MARY ELLEN COSTER WILLIAMS, District Judge.
In this post-award bid protest, Ettefaq-Meliat-Hai-Afghan Consulting, Inc., ("EMA") challenges the awards of multiple contracts by the Department of the Army, CENTCOM Contracting Command ("Army") for trucking services in the Afghanistan Theater of Operations.
This matter comes before the Court on the parties' cross-motions for judgment on the administrative record ("AR") and EMA's motion for a permanent injunction. Upon consideration of the AR, the motion papers, and all classified appendices, the Court concludes that EMA has failed to demonstrate that either EMA's nonresponsibility determination or the vendor vetting process was improper. The Court therefore grants Defendant's motion for judgment on the administrative record and denies Plaintiff's motion for a permanent injunction.
On February 22, 2011, the Army issued solicitation number W91B4N-11-R-5000 for National Afghan Trucking ("NAT") services in Afghanistan. The purpose of the NAT contract was to provide a secure and reliable means of distributing reconstruction material, security equipment, fuel, miscellaneous dry cargo, and life support assets to forward operating bases and distribution sites throughout the combined joint operations area in Afghanistan. The Army anticipated the award of indefinite delivery/indefinite quantity contracts for trucking services in three suites: Suite 1 for bulk fuel, Suite 2 for dry cargo, and Suite 3 for heavy cargo. AR 30. The NAT procurement was essentially a follow-on procurement to the Host Nation Trucking ("HNT") contract, which had involved substantially the same mission requirements.
The solicitation stated that the Army would make awards based on Federal Acquisition Regulation ("FAR") 15.101-2, "lowest price technically acceptable."
To be determined responsible, a prospective contractor must—
Although EMA was an incumbent HNT contractor as a member of a joint venture with Mesopotamia Group ("MG") known as MG EMA, EMA bid on the NAT procurement alone, and independently of MG. EMA timely submitted its proposal for all three NAT suites.
The contracting officer found that EMA was nonresponsible on August 9, 2011, relying entirely on EMA's performance of the HNT contract as part of the MG EMA joint venture. Before addressing any specific provisions of FAR 9.104-1 in her responsibility determination, the contracting officer noted that although EMA's performance issues under the HNT contract arose during its joint venture with MG, the responsibility determination for the NAT award would refer to "MG EMA" as "EMA." EMA 2. In the remainder of the responsibility determination, the contracting officer attributed performance failures of "MG EMA" under the HNT contract to "EMA."
Applying the individual sections of FAR 9.104-1, the contracting officer first determined that EMA did not meet the requirements of FAR 9.104-1(b), which provides that the prospective contractor must "[b]e able to comply with the required or proposed delivery or performance schedule, taking into consideration all existing commercial and governmental business commitments." The contracting officer stated:
EMA 3-4.
The contracting officer also found that EMA did not satisfy the requirements of FAR 9.104-1(c), which requires that the prospective contractor "[h]ave a satisfactory performance record. . . ." The contracting officer stated:
EMA 4.
Additionally, the contracting officer found that, for several reasons, EMA did not satisfy FAR 9.104-1(d)'s requirement that the prospective contractor "[h]ave a satisfactory record of integrity and business ethics." First, the contracting officer found that a number of "events" evidenced EMA's "systemic pattern of fraudulent behavior and activity," specifically a failure to establish proper internal controls ensuring compliance with ITV requirements, a "systematic pattern of failed missions," reoccurring instances of forged TMRs, and the July 13, 2011 referral of EMA for debarment because of such forgery. EMA 4-5.
Second, the contracting officer noted that [] The contracting officer also noted that [] The contracting officer stated:
EMA 5-6.
Third, the contracting officer found EMA nonresponsible under FAR 9.104-1(d) due to reports that an EMA employee attempted to access a military facility with false identification. EMA 6, 87-88. The NAT contracting officer concluded that the "unethical decision to allow unauthorized access to U.S. identification media increases the force protection risk to U.S. and Coalition forces." EMA 6.
