Agencies Do Not Have Unlimited Discretion to Cancel Solicitations, Says the COFC

In its recent decision, the Court of Federal Claims decided whether and when an agency can cancel a FAR part 15 procurement and start from scratch. Agencies have historically been afforded extremely broad discretion in cancelling solicitations. But in this case, the court agreed with the protester that cancellation was wrongful. It also laid out the details of a proper versus improper solicitation cancellation quite nicely. Thus, this landmark decision provides crucial guidance on the subject for agencies and federal contractors alike.

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Negotiation Impasse Results in Cancelled Solicitation

In any negotiation, either party may walk away from the deal at any time for any reason. While this is typically viewed as a negotiation “nuclear option,” it does happen. Unlike the private commercial space, doing business with Uncle Sam typically goes through a progression ultimately resulting in an awarded contract.

As one contractor recently discovered, however, agencies still retain the nuclear option–cancelling the solicitation–if they cannot obtain value for the government.

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GAO Upholds Agency’s Cancellation of LPTA Procurement with only One Acceptable Offer

Pop quiz: Your company is the only technically acceptable offeror in an lowest-priced, technically acceptable procurement. You win, right? Not when the agency cancels the solicitation, hoping that a cheaper offeror who was not technically acceptable will submit a bid if given another chance. GAO recently considered this very scenario.

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Court of Federal Claims Rejects Unsupported Decision to Cancel Solicitation

An agency ordinarily enjoys very broad discretion in its procurement-related decisions. This includes whether an agency will award a contract or, instead, cancel a procurement.

Broad as this discretion is, however, an agency does not have carte blanche to cancel a procurement on a whim. As a recent Court of Federal Claims decision shows, an agency must support its decision with sufficient information, lest the cancellation decision itself be successfully protested.

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Small Business Set-Asides: When The “Rule Of Two” Becomes The “Rule Of One”

An agency isn’t required to cancel a small business set-aside solicitation if the agency learns that one of the small businesses upon whom the set-aside decision rested is no longer small.

In a recent bid protest decision, the GAO confirmed that an agency need not redo its “rule of two” determination when a potential small business competitor outgrows its size standard–even if it could effectively convert a particular solicitation into a “rule of one.”

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GAO: No Set Aside Required Where Offerors’ Prices Too High

An agency was justified in canceling a small business set-aside solicitation–and reissuing the solicitation on an unrestricted basis–where the agency determined that the prices offered by small businesses were too high.

In a recent bid protest decision, the GAO confirmed that while the FAR’s “rule of two” set-aside requirement provides a powerful and important preference for small businesses, it doesn’t require an agency to pay more than fair market value for products or services.

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GAO: “Minimal” Solicitation Changes Justified Cancellation

An agency was entitled to cancel a solicitation when its needs changed–even though the anticipated changes in its needs “might be characterized as minimal.”

In a recent bid protest decision, the GAO confirmed that a procuring agency has broad discretion to cancel a solicitation when the agency’s anticipated needs change, and that discretion extends to cases in which the agency’s changed needs could be addressed by amending the existing solicitation.

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