Agency cancels contract with little explanation, and that's OK

The Government Accountability Office has reaffirmed an agency’s right to cancel a contract after it has been awarded, and even before the contractor has started working on it.

In this instance, Zolon PCS lost a contract through no fault of its own. The company merely got caught up in some bad timing.

Zolon had won a blanket purchase agreement from the Labor Department last year to support the agency’s data warehousing operations and implement new software for enterprise data and information management systems.

Work was delayed because a competitor filed a protest, which led to a corrective action after Labor decided to reevaluate the bids.

But a lot happened during the re-evaluation period and particularly the passage of the American Rescue Plan Act, which put requirements on Labor to store and analyze unemployment insurance data for each state. Labor also had to build a new national data warehouse for that information and include fraud analytics.

The department also received approval for a Technology Modernization Fund project that would change how the agency shares data.

Because of those new requirements, Labor decided it needed a new senior executive-level reporting dashboard.

All of the changes meant that the BPA awarded to Zolon no longer met the department’s needs. Instead of evaluating bids for contract it no longer needed, Labor canceled the BPA in its entirety.

Zolon filed a protest, arguing that Labor was being unreasonable because it still needs the services in the original solicitation. The company also argued that Labor provided no documentation for the decision to cancel the pact.

All the reasons I stated above -- the ARP Act, the TMF-backed project and so on -- only surfaced during Zolon protest.

GAO said that Labor's notice to bidders that the requirements had changed and couldn’t be met by the BPA. That’s all the department needed.

The underlying reasons only emerged because Zolon filed its protest.

I believe that Labor acted reasonably after its needs changed. But why not be more direct in explaining that to Zolon? That part doesn’t make sense.

The lesson is to keep pushing those conversations and asking the "why" question, even if that means you have to go to GAO to do it.