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2010 Procurement Review: Protests



Contents

Successful GAO Protests

Court of Federal Claims

Court of Appeals for the Federal Circuit

SBA Office of Hearings and Appeals

Introduction

Jurisdiction/Timeliness/Standing/Override

Agency's Needs

Defective Solicitations

Evaluations

Organizational Conflicts of Interest

Lack of Meaningful Discussions

Sole Source

Evaluations

Canceling Solicitations

Organizational Conflicts of Interest

Organizational Conflicts of Interest

Small Business/HUB Zone

Small business, 8(a), HUBZone

 

Purchase Orders

Option Exercise

Canceling Solicitations

Discovery/Procedure

Responsiveness

Equal Access to Justice

Protest Costs

Corrective Action

Miscellaneous

Successful GAO Protests

Introduction

The GAO published (some belatedly) 39 decisions sustaining protests on the merits. 

Defective Solicitations

The GAO sustained the protest of DynCorp International LLC because task order solicitations were outside the scope of the underlying multiple-award contracts.

The GAO sustained Total Health Resources'  protest that a solicitation requirement for two years' experience by the prime was unduly restrictive because the agency could not establish the requisite experience by a subcontractor or team member would not suffice.

Similarly, Missouri Machinery & Engineering Co. won its protest because the agency did not establish that a solicitation requirement for vendors to be an original equipment manufacturer's authorized repair facility was necessary to meet the agency's needs.

NCS Technologies convinced the GAO that solicitation provisions requiring (i) computers and monitors to be from the same manufacturer and (ii) computers to have Intel-based microprocessors were unduly restrictive of competition.

Lack of Meaningful Discussions

AINS, Inc., won its protest because of a lack of meaningful discussions; specifically, the agency's request for a new project schedule did not adequately apprise the firm that the agency's evaluators considered its original project schedule to be too short. The GAO usually says that meaningful discussions only require the agency to alert offerors to the general areas in which their proposals are found wanting.

AMEC Earth & Environmental won its protest because the agency failed to conduct meaningful discussions and treated offerors unequally in its evaluation. Specifically, the agency failed to apprise the protester of weaknesses in its proposal to the same extent the agency did so with all other offerors and failed to evaluate other offerors' neglect to identify an issue required by the solicitation that the protester had reasonably identified based on publicly available information.

CIGNA Government Services won its protest because (i) the agency failed to conduct meaningful discussions where it determined that certain of the protester's proposed costs were understated and  adjusted the most probable cost estimate associated with the protester's costs upwards rather than reopening discussions to allow it an opportunity to address the issue; (ii) the agency evaluated the past performance of the awardee's minor subcontractor where the solicitation provided for the consideration of the past performance only of "significant" or "critical" subcontractors; and (iii) the agency presented no rational basis for its less favorable evaluation of the protester's proposal for one of the awards contemplated under the solicitation  than for another, essentially identical proposal submitted by the protester for a different award under the same solicitation. 

Flawed Evaluations 

The GAO sustained a protest by C&B Construction because the agency did not adequately document its rationale for selecting a higher-priced quote in response to a solicitation for the award of a task order under a blanket purchase agreement.

In companion decisions, the GAO sustained protests by McKissack+Delcan JV II and PMO Partnership Joint Venture after the DOT had found the accounting systems proposed by two joint ventures for a cost reimbursable contract unacceptable simply because each proposal was based on using the individual indirect rates of the JV partners. The GAO thought this was a matter of responsibility rather than responsiveness, rejected the agency's unsupported conclusion that CAS 401 demanded a single overhead rate for the JV, and found no other rational basis for the agency's conclusion. Undaunted, the agency then decided that the PMO's proposal should be rejected because it was noncompliant with cost or pricing data requirements in FAR 15.408. PMO protested again, and the GAO sustained this second protest, too, because the solicitation did not require cost or pricing data and was not subject to the requirements of FAR Part 15. 

General Dynamics and Unisys won their GAO protest against the TSA's issuance of a task order to Computer Sciences Corp. because the agency's price realism evaluation of staffing was flawed and because the agency credited CSC for proposing an incentive fee lower than the one the solicitation indicated was mandatory.

The GAO sustained the protest of Shaw-Parsons Infrastructure Recovery Consultants because the agency's evaluators failure to adequately consider narrative responses in past performance questionnaires.

Irving Burton Associates  won its protest because there was no rational basis for the agency's evaluation of (i) the awardee's proposal with regard to a transition plan and the requirement to present program milestones and (ii) the protester's alleged lack of proposal detail.

The GAO sustained the protest of Milani Construction because the agency concluded the protester's offered price for a fixed-price contract was unrealistically low even though the solicitation did not specifically notify offerors that price realism would be an evaluation factor.  Of course, a company can always "buy in" below cost on a fixed-price contract, but there should always be an analysis by every procuring agency as to whether there is a conscious decision to buy in or whether the offered price is so far below cost that the offeror clearly hasn't the foggiest idea of the magnitude of work involved in performing the contract and will only get itself and the Government in trouble if it is awarded the contract.

J2A2JV won its protest because the awardee failed to meet the solicitation's definitive responsibility criterion of five years relevant experience as a general contractor.

The GAO sustained the protest of Ewing Construction Co. because, in taking corrective action on Ewing's prior protest by reevaluating proposals without further discussions, the agency improperly determined that part of Ewing proposal rendered the firm ineligible for award when, under the solicitation's evaluation scheme, such a deficiency should only have resulted in the proposal being downgraded.

Contrack International won its protest because the agency knew of adverse past performance information concerning the awardee but failed to consider it. The GAO also sustained a protest by  Brican Inc. because the agency failed to credit it in the areas of past performance and experience for proposing the same subcontractor that the awardee had been rewarded for proposing.

The GAO sustained a protest by System Engineering International because the agency only included two higher-rated, higher-priced quotations in its price/technical tradeoff analysis when lower-priced, lower-rated quotations were technically acceptable.

Powersolv won its protest because the evaluation of the protester's project manager was inconsistent with solicitation's evaluation scheme and because there was no evidence in the record to demonstrate that the agency meaningfully evaluated price in making its award decision. 

