We already blogged on the COFC’s landmark Rule of Two decision in Tolliver Grp., Inc. v. United States. But the court’s two-part holding (in favor of the plaintiffs on both counts) was just too impactful for a single blog. Not only did the court fault the agency for failing to do a Rule of Two analysis before using an IDIQ, it also said that the agency failed to justify the decision to cancel the solicitations and switch contract vehicles under the Administrative Procedure Act (APA) standard of review, which the court called a “highly deferential”–but not “toothless”–review.
The Court of Federal Claims decision in Tolliver Grp., Inc. v. United States, No. 20-1108C, 2020 WL 7022493 (Fed. Cl. Nov. 30, 2020), arose out of the Department of the Army’s decision to cancel two General Services Administration (GSA) Federal Supply Schedule (FSS) support staffing solicitations, which were 100% set aside for service-disabled veteran owned small businesses (SDVOSB). The solicitations sought fire support specialist training services for the Fires Center of Excellence field artillery school at Fort Sill.
The Army had previously procured these services through a long-term omnibus MAIDIQ (multiple-award indefinite-delivery, indefinite-quantity) contract. Once that expired, the Army used a series of short-term contracts to procure the services. Then, in early 2020, the Army (through the GSA) issued the two relevant FAR Part 8 solicitations and awarded to two SDVOSBs. But as part of a corrective action in response to a GAO protest, the Army canceled the solicitations (and the awards) and transferred the work to an existing MAIDIQ.
According to the Army, this Training Management Support (TMS) MAIDIQ would “provide a potentially better procurement vehicle for this requirement” than the GSA FSS contract. The Army did not issue a formal cancellation decision. So its only “rationale” for the cancellation was set forth in the contracting officer’s four-page internal agency memorandum, which described the solicitations’ requirements and history and outlined the features of the TMS MAIDIQ that the Army could use as a replacement.
Regarding the previous solicitations, the contracting officer merely said, “[a]fter extensive use of the GSA  MAIDIQ and GSA Multiple Award Schedule, it was determined the contract vehicles did not meet [the] mission needs as world events unfolded.” The contracting officer explained:
I believe the Government’s best interest can be met by competing the [solicitations’] requirements under the  recently awarded TMS MAIDIQ. Both time and money can be saved by the Government in pursuit of this avenue. Time and money are expended on soliciting and awarding interim short term contract actions to support on-going requirements. Contract periods can be adjusted to support a Base and Four Option periods on most requirements thus saving manpower and costs tied to phase-in and certification of new contractor employees. Longer periods of performance also support the Government’s ability to successfully recruit and retain qualified personnel on existing requirements, thereby ensuring continuity of the training mission.
Two SDVOSBs brought this lawsuit under the Tucker Act, arguing that the Army’s actions violated two laws: (1) the APA (the subject of this blog); and (2) the Rule of Two (the subject of our first blog on this case).
The plaintiffs argued that the Army’s decision to cancel the two GSA FSS support staffing solicitations failed the APA’s standard of review for actions brought under the Tucker Act, “which requires that an agency action must not be arbitrary, capricious, or otherwise contrary to law.” Specifically, the plaintiffs argued that the cancellation decision was arbitrary and capricious based on “the extreme brevity of the analysis underlying the agency’s decision and . . . there is no documented cancellation decision for either procurement” and even if there were, “the record materials do not justify cancellation.”
The Army argued that it had acted reasonably under the APA’s review standard, or, alternatively, that its “power to cancel a FAR Part 8 solicitation is virtually plenary,” and as such, that its “decision should be reviewed only for ‘bad faith,'” which the Army said was not supported by the record.
In reaching its decision, the court acknowledged that FAR Part 8 does not include the same type of “substantive yardstick for limiting an agency decision to cancel a procurement” that FAR Part 14 does (for the cancellation of sealed bid procurements after opening). But the court also did not agree with the Army’s ultimate position regarding the applicable standard of review. It said, “[w]hile a finding of bad faith may be sufficient, it is not necessary for the Court to determine that an agency decision is arbitrary and capricious.”
Regarding the APA’s review standard for actions brought under the Tucker Act, the court said
[W]e determine whether (1) the procurement official’s decision lacked a rational basis; or (2) the procurement procedure involved a violation of regulation or procedure. When a challenge is brought on the first ground, the test is whether the contracting agency provided a coherent and reasonable explanation of its exercise of discretion, and the disappointed bidder bears a heavy burden of showing that the award decision had no rational basis.
The court applied this standard to the contracting officer’s internal memorandum and did not find the Army’s justification for the cancellation sufficient. It said:
[C]oncluding that the prior MAIDIQ and GSA MAS vehicles were not sufficient for the entire breadth of work contemplated by the new TMS MAIDIQ is not the same thing as concluding that the latter vehicle is somehow superior to the GSA MAS vehicles for the purposes of the statements of work at issue.
According to the court, the Army essentially said that it moved the procurements at issue to the TMS MAIDIQ, so that it “would get a more flexible and longer term of performance while saving time and money.” But this explanation did “not satisfy the agency’s burden.” According to the court, it was
bereft of any specific context or factual details that would support its generalized assertions and naked conclusions about the GSA MAS solicitations not meeting agency needs or how the agency would be better served by transferring the solicitations[.]
The court explained:
If the Court were to accept this rationale at face value without asking for supporting details, the government could always include this attractive catch-all at the end of its decision document to justify almost any solicitation cancellation. Meaningful judicial review requires more than just accepting such a bald assertion.
And the court held:
In sum, this Court concludes that although it is not irrational per se for an agency to prefer one contractual vehicle over another or even for the TMS MAIDIQ to be more suitable for the Army’s needs in this case, the government here did not provide a sufficiently documented rationale or meaningful analysis for cancelling the original  Solicitations for the purpose of transitioning the work to the TMS MAIDIQ.
Finally, the court provided a brief analysis of the policy driving its decision, stating:
The agency should not be permitted to conduct a procurement, inducing would-be contractors to expend time and money preparing and submitting proposals, only to have the rug pulled out from underneath them when an offeror points out putative flaws in the agency’s process. This is not a case where the agency has shown that its substantive needs have changed, and a different vehicle is more capable of meeting those changed needs.
The court’s lengthy discussion of the applicable standard of review and requirements under FAR Part 8 procurements here may not jump out as breaking news. But we have seen more and more agencies attempt to use existing contract vehicles to procure products or services when issues arise in soliciting the work as a new requirement. And at the COFC (as well as at GAO), it often does feel like many agencies’ procurement decisions face a somewhat toothless review. So, this decision has the potential to add some serious bite to reviews of agency decisions.
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