BNUMBER:  B-281499 
DATE:  February 12, 1999
TITLE: EDL Construction, Inc., B-281499, February 12, 1999
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Matter of:EDL Construction, Inc.

File:     B-281499

Date:February 12, 1999

Robert W. Moore and Robert E. Moore, for the protester.
William A. Wilcox, Jr., Esq., International Boundary and Water 
Commission, for the agency.
Jacqueline Maeder, Esq., and Paul Lieberman, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Determination to cancel invitation for bids after bid opening is 
unobjectionable where the agency could not find reasonable the sole 
bid submitted because it was significantly higher than the government 
estimate, and the agency subsequently determined that the solicitation 
specifications no longer reflected its actual needs.    
DECISION

EDL Construction, Inc. protests the cancellation after bid opening of 
invitation for bids (IFB) No. 98-04, issued by the United States 
Section of the International Boundary and Water Commission 
(Commission), for various improvements at the South Bay International 
Wastewater Treatment Plant (SBIWTP) in San Diego County, California.  
The Commission rejected EDL's bid, the only one submitted, and plans 
to resolicit the requirement under a revised solicitation.    

We deny the protest.

The IFB, issued as a total small business set-aside on June 8, 1998, 
contemplated the award of a fixed-price contract for various 
improvement projects at the SBIWTP, including:  installation of a 
30-inch emergency sewer connection replacement, demolition of existing 
piping and isolation valve, and grading improvements; installation of 
an 18-inch gravity sewer pipe; installation of access ladders and 
platforms for five influent pumps; repair of existing security gate 
no. 5; and installation of gate control improvements at gate nos. 2, 3 
and 4.  The IFB requested a single price for all of the work.

At bid opening on August 20, EDL's bid of $974,334 was the only one 
received by the agency.[1]  After bid opening, the agency contacted 
the other bidders on the bidder's mailing list to determine why they 
had not submitted bids.  Some firms had been unable or unwilling to 
bid, others cited repeated delays in the procurement process.  The 
agency also conducted a price analysis to determine the price 
reasonableness of EDL's bid.  The agency reviewed its independent 
government estimate (IGE) of $832,200 and, after finding its estimate 
reasonable and fair, noted that EDL's price of $974,334 was $142,134 
or 17 percent higher than the government estimate.  

Based on the significant difference between EDL's bid and the 
government's estimate, the contracting officer concluded that she 
could not find EDL's price reasonable.  Additionally, the agency 
determined that the scope of the work had changed since the IFB was 
issued.  In particular, the agency no longer requires the repair of 
gate no. 5, but instead requires a wider entrance road on the south 
side of the grit bin storage area, and construction of the Primary 
Effluent Return Connection (PERC) Project.  The PERC project is a 
system to pump treated effluent back to Mexico in the event of a 
failure of the South Bay Ocean Outfall.  The Commission determined 
that the changed requirements are material and will have a significant 
cost impact.  By revising the specifications, the agency also 
anticipates cost savings in certain contract administration services.

On October 21, pursuant to FAR  sec.  14.404-1(c)(6), the Commission 
canceled the IFB on the basis that only one bid was received and the 
contracting officer could not determine the reasonableness of the bid 
price and, pursuant to FAR  sec.  14.404-1(c)(2), because the 
specifications required revision.  The agency determined to cancel and 
resolicit the requirement, so notified the protester on November 5, 
and this protest to our Office followed.

In its protest, EDL challenges, in essence, the validity of the 
Commission's position that the needs have changed in a manner which 
requires revising the IFB specifications, and the propriety of the 
agency's conclusion that the protester's bid price cannot be 
determined reasonable.  Specifically, EDL asserts that the PERC 
project "was not needed to complete this project as defined in the 
[Commerce Business Daily] or [a] project requirement at time of BID."  
Comments at 3.  EDL also questions the Commission's failure to examine 
EDL's worksheets and argues that its bid was only 14.6 percent higher 
than the IGE.  EDL argues that the agency improperly failed to 
promptly notify the protester of the cancellation and argues that the 
agency led the protester to believe that, because only one bid had 
been received, the agency would convert the IFB to a negotiated 
procurement and conduct discussions with EDL.  The protester complains 
that the agency "waited 
15 days after canceling the invitation and continued to take phone 
calls and messages in regards to negotiating this project."  Comments 
at 2.  