Wackenhut Services prevailed because the agency had evaluated the awardee's  management approach, which was prohibited by the solicitation, as an attribute that exceeded the solicitation's minimum requirements.

Biblia won its protest because the agency did not document its "best value" evaluation.

In Vanguard Recovery Assistance, Joint Venture, the agency's  past performance evaluation was based on a numerical scoring system that reduced the offeror's overall rating because it submitted additional information on two less relevant contracts, even though it received the highest adjectival rating on each of the individual contracts it submitted.

Information Ventures won its protest because the record did not support the Contracting Officer's determination to make only one ID/IQ award, rather than multiple awards, under a solicitation for support services.

The GAO sustained the protest of Douglas County Fire District #2 because the agency unreasonably rated the protester's proposal as "fail" in the "geographic coverage" evaluation factor even though (i) it offered to provide the same geographic coverage as it had successfully provided under the predecessor contract and (ii) its proposal language was similar to the awardee's, which the agency rated as "pass."

Marine Hydraulics International won because the agency made several erroneous upward adjustments to the protester's cost proposal during the cost realism evaluation. 

DRS ICAS, LLC is another example of an agency's stubborn insistence on finding ways to stick with its original awardee after taking corrective action, and DRS won because (i) several technical weaknesses assessed by the agency's evaluators lacked a rational basis; (ii) the agency should have considered additional performance under a related contract that occurred between the time of the original evaluation and the reevaluation; and (iii) the agency improperly assessed a weakness for failing to explain an an MTBF calculation when neither the solicitation nor the specifications required such an explanation.

CIGNA Government Services won its protest because (i) the agency failed to conduct meaningful discussions where it determined that certain of the protester's proposed costs were understated and  adjusted the most probable cost estimate associated with the protester's costs upwards rather than reopening discussions to allow it an opportunity to address the issue; (ii) the agency evaluated the past performance of the awardee's minor subcontractor where the solicitation provided for the consideration of the past performance only of "significant" or "critical" subcontractors; and (iii) the agency presented no rational basis for its less favorable evaluation of the protester's proposal for one of the awards contemplated under the solicitation  than for another, essentially identical proposal submitted by the protester for a different award under the same solicitation. 

In Matt Martin Real Estate Management LLC, an unsuccessful post-award protest, the court held, inter alia, that HUD had a rational basis for assigning all five proposals an overall rating of "Good" after analyzing the ratings under each individual evaluation factor, even though the offerors' individual ratings were not identical.

Organizational Conflicts of Interest

C2C and Cahaba Safeguards won companion protests because the GAO was not satisfied with the agency's evaluation of a mitigation plan for a possible organizational conflict of interest (OCI) submitted by the successful offeror.

The GAO sustained another set of companion protests (B. L. Harbert Brasfield & Gorrie, JV,  and McCarthy/Hunt, JV) because the GAO found two types of organizational conflicts of interest: one based on "unequal access to information" and the other on "biased ground rules." However, the Court of Federal Claims subsequently reversed in the Turner Construction Co. case discussed below.

Small Business/HUB Zone Issues

In  Eagle Home Medical Corp., the GAO sustained a protest because the Contracting Officer failed to amend a solicitation to comply with an SBA OHA decision that the NAICS code assigned to the procurement was improper.

DGR Associates won its GAO protest against the terms of a solicitation because the procuring agency failed to consider whether the conditions for a HUBZone set-aside existed before proceeding with an 8(a) set-aside. Rice Services won two GAO protests, each in summary fashion, because the Air Force and the Defense Commissary Agency failed to consider whether SDVOSB set-aside should be reserved for HUBZone concerns.

In Powerhouse Design Architects & Engineers, the GAO sustained a set of protests because the VA failed to follow the requirements of the Veterans Benefits, Health Care, and Information Technology Act of 2006, which required it to set aside architect-engineering services procurements for SDVOSBs.

Purchase Orders

American Security Programs won its protest against against issuance of a task order outside the scope of an FSS contract.

In the Rapiscan Systems protest, the GAO found that issuance of a purchase order for items not included in vendor's FSS contract was improper where solicitation had limited competition to vendors holding FSS contracts.

Canceling Procurements

JER 370 Third Street won its GAO protest because the agency lacked rational basis for canceling the solicitation.

Responsiveness

Hostetter, Keach & Cassandra Construction won its protest against the rejection of its bid as nonresponsive where, although there was a discrepancy in names of bidder and bid bond principal, the record showed that they were the same entity and that the principal would be liable on the bonds if the bidder defaulted.

Protest Costs, Attorneys Fees, Bid and Proposal Costs

In Transportation Security Administration--Costs, the GAO granted a cost-of-living upward adjustment to the statutory limit on hourly rates for attorneys fees in a protest by General Dynamics One Source, a large business.

Court of Federal Claims

Timeliness/Standing/Jurisdiction/Automatic Stay 

In DataMill, the court held that, under FASA, it lacked jurisdiction over protest against an agency's decision to conduct a noncompetitive, sole source procurement via the issuance of a delivery order under a competitor's contract.

In Eskridge Research Corp., the court denied a firm's request for an injunction against the Government's decision to continue to employ the services of a contract awardee during the period in which the Government was accomplishing corrective action in response to the plaintiff's earlier-filed GAO protest. In balancing the equities for an injunction, the court found that interests of national defense and security and the plaintiff's lack of urgency in the timing of both its original GAO protest and its subsequent court case weighed against granting an injunction. Specifically, the court noted, inter alia, that the plaintiff had not filed its GAO protest in time to obtain the automatic stay (even  though the GAO protest had subsequently been dismissed as moot when the agency undertook corrective action): "By sitting on its rights and failing to secure an automatic stay before the GAO or seeking timely relief in this court, the plaintiff created or exacerbated the harm it now claims can only be avoided by preliminary injunction. [The awardee] is performing the current contract because [the plaintiff] did not timely seek to stop this performance. In such circumstances, the equities do not favor the plaintiff." The case is worth a read for several other issues as well, including the concept of mootness.

