Protester Claims Agency “Lost Proposal in the Electronic Ether,” But COFC Finds Protester Can’t Prove It Properly Submitted Proposal; Naval Systems, Inc. v. United States, COFC No. 20-1539C


Protest challenging the rejection of a late proposal is denied. The protester alleged that it had uploaded its proposal through a government portal and received notification of a successful upload, but that the government had lost its proposal in the empty void of cyberspace. The government argued that the protester had not properly submitted its proposal, so the agency had rejected the proposal as untimely under the “late-is-late” rule. The court found that other than conclusory, self-serving affidavits, the protester had not shown that it had properly submitted its proposal in time, nor that its proposal had ever been under the government’s control.

The Navy issued a solicitation seeking software engineering and technical support for the Naval Air Warfare Center. The solicitation stated that proposals had to be submitted electronically via the DoD Safe portal by October 19, 2020 at 12:00 pm EST.

Naval Systems, Inc. (NSI) attempted to submit a proposal in response to the solicitation. According to NSI, two of its employees logged onto the DoD Safe site, uploaded the company’s proposal, and received notification of a successful upload. The next day, however, NSI learned that the Navy had not received its proposal. NSI sent the agency a copy of its proposal on CD-ROM and opened an incident ticket with the DoD Safe Help Desk.

Following an investigation, the DoD Safe Help Desk determined that NSI’s proposal had never been uploaded to the site. The Navy thus rejected NSI’s proposal, reasoning that the company had failed to submit a timely proposal. NSI filed a protest with the Court of Federal Claims, arguing that that Navy had erred in rejecting its proposal. Essentially, NSI argued the DoD Safe system had malfunctioned, so the Navy should have considered its late proposal. Both parties moved for judgment on the administrative record.

Before considering the substance of NSI’s arguments, the court first addressed a motion NSI filed to supplement the administrative record. The court noted that NSI was in a difficult position trying to show that the government was at fault for a proposal that was not in the administrative record. NSI’s protest arose from the very omission of evidence on which the Navy relied in rejecting the company’s proposal—i.e., the very fact that the record was missing a proposal meant that evidence supporting NSI’s claims had to come from outside the record. Thus, the court had allowed NSI to supplement the record with a declaration from an expert to explain the workings of DoD Safe and offer an opinion on the government’s culpability.

NSI had filed a second motion to supplement the record with another expert declaration. NSI argued that further supplementation was necessary because the government still needed to provide detail to enable a credible audit of the activities that occurred with the DoD Safe site on the day NSI attempted to submit its proposal.

The court granted the motion in part stating that it would consider the expert’s declaration to the extent it provided a further explanation of NSI’s view as to the technical inner workings of the DoD Safe System. The court opined that such supplementation is warranted when technical issues require recourse to an extra-record explanation.

The court, however, also denied the motion in part, finding that NSI was effectively seeking to conduct discovery from the Navy. Discovery is typically not allowed in APA cases. Moreover, NSI had not overcome the standard presumption that the agency has properly designated the administrative record. The government, through its own expert, had provided compelling evidence that the information NSI sought—DoD Safe logs—would not show whether NSI’s attempted upload was successful. Thus, the additional information NSI sought was not necessary for judicial review.

Turning to the merits, the court noted that NSI’ argument primarily rested on the affidavits of the two employees who tried to upload the proposal. But the court found that their conclusory self-serving affidavits, without any objective supporting evidence, could not overcome the considerable evidence the government had presented.

As an initial matter, the employees stated they had received a “Drop Off Completed” notification from DoD Safe. The government’s expert, however, opined that it would have been impossible to receive this notification unless all the steps the system’s software process had been completed. Those processes not been completed.

Additionally, NSI speculated that the DoD Safe system may have malfunctioned. But there was ample evidence to show that it functioned properly. Other companies, including NSI’s subcontractor, had been able to upload their proposals.

NSI submitted the browser history from one of its employees that showed he made two separate connections to the DoD Safe system on the day proposals were due. But the court reasoned that history only showed that he had visited the site; it did not show that NSI had actually uploaded its proposal.

NSI invoked the “government control” exception set forth in FAR 52.212-1(f)(2)(i). Under that exception, the government will consider a late proposal if (1) the offer is received before award, (2) consideration of the offer would not delay the acquisition, (3) the offer was received at the government installation designated for offers, and (4) the offer was within the government’s control prior to the proposal deadline. The court found that the NSI could not satisfy the third and fourth elements of the government control exception. There was no evidence, other than unsupported allegations, that NSI uploaded its proposal in a timely or that the government received it.

Finally, digging into the Law & Economics playbook, the court reasoned that in this situation, NSI was the “least cost avoider”—that is, the party who can avoid mistakes at a lower cost. The court stated that NSI could have avoided any alleged problems with the DoD Safe system by attempting to upload its proposal earlier, giving itself more time to troubleshoot.

The court recognized that in making its findings, it was necessarily rejecting the testimony of NSI’s employees. But the court found that the employees’ and the government’s factual assertions were mutually exclusive. The court simply concluded that the government’s explanations were better supported and provided a superior explanation of what transpired when NSI attempted to submit its proposal.

NSI is represented by John R. Tolle if Baker, Cronogue, Tolle & Werfel, LLP. The government is represented by Russell J. Upton, Elizabeth M. Hosford, Robert E. Kirschman, Jr, and Brian M. Boynton of the Department of Justice as well as Christopher Erly of the Navy.

COFC - Naval Systems Inc.