Acta, LLC v. United States ( 2020 )

In the United States Court of Federal Claims
No. 20-356C
(Filed under seal March 31, 2020)
(Reissued April 2, 2020) †
NOT FOR PUBLICATION
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ACTA, LLC, *
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Plaintiff, *
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v. *
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THE UNITED STATES, *
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Defendant, *
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and *
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UNCOMN, LLC, *
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Defendant-Intervenor. *
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ORDER
As discussed at yesterday’s scheduling conference, plaintiff, ACTA, LLC,
seeks a temporary restraining order to prevent USTRANSCOM (the Agency) from
proceeding with performance of the contract awarded to intervenor UNCOMN that
is the subject of this protest. The transition activities under that contract are
scheduled for completion today (or at the latest sometime tomorrow), as this is
apparently the last day of the predecessor contract. A temporary restraining order
by its nature is an “extraordinary and drastic remedy, one that should not be
granted unless the movant, by a clear showing, carries the burden of persuasion.”
Jones Automation, Inc. v. United States, 92 Fed. Cl. 368, 370 (2010) (quoting
Mazurek v. Armstrong, 520 U.S. 968, 972, (1997)). The legal standards governing
† This order was initially filed under seal. As the parties have agreed that it
contains no protected information, it is reissued for public access with a few minor,
non-substantive corrections.
an application for a temporary restraining order are the same as those that govern
requests for preliminary injunctive relief. Munilla Constr. Mgmt., LLC v. United
States, 130 Fed. Cl. 131, 135 (2016); see also Jones Automation, Inc. v. United
States, 92 Fed. Cl. 368, 370 (2010). Preliminary injunctive relief requires that a
plaintiff establish it is “likely to succeed on the merits, [it] is likely to suffer
irreparable harm in the absence of preliminary relief, that the balance of equities
tips in [its] favor, and that an injunction is in the public interest.” Winter v. Nat.
Res. Def. Council, Inc., 555 U.S. 7, 20 (2008).
As is generally the case in the context of any request for preliminary relief,
the likelihood of success on the merits presents the most difficult issues for the
Court. This is made only more so, in the case of a temporary restraining order,
because the merits of plaintiff ’s arguments must be evaluated essentially ex parte,
without the benefit of written opposition from the party against whom the order is
sought. This matter concerns the price realism analysis conducted by the Agency,
which resulted in the rejection of ACTA’s proposal, and an award to UNCOMN, the
only other offeror in contention. See Attach. L to Compl. at 4.
Plaintiff advances three merits arguments. Pl.’s Mem. In Supp. of Appl. for
Temporary Restraining Order (Pl.’s Mem.) at 22–36. Its first claim is that, by not
using its findings of unrealistically low labor rates to assess either the performance
risk associated with ACTA’s proposal or plaintiff’s understanding of requirements,
the Agency was effectively determining that ACTA was nonresponsible. Id. at 25–
26. But because plaintiff is a small business, such responsibility matters must be
referred by a procuring agency to the Small Business Administration (SBA) for
determination. Id. at 25–27 (citing 15 U.S.C. § 637(b)(7); 48 C.F.R. § 19.602-1(a);
see generally 13 C.F.R. § 125.5). In its decision, however, the Agency did not claim
to be making a responsibility determination, but rather had an issue with an aspect
of ACTA’s proposal, namely allegedly unrealistically low pricing. Plaintiff points to
a case from this court to support its claim that such pricing concerns amount to a de
facto non-responsibility determination. Pl.’s Mem. at 25–29 (citing KWR Constr.,
Inc. v. United States, 124 Fed. Cl. 345, 362 (2015)).
This argument presents a close question on the merits. As KWR and the
cases it relies upon make plain, the key inquiry in determining if an agency decision
to reject a small business is a mere proposal evaluation decision or a de facto
responsibility determination turns on whether the agency’s concern was with what
was proposed or with the offeror’s ability to perform as proposed. KWR, 124 Fed Cl.
at 361 (citing PlanetSpace Inc. v. United States, 96 Fed. Cl. 119, 128 (2010)). More
particularly, if this concern with ability to perform led an agency not to conduct any
tradeoff or comparative analysis, but merely to reject the proposal out of hand, that
can seemingly transform the matter into a de facto responsibility determination,
requiring referral to the SBA. KWR, 124 Fed. Cl. at 361–62. From a brief review of
the Source Selection Decision Document it does appear that the Agency did remove
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ACTA from consideration based primarily on a concern about its ability to perform
as proposed. See Ex. L to ECF 15. Based on the limited record the Court has before
it, it sems distinctly possible that plaintiff will prevail on this issue. This
conclusion, of course, is based on the extremely limited record currently available,
and without the benefit of a written response from the government or intervenor.
Regarding the second argument, plaintiff contends that the Agency failed to
conduct or document a proper price realism analysis of the costs of the winning
bidder, intervenor UNCOMN. Pl.’s Mem. at 29–31. The merits of this argument
are almost unreviewable at this stage of the proceedings, for the simple reason that
most of the cost analysis that relates to parties other than plaintiff does not appear
in the exhibits filed in support of the application for a temporary restraining order.