In Jones Automation, the court came within a whisker of holding that it lacked jurisdiction over a protest that a bridge contract should be extended, especially absent any showing that the plaintiff would be excluded from the follow-on competition. However, the court contented itself with concluding the plaintiff had not established the requisite elements for a TRO and invited it (dared it, actually) to let the court know whether it was still interested in pursuing injunctive relief. 

Shamrock Foods lacked standing because it had not bid on the protested solicitation and had waited until after bids were submitted (long after award, actually) to file a protest.

In Technical Innovation, the agency decided to take corrective action after which the original awardee tried to keep the protest on the docket to permit the court to review that corrective action. The court, however, dismissed the original action as moot and concluded the awardee, who was not the original protester, had no standing to keep it alive.

In Gonzalez-McCaulley Investment Group, the court (over the Government's objection) has granted one plaintiff leave to amend a complaint that  failed to include the jurisdictional allegations required by the rules for both a CDA claim and a bid protest.

In the DGR Associates protest, the court rejected the agency's allegation that the protest was untimely under Blue & Gold, Fleet because it was filed after proposals were due. The court noted that the protester (i) had initially filed a timely GAO protest, which satisfied the timeliness requirement and (ii) was in court only because the agency had ignored the GAO's decision in favor of the protester.

In its latest decision in the long-running L-3 Communications Integrated Systems protest (based on the Druyun fiasco), the court denied the Government's motion to dismiss the protester's claim for breach of the implied contract of fair dealing. Specifically, the court held that, contrary to the Government's view, the Federal Circuit's recent decision in Resource Conservation Group did not "preclude a plaintiff either from claiming a breach of the implied contract of fair dealing in a bid protest or from relying on [28 U.S.C.] § 1491(a) as a predicate for jurisdiction in a bid protest involving a procurement."

Homesource lost its protest because it failed to establish prejudice (and, therefore, lacked standing). Specifically, the protester's evaluation scores were so low that it would not have been in line for award even if it had prevailed on the merits.

CS-360, LLC filed a pre-award protest claiming that the agency unreasonably delayed restoring it to the VIP database of eligible SDVOSBs after it resolved the agency's concerns with its status, but the court held that the agency's subsequent determination that the plaintiff was not eligible on different grounds meant the plaintiff lacked standing because it was not eligible for consideration for award, and, therefore, the court lacked jurisdiction.

In Vero Technical Support , the court discussed the definition of "pending" in applying 28 U.S.C. 1500 to decide whether it had jurisdiction (it did not) over a bid protest when a prior suit based on the same operative facts had been dismissed by, but was still within the appeal period in, a federal district court.

PMTech is noteworthy not so much for its specific holding (denying the plaintiff's challenge to the Government's override of the automatic stay during a bid protest) but rather for its thorough discussion of the legislative history, case law, and  standards for deciding whether an override decision is justifiable.

Linc Government Services lost its protest against multiple types of alleged errors in the technical, price, past performance, and trade-off evaluations, but, as a preliminary matter, the court described the three-pronged analysis that may be required to establish the necessary element of "prejudice" in any bid protest:

[B]id protest jurisprudence writ large can be seen as evolving into a three-step analysis. First, in order to demonstrate allegational prejudice, a plaintiff must show that it would have had a substantial chance of being awarded the contract but for the combined impact of all agency decisions alleged to be unlawful. . . .  Second, and only if the plaintiff makes this threshold showing of prejudice, the court determines whether the challenged agency decisions were contrary to law. . . .  And third, in order to demonstrate APA prejudice, the plaintiff must show that it would have had a substantial chance of being awarded the contract but for the combined impact of any agency decisions adjudged to be unlawful. . . .

To be sure, the second prejudice inquiry (the third step in the above analysis) is not always required. If all alleged procurement errors ultimately withstand the court’s scrutiny—i.e., if the court upholds as lawful every agency decision challenged by a plaintiff—the need for a second prejudice inquiry will be obviated. . . . By the same token, if none of the challenged agency decisions survives judicial review—i.e., if all decisions alleged to be unlawful are adjudged to be so—a second prejudice inquiry would simply duplicate the first and would thus be redundant. . . . However, where a plaintiff succeeds on the merits of some but not all of its allegations, a second examination of prejudice becomes necessary. This is because the plaintiff’s success in demonstrating allegational prejudice in such cases does not guarantee its success in demonstrating APA prejudice. . . . Specifically, the plaintiff in such cases may be able to satisfy the substantial chance test based upon the combined impact of all allegedly unlawful agency decisions, but may fail to do so based upon the cumulatively lesser impact of those decisions that the court ultimately determines to be unlawful. . . . [citations omitted]

Mobile Medical International Corp. lost its post-award protest because (i) it did not establish it would have had a substantial chance for award if its protest were sustained and, therefore, lacked standing and (ii) its allegedly proprietary information had not been improperly disclosed because plaintiff, itself, had already disclosed it in the public domain.

In Joyce Terry d/b/a Shirt Shack, the court held that, although it lacked 28 U.S.C. 1491(b) jurisdiction over protests of AAFES procurements (because AAFES is a non-appropriated fund instrumentality or "NAFI")  and also lacked jurisdiction over the CDA count in plaintiff's complaint (because no claim had been submitted to the contracting officer), the court (in what it calls a case of first impression), nevertheless, has 28 U.S.C. 1491(a)(1) jurisdiction over the protest that AAFES acted arbitrarily and capriciously by awarding a concessionaire contract despite the awardee's alleged failure to comply with a material solicitation requirement.

Evaluations

In K-Mar Industries, the court held that the agency did not act irrationally in giving the awardee's staffing plan a technically-acceptable rating (despite the plaintiff's contention the awardee misclassified workers in violation of Service Contract Act) because (i) the awardee did not manifest an affirmative intention not to be bound by that Act and (ii) the specific SCA evaluation espoused by the protester was not in the solicitation evaluation plan.

In DMS All-Star Joint Venture, the court found that the price discussions with offerors were fair, were not unequal, and did not improperly alert one offeror that it must lower its price in a particular area.

The court dismissed the bid protest by White Hawk Group because the offeror had such inferior overall evaluation scores that any errors by the SBA or procuring agency in regard to its small business size or joint venture status were irrelevant and nonprejudicial since it would not have received award anyway.

