TITLE: B-299165, Delaware Resource Group of Oklahoma, LLC, February 26, 2007
BNUMBER: B-299165
DATE: February 26, 2007
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B-299165, Delaware Resource Group of Oklahoma, LLC, February 26, 2007

   Decision

   Matter of: Delaware Resource Group of Oklahoma, LLC

   File: B-299165

   Date: February 26, 2007

   Jared B. Cawley, Delaware Resource Group of Oklahoma, LLC, for the
   protester.

   Alton E. Woods, Esq., and Sherry K. Kaswell, Esq., Department of the
   Interior, for the agency.

   Linda C. Glass, Esq., and Glenn Wolcott, Esq., Office of the General
   Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Agency properly canceled invitation for bids and terminated protester's
   contract awarded thereunder where the agency reasonably determined that
   there were material flaws in the procurement process on which award to the
   protester was based.

   DECISION

   Delaware Resource Group of Oklahoma, LLC (DRG) protests corrective action
   taken by the Department of Interior in canceling invitation for bids (IFB)
   No. RMG00060009, for support services related to distribution of Delaware
   Indian judgment funds, and terminating a contract awarded to DRG under
   that solicitation. DRG maintains that the agency's initial source
   selection decision and award to DRG was proper and that the corrective
   actions are arbitrary and capricious.

   We deny the protest.

   In June 2006, the Department of the Interior, Bureau of Indian Affairs,
   published the IFB at issue here as a 100 percent Service-Disabled
   Veteran-Owned Small Business (SDVOSB) set-aside, seeking support services
   associated with the development of a per capita payment roll for the
   distribution of Delaware Indian judgment funds. Consistent with the sealed
   bidding provisions of Federal Acquisition Regulation (FAR) Part 14, the
   IFB stated: "[c]ontract award will be made to the lowest responsive and
   responsible bidder." IFB at 2. Directly conflicting with that IFB
   provision, as well as with the FAR Part 14 requirements regarding sealed
   bids, the IFB also stated: "The contract will be awarded on the basis of
   the lowest and best responsive bid." IFB, attach. A, para. 4.0. Nothing in
   the solicitation identified any factors on which a determination regarding
   the "best" responsive bid would be based.

   On or before the July 26 bid opening date, the agency received the
   following three bids:

     Upper Mohawk, Inc.  $632,680  
     DRG                 $670,820  
     Central Research    $974,850  

   Agency Report (AR), Tab 9, Contracting Officer's Memo to File (Aug. 21,
   2006).

   Although DRG did not submit the lowest bid, the contracting officer
   selected DRG for contract award on the basis that it had submitted the
   "best responsive bid" and that DRG's price was "fair and reasonable." Id.
   The contracting officer explained that her decision that DRG had submitted
   the "best" bid reflected her assessment of "the general quality of [DRG's]
   submitted written materials pertaining to [the] solicitation,
   accomplishing the scope of work, qualifications, [and] experience," along
   with the fact that DRG's bid included a cost breakout identifying the
   "cost of staff, equipment, supplies and other needs for this project." Id.
   The contracting officer further noted that the bid submitted by Upper
   Mohawk, the lowest priced bidder, "did not contain information about
   judgment fund expertise or the staff's qualifications or experience and no
   cost[] break out was submitted." Id. A contract was awarded to DRG on
   August 31.

   In October, Upper Mohawk filed an agency-level protest complaining that
   award to DRG was improper for various reasons, including the fact that DRG
   had not submitted the lowest bid and was not an SDVOSB. AR, Tab 14, Upper
   Mohawk Agency-level Protest. Thereafter, the agency concluded that award
   to DRG had been improper and, on November 6, terminated DRG's contract for
   the convenience of the government. The agency plans on resoliciting the
   requirement after correcting material errors in the solicitation. On
   November 9, DRG filed an agency-level protest; prior to receipt of the
   agency's response to that protest, DRG filed this protest with our Office
   on November 22.

   DRG complains that termination of its contract was improper for various
   reasons, including that the agency's inclusion of the solicitation clause
   establishing the procurement as an SDVOSB set-aside was "inadvertent"
   and--while not disputing the fact that it failed to submit the lowest
   bid--maintains that termination of its contract 2 months after award was
   "arbitrary and capricious."[1]

   Contracting agencies have broad discretion to take corrective action where
   they determine that such action is necessary to ensure a fair and
   impartial competition. Where the agency has a reasonable concern that
   there were material errors in a procurement, it is well within the
   agency's discretion to correct those errors. Alfa Consult S.A., B-298288,
   B-298164.2, Aug. 3, 2006, 2006 CPD para. 127 at 2; Patriot Contract
   Servs., LLC, B-278276.11 et al., Sept. 22, 1998, 98-2 CPD para. 77 at 4.
   Specifically, an agency may resolicit previously competed requirements
   where the record shows the agency's decision to take this action is made
   in good faith. Federal Sec. Sys. Inc., B-281745, Apr. 29, 1999, 99-1 CPD
   para. 86 at 5.

   Here, nothing in the record suggests that the agency's corrective action
   was unreasonable, or that the agency acted other than in good faith.
   Specifically, the contracting officer acknowledges that the solicitation
   "should not have contained the language" regarding award to the "best" bid
   or, alternatively, that the solicitation should have been issued as a
   request for proposals pursuant to the negotiated procurement procedures of
   FAR Part 15. Further, there can be no dispute that the contracting
   officer's selection of DRG's bid was improperly made on the basis of
   unstated evaluation factors. Finally, there is no dispute that DRG is not
   an SDVOSB and therefore is not eligible for award under the SDVOSB
   set-aside.[2] On this record, we have no basis to question the
   reasonableness of the agency's corrective action to revise the
   solicitation to correct errors which led to the improper award to DRG and
   to allow all interested parties to compete.

   The protest is denied.

   Gary L. Kepplinger
   General Counsel

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

   [1] The contracting officer expressly states: "We recognize our obligation
   to pay start-up costs or other costs [DRG] incurred as a result of
   receiving the award, consistent with the Termination for Convenience
   clause, FAR 52.249-02." Contracting Officer's Statement at 3.

   [2] Apparently, none of the bidders qualified as SDVOSB vendors. The
   agency intends to issue the new solicitation on an unrestricted basis.