Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-14-05140/USCOURTS-ca13-14-05140-0/pdf.json

Nature of Suit Code: 138
Nature of Suit: 
Cause of Action: 

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United States Court of Appeals 

for the Federal Circuit ______________________ 

TINTON FALLS LODGING REALTY, LLC,

Plaintiff-Appellant

v.

UNITED STATES, 

DMC MANAGEMENT SERVICES, LLC,

Defendants-Appellees

______________________ 

2014-5140

______________________ 

Appeal from the United States Court of Federal 

Claims in No. 1:14-cv-00353-EGB, Senior Judge Eric G. 

Bruggink.

______________________ 

Decided: September 2, 2015

______________________ 

LEE DOUGHERTY, Offit Kurman, Attorneys at Law, Vienna, VA, argued for plaintiff-appellant. Also represented 

by KATHERINE AMANDA STRAW. 

NATHANAEL YALE, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellee United States. 

Also represented by JOYCE R. BRANDA, ROBERT E.

KIRSCHMAN, JR., DEBORAH A. BYNUM; DAVIS YOUNG,

JEFFREY DAVENPORT, Military Sealift Command, United 

States Navy, Norfolk, VA. 

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2 TINTON FALLS LODGING REALTY v. US

JONATHAN TODD WILLIAMS, Piliero Mazza PLLC, 

Washington, DC, argued for defendant-appellee DMC 

Management Services, LLC. Also represented by 

KATHRYN V. FLOOD. 

______________________ 

Before DYK, REYNA, and CHEN, Circuit Judges.

Opinion for the court filed by Circuit Judge CHEN. 

Dissenting opinion filed by Circuit Judge REYNA.

CHEN, Circuit Judge. 

Tinton Falls Lodging Realty, LLC (Tinton Falls) appeals from a final judgment of the United States Court of 

Federal Claims (Claims Court) entered in favor of appellees the government and DMC Management Services, 

LLC (DMC) after granting motions on the administrative 

record that DMC was eligible for an award of a small 

business set-aside contract. See Joint Appendix (J.A.) 

3774–75. Tinton Falls claims this was error. We affirm.

BACKGROUND

On February 19, 2013, the United States Department 

of the Navy, Military Sealift Command, in Norfolk, Virginia (MSC), issued contract Solicitation Number N32205-

13-R-6005 (the solicitation). The solicitation involved the 

management and coordination of lodging and transportation services for federal civil service mariners (CIVMARs) 

who were completing required training at the MSC Training Center in Freehold, New Jersey. J.A. 172, 178–79. 

MSC issued the solicitation as a total small business setaside under North American Industrial Classification 

System (NAICS) code 721110 (“Hotels (except Casino 

Hotels)”). J.A. 172.

The scope of work for the solicitation required the 

winning contractor 1) to provide a sufficient number of 

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rooms at lodging facilities (i.e. hotels) in the vicinity of the 

MSC Training Center for CIVMARs attending training 

throughout the life of the contract, and 2) to provide 

transportation to and from those hotels to the MSC Training Center. J.A. 248–51. The contractor was required to 

specify a primary hotel and two or more overflow, or 

backup, hotels. J.A. 248. More than half of the CIVMARs 

attending training had to be housed at the primary hotel 

at all times. Id. The solicitation noted that based on 

historical data, MSC would require around 65 hotel rooms 

each night. Id. This number of rooms, however, often 

varied between 25 and 120, and the contractor was expected to ensure a sufficient number of rooms were available to house CIVMARs for the duration of the contract, 

regardless of how many hotel rooms MSC might require 

each night. Id. The solicitation made clear that MSC 

would be responsible only for the actual number of hotel 

rooms needed each night to house CIVMARs attending 

training. Id.

For transportation services, the solicitation required 

the contractor to provide each CIVMAR with daily transportation to and from the MSC Training Center whenever 

classes were scheduled, including weekends and holidays. 

J.A. 251. The contractor was required to “coordinate 

daily” with the MSC point of contact to determine how 

many trips between the primary and overflow hotels and 

the training center were needed to accommodate each 

CIVMAR’s training schedule and to ensure “timely logistical arrangements” for those trips. J.A. 250. As with the 

hotel rooms, the solicitation made clear that MSC would 

be responsible only for the actual number of trips needed 

to transport CIVMARs to and from the training center. 

J.A. 251.

The scope of work also required the contractor to perform various other services, such as forwarding copies of 

any police reports based on illegal acts by, and maintaining plans to provide emergency medical treatment and/or 

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4 TINTON FALLS LODGING REALTY v. US

transportation to a hospital for, CIVMARs housed at the 

primary and overflow hotels. J.A. 249. The contractor 

was also required to verify the identity of each CIVMAR

who checked into a primary or overflow hotel, maintain a 

daily sign-in record, and transmit this sign-in record to 

the MSC point of contact. J.A. 251.