An IFB may be canceled after bid opening where there is a compelling 
reason to do so.  FAR  sec.  14.404-1(a)(1).  Such a reason exists when 
only one bid is received and the agency cannot determine the 
reasonableness of the bid price.  FAR  sec.  14.404-1(c)(6); Hoboken 
Shipyards, Inc., B-223581, B-223965, Sept. 19, 1986, 86-2 CPD  para.  324 at 
2.  Here, the agency's determination was based on a comparison of the 
EDL bid with the IGE, which has not been shown to be incorrect.  The 
record shows, and our calculations confirm, that EDL's price was 
substantially (more than 17 percent) higher than the government 
estimate.  While EDL complains that the Commission should have 
examined its worksheets, there is no requirement that the agency do 
so; a determination of price reasonableness may be based upon 
comparisons with government estimates, past procurement history, 
current market conditions, and any other relevant factors.  FAR  sec.  
15.404-1(b)(2); Hoboken Shipyards, Inc., supra, at 3.   In view of the 
significant difference in the IGE and EDL's price, we conclude that 
the agency's determination concerning EDL's bid price was reasonable.  
Since cancellation of an IFB is permitted where the only bid received 
cannot be determined to be reasonable, there is no basis to object to 
the agency's cancellation of the IFB.    

Additionally, cancellation after bid opening is proper when an award 
under the solicitation would not serve the actual needs of the 
government.  Environmental Safety Consultants, Inc., B-241714, Feb. 
26, 1991, 91-1 CPD  para.  213 at 2.  Here, as noted above, the agency 
determined that its needs had changed since it issued the IFB.  These 
changes require revisions to solicitation specifications which appear 
to be sufficiently material to warrant cancellation of the IFB.  Id.  
While EDL complains that the "PERC project was not needed," the 
determination of an agency's needs and the best method of 
accommodating them is primarily within the agency's discretion, which 
we will not question unless the record clearly shows that it was 
without a reasonable basis.  Cycad Corp., B-255870, Apr. 12, 1994, 
94-1 CPD  para.  253 at 2-3.  The protester offers no support for its 
contention in this regard, and there is nothing in the record to 
suggest that the PERC project is not needed by the agency.  
Accordingly, the need to revise the solicitation specifications 
provided a valid and independent basis for the agency to cancel and 
resolicit.    

Finally, the protester alleges that the agency misled EDL to believe 
the requirement would be negotiated and did not promptly notify EDL of 
the agency's determination to cancel the IFB.  While the record shows 
that the protester repeatedly contacted the agency regarding the 
status of the procurement, the agency reports that its personnel never 
stated that the original IFB would be converted to a negotiated 
procurement.  Thus, EDL's presumption to the contrary was misplaced.  
With respect to the allegedly delayed notification to EDL, FAR  sec.  
14.404-1(c), which provides the underlying authority for cancellation 
here, does not contain any particular time constraints for notifying 
bidders of a cancellation and, in any event, failure on the part of an 
agency to provide timely notification would be a procedural matter 
which would not affect the validity of the agency's determination.  
See Continental Serv. Co., B-258807, Feb. 15, 1995, 95-1 CPD  para.  88 at 
4.[2]

The protest is denied.

Comptroller General
of the United States
  
1. The IFB had been sent to 29 prospective bidders.

2. The protester received the agency report on December 9, 1998, and, 
because of document disputes was granted an extension of time in which 
to file its comments.  In its comments on the protest, filed with our 
Office on December 21, the protester alleged, for the first time, that 
Malcolm Pirnie, Inc., which prepared the IGE and reviewed EDL's bid 
price, has a conflict of interest because it "will benefit financially 
from the cancellation of this IFB."  Comments at 2.  This allegation 
is not for consideration on the merits because it is untimely.  Under 
our Bid Protest Regulations, this allegation, which in any event is 
not supported in the record, was required to have been filed within 10 
days of when the protester knew or should have known the basis for 
protest.  Bid Protest Regulations  sec.  21.2(a)(2) (1998).  EDL was 
provided with the information that should have put it on notice of 
this protest ground on December 9, upon receipt of the agency report, 
but did not raise the issue until its comments filed more than 10 days 
later.