Medline Industries, Inc. v. United States ( 2021 )

In the United States Court of Federal Claims
Nos. 21-1174 & 21-1098 (consolidated)
Filed: July 30, 2021
Reissued: August 9, 2021 †
MEDLINE INDUSTRIES, INC,
Plaintiff,
and
CONCORDANCE HEALTHCARE
SOLUTIONS, LLC,
Plaintiff,
v.
THE UNITED STATES,
Defendant,
CARDINAL HEALTH 200, LLC,
Intervenor-Defendant,
and
OWENS & MINOR DISTRIBUTION,
INC.,
Intervenor-Defendant.
Kristen E. Ittig, with Stuart Turner, Nathaniel E. Castellano, and Aime JH Joo, Arnold & Porter
Kaye Scholer, LLP, Washington, D.C., for Plaintiff, Medline Industries, Inc.
Aron C. Beezley, with Patrick R. Quigley, Lisa A. Markman, Nathaniel J. Greeson, and Sarah S.
Osborne, Bradley Arant Boult Cummings LLP, Washington, D.C., for Plaintiff, Concordance
Healthcare Solutions, LLC.
†
This Opinion is reissued consistent with the Court’s direction to the parties to propose
redactions. The parties notified the Court that no redactions are necessary. (ECF No. 102).
Therefore, the Opinion is reissued with minor corrections of typographical errors.
Mollie Finnan, Senior Trial Attorney, and Sarah E. Kramer, Trial Attorney, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice, Washington, D.C., with Jason
Fragoso, Department of Veterans Affairs, Gale Furman, and Katherine McCulloch, Defense
Logistics Agency, Of Counsel, for Defendant, the United States of America.
Merle M. DeLancey, Jr., Blank Rome LLP, Washington, D.C., for Intervenor-Defendant,
Cardinal Health 200, LLC.
Jonathan D. Shaffer, Smith Pachter McWhorter PLC, Tysons Corner, VA, for Intervenor-
Defendant, Owens & Minor Distribution, Inc.
MEMORANDUM OPINION AND ORDER
TAPP, Judge.
If there can be a literary analogy to this government procurement, it would be
Longfellow’s The Wreck of the Hesperus which chronicles a prideful sea captain’s avoidable
downfall on the rocks of Norman’s Woe. 1 Like the experienced crew of the Hesperus, agency
personnel warned of the perils of a plotted course and when ignored, “[d]own came the storm
and smote amain, the vessel in her strength” leaving behind only a “dreary wreck” awash upon
the shoals. 2
This is a consolidated bid protest brought by Concordance Healthcare Solutions, LLC
(“Concordance”) and Medline Industries, Inc. (“Medline”). It is related to another protest
brought by Owens & Minor Distribution, Inc. (“O&M”), in which Concordance intervened as a
plaintiff. O&M et al. v. United States et al., Case No. 21-1341. Both protests relate to the
Department of Veterans Affairs’ (“VA”) procurements of medical and surgical supplies. The
root of the controversy is the VA’s attempt to transfer the requirements from its own
procurement to existing contracts held by the Defense Logistics Agency (“DLA”). Although the
United States has represented that the transfer is cancelled—a matter of some dispute—several
issues remain.
I. Background
The factual and procedural background of this case is complex. In brief, the DLA
awarded contracts for medical and surgical supplies in 2016. The VA made its awards for
medical and surgical supply contracts in October 2020. After the VA’s awards (or at least after
bidding had closed), the VA announced that it was moving its requirements to the DLA. Under
the transfer plan, DLA contractors would receive a windfall, essentially doubling the size of their
existing Indefinite-Delivery Indefinite-Quantity (“IDIQ”) contracts. The VA contractors would
be left holding the bag, not knowing when or if the VA would terminate their contracts as the
requirements transitioned. As if this were not chaotic enough, all the while, the VA undertook
corrective action pursuant to protests at the Government Accountability Office (“GAO”).
1
Henry Wadsworth Longfellow, The Wreck of the Hesperus, The New World, Jan. 10, 1840.
2
Sundry employees’ concerns, both ethical and legal, are detailed below.
2
Subsequently, that corrective action, as well as the transfer and the VA procurement itself were
challenged in this Court. Still, several offerors were compelled to submit revised bids for a
“Schrödinger’s procurement” with the VA. 3 Those offerors’ proposals were due during the
period they were challenging the scope and transfer of the VA contract, in addition to
challenging the corrective action, in this Court.
The United States (successfully) fought against temporary and preliminary injunctive
relief. But when presented with opening briefs from Medline and Concordance detailing the
agency record, the United States sought to secure partial remand without explicitly confessing
error (also, a matter of some dispute) by spinning off several claims into a new case while
refusing to stay agency action. That request added bedlam to already existing chaos. Ultimately,
the Court denied the request for remand. The matter is now fully briefed. Having provided the
landscape, additional details are necessary to resolve the remaining legal issues.
A. The DLA and VA MSPV programs
The DLA and VA both procure medical and surgical supplies through “Medical Surgical
Prime Vendor” (“MSPV”) programs. (VA AR 3168). 4 The MSPV programs were intended to
leverage the buying power of the Federal Government. Rather than procuring supplies off the
General Services Administration’s Federal Supply Schedule, the MSPV programs standardize
the list of items the agencies can procure, increasing consistency, lowering costs, and simplifying
the supply chain. (VA AR 3110). Each of these goals is laudable. The DLA started its MSPV
program in 1995, and the VA started its program in 2005. (VA AR 3168, 3174). The DLA
MSPV program encompasses “three Global Regions (North, South, and West) that combine to
provide routine ordering capability and contingency and disaster support as required, throughout
the world.” (DLA AR 3003). The VA MSPV program at issue in this case divides over 1,200
health care facilities into eighteen 5 geographic regions across the United States and its territories.
3
See S.E.H. v. Sec’y of Health & Hum. Servs., No. 15-260V, 2018 WL 6920509, at *66 n.108
(Fed. Cl. Dec. 20, 2018) (describing Erwin Schrödinger’s popular quantum mechanics theory).
4
There are two Administrative Records in this case—one each from the VA and DLA. They are
extensive and contain multiple volumes. (See ECF Nos. 28–35, 46 (consent motion to correct
and supplement), 51–53 (additional tabs)). The records are stamped with a page number in the
bottom righthand corner. The first page of the VA record is stamped “AR 1” and continues
through “AR 4307.” The first page of the DLA record is stamped “AR 3000” and the record is
erratically paginated. Additionally, the United States filed supplements to each record, electing
to replace some defunct pages entirely and, at other times, adding non-integral numbering. Some
page numbers are duplicated in the supplements. Erroneous record citations may be attributable
to any one of these defects. In any event, to refer to each record, the Court will cite the agency
and that page number. For example, the first page of the DLA record is cited “(DLA AR 3000).”
If the document may be found in a supplement, the Court will denote that location with “Supp.”
5
Confusingly, these are numbered VISN 1–23. There is no VISN 3, 11, 13, 14, or 18.
3
(VA AR 216, 231). These geographic regions are called Veteran Integrated Service Networks
(“VISNs”). (VA AR 177).
On May 31, 2016, the DLA issued Solicitation No. SPE2DS-16-R-0001 for its MSPV
contracts. (DLA AR 3000). The solicitation contemplated indefinite-delivery indefinite-quantity
contracts for a 30-month base period with three 30-month option periods—potentially a ten-year
contract. (DLA AR 3003). On April 12, 2017, the DLA awarded contracts to Cardinal Health
200, LLC (“Cardinal”) and O&M. (DLA AR 3358, 3415). The DLA MSPV contracts were
rolled out in June 2017 for all three regions. (DLA AR 3360, 3417). Together, inclusive of
options periods, these awards total over $13 billion. (DLA AR 3360, 3417). Cardinal and O&M
continue to perform under this contract.
In December 2016, the VA launched its “Next Generation” MSPV program, which it
dubbed “MSPV-NG.” (VA AR 3168). The contracts awarded under MSPV-NG have since been
replaced by a series of bridge contracts held by Medline, Concordance, Cardinal Health, and
O&M. (VA AR 3173–75, 3371–72). The VA is currently attempting to transition to a new
iteration of the VA’s MSPV program known as “MSPV 2.0.” MSPV 2.0 seeks to improve item
standardization, cost savings, and clinician involvement while increasing the number of items
available to participating facilities. (VA AR 3174). On September 27, 2019, the VA issued
Solicitation No. 36C10G-19-R-0050 for its MSPV 2.0 contracts. (VA AR 1). This solicitation
includes a three-year base period and two three-year option periods. (VA AR 265). It also
allowed offerors to submit proposals as either a Primary Prime Vendor or an Alternate Prime
Vendor. (VA AR 185). In October 2020, the VA announced contract awards to Medline and
Cardinal. (VA AR 1527–31). Together, inclusive of options periods, these awards total over $10
billion. (VA AR 1527–32).
