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GAO WOULD HAVE CONSIDERED WHETHER THE OMISSION OF THE FIRST ARTICLE TESTING REQUIREMENT JUSTIFIED CANCELLATION OF A SOLICITATION. WE DISMISSED KENDALL'S PROTEST AS UNTIMELY BECAUSE KENDALL FAILED TO FILE ITS PROTEST WITHIN THE 10 WORKING DAYS AFTER THE BASIS FOR PROTEST WAS FIRST KNOWN OR SHOULD HAVE BEEN KNOWN. IT APPEARED THAT KENDALL KNEW OR SHOULD HAVE KNOWN THE BASIS FOR ITS PROTEST ON FEBRUARY 13. KENDALL ARGUED THAT SINCE BIDS HAD BEEN OPENED ON JANUARY 29 AND IT WAS THE LOW BIDDER. THE ARMY SHOULD HAVE AWARDED THE CONTRACT TO IT. OUR OFFICE HAS CONSISTENTLY HELD THAT CONTRACTING OFFICERS HAVE BROAD AUTHORITY TO REJECT ALL BIDS AND CANCEL A SOLICITATION. BECAUSE OF THE ADVERSE EFFECT SUCH A CANCELLATION CAN HAVE ON THE COMPETITIVE BIDDING SYSTEM.

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B-218386.2, MAY 29, 1985, OFFICE OF GENERAL COUNSEL

CONTRACTS - PROTESTS - GENERAL ACCOUNTING OFFICE PROCEDURES - TIMELINESS OF PROTEST - DATE BASIS OF PROTEST MADE KNOWN TO PROTESTER DIGEST: IF A PROTESTER HAD FILED A PROTEST NO LATER THAN 10 WORKING DAYS AFTER IT KNEW THE BASIS FOR PROTEST, AS REQUIRED BY THE TIMELINESS PROVISIONS OF THE BID PROTEST REGULATIONS, GAO WOULD HAVE CONSIDERED WHETHER THE OMISSION OF THE FIRST ARTICLE TESTING REQUIREMENT JUSTIFIED CANCELLATION OF A SOLICITATION.

THE HONORABLE MITCH MCCONNELL: UNITED STATES SENATOR 600 FEDERAL PLACE ROOM 136-C LOUISVILLE, KENTUCKY 40202

DEAR SENATOR MCCONNELL:

WE REFER TO YOUR LETTER OF APRIL 25, 1985, IN REGARD TO THE PROTEST OF KENDALL INTERNATIONAL ARMS CO., INC., AGAINST CANCELLATION OF INVITATION FOR BIDS (IFB) NO. DAAA09-84-B-0899, ISSUED BY THE U.S. ARMY ARMAMENT, MUNITIONS AND CHEMICAL COMMAND, ROCK ISLAND, ILLINOIS.

AS YOU KNOW, OUR OFFICE CONSIDERS PROTESTS SUCH AS KENDALL'S UNDER OUR BID PROTEST REGULATIONS, 4 C.F.R. PART 21 (1985) (COPY ENCLOSED). AS OF APRIL 4, 1985, WE DISMISSED KENDALL'S PROTEST AS UNTIMELY BECAUSE KENDALL FAILED TO FILE ITS PROTEST WITHIN THE 10 WORKING DAYS AFTER THE BASIS FOR PROTEST WAS FIRST KNOWN OR SHOULD HAVE BEEN KNOWN, AS REQUIRED BY THESE REGULATIONS. IT APPEARED THAT KENDALL KNEW OR SHOULD HAVE KNOWN THE BASIS FOR ITS PROTEST ON FEBRUARY 13, 1985, WHEN THE ARMY NOTIFIED THE FIRM BY TELEX THAT THE SOLICITATION IN QUESTION HAD BEEN CANCELED DUE TO INADEQUATE SPECIFICATIONS. KENDALL HAD UNTIL FEBRUARY 28 TO FILE A PROTEST WITH OUR OFFICE, BUT DID NOT DO SO UNTIL MARCH 25.

