ELAINE D. KAPLAN, Judge.
Currently before the Court in this post-award bid protest are plaintiff's motion for a preliminary injunction and plaintiff's motion to supplement the administrative record and take related discovery. For the reasons set forth below, both motions are
Plaintiff IBM Corporation ("IBM") is the incumbent contractor providing audit readiness services for the Department of the Army ("the Army" or "the agency") in support of the Army's effort to produce auditable financial statements by September 2017, as directed by the Department of Defense ("DoD").
According to the RFP, the Army's efforts to meet the September 17, 2017 deadline would involve "one of the most complex and challenging transformations ever attempted." Conformed RFP § C.1.2. The RFP provided that the contract would be awarded on a best-value basis "to the Offeror who gives the Government the greatest confidence that it will best meet or exceed the requirements."
The RFP identified seven factors for evaluation: (1) Experience, (2) Approach to Sample Scenario, (3) Past Performance, (4) Key Personnel, (5) Transition Plan, (6) Small Business Utilization Factor, (7) Price.
According to the RFP, offerors' total evaluated prices consisted of their prices for (1) the Labor contract line item numbers ("CLIN") X001 and (2) the other direct costs ("ODC") CLINs X002 (which all offerors were required to price at $400,000 per CLIN,
The Contractor level of effort to complete deliverables under this contract shall not exceed the following:
During the procurement, some offerors asked the Army to clarify the extent to which section C.2.4.1 permitted a successful offeror to reallocate hours among the labor categories.
Three offerors submitted proposals, including IBM and defendant-intervenor Ernst & Young LLP ("EY"). For Factor 1, the Technical Evaluation Team rated both IBM and EY as "outstanding."
Another difference between IBM's proposal and EY's proposal was not noted in any of the Army's evaluation materials but takes center stage in IBM's bid protest. Specifically, under the heading "Administrative Items," EY included the following language:
AR 972. In the same section of the proposal, EY also stated,
AR 972.
By contrast, IBM's proposal regarding the potential for the reallocation of hours stated as follows:
AR 529.
Before rendering an award decision, the Army contacted each offeror "seeking clarifications relating [to] their ethics policies and information to understand any potential [organizational conflicts of interest ("OCIs")]." AR 1075. When contacting EY, the Army specifically inquired about the role in preparing EY's proposal, if any, played by [], an EY employee who had served as Director of Financial Improvement and Audit Readiness (FIAR Director) in the Office of the Undersecretary of Defense-Comptroller until March 2013.
On May 22, 2014, the Army awarded the new audit-support contract to EY, concluding that the additional strengths provided by IBM did not warrant paying a premium of $30,432,837 (or 54.8%). AR 1153. The Source Selection Authority ("SSA") also praised EY with respect to the transition plan factor for proposing to "offer[] the incumbent a role as a sub-contractor," calling this "a sound approach to ensure availability of trained and qualified personnel." AR 1147.
IBM protested the award at the Government Accountability Office ("GAO"), and the Army issued a stop-work order to EY.
GAO denied the protest on September 5, 2014.
IBM filed a bid protest action in this Court on September 17, 2014, a week after EY began its transition work.
At a status conference on September 19, 2014, the parties discussed an expedited briefing schedule on IBM's motion. During that discussion, counsel for IBM noted that IBM also intended to move for leave to supplement the administrative record. Based on the matters discussed at the status conference, the Court issued an order setting forth an expedited briefing and oral argument schedule on the motion for a preliminary injunction, which incorporated deadlines for filing the administrative record and briefing the motion to supplement the record.
On September 30, 2014, the Court held oral argument on IBM's motion for a preliminary injunction. For the reasons set forth below, the Court denies IBM's motion for a preliminary injunction as well as its motion to supplement the administrative record and engage in discovery. In addition, the Court establishes an expedited briefing schedule for final resolution of this case on the merits by no later than November 7, 2014 (two days before the expiration of IBM's bridge contract).
The standards for determining whether to grant a preliminary injunction are well established. In order to secure such relief, the moving party must demonstrate that: (1) it is likely to succeed on the merits; (2) it will be irreparably harmed without injunctive relief; (3) the balance of hardships tips in its favor and (4) the public interest favors the grant of injunctive relief.
As noted above, EY began performing its transition work on the contract on September 10, 2014 and is scheduled to continue to perform that work for forty-five days. IBM's bridge contract expires on November 9, 2014. At that point, EY will take over performance of the contract. In its motion, IBM seeks to enjoin EY from continuing to perform transition work while the case is before the Court.
