Laboratory Corp. of America v. United States

In the United States Court of Federal Claims
No. 12-622C
(Filed Under Seal: December 21, 2012)
Reissued: January 14, 20131
_________
LABORATORY CORP. OF AMERICA, * Pre-award bid protest; Cross-motions for
* judgment on the administrative record;
* Standard of review – Bannum; Spoliation –
Plaintiff,
* GSA’s failure to maintain full record of
* procurement; Sanction imposed; Website
v. information not incorporated into
*
solicitation; Blue & Gold Fleet; Plaintiff did
*
THE UNITED STATES, not waive claim that offer was timely; No
* patent ambiguity; Agency refusal to accept
* proposal was arbitrary, capricious and
Defendant.
* contrary to law; Injunction issued.
*
__________
OPINION
__________
David E. Frulla, Kelley, Drye & Warren, LLP, Washington, D.C., for plaintiff.
James R. Sweet, Civil Division, United States Department of Justice, Washington, D.C.,
with whom was Acting Assistant Attorney General Stuart F. Delery, for defendant.
ALLEGRA, Judge:
‘“If you knew Time as well as I do,’ said the Hatter,
‘you wouldn’t talk about wasting IT. It’s HIM.’”
‘“I don’t know what you mean,’ said Alice.”
‘“Of course, you don’t,’ the Hatter said, tossing his head contemptuously.
‘I dare say you never even spoke to Time!’”
1
An unredacted version of this opinion was issued under seal on December 21, 2012.
The parties were given an opportunity to propose redactions, but no such proposals were made.
Nonetheless, the court has incorporated some minor changes into this opinion.
‘“Perhaps not,’ Alice cautiously replied:
‘but I know I have to beat time when I learn music.’”
‘“Ah! that accounts for it,’ said the Hatter. ‘He won’t stand beating.
Now, if you only kept on good terms with him, he’d do almost anything you liked with the clock.
For instance, suppose it were nine o’clock in the morning, just time to begin lessons:
you’d only have to whisper a hint to Time, and round goes the clock in a twinkling!
Half-past one, time for dinner!’”2
Defendant, regrettably, has injected an Alice-in-Wonderland quality into this preaward
bid protest case. In this case, Laboratory Corporation of America (LabCorp) protests the refusal
of the U.S. Department of Veterans Affairs (the VA) to accept its quotation for a blanket
purchase agreement. According to the solicitation, the quotation was due on May 31, 2012, at
2:00 p.m. Central Standard Time (CST), which both parties took to mean 2:00 p.m. Central
Daylight Time (CDT).3 As instructed by an amendment to the solicitation, plaintiff loaded its
quotation onto the U.S. General Services Administration’s e-Buy website. At 1:03 p.m. CDT, a
LabCorp employee hit the “continue” button on the website, only to receive a message that that
the submission had been refused because the website was programmed to accept offers only until
2:00 p.m. Eastern Daylight Time (EDT).
In arguments worthy of the Mad Hatter, defendant now admits (begrudgingly) that the
VA made a mistake – that the contracting officer never intended to adjust the time for submitting
proposals when he filed the amendment to the solicitation. Nevertheless, the proposal was still
properly refused, defendant contends, because, whether the contracting officer intended to or not,
the amendment incorporated the website into the solicitation, which, according to defendant,
displayed the time for submitting the proposals as 2:00 p.m. EDT. Hence, according to
defendant, the quotation was late. Now, in fact, we do not know what LabCorp actually saw
because the data corresponding to that webpage was automatically purged by the e-Buy website
immediately after the closing of the procurement. True, LabCorp admits to seeing the time on its
screen. But, it also indicates that, in the early afternoon of the day on which the procurement
closed, it contacted the contracting officer to point out the problem with the time listed on the
website, and was told that the proposals were due at the time listed in the solicitation, i.e., 2:00
p.m. CDT. Despite this communication, defendant argues that LabCorp waived its objections
regarding the timeliness of its quotation because it failed effectively to object to what defendant
views as a patent ambiguity stemming from the difference between the deadline in the
solicitation and the time listed on the webpage LabCorp saw.
2
Lewis Carroll, Alice’s Adventures in Wonderland 101-02 (Lee and Shepard 1869)
(hereinafter “Alice in Wonderland”).
3
The explanation of this seeming anomaly is provided below.
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Fortunately, unlike the Mad Hatter’s unsolvable riddle for Alice (“Why is a raven like a
writing desk?”),4 the solution to defendant’s contorted arguments is readily found in the Federal
Acquisition Regulations and binding precedent. Both establish that the VA’s refusal to accept
plaintiff’s quotation here was arbitrary, capricious, and contrary to law. For the reasons that
follow, the court GRANTS plaintiff’s motion for judgment on the administrative record and
DENIES defendant’s cross-motion for judgment on the administrative record. An appropriate
injunction is entered.
I. BACKGROUND
The administrative record in this case reveals the following:
On May 1, 2012, the VA issued Solicitation VA255-12-Q-0268 (solicitation or RFQ) for
establishing a Blanket Purchase Agreement to provide laboratory testing services to the Veteran
Integrated Services Network’s fifteen medical centers located in Kansas, Missouri, and Illinois.
The solicitation described the due date for submitting a quotation in a box which indicated:
“OFFER DUE DATE/LOCAL TIME 05-31-2012 2:00 pm CST.”5 It said that offers would be
submitted to a VA Contracting Office in Leavenworth, Kansas, but did not specify a method for
submitting an offer. The VA posted the solicitation on the e-Buy website run by the General
Services Administration (GSA).
On May 17, 2012, the VA amended the solicitation via Amendment P00001. The
amendment indicated that “[t]he hour and date specified for receipt of Offers . . . is not
extended.” An addendum to the amendment provided answers to questions that had been
submitted by potential offerors. One of the questions was “[s]hould proposals be uploaded in the
GSA e-Buy system or submitted via email?,” to which the contracting officer responded that
“[s]ubmission through GSA e-Buy is required.” A second question posed was “[d]oes VISN 15
require a hard copy of all signed documents?,” to which the contracting officer responded,
“VISN 15 will only accept documents through e-Buy.” All told, the addendum to the
amendment answered eight questions.
On May 31, 2012, at 11:30 a.m. CDT, Stephen Harbaugh, a contracting specialist for
LabCorp, began to upload the company’s offer onto e-Buy. At this point, he noticed, for the first
time, that the e-Buy website listed the closing time for receipt of proposals as 2:00 p.m. EDT.
Mr. Harbaugh experienced technical difficulties in trying to upload the offer, and, at
approximately 12:10 p.m. CDT, called Sean Jackson, the contracting officer at the VA. The two
discussed the fact that the e-Buy system listed the bid closing time as 2:00 p.m. EDT. Mr.
4
Alice in Wonderland, supra, at 7.
5
For reasons unexplained, the solicitation set the May deadline using Central Standard
Time, even though Central Daylight Time, which was the “local time” in Leavenworth, Kansas,
began on March 11, 2012. See Energy Policy Act of 2005, Pub. L. No. 109-58, 119 Stat. 594(2005). The parties have stipulated, however, that they always believed that the solicitation
should be read to refer to 2:00 pm CDT.
-3-
Jackson confirmed that he was located in the Central Time Zone and that the bid was due at 2:00
p.m. CDT that day.6
Notwithstanding Mr. Jackson’s representation, at 1:00 p.m. CDT (2:00 p.m. EDT), e-Buy
shut down the bidding system for this solicitation. At 1:03 p.m. CDT, Michelle Ballentine
(another LabCorp employee who had been enlisted to help upload the bid) completed uploading
all of the files constituting the offer to e-Buy, and then clicked “continue” on the e-Buy screen.
She received a message from e-Buy stating “Sorry, the RFQ closed on Thursday, May 31, 2012
at 2:00PM. No additional quotes can be accepted at this time.” At 1:02 p.m. CDT, Mr. Jackson
received an email generated by the e-Buy website indicating that “Subject RFQ for [VISN 15] is
now closed. 2 quotes were received. To view and evaluate quotes, please login at www.e-
Buy.gsa.gov.” Shortly before 1:10 p.m. CDT, Mr. Harbaugh called Mr. Jackson at the VA and
left him a voicemail explaining that e-Buy had closed the procurement prematurely and asking
that LabCorp be allowed to submit its proposal by alternative means. Within a few hours, a
follow-up email was sent to Mr. Jackson with a similar request. The following day, June 1,
2012, after receiving another email from another member of the LabCorp team, Mr. Jackson
finally responded via email: “I will have to consult our legal department. It will be next week at
the earliest before I can respond to your request.”
On June 11, 2012, LabCorp filed a pre-award protest with the GAO challenging the
closure of bidding at 1:00 p.m. CDT. On September 13, 2012, the GAO dismissed the protest as
untimely, deciding that LabCorp should have protested what GAO deemed to be a patent
ambiguity in the solicitation before the deadline for receipt of proposals.
