Coastal Environmental Group, Inc. v. United States

In the United States Court of Federal Claims
No. 13-71C
(Filed Under Seal: August 13, 2014)
(Reissued for Publication: August 25, 2014)*
*************************************
COASTAL ENVIRONMENTAL GROUP, *
INC., *
* Bid Protest; Motion to Dismiss; Standing;
Plaintiff, * Cross-Motions for Judgment on the
* Administrative Record; Constructive
v. * Cancellation of a Procurement; Rational
* Basis; Presumption of Good Faith
THE UNITED STATES, *
*
Defendant. *
*************************************
Brian W. Craver, Washington, DC, for plaintiff.
Devin A. Wolak, United States Department of Justice, Washington, DC, for defendant.
OPINION AND ORDER
SWEENEY, Judge
In this bid protest, plaintiff Coastal Environmental Group, Inc. challenges the purported
cancellation of a soil remediation procurement and seeks judgment on the administrative record.
Defendant moves to dismiss plaintiff’s protest for lack of standing and seeks, in the alternative,
judgment on the administrative record. As explained more fully below, the court concludes that
plaintiff has standing to pursue its protest, but that plaintiff’s protest fails on its merits.
Accordingly, the court denies defendant’s motion to dismiss and plaintiff’s motion for judgment
on the administrative record, and grants defendant’s cross-motion for judgment on the
administrative record.
*
The court provided the parties with an opportunity to suggest redactions to this ruling,
but in an August 22, 2014 joint status report, they indicated that no redactions were necessary.
I. BACKGROUND
A. Invitation for Bids and Contract Award
The Omaha Lead Site is a residential area in Omaha, Nebraska where the soil was
contaminated by air emissions from nearby lead smelting and refining operations.1 AR 103. The
United States Environmental Protection Agency (“EPA”), with the assistance of the Nebraska
Department of Environmental Quality, is responsible for remediating the soil on the residential
properties comprising the site. Id.
By early 2012, the EPA had entered into over forty contracts related to the remediation of
the soil at the Omaha Lead Site, id. at 129, but its work was not complete. Indeed, the EPA had
identified approximately 5,000 properties that still required remediation. Id. at 155, 161. Thus,
the EPA decided to invite bids for two soil remediation contracts. Id. at 126, 129, 151, 161. One
of the contracts was to be set aside for a small business, id. at 126, 151, 159, and the other was to
be set aside for a section 8(a) small business, id. at 3, 70, 126.
With respect to the latter contract, the EPA, on March 29, 2012, issued solicitation SOL-
R7-12-00016,2 an invitation for bids (“IFB”) to remediate the soil on as many as 2,600 residential
properties at the Omaha Lead Site.3 Id. at 2-3, 9-16, 137. The EPA contemplated awarding an
indefinite-quantity/fixed-price contract to the lowest bidder who was deemed to be responsible
and who submitted a responsive bid. Id. at 69, 71. The base period of the contract was to be one
year, followed by three one-year option periods. Id. at 9-18. Bidders were required to submit,
among other materials, resumes for key personnel that reflected the specific experience identified
in the IFB. Id. at 67-68. The EPA cautioned that bids not conforming to the “essential
1
The court derives the facts in the background section from the corrected administrative
record filed on May 22, 2014 (“AR”).
2
The solicitation for the contract set aside for a small business was solicitation SOL-R7-
12-00005. AR 151.
3
The administrative record and the parties are inconsistent in referring to the maximum
number of properties encompassed by this IFB–there are references to both 2,600 and 2,400
properties. Under the contract that resulted from the IFB, a maximum of 700 properties could be
remediated during the base period; these properties were divided among six fixed-price contract
line items. AR 463. The first and second option periods were set up the same way. Id. at 465,
468. However, the contract only allowed for the remediation of a maximum of 500 properties
during the third option year–300 properties by way of three fixed-price contract line items and
200 properties by way of indefinite-quantity contract line items. Id. at 470. Accordingly, there
was a maximum of 2,400 properties to be remediated under fixed-price contract line items and a
maximum of 2,600 properties to be remediated under all contract line items. This distinction
may account for the discrepancies in the administrative record and the parties’ briefs.
-2-
requirements” of the IFB would be rejected. Id. at 68. The EPA also provided that bidders were
required to keep their bids open for ninety days from the date the bids were due. Id. at 69. Bids
were due by May 8, 2012. Id. at 177.
Eight companies submitted bids, including plaintiff and PK Management Group, Inc.
(“PK”). Id. at 181-412, 588-775. PK was the low bidder, with a total bid price of $23,897,255.
Id. at 412. Plaintiff, with a total bid price of $26,774,907, was the next lowest bidder. Id. PK’s
bid contained two different bid acceptance periods. On the standard “Solicitation, Offer and
Award” form included with its bid, PK indicated, by not filling in a number on the blank in Box
12, that its offer would remain open for sixty days.4 See id. at 406; accord id. at 1588 (indicating
the contracting officer’s understanding that PK left its offer open for sixty days). However, in
the “Minimum Bid Acceptance Period” clause of its bid, PK indicated that it would leave its bid
open for ninety days. Id. at 410. Similarly, plaintiff’s bid contained two different bid acceptance
periods. On the standard “Solicitation, Offer and Award” form included with its bid, plaintiff
indicated that it would leave its bid open for sixty days by writing “60” on the blank in Box 12.
Id. at 592. However, like PK, plaintiff indicated that it would leave its bid open for ninety days
in the “Minimum Bid Acceptance Period” clause of its bid. Id. at 597.
