Appeal of a COFC decision denying injunctive relief in a bid protest is affirmed. The COFC found that the government’s modification of a contract violated various procurement statutes. Nevertheless, the COFC denied injunctive relief in the protest, reasoning that an injunction would disrupt medical supply chains and that the term of the modified contract was about to end. The protester appealed the denial of injunctive relief to the Federal Circuit. The Federal Circuit affirmed the denial of injunctive relief. But the Federal Circuit was concerned that the government still had option years under the modified contract. If the government exercised its option, it could extend the contract and the protester would have no way to object. Accordingly, the Federal Circuit remanded the protest, ordering the COFC to hold the case in abeyance. If the government exercised its option, the COFC could revisit the propriety of injunctive relief.
In 2016, the Department of Veterans Affairs awarded contracts to four medical supply vendors. The contracts required the vendors to distribute medical supplies from a master list against which the VA would place orders. The VA planned to enter into contracts with suppliers who would supply items for the master list, which the vendors would then distribute to VA hospitals.
After a couple of years, the VA found that the master list only contained a small fraction of the items that VA hospitals needed. The VA decided that rather than contract with suppliers directly, it would outsource the selection of suppliers to the vendors who distributed the medical supplies. The VA issued a Justification & Approval, explaining that the agency was going to use non-competitive procedures to modify the contract so vendors could add items to the master list themselves.
Electra-Med, an SDVOSB, filed a protest with COFC challenging the VA’s plan to use non-competitive procedures. The COFC sided with Electra-Med, finding that the VA’s contract modification was an end-run around the Competition in Contracting Act and that it violated the VA’s obligations to consider veteran-owned small businesses for contracts. Although the COFC found a procurement violation, it declined to grant Electra-Med injunctive relief. COFC found that an injunction could harm the public by disrupting medical supply chains. Moreover, COFC reasoned, the harm to Electra-Med—namely, the opportunity to compete for VA supply contract—was temporary. There was only 18 months lefts on the modified contract. Electra-Med appealed the denial of injunctive relief to the Federal Circuit.
The Federal Circuit affirmed the COFC’s denial of injunctive relief. The court agreed that disrupting the medical supply chains could harm the public. Moreover, as of the date of the appeal, only six months remained on the contract, so to the extent the VA’s vending arrangement harmed the public, it would end soon.
But the court noted that modified vendor contract had additional one year options that would allow the contract to be extended through 2020. An extension of a contract does not constitute a new procurement, so if the VA exercised that option, Electra-Med could not challenge the extension. Accordingly, the Federal Circuit remanded the case to the COFC to hold abeyance. In the event the government exercised its options, the COFC could reconsider the appropriateness of injunctive relief.
The appellants are represented by Eric Crusius, Amy Lynn Novak Fuentes, Gregory R. Hallmark, David R. Black, and Mary Beth Bosco of Holland & Knight LLP. The government is represented by David Michael Kerr, Joseph H. Hunt, Claudia Burke, and Robert Edward Kirschman, Jr. of the U.S. Department of Justice. Defendant-appellee American Medical Depot is represented by Robert Joseph Sneckenbereg and Amy Laderberg O’Sullivan of Crowell & Moring LLP. Defendant-appellee Medline Industries is represented by Kristen Ittig and Michael Edward Samuels of Arnold & Porter Kaye Scholer LLP.
