THOMAS C. WHEELER, Judge.
This bid protest involves the allegations of Plaintiff, Clinton Reilly that he was wrongly excluded from competing for a General Services Administration ("GSA") building lease in Sacramento, California. The leased space was to house a Military Entrance Processing Station for the Department of Defense. Mr. Reilly has leased his building to the GSA for this purpose since 1995 and is the incumbent lessor. Mr. Reilly claims that the GSA acted arbitrarily when it excluded him from competing for the new lease based upon a setback requirement, which the GSA later relaxed in awarding the lease to Defendant-Intervenor, Cannery Venture, LP ("Cannery").
Mr. Reilly learned of this procurement in January 2010 through a pre-solicitation notice, where the GSA announced its need for 30,000 rentable square feet, subject to an 83-foot setback requirement. A few weeks later, the GSA informed Mr. Reilly's realtor that the Reilly property could not be considered for award because it did not meet the setback requirement. In May 2010, the GSA issued a Solicitation for Offers ("SFO") to five potential offerors but excluded Mr. Reilly. On September 29, 2010, the GSA awarded the new lease to Cannery, the only offeror. However, the GSA failed to publish any notice of its award to Cannery, and Mr. Reilly claims to have been hampered in learning the procurement's status. Ultimately, believing that the GSA impermissibly relaxed the setback requirement for Cannery, Mr. Reilly protested unsuccessfully to the Government Accountability Office ("GAO") on June 10, 2011, and he commenced his action in this Court on November 21, 2011.
At first glance, Mr. Reilly's protest challenging his exclusion from the competition 21 months after the fact, and 14 months after lease award, would appear to be untimely. The timeliness of the protest is clouded, however, by the fact that the GSA did not provide the SFO to Mr. Reilly in May 2010 and did not publish any notice of award to Cannery in September 2010. Moreover, the GSA negotiated extensions of the lease in Mr. Reilly's building, and the Government still has not moved out of his building to occupy the new Cannery space. This lack of communication from the GSA, coupled with the Government's continued presence in his building, left Mr. Reilly somewhat in the dark as he attempted to follow relevant factual developments.
Still, for the reasons explained below, Mr. Reilly knew that he had a basis for protest no later than May 31, 2011, when he learned of the lease award to Cannery the previous September. Following the GAO's dismissal of his protest as untimely on July 13, 2011, Mr. Reilly opted to await the outcome of internal governmental discussions to see whether the contemplated relocation to the Cannery space actually would take place. An additional four-month delay occurred before Mr. Reilly filed suit in this Court. Despite apparent confusion with the GSA that could have been avoided through better communications, the Court concludes that Mr. Reilly delayed unreasonably in filing his bid protest, and thus his claims are barred by the doctrine of laches.
On February 3, 2012, counsel for Plaintiff filed a motion to supplement the administrative record, or in the alternative, to supplement the Court's record, with the declarations of Clinton Reilly, Bruce Hohenhaus, and Christian Diggs. Plaintiff's motion is GRANTED IN PART and DENIED IN PART. For the limited purpose of determining standing, prejudice, and laches, the aforementioned declarations are admitted into the Court's record.
In addition, on March 13, 2012, counsel for Plaintiff filed a motion for leave to file a second amended complaint to add as a Plaintiff in this action Mr. Reilly in his capacity as trustee of the Clinton T. Reilly Family Trust. In its motion, Plaintiff explained that in 2001, Mr. Reilly had transferred title to his Sacramento property to the Trust but that Mr. Reilly retains control over the property as the sole trustor, trustee, and beneficiary under the revocable trust. Plaintiff sought to add Mr. Reilly as trustee to address a technical defect raised by Cannery in its cross-motion for judgment on the administrative record. For good cause shown, the Court GRANTS Plaintiff's motion.
Plaintiff, Clinton Reilly is an individual who owns the building located at 3870 Rosin Court, Sacramento, California (hereinafter "the Reilly property"). Amended Complaint ¶ 1 (Jan. 11, 2012). On November 9, 1995, Mr. Reilly entered into a ten-year lease of the property with the GSA, acting on behalf of the U.S. Department of Defense ("DoD"), Military Entrance Processing Station ("MEPS"). Second Reilly Decl. ¶ 2. A MEPS determines an applicant's qualifications for enlistment in the armed services based upon military service standards. AR 10.
In anticipation of the lease expiration, on January 21, 2010, the GSA posted a pre-solicitation notice (hereinafter "the Notice") on the Federal Business Opportunities website ("FedBizOpps"), stating its desire to lease approximately 30,000 rentable square feet of office space in Sacramento or West Sacramento.
On January 26, 2010, GSA leasing specialist, Xitlaly Aranda sent an email containing the information in the Notice to ten brokers in the Sacramento area, including Bruce Hohenhaus, the broker for Clinton Reilly Holdings.