With regard to the merits, IBM asserts a likelihood of success with respect to its three grounds for challenging the award to EY. First, IBM argues that it is likely to prevail on its claim that language in EY's proposal reserving the rights to reallocate labor hours and to create new labor categories conflicted with section C.2.4.1 in the PWS and that, by accepting EY's proposal, the Army unlawfully relaxed that section's requirements for EY but not for IBM or any other offeror. Pl's PI Mem. 21-29. Second, IBM argues that it is likely to succeed on the merits of its claim that the contracting officer's investigation of the potential OCI raised by [] involvement in drafting EY's proposal was inadequate. Pl's PI Mem. 29-33. Finally, IBM contends that it has established a likelihood of succeeding with respect to its argument that the Army's evaluation of EY's transition plan was irrational and contrary to the RFP's stated requirements. Pl.'s PI Mem. 34-38.
Regarding irreparable harm, IBM advances two arguments. First, IBM asserts that, "if performance is allowed to proceed, there is a significant risk that if IBM prevails on the merits, its relief will be limited to bid and proposal costs, and it will lose the opportunity to fairly compete for the contract." Pl.'s Reply in Supp. of Mot. for Prelim. Inj. 21 ("Pl.'s PI Reply"), ECF No. 41. Specifically, IBM argues that "[i]f E&Y is allowed to continue transition and performance while this action is pending, and IBM subsequently prevails on the merits, the Army will undoubtedly oppose the issuance of permanent injunctive relief, arguing that it would be too costly and disruptive to halt performance of E&Y's contract," and "as a court of equity, the Court will be bound to consider such arguments in balancing the harms." Pl.'s PI Reply 22.
Second, IBM argues that if the transition continues, it "is likely to lose Key Personnel and other employees to E&Y, and there is a risk that E&Y will be exposed to IBM's proprietary methods and processes during the transition period." Pl.'s PI Reply 21-22. These consequences, IBM contends, would put it at a competitive disadvantage for any re-competition that might be ordered. Pl.'s PI Reply 22, 25. Specifically, IBM claims that since receiving the contract award, EY has "aggressively recruited" certain IBM employees. Pl.'s PI Reply 26. If the Court ultimately were to order re-solicitation, IBM contends, "IBM would lose the incumbent advantage of continuity of personnel and would have to hire, on short notice, qualified replacement personnel, which may not be possible and could raise costs." Pl.'s PI Reply 26. In addition, IBM argues that if the transition is allowed to continue, "E&Y will be able to observe and gain exposure to IBM's proprietary tools, processes and methodologies." Pl.'s PI Reply 27. "With such information in hand," IBM argues, "E&Y could improve the quality of its technical proposal—which previously was rated lower than IBM's and is thus a significant discriminator in IBM's favor." Pl.'s PI Reply 27.
On the other hand, IBM argues, the government would not suffer significant harm if the transition work were enjoined. It alleges that "a preliminary injunction would merely delay transition for about two months" and, in the meantime, "the Army can obtain all of its audit support needs under IBM's existing bridge contract, which can be extended through at least January 9, 2015—more than 60 days after this Court anticipates deciding this bid protest." Pl.'s PI Reply 3-4.
As noted above, a denial of preliminary relief may be justified by "the absence of an adequate showing with regard to any one factor."
"A preliminary injunction will not issue simply to prevent a mere possibility of injury, even where prospective injury is great. A presently existing, actual threat must be shown."
IBM has failed to show that the grant of preliminary relief is necessary to preserve IBM's ability to litigate its claim and secure full relief. First, the Court is not persuaded by IBM's argument that preliminary relief is required because allowing EY to continue transition work over the next four to five weeks will prejudice IBM's ability to ultimately secure permanent injunctive relief. IBM's observation that allowing the transition to go forward now may strengthen the government's argument against permanent injunctive relief a month from now would apply in any bid protest case in which a preliminary injunction is sought to prevent a contract award from going forward. Its argument does not give adequate weight to the Court's "broad equitable powers to fashion an appropriate remedy" in a bid protest case.
In fact, the court has consistently found unpersuasive arguments like IBM's in which incumbents seek to base a showing of irreparable harm on the possibility that the successful offeror would gain advantages during a transition period that might affect the successful protester's capacity to compete for a new contract.
Finally, the Court also finds unpersuasive IBM's argument that irreparable harm will result because it will lose employees to EY if the transition is not halted. For one thing, IBM's argument is not supported by its declarations which show that—notwithstanding that EY has been "aggressively recruiting" IBM employees since last May—it appears that only one IBM employee has jumped ship.
Second, and in any event, the mere fact that an incumbent's employees begin to move over to work for the awardee does not, without more, constitute irreparable harm.
