Cancellation of Solicitation

XTec first asserts that cancellation of RFQ No. 858797 was improper since the RFQs “broadly worded requirements” were sufficient in scope to cover all of the more detailed requirements GSA now asserts must be included in the solicitation. Protest at 8-14.

A contracting agency need only have a reasonable basis to support a decision to cancel an RFQ. Progressive Servs. Corp., B-404183, B-404251.2, Jan. 11, 2011, 2011 CPD ¶ 18 at 2. A reasonable basis to cancel exists when, for example, an agency determines that a solicitation does not accurately reflect its needs. MedVet Dev. LLC, B-406530, June 18, 2012, 2012 CPD ¶ 196 at 2-3.

The agency responds that, early in 2015, it was “made aware by its customer agencies” that the solicitation “insufficiently captured various agencies’ requirements.” Agency Legal Memorandum, July 27, 2015, at 8. More specifically, the agency maintains that the solicitation failed to contain detailed requirements regarding the SIP interface between the customer agencies’ systems and the USAccess system; failed to reflect sufficient requirements regarding customer-owned hardware; and identified a performance period that was too short. Id. at 8-10; AR, Tab 10, Contracting Officer’s Cancellation Memo, May 6, 2015, at 2. Although not reflected in the contracting officer’s cancellation memo, the agency’s response to this protest also asserts that the solicitation should reflect a requirement for “derived credentials,” which was “being developed” at the time of cancellation. Agency Legal Memorandum, July 27, 2015, at 10.

Here, based on our review of the entire record, we cannot conclude that the agency’s decision to cancel the solicitation was unreasonable. That is, we cannot conclude that the solicitation’s “high level” requirements were, in fact, adequate to meet the government’s needs. Accordingly, we reject XTec’s assertion that cancellation of the solicitation was unreasonable.

[Agency’s failure to engage in reasonable and adequate advance planning.]

Alternatively, XTec asserts that cancellation of the solicitation was caused by the agency’s failure to engage in reasonable and adequate advance planning. We agree.

The Competition in Contracting Act of 1984 (CICA) generally requires that agencies engage in “full and open competition” when conducting government procurements. 41 U.S.C. § 3301(a). While there are specific exceptions to this general requirement, under no circumstances may noncompetitive procedures be used due to a lack of advance planning by contracting officials. 41 U.S.C. § 3304(e)(5); New Breed Leasing Corp., B‑274201, B-274202, Nov. 26, 1996, 96-2 CPD ¶ 202 at 6; TeQcom, Inc., B‑224664, Dec. 22, 1986, 86-2 CPD ¶ 700. Our Office has recognized that, while the requirement for advance planning does not mean that such planning must be completely error‑free, see, e.g., Sprint Communications Co., L.P., B-262003.2, Jan. 25, 1996, 96-1 CPD ¶ 24, as with all agency procurement actions, the advance planning required by CICA must be reasonable. In considering this statutory requirement, we have noted that contracting officials have a duty to promote competition. Precision Logistics, Inc., B-271429, July 18, 1996, 96-2 CPD ¶ 24 at 5; National Aerospace Group, Inc., B‑282843, Aug. 30, 1999, 99‑2 CPD ¶ 43. That is, contracting officials must act affirmatively to obtain and safeguard competition; they cannot take a passive approach and remain in a sole-source situation when they could reasonably take steps to enhance competition. HEROS, Inc., B-292043, June 9, 2003, 2003 CPD ¶ 111 at 7.

Here, as discussed above, the agency asserts that it was required to cancel the solicitation due to the solicitation’s failure to adequately address various requirements of the customer agencies, including the SIP interface requirements; agency-owned hardware; training of agency personnel; and the length of the performance period. See Agency Legal Memorandum, July 27, 2015, at 8-10; AR, Tab 10, Contracting Officer’s Cancellation Memorandum, May 6, 2015, at 2. In responding to XTec’s protest, the agency asserts that it had no reason to know of these solicitation omissions until its customer agencies began expressing their concerns early in 2015. Id.

