Mitchco International, Inc. v. United States ( 2020 )

In the United States Court of Federal Claims
No. 20-879C
(Filed: November 16, 2020)
(Re-filed: December 30, 2020) 1
*********************
MITCHCO INTERNATIONAL, INC.,
Plaintiff,
v.
Bid protest; post-award bid
THE UNITED STATES,
protest; FAR 15.308 (2018);
Defendant, FAR 9.105-2(a)(1) (2018);
best value determination; price
and reasonableness; responsibility
determination.
KENTUCKY OFFICE OF VOCATIONAL
REHABILITATION,
Intervenor,
and
SOUTHERN FOODSERVICE
MANAGEMENT, INC.
Intervenor.
**********************
Alan Mark Grayson, Windermere, FL, for plaintiff.
1
This opinion was originally issued under seal in order to afford the parties
an opportunity to propose redactions of protected material. The parties filed
a joint notice on November 20, 2020, notifying the court that they have no
proposed redactions for the opinion (ECF No. 54). We thus reissue this
opinion unredacted.
Richard Paul Schroeder, Trial Attorney, United States Department of
Justice, Civil Division, Commercial Litigation Branch, Washington, DC,
with whom were Jeffrey Bossert Clark, Assistant Attorney General, Robert
E. Kirschman, Jr., Director, Douglass K. Mickle, Assistant Director, and
Robert B. Neill, William L. Gery, of counsel for defendant.
Peter Andrew Nolan and Andrew J. Schumacher, Austin, TX, for
intervenor, Kentucky Office of Vocational Rehabilitation. W. Brad English,
Huntsville, AL, for intervenor, Southern Foodservice Management, Inc.
Jon D. Levin, Robert G. Jones, and Emily J. Chancey, of counsel for
intervenor, Southern Foodservice Management, Inc.
OPINION
BRUGGINK, Judge.
In this post-award bid protest, Mitchco International, Inc.
(“Mitchco”), alleges that the United States Army (“Army”) improperly
awarded a contract to the Kentucky Office of Vocational Rehabilitation
(“KOVR”) to provide food and dining room operation services at Fort Knox,
Kentucky. Plaintiff seeks a permanent injunction to prevent the Army from
allowing performance under this solicitation by any contractor other than
Mitchco and to direct the Army to terminate the contract issued to KOVR
under this solicitation. The parties have filed cross-motions for judgment on
the administrative record, which are fully briefed. Oral argument is
unnecessary. Because the Army properly documented its award and its
analysis was reasonable, we grant defendant’s and intervenors’ motions for
judgment on the administrative record and deny plaintiff’s motion.
BACKGROUND
I. The Solicitation
The Army issued a small business set-aside solicitation to procure full
food services at designated facilities at Fort Knox, intending to award a
single, firm-fixed price, indefinite delivery, indefinite quantity contract to the
responsible offeror who represented the best value to the government. The
solicitation required management of dining facility functions including,
“food receiving and storage, food preparation, food serving, remote site
2
feeding, grab n go (Pre-packaged Meals) and facility sanitation duties.”
Administrative Record (“AR”) 472. The Army planned to award a contract
without discussions and reserved the right to award the contract to an offeror
who was not the lowest priced offeror. The solicitation called for a five-year
ordering period, with a six-month extension option pursuant to Federal
Acquisition Regulation (“FAR”) 52.217-8. AR 438, 473.
The Source Selection Evaluation Board (“SSEB”) considered the
following factors, listed in descending order of importance: Technical
Capability (Sub-factors: Organizational Structure and Staffing plan), Past
Performance, and Price. Technical Capability and Past Performance Factors
were rated either Unacceptable or Technically Acceptable. Price was not
scored or rated. Offered prices were evaluated for fairness and
reasonableness and to assess whether the prices were balanced pursuant to
FAR 15.404-1. To be eligible for award, an offeror had to be rated
Technically Acceptable overall.
The solicitation stated that it was subject to the Randolph-Sheppard
Act (“R-SA”), 20 U.S.C. § 107, which gives priority to State Licensing
Agencies (“SLA”) for the award of food service contracts that are intended
to be performed by blind persons. This meant that, if a “SLA is determined
to be in the Competitive Range, then the SLA will be afforded the priority
delineated in the R-SA.” AR 351, 465. Further, a contract governed by the
R-SA gives priority to blind persons licensed by a state agency for
opportunities involving the operation of vending facilities on Federal
property. 20 U.S.C. § 107(b).
The solicitation’s subcontracting plan requirement did not apply to a
“100% small business set-aside,” meaning that small business concerns were
not required to submit a subcontracting plan for this solicitation. AR 755.
Thus, the solicitation only required the SLA to submit subcontracting plans.
On April 10, 2020, the Department of Education (“DOE”) confirmed that
KOVR had been the designated SLA for the Commonwealth of Kentucky
(“Kentucky”) since October 18, 2018. The R-SA authorizes the SLA to
license and select vendors for the contract. Thus, KOVR was authorized to
act both as offeror and contract holder for the Fort Knox contract. AR 1041.
KOVR selected Ms. Fay Autry as the Licensed Blind Vendor (“LBV”),
giving her the role of management of operations on the contract and
responsibility of ensuring contract compliance.
