Sekri, Inc. v. United States ( 2023 )

In the United States Court of Federal Claims
No. 21-778
Filed: March 13, 2023
FOR PUBLICATION
SEKRI, INC.,
Plaintiff,
v.
UNITED STATES,
Defendant.
Alan M. Grayson, Windermere, FL, for the plaintiff.
Rafique O. Anderson, Commercial Litigation Branch, Civil Division, U.S. Department of Justice,
Washington, DC, for the defendant, with Steven J. Gillingham, Commercial Litigation Branch,
Civil Division, U.S. Department of Justice, and Nicole M. Wilmoth and Gregory M. Mathews,
Defense Logistics Agency, of counsel.
MEMORANDUM OPINION
HERTLING, Judge
In this pre-award bid protest with an extended procedural history, the plaintiff, SEKRI,
Inc., alleged that the United States, acting through the Defense Logistics Agency (“DLA”) and
the U.S. AbilityOne Commission (“AbilityOne”), has violated statutes and regulations
designating SEKRI as the mandatory source of supply for Advanced Tactical Assault Panels
(“ATAP”). The plaintiff argues that AbilityOne has unlawfully limited SEKRI’s status as a
mandatory source, that the DLA cannot procure the ATAP from any source other than SEKRI,
and that the DLA must procure ATAP at the price set by AbilityOne pursuant to regulation. The
parties have filed cross-motions for judgment on the administrative record based on these
arguments, and the defendant has also filed a motion to dismiss.
Regarding the pricing dispute between the parties, the plaintiff’s claim is unripe and fails
to state a claim upon which relief can be granted. The plaintiff’s pricing claim must therefore be
dismissed pursuant to Rules 12(b)(1) and 12(b)(6) of the Rules of the Court of Federal Claims
(“RCFC”). The defendant’s motion to dismiss regarding the plaintiff’s pricing claim is granted,
and the portion of the plaintiff’s motion for judgment on the administrative record for the
plaintiff’s pricing claim is denied.
The DLA cannot, however, legally procure ATAP from any supplier other than SEKRI
for any portion of its current ATAP requirement. AbilityOne must designate SEKRI as the
mandatory source of supply for 100 percent of the DLA’s ATAP requirement. The plaintiff’s
motion for judgment on the administrative record is granted regarding these claims, and the
defendant’s motion to dismiss and its motion for judgment on the administrative record on these
issues are denied. AbilityOne is enjoined to change SEKRI’s status to be the mandatory source
for 100 percent of ATAP, and the unlawful solicitation the DLA issued to SEKRI is enjoined.
I. FACTUAL AND PROCEDURAL BACKGROUND
This case has a protracted history, and previous opinions set forth much of the relevant
background. See SEKRI, Inc. v. United States, 152 Fed. Cl. 742 (2021) (“SEKRI I”); SEKRI, Inc.
v. United States, 34 F.4th 1063 (Fed. Cir. 2022) (“SEKRI II”); SEKRI, Inc. v. United States,
163 Fed. Cl. 562 (2022) (“SEKRI III”); SEKRI, Inc. v. United States, No. 21-778, 2023 WL
1428644 (Fed. Cl. Jan. 31, 2023) (“SEKRI IV”).
A. The Plaintiff as a Mandatory Source
The Javits-Wagner-O’Day Act (“JWOD Act”) requires entities of the federal government
to procure certain products and services from qualified nonprofit agencies employing th e blind or
severely disabled. 41 U.S.C. § 8504; see also SEKRI II, 34 F.4th at 1065-68 (explaining various
provisions of the JWOD Act and related regulations). The JWOD Act also established the
Committee for the Purchase from People Who Are Blind or Severely Disabled, which
administers the AbilityOne Program and is currently known as AbilityOne. 41 U.S.C. § 8502.
AbilityOne establishes regulations regarding products and services on the procurement list, i.e.,
those products and services that agencies of the federal government are required to procure from
qualified nonprofit agencies employing the blind or severely disabled. AbilityOne also
designates central nonprofit agencies to facilitate procurements between federal and qualified
nonprofit agencies. Id. §§ 8503(c), 8503(d).
AbilityOne has designated SourceAmerica as the central nonprofit agency for qualified
nonprofit agencies employing the severely disabled.1 SEKRI is a Kentucky nonprofit agency
that employs the severely disabled. AbilityOne has designated SEKRI as the mandatory source
of supply for ATAP, which “is a fighting load carrier to be worn with a parachute harness” that
“enables the paratrooper’s fighting load to be in a ready to fight configuration when reaching the
drop zone.” (AR 526.)2
B. Initial Claims
On January 21, 2021, the plaintiff filed its first complaint, alleging that the DLA’s
proposed award of a contract for ATAP to a commercial supplier violated the JWOD Act and
AbilityOne has designated National Industries for the Blind (“NIB”) as the central nonprofit
1
agency for qualified nonprofit agencies employing the blind.
2
Citations to the administrative record (ECF 45, supplemented by ECF 57-1, ECF 87, and
ECF 97) are cited as “AR” with the pagination reflected in that record as filed.
2
related regulations. (ECF 1.) In March 2021, the complaint was dismissed for lack of standing
and for waiver under Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308 (Fed. Cir. 2007).
SEKRI I, 152 Fed. Cl. 742.
In May 2022, the Federal Circuit reversed the dismissal and held that SEKRI had
standing to sue and had not waived its claims under Blue & Gold Fleet. The Federal Circuit also
held that SEKRI was the mandatory source of supply for ATAP, and the defendant had forfeited
any argument to the contrary. SEKRI II, 34 F.4th at 1071 n.9. The Federal Circuit held that the
DLA “knowingly violated its statutory and regulatory obligation under the JWOD Act and its
implementing regulations to procure ATAP from SEKRI using the AbilityOne Program.” Id.
C. On Remand
Following remand, the DLA issued several amendments to the solicitation at issue. The
DLA initially requested competitive proposals to procure Tactical Assault Panels (“TAP”), the
ATAP’s predecessor, instead of ATAP. (AR 304-05.) On July 22, 2022, the DLA canceled the
ATAP/TAP procurement and rescinded all solicitations pertaining to either ATAP or TAP. (AR
306-07.)
The DLA made no immediate decision, however, regarding whether it would procure
ATAP from SEKRI. On August 26, 2022, the plaintiff therefore filed a supplemental complaint
seeking injunctive relief. This supplemental complaint sought to require the DLA to procure
ATAP from SEKRI immediately. (ECF 44.)
After having filed the initial version of the administrative record in this case (ECF 45),
the defendant filed a motion to dismiss, arguing that the plaintiff’s claims in both the original and
supplemental complaints were nonjusticiable. (ECF 62.) The defendant argued that the DLA
“has not yet finally decided that it will indeed procure the ATAP at all,” and no solicitation for
ATAP or TAP was pending. (Id. at 11.) The plaintiff filed a motion (ECF 46) to enforce the
decision of the Federal Circuit and a motion to complete the administrative record (ECF 51).
The defendant’s motion to dismiss was granted:
The defendant’s motion to dismiss is granted because no relief
remains available on the plaintiff ’s pending claims. The DLA has
rescinded the solicitations that violated the JWOD Act and
[AbilityOne] regulations, and if the DLA wishes to procure the
ATAP or the TAP, it must do so from SEKRI according to
[AbilityOne] regulations. Additionally, the DLA cannot be
compelled to procure the ATAP more quickly.
SEKRI III, 163 Fed. Cl. at 591. The plaintiff’s motions were denied. The plaintiff was
nonetheless permitted to file an amended complaint alleging new claims it had raised during
briefing and oral argument.
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D. Current Claims
The plaintiff’s amended complaint was due on January 6, 2023. (See ECF 69.) On
January 4, 2023, the defendant filed a notice that the DLA would issue a solicitation to SEKRI
for 50 percent of its ATAP requirement and a solicitation to Federal Prison Industries (“FPI”),
another statutory mandatory source, for the other 50 percent of its ATAP requirement. (ECF 75.)
