Sonoran Technology and Professional Services, LLC v. United States

In the United States Court of Federal Claims
No. 17-711C
(Filed Under Seal: August 1, 2017)
(Reissued for Publication: August 9, 2017)1
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SONORAN TECHNOLOGY AND *
PROFESSIONAL SERVICES, LLC, *
*
Plaintiff, *
*
v. *
* Bid Protest; Motion to Amend
THE UNITED STATES, * Complaint; Small Business
* Administration; Jurisdiction
Defendant, * over Certificate of Competency
* Decision; Unjustified Delay.
and *
*
SPECTRE PURSUIT GROUP, LLC, *
*
*
Defendant-Intervenor. *
*
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Brett W. Johnson, with whom was Andrew Sniegowski, Snell & Wilmer, LLP, Phoenix,
Arizona, for Plaintiff.
Jessica L. Cole, with whom were Chad A. Readler, Acting Assistant Attorney General,
Robert E. Kirschman, Jr., Director, Claudia Burke, Assistant Director, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice, Washington, D.C., and
Captain Ryan Payne, Of Counsel, Commercial Litigation Field Support, U.S. Air Force,
for Defendant.
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The Court issued this decision under seal on August 1, 2017 and invited the parties to submit proposed
redactions of any competitive-sensitive, proprietary, confidential, or other protected information on or
before August 8, 2017. By that date, none of the parties proposed redactions. Thus, the Court reissues the
opinion in its entirety for publication.
J. Bradley Reaves, with whom was Beth V. McMahon, ReavesColey, PLLC, Chesapeake,
Virginia, for Defendant-Intervenor.
ORDER REGARDING MOTION TO AMEND COMPLAINT
WHEELER, Judge.
In this bid protest, Sonoran Technology and Professional Services, LLC
(“Sonoran”) challenges the United States Air Force’s decision to terminate its contract to
train aircrew to fly B-52 and B-51 aircrafts and award the same contract to Spectre Pursuit
Group, LLC (“SPG”) as a result of corrective action. Sonoran now seeks to amend its
complaint to add two counts against the Small Business Administration (“SBA”) for
issuing a Certificate of Competency (“COC”) to a non-responsible bidder and re-opening
a COC referral contrary to established SBA practices. For the reasons described below,
Sonoran’s motion is DENIED.
Background
On February 29, 2016, the Air Force issued Request for Proposal FA6800-16-R-
0001 seeking a service-disabled veteran-owned small business for courseware
development and training for its aircrew flying B-52 and B-51 aircrafts. AR 489. The
awardee was required to have a facility security clearance (“FCL”) at the time of the award.
Id. at 558. Sonoran and SPG were two of nine offerors who submitted proposals. Id. at
2287-2944. At the time SPG submitted its proposal, it did not have the required FCL. Id.
at 9255, 2315. On July 22, 2016, the Contracting Officer, Captain John R. Sidor,
determined that SPG was not eligible for award because it had not received an FCL, and
he promptly awarded the contract to Sonoran. Id. at 6391, 6653.
After first filing before the Government Accountability Office (“GAO”), which
dismissed the protest, SPG filed a bid protest before this Court on November 28, 2016
challenging the Air Force’s decision not to refer SPG to the SBA for a responsibility
determination. Id. at 8728-85. Sonoran did not intervene in that protest. Id. On December
7, 2016, before any briefing was completed, Capt. Sidor took corrective action and referred
the matter of SPG’s responsibility to the SBA. Id. at 8762. Based on this corrective action,
this Court dismissed SPG’s protest on December 8, 2016. Id. at 8768.
On January 5, 2017, the SBA notified the Air Force and SPG that it could not make
a responsibility determination because the contract had already been awarded to Sonoran.