Contrary to the agency’s assertions, the record establishes that the agency knew in 2011--when it justified, and defended, its prior award of a sole-source task order to HPES--that the USAccess system was “built around a proprietary set of technologies that combine databases and middleware”; that customer agencies had “invested heavily” in hardware for light credentialing configurations; and that “[m]ost of the USAccess customers have slightly different requirements for interface with their internal systems,” each of which had required a “custom interface.” Protest, exh. 1, Contracting Officer’s Statement, Sept. 8, 2011, at 3-4. In short, the agency’s 2011 justification for not competing the logical follow-on task order awarded to HPES expressly referenced the very concerns on which it now relies to support its decision to cancel RFQ No. 858797. Notwithstanding the agency’s 2011 documented recognition of the need for detailed requirements, the agency published RFQ No. 858797 with only “high level” requirements, received and evaluated quotations on that basis, and twice selected XTec for award--asserting that it only reasonably knew that the requirements were inadequate early in 2015. On the record here, we reject the agency’s assertion that it did not know of the necessity for more detailed requirements until earlier this year.

Even if we were to conclude that the agency did not previously know of the customer agencies’ need for more detailed requirements, we reject the argument that such lack of knowledge was reasonable. As noted above, pursuant to CICA’s requirements for advance planning, contracting officials have an affirmative obligation to promote competition and may not take a passive approach to remaining in a sole-source situation when they could reasonably take steps to enhance competition. HEROS, Inc., supra. Here, the [HSPD-12 Managed Services Office] MSO program manager acknowledged at the GAO hearing that GSA had “a very robust communication mechanism with our agency customers,” but, nonetheless, that the customer agencies “felt like the things they were concerned about . . . had not ended up in the RFQ.” Tr. at 34, 36. In this context, the MSO program manager acknowledged that “GSA should have reached out more strenuously to the agency customers to ask them for further detail.” Id. Similarly, the HCA testified that: “we . . . had some leadership turnover in the last three years. . . [a]nd . . .the leadership down to the program folks had not had experience in these kinds of transitions and programs and just had not adequately thought it through or planned for it.” Tr. at 501. On this record, we sustain XTec’s protest based on the agency’s failure to engage in reasonable advance planning.

Extension of HPES’s Task Order

XTec also protests that the extension of HPES’s sole-source task order similarly flowed from the agency’s failure to engage in advance planning, and further asserts that the extension was illegal in that the agency provided no justification for that action until nearly two months after it had taken place. For the reasons discussed above, we agree that the agency’s extension of the task order was caused by its failure to engage in reasonable advance planning, and sustain the protest.

We further view the agency’s failure to either execute or publish the LSJ for nearly two months after the action was taken to be contrary to the requirements of CICA, under which such justification must generally be executed prior to the action being taken, and notice of the action must be published within 14 days. 41 U.S.C. §§ 3304(e), (f). Here, there can be no dispute that the agency failed to comply with these requirements. Nonetheless, in light of our decision sustaining the protest for failure to engage in reasonable advance planning, and our recommendations below, we do not further address this matter.

RECOMMENDATION

Since we do not question the reasonableness of the agency’s determination that RFQ No. 858797 failed to adequately address the government’s requirements, and there is no dispute that the government has an ongoing need for the HSPD-12 services, we do not recommend that the cancelled solicitation be reinstated or that HPES’s ongoing performance of the sole-source task order be terminated. We do recommend that the agency make expeditious efforts to prepare the new solicitation and conduct a competition thereunder. Further, based on the agency’s extension of the HPES task order for up to two years, we recommend that GSA reimburse XTec for the proposal preparation costs it incurred in responding to the solicitation that GSA now concludes was fatally flawed. See The Jones/Hill Joint Venture, B‑286194.4 et al., Dec. 5, 2001, 2001 CPD ¶ 194 at 22; COBRO Corp., B‑287578.2, Oct. 15, 2001, 2001 CPD ¶ 181 at 9. Finally, we recommend that the protester be reimbursed the reasonable costs of filing and pursuing its protest, including reasonable attorneys’ fees. 4 C.F.R. § 21.8(d)(1). The protester’s certified claim for costs, detailing the time spent and costs incurred, must be submitted to the agency within 60 days of receiving this decision. 4 C.F.R. § 21.8(f)(1).  (XTec, Inc. B-410778.3: Oct 1, 2015)  (pdf)

