Protests challenging the evaluation of proposals and investigation of an OCI are denied in part and stayed in part. The court found that the agency’s evaluation of the protesters was rational and consistent with solicitation. But the court found that the agency failed to properly investigate a conflict of interest. Before submitting its proposal, the awardee hired a government employee who had helped to develop the requirements the agency sought in the solicitation. In particular, this government employee had worked on developing regulations related to the procurement and participated in a pilot program with the eventual awardee. The court found that this employee’s involvement in the procurement gave rise to potential unequal access and biased ground rules OCI’s. The agency had failed to consider many aspects of these conflicts when investigating the alleged OCIs. The court remanded to the agency for further investigation into the conflicts.
After September 11, 2001, the government issued a mandate to the Transportation Security Administration (TSA) requiring 100% screening of cargo on passenger planes by 2020. The U.S. Postal Service (USPS) is held to this mandate by TSA regulations. TSA recently developed a policy, called the Mail Amendment, to shift some of the package screening to the USPS. Under the Mail Amendment, the TSA planned to modify its procedures to allow the USPS to conduct package screening. The Mail Amendment, however, was not published in the Federal Register or the CFR. Rather, TSA would only release the Amendment’s contents to contractors hired to conduct screening.
In 2019, as part of the shift in screening to the USPS, the USPS administered a pilot program in which a contractor provided the agency with canine detection services for packages. The contractor for the pilot program was Michael Stapleton Associates (MSA).
The USPS issued a solicitation seeking canine mail screening and x-ray analysis in 2020. Essentially, the contract sought two primary services: (1) canine explosive detection, and (2) explosive device screening and analysis for instances when a canine alerts to a mail piece.
Several offerors submitted proposals. One of the offerors, American K-9 Detection Services, filed a pre-award agency protest with the USPS (called a Business Disagreement). In its protest, American K-9 argued that the USPS had improperly bundled the canine detection and explosive analysis services.
American K-9 also alleged that MSA, which had also submitted a proposal, had an organizational conflict of interest. In particular, American K-9 asserted that in 2019, MSA had hired an individual, Mr. Shelton, a former TSA employee. While Shelton had worked at TSA, he had developed and implemented TSA’s program of using canines for explosives detection. Shelton was now managing MSA’s air cargo business. American K-9 alleged Shelton knew of the non-public Mail Amendment, and this gave MSA knowledge an unfair competitive advantage. Moreover, American K-9 contended, through its participation in the pilot program, MSA had access to non-public information, which further provided the company with an advantage.
The USPS denied American K-9’s Business Disagreement. The USPS did not believe the canine and explosive analysis services had been improperly bundled. Rather, the agency believed that having one contractor provide both services resulted in efficient operability. The USPS also did not believe that MSA’s hiring of Shelton created a conflict because Shelton had no role in the TSA’s regulatory functions.
American K-9 filed a protest with the Court of Federal Claims, reasserting the pre-award arguments it had raised in its initial Business Disagreement.
Meanwhile, the USPS evaluated proposals and selected MSA for award. American K-9 filed a post-award Business Disagreement with the USPS, challenging the evaluation of its proposal and once again arguing that MSA had an OCI. Another offeror, Global K9 Protection Group also filed a post-award Business Disagreement, challenging the evaluation and alleging an OCI. The USPS denied both Business Disagreements.
American K-9 then filed second post-award protest with the COFC challenging the award. Global K also filed a COFC protest. MSA intervened. The parties moved for judgment on the administrative record. The court remanded the case to the USPS, instructing it to re-open its OCI investigation.
Following what the the USPS characterized as “a much more thorough review,” the agency once again concluded there was no conflict. While the USPS had determined that Shelton may have been involved in the development of the Mail Amendment, he had no direct involvement in TSA’s regulations directly related to the Amendment. Also, the USPS found there was no evidence that Shelton had committed an ethics violation or that any of the other offerors had been prejudiced by not having access to the Mail Amendment.
American K-9’s Pre-Award Arguments
The court first addressed American K-9’s pre-award protest arguments. American K-9 contended that the USPS did not need canine detection and explosive services in the same contract and including both requirement in a single procurement unduly restricted competition. The court, however, found that bundling of services had not been arbitrary or capricious. The USPS had reasonably concluded that bundling these two requirements would lead to seamless operations, greater oversight, and reduced errors. The court noted that the USPS had received proposals from five qualified offerors who were able to provide both services. This undermined the claim that the solicitation was unduly restrictive.
American K-9 also argued that the USPS had drafted evaluation factors in a way that favored MSA. Specifically, American K-9 alleged that criteria requiring SAFETY Act designation and past performance requirement with explosive detection unreasonably favored MSA. The court disagreed. Several companies that submitted proposal had received positive marks for SAFETY Act certification. What’s more, MSA was not the only company to receive positive marks for a past performance history providing explosive analysis services. The court reasoned that the USPS’ interest in awarding a contract past performance of explosive analysis was rational.
