Link: GAO Opinion
Agency: Department of the Interior
Disposition: Protest denied.
Agency acted reasonably when it terminated protester’s contract for convenience and cancelled the underlying solicitation where the solicitation’s maximum estimated quantities and maximum ordering values did not reflect the agency’s requirements due to a reduction in program funding.
General Counsel P.C. Highlight:
Optimum asserts that it did not in fact receive Westwind’s (the awardee) price information during its debriefing, that there is nothing unclear or confusing about the solicitation, and that the agency’s third justification does not provide a reasonable basis to cancel the solicitation because the minimum quantities will not be affected by the reduced funding. GAO states that in a negotiated procurement, contracting agencies enjoy broad discretion in determining whether to cancel a solicitation, and need only have a reasonable basis for doing so. Here, GAO need not review the agency’s first two justifications for cancellation since the agency’s third justification establishes a reasonable basis for its decision to cancel the RFP. GAO has held that a reasonable basis for cancellation exists where the solicitation does not accurately reflect the agency’s requirements. Due to reduced funding levels, the agency here recognized that the solicitation did not accurately reflect its requirements given that the maximum estimated order quantities for the CLINs were overstated, as were the maximum order dollar values for the base and option periods.
The protester contends that changes to the solicitation’s maximum values are immaterial because the government is only obligated under the solicitation to order the stated minimum order value ($2 million), which remain unchanged. GAO disagrees. Both the maximum estimated quantities for the CLINs and the maximum order values during each ordering period are provided to help offerors make informed judgments when proposing their unit prices; they could directly affect offerors’ pricing strategy. Moreover, GAO has recognized that reducing maximum quantities can allow further competition from firms unable to perform at the originally stated quantities, but with the ability to perform at lower quantities. Given the magnitude of the changes to these material aspects of the solicitation, the agency acted reasonably in concluding that the solicitation did not accurately state the agency’s requirements and deciding to cancel the solicitation so that it could issue a new solicitation based on the revised estimates. The protest is denied.