Precision Asset Management Corp. v. United States ( 2016 )

In the Um'ted States Court of Federal Claims
NO. 16~261 C
NO. 16-442 C
(FILED UNDER SEAL August 16, 2016)
Reissued August 30, 2016‘
PRECISION ASSET
MANAGEMENT CORP.,
Plaintiff,
v.
PoSt-Award Bid Protest; Subject
Matter Jurisdiction; Standing;
THE UNITED STATES, . _
Econormc Interest; Substantlal Chance.
Defendant,
ALPINE-FIRST PRESToN Jv H
LLC,
Intervenor.
Q INTEGRATED COMPANIES,
LLC,
Plaintiff,
V.
Defendant,
ALPINE~FIRST PRESTGN JV H
)
)
)
§
THE UNITED STATES, )
)
)
)
LLC, )
)
Intervenor.
Sharon A. Roach, Benton Potter & Murdock, P.C., FaHS Church, VA, attorney
of record for Precision ASS€t Manag,ement Corporation. Jcmz``ne S. B€mon, Kathy C.
P()tz‘e)", JO/?n M Mz.¢rdock and Roscmne E. Stafiej, of counsel.
‘ Reissued with redactions pursuant to parties’ proposed redactions. See docs. 69-71.
James C. Fonrcma, Dempsey Fontana, PLLC, Tysons Corner, VA, attorney of
record for Q lntegrated Companies, LLC. Davz``d B. Dempsey and Je]j”ry R. Cook, of
counsel.
Lauren S. Moore, Commercial Litigation Branch, Civil Division, United
States Department of Justice, Washington, DC, attorney of record with whom
appeared Benjamz'n C. Mz``zer, Principal Deputy Assistant Attorney General, Roberl
E. Kz``rschman, Jr., Director and Deborah A. Bym¢m, Assistant Director, for
defendant Jo)iarhcm English, Trial Attorney for the Department of Housing and
Urban Development and Chrz``stopher J. McClintock, Trial Attorney for the Small
Business Administration, ofcounsel.
J. Al€x Wam’, l\/lorrison & Foerster LLP, Washington, DC, attorney of record
for defendant-intervenor, Alpine-First Preston JV ll LLC.
OPINI()N
lVIerow, Sem``or Jua’ge
Gn February 24, 2016, Precision Asset Management Corporation
(“Precision”) filed a bid protest challenging the Department of Housing and Urban
Development’s (“HUD”) award of a property management contract to Alpine~First
Preston JV H, LLC (“Alpine”). See Doc. l. Shortly thereafter, on April 7, 2016, Q
Integrated Companies, LLC (“Q Integrated”) filed a similar protest challenging the
same award See Case No. l :l6-cv~442, Doc. l. Alpine has intervened in both cases.
At the request of the parties, and because the issues are sufficiently related, the court
consolidated the two cases. See Doc. 31.2
The government and Alpine have each filed a motion to dismiss the two
complaints for lack ofjurisdiction, claiming that neither Precision nor Q lntegrated
have the requisite standing to challenge HUD’s award decision See Docs. 36, 37.
ln addition, Precision and Alpine have each filed a motion to supplement the
administrative record. See Docs. 4l, 47.
2 /-\ll references will be made to the docket in Case No. l:lo-cv-26l unless otherwise noted.
I. BACKGROUND AND RELEVANT FACTS3
The Federal Housing Authority (“FHA”), which is part ofHUD, “administers
the single-family mortgage insurance program.” See Doc. 36 at 9. When a
homeowner defaults on an FHA-insured loan, many times, HUD ultimately acquires
title to the property. See id. at lO. HUD outsources the management of these
properties, contracting with various outi'its for asset management services. Asset
management includes services related to the marketing and sale of the properties
HUD has acquired See id.
A. The Solicitation
On July 25, 20l4, HUD issued Solicitation No. DU204SA-13-R-0005 (the
“solicitation”), requesting proposals for asset management services in twelve
geographic areas. See AR at 44-1062.127 (original solicitation and subsequent
modifications). The area at issue in this action, Area 3A, involves property in
Illinois. See Doc. 36 at 9. Once the government received the requested proposals,
the evaluation process involved two steps. First, HUD determined whether each
proposal was technically acceptable, on a pass/fail basis. See AR at 1054.
Those proposals that were deemed technically acceptable, were then
evaluated with the goal of determining which was the best value to HUD. See id.
This analysis considered past performance and price, assigning approximately the
same relative importance to each. See id. In order to determine the strength of a
bidder’s past performance, the technical evaluation panel (“TEP”) analyzed the
recency, relevancy, and quality of that performance, along with the panel’s
confidence in the bidder’s ability to perform under the contract. See AR at 1057.
