TITLE: B-298355, Glen/Mar Construction, Inc., August 3, 2006
BNUMBER: B-298355
DATE: August 3, 2006
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B-298355, Glen/Mar Construction, Inc., August 3, 2006

   Decision

   Matter of: Glen/Mar Construction, Inc.

   File: B-298355

   Date: August 3, 2006

   Mary E. Brown for the protester.

   Phillipa L. Anderson, Esq., Karen A. Nappo, Esq., and Charlma J. Quarles,
   Esq., Department of Veterans Affairs, for the agency.

   Paula A. Williams, Esq., and Michael R. Golden, Esq., Office of the
   General Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Cancellation of request for proposals for construction project was
   reasonable where proposals received were substantially higher than
   agency's available funding.

   DECISION

   Glen/Mar Construction, Inc. protests the cancellation of request for
   proposals (RFP) No. 260-06-01648, issued by the Department of Veterans
   Affairs (VA) to provide construction services at the VA Medical Center in
   Portland, Oregon. Glen/Mar contends that the agency lacked a reasonable
   basis for the cancellation and also challenges the agency's stated
   intention to consider issuing the resolicited project on an unrestricted
   basis.

   We deny the protest.

   On March 29, 2006, the VA issued the RFP as a service-disabled
   veteran-owned small business (SDVOSB) set-aside for construction services
   at the specified VA building. Offerors were requested to propose fixed
   prices for a base line item and for two alternate line items, each of
   which reflected deletions from the required work. Offerors were informed
   that a single award would be made on the base line item, but in the event
   "funding does not allow selection of [the base line item]," the agency
   reserved the right to "reduce the scope of work for any resultant contract
   by selection of one of the alternate [line items]." RFP at 5.

   Two proposals, including Glen/Mar's, were received by the solicitation's
   May 11 extended closing date. The contracting officer reviewed the
   proposals and concluded that each proposal significantly exceeded the
   available funding for this project even if the deductive alternate line
   items were exercised. After confirming that no additional funds were
   available to support an award selection, the contracting officer canceled
   the solicitation. This protest followed.

   Glen/Mar argues that the agency's decision to cancel the solicitation
   lacks a reasonable basis. The protester questions the timing of the
   agency's decision to cancel, alleging that the contracting officer should
   have "attempted negotiations" which "would have confirmed the Contracting
   Officer['s] speculation and would have provided merit to his immediate
   cancellation of this solicitation." Protester's Comments at 2.

   A contracting agency need only establish a reasonable basis to support a
   decision to cancel an RFP. 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 proposals have been submitted and evaluated.
   Quality Support, Inc., B-296716, Sept. 13, 2005, 2005 CPD para. 172 at 2.
   It is well established that an agency's lack of funding for a procurement
   provides a reasonable basis for cancellation, as agencies may not award
   contracts that 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. Here, the agency reports that both
   proposals exceeded the available funding for this project, and the agency
   has submitted documents showing that additional funds were not available.
   Under these circumstances, we have no basis to object to the cancellation.

   Although Glen/Mar contends that negotiations "would have and could have
   resolved any budget constraints," Protest at 3, the protester's belief
   that negotiations might have resulted in reducing the offerors' proposed
   pricing does not render unreasonable the contracting officer's decision to
   cancel the solicitation. In any event, there was a significant difference
   between the pricing proposed and the available funding, which made it
   unlikely that negotiations, without a significant reduction in the scope
   of the contract requirements, would have proved successful.

   In the absence of a showing of bad faith on an agency's part in connection
   with a funding decision (which is neither alleged nor otherwise evident
   here), there is no basis to require an agency to go forward with a
   procurement given that there is insufficient funding for the project.
   James M. Carroll--Recon., supra. Procurement officials are presumed to act
   in good faith and in order for our Office to conclude otherwise, the
   record must show that procuring officials intended to injure the
   protester. Cycad Corp., B-255870, Apr. 12, 1994, 94-1 CPD para. 253 at 5.
   Since the required showing has not been made, we have no basis to question
   the agency's decision to cancel the RFP because of insufficient funding.

   Finally, regarding the protester's objection to the agency's stated
   intention to consider resoliciting the project on an unrestricted basis,
   rather than as an SDVOSB set-aside, the matter is premature at this time.
   Our Office considers protests against specific procurement actions and not
   allegations of anticipated future improprieties. See Ystueta, Inc.,
   B-296628.4, Feb. 27, 2006, 2006 CPD para. 46 at 2-3.

   The protest is denied.

   Gary L. Kepplinger
   General Counsel