United States Government Accountability Office

Washington, DC 20548

Comptroller General

of the United States

 

Decision

Matter of: Great Lakes Dredge & Dock Company, LLC 

File: B-407502.2

Date: February 13, 2013

Paul R. Hurst, Esq., Steptoe & Johnson LLP, for the protester.

S. DeAnn Lehigh, Esq., Department of the Army, Corps of Engineers, for the 

agency.

Andrew J. Stephens, Esq., and Jonathan L. Kang, Esq., Office of the General 

Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protest challenging the agency’s cancellation of an invitation for bids (IFB) is denied 

where the agency concerns regarding an ambiguity in the IFB provided a 

compelling basis for cancellation. 

DECISION

Great Lakes Dredge & Dock Company, LLC (GLDD) of Oak Brook, Illinois, protests 

the post-bid opening cancellation of invitation for bids (IFB) No. W9127S-12-B0025, which was issued by the Department of the Army, Corps of Engineers, for 

dredging services. GLDD contends that the Corps did not have a compelling 

reason to cancel the solicitation and that, as the lowest responsive bidder, it should 

have been awarded the contract.

We deny the protest.

BACKGROUND

The Corps issued the IFB on August 24, 2012, which sought bids for an indefinitedelivery, indefinite-quantity (ID/IQ) contract for dredging services, with a base period 

of one year, and one 1-year option. Agency Report (AR) at 1.1

 

1 Citations to the “IFB” in this decision refer to the solicitation issued on August 24, 

2012. As discussed below, the Corps issued a revised solicitation on January 8, 

2013. Additionally, although not directly relevant here, the Corps initially issued the 

 The dredging was 

(continued...)
Page 2 B-407502.2 

to be performed, as required, at the following locations: between Navigation Miles 0 

and 444.8 on the McClellan-Kerr Arkansas River Navigation system; between 

Navigation Miles 10 and 255 on the White River; and in harbors at Rosedale and 

Greenville, Mississippi. IFB at 1. 

The IFB listed nine contract line item numbers (CLINs) for the base year and nine 

CLINs for the option year. Id. at 4-12. As relevant here, CLIN 0001 was for 

mobilization/demobilization services in the base year, and CLIN 1001 was for 

demobilization services for the option year. Id. at 4, 8. The IFB also incorporated 

the clause at Defense Federal Acquisition Regulation Supplement (DFARS) 

§ 252.236-7004, which provided that the agency would pay 65 percent of the lump 

sum price for mobilization and demobilization upon completion of the mobilization 

work, and the remaining 35 percent upon completion of demobilization. Id. at 39.

The Corps received bids from four firms: GLDD, 4H Construction, Inland Dredging 

Company, LLC, and Orion Marine Construction. AR, Tab 7, Bid Evaluation 

Documents, at 1. On September 24, the bids were opened, and on September 28, 

the Corps announced that 4H Construction was the apparent lowest bidder and 

would be awarded the contract. AR, Tab 2, CO Statement, at 2; AR, Tab 7, Bid 

Evaluation Documents. 

On October 3, GLDD filed a protest with our Office alleging that 4H Construction’s 

bid was materially unbalanced based on its price for CLIN 0001 for 

mobilization/demobilization in the base year. Upon review, the Corps concluded 

that 4H Construction’s bid was materially unbalanced, and therefore nonresponsive, 

as its CLIN 0001 price was significantly higher than all other bidders and the 

government estimate. AR at 1. After concluding that 4H Construction’s bid was 

nonresponsive, the agency canceled the IFB and our Office dismissed GLDD’s 

protest of the award to 4H Construction as academic. 

On November 5, GLDD filed a protest with our Office challenging the Corps’ 

decision to cancel the IFB, rather than awarding the contract to GLDD as the lowest 

 

(...continued)

solicitation on May 23, 2012, as a total small business set-aside, and received two 

bids. Contracting Officer (CO) Statement ¶ 1. After bid-opening, the unsuccessful 

bidder, 4H Construction Corporation, filed a protest with the Small Business 

Administration (SBA), arguing the apparent low bidder, A&H Contractors, Inc., was 

not a small business. Id. ¶ 3; AR, Tab 4c, 4H Construction Protest Letter to SBA. 

On August 9, SBA sustained the protest. AR, Tab 4f, SBA Size Determination. On 

August 10, the agency canceled the initial IFB after determining that there was 

insufficient competition to make an award per Federal Acquisition Regulation (FAR) 

part 6. CO Statement ¶ 5. 
Page 3 B-407502.2 

responsive bidder. Protest at 1. On December 6, the Corps submitted its report on 

the protest; GLDD filed timely comments on the report on December 17.

