After reviewing the bids, the agency determined that all three were unreasonably high priced, and that it could not make award on the basis of the bids submitted. In this connection, the record shows that the agency made its determination regarding the unreasonableness of the prices by comparing them to a government estimate prepared by the agency. The record shows that the government estimate for the work was $13,927,205. AR, exh. 22, Independent Government Estimate at 3. In comparison, 4H’s bid was $18,332,000, and the other two bids were for $19,279,250 and $21,564,150 respectively. AR, exh. 11, Bid Abstract. Because all three bids exceeded the government estimate by more than 25 percent, the agency concluded that they were unreasonably high and that award could not be made to any of the bidders. 

(paragraph deleted)

In response to the protester’s August 8 letter, the agency wrote to 4H on August 15. AR, exh. 15. By that letter, the agency requested that 4H provide the agency with the complete details of its bid estimate in accordance with the requirements of the U.S. Army Corps of Engineers Acquisition Instructions (UAI). The specific provision of the UAI pertinent to the protest is § 33.103-101, which provides as follows:

If, after bid opening, an apparent low bidder protests the reasonableness of the Government estimate, the contracting officer shall provide the details of the Government estimate to the protester upon receipt of complete details of the protester’s estimate. The details of the Government and protester’s estimates are not to be disclosed to third parties.

In response to the agency’s request, 4H specifically declined to provide its bid estimate documents. 4H’s counsel stated as follows:

My understanding of UAI [§ ]33.103-101 is that the protestor must provide the details of its bid estimate in order to obtain a copy of the details of the independent government estimate (“IGE”). 4H has not requested a copy of the details of the IGE at this time, so I do not believe it is necessary or required that 4H provide you with the details of its bid estimate.

AR, exh. 16, 4H Letter, Aug. 17, 2016, at 1 (emphasis supplied).

Subsequent to our dismissal of its earlier protest, 4H filed the instant protest challenging the agency’s corrective action.

4H argues that the agency’s decision to convert the acquisition from sealed bidding to negotiated procedures is unreasonable because the agency’s conclusion that the prices submitted are unreasonably high is based on a government estimate that is unrealistically low. The only basis for the protester’s current challenge to the realism of the government estimate is its contention that it was based on a price for diesel fuel that is too low and does not reflect market realities. The protester maintains that, if the agency calculated the government estimate using a reasonable price for diesel fuel, its bid would be within 125 percent of the government estimate. 4H therefore maintains that the agency is required to award a contract to it at its originally-bid price.

We dismiss 4H’s contention relating to the realism of the government estimate as untimely because the record shows that 4H failed to diligently pursue the information underlying this basis of protest. A protester has an affirmative duty to pursue information providing a basis for protest, and a protester’s failure to utilize the most expeditious information gathering approach under the circumstances constitutes a failure to meet its obligation. MILVETS Systems Technology, Inc., B‑411721.2, B-411721.3, Jan. 14, 2016, 2016 CPD ¶ 42 at 8.

The sole basis for 4H’s challenge to the government estimate as unrealistically low is its contention that the agency did not use a realistic price for diesel fuel in calculating the estimate. The record shows that 4H first learned of the diesel fuel price used by the agency in its calculations when it received the agency’s September 8 letter denying its agency-level protest. However, as discussed in detail above, 4H declined to avail itself of the opportunity presented by the agency to exchange the basis of its bid estimate for the government estimate, as expressly contemplated under UAI § 33.103-101.

Had the protester not declined participation in the timely exchange of bid estimate information with the agency, it would have had a copy of the government estimate during August, at the time its agency-level protest was pending. Additionally, had the protester exchanged its bid estimate and the government estimate with the agency at that time, both parties would have had the necessary information to engage in a frank and detailed discussion regarding the propriety of their respective estimates.

In the final analysis, the protester failed to provide--and receive--the information that could have allowed the parties to resolve their disagreement before the agency expended resources defending its position. Moreover, a timely exchange of information also could have prevented the expenditure of our Office’s time and resources to resolve a matter that may well have been easily and expeditiously resolved by the parties without our involvement. Under the circumstances, we conclude that 4H failed to diligently pursue the information necessary to file its protest on this basis, and accordingly dismiss this allegation as untimely.  (4H Construction Corporation B-413558.4: Feb 8, 2017)

Retro argues that it submitted the lowest bid, and that any error in the IFB does not provide a compelling reason to cancel the IFB because multiple bidders correctly inferred that a subcontractor license would be acceptable, and because Retro, which holds a license, was and would remain the lowest-priced bidder under the IFB, both as issued and as the agency proposes to revise it. Protest at 4.

The Army argues that the circumstances here provide a compelling basis to cancel the IFB for two reasons. First, the restrictive terms of the IFB may have prevented competition by additional bidders that might have submitted a lower bid than Retro, but were discouraged by the apparent requirement that the license be in the prime contractor’s name. AR, at 8-9. The Army argues that the goal of achieving full and open competition requires an IFB that does not overstate the agency’s requirements, and thus the flaw in the IFB constitutes a compelling reason to cancel the IFB. Id. at 8. Second, the Army also argues that Retro’s bid was unacceptable because it did not describe an acceptable approach to performing the work and contained a pricing error (entering a price for one line item as “$12,0000” rather than $12,000). Id. at 10-11. The Army argues that Retro’s bid therefore should have been rejected, and the impropriety of awarding a contract in response to an unacceptable bid further justifies the decision to cancel the IFB--or at least renders Retro not an interested party to protest the cancelation. Id. at 12.

In response, Retro argues that the alleged defects in its bid were identified only after it filed this protest, whereas at the time of award, the defects had been properly waived as minor informalities or minor mistakes. Protester’s Comments at 1-2. Retro also argues that the Army’s main claim, that the allegedly misleading state license requirement justifies cancelation of the IFB, is not a valid legal basis to cancel the IFB because an ambiguous specification is only a basis to cancel an IFB before award, not after. Id. at 1 (citing Federal Acquisition Regulation (FAR) § 14.404-1(c)). Retro also argues that the IFB resulted in full and fair competition, and it questions the credibility of the Army’s claim that a revised IFB would result in more competition. Id. at 2.

