TITLE:  Rice Services, Inc.; Watson Services, Inc., B-293861; B-293861.2; B-293861.3; B-293861.4, June 15, 2004
BNUMBER:  B-293861; B-293861.2; B-293861.3; B-293861.4
DATE:  June 15, 2004
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   Decision

   Matter of:   Rice Services, Inc.; Watson Services, Inc.

   File:            B-293861; B-293861.2; B-293861.3; B-293861.4

   Date:              June 15, 2004

   Keith L. Baker, Esq., and William T. Welch, Esq., Barton, Baker, McMahon,
Hildebrant & Tolle, for Rice Services, Inc., and Philip M. Dearborn, Esq.,
and JenniferA M. Morrison, Esq., Piliero, Mazza & Pargament, for Watson
Services, Inc., the protesters.

   Audrey Roh, Esq., Department of Homeland Security-United States Coast
Guard, for the agency.

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

   DIGEST

   Protest against cancellation of solicitation is denied where agency
reasonably determined that solicitation did not adequately set forth the
agency's needs.

   DECISION

   Rice Services, Inc. and Watson Services, Inc. protest the cancellation of
request for proposals (RFP) No. DTCG84-03-R-AA1049, issued by the United
States Coast Guard for full food services at the Coast Guard Academy.

   We deny the protests.

   The RFP, issued as a set-aside for Historically Underutilized Business
Zone (HUBZone) concerns, contemplated the award of a fixed-price contract,
for a base period of 1 year, with four 1-year options and five additional
award term* years, to provide all food, personnel, management,
supervision, materials and supplies necessary for full food services at
the Coast Guard Academy.  Among other things, the contractor will be
required to manage the dining facilities, stock, replenish, cook and serve
food, clean the facilities, equipment and utensils, bus tables, and
perform cashier services.  RFP, Performance Work Statement (PWS), at 5.

   Award was to be made to the offeror submitting the proposal determined to
represent the best value to the government based upon the evaluation
factors of past performance, technical approach, management approach, and
price. [1]  Past performance and technical approach were equal in
importance and most important,* while management approach and price were
equal in importance and less important* than the past performance and
technical approach factors.  The RFP provided for the submission of
written proposals as well as oral presentations, and informed offerors
that the agency intended to make award without discussions. 

   The Coast Guard received proposals from Wolf Management Services, Inc.,
Rice, and Watson, by the solicitation's closing time.  Based on the
evaluation of the written proposals and oral presentations, Wolf's
proposal was evaluated as excellent/low performance risk* under the past
performance factor, and good+* under both the technical approach and
management approach factors, at a proposed price of $52,063,800; Watson's
proposal was evaluated as excellent/low performance risk* under the past
performance factor, marginal* under the technical approach factor, and
good* under the management approach factor, at a proposed price of
$55,079,563; and Rice's proposal was evaluated as adequate/moderate
performance risk* under the past performance factor, good* under the
technical approach factor, and marginal* under the management approach
factor, at an evaluated price of $51,453,881.  The source selection
authority (SSA) determined that Wolf's proposal represented the best value
to the agency.  Source Selection Statement at 1-4.

   Upon receipt of the required preaward notice that Wolf was the apparent
successful offeror, Federal Acquisition Regulation (FAR) S
15.503(a)(2)(C), both Rice and Watson filed protests with the agency
challenging the eligibility of Wolf for award.  In accordance with FAR S
19.306, the protests were forwarded to the Small Business Administration
(SBA), which ultimately determined that Wolf does not qualify as a HUBZone
[small business concern] for this procurement.*  SBA Decision, Feb. 3,
2004. 

