# I n the United States Court of Federal Claims

No. 17-1875C

(E-Filed: May 1, 2018) 1

GLOBAL DYNAMICS, LLC,

Plaintiff,

v.

THE UNITED STATES,

Defendant,

and

GIACARE and MEDT RUST JV, LLC,

and

MEDTRUST, LLC,

Intervenor-defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Bid Protest; Sole-Source Bridge Contract; 10 U.S.C. § 2304(c)(1) (2012).

Craig A. Holman, Washington, DC, for plain tiff. Michael E. Samuels and Alexandra L. Barbee-Garret, of counsel.

Tanya B. Koenig, Trial Atto rney, with whom appeared Chad A. Readler, Acting Assistant Attorney General, Robert E. Ki rschman, Jr., Director, and Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, United

1 This opinion was issued under seal on Ap ril 25, 2018. Pursuant to the ordering language of the court’s opinion, the parties were invited to identify source selection, proprietary, or confidential material subject to deletion on the basis that the material was protected/privileged. No redactions were pro posed by the parties. Thus, the sealed and public versions of this opinion are identic al, except for the publication date and this

footnote.2 States Department of Justice, Washington, DC, for defendant. Jess ica E. Hom and Evan C. Williams, United States Army Legal Servic es Agency, of counsel. John T. Harryman and Eugene J. Smith, Un ited States Army Medical Command, of counsel.

Jacqueline K. Unger, Washington, DC, for intervenor-defendants.

OPINION AND ORDER

CAMPBELL-SMITH, Judge.

This bid protest involves a dispute related to the award of a contract for registered nursing (RN) services for the San Antonio Military Healthcare System (SAMHS). See ECF No. 1 at 7-8 (complaint). On February 27, 2018, the court issued an opinion and

order in which it ruled on two of the three counts that plainti ff alleges in the complaint.

See ECF No. 61. The court remanded the matte r to the United States Department of the Army (agency) for additional development of the factual record with regard to the second, and only remaining, count. See id . The agency has now completed remand proceedings, and the parties have submitted supplemental briefs to address its findings. See ECF No. 74 (plaintiff’s supplemental br ief); ECF No. 75 (intervenor-defendants’ supplemental brief); ECF No. 76 (defendant’s supplemental brief).

For the following reasons, as to the seco nd count in the complaint, plaintiff’s motion for judgment on the administrative r ecord, ECF No. 43, is GRANTED ; intervenor-defendants’ cross-motion for judg ment on the administra tive record, ECF No. 50, is DENIED ; and, defendant’s cross-motion fo r judgment on the administrative record, ECF No. 51, is DENIED

.

I. Background

The court recounted the detailed history of this case in its previo us opinion. Given the narrower scope of this post-remand opin ion, the court will address only the facts necessary to evaluating the second count of the complaint.

The relevant solicitation was first issu ed by the United States Army Medical Command (MedCom) on September 14, 2012, as a small-business set aside. See ECF

No. 47-1 at 774-886. Plainti ff submitted its initial proposal on October 16, 2012. See

ECF No. 47-2 at 1-241. As a result of a myriad of protest actions challenging agency decisions related to the solicitation, defendan t has issued five sole-source awards to

incumbent contractor Me dTrust, LLC. See ECF No. 61 at 2-5. Only the fifth sole-source award is challenged in the present litig ation. See ECF No. 1 at 20-23.

On December 30, 2016, MedCom undertook corrective action as a result of the Government Accountability Office’s (GAO) de cision in one of the protest actions. See3 ECF No. 48-9 at 965-66. MedCom anticipat ed that a period of 120 days would be sufficient to comply w ith the GAO’s recommendations. See id. at 965. The agency later

advised the GAO that the corrective action was continuing as of May 11, 2017, and represented that it expected to complete the process within forty-five days. See id. at

974-75.

One hundred and seventeen days later, on September 5, 2017, MedCom stated its

intention to award a fifth sole-source contract to MedTrust. See id. at 1004-15. In its justification and approval document (J&A) supporting this decision, MedCom stated:

“The Government has awarded a follow contr act . . . [to plainti ff]; however due to Government Accountability Office (GAO) prot ests on the follow-on RN contract, it is necessary to award a bridge contract to ensure continuity of services until the Contracting Officer completely reso lves the protest.” See id. at 1007.