The contracting officer found that EMA was nonresponsible under FAR 9.104-1(e), requiring that a bidder possess necessary controls and technical skills, because, in addition to the reasons stated under FAR 9.104-1(b) and FAR 9.104-1(c), EMA had received cure notices in January, 2010, and July, 2011, for its failure to improve Global Distribution Management System utilization rates, failure to comply with Defense Base Act ("DBA") insurance coverage requirements, and for refusing certain missions. EMA 7. Finally, the contracting officer found that EMA was not qualified or eligible to receive award under applicable laws and regulations as required by FAR 9.104-1(g), because EMA was "ineligible for award" as a result of the vendor vetting process. EMA 7.
In making her final determination, the contracting officer found that EMA had been seriously deficient in contract performance of the HNT contract, stating:
EMA 13-14.
EMA requested a debriefing on August 11, 2011, and received a written debriefing the following day. AR 22581. EMA filed an agency-level bid protest on August 22, 2011, which was denied on August 23, 2011. AR 21304-39. EMA then filed a bid protest at the Government Accountability Office, but that protest was dismissed due to pending litigation regarding the NAT procurement in this Court. On October 12, 2011, EMA filed its complaint in this Court.
The Court has jurisdiction over this bid protest pursuant to the Tucker Act, 28 U.S.C. § 1491(b)(1) (2011). In a bid protest, the Court reviews an agency's procurement decision under the standards enunciated in the Administrative Procedure Act ("APA"), 5 U.S.C. § 706 (2011). 28 U.S.C. § 1491(b)(4);
An agency action is arbitrary and capricious when the agency "entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or [the decision] is so implausible that it could not be ascribed to a difference in view or the product of agency expertise."
"Contracting officers are afforded considerable discretion in negotiated procurements, such as this one, where award is premised on a `best value' determination."
In resolving bid protests, the trial court is to make findings of fact weighing the evidence in the administrative record.
EMA contends that the Army improperly found EMA nonresponsible under FAR 9.104(b)-(e) and 9.104(g). However, the AR and its classified annexes provide sufficient support for the contracting officer's decision. Under the FAR, when evaluating a prospective contractor for responsibility, a contracting officer "
The contracting officer reasoned that EMA lacked integrity and business ethics as required by FAR 9.104-1(d) because, according to a report prepared by CJ2X, a military intelligence unit, [] The contracting officer stated:
EMA 5-6.
This Court recognizes that CJ2X also concluded that [] EMA claims that [] the contracting officer's reliance on the CJ2X report was irrational. EMA overlooks the contracting officer's conclusion that [] EMA does not contest that [] EMA does not contest that [] support the contracting officer's conclusion that EMA lacked business ethics and integrity.
In another conclusion under FAR 9.104-1(d), the contracting officer found that EMA lacked integrity and business ethics because, [] on August 5, 2011, an Afghan national attempted to gain unauthorized access to a military base with fraudulent identification he claimed was provided by EMA. EMA 87-88. In addition, the Afghan national indicated that EMA regularly provided false identification to EMA's employees.
EMA further argues that the contacting officer's reliance on this intelligence report was misplaced because the Government [] Plaintiff has not provided evidence that calls into question the intelligence report beyond simply repeating [] — and has not articulated why such a report deserves to be discounted. As the Comptroller General has recognized, information in investigative reports may be used as the basis of a nonresponsibility determination.
The contracting officer also concluded that EMA was nonresponsible because the Government withheld "millions of dollars" from EMA under the HNT contract "for a combination of failed missions, cancelled no pay missions, pilferage/backcharges and fuel backcharges." EMA 5. The contracting officer found that these withholdings totaled $23,200,686.62, attributing $6,051,042.62 "to EMA's performance failures." EMA 5. EMA contends that funds totaling roughly $17 million were withheld not because of any fault on EMA's part but because the Government cancelled missions. EMA concedes performance failures that the Government estimates resulted in over $2 million in withheld funds. Pl.'s Mot. 17-18; AR 16244, 16275, 16315, 16323, 16344.
