United States Court of Appeals 

for the Federal Circuit 

__________________________ 

PAI CORPORATION (DOING BUSINESS AS 

PROFESSIONAL ANALYSIS), 

Plaintiff-Appellant, 

v. 

UNITED STATES, 

Defendant-Appellee, 

AND

INNOVATIVE TECHNOLOGY PARTNERSHIPS, 

LLC, 

Defendant. 

__________________________ 

2010-5003 

__________________________ 

Appeal from the United States Court of Federal 

Claims in Case No. 09-CV-411, Senior Judge John P. 

Wiese. 

__________________________ 

Decided: August 5, 2010 

__________________________ 

CYRUS E. PHILLIPS IV, of Arlington, Virginia, argued 

for plaintiff-appellant. 

CHRISTOPHER L. KRAFCHEK, Trial Attorney, Commercial Litigation Branch, Civil Division, United States 
PAI CORP v. US 2

Department of Justice, of Washington, DC, argued for 

defendant-appellee. With him on the brief were TONY 

WEST, Assistant Attorney General, JEANNE E. DAVIDSON, 

Director, and MARTIN F. HOCKEY, JR., Assistant Director. 

__________________________ 

Before BRYSON, GAJARSA, and PROST, Circuit Judges. 

GAJARSA, Circuit Judge.

This is a bid protest case filed by a losing bidder complaining of the unfairness of the contract bidding process. 

PAl Corporation (“PAI”) filed a bid protest in the Court of 

Federal Claims (“trial court”) challenging the award of a 

support services contract to Innovative Technology Partnerships, LLC (“ITP”) by the Department of Energy’s 

Office of Secure Transportation. PAl argues that the 

award of the contract to ITP was unlawful because the 

Department of Energy failed to mitigate a potential 

organizational conflict of interest during the procurement, 

which allegedly provided a certain bidder an unfair advantage in submitting its bid. Specifically, PAl alleges 

that ITP held an unfair competitive advantage over other 

offerors by gaining access to non-public information through: (1) ITP’s proposed employment of the present incumbent contractor, Wackenhut Services, Inc. 

(“Wackenhut”), as its subcontractor, and 

(2) ITP’s concomitant performance as the audits/assessment contractor under the Office of Secure 

Transportation’s Program Office of Independent Oversight contract. The trial court found that the integrity of 

the procurement was not compromised and entered judgment in favor of the government based on the administrative record. PAl Corp. v. United States, No. 09-cv-411, 

2009 WL 3049213, at *11 (Fed. CI. 2009). PAI appeals to 

this court. Because the trial court did not commit any 

errors, as explained and set forth below, we affirm. 
3 PAI CORP v. US

BACKGROUND

The Office of Secure Transportation (“OST”), a division of the Department of Energy (“DOE”), is responsible 

for the safe and secure transportation of all governmentowned nuclear weapons and materials. On December 13, 

2007, DOE issued a “Sources Sought Synopsis” notice 

seeking qualified small businesses capable of carrying out 

certain OST support services.1 In response to the Sources 

Sought Synopsis notice, DOE received twenty responses 

from interested bidders. After reviewing their statements 

of capability, DOE determined that two or more small 

businesses were capable of performing the required 

services as outlined by the performance work statement. 

DOE then designated the proposed procurement as a 

“total small business set-aside” pursuant to 48 C.F.R. § 

19.502-2. 

On July 11, 2008, prior to the release of the final proposed solicitation, DOE received an agency-level protest 

from Global Engineering & Technology (“GET”) alleging 

that the draft solicitation created an organizational 

conflict of interest. Specifically, GET alleged that any 

company partnering with the incumbent contractor, 

 1 The OST support services were identified in 

the performance work statement as the following sixteen 

task areas: (1) paramilitary training programs support; 

(2) analysis, design, and development of training curricula 

and training plans; (3) logistical support of OST programs; (4) property management; (5) equipment operators; (6) munitions support; (7) armorer support; (8) 

mission related work; (9) shipping, receiving, tagging, 

storage, and issuance of equipment and supplies; 

(10) contractor transportation and utilization program; 

(11) quality assurance program; (12) safety program; (13) 

program and management analysis; (14) resources and 

business management support; (15) fleet vehicle management support; and (16) safeguards and security. 
PAI CORP v. US 4

Wackenhut, would have an unfair competitive advantage 

because that company would gain unequal access to nonpublic information as a result of Wackenhut’s performance of the prior OST support services contract. GET also 

alleged that DOE failed to provide sufficient information 

regarding the staffing levels necessary to support the 

sixteen task areas outlined in the performance work 

statement. 

