Acquisition planning on U.S. federal contracts requires the contracting activity to coordinate and integrate the efforts of all personnel responsible for the acquisition via a comprehensive plan that fulfills the government’s requirements in a timely manner and at reasonable cost. The Competition in Contracting Act (CICA) of 1984, implemented by Federal Acquisition Regulation (FAR) Part 6, mandates full and open competition in federal procurement. Consequently, while there are limited exceptions enumerated in FAR § 6.3, federal agencies must generally use competitive procedures in procuring products and services. Furthermore, federal agencies are expressly prohibited from entering contracts for property or services by utilizing non-competitive procedures when they have failed to properly plan the procurement in advance.

Contractors looking to challenge the Government’s use of non-competitive procedures in such improperly planned procurements must be prepared to demonstrate that the agency’s decision was unreasonable under the particular circumstances of that procurement. In 2014, the Bureau of Indian Affairs (BIA), an agency under the Department of Interior (DOI), was involved in a procurement contract for technology services. The procurement at issue was a Buy Indian Set-Aside conducted under the Buy Indian Act of 1910, and the eventual contract was awarded to an eligible non-incumbent contractor. However, a week before the conclusion of the predecessor contract, the incumbent contractor timely protested the award at the Government Accountability Office (GAO). In response, the BIA informed the GAO that it intended to take corrective action and requested that the GAO dismiss the incumbent’s protest.

In procurement parlance, insourcing refers to an organizational decision to perform the work internally instead of procuring it from outside sources. As procuring entities, government agencies may, from time to time, decide to internally perform work that was previously contracted out via competitive procedures or otherwise choose to perform new work using agency employees and resources. While such occasions are relatively rare, contractors may need to challenge such government decisions to insource work. A potential example of such a scenario could involve a contractor challenging an agency’s decision not to issue a follow-on contract on which the contractor is the incumbent due to the agency’s decision to perform the work internally using government employees.

Protesting such insourcing decisions involves a situation in which choosing one protest forum over another may prove advantageous for prospective protestors. This is because when reviewing insourcing decisions, the Government Accountability Office’s (GAO) bid protest jurisdiction may be somewhat limited compared to that of the Court of Federal Claims (COFC). For instance, while the GAO routinely reviews agency decisions to cancel procurements to determine whether the cancellations were reasonable, it has been reticent to review such cancellations under its bid protest function when the work under canceled procurement is to be performed by government employees. This is because the GAO, a part of the legislative branch of the government, considers such insourcing decisions to be within the purview of government discretion and a matter of executive branch policy.

Government agencies must document their evaluations decisions in sufficient detail to provide a reasonable basis to support an award. When a protestor challenges the reasonableness of the government’s evaluation in the form of a bid protest, adjudicative forums such as the Government Accountability Office (GAO) first question whether the government’s evaluation is adequately documented before determining whether the evaluation is consistent with the solicitation’s stated evaluation criteria. Therefore, when an agency fails to document its evaluation or retain evaluation materials, it bears the risk that there may not be sufficiently detailed supporting rationale in the record for the adjudicative forum to conclude that the government had a reasonable basis for the award decision. In such cases, the GAO will typically sustain the protest challenging the government’s evaluation decision and recommend that the agency reevaluate the proposals and sufficiently document its rationale. The adjudicative forum will also generally recommend that the procuring agency terminate the awarded contract for the government's convenience if as a result of the reevaluation, an offeror other than the awardee is in line for the award.

Federal agencies have broad discretion in determining whether to cancel a solicitation, provided they can establish a reasonable basis for their cancellation decision. The government may properly cancel a solicitation for various reasons anytime during the evaluation phase or even during an ongoing bid protest, as long as there is a reasonable basis for doing so. However, procuring agencies may not cancel solicitations for invalid reasons, such as to forego full and open competition or to avoid resolving a bid protest. In reviewing an agency’s cancellation decision for reasonableness, the Government Accountability Office (GAO) will determine whether the cancellation has a valid basis that is sufficiently documented and within the agency’s discretion. Furthermore, there may be instances where the protestor alleges that the agency’s stated reasons for canceling the solicitation are merely pre-textual while questioning the agency’s actual motivation for the cancellation. In such cases, the GAO will thoroughly evaluate the procuring agency’s actions underlying the cancellation decision to ensure the cancellation was reasonable and well-documented.

In B-413924, the GAO sustained such a bid protest where the protestor alleged that the agency’s stated rationale for canceling the solicitation was pre-textual and that the agency’s actual motivation was to subvert competition and award the contract to the incumbent on a sole-source basis. The canceled solicitation subject to the protest was issued on a lowest-price-technically-acceptable (LPTA) basis by the Department of Veterans Affairs (VA) for laundry services for its Los Angeles, Loma Linda, and Long Beach hospitals. After the closing date for the submission of quotations had passed, the VA reopened the solicitation and issued an amendment to increase the maximum award amount from $2.5M to $10M. Once the protestor submitted a revised quotation in response to the amended solicitation, it received a notice that the VA had decided to cancel the solicitation because it received “legal guidance” to do so. Upon canceling the solicitation, the VA issued the incumbent contractor a $1.7M extension.