It appears that the Agency declined to produce those documents before the
Government Accountability Office (GAO) in the protest plaintiff filed there, and the
GAO declined to order such records produced. Based on the allegations in the
complaint, however, plaintiff appears unlikely to prevail on this point. Essentially,
the Agency faulted plaintiff for proposing unrealistically low rates for 20 out of 26
labor positions, but ACTA contends that UNCOMN had two rates that seem to be
unrealistically low---arguably to a greater extent than ACTA’s were. See Compl.
¶ 47. Without seeing the Agency’s analysis of the UNCOMN labor rates, the Court
cannot definitively reject this claim of unequal treatment. But faulting one offeror
for proposing unrealistically-low prices for the vast majority of labor rates, and not
faulting another for underpricing less than 10 percent of these rates, does not on its
face seem to be unequal treatment. Accordingly, the Court finds that the plaintiff
has failed to demonstrate a likelihood of success on the merits under this argument.
In its final merits claim, plaintiff disputes the reasonableness of the Agency’s
reliance on historical prices and on a contract set aside for section 8(a) concerns as
benchmarks against which to evaluate prices for realism. Pl.’s Mem. at 31–36.
These sorts of detail-specific claims disputing the rationality of agency decisions in
an area in which agencies are afforded a great deal of discretion are particularly
challenging for the Court to evaluate on a very limited record and entirely one-sided
briefing. Agencies are afforded great latitude when deciding what methods to
employ in a cost realism analysis if they do not commit to a particular methodology
in the solicitation, which is the case here. DMS All-Star Joint Venture v. United
States, 90 Fed. Cl. 653, 663 (2010) (citing Labat-Anderson Inc. v. United States, 50
Fed. Cl. 99, 106 (2001)). In light of this very deferential standard, issues concerning
the suitability of using one set of data as opposed to other available sets are
particularly difficult grounds upon which bid protesters can make their stand.
Without a developed record and based on mere speculation and unsupported
allegations regarding the creation of the government estimate and the cost
structures of various small business types, the Court cannot at this time find it
likely that ACTA will prevail on this aspect of the protest.
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Having found a decent probability of success on the merits with respect to
ACTA’s SBA referral claim, the Court will now consider the remaining factors
governing temporary injunctive relief. With regard to irreparable injury, under the
facts of this case, plaintiff can only show a very limited harm from not being
afforded relief today, as opposed to less than three weeks from now when its
preliminary injunction motion will be heard. This is mainly because, after losing at
the GAO on March 17, 2020, ACTA did not file its protest here until the late
afternoon of last Friday, March 27, 2020. In the interim, the Agency apparently
issued the notice to proceed on March 18, and ACTA did not submit its prefiling
notice until March 23. Neither the prefiling notice nor the application at issue
noted that the predecessor contract, under which ACTA is a subcontractor, had
been extended only through March 31. The Court learned of the significance of that
date only late yesterday afternoon, at what was expected to be but a scheduling
conference.
By yesterday, it seems that job offers had been made to some 80 percent of
the incumbent workforce, and UNCOMN is now in position as the only contractor
that can prevent an interruption of a critical service. Had the protest been filed
earlier last week, the ability of the Agency to respond to preliminary relief by
securing either a further extension of the incumbent contract or a bridge contract
could have been feasible. But as things now stand, it seems that the loss of some of
ACTA’s employees, and the gain of some experience on the part of UNCOMN, is
now unavoidable as a practical matter. The Court is not persuaded that this change
in the status quo, much of which occurred before the matter was brought before us,
will preclude its ability to fashion effective injunctive relief for plaintiff, if this
proves merited. Since the Agency proceeded with the transition after receiving the
prefiling notice, the protest, and the preliminary injunction request, this Court will
give little, if any, weight to those hardships the government essentially brought
upon itself when it declined to stay the award voluntarily. See GTA Containers, Inc.
v. United States, 103 Fed. Cl. 471, 491 (2012).
What the previous two weeks have shown, however, is that the Agency can
completely transition to a new contract within such a short period. Thus, if the
Court finds the rejection of ACTA’s proposal to have been improper, it expects that
two weeks, plus a reasonable time to execute an alternative contractual
arrangement, should be ample lead time before an ordered termination of the
UNCOMN contract, should it come to that. At bottom, the only actual injury to
plaintiff is the gain in experience that UNCOMN will garner, as ACTA has no right
to expect that it can enjoy incumbency benefits under an expiring contract. But the
injury to the government outweighs this, with too little time left for an alternative
contracting vehicle to avoid a disruption in service. The public interest would not
be served by such an interruption. For these reasons, the application for a
temporary restraining order is DENIED.
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IT IS SO ORDERED.
s/ Victor J. Wolski
VICTOR J. WOLSKI
Senior Judge
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