Protest challenging the cancellation of a solicitation is denied. The protester argued that the cancellation was improper because one of the agency’s reasons for cancelling—lack of acquisition funding—was not included in the cancellation decision. But GAO found that an agency may cancel a solicitation regardless of when the reason for cancellation surfaces, so long as the reason would have justified a cancellation in the first place. Here, the lack of funding independently supported cancellation. The fact that this reason did not appear in the cancellation decision was beside the point.
The Navy’s Military Sealift Command (MSC) issued a solicitation to acquire a vessel for classified maritime security missions. Two offerors submitted proposals, but their prices were more than double the budget that the Navy’s Special Operations Command had allotted to the procurement. MCS tried to negotiate prices. The offerors cut their prices, but the cost still greatly exceeded the Navy’s budget. As a result, the Special Operations Command pulled funding for the procurement.
Around the same time, the Assistant Secretary of the Navy for Research Development and Acquisition issued a memorandum making country of origin requirements applicable to all ships. Shortly thereafter, MSC cancelled the solicitation for a marine security vessel, stating that the new country of origin requirement substantially changed the RFP.
One of the offerors who bid on the solicitation, U.S. Marine Management, Inc., protested the cancellation, arguing that instead of cancellation, the Navy should have simply amended the solicitation to add a new requirement. In response, the Navy argued that cancellation was appropriate because it lacked sufficient funding to make the award. U.S. Marine argued, however, that the cancellation for lack of funding could not be rationale because that reason was not stated as the official reason for cancellation.
GAO, however, reasoned that an agency may properly cancel a solicitation no matter when the information supporting the cancellation first surfaces. Indeed, a new or additional rationale supporting a cancellation provided during development of a protest is acceptable so long as it would have supported cancellation in the first place. Here, the lack of funding would have independently supported cancellation. That the lack of funding was not mentioned in the contracting officer’s decision was irrelevant.
U.S. Marine is represented by Jason A. Carey, J. Hunter Bennett, Evan R. Sherwood, and Peter B. Terenzio III of Covington & Burling, LLP. The agency is represented by Jeffrey N. Davenport of the U.S. Navy. GAO attorneys Louis A. Chiarella and Peter H. Tran, participated in the preparation of the decision.
