[Protest of Cancellation of Navy RFP]

A firm protested the Navy's cancellation of a solicitation which was a small business set-aside. The protester was the only small business which bid on the solicitation; however, its offered price was adjudged by the Navy as unreasonably high and, after an unsuccessful attempt to negotiate a price reduction with the protester, the Navy cancelled the set-aside, resolicited on an unrestricted basis, and awarded the contract. The protester contended that its offer was neither unreasonable nor unfair. A determination of price reasonableness for a small business set-aside is within the discretion of the procuring agency, and GAO will not disturb such a determination unless it is clearly unreasonable or there is a showing of possible fraud or bad faith on the part of the contracting official. Since a courtesy bid from a large business indicated that the Navy would be able to procure the needed equipment at a price 12 percent less than that of the protester, GAO could not find that the Navy abused its discretion in determining that the protester's price was unreasonable or unfair. Furthermore, a determination of price unreasonableness provides a basis for cancellation. In addition, a small business set-aside may be withdrawn when it is determined that award under the set-aside would be detrimental to the public interest. The protester also contended that the period between cancellation of the original solicitation and the deadline for submission of revised proposals was not enough time for the protester to provide new quotes. GAO found this basis of the protest untimely since it was not filed within 10 working days of when the basis of the protest was known, nor was it protested before the closing date for receipt of initial proposals. Finally, GAO would not question the capability of the awardee since such matters are not reviewed by GAO except in circumstances not present here. Accordingly, the protest was denied in part and dismissed in part.