Rotary Furnishing Company, B-277704, November 13, 1997

B-277704 Nov 13, 1997 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights DIGEST Agency's cancellation of solicitation for refurbishing mattresses and box springs is permissible where agency no longer has a need for refurbishing the items because it has determined that the government's interests will be better served by purchasing new mattresses and box springs. The award was to be made on a best value basis considering the following equally weighted criteria: (1) price. The Air Force conducted discussions with that firm and Rotary was asked to explain several areas in its proposal that the agency considered to reflect excessive costs and to explain why its proposal was significantly higher priced than a previous proposal it had submitted. Did not provide what the agency considered to be sufficient evidence to determine that Rotary's costs were reasonable. View Decision Matter of: Rotary Furnishing Company File: B-277704 Date: November 13, 1997 DIGEST Attorneys DECISION Rotary Furnishing Company protests the cancellation of request for proposals (RFP) No. F6231-97-R-0085, issued by the Department of the Air Force, Kadena Air Base, Okinawa, Japan, for refurbishing and cleaning mattresses and box springs. We deny the protest. The RFP, issued January 13, 1997, contemplated the award of a fixed-price requirements contract for a 6-month base period with four 1-year options. The award was to be made on a best value basis considering the following equally weighted criteria: (1) price, (2) technical understanding of the performance work statement, and (3) past performance. The RFP required offerors to submit a detailed breakdown of costs. On the February 7 closing date, the Air Force received proposals from Rotary and Aishii Bed Company, the incumbent contractor. The Air Force's preliminary evaluation found that Rotary failed to submit the requested cost breakdown. After Rotary provided more complete cost information, the Air Force conducted discussions with that firm and Rotary was asked to explain several areas in its proposal that the agency considered to reflect excessive costs and to explain why its proposal was significantly higher priced than a previous proposal it had submitted. The record indicates that Rotary offered several explanations to justify its costs, but did not provide what the agency considered to be sufficient evidence to determine that Rotary's costs were reasonable. Following discussions and issuance of an RFP amendment, which, among other things, deleted certain requirements for cleaning and sterilization, the offerors submitted revised proposals. Aishii submitted the lowest-priced proposal of 269,878,050 yen, and Rotary submitted a proposal priced at 480,319,000 yen. The government estimate was 290,883,456 yen. The Air Force requested best and final offers (BAFO) be submitted by April 1; in their BAFOs, neither Aishii nor Rotary changed its price. On April 17, the Air Force canceled the solicitation because Aishii, though it had submitted the lowest price, was found to be nonresponsible and because Rotary's price was considered unreasonably high--it exceeded the government estimate by an unacceptable margin and was above what the Air Force considered to be the maximum allowable cost for refurbishment of the items. Because the price of refurbishing the items appeared to be so high, the Air Force decided to fulfill its now-urgent requirements by purchasing new mattresses from Federal Prison Industries, and the Air Force reports that it is thus acquiring new mattresses at a price only slightly higher than that proposed by Rotary for refurbishing old ones. After the Air Force denied its agency-level protest, Rotary filed this protest objecting to the cancellation. Rotary contends that the cancellation was improper because the Air Force allegedly conducted misleading discussions by not informing Rotary that its overall price was unreasonably high. Further, Rotary contends that the Air Force relied upon an erroneous and unreasonably low government cost estimate to determine Rotary's price to be unreasonably high, in that the estimate assertedly underrepresented the number of employees necessary to accomplish the work. Finally, Rotary maintains that in determining the maximum allowable cost of repair, which involved a comparison of Rotary's price against the cost of purchasing new mattresses, the Air Force did not consider certain costs that would be incurred if new mattresses are purchased. Cancellation of an RFP after receipt of proposals is warranted where an agency determines that it is not in the best interest of the government to proceed with a particular procurement. See Federal Acquisition Regulation Sec. 15.608(b)(4); Color Dynamics, Inc., B-236033.2, Oct. 27, 1989, 89-2 CPD Para. 391 at 2-3, aff'd, B-236033.3, Dec. 22, 1989, 89-2 CPD Para.