Link: GAO Opinion
Agency: Defense Logistics Agency
Disposition: Protest denied.
Keywords: Cancellation of Solicitation
General Counsel P.C. Highlight: A contracting agency has broad discretion in deciding whether to cancel a solicitation and need only establish a reasonable basis for doing so. Moreover, even if an initial justification is unreasonable, that fact is immaterial, provided that another, proper, basis for the cancellation exists.
KGL Logistics (KGL) protests the cancellation of a solicitation, issued by the Department of Defense, Defense Logistics Agency (DLA), for labor, materials, and the use of a contractor-owned, contractor-operated storage and distribution facility in Kuwait.
The solicitation provided for award of a contract, for a base period of one year with three one-year options. After receiving KGL’s proposal, the agency notified KGL that it was the sole responsible offeror, and that, because of the lack of price competition, it would be required to provide cost and pricing data in support of its proposal. Ultimately, KGL refused to certify its cost or pricing data because it said that its accounting and proposal development systems were not sufficient allow it to submit certified cost or pricing data. KGL also argued that cost or pricing data is not necessary in this procurement.
The agency canceled the solicitation, explaining that it was necessary due to KGL’s unwillingness to certify its cost or pricing data. The agency, in a reply to KGL’s assertion that the cancellation was unreasonable, stated that while the question of whether KGL would submit certified cost and pricing data was a concern, a more important factor in the cancellation was the agency’s review of various long-term options for distribution support in Kuwait, given the continuing and accelerated troop drawdown in Iraq and the changing needs for distribution services in the region.
KGL asserts that the agency’s actual reason for canceling the solicitation is KGL’s refusal to provide certified cost and pricing data. GAO states that in a negotiated procurement, a contracting agency has broad discretion in deciding whether to cancel a solicitation and need only establish a reasonable basis for doing so. Moreover, even if an initial justification is unreasonable, that fact is immaterial, provided that another, proper, basis for the cancellation exists.
GAO finds that the uncertainty surrounding the future need for the services provided a reasonable basis upon which to cancel the solicitation. The record includes an affidavit prepared by DLA’s Deputy Director of Logistics Operations, which clearly indicates the existence of considerable uncertainty regarding the agency’s future needs. Cancellation is appropriate where an agency conducts a reassessment that suggests the solicitation may not reflect its needs, such that the agency is uncertain whether the requirement will exist in the future. In these circumstances, GAO finds no basis to question the agency’s decision to cancel the solicitation rather than enter into a new long-term contract. The protest is denied.