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Cancellation of IT Procurement and Partial Insourcing Enjoined

The Court of Federal Claims enjoined the cancellation of a solicitation for information technology services because the government lacked a rational basis for the cancellation. The protest arose from a request for quotations from firms holding Federal Supply Schedule IT contracts. After the protester filed its complaint challenging the contract award, the government conducted a cost savings analysis and determined it could use government employees to provide the majority of services sought in the RFQ. The government then cancelled the RFQ and issued a new one seeking only help desk services.

No Support

The court determined the decision to cancel and insource ignored the requirements of the solicitation and was unsupported and arbitrary. First, the government relied on the analysis of a government official who had been relieved of responsibilities in the procurement due to alleged Procurement Integrity Act violations, without considering the possibility the official would have an interest in cancelling the procurement as a means of mooting the PIA investigation. In addition, the cancelled solicitation involved 33 positions, but there was no support for the government's projection it would have sufficient IT employees to staff as many as 24 non-help desk positions. Finally, the government's projection of "significant savings" of a least $860,988 was calculated arbitrarily and could not provide a rational basis for cancelling the solicitation. The analysis was performed by the official who was the subject of the pending PIA allegations, was based on only 11 IT positions, provided no reason for using the protester's costs under the incumbent contract to estimate contractor costs, and failed to use the presumptively proper cost comparison method prescribed in Office of Management and Budget Circular A-76.

Rule of Two

The court also preliminarily enjoined the award of a task order for the help desk services sought under the second RFQ, ruling there was a reasonable likelihood the proposed TO violated FAR 19.502-2 (b). FAR 19.502-2 (b) requires acquisitions over $150,000 to be set aside for small business participation when there is a reasonable expectation offers will be obtained from at least two responsible small business concerns and award will be made at fair market prices. Considering three small businesses were competing to provide the services under the cancelled solicitation and at least one small business --the protester --was offering to provide the services at a discount from its FSS contract rates, it was likely the rule of two required the acquisition to be set aside for a small business award. ( MORI Associates v. U.S., FedCl, 56 CCF 79,710)




(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )


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