B. VA’s MSPV Pilot Program and Initial VISN Transfers to DLA
While the VA was readying to field offers for its MSPV 2.0 program, it was
simultaneously exploring other avenues to procure those requirements, including through a pilot
program with the DLA. (VA AR 3168). The VA MSPV program has endured several
iterations—including “Legacy MSPV,” “MSPV-NG,” and now “MSPV 2.0”—and the program
has been historically plagued by various deficiencies. (See VA AR 3174 (timeline of VA MSPV
programs and outcomes), 3178 (“VA’s implementation of the MSPV-NG program is not fully
meeting the needs of its medical centers. . . . VA’s plans for the MSPV 2.0 program address
some of the problems with the current MSPV-NG program, but VA’s plans do not address others
or only partially address them.”)).
Enter, the DLA’s MSPV program—dubbed “Gen V” in its current iteration—which the
VA saw “as a possible alternative to its MSPV program[.]” (DLA AR 3000; VA AR 3168). In
March 2019, the VA sought to implement a pilot program at the Captain James A. Lovell Federal
Health Care Center (FHCC) in North Chicago, a joint medical center already serving both VA
and DLA. (VA AR 3196). Through the pilot program, VA medical centers would use DLA
supply catalogs and place orders through DLA software systems. (VA AR 3196). However, these
plans were delayed and ultimately scuttled by “technical integration issues.” (VA AR 3198).
Undeterred, the VA sought to relaunch the pilot program. “Pilot sites include[d] VISN 20
[encompassing the Pacific Northwest] and the Captain James A. Lovell Federal Health Care
4
Center (FHCC) in North Chicago, Illinois.” (VA Supp. AR 4065). In a strategy memo, the VA
suggested that the MSPV 2.0 program would provide product sourcing for medical centers while
the VA explored a transition to the DLA by 2025. (VA AR 4063). That transition began July 15,
2020. (DLA AR 3771). But even in the early stages of exploring that option, VA officials
expressed apprehension. As early as May 1, 2019, the Executive Director of Procurement for the
Veterans Health Administration, a component of the VA, voiced three very specific concerns:
(1) “Not sure how we get off the hook by just non-competitively giving the workload
to [Department of Defense (“DoD”)] contractors that were previously awarded
[sic] without any VA requirements, which also brings to bear the scope issue . . ..”
(2) “The lawyers will need to further comment, but the proposition that you can take
a non-compliant contract that was awarded two years ago by another agency and
non-competitively add VA’s requirements and then make the contract itself
legally viable by overlaying a VA process that gives some preference to veterans
at the subcontractor level seems very flawed.”
(3) “Final comment is that I don’t believe we are doing the Secretary or anyone else
any favors by moving forward with a process that will result in the VA losing in
Federal court and then having to implement emergency procedures just to keep
the doors of the hospitals open.”
(VA AR 3490 (emphasis in original)). 6
In August 2019, the Secretary of VA approved a partnership with DLA to expand on the
pilot at the Lovell FHCC. (DLA AR 8545). Shortly thereafter, VA entered a Memorandum of
Agreement with DLA to memorialize the strategic partnership and provide an umbrella for future
Interagency Agreements. (DLA AR 8546). In September 2019, the two agencies entered an
Interagency Agreement “to define the terms, conditions and responsibilities of DLA and VA to
enable VISN 20 and The Captain James A. Lovell Federal Health Care Center (FHCC) facilities
to leverage DLA’s medical logistics capabilities.” (DLA AR 8549). The agreement kicked off
the pilot program for the second time. (DLA AR 8549). During an October 2019 meeting, VA
and DLA officials discussed efforts to integrate the two agencies’ MSPV programs and agreed
that the “VISN 20 pilot [would] be a determining factor for [the] path forward on continued
partnership[.]” (DLA AR 8594).
In July 2020, one of the MSPV-NG contractors “decided not to fully support the VA’s
MSPV Program” and was terminated as the Primary Prime Vendor for six VISNs along the
eastern seaboard. (DLA AR 3719). This termination caused the VA to ask whether the DLA
could support those six VISNs through the DLA’s Gen V contracts (the 2016 awards). (DLA AR
3719). DLA was hesitant to absorb those VISNs and, in an August 11, 2020 meeting,
acknowledged the logistical challenges of a rapid transition. (DLA AR 3718–23). Nevertheless,
6
The record is replete with warnings and challenges raised by VA and DLA officials. The Court
could fill several pages with similar examples, but has merely chosen a sample in the interest of
brevity.
5
the VA pushed the DLA to develop a plan for a twelve-month transition of the six VISNs. (DLA
AR 5196–5208). The DLA’s concerns were well documented. Broadly, the DLA acknowledged
that such a rapid transition “presents several significant challenges and risks that may impede
implementation and cause gaps in coverage[.]” (DLA AR 5197). DLA was aware that officials
within the VA had “ethical concerns” with awarding MSPV 2.0 contracts while VA planned to
transition those requirements to DLA in the near term. (DLA AR 5197, 5205, 5209). DLA was
also concerned that the two agencies had never attempted to transfer an entire VISN, only
individual facilities, and were worried about transitioning six VISNs in rapid succession. (DLA
AR 5198). On top of that, the transition for four of the VISNs would involve a change in
vendors, from Concordance and Medline to Cardinal and O&M. (DLA AR 5199). O&M was not
a VA vendor at the time, and DLA warned that such a transition may present “unknown
challenges[.]” (DLA AR 5198). And the DLA Gen V contractors (Cardinal and O&M) were not
aware of the potential for a vast increase in scope and volume of their contracts presented by a
transition. (DLA AR 5205).
In August of 2020, DLA and VA officials met to discuss the transfer. (DLA AR 5209).
Minutes from the meeting reiterates the DLA’s grave concerns with the VA’s plans. First, the
VA’s Strategic Acquisition Center (“SAC”) “noted ethical problems with awarding [MSPV 2.0]
contract[s] with [the] intention of shortly thereafter terminating [them]—[a] nonstarter[.]” (DLA
AR 5209 (emphasis in original)). Second, the proposed transition plan included the simultaneous
rollouts of VISNs 1 & 8 in order to meet the expiration of the MSPV-NG bridge contracts—that
rollout would start before the MSPV 2.0 award. (DLA AR 5204). Ethical concerns aside, the
DLA noted that rolling out two VISNs simultaneously was “unrealistic[.]” (DLA AR 5209).
Third, the DLA noted that the VISN 20 pilot was already behind schedule; that delay bore on
how many VISNs the DLA would be able to absorb in the near term. (DLA AR 5209). Finally,
the DLA minutes quote the VA’s SAC Contracting Officer as acknowledging that the VA
“cannot ethically award a [MSPV] 2.0 vendor to ANY VISN that VA knowingly plans to
transition to DLA in the near term.” 7 (DLA AR 5209 (capitalization in original)).
Seemingly unfazed by the DLA’s concerns, the VA asked DLA to prepare a plan to
immediately transition the entire VA MSPV program to DLA. On September 18, 2020, the DLA
presented its plan to the VA. (DLA AR 3767–85). The plan contemplated an accelerating
schedule for each VISN transfer and a completed transfer of all eighteen VISNs to the DLA by
June 30, 2024. (DLA AR 3783). DLA personnel were not enthusiastic about the potential for
success, describing the proposal in terms such as “crazy” and “wild stuff!” (DLA AR 3786).
Amidst discussions regarding a transfer to DLA, the GAO delivered a report to Congress
in September 2020. (VA AR 3168–3208). In the report, the GAO examined the VA’s MSPV
program and the pilot through DLA, finding serious flaws in both. (VA AR 3168–3208). With
respect to the pilot program, the GAO found:
VA has not defined criteria for assessing the pilot’s success, has not
canvassed widely for internal stakeholder input, and has not generated written
guidance on Veterans First opportunities in the pilot. Consequently, VA
7
“Near term” appears to mean within 24 months of an MSPV 2.0 award. (DLA AR 5209).
6
leadership will lack critical information to assess the pilot’s success and to
make an informed decision on its scalability to other medical centers.
(VA AR 3209; see also VA AR 3201 (“VA has not established criteria to determine whether the
results of the DLA MSPV pilot can be scalable to other VA medical centers.”)).
Resolute, on October 20, 2020, the VA formally requested that the DLA integrate the
VA’s MSPV requirements “enterprise wide in 18 months.” (DLA AR 5430). At that time, the
VA was still acknowledging several challenges, including that VA had not finished planning the
transition, the DLA contractors had not been notified of the increased demands that were soon to
flow, and most notably, that it was “[u]nclear if DLA [could] accommodate [the] accelerated
pace of implementation[.]” (DLA AR 5437). Regardless, in mid-December of 2020, the VA and
DLA entered into a second Interagency Agreement. (DLA AR 3484).
