TITLE: B-295882, Firetech Automatic Sprinkler, May 4, 2005
BNUMBER: B-295882
DATE: May 4, 2005
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B-295882, Firetech Automatic Sprinkler, May 4, 2005

   Decision

   Matter of: Firetech Automatic Sprinkler

   File: B-295882

   Date: May 4, 2005

   A. W. Pharris for the protester.

   Mary E. Carney, Esq., and Spencer C. Bassett, Esq., Department of Justice,
   Federal Prison Industries, for the agency.

   Susan K. McAuliffe, Esq., and Christine S. Melody, Esq., Office of the
   General Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Protest of agency's cancellation of solicitation after receipt of
   quotations is denied where record supports reasonableness of cancellation
   due to lack of available funding.

   DECISION

   Firetech Automatic Sprinkler protests the cancellation of request for
   quotations (RFQ) No. VC0088-05, issued by the Department of Justice,
   Federal Prison Industries (FPI), for the installation of a sprinkler
   system. Firetech contends that the agency lacked a reasonable basis for
   the cancellation. Firetech further challenges the agency's stated
   intention to perform the work in-house.

   We deny the protest.

   Three quotations were received by the RFQ's January 7, 2005 closing time.
   Firetech's quotation, among other things, omitted the firm's name and
   experience information; the firm was given an opportunity to submit the
   missing quotation information. The agency's subsequent review of the
   quotations, however, revealed that they all exceeded the government's
   estimate for the work. The contracting officer, who confimed the agency's
   cost estimate, recognized that the estimate served as the basis for the
   limited funding committed for the project. After confirming that no
   additional funds were available to support a selection from the quotations
   received under the RFQ, the contracting officer canceled the solicitation.
   This protest followed.

   Firetech protests the cancellation of the RFQ. The firm contends that the
   agency's cost estimate for the work must have been flawed, resulting in
   insufficient funding being committed for the work.[1]

   A contracting agency need only establish a reasonable basis to support a
   decision to cancel an RFQ; in this regard, so long as there is a
   reasonable basis for doing so, an agency may cancel a solicitation no
   matter when the information precipitating the cancellation first arises,
   even if it is not until quotations have been submitted and evaluated.
   Quality Tech., Inc., B-292883.2, Jan. 21, 2004, 2004 CPD para. 29 at 2-3;
   DataTrak Consulting, Inc., B-292502 et al., Sept. 26, 2003, 2003 CPD para.
   169 at 5. It is well-established that lack of funding for a procurement
   provides a reasonable basis for cancellation, as agencies cannot award
   contracts which exceed available funds. First Enter., B-292967, Jan. 7,
   2004, 2004 CPD para. 11 at 3-4; James M. Carroll--Recon., B-221502.3, Mar.
   24, 1986, 86-1 CPD para. 290 at 3. Further, an agency may properly cancel
   a solicitation due to funding limitations regardless of any challenge to
   the validity of the agency's underlying cost estimate which, as in this
   case, served as the basis for the funding amount; as stated above,
   agencies simply cannot create obligations that exceed available funds. See
   National Projects, Inc., B-283887, Jan. 19, 2000, 2000 CPD para. 16 at 4.
   Accordingly, given that all the quotations received here exceeded
   available funding for the work, we see no basis to question the propriety
   of the agency's decision to cancel the RFQ.

   To the extent Firetech challenges the agency's stated intention to perform
   the sprinkler installation work in-house, the matter is not appropriate
   for our review. Our Office does not generally review agency decisions to
   perform in-house work related to cancelled procurements, since such
   decisions are matters of executive branch policy, which are not within our
   bid protest function. See, e.g., RAI, Inc., B-231889, July 13, 1988, 88-2
   CPD para. 48 at 1-2. Further, the limited exception to this rule,
   involving cases where an agency utilizes the procurement system to aid in
   its determination, by issuing a competitive solicitation for the purpose
   of comparing the costs of in-house performance with the costs of
   contracting, is not at issue here. Id.

   The protest is denied.

   Anthony H. Gamboa

   General Counsel

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

   [1] The agency contends that our Office lacks jurisdiction to review
   protests of FPI procurements, arguing that FPI is a nonappropriated fund
   activity. Our Office has recently held that, since FPI is defined by
   statute as a federal agency, the agency is subject to our jurisdiction
   under the Competition in Contracting Act, 31 U.S.C. sections 3551-3556
   (2000), amended by the Ronald W. Reagan National Defense Authorization Act
   for Fiscal Year 2005, Pub. L. No. 108-375, sect. 326, 118 Stat. 1811
   (2004). USA Fabrics, Inc., B-295737, B-295737.2, Apr. 20, 2005, 2005 CPD
   para. ___ at 2-3.