Government Contracts Cancellation of Invitation for Bids Was Invalid
Tuesday, May 5, 2020

Cancellation of Invitation for Bids Was Invalid

By Government Contracts Editorial Staff

The Court of Federal Claims set aside the cancellation of an invitation for bids to replace an aircraft ramp at an airbase because the government failed to provide a compelling reason for the cancellation as required under FAR 14.404-1(a)(1). After opening the protester’s $38,875,500 bid and one other bid for $43,973,034, the government disclosed that the independent government cost estimate was $27,016,699. A contracting officer signed a memorandum for record finding the protester’s bid price was “fair and reasonable based on competition.” However, another CO subsequently emailed the protester an amendment stating “[i]n accordance with FAR 14.404-1, the [IFB] has been cancelled and the acquisition will be completed via this solicitation through negotiation in accordance with FAR Part 15.” The government prepared a determination and findings discussing “the disparity in bids received compared with the [IGCE],” quoting FAR 14.404-1(c) as the standard for cancelling an IFB after bid opening, and concluding, “[t]he [CO] has determined that none of the prices received in response to this [IFB] were reasonable in comparison with the [g]overnment’s estimate and in comparison with each other.” The protester contended the government’s rationale for cancelling the IFB was arbitrary on its face because it failed to account for the earlier determination that the protester’s price was reasonable.

No Compelling Reason. FAR 14.404-1(a)(1) requires “a compelling reason” to cancel an IFB after bid opening, and FAR 14.404-1(c) provides for cancellation when “consistent with paragraph (a)(1),” the government determines one of ten conditions is satisfied, including that “[a]ll otherwise acceptable bids received are at unreasonable prices” (FAR 14.404-1(c)(6)). There was no merit to the government’s argument that the reasons listed under FAR 14.404-1(c) were compelling per se, because it ignored the subordinating effect of the phrase “consistent with paragraph (a)(1).” Here, the D&F’s conclusion that all otherwise responsive bids were received at unreasonable prices was not compelling. The D&F simply restated FAR 14.404-1(c)(6) as justification without analyzing or expressly rejecting the MFR’s opposite conclusion. The D&F also cited three possible explanations for the disparity between the bids and the IGCE, which raised unresolved questions about the IGCE’s accuracy, but it then used the disparity to support the conclusion that all of the bid prices received were unreasonable. (Kiewit Infrastructure West Co. v. U.S., FedCl, 64 CCF ¶81,879)

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