On February 26, 2021, personnel from the VA and DLA (and a private consulting firm)
met via videoconference to discuss the collaboration. (DLA AR 7127). Internal correspondence
between DLA personnel reveals communication issues within the VA, with several people on the
call unaware that the transition was already underway. (DLA AR 7124 (“there were some people
in the meeting yesterday that didn’t even know VISN 20 was almost rolled out and I didn’t dare
say [the DLA is] working on VISN 6.”)).
In March 2021, the DLA and VA prepared the transition plan. (VA AR 1735–70). This
plan contemplated that MSPV 2.0 would go live on March 31, 2022. (VA AR 1736). It also
proposed that the vendors for 40 VA facilities would have their MSPV 2.0 contracts terminated
within twelve months—by March 31, 2022. (VA AR 1736). Despite the DLA official’s concern
that transition of more than two VISNs simultaneously was “unrealistic,” (DLA AR 5209), the
two agencies planned to transition as many as six VISNs at the same time. (VA AR 1708
(showing VISN 6, 10, 12, 7, 5, and 23 all transitioning in July 2021)). VA legal officials also
communicated their doubts to the DLA regarding whether the plan complied with the
Competition in Contracting Act (“CICA”). (DLA AR 7819 (“It was pretty clear the VA’s [Office
of General Counsel] does not agree [the VA is] CICA compliant[.]”)). On March 9, 2021, the
DLA formally notified VA contractors that its Gen V contractors would be taking over all
servicing responsibilities by September 2023. (Am. Compl. Ex. 2, ECF No. 38-2). On March 30,
2021, the VA seemingly updated this timeline, indicating to Concordance that the transition
would be complete by June 2022. (Am. Compl. Ex. 9).
By April 2021, challenges from the partnership began to manifest. For example, in VISN
20—where the pilot facilities were located—80% of DLA orders were not delivered. (VA AR
4079). VA learned that these undelivered orders stemmed from a mismatch in payment and
delivery schedules. In other words, VA facilities paid the DLA upon placing the orders, leaving
DLA with little incentive to follow up to make sure the orders were actually delivered to the
requesting facility. (VA AR 4246–47). This problem was “not unique to VISN 20,” those
facilities were “just the first to experience the transition” and thus were “the first in the chute[.]”
(VA AR 4078).
7
C. Protests at the GAO and VA
Meanwhile, throughout early 2021, MSPV 2.0 has been the subject of numerous protests
at the GAO and the VA. (VA AR 1567–1601). O&M challenged the VA’s decision to make
primary awards to Medline and Cardinal rather than O&M for all contract line items (“CLINs”)
on which O&M had been included in the competitive range. (VA AR 1585–96). O&M
challenged the VA’s evaluation of O&M’s technical approach, veteran involvement, and some
aspects of the VA’s evaluation of Medline’s pricing. (VA AR 1588). That protest was denied.
(VA AR 1585–95).
Concordance protested the VA’s decision to make primary awards to Medline rather than
Concordance for seven of the eight CLINs on which Concordance had been determined
competitive. (VA AR 1596–1601). On January 7, 2021, the VA submitted to the GAO a notice
of corrective action and request for dismissal. (VA AR 1596–97). The VA proposed four terms
of corrective action: (1) re-opening price discussions with Medline and Concordance for several
prime vendor awards; (2) using the new evaluation after proposal revisions and discussion to
execute a new responsibility pre-award determination; (3) notifying the parties of the decision;
and (4) allowing post-award debriefing. (VA AR 1597). In essence, the VA agreed to take
corrective action with respect to the seven challenged awards, reopening price discussions for
those VISNs. (VA Supp. AR 4087). The VA concluded that “[t]he proposed corrective action
renders the current protest academic[.]” (VA AR 1597). On February 3, 2021, the GAO
dismissed Concordance’s protest. (VA AR 1598–99). The VA provided Concordance with the
opportunity to revise its Primary Prime Vendor price proposals for VISNs 1, 2, 9, 10, 12, 15, and
23. (VA Supp. AR 4087).
After the GAO’s dismissal, Concordance filed three agency-level protests with the VA.
(VA AR 3379, 3386). These protests—filed January 15, March 5, and April 5, 2021—raised a
litany of issues, none of which are particularly relevant to the instant litigation. (VA AR 3379–
85). Each was dismissed or denied. (VA AR 3385, 3386).
D. Court Proceedings
On March 22, 2021—while the first two VA-level protests were pending, but before the
third was filed—Concordance filed its original Complaint in Case No. 21-1098. Medline filed its
original Complaint on April 8, 2021, docketed in Case No. 21-1174. (Medline Compl., ECF No.
1). On April 26, 2021, the Court consolidated the two protests under Case No. 21-1174 and
granted leave for Concordance to file an Amended Complaint in this action. (Case No. 21-1098,
ECF No. 43). Concordance filed its Amended Complaint on April 27, 2021. (Am. Compl., ECF
No. 38). O&M and Cardinal intervened as defendants. (ECF Nos. 17, 19).
Medline’s six-count Complaint challenges the planned transfer on various grounds and
includes a claim that the VA breached an implied-in-fact contract to fairly consider Medline’s
MSPV 2.0 proposal. Specifically, with respect to the transfer, Medline alleges that (1) the
interagency acquisition violates the Economy Act and FAR Subpart 17.5; (2) DLA’s award of
the VA’s MSPV requirements violate CICA and FAR Part 6; (3) shifting the VA’s MSPV
requirements to the DLA’s MSPV contracts results in an out-of-scope modification to the DLA
MSPV contracts in violation of CICA; (4) the VA’s decision to transfer its MSPV requirements
8
to DLA before completing its pilot program is arbitrary and capricious and contrary to FAR
§ 1.602-2; and (5) the scope of the VA’s corrective action in response to Concordance’s GAO
protest is arbitrary and capricious and contrary to FAR § 1.602-2. (Medline Compl.). Medline
seeks declaratory, injunctive, and monetary relief. (Id. at 32).
Concordance’s seven-count Amended Complaint challenges not only the planned
transfer, (and includes a claim for breach of implied-in-fact contract), but also challenges the
terms and scope of the MSPV 2.0 solicitation. Notably, the key difference between the Medline
and Concordance complaints is Concordance’s fifth Count. 8 (Am. Compl. at ¶¶ 87–94
(hereinafter Concordance’s “Scope Claim”)). Concordance’s Scope Claim alleges that the VA
solicitation announced a nine-year period of performance, inclusive of options. (Am. Compl. at ¶
88). This performance period was scheduled to begin April 1, 2020. (Id.). Concordance alleges
that it relied on this scope and performance period when it prepared its proposal, but now, the
VA has announced that the MSPV 2.0 program will be discontinued by June 2022—before the
base period was scheduled to expire. (Id. at ¶ 89). Concordance alleges that the VA announced
this policy change on March 30, 2021, as it had previously communicated that MSPV 2.0 would
phase out by September 2023. (Id. at ¶ 90). Concordance alleges that this constitutes a material
change in requirements, and thus under FAR § 15.206, the contracting officer is required to
amend the MSPV 2.0 solicitation. (Id. at ¶¶ 91–93). Concordance offers the following succinct
summary of their claim:
The VA has now unequivocally represented that the MSPV 2.0 Solicitation
is not intended for the originally solicited period of performance, scope of
work, or monetary value. The new period of performance has been reduced
from nine years to less than two years, the scope of work is extremely
diminished, and the value of the solicited requirement is a fraction of its
former value . . .. These changes obviously are “so substantial as to exceed
what prospective offerors reasonably could have anticipated” and the VA
must cancel, rescope, and resolicit its true, changed requirement for its MSPV
2.0 Program.
(Am. Compl. ¶ 94 (quoting FAR § 15.206)).
While this consolidated case has been pending, the VA has refused to issue a voluntary
stay of either the MSPV 2.0 procurement or the planned transfer to DLA. (Notice of
Procurement Activity, ECF No. 43). 9 On April 28, 2021, Concordance filed a Motion for
8
Concordance’s Amended Complaint is erroneously numbered. The fifth Count, paragraphs 84–
94, is titled “Count VI.” Therefore, to prevent confusion, the Court will refer to this key count as
Concordance’s “Scope Claim.”
9
While protests were pending before the GAO, the automatic statutory stay was in effect. FAR §
33.103(f)(3). While Concordance’s protests were pending in front of the VA, the VA represented
that it had elected to continue that stay. (ECF No. 40-3 (email from the VA representing that
9
Preliminary Injunction, seeking a narrow injunction related to the Scope Claim. (Mot. for PI,
ECF No. 40). On May 6, 2021, before briefing on the Motion for Preliminary Injunction was
complete, Concordance filed a Motion for a Temporary Restraining Order. (Mot. for TRO, ECF
No. 49). Concordance insisted that its motion for emergency relief became necessary after the
United States filed a Notice of Procurement activity on May 4, 2021. (Mot. for TRO at 2). That
Notice stated that the VA intended to proceed with MSPV 2.0 procurement activity and
requested revised price proposals related to its corrective action before briefing on the Motion for
Preliminary Injunction would be complete. (Notice of Procurement Activity at 1).
