Sunshine Kids Service Supply Company, B-292141, June 2, 2003

B-292141 Jun 02, 2003 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights Subsequently determined that proposal also was technically unacceptable. Agency decision to cancel solicitation was unobjectionable. Was not supported by the record. SKSS asserts that the cancellation was improper. That the agency instead should have made award to SKSS. To the offeror whose proposal was considered the "best value.". Proposals were to be evaluated under three factors. Price was to be evaluated for reasonableness and realism. The agency rejected two of the proposals because the offerors were not HUBZone small businesses. Rejected SKSS's proposal after determining that its price was unreasonably high. Concluded that it was technically unacceptable. SKSS filed this protest with our Office challenging the agency's conclusion that its proposed price was unreasonably high. View Decision Sunshine Kids Service Supply Company, B-292141, June 2, 2003 DIGEST Attorneys DECISION Sunshine Kids Service Supply Company (SKSS) protests the agency's decision to cancel request for proposals (RFP) No. MDA946-03-R-0014, a HUBZone (historically underutilized business zone) small business set-aside issued by the Department of Defense for custodial services. SKSS asserts that the cancellation was improper, and that the agency instead should have made award to SKSS. We deny the protest. The RFP sought proposals to provide all services, supplies, equipment, and supervision necessary to perform interior and exterior custodial work in the Hybla Valley Federal Building in Alexandria, Virginia. The RFP contemplated award of a fixed-price contract for a 6-month base period, with 4 option years, to the offeror whose proposal was considered the "best value." Proposals were to be evaluated under three factors--performance, management approach, and price--with the two technical factors of equal importance and, combined, of significantly more importance than price. Price was to be evaluated for reasonableness and realism, as a reflection of offerors' understanding of the RFP's requirements. The RFP advised that the agency intended to make award without conducting discussions, and warned that initial proposals therefore should contain the offeror's best terms from a price and technical standpoint. Three offerors, including SKSS, submitted proposals. The agency rejected two of the proposals because the offerors were not HUBZone small businesses, and rejected SKSS's proposal after determining that its price was unreasonably high. Because no acceptable HUBZone proposals remained, the agency canceled the RFP, planning to reissue it as a total small business set-aside. Upon learning of its proposal's rejection and the agency's intent to cancel the RFP, SKSS filed an agency-level protest. In the course of preparing its response to that protest, the agency evaluated SKSS's technical proposal, and concluded that it was technically unacceptable. Before the agency issued a formal response to the protest, SKSS filed this protest with our Office challenging the agency's conclusion that its proposed price was unreasonably high. In a negotiated acquisition, agencies have broad discretion in deciding whether to cancel a solicitation; they need only advance a reasonable basis for the cancellation. Encore Mgmt., Inc., B-278903.2, Feb. 12, 1999, 99-1 CPD Para. 33 at 3. Cancellation of a HUBZone set-aside solicitation is reasonable where no acceptable offers are received from HUBZone small business concerns, since the set-aside must be withdrawn under those circumstances and the requirement set aside for small business concerns. Federal Acquisition Regulation (FAR) Sec. 19.1305(d); see Fluid Power Int'l, Inc., B-278479, Dec. 10, 1997, 97-2 CPD Para. 162 at 2-3 (cancellation of a small business set-aside solicitation was reasonable where no acceptable small business quotations were received). As noted, the agency initially canceled the RFP after concluding that SKSS's price was unreasonable, and that there thus were no acceptable HUBZone offers. The contracting officer's conclusion was based in significant part on a comparison of SKSS's price with the agency's estimate--SKSS's price exceeded the estimate by 8.2 percent. The protester asserts that such a small percentage does not support a finding of price unreasonableness. We are inclined to agree with the protester, since the agency has not provided an explanation as to why this arguably modest price difference was significant enough to render SKSS's price unreasonable. /1/ However, the validity of the price reasonableness determination is not dispositive in this case, and we thus need not address it, since the record supports the agency's conclusion--reached during its consideration of the agency-level protest--that SKSS's proposal was technically unacceptable.