LabCorp filed this bid protest on September 20, 2012. On September 28, 2012,
defendant filed the administrative record. The record did not include copies of the webpages that
LabCorp saw during the procurement process. In lieu thereof, defendant included: (i) a
declaration and supplemental declaration made by Mr. Harbaugh during the GAO protest; and
(ii) a declaration made by Gill Machen, the GSA e-Buy program manager. Mr. Harbaugh’s
supplemental declaration stated that “after the close of an RFQ, on e-Buy, there is no way to
retrieve or recreate a screen shot of the particular page a contractor would have seen for that
RFQ. GSA does not archive that information.” Mr. Harbaugh attached to his declaration screen
shots based on generic e-Buy “test scenarios,” a computer log of access to the RFQ file in
6
Plaintiff has submitted a supplemental declaration from Mr. Harbaugh to this effect,
which was corroborated by a copy of Mr. Harbaugh’s contemporaneous notes of the
conversation. Defendant submitted a declaration filed with the General Accountability Office
(GAO) in which Mr. Jackson admitted that a conversation occurred between him and a LabCorp
representative on the day in question. In that declaration, Mr. Jackson does not deny that he
informed plaintiff to comply with the deadline in the solicitation. An email in the record, sent by
a VA official to plaintiff’s counsel, indicates that “Mr. Jackson has no information to refute Mr.
Harbaugh’s statement.” Under these circumstances, the court credits plaintiff’s declaration.
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question in May of 2012, and code-based logs of emails sent from e-Buy to LabCorp during May
2012.7
On October 5, 2012, plaintiff filed a motion for judgment on the administrative record; on
October 19, 2012, defendant filed a cross-motion for judgment on the administrative record.
During briefing on these cross-motions, the court ordered additional briefing on whether
defendant had spoliated evidence in the case. All briefing was completed by November 14,
2012. On November 19, 2012, the court heard oral argument. Per this court’s order, on
November 28, 2012, defendant submitted an additional declaration from Mr. Machen, stating
that the “Government did not have administrative rights allowing it to capture a screen shot of
the images displayed on a particular vendor’s e-Buy website at a particular time, unless that
vendor provided its credential to the GSA.”
II. DISCUSSION
Before turning, in detail, to plaintiff’s claims, we begin with common ground.
A. Standard of Review
The Federal Circuit, in Bannum, Inc. v. United States, 404 F.3d 1346, 1355 (Fed. Cir.
2005), instructed that courts must “distinguish . . . [a] judgment on the administrative record
from a summary judgment requiring the absence of a genuine issue of material fact.” Bannum
teaches that two principles commonly associated with summary judgment motions – that the
existence of a genuine issue of material fact precludes a grant of summary judgment and that
inferences must be weighed in favor of the non-moving party – do not apply in deciding a
motion for judgment on the administrative record. Id. at 1356. The existence of a question of
fact thus neither precludes the granting of a motion for judgment on the administrative record nor
requires this court to conduct a full-blown evidentiary proceeding. Id.; see also Int’l
Outsourcing Servs., LLC v. United States, 69 Fed. Cl. 40, 45-46 (2005). Rather, such questions
must be resolved by reference to the administrative record, as properly supplemented – in the
words of the Federal Circuit, “as if [the Court of Federal Claims] were conducting a trial on
[that] record.” Bannum, 404 F.3d at 1354; see also NEQ, LLC v. United States, 88 Fed. Cl. 38,
46 (2009); Int’l Outsourcing, 69 Fed. Cl. at 46; Carlisle v. United States, 66 Fed. Cl. 627, 631
(2005).
Bannum’s approach reflects well the limited nature of the review conducted in bid
protests. In such cases, this court will enjoin defendant only where an agency’s actions were
arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. 5 U.S.C.
§ 706(2)(A); see also 28 U.S.C. § 1491(b)(4). By its very definition, this standard recognizes the
possibility of a zone of acceptable results in a particular case and requires only that the final
7
At oral argument, defendant’s counsel essentially acknowledged that the emails
referenced in these logs also had not been retained by the e-Buy website and that the log was the
only evidence of what had been sent. The logs themselves contain only cryptic details,
insufficient to allow the court to recreate, completely, the content of the emails.
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decision reached by an agency be the result of a process which “consider[s] the relevant factors”
and is “within the bounds of reasoned decisionmaking.” Balt. Gas & Elec. Co. v. Nat’l Res. Def.
Council, Inc., 462 U.S. 87, 105 (1983); see Software Testing Solutions, Inc. v. United States, 58
Fed. Cl. 533, 538 (2003); Gulf Grp., Inc. v. United States, 56 Fed. Cl. 391, 396 n.7 (2003). As
the focus of this standard is more on the reasonableness of the agency’s result than on its
correctness, the court must restrain itself from examining information that was not available to
the agency. Failing to do so, the Federal Circuit has observed, risks converting arbitrary and
capricious review into a subtle form of de novo review. See Axiom Res. Mgmt., Inc. v. United
States, 564 F.3d 1374, 1379–80 (Fed. Cir. 2009).8 At all events, this court will interfere with the
government procurement process “only in extremely limited circumstances.” C.A.C.I., Inc.-Fed.
v. United States, 719 F.2d 1567, 1581 (Fed. Cir. 1983) (quoting United States v. John C.
Grimberg Co., Inc., 702 F.2d 1362, 1372 (Fed. Cir. 1983)).
The aggrieved bidder must demonstrate that the challenged agency decision was either
irrational or involved a clear violation of applicable statutes and regulations. Banknote Corp. of
Am., Inc. v. United States, 365 F.3d 1345, 1351 (Fed. Cir. 2004), aff’g, 56 Fed. Cl. 377, 380
(2003); see also ARINC Eng’g Servs., LLC v. United States, 77 Fed. Cl. 196, 201 (2007).
Moreover, “to prevail in a protest the protester must show not only a significant error in the
procurement process, but also that the error prejudiced it.” Data Gen. Corp. v. Johnson, 78 F.3d
1556, 1562 (Fed. Cir. 1996).9 “Finally, because injunctive relief is relatively drastic in nature, a
8
In Axiom, the Federal Circuit noted that the “supplementation of the record should be
limited to cases in which ‘the omission of extra-record evidence precludes effective judicial
review.’” 564 F.3d at 1380 (quoting Murakami v. United States, 46 Fed. Cl. 731, 735 (2000),
aff’d, 398 F.3d 1342 (Fed. Cir. 2005)). In forceful terms, the Federal Circuit rejected the lenient
approach to the use of extra-record evidence reflected in Esch v. Yeutter, 876 F.2d 976, 991
(D.C. Cir. 1989), noting that the latter decision: (i) “departs from fundamental principles of
administrative law as articulated by the Supreme Court;” (ii) has “questionable” vitality “even
within the D.C. Circuit . . . in light of more recent opinions by that court which demonstrate a
more restrictive approach to extra-record evidence;” and (iii) at all events, “is not the law of this
circuit.” Axiom, 564 F.3d at 1380-81. As this court has subsequently noted, “[w]hile Axiom
undoubtedly permits limited supplementation of the record with evidence that does not involve
the agency’s procurement decision (e.g., evidence as to whether a plaintiff would experience
irreparable harm), it makes clear that any court in this circuit that relies upon Esch to supplement
the administrative record more broadly does so at peril of reversal.” NEQ, 88 Fed. Cl. at 47 n.6.
9
A review of Federal Circuit cases indicates that this prejudice analysis actually comes
in two varieties. The first is that described above – namely, the ultimate requirement that a
protestor must show prejudice in order to merit relief. A second prejudice analysis is more in the
nature of a standing inquiry. In this regard, the Federal Circuit has held that “because the
question of prejudice goes directly to the question of standing, the prejudice issue must be
reached before addressing the merits.” Info. Tech. & Applications Corp. v. United States, 316
F.3d 1312, 1319 (Fed. Cir. 2003); see also Myers Investigative & Sec. Servs., Inc. v. United
States, 275 F.3d 1366, 1370 (Fed. Cir. 2002); Overstreet Elec. Co., Inc. v. United States, 59 Fed.
Cl. 99, 109 n.5 (2003). Cases construing this second variation on the prejudice inquiry have held
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plaintiff must demonstrate that its right to such relief is clear.” NEQ, 88 Fed. Cl. at 47; see also
Banknote, 56 Fed. Cl. at 380-81; Seattle Sec. Servs., Inc. v. United States, 45 Fed. Cl. 560, 566
(2000).
