A. Intervention as of Right

Agility claims that it has the right to intervene in this action. In its brief, Agility addresses each of the four parts of the Federal Circuit’s formulation of the requirements in RCFC 24(a)(2). The parties’ focus, however, is on the second and third issues— whether Agility possesses the requisite legally protectable and direct interest in the subject of the present action to support its intervention. Agility identifies its interest in this litigation as the opportunity to “be an offeror under the Solicitation, much as [plaintiff] and [intervenor-defendant] are.” ECF No. 37 at 7. It alleges that its interest is direct and immediate because a decision to “reconsider the scope of [DLA’s] corrective action . . . would be linked directed to Agility’s claim that any such redefined corrective action must incorporate new competitors (e.g., Agility).” Id. Conversely, a decision that the corrective action was inappropriate would “foreclose Agility’s interest in the procurement.” Id. at 8.

Plaintiff, defendant, and intervenor-defendant all dispute Agility’s position, arguing that the fact that Agility did not make an offer in response to the original solicitation precludes it from establishing an interest in this protest. See ECF No. 42 at 5 (intervenor-defendant stating that “because it did not submit a proposal, Agility lacks any legally protectable interest in DLA’s initial award decision, or in any reevaluation of the proposals that were submitted in response to the Solicitation”); ECF No. 43 at 3 (plaintiff arguing that “[b]ecause it did not submit a proposal or otherwise participate in the procurement to date, Agility is not eligible to participate in th[e] corrective action”); ECF No. 44 at 3-4 (defendant asserting that “[i]t is unclear how Agility can establish a legally protectable interest in this case, given that it never submitted a proposal and, thus, did not participate in the source selection process (which is the primary focus in this case)”). Moreover, the parties argue that even if Agility had an interest in the litigation, that interest would not be directly affected by the outcome. See ECF No. 42 at 5 (intervenordefendant arguing that “even if the Agency were to reconsider the scope of its corrective action under the Solicitation, its reconsideration would apply to the offerors that bid on the Solicitation—and not Agility”); ECF No. 43 at 3 (plaintiff asserting that Agility lacks a direct interest because if this case is successful, it would result “in the original awardee’s award being reinstated”); ECF No. 44 at 4 (defendant arguing that any interest Agility may have is “indirect and speculative”).

The court agrees with plaintiff, defendant, and intervenor-defendant. It does not appear that Agility, as a non-offeror in this procurement, has any legally protectable interest in the outcome of the instant litigation. Agility has provided the court no basis for concluding that it is legally entitled to become an offeror should the agency press forward with its corrective action. See, e.g., Microdyne Outsourcing, Inc. v. United States, 72 Fed. Cl. 230, 232 (2006) (explaining that the term “interested parties,” as used in 28 U.S.C. § 1491(b)(1) (2012) “excludes those who did not submit proposals, bidders who withdrew from a solicitation, and offerors who were not competitively ranked for award”) (citing Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1334 (Fed. Cir. 2001)).

Even assuming, however, that Agility’s alleged interest was legally protectable, it is far too attenuated to meet the requirement that intervention be based on an interest that is direct or immediate in nature. As noted above, Agility contends that its interest is sufficiently direct and immediate because a decision to “reconsider the scope of [DLA’s] corrective action . . . would be linked directly to Agility’s claim that any such redefined corrective action must incorporate new competitors (e.g., Agility).” ECF No. 37 at 7. Conversely, a decision that the corrective action was inappropriate would “foreclose Agility’s interest in the procurement.” Id. at 8.

Agility’s argument on this point fails on its own terms. First, Agility’s position that a corrective action would include new offerors is entirely too speculative, and cannot be considered either direct or immediate. In addition, if the court determines that the corrective action was inappropriate, Agility loses no rights or opportunities that it currently possesses. Indeed, Agility’s apparent suspension is the condition that foreclosed its opportunity to compete for an award under the subject solicitation, not its inability to intervene in this action.

This conclusion is in accord with the outcome and colorful illustration drawn in Nevada Site Science Support & Technologies Corporation v. United States, 128 Fed. Cl. 337, 338 (2016). Therein, the court denied two motions to intervene filed by disappointed competitors, where the plaintiff sought reinstatement of the original award:

It seems clear to the Court that the potential intervenors have no real interest in this dispute, as “interest” is legally understood. The potential intervenors would certainly have an interest in getting a contract of which they are legally qualified, and, if the plaintiff loses the protest, one of the potential intervenors may receive the subsequent award. However, the simple fact that a party might benefit from another’s legal misfortune does not lead to an understanding that said party should have a role in occurrence of that legal misfortune. If a singer suffers a voice injury and is, as result, fired from her job, it is hardly conceivable to believe that a Court would allow a rival singer to intervene in that case on the side of the employer simply because he might subsequently get the newly vacant job!

Nevada, 128 Fed. Cl. at 338. As was the case for the putative intervenors in Nevada, Agility could, theoretically, receive the award if the contract is re-solicited in the future. But such a possibility does not justify its intervention here. Because Agility has failed to establish the requisite direct and legally protectable interest, the court declines to allow intervention as of right.

B. Permissive Intervention

Agility contends that should the court determine it is not entitled to intervene as of right, the court should, nevertheless, allow it to intervene with permission. See RCFC 24(b)(1)(B) (“On timely motion, the court may permit anyone to intervene who . . . has a claim or defense that shares with the main action a common question of law or fact.”). The issue that Agility offers as justification for permissive intervention is the common “challenge [to] the lawfulness of DLA’s actions under the Solicitation.” ECF No. 37 at 10. Agility, however, focuses more of its argument on fairness. It claims that “[p]rudence and equity demand that Agility not be left in the dark to litigate before the Court without fully understanding what is unfolding in the KGL protest, especially when all other parties will be opposing Agility with the benefit of comprehensive information from both matters.” Id. For these reasons, Agility seeks “equitable intervention.” Id.

Agility has offered no authority to support its request for what it calls equitable intervention. Instead, Agility has provided the court with various reasons to conclude that its interests materially diverge from those at stake in this case. In its opening brief, Agility emphasizes that it does not seek to actively participate in the case. Rather, “Agility’s intervention would serve the sole purpose of ensuring fairness and efficiency in its own challenge to the Solicitation, without adding any burden to the proceedings in KGL’s protest.” Id. at 4. Agility states that it “seeks to intervene only in order to access the record.” Id. at 10.1 In addition, Agility acknowledges that the two cases are substantially different, noting that plaintiff “looks largely backwards in its post-award protest, while Agility’s protest looks forward to a new competition,” id. at 9, and that the two matters come “from very different vantage points,” id. at 10.

Because Agility has failed to demonstrate that it “has a claim or defense that shares with the main action a common question of law or fact,” as required by RCFC 24(b)(1)(B), the court concludes that permissive intervention is inappropriate.  (KGL Food Service, WLL v. U. S. and ANHAM FZCO, No. 18-823C, July 13, 2018)

“To qualify as an “interested party,” a protestor must establish that: (1) it was an actual or prospective bidder or offeror, and (2) it had a direct economic interest in the procurement or proposed procurement.” Distrib. Sols., Inc. v. United States, 539 F.3d 1340, 1344 (Fed. Cir. 2008); see Rex Serv. Corp. v. United States, 448 F.3d 1305, 1307 (Fed. Cir. 2006); Myers Investigative & Sec. Servs., Inc. v. United States, 275 F.3d 1366, 1370 (Fed. Cir. 2002) (“In bid protests under the Tucker Act, ‘we ... construe the term ‘interested party’ in section 1491(b)(1) in accordance with the [standing requirements of the] CICA and hold that standing under § 1491(b)(1) is limited to actual or prospective bidders or offerors whose direct economic interest would be affected by the award of the contract or by failure to award the contract.’”) (quoting Am. Fed’n of Gov’t Emps., AFL-CIO v. United States, 258 F.3d 1294, 1302 (Fed. Cir. 2001).

The Federal Circuit has not yet addressed the precise issue of a prospective bidder’s standing to challenge an insourcing decision. Triad Logistics Servs. Corp. v. United States, No. 11-43C, 2012 WL 5187846, at *10 (Fed. Cl. Feb. 29, 2012). However, in an analogous circumstance, the United States Court of Appeals for the Federal Circuit in Distributed Solutions found that prospective bidders deprived of the opportunity to compete were interested parties with standing to challenge the Government’s action. See Distrib. Sols., 539 F.3d at 1344-45. In Distributed Solutions, the plaintiffs, software vendors, contested “the government's decision to task [one of its current contractors] with awarding subcontracts for the purchase of software instead of procuring the software itself through a direct competitive process.” Id. The Federal Circuit found that the plaintiffs were “not mere ‘disappointed subcontractors’” but were “prospective bidders [that had] submitted qualifying proposals in response [to the government’s Request for Information (“RFI”] and . . . were prepared to submit bids pursuant to the anticipated Request for Quotation[s] (“RFQ”) or Request for Proposal[s] (“RFP”) that typically ensues after an RFI is issued.” Id. at 1344-45. The Distributed Solutions plaintiffs “possess[ed] a direct economic interest in the government action at issue in that they were both deprived of the opportunity to compete . . .” Id. at 1345.

In a similar vein, in Savantage Financial Services, Inc. v. United States, the Court of Federal Claims held that to establish a direct economic interest in a procurement a “plaintiff must demonstrate that it could have competed for the contract had there been a competition.” 123 Fed. Cl. 7, 32 (2015), aff’d, 668 F. App’x 366 (Fed. Cir. 2016); see Myers, 275 F.3d at 1370-71. Specifically, to be considered a prospective offeror, a plaintiff must demonstrate that it was qualified to provide the services at issue, and that it would have submitted an offer had there been a competition. Savantage, 123 Fed. Cl. at 32; see Myers, 275 F.3d at 1370-71. Here, Plaintiff has met these requirements as it had previously competed for and won a contract to provide BASH program-related services to Cannon Airforce Base, had provided those services for over two years, and was poised to offer and provide these same services following the expiration of its contract. Here, as in Savantage, “protestors who have been deprived of the opportunity to compete for the provision of specified products or services and who allege the loss of ‘significant business opportunities’ as a result of the decision to forgo competition have established a direct economic interest in the proposed procurement.” 123 Fed. Cl. at 32-33.

This Court recognizes that the Court of Federal Claims found that plaintiffs challenging insourcing decisions lacked standing in Triad Logistics Services Corp, 2012 WL 5187846, at *26 and Elmendorf Support Services Joint Venture v. United States, No. 12-346C, 2012 WL 3932774, at *2 (Fed. Cl. Sept. 10, 2012) (“Elmendorf II”). In both Triad and Elmendorf II, the Court emphasized the difficulty of fashioning a remedy, but that impediment does not appear to be present here. In Triad, the court noted that “[t]he Air Force [could not] easily reverse the insourcing decision which . . . resulted in agency personnel performing the [vehicle operations and maintenance services] that previously had been performed by [plaintiff] . . .” Triad, 2012 WL 5187846, at *21. In Elmendorf II, the court was “guided by the fact that the only remedy sought by plaintiff [was] a permanent injunction” and reasoned that “an injunction against Air Force performance would inevitably be more disruptive of [base supply] services, more disruptive to the lives of individuals, and cause more waste.” Elmendorf, 2012 WL 3932774, at *3. The Court stated that “[u]nder no circumstances would we enter an injunction now that the Air Force has completely absorbed the work itself.” Id.

Here, there is a single detailee performing the services at issue on a year-to-year basis. Based on the truncated record at this juncture, it would seem that such an arrangement could, if warranted, be terminated subject to the detail’s terms and conditions. Assuming Plaintiff could prove that the insourcing decision was a prejudicial violation of statute or regulation or lacked a rational basis, the Court could order the relief Plaintiff seeks without disruption of the services. Whether the ensuing harm to the detailee, the USDA, the Air Force, and the public interest would outweigh the harm to Plaintiff properly awaits further development of the record. In general, the fact that an insourcing decision may be difficult to unravel is a pragmatic consideration to be weighed in determining the propriety of fashioning injunctive relief, not an issue of whether, as a threshold matter, a protestor is an interested party able to challenge that decision.

Defendant further argues that Plaintiff must have an existing contract to have standing to challenge an agency’s decision to insource a requirement, relying on Triad and Elmendorf II. In Triad, the Court of Federal Claims held that the plaintiff lacked standing to challenge an agency’s decision to insource a requirement because the plaintiff did not have an existing contract with the Government at the time the complaint was filed. Triad, 2012 WL 5187846, at *26. Similarly, in Elmendorf II, the Court of Federal Claims held that the plaintiff lacked standing to challenge an agency’s decision to insource a requirement because, though the plaintiff had an existing contract with the government at the time the complaint was filed, the contract later expired, “eliminat[ing] that contractual ‘hook’ between plaintiff and the work being performed in-house.” Elmendorf, 2012 WL 3932774, at *2. However, nothing in the Tucker Act requires that a plaintiff possess a current contract to challenge an agency’s decision to use a noncompetitive process to acquire services or goods. The passage of time between the expiration of a plaintiff’s contract and its protest of an insourcing decision does not divest the plaintiff of the hallmarks of its prospective bidder status. Rather, a prospective bidder’s delay in challenging a procurement decision is a factor to be weighed in determining the propriety of injunctive relief. For purposes of standing, a plaintiff that performed the exact services being insourced and would have bid on the requirement for those same services, would retain its prospective bidder status after its incumbent contract ended.  (Loomacres, Inc. v. U. S., No. 17-824C, October 31, 2017)

1. SOSi Lacks Standing To Bring Its Claim

The administrative record in this matter clearly demonstrates that SOSi will not suffer a non-trivial competitive injury as a result of the Army’s proposed corrective action. And so, SOSi does not have standing to pursue its claim.

To establish standing in this pre-award bid protest matter, SOSi must demonstrate that it (1) is an actual or prospective bidder and (2) possesses a direct economic interest that would be affected by the award of the ITSS Contract or by the failure to award that contract. Weeks Marine, Inc., 575 F.3d at 1359 (citation omitted). It is without dispute that SOSi is an actual bidder for award of the ITSS Contract. And so, to establish that it has standing to pursue its claim, SOSi must show that it will suffer “a non-trivial competitive injury which can be addressed by judicial relief.” Id. at 1362 (quoting WinStar Commc’ns, Inc., 41 Fed. Cl. at 763); see also Sys. Applic. & Techs., Inc., 691 F.3d at 1382.

In its opposition to the government’s motion to dismiss, SOSi alleges that it has standing to pursue this matter for two reasons. First, SOSi contends that it will suffer a non-trivial competitive injury, because the Army’s proposed corrective action will force SOSi to re-compete for a contract that SOSi believes it has already “rightfully won.” Pl. Rep. at 5. In this regard, SOSi also alleges that the record evidence establishes that SOSi already won the ITSS Contract, because the government concedes in this litigation that the initial evaluation process for the RFP was flawed. Id. at 8, 11-13. Second, SOSi contends that it will also be prejudiced by the proposed corrective action in this case, because reopening the competition would result in SOSi “having to unrealistically lower its price to compete” for the ITSS Contract. Id. at 8. Neither of SOSi’s arguments are supported by the evidence contained in the administrative record.

First, SOSi’s claim that it has standing to bring this matter because SOSi already won the ITSS Contract is speculative and without support in the administrative record. In this regard, it is without dispute that the Army initially awarded the ITSS Contract to Six3. AR at 1768-888. It is also without dispute that, on February 18, 2016, the Army’s contracting officer issued a notice of corrective action that, among other things, set aside that contract award. AR at 1977-79. SOSi argues that it has standing because the government acknowledges in this litigation that there were flaws in the evaluation process that led to the award decision. Pl. Memo. at 30-31. But, even if true, such an acknowledgment does not demonstrate that SOSi should have been awarded the ITSS Contract under the circumstances presented by this case. And so, SOSi cannot rely upon the government’s recognition of flaws in the evaluation process for the ITSS Contract to establish standing here.

The administrative record also does not support SOSi’s argument that SOSI would have been next in line for the award of the ITSS Contract if Six3 had been disqualified. AR at 1732- 35. Rather, the record evidence shows that both the Source Selection Evaluation Board and the Source Selection Authority concluded that another offeror−[***]−proposed the next lowest-priced, technically acceptable offer. Id. at 1732; 1734-35. While SOSi appears to suggest that [***] should have been disqualified from the competition because [***] technical volume exceeded the RFP’s page limitation requirements, there is no requirement in the RFP to disqualify a proposal upon this ground. AR at 176-240, 320-65; Compl. at ¶ 2; Pl. Memo. at 29. Indeed, it is mere speculation to assume that SOSi’s proposal should have received a higher rating than [***] proposal. And so, again, the record evidence simply does not support SOSi’s argument that it has standing to pursue this action.

In addition, SOSi’s novel argument that it will be prejudiced by having to “unrealistically lower its price beyond the price proposed by Six3” during the re-competition for the ITSS Contract is similarly without merit or legal support. Pl. Rep. at 5; see Pl. Memo. at 16-17. Specifically, SOSi argues that it has standing because SOSi will be forced to offer a lower price during the re-competition for the ITSS Contract, due to the disclosure of Six3’s price following the initial award of the ITSS Contract. Pl. Rep. at 5, 8. As SOSi notes in its motion for judgment upon the administrative record, the United States Court of Appeals for the Federal Circuit has held that the original awardee of a contract has standing to challenge subsequent agency corrective action upon the ground that it is prejudiced by the corrective action because the awardee’s price has been disclosed. Pl. Memo. at 35; Sys. Applic. & Techs., Inc., 691 F.3d at 1382-83; see also Wildflower Int’l., Ltd. v. United States, 105 Fed. Cl. 362, 391 (2012) (holding that plaintiff, the initial awardee, had standing to challenge corrective action but, ultimately, upholding the corrective action). But, the Federal Circuit has not held−as SOSi contends here−that an unsuccessful offeror has standing to challenge corrective action involving the reopening of competition because of the disclosure of the initial awardee’s pricing information. See Square One Armoring Serv., Inc., 123 Fed. Cl. at 325 (“[P]laintiff has not pointed to any case, and the court is aware of none, in which the court proceeded to address on the merits a protest by an unsuccessful offeror (as opposed to the original awardee) of an agency's original evaluation of proposals after the agency had agreed to take corrective action.”). Indeed, SOSi cites no case law to support this unusual proposition. Pl. Memo. at 15-17; Pl. Rep. at 3-10. Given this, SOSi has not demonstrated that it will suffer a non-trivial competitive injury as a result of the Army’s proposed corrective action in this case. And so, the Court must dismiss SOSi’s claim. Am. Fed’n of Gov. Emps., AFL-CIO, 258 F.3d at 1302; see RCFC 12(b)(1).   (SOS International LLC v. U. S. and Six3 Intelligence Solutions, Inc, No. 16-317C, August 8, 2016)

The Federal Circuit has articulated the logical conclusion that in order to be an actual or prospective bidder, a protestor must have submitted a bid. See Rex Serv., Corp. v. United States, 448 F.3d at 1307. As explained by the Rex court,

MCI [MCI Telecommunications Corp. v. United States, 878 F.2d 362 (Fed. Cir. 1989)] held that “in order to be eligible to protest, one who has not actually submitted an offer must be expecting to submit an offer prior to the closing date of the solicitation.” Further, “the opportunity to qualify either as an actual or a prospective bidder ends when the proposal period ends.”  Here, because Rex could have bid, but chose not to, it cannot be considered a prospective bidder.

See Rex Serv., Corp. v. United States, 448 F.3d at 1307 (quoting MCI Telecommunications Corp. v. United States, 878 F.2d at 365) (emphasis in original). It is equally clear, however, that even if a bidder did not submit a proposal, if it is the complete successor-in-interest to the actual offeror, the bidder may stand in the shoes and have standing to bring a protest. See L-3 Commc’ns Integrated Sys., L.P. v. United States, 84 Fed. Cl. 768, 778-79 (2008) (“L–3 is the complete successor-in-interest to the actual offeror, Raytheon Company, and embraces the identical business unit which submitted Raytheon Company's bid in the C–5 AMP procurement. As such, L–3 stands in the shoes of Raytheon Company in the instant case and has standing to pursue this claim.”); see also Alabama Aircraft Indus., Inc.-Birmingham v. United States, 83 Fed. Cl. 666, 682 (2008) (successor-in-interest to the original offeror, was the de facto same legal entity which had submitted its proposal), rev’d on other grounds, 586 F.3d 1372 (Fed. Cir. 2009).

Therefore, the court must determine if Universal is the complete successor-in-interest to ABM Security Services, and, moreover, if Universal can offer an identical proposal and all of the assets and services promised in the proposal by ABM Security Services. As the court must compare not only ABM Security Services at the time of sale to Universal, but also if ABM Security Services relied on its corporate parent to qualify for award and to provide services if selected for contract award, this inquiry is a very fact-specific one.

The court first looks to ABM Security Services’ proposal. As noted by defendant, the Supplier Capability portion of the proposal listed “Fast Facts,” which refer to ABM Industries, ABM Security Services’ parent company, and not ABM Security Services. 

(sentence and table deleted)

In addition, above the “Fast Facts,” for the Supplier Capability portion of the technical proposal, ABM Security Services’ proposal stated that: “ABM will continue to leverage our entire network of corporate resources, third-party subject matter experts and intellectual capital to best serve the Postal Service’s needs and expectations,” without differentiating between ABM Security Services and its parent, ABM Industries. (emphasis added). Intervenor claims that “[t]his expression of ABM’s reliance on ABM Industries Inc. is more specifically and starkly demonstrated in portions of ABM’s proposal relating to ‘Supplier Capability,’” citing to the statement above that “ABM will continue to leverage our entire network of corporate resources . . . to best serve the Postal Service’s needs and expectations.” (omission in original). Protestor, however, dismisses this argument, noting that the

“Fast Facts” section states that ABM corporate family has over 110,000 employees, but surely no one would reasonably conclude that ABM was promising that 110,000 employees would work on the contract. The table also says that the janitorial section of ABM’s corporate family cleans over two billion square feet per day and the landscaping and grounds section maintains over 25,000 acres, but USPS cannot with a straight face claim that it thought by this statement that ABM was promising to provide janitors or ground maintenance crews to perform this security guard services contract. Rather, these statements are naturally read to indicate only that ABM is the subsidiary in a larger corporation and that it has the support of its corporate family.

(internal citation omitted).

(sections deleted)

This court believes that Alabama Aircraft supports defendant’s and intervenor’s position. Unlike the conclusion in Alabama Aircraft, that, “Alabama Aircraft has the same operational capabilities as its predecessor and due to the sale to the sister company it is in a stronger financial position to perform the instant contract,” this court believes Universal is not the same position now as ABM Security Services was when it submitted its proposal. In fact, Universal appears to lack all of the resources ABM Security Services articulated when it referenced its parent and related corporations.16 ABM Security Services repeatedly used, and relied on, the name and financial information of its parent company in its proposal. Each instance was designed to bolster the proposal of ABM Security Services, and was not, as Mr. Barlev’s affidavit would like the court to believe, mere information about “ABM corporate family’s work in golf course” and “grounds maintenance.” Protestor would have this court believe that each reference was only coloration and not relevant to the merits of the evaluation. The court disagrees, and concludes that, there are simply too many references to support from, or reliance on, the parent company, ABM Industries. Moreover, the information supplied by Mr. Barlev in his affidavit, including about available personnel, although intended to bolster protestor’s case, in fact, does the opposite. The court believes that, unlike in Alabama Aircraft, in which the court found the references to the parent company “connoted only that [the offeror] had the financial support of its parent,” id. at 682, ABM Security Services’ references to its parent company promised more, including personnel and back up support, which Universal has not demonstrated it can provide after the sale of ABM Security Services by ABM Industries.

CONCLUSION

The court notes that the sale of ABM Security Services did not occur until after the agency agreed to take corrective action, and the corrective action appears to have changed little of the underlying evaluation and award justification. Had the agency not taken the corrective action and had the court evaluated the merits of the claims earlier, defendant and intervenor could not have alleged lack of standing due to the sale to Universal because it would not yet have occurred. Despite the unfortunate procedural history of this protest, and the previous, related protests, and the difficult situation in which protestor Universal finds itself, the court concludes that Universal is not the complete successor-in-interest to ABM Security Services’ proposal, and, therefore, the court cannot consider the merits of the protest. Based on the above discussion, defendant’s and intervenor’s motions to dismiss protestor’s complaint are GRANTED. The parties’ cross-motions for judgment on the Administrative Record are MOOT. Protestor’s complaint is DISMISSED.  (Universal Protection Service, LP V. U. S. and Command Security Corporation, No. 16-126C, April 26, 2016)  (pdf)

On December 11, 2015, the [Forest Service] FS filed its remand decision. See ECF No. 24-1. In it, the CO clarified that, in his view, there had existed alternative rationales for awarding the contract to Connie’s rather than Braseth. First, the CO described the issues that had been identified with respect to Connie’s recent performance and explained that “Connie’s satisfactory rating was appropriate due to these recent performance concerns.” Id. at 1. He then determined that “[s]ince Braseth relied on the same personnel, trucks, etc. as Connie’s, it was rated equally as satisfactory.” Id.

In the alternative, the CO determined that if Connie’s past performance were not imputed to Braseth, then “Braseth had no relevant past performance and thus was entitled only to a ‘neutral’ performance rating consistent with FAR 15.305(a)(2)(iv),” and that “a neutral evaluation would have resulted in a satisfactory rating for Braseth, because every other available adjectival rating was either favorable or unfavorable.” Id. at 2.

The CO then clarified the trade-off analysis that would apply under each alternative. See id. Under the first alternative—in which “Braseth received a satisfactory past performance rating due to its affiliation with Connie’s and thus had the same performance concerns”—the CO determined that the award should go to Connie’s simply because Connie’s offered a lower price. See id. Under the second alternative, the CO determined that the award should still go to Connie’s because “Connie’s known performance and lower price would be considered more advantageous than Braseth’s unknown performance and higher price.” Id.As discussed, Braseth has standing only if it can show that—absent the errors it has alleged—it had a substantial chance of receiving a contract award. On the record before the Court when it issued its previous Opinion, the Court found that Braseth had sufficiently alleged prejudice. First, it assumed that it would have been erroneous for the CO to impute Connie’s past performance to Braseth. Braseth I at 11–12. Next, the Court reasoned that, had Braseth’s satisfactory rating been the result of a truly neutral evaluation, there was a substantial chance Braseth might have secured the award because the CO could reasonably have decided that “the risks associated with dealing with an entity with no performance record at all . . . outweighed the benefits of choosing one that could be rated ‘satisfactory’ but still had known weaknesses.” Id. at 12.

(sections deleted)

The CO’s remand decision, however, has changed the landscape regarding Braseth’s standing. It has clarified that—even if Braseth was correct that it would be legal error to impute to it Connie’s past performance—there would still exist an alternative basis (whose lawfulness Braseth has never challenged) for awarding the contract to Connie’s rather than Braseth: that “Connie’s known performance and lower price [are] considered more advantageous than Braseth’s unknown performance and higher price.” Remand Decision at 2.

Thus, as Braseth itself acknowledged in its briefing on the cross-motions for judgment on the administrative record, if the CO did not impute Connie’s past performance to it, Braseth was entitled, at most, to a neutral past performance evaluation. See Pls.’ Resp. at 6 (arguing that Braseth “should have been rated only on ‘neutral’ past performance” under FAR 15.305(a)(2)(iv)).7 And Braseth has never before—so far as the Court can discern from its papers—challenged the lawfulness of the CO’s trade-off decision, so long as it was based on the premise that Braseth’s satisfactory rating reflected its lack of past performance rather than the attribution of Connie’s performance to Braseth. Thus, even if the Court were to determine that the decision made under the rationale in which Connie’s past performance was attributed to Braseth was erroneous, Braseth still would have no substantial chance of securing the award because the alternative rationale based on Braseth’s neutral rating provides an independent basis for awarding the contract to Connie’s.

The contrary arguments Braseth now raises are based on new contentions that were not made when the cross-motions for judgment on the administrative record were filed, and that are therefore waived. See Novosteel SA v. United States, 284 F.3d 1261, 1274 (Fed. Cir. 2002); Brooks Range Contract Servs., Inc. v. United States, 101 Fed. Cl. 699, 708 (2012) (“A party may waive arguments that might demonstrate that it is an interested party if they are not presented in its opening brief.”). In its supplemental briefs, Braseth argues (for the first time) that, instead of receiving a neutral rating under FAR 15.305(a)(2)(iv), it should have received an “excellent” rating; and, conversely, that the record does not support the “excellent” ratings given to A-Secured and Smith Bros. See Pls.’ Suppl. Brief at 2–3, 7, ECF No. 33. Thus, it now argues that it (along with Connie’s) had a substantial chance of securing one of the awards given to Smith Bros. and A-Secured.

Braseth, of course, did not advance this argument in its original motion for judgment on the administrative record; nor has it directly challenged the Court’s holding to the contrary in its previous Opinion. See Braseth I at 12 n.8 (concluding that “nothing in the record leads the Court to believe . . . that there was a substantial chance that the CO might have chosen [Braseth] over a company with an excellent past performance rating”). Moreover, this argument contradicts Braseth’s concession in its original response that it would have been appropriate for Braseth to receive a neutral rating for its past performance. See Pls.’ Resp. at 6. And it is at odds with the position it took at oral argument that Braseth “didn’t have a contract . . . in the last/prior three years, so it could have been a neutral [on] past performance.” See Oral Argument at 7:04–15. Accordingly, Braseth’s new arguments will not be considered by the Court and provide no basis for establishing Braseth’s continued standing in this case.