In addition to failing to show that it will be irreparably injured if preliminary relief is not granted, IBM has not shown that the balance of hardships tips in its favor. For one thing, granting IBM's request would actually upset, rather than preserve, the status quo. Thus, EY has been performing transition work under the new contract since September 10. IBM did not file its complaint or request for a TRO until September 17, 2014, which is twelve days after GAO denied its bid protest and a week after EY began its forty-five-day transition period. Granting preliminary relief now would mean that EY would have to stop performance, therefore jeopardizing not only the Army's ability to meet its deadline, but also the livelihood of some 100 EY employees currently working on the transition as well as employees of EY's teammates on the contract. [] Decl. ¶¶ 11-12, ECF No. 33. At the same time, even if preliminary relief is denied, IBM will continue to have the benefit of its bridge contract, which does not expire until November 9, 2014. When coupled with the lack of irreparable injury to IBM, these consequences to the government and to EY (as well as the public interest), militate against a grant of the extraordinary remedy of preliminary injunctive relief.
IBM has filed a motion seeking leave to supplement the administrative record and leave to take related discovery. It argues that completion and supplementation of the record is necessary for effective judicial review of its claim that the Army relaxed the solicitation's mandatory staffing requirements for EY and its claim that the contracting officer failed to adequately investigate the potential OCI posed by the involvement of [] in the preparation of EY's proposal. Pl.'s Mem. in Supp. of Mot. to Complete & Supplement AR 2-3 ("Pl.'s AR Mem."), ECF No. 29. For the reasons set forth below, IBM's motion is
"As a general rule, in determining whether an agency's actions are arbitrary or irrational, the `focal point for judicial review [of the agency's decision] should be the administrative record already in existence, not some new record made initially in the reviewing court.'"
As noted, IBM argues that completion and supplementation of the record is necessary for effective judicial review of two of its claims. First, regarding its claim that the Army relaxed the staffing requirements for EY, IBM argues that, after the Army awarded the contract to EY, the Army issued a draft contract to EY that inserted the following language into the PWS: "As approved by the COR, the Contractor will have the flexibility to reallocate hours as long as the ceiling is not exceeded." Pl.'s PI Mem. 12;
In response to IBM's motion, the government represents that it has produced all documents relevant to the Court's review of this procurement. Def.'s Opp'n to Pl.'s Mot. for Disc. & to Complete & Supplement AR 4 ("Def.'s AR Resp."), ECF No. 36. Moreover, the government argues that the depositions IBM requests are unwarranted. With respect to IBM's claim that the Army relaxed the mandatory staffing requirements for EY, the government notes that the record already contains a declaration by the contracting officer, in which the contracting officer explains why he added the language IBM identifies and then took it out. Def.'s AR Resp. 5. In any event, the government argues, the addition and subsequent removal of the language after the award "do not concern the Army's evaluation of E&Y's proposal, and should not be the focus of the Court's review or decision." Def.'s AR Resp. 6.
The Court agrees with the government. First, at oral argument, counsel for IBM acknowledged that IBM had no basis for contesting the government's representations that no additional documentation of post-award communications between the Army and EY exists. Oral Arg. Tr. 29. And while IBM continues to press its requests for depositions on the matter, the Court concludes that granting discovery on this point would be inappropriate. The central issue with respect to IBM's legal claim is whether EY's proposal conflicted with a material term of the solicitation. Although IBM posits that further investigation into the post-award dealings between the Army and EY might shed further light on the parties' understanding of the language in EY's proposal, forgoing such additional investigation certainly will not "preclude[] effective judicial review" of IBM's claims, which are most appropriately determined on the basis of the paper record that includes the solicitation, the proposal, and the contract documents.
Regarding its claim that the contracting officer failed to adequately investigate EY's potential OCI, IBM argues that it has identified the "hard facts" sufficient to show that the Army should have disqualified EY. Pl.'s AR Mem. 9 (citing
Deposing [] regarding the information he accessed as FIAR Director at DoD would be inappropriate. The Court's role here is to review the reasonableness of the investigation that the contracting officer actually conducted, not to conduct its own investigation. The focus of the court's review should be "the information upon which an agency relied when it made its decision, together with any documentation that reveals the agency's decision-making process."
On the basis of the foregoing:
The Court establishes the following schedule for completion of briefing on cross motions for judgment on the administrative record:
Pursuant to the Court's September 19, 2014 Protective Order, this Opinion and Order has been issued under seal. The parties shall have two weeks to propose redactions and, accordingly, shall file such proposed redactions by October 17, 2014. To aid the Court's evaluation of the proposed redactions and in light of the "presumption of public access to judicial records,"
The Protective Order defines "protected information" as "information that must be protected to safeguard the competitive process, including source selection information, proprietary information, and confidential information." Beyond this, the Court must weigh any proposed redaction against a "presumption of public access to judicial records."