The OCI Investigation
The court next turned to the protesters’ various challenges to the USPS’s OCI investigation. American K-9 argued that the USPS should have disqualified MSA because Shelton possessed non-public information while developing the canine detection program for TSA. American K-9 alleged in its multiple investigations, the USPS had failed to meaningfully consider whether MSA’s employment of Shelton created an unequal access OCI.
The court agreed that there were several problems with the USPS’s investigation. It did not appear that the USPS had adequately investigated the circumstances surrounding Shelton’s application with and employment by MSA. The contracting officer had not asked Shelton when he first contacted MSA, when he signed the employment agreement, or whether he had been walled off from the USPS procurement. Indeed, the circumstances surrounding Shelton’s hiring should have raised a red flag. Shelton left TSA for MSA while the MSA was completing the canine detection pilot program. The USPS’s investigation did not inquire as to whether MSA had obtained any competitive advantage through Shelton’s experience. Instead, the investigation focused mainly on whether Shelton worked on the Mail Amendment. Based on the timing of Shelton’s employment with MSA, the USPS should have inquired into whether a biased ground rule OCI existed as a result of Shelton’s participation in the development of the mail amendment and the pilot program.
American K-9 and Global K9 also contended the USPS’s investigation did not properly resolve a dispute as to what TSA had advised Shelton when he left for employment with MSA. The court agreed. Shelton had claimed that he received ethics advice form TSA attorneys regarding post-government employment. But the TSA had no written records of Shelton requesting advice. The record was not clear as to whether the attorneys even provided oral advice to Shelton. Indeed, one of the attorneys that Shelton had supposedly consulted with had left TSA before Shelton. This showed that the USPS’s investigation conclusions were not fully substantiated.
American K-9 and Global K9 further contended that the USPS’s investigation did not sufficiently resolve whether Shelton’s previous work developing the Mail Amendment and participating in the pilot program created an OCI. The court again concurred with the protesters. The court reasoned that the USPS had preemptively concluded that Shelton did not have an active role in the creation of the Mail Amendment or the pilot program. But the court found that the agency had failed to resolve conflicting statements in the record about Shelton’s involvement in the amendment and the pilot program.
Based on these concerns with the investigation, the court concluded that remand was necessary for the USPS to conduct and document a revised investigation.
Challenges to Technical Evaluation
Having considered the OCI issue, the court turned to the protesters’ objections to the evaluation of proposals. American K-9 alleged the government had applied unstated evaluation criteria in evaluating its proposal. The court reviewed each of the alleged instances of unstated criteria and found that the USPS had reasonably applied the stated criteria in assessing American K-9.
American K-9 also argued that the tradeoff decision was flawed because the USPS had incorrectly stated American K-9’s price. The court reasoned that American K-9 had not been prejudiced by this error. The company had not explained how a correctly stated price would have improved its standing nor demonstrated how the misstatement of its price had affected the best-value tradeoff
Global K9 argued in various ways that the USPS had unreasonably assessed weaknesses to its proposal and failed to assign strengths. The court, however, found the evaluation of Global K9 reasonable. The agency had appropriately penalized Global K9 for a lack of information in its proposal. Moreover, the USPS had thoroughly explained its evaluation. The court was disinclined to substitute its judgment for the agency’s
Font Size Argument
American K-9 and Global K9 both argued that MSA had not complied with the solicitation’s font requirements. The solicitation had required that proposals could not use font sizes small than 11. The protesters claimed that MSA had used font sizes smaller than 11 and that this had allowed the company to effectively exceed the solicitation 20-page limitations on proposals.
The court found that the font size was a material solicitation requirement in that it served a substantive purpose by impacting the quality of proposals. Nevertheless, the court found that the protesters had not been prejudiced by MSA’s use of a smaller font. In fact, it was not clear that MSA had obtained any real advantage from the smaller font. The USPS had, through the totality of the procurement, given offerors ample chance to fully explain their technical approaches. American K-9 and Global K9 had both provided detailed, multiple-page responses during discussions. Regardless of MSA’s font size, the government fully considered each offeror’s approach.
Aside from the OCI allegations, the court granted the government’s motion for judgment on the administrative records while denying the protesters. Judgment on the OCI issued was stayed pending a remand to the USPS for a more thorough OCI investigation.
American K-9 is represented by Daniel J. Strouse and Joshua D. Schnell of Cordatis LLP. Global K9 is represented by W. Brad English, Jon D. Levin, Emily J. Chancey, J. Dale Gipson, and Nicholas P. Greer of Maynard, Cooper & Gale, PC. The intervenor. Michael Stapleton Associates, is represented by Ryan C. Bradel, P. Tyson Marx, and Stephen G. Darby of the Ward & Berry PLC. The government is represented by John J. Todor, Jeffrey Bossert Clark, Brian M. Boynton, Robert E. Kirschman Jr., Martin F. Hockey Jr., and Reginald T. Blades Jr. of the Department of Justice as well as Shoshana O. Epstein of U.S. Postal Service.COFC - American K-9 Detection Services