A contracting agency must have a compelling reason to cancel an IFB after bid opening because of the potential adverse impact on the competitive bidding system of resoliciting bids after prices have been exposed. FAR § 14.404-1(a)(1). Where a solicitation contains inadequate or ambiguous specifications, or otherwise does not contain specifications that reflect the agency’s actual needs, those circumstances provide a sufficient reason to cancel the IFB. FAR § 14.404-1(c)(1). Contracting officials have broad discretion to determine whether a compelling reason to cancel exists; our Office’s review is limited to considering the reasonableness of their decision. Brickwood Contrs., Inc., B-292171, June 3, 2003, 2003 CPD ¶ 120 at 4-5.

Specifications must be sufficiently definite and free from ambiguity so as to permit competition on an equal basis. An ambiguity exists if a solicitation requirement is subject to more than one reasonable interpretation when read in the context of the solicitation as a whole. Id. In our view, the contracting officer reasonably determined that there was a compelling reason to cancel the solicitation because the IFB included an ambiguous specification; that is, the IFB here could be reasonably interpreted as limiting competition only to prime contractors that held a state asbestos abatement license, which exceeded the agency’s minimum needs. While Retro points out that the specification could also be interpreted as allowing either the prime contractor or the subcontractor doing the abatement work to possess the license, the contracting officer reasonably concluded that the IFB was susceptible to more than one reasonable interpretation, and thus may have limited competition. The contracting officer’s judgment that the IFB should be canceled is thus reasonable.  (Retro Environmental, Inc. B-411457.3: Aug 19, 2015)  (pdf)

GLDD argues that the Corps lacks a compelling reason to cancel the IFB after bid opening, and maintains that the agency did not meaningfully consider delaying contract award. GLDD complains that its competitors will seek to undercut its low bid in any subsequent re‑procurement, and urges the Corps to reinstate the IFB and permit bidders to extend their bid acceptance periods pending resolution of the real estate issues.

The Corps asserts that its inability to provide the required real estate interests, and the indeterminate amount of time that it will take NJDEP to acquire those interests through the more time consuming eminent domain process, provide compelling reasons to cancel the IFB. Moreover, the Corps maintains that the project performance period will remain unknown for many months--likely impacting bid prices and the availability of other offerors to compete for the requirement--which also provide compelling reasons to cancel the solicitation. AR at 9, citing, inter alia, Southwest Marine, Inc., B-229596, B-229598, Jan. 12, 1988, 88-1 CPD ¶ 22. The Corps maintains that when it issued the IFB, neither the Corps, nor NJDEP, expected the litigation discussed above, which effectively reversed NJDEP’s earlier authorization for construction.

A contracting agency must have a compelling reason to cancel an IFB after bid opening due to the potential adverse impact on the competitive bidding system of resoliciting after bid prices have been exposed. FAR § 14.404-1(a)(1); HDL Research Lab, Inc., B‑254863.3, May 9, 1994, 94‑1 CPD ¶ 298 at 5. Contracting officials have broad discretion to determine whether a compelling reason to cancel exists, and our review is limited to considering the reasonableness of their decision. Chenega Mgmt., LLC, B‑290598, Aug. 8, 2002, 2002 CPD ¶ 143 at 2.

We find the Corps’ decision to cancel the IFB reasonable under the circumstances described above. The Margate litigation, and the indeterminate delays that are likely to result from the required condemnation proceedings, provided compelling reasons for the Corps to cancel the solicitation. The Corps’ decision is also consistent with the IFB’s explicit (and emphatic) warning to potential bidders that there was no guarantee that outstanding real estate issues would be resolved or that a contract would be awarded. IFB at 3. Moreover, contrary to the protester’s assertion, the Corps did in fact consider postponing the award date and requested that bidders extend their bids for 60 days, as discussed above. Despite its arguments now, GLDD initially refused to extend its bid for 60 days, and agreed only to a 30-day extension, which it later extended to 60 days.

While the protester apparently believes that the Corps should continue to seek an indefinite number of bid extensions, we believe that the agency acted reasonably here and was not required to do more. To the extent that GLDD asserts that the Corps did not consider the risks to bidders of cancelling the IFB without award, the agency states, and the protester does not dispute, that the decision to cancel the IFB was taken after substantial consultation with the project manager, real estate professionals, legal counsel, and others, who concluded that the litigation may negatively impact the progress of any awarded contract. We find no basis to disagree with the agency’s deliberations or ultimate decision to cancel the solicitation.  (Great Lakes Dredge & Dock Company, LLC B-411207: Jun 8, 2015)  (pdf)

The protester asserts that the agency did not have a compelling basis to cancel the solicitation, and that the cancellation was defective because the agency did not follow proper procedures.

Regarding the protester’s first argument, once bids have been opened, award must be made to the responsible bidder with the lowest responsive bid, unless there is a compelling reason to reject all bids and cancel the IFB. FAR § 14.404-1(a)(1). In this case, the agency had several compelling reasons for cancellation. First, the agency determined that funding was not available for the project. At the time of cancellation, no FY 2013 funds were available to award the contract. Contracting Officer’s Statement of Relevant Facts at 2. A contracting agency has the right to cancel a solicitation when sufficient funds are not available. National Projects, Inc., B-283887, Jan. 19, 2000, 2000 CPD ¶ 16 at 4. Second, the contracting agency determined that the existing levee meets its needs and, as a consequence, the government would not receive any benefit if it proceeded with the project. Cancellation of bids before award but after bid opening is permitted, when supplies or services being contracted for are no longer required. FAR § 14.404-1(c)(3).  (Specialized Steel Contractors, Inc., B-408022, B-408022.2, May 14, 2013)  (pdf)

GLDD argues that the Corps improperly canceled the IFB because the agency did not have a compelling reason for its action, as required under the FAR. In its response to the protest, the Corps identified several reasons why it believed that cancellation of the August 24 IFB was proper. As relevant here, the agency argues that the August 24 IFB was ambiguous with regard to the mobilization and demobilization CLINs, and that this defect could result in the government paying twice for demobilization services. Agency Supp. Response (Jan. 15, 2013) at 2; Agency Response to GAO Interrogatories (Jan. 24, 2013) at 3. Because we conclude that the defects concerning the mobilization and demobilization CLINs provide a compelling basis to cancel the solicitation, we do not address the agency’s other bases for cancellation.