In its order remanding this matter to the ag ency, the court stated: “[t]his protest is remanded to the agency for the purpose of identifying any further available facts underlying its decision to award a fifth so le-source contract, in accordance with the analysis in this opinion.” ECF No. 61 at 16. The agency responded by filing a memorandum for the record providing the re quested facts, and attaching supporting

exhibits. See ECF No. 73-1.

The memorandum provides a detailed tim eline of the agency’s actions between November 2, 2016, when the GAO issued its protest decision, and September 14, 2017, when the agency approved the fifth sole-source contract. See id. at 4-6. Defendant, in turn, offers three primary reasons for the dela y in completing the corrective action. First, defendant explains that several unexpected matters arose during the period in which it was working on the corrective ac tion that interfered with its ability to allocate resources to the effort. The agency’s memorandum id entifies three “unexpected contract actions [that] required immediate attention,” duri ng the pendency of the corrective action, specifically: (1) a Department of Labor wage determination proceeding; (2) resolution of an agency protest; and (3) the solicitation and award of an interim award, also relating to nursing services. Id. at 3. In its suppleme ntal brief, defendant also notes a fourth matter, stating that the contracting officer was fu rther “delayed in wo rking on the corrective action . . . due to a large dental services acquisition.” ECF No. 76 at 7.

Second, defendant asserts th at “because of three retirem ents, the Health Readiness Contract Office responsible for processing th ese procurements had only one contracting

officer available to work on the corrective action as well as other routine and unplanned contract actions.” Id. at 7. According to defendant, the office is “normally staffed by five contracting officers.” Id. Defendant does not explain the fate of the fifth contracting

officer.4 And finally, defendant highlights the fact that on July 13, 2017, the contracting officer received “unofficial notification that the requirement for Registered Nurses (RN) may increase.” Id. at 8. These changes re quired additional work on cost estimates, which was requested on Augu st 17, 2017. See id. S hortly thereafter, the agency

determined that a fifth sole-source contract was necessary. See ECF No. 48-9 at 1007.

II. Legal Standards

The Tucker Act grants this court jurisdiction

to render judgment on an action by an interested party objecting to a solicitation by a Federal agency for bids or proposals for a proposed contract or to a proposed award or the award of a contract or any alleged violation of statute or regulation in connection with a procurement or a proposed procurement . . . without regard to whethe r suit is instituted before or after the

contract is awarded.

28 U.S.C. § 1491(b )(1) (2012).

The court’s analysis of a “bid protest proceeds in two steps.” Bannum, Inc. v.

United States

, 404 F.3d 1346, 1351 (Fed. Cir. 2005). First, the court determines, pursuant to the Administrativ e Procedure Act’s standard of review, whether the “agency’s action was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with [the] law.” Glenn Def. Mari ne (ASIA), PTE Ltd. v. United States, 720 F.3d 901, 907-08 (Fed. Cir. 20 13) (citing 28 U.S.C. § 1491(b )(4)). An agency’s decision is improper when the agency ha s “entirely failed to consider an important aspect of the problem, offered an explanation for its decisi on that runs counter to the evidence before the agency or [the decision] is so implausibl e that it could not be ascribed to a difference in view or the product of agency expertise. ” Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U. S. 29, 43 (1983). In making this evaluation, the court considers “whether the agen cy has examined the releva nt data and articulated a satisfactory explanation for its action incl uding a rational connection between the facts found and the choice made.” Cybertech Grp., Inc. v. United States, 48 Fed. Cl. 638, 646 (2001) (citations omitted).

If the court finds that the agency acted in error, the court then must determine whether the error was prejudicial. See Bannum, 404 F.3d at 1351. To establish prejudice , “the protester must show ‘that ther e was a substantial chance it would have

received the contract award but for that erro r.’” Alfa Laval Separation, Inc. v. United States, 175 F.3d 1365, 1367 (F ed. Cir. 1999) (quoting Statistic a, Inc. v. Christopher, 102 F.3d 1577, 1582 (Fed. Cir. 1 996)). “In other words, the pr otestor’s chance of securing

the award must not have been insubstantial.” Info. Tech. & Applications Corp. v. United States, 316 F.3d 1312, 1 319 (Fed. Cir. 2003).5 Given the considerable discretion allowe d contracting officers, the standard of review is “highly deferential.” Advanced Data Concepts, Inc. v. United States, 216 F.3d 1054, 1058 (Fed. Cir. 2000). As the Supreme Court has explained, the scope of review under the “arbitrary and capricious” standard is narrow. See Bowman Transp., Inc. v. Arkansas-Best Freight Sys., In c., 419 U.S. 281, 285 (1974). “A reviewing court must

‘consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgme nt,’” and “‘[t]he court is not empowered to substitute its judgment for that of the agency.’” Id. (quoting Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416 (1971)); see also Weeks Ma rine, Inc. v. United States, 575 F.3d 1352, 1368-69 (Fed. Cir. 2009) (stati ng that under highly deferential rational basis review, the court will “sustain an ag ency action ‘evincing rational reasoning and consideration of relevant factors’”) (citi ng Advanced Data Con cepts, 216 F.3d at 1058).

