Show Your Work: COFC Finds Agency Failed to Adequately Explain Its Decision to Cancel Solicitation; The Tolliver Group, Inc. v., United States, COFC Nos. 20-1108C and 20-1290C

86

Offerors’ motion for judgment on the administrative record challenging the cancellation of a solicitation is granted. The agency cancelled a solicitation issued under GSA’s FSS contract so it could solicit the requirements through a different IDIQ contract. Two offerors objected to the cancellation. The government claimed that the court lacked jurisdiction to consider the cancellation of a solicitation, like this one, under FAR Part 8. The court ruled that it had jurisdiction to hear a protest challenging a cancellation regardless of the procurement procedures used. The government also argued that the suit was barred by FASA’s jurisdictional bar on task order protests. But the court reasoned that the bar did not apply because the suit was not a protest and it did not challenge the issuance of a task order. The court found that the decision to cancel was arbitrary because the government had failed to explain the rationale for the cancellation decision. Additionally, the court found that the agency violated the law by failing to conduct a Rule of Two analysis before deciding to cancel the solicitation and procure the requirements through an unrestricted IDIQ contract.

The Army issued two solicitations seeking training and instructor services at Fort Sill. The solicitations set aside the procurement for service disabled veteran-owned small businesses holding GSA Federal Supply Schedule contracts governed by FAR Part 8. Several eligible businesses submitted proposals. The Army awarded one contract to The Tolliver Group, Inc. and the second to Navington Development Group.

A disappointed offeror, People, Technology and Processes, LLC,  (PTP) filed GAO protests challenging both awards. In response to the protests, the Army took corrective action. As part of the corrective action, the Army ended up cancelling both solicitations. An internal Army memo explained that the Army cancelled because another IDIQ contract provided a better procurement vehicle than the GSA FSS contract and saved the agency time and money.

Tolliver filed suit in the Court of Federal Claims challenging the cancellation of the solicitation. Toliver contended the cancellation was irrational because it was not related to a procurement defect. Tolliver further alleged that by moving the requirements to an IDIQ where only large businesses were eligible for award, the Army violated the Rule of Two. PTP also filed a suit in the COFC, asserting similar theories. The court consolidated the cases. All the parties moved for judgment on the administrative record.

Before considering the merits of the suits, the court addressed several jurisdictional argument raised by the government. The Tucker Act provides that the COFC has jurisdiction to consider claims alleging a violation of statute or regulation in connection with a procurement. The Federal Circuit has held that this provision of the Tucker Act gives the COFC jurisdiction to consider challenges to the improper cancellation of a solicitation. But, the government contended, those decisions involved solicitations issued pursuant to FAR Part 14 or 15, which each contain specific provisions governing cancellation. The solicitations in this case were issued under FAR Part 8, which does not have a separate provision government cancellation. The government contended that given the absence of any cancellation provision in Part 8, the court lacked jurisdiction to consider cancellation of the Part 8 solicitation.

The court opined that FAR 1.602-2(b) provided a jurisdictional hook. That provision states that the government must ensure that contractors receive fair and impartial treatment. It is essentially a duty for the government to fairly and honestly consider bids. The government argued that FAR1.602-2(b) lacked independent substance—i.e., an agency can only violate FAR 1.602-2(b) if it violates another specific FAR provision. But the court rejected this, reasoning that the great weight of authority indicates that FAR 1.602-2(b) is itself substantive and can support a claim under the Tucker Act’s “in connection with a procurement” clause

The court continued that even if FAR 1.602-2(b) did not provide a basis to assert jurisdiction, 10 U.S.C. § 23-5(b)(2) provided a separate jurisdictional predicate. That statute provides that all proposals received in response to a solicitation may be rejected if the agency determines such action is in the public interest. This language is almost identical to FAR 15.305(b). Given that the FAR 15.305(b) provides a jurisdictional predicate for considering a cancellation, the court had no problem concluding that 10 U.S.C. §2305 also provides a basis for jurisdiction over a cancellation challenge.