IN ITS PROTEST, KENDALL ARGUED THAT SINCE BIDS HAD BEEN OPENED ON JANUARY 29 AND IT WAS THE LOW BIDDER, THE ARMY SHOULD HAVE AWARDED THE CONTRACT TO IT. KENDALL REQUESTED THAT WE STOP THE ARMY FROM REISSUING THE SOLICITATION.

ACCORDING TO THE ARMY, IT CANCELED THE ORIGINAL SOLICITATION BECAUSE A PROVISION FOR FIRST ARTICLE TESTING HAD BEEN OMITTED. THEREFORE, THE ARMY CONSIDERED IT NECESSARY TO RESOLICIT BIDS BASED ON REVISED SPECIFICATIONS THAT CONTAINED A FIRST ARTICLE REQUIREMENT.

IN CONSIDERING PROTESTS SIMILAR TO KENDALL'S, OUR OFFICE HAS CONSISTENTLY HELD THAT CONTRACTING OFFICERS HAVE BROAD AUTHORITY TO REJECT ALL BIDS AND CANCEL A SOLICITATION. ENGINEERING RESEARCH, INC., 56 COMP.GEN. 364 (1977), 77-1 CPD PARA. 106. HOWEVER, BECAUSE OF THE ADVERSE EFFECT SUCH A CANCELLATION CAN HAVE ON THE COMPETITIVE BIDDING SYSTEM, THE FEDERAL ACQUISITION REGULATION STATES THAT A COMPELLING REASON MUST EXIST TO WARRANT THE CANCELLATION. SEE 48 C.F.R. SEC. 14.404-1 (1984). ALTHOUGH NOT ALL SPECIFICATION DEFECTS NEED RESULT IN CANCELLATION AFTER BID OPENING, SUCH ACTION IS APPROPRIATE IF AWARD UNDER DEFICIENT SPECIFICATIONS WOULD NOT SATISFY THE GOVERNMENT'S NEEDS. POWER EQUIPMENT INC., B-213428.3, OCT. 22, 1984, 84-2 CPD PARA. 427.

IF KENDALL HAD FILED A TIMELY PROTEST, WE WOULD HAVE CONSIDERED WHETHER THE ARMY'S ASSERTION THAT THE OMISSION OF THE FIRST ARTICLE TESTING REQUIREMENT JUSTIFIED CANCELLATION OF THE IFB IN THIS PARTICULAR CASE. ALTHOUGH WE INSTEAD DISMISSED THE PROTEST AS UNTIMELY, WE NOTE THAT THE ARMY ISSUED A RESOLICITATION, IFB NO. DAA09 85-B-0405, ON MARCH 29 AND THAT KENDALL WAS ON THE BIDDER'S LIST FOR THAT IFB.

IN A LETTER TO OUR OFFICE RECEIVED APRIL 4, THE SAME DAY AS THE DISMISSAL, KENDALL ARGUED THAT THE APPLICATION OF A 50 PERCENT EVALUATION FACTOR TO ITS LOW BID PURSUANT TO REGULATIONS IMPLEMENTING THE BUY AMERICAN ACT, 48 C.F.R. SUBPART 25.1, WOULD RESULT IN AN UNREASONABLE COST TO THE GOVERNMENT. (KENDALL REPRESENTS AN AMMUNITION FACTORY IN FINLAND.) BECAUSE THE ARMY CANCELED THE INITIAL SOLICITATION, THIS ISSUE IS ACADEMIC AS TO THE ORIGINAL PROCUREMENT AND IS PREMATURE AS TO THE REISSUED SOLICITATION. IN THE EVENT THAT SUCH AN EVALUATION OCCURS AND KENDALL IS PREJUDICED, THE FIRM MAY WISH TO FILE A TIMELY PROTEST ON THIS BASIS.

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