3
II. The Evaluation and Award
The Army received five proposals. The SSEB determined that three
were eligible for award: KOVR, Mitchco, and Prosperitus. The SSEB rated
each of these proposals as Technically Acceptable, and thus all three were
included in the competitive range.
In a letter dated January 6, 2020, the Army notified Mitchco that
although Mitchco and KOVR were both in the competitive range, KOVR
would receive priority over Mitchco under the R-SA because KOVR is the
designated SLA. The Army also noted that if the “Government and KOVR
SLA reach an impasse, then the successful offer within the competitive range
will be selected . . . .” AR 1848-49. The Army gave Mitchco the opportunity
for debriefing in accordance with FAR 15.505, which Mitchco requested on
January 7, 2020.
Before the debriefing took place, Mitchco filed an agency-level
protest with the Army, which was dismissed on February 6, 2020. The Army
then provided the post-award debriefing to Mitchco on February 10, 2020,
detailing the three factors considered by the SSEB, its evaluation of Mitchco,
and the R-SA requirements which give priority to the SLA, KOVR, because
the SLA was within the competitive range. On February 12, 2020, Mitchco
submitted follow-up questions to the Army, “which the Army deemed to be
additional questions related to the debriefing, as defined in the enhanced
debriefing provisions of section 818 of the National Defense Authorization
Act for Fiscal Year 2018.” AR 3628.
On February 13, 2020, Mitchco filed a small business size protest with
the Army, challenging the award to KOVR. Mitchco requested that the
February 13, 2020 protest be forwarded to the United States Small Business
Association (“SBA”) for its consideration. On March 13, 2020, SBA issued
its determination that KOVR is other than a small business for the “subject
procurement under the size standard listed above,” but did not issue a
determination on whether KOVR is considered an SLA because the SBA
“does not have the purview to determine if KOVR meets the exception under
the SLA for award.” AR 3533-37.
4
On February 17, 2020, before the Army responded to Mitchco’s
follow-up debriefing questions, Mitchco submitted a protest to the U.S.
Government Accountability Office (“GAO”). On February 21, 2020, the
Army requested that GAO dismiss the protest as premature because the
debriefing between the Army and Mitchco was ongoing, which the GAO did
on February 28, 2020. On March 4, 2020, the Army concluded Mitchco’s
enhanced debriefing by responding in writing to its questions. Plaintiff then
filed another protest at GAO on March 5, 2020. GAO denied Mitchco’s
second protest on the merits on June 9, 2020. Mitchco Int’l, Inc., B-
418481.3, 2020 WL 4039018 (Comp. Gen. June 9, 2020). First, GAO
dismissed as untimely Mitchco’s protest that the Army conducted improper
discussions solely with “the awardee, a state licensing agency (SLA), in a
procurement conducted pursuant to the Randolph-Sheppard Act . . . where
this possibility was apparent from the solicitation, and the protester failed to
challenge the terms of the solicitation before award.” Id. at 1. GAO denied
the balance of Mitchco’s protest, that KOVR violated the Procurement
Integrity Act (“PIA”), 41 U.S.C. § 423, “as legally and factually insufficient
where the protester’s allegations, even if unrebutted, fail to establish a
violation of law by the agency.” Id.The Army began discussions regarding items for negotiation with
KOVR on February 3, 2020, and then awarded the contract to KOVR on
February 10, 2020, having determined that KOVR “is responsible within the
definition of FAR 9.104-Standards” and thus eligible and qualified to receive
the award. AR 2136-37. KOVR’s proposal selected Southern Foodservice
Management, Inc. (“Southern”) as teaming-partner on the project, stating
that Southern would “provide all corporate business resources and
operational support needed to ensure professional management and operation
of Fort Knox Full Food Services requirement as described in the
solicitation’s performance work statement . . . .” AR 1041.
III. Procedural History
In addition to these initial protests, Mitchco filed a complaint seeking
a restraining order, a temporary and permanent injunction, a declaration of
rights, and money damages in Franklin Circuit Court, Kentucky on
November 18, 2019. AR 3564. Mitchco’s complaint alleged that Kentucky
breached a contract it made with Mitchco in 1999, awarding Mitchco the
right to provide management and staffing for cafeteria and related food
5
services at Fort Knox. Mitchco made the remarkable assertion that this is a
contract, in effect, in perpetuity, having no expiration date and thus should
remain intact if Kentucky continues to serve as “the prime on the Fort Knox
dining facility contract.” AR 3158. Mitchco also made allegations,
mirroring its earlier protests, that Kentucky committed a PIA violation. 2
Mitchco alleged that Kentucky violated the Kentucky Model Procurement
Code by “allowing the wrong State Cabinet to select the new contractor and
by selecting Southern without full and open competition.” AR 3159. Lastly,
Mitchco alleged that its “due process rights had been violated, and that its
property interest had been taken without just compensation.” Id. Mitchco
sought a permanent injunction requiring Kentucky to “engage Mitchco and
no one else in the performance of the food service contract requirement at
Fort Knox.” Id. It sought $100,000,000.00 in damages.
