Court Cannot Order Agency to Extend Bridge Contract, Offer More Work; COFC Nos. 18-1679C, Navient Solutions LLC, et al v. United States

Motion for preliminary injunction extending a bridge contract and ordering the agency to provide more work is denied, where the plaintiff’s current bridge contract was functioning as intended and agreed upon by the parties and where the agency was not required to provide the contractor with any minimum amount of work. While the plaintiff argued that its financial situation was harmed by a protracted protest process, the court held that it could not provide the relief sought.

In the latest proceedings of an extended case involving the Department of Education’s procurement of student loan debt collection services, FMS Investment Corporation moved the Court of Federal Claims to enjoin FMS’s incumbent Award Term Extension contract for student loan debt collection services from ending as scheduled in April 2019, and (2) require the Department of Education to give FMS more accounts to service.

The underlying protest involved a challenge to the agency’s modification of the requirement after it completes the first down-select in a two-phase solicitation for the services. The plaintiffs argued Education improperly added collection services on defaulted student loans to Phase II, when they were not included in the initial solicitation. The agency is currently conducting a corrective action, but FMS alleged Education is not giving it enough defaulted loan accounts under its current bridge contract to allow it to continue operations.

FMS argued that absent an injunction requiring Education to extend its bridge contract and provide more accounts to service, the company will be forced to lay off employees and shutdown infrastructure. FMS did not claim the agency breached the bridge contract by refusing to provide more accounts and did not claim any legal entitlement to more accounts, other than a general claim of irreparable harm.

In response, the government argued that FMS sought relief above and beyond that required to preserve the status quo during litigation. Further, the agency explained that FMS’s 2015 ATE provided for a two-year period in which FMS would receive new accounts and a two-year in-repayment retention period, during which the government would not furnish new accounts and FMS would windup accounts that are in repayment. The government argues that that process is occurring according to the terms of FMS’ contract and therefore FMS cannot claim financial hardship stemming from the agreed-upon windup period as irreparable harm.

In considering the motion, the court found that FMS was likely to succeed on the merits of the underlying protest. However, success in that protest would do nothing to remedy the harm FMS alleged in its motion, because the motion sought relief FMS could not attain through the protest. Although FMS argued that the status quo includes some minimum amount of debt collection business, the court found this assertion mistaken, as the status quo is exactly the situation FMS now faces. Therefore, the court concluded that granting the injunction would go beyond preserving the status quo.

The court also held that FMS cannot demonstrate irreparable harm. While FMS argued it is dependent upon revenue from its contract with Education, the court explained the agency is not obligated to give FMS a minimum number of accounts or provide FMS with enough revenue to employ a certain number of people. In short, the court found any financial difficulty experienced by the plaintiff to be a consequence of its own business decisions. Regardless of the soundness of Education’s decision not to give FMS more accounts, the decision is legal. While the court expressed sympathy for FMS’s financial situation, it held that it could not grant the relief sought.

FMS Investment Corporation is represented by David R. Johnson, with whom were Tyler E. Robinson, Ryan D. Stalnaker, and Caroline E. Colpoys of Vinson & Elkins LLP. The government is represented by Jana Moses, with whom were Joseph H. Hunt, Assistant Attorney General, Robert E. Kirschman, Jr., Director, Patricia M. McCarthy, Assistant Director, Civil Division, Department of Justice, as well as Sarah Falk, General Attorney, Office of the General Counsel, Department of Education.