# In the United States Court of Federal Claims
No. 22

- 1057
(Filed: March 30 , 2023 )

CAHABA SAFEGUARD ADMINISTRATORS, LLC,

Plaintiff,

v.
UNITED STATES , Defendant,

and
KARNA, LLC, and GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. ,

Defendant

- intervenor s

. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

Kevin Paul Connelly, Vedder Price P.C. , Washington, D.C. for plaintiff. With him on the briefs were Of Counsel Kelley E. Buroker, Tamara Droubi, and Jeffrey M. Lowry, Vedder Price P.C., Washington, D.C.
Stephen J. Smith, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washin gton, D.C. for defendant. With him on the briefs were Brian M. Boynton, Principal Deputy Assistant Attorney General, Patricia M. McCarthy, Director, and Eric. P. Bruskin, Assistant Director, Civil Division, United States Department of Justice, Washington, D.C

. Also with him on the briefs were Corey J. Thompson, Elise Harris, Joshua A. Roman, and Jorge Correa, Assistant Regional Counsel, Office of the Regional Counsel, Region IV, Department of Health and Human Services. With him at the hearing was Douglas Edelschick.
Craig A. Holman, Arnold & Porter Kaye Scholer , LLP , Washington, D.C. for defendant

intervenor Karna, LLC. With him on the briefs were Amanda J. Sherwood and Jessica Nejberger , Arnold & Porter Kaye Scholer , LLP , Washington, D.C. Post

- award bid protest; challenge to corrective action cancelling a solicitation2

Carla J. Weis s, Jenner & Block LLP, Washington, D.C. for defendant

- intervenor General Dynamics Information Technology, Inc. With her on the briefs were Noah B. Bleischer, Nathaniel E. Castellano , Moshe B. Broder and Aime J. Joo , Jenner & Block LLP, Washington, D.C.

O PINION AND ORDER
LETTOW, Senior Judge.

This case arises from the Center for Disease Control’s (“ CDC’s ”) decision to take corrective action and cancel a solicitation and award to Cahaba Safeguard Administrators, LLC (“C ahaba ”)

. The CDC issued a solicitatio n for third

- party administrator services for the World Trade Center Health Program. AR 145. 1 After making an award to C ahaba under a solicitation issued December 3, 2021, AR 2781

- 82 , two offerors who did not receive an award , General Dynamics Information Technology (“General Dynamics”) and Karna, LLC (“Karna”)
, filed bid protests with the Government Accountability Office (“ GAO ”) , AR 3258

- 59, 4155

. As a result, CDC announced that it would take corrective action by cancel ing the solicitation and award to Cahaba

. See AR 4489, 4491, 4497. Cahaba filed a protest in this court on August 22, 2022 , challenging CDC’s decision to take corrective action and asking the court to grant declaratory and injunctive relief

. Compl. , ECF No. 1. The government agreed to voluntarily stay the corrective action through April 14, 2023

. See Joint Status Report at 2, ECF No

. 41; Hr’g Tr. 16:17

- 23 (Aug

. 25, 2022). Given the stay, CDC entered a bridge contract with Karna, which ends in May 2023 but includes an option to extend for six months ; Karna is the current bridge contract holder and the contract incumbent. See Hr’g Tr. 11:2 to 12:23 , 15:10

- 15 (August 25, 2022) ; Def.

- Intervenor Karna LLC ’s Mem. Of Law in Opp’ n to Pl.’s Mot. for J. on the Administrative R. and Cross

- Mot. for J. on the Administrative R. (“Karna’s Cross

- Mot .”) at 9, ECF No. 53

- 1

.
T he court held an initial status conference on August 25, 2022, at which point t he government had requested a remand to CDC

. See Status Conference Order of August 23, 2022, ECF No. 10; Def.’s Partially Unopposed Mot. for Voluntary Remand (“Def.’s Mot. for Remand”), ECF No. 17

. 2 The court granted defendant’s motion to remand after the initial status conference. See Order of August 25, 2022 (“Remand Order”), ECF No. 19 . CDC thereafter issued a r econsideration m emorandum on November 30, 2022 , advising that it had decided to cancel the solicitation, terminate the award to Cahaba , and issue a new solicitation. Recons

. Mem

. at 1 , ECF No. 39. Cahaba then amended its complaint to include challeng e s to CDC’s

