Government Contracts CO Acted Reasonably in Cancelling Solicitation
Monday, April 29, 2019

CO Acted Reasonably in Cancelling Solicitation

By Government Contracts Editorial Staff

Affirming the Court of Federal Claims, the Court of Appeals for the Federal Circuit held the government did not act arbitrarily or capriciously when it cancelled a roof replacement solicitation set aside for service-disabled veteran-owned small businesses, because the contracting officer acted rationally based on the record before him. The CO recommended cancelling and reposting the solicitation because the lowest responsive bidder had proposed a cost 30 percent higher than the government’s estimate. Although the protester had submitted a bid closer to the government’s projected cost, the CO did not consider its bid because the protester was not listed in the VetBiz database on the day bidding closed. Hours after the government finalized the cancellation, the CFC granted the protester a preliminary injunction restoring it to VetBiz (61 CCF ¶81,226). When subsequently making the injunction permanent, the CFC rejected the protester’s challenge to the CO’s cancellation of the roof replacement solicitation (62 CCF ¶81,296).

Compelling Reason. On appeal, the protester argued the cancellation was irrational and subverted the government’s statutory duty to award contracts to SDVOSBs. However, a solicitation may be cancelled if “there is a compelling reason to reject all bids,” and there may be a compelling reason when “[a]ll otherwise acceptable bids received are at unreasonable prices” (FAR 14.404-1). Here, the CO had a compelling reason to request cancellation because the only two acceptable bids proposed costs significantly higher than the government’s estimate, and the protester was not listed in the VetBiz database when bidding closed, so its bid was not acceptable. There also was no indication cost was a mere pretext to cover an improper motivation. The protester sent a letter to the Department of Veterans Affairs before bidding closed expressing its intent to seek a preliminary injunction, but the letter referred to another solicitation. The protester offered no evidence the CO knew the VAs’ Center for Verification and Evaluation had wrongfully removed the protester from VetBiz when he requested the cancellation, and the CO “had to presume the [CVE] had acted lawfully.” The fact the CFC determined four months after the cancellation that the CVE had not acted lawfully did not make the CO’s actions irrational.

Dissent. Judge Dyk dissented on grounds the majority improperly limited the court’s review to whether the CO acted in bad faith, but the fact the CO had no knowledge of the VA’s error in removing the protester from the VetBiz database did not excuse the error. According to the dissent, because the government would likely have awarded the contract to the protester if it had not erroneously removed the protester from the database, the appropriate remedy was to place the protester in the situation it would have occupied had the government not acted improperly. (Veterans Contracting Group, Inc. v. U.S., CA-FC, 63 CCF ¶81,628)

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