In sum, in light of the alternative rationales articulated in the CO’s remand decision, the Court concludes that Braseth lacks standing to bring this protest because—even if Braseth were to succeed in its challenge to the CO’s conclusion that Connie’s performance should be attributed to Braseth—the alternative rationale articulated by the CO, which is based on the assignment of a neutral rating to Braseth, would remain. Braseth therefore had no substantial chance of receiving a contract award under the solicitation even if the errors alleged in its complaint and articulated in its initial motion for judgment on the administrative record were corrected. Accordingly, Braseth’s complaint must be dismissed for lack of subject matter jurisdiction.  (Braseth Trucking, LLC’s v. U. S.,  No. 15-837C/15-844C April 25, 2016)  (pdf)

New Although a plaintiff need not show that it was next in line for the award but for the alleged error, demonstrating prejudice requires the plaintiff to show “more than a bare possibility” of receiving the award. Precision Asset Mgmt. Corp. v. United States, 125 Fed. Cl. 228, 233 (2016). The court concludes that plaintiff has failed to show that it had a substantial chance of receiving the award but for the alleged error.

 Plaintiff argues that, but for the arbitrary and unreasonable rating of its past performance references, it would have received a past performance rating of Excellent/High Confidence, the highest rating, Resp. at 4, or that, in the alternative, an equal evaluation would have resulted in downgrading Sage’s score to Fair/Some Confidence, the same as REO’s current rating. Id. at 6. The crux of plaintiff’s argument is that the agency acted arbitrarily and capriciously when it gave REO a fair confidence rating for exclusively using subcontractor references while not similarly docking Sage for also exclusively listing subcontractor references.

 Recognizing that merely having the same past performance adjectival rating does not advance its cause, plaintiff further argues that, even if REO and Sage were to have the same adjectival rating, REO’s past performance would have been found superior to Sage’s because Sage’s past performance references “provided ‘mostly “Good” ratings’” while REO’s subcontractor, BLB, received mostly “Excellent” ratings with only three ratings of “Good” and that BLB, as the incumbent contractor for area 1P, had more relevant past performance than Sage’s mentor. Id. at 5. Finally, plaintiff argues that because its past performance should have been found superior to Sage’s, the agency would have had to perform a value trade-off, and that REO stood a significant chance in overcoming the monetary difference because “the record demonstrates that the agency was willing to spend at least a 10% price premium for past performance proposals it deemed superior.” Id. at 6.

 In sum, the court cannot conclude that the plaintiff stood a substantial chance of award absent HUD’s alleged errors. The sheer number of “but for” scenarios stretches plaintiff’s argument to the breaking point. Simply put, the court does not believe that REO, with an offer over $8 million higher than that of Sage, stood a substantial chance of receiving the award, even given an equivalent adjectival rating to Sage, whether REO’s rating was adjusted upward or Sage’s rating was adjusted downward. Thus, even if the agency erred in their past performance ratings of the offerors, there could have been no prejudice to REO.  (REO Solution, LLC  v. U. S. and Sage Acquisitions, LLC, No. 16-296C, April 21, 2016)  (pdf)

“The party invoking federal jurisdiction bears the burden of establishing the[] elements [of standing].” Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992) (alterations added); see also Myers Investigative & Sec. Servs. v. United States, 275 F.3d 1366, 1369 (Fed. Cir. 2002) (same).

As a threshold matter, a plaintiff contesting the award of a federal contract must establish that it is an “interested party” to have standing under 28 U.S.C. § 1491(b)(1). See Orion Tech., Inc. v. United States, 704 F.3d 1344, 1348 (Fed. Cir. 2013) (“In a bid protest, only an ‘interested party’ has standing to challenge a contract award.”); see also Myers, 275 F.3d at 1369 (Fed. Cir. 2002) (“[S]tanding is a threshold jurisdictional issue.”). The United States Court of Appeals for the Federal Circuit has construed the term “interested party” under 28 U.S.C. § 1491(b)(1) as synonymous with “interested party” under CICA, 31 U.S.C. § 3551(2)(A). See Rex Serv. Corp. v. United States, 448 F.3d 1305, 1307 (Fed. Cir. 2006) (citing decisions adopting the CICA definition of “interested party” for 28 U.S.C. § 1491(b)(1) purposes). A two-part test is applied to determine whether a plaintiff is an “interested party”: the plaintiff must show “1) that it is an actual or prospective bidder and 2) that it has a direct economic interest [in the procurement or proposed procurement].” Orion Tech., 704 F.3d at 1348 (alterations added); see also Distrib. Sols., 539 F.3d at 1344 (same). In addition, to establish “interested party” status, a plaintiff must show alleged errors in the procurement that were prejudicial. See Labatt Food Serv., Inc. v. United States, 577 F.3d 1375, 1378–79 (Fed. Cir. 2009) (“It is basic that because the question of prejudice goes directly to the question of standing, the prejudice issue must be reached before addressing the merits.”) (citations omitted); see also Myers, 275 F.3d at 1370 (“[P]rejudice (or injury) is a necessary element of standing.”). Thus, a plaintiff must show “how the [G]overnment’s error caused [it] to suffer disparate treatment or particularized harm.” Labatt, 577 F.3d at 1380. But, “non-prejudicial errors in a bid process do not automatically invalidate a procurement.” Id. (citing Data Gen. Corp. v. Johnson, 78 F.3d 1556, 1562 (Fed. Cir. 1996) (“[T]o establish prejudice, a [plaintiff] must show that, had it not been for the alleged error in the procurement process, there was a reasonable likelihood that the [plaintiff] would have been awarded the contract.”)).

Importantly, a proper standing inquiry must not conflate the requirement of “direct economic interest” with prejudicial error. See id. (Examining economic interest but excluding prejudicial error from the standing inquiry “would create a rule that, to an unsuccessful but economically interested offeror in a bid protest, any error is harmful.”). “To prove a direct economic interest, a [plaintiff] must show that it had a ‘substantial chance’ of winning the contract.” Digitalis Educ. Sols., Inc. v. United States, 664 F.3d 1380, 1384 (Fed. Cir. 2012). In contrast, to prove prejudice, a plaintiff must “show that but for the error, it would have had a substantial chance of securing the contract.” Labatt, 577 F.3d at 1378 (emphasis added). Therefore, the “direct economic interest” element focuses on the plaintiff’s general likelihood of winning the contract absent the Government’s error, whereas the prejudice inquiry focuses on the effect of the Government’s error on the plaintiff’s chances of winning the contract.

In this case, Plaintiff submitted a timely proposal in response to the RFQ. AR 1557 (evidencing that Plaintiff’s original proposal was submitted on December 4, 2013, i.e., prior to the December 5, 2013 RFQ deadline); see also AR 1845 (explaining the extension of the RFQ deadline to December 9, 2013); AR 1557–1612 (Plaintiff’s December 4, 2013 proposal). As an “actual bidder,” Plaintiff satisfies the first element of the “interested party” test. See Distrib. Sols., 539 F.3d at 1345 (holding that the plaintiffs were “actual or prospective bidders,” because the plaintiffs “submitted qualifying proposals in response [to a Request for Information (RFI)]” and “were prepared to submit bids pursuant to the anticipated Request for Quotation (RFQ) or Request for Proposal (RFP) that typically ensues after an RFI is issued”)).

But, Plaintiff has not satisfied the second element, i.e., that the plaintiff had “a direct economic interest in the procurement or proposed procurement.” “To prove a direct economic interest, a [plaintiff] must show that it had a ‘substantial chance’ of winning the contract.” Digitalis, 664 F.3d at 1384. Although Plaintiff previously sold approximately $5 million in paper products to the VA, accounting for 32% of VA’s paper product purchases (AR 2335, 2338), Plaintiff’s February 26, 2014 bid and June 11, 2014 revised bid were substantially higher than other offerors. Compare AR 1644 (Plaintiff’s February 26, 2014 bid of $[REDACTED]) and AR 1756 (Plaintiff’s June 11, 2014 revised bid of $[REDACTED]), with AR 1722–23 (Category 3 low market basket price of $2,296,963.76) and AR 1869 (listing Category 3 awardees’ prices as ranging from $2,148,978.40 to $2,550,779.50). Specifically, Plaintiff’s bid was [REDACTED]% higher than the VOSB awardee’s bid and [REDACTED]% higher than the lowest overall awardee’s bid. AR 1869. Therefore, Plaintiff has not shown a “direct economic interest in the procurement or proposed procurement,” because Plaintiff has not “show[n] that it had a ‘substantial chance’ of winning the contract.” Digitalis, 664 F.3d at 1384.

Finally, “[t]o establish prejudice a [plaintiff] must show that there was a substantial chance it would have received the contract but for the [G]overnment’s error in the bid process.” Labatt, 577 F.3d at 1380 (emphases added); see also Galen Med. Assocs., Inc. v. United States, 369 F.3d 1324, 1331 (Fed. Cir. 2004) (“To establish prejudice, the [plaintiff] must show that there was a substantial chance it would have received the contract award but for the error.”) (citation omitted); Info. Tech. & Applications Corp. v. United States, 316 F.3d 1312, 1319 (Fed. Cir. 2003) (The plaintiff “must show that there was a ‘substantial chance’ it would have received the contract award but for the alleged error in the procurement process.”); Alfa Laval Separation, Inc. v. United States, 175 F.3d 1365, 1367 (Fed. Cir. 1999) (“[T]he [plaintiff] must show that there was a substantial chance it would have received the contract award but for that error.”); Statistica, Inc. v. Christopher, 102 F.3d 1577, 1581 (Fed. Cir. 1996) (“To establish competitive prejudice, a [plaintiff] must demonstrate that but for the alleged error, there was a ‘substantial chance that [it] would receive an award[.]”) (citation omitted).

Here, Plaintiff does not argue that the Government committed any error in the award of Jan-San BPAs to the awardees, arguing instead that the VA erred in its post-award decision to make the Jan-San BPAs exclusive and mandatory. See generally Pl. Mot. 1–33 (referring repeatedly to the VA’s “post-award” or “after award” decision to make the Jan-San BPAs exclusive and mandatory); see also Pl. Reply at 1 (“[Plaintiff] is not challenging the establishment or use of the Jan-San BPAs but instead is challenging the VA’s decision to make the Jan-San BPAs mandatory and exclusive for the acquisition of the seventeen items included in the VA’s March 19, 2015 [M]emorandum.”). This alleged error occurred almost one year after the Jan-San BPAs were awarded and is a distinct issue from the GSA’s determination that “[Plaintiff’s] proposed quote does not offer the best overall value and most advantageous terms to the Government[.]” AR 1764 (July 17, 2014 GSA email); see also AR 2373 (March 19, 2015 VA Memorandum stating that the Jan-San “BPAs are mandatory use contradicting vehicles for the seventeen commodities that were standardized by the Veterans Health Administration”).

Of course, when interpreting the court’s jurisdiction under Section 1491(b)(1), “the operative phrase ‘in connection with’ is very sweeping in scope.” Distrib. Sols., 539 F.3d at 1345 (citations omitted). And, “[c]ontract modifications may not materially depart from the scope of the original procurement.” CCL, Inc. v. United States, 39 Fed. Cl. 780, 791 (citing 10 U.S.C. § 2304(a)(1)(A) (emphasizing the importance of “full and open competition”)). But, the scope of the court’s interpretation under Section 1491(b)(1) cannot supplant traditional requirements of standing. Specifically, “the term ‘interested party’ in section 1491(b)(1) is construed in accordance with the [CICA], 31 U.S.C. §§ 3551–[35]56” (Rex Serv., 448 F.3d at 1307) (citation omitted), interpreting this specific term in accordance with CICA does not mean that: any CICA violation authorizes the court to adjudicate a bid protest, pursuant to 28 U.S.C. § 1491(b)(1); or the plaintiff alleging the CICA violation has standing to bring a claim before the court.

Moreover, the May 14, 2015 Amended Complaint has not alleged that the VA likely would have purchased paper products from Plaintiff, if the Jan-San BPAs were not exclusive and mandatory. In fact, the GSA potentially could add additional BPAs to the Jan-San BPA. AR 1145 (“During the life of these BPAs[,] the Government may award additional BPAs for similar requirements. Additional BPAs will not necessarily have the same end date as those initially awarded.”). In other words, the May 14, 2015 Amended Complaint has not alleged that Plaintiff “it would have received the contract but for the [G]overnment’s error in the bid process,” and thus, has failed to establish prejudice. Labatt, 577 F.3d at 1380.

This case is analogous to the United States Court of Appeals for the Federal Circuit’s decisions in Crewzers Fire Crew Transport, Inc. v. United States, 464 F. App’x 866 (Fed. Cir. 2012) (“Crewzers I”) and Crewzers Fire Crew Transport, Inc. v. United States, 741 F.3d 1380 (Fed. Cir. 2014) (“Crewzers II”). In these cases, the plaintiffs brought separate bid protest (Crewzers I) and breach of contract (Crewzers II) actions stemming from the United States Forest Service’s cancellation of the plaintiffs’ BPA to provide crew carrier buses. See Crewzers I, 464 F. App’x at 867; Crewzers II, 741 F.3d at 1381–82. In Crewzers I, a pre-award bid protest, the United States Court of Appeals for the Federal Circuit held that the plaintiffs did not have standing, because the Government had cancelled the plaintiffs’ BPA, so there was no present controversy or redressability. See 464 F. App’x at 868 (holding that the plaintiffs would be “neither restored nor benefitted by [their] requested relief” and that “[w]ithout a BPA, there is no present controversy”). In Crewzers II, a breach of contract action, the United States Court of Appeals for the Federal Circuit “h[e]ld that [the plaintiffs] ha[d] failed to present a nonfrivilous allegation that the BPAs at issue here are binding contracts. These BPAs reflect illusory promises that do not impose obligations on either party.” 741 F.3d at 1382–83; see also Ridge Runner Forestry v. Veneman, 287 F.3d 1058, 1062 (Fed. Cir. 2002) (holding that similar BPAs lacked the mutuality of obligation required to form a binding contract); Zhenxing v. United States, 204 F. App’x 885, 886–87 (Fed. Cir. 2006) (“The BPA at issue . . . is merely a framework for future contracts and only creates a contractual obligation with regard to accepted orders. . . . Once an order is placed under the agreement, a contract is created with respect to that order, but the BPA in this case is not a contract because it lacks mutuality of consideration.”); Modern Sys. Tech. Corp. v. United States, 979 F.2d 200, 202 (Fed. Cir. 1992) (“[T]he Postal Service is not obligated to place any orders, and . . . the contractor is not bound unless it accepts an order. The effect of this . . . is that the [basic pricing agreement] itself does not create any enforceable obligations between either party.”); 24 NASH & CIBINIC REPORT ¶ 26 (“Of course, using [BPAs] means that the contractor is not contractually bound but that is of little consequence to an agency when there are multiple contractors capable of performing the work.”).

In this case, like Crewzers I, Plaintiff does not have standing. Therefore, like Crewzers II, Plaintiff potentially could bring a breach of contract action, because the March 19, 2015 VA Memorandum stated that the Jan-San “BPAs are mandatory use contradicting vehicles,” effectively cancelling any pre-existing agreement that Plaintiff may have had with the VA, such as Agreement No. VA261-BP-C068. AR 2373. But, Plaintiff’s May 14, 2015 Amended Complaint does not allege a breach of contract claim, so the court need not determine whether Plaintiff had a binding contractual agreement with the VA that was cancelled by the March 19, 2015 VA Memorandum.

For these reasons, the court has determined that Plaintiff does not have standing, so the court need not consider the merits. See Info. Tech., 316 F.3d at 1319 (“[B]ecause the question of prejudice goes directly to the question of standing, the prejudice issue must be reached before addressing the merits.”); see also Myers, 275 F.3d at 1369 (“[S]tanding is a threshold jurisdictional issue.”).  (The ClayGroup, LLC vs. U. S., No. 15-411C, August 31, 2015)  (pdf)

This bid protest, brought by Adams and Associates, Inc., (“Adams” or “plaintiff”), once again challenges the solicitation by the Department of Labor (“DOL”) for operation of the Shriver Job Corps Center (“Shriver”) in Massachusetts. The agency began the solicitation process in 2012 at a time when Adams was the incumbent on a contract set to expire in 2013. Adams previously protested this procurement in 2012. The basis of that challenge, and the current one, is that DOL improperly set aside the procurement for small businesses, making Adams, a large business, ineligible to compete. The first protest was unsuccessful. We held that the agency had properly conducted a “rule of two” analysis and that the set-aside did not violate the Workforce Investment Act, Pub. L. No. 105 220, 112 Stat. 936 (1998) (“WIA”) (amending various sections codified throughout Title 29). Adams & Assocs., Inc. v. United States, 109 Fed. Cl. 340 (2013). That decision was affirmed on appeal. 741 F.3d 102 (Fed. Cir. 2014). Adams’ effort to obtain rehearing en banc was also unsuccessful. Adams & Assocs., Inc. v. United States, Nos. 13-5077 & 13-5080 (Fed. Cir. Mar. 14, 2014) (order denying rehearing en banc).

When DOL, having weathered Adams’ challenge, began moving ahead with the procurement as a small business set-aside, Adams filed a protest in April 2014 with the Government Accountability Office ("GAO"). The thrust of the challenge was that, in the interim, Congress had taken certain legislative measures which directly impacted the procurement. The GAO rejected that challenge, in part because it viewed the new allegations as subject to res judicata [a matter judged]; and because the allegations were or could have been brought before the Federal Circuit. Adams & Assoc., Inc., B-409680 et al., 2014 WL 1614214 (Comp. Gen. Apr. 22, 2014). Adams sought reconsideration, which was denied in November of 2014. Adams & Assoc., Inc., B-409680.2 et al. (Comp. Gen. Nov. 12, 2014).

On December 4, 2014, Adams filed the present suit, attempting to block DOL from moving forward with the procurement in the face of congressional instructions, issued subsequent to our prior decision, to consider award to “high-preforming incumbent contractors” such as Adams. Essential to Adams’ present complaint is its assumption that the agency’s delay in moving ahead with the procurement in 2013 or 2014, particularly in light of legislation affecting the Job Corps program, amounted to a defacto new procurement decision. We disagree.

(sections deleted)

On January 17, 2014, while the appeal to the Federal Circuit from our first decision was pending, Congress passed the Consolidated Appropriations Act of 2014 (“the Act”), the purpose of which is to fund various governmental programs. Pub. L. No. 113-76, 128 Stat. 5. The Act provides the following: “[t]o carry out subtitle C of title I of the WIA . . . $1,688,155,000, plus reimbursements, as follows: (1) $1,578,008,000 for Job Corps Operations, which shall be available for the period July 1, 2014 through June 30, 2015.” 128 Stat. 349-50. It is undisputed that the appropriation involves funds that will be used to perform the contract in question. I.e., the legislation squarely affects this contract.

Section 4 of the Act provides as follows:

The explanatory statement regarding this Act, printed in the House of Representatives section of the Congressional Record on or about January 15, 2014 by the Chairman of the Committee on Appropriations of the House, shall have the same effect with respect to the allocation of funds and implementation of divisions A through L of this Act as if it were a joint explanatory statement of a committee of conference. 128 Stat. 7.

The Joint Explanatory Statement (“JES”) referred to provides in relevant part that,

When evaluating contract renewals or re-bids, due consideration should be provided to the federal investment already made in high-performing incumbent contractors as a part of a full, fair, and open competitive process. As part of this process, the Department of Labor (DOL) should consider documented past performances of student outcomes and cost-effective administration as important factors in Job Corps procurements.

160 Cong. Rec. H475 (daily ed. Jan. 15, 2014).

Having lost its prior challenge to this same procurement, plaintiff obviously faces a daunting task in resurrecting standing to thwart the agency’s much-delayed award, particularly as there is nothing in the administrative record that looks like a reopening of the solicitation. As we understand plaintiff’s argument, it contends that the agency did, in fact, reopen the solicitation, as demonstrated by the January 17 FedBizOpps announcement and that, having done so, the “old” solicitation becomes irrelevant. According to plaintiff, DOL is now subject to new directions from Congress, as expressed in the JES, to give due consideration to the federal investment already made in high-performing incumbent contractors as a part of a full, fair, and open competitive process and should consider documented past performances of student outcomes and cost-effective administration. Presumably, Adams would benefit from such consideration.

There are a number of factual and legal deficiencies in this argument. The most basic is that the notice issued by DOL on January 17, 2014, announcing its plan for all upcoming procurements for Job Corps center operations, on its face, is not a reopening of the Shriver solicitation. Plaintiff’s argument reduces to this: the agency could and should have reopened the solicitation in view of all the criticism it had been subject to with respect to Job Corps Centers. It is telling, in plaintiff’s view, that the agency did not go ahead with award after our decision in January 2013. Thus suggesting, presumably, that DOL was pondering reissuing the solicitation. What it neglects to account for is that there have been no more than a couple of weeks since our first decision in which the solicitation has not been subject to a bid protest.

Our jurisdiction requires more solid ground. DOL’s willingness to receive industry feedback on its long range plan for future procurements simply does not morph into a new final decision with respect to the Shriver procurement. Adams has been excluded from competition by an agency action that was upheld by the courts and there has been no new agency action that would change that outcome. Adams is a large business and thus has no standing to object to an award limited to small businesses.

This fact is not altered by the Consolidated Appropriations Act of 2014 or its appended JES. While Section 4 of the Act provides that the explanatory statement regarding the Act by the Chairman of House Appropriations Committee “shall have the same effect with respect to the allocation of funds and implementation of divisions A through L of this Act as if it were a joint explanatory statement of a committee of conference,” 128 Stat. 7, we hold that the Act needs no explanation. It merely appropriates money. There is no ambiguity as to meaning. The JES is superfluous legislative history, at best, and, in any event, does not have the weight of law. Neither the Act itself nor the JES reopen the solicitation. It remains limited to small businesses, and Adams is thus not a prospective bidder.

Even if plaintiff had standing, and the sentiments expressed in the JES were somehow applicable to the agency, the court would be in no position to decide whether it had given “due consideration” to incumbents or high performers. The language is precatory and directed at policy makers in the agency. It is not a proper basis for a legal challenge. Consistent with this view, we believe, is the high probability that Congress had no intent to interfere in an ongoing solicitation and instead was giving the agency fair warning as to how it expected future program monies to be handled.

In sum, whether viewed in terms of plaintiff’s lack of standing to enforce legislation that does not affect this procurement, or the absence of a statute which can be “violated” in connection with this procurement, see 28 U.S.C. § 1491(b)(1), there is no jurisdiction to consider any aspect of the complaint.  (Adams and Associates, Inc. v. U. S., No. 14-1168C, February 10, 2015)  (pdf)

As a threshold matter, a plaintiff contesting the award of a federal contract must establish that it is an “interested party” to have standing under 28 U.S.C. § 1491(b)(1). See Myers Investigative & Sec. Servs. v. United States, 275 F.3d 1366, 1370 (Fed. Cir. 2002) (“[S]tanding is a threshold jurisdictional issue.”). The United States Court of Appeals for the Federal Circuit has construed the term “interested party” under 28 U.S.C. § 1491(b)(1) as synonymous with “interested party” under CICA, 31 U.S.C. § 3551(2)(A) (2006). See Rex Serv. Corp. v. United States, 448 F.3d 1305, 1307 (Fed. Cir. 2006) (citing decisions adopting the CICA definition of “interested party” for 28 U.S.C. § 1491(b)(1) purposes). A two-part test is applied to determine whether a protestor is an “interested party.” The protestor must show that: “(1) it was an actual or prospective bidder or offeror, and (2) it had a direct economic interest in the procurement or proposed procurement.” Distrib. Solutions, Inc. v. United States, 539 F.3d 1340, 1344 (Fed. Cir. 2008) (citations omitted). A third test has added that a protestor must show the alleged errors in the procurement were prejudicial. Labatt Food Serv., Inc. v. United States, 577 F.3d 1375, 1378–79 (Fed. Cir. 2009) (“It is basic that because the question of prejudice goes directly to the question of standing, the prejudice issue must be reached before addressing the merits.”) (internal citations and quotations omitted); see also Myers, 275 F.3d at 1370 (“[P]rejudice (or injury) is a necessary element of standing.”). A party demonstrates prejudice when “it can show that but for the error, it would have had a substantial chance of securing the contract.” Labatt, 577 F.3d at 1378. Importantly, a proper standing inquiry must not conflate the requirement of “direct economic interest” with prejudicial error. Id. at 1380 (examining economic interest but excluding prejudicial error from the standing inquiry “would create a rule that, to an unsuccessful but economically interested offeror in a bid protest, any error is harmful”).

In this case, Universal Marine submitted a proposal in response to the RFP. AR Tabs 31a–d.1, at 1191–1277. As an actual bidder, it satisfies the first element of the “interested party” test. See Distrib. Solutions, Inc., 539 F.3d at 1344 (holding that a protestor must show that “it was an actual or prospective bidder or offeror”).

But, Universal Marine did not satisfy the second element, i.e., that it “had a direct economic interest in the procurement.” Distrib. Solutions, Inc., 539 F.3d at 1344. Direct economic interest requires a showing that but for the alleged error, Universal Marine had a “substantial chance” of winning the contract. See Statistica, Inc. v. Christopher, 102 F.3d 1577, 1582 (Fed. Cir. 1996) (holding that for a protestor “to prevail it must establish not only some significant error in the procurement process, but also that there was a substantial chance it would have received the contract award but for that error”); see also Labatt, 577 F.3d at 1378–79 (same). Universal Marine’s proposed price was the highest of the four proposals. AR Tab 46, at 1795–1801. Thus, to have standing, it would have to challenge the bona fides of each of the other three offeror’s eligibility or the solicitation as a whole. See United States v. IBM Corp., 892 F.2d 1006, 1010 (Fed. Cir. 1989) (upholding the Government’s argument that the plaintiff “could not receive the contract even if its protest were granted, because its bid ranked fourth-lowest . . . [and] it did not challenge either the solicitation itself or the eligibility of the intervening bidders”). Most of Universal Marine’s challenges concern only the awardee—KGL. See, e.g., Pl. Mot. at 12 (“KGL’s proposed management approach does not satisfy the FRP requirements and the Government failed to reasonably assess and evaluate KGL’s technical proposal.”); Pl. Mot. at 14 (“The Government failed to properly evaluate KGL’s approach for hiring incumbent employees.”); Pl. Mot. at 16 (“The Government failed to properly evaluate Plaintiff’s and KGL’s pricing.”); Pl. Mot. at 18 (“The Government failed to provide the required minimal consideration to KGL’s and Plaintiff’s pricing.”) (emphasis added). Based on these four challenges, even if the court were to set aside the award to KGL, the award would go to the second-place offeror, [REDACTED]. Gov’t Mot. at 11. Without any challenge to the intervening offerors, Universal Marine cannot prevail. See IBM Corp., 892 F.2d at 1010.  (Universal Marine Co., K.S.C. v. U. S. and KGL International For Port & Warehousing and Transportation, K.S.C.C., No. 14-1115C, February 10, 2015)  (pdf)

B. Hughes Lacks Standing to Bring the Present Claim

The jurisdictional grant for the U.S. Court of Federal Claims to hear bid protests is found under 28.U.S.C. § 1491(b)(1), which provides that this court

shall have jurisdiction to render judgment on an action by an interested party objecting to a solicitation by a Federal agency for bids or proposals for a proposed contract or to a proposed award or the award of a contract or any alleged violation of statute or regulation in connection with a procurement or a proposed procurement.

Id. The “pivotal element” of this court’s subject-matter jurisdiction is “whether a protestor qualifies as an ‘interested party’” under the statute. RhinoCorps Ltd. Co. v. United States, 87 Fed. Cl. 481, 485 (2009). The Federal Circuit has stated that “an interested party is an actual or prospective bidder whose direct economic interest would be affected by the award of the contract.” Orion Tech., Inc. v. United States, 704 F.3d 1344, 1348 (Fed. Cir. 2013) (citing Rex Serv. Corp. v. United States, 448 F.3d 1305, 1307 (Fed. Cir. 2006)).

Since there is no dispute that Hughes is an actual bidder and thus satisfied the first prong of the interested party test, the dispute in this case centers on whether Hughes has the required “direct economic interest.” To statisfy the “direct economic interest” requirement, a protester must show that it had a “substantial chance” for award but for the alleged error in the procurement process.” Info Tech. & Applications Corp. v. United States, 316 F.3d 1312, 1319 (Fed. Cir. 2003). Here, the government and MSNW argue that Hughes lacks a “direct economic interest” on the grounds that Hughes received a “marginal” rating and was determined by GSA to be ineligible for award. The government and MSNW argue further that, even though GSA reserved the right to consider a “Marginal rating” if “it received limited competition,” the solicitation did not require GSA to consider offerors who received “marginal” ratings. Thus, they contend that Hughes cannot show that it would have a substantial chance of award.

