Protest challenging agency’s cancellation of an invitation for bids is granted. The agency claimed it cancelled because the bids it had received were not reasonably priced. The court, however, found that an agency must have a compelling reason to cancel a sealed bid. And here, the agency’s reasons were wanting. The agency had not explained why it had initially found the protester’s price reasonable. Moreover, the cancellation decision was contradictory; it called into the question the accuracy of the government estimate and then turned around and used that estimate to find the protester’s price unreasonable.
The National Guard Bureau issued an invitation for bids (IFB) under FAR part 14’s sealed bidding procedures. The IFB sought a contractor to replace an aircraft ramp at a base in Oregon. Kiewit Infrastructure West and one other bidder submitted bids. Kiewit had the lowest bid. Kiewit’s bid, however, was significantly higher than the government estimate. Nevertheless, following the opening of bids, the National Guard Bureau issued a memorandum finding that Kiewit’s price was reasonable.
As Kiewit was about to begin with the project, the National Guard Bureau cancelled the IFB. The agency explained in a Determinations & Findings document that Kiewit’s price was not, in fact, reasonable. The National Guard decided that it was going to re-procure through negotiation under FAR part 15.
Kiewit filed a protest with the GAO challenging cancellation of the IFB. GAO denied the protest. Kiewit then filed a protest with the COFC.
The court noted that under FAR 14.404-1, an agency can only cancel an IFB if there is a compelling a reason to do so. Subsection c of that FAR provision lists unreasonable prices as a reason to cancel an IFB.
The government argued that the list in subsection c of FAR 14.404-1 were per se compelling. Thus, the government argued, the National Guard’s finding of unreasonable prices should be reviewed as an exercise of the agency’s broad discretion to determine price reasonableness.
But the court rejected the government’s reading of FAR 14.404-1, finding that it would read the word “compelling” out of the rule. Subsection a of the rule requires the reason for cancellation to be compelling. Subsection c is subordinated to subsection a. Thus, the court could not just find the agency’s reason per se compelling; it had to actually examine whether the reason was compelling.
Here, the court did not find the National Guard’s reason compelling. The Decision & Findings simply restated FAR 14.404-1 without any meaningful analysis and without any explanation as to why the agency rejected its prior determination that Kiewit’s price was reasonable. What’s more, the Decision & Findings itself raised unresolved questions about the accuracy of the government’s estimate, but it then relied on the estimate as a measure of price reasonableness. These external and internal contradictions undermined the price reasonableness determination.
The government attempted to argue that the contracting officer’s statement filed in the prior GAO protest provided sufficient explanation for the agency’s reversal. The court, however, found that the post hoc statement lacked probative value. Rather, the court reasoned that it was limited to the contemporaneous record in deciding a protest, not after-the-fact statements.
As to relief, the court declined to simply award the contract to Kiewit. Instead, the court entered an order setting aside the cancellation of the IFB and enjoining the agency from relying on the invalid cancellation in awarding the contract.
Kiewit is represented by Douglas L. Patin, Aron C. Beezley, Patrick R. Quigley, and Lisa A. Markman of Bradley Arant Boult Cummings LLP. The government is represented by Galina Fomenkova, of the U.S. Department of Justice, Stephen > Hernandez of U.S. Army Legal Services, and Robert Goodin of the National Guard Bureau.