B. Spoliation – GSA’s Failure to Maintain a Full Record of the Procurement
It appears that evidence relevant to this case was destroyed when the e-Buy website
automatically purged the data that would have allowed GSA to recreate the webpages seen by
LabCorp at critical points during the procurement in question. In briefing this case, defendant
chose to emphasize the information that was on these webpages, in arguing that the VA properly
rejected plaintiff’s quotation. Defendant did so even after being warned by the court that such
arguments would raise serious questions regarding the spoliation of evidence. The court must
now consider those questions.
‘“Spoliation is the destruction or significant alteration of evidence, or failure to preserve
property for another’s use as evidence in pending or reasonably foreseeable litigation.”’ United
Med. Supply Co., Inc. v. United States, 77 Fed. Cl. 257, 263 (2007) (quoting West v. Goodyear
Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir. 1999)). Spoliation may result in a variety of
sanctions, with “the oldest and most venerable remedy” being an “adverse inference,” under
which the finder of fact may infer that the destroyed evidence would have been favorable to the
opposing side. Jonathan Judge, “Reconsidering Spoliation: Common-Sense Alternatives to the
Spoliation Tort,” 2001 Wis. L.Rev. 441, 444 (2001); see also Jamie S. Gorelick, Stephen
Marzen, Lawrence Solum & Arthur Best, Destruction of Evidence § 1.3 (1989 & Supp. 2012)
(hereinafter “Gorelick”).
In the Federal system, spoliation sanctions spring from two main sources of authority.
First, sanctions may be based on the court’s inherent power to control the judicial process and
litigation, a power that is necessary to redress conduct “which abuses the judicial process.”
Chambers v. NASCO, Inc., 501 U.S. 32, 44-45 (1991) (recognizing the inherent power of the
courts to fashion appropriate sanctions for conduct that disrupts the judicial process); see also
Shepherd v. Am. Broad. Cos., Inc., 62 F.3d 1469, 1474-75 (D.C. Cir. 1995); see generally
Roadway Express, Inc. v. Piper, 447 U.S. 752, 764-65 (1980). Although established under
Article I of the Constitution, this court, no less than any Article III tribunal, possesses this form
of inherent authority. See United Med. Supply Co. v. United States, 73 Fed. Cl. 35, 36 (2006);
that it requires merely a “viable allegation of agency wrong doing,” with “‘viability’ here turning
on the reasonableness of the likelihood of prevailing on the prospective bid taking the protestor’s
allegations as true.” McKing Consulting Corp. v. United States, 78 Fed. Cl. 715, 721 (2007); see
also 210 Earll, L.L.C. v. United States, 77 Fed. Cl. 710, 718-19 (2006); Textron, Inc. v. United
States, 74 Fed. Cl. 277, 284-85 (2006). This “viability” standard is reminiscent of the
“plausibility” standard enunciated in several recent Supreme Court cases. See Dobyns v. United
States, 91 Fed. Cl. 412, 422-26 (2010) (discussing the “plausibility standard” of pleading drawn
from Ashcroft v. Iqbal, 556 U.S. 662 (2009) and Bell Atl. Corp. v. Twombly, 550 U.S. 544(2007)). Because of the nature of the allegations of error here, the court is convinced that
plaintiff has met this preliminary “standing” threshold.
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Pueblo of Laguna v. United States, 60 Fed. Cl. 133, 136 (2004).10 Second, where the spoliation
violates a specific court order or disrupts the court’s discovery regime, sanctions also may be
imposed under Federal Rule of Civil Procedure 37, which is essentially identical to its
counterpart under this court’s rules. See RCFC 37; Nat’l Hockey League v. Metro. Hockey Club,
Inc., 427 U.S. 639, 642-43 (1976). “In either instance, the policies underlying the sanctions are
multifaceted: to punish the spoliator, so as to ensure that it does not benefit from its misdeeds; to
deter future misconduct; to remedy, or at least minimize, the evidentiary or financial damages
caused by the spoliation; and last, but not least, to preserve the integrity of the judicial process
and its truth-seeking function.” United Med. Supply, 77 Fed. Cl. at 264; see also West, 167 F.3d
at 779; Gorelick, supra, at § 3.14; see generally, Nat’l Hockey League, 427 U.S. at 643.
In keeping with these broad rationales, courts have held that, like any other litigant, the
United States is subject to spoliation sanctions either under the court’s inherent authority or the
sanction provisions of Rule 37. See, e.g., M.A. Mortenson Co. v. United States, 996 F.2d 1177,
1183-84 (Fed. Cir. 1993) (citing additional cases); see also Chilcutt v. United States, 4 F.3d
1313, 1325-26 (5th Cir. 1993), cert. denied, sub nom., Means v. Wortham, 513 U.S. 979 (1994);
United States v. Nat’l Med. Enters., Inc., 792 F.2d 906, 912-13 (9th Cir. 1986); K-Con Bldg. Sys.,
Inc. v. United States, 2012 WL 3744672, at *9-13 (Fed. Cl. Aug. 30, 2012).11 While it is
debatable whether, absent some order authorizing discovery, sanctions under RCFC 37 are
directly available in a bid protest action, cf. Pyramid Real Estate Servs., LLC v. United States, 95
Fed. Cl. 613, 622 (2010) (applying RCFC 37 via RCFC 16(f)), there is little question that the
court may impose spoliation sanctions against defendant under its inherent authority. And it is
upon the latter basis that the court proceeds here. Such sanctions are appropriate when “the party
having control over the evidence had an obligation to preserve it at the time it was destroyed,”
the evidence was “destroyed with a culpable state of mind,” and “the destroyed evidence was
10
The Supreme Court has held that Article I courts exercise the judicial power of the
United States. Freytag v. Comm’r of Internal Revenue, 501 U.S. 868, 889 (1991); Williams v.
United States, 289 U.S. 553, 564-66 (1933); see also Chambers, 501 U.S. at 43 (courts are
vested with inherent powers “governed not by rule or statute but by the control necessarily
vested in courts to manage their own affairs so as to achieve the orderly and expeditious
disposition of cases”) (quoting Link v. Wabash R.R. Co., 370 U.S. 626, 630-31 (1962)).
11
Generally speaking, “when the United States comes into court as a party in a civil suit,
it is subject to the Federal Rules of Civil Procedure as any other litigant.” Mattingly v. United
States, 939 F.2d 816, 818 (9th Cir. 1991). Further, section 205 of the original Equal Access to
Justice Act, Pub. L. No. 96-481, § 205, 94 Stat. 2321, 2330 (1980), expressly repealed former
subdivision (f) of Fed. R. Civ. P. 37, which had disallowed awards of expenses and attorney’s
fees against the United States for discovery abuses. In the accompanying report, Congress
specified that the United States is to be treated like any other litigant in awarding discovery
sanctions: “This change reflects the belief that the United States should be liable for fees the
same as other parties when it abuses discovery.” H.R. Rep. No. 96-1418, at 19 (1980); see also
id. at 9 (noting that a modification made to 28 U.S.C. 2412(b) “reflects the belief that at a
minimum, the United States should be held to the same standards in litigating as private
parties.”).
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relevant to the party’s claim or defense such that a reasonable trier of fact could find that it
would support the claim or defense.” Jandreau v. Nicholson, 492 F.3d 1372, 1375 (Fed. Cir.
2007); see also K-Con Bldg. Sys., 2012 WL 3744672, at *10.12
As a preliminary matter, defendant argues that its agencies did not have a duty to
preserve evidence relating to the procurement when it closed because, at that early juncture,
neither the VA nor GSA could have anticipated litigation. But, the Federal Acquisition
Regulations (FAR) indicate otherwise. They require procuring agencies to maintain all the
contract documents associated with a procurement. Thus, FAR § 4.801(a) states that “[t]he head
of each office performing contracting, contract administration, or paying functions shall establish
files containing the records of all contractual actions.” 48 C.F.R. § 4.801(a). The FAR lists
forty-two (42) items that should “normally [be] contained” in a contract file, including “a copy of
the solicitation and all amendments thereto.” 48 C.F.R. §§ 4.803(a), (a)(8). Regarding this
requirement, the regulations provide that this documentation must be “sufficient to constitute a
complete history of the transaction for the purpose of . . . [f]urnishing essential facts in the event
of litigation or congressional inquiries.” 48 C.F.R. § 4.801(b)(4). In the court’s view, these
regulations recognize the prospect of having some form of litigation be associated with a
procurement, and preclude the VA and GSA from claiming that they were under no obligation to
preserve information relating to the procurement in question because they did not anticipate that
the procurement would be protested.
