BNUMBER:  B-281319; B-281320 
DATE:  January 22, 1999
TITLE: Eastern Technical Enterprises, Inc., B-281319; B-281320,
January 22, 1999
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Matter of:Eastern Technical Enterprises, Inc.

File:     B-281319; B-281320

Date:January 22, 1999

Michael J. Gardner, Esq., Clark & Stant, for the protester.
Kenneth A. Lechter, Esq., Department of Commerce, for the agency.
Susan K. McAuliffe, Esq., and Christine S. Melody, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Cancellation of an invitation for bids after bid opening is proper 
where solicitation does not reflect changed requirements in work and 
award under the solicitation would not serve the government's actual 
needs. 

DECISION

Eastern Technical Enterprises, Inc. protests the cancellation of 
invitation for bids (IFB) No. 51-EANA-8-00076, issued by the 
Department of Commerce, National Oceanic and Atmospheric 
Administration (NOAA), for the drydocking and repair of NOAA Ship 
ALBATROSS IV.  The protester's challenge is based upon the terms of 
the agency's resolicitation of the procurement through the issuance of 
request for proposals (RFP) No. 52-EANA-9-00002.  Eastern contends 
that the RFP did not contain sufficient changes in requirements to 
support the agency's cancellation of the IFB.

We deny the protest.

The IFB was issued on July 22, 1998 to 16 firms.  Three bids were 
received by the September 8 bid opening.  Eastern's bid of $599,469 
was the apparent low bid received; bids of $848,682 and $1,097,402 
were received from two other firms.  On September 22, the agency 
canceled the IFB due to changes in its requirements.  The protester 
received notice of the cancellation on October 6.  On the same day, 
Eastern received the RFP, the agency's resolicitation of the canceled 
requirement.  After comparing the two solicitations' requirements, 
Eastern filed its current protest, contending that the changes in 
requirements were minor and do not support the agency's cancellation 
of the IFB.[1]

Preservation of the integrity of the competitive bidding system 
dictates that after bids have been opened, award must be made to that 
responsible bidder which submitted the lowest responsive bid, unless 
there is a compelling reason to reject all bids and cancel the IFB.  
Federal Acquisition Regulation (FAR)  sec.  14.404-1(a)(1); Zwick Energy 
Research Org., Inc., B-237520.3, Jan. 25, 1991, 91-1 CPD  para.  72 at 2-3.  
However, an IFB may be canceled after bid opening, and all bids 
rejected, where award under the IFB would not serve the government's 
actual needs, and the specifications therefore need to be revised.  
FAR  sec.  14.404-1(c)(1), (2); I.T.S. Corp., B-243223, July 15, 1991, 91-2 
CPD  para.  55 at 3-4.

We conclude that the cancellation here was proper.  As discussed 
below, the record shows that the agency's needs have materially 
changed since the issuance of the IFB, as evidenced by the 
significantly relaxed requirements contained in the RFP.[2]  

The agency cites several examples of changes it believes are 
sufficiently significant to justify the cancellation.  For example, in 
basic item No. 1 of the IFB's performance requirements, regarding 
drydocking and routine drydock work, the agency has deleted two 
requirements:  (1) the requirement that the single section floating 
drydock be capable of leveling the ship within +/-2 minutes of arc 
with reference to the horizontal gravity plane (IFB Detail 
Specifications (DS)  sec.  3.1.3(c)); and (2) the requirement that the ship 
be drydocked on 60-inch minimum height keel blocks (Id.  sec.  3.1.3(b)).  
The Lead Port Engineer explains that these two requirements--which 
pertain to certain ship transducer and underwater body work not 
required under the IFB--were mistakenly included in the IFB, and that 
they exceed the agency's actual drydocking needs.  Specifically, he 
explains the restrictive nature of the unnecessary requirements, and 
the materiality of their deletion as follows:

     Eliminating the tight-tolerance ship leveling requirement 
     provides contractors with the option of performing the work in a 
     graving dock or marine railway instead of only in a single 
     section floating drydock.  Eliminating the 60-inch minimum keel 
     block height requirement allows the ship to be drydocked on more 
     common 48-inch block heights, and in facilities with limited 
     draft capabilities, further increasing competition.  These 
     requirements were needed when the ship had transducer work 
     scheduled in conjunction with underwater body work in drydock.  
     Transducer work was not scheduled for this drydock and repair 
     period and the requirements should not have been included in the 
     specification.

Declaration of James B. Stricker, Lead Port Engineer, at 2.

