At & T Corp. v. United States ( 2017 )

In the United States Court of Federal Claims
No. 17-1025 C
(Filed: August 11, 2017)
Reissued: August 29, 2017 1
)
AT&T CORP., )
)
Plaintiff, )
)
v. )
)
THE UNITED STATES, )
)
Defendant, )
)
and )
)
CDW GOVERNMENT, LLC, )
)
Defendant-Intervenor. )
)
)
Daniel R. Forman, Jonathan M. Baker, Judy Y. Choi, Daniel P. Wierzba, Christian N. Curran,
and Sharmistha Das, Crowell & Moring LLP, Washington, DC, attorney for plaintiff.
Igor Helman, United States Department of Justice, Civil Division, Commercial Litigation
Branch, Washington, DC, for defendant.
David Michael Nadler, Blank Rome LLP, Washington, DC, attorney for defendant-intervenor.
OPINION AND ORDER
SMITH, Senior Judge
This matter is before the Court on plaintiff’s Motion for Preliminary Injunction and
Declaratory Judgment and Motion for Judgment on the Administrative Record. A Court should
always be reluctant to issue any injunctive relief. Injunctive relief intrudes upon the person’s or
agency’s autonomy and decision making expertise. However, when it is required by the law and
justice, the Court should not hesitate. It seems clear that if this Court does not restrain the
Agency, it could set a precedent in which an agency can use its own actions to justify overriding
1
An unredacted version of this opinion was issued under seal on August 11, 2017. The parties
were given an opportunity to propose redactions, and those redactions are reflected herein.
the provisions of the automatic stay established by section 3553 of the Competition in
Contracting Act (“CICA”). While a CICA stay might cost the government time and money, as
well as be a general annoyance, Congress has determined that protecting the integrity of the
government procurement system is a more important governmental goal. Of course, the Court
must adhere to Congress’ determination.
Plaintiff, AT&T Corp. (“AT&T”), contests a United States Department of Commerce,
Census Bureau’s (“Agency” or “Census”) override of the automatic stay of performance required
by CICA, arguing that the override was arbitrary and capricious, without a rational basis, and
contrary to law. Plaintiff also requests that this Court enjoin the Agency from allowing the
continued performance by CDW Government, LLC, (“CDW-G” or “defendant-intervenor”) on
Request for Proposals No. YA1323-17-LA-0001 (“RFP” or “Solicitation”), pending the outcome
of AT&T’s bid protest with the Government Accountability Office (“GAO”). For the following
reasons, plaintiff’s Motion for Declaratory Judgment is granted.
I. Findings of Fact
The United States Constitution requires that the federal government conduct a census
every ten years. U.S. Const. art. I, § 2, cl. 3. The United States Department of Commerce,
Census Bureau conducts the census by putting into place systems and procedures that allow the
Agency to collect population and housing information from across the United States, and then
disseminate that information to the President, the States, and the American people. CDW
Government, LLC’s Memorandum in Opposition to Plaintiff’s Motion for Preliminary Injunction
and Declaratory Judgment and its Cross-Motion for Judgment on the Administrative Record
(hereinafter “DI’s Resp.”) at 2; Administrative Record (hereinafter “AR”) 899. For the
upcoming 2020 Census, the Agency “intends to use mobile devices such as smartphones and
tablets to assist with the data gathering for non-response follow-up, address canvassing, and
several other large-scale operations.” Defendant’s Opposition to Plaintiff’s Motion for
Preliminary Injunction and Declaratory Judgment and Cross-Motion for Judgment on the
Administrative Record (hereinafter “D’s Resp.”) at 4; AR 149. Those devices must be
“procure[d], configure[d], provision[ed], ship[ped], manage[d], and decommission[ed],” and
they must come with “reliable network coverage for all areas” included in the 2020 Census. Id.