III. Analysis

For ease of reference, the court will reitera te the relevant portio n of its previously issued analysis relating to MedCom’s award of a fifth sole-source contract, which is the subject of the second count of the complaint. In its motion for judgment on the administrative record, plaintiff contends that MedCom’s “fifth sole source bridge contract to MedTrust is improper and prejudicial.” ECF No. 43-1 at 35. The circumstances under which the government is permitt ed to award contracts outsid e of the competitive process is governed here by 10 U.S.C. § 2304 (2012). The statute identifies seven circumstances in which such contracts are permissible, two of which plaintiff asserts are implicated in

this case. The two releva nt provisions state:

The head of an ag ency may use procedures othe r than competitive procedures only when—

(1) the property or serv ices needed by the agen cy are available from only one responsible source or only from a limited number of re sponsible sources and no other type of prope rty or services will satisfy the needs of the agency;

(2) the agency’s n eed for the property or servi ces is of such an unusual and compelling urgency that the United States would be seriously injured unless the agency is perm itted to limit the number of sources from which it solicits bids or proposals[.]

10 U.S.C. § 2304(c)(1)-(2). Plai ntiff argues that defendant’s decision to award a solesource bridge contract in Sept ember 2017 fails to meet either standard set forth in these provisions. See ECF No. 43-1 at 35-40. Defe ndant states that it sp ecifically relied on the first of the provisions, 10 U.S.C. § 2304(c)(1 ), in making the fifth award to MedTrust. See ECF No. 51 at 41; ECF No. 48-9 at 1004. The court, in turn, will accordingly limit6 its review of defendant’s decision to cons ider whether it meets the requirements for awarding a contract outside of the compe titive process for the reason that “only one responsible source” and “no other type of . . . services” would meet defendant’s needs. See 10 U.S.C. § 2304(c)(1).

The Federal Circuit has instru cted that a sole-source contract may be set aside if: “(1) the sole-source award lacked a rational basis; or (2) the sole-source procurement procedure involved a violation of a statute, regulation, or procedure.” Emery Worldwide Airlines, Inc. v. United States, 264 F.3d 1071, 1086 (Fed. Cir. 2001) (citing Impresa

Construzioni Geom. Domenico Garufi v. Un ited States, 238 F.3d 1324, 1332 (Fed. Cir. 2001)). In evaluating the propriety of a so le-source contract award, the court must “determine whether the contracting agen cy provided a cohere nt and reasonable explanation of its exercise of discretion.” Impresa, 238 F.3d at 1333 (citation omitted). As this court has observed, “sole-source procurements may not be used when the circumstances justifying the award were due to the agency’s own lack of advanced planning.” Innovation Dev. Enters. of Am., Inc. v. United States, 108 Fed. Cl. 711, 727- 28 (2013) (holding that the “[f]ailure to account for transition periods between an

incumbent contractor and a ne w contractor is . . . [a] form of lack of advanced planning”); 10 U.S.C. § 2304(f)(4)(A) (“In no cas e may the head of an agency . . . enter into a contract for property or services using procedures other than competitive procedures on the basis of the lack of ad vanced planning.”); 48 C.F.R. § 6.301(c)(1) (2017) (“Contracting withou t providing for full and ope n competition shall not be justified on the basis of . . . a lack of advanced planning by th e requiring activity.”).

The court’s February 27, 2018 order re manding this matter to the agency was

founded on the court’s conclusion that defend ant had not adequately explained the delay in completing the corrective action. As the court previously observed:

MedCom’s acknowledgement that it ha s not timely conducted its corrective action gets to the root of the problem in this cas e. As outlined above,

MedCom undertook the most recent corre ctive action on December 30, 2016.