On January 12, 2023, the plaintiff filed an amended complaint, which is currently
pending and asserts three claims for relief. (ECF 77.) In its first claim, the plaintiff alleges that
it is entitled to supply 100 percent of the DLA’s ATAP requirement and that the DLA’s
solicitation to FPI for 50 percent of the DLA’s ATAP requirement is unlawful. (Id. at ¶¶ 120-
24.) Although the plaintiff’s claim focuses on the DLA’s issuance of a solicitation to FPI, the
plaintiff also alleges that the DLA has unlawfully attempted to award a contract for ATAP to
other potential suppliers. 3
In its second claim for relief, the plaintiff alleges that the DLA has failed to accept the
ATAP price that has been set by AbilityOne. The plaintiff alleges that the DLA’s objections to
SEKRI’s price are contrary to law. (Id. at ¶¶ 125-28.)
In its third claim for relief, the plaintiff alleges that the DLA has acted in bad faith. (Id.
at ¶ 137.)
In sum, the plaintiff alleges that the defendant “continues to violate, knowingly, its
obligation to procure all the Government’s ATAP requirement from SEKRI, at the price
established by [AbilityOne]. The fact that the Defendant keeps coming up with new and creative
(and destructive) ways to do that is irrelevant.” (Id. at ¶ 134.)
The plaintiff requests a declaration that SEKRI is entitled to 100 percent of the DLA’s
ATAP requirement at the price established by AbilityOne, an injunction prohibiting the DLA
from issuing a solicitation for ATAP to anyone other than SEKRI, attorney’s fees, bid
preparation and proposal costs, and other relief. 4 (Id. at ¶¶ 134-38.)
On January 20, 2023, the defendant filed a notice that the DLA was unwilling to stay
award of a contract to FPI while this litigation was pending. (ECF 79.) The plaintiff filed a
motion for a temporary restraining order and preliminary injunction seeking to prohibit the
defendant from awarding a contract to FPI while the case was pending. (ECF 82.)
3The plaintiff alleges that a DLA employee retaliated against SEKRI by requesting that
SourceAmerica, NIB, and FPI “join him in preventing SEKRI from obtaining an ATAP
contract.” (ECF 77 at ¶ 116.)
4The plaintiff’s request for bid preparation and proposal costs has already been rejected.
SEKRI III, 163 Fed. Cl. at 586. The plaintiff still has not demonstrated that it has submitted a
bid. Accordingly, bid preparation and proposal costs remain unavailable.
4
On January 31, 2023, the plaintiff’s motion for a preliminary injunction was denied, but
the Court noted that the plaintiff’s claim regarding the legality of a contract to FPI was
“colorable.” SEKRI IV, 2023 WL 1428644, at *1.
The opinion also set a briefing schedule for cross-motions for judgment on the
administrative record. The administrative record was due on February 10, 2023, and the parties’
cross-motions for judgment on the administrative record were due on February 24, 2023. The
defendant filed the administrative record on February 10, 2023. (ECF 87.)
E. Additional Claims
On February 12, 2023, the defendant filed a notice that FPI had withdrawn its proposal to
produce ATAP the day after the issuance of the SEKRI IV opinion. (ECF 89.) The defendant
also noted that AbilityOne had issued a “correction to its Procurement List” in the Federal
Register to reflect that SEKRI was the mandatory source of supply for only 50 percent of the
DLA’s ATAP requirement. (Id.) The defendant represented that the DLA would withdraw and
reissue a solicitation to SEKRI for 50 percent of its ATAP requirement, and the DLA would
issue a solicitation for the remaining 50 percent of its ATAP requirement to commercial sources
for a competitive procurement pursuant to AbilityOne’s “correction.” (Id.)
Also on February 12, 2023, the plaintiff filed a motion for sanctions. (ECF 88.) On
February 14, 2023, the defendant filed a motion that was construed as one to supplement the
administrative record. (ECF 91.) On February 15, 2023, the plaintiff filed a motion to
supplement its complaint. (ECF 92.) During a February 15 status conference, the plaintiff’s
motion for sanctions was denied without prejudice, and the defendant’s motion to supplement the
administrative record and the plaintiff’s motion to supplement its complaint were granted. (ECF
93.)
On February 15, 2023, the plaintiff filed a supplemental complaint, which is also still
pending. (ECF 94.) The plaintiff alleges that the defendant’s filings are misleading and
frivolous. (Id. at ¶¶ 145, 148.) The plaintiff challenges AbilityOne’s correction to the
procurement list as illegal. The plaintiff also challenges the DLA’s withdrawal of the solicitation
to SEKRI and the DLA’s issuance of a competitive solicitation to commercial sources. (Id. at
¶¶ 150-52.) The plaintiff seeks the same relief as in its other pending complaint. (Id. at ¶¶ 157-
60.)
On February 22, 2023, the plaintiff’s motion to unseal the case and case filings, which
had been pending since December 14, 2022, was resolved. (ECF 70.) Except for a handful of
limited redactions to several documents in the administrative record, the case is now proceeding
on the public docket.
F. Pending Cross-Motions
The defendant filed a notice on February 24, 2023, that the DLA “intends to take
corrective action in this case by rescinding the final decision to procure 50 percent of [the DLA’s
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ATAP] requirement from a commercial source.” (ECF 103.) The defendant noted it would file a
motion to dismiss and requested that the existing briefing schedule be vacated.
During a status conference held on February 27, 2023, the defendant explained that
although the commercial solicitation had been rescinded, the DLA was seeking AbilityOne’s
approval to procure only 50 percent of its ATAP requirement from SEKRI. The defendant
explained that the DLA may reissue the solicitation to procure 50 percent of its ATAP
requirement competitively once that approach has been approved by AbilityOne. As a result, the
defendant suggested that a motion to dismiss for mootness was the appropriate vehicle to resolve
the plaintiff’s claims before consideration of motions for judgment on the administrative record.
Although the Court expressed skepticism that the defendant’s actions mooted the plaintiff’s
claims, the defendant was allowed to file a motion to dismiss before the parties filed cross-
motions for judgment on the administrative record; the briefing schedule was adjusted
accordingly. (ECF 106.)
Following the status conference, the defendant filed a notice that, upon consideration of
the Court’s comments during the February 27 status conference, it no longer intended to file a
separate motion to dismiss but wished to address the question of ripeness under a consolidated
briefing schedule for cross-motions for judgment on the administrative record. (ECF 107.) The
parties thereafter agreed to an expedited briefing schedule for cross-motions for judgment on the
administrative record. (ECF 108.)
On March 6, 2023, the plaintiff filed a motion for judgment on the administrative record
(ECF 109), and the defendant filed a motion to dismiss and cross-motion for judgment on the
administrative record (ECF 110). The plaintiff filed its reply brief (ECF 113) on March 8, 2023,
and the defendant filed its reply brief in the morning of March 9, 2023. (ECF 114.) Oral
argument was held in the afternoon of March 9, 2023.
G. The Plaintiff’s Ongoing Status as a Mandatory Source
Over the course of briefing on the plaintiff’s motion for a preliminary injunction, the
pending cross-motions, and the submission of the administrative record, additional context
regarding the ATAP procurement has come to light.
SEKRI initially developed and produced ATAP pursuant to a manufacturing and
development (“M&D”) prototyping contract with the United States Army and its Natick,
Massachusetts facility (“Army-Natick”). (AR 634.) Under that contract, SEKRI was to develop
and then produce 47,854 ATAP units over a period of approximately three years. (AR 437.)
When AbilityOne published a notice in the Federal Register proposing to add ATAP to
the JWOD mandatory-source procurement list, it noted that SEKRI would be the mandatory
source for only 50 percent of the Army’s ATAP requirement. Procurement List; Proposed
Additions, 84 Fed. Reg. 2,823-01 (Feb. 8, 2019).
The parties disagree as to whether AbilityOne intended to add SEKRI as the mandatory
source of supply for 50 percent or for 100 percent of the Army’s ATAP requirement. A
6
document in the administrative record titled “Addition to the Procurement List for Decision”
adds confusion rather than clarity. (AR 623-29.) The first page of the document explains that
SEKRI would be the mandatory source of supply for “50% of the requirement of the U.S.
Army.” (AR 623.) The document noted elsewhere that SourceAmerica had recommended that
SEKRI “be designated by the Commission as the mandatory source of supply for the ATAP
based on its production of the product under the M&D [contract],” notably excluding any 50-
percent limitation. (AR 626.) AbilityOne also analyzed the level of impact on current contractor
sales the addition to the procurement list may cause:
[ATAP] has never been procured commercially, and was prototyped
by SEKRI under the abovementioned M&D contract. . . . Under
these circumstances, [AbilityOne] can determine that the addition of
this requirement to the Procurement List will not cause severe
adverse impact to the current contractor in accordance with
[AbilityOne] regulation 41 CFR 51-2.4(a)(4), as no current
contractor exists.