Before the EPA could award the contract to PK, the low bidder, it needed to review PK’s
bid to ensure that it met the requirements of the IFB. The contract-level contracting officer,
Pauletta France-Isetts, conducted this review and concluded that PK did not meet the IFB’s
requirements because it lacked relevant experience and the resumes of its key personnel did not
reflect the required experience. Id. at 413-14. Ms. France-Isetts prepared a memorandum for the
administrative contracting officer, Yolanda Nero, describing her findings. Id. at 413-18. Ms.
Nero treated Ms. France-Isetts’s conclusion as a finding that PK was not a responsible bidder.
Id. at 419.
Because the contract was set aside for a section 8(a) small business, the EPA was
required to refer the issue of PK’s responsibility to the United States Small Business
Administration (“SBA”) for evaluation in the SBA’s Certificate of Competency program. See 15
U.S.C. § 637(b)(7)(A) (2012); 13 C.F.R. § 125.5 (2012). In the referral, Ms. Nero did not
address whether PK submitted a responsive bid. AR 419-22. On June 22, 2012, the SBA issued
a Certificate of Competency to PK and notified the EPA that it considered PK to be a responsible
bidder. Id. at 435-36. The SBA further advised the EPA that it was required to award the
contract to PK. Id. at 435. Dissatisfied with that outcome, Ms. Nero filed an appeal with the
SBA, but did so without addressing the responsiveness of PK’s bid. Id. at 441. The SBA denied
the appeal. Id. at 446-56. Accordingly, Ms. Nero awarded the contract to PK on September 26,
2012, id. at 457, more than ninety days after bids were due, id. at 177, 457. The following day,
4
The standard “Solicitation, Offer and Award” form provides a blank space for the
offeror to write in the number of calendar days that it will keep its offer open, and indicates that
the default bid acceptance period is sixty days “unless a different period is inserted by the offeror
. . . .” See, e.g., AR 406.
-3-
Ms. Nero notified the other bidders that their bids were not accepted and that the contract had
been awarded to PK. Id. at 513.
B. Plaintiff’s Protests
Shortly after contract award, plaintiff protested the EPA’s award decision at the
Government Accountability Office (“GAO”), arguing that PK’s bid was nonresponsive and that
PK was not a responsible bidder. Id. at 523-34, 550-58, 570-76. The GAO ultimately denied the
protest. Id. at 581-87.
Plaintiff opted to pursue its protest in the United States Court of Federal Claims (“Court
of Federal Claims”). In its January 29, 2013 complaint, plaintiff set forth two claims for relief.
First, it alleged that the EPA’s award of the contract to a bidder with a nonresponsive bid was
arbitrary and capricious. Compl. ¶¶ 19-23. Second, it contended that the SBA’s determination
that PK was a responsible bidder in the absence of any finding that PK submitted a responsive
bid was arbitrary and capricious. Id. ¶¶ 24-27. Plaintiff sought the following relief: (1) an
injunction forbidding further performance of the contract; (2) a declaration that the contract
awarded to PK was null and void; (3) termination of the contract; (4) an injunction requiring that
the contract be awarded to plaintiff as the next lowest bidder; (5) attorney’s fees and costs; and
(6) any other relief deemed just and equitable. Id. at 9-10.
C. The EPA’s Termination of Its Contract With PK
During the status conference conducted by the court the day after plaintiff filed its protest,
defendant represented that the EPA would agree to stay PK’s performance of the contract
pending an expedited ruling from the court on the merits of plaintiff’s protest. However, even
with an expedited briefing schedule, the delay in commencing contract performance was
imposing a financial burden on PK. AR 1148-51, 1443, 1586. PK discussed this issue with the
EPA during a series of telephone calls from February 19 to February 25, 2013, during which the
EPA proposed terminating the contract for convenience at no cost to the government. Id. at
1148-51. The EPA was willing to proceed with such a termination because, as noted in a
February 15, 2013 electronic-mail exchange, it would be able to “protect the funds” designated
for the PK contract and use them for another contract, with every effort to be made to have a
“new contract” awarded by April 2013.5 Id. at 1443; see also id. at 1444-45 (setting up, on
March 1, 2013, a conference call to discuss a “new contract” to replace the PK contract), 1449
(anticipating, on March 8, 2013, a new soil remediation contract to replace the PK contract).
In the meantime, proceedings in this protest continued, and plaintiff filed a motion for
judgment on the administrative record. But then, just before its response and cross-motion were
5
Contrary to defendant’s interpretation of this electronic-mail exchange, see Def.’s Mot.
8, the EPA did not specify that there would be a new procurement, AR 1443. Rather, it only
indicated that there would be a new contract award. Id.-4-
due, defendant filed a notice with the court indicating that the EPA intended to terminate its
contract with PK for its convenience, conclude the procurement, and then reassess its needs for
the soil remediation work that was the subject of the procurement. Notice, Mar. 5, 2013, at 1-2.
Consequently, defendant stated that it intended to move to dismiss the protest as moot. Id. The
EPA terminated its contract with PK on March 11, 2013, AR 1161, and defendant filed its
motion to dismiss this protest that same day.