Two decisions concluded the Government's evaluators had rational bases for excluding the protesters' offers from the competitive range: ManTech (which discusses, inter alia, the permissible methods of conducting a price realism evaluation) and Hyperion.

In PlanetSpace, the court gave up trying to figure out what, if any, trade-off analysis the SSA had conducted and stayed the case to give the SSA an opportunity to submit a statement articulating its trade-off evaluation.

In Electronic Data Systems, the court found that the agency (i) made a clear and significant error in allowing a pricing proposal from the awardee that was not compliant with the solicitation's requirements and (ii) failed to notify all offerors that such an approach was acceptable. Nevertheless, the court found the protester had not established that it was prejudiced by this error because the source selection authority (i) attempted to adjust for it in the final evaluation and (ii) concluded that, even if all the costs at issue were eliminated from the protester's offer, it still would have been significantly higher than the awardee's. Maybe so, but decisions like this make me nervous. Instead of the courts or the agency guessing what the bids would have been had the error not occurred, it would seem preferable to correct it and then find out for certain by requiring the submission of revised proposals.

USfalcon lost its post-award protest because the court concluded there was a rational basis for the agency's decision to eliminate the firm from the competitive range on the ground that the firm's response to a sample task was unacceptable. The court stressed it would not second guess the technical evaluation, itself.

When NASA complied with the court's decision in the original Wackenhut protest and corrected errors in the evaluation, it awarded the contract to Wackenhut. The original awardee, Coastal International Security, then protested, but failed to convince the court (i) that the agency's use of a staffing benchmark instead of an independent government staffing estimate for part of the technical evaluation was improper or (ii) that the SSA was required to follow the details of the SEB's findings.

In Pitney-Bowes Government Solutions, the court denied  the protester's challenges to various aspects of the evaluation: the protester did not establish bias from agency official's past friendly relationship with awardee; the evaluators could use their personal knowledge of the incumbent's past performance issues in making their evaluation; and recovery of improperly destroyed evaluation materials from back-up tapes was sufficient to overcome an allegation of spoliation.

In Ceres Gulf, Inc., the court denied a protest by the prior awardee after the court found that the Army's decision to take corrective action in response to a GAO protest (by rescinding the original award, revising the solicitation, and then soliciting another round of offers) had a rational basis because it was reasonable to conclude the agency had not engaged in meaningful discussions due (in part) to ambiguities in the original solicitation.

The court rejected arguments by Chenega Management that the evaluators were biased, that they did not evaluate offerors on a fair and equal basis, that they were unqualified, and that an illegal gratuity had been accepted by a cognizant government official.

CRAssociates succeeded in convincing the court that there were prejudicial errors in the agency's price, technical, and past performance evaluations that justified an injunction even though the protester lost on several other grounds of its protest (e.g., OCI, flawed responsibility determination, misplaced price information in the technical proposal). Keep firing: you're bound to hit something eventually.

In the Weston Solutions protest, the court ordered the procuring agency to review and clarify its ambiguous rankings of A-E firms and then to make a new determination of final rankings on the record.

EREH Phase I won its post-award protest because the GSA's finding that the property offered by awardee did not lie within a flood plain was arbitrary and capricious (and just plain wrong); but the court also held that the equities did not favor an injunction; so the protester was limited to recovering its bid preparation costs.

In the court's heavily-redacted decision in Pyramid Real Estate Services, the protester failed to timely protest solicitation terms and alleged ambiguities in the solicitation and lost its protest against various conclusions by the evaluators (because the court would not not substitute its judgment for those of the evaluators and  because the protester failed to meet the high burden of proof required to establish the evaluators' bias).

Linc Government Services lost its protest against multiple types of alleged errors in the technical, price, past performance, and trade-off evaluations. The evaluators went to great lengths in order to ascertain that seemingly negative past performance information concerning the eventual awardee was not actually relevant. The issue was whether the evaluators' efforts amounted to commendable diligence or bias (as the protester alleged).

Bilfinger Berger AG Sede Secondaria Italiana won its protest due to the agency's inappropriate reliance on an Italian legal opinion (concerning a certificate required by applicable Italian law) as the basis for a negative responsibility determination. The court rejected the Government's contention that the claim was barred by laches because the contractor had waited a number of weeks for the publication of the redacted version of the GAO's decision on its earlier protest before proceeding in federal court. The court also discussed the plaintiff's standing, i.e., its contention that it would have had a substantial chance for award if the errors it alleged were remedied.

In Bona Fide Conglomerate (a successful post-award request for a TRO under a procurement by the GSA and the Committee for Purchase From People Who Are Blind or Severely Disabled pursuant to the AbilityOne Program, formerly known as the Javits-Wagner-O’Day Act), the court found the plaintiff had raised significant factual questions concerning the agency's failure to follow the evaluation scheme and possible bias but required a $50,000 bond to enter the TRO.

In the original (PlanetSpace I) decision, the court found the SSA's rationale for an award decision ambiguous and ordered the agency to provide an explanation. After having received and reviewed a sworn declaration from the SSA, the court denies the protest because the SSA's declaration evidences a rational trade-off analysis that did not amount to a non-responsibility determination concerning protester's proposal. 

Sole Source  

Mission Critical Solutions won its bid protest. The company originally won its protest at the GAO against a sole source award because  the agency made the award without considering whether it could obtain competition from two or more HUBZone small businesses as required by the HUBZone statute, the provisions of which the GAO recognized as "mandatory." The SBA and the Army fought the protester's position in the protest (but the GAO rejected the SBA's interpretation). On the SBA's request for reconsideration, the GAO reaffirmed its decision and emphasized that HUBZone program set-asides are mandatory when the statutory conditions are met. However, shortly thereafter, the OMB issued a memorandum and then the Office of Legal Counsel of the Department of Justice issued its own memorandum concluding the GAO's position was incorrect and directing executive agencies to disregard it. Mission Critical Solutions took the fight to the Court of Federal Claims, which held that the company's and the GAO's positions were correct after all.