A number of cases support this conclusion. For example, in Pitney Bowes Gov’t
Solution, Inc. v. United States, 93 Fed. Cl. 327, 335-36 (2010), this court held that a Justice
Department contracting officer violated the FAR provisions quoted above when, prior to an
award decision, he caused rating sheets prepared by the members of a technical evaluation panel
to be destroyed. In holding that the duty to preserve evidence had attached before these sheets
were destroyed, this court found that, under the regulations, “[i]t was foreseeable that the
[documents destroyed by the agency] could well become relevant to issues arising in a bid
protest,” adding that “[n]o preternatural clairvoyance would be required to envision that
possibility.” Id. at 335.13 Other courts have likewise concluded that a preservation duty attaches
when regulations require a government agency to maintain a specified set of records. See
DMAC, LLC v. City of Peekskill, 2012 WL 4459290, at *2 (S.D.N.Y. Sept. 26, 2012) (holding
that local government records law put city on notice that it had to retain emails); see also Gerlich
v. U.S. Dep’t of Justice, 828 F. Supp. 2d 284, 300-01 (D.D.C. 2011) (records destroyed in
12
As was noted in K-Con Bldg. Sys., 2012 WL 3744672, at *10 & n.19, while the
Federal Circuit enunciated the three prongs of this sanctions test in describing when an adverse
inference may be applied against an offending party, the same criteria are employed in
determining whether other sanctions may be imposed under this court’s inherent authority.
13
See also Ralph C. Nash, “Destroying Evaluator’s Worksheets: A Bad Practice,” 24
Nash & Cibinic Report ¶ 40 (2010).
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violation of formal regulations requiring preservation “would likely constitute spoliation”).14
The court, therefore, finds that defendant had a duty to preserve the webpage in question, as part
of the history of the procurement.
The next question is whether defendant had a culpable state of mind. While the Federal
Circuit in Micron Technology, Inc. v. Rambus, Inc., 645 F.3d 1311, 1327 (Fed. Cir. 2011)
recently suggested that a showing of bad faith is “normally a prerequisite to the imposition of
dispositive sanctions for spoliation,” that court has not clarified what level of culpability is
required for the imposition of lesser sanctions, such as an adverse inference.15 This court, in
United Medical Supply, summarized the split among the circuits as to the degree of culpability
required for various sanctions, thusly:
There is, in fact, a division of authority among the circuits on this issue. . . . On
one end of [the] spectrum, actually representing a distinct minority, are courts that
require a showing of bad faith before any form of sanction is applied. Other
courts expect such a showing, but only for the imposition of certain more serious
sanctions, such as the application of an adverse inference or the entry of a default
judgment. Further relaxing the scienter requirement, some courts do not require a
showing of bad faith, but do require proof of purposeful, willful or intentional
conduct, at least as to certain sanctions, so as not to impose sanctions based solely
upon negligent conduct. On the other side of the spectrum, we find courts that do
not require a showing of purposeful conduct, at all, but instead require merely that
there be a showing of fault, with the degree of fault, ranging from mere
negligence to bad faith, impacting the severity of the sanction. If this continuum
were not complicated enough, some circuits initially appear to have adopted
universal rules, only to later shade their precedents with caveats. Other times, the
difference between decisions appear to be more a matter of semantics, perhaps
14
Other courts have likewise held that the violation of a regulation requiring document
preservation can support an inference of spoliation. See Talavera v. Shah, 638 F.3d 303, 312
(D.C. Cir. 2011) (violation of U.S. Equal Employment Opportunity Commission record-retention
regulation amounted to a breach of duty justifying spoliation inference); Byrnie v. Town of
Cromwell, Bd. of Educ., 243 F.3d 93, 108-09 (2d Cir. 2001) (violation of regulations
implementing Title VII and Americans with Disabilities Act supported spoliation inference);
Latimore v. Citibank Fed. Savs. Bank,, 151 F.3d 712, 716 (7th Cir. 1998) (“The violation of a
record[-]retention regulation creates a presumption that the missing record contained evidence
adverse to the violator.”); Favors v. Fisher, 13 F.3d 1235, 1239 (8th Cir. 1994) (because
employer violated record retention regulation, plaintiff was “entitled to the benefit of a
presumption that the destroyed documents would have bolstered her case”); Hicks v. Gates
Rubber Co., 833 F.2d 1406, 1419 (10th Cir. 1987) (same); see also Steffen Nolte, “The
Spoliation Tort: An Approach to Underlying Principles,” 26 St. Mary’s L.J. 351, 368-69 (1995)
(collecting additional cases).
15
See K-Con Bldg. Sys., 2012 WL 3744672, at *10 n.19; United Med. Supply, 77 Fed.
Cl. at 266; see also Jandreau, 492 F.3d at 1375.
-10-
driven by state law, with some courts, for example, identifying as “bad faith”
what others would call “recklessness” or even “gross negligence.”
United Med. Supply, 77 Fed. Cl. at 266-67 (footnotes omitted).16 The court ultimately
concluded, based upon “logic and considerable and growing precedent,” that “an injured party
need not demonstrate bad faith in order for the court to impose, under its inherent authority,
spoliation sanctions.” Id. at 268. Thus, the degree of culpability, as well as the harm caused by
the loss of evidence, impacts not only whether a sanction should be imposed, but also which
sanction is appropriate. Id. at 270-71; see also K-Con Bldg. Sys., 2012 WL 3744672, at *12;
Cencast Servs., L.P. v. United States, 94 Fed. Cl. 425, 444 (2010). “Under this balancing
approach, there are no bright lines, at least in terms of mens rea, with the focus instead being on
effectively addressing overall, the spoliation conduct, as well as the harm it engendered.” United
Med. Supply, 77 Fed. Cl. at 270-71; see also Victor Stanley, Inc. v. Creative Pipe, Inc., 269
F.R.D. 497, 529 (D. Md. 2010) (Grimm, M.J.).
Defendant’s failure to preserve the information from the GSA website amounts to
“negligence,” or ‘“culpable carelessness,”’ that is, ‘“[t]he failure to exercise the standard of care
that a reasonably prudent person would have exercised in a similar situation[.]”’ Victory Stanley,
269 F.R.D. at 529 (quoting Black’s Law Dictionary 846 (Bryan A. Garner ed., abridged 7th ed.,
West 2000)). Part of the difficulty in assessing the degree of culpability here stems from
defendant’s shifting positions as to what the website represented. If, as defendant argues, the
website (or a portion thereof) was part of the solicitation, then it would appear that the agency’s
failure to maintain a copy of the webpage that plaintiff saw would amount to gross negligence
(or worse), given not only the FAR’s general instruction to preserve a “complete history of the
transaction for the purpose of . . . [f]urnishing essential facts in the event of litigation,” 48
C.F.R. § 4.801(b)(4), but also its very specific instruction to preserve “a copy of the solicitation
and all amendments thereto.” Id. at § 4.803(a)(8). However, as will be discussed in greater
detail below, the court believes neither that the webpage constituted part of the solicitation, nor
that any of the agency officials involved here remotely believed so. Rather, the court finds – and
it appears that the agency officials all believed – that the website constituted nothing more than
the means for submitting a proposal. In the court’s view, this still means that defendant was
required to preserve the data relating to the website. But, it becomes more understandable why
the VA and GSA did not realize that this was the case, making their failure to do so, in the
court’s eyes, less culpable, i.e., only negligent.17
16
See also the Sedona Conference, The Sedona Conference Glossary: E-Discovery &
Digital Information Management 48 (3d ed. 2010), available at https://thesedonaconference.org/
download-pub/471.
17
In Park v. City of Chicago, 297 F.3d 606, 615-17 (7th Cir. 2002), the Seventh Circuit
noted that an employer’s violation of a record retention regulation creates a presumption that the
missing record contained evidence adverse to the violator, but cautioned that this presumption
would not apply to an inadvertent failure to comply with the regulation. In light of this
distinction, the court believes that an agency that fails to maintain a copy of a document
constituting part of a solicitation is potentially more deserving of a sanction than one that
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The court rejects, as untenable, defendant’s claim that plaintiff was required to maintain
copies of the screen shots it saw and thus was equally culpable in failing to maintain them.
Courts presented with similar “pass the buck” arguments have refused to shift the burden of
production away from the entity that controls a website. See, e.g., Katiroll Co., Inc. v. Kati Roll
and Platters, Inc., 2011 WL 3583408, at *4 (D.N.J. Aug. 3, 2011); Ferron v. Metareward, Inc.,
698 F. Supp. 2d 992, 1002 (S.D. Oh. 2010).18 Nor does it make any sense to suggest, as
defendant has, that the VA and GSA are not culpable because GSA’s design of the website and
document retention policy were adopted in good faith and without notice of the potential
relevance of the screen shots. To be sure, an agency need not preserve every scrap of data on its
servers in an extraordinary measure to preserve all potential evidence. See Arista Records LLC
v. Usenet.com, Inc., 608 F. Supp. 2d 409, 431 (S.D.N.Y. 2009); Zubulake v. UBS Warburg LLC,
220 F.R.D. 212, 217 (S.D.N.Y. 2003). But, given the requirements of the FAR, a procuring
agency may not escape sanctions by designing a website that automatically purges critical
information the moment a procurement closes, no matter how unawares agency officials may
have been regarding their preservation duties.19 Indeed, as has been found in analogous cases
involving governmental entities and corporations, the lack of policies or procedures designed to
give an agency (or other entity) the ability to effectuate, on relatively short notice, a litigation
hold involving a website, provides further support for a finding of spoliation.20 Moreover, it
should not be overlooked that defendant has failed to provide any persuasive evidence that it is
either technologically or logistically infeasible for it to retain the data in question and have it be
inadvertently fails to retain evidence that might otherwise be viewed as constituting a lesser part
of the record of the procurement.