Phase I of the Solicitation began on November 15, 2016, when Census issued the RFP to
all 65 National Institute of Health, Chief Information Office-Commodities Solutions (“CIO-CS”)
contract holders. AR 868-69. The list of offerors was narrowed to five companies, and those
companies were invited to participate in Phase II. AR 869. Phase II of the Solicitation was
released on December 6, 2016. Id. Over the next few months, the Agency issued a series of
amendments addressing the potential need for a Supply Chain Risk Assessment (“SCRA”). AR
470-71. The SCRA was ultimately deemed unnecessary. AR 478-79. On March 23, 2017,
Census responded to four offerors, including AT&T and CDW-G, asking them to address areas
of concern in each of their respective proposals no later than April 3, 2017. AR 484-87. The
contract evaluations, as well as another round of amendments, continued over the next few
months, with the Agency completing its evaluation on June 20, 2017. AR 874. Census awarded
the contract to CDW-G on June 23, 2017. AR 894, 858.
-2-
On June 30, 2017, AT&T filed a protest at the GAO, arguing that “Census’ decision to
award to CDW-G was unreasonable and in violation of applicable procurement law.” Plaintiff’s
Motion for Preliminary Injunction and Declaratory Judgment and Motion for Judgment on the
Administrative Record (hereinafter “P’s Mot.”) at 7. In making that assertion, AT&T argued
that the technical evaluation was unreasonable, particularly given that AT&T’s proposal was
priced ***. Id. The GAO informed the Agency of the protest, and on July 5, 2017, Census
ordered CDW-G to stop work on the contract in accordance with CICA § 3553. AR 896-98.
On July 18, 2017, Census issued its Determinations and Findings (“D&F”), authorizing
the override of the automatic CICA stay, and allowing CDW-G to resume work under the
contract. AR 907. The D&F stated that any delay could “introduce[] adverse risk, unacceptable
delays, and cost increases, and jeopardize[] the mission and quality of the 2020 Census
Program.” AR 906. It further concluded that there are “urgent and compelling circumstances
which significantly, adversely affect the interests of the United States” and, as such, the “2020
Census schedule will not permit a delay.” AR 907.
On July 26, 2017, AT&T requested that the GAO protest be conducted under expedited
procedures. P’s Mot. at 8. On July 28, 2017, the GAO denied the request. Id. Also on July 28,
2017, AT&T filed its Complaint for Declaratory and Injunctive Relief, asking that this Court
“enjoin the United States Department of Commerce, Census Bureau [] from unlawfully
proceeding on the performance of the 2020 Census Decennial Device as a Service (“dDaaS”)
task order.” Complaint for Declaratory and Injunctive Relief (hereinafter “Compl.”) at 1.
Plaintiff’s Motion for Preliminary Injunction and Declaratory Judgment is fully briefed and ripe
for review.
II. Applicable Legal Standard
A. Jurisdiction and Standard of Review
This Court has jurisdiction over bid protest actions pursuant to 28 U.S.C. § 1491(b). The
Court evaluates bid protests under the Administrative Procedure Act’s (“APA”) standard of
review for an agency action. Bannum, Inc. v. United States, 404 F.3d 1346, 1351 (Fed. Cir.
2005) (citing Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324,
1332 (Fed. Cir. 2001)). A motion for judgment on the Administrative Record pursuant to Rule
52.1 of the Rules of the United States Court of Federal Claims (“RCFC”) assesses whether the
administrative body, given all the disputed and undisputed facts in the record, acted in a manner
that complied with the legal standards governing the decision under review. Supreme
Foodservice GmbH v. United States, 109 Fed. Cl. 369, 382 (2013) (citing Fort Carson Supp.
Servs. v. United States, 71 Fed. Cl. 571, 585 (2006); Greene v. United States, 65 Fed. Cl. 375,
382 (2005); Arch Chems., Inc. v. United States, 64 Fed. Cl. 380, 388 (2005)). Under Rule 52.1
of the RCFC, the parties are limited to the Administrative Record, and the Court makes findings
of fact as if it were conducting a trial on a paper record. See Bannum, 404 F.3d at 1354.