While Concordance’s Motion for Preliminary Injunction sought to enjoin a final award of
MSPV 2.0 contracts, its Motion for a TRO sought to enjoin the VA’s attempt to move forward
with corrective action. (Mot. for TRO at 11). In other words, Concordance’s Motion for a TRO
sought to enjoin the VA’s May 12 deadline for Concordance and Medline to submit revised price
proposals. After a hearing, the Court denied both of Concordance’s motions, each time finding
that the likelihood of irreparable harm was low, weighing against emergency or temporary
injunctive relief. (ECF Nos. 59, 67). The Court made clear that “[i]f in fact the changes to MSPV
2.0 requirements are so substantial as to violate federal procurement law, as argued by
Concordance, the Court may order permanent injunctive relief when addressing the merits.”
(ECF No. 67).
Somewhat surprisingly, Intervenor-Defendant O&M filed briefs in support of Plaintiff
Concordance’s motions for emergency and preliminary relief. (ECF Nos. 55, 60). Plaintiff
Medline opposed both motions. (ECF Nos. 54, 61). After resolution of those motions, Medline
and Concordance each filed its Motion for Judgment on the Administrative Record. (Medline
MJAR, ECF No. 63; Concordance MJAR, ECF No. 64).
Meanwhile, O&M commenced a third protest on May 11, 2021. O&M et al. v. United
States et al., Case No. 21-1341. In that action, Concordance intervened as a plaintiff, Medline
and Cardinal intervened as defendants. O&M and the United States jointly moved to consolidate,
but the Court rejected that request. (Case No. 21-1341, ECF No. 13). O&M challenged the scope
of corrective action seeking to be included in MSPV 2.0 price discussions with Medline and
Concordance. (O&M Compl. at ¶¶ 42–47 (Count I), Case No. 21-1341, ECF No. 1). O&M also
raised a FAR § 15.206 challenge that mirrors Concordance’s Scope Claim. (Id. at ¶¶ 48–58
(Count II)). Concordance and O&M each filed its Motion for Judgment on the Administrative
Record on May 27, 2021. (ECF No. 47, 49).
The next day, on May 28, the United States filed motions for voluntary remand in O&M
et al. and in this case. See Owens & Minor Distribution, Inc. v. United States, No. 21-1341, 2021
WL 2549413 (Fed. Cl. June 22, 2021). With those motions, the United States sought to remand
parts of each protest, while avoiding confessing error, staying relevant agency actions, or pausing
litigation. See generally, id. The parties took varying and splintered positions on that request, but
they need not be rehashed here. Notably, despite a judicial admission that the Administrative
“[t]he current stay of performance will remain in effect until the pending agency protest is
decided.”)). On April 19, 2021, when the VA dismissed Concordance’s agency level protest, that
stay apparently dissolved.
10
Record lacked support for the transfer decision, the United States tried to hedge that admission in
its Cross-MJAR, arguing that it had not confessed error. Id. at *3. After a hearing, a joint status
report, and full briefing on the motions to remand, the Court denied those motions for remand
finding that “[t]he agency has not provided a compelling justification for remand, the need for
finality dominates the United States’ interest in a remand, and the scope of the proposed remand
is inappropriate.” Id. at *6.
Consequently, the parties proceeded to brief all merits issues in both this case and O&M
et al. That briefing is now complete and, as Concordance has appropriately commented, it is time
for all parties to face the music.
II. Analysis
The most appropriate place to begin is the VA’s proposed transfer of its MSPV
requirements to DLA. That transfer is arbitrary and capricious and unsupported by the
administrative record. Concordance has demonstrated that it is entitled to a permanent injunction
that prohibits the VA and DLA from completing any transfer of MSPV requirements on this
record. However, the scope of the Court’s injunction should be read as narrowly as it is
intended—that is, the Court offers no opinion as to whether a future transfer of MSPV
requirements to DLA would be lawful or supported by another administrative record. Such a
decision on any future transfer is within the ambit of agency policymaking and must stand or fall
on its own merits.
The second issue is the scope of the MSPV 2.0 solicitation. It is evident that,
notwithstanding that the transfer to DLA can no longer proceed, the VA’s requirements have
materially changed since the MSPV 2.0 solicitation was conceived. Concordance has sufficiently
demonstrated standing to bring a challenge to the entire solicitation and is therefore entitled to an
injunction that enjoins the VA from making a final award under the solicitation as it currently
stands. Additionally, the Court finds that Concordance did not waive its right to challenge that
solicitation.
The third issue is whether the VA breached its implied contract with offerors to fairly
consider their proposals. Concordance seeks to recover bid preparation and proposal costs
because, it alleges, the VA breached its implied-in-fact contract to consider MSPV 2.0 proposals
“fairly, honestly, and in good faith.” (Concordance MJAR at 35, ECF No. 64-1). The Court
agrees that the VA’s decision to pursue a transfer of MSPV requirements to the DLA was
arbitrary and capricious. Therefore, Concordance is entitled to recover bid preparation and
proposal costs. The Court will explain each of these holdings in greater detail below.
A. The VA’s decision to transfer its MSPV requirements to the DLA is unlawful and must
be set aside under the Administrative Procedure Act.
According to 28 U.S.C. § 1491(b)(4), the Court reviews agency procurement decisions
under the Administrative Procedure Act (“APA”), 5 U.S.C. § 706. Under the APA standard, “[i]n
a bid protest case, the inquiry is whether the agency’s action was arbitrary, capricious, an abuse
of discretion, or otherwise not in accordance with law and, if so, whether the error is prejudicial.”
Glenn Def. Marine (ASIA), PTE Ltd. v. United States, 720 F.3d 901, 907 (Fed. Cir. 2013). Thus,
11
judicial review of agency action under the APA proceeds on two tracks: (1) the Court might find
that the agency’s decision lacked either a rational basis or support from the administrative record
or was arbitrary and capricious; and/or (2) the Court could find the agency’s procurement
procedure involved a violation of regulation or statute. Weeks Marine, Inc. v. United States, 575
F.3d 1352, 1358 (Fed. Cir. 2009). To obtain relief, even if the protestor shows that the procuring
agency violated the law, it must also show that the agency’s violation was prejudicial to the
protestor. Glenn Def. Marine, 720 F.3d at 907.
Medline argues that adding the VA’s MSPV program to DLA Gen V contracts without
further competition would constitute an out-of-scope modification to the DLA contracts in
violation of CICA. (Medline MJAR at 17, ECF No. 63-1). Medline also argues that the VA’s
decision to immediately transfer VA MSPV requirements to DLA lacks a rational basis, and
violates FAR § 1.602-2. (Id. at 28). Finally, Medline argues that FAR § 17.5 required the
agencies to prepare a “determination and finding” (“D&F”) to support the transfer of interagency
requirements, but the VA failed to do so. (Id. at 33). In summary, Medline argues that on both
tracks, the VA’s actions fail to survive judicial scrutiny under the APA.
Like Medline, Concordance argues that adding the VA’s scope of work to the DLA’s
Gen V contracts constitutes an out-of-scope modification that is contrary to law. (Concordance
MJAR at 8). Similarly, Concordance alleges that the VA failed to comply with the requirements
of FAR § 17.5 and two statutes governing agency sharing authority. (Id. at 22). Furthermore,
Concordance argues that the VA’s decision to cancel or abridge its MSPV contract awards due to
the transfer is arbitrary and capricious and violates FAR §1.602-2. (Id. at 33).
The United States has offered no defense on the merits of these challenges as to whether
the transfer violates CICA and the FAR, and has conceded that the Administrative Record lacks
support for the transfer:
The Court: So just to be clear, the United States is making a judicial
admission today, a binding judicial admission, that if we move forward, if the
remand is not granted, the United States will not defend against the claim that
the transfer to DLA is unlawful?
[The United States]: We are conceding that there is not adequate support in
the record. . . . We are recognizing that part of this Courts standard of review
is whether there is a rational basis for an agency’s action reflected in the
record. That rational basis is not there.
(Tr. of Oral Arg. at 19:10–25, ECF No. 81). That admission permits the Court to issue a
narrowly tailored ruling: this transfer plan is unsupported by the Administrative Record and
therefore this transfer plan is in contravention of the APA and is therefore unlawful. While the
Court could address the issue as to whether the proposed transfer would constitute a violation of
CICA or the FAR, it need not do so given the United States’ acknowledgement that the record
does not provide a basis upon which the agency action could be upheld.