18
It should be noted that the VA may not escape sanctions here on the basis that the
website in question was maintained by GSA. Courts have regularly rejected arguments that a
given actor should not be held liable for the actions of its contractors or employees, where it has
been shown that the website was under the control of the actor. See Victor Stanley, 269 F.R.D. at
516 n.23 (“agency law is directly applicable to a spoliation motion, and the level of culpability of
the agent can be imputed to the master”); Arteria Prop. Pty. Ltd., 2008 WL 4513696, at *5
(D.N.J. Oct. 1, 2008). The rationale underlying these cases, of course, resonates all the more
where, as here, both agencies are part of a single entity, the United States government.
19
See United Med. Supply, 77 Fed. Cl. at 274 n.30 (citing In re Prudential Ins. Co. of
Am. Sales Practices Litig., 169 F.R.D. 598, 615 (D.N.J. 1997) (“[w]hen senior management fails
to establish and distribute a comprehensive document retention policy, it cannot shield itself
from responsibility because of [its underlying employees] actions”).
20
See, e.g., Keithley v. The Homestore.com., Inc., 2008 WL 4830752, at *7-9 (N.D. Cal.
Nov. 6, 2008) (imposing sanctions based on plaintiff’s destruction of relevant electronic
documents because of the failure to implement a document retention policy or issue a litigation
hold); Treppel v. Biovail Corp. 249 F.R.D. 111, 118-19 (S.D.N.Y. 2008); Doe v. Norwalk Cmty.
Coll., 248 F.R.D. 372, 378 (D. Conn. 2007); In re NTL, Inc. Secs. Litig., 244 F.R.D. 179, 198-99
(S.D.N.Y. 2007); see also Philip M. Adams & Assocs., L.L.C. v. Dell, Inc., 621 F. Supp. 2d 1173,
1190-91 (D. Utah 2009).
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available as evidence, at least when disputes arise. Cf. Arista Records, 608 F. Supp. 2d at 432-33
& n.34.21
Before turning to the sanction that is appropriate here, a word about prejudice. LabCorp
seeks an adverse inference that the e-Buy website did not create a separate deadline for
“uploading offers to e-Buy.” Plaintiff, however, admits that the webpage that its officials saw
listed the deadline as 2:00 p.m. EST. In the court’s view, the prejudice plaintiff has experienced
involves its inability to analyze this information in the context of the webpage on which it was
displayed, and to point to other features of the website, including modifications made on the
relevant webpages over time, that might contradict defendant’s claim that any particular
information on the webpage was incorporated into the solicitation.22 Because defendant did not
maintain the data associated with plaintiff’s webpage, moreover, plaintiff is unable to respond
fully to the secondary evidence provided by defendant in support of its claim regarding what
plaintiff saw, e.g., log information, declarations provided by VA and GSA officials.
It is important to focus on the actual prejudice that LabCorp has experienced, as the
“court should always impose the least harsh sanction that can provide an adequate remedy.”
Pension Comm. of Univ. of Montreal Pension Plan v. Banc of Am. Secs. LLC, 685 F. Supp. 2d
456, 469 (S.D.N.Y. 2010); see also Micron Tech., 645 F.3d at 1328-29; Nacco Materials
Handling Grp., Inc. v. Lilly Co., 278 F.R.D. 395, 405 (W.D. Tenn. 2011). Ultimately, the court
“must construct a sanction that is just and proportionate in light of the circumstances underlying
the failure to preserve relevant evidence, as well as the punitive, prophylactic, remedial and
institutional purposes to be served by such sanctions.” United Med. Supply, 77 Fed. Cl. at 270;
see also Cencast Servs., 94 Fed. Cl. at 444.
Based upon these considerations, the court believes that an appropriate sanction here is to
prohibit defendant from relying upon any secondary evidence regarding what plaintiff saw on the
GSA website. See K-Con Bldg. Sys., 2012 WL 3744672, at *13 (imposing a similar sanction);
see also Reed v. Honeywell Int’l, Inc., 2009 WL 886844, at *11 (D. Ariz. Mar. 31, 2009)
21
In his declaration, Mr. Machen, the GSA employee responsible for running e-Buy,
indicates that the system produces “tens of thousands of pages on a daily basis.” But, he fails to
explain why the system cannot capture screen shots either once or twice a day or at other critical
junctures . (Defendant also notes that, owing to the password protocols employed, the content of
the e-Buy website is not captured by systematic efforts to archive the Internet, such as that
conducted by archive.org and its “Wayback Machine”). Mr. Machen also fails to explain why
the agency would design a website that supposedly places critical information regarding a
procurement on a webpage that is to be purged.
22
For example, in Conscoop-Consorzia Fra Coop. Di Prod. E Lavoro v. United States,
62 Fed. Cl. 219, 229-30 (2004), aff’d, 159 Fed. Appx. 184 (Fed. Cir. 2005), the court concluded
that information on a website was not part of the solicitation because the information was listed
under a heading that said “Description of the Advertised Solicitation.” The court concluded that
this heading indicated that the due date listed in the description was not part of the solicitation
itself. Id.-13-
(discussing this sanction, but postponing its consideration until trial). This secondary evidence
includes all the sample screen shots, log information, declarations, and other indirect proof that
defendant submitted in an effort to demonstrate what plaintiff’s webpage looked like in the
period leading up to the closing of the procurement.23 Beyond this, the court denies, without
prejudice, plaintiff’s request for costs and attorney’s fees to the extent they relate to the litigation
of this spoliation matter.24
C. Alleged Improprieties in Refusing to Accept Proposal
So, did defendant comply with the solicitation in refusing to accept plaintiff’s proposal?
Before addressing this issue, the court must address two further threshold matters: (i)
defendant’s contention that the website – or at least the “deadline” listed thereon – constituted
part of the solicitation; and (ii) defendant’s claim that the patent ambiguity/waiver doctrine
prevents this court from deciding the timeliness of plaintiff’s offer.
1. Was the website part of the solicitation?
The original solicitation indicated that offers were “due” on May 31, 2011, at 2:00 p.m.
CST. Both parties agree that this reference should be construed to require that offers were due
by 2:00 p.m. CDT, the local time in Leavenworth, Kansas, where the government office
designated in the solicitation is located. See 48 C.F.R. § 52.215-1(c)(3)(i) (indicating that “local
time” generally refers to the time where the “Government office designated in the solicitation” is
located). Defendant argues that the amendment to the solicitation did not modify this “due”
time, but instead added a second, distinct requirement to the solicitation, namely, that offers had
to be submitted to e-Buy at the time specified on the website, to wit, 2:00 p.m. EDT. According
to defendant, then, the solicitation, as amended, had two different timing requirements – one for
the submission of offers to the GSA website and a different one for when the offers were “due”
to the VA. Curiously, defendant cannot really explain why the agency would want two such
deadlines, particularly since an offeror, after timely submitting its offer on the e-Buy website,
could do nothing to make sure that its proposal was “timely” received by the VA.25 If defendant
23
To be fair, defendant filed some of these materials in response to requests made by
the court for further information. But, those requests were made in the preliminary stages of this
case, before the court fully understood defendant’s preservation obligations and the depth of its
failure to meet those obligations. Moreover, it should be noted that while defendant included
these materials in the administrative record and various of its other filings, it never moved to
supplement the record to include the latter materials. See Med. Matrix, LLP v. United States,
2007 WL 5161789, at *7 n.18 (Fed. Cl. Dec. 12, 2007) (holding that materials not properly
admitted into the record are not before the court).
24
At the appropriate time, plaintiff, of course, may file an application for such fees
pursuant to 28 U.S.C. § 2412(d)(1)(A).
