BNUMBER:  B-272255
DATE:  September 11, 1996
TITLE:  Nidek, Inc.

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Matter of:Nidek, Inc.

File:     B-272255

Date:September 11, 1996

Polly Zygaczenko for the protester.
Helen Henningsen, Esq., Philip Kauffman, Esq., and Phillipa L. 
Anderson, Esq., Department of Veterans Affairs, for the agency.
C. Douglas McArthur, Esq., and Christine S. Melody, Esq., Office of 
the General Counsel, GAO, participated in the preparation of the 
decision.

DIGEST

Contracting officer had a reasonable basis for canceling a 
solicitation where solicitation failed to include evaluation factors 
upon which the agency would evaluate offers and where the record shows 
that specifications in the solicitation may not accurately reflect 
agency's minimum needs.

DECISION

Nidek, Inc. protests the cancellation of solicitation No. 556-96-01, 
issued by the Department of Veterans Affairs (VA) Medical Center in 
North Chicago, Illinois, for a laser system.  Nidek disputes the 
agency's determination that the solicitation omitted critical 
information, which prevented the evaluation of offers on a common 
basis.

We deny the protest.

In March 1996, the agency identified a need for a YAG 
(yttrium-aluminum garnet)/argon combination laser unit for use in the 
Medical Center's ophthalmology section.  The unit was unavailable 
under the Federal Supply Schedule, and the agency decided to issue a 
solicitation.  Accordingly, the agency published a notice in the 
Commerce Business Daily (CBD) of its intention to issue a solicitation 
for a "Zeiss YAG II/Argon II combination laser or equal," in response 
to which any responsible source could submit a "quotation."

The solicitation, which was issued in early April, did not identify 
the brand name (Zeiss) referenced in the CBD, but sought offers for a 
"YAG/Argon laser combo or equal" with installation, shipping, and 
handling.  The solicitation contained a list of "salient features" for 
the unit to be provided.  The solicitation generally followed the 
format prescribed by Federal Acquisition Regulation (FAR) Subpart 12.3 
(FAC 90-32), for the acquisition of commercial items.  FAR  sec.  12.301(c) 
provides that when the use of evaluation factors is appropriate, the 
RFP should include the clause at FAR  sec.  52.212-2, 
Evaluation--Commercial Items, which provides for award to the offeror 
whose proposal is most advantageous based on "price and other 
factors."  FAR  sec.  52.212-2 contains a block for identifying the 
evaluation factors; here, the contract specialist entered the word 
"None."  

Although the CBD notice advised potential offerors to submit offers by 
May 1, 1996, the solicitation contained no instructions for submission 
of offers.  Upon discovering this omission, the specialist telephoned 
prospective offerors and advised them that proposals were due by the 
close of business on April 30.  Five firms submitted offers on that 
date.

The lowest price submitted was based on separate rather than 
combination units.  Nidek submitted the low price for a combination 
unit, as well as an alternate proposal, advising the agency that the 
specifications were "slightly outdated and below current standards of 
technology" and offering a "newer technology" model for consideration.  
The contract specialist referred Nidek's proposal for evaluation.  The 
evaluator, a doctor who had also generated the requirement, reviewed 
Nidek's literature.  He was unable, however, to determine whether 
Nidek fully complied with the requirements set forth in the 
solicitation.  Further, Nidek had not offered a Zeiss split lamp 
delivery system, as the doctor had expected.  Not having defined the 
characteristics of the Zeiss system necessary for his work, the doctor 
had no basis upon which to judge the Nidek model unit.  The contract 
specialist contacted Nidek, and requested and received additional 
information needed to demonstrate that the protester could and, in 
fact, intended to meet the requirements set forth in the solicitation.  
The doctor advised the contract specialist that he had no objection to 
purchase of the Nidek model.

On May 6, the contract specialist advised Nidek that its price was low 
and that it would be awarded a contract.  When the procurement was 
reviewed by a contracting officer, however, several deficiencies were 
noted.  Almost none of the information normally inserted into the 
blocks of standard form 1449, the first page of the solicitation, was 
present.  The type of solicitation--whether invitation for bids (IFB) 
or request for proposals (RFP)--was not specified.  No time and place 
for submission of bids or receipt of offers was provided.  The 
solicitation contained no evaluation or selection factors.  Further, 
the contracting officer learned of the contract specialist's change to 
the date for submission of offers and her negotiations with Nidek.  
Finally, although the doctor had been willing for the agency to 
purchase the Nidek unit, it was uncertain whether all of his needs 
were set forth in the solicitation or whether the solicitation 
reflected the agency's minimum needs.