Other examples cited by the agency of material changes include:  (1) 
the deletion of basic item No. 23 (IFB DS  sec.  3.23), central hydraulics 
upgrade, which mistakenly remained in the IFB after the work had been 
performed on an unscheduled emergency repair basis (at a cost of 
approximately $70,000); (2) the deletion of basic item No. 24 (Id.  sec.  
3.24), bridge running lights relocation, since it had been performed 
earlier by ship personnel; and (3) the reduction of work required 
under basic item No. 21 (Id.  sec.  3.21), in that the agency changed the 
quantity of work stated by limiting the amount of bulkhead that was to 
be removed and replaced by the contractor.  Declaration of James B. 
Stricker, Lead Port Engineer, at 2; Memorandum from Contracting 
Officer and Head of Contracting Office to Contract File (Sept. 22, 
1998). 

Our review of the record demonstrates that the IFB did not represent 
the agency's actual needs; much of the solicited work, as apparent in 
the above-referenced examples, is no longer needed to meet the 
agency's actual needs in terms of cost and complexity.  

The agency states that the needed changes relate to approximately 25 
percent of the work initially solicited.  Memorandum from Contracting 
Officer and Head of Contracting Office to Contract File (Sept. 22, 
1998).  The materiality of the cited changes is demonstrated here, we 
believe, by both the degree of change (which involves stringent 
requirements changed to substantially more relaxed terms, or which 
were totally deleted) and the significance of certain of the changed 
terms in terms of performance and price of the contract.  As discussed 
above, several of the changes relate to a substantial reduction in 
terms of complexity of the performance requirements, resulting from 
the agency's determination that the initial terms were in excess of 
its actual requirements--for example, relaxation of the stringent 
drydocking terms, deletion of the central hydraulics work, and 
reduction of bulkhead repair and removal work.  The changes in 
required drydocking alone are significant, for instance, not only in 
terms of price, but because the method of drydocking is a core 
requirement of the drydocking portion of the contract terms.

Regarding the effect on price of the stated changes, although the 
record does not contain detailed comparisons in this regard, it is 
clear that the IFB's stringent requirements served as the basis for 
preparation of the bids and that deletion of the requirements may have 
a substantial effect on the prices bid for the entire effort.  For 
instance, bidders reasonably may have included in their bids the cost 
of acquiring certain initially required, less common supplies (such as 
the 60-inch keel blocks) or the cost of providing the no-longer needed 
services (such as meeting the more complex floating drydock 
requirements).[3]

In sum, the changes in the stated requirements, which relate to the 
quantity, quality, and potential price of the supplies and services, 
are material here.  Award on the initially solicited IFB requirements 
simply would no longer meet the agency's actual requirements in 
material respects.  We therefore conclude that the agency had a 
compelling reason to reject all bids and resolicit.  See Envtl. Safety 
Consultants, Inc., B-241714, Feb. 26, 1991, 91-1 CPD  para.  213 at 2.  
Although Eastern contends that the agency should award it a contract 
under the IFB, then modify that contract to provide for the changes 
included in the RFP, it would be improper for an agency to award a 
contract with the intent of making material changes.[4]  Zwick Energy 
Research Org., Inc., supra, at 3.

The protest is denied.

Comptroller General
of the United States

1. The agency reports that the RFP also has been canceled, since 
insufficient time remains to conduct the procurement in light of the 
agency's need to include further necessary changes in the performance 
requirements (for example, regarding hull modifications), and the 
agency's need for immediate use of the ship for a series of survey 
requirements that cannot be delayed.  The agency intends to resolicit 
its actual drydocking and repair requirements for the ship within the 
year.

2. To the extent Eastern challenges the reissuance of the agency's 
requirements as a negotiated procurement, we dismiss the challenge as 
academic in light of the agency's cancellation of the RFP.  Morey 
Mach., Inc.--Recon., B-233793.2, Aug. 3, 1989, 89-2 CPD  para.  102 at 1-2. 

3. Eastern's post-protest statement that changes in the drydocking 
requirements alone would not cause it to change its price is 
unpersuasive here because of its self-serving nature (made by a firm 
wishing to remain in line for award as the apparent low bidder under 
the canceled IFB).

4. Eastern also contends that the agency's failure to provide it with 
a copy of the solicitation in a prompt fashion is an example of bad 
faith by the agency.  These contentions, however, do not demonstrate 
that the agency acted with intent to harm the protester.  See Virginia 
Telecomms. & Sec., Inc., B-247368, May 20, 1992, 92-1 CPD  para.  456 at 4; 
ASI Universal Corp., Inc.--Recon., B-239680.2, Nov. 13, 1990, 90-2 CPD  para.  
389 at 3.