AvKARE, Inc.

B-417250 Apr 18, 2019 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights AvKARE, of Pulaski, Tennessee, protests the agency's cancellation of request for proposals (RFP) No. 36E79719R0003, issued by the Department of Veterans Affairs (VA) for the provision of sildenafil citrate tablets. The protester argues that the agency's decision to cancel the solicitation was unreasonable. We deny the protest. View Decision Decision Matter of:  AvKARE, Inc. File:  B-417250 Date:  April 18, 2019 Julie M. Nichols, Esq., Roeder, Cochran, Phillips, PLLC, for the protester. Jennifer Claypool, Esq., Department of Veterans Affairs, for the agency. Joshua R. Gillerman, Esq., and Tania Calhoun, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST Protest that the agency improperly cancelled the solicitation is denied where the agency had a reasonable basis for the cancellation. DECISION AvKARE, of Pulaski, Tennessee, protests the agency’s cancellation of request for proposals (RFP) No. 36E79719R0003, issued by the Department of Veterans Affairs (VA) for the provision of sildenafil citrate tablets.  The protester argues that the agency’s decision to cancel the solicitation was unreasonable. We deny the protest.   BACKGROUND The RFP, issued on November 13, 2018, as a commercial item solicitation pursuant to the procedures of Federal Acquisition Regulation (FAR) part 12, contemplated the award of a fixed-price requirements contract, to be performed over a 1-year base period and four 1-year options, for the provision of sildenafil citrate tablets at varying dosages and quantities.  Agency Report (AR), Contracting Officer’s Statement (COS) at 1-2.  The procurement sought to furnish a supply of the drug for the VA, as well as for the Federal Health Care Center, State Veterans Homes, Department of Defense, Indian Health Service, and the Bureau of Prisons.  AR, Tab 6, RFP at 5.  The solicitation explained that the objective of the contract was “to ensure [the] availability and consistency of product for nationwide usage and to obtain volume-based, committed use pricing.”  Id. Award was to be made to the firm submitting the lowest-priced, technically acceptable (LPTA) offer.  RFP at 48.  Relevant here, the RFP stated that proposals would be evaluated in accordance with the policies and procedures of FAR part 25, Foreign Acquisition, explaining that the agency would only consider offers of U.S.-made end products or designated country end products, unless it failed to receive any such offers or the offers received were insufficient to fulfill the requirements.  RFP at 4.  Also relevant, the RFP provided that if the offeror was not the manufacturer of the product, it was required to submit a letter of commitment from the manufacturer assuring an uninterrupted source of supply sufficient to satisfy the agency’s requirements for the contract period.  Id. at 45. The VA received five proposals in response to the solicitation.  COS at 2.  The agency rejected two proposals because the offered products were manufactured in India, a non-designated country under FAR part 25.  AR, Tab 10, Technical Evaluation, at 1-2.  A third proposal was found technically unacceptable for failure to provide a National Drug Code (NDC) number that was unique to the offeror, as was required by the RFP.  Id. at 1. The agency established a competitive range and held discussions with the two remaining offerors, AvKARE and Offeror 2.  COS at 2.  The purpose of discussions was to highlight the need for these offerors to provide letters of commitment from their respective manufacturers.  Id.  Both AvKARE and Offeror 2 requested extensions of the due date for the submissions of final proposal revisions (FPR).  Id. at 3.  The agency denied both requests for extension.  COS at 3.   AvKARE timely submitted an FPR that included a letter of commitment assuring uninterrupted supply from its manufacturer.  COS at 3.  Offeror 2 did not submit an FPR. (In its request for an extension, Offeror 2 stated that it was working to obtain the letter of commitment from its manufacturer but it had been delayed).  AR, Tab 12, Offeror 2 Extension Request, at 1.  Ultimately, due to its failure to submit the letter of commitment, the agency rejected Offeror 2’s proposal.  COS at 3. After eliminating Offeror 2, AvKARE was the only firm remaining with a technically acceptable proposal.  Id.  The agency reviewed AvKARE’s proposed price of $181,704,077 and concluded that it was not fair and reasonable.  COS at 3-4.  The agency’s conclusion was based on a comparison between AvKARE’s price, the government estimate, and Offeror 2’s price.  Id. at 4.  The government estimate, $85,195,455, was calculated by multiplying current prices on the open market, derived from a pharmaceutical database, by the estimated annual requirements here.  Thus, AvKARE’s price was nearly $100 million more than the government estimate.