COFC decision finding that agency properly eliminated protester from competition is affirmed. The agency eliminated the protester for failing to provide government-furnished plug-ins in its price proposal. The protester alleged that the government breached an implied contract to fairly consider its proposal and acted arbitrarily and capriciously in not eliminating the proposal without seeking clarifications. The court first addressed whether the COFC has jurisdiction to consider an implied contract claim in a bid protest. After reviewing the history of the COFC’s jurisdiction, the court concluded that the COFC does have jurisdiction to consider a claim based on breach of implied contract in a bid protest. The court then found that the agency reasonably eliminated the protester’s proposal. The failure to include the government-provided plug-ins was a material defect that could not have been cured with clarifications or waived.
The Department of Homeland Security (DHS) posted a solicitation seeking dorm management services at a federal law enforcement training center. The solicitation instructed offerors to complete an included Schedule B. That Schedule listed the supplies and services DHS sought from the offerors by CLIN and included blank spaces for offerors to fill in with their proposed prices.
As initially issued, Schedule B instructed offerors to “not submit pricing” for sixteen CLINs in the schedule. The solicitation stated that DHS would provide the amounts for those CLINs. But it was impossible for offerors to submit accurate pricing without those missing amounts. Thus, at least one offeror asked DHS about the missing amounts. In response to the question, DHS provided the amounts for the sixteen CLINs and instructed offerors to include them in their pricing. While the amounts were included in the Q&A portion of a solicitation amendment, Schedule B itself was never amended to include the amounts.
Seven offerors, including Safeguard Base Operations, LLC and B&O Joint Venture, LLC, submitted proposals. Safeguard’s proposal did not include the government-provided numbers for the sixteen CLINs. DHS found that Safeguard’s proposal was non-compliant. B&O, which had used the plug-in numbers was selected for award.
After filing multiple GAO protests that did not change the award decision, Safeguard filed suit with the Court of Federal Claims. Safeguard alleged that it had been wrongly disqualified from the competition for not providing the plug-in amounts, and that the government had breached an implied contract to honestly and fairly consider its proposal. The COFC ruled against Safeguard, finding that the offerors had been required to include the government-provided amounts for the sixteen CLINs in Schedule B. Safeguard’s failure to list those amounts were a material omission. Safeguard appealed to the Federal Circuit.
Before considering the merits of Safeguard’s appeal, the Federal Circuit addressed an unresolved jurisdictional issue. As part of its protest, Safeguard had alleged that the government had breached an implied-in-fact contract to fairly and honestly consider its proposal. The court noted that the COFC has jurisdiction to hear implied contract claims under 28 U.S.C. § 1491(a)(1), but the COFC’s bid protest jurisdiction is governed by 28 U.S.C. § 1491(b)(1). The question, therefore, was whether the COFC could consider an implied contract claim as part of a bid protest. The court noted that different COFC judges had reached different conclusions on this questions. Some concluding that the COFC lacks jurisdiction over implied contract claims in a procurement case whiles reached the opposite conclusion.
After reviewing the history of the COFC’s jurisdiction, the court concluded that the COFC had jurisdiction to consider implied contract claims in a bid protest. In 1940, The U.S. Supreme Court held, in Perkins v. Lukens Steel Co., 310 U.S. 113 (1940), that private parties lacked standing to challenge government contract awards for violation of the procurement laws because procurement laws were enacted to protect the government, not contractors.
But under 28 U.S.C. § 1491(a), the predecessor court to the COFC had jurisdiction to hear claims against the government based on implied contracts. Thus, in 1956, the Claims Court found that a disappointed bidder could sue to recover the costs or preparing a bid under an implied contract theory.
In 1970, after passage of the Administrative Procedures Act, the D.C. Circuit concluded that Supreme Court’s decision in Perkins was no longer operative. Now, district courts could review agencies’ procurement decisions under the APA.
In 1982, Congress passed the Federal Court Improvement Act, which permitted the COFC to grant declaratory and equitable relief on any contract claim brought before the contract was awarded. A year later, the Federal Circuit concluded that under the Improvements Act, the COFC could only consider implied contract claims in the pre-award context because the Court Improvement Act had not broadened the scope of the COFC’s jurisdiction over implied contracts in the bid protest context.