Pursuant to Federal Acquisition Regulation (FAR) 

clause 52.212-2, MSC evaluated bidders based on their 

ability to satisfy the technical requirements of the solicitation, past performance on comparable government 

contracts (if any), and price. For the solicitation’s technical requirements, bidders were evaluated based on four 

sub-factors: 1) general requirements of the primary and 

overflow hotels, 2) fire and safety policies and procedures

of the primary and overflow hotels, 3) health and sanitation of the primary and overflow hotels, and 4) transportation to and from the primary and overflow hotels to the 

MSC Training Center. J.A. 222–24. For past performance, bidders had to provide evidence of performance 

within the past three years of a government contract with 

similar scope, magnitude, and complexity to the requirements of the solicitation. J.A. 255. For price, MSC indicated that it would evaluate bid proposals in accordance 

with FAR 15.404-1(b). J.A. 256.

MSC received bid proposals from multiple contractors. 

For reasons unclear from the record on appeal, MSC 

found all of the submitted proposals technically unacceptable, thus precluding award of the contract to any of 

the interested bidders. Appellee United States Br. at 9. 

MSC’s contract review board then recommended that 

MSC establish a “competitive range” of bidders and hold 

discussions with those bidders in order to give them an 

opportunity to address MSC’s technical concerns and 

revise pricing to remain competitive, in accordance with 

FAR 15.306(c)–(d). Id. The competitive range consisted 

of all the initial bidders, each of which revised and resubmitted its initial proposal. MSC accepted the bid 

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TINTON FALLS LODGING REALTY v. US 5

proposal of Mali, Inc. (Mali), whose revised bid was the 

lowest-priced, technically acceptable, and otherwise 

eligible proposal. 

Losing bidder DMC filed a size protest with the Area 

Office of the Small Business Administration (SBA). In 

evaluating the protest, the SBA Area Office found that 

Mali was not a small business. In particular, the Area 

Office determined that Mali, along with Tinton Falls and 

two other companies that had submitted bid proposals, 

were part of the same family of hotels operated under a 

parent entity called Hotels Unlimited, Inc. (Hotels Unlimited). J.A. 2745–53. After reviewing Mali’s articles of 

incorporation, by-laws, financial statements, and income 

tax returns, the Area Office concluded that Mali was 

“affiliated” with Hotels Unlimited for purposes of the 

solicitation, and that the combined entity—which had 

annual receipts of above $30 million—did not qualify as a 

“small business concern” under the applicable NAICS 

code. J.A. 2752–53, 2770. Mali appealed this determination to the SBA’s Office of Hearing and Appeals (SBAOHA), which affirmed the Area Office’s conclusion. J.A. 

2779–83. Because DMC had submitted the next lowestpriced, technically acceptable bid proposal, it was then 

declared as the successful bidder. J.A. 2654.

Tinton Falls then filed a size protest with the MSC 

contracting officer. Tinton Falls explained that DMC 

intended to subcontract the lodging services portion of the 

contract—which accounted for more than 80% of the value 

of the contract—to hotels that did not qualify as small 

businesses. J.A. 3457, 3459. As a result, Tinton Falls 

alleged that DMC was unusually reliant upon its subcontractors and would not itself be performing the “primary 

and vital requirements of the contract”—i.e., the provision 

of lodging services—and thus had a relationship with the 

subcontracted hotels that violated the “ostensible subcontractor rule,” 13 C.F.R. § 121.103(h)(4). J.A. 2830–37. 

The Area Office disagreed, concluding that 1) DMC would 

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perform the majority of the primary and vital requirements of the contract—the management and coordination 

of lodging and transportation services to MSC—and 2) 

DMC was not unusually reliant on any of its subcontractors. J.A. 3459–64. Therefore, because DMC qualified as 

a small business under the applicable NAICS code and

had no affiliates or ostensible subcontractors, it was an 

eligible small business for purposes of the solicitation. 

J.A. 3465.

Tinton Falls appealed to the SBA-OHA, arguing that 

the Area Office committed clear error in its decision. 

While Tinton Falls’ appeal was pending at the SBA-OHA, 

the MSC contracting officer filed his own size protest of 

Tinton Falls and two other bidders with the Area Office, 

urging that these three entities (like Mali, the subject of 

the earlier determination) also did not qualify as small 

businesses. The protest asserted that the contracting 

officer believed the remaining acceptable bidders (other 

than DMC) were not small businesses under the applicable NAICS code due to their affiliation with Mali and 

Hotels Unlimited. J.A. 2786. The Area Office agreed, 

issuing a size determination that due to their affiliation 

with Mali, none of the remaining Hotel Unlimited entities 

qualified as a small business for purposes of the solicitation. J.A. 2815.

The SBA-OHA then rejected Tinton Falls’ appeal and 

upheld the Area Office decision that the primary and vital 

requirements of the solicitation were a coordinated package of rooms, transportation, and other services. J.A. 

3560. The SBA-OHA determined that DMC would be 

performing a significant portion of the contract’s primary 

and vital requirements: coordinating hotel rooms and 

transportation services to meet MSC’s needs. J.A. 3560–

61. Thus, the SBA-OHA determined that DMC’s relationship with its subcontracted hotels did not violate the

ostensible contractor rule and that DMC could be considered a small business concern for purposes of the solicitaCase: 14-5140 Document: 61-2 Page: 6 Filed: 09/02/2015
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tion. Id. Tinton Falls then appealed to the Claims Court 

by timely filing the bid protest at issue here and seeking 

preliminary and injunctive relief.1 DMC intervened.