1 The administrative record is paginated consecutively and will be cited as “AR __.”

2 CDC initially announced that it would take corrective action by canceling the award and issuing a new solicitation, but it never took such action. Instead, it asked to reconsider its decision to take corrective action on remand and agreed to a voluntary stay until Apri l 14, 2023

. Hr’g Tr. 13:20

- 25 (Aug

. 25, 2022) ; Joint Status Report at 2

. CDC has not yet taken corrective action as of the date of the entry of this opinion.3

findings and conclusions in its reconsideration memorandum

. See First Am. Compl

. (“Am. Compl.”), ECF No. 43.
At issue in this bid protest are 1) whether CDC’s decision to take corrective action in its reconsideration memorandum was a new decision, 2) whether the reconsideration memorandum included a rational basis to take corrective action and whether it violated regulation or procedure, and 3) whether CDC’s decision s to cancel the solicitation, terminate the award to Cahaba , and issue a new solicitation were reasonable. See Pl.’s Mot. for J. on the Administrative R. (“Pl.’s Mot. ” ) at 1

- 2 , ECF No. 49

. Briefing has been completed, and a hearing was held on March 2 2 , 2023.

FACTS 3

Plaintiff submitted an offer to CDC’s s olicitation n o. 75D301

- 22

- Q

- 74251 for third

- party administrator services for the World Trade Center Health Program. The program provides benefits to treat certain health conditions experienced by first responders to the September 11 , 2001 terrorist attacks and survivors of New York City sites

. See AR 145; Am. Compl. ¶ 11

. On December 3, 202 1 , CDC issued a solicitation for third

- party administrators to provide “ C ontract M anagement, M ember S ervices, P rovider N etwork M anagement, M edical B enefit A dministration, C laims P rocessing, and D ata and B usiness I nformation M anagement

. ” See AR 130

- 31 , 150; Pl.’s Mot. at 2

- 3 . The awarded third

- party administrator would receive a one

- year contract starting on May 1, 2023 , with four one

- year option periods. See AR 184.

A. Solicitation and evaluation criteria
The solicitation involved two phases (Phase I and Phase II ) . AR 238

- 39 . Phase I included a t echnical

- c apabilities o verview and a p rior d emonstrated e xperience section. AR 238

- 39. The t echnical

- c apabilities o verview in volved a checklist inquiring about offerors’ fundamental capabilities, AR 240, including “existing utilization management platform [s] ” for reviews , AR 298

. The technical

- capabilities overview also in volved a discussion of the offerors ’ understanding of risk awareness and risk management and a draft contract management plan that , for example, addressed the offerors ’ management plan for subcontracting services. AR 238

- 41

. The p rior d emonstrated e xperience section involved a description of the offerors ’ past work with three relevant references

. See AR 238

- 41

.

3 The court’s findings of fact are based on the a dministrative r ecord. See Bannum, Inc. v. Un ited States , 404 F.3d 1346, 1357 (Fed. Cir. 2005) (“[T]he [c]ourt

. . . is required to make factual findings under [what is now 52.1 of the Rules of the Court of Federal Claims (“ RCFC ”) ] from the record evidence as if it were conducting a trial on the record.”).4

After reviewing Phase I proposals, CDC assigned offerors a rating of either h igh
c onfidence 4 or l ow c onfidence, 5 reflecting its view of the offerors ’ ability to successfully perform the contract requirements. AR 238, 247

. CDC also provided an “Advisory Down Select” notice to offerors , which included offerors’ assigned rating and a recommendation about whether the y should make Phase II submission s

. A R 238, 247

.
Phase I I included a t echnical

- a pproach o ral p resentation, an a dministrative s ubmissions and s upporting d ocumentation section , and a p ricing p roposal. AR 239. A week before the technical

- approach oral presentations, which were conducted v ia Microsoft Teams, offerors sent their PowerPoint presentations to CDC

. See AR 1360 , 1363

- 1484 , 1770

- 182 6 , 2099

- 2186 , 2542

- 91 , 4590. The t echnical

- a pproach o ral p resentation asked offerors to cover four technical

approach factors: 1) demonstration of technical solutions and systems, 2) transition in/out plan, 3) contract management approach, and 4) staffing plan and key personnel

. AR 242. For the t echnical

- a p proach o ral p resentation, the offerors ha d two hours to give their prepared presentation s

. CDC then took an hour to deliberate and prepare questions, after which the offerors participated in a two

