BNUMBER:  B-270149.2
DATE:  February 14, 1996
TITLE:  Chant Engineering Co., Inc.

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Matter of:Chant Engineering Co., Inc.

File:     B-270149.2

Date:     February 14, 1996

Philip Chant for the protester.
Maria G. Bellizzi, Esq., Department of the Navy, for the agency.
Susan K. McAuliffe, Esq., and Michael R. Golden, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Contracting agency's cancellation of request for proposals is 
unobjectionable where agency reasonably determined that the 
solicitation overstated its minimum requirements and that enhanced 
competition would result from relaxation of requirements.

DECISION

Chant Engineering Co., Inc. protests the cancellation of request for 
proposals (RFP) No. N00600-95-R-2101, issued by the Department of the 
Navy for a proof test machine, grips, liners, and adapters.  

We deny the protest.

The cancellation followed a protest to our Office by Chant of the 
award of a contract under the RFP to Roberts Testing Equipment, Inc.  
According to the agency, it terminated Roberts's contract for 
convenience and canceled the solicitation because its review of the 
procurement record and the solicitation's specifications showed that 
the original RFP materially overstated the agency's minimum needs and 
that cancellation was in the best interests of the government.  We 
closed our file on the protest of the award because the cancellation 
rendered the protest academic.  The Navy reports that the RFP 
specifications currently are being reviewed for substantial revision 
"to draft a more generic, less restrictive, and precise specification 
that states the government minimum requirement" which, the agency 
contends, will "result in increased competition with potential cost 
savings for the [g]overnment"; the agency has identified at least two 
additional competitors that could meet the relaxed specifications.  
The agency further states that funding constraints may preclude 
resolicitation in any event. 

Chant challenges the Navy's decision to cancel the RFP.  Chant argues 
that the two proposals received (Chant's and Roberts's) should 
represent sufficient competition since the agency found 
unobjectionable the receipt of two proposals under prior solicitations 
for similar equipment.  Chant contends that the Navy only canceled the 
RFP after Chant protested the award of the contract to Roberts; Chant 
believes the cancellation represents an effort by the agency to 
prevent a complete review of the propriety of the agency's failure to 
award the contract to Chant initially.  The protester seeks award 
under the original RFP on the basis of having submitted the only 
acceptable proposal.

In a negotiated procurement, the contracting officer has broad 
discretion in deciding whether to cancel a solicitation; he need only 
have a reasonable basis as opposed to the cogent and compelling reason 
required for cancellation where sealed bids have been opened.  Xactex 
Corp., B-247139, May 5, 1992, 92-1 CPD  para.  423.  A reasonable basis to 
cancel exists when a new solicitation presents the potential for 
increased competition or cost savings.  Lucas Place, Ltd., B-235423, 
Aug. 30, 1989, 89-2 CPD  para.  193.  Therefore, an agency may cancel a 
solicitation if it materially overstates the agency's requirements and 
the agency can obtain enhanced competition by relaxing the 
requirements.  Brisk Waterproofing Co., Inc.,
B-256138.3, June 30, 1994, 94-1 CPD  para.  394.

We find that the agency's decision to cancel the solicitation to 
revise and relax its specifications to better reflect the agency's 
actual requirements and seek enhanced competition was reasonable.  

As the Navy reports, irrespective of the propriety of the award to 
Roberts, further review of the RFP specifications and the procurement 
record showed the agency that the original RFP overstated its minimum 
needs and may have restricted competition.  The agency's protest 
report delineates four areas of the RFP's technical specifications 
that will be revised if funding permits resolicitation.[1]  Each of 
these changes affects material specifications that are to be relaxed 
or more accurately defined to better reflect the agency's minimum 
needs--for example, the specifications for the machine's hydraulic 
system, cylinder assembly and cylinder size and capacity are being 
relaxed.  The Navy further reports that the balance of the RFP's 
specifications are being reviewed in their entirety by agency 
technical personnel for revision and that at least two additional 
potential competitors have been identified that could meet the relaxed 
requirements.  

The crux of Chant's protest is that the Navy acted in bad faith in 
canceling the RFP after Chant's protest disclosed that the contract 
should have been awarded to Chant and not to Roberts.  That 
speculation, however, does not provide a sufficient basis to find 
improper agency conduct.  See HBD Indus., Inc., B-242010.2, Apr. 23, 
1991, 91-1 CPD  para.  400.  As indicated above, the record shows that the 
specifications overstated the agency's minimum needs regarding 
material RFP requirements, and that enhanced competition is 
anticipated upon resolicitation on the basis of more accurate and 
relaxed specifications.  In such circumstances, cancellation of the 
RFP  was reasonable. 

The protest is denied.

Comptroller General
of the United States 

1. In response to Chant's protest of the cancellation, the agency 
submitted information to our Office regarding the specific revisions 
to the RFP's specifications that have been proposed to date--the 
agency's review of the balance of the specifications is on-going.  
Chant has not been provided this information due to the agency's 
position that such information, if released to the protester prior to 
the issuance of a new solicitation, would give an unfair competitive 
advantage to Chant upon resolicitation.