D. The EPA’s Reassessment of Its Soil Remediation Needs and Decision Not to Pursue
Another Soil Remediation Contract
When the EPA realized that its contract with PK would be terminated, it recognized a
need to award a new soil remediation contract. Id. at 1443-45, 1449. However, there is no
indication that it considered returning to the original procurement to award the contract to the
next lowest bidder, i.e., plaintiff. Instead, the EPA began to make alternative arrangements for
satisfying its soil remediation needs at the Omaha Lead Site. Initially, it intended to procure the
soil remediation services using a new solicitation. See id. at 1446 (containing a March 5, 2013
electronic-mail message from Ms. Nero to agency counsel, which was subsequently forwarded to
defense counsel, indicating that Ms. Nero was “going to have to reprocure another contract” and
was “planning on putting another solicitation out on the streets”), 1450-53 (discussing, on March
6 and 8, 2013, a possible schedule for issuing a new solicitation to procure a replacement soil
remediation contract). This plan was to be discussed during a March 8, 2013 conference call. Id.
at 1452-53.
In preparation for the conference call, an EPA employee–presumably David Drake, Ph.D.,
chief of the Special Emphasis Remedial Section for EPA Region 7–prepared a one-page briefing
paper regarding the then-current situation at the Omaha Lead Site.6 Id. at 1458. In that briefing
paper, Dr. Drake indicated that there were 660 properties awaiting remediation and 1,900
properties for which the EPA needed to secure access and sample the soil. Id. Dr. Drake
accordingly recommended that the EPA “[d]elay issuing a new soil remediation contract . . . and
continue to focus on securing access and completing sampling.” Id. He believed that the
existing contract with Lawson Environmental Service, LLC (“Lawson”) might be sufficient to
accommodate the EPA’s soil remediation needs,7 and that if it was not, the EPA could solicit a
new contract when necessary. Id.; accord id. at 1456 (“I believe we should delay issuing a new
6
Although the briefing paper does not contain the name of its author, the contents of a
March 8, 2013 electronic-mail message sent by Dr. Drake suggest that he prepared it. See AR
1455.
7
It appears that the Lawson contract was the contract set aside for a small business
described in solicitation SOL-R7-12-00005, the companion to the solicitation at issue in this
protest. Compare AR 457 (indicating that PK was awarded contract number EP-S7-12-07 on
September 26, 2012), with id. at 1092 (indicating that Lawson was awarded contract number EP-
S7-12-06 on September 26, 2012).
-5-
contract at this time. We may not ultimately have sufficient properties for a second contract or
could need a much smaller future contract than originally anticipated.”).
Despite Dr. Drake’s recommendation, the EPA decided after the conference call to
proceed with a new soil remediation procurement. Id. at 1461 (“We will be proceeding with a
Best Value procurement for Omaha . . . . In addition, a small access agreement contract will be
procured . . . .”). It commenced the preparation of a solicitation for the procurement. See id. at
1462-63 (discussing, on March 8, 2013, possible evaluation criteria for the new soil remediation
procurement); 1474 (indicating, on April 10, 2013, that Ms. France-Isetts was beginning to work
on the soil remediation contract). However, the EPA also began to rethink its need for a new soil
remediation contract. See id. at 1477 (indicating, on May 16, 2013, that the EPA was “still
determining” whether it wanted to “rescope” the requirement).
Ultimately, on May 21, 2013, the EPA decided that it would not solicit a new soil
remediation contract. See generally id. at 1481-86. It had determined that only 182 properties
were ready for soil remediation work and that the greater need was for securing property access
agreements–such agreements were needed for 2,317 properties. Id. at 1163, 1481. The EPA
therefore decided to give the 182 properties requiring soil remediation to Lawson and divide the
properties requiring access agreements between the City of Omaha and a new contractor. Id. at
1481. Accordingly, on June 10, 2013, the EPA initiated a new procurement limited to the
securing of property access agreements. Id. at 1164-65. The EPA planned to conduct a sole-
source procurement and award the contract–set aside for a section 8(a) small business and valued
at $800,000–to Prudent Technologies, Inc. (“Prudent”). Id. at 1164-65, 1176, 1195. The EPA’s
decision to pursue this alternative course of action was explained by Dr. Drake in a July 24, 2013
electronic-mail message:
The initial contract with P.K. Management was for $24.6 million and
included the remediation of 2,400 residential properties over a four year period.
We did not have this number of properties to remediate when the contract
was proposed but believed that our ongoing sampling efforts would yield a
sufficient number of properties to remediate. All of the residential properties we
test do not require remediation so we can only estimate the number of properties
that will ultimately require remediation since they all have not been tested.
Our property testing activities during the P.K. contracting delay did not
generate as many properties to remediate as we had anticipated so we re-assessed
our needs for a second remediation contractor and now believe that the existing
Lawson contract which is also for four years with a total of 2,400 properties may
be sufficient to finish the work. However, we will not know for certain until all
of the properties are tested so that is why we now need a new soil testing
contract.
-6-
. . . . After this work is complete we will then be able to definitely
determine if the existing Lawson contract is sufficient. We may need a future
soil remediation contract to finish the work but it is impossible to know this or
determine the scope until all of the residential properties have been tested.
Id. at 1209. The EPA ultimately awarded the contract for securing property access agreements to
Prudent on August 27, 2013. Id. at 1213.
E. Further Proceedings in the Court of Federal Claims
In the meantime, proceedings related to defendant’s motion to dismiss continued in this
court. On July 20, 2013, the court directed the parties to file supplemental briefs addressing the
contents of a notice filed by defendant the previous day. Rather than filing a supplemental brief,
defendant filed a renewed motion to dismiss. Shortly after the conclusion of briefing on the
renewed motion to dismiss, proceedings in the protest were stayed for twenty-three days at
defendant’s request.8 Subsequently, plaintiff moved for leave to file an amended complaint to
add a claim challenging the EPA’s purported cancellation of the soil remediation procurement.