The government and MSNW contend that, even if Hughes is correct and GSA erred by allowing MSNW to submit a QCP after proposals were due, Hughes would still lack standing. According to the government and MSNW, Hughes cannot show that it would have a substantial chance of award because GWMC ranked above Hughes and did not have any “unacceptable” ratings, while Hughes had one “unacceptable” rating. They argue that, in such circumstances, GWMC would be the only offeror with a substantial chance for award.

In response, Hughes argues that it has standing because, in the event that MSNW’s award was not lawful, all “marginal” offerors, including GWMC and Hughes, would potentially be eligible for award. Hughes contends that a protestor does not have to show that, but for the alleged error, the protestor would have actually been awarded the contract. Rather, Hughes argues, it is enough for a plaintiff to show that it would be within the “zone of active consideration” as described by this court in Preferred Sys. Solutions, Inc. v. United States, 110 Fed. Cl. 48, 58 (2013). According to plaintiff, all marginal offerors in this case would be within the zone of active consideration, thus satisfying the direct economic interest requirement. In addition, Hughes argues that, if the award to MSNW were set aside and GSA decided to rebid the contract, Hughes would have a substantial chance of award and thus demonstrates a direct economic interest, as in Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1333-34 (Fed. Cir. 2001).

The court finds that Hughes does not have a substantial chance of award and therefore lacks standing. Because Hughes earned a rating of “unacceptable” for LEED-EB/Green Cleaning and “marginal” ratings for the two other evaluation factors, Hughes was excluded from consideration and could not be awarded the contract in the first instance. Even assuming that the award to MSNW were set aside, Hughes’s low ratings would preclude Hughes from having a substantial chance of award. In the context of this best value procurement, plaintiff’s “unacceptable” rating, which it does not challenge,5 is fatal to its standing claim. Where, as here, the other offeror with a “marginal” rating, GWMC, did not have any “unacceptable” ratings, GWMC alone—and not Hughes—is the only offeror with a substantial chance of award. In the context of this best value solicitation where the evaluation criteria ratings were deemed significantly more important than price, Hughes, with an “unacceptable” rating for a key component of the contract, does not have a substantial chance for award. Hughes is therefore not like the plaintiff in Preferred Solutions, where the plaintiff argued that if it were properly rated it would have had a sufficiently high rating to be considered for award. 110 Fed. Cl. at 58. Here, Hughes’s rating would still not be equal to the higher-ranking GWMC. As government counsel indicated at oral argument, if GSA were to consider an award to a marginally-rated offeror, GWMC, and not Hughes, would have the substantial chance for award. (Hughes Group, LLC v. U. S. and Management Services Northwest, Inc., No. 14-155C, April 22, 2014)  (pdf)

“[B]ecause the question of prejudice goes directly to the question of standing, the prejudice issue must be reached before addressing the merits.” Labatt, 577 F.3d at 1378 (internal quotation marks omitted). A bid protestor has been prejudiced when it can show that, “but for [a significant error in the procurement process], it would have had a substantial chance of securing the contract.” Id.

In deciding whether a protestor would have had a substantial chance of securing the contract, it is necessary to show proper deference to the views of the procuring agency, for “[i]t is well settled that COs are given broad discretion in their evaluation of bids. When an officer’s decision is reasonable, neither a court nor the GAO may substitute its judgment for that of the agency.” Turner, 645 F.3d at 1383 (citation omitted). “De minimis errors in the procurement process do not justify relief,” and “[t]he protestor bears the burden of proving that a significant error marred the procurement in question.” Glenn Def. Marine (Asia), Pte Ltd. v. United States, 720 F.3d 901, 907 (Fed. Cir. 2013). This burden “is greater in negotiated procurement, as here, than in other types of bid protests because ‘the contracting officer is entrusted with a relatively high degree of discretion.’” Id. (quoting Galen Med. Assocs., Inc. v. United States, 369 F.3d 1324, 1330 (Fed. Cir. 2004)). Contracting officers are afforded “an even greater degree of discretion when the award is determined based on the best value to the agency.” Id. at 908. This is just such a case.

Here, based on the Source Selection Evaluation Team’s ratings, the Source Selection Authority determined that AWS “clearly” offered the best value:

Amazon’s proposal contained a number of unique, differentiating capabilities that are considered highly advantageous to the Government. In several areas they exceeded the government’s requirements, providing enhanced capabilities and an overall superior technical solution. . . .

Taking the significant technical advantages of Amazon’s proposal, a tradeoff analysis was performed. Amazon’s price is $148,061,628, while IBM’s is $93,917,785 . . . . I do not believe that the $54 million difference, over five years, outweighs Amazon’s strengths—specifically their superior technical solution. The additional cost to the Government of awarding to Amazon is justified by their proposed superior overall approach, which will lower barriers to entry for C2S users and increase the likelihood of customer adoption. . . .

Although not a basis for my best value tradeoff decision . . . , I note for the record that the price risk in IBM’s proposal likely overstates the overall price difference between Amazon and IBM. IBM’s price proposal has two factors that contribute to additional price risk, and may result in additional costs to the Sponsor:

• The proposed ‘guaranteed minimum’ is more than double their expected year 1 prices and as a result the Government is unlikely to see the benefits of the proposed low catalog prices.

• The contract terms and conditions indicate that IBM will seek to restructure the contractual agreement in Years 2+ if the service price in that year does not exceed the guaranteed minimum.

. . . .

Being mindful of the fact that non-price factors are only slightly more important than price factors, I found the above described advantages of Amazon’s proposal to be well worth the price premium over IBM’s proposal and clearly the best value.

AR 5068-69. In sum, AWS’s offer was superior in virtually every way but price, and IBM’s advantage in that area was likely not as great as IBM attempted to make it appear.

Nevertheless, the GAO sustained IBM’s protest on two grounds: (1) the agency’s Scenario 5 price evaluation lacked a common basis and was therefore unreasonable; and (2) the agency materially relaxed a solicitation requirement for AWS, but not for the other offerors. See AR 10706. Regarding the first ground, the GAO makes no mention of prejudice whatsoever, despite its being raised and argued by both AWS and the agency. Regarding the second, the GAO notes—without any explanation—that “[i]n [its] view, IBM’s assertion that the level of risk to the contractor was reduced by this modification is sufficient to establish prejudice.” AR 10712 n.4, IBM U.S. Federal, 2013 CPD ¶ 142. In neither instance is there any consideration of the proper legal standard for prejudice, nor is there any evidence that IBM met its burden of proof for establishing such prejudice. Consequently, there is no justification for even reaching the merits of IBM’s protest.

Regarding the Scenario 5 price evaluation, the GAO found that, unlike IBM’s solution, “there was no way” to ascertain the speed of AWS’s solution, and therefore “there [was] no basis for concluding that Amazon was evaluated for scenario 5 using the same or otherwise comparable level of performance as included in IBM’s adjusted price.” AR 10709-10. However, at the GAO hearing, the agency’s C2S experts testified that speed was purposely not specified as a performance metric in Scenario 5 because performance depended on a wide variety of factors. M. Jason Holloway, the chair of the agency’s Technical/Management Evaluation Team and advisor to its Price Evaluation Team, explained that “Scenario 5 is a platform service that is very specific to each offeror’s individual capabilities,” and many variables could influence the approach any one offeror might take. AR 10430-31, Holloway Test. Because the agency was “interested in taking advantage of the expertise that [the offerors] could provide,” it intentionally left performance characteristics, such as speed, unspecified. AR 10372-74. Instead, the agency stated only the function to be performed and allowed each offeror the flexibility to propose and price its best commercial practice. Mr. Holloway explained:

We have to validate that [the offerors] followed commercial best practices, but we did not confine them with how they did that. . . . That’s just one characteristic of what would affect performance . . . , just one of many characteristics. We can’t—there’s no way that we could potentially list all the technical specifications in order to have the best solution capable, specifically with a different technical functionalities of each of the diverse set of platform services . . . the offerors provided.

AR 10437, Holloway Test. Thus, once the agency validated each of the proposed Scenario 5 solutions for reasonableness—“[a]nd each of the offerors met that requirement,” AR 10436, Holloway Test.—it compared those solutions based on the same duty cycle (100%) and duration (one year). Given the agency’s emphasis on commercial best practices and recognition of a variety of performance metrics, it is impossible to see how the agency’s decision not to reduce the Scenario 5 comparison to a simple price-to-speed calculation prejudiced IBM.

Regarding the material relaxation of a solicitation requirement, the GAO accepted IBM’s assertion that the result of this relaxation was “sufficient to establish prejudice.” AR 10712 n.4, IBM U.S. Federal, 2013 CPD ¶ 142. In rejecting AWS’s counterargument, the GAO stated, “Our conclusion is not changed by Amazon’s assertion that IBM also sought numerous proposed changes to provisions in the RFP, including a proposal that it would not provide warranties with respect to third party software.” Id. The problem with the GAO’s conclusion is it ignores the relevant rule that if an agency’s “improper deviation from the solicitation” equally affects all offerors, then it causes prejudice to none. Labatt, 577 F.3d at 1380. Naturally, because AWS was awarded the contract, it was the only offeror to engage in post-solicitation negotiations, but prior to the contract award, IBM had proposed negotiating the very same modification. See, e.g., AR 9336 (“Sponsor . . . receives no warranties, indemnities or express or implied patent or other license from IBM with respect to any third party software.”). In other words, AWS’s successful post-solicitation modification had no effect on IBM’s ability to pursue the same result, and therefore no effect on IBM’s proposal or the evaluation of that proposal. Moreover, the agency’s later removal of the requirement at issue because “it [was] redundant to other RFP requirements,” AR 12689, further emphasizes that even if an error was made, its effect was not prejudicial.

The bottom line is that IBM did not lose the competition because of the Scenario 5 price evaluation or AWS’s post-solicitation negotiations, but because of the overall inferiority of its proposal. This proposal contained numerous weaknesses, including some “significant” weaknesses, a technical deficiency, and an overall high risk rating. AR 4638-69; AR 5065-67 (describing “multiple weaknesses,” a technical “deficiency,” and “multiple concerns” creating a high price risk). For example, the Technical/Management Evaluation Team determined that IBM “[did] not demonstrate the capability to auto-scale all required services” and therefore “fail[ed] to meet the [auto-scaling] requirement.” AR 4644-45. This inability was “in direct conflict with the [agency’s] C2S goal ‘to deliver scalable, balanced, and fault tolerant solutions,’” and thus was deemed “unacceptable.” AR 4645. Although IBM protested that rating, the GAO denied this part of IBM’s protest, stating, “We see no basis to question the reasonableness of the agency’s concerns (expressed as a deficiency and a significant weakness under the technical approach subfactor) . . . .” AR 10715. The GAO also affirmed the agency’s consideration of IBM’s guaranteed minimum price, which contributed to the overall high risk rating. See AR 10717.

“[S]tanding is a threshold jurisdictional issue,” and “prejudice (or injury) is a necessary element of standing.” Myers Investigative & Sec. Servs., Inc. v. United States, 275 F.3d 1366, 1369 (Fed. Cir. 2002). To establish prejudice, IBM had to “show that there was a ‘substantial chance’ it would have received the contract award but for the alleged error in the procurement process.” Info. Tech. & Applications Corp. v. United States, 316 F.3d 1312, 1319 (Fed. Cir. 2003) (quoting Alfa Laval Separation, Inc. v. United States, 175 F.3d 1365, 1367 (Fed. Cir. 1999)). IBM failed to make such a showing, and the GAO failed to make relevant findings or apply the proper legal standards. In fact, other than the GAO’s unexplained acceptance of IBM’s speculation that it had suffered prejudice, see AR 10712 n.4, IBM U.S. Federal, 2013 CPD ¶ 142, the GAO made no mention of prejudice to IBM at all. Such a “fail[ure] to consider an important aspect of the problem” is, by itself, sufficient to render the GAO’s decision arbitrary and capricious. Ala. Aircraft, 586 F.3d at 1375 (quoting Motor Vehicle Mfrs. Ass’n., 463 U.S. at 43).

(Sections deleted)

Conclusion

There is no such thing as a perfect procurement. Thus, a bid protestor must show prejudice, not mere error, for “[n]ot every error compels the rejection of an award.” Grumman Data Sys. Corp. v. Dalton, 88 F.3d 990, 1000 (Fed. Cir. 1996). Rather, it is “the significance of errors in the procurement process [that determines] whether the overturning of an award is appropriate,” and it is the protestor who “bears the burden of proving error in the procurement process sufficient to justify relief.” Id. IBM never met that burden, and the GAO neglected to address it. Even if IBM’s arguments regarding the price evaluation and modified solicitation requirement were persuasive, it remains implausible that there would be any effect on the outcome of the procurement. AWS’s offer was superior, and the outcome of the competition was not even close.  (Amazon Web Services, Inc. v. U. S. and IBM U.S. Federal, No. 13-506C, November 8, 2013)  (pdf)

2. Statutory standing

In addition to requiring that the action must be “in connection with a procurement or a proposed procurement[,]” § 1491(b) also requires the plaintiff to be an “interested party” to proceed with a bid protest in this court. 28 U.S.C. § 1491(b). The Federal Circuit held in Distributed Solutions that a plaintiff is an “interested party” under § 1491(b) if it establishes that “(1) it was an actual or prospective bidder or offeror, and (2) it had a direct economic interest in the procurement or proposed procurement.” 539 F.3d at 1344 (citation omitted). The Federal Circuit borrowed this definition from the Competition in Contracting Act, which “explicitly defines [the term ‘interested party’] as ‘an actual or prospective bidder or offeror whose direct economic interest would be affected by the award of the contract or by failure to award the contract.’” Am. Fed’n of Gov’t Emps., AFL-CIO v. United States, 258 F.3d 1294, 1302 (Fed. Cir. 2001) (quoting 31 U.S.C. § 3551(2)).

Other judges of the Court of Federal Claims have considered whether an incumbent contractor is an “interested party” for purposes of § 1491(b) when it challenges an agency’s decision to in-source. Judge Firestone concluded in Santa Barbara that such a plaintiff is an “interested party” because, in part, “[w]here, as here, [the plaintiff] has a track record of winning contracts for the work that the Air Force is now in-sourcing, the economic impact to [the plaintiff] cannot be denied.” 98 Fed. Cl. at 543. The plaintiff in that case satisfied the “interested party” standard because it held a government contract and claimed that it “would expect to compete for future government contracts but for the errors made by the Air Force in its in-sourcing decision[.]” Id. In a subsequent case, Elmedorf I, Judge Bruggink similarly held that a contractor protesting an in-sourcing decision was an “interested party” because “there is a substantial chance that, given the opportunity, plaintiff would perform the services in the future.” 105 Fed. Cl. at 209. The court based this finding on the fact that the plaintiff “in its most recent contract performance assessment report . . . was rated as excellent, and for the duration of the contract, there is no dispute that plaintiff has performed well.” Id.

The court finds Santa Barbara and Elmendorf I instructive on this issue. At the time plaintiff filed its complaint in this case on September 24, 2012, it was providing A&D and PSM services to the Air Force pursuant to the Contract. As did the plaintiffs in Santa Barbara and Elmendorf I, Dellew has a track record of success, and Mr. Hogue’s termination memorandum stated that the Air Force was satisfied with Dellew’s performance. AR 1565. Absent the Air Force’s decision to in-source the Contract, Dellew likely would continue to provide the A&D and PSM services for the Air Force in the future. Plaintiff therefore has satisfied the “interested party” requirement of § 1491(b) because it is an “actual or prospective bidder or offeror” with a “direct economic interest in the procurement or proposed procurement.” See Distributed Solutions, 539 F.3d at 1344.

Relying on Weeks Marine, Inc. v. United States, 575 F.3d 1352 (Fed. Cir. 2009), defendant contends that a protestor is an “interested party” only if it can demonstrate, at a minimum, that it suffered a “‘non-trivial competitive injury which can be addressed by judicial relief.’” Def.’s Br. filed Nov. 2, 2012, at 14 (quoting Weeks Marine, 575 F.3d at 1362). Defendant argues that plaintiff has not suffered a “non-trivial competitive injury” because the Air Force has not shifted plaintiff’s work to any of plaintiff’s competitors and has not issued a new solicitation that puts plaintiff at a disadvantage vis-a-vis its competitors. Id. at 14-15. Defendant also emphasizes that neither 10 U.S.C. § 2463 nor 10 U.S.C. § 129a mandates any kind of formal public-private competition. Id. at 15.

Judge Firestone squarely addressed the same argument in Santa Barbara, noting that the Federal Circuit established the “non-trivial competitive injury” test in Weeks Marine in the context of a pre-award bid protest. 98 Fed. Cl. at 543. The court is especially mindful of this distinction, given the Federal Circuit’s recent explanation that the “non-trivial competitive injury” standard applicable in Weeks Marine does not apply in a post-award protest. COMINT Sys. Corp. v. United States, No. 2012-5039, 2012 WL 6062509, at *5 n.7 (Dec. 7, 2012); see also Sys. Application, 691 F.3d 1374, 1382 (explaining that “[a] protest will, by its nature, dictate the necessary factors for a ‘direct economic interest’”). Judge Firestone also observed that in an analogous case, LABAT-Anderson, Inc. v. United States, 65 Fed. Cl. 570 (2005), the Court of Federal Claims held that an incumbent contractor was an “interested party” for purposes of challenging an agency’s decision not to out-source work. Santa Barbara, 98 Fed. Cl. at 543 (citing LABAT-Anderson, 65 Fed. Cl. at 575-76). LABATAnderson did not involve a solicitation or a formal public-private competition, and the court held in that case that the plaintiff did not need to protest a recent or ongoing solicitation to have standing as an “interested party.” LABAT-Anderson, 65 Fed. Cl. at 575-76. As Santa Barbara and LABAT-Anderson, this case “involves the loss of future contract work by a protestor with a direct and real economic interest in the government’s decision[,]” and therefore satisfies the “interested party” test for standing. See Santa Barbara, 98 Fed. Cl. at 544.

Defendant also challenges plaintiff’s status as an “interested party” based on dicta in Hallmark-Phoenix that noted the “pile of assumptions” that were necessary to find the plaintiff to be an interested party where there was no outstanding solicitation for the services at issue. Def.’s Br. filed Nov. 2, 2012, at 15 (quoting Hallmark-Phoenix, 99 Fed. Cl. at 68). Hallmark-Phoenix is unhelpful to defendant on this issue, however, because Judge Allegra merely cast doubt on whether the plaintiff was an “interested party” and expressly declined to decide the case on those grounds. See Hallmark-Phoenix, 99 Fed. Cl. at 68.

The court acknowledges that in two recent opinions, Triad Logistics, 2012 WL 5187846, and Elmendorf Support Services Joint Venture v. United States, No. 12-346C, 2012 WL 3932774 (Sept. 10, 2012) (“Elmendorf II”), the Court of Federal Claims held that a protestor lacked standing to challenge the government’s decision to in-source. Triad Logistics involved a plaintiff whose contract had already ended by the time it filed its complaint. 2012 WL 5187846, at *20-21. Because the agency had begun performing the services previously performed by the plaintiff, defendant argued that the court could not redress the plaintiff’s injury by ordering the agency to reverse the in-sourcing decision. Id. at *21. Such a remedy, defendant contended, would require the agency to conduct a public-private competition in violation of the Omnibus Appropriations Act of 2009. Id. at *20-21. Judge Horn agreed with defendant, explaining that “the difficulties in fashioning a workable remedy, and, therefore, providing redress to this plaintiff . . . [are] further reason why plaintiff does not have standing to challenge the DoD in-sourcing decision.” Id. at *21. The court confronted similar facts in Elmendorf II. Following Judge Bruggink’s denial of defendant’s motion to dismiss and the plaintiff’s motion for a preliminary injunction in Elmendorf I, 105 Fed. Cl. 203, the plaintiff amended its complaint to reflect the fact that its contract had expired. Elmendorf II, 2012 WL 3932774, at *1-2. Because the plaintiff’s contract had expired by its terms, it could resume work only if the agency conducted a competition. Id. The court therefore held that the plaintiff lacked standing because the plaintiff no longer had a direct economic interest in the contract work, and the court could no longer redress the plaintiff’s injury. Id. at *3-4.

Although Triad Logistics and Elmendorf II framed the issue in terms of standing, this court agrees with defendant that the mootness doctrine provides the proper context for considering the effect of the Contract termination on the court’s ability to fashion a remedy for plaintiff. See Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 189 (2000) (“The confusion [of mootness and standing] is understandable, given this Court’s repeated statements that the doctrine of mootness can be described as ‘the doctrine of standing set in a time frame: The requisite personal interest that must exist at the commencement of the litigation (standing) must continue throughout its existence (mootness).’”); Def.’s Br. filed Nov. 2, 2012, at 33-34. The mootness doctrine comes into consideration in this case because the in-sourcing of the work and termination of the Contract occurred after plaintiff filed its complaint. The court addresses this issue below.

3. Mootness

As with standing, the mootness doctrine originates from the “case or controversy” requirement of Article III of the United States Constitution. Gerdau Ameristeel Corp. v. United States, 519 F.3d 1336, 1340 (Fed. Cir. 2008) (citing Allen v. Wright, 468 U.S. 737, 750 (1984); North Carolina v. Rice, 404 U.S. 244, 246 (1971)). Federal courts are permitted only to entertain matters in which there is an ongoing justiciable issue. See NEC Corp. v. United States, 151 F.3d 1361, 1369 (Fed. Cir. 1998). Accordingly, mootness implicates the court’s subject matter jurisdiction. Id. (“If a case becomes moot it no longer presents a justiciable controversy over which a federal court may exercise jurisdiction.” (citation omitted)). “[A] case is moot when the issues presented are no longer ‘live’ or the parties lack a legally cognizable interest in the outcome.” Powell v. McCormack, 395 U.S. 486, 496 (1969) (citation omitted). “Thus, to avoid dismissal for mootness, an actual controversy must remain at all stages, not merely at the time the complaint is filed.” Gerdau Ameristeel, 519 F.3d at 1340 (citation omitted).

A case will be dismissed as moot if an intervening event during its pendency “renders it impossible for [the] court to grant any effectual relief[.]” Cyprus Amax Coal Co. v. United States, 205 F.3d 1369, 1372 (Fed. Cir. 2000) (holding tax refund suit not moot despite plaintiff’s subsequent compliance with tax refund statute because plaintiff could potentially recover additional taxes under Tucker Act rather than under tax refund claim); see also 15 Moore’s Federal Practice § 101.93[2] (Matthew Bender 3d ed.) (“A claim may . . . be rendered moot because the plaintiff, as a result of some intervening factual event, has lost a present right to be vindicated or no longer has a stake or interest in the outcome of the litigation.”). As explained by the United States Supreme Court, “Jurisdiction, properly acquired, may abate if the case becomes moot because (1) it can be said with assurance that ‘there is no reasonable expectation . . .’ that the alleged violation will recur, and, (2) interim relief or events have completely and irrevocably eradicated the effects of the alleged violation.” County of Los Angeles v. Davis, 440 U.S. 625, 631 (1979) (citations omitted). “When both conditions are satisfied it may be said that the case is moot because neither party has a legally cognizable interest in the final determination of the underlying questions of fact and law.” Id.

Relying on Triad Logistics and Elmendorf II, defendant argues that plaintiff’s complaint is moot because the court is unable to redress plaintiff’s injury. Def.’s Br. filed Nov. 19, 2012, at 4-8. Defendant points out that the Contract has been terminated and that Air Force personnel have begun performing work at eight of the nine bases. 14/ See id. at 4. The court cannot now require the Air Force to provide this work to plaintiff, defendant argues, because DoD is prohibited by statute from converting the work from Federal to contractor performance. Def.’s Br. filed Nov. 2, 2012, at 32-34. Pursuant to 10 U.S.C. §§ 129(a)(e) and 2461, the Air Force must conduct a public-private competition to out-source the work from federal employees to contractors. Id. The Air Force cannot conduct such a public-private competition, however, because it is still subject to the moratorium on publicprivate competitions imposed pursuant to the Omnibus Appropriations Act of 2009. Id. Due to these statutory provisions regarding out-sourcing, defendant finds the court powerless to afford a legal remedy.

Plaintiff responds that its complaint is not moot because the Air Force unfairly placed plaintiff in a Catch-22 by intentionally failing to timely and properly respond to plaintiff’s March 27, 2012 FOIA request. Pl.’s Br. filed Nov. 9, 2012, at 17-19. Because the Air Force delayed until August 2012 to provide plaintiff with the Memorandum of Intent to In-Source and In-sourcing Worksheet, plaintiff did not file its complaint until one week before the termination of the Contract. See id. at 18-19. Absent defendant’s “bad-faith” conduct in responding to plaintiff’s FOIA requests, plaintiff would have filed its complaint earlier, and the Contract thus would not have expired during the pendency of this litigation. Id. at 16-19.

Even assuming that plaintiff could show that the Air Force’s alleged “bad-faith” conduct substantiated an exception to the mootness doctrine, plaintiff has failed to demonstrate that the Air Force’s responses to plaintiff’s FOIA requests constituted “bad faith.” Although the court understands plaintiff’s frustration with the Air Force’s dilatory and incomplete responses and inability to produce complete records, 16/ plaintiff has not shown that the Air Force delayed its response to plaintiff’s FOIA requests or provided incomplete responses with the intention of mooting plaintiff’s potential lawsuit.

The court nevertheless rules that a remedy could be fashioned for plaintiff, assuming success on its claim for permanent injunctive relief, and therefore plaintiff’s complaint is not moot. This case is distinguishable from Elmendorf, in which the plaintiff’s contract ended “by its own terms” because the agency in that case declined to exercise an additional threemonth option period. Elmendorf I, 105 Fed. Cl. at 206-07; see also Elmendorf II, 2012 WL 3932774 at *1-2. Dellew’s contract, in contrast, was terminated for convenience in the middle of an option period. Modification No. P00010 reflects that the Air Force exercised the fourth option period and that the “[p]eriod of [p]erformance” for that option period was April 1, 2012, through March 31, 2013. Lalau Decl., Ex. A. If the Air Force had not terminated the Contract, effective October 1, 2012, Dellew still would be performing work through the end of the fourth option period. Until the fourth option period expires by its terms, on March 31, 2013, this court could order a return to the pre-termination status quo for the remaining months of the fourth option year. Plaintiff’s complaint therefore is not moot at this time.

III. Injunctive relief

(sections deleted)

1. Success on the merits

Plaintiff contends that the Air Force’s decision to in-source the Contract was contrary to law because it violated 10 U.S.C. § 2463(e), effective December 31, 2011, which requires the Secretary of Defense to “ensure that the difference in the cost of performing the function by a contractor compared to the cost of performing the function by Department of Defense civilian employees would be equal to or exceed the lesser of . . . (I) 10 percent of the personnel-related costs for performance of that function; or (ii) $10,000,000.” 10 U.S.C. § 2463(e) (Supp. V 2011); see Pl.’s Br. filed Oct. 23, 2012, at 7-8, 23. Because the Air Force’s decision to in-source the Contract was based on a cost comparison demonstrating a savings of $995,279.00, or 7.9%, see AR 727, plaintiff argues that the in-sourcing decision violated the 10% requirement in § 2463(e), see Pl’s Br. filed Oct. 23, 2012, at 23.

Section 2463(e) does not apply retroactively, however, and the Air Force was bound to comply with the requirements of that statute only if the Air Force made its decision to in-source on or after the effective date of the statute – December 31, 2011. Plaintiff impliedly concedes this point in its brief, see id. at 5, 23, and attempts to explain why the Air Force’s decision to in-source did not occur in 2010 when the Air Force conducted, certified, and approved the cost analysis. Plaintiff emphasizes that both Mr. Hogue’s June 17, 2010 certification of the May 4, 2010 cost comparison and Mr. Allen’s June 25, 2010 Memorandum of Intent to In-Source contain prospective language that merely reflects a “preliminary step” or an “intent” to in-source the Contract at some point in the future, rather than an executed “decision” to in-source in 2010. Id. at 17-18. For example, the express language in the subject line of the June 25, 2010 memorandum refers to an “Intent to In-Source a Contracted Activity.” Id. at 17. Similarly, the memorandum identifies Dellew as a “viable candidate” for in-sourcing and states that the Contract “may be in-sourced.” See id. at 17-18 (quoting AR 1). Plaintiff also characterizes Mr. Allen’s July 20, 2010 e-mail to Mr. Hogue – which stated that there were many “moving parts to work out” regarding “the plan” to in-source the Contract – as a mere “expression of intent to in-source.” See id. at 21 (quoting AR 1528).

According to plaintiff, the Air Force did not make the decision to in-source the Contract until 20 months later, on March 9, 2012, when Mr. Baker prepared an internal memorandum stating: “We wish to terminate [Dellew’s] contract effective 1 October 2012 because of DOD policy to reduce contracts.” See id. at 23; AR at 1560. To support its interpretation of the facts, plaintiff relies on a trio of cases from the Court of Federal Claims purportedly establishing that “the cost analysis is a necessary forerunner to the in-sourcing decision, which is separate and distinct from the event constituting the actual in-sourcing decision, such as when the contractor is notified of its contract termination.” 20/ See Pl’s Br. filed Oct. 23, 2012, at 20 (citing Santa Barbara, 98 Fed. Cl. 536; Hallmark-Phoenix, 99 Fed. Cl. 65; Triad Logistics, 2012 WL 5187846). Because the decision to in-source did not occur until March 2012, plaintiff concludes, the Air Force was obligated to comply with the current version of 10 U.S.C. § 2463(e) requiring a cost savings of $10,000,000.00 or 10%. Id. at 23.

