BNUMBER:  B-278486 
DATE:  February 4, 1998
TITLE: R. & W. Flammann GmbH, B-278486, February 4, 1998
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Matter of:R. & W. Flammann GmbH

File:     B-278486

Date:February 4, 1998

Reed L. von Maur, Esq., David Krakow, Esq., and Bryant J. Spann, Esq., 
Parker, Poe, Adams & Bernstein, for the protester.
Capt. Kyle Hybl and Marian E. Sullivan, Esq., Department of the Air 
Force, for the agency.
Wm. David Hasfurther, Esq., and Michael R. Golden, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protest against cancellation of request for proposals (RFP) is 
sustained where reasons given for the cancellation are not supported 
by the record.  Although contracting officer had appropriate concerns 
regarding the conduct of the procurement, he canceled the procurement 
without first determining whether "irregularities" which occurred 
compromised any award under the RFP.

DECISION

R. & W. Flammann GmbH protests the Department of the Air Force's 
decision to reject all offers submitted under request for proposals 
(RFP) No. F61521-97-R-2002, issued for the painting of military family 
housing (MFH), and the agency's decision to resolicit these needs.  
Flammann believes that the agency has offered no reasonable basis for 
cancellation and that, as the lowest-priced offeror, it should receive 
award under the RFP.

We sustain the protest.

The RFP, issued on August 4, 1997, requested prices for interior 
painting of estimated quantities of MFH apartments at four locations 
in Germany.  Award would consist of a 1-year contract (or one of a 
shorter duration depending on the date of award) with two 1-year 
options.  The RFP contained the clause at Federal Acquisition 
Regulation (FAR)  sec.  52.215-16 (Alternate II) (June 1997), which 
provides that the "Government intends to evaluate proposals and award 
a contract without discussions with offerors."  Ten proposals were 
received by the September 4 deadline for proposal submission.  
According to an agency-level protest filed by Pamet GmbH, the owner of 
Heil Maler GmbH, the third low offeror, telephoned a representative of 
Pamet on September 5 and stated that, according to an agency 
individual involved in the procurement, Pamet's offer was low.  Pamet 
also states that Heil disclosed Heil's price to Pamet.  (The agency 
also obtained a memorandum from Heil showing that these same two 
offerors had discussed their proposed prices shortly after the 
proposal submission deadline on September 4, in order to determine 
possible subcontracting arrangements should either of them receive the 
award.)  The Pamet representative states that on September 5 he called 
and questioned a second agency individual involved in the procurement 
and was advised that Pamet was, indeed, the low offeror. 

On September 8, Flammann, the second low offeror, advised the agency 
that it had made two clerical mistakes in its offer.  First, it 
advised that it had incorrectly multiplied the agency's estimated 
quantity for one line item by its unit price to reach an extended 
price.  The incorrect figure was higher than the correct one.  Second, 
Flammann incorrectly added its total prices for the base and option 
years to reach an estimated aggregate total higher than would have 
been the case had the figures been correctly added.  These errors, and 
the intended proposed prices, were obvious from the pricing pages 
submitted by Flammann with its offer.  The contracting officer allowed 
Flammann to correct the errors and, after correction, Flammann was the 
low offeror.  When Pamet was notified on September 9 that it was no 
longer low because of the correction of Flammann's prices, Pamet filed 
an agency-level protest on September 12 against the correction of the 
prices in Flammann's offer.  Pamet also expressed concern with the 
conduct of the contracting officials.  As a result, the agency 
assigned a different contracting officer to assume responsibility for 
the RFP.  

Upon confirming that the (now) second (Pamet) and third (Heil) low 
offerors had disclosed pricing information to one another and that 
government personnel may have disclosed the identity of the low 
offeror, Flammann, and pricing information, the new contracting 
officer decided--before any award was made--to cancel the RFP and 
resolicit the procurement due to possible irregularities in the 
acquisition process.  It was his view that the possible disclosure of 
prices by someone in the agency to one or two of the offerors 
compromised the integrity of the procurement.  The agency initiated an 
investigation of the procurement.  The agency advises that, after 
conducting its investigation, it has decided that "a criminal 
investigation will not be conducted at this time because there is 
insufficient evidence of specific criminal activity."  Further, while 
administrative action is being taken against the two contracting 
officials and the two offerors who exchanged pricing information, 
there has been no suggestion of wrongdoing on the part of Flammann.

Under FAR  sec.  15.608(b)(4) (June 1997), a procuring agency may reject 
all proposals received in response to an RFP if cancellation is 
"clearly in the Government's interest."  The determination that 
cancellation is clearly in the interest of the government must have a 
reasonable basis.  Griffin Servs., Inc., B-237268 et al., June 14, 
1990, 90-1 CPD  para.  558 at 2.  Here, we conclude that cancellation would 
be improper and that award should be made to Flammann on the basis of 
its low offer under the RFP.  We agree that the contracting officer 
was warranted in being concerned that the integrity of this 
procurement might have been compromised, and that the matter required 
prompt investigation.  However, the contracting officer's decision to 
cancel the solicitation without first determining that the 
"irregularities" actually did compromise an award under this RFP was 
not reasonable.  While the agency asserts that the disclosure of 
prices detrimentally affected the integrity of the procurement, the 
contracting officer had no information that anyone benefited from, or 
was prejudiced by, the disclosure of the prices to the original low 
offeror and the original third low offeror, neither of whom was able 
to change its prices to benefit from this knowledge.  Further, the 
contracting officer recognized that there was no evidence suggesting 
that Flammann was involved in any of the irregularities of concern to 
the agency.  As noted above, Flammann's request for correction 
concerned errors which were clear from the RFP pricing pages submitted 
with its offer and were discoverable by the agency upon review of the 
offer without Flammann's request for correction.  Clearly, the 
contracting officer had not developed facts to support the 
cancellation at the time he made the decision, and the record 
presented in this case does not provide that support.  

Although the agency now states that discussions were required because 
seven offerors understated prices for five line items compared to the 
government estimates, the unit prices proposed by Flammann on each of 
these line items at issue were not understated (indeed, they were the 
same as the government estimates).  Further, if discussions were 
conducted with the seven offerors which understated their prices, the 
result, based on the agency's estimates, presumably would be an 
increase, not a reduction, in prices for these items.  In any event, 
given the price disclosures which have occurred, resolicitation would 
simply promote an auction among offerors without any corresponding 
benefit to the procurement system.  See Rexon Tech. Corp.; Bulova 
Techs., Inc., B-243446.2, B-243446.3, Sept. 20, 1991, 91-2 CPD  para.  262 
at 7-8.  Further, the agency has not raised any other matters that 
would require discussions.

Accordingly, the protest is sustained.  We recommend that award be 
made to Flammann, if otherwise appropriate, on the basis of its low 
offer submitted under the RFP.  We also recommend that Flammann be 
reimbursed the costs of filing and pursuing its protest, including 
reasonable attorney's fees.  Bid Protest Regulations, 4 C.F.R.  sec.  
21.8(d)(1) (1997).  Flammann should submit its certified claim for 
such costs, detailing the time expended and costs incurred, directly 
to the agency within 60 days after receipt of this decision.  4 C.F.R.  sec.  
21.8(f)(1).

Comptroller General
of the United States