   The Coast Guard then reviewed the evaluations of Watson's and Rice's
proposals and determined that cancellation of the solicitation would be
appropriate.  In this regard, the agency noted that Watson's proposal had
been evaluated as marginal* under the technical approach factor because it
did not clearly meet some specified minimum performance or capability
requirements necessary for acceptable contract performance.* 
Justification for Cancellation at 2.  For example, the agency pointed out
that Watson's proposal was missing training meals and key menu nutritional
information*; failed to provide the required number of menu cycles; and
that the menus that were submitted contained a lot of repetition not
conforming to PWS requirements in many cases.*  Id. at 2-3.  As for Rice's
proposal, the agency noted that although the proposal was evaluated
overall as good* under the technical approach factor, it received a rating
of only marginal* under the food/menus/table service subfactor, the most
important subfactor of the technical approach factor.  In this regard, the
Coast Guard noted that, for example, Rice's proposal was missing training
meals and key menu nutritional information.*  Id. at 3.  The agency also
noted that Rice's proposal was determined to be marginal* under the
management approach factor, and specifically evaluated under the corporate
experience subfactor, the most important subfactor of the management
factor, as failing to demonstrate that Rice had relevant corporate
experience.  Id.  The agency concluded that there is no acceptable offer
from a qualified HUBZone small business concern,* and therefore that
cancellation of this solicitation . . . is appropriate and is in the best
interest of the Coast Guard.*  Id. at 6.   

   Watson and Rice both requested and received debriefings, and these
protests followed.  The protesters argue that the Coast Guard's evaluation
of their respective proposals and the resulting cancellation were
unreasonable, with each protester contending that it should be awarded the
contract.  In challenging the propriety of the evaluation, both protesters
assert, among other things, that the agency failed to evaluate their
respective proposals in accordance with the terms of the RFP, and
specifically question the agency's determination that the proposals failed
to provide the required number of menus and nutritional information.  Rice
Protest, Ba**293861, at 4; Watson Protest, B-293861.2, at 11; Rice
Protest, B-293861.3, atA 4. 

   In its report, the Coast Guard maintains that the cancellation of the RFP
was justified because neither Watson nor Rice submitted an acceptable
proposal.  The agency also asserts that the cancellation was justified
because the solicitation itself was defective with regard to the statement
of requirements as evaluated under the food/menus/table service subfactor
of the technical approach factor.

   Specifically, the food/menus/table service subfactor provided, in relevant
part, that offerors shall develop (4) five-week cycle menus and 12 or more
training menus (to include low-fat, protein, and carbohydrate meals) . . .
to reflect healthy foods.*  The food/menus/table service subfactor further
provided that [a]ll menus shall be developed in accordance with the
requirements set forth in the PWS*; that [d]aily menus shall provide a
minimum of 3,000 calorie per cadet*; and that [e]mphasis should be on
variety and creativity.*  RFP at 62; RFP amend. 1, at 3.

   The Coast Guard explains that, with regard to the training menus, it was
seeking 12A days worth of menus consisting of one breakfast, one lunch,
and one dinner for each day,* that is, 12 different combinations of
breakfasts, lunches, and dinners to constitute a different menu for each
day.*  Agency Report (AR), at 32.  However, as pointed out by the agency,
and conceded by the protesters, in response to the requirement for 12 or
more training menus,* both Watson and Rice detailed in their proposals
only 12A specific meals, including four breakfasts, four lunches, and four
dinners.  The Coast Guard further explains that the requirement under the
food/menus/table service subfactor that all menus were to reflect healthy
foods* was intended to elicit from each offeror information as to how much
fat, protein, carbohydrates and calories were in each serving of each food
item, and a showing that the daily menus would meet the contracting
agency's requirements.  RFP at 62; AR at 33.  However, as noted by the
agency, neither Watson nor Rice included in their proposals the detailed
nutritional breakdown for the proposed meals.  The agency reports that it
intends to review the areas in the RFP that were evidently confusing or
misunderstood by some of the offerors, and then will revise the
solicitation, including especially the solicitation language regarding the
menus and the PWS, to make the description of the agency's requirements
clearer.[2]  Contracting Officer's Statement at 6.

   Where an agency determines that a solicitation does not accurately reflect
its needs, cancellation is appropriate.  Rice Servs., Ltd., B-284997.5,
Mar. 12, 2002, 2002 CPD PA 59 at 4.  Further, in a negotiated procurement,
an agency has broad authority to decide whether cancellation is
appropriate, and provided an agency has a reasonable basis for doing so,
it may cancel a solicitation regardless of when the information
precipitating the cancellation first surfaces.  Id.

