Bid Protest Weekly Newsletter by Bryan R. King, Attorney, General Counsel PC
Date: Wednesday, August 14, 2013,5:19pm EST
Vinculum Solutions, Inc., B-408337; B-408337.2, August 5, 2013
A few months ago, we discussed a GAO decision in which a solicitation was canceled due to a lack of funding. While that case was not related to the recent budget sequestration, it was illustrative of an agency’s ability to cancel a procurement for lack of available funds. This past week, GAO released a decision that was related to sequestration, which had a similar result.
Vinculum Solutions, Inc. is the first bid protest decision related to the budget sequestration that went into effect earlier this year. In this case, the IRS issued a solicitation for a multiple-award, IDIQ contract valued at approximately $27 million. After receiving final proposals from several offerors, including the protester Vinculum Solutions, Inc., the agency informed offerors that it was canceling the solicitation due to budgetary constraints.
The record showed that the agency was given a direction to find ways to reduce costs as a result of the budget sequestration. The agency determined that it would save money by performing the services sought by the solicitation in-house.* To provide time for a transition to bring the services in-house, the government issued to the incumbent contractor a short 2-month contract with two 1-month option periods.
Vinculum Solutions challenged the agency’s decision to cancel the solicitation, asserting that the agency was doing so only to award a sole-source contract to the incumbent. GAO disagreed, and denied the protest. The record in this case demonstrated to GAO that the agency was indeed facing budgetary constraints, and that a less costly option was necessary to obtain the services called for by the solicitation. As discussed previously, an agency has broad discretion to cancel a solicitation where funds are not available.
Unfortunately, there is not much of a lesson to learn from this decision, as contractors do not have a lot of options when an agency cancels a solicitation due to lack of funding. Hopefully this sequestration related cancelation is an isolated incident. Given the wide ranging nature of the federal government’s budget cuts, however, it is possible this situation will be repeated. This case is noteworthy as it is important that contractors are aware of the possibility of budget-related cancelations. Such knowledge may factor into a contractor’s ultimate business decision of whether to submit an offer on a future procurement.
* Unfortunately, the protest decision did not go into detail as to how the agency made the decision that it would be more cost-effective to bring the services in house. Such a decision would have likely been a subject for another article.