12
B. The VA’s current requirements are not reflected in the MSPV 2.0 solicitation.
As illustrated above, many of Concordance’s arguments mirror those of Medline. Where
the parties diverge, however, is whether the MSPV 2.0 solicitation must be rescoped to reflect
the current needs of the VA (i.e., Concordance’s Scope Claim). Concordance argues that the
current MSPV 2.0 solicitation violates FAR § 15.206, and thus the VA must be enjoined from
issuing awards. (Concordance MJAR at 30). Concordance prays that the Court direct the VA to
rescope and resolicit its MSPV 2.0 requirements. (Id. at 33). 10
The United States filed its Cross-Motion for Judgment on the Administrative Record after
its admissions that the transfer lacked support in the current record. (USA xMJAR, ECF No. 84
(filed June 8, 2021; the United States made its concession during a June 4 hearing)). Much of
that brief is dedicated to seeking a remand so that the VA might reconsider its charted course.
(E.g., USA xMJAR at 17–25 (arguing that the Court should grant a voluntary remand and
partially stay this litigation), 25–30 (arguing that remand, not injunctive relief, is the appropriate
remedy)). The United States contends that its concessions moot the claims brought by
Concordance and Medline, including Concordance’s Scope Claim. (USA xMJAR at 23–24).
That position is without support in fact or law. Tellingly, United States does not argue that the
VA’s MSPV 2.0 solicitation reflects its current needs. Aside from positing that the United States’
concessions somehow render this controversy academic, the United States only argues that
Concordance cannot demonstrate a prejudicial violation of FAR § 15.206. (Id. at 26). Medline,
too, makes this prejudice argument, which the Court will address below.
Cardinal picks up some of the slack, arguing that FAR § 15.206 does not apply because it
does not require amendment to solicitations for which agency requirements change after an
award. (Cardinal xMJAR at 8, ECF No. 83-1). However, this argument confuses the time at
which Concordance brought its challenge with the point at which agency requirements changed.
The VA made an award decision in October 2020. (VA AR 1527–31). Its decision to proceed
with an interagency transfer that would alter the MSPV 2.0 solicitation requirements predated
those awards. (E.g., DLA AR 3767–3785 (DLA’s Sept. 18, 2020 presentation regarding the
upcoming transfer)). Additionally, as a matter of law, this is a pre-award protest. The VA’s
award decision has been made but not finalized as it remains subject to corrective action. (VA
Supp. AR 4087). That places this case in the posture of a pre-award protest. Jordan Pond Co.,
LLC v. United States, 115 Fed. Cl. 623, 630 (2014) (“In the circumstances of a pre-award protest
where, as here, an award decision has been made but not finalized . . ..”) (citing Orion Tech., Inc.
v. United States, 704 F.3d 1344, 1348–49 (Fed. Cir. 2013)). Under FAR § 9.103(b), until a
responsibility decision is made, “the agency should not consider this procurement as being in the
‘after contract award’ stage for purposes of interpreting the FAR and [agency] regulations. The
agency should interpret these regulations as applying to a pre-award circumstance[.]” Chapman
L. Firm Co. v. United States, 71 Fed. Cl. 124, 134 (2006), aff’d in part, rev’d in part and
remanded sub nom. Chapman L. Firm Co. v. Greenleaf Const. Co., 490 F.3d 934 (Fed. Cir.
2007). The VA has not made a responsibility determination for the MSPV 2.0 procurement. (VA
10
The Court notes that its authority here is constrained by the APA, which only allows the Court
to review and set aside agency actions. 5 U.S.C. § 706. Both Concordance and Medline seek
injunctive relief that exceeds those constraints.
13
AR 1597; USA xMJAR at 8). Therefore, Cardinal’s argument, which is premised on its
suggestion that this case is in a post-award posture, lacks merit.
Medline, apparently assured that the transfer to DLA is unlikely to proceed, now seeks to
protect its status as a putative awardee of MSPV 2.0 contracts, subject to the limited corrective
action. With that backdrop, in its Reply brief, Medline argues that (1) the MSPV 2.0 solicitation
does not violate FAR § 15.206 because it appropriately reflects the scope of current VA
requirements; (2) Concordance’s Scope Claim is untimely; and (3) Concordance cannot
demonstrate competitive prejudice. (Medline Reply at 20–24, ECF No. 90). The Court will
address each of these arguments in turn.
i. The scope of the MSPV 2.0 Solicitation does not reflect the VA’s current
requirements and thus violates FAR § 15.206.
FAR § 15.206 provides that “[w]hen, either before or after receipt of proposals, the
Government changes its requirements or terms and conditions, the contracting officer shall
amend the solicitation.” FAR § 15.206(a) (emphasis added). That section further provides that if
the change in requirements is so substantial that it would exceed the reasonable expectations of
the offerors, a new solicitation is required:
If, in the judgment of the contracting officer, based on market research or
otherwise, an amendment proposed for issuance after offers have been
received is so substantial as to exceed what prospective offerors reasonably
could have anticipated, so that additional sources likely would have
submitted offers had the substance of the amendment been known to them,
the contracting officer shall cancel the original solicitation and issue a new
one, regardless of the stage of the acquisition.
FAR § 15.206(e). “The time of delivery or performance is an essential contract element and shall
be clearly stated in solicitations. Contracting officers shall ensure that delivery or performance
schedules are realistic and meet the requirements of the acquisition.” FAR § 11.401(a). Both the
period of performance and delivery date are key terms of any contract. See, e.g., MSC Indus.
Direct Co. v. United States, 126 Fed. Cl. 525, 533 (2016) (“A discrepancy as significant as the
delivery date is more than sufficient to warrant an amendment to the solicitation.”).
Medline’s first argument is that Concordance’s challenge to the MSPV 2.0 solicitation
rests entirely on the assumption that the VA would immediately transfer its MSPV requirements
to the DLA, and if the transfer is no longer proceeding, then the MSPV 2.0 requirements have
not changed since the solicitation was issued in September 2019. (Medline Reply at 20–21).
Even putting aside the fact that the MSPV 2.0 solicitation still lists the start of the performance
period as April 30, 2020, (VA AR 4), Medline’s argument would require the Court to suspend
reality to create a legal fiction. The VA’s requirements have necessarily changed throughout the
course of the transfer planning and amendments to the timeline. Those requirements might have
changed when the VA decided to pursue the transfer to DLA in the first place—on a timeline
through 2025. (VA AR 4063). The VA’s requirements might have changed when it accelerated
the transfer to conclude by September 2023—a plan that already conceived of transferring
several VISNs away from VA contractors while MSPV 2.0 awardees were still performing on
14
the base period of the contract. (Am. Compl. Ex. 2; VA AR 1708 (showing VISNs 5, 6, 7, 8, 10,
12, 15, and 23 all commencing transfers before MSPV 2.0 was even scheduled to go live)).
However, it strains credulity to think that the VA’s requirements did not change when it further
accelerated that transfer to conclude by June 2022. (Am. Compl. Ex. 9). With each passing day,
the VA’s MSPV 2.0 requirements change as it attempts to transition VISN 6 to DLA despite its
counsel conceding the unlawfulness of that agency action. (See USA xMJAR at 13 (explaining
that the VISN 6 transfer to DLA is currently proceeding)). VISN 20 has already been transferred
as part of the pilot program—that transfer is nearly complete—yet VISN 20 still appears in the
MSPV 2.0 solicitation, albeit as an optional CLIN. (Id. at 13; VA AR 216). Likewise, VISN 6 is
also still part of the MSPV 2.0 solicitation. (VA AR 216). Now, with the Court’s injunction,
nobody can be certain what the VA requires or on what timeline. Perhaps that is why the United
States has resisted making the argument that the solicitation remains accurate. But it is clear that
whatever the VA required in September 2019, those requirements have certainly changed after
nearly two years of administrative challenges, corrective action, changes in agency policy, a
partial transition, and a gauntlet of litigation.
Medline also argues that because MSPV 2.0 contemplated IDIQ contracts, there is
necessarily some uncertainty as to what the VA might require over the course of the performance
period. (Medline Reply at 21). While it is true that the MSPV 2.0 solicitation did not bind the
VA to purchase supplies in sums-certain, the flexible nature of IDIQ contracts does not exempt
procuring agencies from the FAR’s requirements to issue an accurate solicitation. Cf. DZSP 21,
LLC v. United States, 139 Fed. Cl. 110, 117 (2018) (“Cost-reimbursement contracts can afford
the government flexibility in appropriate circumstances, but they do not obviate the requirements
of [FAR] Section 15.206(a).”). It is unclear to the Court what course the VA will chart next. But
it is clear that the VA’s requirements changed multiple times since the MSPV 2.0 solicitation
was issued. Medline’s arguments to the contrary are unavailing.
ii. Concordance’s Scope Claim is timely.