See ECF No. 48-9 at 965- 66. MedCom’s initial esti mate was that 120 days would be sufficient to complete the corre ction. See id. at 965. One hundred and twenty days from December 30, 2016, was April 29, 2017. The corrective action was not completed by th at date. In fact, MedCom notified the GAO that the action was continuing as of May 11, 2017, and further represented that it expected to complete the process within forty-five days. See id. at 974-75. Forty-five days from May 11, 2017, wa s June 25, 2017. The corrective action was, however, s till ongoing 117 days later when

MedCom stated its intention to award MedTrust a fifth sole-source bridge contract, on September 5, 2017. See id. at 1006.7 None of the parties involved in this case have identified any place in the

voluminous administrative record wher e MedCom purports to explain why these delays extended so far beyond ev en its own estimates. Nor have the parties identified any intervening devel opments or obstacles that arose to account for the originally estimated 120 days increa sing to more than 250 days, with still no result.

ECF No. 61 at 9.

In its supplemental brief, defendant argue s that the agency’s decision to award a

fifth sole-source contract was rational because there were three good reasons for its delay in completing the most recent corrective action: (1) three retirements in the relevant agency department resulted in a personnel sh ortage; (2) available personnel were working

on a number of other matters instead of the s ubject corrective action; and, (3) in July 2017, the expected valu e of the contract was significantly increased, requiring additional

work. See ECF No. 76 at 10. See also EC F No. 73-1 at 3-7 (agency’s memorandum). In the court’s view, these explanations are unpersuasive.

First, defendant fails to explain the ci rcumstances of the three retirements that apparently resulted in a drastic reduction of av ailable contracting officers. The court has

no reason to doubt either that three retirements , in fact, occurred, or that losing three of five contracting officers had a significant impact on the department’s ability to complete its duties in a timely fashion. Indeed, th e court is itself pa infully aware of the consequences of limited resources. The problem, however, is that defendant gives the

court no reason to believe that the retirements were sudden or unexpected. There is also no indication that the agency was unable to f ill the vacancies. Mo reover, the agency was presumably aware of the vacancies when it se t the various deadlines it did for completing

the corrective action. In th e post-remand administrative reco rd, the agency representative simply states that the relevant department was typically “staffed by five Contracting Officers. However, due to three retiremen ts, there was only one Contracting Officer available to work the corrective action, as well as the other routine contract actions.”

ECF No. 73-1 at 3.

Defendant’s subtraction skills notwithstanding, in the co urt’s view, the fact that

three officers retired is not enough to excuse th e agency’s failure to ensure it was properly staffed. As plaintiff notes in its supplemental brief, the GAO has sustained a protest in which the agency s ought to justify a sole-source award on the basis of similar personnel issues. See ECF No. 74 at 13 (citing Service Contractors, B-243236, 91-2 CPD ¶ 49, 1991 WL 135563 (Comp. Gen. July 12, 1991). Service Contractors involved a sole-source contract award for grounds maintenance at prop erties for which the Department of Housing and Ur ban Development (HUD) was res ponsible. In the protest action, in which the protestor alleged that a non-competitive award was improper, the agency alleged that “personnel turnover and inexperience” sufficiently explained the need8 for a sole-source award. Service Contract ors, 1991 WL 135563, at *1. The GAO disagreed, and held that the agency’s de fenses related to inadequate personnel “essentially recognize the lack of advance pl anning and merely provide an excuse based on the limitations of the agency procurement personnel.” Id. at *3. The court agrees with this reasoning, and concludes based on the evidence in the record , that the agency’s inadequate staffing was due to its failure to plan for staffing needs in the relevant department.

Defendant also claims th at unexpected, unrelated matte rs required the agency’s attention, contributing to the delay in completing the correc tive action. See ECF No. 76 at 10. The agency’s memorandum explaini ng the facts underlying the decision to award

a fifth sole-source contract includes a list id entifying three “unexpected contract actions [that] required immediate attention,” during the pendency of the corrective action: (1) a Department of Labor wage dete rmination proceeding; (2) reso lution of an agency protest; and (3) the solicitation and award of an interim award, also relating to nursing services. See ECF No. 73-1 at 3. In its supplemental brief, defendant also notes a fourth matter, stating that the contracting officer was furthe r “delayed in working the corrective action . . . due to a large dental servic es acquisition.” ECF No. 76 at 7.

Again, the court has no reas on to doubt the veracity of th e agency’s assertions that it spent its time on these other matters. The court also recognizes that all business before the agency is important. Th is recitation of the agency’s time management, however, does not supply a justification for its failure to allocate adequate time to the corrective action at issue here. The correspondence attached to the contracting officer’s memorandum in the supplemental administrative record does not indicate that the other matters before the agency were especially urgent. In other words, defendant does not explain why these other matters needed to be prio ritized over resolvin g the issues relating to the contract for nursing services at SAMHS. The absence of su ch an explanation is problematic, particularly given the numerous, self-imposed deadlines that the agency did not meet.