In view of these deficiencies, the contracting officer determined that 
the solicitation should be canceled.  Specifically, on May 21, the 
contracting officer executed a determination to cancel the 
solicitation based on the lack of evaluation factors, which she deemed 
critical for the fair consideration of offers and necessary for 
identification of the product or firm providing the best value to the 
government.

By letter dated May 28, the agency advised Nidek of its decision, and 
this protest followed.

Nidek challenges the agency's decision to cancel the solicitation.  
Nidek argues that the omission of evaluation factors was a conscious 
decision on the part of the agency, since the entry "N/A" appears in 
the appropriate block of FAR  sec.  52.212-2.  Nidek contends that it 
obtained the award fairly and that the agency is attempting to rewrite 
the specifications around a specific product in order to lock Nidek 
and other offerors out of the competition.  Nidek argues that no 
vendor raised objections to the solicitation during the process and 
that the agency therefore had no reasonable basis for canceling the 
solicitation.

In a negotiated procurement, an agency must have a reasonable basis to 
cancel an RFP and resolicit after receipt of offers, as opposed to the 
requirement that an agency have a cogent and compelling reason to 
cancel an IFB and resolicit after receipt of sealed bids.  See FAR  sec.  
14.404-1; General Projection Sys., 70 Comp. Gen. 345 (1991), 91-1 CPD  para.  
308.  The difference in standards arose because bids in response to an 
IFB are publicly exposed, and the rejection of bids, in order to seek 
new bids, discourages competition.  Id. 

While the procurement here most closely resembles a negotiated 
competition because there was no public opening and thus no exposure 
of prices, we conclude that the cancellation was proper even under the 
more stringent standard applicable to cancellation of IFBs after bid 
opening.  Here, the agency reports that it included the clause at FAR  sec.  
52.212-2 because it intended to include evaluation factors.  Since in 
the absence of such factors the agency cannot determine the offer most 
advantageous to the government, the solicitation was materially 
deficient.  Such a deficiency warrants cancellation.

In addition, during the evaluation here, concerns were raised whether 
all of the features listed in the solicitation represented legitimate 
needs, and whether the solicitation had failed to identify other 
legitimate needs.  Where a solicitation does not contain 
specifications that reflect the agency's actual needs, the agency has 
sufficient reason to cancel.  See FAR  sec.  14.404-1(c)(1); Days Inn 
Marina, B-254913, Jan. 18, 1994, 94-1 CPD  para.  23 (IFB); LB&B Assocs., 
Inc. B-254708, Dec. 30, 1993, 93-2 CPD  para.  346 (RFP).  Here, even the 
protester, in its proposal, questioned the legitimacy of the agency's 
description of its requirements.  While the agency doctor may have 
been willing for the agency to purchase the Nidek unit to ascertain 
whether it met his needs, it was not unreasonable for the contracting 
officer to cancel the solicitation until such time as the medical 
staff developed an accurate statement of its needs, upon which all 
firms could submit an offer.  Although the contracting officer  did 
not incorporate this concern into her written determination, the 
contracting officer states that she considered it in her decision.  
See General Aero Prods. Corp., B-213541, Sept. 18, 1984, 84-2 CPD  para.  
310 (General Accounting Office will consider a subsequently enunciated 
basis for cancellation).  

The agency advises our Office that pending the resolution of this 
protest, it has not yet identified its minimum requirements for the 
resolicitation.  The resolicitation, including the description of the 
agency's needs, will be handled by a different office and different 
personnel.  To the extent that Nidek predicts that the agency will 
revise the specifications around a specific product to prevent it and 
other offerors from competing, Nidek's arguments are speculative and 
premature since the agency has not issued a new solicitation.  In any 
event, absent an allegation that the features required by a 
solicitation exceed the agency's minimum needs, the mere assertion 
that a specification is written around design features of a particular 
product does not provide a valid basis of protest.  See Staveley 
Instruments, Inc., B-259548.3, May 24, 1995, 95-1 CPD  para.  256.

The protest is denied.

Comptroller General
of the United States