(Id.) AbilityOne staff recommended that AbilityOne approve the ATAP “as suitable for addition
to the [procurement list], in accordance with 41 C.F.R. § 51-2.4.” (Id.)
The addition was made, however, “with the understanding that procurement under the
JWOD Act shall be limited to that portion of the Government’s requirement for the commodity
which is not available or not required to be procured from Federal Prison Industries, Inc.” (Id.
(emphasis omitted).) SourceAmerica had obtained a partial waiver of priority from FPI for five
years or 120,000 ATAP units per year. (AR 577-78.) The quantity specified in the document of
120,000 ATAP units per year corresponds to approximately 50 percent of the DLA’s current
ATAP requirement. (AR 322-23.)
AbilityOne staff recommended the addition of ATAP to the procurement list but did not
specify whether ATAP would be mandatory for 50 percent or 100 percent of the Army’s
requirement. (AR 627.)
AbilityOne commissioners voted unanimously to approve the addition of ATAP to the
procurement list. (AR 630-31.) The plaintiff argues that the AbilityOne commissioners voted to
add ATAP to the procurement list at the 100-percent rate; the defendant argues that the
AbilityOne commissioners voted to add ATAP to the procurement list at the 50-percent rate.
The record neither definitively confirms nor contradicts either party’s argument; the record is
unclear.
When AbilityOne officially added ATAP to the procurement list, however, it listed
ATAP as mandatory for all the Army’s requirement. Procurement List; Additions and Deletions,
84 Fed. Reg. 11,935-01 (Mar. 29, 2019). The 50-percent limitation found in the proposed notice
was absent.
Internal AbilityOne documents in the administrative record reflect this inconsistency. In
April 2019, the ATAP was listed on the procurement list as mandatory only for 50 percent of the
7
Army’s requirement. (AR 642-43.) In August and October 2019, however, the ATAP was listed
as mandatory for 100 percent of the Army’s requirement. (AR 652 -53, 695-96.) In November
2019 and December 2022, the ATAP was again listed as mandatory for only 50 percent of the
Army’s requirement. (AR 526-27, 708-09.)5 These internal AbilityOne documents do not
acknowledge or address, let alone explain, the discrepancy.
On February 7, 2023, AbilityOne published the aforementioned “correction” to the
procurement list in the Federal Register. Procurement List; Additions, 88 Fed. Reg. 7,967-01
(Feb. 7, 2023). The “correction” purports to acknowledge the mistake in the March 29, 2019
notice adding ATAP to the procurement list and provides that ATAP was mandatory for only 50
percent of the Army’s requirement. Id.H. The Solicitation to SEKRI
On February 17, 2023, the DLA issued a request for allocation or solicitation (SPE1C1-
23-R-0051) to SEKRI. (ECF 110-1 at 6.)6 When a DLA contracting officer emailed the
solicitation to SourceAmerica representatives, she stated that the “solicitation quantities
represent 50% of the requirements pursuant to the [AbilityOne] Federal Registry update on
February 7, 2023.” (Id. at 4.)
The solicitation contemplates an “indefinite delivery, indefinite quantity, firm-fixed-price
contract with a three-year ordering period.” (Id. at 6.) The guaranteed minimum quantity is
9,750 ATAP units, and the maximum quantity is 438,750 units. (Id.) The annual estimated
quantity is 120,000 ATAP units for the first year and 117,000 ATAP units for each of the second
and third years. (Id.)
5 In parts of the administrative record, the procurement list reflects that SEKRI was the
mandatory source of supply for the Department of Defense’s ATAP requirement, not just the
Army’s ATAP requirement. (See AR 652.) Although the DLA is now seeking to procure
ATAP, the Army remains the end-user of ATAP. Additionally, Judge Horn has held that the
DLA was required to purchase an item on the procurement list from a mandatory source of
supply even when the Federal Register provided that the mandatory source applied only to
Army-Natick. See Goodwill Indus. S. Fla. v. United States, 162 Fed. Cl. 160, 177, 195-96
(2022). The defendant has not argued that the DLA is exempt from purchasing ATAP from
SEKRI because the requirement only applied to the Army. Accordingly, the fact that the Federal
Register listed ATAP as mandatory only for the Army does not affect analysis of the plaintiff’s
claims.
6 The defendant appended the solicitation to its reply brief. During oral argument, the
plaintiff orally moved to complete the administrative record with the documents appended to the
defendant’s brief. The defendant did not object. Accordingly, the exhibits are incorporated into
the administrative record and considered in resolving the pending motions.
8
Elsewhere in the administrative record, a different DLA contracting officer notes the
quantities that reflect 100 percent of the DLA’s requirement: 19,500 ATAP units as a guaranteed
minimum quantity, 234,000 ATAP units as the annual estimated quantity, and 877,500 ATAP
units as the maximum quantity. (AR 322.)
In its solicitation to SEKRI for the ATAP procurement, the DLA left blank spaces for
ATAP pricing. (ECF 110-1 at 14-15.)
II. JURISDICTION AND STANDING
The Court of Federal Claims has jurisdiction over “an action by an interested party
objecting to a solicitation by a Federal agency for bids or proposals for a proposed contract or to
a proposed award or the award of a contract or any alleged violation of statute or regulation in
connection with a procurement or a proposed procurement.” 28 U.S.C. § 1491(b)(1). Actions
brought under this provision are typically called bid protests.
The plaintiff has alleged violations of law in connection with the DLA’s proposed
procurement of ATAP. (See ECF 77.) Accordingly, the plaintiff’s claims fall within the bid-
protest jurisdiction of the court.
As a mandatory source under the JWOD Act, the plaintiff is, as the Federal Circuit has
held, an “interested party.” See SEKRI II, 34 F.4th at 1073. The plaintiff therefore has standing
to sue.
III. STANDARDS OF REVIEW
A. Motion to Dismiss
To determine subject-matter jurisdiction under RCFC 12(b)(1), the “court must accept as
true all undisputed facts asserted in the plaintiff’s complaint and draw all reaso nable inferences
in favor of the plaintiff.” Trusted Integration, Inc. v. United States, 659 F.3d 1159, 1163 (Fed.
Cir. 2011). When a plaintiff’s jurisdictional facts are challenged, only those factual allegations
that the government does not controvert are accepted as true. Shoshone Indian Tribe of Wind
River Rsrv. v. United States, 672 F.3d 1021, 1030 (Fed. Cir. 2012). The court is not “‘restricted
to the face of the pleadings’” in resolving disputed jurisdictional facts. Id. (quoting Cedars-Sinai
Med. Ctr. v. Watkins, 11 F.3d 1573, 1584 (Fed. Cir. 1993), cert. denied, 512 U.S. 1235 (1994)).
In such cases, courts may review evidence outside the pleadings. Id.The plaintiff has the burden of establishing jurisdiction by a preponderance of the
evidence. Trusted Integration, Inc., 659 F.3d at 1163. If a court finds that it lacks subject-matter
jurisdiction over any of the plaintiff’s claims, RCFC 12(h)(3) requires dismissal of those claims.
Under RCFC 12(b)(6), dismissal “is appropriate when the facts asserted by the claimant
do not entitle him to a legal remedy.” Lindsay v. United States, 295 F.3d 1252, 1257 (Fed. Cir.
2002). The court must both accept as true a complaint’s well-pleaded factual allegations,
Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009), and draw all reasonable inferences in favor of the
non-moving party, Sommers Oil Co. v. United States, 241 F.3d 1375, 1378 (Fed. Cir. 2001). To
9
avoid dismissal under RCFC 12(b)(6), a complaint must allege facts “plausibly suggesting (not
merely consistent with)” a showing that the plaintiff is entitled to the relief sought. Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 557 (2007). “The plausibility standard is not akin to a
‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted
unlawfully.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 556).
B. Motion for Judgment on the Administrative Record in Bid Protests
Review of a motion for judgment on the administrative record pursuant to RCFC 52.1
requires the court to make factual findings based on the administrative record. Bannum, Inc. v.
United States, 404 F.3d 1346, 1356 (Fed. Cir. 2005). Genuine issues of material fact do not
preclude judgment. Id. Rather, the court holds a trial on the administrative record and must
determine whether a party has met its burden of proof based solely on the evidence contained in
that record. Id. at 1355.