The 'l``l;``P assigned each proposal one oftive adjectival ratings for confidence
and quality of past performance: excellent/high contidence, good/significant
contidence, fair/some contidence, no contidence, and neutral/unknown confidence
See AR at lOGO*lOGl. In coming to these determinations, the TEP was to evaluate
the three most recent, relevant references provided by the bidder. Se€ AR at l047.
In place of the three most recent, relevant references, a bidder was also permitted to
3 The court recently evaluated, and ultimately granted, a motion to dismiss for lack of standing
filed by the United States in a protest action that Precision brought relating to a different
geographic area covered by the same solicitation See precision Assel Managemenl C()rp. v.
Um``z‘ed Slmes, Case No. l:lS-cv-l495, Doc. 35 (sealed opinion). The court repeats much ofthe
background here for ease ofreference.
bJ
request that the TEP consider efforts with which certain key personnel had been
involved. See AR at 1049.
B. Precision’s Proposal
Precision submitted its initial proposal for all twelve geographic areas on
September 23, 2014. See AR at 2071-2340. For Area 3A, the only area at issue in
this protest, Precision proposed a cost of$[. . .]. See AR 2329. The initial proposal
included six contract references based on which HUD was to make its past
performance evaluation See AR at 2266~2277.
By letter, dated August 27, 2015, HUD notified Precision that it had
established a competitive range and was initiating discussions See AR at 3757. The
letter also stated that the TEP found plaintiffs proposal to be “Technically
Acceptable.” See id. In an attachment enclosed with the letter, HUD noted that it
had identified “[n]o weaknesses or deficiencies” in Precision’s proposal, and that it
had “[n]o adverse past performance information.” AR at 3719. The only substantive
note on the attachment was that while plaintiffs price was “deemed reasonable,” it
was “either the highest or higher than the overall mean,” when compared to other
proposals [d.
HUD revised the solicitation several times, and plaintiff submitted its revised
proposal on September 9, 2015. See AR at 3854-3885. Its revised proposal included
“updated Past Performance Information and revised pricing.” Doc. l at 9. In its
revised proposal, Precision identified three past performance efforts for evaluation;
XXXXXXXXX XXXXXX XXXXXX XXXXXX. See AR at 3854-62. In its
evaluation, the TEP looked at the XXXXXXX XXXXX XXXX XXXX efforts, but
instead of considering the XXXXXXXX, it considered the XXXXXXXXXX, one
of the references identified in Precision’s initial proposal See AR at 4101. After
conducting its past performance evaluation, HUD assigned plaintiffs proposal a
“Neutral/Unknown Confidence” rating. See AR at 4277. Precision’s final proposed
cost was $[. . .]. See AR at 4296.
C. Q Integrated’s Proposal
As Precision did, Q Integrated submitted its initial proposal for Area 3A on
September 23, 2014. See AR at 1367-1678. In the proposal, Q Integrated stated that
it would perform the contract in partnership with XXXXXXXXXXXX XXXXXX
XXXXXX. See AR at 1389-1409 Specifically, Q Integrated proposed that
XXXXXXXXX Would serve as its sub-contractor and Would perform a maximum
of 49 percent ofthe contract Worl<. See AR at 1389, 1399.
For its past performance evaluation, Q Integrated submitted a list of its own
clients and XXXXXXXclients, along With identifying three specific efforts for the
TEP to review. All three efforts Were projects on Which Q lntegrated served as a
subcontractor to XXXXXX, performing 20 percent of the Worl< on the prime
contracts. See AR at l656-6l.
HUD notified Q Integrated that it had established a competitive range and Was
initiating discussions by letter dated August 27, 2015. See AR at 3739. The letter
stated that the TEP found Q Integrated’s proposal to be “Technically Acceptable.”
See id. On the attachment included vvith the letter, the TEP noted “[n]o adverse past
performance information,” and that Q Integrated’s price Was “lovver than the overall
mean.” See AR at 371 l.
Q Integrated submitted a revised proposal in Which it omitted the reference to
having performed 20 percent of the Work under XXXXXXX on the specified past
efforts, and instead stated that “QINTCO Key personnel processed lOO% of the
volume” for each of the referenced contracts. See AR at 3808, 3810, 3812. The
TEP took issue With the discrepancy, and downgraded Q Integrated’s confidence
rating as a result. See AR at 4006.
D. The AWard and Plaintiffs’ Challenges
The record lists the entities deemed technically acceptable, and in the
competitive range, as follows:
Company Total Value of Confidence Rating
g 4 Contract
XXXX $[. . .] Neutral/Unknovvn Confidence
XXXXXXXXXXXXXX
XXXXXXXXXX $[...] Neutral/Unknown Confidence
XXXXXXXX
XX;§_XXXX g ,`` at gE)<``<:el1@m/``Hig_rr§;_<)nfld@nc@
Prccision Assct $[. . .] Neutral/Unl275 F.3d 1366,
1369 (Fed. Cir. 2002) (noting that “standing is a threshold jurisdictional issue” .
