Global Dynamics, LLC v. United States ( 2018 )

In the United States Court of Federal Claims
No. 17-1875C
(E-Filed: March 14, 2018)1
)
GLOBAL DYNAMICS, LLC, )
)
Plaintiff, )
)
v. )
)
THE UNITED STATES, )
)
Defendant, )
Bid Protest; Sole-Source Bridge
)
Contract; Challenge to GAO Decision;
and )
Doctrine of Laches.
)
GIACARE and MEDTRUST JV, LLC, )
)
and )
)
MEDTRUST, LLC, )
)
Intervenor-defendants. )
)
Craig A. Holman, Washington, DC, for plaintiff. Michael E. Samuels and Alexandra L.
Barbee-Garret, of counsel.
1
This opinion was issued under seal on February 27, 2018. The parties were
invited to identify source selection, proprietary or confidential material subject to deletion
on the basis that the material was protected/privileged, on or before March 14, 2018. On
March 13, 2018, the parties notified the court that they had no proposed redactions to the
court’s opinion of February 27, 2018. See ECF No. 68. Thus, the sealed and public
versions of this opinion are identical, except for the publication date and this footnote.
Tanya B. Koenig, Trial Attorney, with whom appeared Chad A. Readler, Acting
Assistant Attorney General, Robert E. Kirschman, Jr., Director, and Patricia M.
McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, United
States Department of Justice, Washington, DC, for defendant. Jessica E. Hom and Evan
C. Williams, United States Army Legal Services Agency, of counsel. John T. Harryman
and Eugene J. Smith, United States Army Medical Command, of counsel.
Jacqueline K. Unger, Washington, DC, for intervenor-defendants.
OPINION AND ORDER
CAMPBELL-SMITH, Judge.
This bid protest involves a dispute related to the award of a contract for registered
nursing (RN) services for the San Antonio Military Healthcare System (SAMHS). See
ECF No. 1 at 7-8. Before the court are the following motions: (1) plaintiff’s motion for
judgment on the administrative record, ECF No. 43; (2) intervenor-defendants’ cross-
motion for judgment on the administrative record, ECF No. 50; (3) defendant’s motion to
dismiss the first count of the complaint, ECF No. 51; and (4) defendant’s cross-motion
for judgment on the administrative record as to the second and third counts of the
complaint, ECF No. 51. The administrative record has been filed in two parts, as ECF
Nos. 47 and 48. Oral argument was deemed unnecessary.
For the reason stated herein, plaintiff’s motion for judgment on the administrative
record, ECF No. 43, is DENIED in part; intervenor-defendants’ cross-motion, ECF No.
50, is DENIED in part; defendant’s motion to dismiss the first count of the complaint,
ECF No. 51, is GRANTED; and defendant’s cross-motion, ECF No. 51, is GRANTED
in part. This matter is REMANDED to the agency for the purpose of identifying any
additional facts underlying its decision to award a fifth sole-source contract, as
challenged in the second count of the complaint.
I. Background
The contract at issue, for RN services in SAMHS, has a long and tortured history.
The court will detail that history to the extent it is relevant to its analysis.
The solicitation was first issued by the United States Army Medical Command
(MedCom) on September 14, 2012, as a small-business set aside. See ECF No. 47-1 at
774-886. The solicitation called for a single-award, indefinite duration indefinite
quantity contract with a five-year ordering period. See id. at 682, 797. The expected
value for the contract was $20,000 for the first year and a maximum amount of
$200,000,000 for the duration of the contract. See id. at 777. MedCom intended to
“award a contract resulting from this solicitation to the responsible offeror whose offer
2
conforming to the solicitation will be the best value offered to the Government, price and
other factors considered.” Id. at 870.
The solicitation required consideration of the following factors: (1) Personnel
Methodology (which included three subfactors addressing plans for recruitment, retention
and employee relations, and compensation); (2) Management Capability; (3) Staffing
Approach; (4) Past Performance; and (5) Price. See id. at 1077-80. The agency was to
assign a technical/risk rating to each of the first three factors. See id. at 1078. The
solicitation stated that proposed prices would be evaluated using “price analysis, cost
analysis, and cost realism techniques” to ensure prices were “considered realistic and
reasonable.” Id. at 1080.
Plaintiff submitted its initial proposal on October 16, 2012. See ECF No. 47-2 at
1-241. On December 12, 2012, MedCom notified plaintiff that it had been eliminated
from the competitive range. See ECF No. 47-3 at 34. Plaintiff was then notified on
January 24, 2013, that GiaMed was the successful offeror. See ECF No. 47-9 at 10. The
following day, January 25, 2013, plaintiff filed a protest with the Government
Accountability Office (GAO), challenging its removal from the competitive range. See
id. at 23-141.
In the spring of 2013, while plaintiff’s GAO protest was pending, MedCom issued
a sole-source award to the incumbent contractor, MedTrust, LLC. See ECF No. 47-10 at
830-917. This initial sole-source contract covered the period from April 1, 2013, through
September 30, 2013, and included a six-month option period. See id. at 830. The GAO
sustained plaintiff’s protest on May 6, 2013, see ECF No. 48-1 at 1-12, and MedCom
undertook corrective action as a result, see id. at 128-43. While re-evaluating offers as
part of the corrective action, MedCom issued MedTrust a second sole-source contract in
February 2014, covering the period from April 1, 2014, through September 30, 2014.
