TITLE: B-296483, Rand & Jones Enterprises Company, Inc., August 4, 2005
BNUMBER: B-296483
DATE: August 4, 2005
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B-296483, Rand & Jones Enterprises Company, Inc., August 4, 2005

   Decision

   Matter of: Rand & Jones Enterprises Company, Inc.

   File: B-296483

   Date: August 4, 2005

   Robert J. Symon, Esq., Spriggs & Hollingsworth, for the protester.

   Kenneth B. MacKenzie, Esq., and Phillipa L. Anderson, Esq., Department of
   Veterans Affairs, and John W. Klein and Kenneth Dodds, Small Business
   Administration, for the agencies.

   Guy R. Pietrovito, Esq., and James A. Spangenberg, Esq., Office of the
   General Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Agency lacked a reasonable basis to cancel a request for proposals (RFP)
   after disclosure of the offerors' proposed prices where the RFP provided
   only for a price competition and did not contain technical evaluation
   factors, the agency intends to issue an invitation for bids for this same
   requirement, and there is no basis to find the government or the integrity
   of the procurement system would be prejudiced if the RFP were not
   cancelled.

   DECISION

   Rand & Jones Enterprises Company, Inc. protests the cancellation of
   request for proposals (RFP) No. 10N3-215-04, issued by the Department of
   Veterans Affairs (VA) for construction services at the agency's Medical
   Center in Northport, New York.

   We sustain the protest.

   The RFP, issued August 2, 2004, provided for the award of a fixed-price
   contract for the expansion and renovation of the VA's Medical Center in
   Northport. Offerors were requested to propose fixed prices for a base
   contract line item number (CLIN) and for several alternate CLINs, each of
   which reflected deletions from the required work. Offerors were also
   required to propose fixed prices for the maintenance of controls and
   instrumentation for the project. Offerors were informed that a "single
   award will be made on the base bid, but in the event the offer exceeds the
   funds available, a single award will be on alternate number 1." RFP at 1.

   The RFP incorporated the standard "Instructions to Offerors--Competitive
   Acquisition" clause of Federal Acquisition Regulation (FAR) sect. 52.215-1
   that informed offerors that the agency would award a contract to the
   responsible offeror whose proposal represented the best value to the
   government considering the factors and subfactors identified in the
   solicitation. No technical or non-price related evaluation factors were
   identified in the solicitation.

   The RFP also contained the standard "Notification of Competition Limited
   to Eligible 8(a) Concerns" clause of FAR sect. 52.219-18, which informed
   offerors that the solicitation was set aside for small business concerns
   certified by the Small Business Administration (SBA) for participation in
   SBA's section 8(a) program.[1] VA did not, however, offer the procurement
   to the SBA for award under the section 8(a) program as was required by
   SBA's regulations, and therefore the competition was not in fact set aside
   for section 8(a) concerns.[2] SBA Report at 2.

   On September 2, the contracting officer was notified by VA's Acquisition
   Assistance Division that the RFP did not provide any technical evaluation
   factors. Thereafter, the RFP was amended to require the submission of a
   bid bond. The agency did not, however, amend the solicitation to provide
   any technical evaluation factors.

   On September 14, VA received proposals from four firms, including Rand &
   Jones and Arrow Construction/BKC, Inc. VA publicly opened the proposals
   and disclosed the firms' proposed prices.[3] Arrow was the apparent low
   offeror for the base CLIN. However, Arrow notified the agency that it had
   made a mistake in its offered price, and requested either an upward price
   adjustment or the withdrawal of its offer.
   The contracting officer forwarded Arrow's request to VA's Acquisition
   Program Management Division, which informed the contracting officer that
   she could conduct discussions with Arrow and other offerors. This VA
   office also again informed the contracting officer that the solicitation
   did not include any technical evaluation factors. VA then discovered that
   a number of the solicitation's construction drawings required revisions.
   In addition, the proposals expired. On March 3, 2005, VA again amended the
   RFP to provide a new set of construction drawings (but did not add
   technical evaluation factors) and to establish March 24 as a new closing
   date for submission of offers.

   VA received revised proposals from the four firms, and again publicly
   opened the proposals and disclosed the firms' proposed prices. Rand &
   Jones was found to have proposed the lowest price for the base CLIN, for
   which there was apparently available funding. Arrow, which submitted the
   second lowest price for the base CLIN, protested to VA that Rand & Jones
   had graduated from SBA's section 8(a) program and was therefore not
   eligible to receive award under the RFP.[4] VA forwarded Arrow's challenge
   to SBA. SBA took no action in response to the challenge. VA subsequently
   "withdrew" the challenge to Rand & Jones section 8(a) eligibility.