Trison contends that the Army's decision to limit the competition to existing MATOC holders is inconsistent with its proposed corrective action, which caused our Office to dismiss Trison's prior protest as academic. Protest at 5. The protester argues that the goals of the protest system are circumvented where the agency does not promptly implement its promised corrective action. Id. at 5--7. In this respect, the protester suggests that (although it states that it does not allege that the Army acted in bad faith) the agency's actions are a "mere pre-text and not rationally related to the agency's own stated corrective action." Comments at 4. Finally, Trison challenges the urgency of the agency's needs, complaining that the agency waited 12 days to decide how to procure the requirement after terminating EEC's contract and canceling the IFB, and argues that the urgency associated with the agency's requirements are the result of poor procurement planning. Id. at 7.

The agency responds that resoliciting under a new IFB (as the agency originally contemplated) would "endanger the Agency's ability to assure that the work could be completed within the necessary time limits." Contracting Officer's Statement, Sept. 4, 2009, at 2. Specifically, the agency states that a wide variety of operations and activities are being transferred to APG under base realignments and closures (BRAC) and that the renovations are necessary to prepare a building that houses the APG's data center, a mission critical facility for the entire APG installation. Id. In this regard, the agency expects an influx of personnel and a four-fold expansion of the capacity of existing systems in the building and states that the construction services (which would take at least 270 days) must be completed by June 2010 to allow for occupancy in August. Id.

Following the July 17 dismissal of Trison's prior protest, agency officials met on July 21 to consider how to satisfy the agency's urgent requirements; among the acquisition methods considered were whether to resolicit under a new IFB or to conduct a limited competition among MATOC holders. The agency concluded that, if it resolicited under a new IFB, award would likely not be made until mid-October, which the agency believed would likely not leave sufficient time for completion of the renovation services by June. The Army decided that it would conduct a limited competition among MATOC holders to satisfy its requirements. Id. at 2--3.

The record provides no basis to conclude that the agency acted unreasonably in deciding to restrict the resolicitation of the renovation services to MATOC holders to satisfy the agency's urgent requirements. Although Trison complains that the agency waited 12 days to decide how to reprocure the requirement after taking corrective action in response to the prior protest, the protester does not assert that the agency lacks an urgent basis for the completion of these renovation services by June 2010, nor show that the agency's urgent requirement could be timely satisfied by issuing a new IFB. Given that the agency reasonably found that resoliciting these requirements under a new IFB would not timely satisfy its urgent requirements, we have no basis to object to the agency's decision not to issue a new IFB.

Also, we are not persuaded by Trison's arguments that the agency's urgent requirements were created by the agency's taking 12 days after announcing that it would initiate corrective action to decide how to obtain these services or from the errors made in drafting the prior IFB. Although the prior IFB was ambiguous with respect to the price evaluation of certain contract line items, this alone does not establish that the agency's urgent requirements were the result of a lack of advanced procurement planning. See, e.g., New Breed Leasing Corp., B-274201, B-274202, Nov. 26, 1996, 96-2 CPD para. 202 at 6; Sprint Commc'ns Co., LP, B-262003.2, Jan. 25, 1996, 96-1 CPD para. 24 at 9 (an agency's obligation to engage in reasonable advance planning prior to conducting procurements does not constitute a requirement that procurement planning be perfect or completely error-free). We also think that taking 12 days to determine an appropriate acquisition approach was unobjectionable.