Medline’s second argument—that Concordance’s Scope Claim is untimely—is
interesting given that Medline raises essentially the same claim in its Complaint, although it
packages it as a challenge to the scope of corrective action and breach of implied-in-fact
contract. 11 Setting aside that Medline’s arguments in its Complaint and briefing are contradictory
and mutually exclusive, the Court disagrees with the substance of Medline’s new timeliness
argument. Concordance only became aware of the extent to which any MSPV 2.0 award might
be abridged when it received the Administrative Record, or at the very earliest, when the DLA
notified VA offerors in March 2021. (Am. Compl. Ex. 9). Medline argues that this is a post-
award challenge to the solicitation, and such challenges are waived under COMINT Sys. Corp. v.
11
(Medline Compl. at ¶¶ 108, 110 (arguing that the VA’s corrective action should address the
“significant reduction to the solicited MSPV 2.0 scope of work”), 117, (alleging that “the VA
evaluated MSPV proposals with the intent to eliminate portions of the VA MSPV program” in
the middle of the performance period), 118 (arguing that “[b]y evaluating proposals without any
intent of executing the full work scope, the VA breached its implied contractual obligation to
consider Medline’s MSPV 2.0 proposal honestly and in good faith, entitling Medline to recover
its bid and proposal costs.”)).
15
United States, 700 F.3d 1377 (Fed. Cir. 2012) and Blue & Gold Fleet, L.P. v. United States, 492
F.3d 1308 (Fed. Cir. 2007). (Medline Reply at 22). Medline is incorrect—this is a pre-award
challenge for the reasons stated in Section II(B)(i) above. And this is not a situation where
Concordance has sat on its rights despite knowing of a defect in the solicitation.
Concordance was constructively aware of the DLA transition not later than September
2020, when the GAO issued its public report. (VA AR 3168–3208). But in March 2021,
Concordance was given official notice that the DLA transfer was being accelerated by more than
a year. (Am. Compl. Ex. 9). At that time, the base period described in the solicitation had already
been running for a year. (Compare VA AR 4 (MSPV solicitation describing performance period
starting April 1, 2020) with Am. Compl. Ex. 9 (Amendment of Solicitation signed March 30,
2021, accelerating the transition timeline)). With that in mind and considering the March 9, 2021
notice, the March 30 acceleration notice effectively turned an already-abridged two-year base
period into a one-year base period for VISNs 4, 5, 6, 7, and 8. (VA AR 4; Am. Compl. Exs. 2, 9).
Concordance brought its court challenge shortly after the March 9 notice, (Case No. 21-1098,
Compl., ECF No. 1 (filed March 22, 2021)), and Concordance sought emergency injunctive
relief the day after it became aware that the agency stay had dissolved. (Concordance Mot. for
TRO, ECF No. 40-1 (filed April 28); Ex. A (April 27 email from USA Counsel stating “MSPV
2.0 is moving forward.”)). In summary, Concordance’s Scope Claim is timely.
iii. Concordance has demonstrated competitive prejudice.
Now in agreement with the United States, Medline argues that Concordance cannot
demonstrate competitive prejudice and therefore lacks standing to challenge the MSPV 2.0
solicitation. “Only an ‘interested party’ has standing to challenge a contract award.” Digitalis
Educ. Sols., Inc. v. United States, 664 F.3d 1380, 1384 (Fed. Cir. 2012); 28 U.S.C. § 1491(b)(1).
“An interested party is an actual or prospective bidder whose direct economic interest would be
affected by the award of the contract. Thus, a party must show that it is 1) an actual or
prospective bidder and 2) that it has a direct economic interest.” Digitalis Educ. Sols., Inc., 664
F.3d at 1384 (internal citation omitted).
The general rule is that to show a direct economic interest, the protestor “is required to
establish that it had a ‘substantial chance’ of receiving the contract” but for the error in the
procurement process. Rex Serv. Corp. v. United States, 448 F.3d 1305, 1308 (Fed. Cir. 2006).
However, there are exceptions. The Federal Circuit has recognized that when a prospective
bidder is challenging a solicitation before the agency makes an award, often “there is no factual
foundation for a ‘but for’ prejudice analysis.” Weeks Marine, 575 F.3d at 1361. When that is the
case (as it commonly is in pre-award protests), the Court must consider whether the protestor can
demonstrate a “non-trivial competitive injury which can be addressed by judicial relief.” Id. at
1362. But, when an “adequate factual predicate” exists such that the Court can determine
whether the protestor had a “substantial chance” to receive the award, the general rule applies.
Orion Tech., 704 F.3d at 1349; see also Oracle Am., Inc. v. United States, 975 F.3d 1279, 1291
n.3 (Fed. Cir. 2020). Ultimately, “[p]rejudice is a question of fact.” Bannum, Inc. v. United
States, 404 F.3d 1346, 1353 (Fed. Cir. 2005).
The United States argues that Concordance has failed to show competitive prejudice
necessary to establish that it has standing. (USA xMJAR at 25–26). Medline echoes this
16
argument in its own briefs. (Medline Reply at 24). The United States expounds on its argument
by stating that “Concordance fails to address how it would amend its proposal to ensure a
substantial chance of award if VA amended the solicitation.” (USA xMJAR at 26). That is
incorrect as a factual matter. In a declaration from Jaysen Stevenson, President of the
Government Division for Concordance, Concordance states that “[i]n preparing its proposal . . .
Concordance relied on the announced scope of the VA MSPV 2.0 solicitation.” (Concordance
MJAR Ex. A ¶ 9, ECF No. 64-2). 12 Concordance further explains that because the MSPV 2.0
solicitation was tentative, pending the circumstance of the DLA transfer, Concordance was
forced to “account for both the planned transition and the possibility” that the transition would
not occur. (Id. at ¶ 13). Concordance credibly represents that it “would approach a new, rescoped
VA MSPV 2.0 solicitation with dramatically different competition and pricing strategies for all
VISNs—not just the VISNs that are covered by” corrective action. (Id. at ¶ 14 (emphasis in
original)). These representations clearly go to how Concordance would amend its proposal if the
VA were to amend the MSPV 2.0 solicitation.
Not only is the United States’ argument factually erroneous, it is also incorrect as a
matter of common sense. The record confirms that Concordance was forced to submit its revised
proposal during a period when the transition was particularly imminent but known by
Concordance to be unlawful. The VA’s Notice of Procurement Activity (ECF No. 43-1) shows
that on May 4, 2021, the VA requested that Concordance submit its revised price proposals by
May 12. On May 4, Concordance had already sought preliminary injunctive relief, and would
soon move for emergency injunctive relief. (Mot. for PI (filed April 28); Mot. for TRO (filed
May 6)). The United States’ concession of error would not come until June 4, 2021. (See Tr. of
Oral Arg. (held June 4)). In its Motion for Remand, the United States urged the Court to remand
all counts of Concordance’s Amended Complaint, including the count that challenges the scope
of the MSPV 2.0 solicitation:
All counts asserted by Medline and Concordance in their pleadings are
implicated by the agencies’ planned transfer of the VA’s MSPV program to
DLA. The pleadings . . . make indirect challenges by virtue of the alleged
effects of the planned transfer on VA’s MSPV 2.0 procurement and DLA’s
existing MSPV contracts. The agencies intend to reconsider the planned
transfer in light of these allegations and the lack of analysis in the record to
support the planned transfer to DLA.
(USA Mot. for Remand at 2, ECF No. 74 (emphasis added)). This request shows that the United
States recognized the intimate nexus between the status and timeline of the transfer and the scope
of the MSPV 2.0 procurement. Notably, it took several days after that hearing for the United
States to even commit that the transfer had been cancelled. (USA xMJAR at 37 (filed June 4));
but see Owens & Minor Distribution, No. 21-1341, 2021 WL 2549413, at *3 (“Conspicuously
12
Declarations from company executives, although not generally part of the Administrative
Record, are appropriate vehicles for protestors to demonstrate competitive prejudice. Strategic
Analysis, Inc. v. U.S. Dep’t of Navy, 939 F. Supp. 18, 23 n.7 (D.D.C. 1996); Data Gen. Corp. v.
Johnson, 78 F.3d 1556, 1564 (Fed. Cir. 1996); Hunt Bldg. Co. v. United States, 61 Fed. Cl. 243,
272 modified, 63 Fed. Cl. 141 (2004).
17
absent in [the] declarations from VA and the DLA officials is a statement regarding the current
status of the transfer. Is it indeed ‘cancelled?’ The Court is left with some uncertainty.”).
The United States does not attempt to argue that the nexus between the scope of MSPV
2.0 and the transfer to DLA did not affect price; it only argues that uncertainties and surprise
changes to price are “endemic to IDIQ solicitations[.]” (USA xMJAR at 27). But, as explained
above, while protestors are expected to bear some uncertainty in pricing IDIQ contract proposals,
the performance period and delivery date are key to assessing those uncertainties and thus
proposal pricing analysis. See MSC Indus. Direct Co., 126 Fed. Cl. at 533 (“A discrepancy as
significant as the delivery date is more than sufficient to warrant an amendment to the
solicitation.”).
