CHARLES F. LETTOW, Senior Judge.
Plaintiff Alaska Structures, Inc. ("Alaska Structures") protests the decision of the United States Air Force to undertake corrective action and institute a new solicitation for bids to procure canvass Quonset-shaped shelters ("shelters") for winter use by Joint Base Elmendorf-Richardson in Alaska. The corrective action follows an earlier post-award protest challenging the Air Force's award of a contract to California Industrial Facilities Resources, Inc. d/b/a CAMSS Shelters ("CAMSS"). In that protest, Alaska Structures argued that snow-load test results of the shelter model proposed by CAMSS should have been part of the record because the solicitation required CAMSS to provide, and the Air Force to consider, the test results. See Alaska Structures, Inc. v. United States, 144 Fed. Cl. 80 (2019). Alaska Structures moved to require completion of the record by having the government or CAMSS provide the results of snow-load testing of CAMSS' proffered shelter. Id. at 82. The court granted in part Alaska Structures' motion, ordering production of the initial test report applicable to CAMSS' shelter as a supplement to the record, ruling that providing such a test report was necessary to resolve a plausible claim of inconsistent representations by CAMSS of its shelter's snow-load performance. Id. at 86-87. CAMSS promptly produced the test result, and those results showed that the tests were performed on a shelter that was significantly shorter than the specification set out in the Air Force's solicitation. After reviewing the test report that CAMSS produced, the Air Force took corrective action by terminating the CAMSS contract for convenience and issuing a new but substantially similar solicitation that included additional test verification requirements. AR 37-207.
Thereafter, Alaska Structures submitted a motion in the initial litigation for leave to file an amended complaint to challenge the corrective action, and then also filed a separate pre-award protest of the new solicitation. The court consolidated the two cases pursuant to Rule 42(a) of the Rules of the Court of Federal Claims ("RCFC"). See Order to Consolidate, No. 19-792C ECF No. 53; No. 19-1204C, ECF No. 15.
In its protests of the corrective action and the new solicitation, Alaska Structures raises three alleged errors.
In the consolidated cases, Alaska Structures filed a motion for judgment on the administrative record on September 30, 2019. See Pl.'s Mem. of Law in Supp. of its Mot. for Judgment on the Admin. Record ("Pl.'s Mot."), No. 19-792C, ECF No. 59. The government and CAMSS each responded to Alaska Structures' motion and cross-moved for judgment on the administrative record on October 7, 2019. See Mem. in Supp. of [CAMSS'] Resp. & Cross-Mot. for Judgment on the Admin. Record ("CAMSS' Cross-Mot."), No. 19-792C, ECF No. 61; Def.'s Cross-Mot. for Judgment on the Admin. Record & Opp'n to [Pl.'s Mot.] ("Def.'s Cross-Mot."), No. 19-792C, ECF No. 62. After further briefing by parties, see Pl.'s Resp. to Def. and Def.-Intervenor's Cross-Motions for Judgment on the Admin. Record and Reply in Supp. of its Mot. for Judgment in the Admin. Record ("Pl.'s Reply"), ECF No. 63; [CAMSS'] Reply in Supp. of its Cross-Mot. for Judgment on the Admin. Record ("CAMSS' Reply"), ECF No. 65; Def.'s Reply in Supp. of its Cross-Mot. on the Admin Record ("Def.'s Reply"), ECF No. 66, the court held a hearing on October 23, 2019.
The court concludes that the Air Force's corrective action had a rational basis, that the newly revised solicitation is not defectively ambiguous, and that CAMSS is not disqualified from making an offer in response to that solicitation. Accordingly, Alaska Structures' motion for judgment on the administrative record is DENIED, and the government's and CAMSS' cross-motions for judgment are GRANTED.
On December 3, 2018, the Air Force issued a request for quotes for Alaska Small Shelter Systems, product number AK-V280, or equivalent (the "first solicitation"). See generally AR 10. The Alaska Small Shelter System represented a brand name for the requested shelter as produced by Alaska Structures. Compare AR 12-73 (Alaska Structures' bid), with AR 16-93 (amended solicitation).
