Government Contracts Monitor

Warning: Solicitations Cancelled for Budgetary Reasons Are Likely Not Protestable

September 17, 2013

As the Federal Government continues to navigate the fiscal constraints of sequestration, we are likely to see more cancelled solicitations and decisions to move programs in-house in order to cut spending. While contractors can protest these actions, a recent GAO decision in Vinculum Solutions, Inc., B-408337 (Comp. Gen. Aug. 5, 2013), demonstrates that winning such a protest will be an uphill battle.

Vinculum Solutions involves an Internal Revenue Service request for technical proposals for support services for the earned income tax credit program office. The RFP was issued August 14, 2012. At the time, the services were being performed by Booz Allen Hamilton (“BAH”). The agency received proposals, conducted discussions, and requested final proposal revisions by May 7, 2013. However, one week before the due date for proposal revisions, the agency notified the offerors that it was canceling the solicitation “[d]ue to budgetary constraints.” At the same time, the agency issued a sole-source task order to BAH to continue providing the support services for up to 4 months.

Vinculum protested the agency’s decision arguing that the agency improperly cancelled the solicitation so that it could award the work to BAH on a sole-source basis. GAO made quick work of the protestor’s claims explaining that “the contracting agency has broad discretion in deciding whether to cancel a solicitation and need only have a reasonable basis for doing so.” GAO found that prior to award, the agency was told to look for ways to reduce costs in light of sequestration. The agency decided to cancel the solicitation and explore whether it could perform the services in-house for less cost. However, because the agency wasn’t prepared to handle the services in-house right away, it issued a task order to BAH. GAO found nothing irrational about this explanation and thus, dismissed the protest.

While a cancelled solicitation may be frustrating, especially if you are as far along in the proposal process as Vinculum was, decisions to cancel solicitation because of sequestration are likely to be upheld without more evidence that the agency’s decision was irrational.

Katie Calogero is the attorney responsible for the content of this article.