Looking to the Administrative Record, the Court must determine whether a party has met its
burden of proof based on the evidence in the record. Id. at 1355.
-3-
B. CICA Automatic Stay
When a bid protest action is initiated at the GAO, an automatic stay of the protested
contract award is triggered under CICA until the protest action is resolved. 31 U.S.C. §
3553(c)(1). This automatic stay serves the important purpose of preserving “competition in
contracting and ensur[ing] a fair and effective process at the GAO.” Reilly’s Wholesale Produce
v. United States, 73 Fed. Cl. 705, 710 (2006) (citing Advanced Sys. Dev., Inc. v. United States, 72
Fed. Cl. 25, 31 (2006)). “An agency may override an automatic stay if it notifies the GAO in
writing that either ‘performance of the contract is in the best interests of the United States,’ or
‘urgent and compelling circumstances that significantly affect interests of the United States will
not permit waiting for the decision of the Comptroller General concerning the protest.’” Nortel
Gov’t Sols., Inc. v. United States, 84 Fed. Cl. 243, 247 (2008) (citing 31 U.S.C. § 3553(d)(3)(C)).
When an agency overrides a CICA stay, the Court reviews that decision pursuant to the standards
established by the APA, 5 U.S.C. § 706. Planetspace Inc. v. United States, 86 Fed. Cl. 566, 567
(2009); Alion Science & Tech. Corp. v. United States, 69 Fed. Cl. 14, 23 (2005). A protestor
challenging an override decision must establish that the “decision . . . was arbitrary and
capricious.” PGBA, LLC v. United States, 57 Fed. Cl. 655, 660 (2003).
In reviewing an agency’s decision to override the CICA automatic stay, this Court has
routinely applied the four-part test established in Reilly’s Wholesale Produce v. United States.
Reilly’s Wholesale, 73 Fed. Cl. at 705. Nortel sets forth the standard as follows:
When asserting that urgent and compelling circumstances require immediate
performance of a contract, there are several factors an agency must consider,
including: (1) “whether significant adverse consequences will necessarily occur if
the stay is not overridden;” (2) “whether reasonable alternatives to the override
exist;” (3) “how the potential cost of proceeding with the override, including the
costs associated with the potential that the GAO might sustain the protest,
compare[] to the benefits associated with the approach being considered for
addressing the agency’s needs;” and (4) the impact of the override on competition
and the integrity of the procurement system, as reflected in CICA.
Nortel, 84 Fed. Cl. at 247 (citing Reilly’s Wholesale Produce, 73 Fed. Cl. at 711); see also
Superior Helicopter LLC v. United States, 78 Fed. Cl. 181, 189 (2007).
The question before the Court is whether the Agency’s D&F substantively met the
arbitrary and capricious APA review standard that applies under 28 U.S.C. § 1491(b)(4). See
RAMCOR Servs. Grp., Inc. v. United States, 185 F.3d 1286, 1290 (Fed. Cir. 1999). Under the
legal scheme set out in Motor Vehicle Manufacturers Ass’n. of the United States v. State Farm
Mutual Automobile Insurance Co, an agency decision
would be arbitrary and capricious if the agency has relied on factors which
Congress has not intended it to consider, entirely failed to consider an important
aspect of the problem, offered an explanation for its decision that runs counter to
-4-
the evidence before the agency, or is so implausible that it could not be ascribed to
a difference in view or the product of agency expertise.
Motor Vehicle Mfrs. Ass’n of the U.S. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983);
see also Ala. Aircraft Indus., Inc.-Birmingham v. United States, 586 F.3d 1372, 1375 (Fed. Cir.
2009).