Tinton Falls’ arguments before the Claims Court focused on one issue: whether the SBA-OHA had a rational 

basis for determining that the primary and vital requirements of the contract were a coordinated package of 

lodging and transportation services. The parties filed 

cross-motions for judgment on the administrative record. 

After oral argument, the Claims Court granted the government’s and DMC’s motions and denied the relief 

requested by Tinton Falls. Specifically, the Claims Court 

determined that the SBA-OHA had a rational basis for its 

conclusion that the primary purpose of the solicitation 

was a coordinated package of rooms, transportation, and 

services to meet MSC’s fluctuating needs. J.A. 3774. The 

Claims Court entered final judgment for the government 

and DMC, and Tinton Falls timely appealed. We have 

jurisdiction pursuant to 28 U.S.C. § 1295(a)(3).

DISCUSSION

The Claims Court’s legal determinations, including 

interpretations of statutes and regulations, are subject to 

de novo review and its factual determinations are reviewed for clear error. CMS Contract Mgmt. Serv. v. 

Mass. Hous. Fin. Agency, 745 F.3d 1379, 1385 (Fed. Cir. 

2014). Accordingly, we review the grant of a motion for 

judgment on the administrative record de novo. Glenn 

Def. Marine (ASIA), PTE Ltd. v. United States, 720 F.3d 

901, 907 (Fed. Cir. 2013). We thus apply the same “arbitrary and capricious” standard of review set forth in the 

Administrative Procedure Act, 5 U.S.C. § 706(2)(A), as did 

1 The government agreed to a voluntary stay of the 

contract award to DMC, and the Claims Court dismissed 

Tinton Falls’ request for preliminary relief as moot. 

 

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the Claims Court. Weeks Marine, Inc. v. United States, 

575 F.3d 1352, 1358 (Fed. Cir. 2009); 28 U.S.C. 

§ 1491(b)(4). In applying this standard to bid protests, 

our task is to determine whether the procurement official’s decision lacked a rational basis or the procurement 

procedure involved a violation of a regulation or procedure. Savantage Fin. Servs., Inc. v. United States, 595 

F.3d 1282, 1285–86 (Fed. Cir. 2010). 

Here, Tinton Falls argues that the SBA-OHA lacked a 

rational basis for determining that the primary and vital 

requirements of the solicitation were the management 

and coordination of a package of lodging and transportation services. Contracting officers are entitled “to exercise 

discretion upon a broad range of issues confronting them 

in the procurement process.” Id. at 1286 (internal quotation omitted). “For that reason, procurement decisions 

invoke a highly deferential rational basis review.” Id.

(internal quotation omitted). Under this standard, we 

must sustain an agency’s action unless the challenger can 

prove the agency “entirely failed to consider an important 

aspect of the problem, offered an explanation for its 

decision that runs counter to the evidence before the 

agency, or [issued a decision that] is so implausible that 

[the decision] could not be ascribed to a difference in view 

or the product of agency expertise.” Ala. Aircraft Indus., 

Inc. – Birmingham v. United States, 586 F.3d 1372, 1375 

(Fed. Cir. 2009) (quoting Motor Vehicle Mfrs. Ass’n of the 

U.S., Inc. v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 

43 (1983)). 

I 

While the government does not seriously dispute that 

Tinton Falls has standing to pursue its bid protest, DMC 

contends that Tinton Falls lacks standing. To establish 

standing, Tinton Falls must show that it is an interested 

party that will be prejudiced by the award of the contract 

to DMC. Info. Tech. & Applications Corp. v. United 

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TINTON FALLS LODGING REALTY v. US 9

States, 316 F.3d 1312, 1319 (Fed. Cir. 2003). To establish 

prejudice, Tinton Falls must show there is a “substantial 

chance” it would have received the contract award but for 

the alleged error in the procurement process. Id. A party 

can establish a “substantial chance” it would have received a contract by showing that it was an actual or 

prospective bidder whose direct economic interest would 

be affected by the award of the contract or by failure to 

award the contract. Myers Investigative & Sec. Servs., 

Inc. v. United States, 275 F.3d 1366, 1370 (Fed. Cir. 2002)

(citing Am. Fed’n of Gov’t Emps. v. United States, 258 

F.3d 1294, 1302 (Fed. Cir. 2001)). Whether a party has 

standing is a question of law we review de novo. Labatt 

Food Serv., Inc. v. United States, 577 F.3d 1375, 1379 

(Fed. Cir. 2009). The underlying question of prejudice

(“substantial chance”) is a factual question we review for 

clear error. Bannum, Inc. v. United States, 404 F.3d 

1346, 1354 (Fed. Cir. 2005).

DMC contends that Tinton Falls cannot show prejudice because 1) it does not qualify as a small business, and

therefore could not compete in a reopened bid process 

unless that bid is solicited on an unrestricted basis, and 2) 

it did not intend to win the original contract. To support 

the first point, DMC emphasizes that the Area Office 

disqualified Mali, Tinton Falls, and their two related 

entities from the bidding process because they were not 

“small business concerns” for purposes of the solicitation. 