When an agency issues an IFB and opens bids, award must be made to the bidder who submitted the lowest responsive bid, unless there if a compelling reason to reject all bids and cancel the invitation. Federal Acquisition Regulation § 14.404-1(a)(1). The standard for canceling an IFB after bids have been opened is different from the standard for canceling a request for proposals (RFP) after award; an agency need only demonstrate a reasonable basis to cancel an RFP after award. See Noelke GmbH, B-278324.2, Feb. 9, 1998, 98-1 CPD ¶ 46 at 3. This different standard applies because of the potential adverse impact on the competitive bidding system of cancelation after bid prices have been exposed at a public bid opening. United Contracting LLC, B-407417, Jan. 2, 2013, 2013 CPD ¶ ___ at 2. A compelling reason to cancel a solicitation after bid opening exists where material solicitation terms are ambiguous or in conflict. P.J. Dick, Inc. B-259166, B-260333, Mar. 6, 1995, 95-1 CPD ¶ 131 at 4.

The Corps argues that the mobilization and demobilization CLINs in the August 24 IFB required revision because the solicitation was ambiguous as to how the successful contractor would be paid for these services. As discussed above, the August 24 IFB contained CLIN 0001 for mobilization/demobilization, and CLIN 1001 for demobilization. The August 24 IFB also incorporated the following DFARS clause, which specified how mobilization and demobilization costs would be paid:

(a) The Government will pay all costs for the mobilization and demobilization of all of the Contractor’s plant and equipment at the contract lump sum price for this item.

(1) Sixty-Five (65%) percent of the lump sum price upon completion of the contractor’s mobilization at the work site.

(2) The remaining thirty five (35%) percent upon completion of demobilization.

DFARS § 252.236-7004; IFB at 39.

The August 24 IFB also provides: “Demobilization will be paid at the completion of the base year if the option year is not exercised. If the option year is exercised, demobilization will be paid upon its completion.” IFB at 53. In contrast, the revised January 8 IFB contained CLIN 0001 for mobilization and CLIN 0010 for demobilization in the base year, and CLINs 1001 and 2001 for demobilization in each option year; the January 8 IFB also did not incorporate DFARS § 252.236-7004.

The Corps argues that the August 24 IFB CLINs created an ambiguity because, for similar dredging contracts, there is typically one mobilization at the beginning of contract performance, and one demobilization at either the end of the base year, or at the end of the option year, if the option is exercised. Agency Supp. Response (Jan. 15, 2013), at 2. The agency argues that under the August 24 IFB, the CLIN structure for mobilization and demobilization created the possibility that the agency would pay twice for a service provided only once. Agency Response to GAO Interrogatories (Jan. 24, 2013) at 3.

We agree with the Corps that the August 24 IFB was ambiguous with regard to the price to be paid for mobilization and demobilization. Specifically, inclusion of CLIN 0001 for both mobilization and demobilization in the base year, as well as CLIN 1001 for demobilization in the option year, creates uncertainty as to whether the contractor would be paid once, or twice, for demobilization. In this regard, as discussed above, DFARS § 252.236-7004 provides that 65 percent of the “lump sum” for mobilization and demobilization will be paid upon completion of mobilization, and the remaining 35 percent of that lump sum amount will be paid upon completion of demobilization. As applied to the August 24 IFB CLINs, it is not clear whether “lump sum” means only the price for CLIN 0001 for mobilization/demobilization in the base year, or the sum of the prices for CLIN 0001 as well as CLIN 1001 for demobilization in the option year.

For example, if the term lump is read to mean that the contractor will be paid the sum of both CLIN 0001 and 1001, and the agency does not exercise the option year, the agency would pay for demobilization twice--once for the portion of CLIN 0001 attributable to demobilization and once for demobilization under CLIN 1001. As another example, if the term lump sum is read to mean only CLIN 0001, then it is not clear how much the agency should pay for demobilization if it exercises the option year. Under DFARS § 252.236-7004(a)(2), the agency is obligated to pay “[t]he remaining [35 percent]”--however, it is unclear whether that amount should include only CLIN 1001, or that CLIN plus the remainder (35 percent) of CLIN 0001.

GLDD contends that the IFB was not ambiguous and would not result in the government paying twice for demobilization services. In this regard, the protester states that in its performance of prior contracts, it was the practice of the agency to pay 65 percent of the price for the base year mobilization/demobilization CLIN upon completion of mobilization, to exercise the option year, and then pay the full unit price for the demobilization CLIN in the option year. Protester’s Supp. Comments (Jan. 28, 2013) at 4. Although the protester contends that the agency could potentially avoid any confusion or ambiguity concerning payment for mobilization and demobilization by following this prior practice, there is no guarantee that the contract here would be performed in the same manner. Moreover, there is no guarantee that the successful bidder under the IFB here would not dispute the method for calculating the method of payment under the contract’s disputes clause, given the ambiguities discussed above.

In sum, we conclude that the IFB terms governing the amount to be paid for demobilization are ambiguous and in conflict and, therefore, provide a compelling reason for cancelling the August 24 IFB.  (Great Lakes Dredge & Dock Company, LLC, B-407502.2, Feb 13, 2013)  (pdf)

The IFB, issued on May 18, 2012, as a total service-disabled veteran-owned small business (SDVOSB) set-aside, sought bids to replace the roofs on buildings 2 and 4 at the east campus of the Central Alabama Veterans Health Care System, Tuskegee, Alabama. The IFB contained two bid items: (1) “BID ITEM NO. 1” for all the work to replace the roofs on both buildings, and provide a 20-year bituminous roof warranty; and (2) “DEDUCTIVE BID ALTERNATIVE #1” to delete the work for one of the buildings (building 2) and provide a 15-year bituminous roof warranty, instead of a 20-year warranty. IFB at 1.

In addition, amendment No. 0003, added “ADDENDUM ITEM UNIT PRICING,” which stated as a follows:

Contractor to provide unit pricing for rotten, deteriorated or damaged existing wood components needed and not specified. The price shall be per board foot of furnished and installed items. Provide evidence and quantities to the VA.

RFP amend. 3, at 1.

Five bids were received in response to the IFB by the June 18 bid opening. One bidder was determined to be ineligible for award because it was not an SDVOSB. The remaining bids ranged from $85,000 to $499,000 for BID ITEM NO. 1; $19,000 to $175,000 for DEDUCTIVE BID ALTERNATIVE #1; and $4.50 per unit to $50 per unit for the ADDENDUM ITEM UNIT PRICING. Agency Report (AR) at 2.

