Bid Protest Weekly Newsletter by Bryan R. King, Attorney, General Counsel PC
Date: Wednesday, May 29, 2013, 1:00pmEST
Specialized Steel Contractors, Inc., B-408022; B-408022.2, May 14, 2013
In this era of sequestration, contractors are understandably concerned over the future of their current contracts or possible award opportunities down the road. While the recent case of Specialized Steel Contractors, Inc. does not directly address sequestration, it does speak to the issue of funding on government projects.
In this case, the solicitation was issued near the close of fiscal year 2012. Award was to be made after a bid opening, in which the low bid would be selected. Bids were submitted in response to the solicitation, and despite concerns over the imminent close of FY2012, the agency conducted a bid opening. The agency received two bids, with the protester’s bid being the lowest. The agency conducted a legal review of the intended contract, but the review was not completed prior to the end of FY2012.
The agency ultimately decided to cancel the solicitation and not make an award, based upon several factors including the lack of available FY2013 funds. The protester challenged the cancelation. Under the FAR, if an agency utilizes the sealed bidding procurement method, once bids have been open an award must be made to the lowest bidder. However, there is an exception where there is a compelling reason to reject all the bids and cancel the solicitation. The protester argued that there was no compelling reason for the agency to cancel the solicitation in this case.
GAO disagreed with the protester, and denied the protest. GAO noted that the award was not completed prior to the close of FY2012 and the expiration of FY2012 funds, and there were no FY2013 funds available for the project. GAO pointed out that an agency has the right to cancel a solicitation when sufficient funds are not available. Because the agency determined that no funding was available for the project, GAO found that there was a compelling reason to cancel the solicitation.
While this case involved a procurement utilizing sealed bidding procedures, the principle extends to the more prevalent negotiated procurements. An agency is generally allowed to cancel a procurement where there is a lack of funding for the project. Unfortunately, in today’s sequestration landscape, this may become a recurring issue.