The Air Force prepared the solicitation in accordance with commercial item acquisition provisions of Federal Acquisition Regulation ("FAR") Parts 12 and 13, specifically Subparts 12.3, 12.6, 13.1, and 13.5, see AR 16-89 to 90, which set out streamlined and simplified procedures for acquiring commercial items. Initially, per that solicitation as amended, questions were due by December 26, 2018 and quotes were due by December 28, 2018. AR 16-89. Potential bidders had to provide pricing information for shelters and "product data on the item(s) being quoted [that were] detailed enough for the [Air Force] to clearly determine that the item(s) meet the salient [minimum] characteristics." AR 16-90; see also AR 16-93 (contract line item to be priced).
The solicitation specified that award would be made to the "responsible contractor with the lowest priced quote that meets all of the required salient characteristics." AR 16-90. The requirements were for "Alaska Small Shelter Systems, Version 2 (P/N: AK[]-V280) OR EQUAL in accordance with [enumerated] minimum specifications." AR 16-94 (some emphasis removed). Among other "minimum specifications," those relevant to the protest include: (1) "be[ing] designed to allow one shelter to attach to another shelter," with "[e]nd base frame sections [that are] removable so it can be used to connect other shelters;" (2) "withstand[ing] at least 60 mph wind load per ASCE 7-10;" and (3) "meet[ing] at least 20 [pounds per square foot] ground snow load per ASCE 7-10." AR 16-94.
The Air Force received three offers. See AR 22-110 (abstract of offers). CAMSS proffered the low bid. AR 18-98 (CAMSS' proposal). Its six-page proposal consisted of a short cover letter, a page of pricing, and four pages of technical characteristics and various photos of the shelter. See AR 18-97 to 102. CAMSS represented that its equivalent shelter, product number 20QSA, "[met] all of the salient characteristics," AR 18-97, and provided details of its shelter, specifying measurements, capabilities, structural components, and performance characteristics, AR 18-99 to 102. Relevant to the protest, the details CAMSS provided affirmed that its shelter would "meet at least 20 psf ground snow load per ASCE 7-10," AR 18-99, could "connect to multiple shelters with integrated end-to-end connector flap," AR 18-99, had "[e]nd base frame sections [that] are removable . . . to connect other shelters," AR 18-100, and "met [Army] Test Operational Procedure (TOP) 10-2-175 . . . 20 psf snow load test (per initial test)," AR 18-102. CAMSS provided these details in additional pages attached to its price quote but did not include the publicly available technical specifications sheet for the 20Q shelter system. Compare AR 18-99 to 102 (technical details provided by the bid), with AR 2-19 (publicly-available technical specifications for the 20Q system). These technical specifications represented that CAMSS' 20Q shelter met "snow load testing [at] 10 psf for 24 hours" and was "engineer[ed] to 20 psf snow load." AR 2-19 (capitalization removed). CAMSS' proposal also did not include the test it stated that it had performed to confirm its representations. See generally AR 18-97 to 102 (CAMSS' bid); see AR 6-42 (Air Force's responses to Alaska Structures' questions during a protest at the Government Accountability Office ("GAO"), stating "[n]o [snow load] test reports were received").
Alaska Structures submitted the highest of the three bids, see AR 12-73 (Alaska Structures' proposal), but the second highest of the qualifying bids.
On March 26, 2019 the Contracting Officer contacted CAMSS to confirm whether the quoted price was still valid. AR 21-109. CAMSS replied the following day confirming its price. AR 21-109. The Air Force concluded that CAMSS' price was fair and reasonable based on results of a competitive process, AR 22-111 (citing FAR §13.106-3(a)(1)), and that an award to CAMSS represented best value because CAMSS offered the lowest price, AR 22-111. The Air Force awarded the contract to CAMSS on March 27, 2019, AR 23-112, and publicly announced its award decision two days later, AR 24-132.
