TITLE: B-299469, Knight's Armament Company, April 7, 2007
BNUMBER: B-299469
DATE: April 7, 2007
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B-299469, Knight's Armament Company, April 7, 2007

   Decision

   Matter of: Knight's Armament Company

   File: B-299469

   Date: April 7, 2007

   David A. Lutz for the protester.

   Daniel Pantzer, Esq., Department of the Army, for the agency.

   Paula A. Williams, Esq., and Ralph O. White, Esq., Office of the General
   Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Agency's decision to cancel solicitation after receipt and evaluation of
   proposals was unobjectionable where the record shows that the agency
   reasonably concluded that none of the offered products met the
   solicitation's requirements, and that the stated requirements do not
   adequately reflect the agency's needs.

   DECISION

   Knight's Armament Company (KAC) protests the cancellation of request for
   proposals (RFP) No. W15QKN-06-R-0485, issued by the Department of the Army
   for M4 Carbine and M16A2/4 rifle suppressors. The agency canceled the
   solicitation based on a determination that no technically acceptable
   proposals were received and that significant revisions to the solicitation
   were needed. The protester maintains that the decision to cancel the
   solicitation lacks a reasonable basis.

   We deny the protest.

   The solicited suppressors for the M4 Carbine and M16A2/4 rifles will be
   used by infantry units to reduce each weapon's baseline muzzle sound,
   flash, and blast signature. The agency states by reducing noise volume
   these suppressors mitigate safety hazards, such as the risk of hearing
   loss, and improve the soldier's command and control of the weapon. The
   suppressors also promote survivability of soldiers by sufficiently
   reducing muzzle blast and flash so that the soldier's location remains
   undetectable to hostile forces. RFP at 4.

   The RFP, issued on March 7, 2006, sought fixed-priced proposals to furnish
   a base requirement of 50 suppressors meeting the specifications identified
   in the solicitation's purchase description, with four option quantities of
   between 4,000 and 10,000 units. The RFP was limited to suppressors that
   could be considered commercial, off-the-shelf, non-developmental items.
   Along with written proposals, offerors were to submit sample suppressors
   for testing.

   The RFP advised that award would be made to the offeror whose proposal
   represented the best value to the government based on an integrated
   assessment of merit rating (technical testing of sample suppressors and
   production capabilities) and price, with the merit rating more important
   than price. RFP at 13. The RFP also advised that the sample suppressors
   would be tested in two phases: (1) under the "essential criteria" factor,
   the suppressors were to be measured and tested against
   11 identified characteristics on a pass/fail basis; and (2) under the
   "rated requirements" factor, the suppressors were to be evaluated against
   10 subfactors, using adjectival ratings of excellent, good, satisfactory
   and unsatisfactory. Id. at 14-22.

   KAC was one of eight offerors submitting 11 proposals in response to this
   solicitation. Of these, the sample suppressors submitted by four offerors,
   including KAC, were tested against the rated requirements.[1] Contracting
   Officer's (CO) Statement at 2. All four of the tested suppressors were
   rated unsatisfactory under the user assessment subfactor which was the
   most important of the 10 "rated requirements;" none of the tested
   suppressors met or exceeded the performance standards in all areas
   evaluated. Agency Report (AR) exh. 5, Evaluation Report. Consequently, all
   four offerors received an overall rating of unsatisfactory under the
   "rated requirements" factor. Id. at 19.

   The CO reviewed the evaluation results and determined that no offeror had
   demonstrated an ability to meet the government's stated requirements for
   the suppressors. Since none of the offered suppressors met the
   specifications, the agency decided to review the requirements for the M4
   and M16A2/A4 suppressors, which led to the conclusion that significant
   solicitation revisions were needed in order to procure suppressors that
   would meet the Army's unique needs. See AR exh. 7, Product Manager's
   Memorandum; AR exh. 8, Director of Combat Development Memorandum. Based on
   these findings, the agency reports that "funding was suspended" for the
   procurement of the M4 and M16A2/4 suppressors. Supplemental Legal
   Memorandum at 5. The CO explained her decision to cancel the RFP as
   follows:

   Under the thorough examinations and evaluations of all offerors
   [p]roposals, I have found that no offeror can meet the Government's
   requirements for a [commercial off-the-shelf, non-developmental item]
   M4/M16 Suppressor at this time. All of the proposals submitted received an
   overall technical rating of "unsatisfactory" as a result of several
   factors, most importantly none of the suppressors met the user needs
   during the User Assessment area of the technical evaluation.

