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Cancellation and Reissuance of Set-Aside Was Reasonable

The cancellation of a request for proposals that was set aside for service-disabled veteran-owned small businesses was not arbitrary, capricious, or unlawful, according to the Court of Federal Claims, because the government complied with the Federal Acquisition Regulation and reasonably determined none of the offerors possessed sufficient past performance experience. The government rejected all proposals and canceled the guard services RFP after determining none of the SDVOSB offerors had sufficient relevant past performance experience unless their proposed teaming arrangements were considered. According to the government's Determination and Findings, FAR 52.219-27 required the SDVOSB concerns to spend at least 50 percent of the cost of personnel for contract performance on their own employees and "fully attributing the experience of subcontractors to a prime with little or no experience that is responsible for the majority effort, [was] an extreme risk" to the government. The D&F also withdrew the SDVOSB set-aside and set aside the requirement for small business concerns. Seeking injunctive relief, the protesters argued the rejection of all proposals was a responsibility determination that should have been resolved through Small Business Administration Certificate of Competency procedures.
"Great Degree" of Discretion

However, once the government determined the original RFP did not produce any proposals that met its needs, it was within its rights to cancel the RFP and resolicit using a different acquisition strategy. Under FAR 15.305(b), the government may reject all proposals received in response to a solicitation if it is in the government's best interests, and case law grants the government "a great degree" of discretion in canceling solicitations in negotiated procurements. In light of this discretion, it was not irrational for the government to decide it was necessary for the SDVOSB prime contractors to demonstrate "they would be able to shoulder the responsibilities of this large, complex security contract by submitting their own relevant past performance." Furthermore, the SDVOSBs were to be the ultimate guarantors of contract performance, so the risk assessment and cancellation was supported by FAR 9.604(e), which provides the government may "[h]old the prime contractor fully responsible for contract performance, regardless of any team arrangement between the prime contractor and its subcontractors. "The court's conclusion was reinforced by Government Accountability Office decisions finding the government may reasonably require prime contractors to demonstrate the relevance of their own past performance. Finally, the cancellation decision was consistent with FAR 15.308, which requires the source selection authority to exercise independent judgment, FAR 19.1405(c), which mandates SDVOSB set-asides to be withdrawn and the requirement to be set aside for SBCs if no acceptable offers are received from SDVOSB concerns, and FAR 15.206(e), which requires solicitations to be canceled and reissued if an amendment would involve a change so substantial that additional sources would have likely submitted offers. (DCMS-ISA, Inc., et al. v. U.S., FedCl, 52 CCF 79,029)

(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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