In Davenergy-VCI JV, LLC, B-423332, April 29, 2025, Davenergy-VCI protested the cancellation by the Army Corps of Engineers (Corps) of a solicitation for architectural engineering construction management services for medical facility construction projects required by the Department of Veteran Affairs (VA) in Oregon and Washington. Davenergy had already been advised by the Corps that it was found to be the most highly qualified offeror when the agency unexpectedly pulled the plug.
The Decision
GAO denied the protest, ruling that:
- Cancellation Was Justified: GAO found the cancellation reasonable because the most immediate VA project was eliminated from the requirement, the next project was over a year out, and no funds were available to proceed.
- Funding Matters: Agencies cannot award contracts without available funding, and the VA’s mandate that the Corps return allocated funds to the VA was sufficient reason to cancel, even if it occurred months after Davenergy was selected as the most qualified firm.
- Timing Doesn’t Create Pretext: Davenergy argued that delays and communication lapses hinted at improper motives. GAO disagreed, noting that delays—even post-evaluation—do not invalidate a cancellation if a rational basis exists.
- Government Discretion Upheld: Agencies retain broad authority to cancel solicitations when needs change or funding disappears, even after proposals are evaluated.
Key Takeaways for Contractors
- Cancellation Can Happen Late in the Game: Agencies can lawfully cancel after evaluations or vendor selection if requirements shift or funds vanish.
- Protesting Cancellation Is an Uphill Battle: GAO generally won’t second-guess agency judgments on funding availability or project timing unless there’s clear evidence of bad faith or irrationality.
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