On January 8, 2013, while the protest was pending at our Office, the Corps issued a 

revised IFB for the dredging work. As relevant here, the January 8 IFB added a 

second option year. IFB (Jan. 8, 2013) at 9. More significantly, the January 8 IFB 

replaced CLIN 0001 for mobilization/demobilization in the base year with separate 

mobilization and demobilization CLINs for the base year, and added CLINs for 

demobilization in each of the option years.2 Id. at 8-9. The January 8 IFB also 

deleted DFARS § 252.236-7004, which had provided for the 65/35 percent lump 

sum payments for mobilization and demobilization. The revised IFB explained that 

the contractor would be paid for demobilization through the demobilization CLIN for 

the appropriate year, e.g., through the base year CLIN if no options were exercised, 

or through the CLIN for the final option exercised. Id. at 54.

GLDD subsequently argued that the issuance of the January 8 IFB demonstrated 

that the Corps lacked a compelling basis to cancel the August 24 IFB, for reasons 

relating to the evaluation quantities for the dredging work. Our Office requested that 

the Corps and the protester submit additional briefing regarding the January 8 IFB. 

In this briefing, the agency explained the basis for the revisions in the January 8 

IFB.

DISCUSSION

GLDD argues that the Corps improperly canceled the IFB because the agency did 

not have a compelling reason for its action, as required under the FAR. In its 

response to the protest, the Corps identified several reasons why it believed that 

cancellation of the August 24 IFB was proper. As relevant here, the agency argues 

that the August 24 IFB was ambiguous with regard to the mobilization and

demobilization CLINs, and that this defect could result in the government paying 

twice for demobilization services.3

 

2 Another difference between the August 24 IFB and the January 8 IFB is that the 

January 8 IFB added a second option year. 

 Agency Supp. Response (Jan. 15, 2013) at 2; 

Agency Response to GAO Interrogatories (Jan. 24, 2013) at 3. Because we 

conclude that the defects concerning the mobilization and demobilization CLINs 

3 The Corps identified other bases for cancelling the IFB, and GLDD challenged 

these bases. Because we conclude that the defects with the mobilization and 

demobilization CLINs provided a compelling basis to cancel the solicitation, we do 

not address the other issues.
Page 4 B-407502.2 

provide a compelling basis to cancel the solicitation, we do not address the 

agency’s other bases for cancellation. 4

When an agency issues an IFB and opens bids, award must be made to the bidder 

who submitted the lowest responsive bid, unless there if a compelling reason to 

reject all bids and cancel the invitation. Federal Acquisition Regulation 

§ 14.404-1(a)(1). The standard for canceling an IFB after bids have been opened is

different from the standard for canceling a request for proposals (RFP) after award; 

an agency need only demonstrate a reasonable basis to cancel an RFP after 

award. See Noelke GmbH, B-278324.2, Feb. 9, 1998, 98-1 CPD ¶ 46 at 3. This 

different standard applies because of the potential adverse impact on the 

competitive bidding system of cancelation after bid prices have been exposed at a 

public bid opening. United Contracting LLC, B-407417, Jan. 2, 2013, 2013 CPD 

¶ ___ at 2. A compelling reason to cancel a solicitation after bid opening exists 

where material solicitation terms are ambiguous or in conflict. P.J. Dick, Inc. 

B-259166, B-260333, Mar. 6, 1995, 95-1 CPD ¶ 131 at 4. 

The Corps argues that the mobilization and demobilization CLINs in the August 24 

IFB required revision because the solicitation was ambiguous as to how the 

successful contractor would be paid for these services. As discussed above, the 

August 24 IFB contained CLIN 0001 for mobilization/demobilization, and CLIN 1001 

for demobilization. The August 24 IFB also incorporated the following DFARS 

clause, which specified how mobilization and demobilization costs would be paid: 

(a) The Government will pay all costs for the mobilization and 

demobilization of all of the Contractor’s plant and equipment at the 

contract lump sum price for this item.

(1) Sixty-Five (65%) percent of the lump sum price upon 

completion of the contractor’s mobilization at the work site.

(2) The remaining thirty five (35%) percent upon completion of 

demobilization.

 

4 As GLDD notes, the Corps did not cite the mobilization and demobilization CLINs 

as a compelling basis for cancelling the solicitation in its initial report on the protest. 