Id. at 8772. The next day, SPG filed a new bid protest before this Court challenging the
SBA’s failure to make a responsibility determination. Id. at 8773. The SBA decided that
SPG’s case presented “unique circumstances” warranting reconsideration including the
fact that SPG had filed a protest, the Government had informed the Court that a COC would
be processed, and the Air Force committed in writing to terminate the award to Sonoran
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once SBA issued a COC to SPG. Id. at 9721. On January 24, 2017, after SPG had secured
an FCL, the SBA determined that SPG was responsible and issued a COC despite
Sonoran’s contract still being in effect. Id. at 8824. On February 2, 2017, Capt. Sidor
terminated Sonoran’s contract and made an award to SPG. Id. at 8827, 8829. Capt. Sidor
explained to Sonoran that it was terminating the contract “[a]s a result of corrective action
. . . in response to a protest filed by [SPG].” Id. at 8829. This Court dismissed SPG’s
second protest as moot the following day. Spectre Pursuit Group, LLC v. United States,
No. 17-26C (Fed. Cl., Feb. 3, 2017) (Dkt. No. 18).
Sonoran filed this protest on May 30, 2017 and SPG intervened on May 31, 2017.
Dkt. Nos. 1, 9. The Government filed the Administrative Record on June 9, 2017. Dkt.
No. 13. On June 15, 2017, Sonoran filed a motion to supplement the Administrative
Record with depositions from Capt. Sidor and a representative from the SBA. Dkt. No.
14. On June 27, 2017, the Court granted the motion in part and ordered a limited deposition
of Capt. Sidor. Dkt. No. 23. The Court also denied the motion in part by refusing to allow
Sonoran to depose a representative of the SBA because Sonoran never challenged the
SBA’s COC determination in its complaint. Therefore, any discovery into the SBA’s
reasoning behind issuing the COC would be irrelevant to Sonoran’s protest. Id. at 5.
On June 27, 2017, Sonoran filed a second motion to supplement the Administrative
Record seeking the inclusion of “all records currently in possession of [the Government]
that have not yet been disclosed related to the SBA’s decision to grant [SPG’s COC].” Dkt.
No. 26, at 2. In its response, the Government voluntarily amended the Administrative
Record with correspondence between the SBA and Air Force regarding Capt. Sidor’s
request that the SBA provide the Air Force with its rationale for issuing SPG a COC. AR
8826. In light of the Government’s disclosure of correspondence between the SBA and
Air Force about the COC, the Court granted in part Sonoran’s second motion to supplement
the Administrative Record by requiring the Government to provide “all communications,
emails, and documents specifically referred to” in the disclosed correspondence between
the SBA and Air Force. Dkt. No. 41, at 6. The Court was careful to require only those
documents related to the Government’s voluntary disclosure as all else would be irrelevant.
Id. The Government supplemented the Administrative Record with these documents on
July 12, 2017. Dkt. No. 36.
On July 12, 2017, Sonoran filed a motion to amend its complaint to specifically
include counts against the SBA for improperly issuing a COC to SPG and improperly
reconsidering its initial declination to issue a COC to SPG. Pl.’s Mot., Ex. A, at 10-11.
The parties fully briefed the motion by July 31, 2017 pursuant to an expedited briefing
schedule. As a result of Sonoran’s motion to amend, the briefing schedule for the parties’
cross-motions for judgment on the Administrative Record was suspended. Dkt. No. 40.
The Court deems oral argument unnecessary.
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Standard of Review
A party may amend its complaint under RCFC Rule 15(a)(2) with the Court’s leave,
which should be given “freely . . . when justice so requires.” This language is liberally
construed, and courts generally grant leave to amend if there is no “apparent or declared
reason” not to permit amendment. A & D Auto Sales, Inc. v. United States, 748 F.3d 1142,
1158 (Fed. Cir. 2014) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)). The Court
should deny leave to amend if there is evidence of delay, bad faith, repeated failure to
correct a complaint’s deficiencies, undue prejudice to the opposing party, or if the
amendment would be futile. Id. A proposed amendment is futile if it would not survive a
motion to dismiss. Meyer Grp., Ltd. v. United States, 115 Fed. Cl. 645, 650 (2014).
