First Enterprise, B-292967, January 7, 2004

B-292967 Jan 07, 2004 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights DIGEST Determination to cancel invitation for bids after bid opening is unobjectionable where the bids exceeded the funding allocated for the construction project. Were as follows: . The contracting officer reviewed the bids and determined that Ace was the apparent low bidder. Informed the remaining bidders that all the prices received were in excess of the available funding. The offerors' prices and the independent government estimate (IGE) were as follows: . The agency should have made award to First Enterprise. First Enterprise essentially contends that the VA did not have a reasonable basis to cancel the IFB. Thus it did not have sufficient funding to make award to the next lowest bidder. View Decision First Enterprise, B-292967, January 7, 2004 DIGEST Attorneys DECISION First Enterprise protests the cancellation after bid opening of invitation for bids (IFB) No. 600-249-03RT, issued by the Department of Veterans Affairs (VA) for the construction of a prosthetic and eye clinic center as part of the VA Greater Los Angeles Healthcare System, Los Angeles, California. First Enterprise, the bidder in line for award under the IFB, maintains that the agency had no compelling reason to cancel and convert the IFB to a negotiated procurement. We deny the protest. The solicitation, issued on August 6, 2003 as a Small Business Administration (SBA) 8(a) set-aside, contemplated the award of a fixed-price contract. /1/ The IFB required bidders to submit prices for all the required work (the "main bid item"), as well as prices for five deductive bid alternates. The construction project had approved funding in the amount of $3,510,190. At bid opening on September 4, the VA received bids from First Enterprise, Ace Engineering, Inc., DJM Construction Co., Inc., and Stronghold Engineering. The bid prices for the required work, including the deductive alternate items, were as follows: . First Enterprise Ace DJM Stronghold Main Bid Item $3,884,495 $3,592,994 $4,100,000 $3,997,127 Alternate Item #1 $3,814,845 $3,562,994 $4,070,000 $3,967,127 Alternate Item #2 $3,708,985 $3,557,994 $4,060,000 $3,955,127 Alternate Item #3 $3,760,985 $3,514,394 $4,010,000 $3,915,127 Alternate Item #4 $3,752,345 $3,484,394 $3,930,000 $3,895,127 Alternate Item #5 $3,680,895 $3,464,394 $3,900,000 $3,885,127 Agency Report (AR), Tab D, Abstract of Offers, Sept. 4, 2003. The contracting officer reviewed the bids and determined that Ace was the apparent low bidder. The agency subsequently undertook steps to make award of Alternate Item #5 to Ace at a price of $3,464,394. On September 15, Ace notified the contracting officer of a mistake in its bid and asked to withdraw the bid. By letter dated September 24, the agency permitted Ace to withdraw its bid. The VA then decided to reject all remaining bids and to cancel the IFB because, among other reasons, all remaining bids exceeded the amount of funding available. The contracting officer also decided to complete the acquisition by negotiation, consistent with FAR Sec. 14.404-1(f). AR, Tab E, Determination and Findings, at 1-2. On September 23 the VA amended the solicitation, informed the remaining bidders that all the prices received were in excess of the available funding, and converted the IFB to a request for proposals. While the construction project requirements remained the same, the amended solicitation also included a sixth alternate deductive item, in order to maximize the potential for a contract award. Three offerors, including First Enterprise and DJM, submitted proposals by the September 25 closing date. The offerors' prices and the independent government estimate (IGE) were as follows: . First Enterprise DJM Offeror 3 IGE Main Bid Item $3,762,558 $4,008,000 $3,949,100 $3,596,111 Alternate Item #1 $3,727,271 $3,982,000 $3,919,100 $3,566,111 Alternate Item #2 $3,711,506 $3,969,000 $3,907,100 $3,556,111 Alternate Item #3 $3,666,666 $3,921,000 $3,867,100 $3,513,111 Alternate Item #4 $3,656,466 $3,837,000 $3,847,100 $3,494,111 Alternate Item #5 $3,613,986 $3,796,000 $3,827,100 $3,471,111 Alternate Item #6 $3,111,216 $2,989,000 $3,627,100 $3,121,111 AR, Tab G, Abstract of Offers, Sept. 25, 2003. The contracting officer subsequently decided to award Alternate Item #6 to DJM at the price of $2,989,000. This protest followed. First Enterprise's protest centers around the VA's decision to cancel the IFB and convert it to a negotiated procurement. Specifically, the protester argues that after permitting Ace to withdraw its bid, the agency should have made award to First Enterprise, the next lowest bidder. First Enterprise essentially contends that the VA did not have a reasonable basis to cancel the IFB, particularly since bidders' prices had already been disclosed.