Defendant takes the position that the Air Force made the decision to in-source by no later than July 2010 when AFMA approved the in-sourcing of the Contract. Def.’s Br. filed Nov. 2, 2012, at 17-23. Upon AFMA’s validation and approval of the cost comparison, the in-sourcing decision was final, and PACAF began implementing that decision in late 2010 by converting CME positions to civilian positions in the MPES system for eight of the nine bases. Id. at 20. Relying on the August 4, 2010 PACAF In-Sourcing Guide, defendant argues that an in-sourcing decision is final upon AFMA approval – not when the agency takes action to terminate the contract. Id. at 17. Defendant also points out that the decision to in-source cannot be equivalent to the decision to terminate the contract, because a contract termination is not a necessary step in the in-sourcing process. Id. at 19-20. Indeed, the May 28, 2009 In- Sourcing Implementation Guidance recommends that DoD components generally should not terminate contracts to accomplish in-sourcing goals, but, rather, should let contracts “run their course.” See AR 1250. Defendant therefore argues that the Contract termination was not tantamount to the in-sourcing decision itself, but was merely a part of the implementation of the in-sourcing decision. See Def.’s Br. filed Nov. 2, 2012, at 18-20.

The facts contained in the administrative record do not support a finding that the insourcing decision occurred in 2012. Although the various in-sourcing statutes and guidance documents do not define precisely when an in-sourcing decision is final, none of the guidelines equate an in-sourcing decision with a termination for convenience. In fact, the May 28, 2009 In-Sourcing Implementation Guidance correctly assumes that a termination is not even necessary to accomplish in-sourcing. See AR 1250. In this case, for example, PACAF could have achieved the in-sourcing on April 1, 2012, by allowing the Contract to expire by its terms at the end of the third option period. Accordingly, an agency’s termination for convenience is not equivalent to its decision to in-source.

Plaintiff relies on Santa Barbara, Hallmark-Phoenix, and Triad Logistics to support the proposition that the decision to in-source occurs when the Government provides notice to the contractor. Not one of these cases really stands for this point. In Hallmark-Phoenix the court did not make a finding regarding the specific date of the in-sourcing decision, but merely concluded that the in-sourcing occurred prior to the effective date of the Ike Skelton NDAA – January 7, 2011. See 99 Fed. Cl. at 74 n.15. The court in Triad Logistics also did not determine the precise date on which the agency made its decision to in-source. See 2012 WL 5187846, at *4-5. In contrast, the court in Santa Barbara found that the Air Force made its decision to in-source in June 2010. See 98 Fed. Cl. at 540. This date, however, coincided with both the Air Force’s notification to the contractor and the final date of the Air Force’s cost comparisons. Id.

Plaintiff’s focus on the language of the June 25, 2010 Memorandum of Intent to In- Source also is unavailing because that document pre-dated AFMA’s validation and approval of the cost comparison in July 2010. The PACAF In-Sourcing Guide lists AFMA validation and approval as the last step in the in-sourcing “certification process.” Id. at 1357. Mr. Allen’s July 20, 2010 e-mail to Mr. Hogue similarly is unhelpful to plaintiff. The e-mail merely reflected Mr. Allen’s concerns regarding the implementation of the in-sourcing. Id. at 1528.

The court therefore finds that the decision to terminate the Contract and the Air Force’s subsequent notification to the contractor were mere steps in the implementation of the insourcing decision. The decision to in-source occurred upon AFMA’s approval of the cost comparison in July 2010, 21/ and therefore the Ike Skelton NDAA, effective January 7, 2011, and the NDAA for Fiscal Year 2012, effective December 31, 2011, do not apply to the case at bar. Accordingly, the Air Force was not required to adhere to the current version of 10 U.S.C. § 2463(e) requiring a cost savings of $10,000,000.00 or 10% of personnel-related costs.

Plaintiff also charges that, regardless of when the in-sourcing decision was made, the Air Force’s decision was not supported by a proper cost analysis and therefore was irrational and contrary to the pre-2012 statutes and regulations. Pl.’s Br. filed Oct. 23, 2012, at 23-27. Plaintiff presents two principal objections to the substance of the Air Force’s in-sourcing decision. First, plaintiff argues that the Air Force should have conducted a new cost comparison because the 2010 cost comparison was “stale” and contained the following errors: (1) a failure to include the full amount of Line 5 “Additional Costs” and correct number of FTEs; (2) the inclusion of Andersen AFB; and (3) a failure to account for the increase in salaries for civil service employees from 2010 to October 2012, the eventual date of the insourcing. Id. at 24-25. Second, plaintiff takes issue with the fact that PACAF is now performing the work with military personnel. Id. at 24-25. Plaintiff cites the use of military personnel as contrary to the May 28, 2009 In-Sourcing Implementation Guidance, which provides that “[c]ontracted services can only be converted to military performance in very limited circumstances – i.e., when the work is determined to be military essential or justified as a legitimate military exemption consistent with DoD Instruction 1100.22.” Id. at 25 (citing AR 1244 n.1). Plaintiff further emphasizes that the Air Force failed to fully justify the use of military personnel and consider the advantages of converting to military personnel in accordance with 10 U.S.C. § 129a (2006). Id. at 25-26.

The court finds that the Air Force was under no legal obligation to conduct a new cost comparison shortly before it terminated the Contract for convenience. Although the May 28, 2008 In-Sourcing Implementation Guidance instructs DoD to in-source “as expeditiously as possible” once a cost comparison shows that civilian performance will be more cost effective, AR 1246, the Guidance does not specify the “required timeframe” for implementing an insourcing decision, id. at 1251. The Guidance acknowledges, however, that it often will not be practicable for the Government to fully implement the in-sourcing and begin hiring civilian employees immediately after it conducts the cost comparison. The Guidance therefore allows the Government to “obtain contract support on a temporary basis (not to exceed 12 months at a time)” while it “formulate[s] a plan for transitioning to DoD civilian employee performance[.]” Id. Mr. Allen’s July 20, 2010 e-mail to Mr. Hogue indicates that the insourcing of the Contract involved “[m]any moving parts to work out,” including hiring civilian employees and formulating a transition plan. Id. at 1528. Accordingly, the Air Force “obtain[ed] contract support on a temporary basis (not to exceed 12 months at a time),” see id. at 1251, when it exercised the third and fourth option years of the Contract.

Plaintiff also has not made the related showing that the errors in the cost comparison resulted in a “clear and prejudicial violation of applicable statutes or regulations.” Domenico Garufi, 238 F.3d at 1333 (quotation marks and citations omitted). RMD 802 provides that an in-sourcing decision based upon cost savings must be supported by a cost analysis showing that the “DoD civilian employees would be the most cost effective provider.” AR 1252 (emphasis added). RMD 802 further explains that the cost analysis must be compliant with the business rules and procedures outlined in DTM 09-007. See id. The final cost comparison that AFMA approved in July 2010 showed that in-sourcing would result in a cost savings of $995,279.00. See AR 727. To the extent the Air Force’s cost comparison contained errors, those errors did not prejudice plaintiff because the cost comparison still results in a considerable cost savings when the errors are taken into account. PACAF’s initial failure to include the full amount of Line 5 “Additional Costs” and correct number of FTEs was not prejudicial to plaintiff because the AFMA corrected these errors when it validated and approved the cost comparison. See id. The inclusion of Andersen AFB in the cost comparison also was not prejudicial. The DTM-COMPARE Reports segregated each base for purposes of determining the cost of civilian performance, and only three of the 25 FTEs in the cost comparison were designated for Andersen AFB. See id. at 22-27. Defendant points out that, even if Andersen AFB is excluded from the calculus, the in-sourcing results in a cost savings of more than $878,000.00. See Def.’s Br. filed Nov. 2, 2012, at 43-44. Finally, the cost comparison’s failure to account for an increase in civil service salaries from 2010 to 2012 was not prejudicial, because Dellew’s contract price likewise escalated during that time period. AR 433-66.

The Air Force acted reasonably under the circumstances when it decided to terminate the Contract based upon the 2010 cost comparison. As explained above, the cost comparison showed that in-sourcing would result in a cost savings, and an updated cost comparison would not materially alter the analysis. Plaintiff suggests that the 2010 cost comparison was flawed and irrational because Ms. Gietz now believes that the Air Force can perform the work with fewer than seventeen civilian employees—five fewer employees than the Air Force initially contemplated for the eight bases. Nonetheless, plaintiff has failed adequately to explain why the Air Force should be required to conduct a new cost comparison when the 2010 analysis actually may have underestimated the cost savings resulting from in-sourcing.

Finally, the court finds that PACAF’s decision to temporarily use military personnel was not irrational or contrary to law. PACAF is in the process of hiring civilians to perform the work and is using military personnel only on a temporary basis until it completes the process of hiring the sixteen civilians. Gietz Decl. ¶¶ 10-12. The Air Force previously converted the CME positions to civilian positions in the Air Force’s MPES system for eight of the nine bases. AR 1180, 1187, 1194, 1201, 1207, 1213, 1219, 1225. The record does not indicate that the Air Force has since converted those civilian positions to military positions. Because the Air Force is utilizing military personnel as a temporary stop-gap measure, the statutory provisions regarding “conversions” to military personnel, see id. at 1244 n.1, 10 U.S.C. § 129a (2006), are not applicable here.

Plaintiff has not shown that the Air Force’s decision to in-source based upon the 2010 cost comparison resulted in a clear and prejudicial violation of law or lacked a rational basis. Plaintiff therefore has not prevailed on the merits.

(sections deleted)

CONCLUSION

Accordingly, based on the foregoing, defendant’s motion to dismiss and plaintiff’s motion for judgment on the administrative record are denied. Defendant’s cross-motion for judgment on the administrative record is granted. The Clerk of the Court shall enter judgment for defendant.  (Dellew Corporation v. U. S., No. 12-627C, December 20, 2012)  (pdf)

While jurisdiction normally would be fixed at the time of filing a suit, Article III of the Constitution creates an ongoing requirement of a case or controversy; the litigant must maintain a posture in which the injury suffered could be “redressed by a favorable judicial decision” admitting of specific relief. Lewis v. Cont’l Bank Corp., 494 U.S. 472, 477 (1990). This case-or-controversy requirement subsists through all stages of the proceeding. The parties must continue to have a personal stake in the lawsuit. “[I]t is not enough that a dispute was very much alive when suit was filed, or when review was obtained in the Court of Appeals.” Id. at 477-78. We conclude that plaintiff lost its standing when its contractual relationship with the Air Force ended.  (Elmendorf Support Services Joint Venture v U. S., No. 12-346C, September 10, 2012)  (unpublished)  (pdf)

We note at the outset that there exists a split among the judges of this> court regarding whether the decision to in-source contract services is reviewable. In Santa Barbara Applied Research, Inc. v. United States, 98 Fed. Cl. 536 (2011), Judge Firestone held that in-sourcing decisions are properly within our bid protest subject matter jurisdiction, and that plaintiff there had standing to challenge the transfer of services in-house. In Hallmark-Phoenix 3, LLC v. United States, 99 Fed. Cl. 65 (2011), however, Judge Allegra, without deciding the question of subject matter jurisdiction, held that the insourcing decision there was not reviewable based on prudential standing concerns. We consider both approaches in turn below.

I. The court possesses subject matter jurisdiction because the in-sourcing decision is in connection with a proposed procurement

Plaintiff relies on the final clause of § 1491(b)(1), which allows an interested party to bring suit for “any alleged violation of statute or regulation in connection with a procurement or proposed procurement.” In Distributed Solutions, Inc. v. United States, 539 F.3d 1340 (Fed. Cir. 2008), the Federal Circuit considered the question of what constitutes a “procurement” for purposes of that statute. It borrowed the definition that Congress provided in 41 U.S.C. § 403(2) (re-codified at 41 U.S.C. § 111), which relates to the creation of the Office of Federal Procurement Policy. Based on that definition, procurements thus include “all stages of the process of acquiring property or services, beginning with the process for determining a need for property or services and ending with contract completion and closeout.” 41 U.S.C. § 111 (2006).

The substance of the Air Force’s decision here was to stop procuring services from plaintiff and instead to use government employees. Because that decision necessarily included the process for “determining the need for . . . services” that plaintiff currently provides, the in-sourcing decision-making process was “in connection with a procurement or proposed procurement” within the rather generous definition adopted by the Federal Circuit. The statutorily-required cost comparison under 10 U.S.C. § 2463 was the beginning of the contracting process here. Other courts which confronted this issue have come to the same result. See Santa Barbara, 98 Fed. Cl. at 542-43; Triad Logistics Servs. Corp. v. United States, 2012 U.S. Claims LEXIS 393, *45 (2012); see also Rothe Dev., Inc. v. U.S. Dep’t Def., 666 F.3d 336, 339 (5th Cir. 2011); Vero Tech. Support, Inc. v. U.S. Dep’t Def., 437 F. App’x 766, 769-70 (11th Cir. 2011); LABAT-Anderson, Inc. v. United States, 346 F. Supp. 2d 145, 153-54 (D.D.C. 2004).

II. Plaintiff is an “interested party” and is not otherwise barred by prudential standing concerns

Under 28 U.S.C. § 1491(b)(1), plaintiff must be an “interested party” to proceed with its bid protest in this court. Again turning to Distributed Solutions, a plaintiff is an “interested party” for purposes of 28 U.S.C. § 1491(b)(1) if it establishes that: “(1) it was an actual or prospective bidder or offeror, and (2) it had a direct economic interest in the procurement or proposed procurement.” 539 F.3d at 1344. This court and other courts have found the interested party status required by 28 U.S.C. § 1491(b)(1) in the context of a challenge to in-sourcing. See Santa Barbara, 98 Fed. Cl. at 542; LABAT-Anderson, Inc. v. United States, 65 Fed. Cl. 570, 575 (2005); see also Rothe Dev., 666 F.3d at 338-39; Vero, 437 F. App’x at 771. Having concluded that there was a proposed procurement, we have no difficulty finding that plaintiff clearly has a financial interest in maintaining its incumbency. It has demonstrated its desire for the work and, but for the in-sourcing, we have every reason to assume it would still be on the job.

Santa Barbara is instructive. There the court held that “[w]here . . . [plaintiff] has a track record of winning contracts for the work that the Air Force is now in-sourcing, the economic impact to [plaintiff] cannot be denied.” Santa Barbara, 98 Fed. Cl. at 543. Here, in its most recent contractor performance assessment report, plaintiff was rated as excellent, and for the duration of the contract, there is no dispute that plaintiff has performed well. Thus, there is a substantial chance that, given the opportunity, plaintiff would perform the services in the future.

Defendant contends that, even if standing concerns are satisfied in terms of a typical bid protest, nevertheless it is absent here because of the attenuated connection plaintiff has to the statutes it wishes the court to enforce. It invokes Judge Allegra’s rationale in Hallmark-Phoenix, where he dismissed a similar protest due to a perceived lack of “prudential standing.” Prudential standing is a judicially self-imposed standard used to circumscribe the exercise of federal jurisdiction. See Elk Grove Unified Sch. Dist. v. Newdow, 542 U.S. 1, 11 (2004). It is invoked when courts are reluctant to exercise jurisdiction over matters which, although nominally accessible under Article III (or Article I in this court), are really beyond the properly limited role of the federal judiciary. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992); see also Bennett v. Spear, 520 U.S. 154, 162 (1997).

In Hallmark-Phoenix, Judge Allegra declined to exercise jurisdiction because, in his view, 10 U.S.C. § 129a and 10 U.S.C. § 2463 are intended to protect the government’s internal budgetary interests, and are not intended to protect contractors adversely affected by in-sourcing decisions. 99 Fed. Cl. at 76. The proper remedies for violations of 10 U.S.C. § 129a and 10 U.S.C. § 2463, according to Hallmark-Phoenix, are legislative oversight and intervention, not judicial review. See id.

Judge Firestone came to the opposite conclusion in Santa Barbara, 98 Fed. Cl. at 544. Her view is that contractors in plaintiff’s position have a real interest in the proper execution of 10 U.S.C. § 129a and 10 U.S.C. § 2463. We agree. While we recognize that Congress no doubt was motivated by fiscal concerns in requiring periodic assessment of the relative costs of having services performed by outside contractors, and that this makes such protests very different in some regards from ones in which the concerns of the Competition in Contracting Act, 31 U.S.C. §§ 3551–56 (2006), are invoked, nevertheless, the procedures and standards required by these statutes circumscribe the government’s ability to bring services in-house. At a minimum, incumbent contractors have an interest in ensuring that the calculus is done properly. This competitive impulse creates an incentive to expose ways in which the government may have acted improperly. Refereeing such debates is routine work for the court.

Subsequent to oral argument, the Supreme Court in Match-E-Be-Nash- She-Wish Band of Pottawatomi Indians v. Patchak, Nos. 11-246, 11-247, 2012 WL 2202936 (U.S. June 18, 2012), made it clear that the prudential standing test “‘is not meant to be especially demanding.’” 2012 WL 2202936 at *9 (quoting Clarke v. Sec. Indus. Ass’n, 479 U.S. 388, 399 (1987)). Moreover, the test “forecloses suit only when a plaintiff’s ‘interests are so marginally related to or inconsistent with the purposes implicit in the statute that it cannot reasonably be assumed that Congress intended to permit the suit.”’ Id. (quoting Clarke, 479 U.S. at 399). In sum, having concluded that there was a proposed procurement at play here, and because plaintiff’s allegation here is that the procurement (read in-sourcing process) was flawed, we are satisfied that plaintiff has standing to proceed.  (Elmendorf Support Services Joint Venture v U. S., No. 12-346C, June 22, 2012)  (pdf)

This court concludes that Triad is not an interested party, and therefore, does not possess standing to sue. The court, however, does not conclude that an incumbent contractor challenging an in-sourcing decision could never satisfy the interested party requirements. In the case currently before the court, Triad’s contract had been completed before the second complaint was filed in this court. Triad was in the unfortunate position that it no longer possessed a direct, economic interest in an Air Force contract when it filed suit. Moreover, if a contractor’s ongoing contract is in-sourced after the enactment of the Ike Skelton National Defense Authorization Act for Fiscal Year 2011, that incumbent contractor could be in a different position than the plaintiff in this case. Plaintiff’s complaint was properly filed in this court, but for the specific reasons discussed above, plaintiff does not have standing to proceed on its claims.  (Triad Logistics Services Corporation v. U. S., No. 11-43C, April 16, 2012)  (pdf)

“The pivotal element of standing in a bid protest is whether a protestor qualifies as an ‘interested party’ under [section] 1491(b)(1).” Rhino Corps Ltd. Co. v. United States, 87 Fed. Cl. 481, 485 (2009). The Federal Circuit has construed the term “interested party” as synonymous with the term “interested party,” as defined in the Competition in Contracting Act, 31 U.S.C. § 3551(2)(a). See Am. Fed. of Gov’t Emps., 258 F.3d at 1302; see also Avtel Servs. Inc. v. United States, 501 F.3d 1259, 1261 (Fed. Cir. 2007). In order to have standing as an “interested party,” a protester must satisfy a two-part test. First, the protester must demonstrate that it is an actual or prospective bidder. Rex Serv. Corp, 448 F.3d at 1307; see also MCI Telecomm. Corp. v. United States, 878 F.2d 362, 365 (Fed. Cir. 1989) (noting that “one who has not actually submitted an offer must be expecting to submit an offer prior to the closing date of the solicitation”). Second, the protester must demonstrate that it has a direct economic interest in the procurement. Rex Serv. Corp., 448 F.3d at 1307; see also Distributed Solutions, Inc. v. United States, 539 F.3d 1340, 1344 (Fed. Cir. 2008).

In order to establish a direct economic interest in the procurement, a protester must demonstrate prejudice. See Myers Investigative & Sec. Servs., Inc. v. United States, 275 F.3d 1366, 1370 (Fed. Cir. 2002) (“prejudice (or injury) is a necessary element of standing”). The way that a protestor does this depends upon the nature of the protest. In post-award bid protests, a protester must show that it had a “substantial chance” of receiving the contract. Rex Serv. Corp., 448 F.3d at 1308. By contrast, in preaward bid protests “there have been neither bids/offers, nor a contract award,” precluding the court from applying the “substantial chance” standard. Weeks Marine, Inc., 575 F.3d at 1361. Instead, the Federal Circuit has indicated that a protestor must allege a “‘non-trivial competitive injury which can be addressed by judicial relief.’” Id. at 1362 (quoting WinStar Commc’ns, Inc. v. United States, 41 Fed. Cl. 748, 763 (1998)); see also MORI Assocs., Inc. v. United States, 2011 WL 6409124, at *8 (Fed. Cl. Dec. 15, 2011). This standard, the Federal Circuit has recently noted, “strikes the appropriate balance between the language of § 1491(b)(1) . . . . and Article III standing requirements.” Weeks Marine, Inc., 575 F.3d at 1361. The court, therefore, must consider whether Boston Harbor has alleged “a non-trivial competitive injury which can be addressed by judicial relief.” The court concludes that it has not.

Plaintiff claims that if the existing lease is not cancelled before the reevaluation of the offers, the agency likely will select the current lessee to avoid the costs associated with cancelling the lease. Plaintiff argues that the existence of this lurking obligation will create bias on the part of the agency evaluators, causing them to conduct the procurement process in bad faith and ultimately costing plaintiff the new award. As should be obvious from the way it frames this claim, however, plaintiff is not alleging a competitive injury that has or will imminently occur, but rather raises an injury that may occur – or not. This claim is purely conjectural – plaintiff offers no evidence from the earlier stages of this procurement suggesting that the agency employees involved here are biased against it in the slightest.  Indeed, there is the prospect – which plaintiff does not deny – that plaintiff will prevail on the reprocurement.

Plaintiff’s assertion that the GSA evaluators will be biased if the lease is not cancelled contradicts a fundamental tenet of Federal procurement law, to wit, that “government officials are presumed to act in good faith.” Holmes v. United States, 657 F.3d 1303, 1319 (Fed. Cir. 2011); see also Savantage Fin. Servs., Inc. v. United States, 595 F.3d 1282, 1288 (Fed. Cir. 2010) (“As an initial matter, government officials are presumed to act in good faith.”). Absent countervailing indications, this presumption ought to be at its zenith where the government has yet to act. In determining prejudice, the court thus will not presume that GSA will act in bad faith. Instead, the court is “required to assume that the Government [will] carry out the corrective action in good faith.” Eskridge, 92 Fed. Cl. at 95. Moreover, this is not a case in which a challenge to the corrective action would be untimely under cases like Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308, 1313 (Fed. Cir. 2007) and CRAssociates, Inc. v. United States, 2011 WL 7069610, at *12 (Fed. Cl. Dec. 23, 2011). Unlike in those cases, the injury alleged here (a biased evaluation) has not occurred yet, is far from imminent, and, indeed, may never occur.  In that circumstance, plaintiff lacks standing to challenge the agency’s decision not to cancel the lease with ECC. See Weeks Marine, 575 F.3d at 1362-63 (discussing the relevance of this waiver point on the preaward standing inquiry).

A contrary ruling would constitute a broad expansion of this court’s bid protest jurisdiction. Agencies often incurs costs when they are forced to terminate a contract for convenience as the result of a sustained protest or a decision to take corrective action. And, when they do, they are required by the FAR to reimburse the terminated contractor for the portion of the contract performed and other reasonable charges. See, e.g., 48 C.F.R. § 52.212-4(l); see also Int’l Data Products Corp. v. United States, 492 F.3d 1317, 1324 (Fed. Cir. 2007). These outlays, which can be significant, can be effectively diminished if the agency personnel evaluating a reprocurement give the new contract to the prior awardee – thereby allowing the agency to recoup some its “investment” by avoiding paying certain charges twice. If plaintiff is right, then, in all these situations, a protester should be able to obtain an injunction from this court requiring an agency to take additional steps to counteract any bias that might creep into the reprocurement. What those steps should be, short of disqualifying the original awardee, are not apparent, particularly because plaintiff argues that “the shadow cast by the existing lease” falls over the entire agency, and not merely the evaluators previously involved. Fortunately, that is not the law – and plaintiff cites no cases on point to the contrary. Try as it might, plaintiff has failed to distinguish these common situations from the circumstances presented here. Indeed, in commendable candor it admits that the financial exposure in this case might be less than an agency would incur in paying termination for convenience costs for a larger procurement. In sum, plaintiff’s argument on this count proves too much.

Finally, Boston Harbor assumes that if this court has jurisdiction over its claim and sustains that claim, it can fashion an effective remedy. But, that is far from obvious and, indeed, likely not the case. Plaintiff has failed to explain how declaring the lease invalid now – nearly six months after it was executed – will insulate the GSA from liability, so as to leave the objectivity of the GSA evaluators “unimpaired.” While declaring the lease invalid ab initio might avoid certain forms of breach damages, such as expectation damages, it likely would expose GSA to other forms of contractual or pseudo-contractual damages. See e.g., Land Grantors in Henderson, Union, and Webster Counties, Ky. v. United States, 64 Fed. Cl. 661, 708 (2005) (suggesting that restitution damages would be available in the case of a void contract). Accordingly, if the threat of having the agency pay such damages is viewed as inexorably tainting the objectivity of the GSA evaluators – a point which this court contests – there is nothing the court can do to remove that taint now, as the prior signing of the lease has already created this exposure, such as it is. This is yet another reason – albeit not the prime one – why Boston Harbor has not alleged an “injury which can be addressed by judicial relief.” Weeks Marine, 575 F.3d at 1361.

Plaintiff’s alleged injury is neither actual or impending. And even if it is, it cannot be remedied. Accordingly, this court concludes that plaintiff lacks standing to challenge the propriety of the outstanding lease.  (Boston Harbor Development Partners v. U. S. and Emerald Corporate Center, LCC, No. 11-867, March 21, 2012)  (pdf)

I. Digitalis Was Not Prejudiced by the Alleged Errors and Thus Does Not Have Standing.

Standing is a threshold jurisdictional issue. Myers Investigative & Sec. Servs., Inc. v. United States, 275 F.3d 1366, 1369 (Fed. Cir. 2002) (citing Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 102-04 (1998)). The doctrine of standing ensures that the party seeking redress is properly entitled to have the court decide the dispute or issue. Warth v. Seldin, 422 U.S. 490, 498 (1975). It is an outgrowth of the Constitution’s “case or controversy” requirement, and although we are an Article I court, we generally apply the same standard as the federal courts created under Article III. Anderson v. United States, 344 F.3d 1343, 1350 n.1 (Fed. Cir. 2003). This standard requires that, to have standing, a litigant must have suffered a concrete and particular injury that is fairly traceable to the defendant’s action and which is likely to be redressed by a favorable decision. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992).

In the bid protest context, the standing issue is framed by the Tucker Act, which grants jurisdiction over a protest brought by an “interested party.” 28 U.S.C. § 1491(b)(1). Though the statute does not speak of standing, its requirement of an interested party has been interpreted as “impos[ing] more stringent standing requirements than Article III.” Weeks, 575 F.3d at 1359 (citing Am. Fed’n of Gov. Employees v. United States, 258 F.3d 1294, 1302 (Fed. Cir. 2001)). One of these requirements is to demonstrate prejudice. Myers, 275 F.3d at 1370 (“[P]rejudice (or injury) is a necessary element of standing.”). Because the issue of prejudice directly implicates the threshold matter of standing, we address it before considering the merits. Info. Tech. & Applications Corp. v. United States, 316 F.3d 1312, 1319 (Fed. Cir. 2003).

For purposes of standing, a protestor “has been prejudiced when it can show that but for the error, it would have had a substantial chance of securing the contract.” Labatt, 577 F.3d at 1378. At this point in the inquiry, we assume the well-pled allegations of error to be true. USfalcon, 92 Fed. Cl. at 450 (citing Info. Tech., 316 F.3d at 1319; Beta Analytics Int’l, Inc. v. United States, 67 Fed. Cl. 384, 396 (2005)). Here, Digitalis has alleged a number of errors, including the use of a sole-source procurement, erroneous or misleading information in the published synopsis, an unreasonably short comment period, premature negotiations with M&L, and a failure to publicize the J&A postaward. Even assuming the allegations to be true, however, none of these errors actually injured Digitalis. Even if the procurement had proceeded flawlessly, Digitalis’ chances to get the contract would not have been any different.

Here, assuming all of Digitalis’ allegations to be true—that its product was capable of fulfilling agency needs, that the agency relied on a faulty justification, that the published synopsis was misleading, that the comment period was unreasonably short, or that the agency failed to conduct proper market research—none of these allegations were what prevented Digitalis from filing a capability statement, an objection to the notice, or a prompt bid protest here. For example, a longer response time would have availed little, for Digitalis failed to notice the synopsis until nearly three weeks after it was posted. Likewise, the posted notice’s reference to an analog projector was not misleading because Digitalis immediately expressed an interest upon discovering the notice. Similarly, even if the agency had publicized a Request for Quotations on the Federal Business Opportunities website, Digitalis, which was not checking the website during this period, would have been unaware of it. Finally, any delays in protesting the decision are not the fault of the agency, since Digitalis elected to pursue recourse through a Congressman rather than through immediate resort to a bid protest.