   Here, we find that the Coast Guard had a reasonable basis to cancel the
solicitation.  As explained by the agency, and apparently conceded by the
protesters, while the Coast Guard sought the submission by offerors of
12A different training meal menus, each consisting of breakfast, lunch and
dinner, the solicitation did not clearly provide for this.  Accordingly,
the solicitation was flawed in this regard.  Additionally, although the
Coast Guard sought proposals that included detailed nutritional
information for the food items comprising the menus in order for the
agency to ensure that the nutritional needs of Coast Guard personnel would
be met by the selected offeror, the agency reasonably concluded based upon
its review of the RFP, and in light of the proposals received, that the
RFP failed to adequately convey this to the offerors.  We note that the
agency's conclusion in this regard is consistent with the position of
Watson and Rice in their initial protests to our Office, where they argued
that the agency, in downgrading proposals that did not include specific
nutritional information, was improperly imposing a requirement that was
not set forth in the solicitation.  Rice Protest, B-293861, at 4; Rice
Protest, B-293861.3, at 3; Watson Protest, Ba**293861.2, at 11.  In sum,
the solicitation failed to adequately set forth the agency's needs with
regard to training meal menus and nutritional information regarding the
menu items proposed, and the agency's cancellation of the solicitation is
thus unobjectionable.

   In reaching this conclusion, we have considered Watson's argument that the
cancellation of the solicitation was only a pretext, that is, that the
agency's motivation in fact was to avoid awarding a contract on a
competitive basis.  Watson Comments at 4-5.  We have closely examined the
reasonableness of the agency's actions and, as set forth above, find the
cancellation to be reasonable in light of the provisions of the
solicitation that were, as conceded by Watson, ambiguous* or requiring
clarification.  Id. at 10-14; see SMF Sys. Techs. Corp., Ba**292419.3,
Nov. 26, 2003, 2003 CPD P 203 at 4.  For example, in arguing that the
agency's evaluation of its proposal under the food/menus/table service
evaluation subfactor was unreasonable, the protester comments that [o]nce
again, the Agency is penalizing Watson for its own inability to clearly
draft a Solicitation which elicits the same response from all offerors.* 
Watson Comments at 13-14.  Further, the fact that the Coast Guard
discovered the above-noted deficiencies in the RFP after the SBA found
Wolf ineligible for award, and did not assert that these deficiencies
justified the cancellation of the solicitation until it filed its agency
report in response to the protests, does not preclude cancellation of the
RFP.  An agency may properly cancel a solicitation regardless of when the
information precipitating the cancellation arises.  Admiral Towing and
Barge Co., B-245600; B-245602, Jan. 16, 1992, 92-1 CPD PA 83 at 6; see
Rice Servs., Ltd., supra, at 8 (the tardiness of the agency's
determination that a solicitation should be cancelled does not alter the
overriding principle that an agency should not proceed with a procurement
when it reasonably believes that the resulting contract will fail to meet
the agency's requirements).[3]

   The protests are denied.

   Anthony H. Gamboa

   General Counsel

   ------------------------

   [1] The source selection plan provided that proposals would be evaluated
under the past performance factor as excellent/low performance risk,*
good/low performance risk,* adequate/moderate performance risk,*
marginal/high performance risk,* poor/very high performance risk,* or
neutral/unknown confidence,* and under the technical and management
approach factors as excellent,* good,* marginal,* or poor.*  Source
Selection Plan at 7.

   [2] As noted by the agency, in contrast to Watson and Rice, Wolf
apparently understood the agency's intentions in this regard since Wolf
submitted a proposal that detailed the nutritional information and
training meal menus as desired by the agency.

   [3] Watson also argues that it should be reimbursed for the costs of
preparing its proposal and conducting its oral presentation, because the
agency should have been aware earlier of the deficiencies in the
solicitation.  Watson Comments at 17-19.  The expenses Watson (and Rice)
incurred in preparing their proposals and conducting their oral
presentations are typical costs of doing business and competing for
government contracts.  Under the circumstances here, where the agency's
actions were reasonable, there is no basis for the recovery of such
costs.  See 4 C.F.R. S 21.8 (a) (2004); Kos Kam-Pelasgus, Joint Venture,
B-225841, Apr. 1, 1987, 87-1 CPD PA 370 atA 3.