Accordingly, “the party seeking leave must proffer sufficient facts supporting the amended
pleading that the claim could survive a dispositive pretrial motion.” Id. (quoting Kemin
Foods, L.C. v. Pigmentos Vegetales Del Centro S.A. de C.V., 464 F.3d 1339, 1354–55
(Fed. Cir. 2006)) (internal punctuation omitted).
Moreover, “[C]ourts have not hesitated to deny motions to amend that have been
filed after significant delay.” Te-Moak Bonds of Western Shoshone Indians of Nevada v.
Unites States, 948 F.2d 1258, 1262 (Fed. Cir. 1991). Since the bid protest process is
designed to resolve disputes as quickly as possible, even relatively short delays may be
unreasonable in the context of a bid protest. Software Testing Solutions, Inc. v. United
States, 58 Fed. Cl. 533, 536 (2003). The “party seeking to amend its complaint after
significant delays bears the burden of justifying the delay.” Cuper Bajo Nursing Home,
Inc. v. United States, 36 Fed. Cl. 122, 132 (1996).
Discussion
The first issue in this case is whether this Court has jurisdiction to review the SBA’s
decision to issue SPG a COC. If this Court lacks jurisdiction, then Sonoran’s motion to
amend would indeed be futile. Emerald Coast Finest Produce Co., Inc. v. United States,
76 Fed. Cl. 445, 452 (2007). According to FAR 19.602-4(b), “SBA COC’s are conclusive
with respect to all elements of responsibility of prospective small business contractors.”
48 C.F.R. § 19.602-4(1985). According to a plain reading of this provision, the SBA’s
issuance of a COC is not reviewable.
There is also no case law to support Sonoran’s claim that this Court has jurisdiction
to review the SBA’s issuance of a COC. In Cavalier Clothes, Inc. v. United States, the
Federal Circuit held that the SBA is not “immunize[d] from judicial review [of] the refusal
to grant a COC.” 810 F.2d 1108, 1111 (Fed. Cir. 1987) (emphasis added). In contrast, the
SBA’s determination “is only final with respect to a decision certifying a contractor to the
procurement officer as responsible.” Id. (quoting Related Industries, Inc. v. United States,
2 Cl. Ct. 517, 520 (1983)) (emphasis added). Cavalier Clothes further emphasizes the
meaningful difference between the SBA’s decision to deny a COC and to issue a COC.
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“Although [Defense Acquisition Regulation] 1-705.4(a) provided as follows: ‘Contracting
officers shall accept SBA [COCs] as conclusive of a prospective contractor’s responsibility
. . . ,’ the regulations were silent with respect to the effect of an SBA denial of a COC.” Id.at 1111 n.6. As a result, Cavalier Clothes held only that this Court has jurisdiction to
review the SBA’s denial of a COC. Subsequent opinions of this Court finding jurisdiction
to review COC determinations also limited their holdings to decisions denying the issuance
of a COC. See C&G Excavating, Inc. v. United States, 32 Fed. Cl. 231, 240 n.9 (1994)
(“Although the Act commits the final disposition of COC review to the SBA, this does not
preclude judicial review of a decision not to grant a COC.”); Stapp Towing, Inc. v. United
States, 34 Fed. Cl. 300, 306 (1995) (“Unquestionably, the Court of Federal Claims has
jurisdiction to review the . . . determination [to deny a COC.]”); Red River Serv. Corp v.
United States, 60 Fed. Cl. 532, 537 (2004) (clarifying that Cavalier Clothes confirms this
Court’s jurisdiction to review a denial of a COC).2 Thus, based on applicable regulations
and case law, the Court holds that it does not have jurisdiction to review the SBA’s issuance
of a COC to SPG.
In addition, Sonoran has not justified its delay in seeking to amend its complaint.