On March 31, 2020, the Franklin Circuit Court issued a permanent
injunction preventing KOVR from replacing Mitchco with Southern on the
2015 contract. AR 3578-79. The court found that Kentucky violated the
Kentucky Model Procurement Code. AR 3578. On April 1, 2020, Kentucky
filed an Emergency Motion for Clarification to determine if the permanent
injunction applied only to the current contract, or if it would apply to future
contracts, specifically, the new contract award under this solicitation. AR
3581-87. The court entered an order on April 2, 2020, in which it clarified
that the prior ruling regarding the permanent injunction prevents Kentucky
from replacing Mitchco with Southern as its teaming partner. AR 3589.
Thus, although KOVR intended for Southern to be its teaming-partner on the
contract, as it stands, Mitchco is KOVR’s teaming-partner pursuant to the
state court’s injunction.
On March 23, 2020, Southern filed a complaint in Federal District
Court, Western District of Kentucky, Louisville Division seeking a
declaratory judgment, arguing that state courts have no jurisdiction to
manage a federal government contract and seeking a “judgment declaring the
parties’ respective rights and obligations with respect to the bridge Contract.”
AR 3160. That suit is ongoing.
Mitchco filed its complaint in this court on July 17, 2020. The protest
here repeats Mitchco’s earlier allegations that the Army improperly awarded
a contract to KOVR to provide food and dining room operation services at
Fort Knox. Plaintiff also seeks an order terminating KOVR’s contract and
2
A recitation of these allegations is stated below.
6
restraining the Army from allowing any contractor other than Mitchco to
perform the contract. Mitchco did not seek a preliminary injunction because
Mitchco is currently serving as subcontractor on this contract. KOVR, as the
awardee, sought and was granted intervention as of right. The putative
awardee’s post-award bid protest subcontractor, Southern, the entity that
would perform the work on site, sought to intervene of its own right under
Rule 24(b)(2), permissive intervention. We granted its motion. Mitchco
International, Inc. v. United States, No. 20-879 (Fed. Cl. Aug. 17, 2020)
(order granting motion to intervene).
DISCUSSION
I. Jurisdiction
We have jurisdiction over challenges to agency actions in connection
with a federal procurement. See 28 U.S.C. § 1491(b) (2012). Our review is
deferential in accordance with the standard set forth in the Administrative
Procedures Act, 5 U.S.C. § 706, which is to say that we review agency action
in a procurement for illegality and a lack of rationality. Impressa
Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1332-
33 (Fed. Cir. 2001). So long as the agency’s decision was not irrational or
otherwise illegal, we will leave it undisturbed.
In order to avail itself of this review, however, a protestor must show
that it is an economically interested party, which, in the post-award context,
means that it had a substantial chance of award but for the alleged error(s) of
the agency. Data Gen. Corp. v. Johnson, 78 F.3d 1556, 1562 (Fed. Cir.
1996). The protestor need not show that it was next in line for award,
however, to establish standing, only that there would have been a reasonable
likelihood of it being awarded the contract. Id. at 1563. If it cannot make
such a showing, then it was not prejudiced by the asserted error and
jurisdiction will not attach. Even if the disappointed bidder establishes
standing, however, it must also go on to show that the error alleged was
prejudicial, meaning that not only did an error take place, but that error
affected the outcome of the agency’s decision. Labatt Food Serv., Inc. v.
United States, 577 F.3d 1375, 1380-81 (Fed. Cir. 2009) (holding that the
agency’s acceptance of bid revisions by email did not prejudice protestor
because it had no bearing on the agency’s review of final proposals).
7
Here, we find that plaintiff has established standing. Plaintiff alleges
that KOVR is receiving an award that should have gone to Mitchco. Plaintiff
argues that, if KOVR’s proposal had been evaluated in accordance with the
governing rules, KOVR would not be eligible for award; and it argues that
KOVR received preferential treatment when the agency allowed KOVR to
submit proposal revisions but did not do so with Mitchco. We also know
that the agency’s solicitation gave a preference under the R-SA to a
designated SLA within the competitive range. We thus conclude that, had
KOVR been incorrectly evaluated as an SLA, a different outcome is
reasonably likely. Put another way, as both this court and the Federal Circuit
have articulated the test, when the protestor shows that it is “‘within the
active zone of consideration’” by the agency, it has established standing.
Advanced Mgmt. Strategies Group, Inc. v. United States, 139 Fed. Cl. 404,
411 (2018) (quoting Alfa Laval Separation, Inc. v. United States, 175 F.3d
1365, 1367 (Fed. Cir. 1999)). We will consider below the separate question
of prejudice as it pertains to the merits.
II. Injunctive Relief
Standing established, we move to the merits of plaintiff’s request for
a permanent injunction. A party seeking the extraordinary remedy of an
injunction “bears the burden of proving entitlement to relief, central to which
are success on the merits and irreparable harm.” Red River Serv. Corp. v.