“[P]rejudice cannot be assessed in a vacuum, but must be considered in light of all of the
changes the [agency] would have to consider upon reevaluation.” DZSP 21, LLC v. United
States, 137 Fed. Cl. 38, 47 (2018). The VA failed to amend or resolicit its MSPV 2.0
requirements to reflect the current status and timeline of the transfer to DLA. In light of all the
circumstances, Concordance has made a strong showing that the VA inflicted on Concordance a
non-trivial competitive injury. Concordance sufficiently pled the illegality of the transfer plan
that the United States abandoned its defense on the merits and advocated for a remand to
reconsider both the transfer and the scope of the MSPV 2.0 solicitation together. Given the
uncertainty surrounding the status of the procurement, the Court lacks the factual predicate
necessary to comprehensively evaluate whether Concordance did or did not have a substantial
chance at an award. In sum, Concordance was forced to submit revised proposals for an MSPV
2.0 solicitation while the status of the transfer was in limbo. That uncertainty affected its pricing
proposals for MSPV 2.0 components. At the very least, an amendment was needed to clarify the
delivery dates and performance period, and the VA’s failure to take that minimum step was a
violation of FAR § 15.206.
C. The protestors, Concordance and Medline, are entitled to relief.
Although the United States believes declaratory relief offers adequate reprieve, the Court
finds that Medline and Concordance have demonstrated entitlement to a narrow injunction that
removes any doubt as to what the VA is barred from doing next. A party seeking an injunction
must demonstrate (1) success on the merits; (2) irreparable harm absent an injunction; (3) the
balance of hardships favors an injunction; and (4) that an injunction is in the public interest.
PGBA, LLC v. United States, 389 F.3d 1219, 1229 (Fed. Cir. 2004). This Court has broad
authority to order injunctive relief in the context of bid protests. See 28 U.S.C. § 1491(b); Turner
Constr. Co. v. United States, 645 F.3d 1377, 1388 (Fed. Cir. 2011). Though no single factor is
dispositive, “the weakness of the showing regarding one factor may be overborne by the strength
of the others.” FMC Corp. v. United States, 3 F.3d 424, 427 (Fed. Cir. 1993). The trial court’s
decision to grant or deny an injunction is reviewed for abuse of discretion. Asociacion
Colombiana de Exportadores de Flores v. United States, 916 F.2d 1571, 1578 (Fed. Cir. 1990).
Medline and Concordance have both demonstrated success on the merits. Under the
APA, if the reviewing court finds that agency action is arbitrary, capricious, or unsupported by
the administrative record, the court must “hold unlawful and set aside [that] agency action[.]” 5
18
U.S.C. § 706. The United States has conceded that the VA’s actions here are unsupported by the
administrative record. (Tr. of Oral Arg. at 19:10–25).
Medline and Concordance further demonstrated that absent an injunction, they each will
suffer irreparable harm. “The Court of Federal Claims has repeatedly held that a protester suffers
irreparable harm if it is deprived of the opportunity to compete fairly for a contract.” CW Gov’t
Travel, Inc. v. United States, 110 Fed. Cl. 462, 494 (2013) (collecting cases). Medline and
Concordance were deprived of the opportunity to fairly compete for the VA’s MSPV
requirements when those requirements were noncompetitively transferred to the DLA. Thus,
both protestors have demonstrated that they will suffer irreparable harm.
The balance of harms also favors an injunction of both the transfer and the MSPV 2.0
award. Although an injunction that requires the VA and DLA to change course might “cost the
government some money and effort,” that inconvenience must be tolerated, so long as the
injunction “will not completely disrupt the procurement process.” Cardinal Maint. Serv., Inc. v.
United States, 63 Fed. Cl. 98, 110 (2004). On the other hand, absent an injunction, Concordance
and Medline would be shut out from bidding on the VA’s MSPV requirements if procured
through DLA’s Gen V contracts. Consequently, “in light of the large size of the contract, and the
fact that the plaintiff will be prohibited from bidding on the contract in the absence of an
injunction,” Medline and Concordance “will suffer more harm if the court fails to grant an
injunction than the government will suffer if the court does grant an injunction.” See id. With
respect to Concordance’s Scope Claim, the United States cannot show harm because it continues
to service its MSPV requirements through the MSPV-NG bridge contracts. (VA AR 3173–75,
3371–72); DZSP 21, LLC, 139 Fed. Cl. at 122 (“[A]lthough single-sourced bridge contracts may
cost the government more than a competitive contract would, the marginal cost to the
government does not outweigh the potential cost of long-term harm from allowing a flawed
contractual award to take effect.”).
Finally, the public interest favors an injunction. “The public also has a strong interest in
preserving the integrity of the procurement process.” Angelica Textile Servs., Inc. v. United
States, 95 Fed. Cl. 208, 223 (2010), appeal dismissed, 462 F. App’x 970 (Fed. Cir. 2012). That
interest would be undermined if the Court were to deny injunctive relief and allow the VA’s
actions here to stand. Although the United States makes vague references that an injunction
might impede the medical care provided to veterans, (USA xMJAR at 19, 29), these assertions
are not credible. Despite ample opportunity to do so, the United States adduces no evidence to
support such a claim. The United States admits it is procuring its requirements through bridge
contracts and cites no reason, other than costs, why it cannot continue to do so. The transfer lacks
a rational basis, and the current MSPV 2.0 solicitation violates the law. Therefore, injunctive
relief is warranted.
An important question remains as to the appropriate scope of injunctive relief. With
respect to the transfer of VA MSPV requirements to the DLA, the Court reiterates that a narrow
injunction is most appropriate. On this record, this transfer plan must be enjoined. The United
States seeks a carve-out for VISNs 6 and 20. (USA Reply at 8, 9–14, ECF No. 94). Aside from
its competitive prejudice arguments, which the Court has already addressed with respect to
19
Concordance, the United States does not cite the Court to a basis in law 13 or fact for these carve-
outs, other than its bald contention that “any permanent injunction should be narrowly-tailored to
the planned transfer on this administrative record, and exclude the transfers of VISN 20 and
VISN 6.” (Id. at 14). Medline does not contest a carve-out for VISN 20, but Concordance does.
(Medline Reply at 15–16, n.4; Concordance Reply at 8, ECF No. 91). However, Concordance
did not bid for VISN 20. (VA AR 993 et seq.). And VISN 20 was an optional CLIN, distinct
from the remainder of the MSPV 2.0 solicitation as it was part of the pilot for the transfer to
DLA. (VA AR 216). It is difficult to see how any of the factors the Court discussed supporting
Concordance’s competitive prejudice for the rest of MSPV 2.0 apply to VISN 20. Therefore, a
carve-out for VISN 20 is appropriate.
Medline resists a carve-out for VISN 6, arguing that an injunction preventing the transfer
is appropriate and should be comprehensive. (Medline Reply at 14). Concordance also resists a
carve-out for VISN 6 by broadly arguing that “the VA MSPV 2.0 Solicitation is a unitary
solicitation[.]” (Concordance Reply at 11 n.16). The import of this, Concordance argues, is that
whether or not the transfer to DLA is enjoined, “the entire [MSPV 2.0] solicitation must be
amended and [the VA must seek] revised proposals . . . for all services.” (Id.).
The Court need not decide whether this is a “unitary solicitation.” It has already declared
the transfer unlawful on this administrative record. It has also declared that the MSPV 2.0
solicitation, in its entirety, does not comply with federal procurement law. The United States
cites no case that supports siloing VISN 6. Therefore, VISN 6 is included within the scope of the
Court’s injunction. VISN 20 is inherently different, as its association with DLA predated the
VA’s issuance of the MSPV 2.0 solicitation.
The Court is mindful that “[a]n injunction is a drastic and extraordinary remedy, which
should not be granted as a matter of course.” Monsanto Co. v. Geertson Seed Farms, 561 U.S.
139, 165 (2010). Indeed, the Supreme Court has indicated that if a “less drastic remedy” is
sufficient to provide redress, trial courts should abstain from issuing injunctive relief. Id.However, as the Court has noted, the VA has demonstrated its determination to forge ahead with
this transfer despite numerous red flags from agency professionals, a mysterious and disturbing
resistance to acknowledging error, and its indifference to its own counsel’s admissions that the
agency’s actions lack support in the Administrative Record as evidenced by the continued
attempt to transfer VISN 6. In addition, to the Court’s knowledge, and as Concordance notes, the
VA and DLA have not rescinded their interagency agreements or memoranda of understanding
regarding the transfer, neither have they taken any other steps to halt progress on a transfer.