Bid protests require a two-step analysis. See Bannum, 404 F.3d at 1351. First, the court
must determine whether the government’s conduct is “arbitrary and capricious” or “not in
accordance with law” under 5 U.S.C. § 706. See 28 U.S.C. § 1491(b)(4); 5 U.S.C. § 706;
Bannum, 404 F.3d at 1351. A court must “determine whether ‘(1) the procurement official’s
decision lacked a rational basis; or (2) the procurement procedure involved a violation of
regulation or procedure.’” Weeks Marine, Inc. v. United States, 575 F.3d 1352, 1358 (Fed. Cir.
2009) (quoting PGBA, LLC v. United States, 389 F.3d 1219, 1225 (Fed. Cir. 2004)).
Second, if the government’s conduct was “arbitrary and capricious” or “not in accordance
with law,” the court must then “determine, as a factual matter, if the bid protester was prejudiced
by that conduct.” Bannum, 404 F.3d at 1351. In a pre-award bid protest challenging the terms of
a solicitation, a bid protestor was prejudiced if it demonstrates a “non-trivial competitive injury
which can be addressed by judicial relief.” Weeks Marine, 575 F.3d at 1362.
IV. DISCUSSION
The plaintiff’s pending complaints raise three claims: whether the DLA must accept the
price currently set for the ATAP by AbilityOne; whether the DLA can award a contract for a
portion of its ATAP requirement to a supplier other than SEKRI; and whether the DLA has
violated its duty of good faith and fair dealing.
A. Pricing Claim
The parties disagree as to whether the DLA is required to accept the price currently listed
for ATAP on the procurement list. The plaintiff argues that the DLA cannot seek to negotiate a
more favorable contract price for ATAP. The plaintiff seeks to compel the DLA to accept the
same price Army-Natick accepted for a small number of ATAP prototypes under the M&D and
follow-on contracts with SEKRI. The defendant argues that the plaintiff has stated an unripe
claim upon which relief cannot be granted.
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1. Legal Background
AbilityOne sets prices for products on the procurement list, and those prices are binding
on agencies seeking to procure items from the procurement list. See 41 U.S.C. § 8504(a)
(requiring federal government entities to acquire products on the procurement list “at the price
[AbilityOne] establishes”); 41 C.F.R. § 51-5.5(a) (“The prices for items on the Procurement List
are fair market prices established by [AbilityOne] under authority of the [JWOD Act] . . . .”)
The prices set by AbilityOne, however, are not permanent. The JWOD Act provides:
“[AbilityOne] from time to time shall revise its price determinations with respect to [products
and services on the procurement list] in accordance with changing market conditions.”
41 U.S.C. § 8503(b).
Additionally, 41 C.F.R. § 51-2.7(b) provides: “Prices are revised in accordance with
changing market conditions under [AbilityOne] procedures, which include negotiations between
contracting activities and producing nonprofit agencies, assisted by central nonprofit agencies, or
the use of economic indices, changes in nonprofit agency costs, or other methodologies
permitted under these procedures.”
Although cases interpreting this regulation are scarce, Judge Tapp has observed that
AbilityOne’s pricing procedure “explicitly includes the nonprofit agency in a collaborative price-
setting process,” and that AbilityOne “has the rulemaking authority to craft procurement
procedures that include a price component.” Melwood Horticultural Training Ctr., Inc. v. United
States, 153 Fed. Cl. 723, 739, 741 (2021).
AbilityOne’s Fair Market Pricing Policy 51.600 specifies that AbilityOne “has sole
authority and responsibility for determining the [fair-market price] for products and services on
the [procurement list] and in revising the [fair-market price] in accordance with changing market
conditions.” ¶ 5(a) (effective Sept. 3, 2015). This policy implicates procedures “intended to
result in [r]ecommended [fair-market prices] that are fair and reasonable in relationship to the
marketplace and found in negotiations between the Government contracting activity . . . and the
designated [nonprofit agency].” Id. at ¶ 6(b). The policy also considers “the Government’s
socioeconomic interests” and the importance of “provid[ing] employment for people who are
blind or have other significant disabilities.” Id. at ¶ 6(c).
The policy also provides that “[t]here can be only one [fair-market price] per specific
AbilityOne product . . . except where differences exist in packaging, delivery terms, or purchase
volumes.” Id. at ¶ 6(f). Additionally, “[w]hen multiple Contracting Activities and/or
AbilityOne-participating nonprofit agencies establish contracts for the same AbilityOne product,
the [fair-market price] shall be the same for each Contracting Activity.” (Id.)
Regulations implementing the JWOD Act explicitly provide that AbilityOne should
resolve any price disputes that arise in the context of a mandatory -source procurement.
Section 51-6.15 of Title 41 of the Code of Federal Regulations provides:
11
Disputes between a nonprofit agency and a contracting activity
arising out of matters covered by parts 51–5 and 51–6 of this chapter
shall be resolved, where possible, by the contracting activity and the
nonprofit agency, with assistance from the appropriate central
nonprofit agency. Disputes which cannot be resolved by these
parties shall be referred to [AbilityOne] for resolution.
Part 51-5, referenced in 41 C.F.R. § 51-6.15, includes § 51-5.5, a regulation governing
the establishment and revision of fair-market prices for items on the procurement list and
regulations; § 51-5.4, a regulation governing federal agencies’ ability to obtain a purchase
exception; and § 51-5.8, a regulation requiring AbilityOne to investigate any alleged violations
of the JWOD Act or implementing regulations by the government.
Pursuant to the authority of 41 C.F.R. § 51-6.15, AbilityOne has established a process for
resolving price impasses. U.S. AbilityOne Commission Policy 51.640 (effective Sept. 16, 2015).
Either SEKRI or the DLA may initiate this process by emailing the Executive Director of
AbilityOne. Once that process is initiated, both parties have an opportunity to present their
business cases to AbilityOne, which will make a final decision on a binding price “in the most
expeditious manner.” Id.Given the existence of AbilityOne’s price-impasse procedure, the plaintiff’s price claim
poses two issues: ripeness and whether it states a claim for relief.
2. Ripeness
The ripeness doctrine “prevent[s] the courts, ‘through avoidance of premature
adjudication, from entangling themselves in abstract disagreements over administrative policies,
and also [protects] the agencies from judicial interference until an administrative decision has
been formalized and its effects felt in a concrete way by the challenging parties.’” Sys.
Application & Techs., Inc. v. United States. 691 F.3d 1374, 1383 (Fed. Cir. 2012) (quoting Abbot
Labs. v. Gardner, 387 U.S. 136, 148-49 (1967)).
Ripeness encompasses two factors: the fitness of the issue for judicial decision and the
hardship to the parties of withholding court consideration. Id. Regarding the first factor, the
challenged government conduct must constitute “a final agency action.” Id. at 1384; see also
NSK LTD. v. United States, 510 F.3d 1375, 1384 (Fed. Cir. 2007) (“Generally, an agency
decision is not ripe for judicial review until the allegedly offending agency has adopted a final
decision.”) A disappointed bidder in a bid protest generally must exhaust its administrative
remedies before judicial review is appropriate. See 22nd Century Techs., Inc. v. United States,
57 F.4th 993, 999 (Fed. Cir. 2023).
The parties have not indicated that they have engaged in the price-impasse process to
ensure the price for ATAP listed on the procurement list is the current fair-market price. See
41 C.F.R. § 51-2.7. In fact, the procurement list reflects that the price for ATAP has remained
constant between October 2019 and December 2022. (Compare AR 695-96 (October 2019
pricing) with AR 526-27 (December 2022 pricing).) Therefore, the price for ATAP has not been
12
“revised in accordance with changing market conditions under [AbilityOne] procedures.”
41 C.F.R. § 51-2.7(b).
The parties’ failure to seek administrative review of the fair-market price for ATAP by
AbilityOne precludes judicial review of the plaintiff’s claim. The DLA’s refusal to accept
SEKRI’s current ATAP price appears to be attributable in part to the fact that the ATAP price
has not been revised since SEKRI and Army-Natick entered into the M&D prototyping contract.
Neither party has invoked the price-impasse process. AbilityOne has thus taken no “final agency
action” regarding a current fair-market price for the ATAP. See Sys. Application & Techs., 691
F.3d at 1383-84. Until AbilityOne decides on a fair-market price for ATAP that should apply to
a contract between SEKRI and the DLA, the price dispute between the parties is unreviewable.