J.A. 2802–06. DMC therefore contends that Tinton Falls 

cannot show prejudice because it is not a “small business 

concern” eligible to compete for the solicitation. Thus, 

only one technically acceptable bid proposal remained—

DMC’s. The Claims Court rejected DMC’s argument, 

finding that, among other things, there was a “distinct 

possibility” that if Tinton Falls were to succeed in proving 

that DMC was likewise ineligible, the government might 

be required to rebid the contract on an unrestricted basis, 

which would place Tinton Falls in the same position as 

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any other interested party. J.A. 3774 (Tr. at 67:1–15). 

We find no clear error in the Claims Court’s conclusion. 

In Impresa Construzioni Geom. Domenico Garufi v. 

United States, we held that a bid protester had a “substantial chance” of receiving a contract—and therefore 

standing to challenge the award of that contract—if, as a 

result of a successful bid protest, the government would 

be obligated to rebid the contract and the protester could 

compete for the contract during the reopened bid. 238 

F.3d 1324, 1334 (Fed. Cir. 2001). Here, there is no question that if Tinton Falls’ bid protest succeeds, MSC would 

be obligated to reopen the bidding process. In particular, 

if Tinton Falls were to prevail, DMC’s relationship with 

its subcontracted hotels would violate the ostensible 

subcontractor rule and DMC would no longer qualify as a 

small business concern for purposes of the solicitation. 

Thus, no eligible small business would have submitted a 

technically acceptable proposal during the initial bid 

process. With no eligible bidders remaining, MSC would 

be required to reopen the bidding process.2

2 The dissent would reject Tinton Falls’ standing 

arguments on the ground that Tinton Falls had no “substantial chance” of securing the award because certain 

companies that were disqualified earlier in the process 

qualified as small business concerns, and one of them 

would have been awarded the contract. The dissent

states that regulation “obligate[s]” the government to 

accept one of these companies’ technically unacceptable 

bids or at least to grant the companies an additional 

opportunity to remedy their bids. Dissent at 4. But no 

party to this case has taken the position that a regulation 

requires the government to further consider these rejected 

bids. In fact, none of the briefing on appeal even raises 

the possibility that the government would give any further consideration to a deficient bid. And for good rea-

 

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What is less clear is whether Tinton Falls could compete for this hypothetical reopened bid. Tinton Falls 

concedes that for the purposes of the original solicitation, 

it is not a small business concern under the applicable 

NAICS code. Oral Argument at 41:10–30, Tinton Falls 

Lodging Realty, LLC v. United States, No. 2014-5140 

(Fed. Cir. May 6, 2015), available at

http://www.cafc.uscourts.gov/oral-argumentrecordings/14-5140/all. But all parties appear to agree 

that MSC would be obligated to evaluate whether it could 

still solicit the contract as a small business set-aside, or 

whether it would need to reopen the bidding process on an 

unrestricted basis. See Oral Arg. at 19:30–53 (Government: “If there’s no offerors remaining—which would be 

the case if DMC is no longer the [contract] awardee—then 

the agency would have the obligation to evaluate, based 

upon the market research—which would have to be 

conducted—whether or not [the rebid contract] could be 

set aside for small businesses.”). And although there is 

much speculation as to whether MSC would rebid the 

solicitation on an unrestricted basis—thus allowing

Tinton Falls to compete for the contract—none of the 

parties disputes the Claims Court’s finding that this is at 

least a realistic possibility.

DMC’s allegation that Tinton Falls did not intend to 

secure the initial contract is not relevant to this analysis. 

In particular, we fail to see how Tinton Falls’ initial bid 

strategy would prevent it from competing for the reopened 

bid, assuming that the contract were to be solicited on an 

unrestricted basis. To establish prejudice, Tinton Falls 

need not show it would win the contract in competition 

son. Before rejecting these companies’ proposals as 

technically unacceptable, the government gave them an 

additional chance to correct their deficiencies. These 

companies still failed to submit an acceptable proposal.

 

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with other hypothetical bidders. Myers, 275 F.3d at 1370. 

Rather, all a protester must establish to demonstrate 

prejudice is that it has a substantial chance of receiving 

the contract—that it is a qualified bidder and could compete for the contract. Id. at 1370–71. The fact that Tinton 

Falls did not submit the lowest-priced bid of its affiliated 

entities during the initial bidding process does not preclude it from having a substantial chance of winning a 

hypothetical reopened bid for that contract, so long as the 

contract is solicited on an unrestricted basis instead of as 

a small business set-aside. 

In short, the question of standing hinges on whether 

Tinton Falls could compete for a reopened bid if it wins its 

protest of the initial contract award. The factual core of 

this question is whether, after having not received any 

technically acceptable proposals from eligible small businesses in response to its initial solicitation, MSC would 

maintain the contract as a small-business set-aside, or 

reopen the bidding process on an unrestricted basis. Both 

DMC and Tinton Falls agree that nothing in the record 

definitively answers this question, and both parties 

merely speculate as to the parameters of the hypothetical 

reopened bid for the contract. The government—which

does not appeal the Claims Court’s denial of its motion to 

dismiss for lack of standing—conceded at oral argument 

there is a sufficient probability MSC would reopen the bid 

on an unrestricted basis so that Tinton Falls would have 

a “substantial chance” of winning the reopened solicitation. Oral Arg. at 22:35–42 (Court: “If you assume that 

this court rules against your position on the merits, then 

would [Tinton Falls] have a substantial chance?” Government: “Correct.”). Nevertheless, we need not engage in 

further speculative inquiry about what might happen. 