United States, 60 Fed. Cl. 532, 541 (2004) (citing Sofamor Danek, 74 F.3d
1216 at 1219 (Fed. Cir. 1996); see also C.A.C.I., Inc.-Federal v. United
States, 719 F.2d 1567, 1581 (Fed. Cir. 1983) (injunctive relief is an
extraordinary remedy). When considering whether to grant a permanent
injunction, the court must consider whether “(1) the plaintiff has succeeded
on the merits, (2) the plaintiff will suffer irreparable harm if the court
withholds injunctive relief, (3) the balance of hardships to the respective
parties favors the grant of injunctive relief, and (4) the public interest is
served by a grant of injunctive relief.” Centech Grp., Inc. v. United States,
554 F.3d 1029, 1037 (Fed. Cir. 2009). Although an award of injunctive relief
is based on consideration of this four-factor test, failure to achieve success
on the merits is dispositive. See Career Training Concepts, Inc. v. United
States, 83 Fed. Cl. 215, 219 (2008) (“[A] permanent injunction requires
actual success on the merits.”). As a basic proposition, the decision lies in
8
the sound discretion of the trial judge. See FMC Corp. v. United States, 3
F.3d 424, 427 (Fed. Cir. 1993).
A. Success on the Merits
We conclude below that plaintiff has failed to establish irreparable
harm, but we also find that plaintiff has not succeeded on the merits. Mitchco
advances six arguments supporting its contention that the Army committed
prejudicial violations of procurement law: that the Army violated 13 C.F.R.
§ 121.1009(g)(2)(i) by refusing to terminate KOVR’s contract after Mitchco
filed a small-business size protest and KOVR failed to appeal that protest
decision; that KOVR is not qualified to be an SLA; that the Army’s selection
of KOVR’s R-SA proposal for the solicitation violated the Department of
Defense (“DOD”)-DOE Joint Statement of Policy; that KOVR and Southern
have violated the PIA; that the Army violated FAR 15.306 and 15.307 by
conducting discussions with and allowing proposal revisions from the
awardee but not from Mitchco; and that the Army failed to evaluate the
awardee’s proposal in accordance with the terms of the solicitation and
applicable law. None of these have any merit.
1. Mitchco’s Small Business Protest
Mitchco argues that the outcome of its size protest with the SBA,
which determined that KOVR is not a small business concern, required the
Army to cancel its award to KOVR because KOVR failed to appeal the
SBA’s determination. Plaintiff cites 13 C.F.R. § 121.1009(g)(2)(i), which
states: “(2) A contracting officer (“CO”) shall not award a contract to a
protested concern that the Area Office has determined is not an eligible small
business for the procurement in question. (i) If a CO receives such a
determination after contract award, and no OHA appeal has been filed, the
CO shall terminate the award.” Id. (emphasis added). Mitchco argues that,
because KOVR failed to appeal the SBA decision, the Army was required to
terminate KOVR’s contract because it was not eligible to receive an award
set aside for a small business. 3
3
Mitchco’s motion mistakenly asserts that the SBA also determined that
KOVR is not an SLA. In fact, the SBA clearly stated that “The Area Office
does not have the purview to determine if KOVR meets the exception under
the SLA for award.” AR 3537.
9
The government argues that Mitchco incorrectly applies this section
to KOVR because it only applies to business concerns and KOVR is not a
business concern of any size, large or small. 4 This is correct. The SBA
regulatory framework only requires termination if the awardee is a business
concern. KOVR was awarded the contract as an SLA and not as a business
concern, which KOVR does not dispute. Thus, as an SLA, KOVR was not
required to be considered a small business concern to be awarded the
contract. The solicitation stated that “all offerors are hereby notified that the
R-SA applies to this solicitation, therefore, priority will be given to the State
Licensing Agency (SLA) pursuant to R-SA.” AR 747. Mitchco’s SBA
challenge was thus pointless, and the Army did not violate 13 C.F.R. §
121.1009(g)(2)(i) when it failed to terminate KOVR’s contract after
receiving the SBA’s determination.
2. KOVR is Qualified to be an SLA
Mitchco alleges that KOVR misrepresented itself as an SLA because
neither Kentucky nor the federal government properly designated KOVR as
the SLA for the state. Once again, this argument has no merit.
a. KOVR is the SLA for Kentucky
Mitchco cites 782 Ky. Admin. Reg. 1:010(1)(11), which states that
the Kentucky Office for the Blind (“KOB”) “is the state licensing agency for
the Randolph Sheppard Vending Facility Program in Kentucky.” Mitchco
further points to the fact that KOB appeared as the designated SLA in a DOE
publication, in this court, 5 in the Federal Register, and in contracts with R-
SA requirements.
The government acknowledges that KOB was previously designated
as the SLA for the state but points out that all of the instances referenced by
plaintiff were prior to a 2018-2019 reorganization of the Blind Vendor
4
Plaintiff’s reply still contends that KOVR was required to appeal the SBA
decision to avoid contract termination without providing any reasonable
basis for its position.
5
Plaintiff cites to Commonwealth of Kentucky, Education Cabinet,
Department for the Blind v. United States, 62 Fed. Cl. 445, 448 (2004).