See ECF No. 48-2 at 179-83.
In August 2014, plaintiff submitted its final proposal. See ECF No. 48-3 at 890-
959. The contracting officer notified plaintiff that it had been selected as the awardee by
letter dated January 29, 2015. See id. at 1091. Competing offeror GiaMed filed a protest
challenging plaintiff’s status as a small business on February 5, 2015. See ECF No. 48-6
at 4. GiaMed is a joint venture between GiaCare, LLC, and MedTrust, the joint venture
partners who have intervened in the present case. See ECF No. 1 at 10. The contracting
officer forwarded the protest to the Small Business Administration (SBA). See ECF No.
48-6 at 4.
In March 2015, because the SBA had not yet made a determination on the merits
of GiaMed’s protest, MedCom issued a third sole-source contract to MedTrust. See ECF
No. 48-3 at 1092-99. On April 7, 2015, while the SBA size protest was still pending,
MedCom amended the solicitation and reopened it to allow offerors to submit revised
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proposals by April 20, 2015. See id. at 1263-1332. In response, plaintiff filed a protest
with this court challenging the decision to reopen the solicitation. See ECF No. 1 at 11
(citing Global Dynamics, LLC v. United States, Case No. 15-384C, the earlier-filed
protest). MedCom reversed course and cancelled its plan to reopen competition, and the
court dismissed plaintiff’s protest as moot. See Global Dynamics, Case No. 15-384C,
ECF No. 13 (Dismissal Order).
MedCom awarded the contract to plaintiff on June 17, 2015. See ECF No. 48-3 at
1334-1418. GiaMed filed a bid protest action with the GAO on June 29, 2015. See id. at
1434-1580. One month later, on July 30, 2015, the SBA issued its decision that plaintiff
qualified as a small business for purposes of the solicitation. See ECF No. 48-6 at 1-11.
GiaMed filed an appeal of the SBA’s size determination to the Office of Hearings and
Appeals (OHA). See id. at 103.
Following proceedings in GiaMed’s bid protest before the GAO, MedCom elected
to take corrective action, which involved a new price evaluation and a new source
selection decision. See id. at 99-100. The GAO dismissed the protest on August 26,
2015, due to MedCom’s decision to take corrective action. See id. at 101-02 (GAO
Decision). And on October 29, 2015, OHA affirmed the denial of GiaMed’s size protest.
See id. at 103-17 (OHA Decision).
MedCom conducted its corrective action between August 2015 and June 2016.
See id. at 118-27. In June 2016, MedCom again awarded the contract to plaintiff. See id.
at 128-29. Then, on July 25, 2016, GiaMed filed a second GAO protest. See id. at 133-
230. While the GAO protest was pending, MedCom awarded MedTrust a fourth sole-
source contract. See ECF No. 48-9 at 125-34.
The GAO sustained GiaMed’s protest in part on November 2, 2016. See id. at
941-63. In its decision, the GAO held: (1) that the agency “unreasonably failed to
consider the degree to which Global Dynamics’ direct labor rates would enable it to
implement the technical approach for which the [agency] assigned it a strength,” id. at
951-52; (2) that the “source selection authority relied upon . . . erroneous calculations in
determining that there was no statistical difference between the direct labor rates of
Global Dynamics and GiaMed,” id. at 953; (3) that the agency’s “reliance on [Global’s]
contribution margin approach” was unreasonable, id. at 957; (4) that the agency “failed to
consider the risk that Global Dynamics would not be able to carry out its proposed
technical approaches given its low direct and indirect rates,” id.; (5) that the agency
“improperly assigned Global Dynamics’ proposal undeserved strengths,” id.; and (6) that
the agency’s past performance adjectival rating as “substantial confidence was based, in
part, on an erroneous assignment of adjectival ratings,” id. at 962. The GAO concluded
that “[t]here is no basis for our Office to know what the source selection might have been
had the errors not occurred.” Id. at 963. It further found “a reasonable possibility that
GiaMed was prejudiced by the agency’s actions.” Id.
4
On December 30, 2016, MedCom undertook corrective action as a result of the
GAO’s analysis. See id. at 965-66. MedCom anticipated that a period of 120 days would
be sufficient to comply with the GAO’s recommendations. See id. at 965. MedCom
advised the GAO that the corrective action was continuing as of May 11, 2017, and
represented that it expected to complete the process within forty-five days. See id. at
974.
One hundred and seventeen days later, on September 5, 2017, MedCom stated its
intention to award a fifth sole-source contract to MedTrust. See id. at 1004-15. In its
justification and approval document (J&A) supporting this decision, MedCom stated:
“The Government has awarded a follow contract . . . [to plaintiff]; however due to
Government Accountability Office (GAO) protests on the follow-on RN contract, it is
necessary to award a bridge contract to ensure continuity of services until the Contracting
Officer completely resolves the protest.” See id. at 1007.