III. Discussion
A. The Reilly’s Wholesale Test
When an agency is making a decision on whether or not to override the automatic CICA
stay, application of the Reilly’s Wholesale test is not required. However, it is a useful analytical
tool for the Court in reviewing whether the override was arbitrary and capricious. “In
highlighting these particular factors, our court is not substituting its judgment for that of an
agency concerning aspects that are important for a particular procurement, but is rather
identifying factors that would logically be necessary or irrelevant to override decisions in
general.” Supreme Foodservice, 109 Fed. Cl. at 386. While an agency is not required to
incorporate the Reilly’s Wholesale factors, in the case at bar, Census listed those factors in the
D&F, outlining its consideration of each one. AR 902. The government argues that the Reilly’s
Wholesale factors are not dispositive, and that this Court could follow in the vein of Planetspace
Inc. v. United States in solely applying the four factor test for injunctive relief. D’s Resp. at 17;
Planetspace Inc., 86 Fed. Cl. at 567. However, given the substantive use of the Reilly’s
Wholesale factors by the Agency itself, it seems only logical that this Court use this analytical
framework as well, consistent with the majority of other CICA override decisions in this Court.
The first factor in the Reilly’s Wholesale test focuses on “whether significant adverse
consequences will necessarily occur if the stay is not overridden.” Nortel, 84 Fed. Cl. at 247
(citing Reilly’s Wholesale, 73 Fed Cl. at 711). In its D&F, the Agency considers the first factor
and finds that “[the] longer the length of the work stoppage, the greater the adverse impacts on
the ability of the [United States Census Bureau] to ensure the engineering and mobile solutions
and services are integrated, scalable, secure, and can perform for the 2018 End-to-End Census
Test.” AR 903. The Agency goes on to state that any delay in the execution of the procurement
would amount to “unacceptable schedule delays and cost increases, and jeopardizes the mission
and quality of the 2020 Census Program.” Id. at 905. These, the Agency finds, are “urgent and
compelling circumstances which significantly, adversely affect the interests of the United
States.” Id. at 906; see also 31 U.S.C. § 3553(d)(3)(C)(i)(II).
However, the Agency has not demonstrated any immediate threat to health, welfare, or
safety, which are the types of circumstances that typically qualify as “urgent and compelling.”
Supreme Foodservice 109 Fed. Cl. at 387; see also PMTech v. United States, 95 Fed. Cl. 330,
345-46 (2010). While these are not the only circumstances that have led to an agency override
being upheld, threats to health, welfare, or safety provide this Court with compelling
circumstances affecting the public interest that most often tip the scales in favor of an override.
The Court recognizes the importance of the decennial census, and its status as a Congressional
and Constitutional priority, but the risks associated with testing delays are not risks to public
-5-
safety. Furthermore, as plaintiff points out, all of the adverse consequences the Agency details
will not necessarily occur, but are potential risks. P’s Mot. at 19. After reviewing the
government’s evidence and arguments about the effects of the CICA stay, the Court finds that
the override was based on a lot of speculation. The Agency seems to treat its own schedule as a
hard fact to prove its case. This is undercut by three years spent on “market research,” which
caused the Agency to adopt a schedule in which this period of 100 days is allegedly critical. The
Agency’s reasoning is speculative, and the argument that the test run must occur on April 1,
2018 is based on borderline ridiculous assumptions. The Agency argues that it must begin the
test on April 1, 2018, as the Census will begin on April 1, 2020, in order to control for weather
and job market conditions. They might as well have justified the date with the astrological
settings! The government’s argument hinges on April 1, 2018 being set in stone. While the
Agency may find the stay inconvenient, as most stays generally are, convenience was not a
factor Congress considered in enacting CICA.
