The agency issued a solicitation and received offers. The agency determined one offeror had unequal access and biased ground rules OCIs from previous work on a pilot program. To mitigate these conflicts, the agency amended the solicitation’s past performance factor. Other offerors protested, alleging the solicitation amendment was not enough. The COFC agreed with the protesters. The conflicted offeror had an undisputed biased ground rules OCI. Disqualification from the procurement was the only way to mitigate.
Michael Stapleton Associates, Ltd v. United States, COFC No. 22-573, 22-620, 22-630
In 2019, the U.S. Postal Service (USPS) developed a pilot program, (the 3PK9-C program) for canine screening of packages. The USPS hired Michael Stapleton Associates (MSA) to consult on the pilot program. MSA designed processes and procedures for the 3PK9-C program.
In 2020, the USPS issued a solicitation for canine screening services. MSA submitted an offer. The USPS selected MSA for award. Disappointed bidders, American K-9 Detection and Global K-9, filed protests with the COFC. They alleged the USPS had bundled requirements in a way that favored MSA. They also contended MSA had improper advantages due to conflicts of interest.
The court remanded to the USPS to conduct an OCI investigation. The USPS determined that MSA had impaired objectivity and biased ground rules OCIs. USPS took corrective action to mitigate the OCIs. The USPS by shortened MSA’s contract and canceled the options. The USPS also issued two new solicitations in 2022, which split the requirements.
MSA, American K-9, and Global K-9 filed administrative protests with USPS. They all objected to the corrective action. USPS denied MSA’s protest. The USPS sustained the other protests, in part. The agency found that MSA had unfair advantages in the 2022 solicitations. As a result, the USPS amended the new solicitations to mitigate MSA’s incumbent advantage. But the agency declined to exclude MSA from the competition.
MSA filed a protest with the COFC. MSA asserted that USPS’s decision to unbundle the contract was improper, and that the new solicitations were ambiguous. American K-9 and Global K-9 also filed protests with the COFC. They alleged that MSA had an unmitigable biased ground rules OCI. They argued that the USPS should have disqualified MSA.
The court consolidated the protests. All the parties moved for judgment on the administrative record.
Inclusion of USPS Aviation Mail Specialist in 2022 Re-solicitation
The court had remanded the initial 2020 protest for an OCI investigation. The investigation revealed that a USPS employee had sent USPS internal documents to MSA. The CO determined this employee had a conflict and could not take part in the 2022 solicitation. Despite the CO’s order, this employee attended a meeting where the agency revised the 2022 solicitations.
The court found the USPS violated the CO’s order barring the employee from the procurement. The USPS also violated its own procurement rules, the Supplying Principled and Practices (SP&Ps). The agency’s conduct was arbitrary and capricious.
USPS’s Mitigation Efforts
As noted, the USPS attempted to mitigate MSA’s conflicts by amending the 2022 solicitation. But the amendment only modified the solicitation’s past performance factor. The USPS tried to limit the relevance of the MSA’s past work on the pilot program. American K-9 and Global K-9 contended this amendment was inadequate. The amendment did not address MSA’s advantages under other evaluations factors.
The court agreed with the protesters. The amendment did not mitigate price and credentialing advantages MSA had from working on the program. The court opined that the USPS should’ve also amended other evaluation factors.
American K-9 and Global K-9 argued the USPS should have disqualified MSA. The CO’s investigation revealed many biased ground rules conflicts. A biased ground rules OCI exists when a contractor has participated in the ground rules for procurement by, for instance, writing the SOW or specifications. MSA had prepared internal quality control documents, a playbook, and the SOW.
Generally, under the FAR, mitigation of a biased ground rules OCI requires disqualification. But in this case, the government argued, the FAR didn’t apply. Rather, USPS procurements are government by the SP&Ps. The SP&Ps, the government reasoned, allow the USPS more flexibility in addressing conflicts. They don’t necessarily require disqualification.
Moreover, the government contended, the FAR itself did not mandate disqualification. FAR 9.505-2(b)(1) carves out an exception for disqualification where the contractor performed development and design work. Here, the government alleged, MSA’s work on the pilot program had been development and design work. Disqualification was not justified.
The court was not convinced. The FAR’s development and design exception applies to contracts for products. This case involved a contract for services.
Additionally, the court was unpersuaded by the government’s argument about the flexibility of the SP&Ps. The court found that USPS’s SP&P’s, like the FAR, require disqualification for a biased ground rules OCI. Both the FAR’s and the SP&P’s biased ground rules provisions aim to preserve the fairness of the procurement process. If both rules have the same goal, then they should both have same disqualification remedy to accomplish that goal. In light of MSA’s biased ground rules OCI, disqualifation was warranted.
American K-9 and Global K-9 had prevailed on the merits of their claims. The court considered the other injunctive relief factors. The court found American K-9 and Global K-9 would suffer irreparable harm. They would lose profits from a contract worth up to $154 million. The court further found that the balance of hardships favored American K-9 and Global K-9. The government had conceded that transitioning MSA out and a new awardee in would not be difficult.
The court rejected MSA’s protest arguments. MSA complained about the USPS’s decision to unbundle the requirements. But the court found that the USPS had spoken with many stakeholders. The agency reasonably concluded that unbundling the requirements would lead to increased competition.
MSA alleged the 2022 solicitations were ambiguous because they required the contractors for each requirement to interact but provided no instructions for these interactions. The court found the USPS did not need to spell out how the parties would interact. The USPS could resolve any dispute between contractors were one to arise.
American K-9 Detection is represented by Daniel J. Strouse and Joshua D. Schnell of Cordatis LLP. Global K-9 is represented by W. Brad English, Jon D. Levin, Emily J. Chancery, J. Dale Gipson, Mary Ann Hanke, and Nicholas P. Greer of the Maynard Cooper & Gale. MSA is represented by Ryan C. Bradel, and P. Tyson Marx of Ward & Berry PLLC. The government is represented by John J. Todor, Reginald T. Blades Jr., Patricia M. McCarthy, and Brian M. Boynton of the Department of Justice as well as Shoshana O. Epstein of the US Postal Service.
–Case summary by Craig LaChance, Senior EditorCOFC - Michael Stapleton Associates