MedCom then decided to cancel the solicitation on November 2, 2017. See ECF
No. 48-10 at 397-98. The first count of the complaint addresses plaintiff’s challenge to
this cancellation, see ECF No. 1 at 17, but defendant has since rescinded the cancellation,
see ECF No. 49 (notifying the court of MedCom’s rescission). In its motion to dismiss,
defendant claims that this rescission renders the first count of plaintiff’s complaint moot,
see ECF No. 51 at 27-28, and plaintiff agrees, see ECF No. 54 at 7.
II. Legal Standards
The Tucker Act grants this court 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 . . . without regard to whether suit is instituted before or after the
contract is awarded.
28 U.S.C. § 1491(b)(1) (2012).
The court’s analysis of a “bid protest proceeds in two steps.” Bannum, Inc. v.
United States, 404 F.3d 1346, 1351 (Fed. Cir. 2005). First, the court determines,
pursuant to the Administrative Procedure Act’s standard of review, whether the
“agency’s action was arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with [the] law.” Glenn Def. Marine (ASIA), PTE Ltd. v. United States, 720
F.3d 901, 907-08 (Fed. Cir. 2013) (citing 28 U.S.C. § 1491(b)(4)). An agency’s decision
meets this standard when the agency “entirely failed to consider an important aspect of
5
the problem, offered an explanation for its decision that runs counter to the evidence
before the agency or [the decision] 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 v.
State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). In making this evaluation, the
court considers “whether the agency has examined the relevant data and articulated a
satisfactory explanation for its action including a rational connection between the facts
found and the choice made.” Cybertech Grp., Inc. v. United States, 48 Fed. Cl. 638, 646
(2001) (citations omitted).
If the court finds that the agency acted in error, the court then must determine
whether the error was prejudicial. See Bannum, 404 F.3d at 1351. To establish
prejudice, “the protester must show ‘that there was a substantial chance it would have
received the contract award but for that error.’” Alfa Laval Separation, Inc. v. United
States, 175 F.3d 1365, 1367 (Fed. Cir. 1999) (quoting Statistica, Inc. v. Christopher, 102
F.3d 1577, 1582 (Fed. Cir. 1996)). “In other words, the protestor’s chance of securing
the award must not have been insubstantial.” Info. Tech. & Applications Corp. v. United
States, 316 F.3d 1312, 1319 (Fed. Cir. 2003).
Given the considerable discretion allowed contracting officers, the standard of
review is “highly deferential.” Advanced Data Concepts, Inc. v. United States, 216 F.3d
1054, 1058 (Fed. Cir. 2000). As the Supreme Court has explained, the scope of review
under the “arbitrary and capricious” standard is narrow. See Bowman Transp., Inc. v.
Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 285 (1974). “A reviewing court must
‘consider whether the decision was based on a consideration of the relevant factors and
whether there has been a clear error of judgment,’” and “‘[t]he court is not empowered to
substitute its judgment for that of the agency.’” Id. (quoting Citizens to Preserve Overton
Park v. Volpe, 401 U.S. 402, 416 (1971)); see also Weeks Marine Inc. v. United States,
575 F.3d 1352, 1368-69 (Fed. Cir. 2009) (stating that under highly deferential rational
basis review, the court will “sustain an agency action ‘evincing rational reasoning and
consideration of relevant factors’”) (citing Advanced Data Concepts, 216 F.3d at 1058).
This broad discretion extends to agency decisions to take corrective action. See
Jacobs Tech. Inc. v. United States, 100 Fed. Cl. 186, 190-91 (2011). As the United States
Court of Appeals for the Federal Circuit has held, an agency’s decision to follow the
GAO’s recommendation is rational if the court determines that the GAO’s
recommendation was itself rational. See Honeywell v. United States, 870 F.2d 644, 647
(Fed. Cir. 1989).
III. Analysis
A. Motion to Dismiss Count I
In the first count of its complaint, plaintiff alleges that MedCom’s “decision to set
aside its award to Global and cancel the competition is arbitrary, capricious, and lacks a
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rational basis.” ECF No. 1 at 17. After plaintiff filed the complaint, defendant filed a
notice informing the court that MedCom decided to rescind the cancellation to which
plaintiff objects, and to continue with the previously scheduled corrective action. See
ECF No. 49. Defendant then moved the court to dismiss the first count of plaintiff’s
complaint as moot. See ECF No. 51 at 27. Plaintiff agrees that defendant’s rescission
renders moot the first count in its complaint. See ECF No. 54 at 7. Because the issue
raised by the first count in plaintiff’s complaint no longer involves a live case or
controversy, the court dismisses it for lack of subject matter jurisdiction, pursuant to Rule
12(h)(3) of the Rules of the Court of Federal Claims (RCFC). See NEC Corp. v. United
States, 151 F.3d 1361, 1369 (Fed. Cir. 1998) (“If a case becomes moot it no longer
presents a justiciable controversy over which a federal court may exercise jurisdiction.”);
Chapman Law Firm Co. v. United States, 490 F.3d 934, 939 (Fed. Cir. 2007) (“When,
during the course of litigation, it develops that the relief sought has been granted or that
the questions originally in controversy between the parties are no longer at issue, the case
should generally be dismissed.”).