- h our question and answer session “for further information exchange and clarity about the [o] ral [p] resentation.” AR 2 42. CDC did not record the oral presentations, but evaluators took notes during the presentations. AR 4590. Some of the notes captured proposal requirements that increased or decreased the evaluators’ rating of offerors’ success, but some of the notes c aptured only the questions asked, rather than the content of offerors’ answers

. See AR 4590 , 4620

- 23, 4635

- 37, 4863

- 65, 4874

- 75 , 4882, 4885

- 87 , 4992

- 93

. After the presentations, the evaluators made “on

- the

- spot” evaluations, which consisted of confidence ratings for each technical

- approach factor and an overall confidence rating for the technical

- approach oral presentation. See AR 2728 , 2736 , 2744 , 2751, 4861

- 5096. The
a dministrative s ubmissions and s upporting d ocuments included p ast p erformance q uestionnaires, resumes of k ey personnel, and disclosures from partners, subcontractors, and consultants. AR 242

- 43. The p ricing p roposal asked offerors to complete a Department of Health and Human Services subcontracting plan, a narrative of their price, a pricing proposal spreadsheet (including direct labor, materials and services, subcontracted items, travel, and other direct costs, and indirect costs), and a CDC p er

- m ember p er

- m onth p ricing t emplate for fixed

- price. See AR 243

- 44.
As p art of Phase II, CDC assigned offerors a rating of high confidence, some confidence, 6 or low confidence for each factor of the technical

- approach oral presentation; CDC then assigned offerors a rating of high confidence, some confidence, or low confidence for the

4 High confidence was defined as, “ The [g] overnment has high confidence that the [o] fferor understands the requirement, proposes a sound approach, and will be successful in performing the contract with little or no [g] overnment intervention. ” AR 133 2

- 3 3

.

5 Low confidence was define d as, “ The [g] overnment has low confidence that the [o] fferor understands the requirement, proposes a sound approach, or will be successful in performing the contract even with [g] overnment intervention.” AR 133 2

- 3 3

.

6 Some confidence was defined as, “ The [g] overnment has some confidence that the [o] fferor understands the requirement, proposes a sound approach, and will be successful in performing the contract with some [g] overnment intervention.” AR 2783.6

CDC stated that Cahaba’s “proposed approach, including labor hours, categories, rates, and other direct costs” were appropriate. AR 2779. Cahaba “included labor categories for [human resource] positions that are uncommon but are not inappropriate for this effort.” AR 2779. It also indicated that Ca h a b a had “included all tasks for the base period . . . . [and] [t] heir [ per

member per

- month ] pricing [was] deemed appropriate and in line with market research, industry average s [,] and [ an independent government cost estimate] .” AR 2779. Although CDC deemed Karna ’s pricing to be appropriate and its pricing and proposal and administrative requirements were given high confidence , AR 2780, 3163, it assigned Karna some confidence for its technical

approach oral presentation , AR , 2776 , 2779 , 3163

. 7 When discussing the best

- value recommendation, CDC noted that Cahaba’s “proposal is priced the highest out of all offerors

. However, [Cahaba’s] total pricing is comparable to both historical costs and [ an independent government cost estimate] for this requirement.” AR 2780.

C. Award

, protests, and announced corrective action

The t echnical

- e valuation p anel recommended Cahaba r eceive the award. AR 2776

- 77

. Cahaba was notified by CDC that it was selected on May 31, 2022. AR 2948. The three other Phase II offerors, Karn a, General Dynamics , and SPS, all protested the award; Karna and General Dynamics filed protests with GAO on July 20, 2022, and July 25, 2022, respectively

. AR 3258

- 59 , 415 5

. SPS filed a protest with the agency on July 25, 2022 . AR 442 3

. The unsuccessful offerors challenged multiple aspects of the award including the oral presentations and the records kept of it, the evaluation of the oral presentations , the evaluation of the pricing proposal and administrative requirements, and the best

- value tradeoff

. See AR 3258

- 64 , 4155

- 57 , 4423 , 4434

- 45

. CDC announced on August 8, 2022 that it would take correct ive action by canceling the award and issuing a new solicitation to make a new award. See AR 4489 , 4491. In its notice of its decision to take corrective action and request for GAO to dismiss the two protests, CDC did not provide any rational e for its de cision. AR 4489 , 4491. It stated, “The [a]gency will cancel the current award, issue a new solicitation for this requirement [,] and make a new award decision.” AR 4489
, 4491. Because of CDC’s decision to take corrective action , GAO and CDC dismissed th e three protests. AR 4497

- 98 , 4501.

