Protester Was Mandatory Source of Item Being Procured But Not an Interested Party to Challenge Terms of Solicitation; SEKRI, Inc. v. United States, COFC No. 21-778C

164
Proxima Studio | Shutterstock

Government’s motion to dismiss protest is granted. The protester challenged the terms of a solicitation because the solicitation did not list the protester as the mandatory source of the item being procured. The court found that the protester was not an interested party to challenge the solicitation. To be an interested party, a protester must be an actual or prospective bidder. Here, the protester had not submitted bid so it was not an actual bidder. Moreover, it had not diligently pursued its protest rights by filing a protest before the proposal deadline, so it could not be considered a prospective bidder. Even if the protester had been an interested party, the court reasoned, it had waived its protest under the Blue & Gold doctrine. The protester had been aware of a patent error in the solicitation for months but only filed a protest after the closing date for bids.

The Javits-Wagner-O’Day Act established the AbilityOne program, which requires the government to procure certain items from designated non-profit agencies that employ the blind and severely disabled. SEKRI, Inc. was designated under the AbilityOne program as the source of Advanced Tactical Assault Panels (ATAP), which are components of ballistic vests.

The Defense Logistics Agency (DLA) issued a solicitation seeking Tactical Assault Panels (TAP). SEKRI was not a mandatory source of TAP so it did not bid on the solicitation. But several months after issuing the solicitation, DLA issued an amendment changing the requirement to ATAPs.

SEKRI learned of the change from TAP to ATAP shortly after DLA issued the amendment. Because SEKRI was the mandatory source of supply for ATAP, DLA should have acquired the item from SEKRI, not through an open competition.

SEKRI contacted SourceAmerica, the central non-profit agency through with SEKRI communicated with the government under the AbilityOne program. SourceAmerica emailed DLA and explained that the agency was required to procure ATAPs from SEKRI. DLA replied that it was going to procure the ATAP through open competition.

SEKRI did nothing for months. The deadline for proposals passed in October 2020. SEKRI did not submit a proposal, reasoning that it was already the mandatory source for ATAPs so there should not have been an open competition in the first place. SEKRI filed a bid protest with the Court of Federal Claims in January 2021, alleging that DLA failed to designate SEKRI as a mandatory source in the solicitation. The government moved to dismiss the protest arguing that by filing its protest after the proposal deadline, SEKRI had waived its solicitation challenge under Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308 (Fed. Cir. 2007).

The government’s motion was based on the Blue & Gold  waiver theory, but the court raised an issue with SEKRI’s standing sua sponte. A party only has standing to bring a protest if they are an interested party. To be an interested party, the protester must (1) be an actual or prospective bidder, and (2) have an economic interest that would be affected by award of the contract. SEKRI was not an actual bidder. The only question was whether SEKRI could qualify as a prospective bidder.

The court found that SEKRI was not a prospective bidder and thus did not satisfy the first prong of the “interested party” test. Citing the Federal Circuit’s opinion in CGI Federal, Inc. v. United States, 779 F.3d 1346 (Fed. Cir. 2015), the court reasoned that a plaintiff can qualify as a prospective bidder if they diligently pursue their protest rights by, for instance, bringing a protest before the close of bidding. Here, SEKRI knew that DLA had amended the solicitation to seek ATAP long before the proposal deadline. But SEKRI did not do anything in response to the amendment. To be sure, it contacted SourceAmerica. Yet, SourceAmerica merely inquired on SEKRI’s behalf as to whether DLA would be moving forward with the procurement. SEKRI did not protest and did not even informally complain to DLA in a manner that may have salvaged its ability to be a prospective bidder.

The court noted that SEKRI did satisfy the second prong of the “interested party” test. As the mandatory source of supply, it had an economic interest in the award. Thus, the court reasoned, SEKRI would have had standing to maintain this action if it taken the necessary steps to complain or protest DLA’s amendment.

The court further noted that intuitively a mandatory source of supply like SEKRI should have standing to challenge the solicitation without being an actual or prospective bidder because it was challenging the mere fact that there was open competition for bids at all. But the court reasoned, the test established by the Federal Circuit was clear and until the appellate court created an exception to that test, the COFC was bound by that precedent.

Moreover, the court continued, even if SEKRI had standing, its complaint would still need to be dismissed under the Blue & Gold waiver doctrine. Under Blue & Gold, a protester waives its claim if it had the opportunity to object to the terms of a solicitation containing a patent error but failed to do so.

SEKRI attempted to argue that the solicitation’s failure to list the company as the sole source of ATAP was not a patent error. The court disagreed, reasoning that the omission of a mandatory source constitutes an obvious discrepancy of significance. The obviousness of the error was evidenced by SEKRI’s own admission that it found out about the error and asked SourceAmerica to inquire about it.

SEKRI argued that the Blue & Gold rule only applies to bidders and prospective bidders and because the company was neither, the waiver rule should not apply. In support of this argument, SEKRI cited Red River Communications, Inc. v. United States, 109 Fed. Cl. 497 (2013), in which the court found that the waiver rule did not apply to a non-offeror who was excluded from submitting a proposal by the solicitation’s terms.

But the court found the Red River case inapposite. In that case, the protester had not submitted a bid because the solicitation was only issued to holders of an IDIQ contract. The protester was not a party to the IDIQ contact and thus was unaware of the solicitation. In this case, however, DLA provided public notice of the amendment through SAM.gov. The amendment was not circulated to a limited audience and, in fact, SEKRI learned of it before the proposal deadline.

SEKRI argued that it acted in accordance with the AbilityOne program by raising concerns with SourceAmerica. But the court found that it contacts with SourceAmerican were at best an inquiry. They were not a complaint and certainly not a protest. What’s more, after contacting SourceAmerica, SEKRI did nothing further. Indeed, the regulations governing the AbilityOne program allowed SEKRI to complain directly to DLA. Alas, despite the ongoing pendency of the solicitation, SEKRI took no further administrative or judicial actions and did not submit an offer. Its inaction amounted to a waiver under Blue & Gold.

SEKRI is represented by Alan Grayson. The government is represented by Rafique Anderson of the Department of Justice and Allison Eck of the Defense Logistics Agency.

COFC - SEKRI