Ultimately, none of the alleged errors were the cause of Digitalis’ failure timely to challenge the procurement or to submit a capability statement. It is well-established that non-prejudicial errors do not automatically invalidate a procurement. Labatt, 577 F.3d at 1380 (citations omitted). “Without a showing of harm specific to the asserted error, there is no injury to redress, and no standing to sue.” Id. Accordingly, Digitalis lacks standing and its protest must be dismissed.  (Digitalis Education Solutions, Inc. fv. U. S. and Morris & Lee d/b/a Science First, No. 10-855, February 11, 2011)  (pdf)

1. Plaintiff Lacks Standing to Challenge Its Exclusion From the Competition

As a threshold matter, defendant argues that plaintiff lacks standing to challenge its exclusion from the competition. “[T]he question of standing is whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues.” Warth v. Seldin, 422 U.S. 490, 498 (1975). The standing inquiry involves both Article III “case or controversy” limitations on federal jurisdiction and “prudential limitations on its exercise.” Id. The plaintiff bears the burden of establishing its standing to protest. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992).

“The standing issue in this case is framed by 28 U.S.C. § 1491(b)(1), which . . . imposes more stringent standing requirements than Article III.” Weeks Marine, Inc. v. United States, 575 F.3d 1352, 1359 (Fed. Cir. 2009). Under section 1491(b)(1), bid protests may only be brought by “interested parties.” The term “interested party” is construed in accordance with the Competition in Contracting Act of 1984, and, accordingly, “standing under § 1491(b)(1) is limited to actual or prospective bidders or offerors whose direct economic interest would be affected by the award of the contract or by failure to award the contract.” Am. Fed’n of Gov’t Emps. v. United States, 258 F.3d 1294, 1302 (Fed. Cir. 2001) (citing 31 U.S.C. § 3551(2)(A) (2000)); see also Info. Tech. & Applications Corp. v. United States, 316 F.3d 1312, 1319 (Fed. Cir. 2003) (interpreting this standard as requiring a protester to show that it was an interested party prejudiced by the procuring agency’s action and holding that “because the question of prejudice goes directly to the question of standing, the prejudice issue must be reached before addressing the merits”); Myers Investigative & Sec. Servs., Inc. v. United States, 275 F.3d 1366, 1370 (Fed. Cir. 2002) (defining “prejudice” as “injury”). Therefore, plaintiff must establish that it “(1) is an actual or prospective bidder, and (2) possesses the requisite direct economic interest.” Rex Serv. Corp. v. United States, 448 F.3d 1305, 1307 (Fed. Cir. 2006).

In this case, there is no dispute that plaintiff is an actual bidder. Thus, the first prong of the interested party test has been satisfied. With regard to the second prong, however, defendant contends that plaintiff does not possess the necessary direct economic interest that would be affected by award of the contract. The United States Court of Appeals for the Federal Circuit (“Federal Circuit”) has described two ways in which a protester may demonstrate the requisite direct economic interest, depending on the timing of the protest. In postaward bid protests, a protester must show that it had a “substantial chance” of receiving the contract. Id. at 1307. In other words, “[t]o have standing, the plaintiff need only establish that it ‘could compete for the contract’ . . . .” Myers Investigative & Sec. Servs., Inc., 275 F.3d at 1370 (quoting Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1334 (Fed. Cir. 2001)). And, in at least some preaward bid protests, a protester must show “a ‘non-trivial competitive injury which can be addressed by judicial relief.’” Weeks Marine, Inc., 575 F.3d at 1361-63 (quoting WinStar Commc’ns, Inc. v. United States, 41 Fed. Cl. 748 (1998)). Defendant argues that plaintiff’s direct economic interest should be analyzed under the “substantial chance” test applied in postaward bid protests.  At oral argument, it explained that although this protest was lodged before the Army awarded any contracts, the fact that offerors had already submitted proposals made this protest more analogous to a postaward protest for purposes of determining standing.

The key issue presented here is whether the test endorsed by the Federal Circuit in Weeks Marine, Inc.–a nontrivial competitive injury that can be addressed by judicial relief–applies in this preaward bid protest. In Weeks Marine, Inc., the protester objected to the contract vehicle selected by the agency for a dredging procurement, and filed its protest before proposals were due. See Weeks Marine, Inc. v. United States, 79 Fed. Cl. 22, 23, 27-28 (2007) (indicating that the solicitation was issued on June 4, 2007, that the solicitation was amended ten times from June to September 2007, that the protest was filed on September 28, 2007, and that the agency agreed to extend the due date for proposals to November 1, 2007), aff’d in part, rev’d in part, 575 F.3d at 1352. The Federal Circuit remarked:

[W]here a prospective bidder/offeror is challenging a solicitation in the pre-award context[,] . . . it is difficult for a prospective bidder/offeror to make the showing of prejudice that we have required in post-award bid protest cases. The reason of course is that, in a case such as this, there have been neither bids/offers, nor a contract award. Hence, there is no factual foundation for a “but for” prejudice analysis. However, Article III considerations require a party such as [the protester] to make a showing of some prejudice.

575 F.3d at 1361 (citation omitted). It therefore held: “[I]n a pre-award protest such as the one before us, [a] prospective bidder or offeror must establish ‘a non-trivial competitive injury which can be redressed by judicial relief’ to meet the standing requirement of § 1491(b)(1).” Id. at 1363.

There is a lack of unanimity in the Court of Federal Claims concerning whether the test endorsed in Weeks Marine, Inc. applies in all preaward bid protests, regardless of the stage of the procurement. In most preaward bid protests decided after Weeks Marine, Inc. where standing was at issue, the court has analyzed a protester’s direct economic interest under the Weeks Marine, Inc. test.  In some cases the protest was filed before the deadline for proposals. See, e.g., CW Gov’t Travel, Inc. v. United States, No. 11-298C, 2011 WL 4363087 (Fed. Cl. Aug. 26, 2011) (applying the test in a challenge to certain terms in the solicitation); Jacobs Tech. Inc. v. United States, No. 11-180C, 2011 WL 2215018 (Fed. Cl. May 27, 2011) (applying the test in a challenge to a reprocurement that occurred as part of an agency’s corrective action). In other cases, the protester submitted a proposal but the procuring agency had not yet awarded a contract. See, e.g., ICP Nw., LLC v. United States, 98 Fed. Cl. 29 (2011) (applying the test where the protester submitted bids on seven solicitations and then challenged the terms of the solicitations); Camden Shipping Corp. v. United States, 89 Fed. Cl. 433 (2009) (applying the test where the protester submitted a timely proposal but was later eliminated from the competition after its offer had expired, and holding that had the protester “successfully proved the facts alleged, it would have suffered a non-trivial competitive injury resulting from a prejudicial error made by [the agency]”).

In contrast to the decisions in which the court has applied the test endorsed in Weeks Marine, Inc., the court in CS-360, LLC suggested, albeit in dicta, that the Weeks Marine, Inc. test should not be applied in all preaward bid protests 94 Fed. Cl. at 495 n.6. It distinguished the posture of the procurement in the protest before it–where the protester submitted an offer and was declared the lowest bidder–from the posture of the procurement in Weeks Marine, Inc., and concluded: “The traditional ‘substantial chance’ test . . . seems more appropriate given the facts of this case. The standard applied by the Federal Circuit in Weeks Marine is sui generis to that case.” Id. Nevertheless, because the protester in its case was ineligible to participate in the procurement in the first instance, id. at 500, the court recognized that its holding would be the same regardless of which test was used, id. at 495 n.6. Although the facts in CS-360, LLC are distinguishable from those in this case the court reaches the same conclusion: plaintiff lacks standing regardless of which test the court applies.

Plaintiff contends that the Army both could have, and should have, evaluated its cost/price proposal as submitted; in other words, that the cost/price data from five of its teaming partners omitted from its proposal was unnecessary for the Army’s evaluation. Plaintiff’s contention is premised upon its interpretation of section L of the solicitation, which, according to plaintiff, contains only guidelines for preparing and submitting proposals, and not proposal requirements. It therefore argues that teaming partner cost/price data was not a required part its proposal. Plaintiff’s argument lacks merit.

As a preliminary matter, the court notes that although it is generally required to assume that allegations in a complaint are true and construe those allegations in the plaintiff’s favor, it need not do so when jurisdiction is at issue. Here, plaintiff’s allegation that its proposal was timely and complete because it “contained all the information necessary for the Agency to evaluate its proposed costs and prices,” Compl. ¶ 6, and its allegation that section L of the solicitation contained “guidelines,” not “requirements,” id. ¶ 7, are central to the issue of plaintiff’s standing. Thus, the court is entitled to look beyond the complaint to ascertain whether these allegations have a factual basis. As the court explains more fully below, the evidence in the administrative record and the relevant regulations belie plaintiff’s allegations.

First, plaintiff’s general contention that the provisions of section L of the solicitation are mere guidelines and not requirements is clearly contradicted by the plain language of the solicitation. The solicitation contained explicit language requiring offerors to comply with everysection of the solicitation–in other words, sections A through M–including all terms, conditions, representations, certifications, and technical requirements. AR 131, 209, 213, 225. In fact, in section M–the section describing the evaluation factors for award–the Army noted that a successful proposal would conform to all of the solicitation’s requirements, specifically including those set forth in section L. Id. at 225. 

Second, plaintiff’s more specific assertion that the submission of detailed cost/price data for each teaming partner was not required is also contrary to the plain language of the solicitation. The solicitation contained an unambiguous requirement that offerors either supply their teaming partners’ price/cost data to the Army or ensure that the Army received the data directly from their teaming partners by the proposal deadline. Id. at 223. Moreover, the Army clearly indicated in the solicitation that it would use offerors’ teaming partner cost/price data to perform a cost realism analysis. Id. at 231; see also FAR 15.403-3(a)(1)(ii) (noting that an agency can “[r]equire submission of data . . . from the offeror to the extent necessary to determine a fair and reasonable price,” including “data from an offeror to support a cost realism analysis”).  Plaintiff’s attempt to cast the solicitation’s language concerning teaming partner cost/price data as permissive rather than mandatory cannot succeed.

Plaintiff’s reliance on decisions from the Comptroller General and the General Services Board of Contract Appeals (“GSBCA”) cannot detract from the solicitation’s plain language.  In All Phase Environmental, Inc., the Comptroller General remarked that “rather than establishing minimum evaluation standards, the instructions of section L generally provide guidance to assist offerors in preparing and organizing proposals.” B-292919.2 et al., 2004 CPD ¶ 62 (Comp. Gen. Feb. 4, 2004). There is no indication, however, that the solicitation at issue in that case contained the explicit language present in the solicitation here requiring offerors to comply with section L. Id. In Syntrex Inc., the protester contended that section L language indicating that proposed software be “described by giving the ‘date of release for general use’” required that “all offered software must have been released for general use at the time for submission of proposals.” GSBCA No. 8696-P, 87-1 BCA ¶ 19497. The GSBCA disagreed with the protester’s interpretation of the quoted language, finding it “was merely an instruction regarding the format for proposals which required offerors to identify the release date for software,” but the GSBCA did not hold that all section L language constituted instructions. Id. Thus, neither decision provides support for plaintiff’s position.

Given the plain language of the solicitation, plaintiff cannot establish standing to protest under any standard. Under the “substantial chance” standard, plaintiff must show that it could compete for the contract but for the Army’s alleged error in disqualifying its proposal. Plaintiff cannot make this showing because it failed to submit information–complete cost/price data for all> of its teaming partners–clearly required in the solicitation, and plainly necessary for the Army to conduct a cost realism analysis. Acceptance of plaintiff’s argument that complete cost/price data for all of its teaming partners was unnecessary to perform a cost realism analysis would be akin to shifting the burden of providing the information required for a cost realism analysis from plaintiff to the Army. If the burden shifted in that manner, the Army would be forced to examine a teaming partner’s total proposed cost for a particular position and guess the amount of each component of that cost, such as the hourly wage rate, the fringe benefit amount, and the general and administrative cost. The Army, however, is not responsible for filling in missing data, much less filling in missing data with its own guesses. Because plaintiff failed to include critical information in its proposal, it had no chance, much less a substantial chance, of receiving a contract award. Further, under the standard endorsed in Weeks Marine, Inc., plaintiff must demonstrate that it suffered a nontrivial competitive injury that is within the court’s power to remedy. Plaintiff has not made this showing. Because it failed to submit all of the information the Army required to evaluate its proposal, as specified in the solicitation, plaintiff could not have been injured by the Army’s failure to evaluate its proposal.

In sum, regardless of which standard the court employs, plaintiff has not established that it has a direct economic interest in the competition. Therefore, it is not an interested party. Accordingly, plaintiff lacks standing to assert its first claim for relief.  (Orion Technology, Inc. v. U. S. and Strategic Resources, Inc., No 11-573C, December 1, 2011)  (pdf)

Until January 1, 2012, in order to be awarded a contract, an otherwise qualified SDVOSB must be listed in the VIP database. See id. § 8127(e) (“A small business concern may be awarded a contract under this section only if the small business concern and the veteran owner of the small business concern are listed in the database of veteran-owned businesses maintained by the Secretary under subsection (f).”); FAR 804.1102 (“Prior to January 1, 2012, all . . . SDVOSBs must be listed in the VIP database, available at http://www.vetbiz.gov , and also must be registered in the Central Contractor Registration (CCR) (see 48 CAR subpart 4.11) to receive contract awards under VA’s Veteran-owned Small Business prime contracting and subcontracting opportunities program.”). Also until December 31, 2011, an applicant can self-represent its status as a SDVOSB in the VIP database. See FAR 819.7003(b) (“At the time of submission of offer, the offeror must represent to the contracting officer that it is a—(1) SDVOSB concern . . . and (3) Verified for eligibility in the VIP database.”).

After December 31, 2011, the regulations require that an applicant be “listed as verified” in the VIP database. FAR 804.1102 (“After December 31, 2011, all . . . SDVOSBs, must be listed as verified in the VIP database, and also must be registered in the CCR to be eligible to participate in order to receive new contract awards under this program.”). The VA Center for Veterans Enterprise (the “CVE”) evaluates applications for inclusion in the VIP database to verify whether an applicant satisfies the eligibility requirements to be listed as a SDVOSB. See 38 C.F.R. § 74.11(a) (2011) (“The Director, Center for Veterans Enterprise, is authorized to approve or deny applications for VetBiz VIP Verification. The CVE will receive, review and evaluate all VetBiz VIP Verification applications.”). “Once an application, a request for reconsideration, or an appeal to a cancellation notice, as applicable, has been denied, the applicant or participant shall be required to wait for a period of 6 months before a new application will be processed by CVE.” 38 C.F.R. § 74.14.

38 C.F.R. Part 74 and FAR Part 819, when read together, establish a comprehensive regulatory scheme to ensure verification of SDVOSB status in order to prevent unscrupulous offerors from misrepresenting their veteran or service-disabled ownership status. In so doing, the VA is fulfilling its verification obligation according to congressional mandate, as prescribed by 38 U.S.C. § 8127(f)(4) (“In maintaining the database, the Secretary shall carry out at least the following two verification functions: (A) Verification that each small business concern listed in the database is owned and controlled by veterans. (B) In the case of a veteran who indicates a service-connected disability, verification of the service-disabled status of such veteran.”). FAR 819.7003 sets forth the eligibility requirements for SDVOSBs and provides that such eligibility is governed by certain SBA regulations, “except where expressly directed otherwise by . . . 38 C.F.R. verification regulations for SDVOSBs . . . .” Id. § 819.7003(a). Moreover, this regulation also requires an offeror bidding on a solicitation to represent to the contracting officer that the offeror is “[v]erified for eligibility in the VIP database.” Id. § 819.7003(b)(3). 38 C.F.R. § 74.2, in turn, lists “the eligibility requirements for VIP verification.” VA Acquisition Regulation: Supporting Veteran-Owned and Service-Disabled Veteran-Owned Small Businesses, 74 Fed. Reg. at 64,619. 38 U.S.C. § 8127(e) conditions award of a SDVOSB contract upon inclusion in the VIP database. If plaintiff is ineligible to be listed therein, it cannot show a substantial chance of securing the contract and, therefore, cannot establish prejudice. Without such a showing, plaintiff is not an interested party for Tucker Act purposes and lacks standing to bring its claim in the Court of Federal Claims.

In protesting both the GSA and DLA Solicitations as improper, plaintiff alleged that the agencies failed to make any attempts to encourage participation by SDVOSBs in contravention of Executive Order 13,360, Exec. Order No. 13,360, 69 Fed. Reg. 62,549 (Oct. 20, 2004), and 15 U.S.C. § 644(g)(1), which set minimum goals for participation by small businesses in procurement contracts. Additionally, in its protest of the DLA Solicitation, plaintiff alleged that the Solicitation was improper in that it required all SDVOSBs and SBCs to satisfy the NMR. According to plaintiff, these improprieties rendered the Solicitations unlawful, necessitating a rebidding.

On August 26, 2011, defendant filed a notice to the effect that plaintiff is neither certified as nor qualified to be a SDVOSB. Def.’s Br. filed Aug. 26, 2011, at 1. The actual letter from the CVE denied plaintiff’s application for inclusion in the VIP database. The CVE letter explained that plaintiff is a wholly-owned subsidiary of BSE Holdco, LLC, a holding company that itself is a wholly-owned subsidiary of BlueStar Energy Holdings, Inc., a corporation owned 75% by a service-disabled veteran. Given this chain of ownership, the entity owned by the service-disabled veteran is BlueStar Energy Holdings, Inc., not plaintiff. Plaintiff, therefore, is unable to satisfy the “direct ownership” requirement for certification as a SDVOSB.

The CVE letter also announced that plaintiff is unable to satisfy the “control” requirement even though the service-disabled veteran sits on plaintiff’s Board of Directors. Plaintiff’s bylaws provide that it is managed and governed by a Board of Directors (the “Board”) that can act when a quorum—a majority of directors—is present. Given that plaintiff’s Board consists of five directors, three must be present to constitute a quorum. Consequently, because the Board can act in the absence of the service-disabled veteran, it cannot be said that the service-disabled veteran has control of the Board and/or plaintiff. Failure to meet the control requirement for a SDVOSB therefore prevented plaintiff from qualifying as a SDVOSB.

Defendant takes the position that plaintiff’s ineligibility for SDVOSB set-asides is decisive that plaintiff lacks standing to pursue these protests. To establish its standing, plaintiff was required to prove both that it is an actual or prospective bidder and that it had a direct economic interest in the award of the contract. For the reasons stated above, see supra Part II.1-II.2, plaintiff has failed to show that it is an actual or prospective bidder and that it has a direct economic interest in the award of the contract. Defendant reasons that plaintiff was not prejudiced by any government action or inaction as to SDVOSB set-asides because, having failed to qualify as a SDVOSB, plaintiff was not eligible to benefit from these set-asides. Moreover, defendant contends that plaintiff’s ineligibility for the set-asides precludes the court from affording plaintiff the requested relief, thereby rendering plaintiff’s claims moot. Def.’s Br. filed Aug. 26, 2011, at 1.

Plaintiff’s counsel conceded during oral argument that, because an offeror must be certified as a SDVOSB to be eligible for a VA procurement like that in the GSA Solicitation, plaintiff’s failure to obtain such certification renders moot its contention that GSA improperly included a VA procurement in a contract bundle that did not comply with the procedures required for VA procurements (Count III of the GSA Complaint). According to plaintiff, its other claims were not mooted because plaintiff could self-certify its status as a SDVOSB.

As to the GSA Solicitation, defendant’s position is correct. Plaintiff cannot demonstrate the requisite prejudice because it was ineligible to bid for the contract. It ultimately is plaintiff’s own ineligibility, not GSA’s alleged failure to encourage participation by SDVOSBs and SBCs, that would bar plaintiff from availing itself of the set-aside. Defendant also is correct that plaintiff would be unable to demonstrate the requisite prejudice because plaintiff, given its ineligibility for SDVOSB status, could not show that it had a substantial chance of securing the contract. See Labatt, 577 F.3d at 1378. Moreover, by plaintiff’s own admission, it cannot self-certify itself as a SDVOSB for this Solicitation because the Solicitation contains a VA procurement, and such procurements can only be awarded to an entity that is listed in the VIP as a verified SDVOSB. 38 U.S.C. § 8127(e) (requiring small business concern and veteran owner to be listed in database in order to be eligible for award of VA procurement); 38 C.F.R. pt. 74 (establishing verification procedures for SDVOSBs). Because plaintiff did not qualify for inclusion in the VIP, it was not eligible for the GSA contract and cannot maintain suit for GSA’s alleged failure to encourage participation by SDVOSBs. Accordingly, Count II of the GSA Complaint is mooted.

Regarding the DLA Solicitation, it should be noted that DLA dissolved all set-asides> after determining that none of the offerors qualified as a SDVOSB or SBC; therefore, plaintiff’s ineligibility to qualify as a SDVOSB does not preclude it from being awarded the contract as it does with respect to the GSA Solicitation. Nonetheless, it does render plaintiff’s claims moot. Specifically, plaintiff has prayed that this court declare that the DLA (1) failed to make any attempts to encourage participation by SDVOSBs and SBCs (Count II of the DLA Complaint) and (2) impermissibly incorporated the NMR requirement into the Solicitation (Count III of the DLA Complaint). Plaintiff has also requested that this court enter an injunction dissolving the portions of the RFP designated as SBC and SDVOSB setasides and requiring DLA to re-bid those portions without the NMR requirement. These claims are mooted in light of plaintiff’s inability to qualify as a SDVOSB.

Plaintiff contends that it can salvage these claims by self-certifying itself as a SDVOSB. Self-certification, it argues, is acceptable because the DLA Solicitation does not contain a VA procurement and thus does not require that an offeror be listed as a verified SDVOSB in any database. Although self-certification may be acceptable, it is not available in this case. To be considered a SDVOSB, a small business concern “must be at least 51 percent unconditionally and directly owned by one or more veterans or service-disabled veterans.” 38 C.F.R. § 74.3. Moreover, the service-disabled owner must control the “day-today management and long-term decisionmaking” of the entity. 38 C.F.R. § 74.4(a). As explained in the CVE letter, the service-disabled veteran does not directly own plaintiff; rather, the service-disabled veteran owns BlueStar Energy Holdings, Inc., which indirectly owns plaintiff through one of its wholly-owned subsidiaries. This does not satisfy the requirement that the service-disabled veteran directly own the small business concern. See 38 C.F.R. § 74.3(a) (“An applicant or participant owned principally by another business entity . . . that is in turn owned by one or more veterans or service-disabled veterans does not meet th[e] [direct ownership] requirement.”). The CVE letter also indicated that plaintiff does not satisfy the “control” requirement because plaintiff’s Board of Directors could take decisive action in the absence of the service-disabled veteran. The CVE’s finding is accurate and does prevent plaintiff from satisfying the control requirement. See 38 C.F.R. § 74.4(b) (“An applicant or participant’s management and daily business operations must be conducted by one or more veterans or service-disabled veterans.”). Because these decisions can be made without any involvement by the service-disabled veteran, plaintiff cannot be deemed to be controlled by the service-disabled veteran. Plaintiff, therefore, cannot in good faith certify that it qualifies as a SDVOSB. Consequently, Counts II and III of the DLA Complaint are dismissed as moot.

Plaintiff’s inability to qualify as a SDVOSB also serves to deconstruct its futility argument. Essentially, plaintiff contends that it qualified as a prospective bidder for purposes of determining whether or not it is an interested party despite its failure to submit price proposals in response to the Solicitations. Plaintiff explained that it was futile to submit such proposals because GSA and DLA had made no attempts to encourage participation by SDVOSBs, resulting in a diminished likelihood that plaintiff would be awarded the contract. Given this showing and its intention to submit offers in response to any re-solicitations, plaintiff deems itself to be a prospective bidder. Plaintiff, however, is not a SDVOSB; therefore, the agencies’ failure to encourage participation by such entities would not have rendered it futile for plaintiff to submit a bid. As such, plaintiff cannot establish its standing to bring these protests, and the remaining counts—Count I in both the GSA and DLA Complaints—are dismissed for lack of standing.  (BlueStar Energy Services, Inc. d/b/a BlueStar Energy Solutions, v. U. S. Nos. 11-460C and 11-461C, September 22, 2011)  (pdf)

For our purposes, then, the critical question becomes whether the statutes at issue can be understood as granting a contractor standing to challenge an agency’s decision to fulfill its needs using its own employees. Applying the prudential standing inquiry to this action, the court concludes that the injury of which plaintiff complains does not arguably fall within the zone of interests sought to be protected by these statutes. Rather, as will be seen, all of the provisions plaintiff invokes in seeking to overturn the Defense Department’s in-sourcing decision envision enforcement not by judicial review, but by legislative oversight.

Take, to begin with, section 129a of Title 10, which provides that –

The Secretary of Defense shall use the least costly form of personnel consistent with military requirements and other needs of the Department. In developing the annual personnel authorization requests to Congress and in carrying out personnel policies, the Secretary shall –

(1) consider particularly the advantages of converting from one form of personnel (military, civilian, or private contract) to another for the performance of a specified job; and

(2) include in each manpower requirements report submitted under section 115a of this title a complete justification for converting from one form of personnel to another.

This provision was enacted in section 1483(a) of the National Defense Authorization Act for Fiscal Year 1991, Pub. L. No. 101-510, 104 Stat. 1485, 1715, the purpose of which was to provide a “[r]estatement of law relating to annual personnel strength authorizations, annual manpower requirements reports, and annual National Guard and reserve component procurement report[s].” H. R. Conf. Rep. 101-923, at 3233 (1990). Consistent with this purpose, all of the half a dozen or so provisions that constituted section 1483, including section 129a, refer to reports and requests made to Congress. It strains reason to suggest that Congress would bury amongst these reporting provisions a section intended to allow contractors to challenge decisions made by the Secretary on the basis of whether they constituted “the least costly form of personnel.” This suggestion becomes even more untenable once it is realized that section 129a is not a new provision, but started as a “sense of the Congress” provision first passed in 1974 and designed to have the Department of Defense factor its personnel needs into the annual authorization requests made to Congress.  Plaintiff in no way may be viewed “as a proper party to request an adjudication of a particular issue” within the domain of this budget statute. Sierra Club v. Morton, 405 U.S. 727, 732 n.3 (1972) (quoting Flast, 392 U.S. at 100).

The same can be said of 10 U.S.C. § 2463 (2006 & Supp. 2010), as in effect at the time of the in-sourcing decision here. Subsection (a) of that section provides:

(a) Guidelines required. – (1) The Under Secretary of Defense for Personnel and Readiness shall devise and implement guidelines and procedures to ensure that consideration is given to using, on a regular basis, Department of Defense civilian employees to perform new functions and functions that are performed by contractors and could be performed by Department of Defense civilian employees. The Secretary of a military department may prescribe supplemental regulations, if the Secretary determines such regulations are necessary for implementing such guidelines within that military department.

(2) The guidelines and procedures required under paragraph (1) may not include any specific limitation or restriction on the number of functions or activities that may be converted to performance by Department of Defense civilian employees.

Section 2463(b)(1) states the guidelines and procedures required under subsection (a) shall provide for “special consideration to be given to using Department of Defense civilian employees to perform any function that . . . is performed by a contractor” and:

(A) has been performed by Department of Defense civilian employees at any time during the previous 10 years;

(B) is a function closely associated with the performance of an inherently governmental function;

(C) has been performed pursuant to a contract awarded on a non-competitive basis; or

(D) has been performed poorly, as determined by a contracting officer during the 5-year period preceding the date of such determination, because of excessive costs or inferior quality.

Section 2463(b)(2) makes similar provision for the use of civilian employees to perform “a new requirement,” adding that “particular emphasis” should be given to a “new requirement that is similar to a function previously performed by Department of Defense civilian employees or is a function closely associated with the performance of an inherently governmental function.” Finally, insofar as is relevant here, section 2463(c) prohibits the use of “public-private competitions” designed to promote outsourcing for a variety of functions newly assigned to Department of Defense civilian employees.

Like section 129a, the provision in which section 2463 was enacted contained a legislative reporting requirement, indicating that “[n]ot later than 180 days after the date of enactment of this Act, the Inspector General of the Department of Defense shall submit to the congressional defense committees a report on the implementation of this section and the amendments made by this section.” Pub. L. No. 110-181, § 324(b), 122 Stat. 3, 60 (originally codified at 10 U.S.C. § 2463). When Congress amended this statute earlier this year, to include several new requirements, it likewise obliged the Secretary of Defense to “submit to the congressional defense committees a report on the decisions with respect to the conversion of functions to performance by Department of Defense civilian employees made during fiscal year 2010,” and ordered the Comptroller General to submit to the same committees “an assessment of the report.” Pub. L. No. 111-383, § 323(c), 124 Stat. 4137, 4184 (2011). Notably, this same statute further stated that “[n]othing in this section shall be construed . . . to require the Secretary of Defense to conduct a cost comparison before making a decision to convert any acquisition function or other critical function to performance by Department of Defense civilian employees, where factors other than cost serve as a basis for the Secretary’s decision.” Id. at § 323(d).