Angelika Textile Services won its protest because the Contracting Officer, in violation of the Veterans Benefits Act and its implementing regulations (the New Guidelines), did not consider whether SDVOSBs or VOSBs were available to meet a requirement prior to placing a firm on the AbilityOne Procurement List so that she could award it a sole source contract, all this despite the fact that the GAO had previously dismissed the protest as frivolous because it did not spot the issue.

Cancellation of Solicitation

In Madison Services, Inc., the court denied a protest after finding that FEMA's cancellation of solicitation had rational basis and was not a mere pretext. Moreover, the protester's allegations of bad faith did not come close to the standard of clear and convincing evidence needed to overcome the strong presumption of good faith accorded to agency decisions.

Organizational Conflicts of Interest

In the important Turner Construction Co. bid protest decision, the court held that the agency lacked a rational basis for following a GAO recommendation that the court considered irrational. The GAO had concluded that an awardee should have been disqualified for an organizational conflict of interest, and the agency decided to follow that recommendation. The awardee then filed suit, and the court (in granting the plaintiff's request for an injunction) found that the GAO had impermissibly substituted its judgment for the agency's original judgment concerning the absence of a conflict of interest. The court's decision is instructive for its discussion of the various types of OCIs and for its analysis of the standard of review the GAO should use in assessing an agency's determination concerning an OCI and the court's standard of review in assessing both a GAO recommendation and an agency's decision to follow that recommendation. Subsequently, the court denied the intervenor's request to stay the injunction pending an appeal to the Federal Circuit.

Small Business, 8(a), HUBZone

Infiniti Information Solutions won its protest against a direct 8(a) award because HUD ran afoul of (i) 13 C.F.R. 124.503(e) (by going beyond informal market assessments, which are permissible, and performing actual technical evaluations before making the award) and (ii) 13 C.F.R. 504 (by expressing a clear intent to make the procurement a SDVOSB set-aside prior to offering the procurement to the SBA for award as an 8(a) contract).

In the DGR Associates protest, the court castigated the Air Force in the strongest possible language for ignoring the GAO and court's views and the applicable statute in awarding a contract as an 8(a) set-aside without considering giving preference to a HUBZone procurement when there was a reasonable likelihood that two or more qualified HUBZone firms would submit offers and award could be made at a fair and reasonable price.  The court overturned the award and required to agency to consider the HUBZone procurement before proceeding further. 

Angelika Textile Services won its protest because the Contracting Officer, in violation of the Veterans Benefits Act and its implementing regulations (the New Guidelines), did not consider whether SDVOSBs or VOSBs were available to meet a requirement prior to placing a firm on the AbilityOne Procurement List so that she could award it a sole source contract, all this despite the fact that the GAO had previously dismissed the protest as frivolous because it did not spot the issue.

Option Exercise

The fortuitously named (and successful) Magnum Opus protest involves a passel of fascinating issues. The court granted a tailored injunction to the protesters after it decided it had bid protest jurisdiction to hear a protest that the Government's decision to exercise options in only four of six ID/IQ contracts was improper because, by eliminating the contracts' NTE pricing from the option awards, the Government did not evaluate the options as exercised as part of the original evaluation, as required by CICA and FAR 17.207(f) (which the court found confers a cause of action upon potential competitors). The court decided not only that the the Government should have obtained competition for the option years but also addressed a variety of other issues, including, inter alia, the standing of a firm to proceed with a protest absent its joint venture partner; timeliness and waiver issues; and the parameters for a limited  injunction.

Discovery/Procedure

In the latest procedural decision in L-3 Communications Integrated Systems (a bid protest based on the Druyun fiasco), the court held, inter alia, that the standard to be applied in deciding whether the plaintiff should be allowed to supplement the administrative record where the plaintiff had alleged bad faith by government officials was not the "irrefragable proof" required to prove bad faith on the merits, but rather only that the bad faith allegations "appear to be sufficiently well-grounded" to support supplementation of the administrative record.  The court also found exceptions to most evidentiary objections raised by the Government to the requested supplementation, permitting most of the supplementation requested by the plaintiff except as to rough drafts of a final report and documents that had not been adequately identified or authenticated. Stay tuned.

In DataMill, the court declined the protester's request to supplement the administrative and struck an affidavit relied on by the protester in its arguments to the court because the affidavit contained many irrelevant statements, some statements repeating evidence already in the administrative record, and arguments against the protested agency decision. 

In the Allied Technology Group post-award bid protest, the court denied motions by both the protester and the intervenor to supplement the administrative record with affidavits essentially arguing the case and not available to the Contracting Officer at the time the selection decision was made. The court did allow supplementation with certain other factual materials.

Pitney Bowes Government Solutions convinced the court allow additional discovery in its protest because the court was satisfied Pitney Bowes had shown there were indicia of bias and favoritism by the head of the TEP and because the Government had violated FAR Subpart 4.8 by destroying the individual TEP evaluators' worksheets.

In Infiniti Information Solutions, the court denied a government motion for relief from the court's prior decision sustaining a bid protest and directing the Government to set-aside an improper contract award (the Government apparently having ignored that prior decision and having failed to request reconsideration or to appeal within the required time periods).

In Diversified Maintenance Systems, a protest of an award on a HUBZone set-aside, the court discussed the standards for allowing discovery in a bid protest and permitted limited discovery concerning the issue whether the awardee qualified as a HUBZone business.

Acrow Corp. of America contains a detailed analysis of the standards the court will use to decide whether to permit supplementation of the administrative record in a bid protest.

Corrective Action

In Harris Patriot Healthcare Solutions, the protester originally filed suit when the agency indicated it intended to override a CICA stay during a GAO protest, but, after the agency decided to take corrective action and the GAO dismissed the protest as academic, the court concluded the suit concerning the override was moot, despite the  protester's suspicions that the agency would use another contractual vehicle to circumvent maintaining the status quo pending the outcome of the corrective action.