Alaska Structure's first protest focused on a claim that the Air Force's award to CAMSS on March 27, 2019 was invalid because CAMSS offered a non-qualifying product. See Alaska Structures, 144 Fed. Cl. at 82. Specifically, Alaska Structures contended that CAMSS' shelters did not comply with the snow-load requirement specified in the solicitation. Id. In addressing a motion by Alaska Structures to complete the record, the court granted that motion in part and required the government or CAMSS to produce the test report showing the snow-load performance of the shelter proposed by CAMSS, but as a supplement to the record and not as a correction to the record. Id. at 87.
On July 17, 2019, CAMSS produced the initial test report showing snow-load performance of the shelter it proposed. See CAMSS' Resp. Attach. 1, No. 19-1204C, ECF No. 34. The test report, conducted in October 2018, concluded that the 20QSA "met the requirements of TOP 10-2-175 for a target snow load of 20 [PSF]," having adequately withstood that load per the testing procedures for more than 12 hours. Id. at 12. Importantly, however, the test report also showed that the 20QSA shelter tested was a variation that measured only 13 feet long, rather than 32.5 feet as required by the solicitation. Id. at 3. After reviewing the initial test report, the Air Force determined that there was "reason to doubt the representation made in CAMSS['] quote that its proposed 32 ½ feet long CAMSS20QSA was tested to verify a snow load capability of 20 PSF." AR 37-207. Out of concern that CAMSS "made a material misrepresentation about its proposed shelter's initial testing for snow load capabilities," the Air Force issued a Notice of Corrective Action ("the Notice") on July 23, 2019. AR 37-207. The Notice announced the Air Force's decision to "(1) terminate CAMSS' contract for convenience; (2) amend the Solicitation to clarify that offerors must include test results with their quotes verifying that the specific shelter they propose was tested to verify a snow load capability of 20 PSF; (3) allow offerors an opportunity to submit new proposals; (4) conduct new evaluations; and, (5) make a new award decision." AR 37-207 to 208.
The Air Force terminated CAMSS' contract for convenience on July 29, 2019, AR 40-213 to 216, and issued a new solicitation on July 31, 2019, AR 41-217 to 225. While nearly identical to the original, the new solicitation eliminated the brand name or equal requirement (instead specifying simply "Small Shelter Systems" that satisfied the listed salient characteristics). AR 41-223 to 224. Unlike the first solicitation, it explicitly included a requirement that "[a]ll quotes must include test results or other documentation with their submission verifying that the specific shelter quoted meets the requirement to be able to withstand a wind load of 60 MPH and ground snow load of 20 PSF." AR 41-224.
Alaska Structures submitted questions regarding the new solicitation on August 5, 2019. AR 42-226. It noted that the term "other documentation" required to verify snow load capabilities was "ambiguous" and asked "what type(s) of documentation the Air Force will accept" to satisfy the verification requirement. AR 42-226. The Air Force answered that "[q]uoters have the discretion to submit test reports and/or any documentation they believe will demonstrate their product meets the requirements of the [s]olicitation." AR 43-228.
The Air Force received five offers in response to the new solicitation. CAMSS' bid was slightly lower than Alaska Structures' bid. Compare AR 46-281 (CAMSS' bid), with AR 44-230 (Alaska Structures' bid). Unlike the bids of CAMSS and Alaska Structures, the other three proposals did not provide any test reports or documentation of the wind- and snow-load capabilities of their shelters, see generally AR 45; AR 47; AR 48, and therefore were non-compliant.
After the Air Force took corrective action cancelling the award and issuing the new solicitation, Alaska Structures sought to amend its first complaint to challenge the corrective action. Subsequently, Alaska Structures filed a separate pre-award protest of the new solicitation. See Second Compl. No. 19-792C, ECF No. 1. It challenged the corrective action as arbitrary and capricious because the Air Force lacked a rational basis for amending the original solicitation and resoliciting bids and because it declined to disqualify CAMSS from submitting a bid in response to the new solicitation. See Second Compl. ¶¶ 44-67. Additionally, Alaska Structures alleged that the new solicitation contained an ambiguous requirement because it did not identify what documentation was acceptable to verify the testing performed. See Second Compl. ¶¶ 68-74. CAMSS again moved to intervene, and the court granted its motion. See Order Granting Motion to Intervene, No. 19-1204C, ECF No. 12. Because both cases involve the same parties and contain common questions of law and fact, the court consolidated them pursuant to RCFC 42(a).