B. MedCom’s Decision to Award a Fifth Sole-Source Bridge Contract
In its motion, plaintiff contends that MedCom’s “fifth sole source bridge contract
to MedTrust is improper and prejudicial.” ECF No. 43-1 at 35. The circumstances under
which the government is permitted to award contracts outside of the competitive process
is governed here by 10 U.S.C. § 2304 (2012). The statute identifies seven circumstances
in which such contracts are permissible, two of which plaintiff asserts are implicated in
this case. The two relevant provisions state:
The head of an agency may use procedures other than competitive procedures
only when—
(1) the property or services needed by the agency are available from only
one responsible source or only from a limited number of responsible sources
and no other type of property or services will satisfy the needs of the agency;
(2) the agency’s need for the property or services is of such an unusual
and compelling urgency that the United States would be seriously injured
unless the agency is permitted to limit the number of sources from which it
solicits bids or proposals . . . .
10 U.S.C. § 2304(c)(1)-(2). Plaintiff argues that defendant’s decision to award a sole-
source bridge contract in September 2017 fails to meet the standard set forth in either of
these provisions. See ECF No. 43-1 at 35-40. Defendant states that it specifically relied
on the first of the provisions, 10 U.S.C. § 2304(c)(1), in making the fifth award to
MedTrust. See ECF No. 51 at 41; ECF No. 48-9 at 1004. The court, in turn, will
accordingly limit its review of defendant’s decision to consider whether it meets the
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requirements for awarding a contract outside of the competitive process for the reason
that “only one responsible source” and “no other type of . . . services” would meet
defendant’s need. See 10 U.S.C. § 2304(c)(1).
The Federal Circuit has instructed that a sole-source contract may be set aside if:
“(1) the sole-source award lacked a rational basis; or (2) the sole-source procurement
procedure involved a violation of a statute, regulation, or procedure.” Emery Worldwide
Airlines, Inc. v. United States, 264 F.3d 1071, 1086 (Fed. Cir. 2001) (citing Impresa
Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1332 (Fed. Cir.
2001)). In evaluating the propriety of a sole-source contract award, the court must
“determine whether the contracting agency provided a coherent and reasonable
explanation of its exercise of discretion.” Impresa, 238 F.3d at 1333 (citation omitted).
As this court has observed, “sole-source procurements may not be used when the
circumstances justifying the award were due to the agency’s own lack of advanced
planning.” Innovation Dev. Enterprises of Am., Inc. v. United States, 108 Fed. Cl. 711,
728 (2013) (holding that the “[f]ailure to account for transition periods between an
incumbent contractor and a new contractor is . . . a form of lack of advanced planning”);
10 U.S.C. § 2304(f)(4)(A) (“In no case may the head of an agency . . . enter into a
contract for property or services using procedures other than competitive procedures on
the basis of the lack of advanced planning.”); 48 C.F.R. § 6.301(c)(1) (2017)
(“Contracting without providing for full and open competition shall not be justified on
the basis of a lack of advanced planning by the requiring activity.”).
Plaintiff contends that defendant’s fifth sole-source award was improper because:
(1) the agency had found “many firms . . . capable of delivering these precise services,”
and that “numerous offerors have identified their capability and willingness to take on the
work,” ECF No. 43-1 at 36; (2) defendant failed to appropriately plan for a transition of
services from MedTrust to another awardee, see id.; and (3) defendant’s representation in
the J&A supporting the award, that it was “necessary to award a bridge contract to ensure
the continuity of services until the Contracting Officer completely resolves the protest,”
was disingenuous, because at the time the statement was made the agency intended to
cancel the solicitation, id. at 37.
In the J&A, dated September 5, 2017, defendant grounds its decision to award the
fifth sole-source contract to incumbent MedTrust on three bases. First, defendant states
that it considered twenty possible service providers, but found that “no other business
concern can perform these short term services.” ECF No. 48-9 at 1009. Defendant’s
reasoning essentially amounts to a determination that as of September 5, 2017, there was
not sufficient time to transfer responsibilities to a new company before the current bridge
contract expired on September 30, 2017. It stated that “a successor contractor would
need to recruit and present a bona fide express offer of employment to qualified workers
performing under the existing contract,” a process that would require almost two months
to complete. Id. at 1007. As such, the agency determined that “there is not a sufficient
8
amount of time for the Government to conduct a competitive acquisition and award a
contract in time for the contract to be able to meet the Government’s requirement.” Id. at
1008. MedCom then concluded that “[o]nly MedTrust LLC possesses the unique
qualifications to instantly perform the continuation of these services given that only
MedTrust LLC already has the required resources, trained manpower, and has completed
all in-processing requirements for their employees.” Id.Second, defendant argues that, “although MedCom acknowledges that it has also
contributed to delays in conducting its corrective action and that it has not done enough
to ensure timely action,” the time spent on the latest corrective action is not excessive.