D. Bid p rotest of corrective action
In response to CDC’s announcement that it would cancel the solicitation and award, Cahaba filed this bid protest on August 22, 2022. Compl

. Karna and General Dynamics then intervened as defendant

- intervenors. Order Granting Karna’s Mot. to Intervene, ECF No. 13; Order Granting General Dynamic s ’s Mot. to Intervene, ECF No. 16. The government filed a motion for voluntary remand on August 25 , 2022 , asking to reconsider its de cision to take corrective action . Def.’s Mot. for Remand. The court held an initial status conference on August 25, 2022, ECF No. 10, after which the court granted the motion to remand. See Remand Order

. 8

7 All four offerors who advanced to Phase II received an “acceptable” rating for their past perfor mance. AR 3142 , 3153 , 3163 , 3175.

8 At that initial conference, the court observed that CDC had issued “ almost no reasoning whatsoever for the cancellation of the award and the reinstitution of a procurement effort .” Hr’g Tr. 5:15

- 17 (Aug

. 25, 2022)

.7

During the initial status conference, CDC repr esented that it would not use the opportunity to reconsider its decision during remand as a pro forma exercise to add information and reasons to support its decision to take corrective action to the record. See Hr ’ g Tr. 6:2

- 24 (Aug

. 25, 2022). CDC also stated that it agreed to voluntarily stay corrective action and that because of the voluntary stay, it entered a bridge contract that ends on May 2023 but includes an option to extend for six months

. See Hr’g Tr. 15:10

- 15, 16:20

- 23 (Aug

. 25, 2022 ). Karna holds the bridge contract. See Hr’g Tr. 12:16

- 23 (Aug

. 25, 2022).

E. Remand to CDC and resulting reconsideration memorandum
The court remanded to CDC until November 30, 2022. Remand Order at 1 . The court directed CDC to “(1) reconsider its decision to take corrective action and take any further administrative actions consistent with that reconsideration; [and] (2) be authorized to consider any further information that the agency may gather dur ing the remand in accordance with any procedures the agency may establish for that purpose. ” See Remand Order at 1

- 2 , RCFC 52.2(b)(1)( A )

. On remand, CDC gave offerors a chance “ to address 1) whether taking corrective action is necessary and appropriate; and 2) the scope of potential corrective action, by providing a written submission responding to [an] attached list of questions.” See AR 4503. All four offerors made submission s. Recons

. Mem. at 1.
On November 30, 2022, CDC filed a r econsideration m emorandum

. See Recons

. Mem

. I n it, CDC represented that “ [a] fter conducting a thorough review and evaluation of whether to take corrective action, including consideration of the o fferors’ respective protest grounds and submissions, the [ a ] gency

. . . determined to undertake corrective action by cancelling the current award to [ C ahaba ] and pursuing a new contract award by issuing a [s] olicitation in order to ensure the integrity of this essential contract action. ” Id. at 1. Th e memorandum stated that it
was “ a new decision and supersedes the [a] gency’s original decision in this matter. ” Id. CDC explained that it decided to tak e corrective acti on because of the oral presentations and associated record, the potential application of unstated evaluation criteria, the agency’s binary evaluation of offeror s’ past performance, the price realism analysis, and the professional compensation analysis , as well as concerns that it could not defend against claims in a protest

. See i d

. at 1

- 4. The agency pointed to “the depth and breadth of the procurement issues raised by the offerors ,” including the technical, pricing, and past performance evaluations which could have affected the best

- value decision and thereby could have caused them prejudice. See i d. at 4. Given that CDC found persuasive offerors ’ concerns , it concluded that “ the [a ] gency believe s that cancellation of the award to [ C ahaba ] and the issuance of a new [s] olicitation open to all interested parties (and to other offerors) which more accurately defines the [a] gency’s expectations for proposal submission and clearly states the [a] gency’s evaluation criteria is reasonable and appropriate .” See i d.

F. Motion and cross

- motions for judgment on the administrative record

Cahaba filed its motion for judgment on the administrative record on February 3, 2023. Pl.’s Mot. Defendant , the government, and defendant intervenors, Karna and General Dynamics, filed their responses and cross

- motions for judgment on the administrative recor d on February 17 , 2023 . Def.’s Opp’n to Pl.’s Mot. for J. upon the Administrative R. and Cross

- Mot. for J.8

upon the Administrative R. (“Def.’s Cross

- Mot.”), ECF No. 52; Def.

