Comint Systems Corp. v. United States , 700 F.3d 1377 ( 2012 )

United States Court of Appeals
for the Federal Circuit
__________________________
COMINT SYSTEMS CORPORATION AND
EYEIT.COM, INC., JOINT VENTURE,
Plaintiff-Appellants,
AND
NETSERVICES & ASSOCIATES, LLC,
Plaintiff,
v.
UNITED STATES,
Defendant-Appellee,
AND
NETCENTRICS CORPORATION,
Defendant-Appellee,
AND
DIGITAL MANAGEMENT, INC.,
Defendant,
AND
POWERTEK CORPORATION,
Defendant.
__________________________
2012-5039
__________________________
Appeal from the United States Court of Federal
Claims in consolidated case nos. 11-CV-400 and 11-CV-
416, Judge Margaret M. Sweeney.
COMINT SYSTEMS CORP v. US 2
__________________________
Decided: December 7, 2012
___________________________
PHILIP F. HUDOCK, of Reston, Virginia, argued for
plaintiff-appellant.
ALEXANDER V. SVERDLOV, Trial Attorney, Commercial
Litigation Branch, Civil Division, United States Depart-
ment of Justice, of Washington, DC, argued for defendant-
appellee United States. With him on the brief were
STUART F. DELERY, Acting Assistant Attorney General,
JEANNE E. DAVIDSON, Director, and PATRICIA M.
MCCARTHY, Assistant Director. Of counsel on the brief
were ANDREW BRAMNICK and LISA MARIE GOLDEN, Assis-
tant General Counsel, Washington Headquarters Services
& Pentagon Force Protection Agency, Office of General
Counsel, Department of Defense, of Washington, DC.
KAREN R. HARBAUGH, Squire Sanders (US) LLP, of
Washington, DC, argued for defendant-appellee Netcen-
trics Corporation. With her on the brief were ROBERT E.
GREGG and JEREMY W. DUTRA.
__________________________
Before BRYSON, DYK, and PROST, Circuit Judges.
DYK, Circuit Judge.
This case involves contracts awarded by the United
States Department of Defense through the Washington
Headquarters Service (“the agency”) for information
technology services. After the award, Joint Venture of
COMINT Systems Corporation and EyeIT.com, Inc.
(“Comint”), an unsuccessful bidder, brought a bid protest
action in the United States Court of Federal Claims
3 COMINT SYSTEMS CORP v. US
(“Claims Court”), challenging the procurement. The
Claims Court dismissed Comint’s challenge, finding that
Comint lacked standing to challenge the solicitation or
the award because the agency had not erred in rejecting
Comint’s bid on technical grounds. We hold that Comint
failed to preserve its right to challenge the solicitation by
failing to raise its objections before award and that
Comint has not demonstrated standing to protest the
agency’s failure to award it a contract under the solicita-
tion. Accordingly, we affirm.
BACKGROUND
On August 2, 2010, the agency issued a solicitation
seeking offers for a multiple award, indefinite deliv-
ery/indefinite quantity contract for information technol-
ogy services. The agency described the services to be
acquired as “Net-Centric Integrated Enterprise Informa-
tion Technology Services.” J.A. 2. These services include
help desk, server, network, and applications support
services. The solicitation instructed bidders to submit
separate bids for the Basic Contract, Task Order 1, and
Task Order 2.1 The solicitation stated that the agency
would first evaluate which offers represented “the best
value to the Government for award of the Basic Contract,”
and that those offers would “then be further evaluated for
award of Task Order 1 and 2.” J.A. 6594. Fourteen
bidders submitted proposals by September 13, 2010,
including Comint. Every bidder, including Comint, sub-
mitted separate bids for the Basic Contract and Task
Orders 1 and 2.
During the course of the review of the submitted bids,
the agency decided to limit the initial award to the Basic
1 “[A t]ask order [is] an order for services placed
against an established contract or with Government
sources.” 48 C.F.R. § 2.101.
