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Protest challenging the scope of agency’s corrective action is denied. The protester successfully challenged the agency’s evaluation of the awardee. As part of a corrective action following the protest, the agency allowed offerors to submit revised proposals. The protester challenged the scope of the corrective action, contending that allowing proposal revisions was not rationally related to the procurement defect identified in the prior protest. Citing Federal Circuit precedent, the COFC reasoned that the standard for a corrective action is simply whether the action has a rational basis. The court does not consider whether the corrective action is rationally related to a procurement defect. Here, the corrective action had a rational basis even though it exceeded what was necessary to address the procurement defect. The agency had reasonably allowed proposal revisions to give offerors an opportunity to reduce their prices and address changed conditions.

The Defense Logistics Agency (DLA) awarded a contract for food distribution services in Iraq and Kuwait to KGL Food Services. A disappointed offeror, ANHAM FZCO, filed a protest with the Court of Federal Claims, challenging the award. The court sustained the protest, finding that the evaluation of KGL’s warehouse facilities arbitrary. The court enjoined the award to KGL.

In light of the court’s decision, DLA took corrective action to reevaluate proposals in accordance with the COFC decision. DLA did not initially commit to further negotiations with offerors. But after hearing back from several offerors, DLA decided that it open negotiations and allow proposal revisions. DLA believed revised proposals would permit offerors to reduce prices and address changed conditions.

ANHAM filed a protest contesting the scope of the corrective action. ANHAM claimed that the corrective action was not rationally related to the defect the court had identified in the protest. Moreover, ANHAM contended, the corrective action, which gave offerors an opportunity revise their proposals, unfairly favored KGL.

At the outset, the court noted that standard of review for an agency’s corrective action. In Dell Federal Systems, L.P. v. United States, 906 F.3d 982 (Fed. Cir. 2018), the Federal Circuit held that a corrective action only requires a rational basis for its implementation. In that decision, the Federal Circuit had rejected the heightened standard applied by the Court of Federal Claims—namely, that the corrective action must be narrowly targeted to the defects it is intended to remedy. The Federal Circuit opined that the “narrowly targeted” standard was too stringent for corrective action.

With this standard in mind, the court turned to ANHAM’s arguments. ANHAM agreed that the Federal Circuit’s rational basis test applied. But the company argued that the test required to court to not only determine whether the corrective action had a rational basis but also whether the action was rationally related to the procurement defect that precipitated the corrective action.

But the court found ANHAM’s framing problematic. First, ANHAM’s argument assumed that the only issue DLA could address was the evaluation error identified in the protest. The court disagreed with that proposition. While a corrective action cannot be untethered to any problem with the procurement, it is not limited to merely addressing evaluation errors identified by the court. Rather, a corrective action can also address broader issues with the procurement. As the Federal Circuit noted in Dell a corrective action can be used to correct perceived errors in the procurement, or, in the absence of error, to improve the competitive process.

Second, the court found that ANHAM’s argument improperly imported an additional requirement into the rational basis test—i.e., that the corrective action must be rationally related to the procurement error. But the Federal Circuit explicitly rejected this heightened standard in Dell. Rather, the rational basis test requires the court to ask a simple, straightforward question: Has the agency provided a coherent and reasonable explanation for its corrective action? A more specific inquiry is unnecessary.

Having settled on the proper test, the court analyzed whether DLA’s corrective action had a rational basis. The court found that the scope of DLA’s corrective action was reasonable. The solicitation had been issued more than four year ago, and offerors had submitted final proposal revisions over three years ago. Given the passage of time, it was  reasonable for DLA to both correct the evaluation error and allow revisions to three-year old proposals so offerors could account for changed prices and conditions.

Finally, ANHAM claimed that DLA’s proposed corrective action unreasonably favored KGL. Specifically, if offerors were allowed to revise their proposals, then KGL could improve its rating under the solicitation’s experience factor by adding the bridge contract it had been performing for DLA since ANHAM prevailed on the protest.

The court interpreted this as essentially a bad faith argument, i.e., that DLA was using the corrective action to steer the contract to KGL. But to succeed on this argument, ANHAM had to produce clear and convincing evidence that DLA was acting in bad faith. The court did not believe ANHAM could carry this burden of proof. All offerors were given a chance to revise their proposals. Moreover, several offerors, not just KGL had requested an opportunity to revise their proposals. This indicated that DLA was not favoring KGL.

ANHAM is represented by Richard P. Rector, Dawn E. Stern, Thomas E. Daley, Eric J. Marcotte, and C. Bradford Jorgensen. The intervenor, KGL, is represented by John E. McCarthy, Jr., David C. Hammond, Mark A. Ries, Robert J. Sneckenberg, Charles Baek, Jared Engelkind, Sarah Hill, Nkechi Kanu, and Gabrielle Trujillo. The government is represented by Daniel S. Herzfeld, Joseph H. Hunt, Robert E. Kirschman, Jr., and Douglas K. Mickle of the U.S. Department of Justice as well as Daniel K. Poling, R. Zen Schaper, Gale Furman, and Cathleen Choromanski of the Defense Logistics Agency.