The Sheridan Corporation won its protest when the court found that the agency's proposed corrective action in response to a GAO protest had been filed was improper. Though the agency's requirements had not changed, the agency proposed to broaden the  former competitive range and solicit revised proposals. The court found the corrective action prejudiced the original awardee after its prices had been exposed and was unnecessary. In a subsequent decision, the court permanently enjoined the Government from resoliciting revised proposals where the agency's needs had not changed: 

The Court finds the MCII Generator case particularly relevant to the present case. In both situations, the "defect" identified by the Government had no relation to the proposed corrective action. The record in both cases suggests that the respective agencies made the correct award decisions, and that if any flaws in the process existed, such flaws occurred during the evaluation of the properly submitted proposals. In such circumstances, a reevaluation of the proposals may be warranted, but a resolicitation of the proposals compromises the integrity of the procurement system, especially where the winning price has been disclosed to the public.

Defendant argues that this case can be distinguished from Delaney, MCII Generator, and other cases because here, the resolicitation is on identical terms. The Court finds this position entirely illogical. Instead, the fact that the agency conducted the resolicitation on identical terms further strengthens Plaintiff’s argument that a resolicitation was improper and unnecessary. Where the terms of the RFP remain unchanged and the initial proposals were properly submitted, there is no rational basis for the agency to resolicit proposals that it already received under a properly conducted solicitation. The only conceivable reason to permit resolicitation would be to allow the unsuccessful offerors an opportunity to beat the now disclosed price of the winning proposal. Such a result is impermissible and would severely damage the integrity of the procurement process.

Miscellaneous

In FAS Support Services, the court held that the Government did not err in refusing to reinstate a bidder to a competition, after the bidder had been (i) suspended because its 49% owner was de-barred but then (ii) removed from the suspension list after it divested itself of the de-barred firm. The court noted, inter alia, that the post-divestiture firm was a significantly different entity, which was too big a change for the Government to be required to re-assess mid-competition.

In Navarro Research and Engineering, the court held that 41 U.S.C. 253j(d)'s requirement for a post-award debriefing (and other enhanced competition procedures) on solicitations for large task order contracts does not apply to GSA FSS solicitations.

Mobile Medical International Corp. lost its post-award protest because (i) it did not establish it would have had a substantial chance for award if its protest were sustained and, therefore, lacked standing and (ii) its allegedly proprietary information had not been improperly disclosed because plaintiff, itself, had already disclosed it in the public domain.

In Pyramid Real Estate Services, LLC v. United States, No. 10-599C (Dec. 9, 2010), the court assessed monetary sanctions against an attorney in a bid protest for disclosing material under a protective order to its client in order to file a separate bid protest.

Equal Access to Justice

Regarding an EAJA application in Infiniti Information Solutions, the court held, inter alia, that government contract law was not a legal specialty justifying an increase in the statutory cap on hourly attorney rates recoverable under the EAJA.  The decision includes other interesting issues, including whether the fact that the GAO originally dismissed the protest proved the Government's position was substantially justified (it did not). The court, on its own motion decided to reduce the amount of time one attorney recorded preparing for oral argument: "The vast majority of work throughout the case had been undertaken by [two other attorneys], who were undoubtedly substantially more familiar with the matter than [the attorney who actually made the oral argument] was. The court infers that much of [the latter attorney's] time in preparation for oral argument was spent becoming familiar with the facts and law of the case for the first time. Because no explanation was given for why [the other two attorneys] could not deliver the argument themselves, the court finds that half of the 23.3 hours spent in preparation for oral argument were not 'reasonably expended.' " 

 

        

Court of Appeals for the Federal Circuit

Agency's Needs

Savantage Financial Services affirmed the decision of the Court of Federal Claims because the agency had a rational basis for requiring an integrated financial, acquisition, and asset management system that is currently fully operational within the federal government.

Organizational Conflicts of Interest

In PAI Corp. v. United States , the CAFC affirmed the Court of Federal Claims' opinion and denied a claim that the procuring agency had failed to follow applicable regulations in documenting and mitigating organizational conflicts of interest because the Contracting Officer reasonably determined (after certain corrective actions had been completed) that no "significant" conflict of interest remained.

 

SBA Office of Hearings and Appeals

The OHA also: (i) dismissed as premature an appeal that a size determination "might" affect a firm's 8(a) eligibility; (ii) returned another dispute to the Area Office and required it to explain its rationale for a finding of affiliation; (iii) concluded there is no exception for 481(a) income adjustments that counters the general rule that total income plus cost of goods sold as stated on a firm's tax return is the basis for calculating annual receipts for purposes of size determinations;   (iv) denied a petition for reconsideration of its decision in SIZ-5090 regarding the inclusion of inclusion of conference management revenues in annual receipts as amounts collected for another pursuant to 13 C.F.R. § 121.104(a); and (v) dismissed an appeal both regard to the current procurement (because it was untimely for that purpose) and for future procurements (because it lacked the requisite specificity as to the alleged errors in the Area Office's determination.

In Precision Lift (which is dated December 17, 2007, but published this year), the OHA reversed the Area Office's determination that an offeror would not be supplying the product of a small domestic manufacturer.

In Hazzard's Environmental and Trucking Co., the OHA granted the SBA's request to dismiss an appeal of a termination from the 8(a) program because of the protester's pattern of failing to provide required documentation to the SBA to establish its continued eligibility for the 8(a) program.

In Office Design Group, Inc., the SBA's OHA upheld an SBA decision that a firm was not eligible for the 8(a) business development program because the disadvantaged individual on whom it based its claimed status did not hold its highest officer position and a non-disadvantaged officer received higher compensation than did the disadvantaged individual.

In the Women's Venture Fund, the OHA originally held that the SBA's suspension of the firm from the program was improper because it had been attempted without affording the firm a hearing. Subsequently, the SBA tried unsuccessfully to convince the OHA to reconsider its decision or to decide sua sponte that the insistence on the requirement for a hearing was misplaced, both of which the OHA refused to do. However, unfortunately for the Fund, the SBA found a way to prevail in the end. It sent the firm reinstatement papers that included unacceptable terms and, when the firm did not sign and return them in the time required, it in effect "relinquished" its awards. Unfortunately, the OHA had no jurisdiction to hear an appeal from this situation because the SBA had not terminated the firm from the program, so, in the end, the SBA got what it wanted all along.