ECF No. 51 at 43. Defendant specifically bases this judgment on its assertion that the
time “spent on the latest corrective action is consistent with MedCom’s previous
corrective action evaluations,” about which plaintiff has not previously complained. Id.And third, defendant emphasizes the fact that plaintiff is only challenging the fifth,
most recent, sole-source bridge contract award, stating that “five years’ worth of bridge
contracts are not at issue in this case. Global has chosen not to challenge the previous
bridge contracts and only now challenges the agency’s decision.” Id. (emphasis in
original). At the same time, defendant complains that in arguing that defendant failed to
properly plan for a transition from the incumbent in violation of 10 U.S.C. § 2304(f)(4),
plaintiff “completely ignores the delays necessary due to the protracted litigation in this
case.” ECF No. 51 at 46. Defendant points out that plaintiff’s complaint challenges only
the fifth sole-source award. See ECF No. 1 at 20-23. The court, however, reads any
discussion of the previous sole-source awards as background to the current state of play,
and will not permit either party to exploit the history of this case beyond what is directly
relevant to the claims at bar.
MedCom’s acknowledgement that it has not timely conducted its corrective action
gets to the root of the problem in this case. As outlined above, MedCom undertook the
most recent corrective action on December 30, 2016. See ECF No. 48-9 at 965-66.
MedCom’s initial estimate was that 120 days would be sufficient to complete the
correction. See id. at 965. One hundred and twenty days from December 30, 2016, was
April 29, 2017. The corrective action was not completed by that date. In fact, MedCom
notified the GAO that the action was continuing as of May 11, 2017, and further
represented that it expected to complete the process within forty-five days. See id. at
974-75. Forty-five days from May 11, 2017, was June 25, 2017. The corrective action
was, however, still ongoing 117 days later when MedCom stated its intention to award
MedTrust a fifth sole-source bridge contract, on September 5, 2017. See id. at 1006.
None of the parties involved in this case have identified any place in the
voluminous administrative record where MedCom purports to explain why these delays
extended so far beyond even its own estimates. Nor have the parties identified any
intervening developments or obstacles that arose to account for the originally estimated
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120 days increasing to more than 250 days, with still no result. As plaintiff points out,
“no party filed any litigation of any kind against the Army between . . . November 2,
2016 when GAO sustained GiaMed’s protest and MEDCOM’s November 2, 2017
Solicitation cancellation.” ECF No. 54 at 18 (emphasis omitted). In its reply, defendant
provides a timeline of its actions, see ECF No. 59 at 19, but still provides no reason for
the unexpectedly protracted process. In fact, defendant admits that it could have
accomplished the corrective action more quickly than it did. See id. (“Could MedCom
have conducted the corrective action in less time? Yes.”).
Plaintiff may be correct that the delay resulted from an impermissible lack of
advanced planning on defendant’s part. Defendant justified the award of a sole-source
bridge contract on the basis that it does not have enough time to make a competitive
award, stating that only MedTrust “possesses the unique qualifications to instantly
perform the continuation of these services given that only MedTrust LLC already has the
required resources, trained manpower, and has completed all in-processing requirements
for their employees; thus requiring no transition efforts to continue performing these
services.” ECF No. 48-9 at 1008. But even assuming there is a good explanation for the
delayed corrective action, defendant knew for at least one year that the sole-source
contract was going to expire on September 30, 2017. Moreover, while defendant
acknowledges it “contributed to delays in conducting its corrective action and that it has
not done enough to ensure timely action,” ECF No. 51 at 43, it fails to offer any
explanation for the delay. Because the agency’s statement elides this critical discussion,
the record before the court does not provide the facts necessary for the court to determine
whether the fifth sole-source award had a rational basis and complied with all pertinent
statutes, regulations, and procedures.
As such, the court will remand this matter to the agency for the purpose of
identifying any additional facts that may have been omitted from the J&A, and informing
the court of the basis for the extraordinary and unexpected delays as discussed herein.
The court notes that it seeks only facts that were contemporaneous to the corrective
action and fifth sole-source award, and will not countenance post hoc rationalizations for
the decision.