This court has jurisdiction over bid protests pursuant to the Tucker Act, 28 U.S.C. § 1491. The Tucker Act vests this court with jurisdiction to "to render judgment on an action by an interested party objecting to a . . . proposed contract or to a proposed award or the award of a contract or any alleged violation of statute or regulation in connection with a procurement or a proposed procurement." 28 U.S.C. § 1491(b)(1).
A threshold issue is whether Alaska Structures has standing to challenge the Air Force's corrective action, a burden it bears as plaintiff. See Myers Investigative & Sec. Servs., Inc. v. United States, 275 F.3d 1366, 1369-70 (Fed. Cir. 2002) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)). To demonstrate standing under 28 U.S.C. § 1491(b)(1), Alaska Structures must be an "interested party" who suffered prejudice from a significant procurement error. CliniComp Int'l, Inc. v. United States, 904 F.3d 1353, 1358 (Fed. Cir. 2018). An interested party is an actual or prospective bidder with a "direct economic interest" in the procurement. Myers, 275 F.3d at 1370; see also TRAX Int'l Corp. v. United States, 144 Fed. Cl. 417, 428 (2019); Veteran Shredding, LLC v. United States, 140 Fed. Cl. 759, 763 (2018). Generally, an interested party suffers prejudice from a significant procurement error when "but for the error, it would have had a substantial chance of securing the contract." CliniComp, 904 F.3d at 1358 (emphasis in original); see also Eskridge & Assocs. v. United States, 142 Fed. Cl. 410, 422-23 (2019), appeal docketed, No. 19-1862 (Fed. Cir. May 10, 2019). An exception arises, however, "when a prospective bidder challenges the terms of the solicitation itself, prior to actually submitting a bid." Orion Tech., Inc. v. United States, 704 F.3d 1344, 1348 (Fed. Cir. 2013). In a pre-award protest, such as the one now before the court, the question can arise "whether there is sufficient factual development . . . to apply the primary `substantial chance' standard." Veteran Shredding, 140 Fed. Cl. at 764 (citing Orion Tech., 704 F.3d at 1348-49 ("Weeks Marine[, Inc. v. United States, 575 F.3d 1352, 1361 (Fed. Cir. 2009),] set out an exception to the general standing test [of substantial chance] in the case of pre-bid, pre-award protest.") (emphasis added)). In this instance, the pre-award protest occurs in post-bid but pre-award circumstances, and there is sufficient factual development to apply the "substantial chance" test for standing.
A further showing that a plaintiff must make to establish its standing is "that it was prejudiced by a significant error in the procurement process." CliniComp, 904 F.3d at 1358 (citing Diaz v. United States, 853 F.3d 1355, 1358 (Fed. Cir. 2017)) (additional citations omitted); see also TRAX Int'l, 144 Fed. Cl. at 428. Determining whether prejudice has been shown for purposes of establishing a plaintiff's standing requires the court to engage in a factual analysis. Labatt Food Serv., Inc. v. United States, 577 F.3d 1375, 1379 (Fed. Cir. 2009)); see also CliniComp, 904 F.3d at 1359. Although the inquiries may be similar, prejudice must be shown either as part of, or in addition to, showing a direct economic interest. CliniComp, 904 F.3d at 1358. Courts should not "conflat[e] the standing requirements of prejudicial error and economic interest," because doing so would mean that "there would be no such thing as an error non-prejudicial to an economically interested offeror in a bid contest." Labatt, 577 F.3d at 1380. Consequently, prejudice "must be reached before addressing the merits." Id. at 1378-79 (quoting Information Tech. & Applications Corp. v. United States, 316 F.3d 1312, 1319 (Fed. Cir. 2003)); see also TRAX Int'l, 144 Fed. Cl. at 428.