   The problems found during the technical evaluation proved that in order to
   meet the Government's requirements the suppressors would require major
   modifications, which would be accomplished only at a substantial increase
   in cost for both materiel and labor. This is too much of a risk to take
   when a firm fixed price contract is anticipated.

   [The requiring activity] recommends cancellation . . . based on the
   following reasons:

   a.      No technically acceptable candidate out of a total of
   11 submissions for the M4/M16 suppressor RFP.

   b.      Pending revisions to one or more requirements outlined in the
   Capabilities Production Document.

   AR exh. 6, CO's Cancellation Memorandum, at 21. This protest followed.

   KAC argues that the agency's decision to cancel the solicitation lacks a
   reasonable basis. The protester's core allegation is that the evaluation
   of its offered suppressor was unreasonable and not consistent with the
   stated terms of the RFP. The protester contends that this improper
   evaluation led the agency to unreasonably conclude that no offeror could
   meet the Army's need for commercial off-the-shelf suppressors despite the
   fact that KAC currently supplies suppressors to other government agencies
   under another contract.

   In a negotiated procurement, a contracting agency need only establish a
   reasonable basis to support a decision to cancel an RFP. A reasonable
   basis for cancellation exists and cancellation is appropriate when a
   solicitation does not accurately reflect the agency's requirements.
   Superlative Techs., Inc., B-293709.2, June 18, 2004, 2004 CPD para. 116 at
   3. Here, the record reflects that the agency canceled the RFP and decided
   to revise its requirements after the CO reviewed the evaluation results
   and concluded that none of the tested suppressors met or exceeded the
   standards in all areas evaluated. For example, the evaluators determined
   that the protester's offered suppressor was not a good candidate for use
   with the M4 and M16 rifles because when tested for toxic fumes the
   protester's offered suppressor exceeded the acceptable limits set by OSHA
   (Occupational Safety and Health Administration), NIOSH (National Institute
   for Occupational Safety and Health), and ACGIH (American Conference of
   Governmental Industrial Hygienists) for carbon monoxide, ammonia, and
   hydrogen cyanide. AR exh. 5, Technical Evaluation Report, at 16-18; RFP at
   21.

   While the protester disagrees with the evaluation findings, such as the
   one above, the record here does not support a conclusion that the agency's
   evaluation was unreasonable. Rather, the Army has demonstrated that the
   cancellation resulted from anomalies in the evaluation results that raised
   questions concerning current system configuration standards and key
   performance parameters which the agency concluded needed refining. Thus,
   our review of the record provides no basis for us to object to the
   agency's decision to cancel the RFP and resolicit using a revised RFP.

   In any event, although we conclude that the Army has advanced a reasonable
   basis for canceling the RFP, the agency subsequently has produced
   documentation indicating that the available funds for this procurement
   have been withdrawn. It is well established that the lack of funding for
   the requirements covered by an RFP clearly supports a decision to cancel,
   as agencies cannot award contracts which exceed available funds. Quality
   Support, Inc., B-296716, Sept. 13, 2005, 2005 CPD para. 172 at 2. So long
   as a reasonable basis exists, an agency may cancel a solicitation no
   matter when the information precipitating the cancellation first surfaces
   or should have been known, even if the cancellation occurs after proposals
   have been submitted and evaluated, or even if discovered during the course
   of a protest. Peterson-Nunez Joint Venture, B-258788, Feb. 13, 1995, 95-1
   CPD para. 73 at 4.

   The protest is denied.[2]

   Gary L. Kepplinger
   General Counsel

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

   [1] Seven of the 11 proposals were found technically unacceptable under
   the first phase of assessing the offered suppressors against the 11
   "essential criteria."

   [2] The protester also argues that it should at least be entitled to
   recover its proposal preparation costs, given that the decision to cancel
   the solicitation was made after the protester had expended considerable
   resources to address the RFP. However, reimbursement of such costs is
   predicated on a finding by our Office that an agency's actions violated a
   procurement statute or regulation. 4 C.F.R. sect. 21.8(d) (2006). Since,
   as discussed above, we find nothing objectionable in the Army's decision
   to cancel the protested solicitation, we have no basis to recommend that
   the protester be reimbursed these costs. See Bahan Dennis Inc.,
   B-249496.3, Mar. 3, 1994, 94-1 CPD para. 184 at 6.