The agency first raised this argument in its response to the protester’s January 10, 

2013, filing concerning the January 8 IFB. Our Office has held that even if an 

agency’s initial bases for cancelling an IFB are not compelling, cancellation is not 

objectionable if the agency subsequently identifies a compelling basis for the 

cancellation. Mid Atlantic Commc’ns, B-221277, Mar. 27, 1986, 86-1 CPD ¶ 294 

at 4. 
Page 5 B-407502.2 

DFARS § 252.236-7004; IFB at 39. 

The August 24 IFB also provides: “Demobilization will be paid at the completion of 

the base year if the option year is not exercised. If the option year is exercised, 

demobilization will be paid upon its completion.” IFB at 53. In contrast, the revised 

January 8 IFB contained CLIN 0001 for mobilization and CLIN 0010 for 

demobilization in the base year, and CLINs 1001 and 2001 for demobilization in 

each option year; the January 8 IFB also did not incorporate DFARS § 252.236-

7004. 

The Corps argues that the August 24 IFB CLINs created an ambiguity because, for 

similar dredging contracts, there is typically one mobilization at the beginning of 

contract performance, and one demobilization at either the end of the base year, or 

at the end of the option year, if the option is exercised. Agency Supp. Response 

(Jan. 15, 2013), at 2. The agency argues that under the August 24 IFB, the CLIN 

structure for mobilization and demobilization created the possibility that the agency 

would pay twice for a service provided only once. Agency Response to GAO 

Interrogatories (Jan. 24, 2013) at 3.

We agree with the Corps that the August 24 IFB was ambiguous with regard to the 

price to be paid for mobilization and demobilization. Specifically, inclusion of CLIN 

0001 for both mobilization and demobilization in the base year, as well as CLIN 

1001 for demobilization in the option year, creates uncertainty as to whether the 

contractor would be paid once, or twice, for demobilization. In this regard, as 

discussed above, DFARS § 252.236-7004 provides that 65 percent of the “lump 

sum” for mobilization and demobilization will be paid upon completion of 

mobilization, and the remaining 35 percent of that lump sum amount will be paid 

upon completion of demobilization. As applied to the August 24 IFB CLINs, it is not 

clear whether “lump sum” means only the price for CLIN 0001 for

mobilization/demobilization in the base year, or the sum of the prices for CLIN 0001 

as well as CLIN 1001 for demobilization in the option year.

For example, if the term lump is read to mean that the contractor will be paid the 

sum of both CLIN 0001 and 1001, and the agency does not exercise the option 

year, the agency would pay for demobilization twice--once for the portion of CLIN 

0001 attributable to demobilization and once for demobilization under CLIN 1001. 

As another example, if the term lump sum is read to mean only CLIN 0001, then it is 

not clear how much the agency should pay for demobilization if it exercises the 

option year. Under DFARS § 252.236-7004(a)(2), the agency is obligated to pay 

“[t]he remaining [35 percent]”--however, it is unclear whether that amount should 
Page 6 B-407502.2 

include only CLIN 1001, or that CLIN plus the remainder (35 percent) of CLIN 

0001.

5

GLDD contends that the IFB was not ambiguous and would not result in the 

government paying twice for demobilization services. In this regard, the protester 

states that in its performance of prior contracts, it was the practice of the agency to 

pay 65 percent of the price for the base year mobilization/demobilization CLIN upon 

completion of mobilization, to exercise the option year, and then pay the full unit 

price for the demobilization CLIN in the option year. Protester’s Supp. Comments 

(Jan. 28, 2013) at 4. Although the protester contends that the agency could 

potentially avoid any confusion or ambiguity concerning payment for mobilization 

and demobilization by following this prior practice, there is no guarantee that the 

contract here would be performed in the same manner. Moreover, there is no 

guarantee that the successful bidder under the IFB here would not dispute the 

method for calculating the method of payment under the contract’s disputes clause, 

given the ambiguities discussed above. 

In sum, we conclude that the IFB terms governing the amount to be paid for 

demobilization are ambiguous and in conflict and, therefore, provide a compelling 

reason for cancelling the August 24 IFB.

The protest is denied. 

 

Susan A. Poling

General Counsel

 

5 Additionally, although not specifically argued by the Corps, it is also unclear how 

the agency should calculate the price for mobilization. DFARS § 252.236-

7004(a)(2) states that the contractor should be paid a lump sum based on 

65 percent of the combined price for mobilization and demobilization. If the agency 

does not know whether it will exercise the option year, it is unclear whether the 

mobilization price should include CLINs 0001 and 1001, or only CLIN 0001.