C. MedCom’s Decision to Follow the GAO’s Recommendation
Plaintiff also argues that MedCom’s decision to follow the GAO’s
recommendation in GiaCare and MedTrust JV, LLC, B-407966.4, 2016 CPD ¶ 321
(Comp. Gen. Nov. 2, 2016), was irrational because the GAO’s recommendation was
itself irrational. See ECF No. 43-1 at 40. See Honeywell, 870 F.2d at 647 (holding that
an agency’s decision to follow the GAO’s recommendation is rational if the court
determines that the GAO’s recommendation was itself rational). In its GAO protest,
GiaMed alleged a number of errors in MedCom’s June 2016 decision to award the
contract to plaintiff. The GAO summarized the arguments with merit as follows:
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GiaMed raises a number of allegations in its protest. First, GiaMed
challenges the Army’s price realism analysis, alleging that the awardee
proposed unrealistically low direct and indirect rates. Second, GiaMed
challenges the Army’s technical evaluation, contending that the Army failed
to consider the risk that Global Dynamics would not be able to deliver on its
proposed technical approaches given its low direct and indirect rates and also
that the Army improperly assigned Global Dynamics’ proposal undeserved
strengths. Third, GiaMed challenges the Army’s past performance
evaluation, claiming that the Army unreasonably overlooked Global
Dynamics’ lack of experience and, instead, improperly credited Global
Dynamics with the experience of its subcontractor. Fourth, GiaMed alleges
that the awardee misrepresented the availability of key personnel and, thus,
the Army should reject its proposal. Fifth, GiaMed contends that the Army
erroneously concluded that Global Dynamics met the solicitation’s
requirement to demonstrate financial capability. Sixth, GiaMed expresses
dissatisfaction with the Army’s evaluation of GiaMed’s technical proposal
and contends that the Army unequally evaluated offerors’ proposals. Finally,
GiaMed alleges that the Army’s source selection decision is flawed.
ECF No. 48-9 at 948. The GAO sustained the protest on each of these grounds. See id.
at 951-62. It further found “a reasonable possibility that GiaMed was prejudiced by the
agency’s actions.” Id. at 963.
In the instant action, plaintiff claims that the GAO “exceeded its role as to each of
the sustained issues.” ECF No. 43-1 at 43. Specifically, plaintiff argues that the GAO
impermissibly substituted its own judgment for that of the agency, see id. at 42-47; and
failed to appropriately analyze prejudice to the protestor, see id. at 47-51.
Defendant claims that the doctrine of laches prohibits plaintiff from challenging
the GAO’s decision. The doctrine of laches “bars a claim when a plaintiff’s neglect or
delay in bringing suit to remedy an alleged wrong, which taken together with lapse of
time and other circumstances, causes prejudice to the adverse party.” Nat’l
Telecommuting Inst., Inc. v. United States, 123 Fed. Cl. 595, 602 (2015) (citations
omitted); see also JANA, Inc. v. United States, 936 F.2d 1265, 1269-70 (Fed. Cir. 1991)
(stating that “[t]he defense of laches requires a showing of two things: (1) unreasonable
and unexcused delay by the claimant, and (2) prejudice to the other party . . .”).
Defendant bears the burden of proving the elements of the defense. See Nat’l
Telecommuting, 123 Fed. Cl. at 602. The Federal Circuit has recognized laches as an
available defense in the bid protest context. See Blue & Gold Fleet, L.P. v. United States,
492 F.3d 1308, 1314-15 (Fed. Cir. 2007) (collecting cases noting the use of laches in bid
protests); Software Testing Sols., Inc. v. United States, 58 Fed. Cl. 533, 535-36 (2003)
(stating that delay may be “considered in the multi-factored analysis of whether
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injunctive relief is warranted” or in “the application of equitable doctrines such as
laches”).
Plaintiff argues, in response, that the doctrine of laches is unavailable here.
Plaintiff reasons that the court treats challenges to agency corrective action as it does pre-
award protests, and the doctrine of waiver, rather than the doctrine of laches, applies for
purposes of evaluating timeliness in the pre-award context. See ECF No. 54 at 25.
Laches cannot, therefore, apply in this case. See id. The court agrees that challenges to
agency corrective action are treated as pre-award protests. See Sys. Applic. & Techs.,
Inc. v. United States, 691 F.3d 1374, 1382 (Fed. Cir. 2012); Square One Armoring Serv.,
Inc. v. United States, 123 Fed. Cl. 309, 327 (2015) (collecting cases). The court,
however, does not find persuasive plaintiff’s contention that the doctrine of waiver—but
not the doctrine of laches—applies in the pre-award context.
According to plaintiff, “when corrective action involves withdrawing a contract
award and reopening the competition, the Blue & Gold timeliness rule for pre-award
protests governs the action and the protester must file such protest prior to the reopened
procurement proposal due date or new award decision, whichever is earlier.” ECF No.
54 at 25. In Blue & Gold, the Federal Circuit reviewed a number of equitable doctrines,
including laches, but its specific holding in the case was based on waiver. The 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.” Blue & Gold, 492 F.3d at 1315. Plaintiff’s argument improperly
conflates the concepts of waiver and laches. Its contention that the waiver rule applied in
Blue & Gold is the only timeliness rule that can be applied in the pre-award context
overstates the holding of that case.
Laches is not a commonly used defense in pre-award bid protests, but this court
has, in at least one instance, analyzed the defense in the pre-award context. Mississippi
Department of Rehabilitation Services v. United States, 61 Fed. Cl. 20 (2004), involved a
solicitation for a food service contract at a Naval Air Station. In that case, the plaintiff
submitted its bid on August 18, 2003, the day before offers were due. See id. at 24. On
August 29, 2003, the contracting officer informed the plaintiff that its bid would not be
evaluated. See id. The plaintiff filed its pre-award protest four days later, on September
3, 2003. See id. As part of its defense to the protest action, the government argued that
the plaintiff’s four-day delay in filing a complaint after the contracting officer
disqualified its proposal implicated the doctrine of laches. See id. at 30-31.