25
The best defendant can do, in terms of mustering up an explanation, is to analogize the
situation here to that of using the postal service to deliver an offer. Thus, it suggests that, in the
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is right, then, the VA’s contracting officer set up a second deadline via an amendment that made
the due date listed in the solicitation really no deadline at all.26
Is this really what happened here? The court thinks not. For one thing, defendant
proceeds from the false notion that when the amendment indicated that “[s]ubmission through
GSA e-Buy is required,” it incorporated into the solicitation any relevant information found on
the website, including, in particular, the incorrect closing time listed for the procurement, to wit,
2:00 p.m. EDT. Of course, like other contract documents, the interpretation of the amendment
begins with an examination of its plain language. See Banknote, 365 F.3d at 1353; see also NVT
Techs., Inc. v. United States, 370 F.3d 1153, 1159 (Fed. Cir. 2004).27 And there is no hint in the
language of the amendment that the VA intended to incorporate information on the website into
the solicitation. Rather, the amendment merely provided “[s]ubmission through GSA e-Buy is
required,” the plain meaning of which in no way connotes the incorporation of any terms, let
alone a critical modification of the timing provisions of the solicitation.28 As it turns out, the
absence of any language setting up a new deadline is not surprising, as defendant now admits
that the contracting officer did not intend the amendment to create two deadlines – one for
submitting the proposal to the e-Buy website and another for the proposal to be received – but
that he (or someone) instead simply committed an error in programming the deadline into the e-
Buy website.29 The court cannot conceive why it ought to construe the amendment in a way that
paper world, an agency might want to establish one deadline for mailing a proposal at the post
office and another for when that proposal must be received by the procuring agency. But, this
analogy simply begs another question: why would an agency have two such deadlines, rather
than simply requiring an offeror to use the post office and then requiring timely receipt. The
latter scenario – specifying a means of delivery and requiring that the offer be timely received –
is what plaintiff, of course, believes the solicitation required here.
26
“‘Well! I’ve often seen a cat without a grin,’ thought Alice; ‘but a grin without a cat!
It’s the most curious thing I ever saw in all my life!’” Alice in Wonderland, supra, at 94.
27
For specific cases applying this rule of construction to amendments, see Maint.
Eng’rs, Inc., 99-2 B.C.A. ¶ 30513 (1999); Sual Subsidiary II Ltd. P’ship v. Gen. Servs. Admin.,
98-2 B.C.A. ¶ 29871 (1998); Data Switch Corp., 89-3 B.C.A. ¶ 22049 (1989).
28
Notably, the form that the VA used to file the amendment (Standard Form 30)
included a pre-printed block that stated “The hour and date specified for receipt of Offers” and
then had two checkboxes – “is extended” and “is not extended.” On the amendment in question,
the VA checked the latter of these two boxes.
29
The following colloquy between the court and government counsel occurred during
the oral argument in this case:
Q: [H]e didn’t know – did he – that the website was out of sync with the solicitation?
A: I don’t think at the time he did know, no, your honor.
-15-
its language does not admit in order to give effect to an intent that the contracting officer never
had. Compare United States v. Winstar Corp., 518 U.S. 839, 911 (1996) (“Under ordinary
principles of contract law, one would construe the contract in terms of the parties’ intent, as
revealed by language and circumstance.”).
Nor will the court blithely construe the language in the amendment to incorporate, by
reference, into the solicitation any material on the website. On this count, the Federal Circuit has
sensibly indicated that “the language used in a contract to incorporate extrinsic material by
reference must explicitly, or at least precisely, identify the written material being incorporated
and must clearly communicate that the purpose of the reference is to incorporate the referenced
material into the contract.” Northrop Grumman Info. Tech., Inc. v. United States, 535 F.3d 1339,
1345 (Fed. Cir. 2008); see also Precision Pine & Timber, Inc. v. United States, 596 F.3d 817,
826 (Fed. Cir. 2010) (“To incorporate material by reference, a contract must use clear and
express language of incorporation, which unambiguously communicates that the purpose is to
incorporate the referenced material . . . .”); Teg-Paradigm Envtl., Inc. v. United States, 465 F.3d
1329, 1339 (Fed. Cir. 2006). Applying this rule here makes eminent sense given the VA’s
Acquisition Regulations, which require a contracting officer to “advise bidders or offerors of
changes made to the solicitation by issuing an amendment.” 48 C.F.R. § 801.602-77(b). There
Q: Which time are we talking about?
A: Up til the closing – until –
Q: – a until after the closing. So if you’re right, at the time he made that
amendment, ok, he didn’t think that he was changing the timing did he?
A: Your honor he thought he was requiring submission through e-Buy. And whether
–
Q: An hour earlier than the other deadline that was in the solicitation? That’s the
question.
A: Your honor whether there was an error in that timing or not, it was clear to them –
Q: Answer the question – did he know at the time he made the amendment that he
was changing the timing of this so that the submission to eBuy would be an hour
earlier than the time it had to be received under the solicitation?
A: I don’t believe he knew the time was an hour earlier when he changed it.
Q: Alright. So. And so the first time actually he discovers either that there’s a
problem is when he gets a phone call or perhaps even after that. Correct?
A: It’s probably after that, your honor.
Oral argument at 10:33:19 a.m. EST – 10:34:12 a.m. EST, Lab. Corp. of Am. v. United States,
No. 12-622C (Fed. Cl. Nov. 19, 2012).
-16-
is little doubt that the amendment in question did not “explicitly, or at least precisely” identify
the fact that the timing provisions of the solicitation were being modified to reflect the time listed
on the webpage. Northrop Grumman Info. Tech., 535 F.3d at 1345. To the extent that the
amendment could be viewed as attempting to accomplish this, it was ineffective in doing so.
In this and other ways, this case parallels Conscoop-Consorzia, in which this court
rejected a protester’s claim that a website had modified the due date for offers. In that case, the
solicitation stated that proposals were due 2:00 p.m., Naples, Italy time, while the agency
website, through which the solicitation was distributed and accessed, indicated that proposals
were due at 2:00 p.m., U.S. Time Zones. Conscoop-Consorzia, 62 Fed. Cl. at 221-22, 229. The
Navy rejected a proposal that was submitted after 2:00 p.m., Naples time, but before 2:00 p.m.
U.S. Time Zones. Id. at 223-24. Upholding this decision, this court observed that under the
government procurement rules, “the solicitation is the controlling document for determining the
submission deadline for price proposals.” Id. at 229. In this regard, the court noted that the
Competition in Contracting Act specifies that a ‘“solicitation for sealed bids or competitive
proposals . . . shall at a minimum include . . . in the case of competitive proposals . . . the time
and place for submission of proposals.”’ Id. (quoting 10 U.S.C. § 2305(a)(2)(B)(ii)(II)). The
court then rejected the claim that the solicitation’s references to the agency website – which
indicated that the solicitation “will ‘be issued via’ the website, and that the website is the
‘method of distributing’ solicitation amendments” – had the effect of incorporating the website’s
content into the solicitation, finding that “the language of the solicitation in no way suggests that
the words on the web site should be read as part of the solicitation.” Conscoop-Consorzia, 62
Fed. Cl. at 230. Presumably on the basis of these arguments, the Federal Circuit affirmed. 159
Fed. Appx. 184 (Fed. Cir. 2005).
Of course, defendant argues that Conscoop-Consorzia is distinguishable – and surely it is
different, at least insofar as, there, it was defendant that strenuously argued that the deadline on
the website was not part of the solicitation. See Conscoop-Consorzia, 62 Fed. Cl. at 229. Here,
of course, the shoe is on the other foot.30 But, the basic concepts that led the court in Conscoop-
Consorzia to conclude that the website there was not part of the solicitation are also dispositive
here, to wit, that: (i) under the Federal procurement system, the solicitation controls the
submission deadline for proposals; and (ii) a provision in the solicitation that indicates that a
website will be used for a specific purpose (e.g., to distribute the solicitation, to publish
amendments), will not be construed, without additional direction, to incorporate into the
solicitation other information listed on the website. In the latter respect, this case is a far cry
from those in which an agency made clear that the due date listed on a website had been
30
In urging the affirmance of this court’s decision in Conscoop-Consorzia, the Justice
Department argued to the Federal Circuit that this court had “correctly rejected” the notion that
the website was part of the solicitation, asserting that “the web site was not part of the
solicitation, and was merely a mechanism to provide access to the solicitation.” Brief of
Defendant-Appellee the United States at 21, Conscoop-Consorzia FRA Corp. Di Prod. E. Lavoro
v. United States, 159 Fed. Appx. 184 (Fed. Cir. 2005) (No. 04-5150). In this regard, the Justice
Department further asserted that the website’s reference to “US Time Zones” “was not part of
the solicitation, and merely constituted ancillary information provided by the Navy.” Id.-17-
incorporated into a solicitation. See Career Training Concepts, Inc. v. United States, 83 Fed. Cl.
215, 225 (2008) (agency email to potential offerors indicating that the time for submitting a
proposal had been extended and referring to e-Buy website as listing the new deadline);
LexisNexis, Inc., 2007 C.P.D. ¶ 73, at *5 (2007) (additional information incorporated into
solicitation where agency “explained at length when and how it posted the amendments” via a
hyperlink). Based upon these authorities, the court concludes that defendant was right in
Conscoop-Consorzia and is wrong here.