After consideration of GET’s protest, DOE determined 

that GET could not protest the draft solicitation before it 

had been approved for final release. However, in the 

interest of promoting competition and to level the playing 

field for all potential bidders, DOE agreed to provide 

offerors with additional information regarding the former 

OST support services contract, previously performed by 

Wackenhut. Accordingly, DOE launched the OST support 

services contract website to provide specific information to 

the public regarding the procurement. The website 

included the former OST support services contract that 

was being performed by the incumbent contractor, Wackenhut. It also provided information regarding OST command structure, mission, logistics, property management, 

and specialized training for OST Federal Agents. In 

addition, DOE released a twelve-month overview of the 

direct labor hours for each of the task areas and an estimated training calendar required to implement the OST 

support services. 

On August 29, 2008, DOE issued a final competitive 

contract solicitation to provide support services for OST. 

The solicitation would result in a single indefinitedelivery, indefinite-quantity cost-plus-award-fee type 

contract for a base period of two years and two eighteenmonth option periods. The guaranteed minimum amount 

of designated services under the contract was $3 million 

and the maximum ordering limit was $95 million. 
5 PAI CORP v. US

DOE received nine timely proposals from small businesses, including ITP, PAI, and Advanced Technologies 

and Laboratories International, Inc. (“ATL”). 

ITP’s proposal announced its intention to partner with 

Wackenhut, the incumbent for the OST support services 

contract, to perform the current OST contract. 

The contracting officer conducted an initial review of the 

proposals to determine whether they included all information required by the solicitation. The contracting officer 

also ensured that the organizational conflict of interest 

disclosures submitted by the bidders revealed no actual or 

potential conflicts. On December 22, 2008, the Source 

Selection Authority selected ITP as the bidding offeror 

that provided the best value to the government in terms 

of cost and technical capabilities. On December 29, 2008, 

the contracting officer awarded the contract to ITP. 

On January 12, 2009, ATL filed a protest with the 

Government Accountability Office alleging (1) organizational conflicts of interest involving ITP, Wackenhut, and 

DOE that were not properly mitigated or disclosed prior 

to the procurement, (2) improper evaluation of ATL’s and 

ITP’s proposed costs, and (3) improper evaluation of ITP’s 

and ATL’s technical proposals. In response to ATL’s 

protest, an Integrated Project Team of DOE agreed to 

take corrective action to clarify and resolve, where appropriate, the raised organizational conflict of interest issues, 

the cost realism evaluation, and the past performance 

evaluation. The Integrated Project Team further agreed 

to document its findings and issue a new source selection 

decision. Accordingly, ATL withdrew its protest on February 19, 2009. As part of its corrective action, the Integrated Project Team reevaluated proposals for past 

performance and cost and reconsidered potential organizational conflicts of interest. 
PAI CORP v. US 6

In response to ATL’s protest, the contracting officer 

completed an additional comprehensive organizational 

conflict of interest investigation and provided her conclusions in a memorandum entitled “Organization Conflict of 

Interest Analysis,” issued on June 8, 2009. First, the 

contracting officer noted that she had reviewed the offerors’ submissions regarding any potential organizational 

conflicts of interest and determined that no significant 

potential conflict existed. In particular, the contracting 

officer determined that, although ITP and Wackenhut had 

access to non-public information through their existing 

contracts, such information had no competitive value in 

the present procurement. The contracting officer also 

found that, with respect to ITP, the information to which 

it had access involved constantly changing requirements, 

was quickly outdated, and was therefore of little value. 

With respect to Wackenhut, the contracting officer also 

determined that the information to which it had access 

was not relevant to the requirements addressed in the 

solicitation’s first two sample task orders. In the case of 

the third sample task order, the contracting officer found 

that Wackenhut’s access to non-public information had 

been effectively offset by other information disclosed in 

the solicitation. 

Next, the contracting officer noted that DOE’s released information was sufficient to guide offerors in 

preparing an effective technical proposal. Thus, the 

contracting officer concluded that no significant potential 

conflict existed that would preclude an award to ITP for 

the OST support services contract. On June 4, 2009, the 

Integrated Project Team briefed the Source Selection 

Authority which then selected ITP because the company’s 

bid represented the best value to the government due to 

its highest technical rating and lowest probable cost. 
7 PAI CORP v. US

Shortly thereafter, PAI filed a complaint in the Court 

of Federal Claims alleging, inter alia, that the integrity of 

the procurement was compromised by an alleged unequal 

access to information relating to an organizational conflict 

of interest.2 The parties filed cross-motions for judgment 

on the administrative record. The Court of Federal 

Claims denied PAI’s motion, granted the government’s 

and ITP’s motions, and dismissed PAI’s complaint. See

PAl Corp., 2009 WL 3049213, at *11. PAI timely appealed to this court. We have jurisdiction to review final 

decisions of the Court of Federal Claims pursuant to 

28 U.S.C. § 1295(a)(3). 

DISCUSSION

We review rulings on motions for judgment on the 

administrative record de novo. Norfolk Dredging Co. v. 