The Reilly’s Wholesale test’s second factor is “whether reasonable alternatives to the
override exist.” Nortel, 84 Fed. Cl. at 247 (citing Reilly’s Wholesale, 73 Fed Cl. at 711). In
response to this question, the Agency determined that there are no reasonable alternatives
available to address the issues arising from the 100-day stay. AR 905. The Agency makes this
finding on the basis that “the [United States Census Bureau] does not have time to obtain devices
from another contractor via competition.” Id. The only option Census explored, according to the
D&F, is extending the contract of a previous supplier. Id. While the alternative options
suggested by the plaintiff may or may not be viable—as the government asserts—there is still
nothing in the record that leads this Court to find that no other reasonable alternatives exist.
Further, nothing in the Administrative Record shows this Court that the Agency even engaged in
a meaningful review of other reasonable alternatives.
The third Reilly’s Wholesale factor examines “how the potential cost of proceeding with
the override, including the costs associated with the potential that the GAO might sustain the
protest, compare[] to the benefits associated with the approach being considered for addressing
the agency’s needs.” Nortel, 84 Fed. Cl. at 247 (citing Reilly’s Wholesale, 73 Fed Cl. at 711).
The Agency estimated that the cost for the contractor to perform during the override is $1.5
million. AR 906. There is no further explanation or breakdown of the $1.5 million cost in the
D&F, indicating to the Court that the Agency did not conduct a significant analysis of the cost
and benefits of proceeding with the override. For example, the Agency did not consider the
additional costs should GAO sustains plaintiff’s protest. The Agency includes no reasoning to
demonstrate that the benefits of the override outweigh the costs of proceeding with the CICA
stay in place. Thus, the cost-benefit analysis cannot be said to weigh in favor of the override.
The fourth factor in the Reilly’s Wholesale test addresses “the impact of the override on
competition and the integrity of the procurement system, as reflected in CICA.” Nortel, 84 Fed.
Cl. at 247 (citing Reilly’s Wholesale, 73 Fed Cl. at 711). This Court has previously held that
“Congress has determined that the public interest is served by the imposition of an automatic
stay to allow the GAO an opportunity to ascertain the merits of a bid protest.” URS Fed. Servs.,
Inc. v. United States, 102 Fed. Cl. 674, 677 (2012). “After repeated elaboration, it should be
beyond controversy that the point of the CICA automatic stay was to enhance the GAO as a
forum for bid protests, so that the integrity of the competitive procurement process could be
-6-
protected.” Supreme Foodservice, 109 Fed. Cl. at 385; see also, PMTech, 95 Fed. Cl. at 346-47;
CIGNA Gov’t Servs., LLC v. United States, 70 Fed. Cl. 100, 112 (2006); PGBA, LLC, 57 Fed. Cl.
at 657-58. Essentially, “‘the automatic stay is intended to preserve the status quo during the
pendency of the protest so that an agency would not cavalierly disregard GAO’s
recommendations to cancel the challenged award,’ thereby ‘preserv[ing] competition in
contracting and ensur[ing] a fair and effective process at the GAO.’” Reilly’s Wholesale, 73 Fed.
Cl. at 710 (alterations in original) (quoting Advanced Sys. Dev., 72 Fed. Cl. at 31). By refusing to
respect the CICA stay, the Agency has put itself in a primed position to, at a later point in the
protest process, argue that it would be unfairly burdened if the award to CDW-G were set aside,
because Census would be forced to replicate months’ worth of work that had already been
completed. If this Court were to allow the agency override to stand, it would ultimately be pulling
the CICA teeth from the GAO, rendering it a government body with bark but no ability to bite.
This is not what Congress intended. As such, this Court must invalidate the Agency’s decision to
override the stay.
