The Navy awarded a contract for services at a base in Spain to the incumbent contractor. In performing the incumbent contract, the awardee had experienced labor problems—strikes, protests, litigation. The protester argued the awardee had made a misrepresentation by failing to mention the labor issues, and that the Navy should’ve downgraded the awardee’s past performance due to the labor unrest. The court, however, found there had been no misrepresentation. The Navy was well-aware of the incumbent’s labor issues. What’s more, there was no need to downgrade the awardee’s past performance. The Navy had reasonably concluded that these types of labor disputes are routine in Spain and didn’t impact the quality of the awardee’s past performance.
Alisud-Gesac Handling-Servisair 2 SCARL v. United States, COFC No. 22-61
Background
The Navy issued two RFPs for air terminal and ground handling services at two airfields in Rota, Spain and Naples, Italy. Louis Berger Aircraft Services (LBAS), the incumbent on the Rota contract, submitted proposals for each RFP. The incumbent on the Naples contract, Alisud-Gesac Handling-Servisair 2 SCARL (Alegese), also submitted proposals. The Navy awarded both contracts to LBAS.
Alegese filed a protest with the Court of Federal Claims. Algese argued that LBAS had misrepresented its past performance on the Rota contract by omitting information about labor unrest and resulting litigation in Spanish courts from its proposal.
Analysis
Motion to Dismiss
The government moved to dismiss the protest alleging that Algese lacked standing because (1) it lacked facility security clearance and thus was ineligible, and (2) the company had been disqualified at an early evaluation stage and was not next in line for award.
The court didn’t find either of these arguments compelling. As to the facility clearance, the Navy had not found Alegese ineligible due to the facility clearance and had in fact told the company that the clearance issues could be addressed later during performance. With regard to being next in line for award, the court noted that Alegese had challenged the unacceptable rating assigned to its proposal, and if that challenge was successful, Alegese would likely leapfrog into second place as the leading alternative to LBAS.
Labor Unrest
Algese’s primary argument focused on labor disputes involving LBAS’s workforce on the Rota contract. After receiving the Rota contract in 2015, LBAS had reduced its workforce, which resulted in strikes, protests outside the base, and lawsuits in Spanish courts. Alegese contended that by failing to mention these labor issues in its proposals, LBAS had made a material misrepresentation. Moreover, Algese reasoned, the existence of the labor disputes should have caused the Navy to downgrade LBAS’s proposal.
The court, however, found that there was no misrepresentation. The Navy was actually well-aware of the unrest. (Protests were occurring at the base.) The Navy could not have relied on the omission of the labor issue in selecting LBAS for award.
Additionally, the court did not think the Navy had erred in failing to downgrade LBAS’s past performance. While the unrest had resulted in litigation, the Navy had reasonably determined that these suits reflected value differences between the U.S. and Spain. Such labor disputes are routine in Spain. The Navy believed that LBAS’s decision to reduce its workforce was a business judgment. The resulting unrest did not indicate anything more nefarious.
Algese asserted that the Navy should not have found LBAS responsible because it faced potential liability from the labor litigation in Spain. But again, the Navy knew about the suits and had reasonably determined that operations in Rota had not been, and would not be, harmed.
The Naples Contract
As part of its challenge to the Naples award, Algese raised many of the same arguments as the Rota award, arguing that the labor issues in Spain should’ve precluded award of the Naples contract too. The court didn’t find these arguments any more persuasive when raised against the Naples contract.
Algese further argued that LBAS had failed to submit a past performance reference for one of its subsidiaries as required by the solicitation. But the court found that the Navy had properly understood the subsidiary was only being used for a small part of the contract, so a past performance reference was unnecessary.
–Case summary by Craig Lachance, Senior Editor