On July 12, the contracting officer cancelled the IFB pursuant to Federal Acquisition Regulation (FAR) § 14.404-1(c)(4). The contracting officer determined, based on the significant variance in prices, that bidders may not have comprehended the VA’s requirements because ADDENDUM ITEM UNIT PRICING in amendment 3 failed to include a specific estimate of the deteriorated or damaged wood components in need of repair, or a basis for evaluating the costs for this work. Specifically, the contracting officer decided to issue a new solicitation to provide: a detailed statement of work; revised specifications; the estimated square footage of rotten, deteriorated, or damaged existing wood; the estimated quantities of components needed; and, a formula by which the bidder would be able to accurately bid on the work required. AR, exh. 4, Determination and Findings, at 3.

Because of the potential adverse impact on the competitive bidding system of cancellation after bid prices have been exposed, a contracting officer must have a compelling reason to cancel an IFB after bid opening. FAR § 14.404-1(a)(1). The contracting officer has the discretion to determine whether the necessary circumstances exist for canceling a solicitation, and we will review the decision to ensure that it was reasonable. Dynamic Corp., B-296366, June 29, 2005, 2005 CPD ¶ 125 at 4. As a general rule, the need to change inadequate or ambiguous specifications and to revise them, after the opening of bids, to express properly the agency’s minimum needs constitutes such a compelling reason. See FAR § 14.404-1(c)(1), (2); G.H. Harlow Co., Inc., B-245050 et al., Nov. 20, 1991, 91-2 CPD ¶ 484 at 3. In addition, FAR § 14.404-1(c)(4) provides that a compelling basis to cancel exists if the IFB does not provide for consideration of all factors of cost to the government.

Here, we find the contracting officer’s determination to cancel the solicitation reasonable because certain material matters related to the specifications and cost to the government were not included in the invitation. As noted by the contracting officer, the record evidences a wide disparity in bid prices, and we find that without a more accurate formula for pricing the work, the agency could not accurately compare the bidder’s prices against each other, or otherwise determine which bid reflected the lowest price to the government. Thus, any award under the IFB would be prejudicial to the remaining bidders and the government. See Dynamic Corp., supra. Although, the protester raises several arguments as to why the cancellation is improper, it has not shown that the agency was not reasonably within its discretion to cancel the IFB.  (United Contracting LLC, B-407417, Jan 2, 2013)  (pdf)

A contracting agency must have a compelling reason to cancel an IFB after bid opening due to the potential adverse impact on the competitive bidding system of resoliciting after bid prices have been exposed. Federal Acquisition Regulation (FAR) sect. 14.404-1(a) (1); HDL Research Lab, Inc., B-254863.3, May 9, 1994, 94-1 CPD para. 298 at 5. An IFB may be canceled and all bids rejected after opening where, consistent with the compelling reason standard, cancellation is clearly in the public's interest. FAR sect. 14.404-1(c)(10). An agency's desire to obtain enhanced competition by materially modifying specifications to make them less restrictive constitutes a valid reason for canceling an IFB under this FAR standard. Hroma Corp., B-285053, June 6, 2000, 2000 CPD para. 88 at 4; Diversified Energy Sys.; Essex Elec. Eng'rs, Inc., B‑245593.3, B-245593.4, Mar. 19, 1992, 92-1 CPD para. 293 at 3.

Here, in response to Cummins's protest, the agency explains that, while it requires Onan engines, it has no legitimate need for the contractor to be a certified Onan distributor. Agency Report (AR) at 5. In this regard, the agency notes that Fermont has provided the engines in the past, in a manner that meets its needs. Id. at 6. This being the case, and since it is clear that at least one bidder--Fermont, which submitted the lowest price--would be precluded from competing if the certification requirement is not removed from the IFB, the agency reasonably determined that resolicitation would result in enhanced competition and, accordingly, that cancellation was in the public's interest. Under these circumstances, there was a compelling reason to cancel the IFB, and the cancellation therefore was unobjectionable. See Siemens Power Corp.; Asea Brown Boveri, Inc., B-257167, B‑257167.2, Aug. 11, 1994, 94-2 CPD para. 160 at 2-3 (cancellation was unobjectionable where agency determined it had overstated its needs and less restrictive specifications should result in enhanced competition and lower costs).

Cummins argues that, because it submitted a responsive bid and it is a responsible bidder, it will be prejudiced by the cancellation and resolicitation. However, the fact that Cummins may be prejudiced does not preclude cancellation where, as we have found is the case here, there is a compelling reason for the cancellation. In any case, we note that Cummins will have the same opportunity as the other bidders to submit a new bid with knowledge of the other bids submitted.  (Cummins Power Systems, LLC, B-402079.2, January 7, 2010)  (pdf)

Sea Box asserts that the agency improperly determined that the bid prices all were unreasonably high, and challenges the agency’s determination that it lacked sufficient funds. The protester asserts that the original estimate of $624,750 was not based on proper market research and therefore was unrealistically low. Comments at 2. Sea Box concludes that, since its bid for non-Chinese-made connexes was low, the agency should have awarded it a contract instead of canceling the IFB.

Cancellation of a solicitation after bids have been opened and prices have been exposed is only permitted where a compelling reason exists to cancel. National Projects, Inc., B‑283887, Jan. 19, 2000, 2000 CPD para. 16 at 4; Federal Acquisition Regulation (FAR) sect. 14.404-1(a)(1). A contracting agency properly may cancel a solicitation when sufficient funds are not available, regardless of any disputes concerning the validity of the government estimate or the reasonableness of the low responsive bid price. National Projects, Inc., supra; J. Morris & Assocs., Inc., B‑256840, July 27, 1994, 94-2 CPD para. 47 at 2 n.1; Armed Forces Sports Officials, Inc., B-251409, Mar. 23, 1993, 93-1 CPD para. 261 at 2-3, recon. denied, B-251409.2, May 24, 1993, 93-1 CPD para. 402.

Here, only two bids--Sea Box’s and one other--offered products that met the solicitation’s BAA requirements, and by the time the agency canceled the IFB, Sea Box was unable to supply 238 connexes that were BAA compliant. The agency determined that both bids exceeded the original budgeted funds and the additional funds identified by the contracting officer, and the protester has not shown otherwise. Under these circumstances, the agency had a compelling reason to reject all bids and cancel the solicitation.