Accordingly, this court concludes that the deadline listed on the website did not become
part of the solicitation here.
2. Did plaintiff waive its timeliness claim?
In what is essentially a last ditch argument, defendant next contends that it is entitled to
prevail under a waiver argument. It asserts, in this regard, that plaintiff should be precluded
from challenging the VA’s rejection of its proposal because the information on the website gave
rise to a patent ambiguity and LabCorp failed properly to raise that issue prior to the close of the
procurement process.
Unlike protests at the GAO, the statute governing this court’s bid protest jurisdiction
imposes no separate time limits. See 28 U.S.C. § 1491(b)(1); but see 28 U.S.C. § 2501.
However, in Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308, 1315 (Fed. Cir. 2007), the
Federal Circuit held that “a party who has the opportunity to object to the terms of a government
solicitation containing a patent error and fails to do so prior to the close of the bidding process
waives its ability to raise the same objection afterwards in a § 1491(b) action in the Court of
Federal Claims.” See also COMINT Sys. Corp. v. United States, 2012 WL 6062509, at *3 (Fed.
Cir. Dec. 7, 2012). This rule, however, does not preclude a party from pursuing an error that it
raised with the agency prior to the close of the procurement process. Thus, in DGR Associates,
Inc. v. United States, 94 Fed. Cl. 189, 202-04 (2010), the court held that Blue & Gold Fleet was
inapposite because the plaintiff had challenged the Air Force’s solicitation before the closing
date for receipt of proposals. The court rejected the notion that, to avoid waiver, a protester must
file either formal protest or an action in this court before the close of the bidding process. It
noted that such a view did not comport with FAR § 33.103, which indicates that that a party
should attempt to resolve its concerns, if possible, by contacting the contracting officer. Id. at
202-03 (citing 48 C.F.R. § 33.103). The court held that “[t]he correct interpretation of Blue &
Gold Fleet is that, if a party has challenged a solicitation impropriety before the close of the
bidding process, the party is not precluded from later filing its protest at the Court of Federal
Claims.” DGR Assocs., 94 Fed. Cl. at 203; see also Distributed Solutions, Inc. v. United States,
104 Fed. Cl. 368, 394 (2012).
This waiver doctrine does not get defendant off the hook here for several reasons. First,
contrary to defendant’s suggestion, a patent ambiguity may not be created where the solicitation
itself is facially unambiguous and the only conflict that allegedly exists is between the
solicitation and some ancillary source of information. It is, of course, axiomatic that extrinsic
evidence may not be used to import ambiguity into unambiguous contract language. See Beta
Sys., Inc. v. United States, 838 F.2d 1179, 1183 (Fed. Cir. 1988); Smelser v. United States, 53
-18-
Fed. Cl. 530, 542 (2002); Safeco Credit v. United States, 44 Fed. Cl. 406, 419-20 (1999); see
also R.B. Wright Constr. Co. v. United States, 919 F.2d 1569, 1572 (Fed. Cir. 1990). And, it
stands to reason that if extrinsic evidence cannot be used to create an ambiguity that does not
otherwise exist, it cannot be used to create a patent one.31
This distinction finds support in numerous cases that describe the patent ambiguity
doctrine as arising where a government “contract contains facially inconsistent provisions.”32
And, indeed, several cases have flatly rejected defendant’s attempts to rely upon circumstances
or documents outside a solicitation to create a patent ambiguity. See, e.g., Chris Berg, Inc. v.
United States, 455 F.2d 1037, 1045 (Ct. Cl. 1972) (“[I]t is not the actual knowledge of the
contractor but the obviousness of the discrepancy [in the contract terms] which imposes the duty
of inquiry.”); Hoppman Corp. v. United States, 18 Cl. Ct. 220, 227 (1989) (Rader, J.) (rejecting
“arguments that circumstances or documents outside the bid solicitation created, or should have
flagged, a patent ambiguity,” because “this court’s inquiry for an ambiguity must focus on the
language of the contract or bid solicitation”); see also Ets-Hokin Corp. v. United States, 420 F.2d
716, 722-23 (Ct. Cl. 1970); SIPCO Servs. & Marine, Inc. v. United States, 41 Fed. Cl. 196, 215-
16 (1998); XXX Constr. Co., Inc. v. United States, 16 Cl. Ct. 491, 496 (1989). These cases
demonstrate that there was no ambiguity here at all, let alone one patent enough to trigger the
waiver rule. The relevant language of the solicitation was clear, and the webpage, in terms of its
capacity to create an ambiguity, was correspondingly irrelevant.
But, even if there were a patent ambiguity here, this hardly is a case in which LabCorp
“s[a]t on [its] right[] to challenge what [it] believe[s] is an unfair solicitation.” Blue & Gold
Fleet, 492 F.3d at 1314. The record reflects that when it discovered the problem on the
webpage, LabCorp immediately contacted the contracting officer and was told that the deadline
in the solicitation was controlling. Given this, defendant should not be heard to argue that
LabCorp failed adequately to pursue its objection to its final resolution.33 Plaintiff’s
representatives made an inquiry and received a definitive answer. They did not realize that there
31
The situation might be different in a case where the patent ambiguity involves the
omission of a critical term in the solicitation. But, that is not this case. Nor is this a case in
which the contractor knew that the agency held an interpretation different from its own. See
HPI/GSA-3C, LLC v. Perry, 364 F.3d 1327, 1336-37 (Fed. Cir. 2004).
32
Stratos Mobile Networks USA, LLC v. United States, 213 F.3d 1375, 1381 (Fed. Cir.
2000); see also M.A. Mortensen Co. v. Brownlee, 363 F.3d 1203, 1207 (Fed. Cir. 2004).
33
See Engineered Demolition, Inc. v. United States, 70 Fed. Cl. 580, 591 n.15 (2006)
(contractor fulfilled duty to inquire when it raised issue with government agency and received
clarification); Mktg. & Mgmt. Info., Inc. v. United States, 57 Fed. Cl. 665, 675 (2003) (contractor
fulfilled duty to inquire when it directly asked question at pre-bid conference and the agency
representative answered the question); see also Elizabeth D. Lauzon, “Construction and
Application of Patent Ambiguity Doctrine to Government Contracts,” 13 A.L.R. Fed. 2d 261 § 4
(2006) (cataloguing other cases in which a contractor fulfilled the duty to inquire); compare
Cmty. Heating & Plumbing Co., Inc. v. Kelso, 987 F.2d 1575, 1580 (Fed. Cir. 1993).
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was still a problem until they had finished loading their proposal onto the website (which the
website allowed) and then attempted to submit the proposal. It was then that they received the
electronic notice that the procurement had closed. By then, it was too late for plaintiff to object
further – even though its official attempted to contact the contracting officer again. Under these
circumstances, this case is more akin to those in which a protester did not become aware of an
alleged defect in the solicitation until after the close of bidding. In such cases, this court has
consistently held that the Blue & Gold Fleet waiver rule is not triggered. See, e.g., Reilly v.
United States, 104 Fed. Cl. 69, 77 (2012); Allied Materials & Equip. Co., Inc. v. United States,
81 Fed. Cl. 448, 459-60 (2008); Knowledge Connections, Inc. v. United States, 79 Fed. Cl. 750,
759 (2007). And such is the case here, as well.
As there is no waiver here, the court must next determine whether the VA acted in a
fashion that was arbitrary, capricious, an abuse of discretion, or otherwise contrary to law when
it refused to accept plaintiff’s proposal.
3. Was the VA’s action in rejecting the proposal arbitrary, capricious,
an abuse of discretion, or otherwise contrary to law?
As noted above, the Competition in Contracting Act specifies that a “solicitation . . . shall
at a minimum include . . . in the case of competitive proposals . . . the time and place for
submission of proposals.” 10 U.S.C. § 2305(a)(2)(B)(ii)(II). Logic and common sense suggest
that in enacting this requirement, Congress intended that agencies would accept offers that were
submitted properly before the deadline specified in a solicitation. Beyond this, “[i]t is hornbook
law that agencies must evaluate proposals and make awards based on the criteria stated in the
solicitation.” Banknote, 56 Fed. Cl. at 386 (discussing 10 U.S.C. § 2305); see also Elec. Data
Sys., LLC v. United States, 93 Fed. Cl. 416, 430 (2010); NEQ, 88 Fed. Cl. at 47; PGBA, LLC v.
United States, 60 Fed. Cl. 196, 207, aff’d, 389 F.3d 1219 (Fed. Cir. 2004). If this principle
means anything, it must be that an agency may not reject, as untimely, an offer that is received
prior to the deadline specified in the solicitation. Otherwise, full and open competition does not
occur. See H.R. Rep. No. 98-1157, at 17 (1984) (“Full and open competition is accomplished
only when . . . all qualified vendors are allowed . . . to submit offers on Federal procurements . . .