10
Program in Kentucky. AR 2058-60. Defendant cites a 2018 executive order
issued by the Governor of Kentucky reorganizing the relevant state offices
and divisions responsible for the Blind Vendor Program, resulting in KOVR
becoming the SLA for Kentucky. Ky. Exec. Order 18-779 (Sept. 21, 2018);
AR 2058-60. This reorganization was then codified in 2019 by the Kentucky
legislature. KY ST § 12.020 (2019). This was in turn confirmed by the DOE
in a letter on April 10, 2020, recognizing that the Kentucky Office of
Vocational Rehabilitation now served as “the designated SLA for the State
of Kentucky” since October 18, 2018. AR 3604, 3629 n.2. All of these
changes took place prior to the solicitation and award. 6
Mitchco replies that a state governor’s executive order is not a legally
sufficient means of designating an SLA under the R-SA. To support this
assertion, Mitchco cites to 20 U.S.C. § 107b and 34 C.F.R. § 395, arguing
that the executive order does not satisfy the requirements for SLA approval
in these code sections, which includes approval from the chief executive of
the state and submission of an application letter to the U.S. Secretary of
Education. Mitchco further argues that the language of the executive order
fails to transfer SLA status to KOVR. The relevant language Mitchco cites
from the executive order is as follows: “The Division of Kentucky Business
Enterprise (‘KBE’) will be established and will continue to oversee the Blind
Vendor Program as stipulated in the Randolph-Sheppard Act.” AR. 2063.
Based on this language, Mitchco argues that KBE is not interchangeable with
KOVR, and that KBE’s oversight role is not the same as being the state
licensing agency.
Mitchco also argues that the CO acted improperly by sending an email
to DOE requesting the agency to confirm that KOVR is the SLA for
Kentucky. Mitchco alleges that this email amounts to a request to backdate
the determination to a date before the solicitation was issued, which Mitchco
asserts constitutes a violation of FAR 3.101-1, requiring agency contracting
6
Plaintiff’s reply to the government’s argument is that the statute enacted in
2012, 782 Ky. Admin. Reg. 1:010(1)(11), is controlling, even over the 2018-
2019 reorganization and subsequent 2019 statute which placed the Division
of Blind Services under KOVR. The government correctly points out that
Mitchco’s reply fails to recognize that where a regulation conflicts with a
statute subsequently enacted, the regulation becomes invalid. See Ruby
Const. Co., Inc. v. Dep’t of Revenue, 578 S.W.2d 248, 254 (Ky. App. 1978)
(finding a regulation to be invalid because it conflicted with an enacted
statute).
11
officials to act impartially and above reproach. All of this is to say that
Mitchco disagrees with the Army’s conclusion that KOVR was the duly
licensed state Kentucky state agency for R-SA contracts.
Mitchco’s arguments against the legal sufficiency of the 2018
executive order are made moot by the Kentucky legislature’s 2019
codification of the 2018 executive order, and Mitchco’s arguments to the
contrary are frivolous. In addition, its ad hominum attack on agency officials
is specious and troubling. The government correctly points out that the
contracting officer’s inquiry was routine and that his request that “the written
verification be retroactive” to the date of the executive order does not
constitute a request to backdate. See AR 3608. 7 We also agree with
defendant’s characterization of Mitchco’s allegations, 8 and that Mitchco is
grasping at straws in making a groundless allegation. Government officials
are presumed to act in good faith. Savantage Fin. Servs., Inc. v. United
States, 595 F.3d 1282, 1288 (Fed. Cir. 2010). To overcome the presumption
of good faith, “the proof must be almost irrefragable,” which “amounts to
clear and convincing evidence.” Galen Med. Assocs., Inc. v. United States,
369 F.3d 1324, 1330 (Fed. Cir. 2004) (quotations and citations omitted).
“Innuendo, suspicion, conjecture, or counsel’s argument are not sufficient.”
Proxtronics Dosimetry, LLC v. United States, 128 Fed. Cl. 656, 682 (2016)
(citations omitted).
7
Mitchco’s allegation that DOE and the CO acted in bad faith is totally
devoid of support in the administrative record, much less does it meet the
required burden of proof of clear and convincing evidence. The email was a
request that DOE provide documentation confirming KOVR’s SLA status
that dated back to when the executive order effectively transferred the SLA
status to KOVR. AR 3608. The email request did not include any language
asking the DOE officer to “backdate” or change the determination to a date
prior to the solicitation.
8
The government contends that Mitchco’s allegations were full of
inflammatory accusations that the CO and DOE acted in bad faith. It explains
that the CO made the statement in an email which included four other
government employees; thus, the CO was not attempting to hide this
communication. See AR 3608-09. Additionally, the government reasonably
points out that Mitchco’s allegations do not even try to explain a motive for
wrongdoing on the part of the CO.
12
b. KOVR is properly considered the SLA by DOE
Mitchco also contends that KOVR does not meet the requirements for
an SLA set out in 34 C.F.R. §§ 395.2 to .5. and 20 U.S.C. § 107b, including
approval from the chief executive of the state and submission of an
application letter to the U.S. Secretary of Education.