United States, 375 F.3d 1106, 1108 (Fed. Cir. 2004). We 

also review factual findings based on the administrative 

record for clear error. Blue & Gold Fleet, L.P. v. United 

States, 492 F.3d 1308, 1312 (Fed. Cir. 2007). In a bid 

protest case, an agency’s decision to award a contract 

must be upheld unless it is “arbitrary, capricious, an 

abuse of discretion, or otherwise not in accordance with 

law.” Bannum, Inc. v. United States, 404 F.3d 1346, 1351 

(Fed. Cir. 2005). The court must determine whether “(1) 

the procurement official’s decision lacked a rational basis; 

or (2) the procurement procedure involved a violation of 

regulation or procedure.” Weeks Marine, Inc. v. United 

States, 575 F.3d 1352, 1358 (Fed. Cir. 2009). 

Contracting officers “are entitled to exercise discretion 

upon a broad range of issues confronting them in the 

procurement process.” Impresa Construzioni Geom. 

 2 PAI also challenged at the trial court DOE’s 

technical and price evaluation; however, those issues are 

not raised on this appeal. 
PAI CORP v. US 8

Domenico Garufi v. United States, 238 F.3d 1324, 1332 

(Fed. Cir. 2001) (internal quotation marks omitted). 

Accordingly, procurement decisions are subject to a 

“highly deferential rational basis review.” 

CHE Consulting, Inc. v. United States, 552 F.3d 1351, 

1354 (Fed. Cir. 2008) (internal quotation marks omitted). 

Applying this highly deferential standard, the court must 

sustain an agency action unless the action does not 

“evince[ ] rational reasoning and consideration of relevant 

factors.” Advanced Data Concepts, Inc. v. United States, 

216 F.3d 1054, 1058 (Fed. Cir. 2000) (alterations added). 

The issue before us is whether an organizational conflict of interest is so pervasive as to have created an 

advantage to one bidder over the others, and whether the 

contracting officer failed to exercise proper discretion and 

to follow proper procedures in making the determination 

that no organizational conflict of interest existed. The 

Federal Acquisitions Regulations (“FAR”) recognize that 

“the identification of [organizational conflicts of interest] 

and the evaluation of mitigation proposals are factspecific inquiries that require the exercise of considerable 

discretion.” Axiom Res. Mgmt. v. United States, 564 F.3d 

1374, 1382 (Fed. Cir. 2009) (citing 48 C.F.R. § 9.505). 

FAR requires that “[e]ach individual contracting situation 

should be examined on the basis of its particular facts and 

the nature of the proposed contract. The exercise of 

common sense, good judgment, and sound discretion is 

required in both the decision on whether a significant 

potential conflict exists and, if it does, the development of 

an appropriate means for resolving it.” 48 C.F.R. § 9.505 

(2004); see also Axiom, 564 F.3d at 1382 (citing ARINC 

Eng’g Servs. v. United States, 77 Fed. Cl. 196, 202 (2007) 

(“The responsibility for determining whether such unequal access exists and what steps should be taken in 
9 PAI CORP v. US

response thereto rests squarely with the contracting 

officer.”)). 

This court will not overturn a contracting officer’s determination unless it is arbitrary, capricious, or otherwise 

contrary to law. John C. Grimberg Co. v. United States, 

185 F.3d 1297, 1300 (Fed. Cir. 1999). To demonstrate 

that such a determination is arbitrary or capricious, a 

protester must identify “hard facts”; a mere inference or 

suspicion of an actual or apparent conflict is not enough. 

C.A.C.I., Inc.-Fed. v. United States, 719 F.2d 1567, 1581 

(Fed. Cir. 1983); Filtration Dev. Co., LLC v. United States, 

60 Fed. Cl. 371, 380 (2004) (holding that the disappointed 

bidder failed to provide “any factual basis” to establish the 

existence of an organizational conflict of interest). 

PAI’s sole argument of legal error on appeal is that 

the contract award to ITP is unlawful because the contracting officer failed to comply with the applicable FAR 

in issuing the solicitation. Specifically, PAI alleges 

that the contracting officer’s organizational conflict of 

interest analysis violates 48 C.F.R. §§ 9.504(a) and 

9.506(b). PAI asserts that, in order to comply with these 

regulations, the contracting officer is required to (1) 

analyze any type of conflict that may arise during the 

procurement, including apparent or potential conflicts, 

and (2) document in writing a plan to neutralize any type 

of conflict before a solicitation is issued. However, 

PAI’s argument conflates the requirements of the two 

regulations. 