The court also notes that defendant’s representation that the agency was simply unable to complete the corrective action due to personnel and workload constraints is at odds with its previous admission that the agency could have acco mplished the corrective action more quickly. See ECF No. 59 at 19 (“Could MedCom have conducted the corrective action in less time? Yes.”).

The final reason defendant offers to es tablish the rationality of the sole-source

award is that “the initial notice of an incr eased requirement for RN s in July 2017, and the development of that number through August 2017, necessarily affe cted the corrective action because of its potential impact on the procurement.” ECF No. 76 at 10. As the court previously explained, the agency’s fi rst self-imposed dead line for completing the corrective action was April 29, 2017, and was later moved to May 11, 2017, and finally was set at June 25, 2017. See ECF No. 61 at 9. Even by defendant’s own version of9 events, the agency failed to m eet any of those deadlines well before it received any notice of an increase in the required number of nurses. As such, the need for additional nurses identified in July cannot serve to justify the agency’s failures to act in April, May, or

June.

Defendant offers no separa te explanation of its failure to award a competitive bridge contract. The court finds the reasons offered with regard to the delayed corrective action no more persuasive in that context. In addition, the intervenor-defendants’ arguments, see ECF No. 75, are largely in lin e with defendant’s arguments, and therefore have not been separate ly addressed herein.

The court concludes, for the foregoing r easons, that the fifth sole-source award lacked a rational basis, and therefore, the agency’s decision to make the award did not comport with the requirements for awarding a contract outside of the competitive process. See 10 U.S.C. § 2304(c)(1). The c ourt also finds that plaintiff was prejudiced by the agency’s error. In the long history of this procuremen t, plaintiff has been awarded

the contract three times. See ECF No. 61 at 3-4. Thus, had the agency timely completed the corrective action and awarded the contract, there is good reason to believe plaintiff had a substantial chance of being the awardee. See Alfa Laval, 175 F.3d at 1367 (stating that in order to establish prejudice, “ the protester must show ‘that there was a substantial

chance it would have received the contract awar d but for that error’”) (quoting Statistica, 102 F.3d at 1582).

As a remedy for the improper award of th e fifth sole-source contract, plaintiff asks that the court enjoin performance of the contract after J une 30, 2018, and direct defendant to either complete th e corrective action and transition the contract by that time, or award a competitive bridge contract. See ECF No. 74 at 24. In its supplemental brief, plaintiff does not address the factors for injunctive relie f as they apply specifically to the second count of the complaint. Instea d, it simply “reiterates its prior request for declaratory and permanent injunctive relief.” Id . Given the changes in the po sture of this case from the time plaintiff made its initial ar gument, this statement does not assist the court with the task of determining what relief is appropriate.

Plaintiff has prevailed on the merits of its claim, but in fashioning the proper remedy, the court is sensitive to the agency’s need to ensure the con tinuity of critical medical services. The patients of SAMHS should not be made to su ffer for the agency’s procurement error. To that end, the court will extend plaintiff the opportunity to submit further analysis of whether permanent injunc tive relief is appropriate here, and how that remedy would be implemented gi ven the unique constraints of this case. Defendant and intervenor-defendants will be heard in response.10 IV. Conclusion

For the foregoing reasons, as to the se cond count in the complaint, plaintiff’s motion for judgment on the administrative r ecord, ECF No. 43, is GRANTED ; intervenor-defendants’ cross-motion for judg ment on the administra tive record, ECF No. 50, is DENIED ; and, defendant’s cross-motion fo r judgment on the administrative record, ECF No. 51, is DENIED

.

On or before May 9, 2018 , plaintiff shall FILE a renewed motion presenting to the court its analysis of why permanent in junctive relief, in addition to a declaratory judgment, is appropriate to reme dy the error alleged in the seco nd count of th e complaint. Defendant and intervenor-defendants may FILE their responses to plaintiff’s renewed motion, on or before May 16, 2018

.

In addition, on or before May 9, 2018 , the parties shall CONFER and FILE a joint proposed redacted version of this opinion, with any competition-sensitive or otherwise protectable information blacked out and enclosed in brackets.

IT IS SO ORDERED.

s/Patricia Campbell-Smith

PATRICIA CAMPBELL-SMITH Judge