Based upon the expressions of interest submitted to the GSA, on February 18, 2010, the agency conducted a market survey of approximately 16 properties, including the property of the eventual awardee, Cannery Venture LP.
On the basis of the market survey, the GSA sent SFO 9CA2463 to five potential offerors on May 3, 2010.
Like the Notice, the SFO stated that the GSA was seeking approximately 30,000 rentable square feet of office space; that "the building must be Class A office space at the time of award"; and that "the space must be located on a single floor of contiguous space." AR 760. Unlike the Notice, however, the SFO referenced and incorporated the DoD Standards.
In addition, the DoD Standards include alternative means of compliance for existing buildings that do not satisfy the minimum standoff distances. For example, the DoD Standards state that "where providing the minimum standoff distance is not possible. . . lesser standoff distances may be allowed where the required level of protection can be. . . achieved through analysis or . . . through building hardening or other mitigating construction or retrofit." § 2-4.8.2. Alternatively, where building retrofits are "impractical," "operational options" can be used, such as "establishing access control for authorized parking at [specified] standoff distances." § 2-4.8.3. Mr. Reilly emphasizes that, unlike the SFO, the Notice did not "refer to or incorporate the DoD Antiterrorism Standards, including any of the alternative means of meeting the setback requirements." Pl.'s Mot. J. Admin. R. 11 (Feb. 3, 2012).
In response to the SFO, Cannery was the only offeror to submit a formal lease proposal, which it did on June 8, 2010.
Despite his position as the incumbent lessor, Mr. Reilly maintains that he did not learn until May 31, 2011 that the GSA had awarded the lease to Cannery. Pl.'s Mot. J. Admin. R. 3 (Feb. 3, 2012); Second Reilly Decl. ¶ 10. During oral argument in this case, counsel for the Government represented that the GSA did not post the September 29, 2010 lease award on FedBizOpps due to an agency oversight. Tr. 53, 57 (Austin). Moreover, Mr. Reilly maintains that between February 2010 and May 2011, he, Mr. Hohenhaus, and other members of his staff "repeatedly attempted" to contact GSA representatives concerning the solicitation but received no response from the GSA. Second Reilly Decl. ¶ 6. During the same period, Mr. Reilly claims the on-site MEPS personnel informed his staff that the MEPS would not be relocating.
Although Mr. Reilly maintains he did not learn of the lease until May 31, 2011, he admits that he learned in February 2011 that the GSA was considering The Cannery.
Mr. Reilly maintains that when he affirmatively learned on May 31, 2011 of the GSA's lease with Cannery, he "immediately contacted [his] attorneys." Second Reilly Decl. ¶ 11. On June 10, 2011, counsel for Mr. Reilly filed a bid protest (B-405190) with the GAO, challenging the GSA's lease award to Cannery.
While Mr. Reilly's protest was pending at the GAO, his counsel submitted a FOIA request to the GSA "to garner additional information" about the GSA's lease with Cannery. Second Reilly Decl. ¶ 12; Pl.'s Mot. J. Admin. R. 36 (Feb. 3, 2012). In that same timeframe, Mr. Reilly reports that his staff was in regular contact with MEPS personnel, who allegedly thought it was a mistake to relocate to The Cannery and "were doing everything in their power to cancel the lease." Second Reilly Decl. ¶ 16. Based upon the representations of MEPS personnel, Mr. Reilly "understood that there was an internal battle going on between the GSA and the MEPS concerning the plan to move to the Cannery."
In response to the FOIA request, the GSA provided Mr. Reilly with a copy of its lease with Cannery, as well as a copy of the SFO, on September 2, 2011.
Despite receiving a copy of the GSA's lease with Cannery, Mr. Reilly continued to believe that the MEPS was not moving, in apparent reliance on statements from certain MEPS personnel to that effect.
Counsel for Mr. Reilly filed this post-award challenge on November 21, 2011, protesting the lease award to Cannery and requesting declaratory and injunctive relief. On December 2, 2011, Cannery filed a motion to intervene, which the Court granted the same day. Mr. Reilly filed an amended complaint on January 11, 2012, as well as a motion for a preliminary injunction and, as necessary, a temporary restraining order, requesting the Court to prohibit the GSA from authorizing further performance of the lease until the Court could decide Mr. Reilly's protest on the merits. After hearing oral argument, the Court denied Mr. Reilly's application for a TRO on January 20, 2012.
On February 3, 2012, Mr. Reilly filed a motion for judgment on the administrative record. On February 24, 2012, the Government filed a motion to dismiss for lack of subject matter jurisdiction and an alternative cross-motion for judgment on the administrative record. Likewise, on February 24, 2012, Defendant-Intervenor, Cannery filed a response to Mr. Reilly's motion and a cross-motion for judgment on the administrative record. The parties subsequently filed responses and replies in support of their respective motions for judgment on the administrative record. After carefully considering the parties' positions, the Court concludes that Reilly's claims should be dismissed as untimely.