Finally, the record does not support Trison's allegation that the cancellation of the IFB and decision to conduct a limited competition among MATOC holders was a "mere pretext" to avoid resoliciting Trison. As noted above, the record shows that the Army reasonably found that resoliciting under a new IFB likely would not meet the agency's urgent requirements. Trison's arguments that the agency's actions are a "mere pretext" are based upon no more than inference and supposition, upon which our Office will not attribute unfair or prejudicial motives to procurement officials. See Shinwha Elecs., B-290603 et al., Sept. 3, 2002, 2002 CPD para. 154 at 5 n. 6.  (Trison Construction, Inc., B-401537.2, November 9, 2009) (pdf)

We agree with the agency that the circumstances presented met the requirements for an exception to full and open competition due to an unusual and compelling urgency, when, at the end of DAV Prime JV's contract, it did not have a follow-on contract in place for services during the summer months--when the portable chemical toilet services would be most used. However, the record here evidences that the urgency resulted from the Army's failure to adequately plan for this procurement in advance and that DAV Prime JV was not the only firm interested and capable of performing these services.

The Army knew in August 2008 of the OHA's decision that DAV Prime JV was not an SDVOSBC. Both the SBA and our Office's decision in November 2008 suggested that the Army should consider whether to exercise an option, since DAV Prime JV had been found not to be an eligible SDVOSBC. In early March 2009, approximately 5 months later, the agency finally determined that it would not exercise the first option year because DAV Prime JV was not pursuing efforts to meet the eligibility requirements for an SDVOSBC joint venture.

The agency points to the delay in issuing a new solicitation--due to a rather broad NAICS Code for septic tank and related services--as the reason for the delay in procuring follow-on services and the cause of the urgency. However, as the market survey took longer than expected, it is apparent that the agency should reasonably have been aware that the follow-on contract would not be in place by May 31, the date DAV Prime JV's contract expired, and that the agency was required to plan how it would obtain these services until the follow-on contract would be in place.

If there was not time for full and open competition for the interim services until the follow-on contract was executed, in accordance with FAR Subpart 6.3, the agency should have conducted a limited competition among qualified sources who the agency found would be interested in performing the services. While the final results of the market survey, which ultimately led to the agency's decision to issue the follow-on procurement as a small business set-aside, took longer than the Army anticipated, the survey identified potential qualified sources that would be interested in providing these services and could have been included in a limited competition. Further, because the Fort Drum requirement for portable chemical restroom services was "a recurring requirement that has been procured by contract for at least the last 10 years," see MCS's Sept. 19, 2008 Protest, Agency Acquisition Strategy, at 1, the Army was presumably already familiar with the potential sources who could provide these interim services. Indeed, MCS, a qualified firm, had already indicated its interest and capability of providing these services. Thus, the record evidences that DAV Prime JV was not the only firm capable of performing these services.

Based on this record, the agency's has not provided a reasonable basis for the sole‑source extension. It is apparent that the Army did not properly plan in advance for its requirement to extend this contract; we do not think that the agency could sit idly by in the face of the circumstances here and not take action to obtain more competition for its requirements. VSE Corp.; Johnson Controls World Servs., Inc., B‑290452.3, et al., May 23, 2005, 2005 CPD para. 103 at 9.

MCS's protest is sustained.  (Major Contracting Services, Inc., B-401472, September 14, 2009)  (pdf)