In response, the government cites the April 5, 2020 letter from DOE
advising the CO that, while in the past it required “specific letters
redesignating State agencies” as the SLA, that “it has not been the
Department’s practice for the past several years.” AR 3604. As DOE
explained to the CO, the regulations implementing section 107a(a)(5) of the
R-SA “provide that the SLA in its application to be a designated agency
assures that it will ‘submit promptly to the Secretary for approval a
description of any changes in the legal authority of the [s]tate licensing
agency, its rules and regulations, blind vendor agreements, schedules for the
setting aside of funds, contractual arrangements for the furnishing of services
by a nominee, arrangements for carrying general liability and product
liability insurance, and any other matters which form a part of the
application.’” AR 3604 (citing 34 CFR 395.3(a)(11)(iii)). DOE further
advised the CO that:
Kentucky fulfilled its obligation to “submit promptly to the
Secretary for approval a description of any changes in the legal
authority of the State licensing agency’ when it provided RSA
with Governor Matthew Bevin’s Executive Order issued on
September 21, 2018, which reorganized Kentucky’s Education
and Workforce Development Cabinet and combined what had
been separate agencies for the blind and for vocational
rehabilitation into a combined agency that provided vocational
rehabilitation services and services for the blind. RSA
approved the change in the State agency that provides
vocational rehabilitation services and services for the blind by
issuing on October 18, 2018 the Grant Award Notification for
Kentucky’s FY2019 VR formula grant award to the Kentucky
Office of Vocational Rehabilitation, thereby also approving the
redesignation of the Kentucky State Licensing Agency to the
Kentucky Office of Vocational Rehabilitation. RSA has
13
continued to validate that designation by treating the Kentucky
Office of Vocational Rehabilitation as the SLA for Kentucky
through its various interactions with the State. RSA can
confirm that, since October 18, 2018, the designated SLA for
the State of Kentucky has been the Kentucky Office of
Vocational Rehabilitation.
AR 3604.
Mitchco’s only response to the government’s explanation in its cross-
motion is to question the authority of the DOE official who sent the
designation confirmation letter. As the email makes clear, the officer
submitted the designation letter according to the advice of DOE’s General
Counsel and on behalf of DOE. This was no rogue actor, and counsel’s
allegations to the contrary are baseless. The record provides ample support
for the CO’s decision to treat KOVR as an SLA. It was lawfully considered
such by both the government of Kentucky and DOE. Mitchco’s challenge to
the DOE letter confirming KOVR’s SLA status is thus rejected. 9
3. DOD-DOE Joint Statement of Policy
Mitchco argues that KOVR violated Section 848 of the National
Defense Authorization Act for Fiscal Year 2006, Pub. L. No. 109-63, and the
resulting Joint Statement of Policy, 81 Fed. Reg. 36506 (June 7, 2016)
(proposed rule), which Mitchco argues requires SLA offerors to “assign at
least one blind person per military dining facility in a management role.” AR
2390. Mitchco contends that KOVR’s proposal does not meet this
9
In its response to the government’s motion for judgment on the
administrative record, Mitchco even concedes that the 2019 legislation, 2019
Ky. Acts ch. 146, § 1, implemented the 2018 proposed reorganization,
effective on June 26, 2019. Despite conceding this point, Mitchco still
contends that an earlier version of statute 782 Ky. Admin. Reg. 1:010(1)(11),
which identified Kentucky Office for the Blind as the SLA controls.
However, it appears that the version of the statute upon which Mitchco relies
was effective in 2012, AR 2499-2514, and was since amended multiple
times. In fact, the version that Mitchco cites is not even the most recent
version before the 2019 amendments identifying KOVR as the SLA. See,
e.g., KY ST § 12.020 (2018).
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requirement. Mitchco concedes that KOVR’s proposal identified Fay Autry
as a LBV, but Mitchco argues that because this solicitation includes multiple
facilities the Joint Statement of Policy requires the SLA’s proposal to assign
one blind employee per facility.
KOVR contends that Mitchco is misguided in its reliance on the Joint
Statement of Policy because it is precisely what the title suggests, a policy
statement without binding legal effect. KOVR points to a 2007
memorandum from DOD stating that the Joint Statement of Policy “should
not be cited in individual solicitations until it is implemented in
complementary regulations” by DOE and DOD. Memorandum from the
Dep’t of Def. on applicability of the R-SA to military dining facilities, Shay
D. Assad, Dir. of Def. Procurement and Acquisition Pol’y, to Dirs. of Def.
Agencies (March 16, 2007). 10 KOVR also cites to a DOD rule published in
the Spring of 2019 that withdrew the pending regulation (81 Fed. Reg.
36506) without taking further action after DOE notified DOD that the 2006
Joint Policy Statement “no longer reflects the position of the DOE.”
Department of Defense, Food Services for Dining Facilities on Military
Installations RIN: 0750-A178, REGINFO.GOV (Spring 2019),
https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201904&RI
N=0750-AI78.
KOVR also argues that the interests sought to be protected by the R-
SA are enlargement of “the economic opportunities of the blind and
stimulating the blind to greater efforts in striving to make themselves self-
supporting . . . .” 20 U.S.C. § 107(a). Thus, the R-SA’s purpose is to provide
opportunities, not specifically hourly jobs for blind individuals. KOVR
argues that its proposal satisfied the R-SA by identifying Fay Autry as the
LBV and Contract Manager, as she would be receiving profits and
entrepreneurial opportunities by managing the operation, and no additional
blind employees had to be identified.
We agree. In the absence of any specific legal requirement that blind
persons had to be engaged at all locations, it was not unreasonable for the
Army to find that KOVR satisfied the more general R-SA requirements,
which aim to “provide blind persons with remunerative employment,
enlarging the economic opportunities of the blind, and stimulating the blind
10
The memorandum is publicly available at:
https://www.acq.osd.mil/dpap/cpic/cp/docs/DPAP%20Memo-
Military%20Dining%20Policy%20(Mar%202007).pdf.