II. MOTIONS TO DISMISS
The government and Alpine have each filed a motion to dismiss, alleging that
this court lacks subject matter jurisdiction to consider plaintiffs’ cases on the basis
that neither plaintiff has the requisite standing. See Docs. 36, 37. Because the
motions make essentially the same arguments, the court will consider them together
Plaintiffs bear the burden of establishing the court’s subject matter jurisdiction by a
preponderance of the evidence. See ana’t v. Um.``tea' States, 7l0 F.3d 1369, l373
(Fed. Cir. 2013). In determining whether the court has jurisdiction over a plaintiffs
claims, the court “must accept as true all undisputed facts asserted in the plaintiff’s
complaint and draw all reasonable inferences in favor of the plaintif .” Trusted
lnregratz'on, ]nc. v. Unz``ted Staz‘es, 659 F.3d 1159, ll63 (Fed. Cir. ZOll) (citing
Her)ke v. Um``ted Smtes, 60 F.Bd 795, 797 (Fed.Cir.1995)).
This couit’s jurisdiction is based on the Tucker Act, which states in relevant
pait, that the Court of Federal Claims:
shall have jurisdiction to render judgment on any 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
23 u.s.c. § i491(b)(i).
Under this section, a plaintiff must demonstrate that it is an “interested paity,”
in order to establish this court’s jurisdiction As the Federal Circuit has held, the
“interested party” requirement in the Tucker Act “imposes more stringent standing
requirements than Article IH.” Weeks Marz``ne, lnc. v. Um.'ted States, 575 F.3d 1352,
1359 (Fed. Cir. 2009). Though the term “interested paity” is not defined by the
statute, courts have construed it to require that a protestor “establish that it ‘( 1) is an
actual or prospective bidder and (2) possess[es] the requisite direct economic
interest.” See id. (citing Rex Serv. Corp. v. Um‘z‘ed States, 448 F.3d 1305, 1308 (Fed.
cii~. 2006)).
There is no dispute that both Precision and Q lntegrated are actual bidders.
See Doc. 36 at 30, 33. But the plaintiffs must also demonstrate sufficient economic
interest to support standing A 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.” [nfo. Tech. & App]z``cations Corp. v. Um'rea’ Sz‘czzes, 316 F.3d
1312, 1319 (Fed. Cir. 2003) (citing A!fa Laval Sepamlz``on, [nc. v. Urzl``ted Smles, 175
F.3d 1365, 1367 (F@d. cir. 1999)).
The government and Alpine assert that neither Precision nor Q Integrated can
demonstrate a substantial chance of receiving the award but for the various alleged
errors in the procurement process. For the reasons that follow, the court disagrees
A. Precision has standing
Precision alleges a number of errors in HUD’s past performance evaluation
process, including consideration of improper references and inadequate discussions
of deficiencies See Doc. 1 at 15-16. HUD considered the XXXXXX effort, the
XXXXXX effoi“r, and the XXXXX effort, but did not evaluate the XXXX effort,
which was submitted specifically in support of Precision’s proposal for Area 3A.
See Doc. 1 at 11-12. Precision also argues that HUD violated its obligation under
the terms of the solicitation to consider other references if any of the initially
evaluated efforts were found to be “not relevant.” See Doc. 1 at 14. Additionally,
Precision alleges that HUD violated its obligation to engage in meaningful
discussions by failing to notify Precision of several deficiencies in its proposal
related to evaluation of its past performance efforts. Se@ Doc. 1 at 16. As noted
above, HUD ultimately determined that it had “Neutral/Unl117
Fed. Cl. 54, 62 (2014); see also Data Gen. Corp. v. Jo/mson, 78 F.3d 1556, 1562
(Fed. Cir. 1996) (“To establish prejudice, a protester is not required to show that but
for the alleged error, the protester would have been awarded the contract.”).
Demonstrating prejudice does require, however, that the plaintiff show more than a
bare possibility of receiving the award. See Banmzm, ]nc. v. Um``red Stares, 404 F.3d
1346, 1358 (Fed. Cir. 2005) (affirming the trial court’s determination that the
plaintiff had not demonstrated a substantial chance of award when its “argument
rest[ed] on mere numerical possibility, not evidence”).
In Irzformarion Technologies, for example, the Federal Circuit found that the
plaintiff had established a “substantial chance” of receiving the contract at issue
because the record supported the conclusion that had the alleged errors been cured,
“[t]here is no question . . . its proposal would have been improved and its chances of
securing the contract increased.” lnfo. Tech., 316 F.3d at 1319.