The government contended that 10 U.S.C. § 2305 only applied to procurement’s requesting “competitive proposals.” GSA’s multiple award schedule program, however, only establish a “competitive procedure,.” 10 U.S.C. § 2305 did not apply

The court rejected this argument reasoning that the asserted dichotomy between “competitive proposals” and “competitive procedures” was false; there’s no difference between the two. Moreover, the court reasoned, the cancelled solicitation in this case, in fact, sought competitive proposals. The solicitation utilized the procedures under Part 8 in conjunction with Part 15 procedures for contract negotiation. Indeed, the administrative record confirmed that the Army engaged in negotiations and allowed offerors to submit proposal revisions. Thus, the Army actually solicited “competitive proposals.”

The government also argued that the court was precluded from considering the plaintiffs’ “Rule of Two” theories under the Federal Acquisition Streamlining Act’s (FASA) task order bar. The plaintiffs alleged the government erred by failing to conduct a Rule of Two analysis before cancelling the solicitations and moving the requirements to another IDIQ contract. The government noted that FASA precludes the court from hearing a protest in connection with a task or delivery order. The government alleged that the plaintiffs’ “Rule of Two” arguments were in effect challenges to the government’s issuing task orders under the IDIQ contact and thus were barred by FASA.

The court disagreed. As an initial matter, the court noted that FASA bar only applies to protests of a task order. A protest is generally defined as a challenge to a solicitation or award. Here, the plaintiffs were not necessarily challenging a solicitation or award; they were challenging the cancellation of a solicitation. In fact, they had brought their challenge under the prong of the Tucker Act providing jurisdiction to consider a violation of  procurement law or regulations.

Additionally, the court opined, the FASA bar only relates to the issuance or proposed issuance of a task order. The fact that an agency has proposed to use an IDIQ as a procurement vehicle is not the same as issuing a task order. The plaintiffs were not challenging a solicitation for a task order or the award of a task order. The FASA bar was inapplicable to the challenge of an agency’s selection of a task order vehicle.

Moreover, the court continued, the FASA bar only prevents challenges “in connection” with a task order. The allegation that the Army failed to conduct a Rule of Two analysis was not conceptually or temporally connected to the issuance of a task order. When an agency refuses to perform a Rule of Two analysis, that does not mean it will necessarily elect to make a task order award. In fact, the agency may solicit the working utilizing procurements that don’t even contemplate task orders. There is no necessary connection between the Rule of Two analysis and the issuance of a task order.

Turning to the merits of the suit, the court found that the cancellation decision was irrational because Army failed to provide a reasonable explanation for its decision. Courts are authorized to set aside agency action when the record fails to articulate a rational connection between the facts found and the decision made. In this case, the Army cancelled the solicitation on the grounds that it would save time and money. But the court found that the Army’s rationale was bereft of any specific context or factual detail that would support these generalized assertions and naked conclusions. Agencies must “show their work” when making a decision. Indeed, the court noted, if it were to accept the Army’s “time-and-money-saved” allegations at face value, the government could always include that catch-all at the end of a decision to justify any solicitation cancellation.

The court also found that the agency failed to comply with the Rule of Two. The Rule of Two—codified at FAR 19.502-2(b)—provides that agencies shall set aside any acquisition when at least two small businesses can make an offer at reasonable prices. The Rule of Two applies to “any acquisition”. The cancelled solicitation were themselves acquisitions. The continued need for the requirements in those solicitations were either an in-process acquisition or a new acquisition. Either way, the Rule of Two applies. Even if the other IDIQ had a small business component, this did not obviate the Army’s obligation to conduct a Rule of Two analysis.

Having found that the Tolliver and PTP had prevailed on the merits, the court also determined they were entitled to injunctive relief. The plaintiffs had been harmed by the cancellation by losing the opportunity to compete and profit from the cancelled solicitations. While the government alleged that the continued used of the FSS contracts would be onerous, this alleged harm did not outweigh the harm to the plaintiffs.

Plaintiff, The Tolliver Group is represented by Jon D. Levin, W. Brad English, Emily J. Chancey, and Michael W. Rich of Maynard, Cooper & Gale, PC. Plaintiff People, Technology and Processes by Craig A. Holman and Nathaniel E. Castellano of Arnold & Porter Kaye Scholer LLP. The government is represented by David R. Pehlke, Jeffrey Bossert Clark, Robert E. Kirschman, Jr., and Douglas K. Mickle of the Department of Justice.

COFC - Tolliver Group