In spite of this language, plaintiff would have this court enforce the guidelines issued by the Secretary of Defense under these provisions, ignoring the limited budgetary context in which those guidelines arise. While those guidelines are specific in mapping out procedures for comparing private versus public costs, nothing in them remotely suggests an intent to confer a right to judicial review – nor does it seem that the agency, in deciding what sort of guidance to issue, could expand the scope of interests covered by the statute so as to afford prudential standing to someone who did not have standing under the statute itself.  There is little to distinguish these internal Department of Defense guidelines from the sorts of FAR guidelines and other internal agency guidance that courts have regularly refused to enforce. See Carolina Tobacco Co. v. United States, 402 F.3d 1345, 1349 (Fed. Cir. 2005); Am. Tel. & Tel. Co. v. United States, 307 F.3d 1374, 1380 (Fed. Cir. 2002), cert. denied, 540 U.S. 937 (2003); ConocoPhillips v. United States, 73 Fed. Cl. 46, 52-53 (2006). Two cases decided by the General Accountability Office, indeed, have recognized as much in flatly dismissing protests of in-sourcing decisions based upon alleged violations of section 2463(a) (and section 129a). See Triad Logistics Serv. Corp., 2010 C.P.D. ¶ 279 (2010) (“since the cited guidance issued pursuant to section 2463 was only internal DoD policy, the assertion that the agency did not adhere to that policy guidance is not a basis for challenging the agency’s action”); Aleut Facilities Support Servs., 2009 C.P.D. ¶ 202 (same). The court agrees with these decisions.

Nor is there any nontextual indication that, in enacting section 2463, Congress intended to prompt anything other than the creation of internal agency procedures subject to legislative oversight. The critical portions of section 2463 were first enacted by section 343 of the National Defense Authorization Act for Fiscal Year 2006, Pub. L. No. 109-163, 119 Stat. 3136, 3200-3201 (codified at 10 U.S.C. § 2461 note (2006)). The version of the bill passed by the House of Representatives would have required the Secretary of Defense to conduct a formal public-private competition before deciding to in-source a requirement, akin to the formal process for out-sourcing authorized in Office of Management and Budget (OMB) Circular A-76, as modified, 68 Fed. Reg. 32134. See H.R. 1815, 109th Cong. (2005); H.R. Rep. No.109-89, at 305 (2005). Ultimately, however, Congress rejected this approach in favor of a simpler requirement that the Secretary “prescribe guidelines and procedures to ensure that consideration is given to using federal government employees for work that would otherwise be performed under Department of Defense contracts, but could be performed by federal government employees.” H.R. Conf. Rep.109-360 at 672 (2005). The accompanying Conference Committee Report indicated that the conferees expected “these guidelines to provide for the assignment of work to federal government employees (and for hiring new federal government employees) in appropriate circumstances, without the requirement to perform public-private competition under Office of Management and Budget Circular A-76 or any other provision of law or regulation.” Id. It is reasonable to assume that in not requiring agencies to conduct formal competitions, like those associated with out-sourcing determinations made under OMB Circular A-76, Congress intended to avoid the protest litigation occasioned by such competitions.  This legislative history, as well as that underlying section 324 of the National Defense Authorization Act for Fiscal Year 2008, Pub. L. No. 110-181, 122 Stat. 3, 60, in which section 2463 was reenacted, suggests that Congress’ reason for doing so was to encourage the Defense Department to make greater and more flexible use of civilian employees. See H.R. Conf. Rep. 110-477, at 878 (2007) (noting that the purpose of the bill is to “ensur[e] full consideration is given to using federal employees”).

D.

Based on the foregoing, this court concludes that neither section 129a nor section 2463 confers prudential standing upon plaintiff to challenge the in-sourcing decision here. This conclusion is reinforced by the Federal Circuit’s decision in American Telephone and Telegraph Co. v. United States, supra (hereinafter “AT&T”). In that case, the Federal Circuit upheld a decision by this court dismissing a suit by AT&T in which the company sought damages based on the Navy’s alleged violation of section 8118 of the Department of Defense Act. 307 F.3d at 1377. The latter statute provided limits on certain fixed-price contracts and required the Undersecretary of Defense to make periodic reports to the Congressional appropriations committees regarding the obligation of such contracts. Id. The Federal Circuit rejected the notion that this section afforded this court the ability to invalidate a contract that did not comply with the spending provisions. Id. at 1379. In this regard, the court wrote:

The language of section 8118 does not explicitly create a cause of action for enforcement of its expenditure prohibitions. Instead the only explicit provision with enforcement consequences in section 8118 requires quarterly reports to the “Committees on Appropriations of the Senate and the House of Representatives in writing.” Thus, section 8118 envisions enforcement, if any, through legislative procedures. The language permits the appropriate legislative committees to monitor compliance and, presumably, guarantee enforcement in the form of future reductions in, or limitations on, appropriated funds. . . . Based on that oversight, the committees and Congress can then adjust the spending allotments in future bills to ensure compliance with legislative objectives. Thus section 8118 is an appropriations oversight provision that envisions enforcement, if any, in the form of legislative spending adjustments in future bills. Section 8118 does not make any provision for judicial enforcement.  Id. at 1377-78.

Now, plaintiff is quick to point out – and correctly so – that AT&T is not a prudential standing case. Yet, the conclusions reached by the Federal Circuit in that case and the striking similarities between the statute it considered and those confronted by the court cannot help but impact the interpretational task at hand. Like the statute in AT&T, the statutes at issue contain reporting requirements that signal Congress’ desire to enforce the in-sourcing requirements in these statutes through oversight. See id. at 1377 (“[P]laintiffs cannot claim a protectable interest in the proper application of Section 8118 for Congress intended to give them none.”). Where statutes are drafted in this fashion, it is not this court’s “role to discipline the agency’s compliance with the supervisory and report instructions of congressional oversight.” Am. Tel. & Tel. Co. v. United States, 177 F.3d 1368, 1375 (Fed. Cir. 1999) (en banc).  As was true in AT&T, plaintiff here is, at best, an indirect beneficiary of the statutes in question and not among those Congress relied upon to challenge alleged agency disregard of the law. See Cort v. Ash, 422 U.S. 66, 78 (1975). Rather, Congress chose to rely on itself to perform the latter task. Accordingly, in the court’s view, AT&T lends considerable weight to the conclusion that the statutes in question do not envision judicial enforcement of the in-sourcing requirements. See also ConocoPhillips, 73 Fed. Cl. at 52; Gould, Inc. v. United States, 66 Fed. Cl. 253, 259 (2005).

It is not enough that plaintiff will experience a competitive injury as a result of the in-sourcing decision or that this injury might be remedied by a ruling setting aside that decision. For even where it is undisputed that a governmental decision causes competitive injury, a plaintiff must demonstrate that its interests are protected by the statutes in question. See Data Processing, 397 U.S. at 154; see also Leaf Tobacco Exporters Ass’n, Inc. v. Black, 749 F.2d 1106, 1112 (4th Cir. 1984) (“In Data Processing, undisputed competitive injury did not relieve the plaintiffs from demonstrating that their interests were protected by the statute in question.”). Nor does plaintiff’s standing turn upon the unavailability of other parties to challenge the in-sourcing decision. As the Supreme Court has stated, “the assumption that if respondent have no standing to sue, no one would have standing, is not a reason to find standing.” Valley Forge Christian College, 454 U.S. at 489 (quoting Schlesinger v. Reservists Comm. to Stop the War, 418 U.S. 208, 227 (1974)). Rather, “our system of government leaves many crucial decisions to the political process.” Schlesinger, 418 U.S. at 227. Nor does the mere existence of an alleged statutory violation confer standing. “[A]n asserted right to have the Government act in accordance with law is not sufficient, standing alone, to confer jurisdiction on a federal court.” Allen, 468 U.S. at 754; see also Whitemore v. Arkansas, 495 U.S. 149, 160 (1990) (citing numerous cases).

What is controlling here – and what demands, in the final analysis, that plaintiff’s case be dismissed – is the language of the statutes in question. That language indicates that Congress intended to reserve for itself, and not any court, the twin job of deciding whether the Defense Department has properly in-sourced various tasks and of requiring the agency to changes its policies as proved necessary. Both tasks were to be accomplished by application of the considerable pressures of the legislative process – what Madison, in Federalist No. 48, referred to as Congress’ “complicated and indirect measures.” See United States v. Richardson, 418 U.S. 166, 179 (1974) (“In a very real sense, the absence of any particular individual or class to litigate these claims gives support to the argument that the subject matter is committed to the surveillance of Congress, and ultimately to the political process.”). To infer otherwise risks triggering a wave of cases brought by hopeful contractors each believing that they have the likely prospect of receiving a contract if a particular function is outsourced. The disruption inherent in such cases likely would hinder the ability of the Department of Defense to establish, on a timely basis, its personnel needs in formulating its authorization requests to Congress, thereby impeding the legislative oversight process that Congress intended to establish.

Would the same Congress that sought to promote in-sourcing expose those decisions to protests filed by outside contractors? It is hard to imagine this.  To be sure, to establish prudential standing “there need be no indication of congressional purpose to benefit the would-be plaintiff.” Clarke, 479 U.S. at 399-400; see also Nat’l Credit Union Admin., 522 U.S. at 492. At the same time, however, the Supreme Court has emphasized that the prudential standing doctrine “seeks to exclude those plaintiffs whose suits are more likely to frustrate than to further statutory objectives,” denying a right to review “if the plaintiff’s interests are so . . . inconsistent with the purposes implicit in the statute that it cannot reasonably be assumed that Congress intended to permit the suit.” Clarke, 479 U.S. at 399; see also Thompson v. N. Am. Stainless, LP, 131 S. Ct. 863, 870 (2011); Corrosion Proof Fittings v. Envtl. Protection Agency, 947 F.2d 1201, 1209 (5th Cir. 1991); CC Distributors, 883 F.2d at 152.  The statutes in question are not silent in this regard. Rather, the text, structure and legislative history of these provisions all reveal that these statutes were not designed to confer benefits on outside contractors. And it is that negative intent, rather than the absence of an affirmative intent to confer standing on outside contractors, that ultimately dictates the conclusion that plaintiff here lacks the prudential standing to challenge the Air Force’s in-sourcing decision.  (Hallmark-Phoenix 3, LLC v. U. S., No. 11-98C, May 24, 2011)  (pdf)

A. SBAR Has Standing to Challenge the Air Force’s Decision to In-Source

The Tucker Act, 28 U.S.C. § 1491(b)(1), gives the Court of Federal Claims “jurisdiction to render judgment on an action by an interested party objecting to . . . any alleged violation of statute or regulation in connection with a procurement or proposed procurement.” The government concedes that the Court of Federal Claims has jurisdiction generally to hear challenges to procurement-related decisions, but argues that this case must be dismissed because SBAR does not have standing to bring a challenge to the Air Force’s in-sourcing decision. The government makes two standing arguments in support of its motion to dismiss for lack of standing. First, it argues that SBAR is not an “interested party” within the meaning of section 1491(b)(1), and therefore it cannot be heard to complain about the Air Force’s in-sourcing decision. In particular, the government argues that because this case does not involve a formal public-private competition SBAR cannot claim it suffered the “competitive injury” allegedly necessary for standing under section 1491(b)(1) as interpreted by the Federal Circuit in American Federation of Government Employees, AFL-CIO (“AFGE”) v. United States, 258 F.3d 1294 (Fed. Cir. 2001) and modified by Weeks Marine, Inc. v. United States, 575 F.3d 1352 (Fed. Cir. 2009). Second, the government argues that SBAR fails the Federal Circuit test for “prudential standing” allegedly established in Galen Medical Associates, Inc. v. United States, 369 F.3d 1324 (Fed. Cir. 2004), because SBAR is not the intended beneficiary of the interests protected by 10 U.S.C. § 129a and 10 U.S.C. § 2463, the two statutes implicated in an in-sourcing decision. According to the government, the Federal Circuit in Galen determined that protestors must be both “interested parties” and meet a prudential standing requirement to maintain an action under section 1491(b)(1).

SBAR argues that the government’s motion to dismiss is without merit. It argues that, as the awardee of the current MWLS IDIQ contract with an interest in future contract work, SBAR is plainly an “interested party” under section 1491(b)(1). SBAR argues that “the Air Force’s decision to insource the MWLS work has had, and will continue to have, a direct economic impact on SBAR” and thus it has fully satisfied the standing criteria established by the Federal Circuit in AFGE and Weeks Marine. Pl.’s Resp. & Reply 7, ECF No. 50. With regard to the government’s “prudential standing” argument, SBAR argues that there is “no separate prudential standing” test in the Federal Circuit. Id. at 9. SBAR asserts that Galen merely requires that a plaintiff bringing a protest under section 1491(b)(1) demonstrate that it is economically prejudiced by the government’s alleged error in the procurement-related action. SBAR contends that it cannot be disputed that it has been prejudiced – i.e. economically harmed – by the errors they allege the government committed in making the in-sourcing decision.

Whether this court has jurisdiction to hear SBAR’s challenge to the government’s in-sourcing decision – and whether SBAR has standing to bring that challenge – is a threshold question that turns on whether the government’s in-sourcing decision was made “in connection with a procurement” within the meaning of section 1491(b)(1) and whether> SBAR is an “interested party” within the meaning of section 1491(b)(1). There appears to be no dispute that the Air Force’s decision to in-source the work SBAR had been performing at four Air Force bases and continues to perform at five other locations is a decision that was made “in connection with a procurement” as that term has been interpreted by the Federal Circuit. See Distributed Solutions, Inc. v. United States, 539 F.3d 1340, 1346 (Fed. Cir. 2008) (“[T]he phrase, ‘in connection with a procurement or proposed procurement,’ by definition involves a connection with any stage of the federal contracting acquisition process, including ‘the process for determining a need for property or services.’”). The substance of the Air Force’s decision has been to stop procuring services from SBAR and to instead use Air Force civilian employees to do the same work. Thus, the in-sourcing decision in this case was made for the purpose of determining the need for contract services and thus was made “in connection with a procurement decision.” For this reason, the court agrees with both the government and SBAR that SBAR has properly invoked the court’s 1491(b)(1) jurisdiction.

The court also finds that SBAR is an “interested party” with standing to challenge the in-sourcing decision. In AFGE the Federal Circuit held that standing under section 1491(b)(1), is limited to “interested parties” who, as defined by the Competition in Contracting Act (“CICA”), 31 U.S.C. §§ 3551-3556, are “actual or prospective bidders and offerors whose direct economic interest would be affected by the award of the contract or the failure to award the contract.” AFGE, 258 F.3d at 1302. In AFGE, the Federal Circuit determined that federal employees who were likely to lose their jobs based on a government decision to out-source their work to private contractors did not have standing to challenge the out-sourcing decision on the grounds that they were not eligible to bid on government work. As such, they could not meet the “interested party” definition in CICA, which the Federal Circuit determined was engrafted onto section 1491(b)(1).

Here, in contrast to the parties in AFGE, SBAR has a government contract and claims that it would expect to compete for future government contracts but for the errors made by the Air Force in its in-sourcing decision, which prevents SBAR or any other contractor from performing the functions at issue. Where, as here, SBAR has a track record of winning contracts for the work that the Air Force is now in-sourcing, the economic impact to SBAR cannot be denied. This is all that is required for SBAR to satisfy the criteria for standing under section 1491(b)(1).

The court cannot accept the government’s contention that section 1491(b)(1) applies only where a party can demonstrate a “non-trivial competitive injury” arising from a violation of a statute or regulation intended to promote competition. That test was established in Weeks Marine to clarify the harm necessary to demonstrate interested party status in the pre-award bid protest context. While it is true that the relevant statutes and regulations at issue here, 10 U.S.C. § 2463 and 10 U.S.C. § 129a, do not mandate any kind of formal public-private competition, it is also true that the in-sourcing decision at issue was based on a cost comparison between the cost of using the contractors with the cost of switching to civilian Air Force employees. Where a protestor stands to lose future work for which it likely would have competed because of alleged errors in the cost comparison mandated by Congress, the protestor should have standing to challenge the decision to insource. This court has recognized the right of contractors to challenge decisions under OMB Circular A-76 not to out-source work where the protestors were among those who were selected for cost comparative purposes with the government in-house organization.

See LABAT-Anderson, Inc. v. United States, 65 Fed Cl. 570, 575-76 (2005). This court has also allowed potential contractors to challenge decisions to cancel a solicitation and not to compete work, where the protestor might have won the award. Indeed, Distributed Solutions dealt with a situation where the government decided it would not directly procure certain services from contractors. This case presents an analogous challenge to a government decision regarding the desirability of using contractors or civilian personnel. Like Distributed Solutions and LABAT-Anderson, this case also involves the loss of future contract work by a protestor with a direct and real economic interest in the government’s decision. SBAR has met the test for standing under section 1491(b)(1).

The government’s alternative contention that the court should dismiss the case on “prudential standing” grounds is without merit. To begin, the court agrees with SBAR that the concept of “prudential standing” does not apply to bid protests under section 1491(b)(1). Prudential standing is typically applied to challenges under the Administrative Procedure Act (“APA”) 5 U.S.C. §§ 500 et seq., which has more liberal standing criteria than those set in section 1491(b)(1). In AFGE, the Federal Circuit held that is was rejecting the “less stringent” standing requirements imposed under the APA in favor of the “interested party” test, based on the definition in CICA. AFGE, 258 F.3d at 1302. Under AFGE, once a party satisfies the more stringent “interested party” test, standing is established. In this connection, the court does not read Galen as requiring something more to establish standing than AFGE required. Galen requires a protestor to show that it was prejudiced by an error in the government’s decision. Here, SBAR has alleged that it has been prejudiced by errors in the government’s in-sourcing decision. Indeed, the errors SBAR identified were of sufficient concern to the government that it elected to perform a re-evaluation of its decision and to stay full implementation of its decision until the Air Force completed its re-evaluation.

The government argues that, regardless of the errors the government may have committed in making its decision, the court should dismiss SBAR’s case because, in contrast to the protestor in Galen, SBAR has no interests that are protected under 10 U.S.C. § 2463 or 10 U.S.C. § 129a. According to the government, SBAR is not within the “zone of interests” protected by these statutes and therefore errors committed by the government in fulfilling its obligations under those statutes cannot give rise to a claim of “prejudice.” The court does not agree. Having satisfied the “interested party” test, SBAR has established standing. Moreover, even if “prudential standing” were required, the court finds that the Ike Skelton NDAA was enacted, at least in part, for the benefit of the contracting community. See Ike Skelton NDAA, 124 Stat. at 4184. The Ike Skelton NDAA modified 10 U.S.C. § 2463 in January 2011 to prevent the DoD from imposing any specific quotas or goals on in-sourcing without a considered cost analysis and mandated that the DoD conduct a specific cost comparison that takes into account the “full costs of civilian and military manpower” before making any in-sourcing decision, where, as here, cost alone is the deciding criteria. Id. While the government argues that these provisions and the guidance referenced in the Act, DTM 09-007, do not provide any benefits for contractors, the provisions clearly prohibit the DoD from arbitrarily removing work from contractors without a solid analysis. The court finds that the mandates in Ike Skelton NDAA are sufficient to provide grounds for review when potential contractors challenge a procurement-related in this context, and thus SBAR has satisfied any prudential standing requirement.  (Santa Barbara Applied Research, Inc. v. U. S. No. 11-86C, May 4, 2011)  (pdf)

1. The VIP database and SDVOSB contracts

The Veterans Benefits, Health Care, and Information Technology Act of 2006, Pub. L. No. 109-461, §§ 502-03 (codified at 38 U.S.C. §§ 8127-28 (2006)), was enacted to increase contracting opportunities for service-disabled veteran and veteran-owned qualified small businesses. See 38 U.S.C. § 8127(a). Accordingly, the [Department of Veterans Affairs] DVA sets aside certain contracts for SDVOSB concerns. See id. §§ 8127-28. The DVA keeps an online database of qualified SDVOSBs at its [Vendor Information Pages] VIP website, www.VetBiz.gov. See id. § 8127(f) ("[T]he Secretary shall maintain a database of small business concerns owned and controlled by veterans and the veteran owners of such business concerns.”); 48 C.F.R. 2/ § 804.1102 (2010) (providing VIP online database).

Until January 1, 2012, in order to be awarded a contract, an otherwise qualified SDVOSB must be listed in the VIP database. See id. § 8127(e) (“A small business concern may be awarded a contract under this section only if the small business concern and the veteran owner of the small business concern are listed in the database of veteran-owned businesses maintained by the Secretary under subsection (f).”); 48 C.F.R. § 804.1102 (“Prior to January 1, 2012, all VOSBs and SDVOSBs must be listed in the VIP database, available at http://www.VetBiz.gov , and also must be registered in the Central Contractor Registration (CCR) (see 48 CAR subpart 4.11) to receive contract awards under VA's Veteran-owned Small Business prime contracting and subcontracting opportunities program.”). Also until December 31, 2011, an applicant can self-represent its status as an SDVOSB in the VIP database. See 48 C.F.R. § 819.7003(b) (2010) (“At the time of submission of offer, the offeror must represent to the contracting officer that it is a–(1) SDVOSB concern or VOSB concern; . . . and (3) Verified for eligibility in the VIP database.”).

After December 31, 2011, the regulations require that an applicant be “listed as verified” in the VIP database. 48 C.F.R. § 804.1102 (“After December 31, 2011, all VOSBs, including SDVOSBs, must be listed as verified in the VIP database, and also must be registered in the CCR to be eligible to participate in order to receive new contract awards under this program.”). The Center for Veterans Enterprise (the “CVE”), a division of the DVA, evaluates applications for inclusion in the VIP database to verify whether an applicant satisfies the eligibility requirements to be listed as a SDVOSB. See 38 C.F.R. § 74.11(a) (2010) (“The Director, Center for Veterans Enterprise, is authorized to approve or deny applications for VetBiz VIP Verification. The CVE will receive, review and evaluate all VetBiz VIP Verification applications.”). The CVE has authority to remove from the VIP database a firm “found to be ineligible due to an SBA protest decision or other negative finding,” and the firm will not be eligible to participate in the 38 U.S.C. § 8127 program. 38 C.F.R. § 74.2(e) (2010). “Once an application, a request for reconsideration, or an appeal to a cancellation notice, as applicable, has been denied, the applicant or participant shall be required to wait for a period of 6 months before a new application will be processed by CVE.” 38 C.F.R. § 74.14 (2010).

An interested offeror bidding on a procurement may challenge another offeror’s listing status as an SDVOSB in the VIP database by filing a protest with the VA Office of Small and Disadvantaged Business Utilization (the “OSDBU”). See 48 C.F.R. § 819.307(c) (2010).  Pending an interagency agreement with the Small Business Administration (the “SBA”), the Executive Director of the OSDBU decides protests of SDVOSB status raised by either another offeror or the contracting officer. Id. His decision is final. Id.

(sections deleted)

2) Analysis

Defendant bases its claim that plaintiff has no standing on two regulations, 48 C.F.R. § 819.307(c)(3) and 38 C.F.R. § 74.2(e), which, respectively, acts to bar a purported SDVOSB from bidding on a future procurement if a status protest has been sustained against that bidder and grants the CVE authority to remove the bidder from the VIP database. Defendant argues that the two regulations “go hand in hand” and accuses plaintiff of “parsing” the regulatory scheme by differentiating between being listed on the VIP database, 48 C.F.R. § 804.1102, from the VIP verification application process, 38 C.F.R. § 74.11, in 12 order to misrepresent its status as an SDVOSB. 8/ Def.’s Br. filed Aug. 19, 2010, at 4-5 (citing Pl.’s Br. filed Aug. 6, 2010, at 8).

“The rules of statutory construction apply when interpreting an agency regulation.” Roberto v. Dep’t of the Navy, 440 F.3d 1341, 1350 (Fed. Cir. 2006). The court begins its analysis of the regulations by “reviewing its language to ascertain its plain meaning.” Am. Airlines, Inc. v. United States, 551 F.3d 1294, 1299 (Fed. Cir. 2008). The court may consider the language of other, related regulations to guide its analysis. Roberto, 440 F.3d at 1350. The court will defer to the relevant agency’s interpretation of a statute or regulation that is “not clear on its face or does not speak directly to an issue.” Am. Airlines, 551 F.3d at 1299-1300 (citing Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-45 (1984)); see also Roberto, 440 F.3d at 1350 (“[I]f the regulation is silent or ambiguous, the court then gives deference to the agency’s own interpretations.”). However, when the regulation’s text is clear, the court’s inquiry ends with the plain meaning. Roberto, 440 F.3d at 1350.

The court agrees in part with plaintiff’s construction of 48 C.F.R. § 819.307(c)(3). Defendant argues that plaintiff’s interpretation of the regulation “fails to include a situation, such as the one at issue here, where a status protest has already been sustained against an offeror.” Def.’s Br. filed Aug. 19, 2010, at 5. Section 819.307(c)(3) provides:

If the Executive Director sustains a service-disabled veteran-owned or veteran-owned small business status protest and the contract has already been awarded, then the contracting officer cannot count the award as an award to a VOSB or SDVOSB and the concern cannot submit another offer as a VOSB or SDVOSB on a future VOSB or SDVOSB procurement under this part, as applicable, unless it demonstrates to VA that it has overcome the reasons for the determination of ineligibility.

48 C.F.R. § 819.307(c)(3). This regulation applies to status protests of successful bidders to whom “the contract has already been awarded,” not merely protests sustained against an unsuccessful bidder. Id. Nothing in the text suggests a broader application. Indeed, the VA’s own final rule confirms this construction: “Lastly, 819.307 is clarified to explain that if a SDVOSB or VOSB status protest is granted, if contract award has already been made, VA will not be required to terminate the award . . . .” VA Acquisition Regulation: Supporting Veteran-Owned and Service-Disabled Veteran-Owned Small Businesses, 74 Fed. Reg. 64,619, 64,627 (Dec. 8, 2009) (emphasis added). Defendant’s construction of the regulation to encompass unsuccessful bidders ignores the conjunctive clause “and the contract has already been awarded,” 48 C.F.R. § 819.307(c)(3), which would render meaningless the immediately succeeding clause, “then the contracting officer cannot count the award as an award to a VOSB or SDVOSB,” id. This result the court cannot sanction, as it “would contravene the ‘longstanding canon of statutory construction that terms in a statute should not be construed so as to render any provision of that statute meaningless or superfluous.’” Roche v. Merit Sys. Prot. Bd., 596 F.3d 1375, 1380 (Fed. Cir. 2010) (quoting Beck v. Prupis, 529 U.S. 494, 506 (2000)). The court must also follow the “cardinal rule that statutory language must be read in context since a phrase gathers meaning from the words around it.” Hawkins v. United States, 469 F.3d 993, 1001 (Fed. Cir. 2006) (citation omitted) (internal quotation marks omitted). The court concludes that, by its plain terms, 48 C.F.R. § 819.307(c)(3) only applies to status protests sustained against firms that already have been awarded a contract.

Applying this construction to the facts of this case, it becomes clear that the regulation is inapplicable. When the OSDBU sustained the status protest against plaintiff on April 30, 2010, by plaintiff’s own admission, see Pl.’s Br. filed Aug. 6, 2010, at 4, the protested procurement had not been awarded to plaintiff. Nothing in the regulation’s text supports applying its penalty clause—barring sustained protested firms from future bids—to an anomalous situation where, as here, the sustained protested firm was an unsuccessful bidder. Therefore, 48 C.F.R. § 819.307 does not bar plaintiff from bidding on the Solicitation.

For the same reason, however, plaintiff cannot take refuge in the regulation’s safe harbor provision, “unless it demonstrates to VA that it has overcome the reasons for the determination of ineligibility.” 48 C.F.R. § 819.307(c)(3). The regulation simply does not apply to a sustained status protest regarding an offeror’s prior, unsuccessful bid. Even though the regulation does not bar plaintiff from bidding, that does not mean that, by negative implication, the regulation permits plaintiff to bid on future procurements after the CVE’s determination of ineligibility for SDVOSB status. In other words, § 819.307(c)(3) does not apply to this case.

Defendant argues that the DVA’s amendment to the pre-solicitation notice to conform it to 38 U.S.C. § 8127(e) and the DVA’s own interpretation of that statute in Corners Construction confirm that plaintiff has until the actual award of the contract to be listed in the VIP database. Plaintiff insists that, in light of the CVE’s acknowledgment that plaintiff cured the defects identified in the OSDBU’s April 30 letter, nothing prevents it from being placed back on the VIP database prior to the contract’s award. The court concludes, however, that notwithstanding the CVE’s observations pertinent to the OSDBU’s status protest, plaintiff is ineligible to bid by virtue of 48 C.F.R. § 819.7003(a) and 38 C.F.R. § 74.2(e).

38 C.F.R. Part 74 and 48 C.F.R. Part 819, when read together, establish a comprehensive regulatory scheme to ensure verification of SDVOSB status in order to prevent unscrupulous bidders from misrepresenting their veteran- or service-disabled ownership status. In so doing, DVA is fulfilling its verification obligation according to congressional mandate, as prescribed by 38 U.S.C. § 8127(f)(4) (“In maintaining the database, the Secretary shall carry out at least the following two verification functions: (A) Verification that each small business concern listed in the database is owned and controlled by veterans. (B) In the case of a veteran who indicates a service-connected disability, verification of the service-disabled status of such veteran.”). Defendant correctly contends that these two provisions cannot be considered in isolation. Each provision is examined in turn.