As noted above, the GSA decided in early 2010 not to consider leasing the Reilly property because it does not meet the 83-foot setback requirement set forth in the Notice. See AR 1826. Mr. Reilly contends that this decision violated the arbitrary and capricious standard of the Administrative Procedure Act ("APA"), 5 U.S.C. § 706 (2006), because the agency subsequently relaxed the setback requirement by incorporating the DoD Standards, with their alternative means of compliance, in the SFO.
The Government first argues that this Court does not possess jurisdiction to hear Reilly's complaint because Mr. Reilly is not an "interested party," within the meaning of the Tucker Act, 28 U.S.C. § 1491(b), and thus, he does not have standing to challenge the GSA's procurement decisions, Def.'s Mot. 17 (Feb. 24, 2012). In particular, the Government contends that Mr. Reilly is not an interested party because he: (a) never submitted a proposal in response to the SFO, id. at 17; and (b) would not have had a substantial chance of winning the award, even if he had submitted a proposal,
Like the Government, Cannery contends that Mr. Reilly lacks standing to pursue his protest. Cannery's Cross-Mot. 10 (Feb. 24, 2012). In addition, Cannery asserts that Mr. Reilly unreasonably delayed in filing his protest such that it should be dismissed as untimely.
The Court is persuaded that Mr. Reilly unreasonably delayed in filing the present action and that his claims are barred by the doctrine of laches. Because of the unique circumstances of this case, however, the Court wishes to address first the parties' arguments on standing.
"Standing is a threshold jurisdictional issue" that must be met in any protest.
In arguing that Mr. Reilly is not an interested party, the Government makes two related arguments based upon Mr. Reilly's actions prior to the close of the bidding process. First, the Government contends that Mr. Reilly is not an actual or prospective offeror because he failed to submit a proposal in response to the SFO. Def.'s Mot. 17 (Feb. 24, 2012). Second, the Government asserts that Mr. Reilly waived his right to contest the terms of the Notice because he did not protest before the close of the bidding process.
It is uncontested that Mr. Reilly did not submit a proposal in response to the SFO. Mr. Reilly argues, however, that he is "effectively an `actual offeror' for purposes of challenging GSA's decision to exclude him from the competition" because he submitted an expression of interest in response to the Notice. Pl.'s Mot. J. Admin. R. 19 (Feb. 3, 2012). Whether styled as an actual or prospective offeror, the Court agrees.
In
Similarly, in
As in
Moreover, Mr. Reilly demonstrated adequate interest in the solicitation to qualify as an actual or prospective offeror. Not only did Mr. Reilly submit an expression of interest in response to the Notice, but he was also the 15-year incumbent lessor. As such, the Court finds Mr. Reilly's initial communications with the GSA sufficient for him to qualify as an actual or prospective offeror for standing purposes.
In a related argument, the Government contends that Mr. Reilly waived his right to contest the terms of the Notice because he failed to protest before the conclusion of the bidding process.
The instant action is distinguishable from Blue & Gold. As this Court pointed out in
Here, unlike in
Lastly, the Government maintains that Mr. Reilly lacks standing because he has not shown that he suffered a direct economic impact as a result of the alleged defect in the Notice. Def.'s Mot. 24 (Feb. 24, 2012). A protester's direct economic interest is said to be affected when it "can show that but for the error, it would have had a substantial chance of securing the contract."
The Government maintains that Mr. Reilly did "not stand a substantial chance of receiving the award" because he failed "to satisfy other material requirements" of the procurement. Def.'s Rep. 9 (Mar. 9, 2012). Specifically, the Government alleges that "Reilly has not shown . . . how he would have been able to meet the alternative required levels of protection" set forth in the DoD Standards. Def.'s Mot. 24 (Feb. 24, 2012). In addition, the Government submits that the Reilly property contains a Class C building and falls within the 100-year flood plain in violation of the requirements of the SFO.
For his part, Mr. Reilly states that he "is willing and able to meet the necessary force protection requirements through means other than the setback." Pl.'s Resp. 14 (Mar. 2, 2012). Moreover, Mr. Reilly posits that his property houses a Class A building and that a property within the 100-year flood plain is not automatically excluded from consideration under the SFO.
On balance, Mr. Reilly has presented minimal evidence to demonstrate that if not for the alleged defect in the Notice, he would have had a substantial chance of securing the lease. In his second declaration, Mr. Reilly states that if he had known that the GSA was considering alternatives to the building setback requirement, he "could have and would have submitted an expression of interest that would have satisfied" such alternatives. ¶ 11. In his third declaration, Mr. Reilly also avers that his property houses a Class A building. ¶ 3. Other than these self-serving statements, however, Mr. Reilly has offered no evidence that his property could have been altered to satisfy the DoD Standards or that the building on the property is Class A.