Our review of this aspect of the Claims Court’s decision 

requires us merely to determine whether the court clearly 

erred by finding that Tinton Falls could compete for the 

reopened bid if it prevails in its protest of the initial 

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contract award. See Bannum, 404 F.3d at 1354. Based on 

the record, we are unable to find clear error in the Claims 

Court’s factual determination that Tinton Falls has 

demonstrated prejudice.3

II 

Proceeding to the merits, at issue here is a narrow 

challenge to the Claims Court’s determination that DMC’s 

relationships with its subcontracted hotels did not violate

the ostensible contractor rule, and thus did not disqualify 

DMC as a small business concern under the solicitation

and preclude award of the contract to DMC. Congress has 

given SBA the exclusive authority to establish definitions 

and standards for determining whether an entity qualifies 

as a “small business concern” for purposes of federal law. 

15 U.S.C. § 632(a)(2)(A). Determinations under SBA’s 

regulations are binding on federal procurement officers. 

15 U.S.C. § 637(b)(6). Qualifying as a “small business 

concern” for the purpose of a bid proposal may have 

several advantages. See 13 C.F.R. § 121.401. For example, solicitations for certain government procurements, 

like the solicitation here, are limited to “small business 

concerns.” 

3 We need not determine whether, in all circumstances, a protester can “compete” for a reopened bid for 

the purposes of standing under Impresa when the protester was not a qualified bidder for the initial bid and 

would be a qualified bidder for the reopened bid only if 

the contract was solicited with substantially different 

eligibility requirements. We hold only that under the 

particular facts of this case, the Claims Court did not 

clearly err in finding that Tinton Falls had a substantial 

chance of winning a reopened bid should it prevail in its 

bid protest.

 

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When an agency issues a solicitation for a small business set-aside contract, it must select an NAICS code for 

that contract, “which best describes the principal purpose 

of the product or service being acquired.” 13 C.F.R. 

§ 121.402(a)–(b). Each NAICS code is associated with a 

number of employees or amount of annual receipts, both 

of which limit the size of a business that can qualify as a 

small business for purposes of the contract. 13 C.F.R. 

§ 121.201. Pertinent to the inquiry here are the regulations relating to affiliated businesses. Even if a business 

falls within the employee and annual receipt limits of the 

applicable NAICS code, it may fail to qualify as a small 

business for purposes of the contract if it is affiliated with 

other entities. A business is affiliated with another 

business when “one controls or has the power to control 

the other.” 13 C.F.R. § 121.103(a)(1). In determining 

affiliation, SBA considers factors such as ownership, 

common management, previous relationships with or ties 

to another concern, contractual relationships, and joint 

ventures between entities. 13 C.F.R. § 121.103(a)(2), (c)–

(h). Businesses are treated as joint venturers—and 

therefore affiliates—when a subcontractor “performs 

primary and vital requirements of a contract . . . or [is] a

subcontractor upon which the prime contractor is unusually reliant.” 13 C.F.R. § 121.103(h)(4). This is referred to 

as the “ostensible subcontractor” rule. See id. (“A contractor and its ostensible subcontractor are treated as joint 

venturers.”).

Here, Tinton Falls does not allege that DMC will be 

“unusually reliant” on a subcontractor in order to perform

the contract. Rather, as discussed above, Tinton Falls 

challenges only the SBA-OHA’s determination that the 

primary and vital requirements of the solicitation are a 

coordinated package of hotel and transportation services. 

Tinton Falls contends that the primary and vital requirement of the solicitation is the provision of lodging 

services itself, and does not include the management and 

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coordination of lodging and transportation services to 

meet MSC’s needs. According to Tinton Falls, the solicitation does not require bidders to provide a management 

plan or detail how subcontractors will be managed. 

Rather, much of the statement of work in the solicitation 

is devoted to criteria relating to minimum requirements 

for hotels. See J.A. 248–51, 253–55. Tinton Falls cites to 

the chosen NAICS code to support its position that lodging services are the primary purpose of the solicitation. 

Specifically, Tinton Falls notes that the MSC contracting 

officer chose NAICS code 721110 (“Hotels (except Casino 

Hotels)”), rather than the other NAICS codes that appear 

to describe management services, such as NAICS codes 

541611 (“Administrative Management & General Management Consulting Services”) and 561990 (“All Other 

Support Services”). Tinton Falls concludes that the SBAOHA lacked a rational basis for its determination that 

management and coordination of the lodging and transportation services is the primary and vital requirement of 

the contract.

Tinton Falls contends that when the primary and vital requirements of the solicitation are properly defined as 

lodging services, DMC’s relationships with its subcontracted hotels violate the ostensible contractor rule. The 

SBA-OHA estimated that the cost of hotel rooms accounts 

for about 80% of the contract value. J.A. 3551. DMC does 

not own any hotels and intends to subcontract the provision of these hotel rooms to several different hotels. J.A. 