Under CICA, 41 U.S.C. sect. 253(a)(1)(A), contracting officers have a duty to promote and provide for competition and to provide the most advantageous contract for the government. In their role of promoting and providing for competition, contracting officials must act affirmatively to obtain and safeguard competition; they cannot take a passive approach and remain in a noncompetitive position where they could reasonably take steps to enhance competition. VSE Corp., Johnson Controls World Servs., Inc., B-290452.3 et al., May 23, 2005, 2005 CPD para. 103 at 8; HEROS, Inc., B-292043, June 9, 2003, 2003 CPD para. 111 at 7; National Aerospace Group, Inc., B-282843, Aug. 30, 1999, 99-2 CPD para. 43 at 8. See also S. Rep. No. 98-50, at 18 (1984), reprinted in 1984 U.S.C.C.A.N. 2174, 2191 (stating that CICA requires agencies to “make an affirmative effort to obtain effective competition”). CICA further provides that under no circumstance may noncompetitive procedures be used due to a lack of advance planning by contracting officials. 41 U.S.C. sect. 253(f)(5)(A); Signals & Sys., Inc., B-288107, Sept. 21, 2001, 2001 CPD para. 168 at 9. Although the requirement for advance planning is not a requirement that such planning be successful or error-free, see Abbott Prods., Inc., B-231131, Aug. 8, 1988, 88-2 CPD para. 119, at 8, the advance planning must be reasonable. Signals & Sys., Inc., supra, at 13. Here, we conclude that the agency has failed to comply with the CICA mandate for reasonable advance planning. With regard to the feasibility of alternatives to a sole-source award, the agency principally focuses on the difficulties associated with either acquiring a new software system, or having another firm perform the required services without license rights to the RGII software. The agency also asserts that its advance planning efforts have been reasonable in that it has taken steps to avoid expansion of its reliance on RGII. In this regard, the agency notes, for example, that it has been considering using a program developed by another agency office, the Bureau of European Affairs, to meet its needs here, instead of contracting with RGII for the development of additional proprietary software. Agency’s Response to GAO Questions, supra, at 4. While, as discussed above, it is reasonable to conclude that, given the restrictive nature of the agency’s current licensing agreement with RGII, only RGII can now meet its needs, the agency’s arguments simply do not address the issue of whether the agency’s acquisition planning--in the face of those restrictions--was reasonable, given the requirement that the agency make an affirmative effort to obtain competition. The agency has produced no record of any steps that it has taken to end its reliance on the services of the incumbent to maintain the existing software systems; in fact, this latest proposed sole-source award has a potential term of 5 years. It is possible, for example, that the agency could purchase additional rights to the proprietary software in order to promote competition, see Environmental Tectonics Corp., B‑248611, Sept. 8, 1992, 92-2 CPD para. 160 at 5, rights that the government relinquished nearly 6 years ago. In this regard, the protester asserts that in 2004 RGII offered the agency a source code license to multiple copies of Monument for less than $1.2 million, and that at the time RGII stated that the value of Monument was less than $1 million. Protest, Tab E, Letter from Protester to Agency, Aug. 7, 2006, at 2. Further, the agency acknowledges that the “value of the software may in fact now be quite limited.” Agency’s Response to GAO Questions, supra, at 3. Under the circumstances here--where the agency ceded substantial rights in the software created by RGII under the development contract, and where there is no indication that the agency has explored the possibility of acquiring additional rights from RGII--we think that, to satisfy its obligation to engage in reasonable advance planning and to promote competition, the agency was required to consider whether the costs associated with a purchase of additional license rights, or some other alternative, outweigh the anticipated benefits of competition. See HEROS, Inc., supra, at 7, 10. (eFedBudget Corporation, B-298627, November 15, 2006) (pdf)