ONS21 Security Services succeeded in its size protest because the Area Office had no authority to change the NAICS code assigned to a procurement in response to a size protest, at least absent a NAICS code protest, and the protested firm's receipts clearly exceeded the limit established by the NAICS code in the solicitation.  It appears the Area Office really dropped the ball in the size appeal of  DynaLantic Corp. because the OHA vacated the Area Office's denial of the size protest and remanded for further investigation of a host of possible violations of the clear fracture and ostensible subcontractor rules and other matters related to possible affiliation. In Corners Construction, the OHA affirmed the determination a firm was not an eligible SDVOSB because its General Partnership Agreement was ambiguous on relevant points, and its service-disabled veteran was not shown to have sufficient experience to control the firm.

In Alutiiq International Solutions, the OHA overturned the Area Office's  finding that a firm violated the ostensible subcontractor rule. The OHA noted that the firm's associations to which the Area Office objected were with its parent rather than a subcontractor and also fell within the ANC exemption to the SBA's affiliation rules. In A1 Procurement, the OHA upheld the Area Office's determination  that a firm ran afoul of ostensible subcontractor rule because the firm had no experience in the type of work required by the contract and planned to use a large business as a subcontractor to perform an undefined portion of work.

In CWU, Inc. , the OHA upheld the Area Office's determination that a firm violated the ostensible subcontractor rule because, inter alia, it "(1) hired the incumbent contractor; (2) proposed giving the incumbent 49% of the work; (3) did not delineate tasks it would perform or that [the incumbent] would perform on either a task or a cost basis; and (4) proposed to keep all of the incumbent‘s on-site management employees in the same positions as under the previous contract." The OHA concluded "there is little evidence that Appellant planned to contribute anything to the contract other than its size." Ouch. 

However, in Colamette Construction Co., the OHA reversed the Area Office's finding of a violation of the ostensible subcontractor rule: "[T]here is no evidence of unusual reliance because [the alleged ostensible subcontractor] is performing only 3% of the anticipated value of the contract. Second, other than the evidence concerning the shared indemnity, and perhaps the evidence that [the alleged ostensible subcontractor] provided limited assistance with Appellant’s bid preparation, I can find no evidence that is even arguably probative that [the alleged ostensible subcontractor] may be Appellant’s ostensible subcontractor for the instant procurement. When I weigh [the alleged ostensible subcontractor's] agreement to indemnify the surety against Appellant’s extensive industry experience and [the alleged ostensible subcontractor's] limited role in performing the . . . contract, I find the issue of indemnification to be an outlier and thus not probative of a violation of the ostensible subcontractor rule." The OHA also found that the Area Office had confused general affiliation tests with an ostensible subcontractor analysis: "[T]he fact that Appellant leases office space or receptionist services from [the alleged ostensible subcontractor] is irrelevant under an ostensible subcontractor rule analysis." 

Jenn-Kans is another decision in which the OHA discussed affiliation in the context of identity-of-interest and clear fracture analysis.

In the belatedly published, but still interesting, NEIE Medical Waste Services, the SBA had dismissed an SDVOSB eligibility protest as untimely because it was not submitted within five days of bid opening in a sealed bid procurement. The OHA remanded the case for a determination whether the protester was correct in its allegation that, regardless how the acquisition was labeled, it was not conducted according to sealed bid procedures. The OHA noted that, if the protester's allegations were correct, the timeliness rule would not apply. On the other hand, in Excelsior Defense, the OHA affirmed a dismissal (as untimely) of a protest  in a negotiated procurement filed more than five days after receipt of notice from the Contracting Officer of the apparently successful offeror.

In Judson Builders, the OHA affirmed the decision of the Area Office because, as required by the applicable regulation, the Area Office relied on tax returns filed by a firm before it self-certified, instead of amended returns filed after the initiation of a size determination. In PMTech, the OHA remanded a case to Area Office for additional findings because it had not included sufficient information in its original size determination to enable the OHA to evaluate the Area Office's conclusions concerning the total average employee count of the protested firm and its affiliates. In Specialized Veterans, the OHA upheld a finding of affiliation through the totality of circumstances, including the provision of technical and financial assistance, e.g., enabling the protested firm to obtain required bonding. In Forterra Systems, Inc., the OHA found affiliation based on the presumption of ownership and control by two shareholders holding 28.74% and 17.32% of voting stock (pursuant to 13 C.F.R. 121.103(c)(2)).

  In Incisive Technology, the OHA found that a firm's almost total dependence on subcontracts with one large firm for  revenues created affiliation through economic dependence.

In  Condor Reliability Services, the OHA concluded the Area Office was correct in finding affiliation by identity of interest among family members absent evidence of a clear line of fracture. Similarly, in Speegle Construction, the OHA upheld the Area Office's finding of affiliation due to identity of interest between family members because there was insufficient evidence of a clear fracture (the challenged family member was a Vice President with, among other things, the power to control the firm upon the absence or inability of its President).

In The Clement Group, that the Area Office's finding of affiliation through negative control was improper because, under Alabama law, the 51% owner could remove directors for cause if they attempted to prevent action by refusing to attend meeting and, thereby, preventing a quorum.

In  Gulf-Shred, Inc. dba Shred-It Mobile/Biloxi, the OHA reversed the Area Office's determination because the indemnity provision in a franchise agreement did not create an affiliation between the franchisor and the franchisee and because the franchise agreement did not give the franchisor the power to control the franchisee.

In Silver Enterprises Assocs., the OHA affirmed an Area Office size determination because the probative value of signed statements provided under penalty of perjury by the challenged firm outweighed the general allegations of the protester.

In Size Appeal of Ecotope Environmental Services, Ltd., the OHA affirmed the Area Office's finding that the protested firm was other than small based upon an adverse inference after the protested firm failed to file SBA Form 355 as requested by the  Area Office.

In Size Appeal of TLC Catering, the OHA reversed the Area Office's finding of a violation of ostensible subcontractor rule where the subcontractor made sandwiches and the prime provided all other box-lunch ingredients, and assembled, delivered, and served the box lunches.

In Size Appeal of Sunshine Kids Services, Inc., the OHA concluded that the Area Office properly dismissed a protest as untimely despite the protester's contention that the agency's notice of award was not sufficient to give it notice of its protest grounds because it did not identify the separate members of the JV awardee. The OHA noted that the applicable regulations only require notice of the awardee, not its constituents.