Furthermore, the plaintiff has not demonstrated that it will be harmed by the withholding
of immediate judicial consideration of the parties’ pricing dispute. The plaintiff has the same
opportunity available to the DLA to engage in the price-impasse program conducted by
AbilityOne. The plaintiff has not explained its reluctance to participate in that program and can
show no injury from having to do so.
The plaintiff’s price claim is therefore unripe and must be dismissed pursuant to RCFC
12(b)(1) and RCFC 12(h)(3).
3. Stating a Claim for Relief
Beyond the lack of ripeness, the plaintiff does not allege facts plausibly suggesting that
the DLA has violated the law by seeking to negotiate a different price for the ATAP.
The plaintiff argues that the DLA has “zero legal authority” to set a price for ATAP.
(ECF 109 at 7 (emphasis in original).) Although the DLA may not unilaterally set or revise the
price for ATAP, the regulations implementing the JWOD Act do not support the plaintiff’s
argument. Prices for items on the procurement list may be revised through “negotiations
between contracting activities and producing nonprofit agencies . . . .” 41 C.F.R. § 51-2.7(b).
The defendant is therefore proceeding in accordance with applicable regulations that specifically
authorize the defendant’s approach. Because the defendant is entitled to negotiate an ATAP
price, the plaintiff cannot sustain a claim that the defendant is acting illegally.
The plaintiff argues that under AbilityOne Policy 51.600, the DLA is required to accept
the ATAP price from the M&D contract because there can be only one fair-market price per
product on the procurement list. The policy, however, provides an explicit exception when
“differences exist in . . . purchase volumes.” The DLA is contemplating purchasing a
substantially larger number of ATAP units than Army-Natick purchased under the M&D
contract. Furthermore, nothing in the policy prohibits a government agency from negotiating a
different price for a product on the procurement list. To the contrary, both contracting federal
agencies and qualified nonprofit agencies are required to cooperate in negotiations to develop or
revise a fair-market price. AbilityOne Fair Market Pricing Policy 51.600 at ¶¶ 5(b), 5(f)-(g).
13
AbilityOne procedures contemplate that disputes over pricing will arise. A regulation
provides that pricing disputes be referred to AbilityOne for resolution. 41 C.F.R. § 51-6.15.
AbilityOne has established a price-impasse procedure for instances, like the one at issue here,
when the parties cannot agree on a price. The plaintiff argues that the defendant has put nothing
in the record suggesting that the DLA is participating in any impasse proceeding, but that
argument misses the point. Pursuant to the regulations implementing the JWOD Act, price
disputes should be resolved with the assistance of AbilityOne, not in a judicial forum. See
41 U.S.C. § 8504(a); 41 C.F.R. § 51-6.15; Melwood, 153 Fed. Cl. at 739, 741.
Disrupting negotiations to require specific pricing for future ATAP procurements would
be an improper exercise of judicial authority and undercut the extensive regulatory regime in
place to address pricing disputes. Cf. Parcel 49C L.P. v. United States, 31 F.3d 1147, 1154 (Fed.
Cir. 1994) (holding that the proper remedy in a bid protest merely restores the status quo before
any illegal action and accommodates an agency’s present and future needs).
The JWOD Act and its implementing regulations reflect that AbilityOne has the authority
to determine the current fair-market price for products on the procurement list and to resolve
price impasses. The complaint fails to allege a violation of law and therefore does not state a
claim. The plaintiff’s pricing claim must be dismissed pursuant to RCFC 12(b)(6).
4. Conclusion
The plaintiff’s pricing claim is unripe and must be dismissed under RCFC 12(b)(1).
Additionally, the plaintiff has failed to state a claim upon which relief can be granted regarding
the pricing dispute between the parties. The plaintiff’s pricing claim is therefore also dismissed
pursuant to RCFC 12(b)(6).
B. Allocation Claim
The plaintiff argues that it is entitled to supply 100 percent of the DLA’s requirement for
the ATAP. The defendant argues that the plaintiff’s claim is nonjusticiable. On the merits, the
defendant argues that the plaintiff is entitled to supply only half of the DLA’s ATAP
requirement.
1. Justiciability
The defendant argues that the plaintiff’s entire third complaint is moot because the ATAP
procurement from FPI has been canceled. (ECF 110 at 7.) The defendant also argues that the
plaintiff’s complaint should be dismissed because the plaintiff “seeks an advisory opinion about
a non-existent procurement” to another potential ATAP supplier for which the DLA is currently
seeking a purchase exception from AbilityOne. (Id. at 8.)
“[A] case is moot when the issues presented are no longer ‘live’ or the parties lack a
legally cognizable interest in the outcome.” Powell v. McCormack, 395 U.S. 486, 496 (1969).
“[A] defendant claiming that its voluntary compliance moots a case bears the formidable burden
of showing that it is absolutely clear the allegedly wrongful behavior could not reasonably be
expected to recur.” Friends of the Earth, Inc. v. Laidlaw Env’t Servs. (TOC), Inc., 528 U.S. 167,
14
190 (2000). A defendant’s voluntary cessation of allegedly illegal conduct renders a case moot
when (1) there is no reasonable expectation that the alleged violation will recur, and (2) “interim
relief or events have completely and irrevocably eradicated the effects of the alleged violation.”
Cnty. of Los Angeles v. Davis, 440 U.S. 625, 631 (1979).
The defendant misunderstands the scope of the plaintiff’s pending complaint. Although
the plaintiff objected to the procurement of ATAP from FPI, the plaintiff has alleged that the
defendant has “violate[d], knowingly, its obligation to procure all of the Government’s ATAP
requirement from SEKRI, at the price established by [AbilityOne]. The fact that the Defendant
keeps coming up with new and creative (and destructive) ways to do that is irrelevant.” (ECF 77
at ¶ 134.) The plaintiff’s complaint thus broadly encompasses all the DLA’s efforts to divert any
portion of the ATAP procurement from SEKRI.
The defendant argues that SEKRI is receiving all the ATAP that the DLA is currently
seeking to procure. This argument is belied by the statement of the DLA contracting officer in
the administrative record explaining to SourceAmerica that the solicitation most recently issued
to SEKRI represents “50% of the requirements” that the DLA has for the ATAP. (ECF 110 -1 at
4.)
On this record, the defendant has not established that there is no reasonable expectation
that the alleged violation will recur. See Friends of the Earth, 528 U.S. at 190; Cnty. of Los
Angeles, 440 U.S. at 631. To the contrary, on the merits, the defendant continues to assert that
the DLA and AbilityOne have lawfully limited the scope of the award of an ATAP contract to
SEKRI. Given these repeated assertions by the defendant, the plaintiff’s complaint is not moot.
Additionally, the plaintiff’s request for relief does not constitute a request for an advisory
opinion. An advisory opinion involves “questions that cannot affect the rights of litigants in the
case before them,” or advises “what the law would be upon a hypothetical state of facts.” North
Carolina v. Rice, 404 U.S. 244, 246 (1971). The plaintiff asserts its right to the benefits of its
status as the mandatory source for ATAP; the plaintiff also alleges specific facts based on events
that have already occurred. Under Rice, the plaintiff is not seeking an “advisory opinion.”
The defendant argues that the case is nonjusticiable because any relief would be
impermissibly prospective and hypothetical. The plaintiff, however, has suggested two specific
injunctive measures. According to the plaintiff, if it prevails the relief ordered should: (1) enjoin
the solicitation issued to SEKRI as containing an unlawful quantity limitation ; and (2) enjoin the
recent “correction” to the Federal Register providing that SEKRI was a mandatory source for
only 50 percent of the DLA’s ATAP requirement.
The plaintiff’s suggested injunctive relief is neither impermissibly prospective nor
hypothetical. Judges of this court routinely enjoin unlawful solicitations in bid protests. E.g.,
Goodwill Indus. S. Fla. v. United States, 162 Fed. Cl. 160, 213 (2022). That authority extends to
pre-award protests for which the eventual procurement remains hypothetical in some way. E.g.,
Weeks Marine, 575 F.3d 1352.