COMINT SYSTEMS CORP v. US 4
Contract. Accordingly, on January 19, 2011, the agency
issued Amendment 5 to the solicitation. Amendment 5
informed offerors that Task Order 1 and Task Order 2 “no
longer reflect[ed] the Government requirements,” and
that the task orders would “not be awarded concurrent
with the Basic Contract(s).” J.A. 6688. The amendment
converted the task orders into sample tasks and indicated
that the agency would continue to use bidders’ proposals
for those tasks when evaluating the pricing factor for the
award of the Basic Contract. Amendment 5 made clear
that the agency would “NOT accept any revisions to the
proposals.” J.A. 6688 (emphasis in original). Comint
returned its signed copy of Amendment 5 to the agency
the next day, confirming that it “acknowledge[d] receipt of
[the] amendment.” J.A. 7438.
The agency’s Source Selection Evaluation Board
(“Evaluation Board”) evaluated each proposal. The
Evaluation Board analyzed each offer according to the
factors set forth in the solicitation, the most important of
which was “Quality/Capability.” J.A. 336. The Evalua-
tion Board rated the Quality/Capability of Comint’s
proposal as “marginal,” concluding that Comint had a
“moderate to high associated risk of unsuccessful per-
formance.” J.A. 13054. The Evaluation Board based
Comint’s marginal Quality/Capability rating on eleven
specific technical deficiencies that it identified in Comint’s
proposal, seven of which it labeled “significant.” J.A.
13054–56. The solicitation made clear that even one
weakness in a proposal, absent one or more offsetting
strengths, warranted a marginal Quality/Capability
rating.
5 COMINT SYSTEMS CORP v. US
The agency’s contracting officer also drafted a memo-
randum evaluating each proposal’s price reasonableness.2
The memorandum stated that “[t]he Contracting Officer
[could not] make a definitive price reasonableness deter-
mination . . . because [Comint] made an incorrect assump-
tion for Sample Task 1.” J.A. 13240. The Contracting
Officer found that Comint “incorrectly assume[d] that all
user workstations contain no user specific data that must
be maintained, captured, or transferred to the ‘new’ or re-
imaged workstation.” Id. As a result of this erroneous
pricing assumption, the Contracting Officer concluded
that Comint was ineligible for award under the Basic
Contract.
On April 6, 2011, the agency issued awards for the
Basic Contract to NetCentrics Corporation, Digital Man-
agement, Inc., and PowerTek Corporation. Each awardee
had received an “outstanding” Quality/Capability rating.
No award was made to Comint.
Comint submitted a bid protest to the agency on April
18, 2011. The agency denied Comint’s protest on June 1,
2011, finding Comint’s protest untimely and lacking
merit. On June 20, 2011, Comint brought a bid protest
suit in the Claims Court. Comint primarily argued that
Amendment 5 changed the solicitation so substantially
that the agency was required to either cancel the solicita-
tion or permit offerors to submit revised proposals. Under
the Federal Acquisition Regulations, the agency must
amend the solicitation when “the Government changes its
requirements or terms and conditions.” 48 C.F.R.
2 As the Claims Court noted, this memorandum
was undated. However, its references to “sample” task
orders make clear that it was created after the issuance of
Amendment 5. See Joint Venture of Comint Sys. Corp. &
EyeIT.com, Inc. v. United States, 102 Fed. Cl. 235, 243
(2011).
COMINT SYSTEMS CORP v. US 6
§ 15.206(a). However, the government must cancel the
solicitation and issue a new one if “in the judgment of the
contracting officer . . . an amendment proposed for issu-
ance after offers have been received is so substantial as to
exceed what prospective offerors reasonably could have
anticipated, so that additional sources likely would have
submitted offers had the substance of the amendment
been known to them.” Id. § 15.206(e). Comint also
claimed, inter alia, that the agency erred in deeming its
proposal ineligible, and that its Quality/Capability rating
was arbitrary. The Claims Court dismissed Comint’s
protest on December 2, 2011, finding that Comint lacked
standing. Joint Venture of Comint Sys. Corp. &
EyeIT.com, Inc. v. United States, 102 Fed. Cl. 235 (2011).
