BNUMBER:  B-278324.2 
DATE:  February 9, 1998
TITLE: Noelke GmbH, B-278324.2, February 9, 1998
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Matter of:Noelke GmbH

File:     B-278324.2

Date:February 9, 1998

Reed L. von Maur, Esq., David L. Krakow, Esq., and John B. Anderson, 
Esq., Parker, Poe, Adams & Bernstein, for the protester.
Laura Smith, Esq., Department of the Army, for the agency.
Ralph O. White, Esq., and Christine S. Melody, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protester's contention that agency improperly canceled solicitation 
and resolicited as corrective action in response to an earlier 
meritorious protest is denied where the record shows that the 
protester was not entitled to award under the earlier solicitation, 
and where the agency reasonably concluded that the specification 
overstated the government's needs and the agency might achieve greater 
competition by resoliciting.  Contention that disclosure of prices 
under the original solicitation barred the agency from canceling and 
resoliciting without a compelling reason is also denied since neither 
option--cancellation nor reevaluation of revised proposals--placed the 
protester in any worse position vis-ï¿½-vis other offerors.

DECISION

Noelke GmbH protests the corrective action taken by the Department of 
the Army, Corps of Engineers in response to its earlier protest 
challenging award of a contract to SKE GmbH, pursuant to request for 
proposals (RFP) No. DACA90-97-R-0060, seeking offers for the 
renovation of two buildings located at Kleber Kaserne, Kaiserslautern, 
Germany.  Noelke argues that, rather than terminating SKE's award and 
resoliciting for these services, the agency should have made award to 
Noelke as the offeror with the lowest proposed price under the RFP.  

We deny the protest.

BACKGROUND

On October 8, 1997, shortly after learning of award to SKE, Noelke 
filed a protest with our Office arguing that the evaluation of 
proposals and the resulting price/technical trade-off--the Army 
concluded that SKE's higher-rated, higher-priced offer presented the 
best value to the government--were unreasonable.  Prior to submitting 
the agency report, the Army advised our Office that it was taking 
corrective action by terminating the awardee's contract and 
resoliciting for the needed services.  Specifically, the letter stated 
that "[a]mong the deficiencies found in the procurement, the 
[a]gency's records reflected errors in the reading and subsequently 
the scoring of the proposals, and as such, the propriety of the 
agency's cost-tech trade off is questionable."  Army Request for 
Dismissal, Oct. 22, 1997, at 1.  Our Office subsequently dismissed 
Noelke's initial protest as academic.

On October 31, Noelke filed its current protest with our Office 
challenging the Army's proposed corrective action.  Noelke argues that 
the Army should have made award to it under the RFP, and that the 
agency's decision to resolicit for these renovation services is 
unreasonable.

In the agency report filed on November 22 in response to Noelke's 
current protest, the Army's justification of its decision to cancel 
and resolicit does not rely upon the same reasons identified in its 
above-referenced dismissal request.  Instead, the Army explains that 
cancellation and resolicitation are appropriate because:  the 
evaluation scheme was misleading, did not accurately reflect the 
agency's priorities, and no longer reflects the agency's needs; the 
specifications were ambiguous and inaccurate; and circumstances 
suggest that there may be a significantly broader competition now than 
was achieved under the earlier solicitation.

At the time the Army submitted its agency report here, it had not 
issued the revised solicitation.  On December 4, the new solicitation 
(RFP No. DACA90-98-R-0007) was issued, including new evaluation 
criteria, and on December 23, the Army issued amendment 0001 to the 
new solicitation, revising the new solicitation's evaluation scheme.  
At each juncture, Noelke has been permitted to file supplemental 
comments on the Army's actions.

DISCUSSION

With respect to Noelke's initial argument--that it is entitled to 
award as a result of the corrective action taken in response to its 
earlier protest--Noelke's complaint misstates the appropriate remedy 
available under these circumstances.  Although the Army agreed with 
Noelke's general contentions that the evaluation and resulting 
price/technical trade-off were flawed, we have no basis to assume that 
under a proper evaluation, Noelke would have won the competition.  
Noelke's claim that it was entitled to award as the responsible 
offeror which submitted the lowest-priced, "responsive" proposal, 
overlooks the fact that this was a best value procurement, and that 
the RFP advised offerors that the agency was "more concerned with 
obtaining superior technical or management features than with making 
an award at the lowest overall cost to the Government."  RFP No. 
DACA90-97-R-0060, Amend. 0001 at 00100-7.  Thus, Noelke is not 
entitled to award as a result of the agency's corrective action 
decision.   See Anderson Hickey Co., B-250045.3, July 13, 1993, 
93-2 CPD  para.  15 at 3.

Noelke next contends that the agency could not reasonably cancel this 
solicitation and resolicit for the services.[1]  Specifically, Noelke 
argues that:  (1) none of the reasons given in the agency's request 
for dismissal of the prior protest adequately support its cancellation 
decision; (2) our Office should reject the reasons stated in the 
Army's agency report filed in answer to this protest in favor of the 
reasons stated by the Army in its earlier dismissal request; and (3) 
the reasons stated by the Army in its agency report are insufficient 
to justify its cancellation decision. 

