit where the record contains plausible evidence or a reasonable possibility that not to do so would be prejudicial to the government or the integrity of the competitive system itself. See Meisel Rohrbau GmbH Co. KG, 66 Comp.Gen. 383 (1987), 87-1 CPD Para. 414; Pacific Coast Utilities Serv., Inc., B-220394, Feb. 11, 1986, 86-1 CPD Para. 150. For example, an agency may cancel a solicitation if it materially overstates the agency's requirements and the agency desires to obtain enhanced competition by relaxing the requirements. See CooperVision, Inc., B-229920.2, Mar. 23, 1988, 88-1 CPD Para. 301; Aero Innovations, Ltd., B-227677, Oct. 5, 1987, 87-2 CPD Para. 332.

Here, the agency was notified by NAEC that the QPL specification was inaccurate and exceeded the user's minimum needs. The agency concluded that absent a revised specification, the existing QPL would be limited to a single product, making any award under the solicitation an effective sole source. Under these circumstances, we believe that the agency reasonably determined to cancel the RFP and resolicit based upon a relaxed specification which could increase competition.

Where, as here, an agency discovers that a solicitation overstates the government's minimum needs, the best interests of the government generally require that no award be made under the restrictive solicitation. Control Concepts, Inc., B-233354.3, Apr. 6, 1989, 89-1 CPD Para. 358. Having determined that the specification underlying the QPL in this case was unduly restrictive, the agency clearly was justified in deciding to resolicit the requirement. Furthermore, we believe that the potential for increased competition by a resolicitation outweighs any possible competitive disadvantage to HBD on account of its proposed price having been disclosed. The protester also contends that Flexfab consciously proposed a product which the firm knew was not compliant with the QPL specification. A resolicitation, the protester argues, would therefore reward Flexfab for its "chicanery," and impair the integrity of the competitive procurement process. The agency responds by defending Flexfab's conduct and assuming complete responsibility for the improper award. Flexfab has submitted comments which deny any deliberate attempt on its part to qualify a nonconforming product and notes in its own defense that it was reasonable to assume the product was compliant since its predecessor product had been successfully qualified under the same specification. On the record before us, we find no basis to question Flexfab's conduct in this regard.

Finally, the protester alleges that the agency has acted in bad faith throughout this procurement by failing to proceed openly and expeditiously. We find no support for this allegation in the record. There must be very strong proof before we will find that an agency has acted in bad faith toward a protester. G.K.S., Inc., 68 Comp.Gen. 589 (1989), 89-2 CPD Para. 117. In this case, HBD has presented nothing more than surmise and speculative comments suggesting that the agency is biased in favor of Flexfab. This simply does not provide a sufficient basis to find bad faith or improper conduct on the part of the agency.

The protest is denied.

/1/ In determining that the newly developed Flexfab hose did not fully comply with the QPL specification, the agency also concluded that the older model Flexfab hose included on the QPL was likewise not fully compliant. Thus, the agency reports that absent a relaxation of the specifications, only HBD's product will be on the QPL.