The Claims Court noted that a bid protest plaintiff
must show prejudice in order to establish standing to
challenge a government procurement. Id. at 250. The
court observed that in a post-award bid protest, the
plaintiff must show it had a “substantial chance” of re-
ceiving the contract to make a showing of prejudice. Id. at
251. Applying these standards to Comint, the court noted
that Comint’s proposal “ranked, at best, ninth based upon
its Quality/Capability factor rating,” and that the
awardees all obtained “outstanding” ratings. Id. at 252.
The court concluded that, based on its low technical
rating, Comint did not have a substantial chance of
receiving a contract and thus could not show prejudice.
Id. at 252–53. The court dismissed Comint’s protest for a
lack of standing, without reaching the question of eligibil-
ity. Id. Comint appealed.3
3 The Claims Court also found that Netservices
& Associates, LLC, another disappointed bidder, also
lacked standing to challenge the procurement. Id. at 253-
54. Netservices did not appeal.
7 COMINT SYSTEMS CORP v. US
DISCUSSION
The Claims Court has jurisdiction to review bid pro-
tests pursuant to 28 U.S.C. § 1491(b)(1). Impresa Con-
struzioni Geom. Domenico Garufi v. United States, 238
F.3d 1324, 1330 (Fed. Cir. 2001). We have jurisdiction
over an appeal from the Claims Court under 28 U.S.C.
§ 1295(a)(3). Id. We review de novo whether a party has
standing to sue. Myers Investig. & Sec. Servs., Inc. v.
United States, 275 F.3d 1366, 1369 (Fed. Cir. 2002). We
review the Claims Court’s assessment of agency actions
without deference, reapplying the same standard of
review applicable in the Claims Court. Bannum, Inc. v.
United States, 404 F.3d 1346, 1351 (Fed. Cir. 2005). We
evaluate agency actions according to the standards set
forth in the Administrative Procedure Act; namely, for
whether they are “arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law.” 5
U.S.C. § 706(2)(A); Bannum, 404 F.3d at 1351.
I
We first consider Comint’s challenge to Amendment 5
of the solicitation. The government urges that Comint
failed to preserve its challenge to Amendment 5 by failing
to raise it until after the contract was awarded to other
bidders. We agree that Comint failed to preserve its
challenge to Amendment 5 by not raising the issue before
the award of the contract. Because we find that Comint
failed to preserve its challenge to Amendment 5, we do
not reach the question of whether Comint has standing to
protest Amendment 5.4
4 See Sinochem Int’l Co. v. Malaysia Int’l Ship-
ping Corp., 549 U.S. 422, 431 (2007) (“[A] federal court
has leeway ‘to choose among threshold grounds for deny-
ing audience to a case on the merits.’” (quoting Ruhrgas
COMINT SYSTEMS CORP v. US 8
In Blue & Gold Fleet, L.P. v. United States, this court
held that “a party who has the opportunity to object to the
terms of a government solicitation containing a patent
error and fails to do so prior to the close of the bidding
process waives its ability to raise the same objection
afterwards in a § 1491(b) action in the Court of Federal
Claims.” 492 F.3d 1308, 1315 (Fed. Cir. 2007). Comint
points out that Blue & Gold’s holding does not explicitly
apply to this case since Comint had no opportunity to
challenge the solicitation before “the close of the bidding
process,” Amendment 5 having been adopted after the
bidding process closed. Amendment 5 was, however,
adopted before the award, and we think the reasoning of
Blue & Gold applies to all situations in which the protest-
ing party had the opportunity to challenge a solicitation
before the award and failed to do so.