   Instead, the contracting officer cancelled the RFP because it failed to
   contain any technical evaluation factors and informed the offerors that
   the agency would issue an invitation for bids (IFB) for this
   requirement.[5] See, e.g., Agency Report, Tab 15,
   VA Letter to Arrow. This protest by Rand & Jones of the cancellation of,
   and the failure to make award under, the RFP followed.

   As a general rule, in a negotiated procurement the contracting agency need
   only demonstrate a reasonable basis to cancel a solicitation after receipt
   of proposals,
   as opposed to the "compelling reason" required to cancel an IFB where the
   bids have been opened. See FAR sect. 14.404-1(a)(1); CFM Equip.
   Co.--Recon., B-251344.2, Aug. 30, 1993, 93-2 CPD para. 134 at 3. The
   standards differ because, in procurements using sealed bids, competitive
   positions are exposed as a result of the public opening of bids, while in
   negotiated procurements there is no public opening. CFM Equip.
   Co.--Recon., supra. In situations like this one, our Office has stated
   that cancellation of an RFP, even after one or more of the offerors'
   prices have been revealed, is proper where the agency has a reasonable
   basis to cancel, and the record contains plausible evidence or a
   reasonable possibility that a decision not to cancel would be prejudicial
   to the government or the integrity of the procurement system.
   See Noelke GmbH, B-278324.2, Feb. 9, 1998, 98-1 CPD para. 46 at 3-4.

   Here, the record contains no evidence, or even argument, that the
   government or the integrity of the procurement system would be prejudiced
   if the RFP were not cancelled and award were made thereunder. VA's only
   asserted basis for cancellation is that the RFP did not contain evaluation
   factors.[6] However, where, as here, a negotiated procurement does not
   provide technical evaluation factors, award is to be made to the
   responsible offeror with the lowest-priced, technically acceptable offer.
   See Omatech Serv. Ltd., B-254998, B-254998.2, Dec. 17, 1993, 93-2 CPD
   para. 329 at 3. Thus, the competition for award under the RFP was solely
   based on price. The agency does not assert that it will change any of its
   requirements but will issue an IFB, under which the sole basis for award
   is price, for the same requirements. Thus, since the basis for award under
   the RFP and IFB would be the same, the agency lacks a reasonable basis to
   cancel the RFP. Moreover, not only is neither the government nor the
   integrity of the competitive procurement system prejudiced by not
   cancelling the RFP here, but Rand & Jones, whose low competitive price for
   this same requirement has been been publicly disclosed, would be
   prejudiced if this requirement were recompeted on the basis of price.

   We sustain the protest.

   We recommend that VA award a contract to Rand & Jones under the RFP,
   if Rand & Jones is found to be responsible and if there is sufficient
   funding.
   We also recommend that Rand & Jones be reimbursed its cost of filing and
   pursuing the protest, including reasonable attorneys' fees. 4 C.F.R. sect.
   21.8(2)(1) (2005).
   In accordance with 4 C.F.R. sect. 21.8(f)(1), the protester's certified
   claim for such costs, detailing the time expended and costs incurred, must
   be submitted directly to the agency within 60 days after receipt of this
   decision.

   Anthony H. Gamboa

   General Counsel

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

   [1] The procurement was also identified on the agency's electronic
   business opportunities system as being set aside for a competitive section
   8(a) award.

   [2] SBA's regulations provide in pertinent part that "[a]ny competition
   conducted without first obtaining SBA's formal acceptance of the
   procurement for the 8(a) [business development] program will not
   considered an 8(a) competitive requirement." 13 C.F.R. sect. 124.504(b)(1)
   (2005).

   [3] The disclosure of offerors' proposed prices in a negotiated
   procurement prior to award, as was done here by VA, is prohibited. See FAR
   sections 3.104-3(a), 3.104-4.

   [4] As noted above, the procurement was not in fact set aside for section
   8(a) concerns. In any event, SBA advises that Rand & Jones was an eligible
   section 8(a) participant on the date that initial offers were submitted,
   and would therefore have been eligible for an award under the section 8(a)
   program, despite the firm's later graduation from the program. SBA Report
   at 3; see 15 U.S.C. sect. 637(a)(1)(C)(ii) (2000); 13 C.F.R.
   sect. 124.507(d).

   [5] In response to our inquiry, VA informed us that it intends to set
   aside the IFB for service-disabled veteran-owned small businesses. Under
   FAR sect. 19.1405, an agency is permitted to set aside acquisitions
   exceeding the micro-purchase threshold for service-disabled veteran-owned
   small businesses where offers are expected from two or more
   service-disabled veteran-owned small businesses and award is expected to
   be made at a fair market price. The agency does not assert, and the record
   does not indicate, that this proposed service-disabled veteran-owned small
   business set-aside was the reason the RFP was cancelled.

   [6] The RFP also did not request technical proposals.