The agency canceled an invitation for bids and converted a sealed bid to a negotiated procurement. GAO said the cancellation was reasonable, but the conversion was not. The FAR allows agencies to convert sealed bids in a few enumerated instances. But here, the agency had withdrawn the only protest defense that would have allowed a conversion.
Great Lakes Dredge & Dock Company, LLC, GAO B-421676.4
- Cancellation of Solicitation – The agency issued an invitation for bids. The bids received, however, exceeded the government estimate and the agency’s funding for the project. The agency canceled the solicitation. The agency offered three bases for the cancellation: (1) bids were unreasonably high, (2) bids exceeded government estimate by 25 percent, and (3) bids exceeded available funding. The agency determined it would convert the requirement into a negotiated procurement.
- Agency Withdraws Two Defenses – The protester objected to the cancellation. In response to the protest, the agency dropped two of its defenses—i.e., that the bids were unreasonably high, and that they exceeded government funding. The agency elected to defend the protest solely because the cancellation was justified due to lack of funding.
- Cancellation Was Reasonable – GAO found the agency reasonably canceled the solicitation. An agency’s determination that funding is not available is a sufficient reason to cancel. Agencies cannot award contracts that exceed funding.
- Agency Could Not Convert to Negotiated Procurement – The FAR allows an agency to convert a sealed bid into a negotiated procurement in a few enumerated instances. One of those instances is where the bids are unreasonably high. Here, however, the agency had withdrawn its unreasonably-high-bid defense and elected to only defend on lack of funding. But the FAR does not allow an agency to convert a sealed bid to a negotiated procurement for lack of funding. Thus, while the agency reasonably canceled the solicitation for lack of funding, GAO determined the agency had erred in converting a sealed bid into a negotiated procurement.
The protester is represented by Paul R. Hurst, Amba M. Datta, and Caitlin T. Conroy of Steptoe LLP. The agency is represented by Jason Shippy and Aaron R. Inkenbrandt of the Army. GAO attorneys Michelle Litteken and Christina Sklarew participated in the decision.
–Case summary by Craig LaChance, Senior Editor