On December 16, 2013, after the conclusion of all briefing, the court issued a decision
resolving defendant’s motion to dismiss, defendant’s renewed motion to dismiss, and plaintiff’s
motion to amend its complaint. Coastal Envtl. Grp., Inc. v. United States, 114 Fed. Cl. 124(2013). The court granted defendant’s motions, holding that the two claims for relief set forth in
plaintiff’s complaint were moot. Id. at 130-32, 135. However, the court also granted plaintiff’s
motion, allowing plaintiff to file a supplemental complaint. Id. at 132-35.
Plaintiff filed its supplemental complaint shortly thereafter, adding a third claim for
relief–captioned “Bad Faith Cancellation of the Procurement”–to challenge the EPA’s purported
cancellation of the original procurement, i.e., the procurement that resulted in the award of the
contract to PK. Supplemental Compl. ¶¶ 28-40. Plaintiff seeks the following relief: (1) a
declaration that the EPA violated statute and regulation in awarding the contract to PK; (2) a
declaration that the EPA’s cancellation of the soil remediation procurement violated the law
because it was done in bad faith, without a compelling reason or rational basis; (3) an injunction
enjoining the procurement of soil remediation services by any means other than through the
procurement that was cancelled; (4) attorney’s fees and costs; and (5) any other relief deemed
just and equitable. Id. at 14-15.
Defendant subsequently filed a supplemental administrative record to add documents
relevant to plaintiff’s new claim for relief. Proceedings regarding the supplemental
administrative record and the parties’ requests to further supplement the administrative record
8
Defendant requested the stay due to the lapse of appropriations to the United States
Department of Justice. Although the lapse commenced on October 1, 2013, defendant did not
move to stay proceedings until October 7, 2013. The court lifted the stay on October 29, 2013.
-7-
lasted several months, and are described more fully in a contemporaneously filed decision
sanctioning the EPA for the misconduct of its contracting officials. See Coastal Envtl. Grp., Inc.
v. United States, No. 13-71C, slip op. (Aug. 13, 2014). Ultimately, defendant filed a corrected
administrative record on May 22, 2014. Plaintiff filed its motion for judgment on the
administrative record on July 9, 2014, and defendant filed its motion to dismiss and cross-motion
for judgment on the administrative record on July 31, 2014. Upon the conclusion of briefing, the
court heard argument, and is now prepared to rule.
II. DEFENDANT’S MOTION TO DISMISS
Defendant first moves to dismiss plaintiff’s protest for lack of jurisdiction pursuant to
Rule 12(b)(1) of the Rules of the United States Court of Federal Claims (“RCFC”), arguing that
plaintiff lacks standing to pursue its protest. “[T]he question of standing is whether the litigant is
entitled to have the court decide the merits of the dispute or of particular issues.” Warth v.
Seldin, 422 U.S. 490, 498 (1975). Without standing, a litigant’s dispute is not justiciable. Fisher
v. United States, 402 F.3d 1167, 1176 (Fed. Cir. 2005) (panel portion) (noting that justiciability
“encompasses a number of doctrines under which courts will decline to hear and decide a cause,”
including the “doctrines of standing, mootness, ripeness, and political question”). The court’s
inquiry into the justiciability of a case is distinct from its inquiry into whether it has jurisdiction
over the case’s subject matter. Powell v. McCormack, 395 U.S. 486, 512 (1969); Baker v. Carr,
369 U.S. 186, 198 (1962); Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 1335 n.3 (Fed.
Cir. 2008); Murphy v. United States, 993 F.2d 871, 872 (Fed. Cir. 1993). In other words, the
court may find that it possesses jurisdiction over the subject matter of a case but that the dispute
is nevertheless nonjusticiable. Thus, while standing is jurisdictional in that it involves the court’s
power to adjudicate a case,9 an RCFC 12(b)(1) motion may not be the appropriate vehicle by
9
See, e.g., Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 102-10 (1988)
(characterizing the justiciability issue of standing as a jurisdictional issue); Myers Investigative &
Sec. Servs., Inc. v. United States, 275 F.3d 1366, 1369 (Fed. Cir. 2002) (“[S]tanding is a
threshold jurisdictional issue.”).
-8-
which to dismiss a case for lack of standing.10 Ultimately, however, the precise nature of the
motion filed by defendant is not relevant here because plaintiff has standing to protest.
“The standing issue in this case is framed by 28 U.S.C. § 1491(b)(1), which . . . imposes
more stringent standing requirements than Article III.” Weeks Marine, Inc. v. United States, 575
F.3d 1352, 1359 (Fed. Cir. 2009). Under section 1491(b)(1), bid protests may only be brought by
“interested parties.” The term “interested party” is construed in accordance with the Competition
in Contracting Act of 1984, and, accordingly, “standing under § 1491(b)(1) is limited to actual or
prospective bidders or offerors whose direct economic interest would be affected by the award of
the contract or by failure to award the contract.” Am. Fed’n of Gov’t Emps. v. United States,
258 F.3d 1294, 1302 (Fed. Cir. 2001) (citing 31 U.S.C. § 3551(2)(A) (2000)); see also Info.
Tech. & Applications Corp. v. United States, 316 F.3d 1312, 1319 (Fed. Cir. 2003) (interpreting
this standard as requiring a protestor to show that it was an interested party prejudiced by the
procuring agency’s action and holding that “because the question of prejudice goes directly to the
question of standing, the prejudice issue must be reached before addressing the merits”); Myers
Investigative & Sec. Servs., Inc., 275 F.3d at 1370 (defining “prejudice” as “injury”). Therefore,
a party lodging a protest must establish that it “(1) is an actual or prospective bidder, and (2)
possesses the requisite direct economic interest.” Rex Serv. Corp. v. United States, 448 F.3d
1305, 1307 (Fed. Cir. 2006); see also Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)
(noting that the burden of establishing standing is on “[t]he party invoking federal jurisdiction”).