While the dollar amount associated with missions cancelled for the government's convenience should not have been held against EMA, it is not contested that sums were properly withheld due to EMA's own performance failures including forgery, failed missions, pilferage, and fuel backcharges. EMA does not contest that these failures occurred, only the amount that should have been withheld. Whether the withheld amounts attributable to EMA's nonperformance should have been closer to $2 million or to $6 million, the withholdings were substantial and provided a reasonable ground for the contracting officer's nonresponsibility finding.
EMA also had a record of substandard ITV use — the requirement that carriers install satellite-based tracking devices on cargo trucks — that raised serious doubts as to its reliability to perform in a warzone. The HNT statement of work required that "[a]ll vehicles used in support of HNT missions must have [an ITV] device . . . ." AR 21273. The Government issued a letter of concern on December 22, 2009, indicating that EMA's use of ITV devices had fallen to seven percent in the previous four weeks. AR 16244. Over a year later, ITV use remained a significant problem. In a July 5, 2011 cure notice, the Army noted that EMA's ITV use was 56 percent between April 1, 2010 and April 1, 2011. EMA 32. EMA does not contest this pattern of ITV use, and the contracting officer's reliance on EMA's lengthy record of ITV nonuse to conclude EMA lacked the requisite business ethics was reasonable.
As with its record of ITV use, EMA does not deny that its drivers forged TMRs. AR 16276 ("[EMA] agree[s] that there have been approximately 20+ mission sheets discovered forged during the HNT contract."); 16273 (explaining that "drivers . . . attempted to white out . . . details on the mission sheet"). Instead, EMA classifies the instances of forgery as "relatively small." Pl.'s Mot. for J. on the AR ("Pl.'s Mot.") 18. It was within the contracting officer's discretion, however, to determine to what extent admitted instances of fraud indicated a lack of integrity and business ethics.
In short, the contracting officer reasonably concluded that EMA's record of forgery, mission failure, unsatisfactory ITV use, inability to control its identification credentials, and [] raised significant doubts regarding EMA's integrity and business ethics. Those findings were sufficient to justify the contracting officer's conclusion that EMA was nonresponsible. EMA's arguments that instances of forgery were "relatively small" or that it had [] do not alter the evidence that such misconduct occurred.
In any event, a review of EMA's performance on the HNT contract as a whole reveals not that EMA was responsible for only minor, isolated incidents of nonperformance, but that EMA exhibited serious deficiencies and a pattern of noncompliance which combined to raise serious doubts about EMA's ability to perform the NAT contract.
The Court reaches this conclusion despite the fact that the contracting officer occasionally overstated EMA's record of nonperformance on the HNT contract or failed to articulate precise connections between the record evidence and her conclusions. For instance, the contracting officer relied on EMA's alleged failure to meet PSC arming requirements to find that EMA could not comply with the proposed schedule under FAR 9.104-1(b), that EMA lacked a satisfactory performance record under FAR 9.104-1(c), and that EMA lacked the necessary organization and experience under FAR 9.104-1(e). The record, however, is unclear as to whether EMA actually failed to comply with the PSC arming requirements. So too, the contracting officer provided no explanation why EMA's ITV use, failure to comply with DBA insurance requirements, and refusal to accept missions were "indicative of a lack of quality assurance and operational control" under FAR 9.104-1(e). EMA 7;
Nonetheless, the FAR does not require that each of the contracting officer's conclusions be independently sufficient on its own to support a finding of nonresponsibility. Rather, the contracting officer's nonresponsibility determination as a whole must be rational.
EMA concedes that it did not meet certain requirements of the HNT contract, but argues that the contracting officer did not credit EMA's subsequent corrective actions. EMA's argument fails because the contracting officer's consideration of EMA's documented record of nonperformance was not arbitrary or capricious, even though EMA had undertaken corrective action.