15
to greater efforts in striving to make themselves self-supporting . . . ” 20
U.S.C. § 107(a). The Army’s selection of KOVR’s R-SA proposal for the
solicitation was not a violation of law.
4. Mitchco argues that KOVR and Southern have committed
PIA violations
Mitchco alleges that KOVR and Southern have committed PIA
violations. Mitchco initially reported these allegations to the CO on Nov. 13,
2019, and then reported additional alleged violations shortly before filing its
initial GAO protest. Plaintiff urges that the CO’s failure to take remedial
action in response was irrational and contrary to FAR 3.104-7.
Mitchco’s Nov. 13, 2019 letter to the CO alleged that two Southern
employees attended a site visit and returned to the worksite the day after the
visit without invitation, demanding proprietary information from Mitchco’s
employees. Mitchco reported additional allegations of PIA violations against
Southern to the Army on Feb. 13, 2020, to wit, that KOVR received
Mitchco’s proprietary documents and then turned these documents over to
Southern.
Plaintiff claims that Southern’s site visits and its questioning of
Mitchco’s staff about allegedly proprietary information gave it an unfair
advantage over other offerors in violation of the PIA, which prohibits
competing contractors from knowingly obtaining other offeror’s bid
information or source selection information about a procurement. 41 U.S.C.
§ 2102 (a)(1)-(2). Mitchco thus concludes that the CO’s failure to address
these allegations and his denial of Mitchco’s PIA protests were arbitrary,
capricious, and contrary to law.
In response, both the government and KOVR point out that the only
“person” who can violate the PIA with respect to procurement information
is a present or former official of the Federal Government or an advisor to the
Federal Government with respect to a Federal agency procurement.
41 U.S.C. § 2102 (a)(3) (defining “person” as it pertains to application of the
PIA). Thus, the government avers that this claim should be dismissed for
lack of jurisdiction, as this court has jurisdiction over claims under 28 U.S.C.
§ 1491(a), which gives this court “jurisdiction to render judgment upon any
16
claim against the United States,” not against non-federal entities, and
Mitchco’s PIA claim is alleged against non-federal entities. 11
We agree. PIA violation claims can only be properly brought against
present or former officials of the Federal Government or an advisor to the
Federal Government with respect to a Federal agency procurement.
41 U.S.C. § 2102 (a)(3). We find that this claim is not properly brought
under 28 U.S.C. § 1491(a). Thus, this claim is dismissed for lack of
jurisdiction.
Regarding the allegations against Southern, KOVR also notes that
Mitchco fails to allege that Southern disclosed any contractor bid or proposal
information to KOVR. Further, Southern and the government explain that
the information Southern received related to the incumbent contract and not
the pending solicitation contract and none of the information shared was
“source selection” or “contractor bid or proposal” information. Further,
KOVR argues that it could not have violated subsection (b) of the PIA
because the documents identified by Mitchco are all documents that KOVR
was authorized to possess as the prime contractor for the incumbent contract,
which Mitchco was performing under merely as the teaming partner and
subcontractor. KOVR cites 41 U.S.C. § 2107(1)-(2), which provides a safe
harbor covering the receipt of information by persons authorized to receive
that information and a contractor disclosure of its own bid or proposal
information. Because the PIA was not violated, it argues, the CO lawfully
and rationally ignored the allegations of misconduct brought by Mitchco.
We find a total lack of prejudice with respect to these allegations.
Even if KOVR and Southern acquired Mitchco’s propriety staffing
information, it would have made no difference, both because plaintiff has not
shown that this information was bid proposal information or that it was
somehow useful in KOVR’s success in capturing the award. KOVR had
preference for award from the Army due to its standing as an SLA under the
11
In its reply, plaintiff does not answer the jurisdictional issues raised by
defendant, but instead makes a bald assertion that it is not wrong to direct a
PIA violation at a non-federal entity and then restates its position that the CO
violated FAR 3.104-7 by failing to investigate intervenors’ alleged PIA
violations.
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R-SA. Like virtually all of plaintiff’s allegations, these assertions of PIA
violations are a groundless distraction.
5. KOVR’s Discussions with the Army and Proposal
Revisions
Mitchco alleges that KOVR received preferential treatment in the
proposal revision process. Mitchco states that, although the Army found that
both KOVR and Mitchco were within the competitive range, the Army only
conducted discussions with and accepted proposal revisions from KOVR and
not from Mitchco. Mitchco alleges that this treatment violated FAR
15.306(c) & (d), and FAR 15.307(b).
KOVR and the government respond that this argument is baseless
insofar as it is directed at the Army’s application of the R-SA’s priority to
KOVR. KOVR argues that the FAR allows the Army to directly negotiate
with KOVR for dining facilities contracts without resort to a competitive
procurement. See 34 C.F.R. §§ 395.33(a), (d). Thus, once an SLA was
identified as within the competitive range, the Army was within its rights to
negotiate only with it. Defendant adds that, although the solicitation
expressly notified offerors that the Army would apply the R-SA priority to
KOVR, Mitchco did not file a pre-offer protest, thus, waiving its challenge
under Blue & Gold, Fleet, L.P. v. United States, 492 F.3d 1308, 1315 (Fed.