15
In bid protests, the Court of Federal Claims has “broad equitable powers to fashion an
appropriate remedy” to return the procurement process to the status quo before the illegal action
occurred. Turner Constr. Co., Inc. v. United States, 645 F.3d 1377, 1388 (Fed. Cir. 2011). If the
plaintiff prevails on the merits of its claim that AbilityOne’s correction to the procurement list
was unlawful, the Court has the equitable authority to order AbilityOne to change SEKRI’s
status on the procurement list to reflect that it is a mandatory source for 100 percent of the
DLA’s ATAP requirement. Accordingly, the plaintiff’s proposed injunctive relief is sufficiently
narrow to comport with the jurisdiction conferred on the Court of Federal Claims by the Tucker
Act. See also Sys. Application, 691 F.3d at 1382 (explaining that the defendant’s objection to the
injunctive relief concerned “the scope of the Court of Federal Claims’ equitable powers,” not “an
issue of Tucker Act jurisdiction”).
If the defendant had asserted that it was reconsidering the need for ATAP or had decided
not to procure any ATAP, the plaintiff’s complaint could be construed as moot or as seeking an
advisory opinion. See SEKRI III, 163 Fed. Cl. at 577-78. But when the defendant repeatedly
asserts that it needs the ATAP, and the record reflects that it still intends to procure half of it
from sources other than the plaintiff, then the plaintiff’s claim is not moot; the plaintiff is seeking
to vindicate a specific right to manufacture all ATAP the defendant plans to procure. There is
nothing advisory about the relief the plaintiff may secure if it prevails on the merits of that claim.
The defendant argues that the plaintiff’s claim is not ripe because the DLA may change
its mind regarding the quantity of ATAP units it needs, and AbilityOne may adjust SEKRI’s
status on the procurement list. Acceptance of the defendant’s justiciability arguments would
significantly narrow the court’s jurisdiction over pre-award bid protests. The defendant is
always able to assert that the contracting agency could hypothetically change its approach in the
future and decide to pursue a different procurement strategy. Few pre-award bid protests would
ever be justiciable under the defendant’s interpretation of the law. The court is tasked with
evaluating the facts on the ground and determining whether a legal violation exists. The record
here is sufficiently developed to enable judicial review and to support the exercise of jurisdiction
over the plaintiff’s claims.
In sum, the plaintiff’s claim that it is entitled to 100 percent of the DLA’s ATAP
requirement is justiciable.
2. Merits
There are three issues that must be resolved to address the plaintiff’s claim: (1) whether
AbilityOne’s addition of ATAP to the procurement list complied with regulatory requirements;
(2) whether some other reason can justify the DLA’s limited procurement of ATAP from
SEKRI; and (3) whether the solicitation the DLA issued to SEKRI was for 100 percent or for 50
percent of the DLA’s ATAP requirement.
a. Addition of ATAP to the Procurement List
As summarized above, the parties disagree as to whether AbilityOne actually voted to
add ATAP to the procurement list in full or in part.
16
Even accepting the defendant’s argument that AbilityOne voted to add only 50 percent of
the Army’s ATAP requirement to the procurement list, that act of adding ATAP to the
procurement list must comport with AbilityOne’s regulations.
Regulations implementing the JWOD Act permit AbilityOne to designate “where
appropriate, any limitation on the portion of the commodity which must be procured under the
JWOD Act.” 41 C.F.R. § 51-2.8(b) (emphasis added). Other regulations give meaning to the
term “appropriate.”
Another AbilityOne regulation implementing the JWOD Act provides that “[w]hen
[AbilityOne] determines that a proposed addition [to the procurement list] is likely to have a
severe adverse impact on a current contractor, it takes this fact into consideration in deciding . . .
to add only a portion of the Government requirement for the item.” 41 C.F.R. § 51-2.5. This
regulation does not apply when an item is already on the procurement list. Goodwill Indus. S.
Fla. v. United States, 162 Fed. Cl. at 201.
“Impact” on current contractors is one of four criteria AbilityOne is authorized to
consider in deciding whether a product is suitable to add to the procurement list. 41 C.F.R. § 51-
2.4(a). The other three factors are the employment potential for persons who are blind or have
other severe disabilities; the qualifications of the nonprofit agency; and the capability of the
nonprofit agency to meet government quality standards and delivery schedules. Id.AbilityOne may also consider other “information it deems pertinent, including comments
on a proposal published in the Federal Register to add the commodity or service to the
Procurement List and information submitted by Government personnel and interested persons.”
Id. § 51-2.4(b). AbilityOne does not consider price, however, in determining whether an item is
suitable for addition to the procurement list. Id.
No other regulation provides any other basis on which AbilityOne may limit the scope of
the requirement of an item on the procurement list. When a commodity is suitable to be
furnished by a qualified nonprofit agency, AbilityOne must add that item to the procurement list.
41 C.F.R. § 51-2.2(b) (providing that AbilityOne is responsible for “[determining] which
commodities and services procured by the Federal Government are suitable to be furnished by
qualified nonprofit agencies employing persons who are blind or have other severe disabilities
and add[ing] those items to [AbilityOne]’s Procurement List”).
Reading the regulations together, there is a limited universe of reasons why an item could
be found to be suitable for only limited inclusion on the procurement list. Cf. Goodwill, 162 Fed.
Cl. at 201 (rejecting a limitation on scope for items on the procurement list when not explicitly
permitted by regulations). Primarily, an item may be included only in part if full addition of the
item would adversely affect current contractors for the product. 41 C.F.R. § 51-2.5.
Alternatively, an item may not be suitable for full inclusion on the procurement list based
on a factor set out in 41 C.F.R. § 51-2.4. For example, perhaps full inclusion would not generate
additional employment for persons who are blind or have severe disabilities. Id. § 51-2.4(a)(1).
Alternatively, the nonprofit agency may not be capable of fulfilling the government’s full
17
requirements according to needed quality standards and delivery schedules. Id. § 51-2.4(a)(3).
AbilityOne may also consider limiting the scope of an addition to the procurement list if it
receives comments in response to proposed additions to the Federal Register or if government
personnel comment. Id. § 51-2.4(b).
None of those reasons apply in this case. AbilityOne explicitly found that ATAP had
“never been procured commercially, and was prototyped by SEKRI under [an] M&D contract.”
(AR 626.) “[N]o current contractor [for ATAP] exists.” (Id.; see also AR 633 (finding “no
impact” to any other contractors).) Accordingly, the addition of ATAP to the procurement list
could not adversely affect any current contractor. See 41 C.F.R. § 51-2.5.
AbilityOne determined that adding ATAP to the procurement list would “help [fill
SEKRI’s] excess capacity.” (AR 625.) Further, “[i]f additional sewing personnel are needed,
SEKRI has former employees who could be called back to work.” SEKRI had successfully
completed the full requirements of the M&D contract. (Id.) An AbilityOne employee
commented: “All suitability criteria have been met and are adequately documented.” (AR 633 -
34.) Accordingly, AbilityOne did not find that full inclusion on the procurement list would not
generate additional employment opportunities for SEKRI’s severely disabled workers or that
SEKRI was incapable of meeting the government’s full requirements. 41 C.F.R. §§ 51-2.4(a)(1),
51-2.4(a)(3).
Additionally, AbilityOne received no comments in response to the notice published in the
Federal Register or from other government employees. (AR 626.) AbilityOne deemed no other
information “pertinent.” See id.7
AbilityOne did not comply with its own regulations for limiting the scope of the addition
of ATAP to the procurement list. See 41 C.F.R. §§ 51-2.4, 51-2.5. The purported limitation of
50 percent to the inclusion of ATAP on the procurement list is therefore contrary to law. In the
7 The only reason plausible from the record as to why SEKRI would be the mandatory
source for just 50 percent of the government’s requirement is because FPI had granted only a
partial waiver. FPI had waived its priority for ATAP for five years for up to 120,000 ATAP
units annually. (AR 577.) That quantity corresponds to approximately 50 percent of the DLA’s
current ATAP requirement. (See AR 328 (“On October 26, 2022, FPI exercised its priority over
50% of the total requirement and waived its priority over the remaining 50% of the total
requirement.”)) If accurate, and provided that FPI can legally produce ATAP, the 50-percent
limitation would be lawful because FPI is a superior mandatory source to JWOD Act suppliers
for products on the procurement list. See 48 C.F.R. § 8.704.
Regardless, the scope limitation would then apply only if FPI were involved in the
procurement. The defendant has filed a notice indicating that FPI withdrew its proposal to
produce ATAP and is no longer participating in the ATAP procurement. (ECF 89.) Accordingly,
the plausible reading of the scope limitation does not affect analysis of the present dispute, and
AbilityOne’s scope limitation is still contrary to AbilityOne regulations.