In 1996, however, Congress enacted the Administrative Dispute Resolution Act (ADRA), which created a new §1491(b). That new section gave the COFC jurisdiction to hear pre and post-award bid protests, and to grant any relief deemed proper, including declaratory and injunctive relief. But it was not clear whether the ADRA still authorized COFC jurisdiction over implied contracts claims asserted in a bid protest, or whether those claims could only be asserted outside of bid protests under §1491(a).
Addressing that question now, the Federal Circuit determined that by enacting the ADRA, Congress did not intend to limit the COFC’s jurisdiction over any type of bid protest. Rather, Congress intended to consolidate jurisdiction over protests in the COFC and intended that the APA standard of review apply to all such protests. Indeed, the court reasoned that it would have been anomalous for Congress to enact the ADRA to deny a pre-existing remedy—i.e., protests based on an implied contract. That anomaly was avoided by construing the § 1491(b) as providing the COFC with jurisdiction over implied contract claims in the procurement context. Section 1491(a), on the other hand, governs all other implied in fact contract claims.
Having found that the COFC had jurisdiction over Safeguard’s implied contract theory, the court turned to the merits of the protest. Safeguard argued that the solicitation did not require it to provide the government’s plug-in amounts. The court noted that while the solicitation was not a model of clarity, it did require offerors to submit the government-provided amounts in their proposals. Indeed, this was the only way to give meaning too all the solicitation provisions without rendering parts superfluous.
The solicitation instructed offerors to not submit “pricing” for the sixteen CLINs while also stating that they should include the government’s amounts. The only way to reconcile these provisions, the court reasoned, was to interpret “pricing” as referring to offeror-provided pricing, not to the government-provided “amounts.” The court noted that if, as Safeguard argued, the word “pricing” referred to all types of pricing, then the government’s response to the question on the sixteen CLINs would have effectively been a “note to self”—that is, a reminder for the government to supply the amounts later. It made little sense for the government to respond to an offeror’s question with a note to self.
Safeguard also contended that the solicitation did not provide notice that an offeror’s proposal could be eliminated for failing to include the government amounts. The court noted that Section A of the solicitation stated that “exceptions to the line item structure in Section B may result in a bid not being considered for award.” The court reasoned this was somewhat confusing because this provision referred to “Section B” not to “Schedule B.” But the court concluded that Section B included Schedule B. The solicitation repeatedly referred to details in Section B that could only be found in Schedule B. Reading the solicitation as a whole, the court’s interpretation was the only interpretation that could give meaning to the wording of Section B and Schedule B. Safeguard was clearly on notice that failure to submit information for the sixteen CLINs could result in elimination.
Safeguard contended that that DHS should have sought clarifications instead of eliminating its proposal. The court, however, found that Safeguard’s omissions could not be clarified. They were material deficiencies. Had the omission been corrected, it would have required a revised proposal that materially altered Safeguard’s costs. Indeed, by omitting the CLINs, Safeguard’s price was over $6 million lower than it should have been.
Safeguard further argued that its omission should have been waived as a minor informality. The court disagreed, finding that an agency can waive irregularities in the form of a proposal, but the omission of the plug-ins was an error of substance not form.
Lastly, Safeguard believed the COFC had abused its discretion in not allowing Safeguard to supplement the administrative record. Safeguard had wanted to submit affidavits that purported to show that DHS was biased against the incumbent, which was affiliated with Safeguard.
The court found that the COFC had not abused its discretion. The affidavits were not necessary for judicial review. Moreover, the court found that information in the affidavits was not even accurate. There was no evidence that DHS officials were biased or that the alleged bias impacted the evaluation.
A judge on the panel dissented from the opinion. The dissenting judge opined that the instructions concerning the government plug-ins were not so clear. The solicitation instructed offerors not to include the plug-ins. While the agency later stated that offerors should include the amounts in a response to questions, DHS should have amended the solicitation and not excluded Safeguard. The dissenting judge also believed the COFC erred in not further considering Safeguard’s allegations of bias.
Safeguard is represented by Alex Daniel Tomaszczuk, Kevin Reza Massoudi, Aaron Ralph, and Alexander Brewer Ginsburg of Pillsbury Winthrop Shaw Pittman LLP. Intervenor B&A is represented by Richard William Arnholt, Brian Iverson, Todd Overman, Roy Talmor, and Sylvia Yi of Bass Berry & Sims PLC. The government is represented by P. Davis Oliver, Jeffrey B. Clark, Robert Edward Kirschman, Jr., and Douglas K. Mickle of the Department of Justice as well as James Calvin of the Department of Homeland Security.
