TITLE:  CAT Flight Services, Inc., B-294186, August 17, 2004
BNUMBER:  B-294186
DATE:  August 17, 2004
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   Decision

   Matter of:   CAT Flight Services, Inc.

   File:            B-294186

   Date:              August 17, 2004

   Larry J. Bradford for the protester.

   Joshua Kranzberg, Esq., U.S. Army Materiel Command, for the agency.

   Scott H. Riback, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Protest challenging cancellation of a request for proposals is denied
where record shows that, due to a significant reduction in agency's
requirement for the solicited items, as well as the fact that agency was
able to meet its requirements under another, preexisting contract, it no
longer has a need for the items. 

   DECISION

   CAT Flight Services, Inc. protests the cancellation of request for
proposals (RFP) No.A DAAH01-03-R-0316, issued by the Department of the
Army for a quantity of ballistic aerial target systems (BATS).

   We deny the protest.

   The solicitation sought proposals to furnish a first-article quantity of
10 BATS, and subsequent production quantities ranging from 1 to 700 BATS,
during each of
4 option years, and from 1 to 2,000 BATS during a fifth option year.  The
Army received several initial proposals, established a competitive range
that included the protester, engaged in discussions with the competitive
range firms, and sought final proposal revisions (FPR).  After receiving
the FPRs, the agency requested that the offerors extend their proposal
acceptance period for 30 days.  Prior to the expiration of the extended
acceptance period, the agency canceled the RFP, stating that its need for
the BATS had been drastically reduced to a quantity of only approximately
143 per year, a requirement it could fulfill under another, preexisting
contract with another concern, Costal Metal Craft (CMC).

   The record shows that agency issued the RFP in the first instance because
of a concern that CMC would not be able to perform its contract.  In this
regard, CMC apparently experienced performance difficulties both in terms
of meeting the delivery schedule (which contemplated delivery of 100 BATS
per month), and in terms of performing at its proposed prices.  Due to
these concerns, the agency issued the current solicitation to ensure that
it would able to meet its needs for BATS.  Contracting Officer's
Statement, July 14, 2004, at 2-5.  In an effort to at least partially meet
its BATS needs while the current acquisition was being conducted, the
agency engaged in negotiations with CMC.  This resulted in a modification
of CMC's original delivery schedule (downward to 40 BATS per month) and an
increase in its unit price that was occasioned by a design modification to
the BATS.  Id.   Thereafter, in
April 2004, the agency learned that there would be a significant reduction
in the number of personnel assigned to SHORAD battalions; the agency's
requirement for BATS was correspondingly reduced, since fewer personnel
would have to be trained using the BATS.  AR, exh. E.  The agency
concluded that, in light of the reduction in its requirement to only 143
BATS per year and the revised delivery schedule under CMC's contract, it
no longer would require the BATS being solicited under the current RFP. 
The Army canceled the solicitation on this basis. 

   CAT argues that the cancellation was unreasonable because the RFP was
structured in such a way that the agency properly could have ordered any
quantity, including the significantly reduced quantity that it now states
it needs, and that it was improper for the agency to meet its requirements
under the CMC contract while
at the same time soliciting offers for a contract for the same
requirement.  CAT concludes that the agency either should make award under
the solicitation or reimburse CAT the costs associated with preparing its
proposal. 

   An agency need only advance a reasonable basis to cancel an RFP, and
cancellation is reasonable where the solicitation no longer reflects the
agency's requirements.  Daston Corp., B-292583, B-292583.2, Oct. 20, 2003,
2003 CPD P193 at 3.  Cancellation is proper no matter when the information
precipitating the cancellation comes to light, even if this results in
cancellation after the receipt of proposals.  Id.

   As discussed above, the record shows that, due to the agency's need for a
reduced quantity of BATS and CMC's ability to meet that reduced need under
its current contract, as modified, the agency no longer needed the BATS
covered by the solicitation in question.  Given these circumstances, the
cancellation was reasonable.  Daston Corp., supra.  The fact that a
contract awarded under the solicitation could have been used to meet the
agency's reduced needs is irrelevant; since the agency had a contract in
place with CMC that already covered the agency's BATS requirements, there
was nothing improper in its ultimate decision to modify that contract to
meet its needs.  The agency's actions in this regard constituted contract
administration activities, which are not subject to review under our bid
protest jurisdiction.  4 C.F.R. S 21.5(a) (2004).[2]  While it is
unfortunate that CATS incurred costs in responding to the RFP, there was
nothing improper or unreasonable in the agency's issuing the solicitation
for purposes of ensuring that it would have an adequate quantity of BATS
no matter the outcome of its negotiations regarding the terms of CMC's
contract.  Under the circumstances, the cancellation was unobjectionable. 

   There also is no basis for our Office to recommend that CAT be reimbursed
the costs associated with preparing its proposal.  We recommend the
payment of such costs only where we find that a protest is meritorious,
and there no longer is any other practicable remedy.  Locus Tech., Inc.,
B-293012, Jan. 16, 2004, 2004 CPD P 16 at 6-7.

   The protest is denied.

   Anthony H. Gamboa

   General Counsel

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   [1] The BATS is an expendable, unguided rocket powered target used to
train defensive air gunnery personnel that are assigned to the Army's
short range air defense (SHORAD) battalions. 

   [2] CAT does not allege--and the record does not reflect--that the
agency's negotiations with CMC that resulted in a change to its delivery
schedule resulted in an out-of-scope modification of CMC's contract.