The court examined the contours and applicability of the doctrine of laches at
length in its opinion. See id. After reviewing the elements of a laches defense and the
principle behind it, the court discussed the circumstances in which the defense is
appropriately raised. It stated:
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Because laches is an equitable defense, in actions of law “[w]hen a limitation
on the period for bringing suit has been set by statute, laches will generally
not be invoked to shorten the statutory period.” Advanced Cardiovascular
Sys. v. SciMed Life Sys., 988 F.2d 1157, 1161 (Fed. Cir. 1993). The Tucker
Act, which grants this Court’s bid protest jurisdiction, does not limit the time
in which a bid protest may be brought, allowing suits to be brought both
before and after the award of a contract. 28 U.S.C. § 1491(b). Against a
backdrop that disfavors the shortening of time limits prescribed by Congress,
we examine the contention that [plaintiff] unreasonably delayed bringing this
suit.
Id. at 30. The court raised no question as to whether the defense was or should be limited
to the post-award context. The court ultimately determined that the facts at bar did not
involve the requisite undue delay or prejudice to invoke laches, and rejected the defense
on the merits. See id. at 31.
A careful review of the available authority and the analysis in Mississippi
Department of Rehabilitation Services does not furnish the court with a reason to cabin
the use of laches in the bid protest context to post-award actions. That is not to say that
laches may be invoked casually—as defendant still must carry its burden to demonstrate:
“(1) unreasonable and unexcused delay by the claimant, and (2) prejudice to the other
party . . . .” JANA, 936 F.2d at 1269-70. “The general rule is that laches is an equitable
doctrine that must be considered in light of the facts of each case.” Cornetta v. United
States, 851 F.2d 1372, 1379 (Fed. Cir. 1988). There “are no predetermined exact
boundaries to the length of time that are considered unreasonable by the courts and
sufficient to support a laches defense.” Mexican Intermodal Equip., S.A. de C.V. v.
United States, 61 Fed. Cl. 55, 71 (2004). “When applying the doctrine of laches in order
to bar a claim, the period of delay is measured from when the claimant had actual notice
of the claim or would have reasonably been expected to inquire about the subject matter.”
Advanced Cardiovascular, 988 F.2d at 1161.
The GAO issued the decision now challenged by plaintiff on November 2, 2016.
See ECF No. 48-9 at 941-63. On December 30, 2016, MedCom undertook corrective
action as a result of the GAO’s analysis. See id. at 965-66. Thus, plaintiff was on notice
of the GAO’s decision and the agency’s intent to act on the GAO’s recommendation for
nearly one year before filing the instant action. See ECF No. 1 (filed on December 14,
2017). In order to avoid the operation of laches, plaintiff’s delay must be reasonable and
excused. The record here demonstrates, by plaintiff’s own admission, that its delay was
neither. In the complaint, plaintiff states:
Global respects GAO’s critical role in the procurement process and, indeed
initially intended to accept GAO’s November 2016 decision,
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notwithstanding that Global disagreed with the decision. But contrary to the
Army’s representations to GAO, the Army has not undertaken the corrective
action and instead now seeks to cancel this procurement. With litigation
required and no further delay warranted, Global necessarily challenges
GAO’s decision and the Army’s purported reliance on it.
ECF No. 1 at 25. This statement exposes the disingenuous nature of plaintiff’s challenge
to the GAO decision. Plaintiff admits it had no intention of challenging the decision
before the agency failed to complete the corrective action in a timely manner, and made
the subsequent decision to cancel the procurement altogether.
Furthermore, in response to defendant’s assertion of a laches defense, plaintiff
makes no attempt to explain the lapse in time. Plaintiff, instead, continues to conflate its
delay in challenging the GAO decision with its objection to the agency’s delay in
accomplishing the corrective action. It argues:
[L]aches is an equitable principle. The Agency must have clean hands to
raise it. But the Agency is the cause of the very delay on which it seeks to
rely. The Agency twice represented to GAO and Global that the Agency was
diligently pursuing its corrective action despite [the fact] that the Agency was
not doing so.
ECF No. 54 at 27. But the “delay on which the [agency] seeks to rely” is not the delayed
corrective action. Rather, defendant’s laches argument is explicitly based on its
complaint that plaintiff “waited nearly a year to challenge MedCom’s decision to
implement corrective action following the 2016 GAO decision.” ECF No. 51 at 28.
Plaintiff goes even further, declaring that this action only exists “because the Agency
never took the corrective action and instead attempted to cancel the Solicitation and
award MedTrust still further sole source awards.” ECF No. 54 at 27. As such, plaintiff
has offered no passable explanation to justify its delay in challenging the GAO’s
recommendation.
In addition to finding that plaintiff’s delay was unexcused, it was also
unreasonable. Given the long, involved history of this case, plaintiff should have been
positioned to object with all deliberate speed to the agency’s chosen course. By its own
admission, plaintiff affirmatively decided not to challenge the decision until another
related, but independent problem arose, in the form of the agency’s cancellation of the
procurement. It is true, as defendant points out, that the year-long delay far exceeds the
delays that this court has previously found unreasonable in the context of a laches
defense. See Software Testing Sols., 58 Fed. Cl. at 536 (holding that a two-month delay
created a “strong argument in favor of applying laches”); Nat’l Telecommuting 123 Fed.