18
absence of any rationale in the record, AbilityOne’s scope limitation for ATAP on the
procurement list is arbitrary and capricious. E.g., GHS Health Maintenance Org., Inc. v. United
States, 536 F.3d 1293, 1302 (Fed. Cir. 2008). Accordingly, even accepting the defendant’s
argument that AbilityOne voted to designate SEKRI as the mandatory source for only 50 percent
of the Army’s ATAP requirement, that designation was unlawful.
b. Scope Modification in the Federal Register
Setting aside the lawfulness of the addition of ATAP to the procurement list, it appears
that ATAP was added to the procurement list in full. Procurement List; Additions and Deletions,
84 Fed. Reg. 11,935-01 (Mar. 29, 2019). Furthermore, SEKRI appeared on the procurement list
as the mandatory source for 100 percent of the Department of Defense’s ATAP requirement at
various times during the past four years. (AR 652-53, 695-96.)
Judge Horn’s decision in Goodwill is instructive regarding the legality of competitively
procuring any portion of a product on the procurement list from a producer other than the
mandatory source. See 162 Fed. Cl. 160.
Under the facts giving rise to Goodwill, AbilityOne added Women’s Improved Hot
Weather Combat Uniform (“IHWCU”) Trousers to the procurement list and indicated that the
plaintiff, Goodwill Industries of South Florida, Inc. (“Goodwill”), was the mandatory source for
50 percent of the Department of Defense’s requirement. Id. at 178-79. Unlike in this case, the
formal addition of the IHWCU Trousers to the procurement list was consistent with the notice of
the proposed addition first published in the Federal Register. Id. at 176-77. The DLA sought to
procure the IHWCU Trousers competitively from small businesses. Id. at 182-83.
The plaintiff protested the issuance of solicitations to any contractor other than Goodwill.
Id. at 183-84. The defendant argued that the 50-percent scope limitation justified the DLA’s
commercial solicitation. Id. at 184. Based on the language of the JWOD Act, Judge Horn held,
in a comprehensive and carefully reasoned opinion, that the DLA was required to purchase all
the required IHWCU Trousers from Goodwill regardless of the limitation to 50 percent that
AbilityOne had set in the Federal Register notice. Id. at 197. Judge Horn undertook a detailed
analysis of the JWOD Act and its implementing regulations to conclude that the 50-percent
limitation in the Federal Register notice was unlawful:
It would be inconsistent, therefore, to read the JWOD Act to allow
AbilityOne to limit the procurement of Women’s IHWCU Trousers
to only 50% of Army-Natick’s needs without first making a finding
that the Women’s IHWCU Trousers would not be “available within
the period required by the entity” from a JWOD Act qualified
nonprofit.
Id. at 203 (quoting 41 U.S.C. § 8504(a)).
Although Goodwill is not binding, Judge Horn’s decision in Goodwill is highly
persuasive, especially given the similar facts and legal issues between that case and the present
one. The Court adopts Judge Horn’s analysis and applies it to the present case.
19
The JWOD Act provides that an “entity of the Federal Government intending to procure a
product or service on the procurement list . . . shall procure the product or service from a
qualified nonprofit agency . . . if the product or service is available within the period required by
the entity.” 41 U.S.C. § 8504(a) (emphasis added). Aside from availability, the only other
statutory exception concerns procurements for products produced by FPI, which is a superior
mandatory source to JWOD Act mandatory sources. Id. § 8504(b).
A regulation implementing the JWOD Act provides that the central nonprofit agency
shall issue a purchase exception when the qualified nonprofit agency “cannot furnish a
commodity or service within the period specified, and [the] commodity or service is available
from commercial sources in the quantities needed and significantly sooner than it will be
available from the nonprofit agency(ies).” 41 C.F.R. § 51-5.4(a). A purchase exception may
also be granted “when the quantity involved is not sufficient to be furnished economically by the
nonprofit agency(ies).” Id. § 51-5.4(b). See also id. § 51-6.7(b) (allowing purchase exceptions
when the nonprofit agency cannot meet a government entity’s requirements). “Ordering offices
may acquire supplies or services on the Procurement List from commercial sources only if the
acquisition is specifically authorized in a purchase exception granted by the designated central
nonprofit agency.” 48 C.F.R. § 8.706(a).
Although 41 C.F.R. §§ 51-2.5 and 51-5.3 permit AbilityOne to limit the scope of an item
on the procurement list, those regulations do not apply when an item is already on the
procurement list and the qualified nonprofit agency is available to furnish 100 percent of the
government’s requirement. In Goodwill, Judge Horn held that these regulations do:
not give AbilityOne, the appropriate central nonprofit agency, or
procuring agencies, the discretion to unilaterally change the scope
of the Procurement List items at issue in this protest without first
making the findings required by the JWOD Act and its
implementing regulations that qualified nonprofits could not meet
the solicitation requirements in the time required by the procuring
agency.
162 Fed. Cl. at 201.
In short, once an item is on the procurement list, it is only appropriate to limit the
mandatory nature of that item if a purchase exception has been granted. Goodwill, 162 Fed. Cl.
at 200 (“Only after AbilityOne or the appropriate central nonprofit agency grants a purchase
exception to procure the remainder of the items from a non-JWOD Act qualified source, can the
item [be] procured from a commercial supplier or a different set aside source.”)
The plaintiff is available to produce the entire quantity of ATAP the DLA requires within
the time required by the DLA. (E.g., AR 245 (a SourceAmerica employee noting in August
2022 that “SEKRI was excited and ready to produce the [234,000 ATAP units annually] to meet
DLA’s immediate needs.”)) The defendant has not disputed that fact. Nothing in the record
undercuts the plaintiff’s claim that it can satisfy the defendant’s requirements. The defendant
20
has neither obtained a purchase exception nor demonstrated that a purchase exception is
appropriate under 41 C.F.R. § 51-5.4.
The superior mandatory source, FPI, is no longer involved in this procurement, and no
other mandatory source is authorized to produce ATAP. Accordingly, no statute or regulation
permits the DLA to procure ATAP from any source other than SEKRI. While the DLA is not
under any obligation to procure ATAP, if the DLA decides to procure ATAP, the DLA remains
under the “affirmative obligation” to procure it from SEKRI. SEKRI II, 34 F.4th at 1073.
Once the ATAP was added to the procurement list as a 100 percent mandatory
procurement (and, as previously explained, in the absence of any basis supported by
AbilityOne’s own regulations, the designation of SEKRI as the mandatory source had to be for
100 percent), any proposed deletion of a portion of the ATAP requirement on the procurement
list required AbilityOne to comply with 41 C.F.R. § 51-6.8. That regulation requires that before
AbilityOne may delete an item from the procurement list it must first determine that “none of the
nonprofit agencies participating in the AbilityOne Program are capable and desirous of
furnishing the commodity or service to the Government,” or that “the commodity or service is no
longer suitable for procurement from nonprofit agencies employing people who are blind or have
other severe disabilities.” AbilityOne has made neither finding, and neither factor applies.8
AbilityOne’s attempted “correction” of the procurement list is therefore unlawful and
invalid. AbilityOne has not issued a purchase exception for ATAP, and no purchase exception is
currently appropriate. AbilityOne also has not undertaken any of the procedures necessary to
delete an item from the procurement list.
c. The Solicitation to SEKRI
The defendant argues that “all that is in the procurement pipeline now is directed at
SEKRI” because no commercial solicitation is currently pending. (ECF 114 at 8.) The
defendant argues that SEKRI is therefore receiving a solicitation to produce all the ATAP the
DLA currently needs.
This argument is unsupported by the administrative record and must be rejected. When
the DLA contracting officer issued the solicitation to SEKRI on February 17, 2023, she
8 The plaintiff argues that the correction to the Federal Register is unlawful because it is
signed only by AbilityOne staff and therefore cannot override a decision by the AbilityOne
commissioners. The “correction” to the Federal Register was signed by the AbilityOne Acting
Director of Business Operations. Procurement List; Additions, 88 Fed. Reg. 7,967 -01 (Feb. 7,
2023). The Federal Register notice purporting to add ATAP to the procurement list for all the
Army’s requirement, however, was also signed by the AbilityOne Deputy Director of Business
Operations. Procurement List; Additions and Deletions, 84 Fed. Reg. 11,935 -01 (Mar. 29,
2019). There is no evidence that AbilityOne staff have acted ultra vires in contradiction to the
intent of AbilityOne commissioners. The plaintiff’s argument must be rejected.