Moreover, it is undisputed that the Reilly property lies within the 100-year flood plain.
Considering the entire record, the evidence strongly suggests that Mr. Reilly would not have had a substantial chance of receiving the lease award and thus, would not qualify as an interested party under the Tucker Act. The Court need not decide this issue definitively, however, because it finds that Mr. Reilly's claims are barred by the doctrine of laches.
In its cross-motion for judgment on the administrative record, Cannery contends that Mr. Reilly's claims should be barred by the doctrine of laches.
In the instant case, the Court finds that application of the laches doctrine is appropriate. The record shows that by February 2011, Mr. Reilly knew the facts forming the basis of his protest but did not file a protest in this Court until November 21, 2011— nine months later. On February 15, 2011, Major Pruiett informed Mr. Diggs, Reilly's Leasing Manager, that the GSA was considering relocating the MEPS to The Cannery. Diggs Decl. ¶ 9. Major Pruiett described the situation as "urgent" and commented that "the train has left the station and it is up to us to stop it."
The memorandum states that The Cannery "presents a number of conflicts with guidelines established by the Department of Defense for the security of MEPS facilities," specifically noting that the property "directly abuts a major thoroughfare" in violation of the 83-foot setback requirement.
Mr. Reilly counters that a protest in February 2011 would have been "premature" because he did not learn until May 31, 2011 that the GSA had made a final decision in September 2010 to award the lease to Cannery. Pl.'s Repl. to Cannery 7 n.6 (Mar. 2, 2012); Tr. 21-22 (Black). The Court is skeptical that Mr. Reilly was ignorant of the lease award to Cannery from September 2010 until May 31, 2011. In Mr. Reilly's own declaration, he submits that in December 2010, he and his staff made an "extensive presentation" to the MEPS and the GSA concerning the Reilly property and extension of the lease. Second Reilly Decl. ¶ 9. It is difficult for the Court to accept that in the midst of such interactions, the GSA never mentioned, and neither Reilly nor his representatives ever learned of, the fact of the GSA's lease with Cannery. In any event, in asserting that a protest in February 2011 would have been premature, Mr. Reilly ignores the fact that by this time, he knew the basis of his claim: namely, that The Cannery had
Moreover, even if measured from May 31, 2011,
Here, Mr. Reilly waited at least twice as long to file the instant protest. Mr. Reilly maintains that he learned for the first time on May 31, 2011 that the GSA had executed the lease with Cannery in September 2010. Second Reilly Decl. ¶¶ 10-11. Upon learning of the lease, Mr. Reilly submits that he "immediately" contacted his attorneys, who shortly thereafter filed a protest at the GAO on June 10, 2011.
To explain his delay, Mr. Reilly provides two primary justifications, both of which the Court finds inadequate. First, Mr. Reilly explains that in the interim, he was "collecting more information about potential protest grounds through the FOIA process." Pl.'s Repl. to Cannery 8 (Mar. 2, 2012). In that regard, Mr. Reilly emphasizes that he did not receive the SFO in response to his FOIA request until September 2, 2011, thereby reducing his delay to two and one half months.
Second, Mr. Reilly explains that between July 2011 and October 2011, he was communicating with MEPS personnel, who represented that they were attempting to convince the GSA to cancel its lease with Cannery and maintain the MEPS at the Reilly property.
The Court does not quarrel with Mr. Reilly's representations that MEPS personnel wanted to remain at his property. However, in choosing to rely on the efforts of the MEPS personnel, rather than timely filing a bid protest, Mr. Reilly simply chose to put all his eggs in one basket—ultimately to his detriment. A plaintiff may choose to sit on his rights while a government contract proceeds, but he will be barred from protesting if the Government is prejudiced as a consequence.
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Although the parties did not brief the issue extensively, the record demonstrates that the Government would be economically prejudiced if the Court granted Mr. Reilly's requested relief. Such an order would require the Government to terminate or breach its current contract with Cannery, thereby obliging it to pay damages to Cannery. Mr. Reilly concedes that Cannery has progressed on tenant improvements and made expenditures in the process.
Finally, the Court notes that the administrative record lends support to the Government's position that the agency both considered The Cannery's ability to meet the setback requirement,
Based upon the foregoing, the Court DISMISSES Reilly's claims as untimely and need not reach the parties' cross-motions for judgment on the administrative record.
In addition, during oral argument on March 14, 2012, counsel for Plaintiff made a motion to exclude Appendix 1 to the Government's reply brief.
This decision is filed under seal. On or before April 4, 2012, counsel for the parties shall carefully review this opinion for competition-sensitive, proprietary, confidential, or other protected information and submit to the Court any proposed redactions before the opinion is released for publication.
IT IS SO ORDERED.