- Intervenor’s Cross

- Mot. for J. on the Administrative R. (“General Dynamic s ’s Cros s

- Mot.”), ECF No. 50 ; Karna’s Cross

Mot. Cahaba filed its reply and response on February 28, 2023. Pl.’s Reply in Supp

. of its Mot. for J. on the Administrative R. and Opp’n to Def.’s and Def.

- Intervenors’ Mot s . for J. on the Administrative R. (“Pl.’s Re ply”), ECF No. 54. The government and defendant

- intervenors filed their replies and response on March 10, 2023

. S ee Def.’s Reply in Supp. of its Cross

- Mot. for J. upon the Administrative R. (“Def.’s Reply”), ECF No 56; Reply in S upp

. of Def.

- Intervenor’s [General Dynamics’ s ] Cross

- Mot. for J. on the Administrative R., ECF No 57; Def.

- Intervenor Karna’s Reply in Supp. of its Cross

- Mot. for J. on the Administrative R., ECF No. 55. As noted previously, a hearing on the cross

- motions were held on March 22, 2 023. The competing motions are ready for disposition.

STANDARDS FOR DECISION
Judgment on the a dministrative r ecord, pursuant to RCFC 52.1 , “is properly understood as intending to provide for an expedited trial on the record.” See Bannum, Inc. , 404 F.3d at 1356

. The rule requires the c ourt “to make factual findings

. . . from the record evidence as if it were conducting a trial on the reco rd .” Id. at 135 7

. “[ T ] he c ourt asks whether, given all the disputed and undisputed facts, a party has met its burden of proof based on the evidence in the record. ” Bae Sys. Norfolk Ship Repair, Inc. v. United States , 163 Fed. Cl. 217, 225 (2022) (quotin g Jordan Pond Co. v. United States , 115 Fed. Cl. 623, 630 (2014) )

. Generally, in an action brought pursuant to Section 1491(b) of the Tucker Act, the c ourt

“ review [ s ] “the agency ’ s actions according to the standards set forth in the Administrative Procedu re Act (“APA”)
, 5 U.S.C. § 706 .” See Nat ’ l Gov ’ t Servs., Inc. v. United States , 923 F.3d 977, 981 (Fed. Cir. 2019) (citing 28 U.S.C. § 1491(b)(4) ). Under the APA, the court determines whether an agency decision is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706 (2)(A). When applying this standard, the court decide s 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) (quoting PGBA, LLC v. United States , 389 F.3d 1219, 1225 (Fed. Cir. 2004) ) ; Dell Fed

. Sys., L.P. v. United States , 906 F.3d 982, 990 (Fed. Cir. 2018) (quoting Centech Grp., Inc. v. United States , 554 F

. 3d 1029, 1037 (Fed. Cir. 2009)). For the rational basis standard, t he agency must have “provided a cohere nt and reasonable explanation of its exercise of discretion , ” and the challenger bears the burden of showing that there was no rational basis for the decision. Del l Fed

. Sys. , 906 F.3d at 992 (quoting Banknote Corp. of Am. v. United States , 365 F.3d 1345, 1351 (Fed. Cir. 2004) ). This rational basis standard applies to an agency’s decision to take corrective action. Del l Fed

. Sys. , 906 F.3d at 991

- 92. Although the
c ourt’s review is deferential, it is not “toothless.” See Tolliver Group, Inc. v. Unit ed States , 151 Fed. Cl. 70, 109 (2020)

. For the violation of regulation or procedure standard, “ the disappointed bidder must show ‘ a clear and prejudicial violation of applicable statutes or regulations. ’ ” Impresa Construzioni Geom. Domenico Garufi v. United States (“Impresa”) , 238 F.3d 1324, 1333 (Fed. Cir. 2001) (quoting Kentron Hawaii, Ltd. V. Warner , 480 F.2d 1166, 1169 (D.C. Cir. 1973)); Latacore, Inc. v. United States Dep’t of the Navy , 19 F.3d 1346, 1356 (11 th Cir. 1994))

. To show prejudice, the challenger must show “that there was a ‘substantial chance’ it would have received the contract award but for the . . . errors in the bid process.” Bannum, Inc. , 404 F.3d at9