While we do not question the agency's need for a transition period (even though the record does not clearly establish that this period is required to take as much as 4 months), we agree with VSE that the agency's predicament of not being able to complete a transition period in the event of an award to a firm other than EG&G was caused by the agency's failure to consider meeting its requirement for these bridge services with any firm other than EG&G. In this regard, the record evidences that the agency was aware from the start of 2004, and increasingly certain as the year passed, that the RFP might well be canceled; that EG&G's latest contract extension would expire on April 1, 2005; that a follow-on contract would require a transition period; and that there were other capable contractors, such as VSE and Johnson Controls, which had competed during the agency's protracted competitive procurement, that might be interested in the agency's interim requirements. Yet the agency did not take any steps to avoid having to negotiate exclusively with EG&G to satisfy its requirements. Under the Competition in Contracting Act of 1984 (CICA), 41 U.S.C. 253(a)(1)(A), contracting officers have a duty to promote and provide for competition and to provide the most advantageous contract for the government. In doing so, contracting officials must act affirmatively to obtain and safeguard competition; they cannot take a passive approach and remain in a noncompetitive position where they could reasonably take steps to enhance competition. See Signal & Sys., Inc. , B-288107, Sept. 21, 2001, 2001 CPD 168 at 14-15. Thus, 41 U.S.C. 253(f)(5)(A) provides that under no circumstance may noncompetitive procedures be used due to a lack of advanced planning by contracting officials. Signal & Sys., Inc. , supra , at 9. Although the requirement for advanced planning is not a requirement that such planning be successful or error-free, see Abbott Products, Inc. , B-231131, Aug. 8, 1988, 88-2 CPD 119, the advanced planning must be reasonable. Signal & Sys., Inc. , supra , at 13. Also, even where the agency has a basis to conduct a noncompetitive procurement, it is still required to request offers from as many potential sources as is practicable under the circumstances. 41 U.S.C. 253(e); Signal & Sys., Inc. , supra , at 8-9. As described above, even though the agency was increasingly aware many months in advance that the on-going competitive solicitation for these services might well be cancelled, the only alternative considered by the agency was the sole-source extension of EG&G's contract. If the agency had earlier planned to compete for these interim services, as required, a transition period between EG&G's existing contract and the bridge contract could have been accommodated, given that there were more than 4 months between when the RFP was actually cancelled and when EG&G's contract expired. In this regard, the record evidences that the agency could easily have decided earlier to cancel the RFP, given that virtually all of the reasons for the cancellation were apparent months earlier. Thus, we find that the circumstance of not having sufficient time to complete a transition period was created by the CBP's failure to engage in reasonable advanced procurement planning. See Techno-Sciences, Inc. , B-257686, B-257686.2, Oct. 31, 1994, 94-2 CPD 164 at 9, 11 (agency needs to account for reasonable phase-in periods to achieve adequate advance procurement planning). The situation here is exacerbated by the fact that EG&G's incumbent contract expired in May 2001 and has been extended on a sole-source basis for the past 4 years. Moreover, while the base period for the protested sole source contract extension is only for 6 months, the record evidences that the agency anticipates that the full 18 months will be needed before the new contractor selected under the anticipated competitive procurement can start contract performance. See Draft J&A. In sum, we do not think that the agency could sit idly by in the face of the circumstances present here and not consider obtaining more competition for its sole-source requirements. (VSE Corporation; Johnson Controls World Services, Inc., B-290452.3; B-290452.4; B-290452.5, May 23, 2005) (pdf)

In enacting CICA, Congress explained: “Effective competition is predicated on advance procurement planning and an understanding of the marketplace.” S. Rep. No. 50, 98th Cong., 2d Sess. 18 (1984), reprinted in 1984 U.S.C.C.A.N. 2191. The Senate Report also quoted with approval the following testimony regarding the need for advance planning:

Opportunities for obtaining or improving competition have often been lost because of untimely, faulty, or the total lack of advance procurement planning. Noncompetitive procurement or inadequate competition also has resulted many times from the failure to develop specifications . . . . By requiring effective competition, Congress will serve notice on the agencies that they will need to do more than the minimum to comply with the statute.  S. Rep. No. 50, 98th Cong., 2d Sess. 19 (1984), reprinted in 1984 U.S.C.C.A.N. 2192.  Finally, in interpreting this statutory requirement, our Office has noted that contracting officials have a duty to promote and provide for competition and to obtain the most advantageous contract for the government. Precision Logistics, Inc., B-271429, July 18, 1996, 96-2 CPD ¶ 24 at 5; National Aerospace Group, Inc., B‑282843, Aug. 30, 1999, 99-2 CPD ¶ 43. In other words, contracting officials must act affirmatively to obtain and safeguard competition; they cannot take a passive approach and remain in a sole-source situation when they could reasonably take steps to enhance competition.  Here, the Army's actions over the past several years fail to comply with CICA's statutory mandate for reasonable advance planning.

(HEROS, Inc., B-292043, June 9, 2003)  (pdf)