There is no question that Comint could have chal-
lenged the solicitation before the award. The Federal
Acquisition Regulations require that agency contracting
officers “consider all protests . . . whether protests are
submitted before or after award.” 48 C.F.R. § 33.102(a)
(emphasis added). If efforts to obtain relief from the
contracting officer fail, the Tucker Act specifically author-
izes pre-award challenges. The statute gives the Claims
Court “jurisdiction to render judgment on an action by an
interested party objecting to a solicitation by a Federal
agency,” and further provides that the Claims Court has
jurisdiction “without regard to whether suit is instituted
AG v. Marathon Oil Co., 526 U.S. 574, 585 (1999))). We
note, however, that the standing question with respect to
a claim that the agency had an obligation to rebid the
contract turns on whether the bidder had a substantial
chance of securing the award on the rebid, not on whether
it had a substantial chance of securing the award under
the original solicitation. See Impresa, 238 F.3d at 1334.
9 COMINT SYSTEMS CORP v. US
before or after the contract is awarded.” 28 U.S.C.
§ 1491(b)(1).
The same policy underlying Blue & Gold supports its
extension to all pre-award situations. In Blue & Gold, we
explained:
In the absence of a waiver rule, a contractor with
knowledge of a solicitation defect could choose to
stay silent . . . . If its [] proposal loses to another
bidder, the contractor could then come forward
with the defect to restart the bidding process,
perhaps with increased knowledge of its competi-
tors. A waiver rule thus prevents contractors
from taking advantage of the government and
other bidders, and avoids costly after-the-fact liti-
gation.
492 F.3d at 1314.
To be sure, where bringing the challenge prior to the
award is not practicable, it may be brought thereafter.
But, assuming that there is adequate time in which to do
so, a disappointed bidder must bring a challenge to a
solicitation containing a patent error or ambiguity prior to
the award of the contract.5 Here, Comint does not claim
to have been unaware of the alleged defect in Amendment
5 prior to the award of the contract. Comint signed and
returned its copy of the amendment to the agency, signal-
ing its agreement with its terms. Amendment 5 issued on
January 19, 2011. Comint signed the amendment on
January 20, 2011. The agency did not award the contract
until April 6, 2011. Here, Comint had two and a half
months between the issuance of Amendment 5 and the
5 Latent errors or ambiguities are not, of course,
subject to this requirement. See Blue & Gold, 492 F.3d at
1313.
COMINT SYSTEMS CORP v. US 10
award of the contract in which to file its protest. That
was more than an adequate opportunity to object. Only
now that the contracts have been awarded to other bid-
ders does Comint seek to “restart the bidding process” by
objecting to Amendment 5. See id. This is precisely what
Blue & Gold forbids.
Comint further attempts to excuse its delay by sug-
gesting that Amendment 5 itself forbade Comint from
raising its objections. Comint argues that it could not
challenge Amendment 5 because the amendment stated
that “[t]he Government will NOT accept any revisions to
the proposals.” J.A. 6688 (emphasis in original). How-
ever, the amendment only stated that the government
would not entertain revised proposals; it did not state
that bidders were forbidden from protesting its terms.
Nor could it do so.
Finally, we note that the Government Accountability
Office (“GAO”) applies a similar rule, setting various time
limits in which protests must be submitted. See 4 C.F.R
§ 21.2. Unless the basis for the protest becomes apparent
later than ten days before the award, the GAO does not
permit a disappointed bidder to wait until after the
award. See id. It would be incongruous to bar later GAO
protests but to permit a later court challenge. See Blue &
Gold, 492 F.3d at 1314.
In summary, Comint had ample time and opportunity
to raise its objections to Amendment 5, but chose instead
to wait and see whether it would receive an award of the
contract. Having done so, Comint cannot now “come
forward with [its objections] to restart the bidding proc-
ess,” and get a second bite at the apple. See id. Comint
failed to preserve its objections to Amendment 5 by not
raising them until after the award of the contract.
11 COMINT SYSTEMS CORP v. US
II
We turn now to Comint’s claim that that the ineligi-
bility determination and the marginal Quality/Capability
rating assigned to it by the agency were arbitrary.6 Here
the Claims Court appeared to hold that Comint lacked
standing because Comint could not receive an award
given its marginal Quality/Capability rating. See Comint,
102 Fed. Cl. at 252–53. The question whether a protester
“ha[s] a substantial chance of securing the award,” Myers,
275 F.3d at 1370, turns on whether the protester would
have had a substantial chance if not for the alleged er-
rors.7 Here, the propriety of the marginal Qual-
ity/Capability rating assigned to Comint by the agency is
determinative of both Comint’s standing and the merits.