135 8 (quoting Info. Tech. & Applications Corp. v. United States , 316 F.3d 131 2, 1319 (Fed. Cir. 2003)); see Kiewit Infrastructure W

. Co. v. United States , 147 Fed. Cl. 700, 707 (2020) (requiring a showing of prejudice when challenging a cancellation decision).
When deciding whether to grant injunctive relief, the court “must consi der whether (1) the plaintiff has succeeded on the merits, (2) the plaintiff will suffer irreparable harm if the court withholds injunctive relief, (3) the balance of hardships to the respective parties favors the grant of injunctive relief, and (4) the pu blic interest is served by a grant of injunctive relief.” Centech Grp. , 554 F.3d at 1037

. ANALYSIS
The parties disagree about whether CDC’s decision to take corrective action by canceling the award to Cahaba and issuing a new solicitation had a rational basis and complied with the Federal Ac quisition Regulation (“FAR”)

.

A. CDC’s reconsideration memorandum is a new agency decision
The parties disagree about whether CDC’s reconsideration memorandum, which it filed after remand, is a new agency decision . Cahaba contends that CDC’s reconsideration memorandum is not a new decision and therefore avers that CDC’s reconsideration memorand um includes impermissible post

- hoc justifications. Pl.’s Mot. at 14. Meanwhile, CDC contends that it s reconsideration memorandum is a new decision and therefore is permitted to contain new rationales for corrective action

. Def.’s Cross

- Mot. at 11.

Whe n a court finds that “the grounds for agency action are inadequate, ‘a court may remand for the agency to do one of two things. First, the agency c an offer a fuller explanation of the agency’s reasoning at the time of the agency action.’ If it chooses th is route ‘the agency may elaborate’ on its initial reasons for taking the action, ‘but may not provide new ones.’ Alternatively, ‘the agency can deal with the problem afresh’ by taking new agency action. ‘An agency taking this route is not limited to its prior reasons.’” Biden v. Texas , 142 S. Ct. at 2528 , 2544 (2022) (quoting Dep’t of Homeland Sec. v. Regents of Univ. of Cal. , 140 S. Ct. at 1891 (2020)) (internal citations omitted). This is permitted even if the agency determines to take the
same corrective action that it initially took

. Biden v. Texas , 142 S. Ct. at 2546

- 47

. If an agency takes new agency action, it “ ‘ must comply with the procedural requirements for new agency action’

– but the benefit is that the agency is ‘not limited to its prio r reasons’ in justifying its decision.” Biden v. Texas , 142 S. Ct. at 2546 (quoting Regents , 140 S. Ct. at 1908).

CDC’s reconsideration memorandum is a new decision

. T herefore , CDC was not limited to expanding its rationale at the time of its original de cision and instead was permitted to offer new rationale s for its decision to take corrective action. The memorandum states, “This [r]econsideration [m]emorandum is a new decision and supersedes the [a]gency’s original decision in this matter.” Recon s

. Me m

. at 1. Although CDC’s initial award and first decision to take corrective action were procedurally and substantively flawed , its new decision on remand, not its initial decision, provides the basis for analysis

. See Biden v. Texas , 142 S. Ct. at 2544 , 2548

. For example, CDC’s initial award to Cahaba resulted from the technical evaluation10

panel’s recommendation memorandum , but, a lthough the panel’s memorandum states that Cahaba’s “approach is comprehensive, and clearly addresses all tasks and subt asks, ” AR 2776

- 77, the agency ’s best

- value analysis was minimal , to be charitable . It included statements such as that Cahaba’s price was “comparable to both historical costs and [ an independent government cost estimate] for this requirement

. ” See AR 27 70, 2780. In addition, CDC’s initial decision to take corrective action
, which it notified GAO of 18 days after Karna filed the first protest, provided no reasoning for the agency’s decision

. AR 4489 , 4491.

A fter considering offerors’ protest grounds and soliciting and considering offerors’ submissions during the remand , CDC announced that it decided to cancel its current award to Cahaba and issue a new solicitation in its reconsideration memorandum

. See Recon s

. Mem at 1

. In its new decision, CDC provided new rationales for taking corrective action. CDC reasoned that it would take corrective action because of the oral presentations and associated record, the potential application of unstated evaluation criteria, the agency’s binary evaluation of offerors’ past performance, the price realism analysis, and the professional compensation analysis . The agency had concerns that it could not defend against the protesters’ allegations in a protest

. See i d. at 1

- 5

. 9 Because CDC’s reconsideration me morandum was a new agency action, CDC was permitted to provide new rationale s for its decision to take corrective action. The decision and rational es provided in the reconsideration memorandum [, not the agency’s original solicitation and decision to take corrective action,] provide the proper basis for the court’s analysis.