Conceding, as it must, that plaintiff was an actual bidder in the procurement at issue,
defendant’s argument pertains only to the second prong of the standing test–direct economic
interest. To prove that it possesses a “direct economic interest,” a protestor must show that it had
a “substantial chance” of being awarded the contract. Rex Serv. Corp., 448 F.3d at 1307. In
other words, “[t]o have standing, the plaintiff need only establish that it ‘could compete for the
contract’ . . . .” Myers Investigative & Sec. Servs., Inc., 275 F.3d at 1370 (quoting Impresa
Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1334 (Fed. Cir. 2001)).
According to defendant, plaintiff did not have a substantial chance of being awarded the contract
because it submitted a nonresponsive bid, i.e., a bid that was only left open for sixty days and not
the ninety days required by the IFB. The court does not find defendant’s argument persuasive.
10
See, e.g., Baker, 369 U.S. at 196 (holding that a case that is “unsuited to judicial
inquiry or adjustment” should be dismissed for “a failure to state a justiciable cause of action”
and not for “a lack of jurisdiction of the subject matter” (internal quotation marks omitted));
Oryszak v. Sullivan, 576 F.3d 522, 526-27 (D.C. Cir. 2009) (Ginsburg, J., concurring) (noting
that when “a plaintiff makes a claim that is not justiciable . . . a court should dismiss the case for
failure to state a claim” and that “it is important to distinguish among failure to state a claim, a
claim that is not justiciable, and a claim over which the court lacks subject matter jurisdiction”);
see also Kontrick v. Ryan, 540 U.S. 443, 455 (2004) (“Clarity would be facilitated if courts and
litigants used the label ‘jurisdictional’ . . . only for prescriptions delineating the classes of cases
(subject-matter jurisdiction) and the persons (personal jurisdiction) falling within a court’s
adjudicatory authority.”).
-9-
As defendant notes, plaintiff’s bid included both sixty-day and ninety-day bid acceptance
periods. Citing a decision from the GAO, defendant asserts that a bid containing conflicting
acceptance periods is ambiguous and therefore nonresponsive. See Sundt Corp., B-274203, 96-2
CPD ¶ 171 (Comp. Gen. Nov. 5, 1996). However, defendant disregards the fact that the bid
acceptance period portion of the standard “Solicitation, Offer and Award” form indicates on its
face that it is not applicable if the solicitation includes the “Minimum Bid Acceptance Period”
clause. See, e.g., AR 406. Thus, this case is unlike Sundt Corp., which concerned a different
form that did not indicate that the bid acceptance period designated on the form would be
rendered inapplicable by the inclusion of the “Minimum Bid Acceptance Period” clause in the
solicitation. Because the form completed by plaintiff indicated that the “Minimum Bid
Acceptance Period” clause was controlling, plaintiff’s designation of a sixty-day bid acceptance
period on that form is of no import. Accordingly, plaintiff’s bid must be read to include only a
ninety-day bid acceptance period. It therefore was not ambiguous or nonresponsive for this
reason.
Furthermore, it is clear from its conduct that the EPA would not have considered
plaintiff’s bid to be ambiguous or nonresponsive for containing purportedly conflicting bid
acceptance periods because it awarded the contract to PK, notwithstanding the fact that PK’s bid
contained the exact same sixty/ninety-day acceptance period dichotomy. Logic dictates that if
such a dichotomy is not considered to be a fatal flaw for one bidder, then that same flaw cannot
be fatal for any other bidder. Defendant does not provide a reason for applying a different
standard within the same procurement–because, simply put, there is none. Thus, had the EPA
not awarded the contract to PK, plaintiff, as the second low bidder, would have had a substantial
chance of being awarded the contract. Plaintiff therefore has standing to protest.
III. CROSS-MOTIONS FOR JUDGMENT ON THE ADMINISTRATIVE RECORD
The parties have each filed a motion for judgment on the administrative record pursuant
to RCFC 52.1, urging the court to enter judgment in its favor. In ruling on such motions, “the
court asks whether, given all the disputed and undisputed facts, a party has met its burden of
proof based on the evidence in the record.” A & D Fire Prot., Inc. v. United States, 72 Fed. Cl.
126, 131 (2006) (citing Bannum, Inc. v. United States, 404 F.3d 1346, 1356 (Fed. Cir. 2005)11).
Because the court makes “factual findings . . . from the record evidence,” judgment on the
administrative record “is properly understood as intending to provide for an expedited trial on the
administrative record.” Bannum, Inc., 404 F.3d at 1356.
11
The decision in Bannum was based upon then-RCFC 56.1, which was abrogated and
replaced by RCFC 52.1. RCFC 52.1 was designed to incorporate the decision in Bannum. See
RCFC 52.1, Rules Committee Note (June 20, 2006).
-10-
A. Bid Protest Standard of Review
In a bid protest, the Court of Federal Claims reviews the challenged agency action
pursuant to the standards set forth in 5 U.S.C. § 706. 28 U.S.C. § 1491(b)(4) (2012). Although
section 706 contains several standards, “the proper standard to be applied in bid protest cases is
provided by 5 U.S.C. § 706(2)(A): a reviewing court shall set aside the agency action if it is
‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.’”