3550. And because at least the primary hotel subcontracted by DMC does not qualify as a small business for 

purposes of the solicitation, J.A. 3452, Tinton Falls concludes that DMC cannot be considered a “small business 

concern” for purposes of the solicitation because, pursuant 

to 13 C.F.R. § 121.103(h), it is a joint venturer with, and 

an affiliate of, the subcontracted hotels. 

We disagree with Tinton Falls that the SBA-OHA 

lacked a rational basis for determining the primary and 

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vital requirements of the solicitation. Contrary to Tinton 

Falls’ characterization, the solicitation requires more than 

simply a fixed block of hotel rooms for a certain period of 

time; rather, the contractor must be able to secure an 

unpredictable and widely-varying number of acceptable 

hotel rooms on short notice. For example, the solicitation 

estimates that MSC will require around 65 hotel rooms 

per night, but warns that in the past, MSC’s needs have 

fluctuated between 25 and 120 rooms per night. J.A. 248. 

And while the contractor is required to “ensure a sufficient number of single rooms are available at all times to 

meet the Government’s needs,” MSC will pay only for the 

number of rooms each night used to house CIVMARs 

attending training. J.A. 248–49. Further, the contractor 

is expected to “make every effort” to provide rooms within 

one hour of CIVMAR arrivals. Id. And MSC is not required to provide advance notice of its daily room requirements to the contractor. Id. Thus, even though no 

management and coordination tasks are expressly identified, there is no question that the solicitation requires 

management and coordination to supply a potentially 

large and varying number of hotel rooms with little or no 

notice. 

Tinton Falls also minimizes the requirement that the 

contractor must provide all transportation to and from the 

hotels and the MSC Training Center. J.A. 250. The 

number of trips required by MSC is based on CIVMAR 

training class schedules, which can vary. Id. And as with 

the lodging services, MSC will pay only for the actual 

number of trips provided between the hotels and the 

training center. J.A. 251. In addition, the contractor 

must provide various other services relating to the lodging 

and transportation of CIVMARs, such as ensuring that all 

CIVMARs check in each night and maintaining logs of all 

passengers who use the provided transportation services. 

Id. Further, the contractor is required to be the single 

point of contact for the MSC, and must be available to be 

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TINTON FALLS LODGING REALTY v. US 17

contacted by the MSC at all times. J.A. 247. DMC intends to allocate two of its employees to perform the 

majority of the labor associated with these management 

and coordination tasks. J.A. 3549.

The record supports this interpretation of the solicitation’s requirements. After reviewing the scope of work in 

the solicitation, the Area Office explained that the contract involved “more than a place to stay and a bus ride to 

and from the [MSC] training facility”—rather, the contract was “for an overall package of rooms, transportation[,] and services.” J.A. 3459. The Area Office noted 

that “[t]he number of CIVMARs that attend [MSC] trainings varies constantly and the contract requires the 

contractor to monitor, control, record[,] and report the 

changing needs of [MSC] for lodging and transportation.” 

Id. Thus, it found that the primary and vital element of 

the solicitation was the coordination of lodging, transportation, and other services to MSC. Id.

The SBA-OHA agreed with the Area Office’s identification of the primary and vital requirements of the solicitation. J.A. 3560. Finding Tinton Falls’ characterization 

of the solicitation as “merely a hotel contract [to be] a 

gross simplification,” it instead described the coordination 

of hotel rooms and transportation to meet MSC’s needs as 

the most complex task in the solicitation. J.A. 3561. The 

Claims Court agreed with the SBA-OHA, finding that its 

characterization of the primary purpose of the contract as 

a “coordinated package of rooms, transportation, and 

services” was not “irrational,” because the “element of 

coordination of hotel and transportation [services] is 

vital.” J.A. 3774 (Tr. at 67:20–25). It noted that there 

were at least some management functions that “simply 

picking up the phone and calling for a taxi or a hotel room 

would not furnish,” such as the required coordination 

between MSC, the hotels, and the transportation services, 

and the daily logs monitoring the whereabouts of the 

CIVMARs. Id. (Tr. at 68:12–21). The Claims Court 

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18 TINTON FALLS LODGING REALTY v. US

concluded that the scope of work in the solicitation made 

clear that MSC was “buying the right to send people to a 

single point of contact knowing that they [we]re going to 

be taken care of in terms of meals, hotel rooms, and 

transportation.” Id. (Tr. at 68:22–25).

In short, Tinton Falls fails to meet its high burden of 

showing that the SBA-OHA’s determination lacked a 

rational basis. The SBA-OHA evaluated the scope of 

work and other contract requirements in the solicitation

and provided a coherent and reasonable explanation of 

how it determined that the primary and vital requirements of the contract were the management and coordination of a package of lodging and transportation 

services.

* * *

We have considered the parties’ remaining arguments 

and find them unpersuasive.

CONCLUSION

Because there is a rational basis for the SBA-OHA’s 

determination that the primary and vital requirements of 

the solicitation are the management and coordination of a 

package of lodging and transportation services, the 

Claims Court’s grant of the government and DMC’s 

motion for judgment on the administrative record was not 

arbitrary and capricious. 