In Size Appeal of Sabre88, LLC, the OHA affirmed the Area Office's finding of affiliation through the newly organized concern rule because one firm's Managing Member was a key employee of the other, and there was no clear evidence of fracture.

In Size Appeal of LGS Management, Inc., the OHA affirmed the Area Office's  determination that a common address was not enough to establish affiliation between two firms, especially in light of other evidence that argued against affiliation.

In Size Appeal of Beltsville Industries Group, Inc.-Desbuild Incorporated Joint Venture, the OHA affirmed the Area Office conclusions that (i) the members of a mentor-protégé that formed four joint ventures, no single one of which violated the 3 offers in 2 years rule, were not affiliated with one another, and (ii) the various joint ventures were not affiliates.

In Size Appeal of LOGMET, LLC, the OHA reversed the Area Office's size determination that firms were affiliated based on the identity of interest and ostensible subcontractor rules; the OHA found that the subcontracts did not rise to level of economic dependence and that the prime contractor had the capacity to perform the entire contract and only chose to assign a portion of the  work to the subcontractor.

In Size Appeal of Cummings Construction, the OHA affirmed the Area Office's finding of affiliation based upon identity of interest (via economic dependence) with the 49% owner. 

VET Decisions

Matter of Airborne Services, LLC, overruled the prior decision in  Matter of United Medical Design Builders, LLC, SBA No. VET-197 (2010)  and stated in part as follows:

I hereby overrule United Medical to the extent it holds that the SBA has an obligation to adjudicate protests brought in relation to VAAR Part 819 procurements. The SBA currently has no authority or obligation to decide SDVO SBC status protests filed in connection with procurements issued under VAAR Part 819, and the SBA’s decision to reject jurisdiction for such protests is consistent with the statutes and regulations at issue. Consequently, SDVO SBC status protests relating to VAAR Part 819 must be decided by the VA OSDBU until an interagency agreement is executed between the VA and the SBA to allow the SBA D/GC to decide such protests under VAAR § 819.307.

In Reese Goel JV, the OHA held it lacked jurisdiction to hear an appeal from determination by the VA's Office of Small and Disadvantaged Business Utilization.

In Cooper-Glory LLC, the OHA determined that a joint venture owned by two other companies was not qualified as a SDVOSB and, in doing so, rejected the protester's attempt to rely on rules from other sections of the SBA's regulations that encourage joint ventures. In International Logistics, the OHA found that an ownership interest in an SDVOSB was not unconditional because it could not be sold at fair market value to anyone of the owner's choosing. Two other decisions (Teracore  and Advanced Environmental Solutions) involved the question whether the service-disabled owner's ownership or work in another firm impeded his ability to full time manage and operate the SDVOSB in question. In Jordan-Reses Supply Co., the VA had extended blanket purchase agreements with several companies, two of which were SDVOSBs, one a small business, and another a large business. In doing so, the Contracting Officer indicated that any orders placed during the extended period should give preferential status to the SDVOSBs. The small business protested, but the OHA affirmed the dismissal of the protest on the grounds that it was speculative (since no contract actions had yet occurred and) that it raised a non-protestable issue (since it did not involve an SDVOSB set-aside).

The OHA also decided in United Medical Design Builders, LLC, that a firm was not qualified as an SDVOSB because, under its operating agreement, the service-disabled veteran could not be considered the managing member of the LLC and did not control its management and daily business operations.

 

8(a) (BDP Decisions

In Spectrum Contracting Services, Inc., the OHA upheld the SBA's determination that an individual had not presented sufficient evidence to establish that his retinitis pigmentosa, which impaired his vision, had resulted in him being socially disadvantaged due to his physical disability. The OHA's decision includes a very detailed and skeptical analysis of the evidence the applicant had submitted. 

In Cybersoft International, Inc., the OHA dismissed an appeal from a termination from the 8(a) program whose only grounds was the appellant's "unconditional apology" for failing to provide required documents in a timely manner.

In NuRelm, Inc., the OHA dismissed an appeal from termination from the 8(a) program which alleged only that its 8(a) annual update, although admittedly late, was complete when it was finally submitted.

In Secure Trendz, Inc., the OHA dismissed as untimely an appeal filed more than 45 days after the firm received the SBA's decision terminating it from the 8(a) program. To the same effect is Indigo Spectrum, Inc., SBA No. BDP-360 (July 2, 2010).

In LCCCS, the OHA dismissed an appeal from a termination from the 8(a) program because the petitioner alleged only that “[d]ue to staff turnovers and server crashes,” the firm was unable to retrieve information “which triggered a chain of delays to everyone that needed access to [the firm's] past and current tax information including SBA.” 

In Capitol Drywall Supply, Inc., the OHA dismissed an appeal from termination from the 8(a) program because the petitioner alleged only that it had faced "challenges." 

In Alabasi Construction, Inc., the OHA upheld the SBA's determination that the applicant's evidence presented with regard to his education, employment, and business history as an Arab American of Iraqi descent, who was sometimes suspected (without evidence) of being a terrorist was insufficient to establish negative impact upon his entrance into or advancement in the business world, which is one of the requirements for a finding of social disadvantage under 13 C.F.R. 124.103(c)(2)(iii). 

In J. Millennium Enterprises, Inc., the OHA dismissed an appeal from termination from the 8(a) program because the petitioner admitted it had not submitted required documents to the SBA.

In Royal Engineers & Consultants, LLC, the OHA dismissed as untimely an appeal that had been filed at the wrong office.

In Hazzard's Excavating and Trucking Co., the OHA held that an allegation of a lack of support from the SBA's district office was insufficient as an excuse for termination from the 8(a) program. 

In Dominican Services, Inc., the OHA denied a motion for reconsideration, which was based on the fact that the copy of the SBA's original motion to dismiss sent to the protesting firm was not signed, a defect the OHA concluded was an immaterial technical mistake, even though the protester claimed that was the reason it had not responded to the motion (which was the reason the OHA originally had dismissed its appeal).


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