Judge tells Army to reinstate SETA III contract before cancelling it again

The protest saga over a $365 million Army contract for broad analysis and acquisition support services has taken a bizarre turn with a federal judge’s ruling that the procurement must be reinstated, albeit with some room for cancelling it again.

In July, the Army told the U.S. Court of Federal Claims of its plans to cancel the Systems Engineering and Technical Assistance III contract for reasons unrelated to the protests.

President Trump’s executive order in April requiring agencies to buy commercially-available products and services whenever possible caught the attention of Army leaders overseeing SETA III, who deemed this contract to be “non-commercial.”

The protests by Mayvin, StraCon Services Group and TAPE LLC remain poised to essentially become moot under the Army’s plan to pursue commercial solutions for its SETA needs.

But the judge overseeing the case has told the Army that while it can still eventually cancel the procurement, the service branch must go about doing so in a different way.

It is important to note that Judge Zachary Somers’ 30-page ruling, first filed July 24 and unsealed Thursday, does not address nor mention the executive order in any way. Neither is the Army’s desire to acquire commercial solutions for the SETA III requirement set.

The ruling instead addresses the Army’s first attempt in the summer of 2024 at cancelling SETA III and starting all over again, following several lawsuits from protesters seeking different solutions for resolving various post-award issues surrounding the contract.

SETA III has been structured as a set-aside contract reserved for woman-owned small businesses, which is key because the Federal Acquisition Regulation spells out the steps for contracting officers to withdraw set-asides.

Contracting officers have to give their reasons in writing to both an agency small business specialist and a Small Business Administration procurement center representative.

That prescribed chain of events is where the judge found problems with how the Army tried to nix SETA III.

In prior court filings, attorneys representing the Army acknowledged the service branch did not observe the procedural requirements for withdrawing set-asides.

As the Army saw things, withdrawals of set-asides and cancellations of them are distinct events. The Army believed FAR provision 19.502-9, the section that governs withdrawals, only apply when an agency decides to open up the competition.

The judge instead found that while the terms cancellation and withdrawal “are not necessarily synonymous,” they both contemplate an action that revokes or takes back a prior action.

“In the context of FAR 19.502-9, a cancellation of a small business set-aside is at least a type or method of withdrawal of a set-aside. Functionally, when a set-aside is cancelled, it ceases to exist,” Somers wrote. “When a set-aside is withdrawn, it too ceases to exist. The terms are coextensive. Thus, when the agency cancelled the solicitation, it was required to observe the requirements of FAR 19.502-9 because the set-aside was withdrawn.”

A second FAR provision worth noting is 15.206(e), which is often referred to as the cardinal change provision that says withdrawals of set-asides always entail the cancellation of a solicitation.

The Army contended that it could essentially withdraw the set-aside aspect and continue with the SETA III procurement, but the judge found that interpretation as one that “does not comport with the FAR.”

Somers also took issue with how the Army documented other reasons for why it wanted to cancel SETA III, namely in how the service branch wanted to instead set it up as a multiple-award contract instead of single-award.

Advanced Technology Leaders was the original winner of the contract in 2023 before this entire saga began. The current SETA II contract held by OST is slated to expire on Nov. 19 and all task order work must wrap up by Feb. 14, 2026.

Where to now for the Army regarding SETA III? Recall that the Army previously told the court it planned to solicit, evaluate and award a new commercial contract before SETA II expires.

But the Army must apparently first re-activate the SETA III procurement as it were, even as Judge Somers acknowledges the service branch’s desire to take a different path.

Somers did write the Army can still “cancel it in a manner that is not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”

The protest storyline may have concluded with this ruling, but the seemingly inevitable replacement for SETA III will start a brand new story centered around this question:

What exactly does the Army consider a “commercial” contract for SETA work?