Nor are any HNT performance problems irrelevant because, as EMA claims, they began two years prior to the responsibility determination and were too remote. FAR 9.104-1(d) requires that a prospective contractor have a satisfactory record of performance and business ethics without specifying its duration. The NAT solicitation noted that "[a] prospective contractor that is or
EMA also argues that the Army's nonresponsibility determination was arbitrary and capricious because the contracting officer failed to properly consider mitigating circumstances. EMA claims that the Army's own policies were partly to blame for EMA's nonperformance. EMA argues that, as of 2009, the Army "failed to permit delivery trucks on site, failed to create verification procedures for mission sheets, failed to verify downloads, and lost documents demonstrating EMA's compliance with the HNT contract." Pl.'s Mot. 32. EMA also points to its January 7, 2011 correspondence with the Army, in which it suggests that some instances of "pilferage" might have been cases of inadequate government record keeping. EMA's imprecise allegations of government practices cannot excuse its own performance problems under the HNT contract. EMA has not articulated a connection between the Government's conduct and its record of nonperformance that would cast doubt on the contracting officer's determination that EMA had a track record of varied performance failures.
Prior to award of the NAT contract, the military implemented a classified "vendor vetting" program designed to ensure the reliability of government contractors in Afghanistan and Iraq. As a result of this process, EMA was determined to be ineligible for award. EMA claims that the Army failed to follow the vendor vetting procedures, and that this failure resulted in EMA's unwarranted disqualification under the vetting program.
On November 5, 2010, CENTCOM Contracting Command issued an "Acquisition Instruction" governing acquisitions supporting operations in Afghanistan. REF 11. The Acquisition Instruction requires contracting officers to vet all non-U.S. vendors operating in Afghanistan as directed by Fragmented Order ("FRAGO") 10-330. REF 74. FRAGO 10-330 mandates the creation of a program to "vet prospective non-US vendors to prevent insurgents, terrorists, criminals, and militias from using contract proceeds to fund their operations" []
The vetting process is outlined both in the Acquisition Instruction and, primarily, in FRAGO 10-330. The process has several steps. First, a non-U.S. vendor registers with the Joint Contingency Contracting System ("JCCS") by submitting data regarding the vendor's location and identification. REF 74, 230. Second, the contracting officer submits all non-U.S. vendors for vetting by JCCS, a process which takes approximately 14 days. REF 75, 231.
[]. A "rejected" vendor is ineligible to receive contract awards in Afghanistan. REF 231-33.
The FRAGO delineating the vendor vetting process contains the following sections:
[]a bidder is "rejected" does not necessarily mean that a contractor is ineligible for award at the time of rejection. [] a contracting officer may not award contracts to the rejected vendor. REF 76, 233.
Under both the FRAGO and the Acquisition Instruction, notification of rejection is required only if the vendor would otherwise be the "apparent successful offeror," and the vendor requests a debriefing. REF 75-76. Even if an apparent successful offeror requests and receives a debriefing, the contracting officer may only inform it of the following, in writing:
REF 76. The FRAGO mandates that rejected vendors "shall only be notified of their rejected status if there is a legal necessity to do so." REF 244. The Acquisition Instruction states that "[i]f an offeror is not the apparent successful offeror, follow normal procedures.
[]
[] Under FRAGO 10-330, the requiring activity [] permitting EMA to receive a NAT award. In accordance with the vendor vetting process, the contracting officer requested confirmation from the requiring activity [] On August 3, 2011, the requiring activity declined to [] EMA 11. [] EMA was, under the vendor vetting program, determined to be a "rejected" contractor for United States procurements in Afghanistan as of August 3, 2011.