Banknote Corp. of Am. v. United States, 365 F.3d 1345, 1350 (Fed. Cir. 2004). Under this
standard, the court “may set aside a procurement action if ‘(1) the procurement official’s decision
lacked a rational basis; or (2) the procurement procedure involved a violation of regulation or
procedure.’” Centech Grp., Inc. v. United States, 554 F.3d 1029, 1037 (Fed. Cir. 2009) (quoting
Impresa Construzioni Geom. Domenico Garufi, 238 F.3d at 1332).
Procurement officials “are entitled to exercise discretion upon a broad range of issues
confronting them in the procurement process.” Impresa Construzioni Geom. Domenico Garufi,
238 F.3d at 1332 (internal quotation marks omitted). Thus, when a protestor challenges the
procuring agency’s decision as irrational, the court’s review is “highly deferential” to the
agency’s decision, Advanced Data Concepts, Inc. v. United States, 216 F.3d 1054, 1058 (Fed.
Cir. 2000), and “[t]he court is not empowered to substitute its judgment for that of the agency,”
Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971). “Accordingly, the
test for reviewing courts is to determine whether the contracting agency provided a coherent and
reasonable explanation of its exercise of discretion, and the disappointed bidder bears a heavy
burden of showing that the award decision had no rational basis.” Impresa Construzioni Geom.
Domenico Garufi, 238 F.3d at 1332-33 (citation and internal quotation marks omitted); accord
Advanced Data Concepts, Inc., 216 F.3d at 1058 (“The arbitrary and capricious standard . . .
requires a reviewing court to sustain an agency action evincing rational reasoning and
consideration of relevant factors.”).
B. Discussion
Plaintiff contends that the EPA cancelled the original soil remediation procurement in
early March 2013 when it decided, upon the termination of its contract with PK, not to seek the
revival of any of the existing bids and to instead solicit a new soil remediation contract. Plaintiff
challenges this purported cancellation on three general grounds. First, plaintiff argues that the
corrected administrative record does not contain any explanation for the EPA’s decision to solicit
a new contract instead of seeking the revival of an earlier bid, which forecloses a determination
that the decision had a rational basis. Second, plaintiff contends that the purported cancellation
was irrational because it occurred before the EPA reassessed its soil remediation needs. Third,
plaintiff argues that by cancelling the procurement, the EPA did not treat all bidders equally and
impartially, asserting that the EPA permitted PK to extend its bid acceptance period to allow for
the initial award of the contract, but failed to ask plaintiff to extend its bid acceptance period to
allow for the award of a contract to replace PK’s terminated contract.
-11-
1. The EPA Constructively Cancelled the Procurement
The threshold issue implicated by plaintiff’s contentions is whether the EPA’s decision to
solicit a new soil remediation contract instead of seeking the revival of an earlier bid constitutes
the cancellation of the procurement. The starting point for the court’s analysis are the provisions
of the Federal Acquisition Regulation (“FAR”) concerning sealed bid procurements. Under FAR
14.404-1(a)(1), after opening the bids but before awarding a contract, an agency may reject all of
the bids and cancel the IFB if there is a “compelling reason” to do so. More particularly:
Invitations may be cancelled and all bids rejected before award but after opening
when . . . the agency head determines in writing that–
(1) Inadequate or ambiguous specifications were cited in the invitation;
(2) Specifications have been revised;
(3) The supplies or services being contracted for are no longer required;
(4) The invitation did not provide for consideration of all factors of cost to
the Government . . .;
(5) Bids received indicate that the needs of the Government can be
satisfied by a less expensive article differing from that for which the bids
were invited;
(6) All otherwise acceptable bids received are at unreasonable prices, or
only one bid is received and the contracting officer cannot determine the
reasonableness of the bid price;
(7) The bids were not independently arrived at in open competition, were
collusive, or were submitted in bad faith . . .;
(8) No responsive bid has been received from a responsible bidder;
(9) A cost comparison . . . shows that performance by the Government is
more economical; or
(10) For other reasons, cancellation is clearly in the public’s interest.
FAR 14.404-1(c). As is evident by the provision’s plain language, the EPA’s purported decision
to cancel the procurement does not fit within the four corners of FAR 14.404-1 because the EPA
-12-
made the decision after contract award, did not expressly reject all of the bids,12 and did not
determine, in writing, that there was a compelling reason to reject all of the bids and cancel the
IFB.13
The inapplicability of FAR 14.404-1, however, does not preclude the possibility that a
sealed bid procurement has been cancelled. The GAO has concluded that when a procuring
agency allows all bids to expire without awarding a contract, the agency has constructively
cancelled the procurement. See Adrian Supply Co., B-240871 et al., 90-2 CPD ¶ 515 (Comp.
Gen. Dec. 21, 1990); U.S. Rentals, 69 Comp. Gen. 395 (1990). That the GAO’s decisions are
distinguishable on their facts does not render the concept of constructive cancellation irrelevant
in this protest.
As reflected in the corrected administrative record, the EPA invited bids for soil
remediation services, opened the bids that it received, and awarded the contract to PK. Plaintiff
immediately protested the EPA’s contract award decision, first before the GAO and then in this
court. During the pendency of this protest, PK determined that the financial burden of the delay
in commencing contract performance was heavier than it could bear. Thus, the EPA and PK
agreed to terminate their contract for convenience at no cost to the government. At the same
time, the EPA decided to replace its contract with PK by issuing a new solicitation. Indeed, the
EPA began to act on this decision after the termination of its contract with PK.
