In Seventh Dimension, LLC v. United States, No. 21-2275C (May 11, 2022), the Court of Federal Claims provided detailed guidance concerning the question of “whether, and under what circumstances, the government may cancel a Federal Acquisition Regulation (“FAR”) part 15 procurement and start over from scratch.” Seventh Dimension, LLC was, as the court put it, “the last offeror standing in this contractor edition of Survivor” after filing multiple successful protests of an Army procurement. However, Seventh Dimension was unable to reap the benefits of its hard-fought success because the agency ultimately “decided to pull the plug on the show, cancelling the procurement following a two-year process.” Seventh Dimension challenged the agency’s cancellation decision as arbitrary and capricious, and the Court of Federal Claims agreed.

Here are five things from the decision that contractors need to know:

1. Agencies have wide discretion to cancel solicitations.

It is well-recognized that agencies have broad discretion to amend or cancel a situation based on changed circumstances, and there are few limits on that discretion. As a result, protestors challenging an agency’s decision to cancel a solicitation typically face an uphill battle. Nevertheless, as the Seventh Dimension decision makes clear, agency discretion to cancel a solicitation is “not boundless.”

2. The authority that the agency invokes in its cancellation decision matters.

The Seventh Dimension court examined the various statutory and regulatory means an agency may rely upon to cancel a solicitation, including 10 U.S.C. §§ 3301(b) and 3303(c), FAR  206(e), and FAR 15.305(b). In Seventh Dimension, the agency conceded that it had solely relied upon FAR 15.206(e) to support its cancellation decision. Accordingly, the court focused on the specific requirements of that provision in analyzing the parties’ arguments. The particular arguments that will be raised in a challenge to an agency’s decision to cancel a solicitation will depend in large part on the legal authority the agency relies upon as the basis for its decision.

3.Market research or otherwise” has teeth.

FAR 15.206(e) requires that a contracting officer’s judgment in deciding to cancel a solicitation be based on “market research or otherwise.” The court rejected the government’s argument that the phrase “market research or otherwise” merely requires that the cancellation decision have a reasonable basis. Instead, the court held that “market research or otherwise” means market research or information similar to market research, which may include “information or data already in an agency’s possession or perhaps even an agency’s concrete experience.”  The court’s extensive discussion of FAR 15.206(e) provides helpful guidance for future cases involving that provision and similar language in other regulations.

4. Government arguments concerning the scope of its discretion should be scrutinized.

In defending protests—whether of cancellations of solicitations or otherwise—the government will frequently argue that it had had essentially unfettered discretion to take the challenged action. Such arguments should not be accepted at face value. As the Seventh Dimension court observed, “where the FAR wants to yield maximum discretion to a CO, the FAR knows how to do so.” The court contrasted the language of FAR 15.206(e)—which specifically requires a contracting officer’s “judgment” to be based on “market research or otherwise”—with other FAR provisions that authorize contracting officers to exercise “judgment” without specifying the class of information that must be considered. Based on this comparison, the court concluded that an agency’s discretion under FAR 15.206(e) was not as broad as the agency claimed.

5. Pretextual cancellations are not permitted.

Agencies are not permitted to cancel a solicitation as a pretext for improper motives or reasons—such as irritation with a contractor who has filed multiple protests, for example. The Seventh Dimension court was troubled by the fact that the protestor had filed multiple successful protests, only to ultimately be deprived of a contract award “at the eleventh hour” based on an unsupported, irrational cancellation decision. As the court put it, the facts of the case were “reminiscent of a game of Lucy and the football from the world of Charles Schulz.” Nevertheless, the court ultimately concluded that there was no concrete evidence that the agency had acted in bad faith.