Cir. 2007). We agree. Although the solicitation was clear about the R-SA’s
application giving priority to an SLA and thus allowing the agency to
negotiate only with the KOVR, Mitchco did not challenge that aspect of the
solicitation in a pre-award protest, but instead decided to wait to raise the
issue post-award. Thus, Mitchco waived its opportunity to assert this protest
allegation.
6. KOVR’s Proposal Was Technically Acceptable
Lastly, Mitchco alleges that KOVR’s proposal was not Technically
Acceptable. Mitchco claims that KOVR’s proposed subcontractor,
Southern, intended to utilize its staff not only to cook, but to clean toilets.
Mitchco argues that Southern intends to ignore service occupation limitations
in the applicable collective bargaining agreement. Mitchco further claims
that KOVR and Southern do not have a signed written contract, leaving
Southern with the ability to walk away from the work.
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These allegations are without any factual support in the record.
Plaintiff’s bald assertions are based upon an alleged conversation between
employees of Southern and Mitchco. Mitchco provides no supporting details
or competent evidence to substantiate its argument that KOVR proposed the
cook would clean restrooms, or that KOVR’s proposal ignores the collective
bargaining agreement. As to whether Southern has a signed contract with
KOVR, the solicitation did not require one.
In sum, Mitchco has misfired badly on all of its merits assertions of
procurement law violations.
B. Irreparable Harm
The factor of irreparable harm is also lacking here. When considering
irreparable harm, “the relevant inquiry in weighing this factor is whether
plaintiff has an adequate remedy in the absence of an injunction.” Magellan
Corp. v. United States, 27 Fed. Cl. 446, 447 (1993). This court takes judicial
notice of the Franklin Circuit Court order, which granted Mitchco a
permanent injunction requiring Kentucky to award the Fort Knox
procurement to Mitchco in accordance with a prior contract between Mitchco
and Kentucky. By obtaining an injunction from the state court, plaintiff has
effectively nullified any assertion of irreparable harm here. Although
Mitchco is not the awardee, if the state injunction stands, it is still the sub-
contractor that will perform the work. Mitchco explains the value of its loss
in its motion: “although Mitchco currently is performing the food services
subcontract under the Contract, per Kentucky court order, Mitchco’s
proposed price is slightly (less than 2%) higher than [Kentucky’s] . . .
proposed price” and absent injunctive relief in this action, Mitchco has no
claim against the U.S. Government for the difference. Pls.’ Mot. for
Judgment on the Admin. Rec. and Permanent Injunction (ECF 31 at 44). In
other words, under the state court order, Mitchco will retain more than 98%
of the value of the work even in the absence of an injunction from this court.
The difference in the value of serving as the prime contractor versus the
subcontractor does not rise to the level of an irreparable injury.
As additional arguments, Mitchco also complains that it suffers loss
by being required to make R-SA payments to the “blind vendor” under the
Contract that Mitchco would not be making if it were the prime contractor.
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Mitchco also alleges that it faces the threat of removal, notwithstanding the
Kentucky court order, which is not a threat that Mitchco would be facing if
Mitchco were the prime contractor. Neither of these are persuasive.
Mitchco’s allegation regarding the harm caused by making R-SA
payments to the blind vendor is unquantified, and it does not explain how
this is worse than its cost of labor as the prime contractor. Even presuming
a difference of some small percentage, the harm would be far from
irreparable. We also find that the fear of losing the subcontract is not an
irreparable harm. The fear in and of itself is not irreparable as it is entirely
speculative whether the underlying injury would ever befall plaintiff. As the
Supreme Court cautioned, “issuing a[n] . . . injunction based only on a
possibility of irreparable harm is inconsistent with our characterization of
injunctive relief as an extraordinary remedy that may only be awarded upon
a clear showing that plaintiff is entitled to such relief.” Winter v. Natural
Res. Def. Council, Inc., 555 U.S. 7, 22 (2008) (citing Mazurek v. Armstrong,
520 U.S. 968, 972 (1997)).
Plaintiff’s reliance on United Payors & United Providers Health
Servs., Inc. v. United States, 55 Fed. Cl. 323 (2003), is unavailing. United
involved a plaintiff which lost the contract award entirely; its only relief
would be “the recoupment of its bid and proposal costs” on a five-year
contract. Id. at 333. Such relief would not have adequately compensated
that plaintiff’s lost profits. Thus, the court found that “[t]his type of loss,
deriving from a lost opportunity to compete on a level playing field for a
contract, has been found sufficient to prove irreparable harm.” Id. The loss
here was insufficient to show irreparable harm because Mitchco has virtually
100% of the benefit of the contract award as subcontractor and the value
between its profits as the prime contractor versus the subcontractor does not
rise to the level of irreparable harm.
Plaintiff has shown neither success on the merits nor that it will suffer
an irreparable injury absent the sought injunction. We thus need not consider
the other factors. No relief is warranted.
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CONCLUSION
The allegations levied and the arguments made are wholly without
support in the record and the law, and they were brought by an offeror who
represents that it will be performing the work no matter the outcome of this
suit. Plaintiff’s motion for judgment on the record and a permanent
injunction is denied. Defendant’s and intervenors’ cross-motions are
granted. The Clerk of Court is directed to enter judgment for defendant. No
costs.
s/Eric G. Bruggink
ERIC G. BRUGGINK
Senior Judge
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