Generally, government agencies are given broad discretion to define their needs; however, last month, the United States Court of Federal Claims chose to curtail an agency’s authority to cancel and amend bid solicitations in Seventh Dimension, LLC v. U.S., No. 21-2275C (May 2022).
Seventh Dimension, a provider of training and support services to the Department of Defense (DoD), challenged a U.S. Department of the Army, Special Operations Command (USASOC) decision to cancel and resolicit a procurement after a two-year bidding process solely relying on the Contracting Officer’s (CO) discretion. The cancellation followed two successful bid protests leaving Seventh Dimension as the final acceptable offeror in what Judge Solomson appropriately dubbed the “contractor edition of Survivor.”
The case turns on the operative language of FAR 15.206(e): whether the Contracting Officer (CO) reasonably exercised her “judgment based on market research or otherwise” that the USASOC’s proposed amendment “is so substantial as to exceed what prospective offerors reasonably could have anticipated, so that additional sources likely would have submitted offers had the substance of the amendment been known to them.”
The court found that the CO failed to consult “market research or otherwise,” relying exclusively on FAR 15.206(e). The government’s counsel conceded this fact but nonetheless ineffectively argued FAR 15.206(e) does not require the actual review of “market research or otherwise,” only that the regulatory language requires “the contracting officer have a rational basis for the determination.” The court called the government’s suggestion “an unbounded interpretation” of the phrase. Judge Solomson found this alone was sufficient for Seventh Dimension to prevail.
The court went further to analyze the following:
- Whether the proposed amendment is a cardinal change.
- Whether “additional sources likely would have submitted offers had the substance of the amendment been known to them,” warranting the cancellation.
The government argued that amending the solicitation to remove contractor-provided land and training requirements justified the cancellation and combined with the change in contract type from indefinite delivery indefinite quantity (IDIQ) to firm fixed price (FFP), constituted a cardinal change. The court disagreed, noting the government’s inconsistent stance before the Government Accountability Office calling the land and training requirements “minimal in nature” and that these requirements were added by amendment previously. Further, the court stated that if the canceled IDIQ solicitation was flexible enough to “accommodate the Army’s actual needs,” it would be anticipated and, therefore, unnecessary. During oral argument, the government conceded that the solicitation parameters were sufficient to meet the USASOC’s needs, dismantling the government’s argument that there was a cardinal change.
Without evidence to substantiate the assertion, the government suggested that an FFP contract may be more favorable than an IDIQ, arguing the wrong standard. Instead, the court pointed out that the correct standard centers on whether “additional sources likely would have submitted offers had the substance of the amendment been known to them,” not whether an offeror “may view” the revised solicitation more favorably. When asked where the CO pointed to in the record to support the cancellation decision, the government responded with circular logic: “the changes that were made to the solicitation.” The court referenced the standards delineated in the Administrative Procedure Act (APA), which require the CO’s judgment to be supported with facts from the administrative record that amount to more than the changes themselves. The APA standard requires more than conjecture, “it requires reasoned judgment based on evidence or facts contained in the administrative record.”
The court disagreed with the government’s understanding of FAR 15.206(e) crucial operative language. With the recent decision, the long-held notion that government agencies possess broad discretion to oversee their affairs, including canceling solicitations, has eroded ever so slightly.
For more information on our firm’s bid protest practice, please contact the author at email@example.com. The author would like to thank our law clerk Stephen Finan for his valuable contributions to this article.