All three awardees received “outstanding” Qual-
ity/Capability ratings. According to the solicitation, a
marginal Quality/Capability rating is appropriate when a
proposal “has one or more weaknesses, which are not
offset by strengths.” J.A. 337. Quality/Capability was the
most important factor in the evaluation of proposals. The
Evaluation Board identified eleven weaknesses in
Comint’s proposal and found no offsetting strengths. For
6 Blue & Gold is inapplicable here because
Comint did not learn of its Quality/Capability rating or
the ineligibility determination until April 6, 2011, the
date on which the contracts were awarded.
7 Comint argues that under Weeks Marine, Inc.
v. United States, 575 F.3d 1352 (Fed. Cir. 2009), it need
only show a “non-trivial competitive injury” to establish
standing and that it is not necessary for it to have had a
substantial chance of receiving an award of the contract.
However, in Weeks Marine this court specifically held that
the “non-trivial competitive injury” standard was applica-
ble to “a pre-award protest.” Weeks Marine, 575 F.3d at
1363 (emphasis added). That standard does not apply
here because Comint’s bid protest is a post-award protest.
COMINT SYSTEMS CORP v. US 12
example, the Evaluation Board found that while Comint’s
proposal identified program management tools, it
“lack[ed] details as to how [Comint] intend[ed] to inte-
grate and use” those tools. J.A. 13054. It also found that
Comint’s “discussion of quality management was inade-
quate” because it referenced “checklists and dashboards
that do not yet exist.” Id. The Evaluation Board also
noted that Comint’s prior experience was limited to
contracts of a small dollar value and that in many of those
contracts Comint provided only supporting roles. Thus,
Comint’s marginal Quality/Capability rating appears
consistent with the solicitation.
Comint advances a multitude of theories as to why
the agency was wrong to ascribe many of these weak-
nesses to its proposal, although Comint does not challenge
all eleven identified weaknesses. Comint argues that the
agency was wrong to criticize its written proposal for a
lack of detail while imposing a pagination limitation.
Comint also argues that, by noting that Comint’s proposal
lacked any discussion of corporate resources, the agency
improperly required it to “have its own in-house legal
department.” Appellant’s Br. 44. Those objections are
without merit. Additionally, Comint suggests that the
agency should not have labeled its inexperience on large-
scale contracts a weakness because the solicitation re-
quired offerors to qualify as small businesses. Other
offerors, however, demonstrated appropriate experience
with large contracts while still qualifying as small busi-
nesses. Comint’s challenges to its Quality/Capability
rating all involve the “minutiae of the procurement proc-
ess in such matters as technical ratings . . . which involve
discretionary determinations of procurement officials that
a court will not second guess.” E.W. Bliss Co. v. United
States, 77 F.3d 445, 449 (Fed. Cir. 1996). Comint has not
shown that its marginal Quality/Capability rating was
13 COMINT SYSTEMS CORP v. US
legally erroneous and does not contend that it could have
received an award given that rating.
Because Comint has not shown that its marginal
Quality/Capability rating was arbitrary or capricious,
Comint cannot show that it had a substantial chance of
receiving the award. Comint thus cannot demonstrate
standing to object to the agency’s failure to award it a
contract. See Info. Tech. & Applications Corp. v. United
States, 316 F.3d 1312, 1319 (Fed. Cir. 2003). Because
Comint did not preserve its challenge to Amendment 5 to
the solicitation and lacks standing to object to the
agency’s failure to award it a contract, the Claims Court’s
dismissal of Comint’s bid protest is affirmed.8
AFFIRMED
8 Comint also argues that the Claims Court erred in
striking various documents from the administrative
record. The documents consist of internal agency com-
munications and drafts relating to best value and pricing
documents. Because we see no relevance in those docu-
ments, we hold that the Claims Court did not err in
striking those documents from the administrative record.