Assuming that Precision was assigned the highest confidence rating, a revised
chart of the competitive range would appear as follows:
Company Total Value of Conf"ldence Rating
Contract
XXXXXXXXXX $[. . .] Neutral/Unknown Contidence
XXXXX 1
XXXXXX $[. . .] Neutral/Unknown Confidence
XXXXXX
XXXXX $[. . .] EXcellent/High Confidence
Precision Asset S[. . .] Excellent/High Conf"ldence
Management
Alpine-First Preston JV $[. . .] EXcellent/High Confidence
II
XXXXX $[. . .] Neutral/Unl78 F.3d 1556, 1562 (Fed. Cir. 1996) (“To establish prejudice, a protester is not
required to show that but for the alleged error, the protester would have been
awarded the contract.”).
As noted with regard to Prccision, particularly considering the government’s
demonstrated willingness to award the contract for Area 3A to a bidder who has not
offered the lowest price, Q Integrated has established that it has a substantial chance
of receiving the award because if HUD’s alleged errors are corrected “[t]here is no
question . . . its proposal would have been improved and its chances of securing the
contract increased.” fnfo. Tech., 316 F.3d at 1319
The court, therefore, DENIES both the government’s motion to dismiss, see
Doc. 36, and Alpine’s motion to dismiss, see Doc. 37.
III. MOTIONS TO SUPPLEMENT THE RECORD
In addition to the motions to dismiss, the court has considered the two pending
motions to supplement the record filed by Precision, see Doc. 41, and Alpine, see
Doc. 47. As a general rule, “[t]he scope ofreview ofthe agency’s actions is limited
to the administrative record developed by the agency.” Myers [nvesz‘z``gatz``ve & Sec.
Servs., [nc. v. Um'tea' States, 47 Ped. Cl. 605, 6l5 (ZOOO), afd, 275 F.3d 1366 (ch.
Cir. 2002) (citing Camp v. Pitts, 4ll U.S. l38, 142 (1973) (“the focal point for
judicial review should be the administrative record already in existence, not some
new record made initially in the reviewing court”). Supplementation of the record
may be appropriate, however, where “required for meaningful judicial review.”
]mpresa Construziom`` G€om. Domenl``c Gm”ufz v. Unz``z‘ed Smtes, 238 F.3d l324, l338
(Fed. Cir. 200l).
Shortly after the government and Alpine filed the motions to dismiss,
Precision filed a motion to supplement the record with three categories of
documents:
l. The “Response to the Size of Appeal of Alpine-First Preston JV H”
(hereinafter the “SBA Response”) that was filed with the SBA Office
ofHearings and Appeals (“OHA”), Docket No. SIZ~2016-03-22-23, on
April l4, 2016, by the Small Business Adrninistration (“SBA”), and
2. The late revisions to the lnitial and Revised Proposal ofAlpine-First
Preston (“Alpine”), and
3. Any and all explanations and justifications relied upon by HUD in
accepting late revisions to Alpine’s lnitial and Revised Proposals.
See Doc. 41 at l-Z. In response to this motion to supplement, the government points
to a declaration, executed by the contracting officer, in which she states that she
confirms, after searching her files, emails and the contract files, that “no such
documents were received.” See Doc. 45 at 32.
The fact that the contracting officer never received these documents explains
why they were omitted from the administrative record filed with the court. Because
the court did not find the documents necessary for a review of the issues raised in
the motions to dismiss, the court hereby DENIES Precision’s motion to supplement
If, however, Precision believes these documents are relevant to an issue before the
court at a later date, it may reassert its motion.
In its motion to supplement, Alpine requests that the court consider additional
documents relating to post-award SBA proceedings c‘ifthe Court decides to consider
the plaintiffs’ size-related arguments, or to supplement the Administrative Record
,,
la
with documents relevant to those arguments.” See Doc. 47 at 2. Because the court
has denied Precision’s motion to supplement, Alpine’s motion is DENIED as moot.
IV. CONCLUSI()N
The court DENIES both the government’s motion to dismiss, See Doc. 36,
and Alpine’s motion to dismiss, see Doc. 37. In addition, the court DENIES both
Precision’s motion to supplement the administrative record, See Doc. 41, and
Alpine’s motion to supplement the administrative record, see Doc. 47, vvith leave to
refile should the documents become relevant at a later point in the proceedings
The parties are further ordered to confer as to a time that all are available for
a status conference to discuss how this case should proceed. One party, acting as a
representative for all four parties, shall tile a notice of availability With the court no
later than Tuesday, August 23, 2016.
SO ORDERED.
s/ J ames F. Merovv
J ames F. Merow,
Senior Judge
l4