B. CDC’s new decision to take corrective action had a rational basis and did not violate regulation or procedure
The parties disagree about whether CDC’s decision to take corrective action, as relayed in its reconsideration memorandum, had a rational basis and whether it violated regulation or procedure . Cahaba avers that even if CDC’s reconsideration memorandum is a new decision, it lack s a rational basis and violated regulation or procedure , Pl.’s Mot. at 18, 29, while CDC contends that the new decision has a rational basis , Def.’s Cross

- Mot. at 15 , and did not violate regulation or procedure, see Def.’s Reply a t 13.

CDC avers that corrective action is warranted because of the oral presentations and associated record, the potential application of unstated evaluation criteria, the agency’s binary evaluation of offerors’ past performance, the price realism analysi s, and the professional compensation analysis . The agency is concern ed that it could not defend against the se grounds in a protest. Recon s

. Mem

. at 1

- 4 . Cahaba argue s that none of the reasons offered by CDC to take corrective action have a rational basis.
The rational basis test requires that an agency “provide[] a coherent and reasonable explanation of its exercise of discretion” to take corrective action and the challenge r bears the

9 The initial reconsideration memorandum that CDC filed on November 30, 2022 was not signed, see Recon s

. Mem

. , but on February 17, 2023 the agency filed a version that was signed by the contracting officer, Michael Crow. Signed Recon s

. Mem

. , E CF 5 1

. Michael Crow was the author of the November reconsideration memorandum and was the contracting officer at the time of the decision

. Def.’s Cross

- Mot. at 11 n.2; see Hr’g Tr. 24:4

- 11 (March 22, 2023).11

burden of showing that there was no rational basis for the decision. Del l Fed

. Sys. , 906 F.3d at 992 (quoting Banknote Corp. , 365 F.3d at 1351)

. The court determines if the administrative record supports the agency’s rationales; the court nee ds to find a reasoned basis for corrective action. See Har

m onia Holdings Grp., LLC v. United States , 160 Fed. Cl. 674, 685

- 91 (2022); Raytheon Co. v. United States , 809 F.3d 590, 596

- 99 (Fed. Cir. 2015).

CDC’s corrective action was reasonable because of its analyses of price realism and professional compensation

. FAR 15.305 discusses an agency’s obligation to conduct a cost or price evaluation and states that “[t]he contracting officer shall document [it] .” 48 C.F.R. § 15.305. The record supports CDC’s contention that “[b]ecause the level of pricing detail expected and anticipated by the [a]gency was not clearly stated in the [s]olicitation,

. . . offerors that interpreted pricing proposal instructions to require less detail may have been prejudiced during the [a]gency’s pricing evaluation.” Recon s

. Mem

. at 4. CDC emphasized that the per

member per

- month template and solicitation’s instructions regarding it and other pricing details “did not clearly communicate the [a]gency’s pricing expe ctations and could have been interpreted differently by offerors.” Id. at 4. A lthough offerors were asked to complete the per

member per

- month template and to provide the cost/price for the fixed

- price contract line

- item numbers , see AR 1 1 8 , 248 , the sol icitation did not expand on the level of detail that should be included and did not state that the template should include the detail required in the pricing proposal spreadsheet, see AR 1 1 8 , 244, 248

. The record also supports the agency’s contention that this affected General Dynamics ’s evaluation , s ee AR 2779

- 80 , 2787 , Recons. Mem. at 4, despite Cahaba’s contention that General Dynamic s ’s score suffered from the information it submitted instead of a lack of clarity in the solicitation. See Pl.’s Mot. at 27

- 28. Karna may have suffered from the same shortcoming. See AR 2780. Because at least one offeror was improperly negatively affected by its lack of pricing detail, this could have affected the b est

value determination and ultimate award

. See Hr’g Tr. 21:5 to 22:12 (March 22, 2023). C orrective action is reasonable because of the solicitation’s p rice r ealism analysis.

