Link: GAO Opinion
Agency: Department of Veterans Affairs
Disposition: Protest and request denied.
Keywords: RFP Cancellation
General Counsel P.C. Highlight: In a negotiated procurement, such as this one, a contracting agency has broad discretion in deciding whether to cancel a solicitation, and need only establish a reasonable basis for doing so.
KNAPP Logistics Automation protests the corrective action undertaken by the Department of Veterans Affairs (VA) in response to KNAPP’s protest of the award of a contract, under a request for proposals (RFP), for a tablet capsule automation (TCA) system. KNAPP also requests that GAO recommend that VA reimburse the protester’s costs of filing and pursuing its earlier protest concerning this procurement.
The solicitation sought proposals to replace VA’s TCA system in North Charleston, South Carolina. After the contract was awarded to another offeror, KNAPP filed a protest challenging the award. Prior to submitting a supplemental report responsive to the protest, VA advised GAO that it would take corrective action in response to the protest, based on the following determination, “Upon review of the record, VA has determined that corrective action is necessary. VA has determined that it will cancel the award to [the awardee] and that a new solicitation for the [TCA] system . . . will be issued in the near future.” GAO dismissed the protest.
KNAPP argues that VA should not have cancelled the solicitation, and should have instead awarded it the contract as the lowest-priced, technically acceptable offeror. GAO states that contracting officers in negotiated procurements have broad discretion to take corrective action where the agency determines that such action is necessary to ensure a fair and impartial competition. As a general matter, the details of corrective action taken in response to a protest are within the sound discretion and judgment of the contracting agency. GAO generally will not object to the specific corrective action, so long as it is appropriate to remedy the concern that caused the agency to take corrective action.
The agency stated that it would take corrective action by canceling the award to the awardee and issuing a new solicitation. In response to the instant protest and request for costs, VA has provided additional information concerning its rationale for opting to cancel and resolicit. First, the agency concluded that the awardee’s proposal had improperly taken exception to the solicitation with regard to the payment terms. For this reason, the agency contends that it properly took corrective action and terminated the awardee’s contract. Second, the agency states that it concluded that cancellation of the solicitation was necessary because the agency intends to add additional requirements to the TCA system. In this regard, VA states that the agency currently uses a manual mail packaging system, and it intends to add additional requirements to the TCA procurement.
GAO states that in a negotiated procurement, such as this one, a contracting agency has broad discretion in deciding whether to cancel a solicitation, and need only establish a reasonable basis for doing so. A reasonable basis to cancel exists when, for example, an agency determines that a solicitation does not accurately reflect its needs, or where there is a material increase in the services needed to satisfy the agency’s requirements; in such cases, cancellation of the solicitation and issuance of a revised solicitation is appropriate. GAO states that VA’s basis for canceling the solicitation was reasonable. In this regard, the corrective action addressed the protest argument that award to the awardee was improper. Furthermore, the corrective action was based on the agency’s determination that new requirements will require the agency to issue a revised solicitation and obtain new proposals, which precludes award to KNAPP based on its existing proposal. On this record, GAO concludes that VA’s corrective action was reasonable.
Next, KNAPP requests that GAO recommend that it be reimbursed the costs of filing and pursuing its initial protest. GAO states that when a procuring agency takes corrective action in response to a protest, it may recommend reimbursement of protest costs, including reasonable attorneys’ fees, if, based on the circumstances of the case, GAO determines that the agency unduly delayed taking corrective action in the face of a clearly meritorious protest, thereby causing the protester to expend unnecessary time and resources to make further use of the protest process in order to obtain relief. A protest is clearly meritorious where a reasonable agency inquiry into the protester’s allegations would reveal facts showing the absence of a defensible legal position. Additionally, while GAO considers corrective action to be prompt if it is taken before the due date for the agency report responding to the protest, it generally does not consider it to be prompt where it is taken after that date.
Rather than provide a supplemental report addressing this matter, VA took corrective action. As the agency acknowledges, the corrective action was based in part on KNAPP’s argument that the awardee’s proposal had improperly taken exception to the terms of the solicitation. GAO finds that the corrective action was prompt. As GAO has held, an agency’s corrective action is prompt when it is taken in response to a supplemental protest argument prior to providing the agency’s response to that newly-raised argument. GAO concludes that there is no basis to recommend reimbursement of the protester’s costs. The protest and request for costs are denied.