GAO Says Changed Requirements and Lack of Funding Are Sufficient Reasons to Cancel Contract

The agency canceled the protester’s contract. The protester objected. GAO noted  agencies have broad discretion to cancel a contract. It denied the protest because the agency had reasonably canceled due to a change in requirements and lack of funding.

Davenergy-VCI JV, LLC, GAO B-423332

• Protest – The protester objected to the cancellation of a contract for architectural engineering construction management services. The agency responded it was reasonable because the requirements changed and it no longer had funding to proceed with an award.
• Decision – In a negotiated procurement, the contracting agency has broad discretion in deciding whether to cancel a solicitation. It only needs to establish a reasonable basis for the cancellation. According to prior decisions, no longer having a requirement for the item solicited and having a lack of funding were both reasonable bases to cancel a solicitation. Thus, GAO found the cancellation was proper and denied the protest.

The protester was represented by Nicholas Nazarko of Davenergy-VCI JV, LLC. The agency was represented by Matthew R. Keiser and Elisabeth A. Dixon of the Army. Charmaine A. Stevenson and John Sorrenti of GAO participated in the preparation of the decision.

— Case summary by Joshua Lim, Assistant Editor.

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