(Concordance Reply at 7). In light of this, the Court is left with no assurances that a light-touch
remedy would be “sufficient to redress [the protestors’] injury.” Monsanto Co., 561 U.S. at 165.
13
Earlier in this litigation, the United States promised that it would provide a case to support its
position should one exist. During the May 21, 2021 Oral Argument, the Court asked for a case
that supported separating a solicitation into its VISNs and allowing protestors to seek an
injunction of some, but not all awards. (Case No. 21-1098, Tr. of May 21 Oral Arg., at 18–19,
ECF No. 45). The United States admitted that it had not yet identified one but committed that it
“would certainly include it in [its] merits briefing[.]” (Id.). It has not done so.
20
Therefore, the Court finds that permanent injunctions preventing a transfer on the current record
and enjoining an award under the current MSPV 2.0 solicitation to be the only sufficient
remedies.
D. Concordance is entitled to recover bid preparation and proposal costs.
In its opening merits brief, Concordance alleged that the VA breached its implied-in-fact
contract with Concordance by issuing the MSPV 2.0 solicitation despite the VA’s undisclosed
plan to truncate the scope of performance. (Concordance MJAR at 35). The United States failed
to respond to this allegation in its Response and Cross-MJAR, thus has waived its arguments on
the issue. Likewise, though raised in its Complaint, Medline’s MJAR failed to mention bid
proposal costs, thus Medline has waived that issue.
The Court of Federal Claims has jurisdiction over implied-in-fact contract claims brought
in bid protests. Safeguard Base Operations, LLC v. United States, 989 F.3d 1326, 1342 (Fed. Cir.
2021) (citing 28 U.S.C. § 1491(b)(1)). In addition to its powers to issue injunctive relief, the
Court may award “bid preparation and proposal costs” should it find the United States in breach.
28 U.S.C. §1491(b)(2). The United States breaches this implied contract if the Court finds the
United States’ “consideration of offers is . . . arbitrary and capricious toward the bidder-
claimant.” Cent. Arkansas Maint., Inc. v. United States, 68 F.3d 1338, 1341 (Fed. Cir. 1995)
(internal quotations omitted).
“Under the ‘arbitrary and capricious’ standard[,] the scope of review is a narrow one. A
reviewing court must consider whether the decision was based on a consideration of the relevant
factors and whether there has been a clear error of judgment.” Bowman Transportation, Inc. v.
Arkansas-Best Freight System, Inc., 419 U.S. 281, 285 (1974) (internal quotations omitted). The
Court may not substitute its own judgment for that of the agency. Id. But the agency must
articulate a “rational connection between the facts found and the choice made.” Burlington Truck
Lines, Inc. v. United States, 371 U.S. 156, 168 (1962).
Concordance argues that the VA acted arbitrarily and capriciously by proceeding with the
MSPV 2.0 solicitation over the objections and ethical concerns of VA employees. (Concordance
MJAR at 35–37). On the Court’s review, the record reflects a clear error of judgment on the part
of the VA. 14
As noted above, Section I(B) supra, in early May 2019, VA’s Executive Director of
Procurement noted his concerns to the Associate Executive Director of the VA’s Strategic
Acquisition Center regarding the scope issue, the flawed process proposed by the VA, and the
prediction, now proven accurate, that the VA’s plan could not withstand court scrutiny. (VA AR
3490). In the summer of 2020, when informed that it would be receiving a substantial portion of
work previously awarded under a VA contract, “Cardinal was flabbergasted[,]” according to
DLA employees. (DLA AR 3721). By the end of 2020, the VA had already made plans to cancel
MSPV 2.0 contracts. (VA AR 1617). In February 2021, VA had planned to cancel MSPV 2.0 “as
14
As noted in footnote 6, supra, the record is replete with warnings from agency officials. The
Court favors brevity.
21
soon as possible to avoid compounding terminations costs” because a “[t]ransition [from MSPV-
NG] to [MSPV] 2.0 and then again to DLA is too much churn.” (VA AR 1955). Nevertheless,
the VA has proceeded with the MSPV 2.0 program.
In addition to practical concerns, the record shows that agency officials raised ethical
concerns which, apparently, were not heeded. For example, the DLA reported that the VA’s
Strategic Acquisition Center “communicated that due to ethical concerns, [MSPV 2.0] contracts
cannot be awarded if VA knowingly plans to transition to DLA in the near term[.]” (DLA AR
5197, 5205, 5209). These concerns were shared by DLA procurement officials and dated back to
at least September of 2020, before the VA made initial MSPV 2.0 awards. (DLA AR 5217; VA
AR 1527–31).
Even in its Reply, the United States has not pointed to any portion of the record that
resolves these practical and ethical concerns. (USA Reply at 16–18). The Court is left to
conclude that the VA’s decision—proceeding with MSPV 2.0 despite the transfer plan—was
arbitrary and capricious. Consequently, Concordance is entitled to judgment on its implied-in-
fact contract claim and therefore is entitled to recover the costs of its bid preparation and
proposal. Further proceedings may be required for quantum.
III. Conclusion
The VA’s decision to transfer its MSPV requirements to the DLA is unsupported by the
Administrative Record and must be declared unlawful and set aside under the APA.
Additionally, the VA’s MSPV 2.0 Solicitation does not reflect the current needs of the agency,
warranting the declaratory and injunctive relief described in this Opinion. Finally, the VA
breached its implied-in-fact contract with Concordance to consider Concordance’s offer fairly,
honestly, and in good faith. Despite the Court’s criticisms of the merits of arguments sometimes
advanced by counsel, all counsel to this action have performed admirably in navigating the
challenges presented by this complex procurement dispute.
In summary, consistent with the body of this Opinion, the Court ORDERS 15 the
following:
(1) Medline’s Motion for Judgment on the Administrative Record, ECF No. 63-1,
is GRANTED-IN-PART and DENIED-IN-PART. The Clerk is directed to
enter judgment for Medline.
(2) Concordance’s Motion for Judgment on the Administrative Record, ECF No.
64-1, is GRANTED-IN-PART and DENIED-IN-PART. The Clerk is
directed to enter judgment for Concordance.
(3) The United States’ Cross-Motion for Judgment on the Administrative Record,
ECF No. 84, is DENIED.
15
On July 27, 2021, the Court issued an order awarding injunctive relief. This Opinion replaces,
controls, and supersedes that Order to the extent the parties understand there to be any conflict.
22
(4) Cardinal’s Cross-Motion for Judgment on the Administrative Record, ECF No.
83, is DENIED.
(5) The United States’ Motion for Clarification, ECF No. 98, is DENIED AS
MOOT.
(6) The Department of Veterans Affairs’ plan to transfer its Medical Surgical
Prime Vendor requirements to the Defense Logistics Agency is DECLARED
UNLAWFUL as reflected in this Administrative Record.
(7) The Department of Veterans Affairs is PERMANENTLY ENJOINED from
transferring its Medical/Surgical Prime Vendor (“MSPV”) Program to the
Defense Logistics Agency based on the Administrative Record presented to the
Court.
(8) The Defense Logistics Agency is PERMANENTLY ENJOINED from
procuring the medical and surgical requirements encompassed within the
Department of Veterans Affairs’ MSPV 2.0 program with the exception of
those facilities encompassed within the Department of Veterans Affairs’ Pilot
Program.
(9) The Department of Veterans Affairs’ procurement under Solicitation Number
36C10G-19-R-0050 (MSPV 2.0) is DECLARED UNLAWFUL in its entirety
as that solicitation does not reflect the current needs of the Agency.
(10) Any Notice to Proceed issued pursuant to Solicitation Number 36C10G-19-R-
0050 (MSPV 2.0) is DECLARED UNLAWFUL with the exception of any
Notice pertaining to those facilities encompassed within the Department of
Veterans Affairs’ Pilot Program.
(11) The Department of Veterans Affairs is PERMANENTLY ENJOINED from
issuing awards under Solicitation Number 36C10G-19-R-0050 (MSPV 2.0) in
its current form.
(12) The Department of Veterans Affairs is PERMANENTLY ENJOINED from
issuing any Notice to Proceed under Solicitation Number 36C10G-19-R-0050
(MSPV 2.0) in its current form.
(13) Concordance is entitled to judgment on its implied-in-fact contract claim and
therefore is entitled to recover the costs of its bid preparation and proposal.
(14) This Opinion will issue under seal. No later than August 12, 2021, the parties
are ORDERED to submit a joint notice of proposed redactions. A public
version of this Opinion will follow those redactions.
23
(15) On or before August 12, 2021, the parties are ORDERED to file a joint status
report advising the Court if further proceedings are necessary in this matter,
including but not limited to, quantum of costs Medline and Concordance are
entitled to recover.
IT IS SO ORDERED.
s/ David A. Tapp
DAVID A. TAPP, Judge
24