48 C.F.R. § 819.7003 sets forth the eligibility requirements for SDVOSBs and provides that such eligibility is governed by certain SBA regulations, “except where expressly directed otherwise by . . . 38 C.F.R. verification regulations for SDVOSBs and VOSBs.” Id. § 819.7003(a). Moreover, this regulation also requires an offeror bidding on a solicitation to represent to the contracting officer that the offeror is “[v]erified for eligibility in the VIP database.” Id. § 819.7003(b)(3) (emphasis added). 38 C.F.R. § 74.2, in turn, lists “the eligibility requirements for VIP verification.” VA Acquisition Regulation: Supporting Veteran-Owned and Service-Disabled Veteran-Owned Small Businesses, 74 Fed. Reg. at 64,619. Section 74.2(e) provides:

U.S. Small Business Administration (SBA) Protest Decisions. Any firm registered in the VetBiz VIP database that is found to be ineligible due to an SBA protest decision or other negative finding will be immediately removed from the VetBiz VIP database. Until such time as CVE receives official notification that the firm has proven that it has successfully overcome the grounds for the determination or that the SBA decision is overturned on appeal, the firm will not be eligible to participate in the 38 U.S.C. [§] 8127 program.

38 C.F.R. § 74.2(e) (emphasis added). Plaintiff disputes the applicability of 38 C.F.R. § 74.2(e) on the ground that it is specific to SBA decisions. See Pl.’s Br. filed Aug. 6, 2010, at 5 (“The title of the clause alone speaks to its inapplicability . . . .”). However, a regulation is not interpreted merely according to its title. See Fla. Dep’t of Revenue v. Piccadilly Cafeterias, Inc., 554 U.S. 33, __, 128 S. Ct. 2326, 2336 (2008) (“To be sure, a subchapter heading cannot substitute for the operative text of the statute.”); Pa. Dep’t of Corrections v. Yeskey, 524 U.S. 206, 212 (1998) (explaining that title of statute does not limit plain meaning of its text). As the text of the regulation explicitly provides, a firm will be removed from the VIP database if it is found to be ineligible due to “[an]other negative finding,” not only an SBA decision. Moreover, the CVE’s authority to remove a bidder upon a negative finding by the DVA and bar that bidder from bidding on future procurements is not so readily discounted, and the court declines to do so now. 48 C.F.R. § 819.7003 expressly conditions eligibility for SDVOSB status on satisfying the verification requirements of 38 C.F.R. Part 72. Upon plaintiff’s application, which proceeded in tandem with the Solicitation, the CVE removed plaintiff from the VIP database on April 30, 2010, thereby rendering plaintiff ineligible to participate in the Solicitation. Nothing in the regulatory scheme permits a firm to represent itself as an SDVOSB once it has been removed from the VIP database. To do so would turn the DVA’s verification process on it head. 38 U.S.C. § 8127(e) conditions award of an SDVOSB contract upon inclusion in the VIP database. Because plaintiff is ineligible to be listed therein, it cannot show a substantial chance of securing the contract and, therefore, cannot establish prejudice. Without such a showing, plaintiff is not an interested party for Tucker Act purposes and lacks standing to bring its claim in the Court of Federal Claims.  (CS-360, LLC, v. U. S., No 10-457C, September 16, 2010) (pdf)

I. Standing

Standing is a threshold jurisdictional issue. Myers Investigative & Sec. Servs., Inc., v. United States, 275 F.3d 1366, 1369 (Fed. Cir. 2002) (citing Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 102-04 (1998)). The doctrine of standing ensures that the party seeking redress is properly entitled to have the court decide the dispute or issue. Warth v. Seldin, 422 U.S. 490, 498 (1975). It is an outgrowth of the Constitution’s “case or controversy” requirement, and, although we are an Article I court, we generally apply the same standard as the federal courts created under Article III. Anderson v. United States, 344 F.3d 1343, 1350 n.1 (Fed. Cir. 2003). This standard requires that, to have standing, a litigant must have suffered a concrete and particular injury that is fairly traceable to the defendant’s action and which is likely to be redressed by a favorable decision. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992).

In the bid protest context, the standing issue is framed by 28 U.S.C. § 1491(b)(1), which grants jurisdiction over a protest brought by an “interested party”:

Both the Unites [sic] States Court of Federal Claims and the district courts of the United States shall have jurisdiction to render judgment on an action by an interested party objecting to a solicitation by a Federal agency for bids or proposals for a proposed contract or to a proposed award or the award of a contract or any alleged violation of statute or regulation in connection with a procurement or a proposed procurement. . . .

28 U.S.C. § 1491(b)(1) (2006). Though the statute does not speak of standing, its requirement of an interested party has been interpreted as “impos[ing] more stringent standing requirements than Article III.” Weeks Marine, Inc. v. United States, 575 F.3d 1352, 1359 (Fed. Cir. 2009) (citing Am. Fed’n of Gov. Employees v. United States, 258 F.3d 1294, 1302 (Fed. Cir. 2001)). Here, the crux of the standing argument is whether Navarro is an interested party.

At first blush, Navarro—the incumbent contractor and a disappointed bidder—seems the very model of an interested party, having failed in its bid to receive a contract valued at nearly $30 million. The government, however, argues that Navarro does not qualify as an interested party and thus lacks standing. The government’s argument, discussed in more detail below, is drawn from decisions in which the plaintiff was challenging the merits of an award. We believe that Navarro’s situation is sufficiently different from the typical bid protest that a different standing requirement should apply here.

The government’s argument begins by noting that, although 28 U.S.C. § 1491 does not define an interested party, past cases have applied the definition found in the Competition In Contracting Act, 31 U.S.C. § 3551(2) (2006). Def. Resp. 4 (citing Rex Serv. Corp. v. United States, 448 F.3d 1305, 1307 (Fed. Cir. 1996)). Under this definition, interested parties are those “actual or prospective bidders or offerors whose direct economic interest would be affected by the award of the contract or by failure to award the contract.” 31 U.S.C. § 3551(2)(A); Rex Serv. Corp., 448 F.3d at 1307. While plaintiff would obviously meet that requirement, the government next draws from decisions holding that a protestor has a “direct economic interest” only if it could be put in a position for award as a result of prevailing in its bid protest. Def. Resp. 5 (citing United States v. Int’l Bus. Machs. Corp., 892 F.2d 1006, 1011 (Fed. Cir. 1989)). In other words, the contractor “must show that there was a ‘substantial chance’ it would have received the contract award but for the alleged error in the procurement process.” Info. Tech. & Applications v. United States, 316 F.3d 1312, 1319 (Fed. Cir. 2003); see also Myers, 275 F.3d at 1369-70 (“[P]rejudice (or injury) is a necessary element of standing.”).

In the present action, Navarro is not challenging the procurement decision itself but rather seeks to enforce a post-award procedural remedy—an allegedly mandatory debriefing. In other words, even if Navarro were to prevail here, it would not be awarded the contract. It would still have to obtain review of the merits of the award and succeed. Thus, the government argues, Navarro has no direct economic interest, is not an interested party, and therefore lacks standing. Although the precise question presented is one of first impression,6 we believe that the relevant statutes and related case law mean that the government is incorrect.

The government’s argument relies on standing doctrine developed in typical bid protests, in which the winner of the competition has been announced or even awarded the contract. In such a “substantive” challenge to a procurement, it makes sense to insist that the protestor has a substantial chance at the award. Otherwise, the court’s ruling would serve no purpose, neither changing the award nor redressing the protestor’s real grievance.

In Weeks Marine, Inc. v. United States, 575 F.3d 1352 (Fed. Cir. 2009), the Federal Circuit confronted a challenge to standing in a pre-award protest, in which the plaintiff challenged the agency’s decision to use task order contracts rather than sealed bidding procedures. Id. at 1354-58. The challenge, in other words, was not unique to the plaintiff’s circumstances. It went to the validity of the entire solicitation process. The Court of Federal Claims had ruled in favor of the contractor and enjoined the agency from moving forward with the solicitation. On appeal, the government, relying on standing decisions developed in post-award contexts, made the same challenge to standing which it makes here—that plaintiff’s injury was too speculative because there was no assurance that, if successful with the protest, plaintiff would receive the award.

The Federal Circuit rejected the government’s argument. It began with the proposition that determining bid protest standing is a two-prong test requiring the protestor “to establish that it ‘(1) is an actual or prospective bidder and (2) possess[es] the requisite direct economic interest.’” Id. at 1359 (quoting Rex Serv. Corp., 448 F.3d at 1308). The first prong was not disputed. Id. at 1359-60. As to the second prong, the Weeks Marine court held that the unique context of pre-award bid protests merited a modification of the usual standing requirement. It rejected the “substantial chance” definition of direct economic interest in favor of a more inclusive test. Id. at 1361-62. The court adopted the standard used by the trial court, in which “standing is established by alleging a ‘non-trivial competitive injury which can be redressed by judicial relief.’” Id. at 1361 (quoting unattributed source). This standard “strikes the appropriate balance between the language of § 1491(b)(1) . . . and Article III’s standing requirements.” Id. at 1362. The court noted that a different result would lead to the anomalous outcome that the protestor had no standing, but if it subsequently challenged an actual award at a later point in the process, it would be confronted with the argument that, by not protesting, it had waived the right to challenge the terms of the solicitation.

The court also reasoned that a different result would be at odds with prior decisions recognizing the broad terms of 28 U.S.C. § 1491’s jurisdictional grant to this court. See RAMCOR Serv. Group, Inc. v. United States, 185 F.3d 1286, 1289 (Fed. Cir. 1999) (noting that language in § 1491(b)(1) “is very sweeping in scope”). This court has been given jurisdiction to hear challenges to “any alleged violation of statute or regulation in connection with a procurement or a proposed procurement.” 28 U.S.C. § 1491(b)(1). Denying standing to a protestor attempting to enforce one of the statutory requirements related to a procurement would be tantamount to making the procedure illusory.

We therefore conclude that the Weeks Marine standard strikes the appropriate balance in a bid protest seeking an allegedly mandatory post-award debriefing. An interested party is an actual or prospective bidder alleging a non-trivial competitive injury related to the procurement which can be redressed by judicial relief. Here, Navarro satisfies this standard and therefore has standing.

Navarro satisfied the first prong of the test—an actual or prospective bidder—when it submitted a bid on the RFQ. We also believe Navarro has satisfied the second prong by alleging a non-trivial competitive injury capable of judicial redress. If Navarro were to prevail here and receive the debriefing it seeks, it would then have the ability, assuming it refiled a protest at GAO, to trigger a stay of the transition to the new contractor. In such situations, it is not uncommon for the incumbent contractor to continue performance during the pendency of the stay. The ability to perform during this interim period is not a trivial benefit. Furthermore, the information gleaned from the debriefing could be helpful to Navarro in its protest at GAO and in shaping its future bidding strategies. Finally, a stay in place during the pendency of a protest allows the court, in the event the protest is well founded in fact and law, to award injunctive relief without the extraneous concern that too much work has been performed by the putative awardee to prevent undue harm to it or the government.

In sum, Congress created a mechanism that gives a bidder the presumptive right to a stay during the pendency of a bid protest at GAO. We need not second guess why Congress believed it important to the competitive process to create such a possibility. Nor do we second guess the assignment to this court of the responsibility to hear protests involving a statute or regulation connected with that same procurement. It is sufficient to say that our obligation to hear the latter type claim would be meaningless if the protestor here had to persuade us that it would succeed at GAO. Plaintiff has standing.  (Navarro Research and Engineering, Inc. v. U. S., and Portage, Inc., No. 10-481C, August 16, 2010)  (pdf)

Standing

The Government contends that L-3 does not have standing and that this Court lacks jurisdiction because L-3 is not an interested party under the ADRA. The Federal Circuit has construed the term “interested party” in the ADRA to have the same meaning that it has under the Competition and Contracting Act, 31 USC § 3551-56 (“CICA”). E.g., Rex Service Corp. v. United States, 448 F.3d 1305, 1307 (Fed. Cir. 2006); American Federation of Government Employees v. United States, 258 F.3d 1294, 1302 (Fed. Cir. 2001). CICA defines the term “interested party” to mean “an actual or prospective bidder or offeror whose direct economic interest would be affected by the award of the contract or by failure to award the contract.” 31 U.S.C. § 3551(2)(A). Defendant contends that L-3 fails to qualify as an interested party because it was not an actual or prospective offeror and did not submit a proposal -- indeed it did not even exist when its predecessor submitted its offer. While this is true, this argument ignores the reality that L-3 is the complete successor-in-interest to the actual offeror, Raytheon Company, and embraces the identical business unit which submitted Raytheon Company’s bid in the C-5 AMP procurement. As such, L-3 stands in the shoes of Raytheon Company in the instant case and has standing to pursue this claim. See Alabama Aircraft Industries, Inc. v. United States, 83 Fed. Cl. 666, 682 (2008) (holding that successor-ininterest to the original offeror, was in effect, the same legal entity which had submitted its proposal and was an interested party under ADRA); accord, Coggeshall Dev. Corp. v. United States, 23 Cl. Ct. 739, 743 (1991) (holding that successor-in-interest under Government deed had a contractual relationship with the United States and could maintain a breach of contract action); Harnischfeger Corp., B-224371, 86-2 CPD ¶ 296. As such, L-3 is an interested party under ADRA and has standing to pursue this protest.  (L-3 Communications Integrated Systems, L. P., v. U. S. and Lockheed Martin Aeronautics Company, No. 06-396C-Costs, Filed November 26, 2008, Reissued December 5, 2008) (pdf)

The Air Force and Boeing claim that Alabama Aircraft fails to qualify as an “interested party” because “it is not the same entity that submitted a proposal” and because it lacks adequate financial resources to perform the KC-135 contract. Intervening Def.’s Reply to Pl.’s Opp’n to Def.’s and Intervening Def.’s Mot. to Dismiss at 1-2 (“Intervening Def.’s Reply on Standing”); see also Def.’s Mot. to Dismiss at 10. The Air Force further argues that “[i]f Pemco actually wished to change its name, or declare [Alabama Aircraft] a successor in interest to the bid, as [Alabama Aircraft] appears to allege, Pemco should have done so formally so that the Government could determine if its interests are protected.” Def.’s Mot. to Dismiss at 11. Alabama Aircraft resists these contentions on the grounds that it is the same corporate entity as Pemco Aeroplex, that the Air Force had notice of the sale of Pemco World Air and the resulting name change, and that it has the financial capability to perform the contract, as evidenced by an audit report prepared in June 2008 by the Defense Contract Audit Agency. Pl.’s Opp’n to Def.’s and Intervening Def.’s Mot. to Dismiss at 10, 19-20 (“Pl.’s Opp’n). Whether Alabama Aircraft qualifies as an “interested party” and has standing to protest must be addressed as a threshold issue in this case.  (p. 19)

(sections deleted)

Alabama Aircraft has standing to challenge the Air Force’s award of the KC-135 PDM contract because it satisfies the definition of “interested party.” Despite its name change and the sale of a sister subsidiary, Alabama Aircraft is the same legal entity as the company that submitted its second final proposal revision in June 2007. Alabama Aircraft has the same operational capabilities as its predecessor and due to the sale to the sister company it is in a stronger financial position to perform the instant contract. Furthermore, the Air Force had ample notice of the sale of the sister company and failed to initiate any inquiries about whether the sale called into question Alabama Aircraft’s capabilities to perform the contract. The DCAA audit report completed in June 2008, while not the equivalent of a responsibility determination, confirms that for the near future Alabama Aircraft has sufficient financial resources to perform under the contract. For these reasons, Alabama Aircraft continues to be an interested party with standing to pursue this bid protest.  (p. 24)  (Alabama Aircraft Industries, Inc. - Birmingham v. U. S., and The Boeing Company, No. 08-470C, October 7, 2008) (pdf)

1. Standing as a function of relative responsiveness

Plaintiff argues that it has standing to pursue this action (1) because it was an actual offeror in this Solicitation and (2) because its direct economic interest would be affected adversely by the award to CSC, the successful bidder. Plaintiff contends that the MCC arbitrarily excluded plaintiff’s proposal from the competitive range because plaintiff’s final proposal still contained open-market items (plaintiff argues that this nonconformity was illusory), whereas CSC’s final proposal manifested the same type of noncompliance for a similar requirement.

Defendant had argued in its two briefs that the MCC’s exclusion of plaintiff’s final proposal as noncompliant defeats its claim to standing. See Def.’s Br. filed Aug. 8, 2008, at 1; Def.’s Br. filed July 31, 2008, at 19. During oral argument, however, defendant conceded that plaintiff has standing to challenge the MCC’s determinations that plaintiff’s proposal was noncompliant and that CSC’s proposal was compliant. See Transcript of Proceedings, at 36, Dyonyx, L.P. v. United States, No. 08-458C (Fed. Cl. Aug. 19, 2008) (“Tr.”). (“Our view is that Dyonyx has standing to address two issues here. First, whether or not their proposal was in fact compliant, which goes to the open-market issue, and, secondly, whether or not CSC’s proposal was in fact compliant.”) Defendant nonetheless would limit the court’s consideration to these issues.

Although jurisdiction cannot be established by a litigant’s concession, see Industrial Addition Ass’n v. Comm’r, 323 U.S. 310, 313 (1945) (stating that parties cannot confer jurisdiction by mutual consent), accord Grantham v. Brown, 114 F.3d 1156, 1158 (Fed. Cir. 1997); Gould v. Control Laser Corp., 866 F.2d 1391, 1393 (Fed. Cir. 1989); Glasstech, Inc. v. AB Kyro OY, 769 F.2d 1574, 1577 (Fed. Cir. 1985), defendant, in effect, acknowledged that using the acceptability of a proposal to determine standing could produce an inane result. Thus, defendant would be arguing that, even if CSC’s proposal was materially noncompliant, plaintiff lacked standing to question the award because plaintiff’s proposal was materially noncompliant. Ultimately, defendant argued that plaintiff’s final proposal failed a mandatory requirement that pertained to compliance, whereas CSC’s proposal manifested a weakness in staffing, a non-mandatory technical subfactor that the MCC considered in weighing the minimum qualifications of the staff proposed by both plaintiff and CSC. This argument is not an issue of standing.

The caselaw has confused the legal issue whether a noncompliant proposal forfeits the offeror’s status as an actual offeror. This confusion arises within the Court of Federal Claims and not in the binding precedent of the Federal Circuit. The confusion traces to the Federal Acquisition Regulation, which attaches the concept of responsiveness to eligibility “[t]o be considered for award.”

PART 14 – SEALED BIDDING
SUBPART 14.3 – SUBMISSION OF BIDS

14.301 Responsiveness of bids.

(a) To be considered for award, a bid must comply in all material respects with the invitation for bids [IFB]. Such compliance enables bidders to stand on an equal footing and maintain the integrity of the sealed bidding system.

The FAR confines the concept of responsiveness to sealed bidding. FAR Part 15 Contracting by Negotiation, governing competitive procurements, neither employs the term nor the concept of “responsiveness.” This distinction is significant. As the Federal Circuit held in AFGE, 258 F.3d at 1302, “the term ‘interested party’ in [28 U.S.C.] § 1491(b)(1), . . . [as related to standing] is limited to actual or prospective bidders or offerors whose direct economic interest would be affected by the award of the contract or by failure to award the contract.”

Subsequently, the Court of Federal Claims in A&D Fire Protection, Inc. v. United States, 72 Fed. Cl. 126, 139 (2006), involving a negotiated procurement (an RFP) held that, by failing to prove that it submitted a bid bond, the offeror has failed to show that it was a “qualified bidder” and therefore lacked standing. The court also held that the solicitation’s prohibition of submission of a bid bond via facsimile transmission rendered the proposal nonresponsive. See id. at 138-40. The court in Dismas Charities, Inc. v. United States, 75 Fed. Cl. 59 (2007), another negotiated procurement, cited and quoted A&D for the proposition that a bidder submitting a nonresponsive bid lacks standing and continued:

Although responsiveness is generally used to describe sealed bids, the same concept applies to final offers submitted after negotiations. Just as a sealed bid that does not meet the minimum solicitation requirements is non-responsive and cannot be considered for contract award, FAR § 14.301(a), a Final Proposal Revision that does not conform to the solicitation requirements is technically unacceptable and cannot be considered for award unless the agency reopens negotiations for all offerors or modifies the solicitation. See FAR § 15.307(b); cf. Labat-Anderson, Inc. v. United States, 42 Fed. Cl. 806, 841 (1999) (contrasting technically unacceptable initial proposals with technically unacceptable Best and Final Offers).

Dismas Charities, 75 Fed. Cl. at 61.

FAR § 15.307(b) addresses proposal revisions in negotiated procurements. Although Labat-Anderson states that generally a technically unacceptable proposal must be excluded from the competitive range, neither FAR § 15.307(b) nor Labat-Anderson purports to address standing as a function of technical acceptability. Nor does Burroughs Corp. v. United States, 617 F.2d 590 (Ct. Cl. 1980), 3/ cited by Labat-Anderson for the proposition that a technically unacceptable proposal cannot be considered for award. Id. at 596 (cited in Labat-Anderson, 42 Fed. Cl. at 841).

Defendant’s opening brief seized on Dismas as authority for its argument that plaintiff’s proposal was “non-responsive” and “non-compliant” and thereby forfeited plaintiff any standing to protest. Def.’s Br. filed July 31, 2008, at 19. However, Dismas cited a regulation and case, FAR § 15.307(b) and Labet-Anderson, that apply to consideration of evaluation of negotiated proposals after discussions.

While defendant drew support from Dismas, it was also inspired by Eracent, Inc. v. United States, 79 Fed. Cl. 427 (2007), also cited in defendant’s opening brief. This case involved a GSA FSS acquisition for which a non-FSS contractor had standing to challenge whether a FSS order included non-FSS items which, by regulation, were prohibited from inclusion in a task order. The court ruled on the merits. To the extent that the non-FSS contractor/protestor was challenging a potential violation of 31 U.S.C. § 3324 (2000) (dealing with advances of public money), the court alternatively ruled that plaintiff lacked standing. 79 Fed. Cl. at 433. Judgment, however, was entered on the merits.

Given that Dismas cannot stand for the broad proposition argued in defendant’s opening brief, the court reiterates that it is the Federal Circuit, not the Court of Federal Claims, that issues the decisions defendant should cite as law. As Judge Bush pointed out in her recent decision Tip Top Construction Inc. v. United States, 2008 WL 3153607 (Fed. Cl. Aug. 1, 2008), Rex is the law of the Circuit. The Government’s efforts to whittle away the jurisdiction of the Court of Federal Claims by circular arguments attacking standing, such as in Tip Top, 2008 WL 3153607 at *11 (characterizing as “circular” defendant’s argument that protestor could not show that it was responsible and therefore could not show that it had a substantial chance of winning award), or in the case at bar (arguing that offeror had no standing based on noncompliant sources of items proposed), are transparent and misleading attempts to change binding law.  (Dyonyx, L. P., v. United States, No. 08-458C, September 15, 2008) (pdf)

The Tucker Act permits postaward bid protests to be brought by “interested parties.” 28 U.S.C. § 1491(b)(1). The United States Court of Appeals for the Federal Circuit (“Federal Circuit”) has held that the term “interested party” should be construed in accordance with the Competition in Contracting Act of 1984, and that, accordingly, “standing under § 1491(b)(1) is limited to actual or prospective bidders or offerors whose direct economic interest would be affected by the award of the contract or by failure to award the contract.” Am. Fed’n of Gov’t Employees v. United States, 258 F.3d 1294, 1302 (Fed. Cir. 2001) (citing 31 U.S.C. § 3551(2)(A)). Accordingly, plaintiff must establish that it “(1) is an actual or prospective bidder, and (2) possesses the requisite direct economic interest.” Rex Serv. Corp. v. United States, 448 F.3d 1305, 1307 (Fed. Cir. 2006). To prove that it possesses a “direct economic interest,” plaintiff must show that it had a “substantial chance” of receiving the contract. Id. at 1307. In other words, “[t]o have standing, the plaintiff need only establish that it ‘could compete for the contract’ . . . .” Myers Investigative & Sec. Servs., Inc. v. United States, 275 F.3d 1366, 1370 (Fed. Cir. 2002) (citing Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1334 (Fed. Cir. 2001)).

(sections deleted)

As the court reads the complaint, plaintiff seeks two forms of relief. First, plaintiff requests that the court set aside the contract award to defendant-intervenor. In support of this request, plaintiff contends in Counts I and II that the Army and the SBA knowingly failed to consider defendant-intervenor’s ostensible subcontractor during the procurement process. However, plaintiff is not an “interested party” entitled to pursue either claim because under the facts of this case, there is no chance, much less a substantial chance, that plaintiff could be awarded the contract in the event that the Army’s contract with defendant-intervenor is set aside. Assuming, arguendo, that the SBA and the Army improperly considered defendant-intervenor to be a small business, plaintiff itself is not a small business and there remains a small business in the competitive range–Torres–that would be awarded the contract if the award to defendantintervenor is set aside. Plaintiff’s argument that Torres is not a small business, id. at 2, 12-17, 20, lacks merit because neither the contracting officer nor the SBA has determined that Torres is not a small business, and this court lacks any authority to entertain a size protest. See 13 C.F.R. § 121.1002 (providing that the SBA “makes all formal size determinations”); see also Compl. ¶¶ 25, 29 (alleging that plaintiff lodged a size protest of Torres with the SBA as part of its size protest of defendant-intervenor but that the SBA dismissed its size protest of defendantintervenor for lack of standing, without addressing the size protest of Torres). Thus, without any The second, and more general, form of relief requested by plaintiff is the full and open recompetition of the contract. However, to obtain such relief, the court would first be required to set aside the contract award to defendant-intervenor, relief that the court has already determined that plaintiff is foreclosed from pursuing because it lacks standing. Thus, it follows that plaintiff lacks standing to seek recompetition of the contract. As noted by defendant, Def.’s Reply Support Def.’s Mot. Dismiss Lack Standing & Non-Justiciability 7-10, the cases cited by plaintiff in support of its standing argument are unpersuasive. For example, plaintiff’s reliance upon Impresa Construzioni is unavailing because even though the Federal Circuit held that sustaining the bid protest would require the contract to be rebid, 238 F.3d at 1334, its holding was undoubtably based on the fact that after setting aside the award, there were no other offerors in the competitive range to which the award could be made, see id. at 1329. This is not true in the instant case, where Torres remains a qualified bidder in the competitive range. (International Management Services, Inc., v. U. S. and Aegis, Mission Essential Personnel LLC, No. 07-831C, Reissued January 9, 2008) (pdf)

In this bid protest action, Plaintiff, Ezenia!, Inc. (Ezenia), as well as the Defendant- Intervenor Carahsoft Technology Corp. (Carahsoft), are vendors on the Army’s Federal Supply Schedule that provide commercial software to the military. The military, and in particular the Army, use different types of software for command and control of soldiers, especially those who are engaged in combat operations. These products allow video-teleconferencing on a computer via the internet in a secure environment, while at the same time allowing the computer screen to show the windows from other computer programs such as PowerPoint presentations or battle plan diagrams. Two such products are Adobe Breeze (now called Adobe Connect) and Ezenia’s InfoWorkspace (IWS). Because of the need for interoperability, the Army standardized the software through an evaluation technique called “Best of Breed” and chose Adobe Breeze as its computer software. Ezenia clearly states in its papers that it is not protesting the actual decision of the Army to standardize, but rather is challenging the award of sole-source contracts for the brand name Adobe Connect product. Ezenia alleges that three contracts were procured in violation of the proper statutory and regulatory guidelines governing those awards. As such, Ezenia asserts that it is an interested party protesting the Army’s actions in connection with these procurements. Defendant and Defendant-Intervenor move this Court to dismiss Plaintiff’s action pursuant to Rule 12(b)(1) for want of subject-matter jurisdiction. Both Defendant and Defendant-Intervenor argue that the matter must be dismissed because Plaintiff fails to identify a procurement action within this Court’s jurisdiction, and/or that Plaintiff is not an “interested party” with standing to bring this action. Both assert that Ezenia is not an “interested party” because Ezenia is not a qualified bidder. Both further contend that Ezenia is really protesting the standardization decision of the Army to use the Adobe product and that this Court is without jurisdiction to entertain such a protest. After briefing, oral argument and careful consideration, the Court finds that it must dismiss this matter. It is clear to the Court that even though Ezenia states clearly that it is not challenging the Army’s decision to standardize, that is exactly what Ezenia is challenging. The procurements that have been identified by both Plaintiff and Defendant are purchases that were properly done within the statutory and regulatory guidelines. Although not necessary, the Court also finds that Plaintiff is not an interested party. The Court, therefore, GRANTS Defendant’s and Defendant- Intervenor’s Motions to Dismiss.  (Ezenia!, Inc. v. U. S. and Carahsoft Technology Corporation, No. 07-759C, Reissued after seal on January 4, 2007)