The EPA’s decision to issue a new solicitation meant that it would not seek the revival of
bids under the IFB. Thus, for all intents and purposes, the EPA’s decision constituted the
cancellation of the procurement. See also Klinge Corp. v. United States, 83 Fed. Cl. 773, 773-
74, 776 (2008) (finding a “de facto cancellation” where the procuring agency did not formally
cancel the solicitation after the contract award was overturned as a result of a protest and the
contracting officer “could have revived it by asking [the offeror] to renew its proposal”);
Magnavox Advanced Prods. & Sys. Co., B-215426, 85-1 CPD ¶ 146 (Comp. Gen. Feb. 6, 1985)
(finding a “de facto cancellation” when the procuring agency rejected the sole offeror and
resolicited the requirement).
In an attempt to avoid this conclusion, defendant argues that it was not possible for the
EPA to cancel the procurement once the contract had been awarded to PK. It relies on FAR
12
FAR 14.404-3 requires that “[w]hen it is determined necessary to reject all bids, the
contracting officer shall notify each bidder that all bids have been rejected and shall state the
reason for such action.”
13
Defendant asserts that by awarding the contract to PK and notifying the other bidders
that their bids had not been accepted, the EPA rejected those other bids. Def.’s Resp. & Cross-
Mot. 24. This is incorrect. FAR 14.404-2 and FAR 14.409-1(a)(1) clearly distinguish between
bids that are rejected as being nonconforming or otherwise unacceptable, and potentially
conforming bids that are not accepted due to their higher price.
-13-
14.101, which describes the five steps in the sealed bidding process: (1) preparing an IFB, (2)
publicizing the IFB, (3) submitting bids, (4) evaluating bids, and (5) awarding the contract.
Under defendant’s interpretation of this provision, an award of a contract pursuant to the sealed
bidding process concludes the procurement. Defendant is mistaken; a contract award does not
end a procurement. Rather, a procurement remains ongoing during contract performance and
does not conclude until the contract is closed out. 41 U.S.C. § 111 (2012) (“[T]he term
‘procurement’ includes all stages of the process of acquiring property or services, beginning with
the process for determining a need for property or services and ending with contract completion
and closeout.”); accord Distributed Solutions, Inc. v. United States, 539 F.3d 1340, 1345 (Fed.
Cir. 2008) (adopting a definition identical to the one appearing in 41 U.S.C. § 111 to determine
the existence of a procurement for the purposes of 28 U.S.C. § 1491(b), which defines the bid
protest jurisdiction of the Court of Federal Claims); see also FAR 2.101 (defining procurement to
mean “the acquiring by contract with appropriated funds of supplies or services (including
construction) by and for the use of the Federal Government through purchase or lease”). FAR
14.101 does not bar a procuring agency from returning to an earlier stage of the sealed bidding
process if the agency is unable to proceed under an awarded contract. In fact, once a procuring
agency terminates a contract awarded through the sealed bidding process, there appear to be no
legal obstacles preventing the agency from seeking to revive earlier bids. See, e.g., Performance
Textiles, Inc., B-256895, 94-2 CPD ¶ 65 (Comp. Gen. Aug. 8, 1994) (holding, when a contract is
terminated for default, “that it is reasonable to award a repurchase contract to the next low
responsive, responsible bidder on the original solicitation at its original bid price provided that
there is a relatively short time span between the original competition and the default and there is
a continuing need for the items”); V & Z Heating Corp., B-224725, 86-2 CPD ¶ 472 (Comp.
Gen. Oct. 20, 1986) (holding that a procuring agency may permit a second-low bidder to revive
its expired bid after terminating the contract awarded to the lowest bidder for the submission of
an inadequate bid guarantee, so long as it “would not compromise the integrity of the competitive
bidding system” to do so); Architectural Window Sys., Inc., B-213799, 84-1 CPD ¶ 326 (Comp.
Gen. Mar. 19, 1984) (holding that a procuring agency could, after awarding a contract, seek to
revive a withdrawn bid upon determining that the withdrawal of the bid was based on its
erroneous interpretation of the IFB); Ubique, Ltd., DOTCAB No. 71-28, 72-1 BCA ¶ 9340(noting that the procuring agency, after terminating the originally awarded contract for default,
awarded a new contract to the second-low bidder after asking the second-low bidder to extend its
bid acceptance period); see also Rice Servs., Ltd. v. United States, 25 Cl. Ct. 366, 368 (1992)
(holding that the integrity of the competitive acquisition process is not compromised when a
procuring agency asks all offerors to revive their proposals after the expiration of the acceptance
period); TCA Reservations, Inc., B-218615, 85-2 CPD ¶ 163 (Comp. Gen. Aug. 13, 1985) (“[A]
bidder may extend its acceptance period, and thus revive its expired bid, where it offered the
acceptance period required by the IFB, and revival of the bid would not compromise the integrity
of the competitive bidding process.”).
In short, once the EPA decided to issue a new solicitation to procure a replacement soil
remediation contract rather than seek to revive bids under the existing IFB, it constructively
cancelled the procurement.