Sonoran filed its complaint on May 30, 2017 and this motion to amend its complaint on July
12, 2017. On June 15 2017, Sonoran filed its first motion to supplement the Administrative
Record noting that “nothing in the AR explains why the SBA declined the initial COC
request or why the SBA ultimately issued the COC after the initial declination. It is also
unclear why the SBA did not consider [SPG’s] competency as of the date of the submission
of its bid . . . .” Dkt. No. 14-1, at 9. From this statement, it is clear that Sonoran had questions
regarding the SBA’s decision-making process as of at least June 15, 2017. On June 27, 2017,
the Court denied Sonoran’s request to depose the SBA because the SBA’s decision-making
process was irrelevant to the counts alleged in Sonoran’s complaint. Dkt. No. 35. Thus,
Sonoran was aware that its complaint was insufficient to warrant investigation into the
SBA’s decision as of June 27, 2017. Still, instead of moving to amend its complaint, Sonoran
filed a second motion to supplement the Administrative Record with SBA documents on
June 27, 2017. Dkt. No. 25. In its Opinion on the second motion to supplement the
Administrative Record, the Court again reminded Sonoran that the SBA’s independent
decision-making process was irrelevant to its complaint. Dkt. No. 41, at 6. Finally, the
Government supplemented the record with some communications between the SBA and the
Air Force on July 12, 2017, the same day Sonoran filed its motion to amend the
Administrative Record.
On its face, Sonoran’s delay is significant because this is a bid protest and the Court
twice informed Sonoran that the SBA’s independent reasoning was irrelevant to its
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One U.S. Court of Federal Claims decision held that this Court has jurisdiction to review the SBA’s
issuance of a COC by citing Stapp Towing. Lawson Environmental Services, LLC v. United States, 126
Fed. Cl. 233, 248 (2016). Lawson, however, extends the holding in Stapp Towing to include issuances of
COCs without articulating its reasoning or addressing the holding in Cavalier Clothes. Id.5
complaint. Sonoran attempts to justify its delay by claiming that it has “learned of facts”
supporting a claim against the SBA. Pl.’s Mot. at 6. According to Sonoran:
The Administrative Record and investigation conducted since
filing the Complaint reveal that SBA’s independent
procurement decisions and conduct in finding [SPG]
responsible and granting the COC were arbitrary, capricious,
and not in accordance with the law. Specifically, SBA failed to
treat offerors fairly and equally, and violated its own
regulations by re-opening [SPG’s] COC referral after the initial
declination. In addition, SBA’s responsibility determination
was arbitrary and capricious in its failure to articulate a
reasonable basis for the determination and in its failure to
consider the reality that without the required FCL on the
performance start date, [SPG] was not able to perform the
contract as required under the Solicitation. [ . . . ] Finally,
SBA’s failure to determine whether [SPG] was responsible at
the time of bid or prior to award, rather than almost six months
after award, is also arbitrary and capricious.
Id. In its motion, Sonoran cites no new evidence of the SBA’s improper action and does
not even refer to any of the July 12, 2017 supplementations made to the record. Instead,
Sonoran simply states that there has been an “investigation conducted” and then makes
conclusions of law about the SBA’s improper action. Therefore, Sonoran has not met its
burden to show that its delay was justified and, seemingly, has not attempted to do so.
Conclusion
For the reasons explained above, Sonoran’s motion to amend the complaint is
DENIED. The resolution of this case has been delayed twice – once due to Sonoran’s
motions to supplement and once due to Sonoran’s motion to amend its complaint. See Dkt.
Nos. 29, 40. The parties shall file a joint status report on or before Friday, August 4, 2017
proposing an expedited briefing schedule for the coming cross-motions for judgment on
the Administrative Record. In order for the bid protest system to function as it is intended,
this matter cannot afford any further delay.
IT IS SO ORDERED.
s/ Thomas C. Wheeler
THOMAS C. WHEELER
Judge
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