B. Injunctive Relief
Having found that the Agency was arbitrary in its override of the CICA stay in
accordance with the Reilly’s Wholesale test, this Court need not go further. While plaintiff’s
Motion was styled as one for a preliminary injunction, AT&T’s claim is really asking for
declaratory relief. “Declaratory relief is particularly appropriate in bid protest actions contesting
agency stay override determinations entered pursuant to 31 U.S.C. § 3553(d)(3)(C).” Chapman
Law Firm Co. v. United States, 65 Fed. Cl. 422, 424 (2005). This Court agrees with the
reasoning set forth in Chapman Law Firm, which stated the following:
Congress did not require any evaluation of injunctive relief factors as a
prerequisite to a stay of contract performance upon the filing of a protest with the
GAO. Thus, it would be contrary to the legislative scheme to impose such an
additional requirement, upon finding that an agency override determination lacks
validity, in order to reinstate the statutory stay applicable during the GAO protest
period. Declaratory relief preserves the scheme that Congress enacted.
Chapman Law Firm, 65 Fed. Cl. at 424. “Congress enacted a statute requiring less than the
typical injunctive relief factors.” Supreme Foodservice GmbH, 109 Fed. Cl. at 397 (emphasis in
original). “In creating the CICA stay of performance, Congress decided that the injunctive relief
factors need not be invoked when a bid protest is timely filed with the GAO, instead requiring
that contract performance be stayed automatically.” Id.; see also 31 U.S.C. § 3553(d)(3)(A)-(B).
“To allow an arbitrary override to insert the injunctive relief requirements into the process would
convert the CICA stay to something other than what Congress created.” Id.When making a determination on whether or not to apply an injunction, this Court
typically evaluates the following four factors: 1) the likelihood of success on the merits; 2)
whether plaintiff will suffer irreparable harm absent an injunction; 3) balance of harm to the
respective parties if the injunction is either granted or not granted; and 4) the public interest
involved in granting the injunction. Centech Grp., Inc. v. United States, 554 F.3d 1029, 1037
(Fed. Cir. 2009); PGBA, LLC v. United States, 389 F.3d 1219, 1228-29 (Fed. Cir. 2004); Mobile
-7-
Med. Int’l Corp. v. United States, 95 Fed. Cl. 706, 742-43 (2010). Regardless of Congress’
decision to exclude the elements of a preliminary injunction from the CICA automatic stay, “the
likelihood of success on the merits” factor is wholly inapplicable to CICA overrides. The
purpose of a preliminary injunction is to preserve the status quo during the pendency of a bid
protest while the Court makes a decision on the merits. When a plaintiff challenges an agency’s
decision to override the automatic CICA stay, the Court never proceeds to briefing or a hearing
on the merits in the traditional sense. Instead, the Court is asked to review the override, while
the GAO engages in a review of the merits. Once the Court has come to a decision on the
override, jurisdiction over the protest reverts back to the GAO. If this Court were to impose an
injunction during its review of the CICA override, it would more closely resemble a permanent
injunction, as it would ultimately dispose of the case in this Court. However, a permanent
injunction is not truly what the protestor seeks, because the protestor is not requesting the
Agency cease all work in perpetuity, but rather that the Agency abide by the CICA stay.
IV. Conclusion
For the foregoing reasons, the Court concludes that the decision to override the CICA
stay of performance issued by the United States Department of Commerce, Census Bureau on
July 18, 2017, was arbitrary, capricious, and contrary to 31 U.S.C. § 3553(d)(3)(C)(i), and is thus
invalid. The plaintiff’s Motion for Declaratory Judgment on the Administrative Record in regard
to the CICA override is GRANTED, plaintiff’s Motion for Preliminary Injunction is DENIED
as moot, and the Cross-Motions for Judgment on the Administrative Record by defendant and
defendant-intervenor are DENIED. As this Court believes the government to be a law-abiding
party, the Court shall not impose a permanent injunction at this time. However, this Court shall
retain jurisdiction over this case pending the outcome of the protest at the GAO. Until such a
time as the GAO issues its decision, this case is STAYED. Finally, this Court encourages the
GAO to engage in an expedited review of AT&T’s protest, per the plaintiff’s original request and
as it is in the interest of all parties and the public.
IT IS SO ORDERED.
s/ Loren A. Smith
Loren A. Smith,
Senior Judge
-8-