Protest challenging agency’s evaluation of proposals and failure to investigate an alleged OCI is sustained. As an initial matter, the agency omitted critical documents from the administrative record for what appeared to be self-serving reasons. The court ordered the agency to show cause as why it should not be sanctioned. Additionally, the court found that the agency had wrongly found the awardee’s proposal acceptable and erred in not conducting discussions. Moreover, the court found that this was significant evidence of a conflict of interest. In particular there were statements from the former employees of the awardee who claimed that the agency had considered the awardee a favored vendor. Also, evidence in the record indicated that the SSEB Chair was severely compromised. The court found that the agency had shown an “ostrich-like” lack of curiosity in looking into these allegations and that it should have performed a more thorough investigation.
The Army issued a solicitation seeking training services for the United States Special Operations Command. The solicitation contemplated the award of a single IDIQ contract. The Army received proposals from ten offerors, including Oak Grove Technologies, LLC, Lukos-VATC JV III, LLC, and F3EA, Inc. The army awarded the contact to F3EA. Oak Grove filed a GAO protest, alleging the F3EA benefitted from an unequal access and biased ground rules OCI. In response to the protest, the Army took corrective action to reevaluate proposals and to investigate the alleged OCIs.
The Army concluded that the allegations concerning the OCIs were not credible. The Army again awarded the contract to F3EA. Oak Grove filed a second protest with GAO. GAO denied the protest, finding that Oak Grove lacked standing. Oak Grove then filed suit with the Court of Federal Claims, challenging the evaluation and again asserting that F3EA benefitted from OCIs. F3EA intervened.
The government moved to dismiss the protest, alleging that Oak Grove lacked standing. The government contended that even if Oak Grove’s protester argument were successful, the company was not next in line for award. The Army had found Oak Grove’s proposal unacceptable. Another offeror, Lukos, had the only other acceptable proposal and thus would be the only other offeror in line for award.
But the court found that Oak Grove had standing to protest. Oak Grove had alleged sufficient facts that if true would demonstrate that the Army acted arbitrarily and abused its discretion in evaluation F3EA’s and Lukos’ proposals. The allegations, if proven, would require the Army to resolicit or engage in discussions with offerors because there would be no remaining awardable offerors.
Before proceeding to the merits of the case, the court felt compelled to address the government’s mishandling of the administrative record. The court noted that the government had omitted several critical documents from the record. For instance, the government had failed to include a financial capability report on Lukos, parts of the Lukos’ proposal, and source selection documents. Additionally, the record inexplicably did not include F3EA’s price volume. Importantly, the government had omitted a letter terminating the SSEB chair. That letter indicated the chair had been terminated for “repeated inconsistencies within multiple revisions” of the evaluation report, including significant findings that had simply been left out of the report.
The court opined that the government’s handling of the administrative record had been unacceptable. The government had attempted to excuse its handling of the record by citing, a “not especially relevant” standard. There was no authority for this standard. The government does not possess a veto over the documents that go in the record based on a self-serving conclusion that they are “not especially relevant.” Although the government’s counsel claimed that the document omissions were merely an oversight, the court found that this was a facile explanation that did little to mitigate the harm the government caused by excluding documents that should have been included. The court reasoned that while it wanted to assume the government acted in good faith, the government had admitted it made sentient choices regarding the contents of the record, which appeared to favor the agency. Such apparent gamesmanship wastes judicial resources and undermines trust in the procurement process. The court ordered the government to show cause for why it should not be sanctioned for wasting time and resources on the administrative record.
Turning to the merits, Oak Grove argued that the government had erred in finding that F3EA and Lukos submitted acceptable proposals. Regarding F3EA, Oak Grove argued that its proposal was deficient because the company did not submit a teaming agreement as required by the solicitation. The government and F3EA argued that the omission of the teaming agreement was an “inconsequential formality.”
The court rejected the government’s argument. The submission of a teaming agreement serves a substantive material purpose—it ensures that the prime contractor can’t simply claim the capability and experience of other companies absent some evidence that the those other companies will not actually perform the contract.