The government contests Alaska Structures' standing to pursue its first protest but not the second. Hr'g Tr. 25:15 to 26:23 (Oct. 23, 2019).
The standards of the Administrative Procedure Act ("APA"), 5 U.S.C. § 706, govern the court's review of a protest of the government's decisions regarding award of a contract. See 28 U.S.C. § 1491(b)(4) ("In any action under this subsection, the courts shall review the agency's decision pursuant to the standards set forth in section 706 of title 5."). Under the APA, the court may set aside a government procurement decision that is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law," 5 U.S.C. § 706(2)(A), subject to the traditional balancing test applicable to a grant of equitable relief. See PGBA, LLC v. United States, 389 F.3d 1219, 1224-28 (Fed. Cir. 2004); Hyperion Inc. v. United States, 115 Fed. Cl. 541, 550 (2014).
"The court may not `substitute its judgment for that of the agency,'" Hyperion, 115 Fed. Cl. at 550 (quoting Keeton Corrs., Inc. v. United States, 59 Fed. Cl. 753, 755 (2004) (in turn quoting Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971), abrogated on other grounds as recognized in Califano v. Sanders, 430 U.S. 99, 105 (1977))), but "must uphold an agency's decision against a challenge if the `contracting agency provided a coherent and reasonable explanation of its exercise of discretion,'" Id. (citing Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374, 1381 (Fed. Cir. 2009)); see also Tinton Falls Lodging Realty, LLC v. United States, 800 F.3d 1353, 1358 (Fed. Cir. 2015). The court may overturn the government's procurement decision only "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 v. United States, 238 F.3d 1324, 1332 (Fed. Cir. 2001)). In conducting the rational-basis analysis, the court looks to whether the "the contracting agency provided a coherent and reasonable explanation of its exercise of discretion," Axiom, 564 F.3d at 1381 (quoting Impresa Construzioni, 238 F.3d at 1333), and it affords "contracting officers . . . discretion upon a broad range of issues," AgustaWestland N. Am., Inc. v. United States, 880 F.3d 1326, 1332 (Fed. Cir. 2018) (quoting Impresa Construzioni, 238 F.3d at 1332-33). Accordingly, "the disappointed bidder bears a heavy burden of showing that the award decision had no rational basis." Centech, 554 F.3d at 1037 (quoting Impresa Construzioni, 238 F.3d at 1332-33). The Federal Circuit has specifically emphasized that "corrective action only requires a rational basis for its implementation." Dell Fed. Sys., 906 F.3d at 991.
Alaska Structures contests the Air Force's decision to take corrective action on two grounds: that the Air Force's needs had not changed and that the Air Force already had the information it needed to reevaluate the bids submitted in response to the original solicitation. Pl.'s Mot. at 13-14.
The government responds that "Air Force rationally took corrective action at a time when there was no documented, verified explanation for why CAMSS's first snow load test on a 13.5 [sic]-foot variation of its proposed shelter could reasonably be extrapolated to make assertions about the snow load capabilities of CAMSS's 32.5-ft. long shelter for which the Air Force had contracted." Def.'s Reply at 1. The government also contends that it "did not err into excluding CAMSS from further competition because there never has been a finding that CAMSS made a material misrepresentation." Id. at 2; see also Def.'s Cross-Mot. at 2.
CAMSS similarly argues that the Air Force's corrective action was appropriate because "it became apparent that the prior [s]olicitation did not accurately reflect its needs. CAMSS' Cross-Mot. at 16 (heading). CAMSS also avers that the Air Force never found that CAMSS had misrepresented the snow-load capabilities of its shelter, but rather that the Air Force only expressed "concern[]" about CAMSS' reliance on test results for a shorter shelter. Id. at 13.
As noted earlier, after CAMSS produced the test report underpinning its original offer, the Air Force decided to take corrective action by terminating the contractual award to CAMSS, revising the solicitation, calling for new proposals, conducting a new evaluation, and making a new award. See Notice, AR 38. The contracting officer explained her reasoning, as follows:
AR 37-207.