Cl. at 602 (applying laches to bar a claim after a six-month delay). More than the ticking
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off of a particular number of days, however, the court finds plaintiff’s opportunistic
reversal on the issue unreasonable.
Even given an unexcused and unreasonable delay, laches will not apply unless that
delay results in prejudice to defendant, “either economic prejudice or defense prejudice.”
JANA, 936 F.2d at 1269. In this case, defendant alleges economic prejudice, which can
be established by showing “the loss of monetary investments or incurred damages that
likely would have been prevented by earlier suit.” ECF No. 51 at 31 (citing Software
Testing Sols., 58 Fed. Cl. at 536; A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960
F.2d 1020, 1033 (Fed. Cir. 1992)). According to defendant, had plaintiff objected to the
GAO’s decision in a timely fashion, it would not have spent its resources to implement
the recommendation. See ECF No. 51 at 31. Specifically, defendant would not have
reconvened the technical evaluation panel, which completed its re-evaluation of
plaintiff’s proposal on May 31, 2017, nor would it have re-evaluated plaintiff’s past
performance, a task it completed on July 10, 2017. See id. (citing ECF No. 48-9 at 976-
997). Plaintiff’s only defense to defendant’s charge of prejudice is its assertion that the
agency was not prejudiced because it “has not even performed the first step in its
corrective action plan.” ECF No. 54 at 27. This statement is plainly contradicted by the
record evidence cited by defendant to demonstrate that re-evaluations were completed in
May and July.
The court agrees that defendant suffered as a result of plaintiff’s failure to timely
assert its rights. If plaintiff’s challenges to the GAO’s recommendation are meritorious,
as it now enthusiastically claims they are, defendant would not have taken steps to
implement the recommendation. Reconvening the evaluation panel and re-evaluating
both the technical and past performance aspects of proposals amount to a considerable—
and potentially wasted—expenditure of resources on the part of the agency and its
employees. Furthermore, had the GAO’s recommendations been reversed and plaintiff’s
positions sustained, the agency would presumably have moved forward with the award to
plaintiff, obviating the need for the bridge contract that has been an additional source of
friction in this case.
The court concludes that the unique circumstances of this case justify the
application of the doctrine of laches to bar plaintiff’s challenge to the GAO’s November
2, 2016 decision.
IV. Conclusion
For the foregoing reasons:
(1) As to Count I, defendant’s motion to dismiss, ECF No. 51, is GRANTED.
Pursuant to RCFC 54(b), insofar as there is no just reason for delay, the clerk’s office is
15
directed to ENTER final judgment DISMISSING Count I of plaintiff’s complaint
without prejudice;
(2) As to Count II, pursuant to 28 U.S.C. § 1491(a)(2) (2012) and RCFC
52.2(b), this matter is REMANDED for thirty days to the United States Department of
the Army:
(a) This protest is remanded to the agency for the purpose of identifying
any further available facts underlying its decision to award a fifth sole-source
contract, in accordance with the analysis in this opinion;
(b) The initial thirty day period of remand may be extended upon timely
request to the court by the United States Department of Justice, in which defendant
must note the position of plaintiff and intervenor-defendants as to the requested
extension;
(c) All proceedings in the subject matter are STAYED pending further
order of the court;
(d) The parties shall FILE a Joint Status Report within three days
following the conclusion of the remand proceedings that sets forth the parties’
positions regarding whether further litigation is necessary, and, if so, a proposed
date for defendant to file the administrative record associated with the remand
proceedings, and a proposed briefing schedule on the merits for the court’s
consideration; and
(e) The clerk’s office shall SERVE a certified copy of this remand
order, in accordance with RCFC 5 upon each party, and upon:
United States Army Legal Services Agency
Attention: Evan Williams
9275 Gunston Road, Suite 2140
Ft. Belvoir, Virginia 22060-5546
(3) As to Count III, plaintiff’s motion for judgment on the administrative
record, ECF No. 43, is DENIED; defendant’s cross motion for judgment on the
administrative record, ECF No. 51, is GRANTED; intervenor-defendants’ cross motion
for judgment on the administrative record is DENIED.2 Pursuant to RCFC 54(b), insofar
2
The court notes that it has denied the intervenor-defendants’ cross-motion as to the
third count of the complaint because they did not raise the dispositive issue of laches.
16
as there is no just reason for delay, the clerk’s office is directed to ENTER final
judgment DISMISSING Count III of plaintiff’s complaint with prejudice; and
(4) On or before March 14, 2018, the parties shall CONFER and FILE a
Joint Proposed Redacted Version of this opinion, with any competition-sensitive or
otherwise protectable information blacked out and enclosed in brackets.
IT IS SO ORDERED.
s/Patricia Campbell-Smith
PATRICIA CAMPBELL-SMITH
Judge
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