Our conclusion is not changed by Sea Box’s observation that the IFB allowed the agency to make multiple awards, meaning that award could be made for less than the entire requirement, and that the agency therefore could have purchased a quantity of connexes from Sea Box up to the available funding. Comments at 3-4. While the IFB allowed the agency to make multiple awards, it did not require the agency to do so. The management of an agency’s funds generally depends on the agency’s judgment concerning which projects and activities shall receive increased or reduced funding. National Projects, Inc., supra at 5; Armed Forces Sports Officials, Inc., supra, at 2. Thus, the failure to make award to Sea Box for a reduced quantity was not improper.  (Sea Box, Inc., B-400198, August 25, 2008) (pdf)

With regard to the cancellation of the IFB, a contracting agency must have a compelling reason to cancel an IFB after bid opening because of the potential adverse impact on the competitive bidding system of resolicitation after bid prices have been exposed. Federal Acquisition Regulation (FAR) sect. 14.404-1(a)(1); HDL Research Lab, Inc., B-254863.3, May 9, 1994, 94-1 CPD para. 298 at 5. Where a solicitation contains inadequate or ambiguous specifications, or otherwise does not contain specifications that reflect the agency’s actual needs, the agency has sufficient reason to cancel. FAR sect. 14.404-1(c)(1); Days Inn Marina, B-254913, Jan. 18, 1994, 94-1 CPD para. 23 at 2. Contracting officials have broad discretion to determine whether a compelling reason to cancel exists, and our review is limited to considering the reasonableness of their decision. Chenega Mgmt., LLC, B-290598, Aug. 8, 2002, 2002 CPD para. 143 at 2.

USAID first contends that its decision to cancel BOQ B was reasonable because the specifications for Class 300 gate valves were ambiguous with regard to whether NRS or RS gate valves were required. USAID states that the omission of language specifying NRS valves likely arose because the shortcomings of RS valves in buried applications appeared self-evident to USAID’s engineers and outside technical staff. AR, Tab 3, Memorandum, at 5. Thus, to these engineers, specifying that the project was for buried water lines meant that only NRS valves were suitable. USAID therefore argues that the specifications were ambiguous because its engineers interpreted the specification language to mean that only NRS valves would work, while to Corcel, the specification of a buried application did not eliminate RS valves from consideration.

Specifications must be sufficiently definite and free from ambiguity so as to permit competition on an equal basis. Hebco, Inc., B-228394, Dec. 8, 1987, 87-2 CPD para. 565 at 2-3. An ambiguity exists if a solicitation requirement is subject to more than one reasonable interpretation when read in the context of the solicitation as a whole. Phil Howry Co., B-245892, Feb. 3, 1992, 92-1 CPD para. 137 at 2-3. Based on our examination of the record here, we do not agree with the agency that the specifications were ambiguous in the context of the solicitation as a whole. Rather, as explained below, we conclude that Corcel’s interpretation of the solicitation, as written, was the only reasonable interpretation.

The specification requirements for Class 300 gate valves, as relevant here, were limited to the statement that the valves must be suitable for buried service. However, the specification document attached to the BOQ also contained requirements for other types of valves, and in a specification for lower pressure valves, the specification document explicitly required that the valves be “[s]uitable for buried service with non-rising stem.” AR, Tab 5, at 5 (emphasis added). By clearly requiring NRS valves in a specification for lower pressure buried gate valves, but not clearly requiring NRS valves for the Class 300 gate valve requirement, the solicitation suggested that any type of Class 300 gate valves suitable for buried service would be acceptable. Furthermore, the specifications listed “Velan” as an approved manufacturer of the required Class 300 valves. As pointed out by Corcel, Velan does not manufacture a Class 300 NRS gate valve, although it does manufacture a Class 300 RS gate valve. Comments at 4. The agency does not dispute this fact.  Under these circumstances, we think that Corcel’s interpretation of the specifications, that the valves needed only to be suitable for buried use and were not required to be NRS, is the only reasonable interpretation. Therefore, we conclude that there was no ambiguity in the specifications that would justify cancellation of BOQ B of the IFB.

USAID next contends that its decision to cancel BOQ B was reasonable because, if Corcel’s interpretation of the solicitation was the only reasonable reading, then the specifications failed to meet the agency’s needs for the intended project. We agree.

An IFB may be canceled after bid opening, and all bids rejected, where an award under the IFB would not serve the government’s actual needs, Eastern Technical Enter., Inc., B-281319, B-281320, Jan. 22, 1999, 99-1 CPD para. 17 at 2, and our Office will defer to the agency and to the technical expertise of its engineering personnel in defining the government’s needs. Corbin Superior Composites, Inc., B-242394, Apr. 19, 1991, 91-1 CPD para. 389 at 5; Kings Point Mfg. Co., Inc., B-210757, Sept. 19, 1983, 83-2 CPD para. 342 at 3. Accordingly, we will question that determination only where it is shown to have no reasonable basis.