With respect to Noelke's contention that the Army should be held to 
its initial justifications for its cancellation decision, the Army 
argues that its request for dismissal of the earlier protest is not 
dispositive here, and that our Office should instead review the 
materials provided in the agency report submitted in response to the 
instant protest.  We agree.  The reasons justifying the cancellation 
set forth in the agency report here can be used so long as they would 
have been proper support for the determination to cancel at the time 
that decision was made.  Peterson-Nunez Joint Venture, B-258788, Feb. 
13, 1995, 95-1 CPD  para.  73 at 5.  

Turning to the justifications for the cancellation decision in the 
agency report, Noelke argues that none of the proffered reasons are 
sufficient to support the agency action.  Noelke also contends that 
our Office should hold the agency to a higher standard of review than 
usually applies to cancellation of a negotiated procurement because 
prices have been disclosed.[2]

As a general rule, in a negotiated procurement the contracting agency 
need only demonstrate a reasonable basis to cancel a solicitation 
after receipt of proposals, as opposed to the "compelling reason" 
required to cancel an invitation for bids (IFB) where the bids have 
been opened.  Federal Acquisition Regulation  sec.  14.404-1(a)(1); see CFM 
Equip. Co.--Recon., B-251344.2, Aug. 30, 1993, 93-2 CPD  para.  134 at 3.  
The standards differ because, in procurements using sealed bids, 
competitive positions are exposed as a result of the public opening of 
bids, while in negotiated procurements there is no public opening.  
CFM Equip. Co.--Recon., supra.  

In situations like this one, our Office has stated that cancellation 
of an RFP, even after one or more of the offerors' prices have been 
revealed, is proper where the record contains plausible evidence or a 
reasonable possibility that a decision not to cancel would be 
prejudicial to the government or the integrity of the procurement 
system.  Budney Indus., B-252361, June 10, 1993, 93-1 CPD  para.  450 at 
3-4.  Here, for the reasons below, we conclude that the cancellation 
is justified, and we are not persuaded that any harm caused by the 
release of prices outweighs the government's interest in canceling 
this solicitation and beginning anew. 

Despite Noelke's assertions, the Army's choice here is not between 
award to Noelke and resolicitation.  As explained above, the 
circumstances of this procurement do not provide Noelke a right to 
award.  Instead, the focus of our review must be limited to the 
propriety of the decision to cancel and resolicit versus amending the 
original RFP, requesting revised best and final offers (BAFO), and 
reevaluating.  At this juncture, the disclosure of prices prior to the 
revision of the solicitation does not mitigate in favor of either 
approach--cancellation or reevaluation.  Simply put, Noelke's position 
under the Army's current approach is no different than it would be if 
the agency had asked for revised BAFOs and reevaluated.  Anderson 
Hickey Co., supra, at 4 n.3.

With respect to its decision to cancel, the agency identifies 12 
separate examples where it believes the revised specifications have 
been modified to more accurately reflect the agency's needs, and 
argues that competition may be broadened as a result.  For example, in 
several cases, the Army clarified the application of certain German 
statutes to the construction work anticipated here.  Noelke's 
arguments that the statutes in question would have applied in any 
event, and the Army's reasonable and persuasive responses to the 
contrary, suggest that without specific direction in this area, the 
construction could have become bogged down in dispute over the 
application of these statutes.  In our view, this clarification alone 
provides a reasonable basis to cancel and resolicit for these 
services.  

We also see nothing unreasonable in the Army's contention that the 
passage of time, together with the above-mentioned clarifications, may 
result in a significant increase in competition.  Specifically, the 
Army explains that the original solicitation was issued in August when 
many German employees take extended vacations, and the agency expects 
that interest in the current solicitation may be significantly higher 
now.  As evidence of this possibility, the Army notes that only seven 
firms requested copies of the original RFP, and only three offers were 
received.  To date, 16 firms have requested and received the revised 
solicitation.  In our view, the possibility of increased competition 
(and the lower prices which often result) provides a reasonable basis 
to cancel this solicitation.  Chant Eng'g Co., Inc., B-270149.2, Feb. 
14, 1996, 96-1 CPD  para.  96 at 2; FRC Int'l, Inc., B-260078, Apr. 10, 
1995, 95-1 CPD  para.  189 at 2.  

As a final matter, we note that much of Noelke's protest appears 
premised on the assumption that the Army is acting in bad faith in 
canceling this solicitation.  We find no support for this allegation 
in the record.  Given that Noelke has offered no basis for our Office 
to conclude that the Army is acting in bad faith here, we will not do 
so.  See Brisk Waterproofing Co., Inc., B-256138.3, June 30, 1994, 
94-1 CPD  para.  394 at 5.

The protest is denied.

Comptroller General
of the United States

1. Where, as here, an agency terminates a contract and resolicits, it 
is in effect canceling the RFP, and we will determine the propriety of 
the agency action applying the rules pertaining to the cancellation of 
a solicitation.  Switlik Parachute Co., Inc., B-275539, Mar. 3, 1997, 
97-1 CPD  para.  113 at 2 n.1.

2. The awardee's price was disclosed at the time of the earlier 
protest.  Noelke claims that the Army has disclosed its price during 
this protest.  The Army admits that it provided a copy of Noelke's 
protest filing--which contained the company's price, but was not 
marked by Noelke's counsel as protected--to the awardee.