AFFIRMED

Case: 14-5140 Document: 61-2 Page: 18 Filed: 09/02/2015
United States Court of Appeals 

for the Federal Circuit ______________________ 

TINTON FALLS LODGING REALTY, LLC,

Plaintiff-Appellant

v.

UNITED STATES, 

DMC MANAGEMENT SERVICES, LLC,

Defendants-Appellees

______________________ 

2014-5140

______________________ 

Appeal from the United States Court of Federal 

Claims in No. 1:14-cv-00353-EGB, Senior Judge Eric G. 

Bruggink.

______________________ 

REYNA, Circuit Judge, dissenting. 

Because Tinton Falls has not established by preponderant evidence that it has a direct economic interest in 

the solicitation, I respectfully dissent from the majority’s 

decision to reach the merits of this case. 

The standing question in this case is governed by 28 

U.S.C. § 1491(b)(1), which “imposes more stringent standing requirements than Article III.” Weeks Marine, Inc. v. 

United States, 575 F.3d 1352, 1359 (Fed. Cir. 2009). 

Section 1491(b)(1) allows an “interested party” to object 

“to a solicitation . . . for bids or proposals for a proposed 

contract” or to “any alleged violation of statute or regulation in connection with a procurement or proposed proCase: 14-5140 Document: 61-2 Page: 19 Filed: 09/02/2015
2 TINTON FALLS LODGING REALTY v. US

curement.” Standing under § 1491(b)(1) “is limited to 

actual or prospective bidders or offerors whose direct 

economic interest would be affected by the award of the 

contract or by the failure to award the contract.” Am. 

Fed’n of Gov’t Emps., AFL-CIO v. United States, 258 F.3d 

1294, 1302 (Fed. Cir. 2001). 

As the bid protester, Tinton Falls bears the burden of 

establishing the elements of standing. See Myers Investigative & Sec. Servs., Inc. v. United States, 275 F.3d 1366, 

1369 (Fed. Cir. 2002). Because standing is an “indispensable part of the plaintiff’s case, each element must be 

supported in the same way as any other matter on which 

the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive 

stages of the litigation.” Lujan v. Defs. of Wildlife, 504 

U.S. 555, 561 (1992). General allegations of standing may 

suffice at the pleading stage, but facts supported by 

affidavits or other evidence are required at summary 

judgment. Id. Those facts must be “supported adequately 

by the evidence adduced at trial.” Id. (quoting Gladstone 

Realtors v. Vill. of Bellwood, 441 U.S. 91, 115 n.31 (1979)). 

Tinton Falls’ bid protest progressed to trial on the 

administrative record, and facts establishing standing 

should have been adequately supported by the record. See 

J.A. 3774. Judgment on the administrative record is the 

final stage in a bid protest and requires the Court of 

Federal Claims “to make factual findings from the record 

evidence as if it were conducting a trial on the record.” 

Bannum, Inc. v. United States, 404 F.3d 1346, 1353-54 

(Fed. Cir. 2005). Tinton Falls was therefore required to 

establish by preponderant evidence that it had a direct 

economic interest in the solicitation. Reynolds v. Army & 

Air Force Exch. Serv., 846 F.2d 746, 748 (Fed. Cir. 1988) 

(Once standing is called into question, the party asserting 

Case: 14-5140 Document: 61-2 Page: 20 Filed: 09/02/2015
TINTON FALLS LODGING REALTY v. US 3

standing “bears the burden of establishing subject matter 

jurisdiction by a preponderance of the evidence.”).1

Tinton Falls could have conceivably met its burden in 

one of two ways. As the majority notes, an actual bidder 

such as Tinton Falls can demonstrate that it would have 

had a “substantial chance” of securing the original contract if not for an alleged error in the procurement process. Labatt Food Serv., Inc. v. United States, 577 F.3d 

1375, 1378 (Fed. Cir. 2009). Tinton Falls could have also 

demonstrated that a successful protest would obligate the 

government to rebid the contract and that Tinton Falls 

would be qualified to compete on the rebid. Impresa 

Construzioni Geom. Domenico Garufi v. United States, 

238 F.3d 1324, 1334 (Fed. Cir. 2001). 

The record evidence, however, leaves no question that 

Tinton Falls would not have secured the original contract. 

Tinton Falls is other than small and does not qualify to 

compete for a small business set-aside contract. See J.A. 

2808–10 (Notice to Tinton Falls that “[t]he Small Business Administration (SBA) has made a formal size determination that your business is other than small”). Even if 

the government removed the small business set-aside and 

issued a revised, unrestricted solicitation, the record 

indicates that two other small businesses submitted lower 

bids than Tinton Falls and would have been next in line 

to receive the original contract. 

1 Tinton Falls had the same burden in the Court of 

Federal Claims because “[t]he Court of Federal Claims, 

though an Article I court, . . . applies the same standing 

requirements enforced by other federal courts created 

under Article III.” Weeks Marine, 575 F.3d at 1359 (quoting Anderson v. United States, 344 F.3d 1343, 1350 n.1 

(Fed. Cir. 2003)).