Although Corcel has zealously advocated the technical merits of its customized RS valves, we conclude from the record that an award under BOQ B of the IFB would not have met the agency’s needs, and that the cancellation of BOQ B of the IFB was therefore reasonable. Based on our review of the record, and specifically of the statements of the contracting officer, the USAID engineer, the PWA, and the independent engineering firms consulted by USAID, it is clear that all parties to the approval of the solicitation understood the specifications to require NRS gate valves. These parties understood NRS gate valves to be necessary to the project due to their perceptions of the inherent shortcomings of RS valves in buried applications and their understanding of the PWA’s technical standards, and clearly did not anticipate that a bidder would offer RS valves customized for buried applications. According to the agency, standard off-the-shelf RS valves are not suitable for buried applications due to several concerns. First among these is that the threaded stem of a RS valve is at least partially outside the valve body itself, and if buried, would be directly exposed to dirt and debris that would jam and corrode the mechanism. Engineer’s Statement of Facts, at 4. Second, RS valves have more maintenance issues as they require periodic lubrication, which would be impossible in the case of a buried valve. Id. Third, due to their rising mechanism, RS valves are greater in height than NRS valves, which imposes restrictions on their use, especially where pipelines are to be buried in roads.  Corcel’s customized valves claim to address the major shortcomings of RS valves in buried uses by equipping the standard RS valve with custom stem enclosures, sealed lubrication housings, and a separately manufactured valve box. However, these customizations do not allay all of the agency’s concerns about the use of RS valves in buried applications, and introduce some additional concerns. For example, the agency remains concerned about the lubrication needs of RS stem valves, and how those needs would be met once the valves were buried. Agency Technical Supplement, at 3. In response, Corcel has referred to its manufacturer’s catalog sheet on “adapto-gear actuators” which are “fully enclosed light weight, maintenance free, bevel gear units for valves that require gearing to facilitate operation.” Comments, at 8; Corcel Supplementary Response, at 4. Corcel highlights the assurance that these parts are “maintenance free.” However, this claim relates to the adapto-gear actuator, an accessory item, and not the RS valves themselves. See Comments, Tab 12. It is unclear that such an accessory, for valves that require gearing, would be suitable or necessary for the valves required under the BOQ. Protest, Tab 3, at 1. Furthermore, the agency is reasonably concerned that these customizations and accessories may themselves add an unnecessary maintenance burden on the PWA, and that the addition of such customizations and accessories will further exacerbate the height drawback inherent to RS valves. Agency Technical Supplement, at 3. Finally, despite Corcel’s customizations, Corcel is still offering RS valves, which the agency is reasonably concerned will not be acceptable to the PWA. Contracting Officer’s Statement of Facts, at 4; Engineer’s Statement of Facts, Tab D.

In light of the foregoing concerns and the clear statement of the PWA that only NRS valves are acceptable, we think that the USAID engineering personnel had a reasonable basis to conclude that NRS valves were necessary to meet the agency’s needs for this project. On that basis, and also considering the clear consensus that a requirement for NRS valves had been intended in pre-solicitation planning, we conclude that the agency had a compelling reason to cancel the BOQ B portion of the IFB.  (Corcel Corporation, B-311332; B-311332.2, June 13, 2008) (pdf)

Although DRG did not submit the lowest bid, the contracting officer selected DRG for contract award on the basis that it had submitted the “best responsive bid” and that DRG’s price was “fair and reasonable.” Id. The contracting officer explained that her decision that DRG had submitted the “best” bid reflected her assessment of “the general quality of [DRG’s] submitted written materials pertaining to [the] solicitation, accomplishing the scope of work, qualifications, [and] experience,” along with the fact that DRG’s bid included a cost breakout identifying the “cost of staff, equipment, supplies and other needs for this project.” Id. The contracting officer further noted that the bid submitted by Upper Mohawk, the lowest priced bidder, “did not contain information about judgment fund expertise or the staff’s qualifications or experience and no cost[] break out was submitted.” Id. A contract was awarded to DRG on August 31. In October, Upper Mohawk filed an agency-level protest complaining that award to DRG was improper for various reasons, including the fact that DRG had not submitted the lowest bid and was not an SDVOSB. AR, Tab 14, Upper Mohawk Agency-level Protest. Thereafter, the agency concluded that award to DRG had been improper and, on November 6, terminated DRG’s contract for the convenience of the government. The agency plans on resoliciting the requirement after correcting material errors in the solicitation. On November 9, DRG filed an agency-level protest; prior to receipt of the agency’s response to that protest, DRG filed this protest with our Office on November 22. DRG complains that termination of its contract was improper for various reasons, including that the agency’s inclusion of the solicitation clause establishing the procurement as an SDVOSB set-aside was “inadvertent” and--while not disputing the fact that it failed to submit the lowest bid--maintains that termination of its contract 2 months after award was “arbitrary and capricious.”  Contracting agencies have broad discretion to take corrective action where they determine that such action is necessary to ensure a fair and impartial competition. Where the agency has a reasonable concern that there were material errors in a procurement, it is well within the agency’s discretion to correct those errors. Alfa Consult S.A., B-298288, B-298164.2, Aug. 3, 2006, 2006 CPD para. 127 at 2; Patriot Contract Servs., LLC, B-278276.11 et al., Sept. 22, 1998, 98-2 CPD para. 77 at 4. Specifically, an agency may resolicit previously competed requirements where the record shows the agency’s decision to take this action is made in good faith. Federal Sec. Sys. Inc., B-281745, Apr. 29, 1999, 99-1 CPD para. 86 at 5.  Here, nothing in the record suggests that the agency’s corrective action was unreasonable, or that the agency acted other than in good faith. Specifically, the contracting officer acknowledges that the solicitation “should not have contained the language” regarding award to the “best” bid or, alternatively, that the solicitation should have been issued as a request for proposals pursuant to the negotiated procurement procedures of FAR Part 15. Further, there can be no dispute that the contracting officer’s selection of DRG’s bid was improperly made on the basis of unstated evaluation factors. Finally, there is no dispute that DRG is not an SDVOSB and therefore is not eligible for award under the SDVOSB set-aside. On this record, we have no basis to question the reasonableness of the agency’s corrective action to revise the solicitation to correct errors which led to the improper award to DRG and to allow all interested parties to compete. (Delaware Resource Group of Oklahoma, LLC, B-299165, February 26, 2007) (pdf)