Even assuming, arguendo, that plaintiff could establish his financial wherewithal, technical and/or other necessary specialized expertise, and prior experience in contracting on similar projects suited to the Solicitation, plaintiff nonetheless would be unable to establish that he had a substantial chance of contract award. Because plaintiff did not submit a bid prior to the close of the period for submission of proposals, even if he could prevail on his challenge to the terms of the solicitation and the court were to order a reevaluation of the proposals with the allegedly illegal provisions removed, plaintiff would have no chance of securing award of the contract, as he has formulated it. Rex Serv. Corp., 448 F.3d at 1308 (holding that plaintiff-protestor alleging violations in solicitation process did not have “substantial chance” of receiving contract because plaintiff never bid on contract prior to close of solicitation); see also AFGE, 258 F.3d at 1302 (“Congress intended standing under the [ADRA] to be limited to disappointed bidders.”) Plaintiff does not qualify as an interested party with standing under the ADRA because he does not establish a substantial chance of award and thus does not show a direct economic interest in the award or failure to award the contract. Nonetheless, in the interest of giving full consideration to the issue of standing, the court examines the issue of plaintiff’s status as an actual or prospective bidder. (Brian X. Scott, v. U. S., No. 07-216C, August 23, 2007) (pdf)

This Court has held that "[a] bidder submitting a nonresponsive bid has no standing to protest an award, because it has no chance of receiving the award." A & D Fire Protection, 72 Fed. Cl. at 138. Although responsiveness is generally used to describe sealed bids, the same concept applies to final offers submitted after negotiations. Just as a sealed bid that does not meet the minimum solicitation requirements is non-responsive and cannot be considered for contract award, FAR § 14.301(a), a Final Proposal Revision that does not conform to the solicitation requirements is technically unacceptable and cannot be considered for award unless the agency reopens negotiations for all offerors or modifies the solicitation. See FAR § 15.307(b); cf. Labat-Anderson, Inc. v. United States, 42 Fed. Cl. 806, 841 (1999) (contrasting technically unacceptable initial proposals with technically unacceptable Best and Final Offers). The Government and Bannum claim that Dismas submitted a non-compliant proposal by including the 240-day development schedule. However, Bureau of Prisons decisionmakers evaluated Dismas's Final Proposal Revision on its merits in its Source Selection Decision (“SSD”) dated February 6, 2006, and never explicitly stated that it did not comply with the solicitation. The SSD elsewhere declared that "[a]ll of the offerors' responses to ‘Request for Final Proposal Revisions' have been reviewed and determined to be acceptable," AR 1307, that "Dismas received a color rating of Blue/Very Good" for the Site Location factor under Technical/Management, which included the comments about the 240-day start-up period, AR 1315, and that "Dismas met the minimum requirements" for Technical/Management and "was rated higher than the other offerors" for that category. AR 1319. Even the post-award debriefing letter, dated May 31, 2006, declared that "Dismas' proposal also met the requirements of the solicitation in every factor of the solicitation and had a very good solution for meeting the needs and objectives of the program.” AR 923. In a similar case, the Court determined that a plaintiff whose potentially non-responsive bid was treated as an alternative proposal by the agency, which then evaluated the bid on the merits, did have a substantial chance of receiving the award, and therefore, was an interested party for the purposes of this Court's bid protest jurisdiction. Galen Medical Assoc., Inc. v. United States, 56 Fed. Cl. 104, 108 (2003), aff'd 369 F.3d 1324 (Fed. Cir. 2004). Despite Dismas's current argument that, like the Galen bid, its 240-day proposal was "an alternative, additional option," the Final Proposal Revision never described it as such. AR 859-60. In fact, Plaintiff’s counsel admitted at the hearing that no language in the record itself supported Dismas’s argument that the 240-day startup plan was an alternative proposal. Transcript at 30-31. Instead, Dismas used the words "revise" or “revised” at least five times in the Final Proposal Revision in referring to its new plans. AR 859-60. These contemporaneous descriptors point to a replacement of the original 120-day plan with a 240-day plan, rather than a possible alternative. The fact that the Bureau of Prisons personnel evaluated Dismas based on the increased costs associated with the 240-day plan, compare AR 860 with AR 1319, demonstrates that they also considered it a substitute rather than an option. In addition, there was no evidence in Galen that the contracting officials "found plaintiff's proposal technically unacceptable." 56 Fed. Cl. at 108. In contrast, the Bureau of Prisons officials in this case noted in the final SSD that Dismas's 240-day start-up period "would extend beyond the required performance date." AR 1315. Because Dismas's 240-day proposal was not "an alternative, additional option," A & D Fire Protection provides more useful guidance. In that case, the Court held that a protestor was not an “interested party” because its bid had not included a required bid bond and was therefore non-responsive. 72 Fed. Cl. at 140. The Court concluded that the protestor did not have standing–even though its bid had been evaluated twice by the agency, and it had not been declared non-responsive. Id. Similarly, Dismas did not meet a fundamental requirement of the solicitation, and it "cannot excuse its failure to properly submit a [requirement] by the agency's lack of diligence in removing a nonresponsive bid from consideration." See id. Dismas submitted a Final Proposal Revision that did not conform to the solicitation requirements. As a result, it did not have a substantial chance of contract award and cannot be an "interested party" for purposes of this Court's bid protest jurisdiction. (Dismas Charities, Inc., v. U. S. and Bannum, Inc., 06-825C, February 7, 2007) (pdf)

Because we conclude that Fire-Trol has not shown itself to be an “interested party” within the meaning of 28 U.S.C. § 1491(b)(1), we do not reach the question whether the statutory and regulatory violations Fire-Trol alleges are “in connection with a procurement or a proposed procurement,” id., even though the USFS has not yet issued a solicitation. Nor do we reach the question whether plaintiff’s claim based on alleged violation of the APA would be within the Court’s jurisdiction if the Court were to hold that the alleged APA violation was “in connection with a procurement or proposed procurement.” Id. Though Fire-Trol has expressed its intention to bid in response to solicitations to be issued during the USFS’s 2005 procurement for wildland fire retardant, it concedes that no such solicitation has yet been issued. Given that fact, Fire-Trol is not now “an actual or prospective bidder or offeror” within the meaning of 31 U.S.C. § 3551(2). Therefore, Fire-Trol is not now an “interested party” within the meaning of 28 U.S.C. § 1491(b)(1).  (Fire-Trol Holdings, LLC v. U. S., No. 04-1389C, October 12, 2004) (pdf)

Although the United States Court of Appeals for the Federal Circuit has not explicitly addressed the standard of review for a plaintiff’s standing in a pre-award context, the court is persuaded that a plaintiff would not be required to establish that, but for the alleged error, “there was a substantial chance it would have received the contract award[.]” Alfa Laval, 175 F.3d at 1367. At the pre-award juncture, a plaintiff usually will not know who the other offerors are and may not know their bona fides. Indeed, if the plaintiff had knowledge of these facts, certainly a factual question of how that information was ascertained would raise an issue under the Sherman Act, 15 U.S.C. §§ 1 and perhaps the Procurement Integrity Act, 41 U.S.C. §§ 401-36, as well. Without at least some of this information, however, a plaintiff would have no idea whether its offer would be within the “zone of active consideration.” Statistica,102 F.3d at 1581. Of course, a rule could be fashioned that would require a plaintiff to have prior comparable industry experience or experience as a government contractor, but such a rule would preclude a new entrant from being able to assert a bid protest. For these reasons, the court declines to require the plaintiff in this case to satisfy the “substantial chance” standing test pre-award, but rather will rely on the “interested party” test until the United States Court of Appeals for the Federal Circuit directs otherwise.  (Red River Service Corp., v. U. S., No. 03-2747C, April 30, 2004) (pdf)

MCI Telecomm. Corp. v. United States, 878 F.2d 362 (Fed. Cir. 1989), presented the nearly identical question of “whether a would-be protestor wishing to bring about a resolicitation on which it says it intends to bid has the necessary status, even though it failed to either bid in response to the original solicitation or to protest before the close of the proposal period...” 878 F.2d at 364.1 In MCI, as here, plaintiff charged that the government waived mandatory contract requirements and that a resolicitation should occur. The Court reasoned that the use of the word “prospective” indicated that, “in order to be eligible to protest, one who has not actually submitted an offer must be expecting to submit an offer prior to the closing date of the solicitation...the opportunity to qualify either as an actual or a prospective bidder ends when the proposal period ends.” MCI, 878 F.2d at 365. See also Fed. Data Corp. v. United States, 911 F.2d 699, 704 (Fed. Cir. 1990); United States v. IBM, 892 F.2d 1006, 1010-11 (Fed. Cir. 1989); Ryan Co. v. United States, 43 Fed. Cl. 646, 657 (1999). Therefore, because McRae decided not to submit a bid for this contract or protest the RFP requirements prior to the close of bidding, McRae is not a “prospective bidder” and does not have standing to challenge the award.  (McRae Industries, Inc. v. U. S.. No. 01-460C, August 14, 2002)  (pdf)

The Claims Court in Myers found no prejudice because the plaintiff had “not proven it had the sources or the man-power to supply the . . . services sought by [the sole-source contracts]” and had “not provided the court with any evidence demonstrating that it ha[d] been awarded or successfully performed contracts for similar services in the past.” Id. at 1371. We accordingly held that the plaintiff in that case lacked standing to bring its bid protest. Id.

A similar analysis and conclusion apply here. The Claims Court reviewed the record, including what the proposed contract to Cerner would require and evidence bearing on CliniComp’s capabilities. The Claims Court noted that the contract would require comprehensive EHR services—both in-patient and outpatient—at 1,600 VA healthcare sites. CliniComp, 134 Fed. Cl. at 750–51. And it found that CliniComp failed to demonstrate a capability even approaching what would be required under a contract of this size and scope, given that CliniComp only had experience providing EHR services at 100 facilities and had not demonstrated an ability to provide outpatient services. Id. Ultimately, the Claims Court found that the evidence before it made clear that CliniComp failed to show it possessed the kind of experience that would enable it to compete for the work contemplated by the VA’s proposed contract to Cerner. Id. at 751. The Claims Court accordingly found that CliniComp lacked standing. Id.

Prejudice is a fact question. E.g., Diaz, 853 F.3d at 1359; Tinton Falls Lodging Realty, LLC v. United States, 800 F.3d 1353, 1358 (Fed. Cir. 2015). We see no clear error in the Claims Court’s factfinding in this regard, nor has CliniComp demonstrated any such error. We therefore conclude that CliniComp lacks standing in this bid protest.

Resisting this conclusion, CliniComp argues that because this is a pre-award protest, the Claims Court should have applied the test for prejudice articulated in Weeks Marine, Inc. v. United States, 575 F.3d 1352 (Fed. Cir. 2009). In Weeks Marine, the Army Corps of Engineers had previously awarded contracts for dredging work— including some to the plaintiff—under competitive sealed bidding procedures. Id. at 1355–56. The Corps then decided to change its method of procurement from competitive sealed bidding to a negotiated procurement involving indefinite duration indefinite quantity multipleaward task order contracts. Id. at 1355. Before submitting a bid, and before any award was made under the new solicitation, the plaintiff filed a bid protest challenging the solicitation’s new method of procurement. Id. at 1354–55, 1360.

We first evaluated the plaintiff’s standing to bring its pre-award protest to the terms of the solicitation. We noted that, in that context of a pre-award challenge to a competitive solicitation, “it is difficult for a prospective bidder/offeror to make the showing of prejudice that we have required in post-award bid protest cases.” Id. at 1361. This was because in that case “there ha[d] been neither bids/offers, nor a contract award,” and therefore “no factual foundation [existed] for a ‘but for’ prejudice analysis.” Id. Acknowledging that some prejudice must be shown, however, we required the plaintiff to demonstrate a “non-trivial competitive injury which can be addressed by judicial relief.” Id. at 1361–62. We found that the plaintiff demonstrated such an injury. We observed, however, that there was no dispute that the plaintiff in that case could do the work required under the new solicitation. Id. at 1360 (noting the government’s concession that the plaintiff “is capable of doing the dredging work contemplated by the contracts,” including that it had the technical capability and the financial wherewithal to do the work).

Here, unlike in Weeks Marine, there is a dispute as to whether CliniComp could do the work required under the proposed contract to Cerner. And as described above, CliniComp failed to show that it was a qualified bidder in this regard. Absent such a showing, CliniComp could not satisfy the “non-trivial competitive injury” standard for prejudice set forth in Weeks Marine. In other words, to suffer a non-trivial competitive injury, CliniComp must at least be qualified to compete for the contract it seeks. Therefore, although we apply the standard for prejudice as articulated in Myers, our conclusion would be the same applying the “non-trivial competitive injury” standard set forth in Weeks Marine.

CliniComp also argues that the requirements of the proposed Cerner contract are not known, and therefore, we cannot conclude that CliniComp is incapable of performing the contract. See CliniComp’s Br. 29, 36, 39. The Claims Court rejected this argument, finding that “[t]he administrative record contains ample evidence regarding the nature and scope” of the proposed contract to Cerner. CliniComp, 134 Fed. Cl. at 751. We likewise reject this argument. The D&F indicates, for example, that the contract would require deploying and maintaining an EHR system for approximately 1,600 VA care sites. J.A. 10001, 10005. It also lists several examples of the EHR services required, including outpatient services. J.A. 10005. This is not a case where a plaintiff is unable to demonstrate its ability to compete due to a lack of information about what is required. Here, CliniComp lacks standing because it failed to demonstrate an ability to perform specific requirements that are set forth in the administrative record.

CliniComp further argues that it has standing because, as an incumbent EHR systems provider to the VA, it stands to lose work as a result of the proposed award to Cerner. CliniComp’s Br. 34 (“CliniComp has standing to challenge a VA procurement decision that will result in the VA terminating CliniComp’s business and its use of CliniComp’s products.”). But to have standing, CliniComp’s prejudice must be due to some alleged error in the procurement process. Labatt, 577 F.3d at 1380–81. Here, CliniComp claims prejudice from the government’s alleged error of awarding this contract on a sole-source basis. To establish that its prejudice is due to this alleged error, CliniComp must show that if the error were rectified—i.e., if the contracting process were made competitive—CliniComp could compete for the contract. CliniComp has not made that showing.

CliniComp finally argues that it is qualified to compete because it could hire subcontractors to help do the work required under the proposed contract to Cerner. CliniComp’s Br. 41. The Claims Court did not address this argument—possibly because CliniComp did not raise it in its briefing on the motions to dismiss or motions for judgment on the administrative record. Even if not forfeited, however, the argument is unpersuasive. CliniComp has not supplied any details regarding how, or with whom, it would subcontract to perform what is required under the proposed contract to Cerner.2 CliniComp’s vague, cursory references to using subcontractors to perform the work it is unable to do are insufficient to cure CliniComp’s otherwise deficient showing that it is a qualified bidder here. (CliniComp International, Inc. v. U. S. and Cerner Corporation, Nos 2018-1101, 2018-1318, September 19, 2018)

In a bid protest, only an “interested party” has standing to challenge a contract award. Rex Serv. Corp. v. United States, 448 F.3d 1305, 1307 (Fed. Cir. 2006). An interested party is an actual or prospective bidder whose direct economic interest would be affected by the award of the contract. Id. Thus, a party must show 1) that it is an actual or prospective bidder and 2) that it has a direct economic interest. As the Claims Court noted, there is no dispute that Orion is an actual bidder, thus satisfying the first prong of the interested party test. Orion Tech., 102 Fed. Cl. at 226. The standing dispute is only whether Orion has the required direct economic interest.

Generally, to prove the existence of a direct economic interest, a party must show that it had a “substantial chance” of winning the contract. Rex Serv., 448 F.3d at 1308. An exception to that standard is when a prospective bidder challenges the terms of the solicitation itself, prior to actually submitting a bid. Weeks Marine, Inc. v. United States, 575 F.3d 1352, 1361 (Fed. Cir. 2009). In that circumstance, the protestor can establish standing by demonstrating that it suffered a “non-trivial competitive injury which can be redressed by judicial relief.” Id. at 1361–62.

Orion argues that the “non-trivial competitive injury” standard should apply to this post-proposal, preevaluation protest because there is an inadequate factual foundation for performing a “substantial chance” test because the Army did not evaluate Orion’s proposal prior to determining the competitive range. Orion contends that it suffered such a non-trivial competitive injury because it was likely that its proposal would have been found reasonable and realistic if the Army had evaluated it. In addition, Orion argues that it has standing to challenge the Army’s decision to reject its second proposal, submitted after the Amendment.

The government responds that the “substantial chance” test should apply here because the “non-trivial competitive injury” test is only a limited exception for preaward, pre-bid challenges based on the solicitation alone. In this situation, the government argues that there is a sufficient factual predicate to ascertain whether Orion was harmed to justify using the substantial chance test. The government contends that, under that test, Orion did not have a substantial chance of receiving the contract because its proposal was late and was missing material information needed to perform the cost realism analysis. The government also argues that Orion does not have standing to challenge the Army’s decision to reject Orion’s second proposal after the Amendment.

We agree with the government that the appropriate test for standing in these circumstances is the “substantial chance” test. In Weeks Marine, we set out an exception to the general standing test in the case of pre-bid, pre-award protests because at that stage it is difficult, if not impossible, to establish a substantial chance of winning the contract prior to the submission of any bids:

[W]here a prospective bidder/offeror is challenging a solicitation in the pre-award context[,] . . . it is difficult for a prospective bidder/offeror to make the showing of prejudice that we have required in post-award bid protest cases. The reason of course is that, in a case such as this, there have been neither bids/offers, nor a contract award. Hence, there is no factual foundation for a “but for” prejudice analysis. However, Article III considerations require a party such as Weeks to make a showing of some prejudice.

 Id. at 1361 (citations omitted). Here, Orion is not challenging the terms of the solicitation, as was the case in Weeks Marine; it is challenging the Army’s application of those solicitation criteria to Orion. The Army evaluated Orion’s bid for compliance with the terms of the solicitation and then gave detailed reasons for rejecting Orion’s proposal. In addition, Orion’s bid was within the competitive range later established by the Army after Orion’s exclusion but before the Army’s initial response to Orion’s first GAO protest. Given the circumstances, there is an adequate factual predicate to ascertain under the traditional “substantial chance” standard whether Orion was prejudiced by the Army’s decision to exclude its initial proposal.

Applying the “substantial chance” standard to Orion’s original proposal, Orion had standing to challenge the exclusion of its original submission. The solicitation did not mandate that Orion’s proposal must be excluded. Instead, the solicitation stated multiple times that an incomplete proposal “may” not be considered for an award. J.A. 110, 114, 124. That language is permissive, not mandatory, reserving to the Army discretion to decide whether or not to exclude Orion’s proposal. The Federal Acquisition Regulations (“FAR”) cited by the parties similarly do not mandate exclusion of Orion’s proposal; rather, those provisions mandate the Army’s obligations to verify and evaluate pricing data. See FAR § 15.404- 1(d)(1), (2). It is beyond question that the Army had the discretion to keep Orion’s proposal alive for further processing. To deny Orion standing would effectively prevent any challenge to a discretionary decision of the Army.

Moreover, had the Army not excluded Orion’s proposal, Orion could have likely competed for the contract. For example, Orion’s total cost/price that was provided in its original proposal was also within the later established competitive range. The Army could have evaluated Orion’s proposal based on its total cost/price and rated and ranked Orion accordingly when establishing the competitive range. If the omitted data then prevented a complete realism analysis, the Army could have found the proposal unrealistic and included that issue in later discussions and allowed supplementation of Orion’s proposal under FAR § 15.306(d). Alternatively, had Orion not already been excluded from the competition, it would have had a second opportunity to submit the missing data along with new cost/price volume data after the Army’s later Amendment and in related discussions. The fact that the missing information was critical to the cost realism analysis and may have prevented the Army from analyzing the proposal is relevant to the reasonableness of the Army’s decision-making, not to determining prejudice for standing purposes. Orion thus had standing to challenge its initial exclusion from competition.

In arriving at that conclusion, however, we do not hold that the mere timely submission of a proposal, no matter how defective, automatically confers standing under the substantial chance standard. Instead, we only conclude that under the facts of this case, where the Army had discretion to process Orion’s competitive proposal, but chose not to, and where Orion’s original proposal was within the later-established competitive range, we conclude that Orion had a substantial chance of receiving the contract and therefore had standing to challenge the exclusion of its proposal based on the Army’s alleged arbitrary action in refusing to exercise its discretion in Orion’s favor. Thus the Claims Court erred in dismissing Orion’s protest for lack of standing.

In addition, because the exclusion of Orion’s second proposal was a direct result of the exclusion of the first proposal, our finding of standing arising from the first proposal moots the issue concerning whether Orion has standing to independently challenge the Army’s refusal to consider Orion’s second proposal. We therefore need not reach it.  (Orion Technology, Inc. v. U. S. and Strategic Resources Inc., No. 2012-5062, January 14, 2013)  (pdf)

Only an “interested party” has standing to challenge a contract award. Rex Serv. Corp. v. United States, 448 F.3d 1305, 1307 (Fed. Cir. 2006). An interested party is an actual or prospective bidder whose direct economic interest would be affected by the award of the contract. Id. Thus, a party must show that it is 1) an actual or prospective bidder and 2) that it has a direct economic interest. “[I]n order to be eligible to protest, one who has not actually submitted an offer must be expecting to submit an offer prior to the closing date of the solicitation.” MCI Telecomms. Corp. v. United States, 878 F.2d 362, 365 (Fed. Cir. 1989). To prove a direct economic interest, a party must show that it had a “substantial chance” of winning the contract. Rex Serv., 448 F.3d at 1308.

Digitalis argues that the Court of Federal Claims should have first determined whether the Department was required to conduct a full competition for the contract rather than a sole-source notice. Then, if we find that the Department should have conducted a full competition, Digitalis argues that it is clear that it would have had a substantial chance of prevailing.

Digitalis also argues that its failure to submit a statement of capability is “irrelevant” to the analysis. It contends that the filing of a capability statement would have been futile based on the Department’s response to Sky Skan that basically required it to emulate Science First. Further, Digitalis argues that the period for submitting statements of capability was unreasonably short.
The government responds that Digitalis is not an “interested party” under 28 U.S.C. § 1491(b)(1) because it fails both prongs of the relevant test: it is not an actual or prospective bidder and it does not possess a direct economic interest. The government argues that Digitalis was not an “actual or prospective bidder” because it failed to submit a capability statement. It analogizes to Rex Service where we held that if a party does not bid during the bid period, it does not have standing regardless of any illegalities by the government in the bid process. Government Br. 15 (citing Rex Serv., 448 F.3d at 1308). The government contends that five days is a reasonable amount of time for a notice of intent to sole-source. It argues that the Court of Federal Claims previously found a six-day window reasonable and, regardless, Digitalis would have needed a twenty-three day window in order to see the notice.

The government argues that Digitalis does not have a “direct economic interest” for similar reasons. It asserts that it is not enough for a party to simply show that it would have competed in a competition had there been one. It notes that even if the Department had held a flawless sole-source procurement with a notification period of over twenty days, Digitalis still would have been unable to file a statement of capability because it would not have known of the contract.

We agree with the government that the rule of Rex Service controls the result of this case. In Rex Service, the government issued a request for proposals and received bids from contractors. One day before the end of the period to submit proposals, Rex Service filed an objection to the request for proposal. Rex Serv., 448 F.3d at 1307. It argued that the government’s violations of certain statutes and regulations prevented it from filing a proposal or bid. Id.

We held that Rex Service did not satisfy either prong of the test for standing because it failed to submit a proposal during the prescribed time. Id. at 1307-08. We noted that “in order to be eligible to protest, one who has not actually submitted an offer must be expecting to submit an offer prior to the closing date of the solicitation” and that the opportunity to become a prospective bidder ends when the proposal period ends. Id. at 1308 (quoting MCI, 878 F.2d at 365). We further held that Rex Service had no direct economic interest because it had no substantial chance to be awarded the contract due to its failure to submit a bid. Id. at 1308.

We see no reason to limit this rule to competitive procurements. Indeed, the Court of Federal Claims has already extended it to sole-source contracts under similar facts. See Infrastructure Def. Techs. v. United States, 81 Fed. Cl. 375 (2008). In a sole-source award such as this one, the notice of intent issued by the government is analogous to a request for a proposal. Interested parties are invited to submit statements of capability in order to convince the government that it should hold a full competition for the contract rather than sole-source the contract to the proposed contractor. We therefore hold that in order to be an actual or prospective bidder, a party must submit a statement of capability during the prescribed period. Failure to do so also means that a party does not have the requisite direct economic interest because it cannot have a “substantial chance” of convincing the government to hold a formal competition and subsequently bid on the contract. Rex Serv., 448 F.3d at 1308.

This holding should not be read, however, as foreclosing challenges to the reasonableness of the procurement time period. Digitalis attempts to do this by challenging the five-day period. Digitalis argues that the selected time period is unreasonably short and that therefore Digitalis should be permitted to challenge the procurement despite not having filed a statement of capability within the time period. The government seemed to argue that a party who fails to submit a statement of capability during the prescribed period may only object to the reasonableness of the time period if it is so short that it was impossible for the contractor to bid. We do not agree. Determining whether the time period is reasonable is necessarily a fact intensive analysis. In the context of commercial item procurement, regulations require that the government “establish a solicitation response time that will afford potential offerors a reasonable opportunity to respond . . . .” 48 C.F.R. § 5.203(b). Because commercial items are often readily available to the public, a brief time period for soliciting responses may be reason-able. See, e.g., Cal. Indus. Facilities Res., Inc. v. United States, 80 Fed. Cl. 633, 635-36 (2008) (holding that a period of six days was reasonable in a solicitation for commercial items). Contrary to the government’s argument, the proper inquiry is not whether it is possible for a party to submit a statement of capability during the time period, but whether it is reasonable to expect contractors to see a notice and respond.

As the Court of Federal Claims noted, “the administrative record lends credence to a number of Digitalis’s allegations of hasty and shoddy contracting.” Digitalis, 97 Fed. Cl. at 95. Yet at least one potential offeror, Sky Skan, saw the notice and filed a statement of capability, which suggests that the time period was not unreasonably short. We do not need to decide whether the posting time was unreasonable, however, because Digitalis did not check fedbizopps or otherwise notice the sole-source award to Science First for more than twenty days. As the Court of Federal Claims held, a twenty-day period would have certainly been reasonable and Digitalis would still have failed to file a statement of capability. Because Digitalis did not even discover the procurement posting for more than twenty days, we conclude it was not an interested party. We cannot analyze standing in a vacuum, but rather must take into account the circumstances of the litigant. To conclude otherwise would open the procurement process up to an infinite number of challenges even long after the procurement process ended. We do not reach the merits of whether five days is a reasonable time period because we conclude that Digitalis was not an interested party with standing to challenge the reasonableness of the time period.  (Digitalis Education Solutions, Inc. fv. U. S. and Morris & Lee d/b/a Science First, No. 2011-5079), January 4, 2012 (pdf)

We cannot accept plaintiff’s interpretation of the FAR provisions regarding sole source Section 8(a) acquisitions. In our view, the SBA and the GSA acted within the strictures of the applicable regulations when two Section 8(a) firms were nominated by the SBA, and GSA subsequently chose between the two eligible firms. In this connection, then, we cannot accept plaintiff’s argument that the subject procurement is anything other than a Section 8(a) sole source acquisition. Thus, we must reject plaintiff’s argument that the government must be required to issue a solicitation for the San Bruno contract. Resultantly, we also reject plaintiff’s argument that it became an interested party when the government failed to issue a solicitation. Furthermore, as plaintiff concedes that there was no solicitation, and it did not submit a bid, we are constrained to find that plaintiff is not an interested party, and thus lacks standing to bring this pre-award bid protest. Data Transformation, 13 Cl. Ct. at 172. Therefore, we must GRANT defendant’s motion on this basis. (Innovative Resources v. U. S., No 04-1533C, December 17, 2004) (pdf)

The term Congress did choose to define standing under § 1491(b), "interested party," is a term that is used in another statute that applies to government contract disputes, the CICA.  As set forth above, the CICA explicitly defines that term as "an actual or prospective bidder or offeror whose direct economic interest would be affected by the award of the contract or by failure to award the contract."  31 U.S.C. § 3551(2).  Section 3551, by its own terms, applies only to contract disputes decided by the Comptroller General of the GAO pursuant to 31 U.S.C. §§ 3551-56.  However, the fact that Congress used the same term in § 1491(b) as it did in the CICA suggests that Congress intended the same standing requirements that apply to protests brought under the CICA to apply to actions brought under § 1491(b)(1).  We therefore construe the term "interested party" in § 1491(b)(1) in accordance with the CICA, and hold that standing under § 1491(b)(1) is limited to actual or prospective bidders or offerors whose direct economic interest would be affected by the award of the contract or by failure to award the contract.  This construction is consistent with the legislative history of § 1491(b)(1), which, as discussed above, indicates that Congress intended to extend the jurisdiction of the Court of Federal Claims to include post-award bid protest cases brought under the APA by disappointed bidders, such as the plaintiff in Scanwell.  Because Appellants here are not actual or prospective bidders or offerors, they do not have standing to challenge the DLA's cost comparison analysis or its decision to award the depot services contract to EG&G.   (American Federation of Government Employees v. U. S., No. 00-5090,  July 23, 2001)