TITLE:  Matter of:   C-Cubed Corporation
BNUMBER: B-289867 
DATE:  April 26, 2002
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Decision

Matter of:   C-Cubed Corporation

File:            B-289867

Date:              April 26, 2002

Eric Moe, Esq., for the protester.
Roy E. Potter, Esq., Government Printing Office, for the agency.
Jacqueline Maeder, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

Contracting agency properly canceled invitation for bids after opening where
it reasonably determined that solicitation's estimates no longer represented
its actual needs.

DECISION

C-Cubed Corporation protests the post-bid opening cancellation of invitation
for bids (IFB) No. B541-S, issued by the Government Printing Office (GPO)
for production and distribution of certain digitized documents.  C-Cubed,
the low bidder, contends that GPO did not have a compelling reason to cancel
the solicitation, and that it therefore should have been awarded the
contract.

We deny the protest.

The IFB, issued November 7, 2001, contemplated the award of a fixed-price
requirements contract for a base year, with 1 option year, for the
production of documents from electronic files and/or camera-ready copy.  The
contractor was to process and copy the documents to 3.5-inch diskettes
and/or CD?ROMs, or make them available at Internet sites; prepare the
identification labeling for the diskettes and CD-ROMs; pack the finished
products; and ship the products to the requesting activity.  The IFB listed
10 contract line items (CLIN)--6 under section I (data entry requirements),
2 under section II (mailing requirements), and 2 under section III
(additional operations)--and required bidders to submit a unit price for
each.  IFB, Section 4--Schedule of Prices, at 13-14.

CLINs 5 and 6 under section I requested unit prices for the production of
each 3.5?inch diskette and each CD-ROM, and CLINs 1 and 2 under section II
requested unit prices for producing and affixing mailing labels for each
diskette and each CD?ROM.    Extended prices and the low bid were to be
determined by multiplying the unit prices by the estimated quantities in IFB
Section 3 (Determination of Award).  The estimated quantities (as relevant
here) were:  125,000 diskettes, 7,000 CD-ROMs, 50,000 mailing labels for the
diskettes, and 50,000 mailing labels for the CD-ROMs.

GPO received four bids by the November 27 bid opening date.  C-Cubed's bid
was low at $23,225.  The other three bids were $108,760.75, $141,570, and
$282,150.  Because of the disparity in prices, GPO asked C-Cubed, which is
the incumbent contractor, to confirm its bid.  Agency Report (AR) at 2.
After C-Cubed did so, the agency again asked the protester to review its
prices, with specific emphasis on its ?no charge? for four CLINs, including
CLIN 5 under section I (production of 125,000 diskettes), and both CLINs
under section II (preparing and affixing labels for mailing diskettes and
CD?ROMs).  Protest, exh. 1, C-Cubed Bid, at 14-15.  The agency was
particularly concerned about C-Cubed's ?no charge? for CLIN 5, since it was
the likely highest dollar value CLIN.  AR, exh. D, Contracting Officer's
Memorandum, at 1.  C?Cubed again confirmed its prices, explaining that it
bid ?no charge? for the production of the diskettes because ?[b]ased on the
current usages under this contract and current technology requirements,?
this item ?is rarely if ever used.?  Protest, exh. 4, at 1.  C-Cubed further
stated that it bid ?no charge? for the diskette mailing labels because there
was no demand for them, and that it included the CD?ROM labeling costs in
the CD?ROM production costs.  Id.

The agency reviewed the orders that had been issued under the current
contract, and confirmed that CD-ROMs, not diskettes, were the major item
ordered the previous year.  AR at 2.  The agency therefore determined that
the IFB estimates did not accurately reflect its needs.  The agency also
found that C-Cubed would not have been the low bidder if corrected estimates
were applied to the bidders' unit prices.  Id.  GPO concluded that the
?discrepancies identified in the Determination of Award figures are
significant in nature? and ?do not reflect the actual work to be performed
on the contract, therefore, the actual cost of the contract to the
Government could not be determined.?  AR, exh. E, Cancellation and
Readvertisement, at 1.  Accordingly, GPO canceled the IFB on January 24,
2002.  Subsequently, it issued a revised, undated solicitation in which the
estimate for diskettes was reduced from 125,000 to 1,000, the estimate for
CD-ROMs was increased from 7,000 to 50,000, and the estimates for preparing
mailing labels for the diskettes and the CD-ROMs were reduced from 50,000 to
500 and 50,000 to 40,000, respectively.

C-Cubed argues that the cancellation was improper.  The protester contends
that, because the IFB contemplated award of a requirements-type contract,
GPO was not obligated to order any particular quantity and, consequently,
any misstated estimates did not provide a compelling reason to cancel the
IFB.  Protest at 2.

GPO's Printing Procurement Regulation (PPR) requires that there be a
compelling reason to cancel an IFB after bid opening.  PPR, Chapt. XII, sect. 2;
see News Printing, Inc., B-274773.2, Feb. 11, 1997, 97-1 CPD para. 68 at 2.
(This corresponds to Federal Acquisition Regulation sect. 14.404-1, to which
GPO, as a legislative branch agency, is not subject.)  Determining whether a
compelling reason exists involves the exercise of the contracting agency's
judgment; we review such a determination only to ensure that it is
reasonable.  News Printing, Inc., supra.

GPO's decision to cancel the solicitation here was reasonable, since the
record shows that the agency's needs are grossly different from those
reflected in the canceled IFB, and that using the corrected estimates would
change the outcome of the competition.  The reasonableness of correcting the
estimates is only underscored by C-Cubed's status as the incumbent, since it
was uniquely positioned to recognize and take advantage of the inaccuracies
in the initial estimates.  The fact that the government is not obligated
under a requirements contract to purchase any particular quantity, as
C-Cubed asserts, has no bearing on the propriety of the cancellation.  This
is because, absent reasonably reliable quantity estimates, firms have no
reasonable basis to prepare their bids, and the government cannot determine
which bid will actually result in the low overall cost of performance.
Beldon Roofing & Remodeling Co., B-277651, Nov. 7, 1997, 97-2 CPD para. 131 at
7.  We conclude that the substantial change in the estimated quantities
provided a reasonable basis for canceling the solicitation.

Anthony H. Gamboa
General Counsel