.”); see also Cal. Marine Cleaning, Inc. v. United States, 42 Fed. Cl. 281, 296-97 (1998) (a bid is
“timely” if it is “delivered to the place specified in an IFB on or before the time and date
specified in the IFB”).
Here, the solicitation indicated that offers were due by 2:00 p.m. CDT. Plaintiff
attempted to submit its offer through the e-Buy website at 1:03 p.m. CDT. The offer was refused
by the e-Buy system as untimely. It was not untimely.34 Defendant’s action in rejecting the
34
In a startling argument, defendant suggests that plaintiff should not be heard to
complain because its offer, in fact, was not delivered to the contracting officer before the 2:00
p.m. CDT deadline. In making this claim, defendant seemingly dons blinders to why that
happened. In this regard, this case is reminiscent of those noting that an offer can be accepted
when an agency affirmatively interfered with what would otherwise have been a timely delivery.
See, e.g., White Oak Telecomm., Inc. v. Dep’t of Veterans Affairs, 94-3 B.C.A. ¶ 27258 (1994);
Network Imaging Sys. Corp. v. Dep’t of Agriculture, 94-2 B.C.A. ¶ 26883 (1994); SYS v. Nat’l
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offer, therefore, was arbitrary, capricious, an abuse of discretion, and contrary to law. See, e.g.,
BH & Assocs., 88-1 B.C.A. ¶ 20340 (1987). It is beyond peradventure that this action prejudiced
plaintiff – that it has suffered a “non-trivial competitive injury which can be addressed by
judicial relief.” Weeks Marine, Inc. v. United States, 575 F.3d 1352, 1361 (Fed. Cir. 2009)
(quoting WinStar Commc'ns, Inc. v. United States, 41 Fed. Cl. 748, 763 (1998)); see also Sys.
Application & Techs., Inc. v. United States, 691 F.3d 1374, 1382 (Fed. Cir. 2012). And it falls to
this court to remedy defendant’s misfeasance.35
D. Injunctive Relief
Having concluded that the instant procurement was legally flawed and that plaintiff was
thereby prejudiced, the court must determine whether plaintiff has made three additional
showings to warrant injunctive relief, to wit, that: (i) it will suffer immediate and irreparable
injury; (ii) the public interest would be better served by the relief requested; and (iii) the balance
of hardships on all the parties favors plaintiff. Idea Int’l, Inc. v. United States, 74 Fed. Cl. 129,
137 (2006); Bannum, 60 Fed. Cl. at 730; Seattle Sec. Servs., 45 Fed. Cl. at 571. No one factor is
dispositive to the court’s inquiry as “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); see also Seattle Sec. Servs., 45 Fed. Cl. at 571. In the instant case, the existence of
irreparable injury to plaintiff, the balancing of harms in favor of the plaintiff, and the public
interest all lead this court to grant injunctive relief to plaintiff.
1. Irreparable Harm
When assessing irreparable injury, “[t]he relevant inquiry in weighing this factor is
whether plaintiff has an adequate remedy in the absence of an injunction.” Magellan Corp. v.
United States, 27 Fed. Cl. 446, 447 (1993); see also Serco Inc. v. United States, 81 Fed. Cl. 463,
501 (2008). Plaintiff argues that it will suffer irreparable harm if an injunction is not granted,
because the only other available relief – the potential for recovery of bid preparation costs –
would not compensate it for the loss of valuable business on the contract in question. This type
of loss, deriving from a lost opportunity to compete on a level playing field for a contract, has
been found sufficient to prove irreparable harm. See id. at 501-02; Impresa Construzioni Geom.
Domenico Garufi v. United States, 52 Fed. Cl. 826, 828 (2002); United Int'l Investigative Servs.,
Inc. v. United States, 41 Fed. Cl. 312, 323 (1998) (“[T]he opportunity to compete for a contract
and secure any resulting profits has been recognized to constitute significant harm.”); Bean
Dredging Corp. v. United States, 22 Cl. Ct. 519, 524 (1991) (bidder would be irreparably harmed
because it “could recover only bid preparation costs, not lost profits, through an action at law”).
Aeronautics & Space Admin., 93-2 B.C.A. ¶ 25582 (1992). It is worth noting, as an aside, that
defendant has revealed that the e-Buy website is programmed so that all the times displayed
thereon are expressed in Eastern Time, regardless of the specific time zone actually listed in a
given solicitation. That feature seemingly begs mischief.
35
Because this court accepts plaintiff’s prime argument on this point, it need not address
plaintiff’s alternative arguments (e.g., that the VA’s conduct violated a covenant of good faith
and fair dealing).
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Accordingly, plaintiff has adequately demonstrated that it will suffer irreparable harm if
injunctive relief is not provided.
2. Balance of Hardships
Under this factor, “the court must consider whether the balance of hardships leans in the
plaintiff’s favor,” requiring “a consideration of the harm to the government.” Reilly’s Wholesale
Produce v. United States, 73 Fed. Cl. 705, 715 (2006); see also Heritage of Am., LLC v. United
States, 77 Fed. Cl. 66, 78-79 (2007); PGBA, LLC v. United States, 57 Fed. Cl. 655, 663 (2003).
Defendant intimates that enjoining the performance of the blanket purchase agreement would
delay implementation of a contract designed to benefit the VA’s operations. But, this court has
observed that “‘only in an exceptional case would [such delay] alone warrant a denial of
injunctive relief, or the courts would never grant injunctive relief in bid protests.’” Id. (quoting
Ellsworth Assocs., Inc. v. United States, 45 Fed. Cl. 388, 399 (1999)); see also Serco Inc., 81
Fed. Cl. at 502; Reilly’s Wholesale, 73 Fed. Cl. at 715-16. Defendant has offered no reason why
this is such an exceptional case.
In suggesting that an injunction ought not be issued, defendant also asserts that allowing
plaintiff to participate in this procurement would harm the offerors that submitted their offers
through the e-Buy website before 2:00 p.m. EDT. It cites Labatt Food Service, Inc. v. United
States, 577 F.3d 1375, 1381 (Fed. Cir. 2009), for the proposition that plaintiff should not be
given special treatment and extra time to submit its proposal. See also Elec. On-Ramp, Inc. v.
United States, 104 Fed. Cl. 151, 162 (2012). Of course, any harm flowing to the other offerors
here stems from defendant’s own arbitrary and capricious actions. Moreover, none of those
offerors are entitled to an award under this procurement based upon the legally erroneous
exclusion of plaintiff from the competition. Finally, any bona fide concerns defendant has in
terms of maintaining an even playing field here may be addressed via the terms of the injunction
and the flexibility it will afford defendant on how to proceed.
3. Public Interest
Plaintiff also contends that the public interest will be served by granting the requested
preliminary injunctive relief. “Clearly, the public interest in honest, open, and fair competition
in the procurement process is compromised whenever an agency abuses its discretion in
evaluating a contractor’s bid.” PGBA, 57 Fed. Cl. at 663; see also Rotech Healthcare Inc. v.
United States, 71 Fed. Cl. 393, 430 (2006); Cincom Sys., Inc. v. United States, 37 Fed. Cl. 266,
269 (1997); Magellan, 27 Fed. Cl. at 448. In the present case, the public’s interest likewise lies
in preserving the integrity of the competitive process.
III. CONCLUSION
Unlike someone on good terms with the Mad Hatter’s Time, the officials at the VA could
not whisper a hint to Time and make the clock on this procurement go round, in a twinkling, to a
time different than that listed in the solicitation. There is nothing on this side of the looking
glass to support the VA’s rejection of plaintiff’s offer. It is time, via an injunction, for defendant
to return to reality.
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Based on the foregoing:
1. Plaintiff’s motion for judgment on the administrative record is
GRANTED and defendant’s cross-motion for judgment on the
administrative record is DENIED.
2. Defendant, acting by and through the Department of Veterans Affairs, is
hereby ENJOINED from evaluating quotations received, and making an
award, under solicitation VA255-12-Q-0268, unless the Department of
Veterans Affairs makes provision to accept a quotation from LabCorp and
evaluate it on the same terms as other quotations already received (or amended
quotations to be received).
3. Alternatively, defendant, acting by and through the Department of
Veterans Affairs, may conduct a new procurement for the services
described in solicitation VA255-12-Q-0268.
4. Nothing herein shall be deemed to prevent defendant and plaintiff from
mutually agreeing to resolve this matter in such fashion as they deem
appropriate.
5. This opinion shall be published, as issued, after January 11, 2013, unless
the parties identify protected and/or privileged materials subject to
redaction prior to that date. Any such materials shall be identified with
specificity, both in terms of the language to be redacted and the reasons
for each redaction (including appropriate citations to authority).
IT IS SO ORDERED.
s/Francis M. Allegra
Francis M. Allegra
Judge
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