F3EA attempted to argue that the solicitation merely instructed offerors to provide a teaming agreement, but that instruction just governed the contents of the administrative volume, which is not evaluated. F3EA argued that the instruction was not included in the evaluation criteria, Section M of the solicitation, and thus was not a material requirement. The court, however, found that this argument read the instruction entirely out of the solicitation. An in any event, the solicitation made it clear that the teaming arrangement was highly relevant to material criteria—namely, capability and past performance. F3EA’s proposed collaboration with a subcontract contributed to its favorable ratings. F3EA needed to establish that the proposed subcontractor would actually perform.
As to Lukos, Oak Grove argued that Lukos’ proposal was unacceptable because the agency had failed to account for numerous inconsistencies in Lukos’ price proposal. The court agreed. The Army’s price negotiation memorandum indicated that the agency had determined that Lukos was not financially capable of performing the contract. The court struggled to find how, in light of this, the Army was able to find that Lukos was awardable. Indeed,DCMA had expressly recommended no award for Lukos.
Next Oak Grove argued that the Army’s decision to not conduct discussions had been arbitrary and capricious. The evaluation and source selection documents relied on FAR 15.306(a) as support for the decision to not conduct discussions. Under that section, the government has discretion to make an award without discussions.
But the court noted that this solicitation was also government by DFARS 215.306, which provides that for acquisitions with a value of $100 million or more, an agency should conduct discussions. In fact, DFARS 215.306 suggests that an agency must justify not engaging in discussions when the provision applies. Thus, it appeared to the court that the Army had got the proper framework backwards. In this case, which involved a procurement with a value that exceeded $100 million, conducting discussions should have been the default position. The Army, however, incorrectly presumed that not conducting discussions was the default position. Given the fact that all the offerors, or nearly all the offerors, submitted non-compliant proposals, the Army should have conducted discussions.
Finally, Oak Grove alleged that the Army failed to properly investigate an OCI and potential violations of the Procurement Integrity Act. Specifically, Oak Grove claimed that the SSEB chair had improperly influenced the procurement to favor F3EA. Oak Grove based this allegation on emails from former F3EA employees who alleged that the Army had indicated that F3EA was the vendor of choice for the procurement and that F3EA had been allowed to write position descriptions and qualifications for task orders under the IDIQ contract.
The court reasoned that while these allegation did not, by themselves, establish an OCI or PIA violation, they certainly raised questions as to whether the procurement was conducted fairly. The problem was that the Army did not fully investigate the allegations. The agency had simply reviewed written statements from the evaluators. While this was the start of a reasonable investigation, that is where the agency concluded its investigation. The Army never interviewed the former F3EA employees. Rather than conducting follow-up with those individuals, the Army just closed the investigation, “reflecting a lack of curiosity that could only be described as ostrich-like.”
What’s more, it was apparent from the letter terminating the SSEB chair that the Chair was compromised. The Chair had multiple roles in the procurement and was reviewing his own work. In particular, the court noted that he had authored the CPARs that F3EA had submitted for its past performance. Moreover, from the administrative record, it appeared that while this individual was supposed to only be on involved in the source selection, he had been heavily involved in the evaluation. To make matters worse, the termination letter, which the government had produced late, cast a long shadow over the conduct of the SSEB chair. Again, that letter indicated that the SSEB chair had made inconsistent findings based on incomplete evaluation information. This lent more than a modicum of support to allegations of the former F3EA employees. Given all of this, the agency’s investigation into allegations of improper conduct had been patently insufficient.
The court enjoined the government from proceeding with its award to F3EA. The court directed the government to either resolicit the procurement or reopen and conduct discussions.
Oak Grove is represented by Craig A. Holman, Thomas A. Petit, and Anna L. Dykema of Arnold & Porter Kaye Scholer, LLP. The intervenor, F3EA, is represented by Joshua A. Mullen of Baker Donelson, Bearman Caldwell & Berkowitz, PC and Adam K. Lasky of Seyfarth Shaw, LLP. The government is represented by Joseph A. Pixley, Brian M. Boynton, Robert E. Kirschman, Jr., and Douglas K. Mickle of the Department of Justice as well as Harry Parent of the Army.