EMA attempts to find fault with the Government's responsibility determination by alleging procedural infirmities with the Army's application of the vendor vetting requirements to EMA. Specifically, EMA argues that because it was a technically acceptable offeror with a reasonable price on the NAT procurement at the time it was determined to be "rejected" under the vendor vetting program, it was an "apparent successful offeror" and should have been advised of its right to reconsideration during its debriefing. []
EMA's argument hinges on its contention that it should have been deemed to be an "apparent successful offeror" within the meaning of the Acquisition Instruction when it was rejected under the vendor vetting program on August 3, 2011. The Acquisition Instruction requires:
REF 76 (emphasis added). EMA claims that because it was "rejected" under the vendor vetting procedures on August 3, 2011,
However, Plaintiff's characterization of itself as an "apparent successful offeror" at the conclusion of the vendor vetting process is not supported by the record or the chronology of events. The contracting officer's inquiry into Plaintiff's responsibility, which had raised several concerns, was well under way before the contracting officer determined that EMA was ineligible for an award under the vendor vetting procedures. Although CJ2X issued its report on July 25, 2011, []
On July 31, 2011, [] the contracting officer notified EMA that it was then being evaluated for responsibility, listed seven areas of concern relating to EMA's performance, characterized these concerns as "adverse information which may impact the responsibility determination," and afforded EMA the opportunity to respond by August 2, 2011. AR 16236-39. The adverse information included forged mission sheets, noncompliance with ITV contract requirements, withholding of contract payments due to failed or cancelled missions, and pilferage and fuel backcharges. Id. It was not until August 3, 2011, that the contracting officer learned that the requiring activity would [] for EMA. The responsibility determination indicated:
EMA 11 (emphasis added).
Under these circumstances, it is not appropriate to make either a factual or legal finding that EMA was an "apparent successful offeror" as of August 3, 2011, when its vendor vetting rating was completed and it could have been debriefed. Rather, the responsibility assessment had begun and had unearthed unresolved "adverse information" including forgery, pilferage, and noncompliance concerning EMA's past performance which had yet to be fully considered by the contracting officer. AR 16236-39. EMA did not respond to this adverse information until August 2, 2011. EMA 56.
In creatively arguing that it was denied its rightful debriefing (and ensuing reconsideration and reinstatement of eligibility), Plaintiff is attempting to construct a bedrock principle for deeming contractors "apparent successful offerors" where none exits. Plaintiff urges that it was an apparent successful offeror in August 2011, because it had been determined to be technically acceptable with reasonable pricing as of July 29, 2011. Plaintiff ignores the fact that by July 31, its responsibility determination was proceeding apace, and the contracting officer had serious concerns. While it is true that often a technically acceptable offeror whose price is reasonable is described as an apparent successful offeror, such a description does not carry with it the type of definitive legal gravitas Plaintiff is trying to import here. Rather, this label of apparent successful offeror typically applies to an offeror who has satisfied all requirements for award at a given point in time. In the instant case, it is clear that Plaintiff was not an "apparent successful offeror" at the time that the vendor vetting process' debriefing and notice requirement would have attached. The earliest the contracting officer could have conducted a debriefing for EMA was August 3, 2011, after she learned that the requiring activity would [] At that point, however, EMA had yet to satisfy the requirements of the
This interpretation of "apparent successful offeror" in the vendor vetting context is reflected in FRAGO 10-330, which requires that, after skipping a rejected vendor, the contracting officer award the contract to the next responsible and vetted vendor. REF 233. Specifically, the FRAGO provides: "
For the first time during oral argument, counsel for Plaintiff requested new relief — that the Court order another debriefing, instructing the contracting officer to advise EMA of its right to seek reconsideration during that debriefing. Tr. 64-65. Counsel argued that "based on the criteria set forth by the Army, the court is able to determine whether [EMA is] an apparently successful offeror or not, as that system is meant to work. . . . [T]he court can conclude that it is unreasonable, arbitrary, and capricious for the [contracting officer] not to have afforded the opportunity that EMA is requesting the Court to order on remand." Tr. 54-55.
The Administrative Dispute Resolution Act grants this Court jurisdiction to render judgment on an action objecting to "any alleged violation of statute or regulation in connection with a procurement." 28 U.S.C. § 1491(b)(1). The Court possesses jurisdiction to provide Plaintiffs newly requested relief — another debriefing — since the vendor-vetting process for EMA was invoked "in connection with a procurement" under 28 U.S.C. § 1491(b)(1).
Defendant's Motion for Judgment on the Administrative Record is