21
explained that the “solicitation quantities represent 50% of the requirements pursuant to the
Ability One Commission’s Federal Registry update on February 7, 2023.” (ECF 110 -1 at 4.)
The solicitation contemplates an average estimated quantity of 117,000-120,000 ATAP units.
(Id. at 6.) On August 12, 2022, a DLA employee informed SourceAmerica that this quantity was
“for 50% of the requirements.” (AR 247.) On October 20, 2022, the DLA employee also wrote
that “100% of the requirements” corresponded to an annual estimated quantity of 234,000 ATAP
units, and “50% of the requirements” corresponded to an annual estimated quantity of 117,000
ATAP units. (AR 322-23.)
Accordingly, the current solicitation pending to SEKRI duplicates AbilityOne’s error and
is therefore unlawful.
3. Prejudice
Having resolved the merits of the plaintiff’s claims, finding prejudice is relatively
straightforward. AbilityOne erred by unlawfully limiting the scope of SEKRI’s status as a
mandatory source of ATAP supply on the procurement list. The DLA erred by attempting to
procure ATAP from sources other than SEKRI. Those errors caused SEKRI to suffer a “non-
trivial competitive injury” in the form of an unlawful scope limitation in the solicitation pending
to SEKRI. Weeks Marine, 575 F.3d at 1361. SEKRI need show no more to demonstrate
prejudice. Id.C. Bad-Faith Claim
In its pending complaints, the plaintiff has alleged that the DLA has acted in bad faith.
The plaintiff has chosen not to address that claim in its motion for judgment on the
administrative record, explaining:
SEKRI is not addressing its third present claim (in the Second and
Third Supplemental Complaints) regarding “[e]nsur[ing] that
contractors receive impartial, fair, and equitable treatment,” FAR
1.602-2(b), in this brief. The reason is that the Defendant has
excluded from the administrative record every single document
regarding that claim, despite extensive e-mail correspondence
between respective counsel. SEKRI, a tiny nonprofit whose priority
is to create and sustain employment for the disabled, should not have
to bear the effort and expense of forcing the Defendant to comply
with the well-established rules regarding filing the administrative
record. . . . Therefore, SEKRI respectfully suggests that the proper
disposition of the third present claim (the impartiality claim) is
dismissal without prejudice.
(ECF 109 at 39 n.57.)
The plaintiff’s third claim alleging bad faith is dismissed without prejudice. Even were
this claim to be considered, it would not produce additional relief for the plaintiff at this stage.
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V. RELIEF
The only remaining issue is the appropriateness of injunctive relief. The plaintiff seeks
an injunction restoring SEKRI’s status as a mandatory source of ATAP without the 50-percent
scope limitation and enjoining the solicitation the DLA issued to SEKRI. 9
A court must consider four factors in deciding whether injunctive relief is proper:
(1) whether, as it must, the plaintiff has succeeded on the merits of
the case; (2) whether the plaintiff will suffer irreparable harm if the
court withholds injunctive relief; (3) whether the balance of
hardships to the respective parties favors the grant of injunctive
relief; and (4) whether it is in the public interest to grant injunctive
relief.
PGBA, LLC v. United States, 389 F.3d 1228-29 (Fed. Cir. 2004).
For its allocation claim, the plaintiff has succeeded on the merits, so the first factor for
injunctive relief is met.
A. Irreparable Harm
The plaintiff argues that it stands to suffer the loss of investment in production of the
ATAP and employees who face few, if any, similar work opportunities, if an injunction is not
issued. The plaintiff argues it has invested substantial time and resources into monitoring and
contesting the DLA’s actions regarding the ATAP procurement despite the DLA’s affirmative
obligation to ensure its compliance with the JWOD Act.
The loss of potential revenue and profits may constitute irreparable harm. See Springfield
Parcel C, LLC v. United States, 124 Fed. Cl. 163, 194 (2015). The plaintiff’s assertion supports
a finding that it will suffer irreparable harm in the absence of an injunction .
9
The plaintiff also seeks an injunction compelling the DLA to order ATAP from SEKRI at
the current price on the procurement list. The plaintiff’s claim regarding the pricing dispute has
been dismissed so no relief is appropriate for that claim. Additionally, the DLA cannot be
ordered to procure ATAP. See SEKRI III, 163 Fed. Cl. at 588-89 (“The decision of whether to
procure the ATAP remains vested in the DLA.”) Accordingly, those aspects of the plaintiff’s
requested injunctive relief are denied.
Additionally, in SEKRI III, the Court held that SEKRI “cannot claim entitlement to bid
preparation and proposal costs” because it had never submitted a bid. 163 Fed. Cl. at 587. The
plaintiff still has not demonstrated that it has submitted a bid. Accordingly, as noted in footnote
4 above, the plaintiff’s request for bid preparation and proposal costs is denied.
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B. Balance of Hardships
The plaintiff argues that any harm to the DLA is of its own making and therefore does
not outweigh hardship to SEKRI. The defendant argues that an injunction would harm the DLA
by interfering with processes to procure an item necessary to national security.
In fashioning relief in a bid protest, Congress has enjoined “the courts [to] give due
regard to the interests of national defense and national security . . . .” 28 U.S.C. § 1491(b)(3).
The selection of a remedy for a violation of procurement law is at its most deferential in dealing
with defense and national-security procurements.
Balanced against the statutory dictate of the Tucker Act in this case is the obligation
established by the JWOD Act. AbilityOne and the DLA have violated the JWOD Act and its
implementing regulations. Underlying the determination of a violation of the JWOD Act is the
finding that the plaintiff can produce all the ATAP required by the DLA within the time
required. If the plaintiff could not satisfy those parameters, the DLA would have been able to
move forward through the established process to request that AbilityOne grant a purchase
exception. Because the DLA cannot satisfy the test for obtaining a purchase exception, it cannot
show injury from an injunction requiring it to comply with the law and acquire 100 percent of its
ATAP requirement from SEKRI.
To the extent the DLA now displays a sense of urgency to procure ATAP, that urgency is
entirely of the DLA’s own creation. The DLA delayed deciding whether and how to procure
ATAP for many months after the remand from the Federal Circuit, and then the DLA made a
series of decisions that were legally questionable. The DLA could have ended the litigation at
any time by ordering ATAP directly from SEKRI or initiating the AbilityOne process for
resolving price impasses promptly upon remand.
With an injunction in place, the parties may expeditiously resolve their pricing dispute
with the aid of AbilityOne, and the DLA can reissue an allocation request to SEKRI reflecting
100 percent of its ATAP requirement. The DLA will be able to equip the Army with ATAP in a
timely manner. In sum, an injunction would impose no cognizable hardship on the defendant.
C. Public Interest
“There is an overriding public interest in preserving the integrity of the procurement
process by requiring the government to follow its procurement regulations.” Hospital Klean of
Tex, Inc. v. United States, 65 Fed. Cl. 618, 624 (2005). The public interest militates in favor of
injunctive relief, as AbilityOne and the DLA will be required to follow the JWOD Act and its
implementing regulations.
An injunction also furthers the public interest by protecting a nonprofit agency that
employs the severely disabled. See SEKRI II, 34 F.4th at 1066.
Accordingly, all four factors support injunctive relief. AbilityOne is enjoined and
directed to update SEKRI’s status to be a mandatory source for 100 percent of the ATAP
requirement. The unlawful solicitation issued by the DLA to SEKRI is enjoined.
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VI. CONCLUSION
The price dispute between the parties is not ripe and presents a claim upon which no
relief can be granted. Accordingly, the plaintiff’s claim related to the pricing dispute is
dismissed pursuant to RCFC 12(b)(1) and 12(b)(6).
The plaintiff’s claim that the DLA has acted in bad faith is dismissed without prejudice.
SEKRI is the mandatory source of supply for 100 percent of the Department of Defense’s
ATAP requirement. No statutory or regulatory exception currently permits AbilityOne to limit
the scope of ATAP on the procurement list. The DLA cannot procure any portion of its current
ATAP requirement from any source other than SEKRI, so the pending solicitation limited to 50
percent of the DLA’s needs is unlawful. AbilityOne is therefore enjoined to update SEKRI’s
status on the procurement list to reflect that it is a mandatory source of supply for 100 percent of
the ATAP requirement, and the DLA’s solicitation SPE1C1-23-R-0051 is enjoined.
The Court will issue an Order consistent with this Memorandum Opinion.
s/ Richard A. Hertling
Richard A. Hertling
Judge
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