Rather than amending its prior solicitation, the Air Force issued a new solicitation setting out the same requirements as the original solicitation, except that a testing requirement was specified. The new solicitation required that "[a]ll quotes must include test results or other documentation with their submission verifying that the specific shelter quoted meets the requirement to be able to withstand a wind load of 60 MPH and ground snow load of 20 PSF." AR 41-224. The new solicitation further stated that "[t]est results or other documentation verifying this capability can have been prepared either by the quoter or a third-party." AR 41-224.
In the circumstances, Alaska Structures argues that the Air Force's corrective action is overbroad because "there was no need to take corrective action by resoliciting bids and test reports." Pl.'s Mot. at 16. It argues that the Air Force in effect cancelled the original solicitation and did so improperly because it had all the information it needed to make a new award under the original solicitation. Id. It invokes Parcel 49C Ltd. P'ship v. United States, 31 F.3d 1147, 1151 (Fed. Cir. 1994), for the proposition that `"pretextual' justifications for cancellation of a procurement violate the agency's duty to conduct a fair procurement." See Pl.'s Mot. at 13.
Alaska Structures' argument based on cancellation puts form over substance in characterizing the Air Force's action. Alaska Structures points out that the number of the solicitation was changed, and the Air Force issued the new, revised solicitation on a new, separate page of the FedBizOpps website. Hr'g Tr. 8:10 to 9:12. Even so, the substance of the revised solicitation matched that of the original, excepting only the requirement to provide verifying test results or other documentation. That additional requirement was at the heart of the corrective action. In effect, with this change, the original solicitation was reissued in revised form, albeit not as formally amended. The distinction is not material to an analysis of the change and this court will treat the new solicitation as a revision of the original solicitation, carrying forward and not cancelling the original solicitation.
Alaska Structures contends that the Air Force acted arbitrarily when it failed to disqualify CAMSS from the competition, arguing that CAMSS' initial test results showed that CAMSS had not actually tested its proposed shelter as required, and that its representations in its original offer were material misrepresentations. Pl.'s Mot. at 16.
This challenge by Alaska Structures is unavailing. The Air Force only expressed "concern[]" that CAMSS had made a "potential misrepresentation" when it relied for its first bid on a test of a structure significantly shorter than that which it was offering. AR 37-207. Its corrective action responded to that concern, and it understandably called for new offers in connection with a revised solicitation that mandated submission of test results on the actual shelter being offered.
Alaska Structures contends that the revised solicitation contains a patent ambiguity because it allows offerors to submit "other documentation" verifying the offered shelter have the requisite snow- and wind-load capabilities without identifying what documentation is acceptable. Pl.'s Mot. at 24. "As a general rule, offerors must be given sufficient detail [in a solicitation] to allow them to compete intelligently and on a relatively equal basis." Glenn Def. Marine (Asia), PTE Ltd. v. United States, 97 Fed. Cl. 568, 578 (2011) (citation omitted).
This ground for Alaska Structures' protest is academic and not significant. The three bidders on the revised solicitation other than Alaska Structures and CAMSS supplied neither test reports nor other documentation to support their offers, while both Alaska Structures and CAMSS submitted verifying test reports. Both of the qualified offers thus submitted verification that moots this claim of error.
For the foregoing reasons, Alaska Structures' motion for judgment on the administrative record is DENIED and the government's and CAMSS' cross-motions for judgment on the administrative record are GRANTED.
No costs.
It is so
The pertinent shelters are constructed in segments of 6.5 feet each, Hr'g Tr. 42:22 to 43:5, and that is why CAMSS' initial test was conducted on a shelter 13 feet long (2 × 6.5), Hr'g Tr. 8:12-13, and Alaska Structures' test was conducted on a shelter 32.5 feet long (5 × 6.5), Hr'g Tr. 21:16-25. The court accordingly grants leave for the submission of the Vesper Declaration.
