Link: GAO Opinion
Agency: Department of the Army
Disposition: Protest denied.
Keywords: Contract Termination/ RFP Cancellation
General Counsel P.C. Highlight: A procuring agency has broad authority to cancel an RFP, and needs only a reasonable basis to do so. Such a reasonable basis exists where a solicitation does not present a reasonably accurate representation of the agency’s anticipated actual needs.
Platinum Services Inc. (Platinum) protests the termination of contracts and the cancellation of a request for proposals (RFP), issued by the Department of the Army (Army), for inbound, outbound, and local shipment of household and other goods for service members in the D.C. area.
The Army originally issued multiple solicitations, including RFPs, contemplating the award of fixed-price requirements contracts for a 10-month base period with four one-year options. Award was to be made to the lowest-priced, technically-acceptable offeror. The solicitations included an ordering limitations clause, which contained three columns: the estimated maximum daily requirements; the minimum acceptable daily capabilities; and the offeror’s guaranteed daily capability. The Army also issued a series of amendments in an attempt to clarify the solicitation and to respond to questions from potential offerors.
The agency awarded six contracts, including two to Platinum, but prior to commencement of performance, one of the awardees advised the agency that it had misunderstood the maximum daily requirements. The agency received new input and again, revised its estimates for a third time. Given the new estimates, the agency determined that it would be best to terminate the contracts and cancel the underlying solicitations. Platinum asserts that the cancellations were unreasonable because there is there is no basis for concluding that the solicitations as amended (and the resulting contracts) did not accurately reflect the agency’s needs, or otherwise confused offerors.
GAO states that a procuring agency has broad authority to cancel an RFP, and needs only a reasonable basis to do so. Such a reasonable basis exists where a solicitation does not present a reasonably accurate representation of the agency’s anticipated actual needs. Further, where a valid basis for cancellation exists, an agency properly may cancel a solicitation no matter when the information precipitating the cancellation first surfaces or should have been known. Upon examining the record, GAO found that the significantly overstated estimates in amendment 5 provided a reasonable basis for cancellation. Since the risks associated with a variance between actual and estimated purchase quantities are borne by the contractor, the government is obligated to use its best information in preparing quantity estimates so that offerors can appropriately assess and apportion risk and other contract performance costs into their prices. Where award is made on the basis of estimates that vary significantly from the agency’s actual requirements, the contractor is in the untenable position of performing contract work of a magnitude significantly different from the solicited work, posing a risk to both the contractor and the government that the contractor will be unable to perform as required. The protest is denied.