-14-
2. Plaintiff Has Not Established That the EPA’s Cancellation of the Procurement Lacked a
Rational Basis
When it became clear to the EPA that its contract with PK would be terminated, it was
faced with a decision–should it request that the other bidders revive their bids by extending their
bid acceptance periods or should it pursue the cancellation of the procurement? As noted above,
the EPA effectively chose the latter approach. However, as plaintiff notes, the rationale for the
EPA’s decision is not documented in the corrected administrative record. A February 15, 2013
electronic-mail exchange indicated only that the EPA would endeavor to quickly award a new
contract, and March 1, 2013 electronic-mail messages were directed at setting up a conference
call to discuss a new contract. None of these communications addressed how the EPA planned
to award the new contract. And, when the EPA finally expressed its intent to issue a new
solicitation to replace its contract with PK–via a statement made by Ms. Nero on March 5, 2013,
that was relayed to defense counsel–it provided no explanation for the decision. In fact, the
record does not contain even a post hoc explanation of the EPA’s decision to resolicit the soil
remediation requirement instead of seeking the revival of bids under the existing IFB.
Nevertheless, pursuant to binding precedent, the EPA is not required to provide an
explanation for its decision. Government contract officials are presumed to “exercise their duties
in good faith.” Am-Pro Protective Agency, Inc. v. United States, 281 F.3d 1234, 1239 (Fed. Cir.
2002). A protestor seeking to overcome this “strong presumption” bears a heavy burden of
proof. Id. at 1238-39. Where, as here, there is no regulation requiring an agency to provide an
explanation for its decision,14 the presumption of regularity renders an explanation unnecessary
“unless that presumption has been rebutted by record evidence suggesting that the agency
decision is arbitrary and capricious.” Impresa Construzioni Geom. Domenico Garufi, 238 F.3d at
1338.
In an attempt to rebut the presumption of good faith, plaintiff emphasizes the fact that it
protested the award of the soil remediation contract to PK and maintained the protest until, and
after, the EPA constructively cancelled the procurement. Plaintiff argues that the existence of a
protest challenging the propriety of the contract award precluded the EPA from unilaterally
concluding the procurement. Rather, plaintiff contends, the only option available to the EPA that
would ensure that it acted with the “integrity, fairness, and openness” required by FAR
1.102(b)(3) and FAR 1.102-2(c)(1) was to proceed under the IFB and seek the revival of bids.
Plaintiff also argues that the duty to treat bidders impartially required the EPA to ask plaintiff to
extend its bid acceptance period because the EPA had previously allowed PK, as the presumptive
14
FAR 14.404-1(c) requires a written determination in support of a cancellation decision,
but as noted above, and as conceded by plaintiff, Pl.’s Reply & Resp. 5-6 n.2, FAR 14.404-1 is
not applicable here.
-15-
awardee, to extend its bid acceptance period.15 Finally, plaintiff suggests that the EPA’s
cancellation decision was made in bad faith, contending that the EPA was either attempting to
punish it for filing the two protests or to avoid continued litigation.
Plaintiff’s contentions are insufficient to overcome the presumption that the EPA acted in
good faith in constructively cancelling the procurement. First, the existence of a bid protest does
not deprive a procuring agency of the authority to take action in connection with the procurement
at issue. Indeed, agencies might, for example, decline to stay performance of a contract during
the pendency of a protest or choose to take corrective action in response to the protest. If the
protestor objects to such actions, it may seek relief in the appropriate administrative or judicial
forum. Thus, the fact that plaintiff was protesting the EPA’s award of the contract to PK in the
Court of Federal Claims did not, in and of itself, prevent the EPA from terminating its contract
with PK and cancelling the underlying procurement.
Second, the fact that the EPA allowed the presumptive awardee, PK, to extend its bid
acceptance period to allow for the award of the contract does not mean that the EPA was required
to ask plaintiff to extend its bid acceptance period five months later upon the termination of PK’s
contract. The award of the contract to PK effectively reset the EPA’s duty of impartiality to the
bidders in the procurement. Upon the termination of PK’s contract, the EPA’s obligation applied
only to its treatment of the remaining bidders in relation to each other; its prior treatment of PK
was irrelevant. Third, there is absolutely no support in the corrected administrative record for the
contention that the EPA decided to cancel the procurement due to animus towards plaintiff or as
a litigation avoidance tactic. The court declines to assign improper motives to the EPA based on
innuendo.
Altogether, plaintiff has cited no evidence in the corrected administrative record
suggesting that the EPA’s decision to cancel the procurement was not made in good faith.
Moreover, plaintiff has not identified any legal authority for the proposition that the EPA was
required to seek the revival of bids upon the cancellation of the procurement; indeed, the
decisions describing circumstances analogous to those present here–V & Z Heating Corp. and
Architectural Window Sys., Inc.–suggest that seeking the revival of bids after the original
contract is terminated is a permissive, not a mandatory, act. Accordingly, the court concludes
that plaintiff has not met its heavy burden of proving that the EPA did not act in good faith when
it cancelled the procurement or that the EPA’s cancellation decision lacked a rational basis.
IV. CONCLUSION
For the reasons set forth above, the court DENIES defendant’s motion to dismiss and
plaintiff’s motion for judgment on the administrative record, and GRANTS defendant’s cross-
15
Although not cited by plaintiff, the duty to treat bidders impartially, fairly, and equally
is imposed on contracting officers by FAR 1.602-2(b).
-16-
motion for judgment on the administrative record. Plaintiff’s protest is DISMISSED with
prejudice. No costs. The clerk is directed to enter judgment accordingly.
The court has filed this ruling under seal. The parties shall confer to determine agreed-to
proposed redactions. Then, by no later than Friday, August 22, 2014, the parties shall file a
joint status report indicating their agreement with the proposed redactions, attaching a copy of
those pages of the court’s ruling containing proposed redactions, with all proposed
redactions clearly indicated.
IT IS SO ORDERED.
s/ Margaret M. Sweeney
MARGARET M. SWEENEY
Judge
-17-