BNUMBER:  B-262244
DATE:  November 21, 1995
TITLE:  Berendse & Sons Paint Co., Inc.

**********************************************************************

Matter of:Berendse & Sons Paint Co., Inc.
File:     B-262244
Date:   November 21, 1995

Tony Berendse for the protester.
Vera Meza, Esq., and Garland E. Yarber, Esq., Department of the Army, 
for the agency.
Adam Vodraska, Esq., and James A. Spangenberg, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Cancellation of solicitation after bid opening was proper where 
solicitation limited  the government's right to place work orders such 
that it would not meet the government's actual minimum needs. 

DECISION

Berendse & Sons Paint Co., Inc. protests the Army's cancellation of 
invitation for bids (IFB) No. DAAC79-95-B-0001, for painting and minor 
repair of structures at the Red River Army Depot, Texarkana, Texas.  
Berendse contends that the agency did not have a compelling reason to 
cancel the IFB after the bids had been opened, and that Berendse is 
entitled to award as the apparent low, responsive and responsible 
bidder.

We deny the protest. 

The IFB contemplated the award of an indefinite quantity contract for 
painting and minor repairs to buildings and other structures at the 
depot, for a base year with 4 option years.  The bid schedule 
consisted of numerous line items (some for removal of lead-based and 
asbestos-fibered paint), for which bidders entered unit and extended 
prices based on the estimated quantity for each item.  According to 
the IFB, the maximum dollar value of delivery orders which could be 
issued by the agency was $100,000 per year.

Section 2A of the specifications, "Lead and/or Asbestos Abatement," 
required that contractors directly responsible for removing lead-based 
paint and/or asbestos-fibered paint be licensed by the state and 
demonstrate prior experience with abatement projects of similar scope 
by submitting at least three references from previous customers.  
Contractors were also required to submit a notarized statement listing 
any citations, penalties, terminations, and legal proceedings or 
claims related to their abatement work.   Section 2A stated that 
"[f]ailure to submit requested information/documentation or the 
submission of incorrect information/documentation will result in 
automatic disqualification of the bid package."

The agency evaluated bids based on the total price for all line items 
for the base year and the option years.  Berendse was the low bidder 
with a total price of $1,852,908 (averaging $370,581.60 per year), and 
the government estimate was $3,173,683.10 ($634,736.62 per year).  

Another bidder, Lewis Environmental Service, complained that all the 
other bids, including Berendse's, should have been rejected as 
"nonresponsive" for failing to include the licensing and 
qualifications information required by section 2A of the 
specifications; Lewis was the only bidder which had provided such 
information with its bid.  Although the contracting officer concluded 
that the information regarding licensing and qualifications concerned 
responsibility rather than responsiveness, he decided to cancel the 
IFB due to the IFB's ambiguous requirements in this regard and because 
the IFB was otherwise deficient.

Section 2A of the reissued IFB was corrected to require that licenses 
and qualifications be submitted by the lead and/or asbestos abatement 
contractor/subcontractor and approved by the agency prior to the 
commencement of abatement work under a delivery order (rather than 
submitted with the contractor's bid), and to reserve the right of the 
agency to reject abatement subcontractors proposed for use on any 
delivery order "for any reason that serves the best interests of the 
government or building occupants."  In addition, faulty estimated 
quantities for nine of the line items were corrected and various 
standard clauses added.[1]  Finally, the maximum dollar amount for 
delivery orders in any 1 contract year was increased from $100,000 to 
$1,000,000.

Because of the potential adverse impact on the competitive bidding 
system of canceling an IFB after prices have been exposed, any 
cancellation after bid opening must be based on a compelling reason.  
FAR  14.404-1(a)(1);  Ferguson-Williams, Inc., B-258460; B-258461, 
Jan. 24, 1995, 95-1 CPD  39.  Under FAR  14.404-1(c), an IFB may be 
canceled and all bids rejected after bid opening but before award when 
"[i]nadequate or ambiguous specifications were cited in the 
invitation," and where "[f]or other reasons, cancellation is clearly 
in the public's interest."  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.  H. Angelo & Co., Inc., B-260680.2, Aug. 21, 1995, 95-2 CPD  
74.  In this regard, we generally consider cancellation after bid 
opening to be appropriate when an award under the solicitation would 
not serve the actual minimum needs of the government.  McGhee Constr., 
Inc., B-250073.3, May 13, 1993, 93-1 CPD  379; Bangar Contractors 
Corp., B-240071, Oct. 16, 1990, 90-2 CPD  295.

In this case, the agency had a compelling reason to cancel the IFB 
because award would not have resulted in a contract which would 
satisfy the government's actual minimum needs. Under the IFB as 
initially issued, the contractor would not have been obligated to 
accept further delivery orders once the total amount of work ordered 
by the agency reached $100,000 in any 1 year.  Given that actual 
orders anticipated to be placed with the contractor significantly 
exceeded the $100,000 per  year limitation, as indicated by Berendse's 
own low total bid price and the government estimate, it was entirely 
possible that the government would be unable to satisfy its minimum 
requirements for work in excess of $100,000 per year under the initial 
IFB.  By revising the IFB to allow the agency to order up to 
$1,000,000 of work per year, the agency will be assured of its ability 
to satisfy its minimum needs under this IFB.  Since award under the 
initial IFB would not have satisfied the government's needs, we find 
that there was a compelling reason to cancel the IFB and resolicit 
with a corrected IFB.[2]  See Zeta Constr. Co., Inc., B-244672, Nov. 
5, 1991, 91-2 CPD  428; Holk Dev., Inc., B-236765.2, Jan. 18, 1990, 
90-1 CPD  65.

The protest is denied.

Comptroller General
of the United States

1. Among the standard clauses added in the revised IFB were "Audit and 
Records-- Sealed Bidding," Federal Acquisition Regulation (FAR)  
52.214-26; "Subcontractor Cost or Pricing Data--Modifications--Sealed 
Bidding," FAR  52.214-28; "Performance of Work by the Contractor," 
FAR  52.236-1; and "Subcontracts (Fixed-Price Contracts)," FAR  
52.244-1.

2. Although this was not the primary reason given by the agency for 
canceling the solicitation, information justifying the cancellation of 
a solicitation can be considered no matter when the information 
surfaces or should have been know.  Ferguson-Williams, Inc., supra; 
McGhee Constr., Inc., supra.  In view of our determination that the 
solicitation's understatement of its yearly order limitations 
constituted a compelling reason to cancel, we need not decide whether 
the other changes would have justified the cancellation.