The PPR states that an IFB may be cancelled after bid opening where cancellation is “clearly in the best interest of the government.” PPR, Chap., XII, sect. 2.1(b). Here, the contracting officer had two principal reasons for concluding that the cancellation was in the government’s best interest: the agency failed to publish the solicitation on FedBizOpps; and the agency failed to solicit two incumbents. As explained below, we think the contracting officer’s decision to cancel the solicitation and, in the resolicitation, to adhere more closely to the policy guidance in the PPR, was reasonable. The PPR provides that contracting officers “shall promote and provide for competition to the maximum extent practicable.” PPR, Chap. VIII, sect. 3.4(a). Under the PPR, the term “maximum extent practicable” is defined to mean that “all responsible sources are permitted to complete.” Id. sect. 3.3. In this case, it clearly was reasonable for the contracting officer to conclude that the failure to publish the IFB on FedBizOpps may have impeded all responsible sources from competing. Compounding that failure, two incumbent contractors were not sent the IFB, also contrary to the policy in the PPR to include previously successful bidders on the bidders list. PPR, Chap. X, sect. 1.1(b)(2). Under these circumstances, it was reasonable for the contracting officer to conclude that cancellation would serve the public’s interest in maximizing competition. Kertzman Contracting, Inc.; Centigrade, Inc.—Entitlement to Costs, supra. In support of their position that the cancellation lacked a compelling basis, the protesters argue first that the grounds cited by the contracting officer reflect GPO policy, not regulations, and that the agency actions not taken were optional, not required. We recognize that some provisions of the PPR describe the procedures to be used in mandatory language, while other provisions are expressed in terms of a policy to be followed. These differences in terminology in the PPR are not dispositive of the propriety of the decision to cancel, however; rather, it is clear that, as discussed above, the PPR directs contracting officers to promote and provide for maximum competition that offers the opportunity for all responsible sources to compete. As discussed above, the record shows that the cancellation here was consistent with that responsibility. The protesters also argue that one of the incumbent contractors not solicited originally failed to take advantage of the opportunity to obtain a copy of the solicitation through a bid subscription service, and that its failure to do so, rather than the agency’s failure to solicit the firm, was the principal reason that the incumbent did not receive a copy of the IFB. This argument does not support the conclusion that the cancellation was improper. The central issue here is whether the agency’s failure to publicize the solicitation and to include two incumbents on the bidders list justifies cancellation of the solicitation in furtherance of the government’s interest in maximizing competition. As explained above, we conclude that it does. We therefore see no basis to question the contracting officer’s decision to cancel the IFB. (Goodway Graphics of Virginia, Inc.; NPC, Inc.; P.A. Hutchison Co., B-297789, March 21, 2006) (pdf)

After reviewing the bids, the contracting officer decided that it was appropriate to cancel the IFB for three reasons.

• First, it was not clear whether bidders were obligated to enter bids for all the unit price items in the attachment. As quoted above, the agency, in response to a bidder's question on this issue, stated that bidders could offer different unit prices if they deemed them "applicable." In contrast, Section 10 of the SF stated that bidders were to "furnish all labor, material, equipment and supervision for the demolition, abatement and chilled water by-pass" for the building. (Emphasis added.) In fact, three of the eight bidders, including the protestor, did not enter unit prices for all the types of materials specified. The contracting officer determined that the price evaluation method called for by the IFB, which added all of the unit prices to arrive at a grand total, did not adequately account for those bids which did not include unit prices for all material types, and therefore provided those bidders a possible price advantage.
   
• Second, the estimated quantity of work for some types of abatement services was substantially overstated due to the way in which the attachment was laid out. For example, the estimated quantity of work for each of the three types of pipe insulation abatement was given as 100, for a total of 300 for all three types, although the actual estimated quantity was 100 for the three types combined. Similar overstatements occurred throughout the attachment. Although each of the bidders was using the same incorrect information, the contracting officer reasoned that the overstated quantities may have produced inaccurate pricing, because bidders' unit pricing would presumably be lower for larger quantities of work.
   
• Finally, the attachment was intended to request pricing information for abatement services at various locations within the building, and the form contained blank spaces for three types of removal which were up to the bidder to define. For example, as set out above, under the category "pipe insulation," the attachment asked bidders to "identify [three] types of material or removal method[s] having different unit costs." Some bidders responded by bidding on different diameter pipes, while others selected different asbestos containment methods. Even bidders who chose to bid on three different pipe diameters did not all choose the same ones. Consequently, the individual unit prices varied significantly among the bidders. For instance, the average low bid for the three types under pipe insulation was $3.10, and the average high bid was $16.83, a difference of over 400 percent. See Protest, Exhibit B. Because GSA had not defined the unit items, but rather left their definition to bidders' discretion, the contracting officer determined that the unit prices provided by each bidder could not reasonably be compared to one another.

We find that the GSA properly canceled the IFB here because it contained numerous ambiguities, as a result of which bidders did not prepare their bids based on a common understanding of the agency's requirements, and prices could not be compared on an equal basis. The ambiguities misled bidders as to the requirement to enter prices for all the unit price items listed, producing lower total bids for the three bidders who did not bid on each of the unit prices. Further, even if every bidder had entered prices for each unit price item, because, in completing the attachment, the IFB left to the bidders' discretion the nature of the work that each bid, the resulting total price for the unit work provided by each of the bidders did not afford the agency a basis on which to accurately compare the bid prices. In addition, as explained above, the way in which the estimated quantities were listed in the attachment was misleading and resulted in a substantial overstatement of the estimates, which in turn likely materially affected the bidders' prices. The record thus shows that the lack of clarity in the attachment resulted in bidders competing on an unequal basis, such that any award based on this IFB would be prejudicial to the remaining bidders and the government. This provides the agency with a compelling reason to cancel the IFB. Neals Janitorial Serv. , B-276625, July 3, 1997, 97-2 CPD paragraph 6 at 5. (Dynamic Corporation, B-296366, June 29, 2005) (pdf)

A contracting agency has the right to cancel a solicitation when sufficient funds are not available regardless of any disputes concerning the validity of the IGE, National Projects, Inc., B-283887, Jan. 19, 2000, 2000 CPD ¶ 16 at 4; J. Morris & Assocs., Inc., B-256840, July 27, 1994, 94-2 CPD ¶ 47 at 2 n.1, as agencies cannot create obligations that exceed available funds. Further, the VA is precluded by law from obligating or expending funds in excess of $4 million total for any medical facility project without express Congressional approval. See 38 U.S.C. §§ 8101 et seq. (2000). Since the VA previously had obligated $366,228 for the design aspect of the project here, the contracting officer could not have made contract award to First Enterprise after the withdrawal of Ace's bid, even if it had sought to obtain additional funds. Accordingly, the VA's decision to cancel the IFB after determining that all bids not withdrawn exceeded available funding was proper. (First Enterprise, B-292967, January 7, 2004)  (pdf)