 

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4 TINTON FALLS LODGING REALTY v. US

Nor has Tinton Falls established through preponderant evidence that a successful protest would obligate the 

government to rebid the contract as unrestricted or that 

Tinton Falls is qualified to compete on rebid. Cf. Impresa, 

238 F.3d at 1333. To the contrary, the record suggests 

that the government would not be obligated to rebid. 

Excluding DMC and the four other than small businesses 

associated with Hotels Unlimited, the record indicates 

that three proposals remained in the competitive range. 

Those three proposals were submitted by offerors that 

self-certified as small businesses. Given that two or more 

offers from small businesses remained in competitive 

range, the government would have been obligated to 

award the contract to the next small business in line, or 

at least obligated to request revised proposals from the 

three offerors that remained in competitive range. See

FAR § 19.502-2 (requiring an acquisition such as the one 

at issue here to be set aside for small business absent “a 

reasonable expectation” of obtaining offers from responsible small businesses). 

Court of Federal Claims precedent should have guided 

the standing question in this case. In International Management Services, Inc. v. United States, the Court of 

Federal Claims held that a bid protestor lacked standing 

to challenge a small business set-aside contract because 

the protester had been deemed other than small. 80 Fed. 

Cl. 1, 4–8 (2007). On those facts, “there is no chance, 

much less a substantial chance, that plaintiff could be 

awarded the contract in the event that the [government’s] 

contract with defendant-intervenor is set aside.” Id. at 6. 

The protester made an argument identical to the one

Tinton Falls makes here, arguing the defendantintervenor and the remaining offerors were themselves 

unqualified. Id. The protester thus argued that if the 

Court of Federal Claims sustained its protest and found 

that “no offeror was small, . . . the government would be 

obligated to rebid the contract (using full and open compeCase: 14-5140 Document: 61-2 Page: 22 Filed: 09/02/2015
TINTON FALLS LODGING REALTY v. US 5

tition), and [it] could compete for the contract once again.” 

Id. (quoting Pl.’s Opp’n Def.’s Mot. Dismiss at 22) (alterations in original). The Court of Federal Claims rejected 

that argument because, like here, there remained a small 

business in competitive range. Id. at 6–7; see also Taylor 

Consultants, Inc. v. United States, 90 Fed. Cl. 531, 541–43

(2009). Under International Management Services, the 

Court of Federal Claims should have found that Tinton 

Falls lacked standing. 

The fact that the three remaining small businesses in 

competitive range originally submitted technically unacceptable proposals is insufficient to establish Tinton Falls’ 

standing. The technical unacceptability of an otherwise 

qualified offer in competitive range does not limit the 

offeror’s ability to establish a substantial chance of winning a contract. See Allied Tech. Grp., Inc. v. United 

States, 94 Fed. Cl. 16, 37–38 (2010), aff’d, 649 F.3d 1320 

(Fed. Cir. 2011). Even if the technical unacceptability of 

the remaining small business offers required the government to reassess whether two or more technically acceptable small businesses remained, the record indicates 

that seven additional vendors were interested in the 

solicitation. We cannot presume from the record that 

those seven additional vendors are other than small or 

that those vendors would submit technically unacceptable

offers in the future. Nor can we presume that the three 

remaining small businesses in competitive range would be 

incapable of submitting technically acceptable proposals 

on rebid. As far as the record reveals, Tinton Falls failed 

to make any allegation to the contrary. See J.A. 3566–67 

(Complaint). It had the burden to do so. 

Only in a future hypothetical world in which the government found no two eligible small businesses could 

Tinton Falls compete on rebid. Yet Article III standing, 

and by extension the more demanding standard provided 

by § 1491(b)(1), requires more than speculation or abstract hypotheticals. Article III standing requires an 

Case: 14-5140 Document: 61-2 Page: 23 Filed: 09/02/2015
6 TINTON FALLS LODGING REALTY v. US

“alleged (and ultimately proved) . . . ‘injury in fact’—a 

harm suffered by the plaintiff that is ‘concrete’ and ‘actual 

or imminent, not conjectural or hypothetical.’” Steel Co. v. 

Citizens for a Better Env’t, 523 U.S. 83, 103 (1998) (internal quotation marks omitted) (quoting Whitmore v. Arkansas, 495 U.S. 149, 155 (1990)). Nothing in the record 

suggests that a future rebid or Tinton Falls’ competition 

on such a rebid is even a possibility, much less a substantial chance. The Court of Federal Claims’ finding to the 

contrary is clearly erroneous.

The majority rests its analysis of standing in part on 

the fact that the government does not “seriously dispute” 

that Tinton Falls has standing, Maj. Op. at 8–9, and that 

“none of the parties disputes the Claims Court’s finding 

that [Tinton Falls’ future competition] is at least a realistic possibility,” id. at 11. Yet a party’s lack of argument or 

concession regarding standing is irrelevant. Standing is a 

nonwaivable jurisdictional requirement. Citizens for a 

Better Env’t, 523 U.S. at 102–04; Myers, 275 F.3d at 1369 

(“standing is a threshold jurisdictional issue”). Because 

the record is void of preponderant evidence establishing 

this jurisdictional requirement, I respectfully dissent. 

Case: 14-5140 Document: 61-2 Page: 24 Filed: 09/02/2015