Section 9.504(a) requires that a contracting officer “(1) 

[i]dentify and evaluate potential organizational conflicts 

of interest as early in the acquisition process as possible; 

and (2) [a]void, neutralize, or mitigate significant potential conflicts before contract award.” 48 C.F.R. § 9.504(a) 

(emphasis added). This regulation requires a contracting 
PAI CORP v. US 10

officer to identify and evaluate potential conflicts in the 

early stages of the acquisition process. Section § 9.504(a) 

does not require that this preliminary analysis be documented in writing, but if a potential conflict is identified, 

the regulation specifies that the contracting officer must 

avoid, neutralize, or mitigate any “significant potential 

conflicts” before the contract award. Id. § 9.504(a). 

A significant potential conflict is one which provides the 

bidding party a substantial and unfair competitive advantage during the procurement process on information or 

data not necessarily available to other bidders. See

ARINC, 77 Fed. CI. at 202. Section 9.504(a) therefore 

requires mitigation of “significant potential conflicts,” but 

does not require mitigation of other types of conflicts, 

such as apparent or potential non-significant conflicts. 

The contracting officer does have considerable discretion 

in determining whether a conflict is significant. Moreover, the FAR provides a contracting officer with considerable discretion to conduct fact-specific inquiries of 

acquisition proposals to identify potential conflicts and to 

develop a mitigation plan in the event that a significant 

potential conflict exists. 48 C.F.R. § 9.505; see also Axiom, 

564 F.3d at 1382. 

In contrast to § 9.506(a), § 9.506(b) specifies a unique 

documentation requirement once a “significant potential 

organizational conflict” is deemed to exist. 

48 C.F.R. § 9.506(b). This regulation requires that, in the 

event “the contracting officer decides that a particular 

acquisition involves a significant potential organizational 

conflict . . . , the contracting officer shall, before issuing 

the solicitation, submit . . . [a] written analysis, including 

a recommended course of action for avoiding, neutralizing, 

or mitigating the conflict . . . .” Id. (emphasis added). 

Moreover, § 9.506(b) requires that, if the contracting 

officer makes such a determination, the written analysis 
11 PAI CORP v. US

be approved by the chief of the contracting office. Id. 

This regulation requires a written analysis, but only for 

“significant potential conflict[s].” Id. (alteration added). 

Thus, the contracting officer is not required to document 

in writing or submit for approval a plan to neutralize 

apparent or potential conflicts, which in her discretion 

and judgment are deemed not to be significant. 

In this case, the contracting officer fully complied with 

the FAR requirements. First, the contracting officer 

timely identified and evaluated any potential conflicts in 

compliance with § 9.504(a). After GET filed the agencylevel protest in July 2008, the contracting officer pursued 

a number of steps to resolve any potential conflicts, including narrowing the technical scope of the solicitation, 

providing to the potential offerors additional information 

regarding the OST support services contract, and requiring that each potential offeror certify that its participation in the procurement did not create any organizational 

conflicts of interest. The contracting officer also completed an additional and comprehensive conflicts investigation in June 2009. In a written memorandum, the 

contracting officer noted that she had thoroughly reviewed the offerors’ submissions regarding any potential 

organizational conflicts of interest. The contracting 

officer determined that no significant potential conflict 

existed that would preclude an award of the OST support 

services contract to ITP. Furthermore, because the contracting officer determined that no significant potential 

conflict existed, she was not required to submit a written 

analysis pursuant to § 9.506(b), nor was she required to 

obtain approval from the chief contracting officer for 

adjustments to the solicitation. In light of the considerable discretion given to contracting officers in identifying 

and mitigating significant potential conflicts, we agree 
PAI CORP v. US 12

with the trial court that the contracting officer in this case 

complied with the FAR requirements. 

Moreover, PAI failed to establish that there was any 

significant potential conflict that provided ITP with an 

unfair competitive advantage during the procurement. 

See ARINC, 77 Fed. Cl. at 202. PAI failed to introduce 

any evidence before the trial court showing that ITP 

gained a substantial and unfair competitive advantage 

through unequal access to information. See C.A.C.I., 

719 F.2d at 1581 (stating that a disappointed bidder must 

identify “hard facts” to overturn an agency’s award of a 

contract). Moreover, PAI’s bare allegation that ITP and 

Wackenhut had a prior contractual relationship with OST 

is insufficient to show a significant potential conflict. Id. 

“The mere existence of a prior or current contractual 

relationship between a contracting agency and a firm does 

not create an unfair competitive advantage, and an 

agency is not required to compensate for every competitive advantage gleaned by a potential offeror’s prior 

performance of a particular requirement . . . .” ARINC, 77 

Fed. Cl. at 203; see also Ala. Aircraft Indus. Inc.-

Birmingham v. United States, 83 Fed. CI. 666, 686 (2008) 

(holding that incumbent status by itself is insufficient to 

create an organizational conflict of interest). Accordingly, 

we find that PAI failed to establish the existence of a 

significant potential conflict and thus failed to show that 

the integrity of the procurement was compromised. 

AFFIRMED