A contracting agency must have a compelling reason to cancel an IFB after bid opening because of the potential adverse impact on the competitive bidding system of resolicitation after bid prices have been exposed. FAR § 14.404-1(a)(1); HDL Research Lab, Inc., B-254863.3, May 9, 1994, 94-1 CPD ¶ 298 at 5. Where a solicitation contains inadequate or ambiguous specifications, or otherwise does not contain specifications that reflect the agency's actual needs, the agency has sufficient reason to cancel. FAR § 14.404-1(c)(1); Days Inn Marina, B-254913, Jan. 18, 1994, 94-1 CPD ¶ 23 at 2. Contracting officials have broad discretion to determine whether a compelling reason to cancel exists, and our review is limited to considering the reasonableness of their decision. Chenega Mgmt., LLC, B-290598, Aug. 8, 2002, 2002 CPD ¶ 143 at 2. Our review of the record here shows that the FHWA reasonably concluded that it had a compelling reason to cancel the solicitation because it both included ambiguous specifications and failed to reflect the agency's actual needs.  (Brickwood Contractors, Inc., B-292171, June 3, 2003) (pdf)

Here, we find that the Army reasonably concluded that it had a compelling reason to cancel the IFB after bid opening. The IFB contained conflicting terms with respect to the contract performance period, which is a material solicitation requirement. See The Ryan Co., B-275304, Feb. 6, 1997, 97-1 CPD ¶ 62 at 3 n.1. The bid schedule stated that the performance period would expire January 31, 2003 (which was only 3 months after the October 23 bid opening date), but the IFB stated in other clauses that the period of performance would be 12 months from the date of award. The IFB also incorporated by reference the standard “Order of Precedence--Sealed Bidding” clause, FAR § 52-214-29, which provides that solicitation inconsistency are to be resolved by giving precedence in the following order: (1) bid schedule; (2) representations and instructions; (3) contract clauses; (4) other documents, exhibits and attachments; and (5) specifications. Application of the Order of Precedence clause indicates that, as argued by the Army, any contract awarded under the IFB would have expired on January 31, 2003.  (Paragon Van Lines, Inc, B-291820.2; B-291913, April 8, 2003)

We conclude that MARAD reasonably determined that the bunkering requirement could not be met as it intended--by barge, within a 4-hour transit time to the layberth-and, therefore, that the agency had a compelling reason to cancel the IFB. See Champion Structure Co., B?198863, Oct. 17, 1980, 80-2 CPD ¶ 291 at 2 (cancellation proper where award would result in a contract impossible to perform).  (Chenega Management, LLC, B-290598, August 8, 2002)  (pdf)

Where prior to issuing a solicitation on an unrestricted basis, an agency fails to investigate whether the conditions requisite to a set-aside under the JWOD Act or for a category of small business may be expected, cancellation is clearly in the public interest if the agency subsequently determines that the solicitation should have been set aside. Ryon, Inc., B-256752.2, Oct. 27, 1994, 94-2 CPD para. 163 at 4 (cancellation even after bid opening was proper where agency erroneously determined initially not to set procurement aside for small business).  (Diversified Management Group, A Joint Venture, B-288443.2, October 12, 2001)

Upon learning that the IFB should have incorporated FAR sect. 52.219-14, requiring the contractor to perform at least 15 percent of the cost of the contract with its own employees, rather than FAR sect. 52.236-1 as completed by the Corps, requiring the contractor to perform 60 percent of the total amount of work with its own organization, the contracting officer determined that the IFB should be canceled.

Here, the record shows that at least one potential bidder was dissuaded from submitting a bid in response to the solicitation by the requirement that the contractor perform at least 60 percent of the work with its own organization, [3] and we think that the agency could reasonably have surmised that other prospective bidders were likewise dissuaded, given that more than 50 contractors requested plans and specifications for the solicitation, but only 3 submitted bids. Agency Report, Apr. 21, 2000, at 7. Under such circumstances, we think that the agency reasonably determined that resolicitation would result in enhanced competition and, accordingly, that cancellation was in the public's interest.  (Hroma Corporation, B-285053, June 6, 2000)

Even if the government estimate is adjusted upward to $3.9 million or $4.3 million as asserted by the protester, Overstreet's bid is still 18 percent to 8.6 percent higher than the government estimate. Since a contracting officer may reject a bid as unreasonably priced when the bid exceeds the government estimate by as little at 7.2 percent, we see no basis to object to the contracting officer's determination of price unreasonableness. See Atkinson Dredging Co. Inc.--Recon., supra, at 2; Building Maintenance Specialists, Inc., B-186441, Sept. 10, 1976, 76-2 CPD para. 233 at 4.  (Overstreet Electric Company, Inc., B-284691, May 12, 2000)

A contracting agency has the right to cancel a solicitation when sufficient funds are not available, regardless of any disputes concerning the validity of the IGE or the reasonableness of the low responsive bid price. J. Morris & Assocs., Inc., B-256840, July 27, 1994, 94-2 CPD para. 47 at 2 n.1; Armed Forces Sports Officials, Inc., B-251409, Mar. 23, 1993, 93-1 CPD para. 261 at 2-3, recon. denied, B-251409.2, May 24, 1993, 93-1 CPD para. 402. We therefore conclude that the agency had a compelling reason to reject all bids and to cancel the solicitation.  (National Projects, Inc., B-283887, January 19, 2000)

We have long held that, where a solicitation's quantity estimates are found to be erroneous, it is generally improper for the contracting agency to reevaluate existing bids based on corrected estimates that are substantially different from those that formed the basis of the bidders' competition. See, e.g., Edward B. Friel, Inc., B-183381, Sept. 22, 1975, 75-2 CPD para. 164 at 10. Here, the error in the quantity estimate for item No. 35 is so large that there is no way to predict the impact that correcting it may have on the prices bid for that or other items being procured. Accordingly, instead of making an award in these circumstances, the agency should have resolicited the procurement on the basis of its best estimate of its actual requirements. While we recognize the potential adverse impact on the competitive bidding system of resoliciting after prices have been exposed, here a compelling reason for doing so exists, since the IFB substantially overstates the anticipated needs of the government. See Deere & Co., B-241413.2, Mar. 1, 1991, 91-1 CPD para. 231 at 2.  (Mallinckrodt Inc., B-282902, September 10, 1999)

The agency canceled the IFB only after it determined that both Poerio's and Massaro's varying interpretations of the IFB's pricing terms were reasonable. Since we have determined that Massaro's interpretation was not reasonable, and that the IFB was not ambiguous, we conclude that the VA did not have a compelling reason to cancel the IFB after bids had been exposed.  (Massaro Company; Poerio Inc., B-280772.2; B-280772.3, December 4, 1998)