TITLE:   Quality Inn & Suites Conference Center, B-283468, October 20, 1999
BNUMBER:  B-283468
DATE:  October 20, 1999
**********************************************************************
Quality Inn & Suites Conference Center, B-283468, October 20, 1999

Decision

Matter of: Quality Inn & Suites Conference Center

File: B-283468

Date: October 20, 1999

Phillip E. Johnson, Federal Contract Specialists, Inc., for the protester.

COL Nicholas P. Retson and CPT David J. Goetz, Department of the Army, for
the agency.

John L. Formica, Esq., and James A. Spangenberg, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

Agency properly canceled a solicitation for lodging and transportation after
bid opening where the bid prices were reasonably determined to be
unreasonably high because they were well more than twice the prices paid
under the predecessor contract and the independent government estimate, and
where the protester's bid price was itself considerably higher than the
price purportedly established by the protester as reasonable based upon its
own market survey.

DECISION

Quality Inn & Suites Conference Center protests the cancellation of
invitation for bids (IFB) No. DABT57-99-B-0002, issued by the Department of
the Army, for lodging and transportation for the School of Cadet Command,
Fort Monroe, Virginia.

We deny the protest.

The IFB required that the contractor provide accommodations located within 5
miles of Fort Monroe. The solicitation also required that the contractor
provide transportation to and from certain local airports, bus and train
stations and the accommodations upon the arrival and departure of the
students attending the school, as well as daily transportation between the
accommodations and Fort Monroe. Agency Report, Tab 3, IFB, section C,
Performance Work Statement, at 5-7. The IFB provided for the award of a
requirements contract for a base period of 1 year with two 1-year options.
Id. at B-1, B-2, F-1, I-7, I-8.

The agency received two bids. Holiday Inn Hampton Hotel & Conference Center
submitted the low bid of $1,853,100, or $58 per room, and the protester
submitted a bid totaling $2,315,497, or $74.55 per room. Contracting
Officer's Statement at 2; Agency Report, Tab 4, Abstract of Bids.

Quality Inn filed a protest with the contracting agency, challenging the
responsiveness of Holiday Inn's low bid. Agency Report, Tab 10. The agency
did not answer this protest, but found that the bids received were
unreasonably high based upon the agency's independent government estimate
(IGE), market research, and the prices paid on the predecessor contract, and
therefore cancelled the solicitation. Contracting Officer's Statement at
2-3. This protest followed.

Quality Inn argues that its bid was not unreasonably high, but rather the
agency's estimate was unreasonably low. The protester also questions the
results of the agency's market research, and the validity of using the
prices paid on the predecessor contract as an aid in determining the
reasonableness of the prices bid in response to this IFB. Protest at 4.
Quality Inn also argues, as it did in its agency level protest, that the low
bid submitted by Holiday Inn should be rejected as nonresponsive. The
protester concludes that it should be awarded the contract at its bid price
of $2,315,497 ($74.55 per room).

An IFB may be canceled after bid opening if the prices of all otherwise
acceptable bids are unreasonable. Federal Acquisition Regulation sect.
14.404-1(c)(6). The determination that prices are unreasonable is a matter
of administrative discretion that we will not disturb unless the
determination is unreasonable or there is a showing of fraud or bad faith on
the part of contracting officials. Howard W. Pence, Inc., B-277735.2, Nov.
21, 1997, 97-2 CPD para. 150 at 2. An agency may select whatever price analysis
techniques will ensure a fair and reasonable price, including relying on
such factors as government estimates, procurement history, current market
conditions, and any other relevant factors, including those that have been
revealed by the competition itself. Nomura Enter., Inc., B-271215, May 24,
1996, 96-1 CPD para. 253 at 2. We have found, for example, that the cancellation
of an IFB was justified where the low responsive bid exceeded the government
estimate by as little as 7.2 percent. Building Maintenance Specialists,
Inc., B-186441, Sept. 10, 1976, 76-2 CPD para. 233 at 4.

In finding that the bids submitted were unreasonably high, the agency points
out that under the predecessor contract, the price paid per room for the
base period was $19.50 (for 10,450 rooms), for the first option period was
$21.50 (for 11,000 rooms), and for the second option period was $22.50 (for
11,000 rooms). Agency Report, Tab 7, Determination and Findings for
Rejection of Bids, at 2. That is, the prices per room bid by Holiday Inn and
the protester are more than twice and three times, respectively, the prices
paid during the last option year of the predecessor contract. The agency
also compared the prices bid with the IGE for the requirement of $22.50 per
room (which totaled $718,875 and apparently was based upon the prices paid
under the predecessor contract) with the same results.

The agency states that it also performed market research by reviewing the
prices paid under recent purchase orders and by conducting a telephone
survey, and found that the average price, without taking into account either
transportation or any discount for ordering a large number of rooms, was $33
per room. Id.

The protester disputes the accuracy of the IGE and the viability of
comparing the prices paid under the predecessor contract to the prices bid
here, arguing that it is unreasonable for the agency to expect that "a price
of a single room with the transportation as required for this contract that
has been paid over the last 12 months to remain the same for the next 3
years." Protester's Comments at 3. The protester also asserts that it
conducted its own market survey. Specifically, the protester included two
survey sheets, one of which stated only that the IGE of $22.50 per room for
the lodging and transportation required by this contract was too low, while
the other listed a "reasonable price" for the required lodging and
transportation services of $55 per room. Id. at exhs. A, B. The protester
concludes that, because the results of its market survey differ from the
results of the agency's market survey, the agency's market survey was
"insufficient." Id. at 2.

The protester has provided no basis for our Office to object to the agency's
cancellation of the IFB because the prices bid were unreasonably high. The
agency's determination was based upon the comparison of the prices bid with
the government estimate, the current contract price, and a market survey,
all of which are valid bases for determining the fairness of bid prices.
Logistics Int'l, Inc., B-254810, Jan. 21, 1994, 94-1 CPD para. 28 at 2-3.
Although the protester has challenged the propriety of certain of the
agency's conclusions, for example, the agency's development of an IGE that
equates to the current contract price without accounting for any price
escalation over the possible 3-year term of the contract, that challenge
does not account for the enormous disparity between the prices bid and the
IGE. We note here that even the evidence furnished by the protester, such as
its market survey indicating that $55 is a reasonable price per day for the
lodging and transportation requirements set forth in the IFB, indicates that
the protester's bid (which, based upon the protester's arguments here, is
the only otherwise acceptable bid submitted in response to the IFB) is
unreasonably priced. That is, the protester's bid price of $74.55 per room
exceeds by 36 percent the price purportedly established as reasonable by the
protester's own market survey. In sum, under the circumstances here, we have
no basis to object to the agency's determination to cancel the solicitation
because the prices bid were unreasonably high.

The protest is denied.

Comptroller General
of the United States