CDC’s decision to take corrective action was also reasonable because of its f lawed professional compensation analysis . Under FAR 52.222

- 46 the government must evaluate “a total compensation plan setting forth salaries and fringe benefits proposed for the professional employees who will work under the contract.” 48 C.F.R. § 52.22

- 46 (a)

. In its reconsideration memorandum, CDC states that the “[s]olicitation instructions did not clearly define what information offerors were required to submit with their pricing proposals per FAR 52.222

- 46, nor did the a gency receive sufficient information from all offerors as part of their pricing proposal submissions to perf orm an adequate professional compensation analysis.” Recons

. Mem

. at 4. Although Cahaba avers that “in response to debriefing questions, the CDC clearly indicated that it considered the requirements of FAR 52.222

- 46,” Pl.’s Mot. at 28 (citing AR 3165) , 10 the citation does not support that CDC had the necessary information from offerors to conduct the required evaluation or that the agency actually conducted it . In addition, this

10 A response to a debriefing question states, “ The considerations of FAR 52.222

- 46 Evaluation of Compensation for Professional Employees, which is incorporated by reference in the solicitation at page 86, were taken into account during the [g] overnment’s pricing evaluation.” AR 3165. This, ho wever, is not supported by the record as a whole.12

statement was made before CDC identified the professional

- compensation analy sis error in its reconsideration memorandum. CDC’s corrective action was reasonable because of its flawed professional compensation analysis

. 11

C. Prejudice to Cahaba
The parties disagree about whether Cahaba was prejudiced by CDC’s decision to take correcti ve action, specifically to cancel the award and issue a new solicitation. Cahaba contends that it suffered prejudice because it was awarded the contract under the initial solicitation. Pl.’s Reply at 16

- 19. Defendant avers that Cahaba did not suffer pre judice. See Def.’s Reply at 15.
When alleging an agency’s corrective action violated regulation or procedure, “the disappointed bidder must show a clear and prejudicial violation of applicable statutes or regulations.” Impresa , 238 F.3d at 1333. To sh ow prejudice, the challenger must show “that there was a ‘substantial chance’ it would have received the contract award but for the . . . errors in the bid process.” Bannum, Inc. , 404 F.3d at 135 8 (quoting Info. Tech. & Applications Corp. , 316 F.3d at 1319 ) . Although Cahaba argues that it was prejudiced because it was awarded the contract under the initial solicitation which CDC decided to cancel, rather than amend, see Pl.’s Reply. at 17

- 18, CDC did not violate procedure or regulation. See supra at 12 n. 11 . In addition, not only did CDC give rational reasons to take corrective action based on errors in the solicitation and award, see supra at 10

- 12 , but also Cahaba will be able to make submissions to the new solicitation and be conside red by the agency. See Hr. Tr. 48:7 to 49:9 (March 22, 2023).

D. Scope of the corrective action
The parties disagree about the proper scope of CDC’s corrective action. Cahaba avers that even if CDC was permitted to take corrective action, CDC did not provid e a rational basis to cancel the award and issue a new solicitation

. S ee Pl.’s Mot. at 28

- 31

. CDC counters that its decision to cancel the award and issue a new solicitation that is open to both current offerors and new offerors is reasonable. See Def.’s Cross

- Mot. at 24

- 25

. An agency’s cance l lation will be upheld when “the record discloses a reasonable motivation for cance ll ation

. ” Veterans Contrac ting Grp., Inc. v. United States , 920 F.3d 801, 806 (Fed. Cir. 2019 ). The agency’s corrective action only needs to have a rational basis and the Federal Circuit has rejected efforts to apply a “‘ narrow targeting’ test to evaluate the appropriateness of a corrective action

. ” See Dell Fed. Sys. , 906 F.3d at 99 1

- 92

. The agency is

11 CDC’s decision to take corrective action did not violate regulation or procedure. See mLINQS, LLC v. United States , ___ Fed. Cl. ___, ___, 2023 WL 2366654 , at *28

- 30 (March 6, 2023) (upholding a cancel lation because the record provided a reasonable basis for it) ; Harmonia Holdings Grp. , 160 Fed. Cl. at 684

- 88 (reasons justifying the cancellation were grounded in the record)

. Cahaba contends that CDC’s decision to take corrective action violated FAR 15. 206 and FAR 15.305, Pl.’s Mot. at 29

- 3 1 , but CDC did not cite to either provision to support its decision to take corrective action and FAR 15.305 permit s an agency to “reject all proposals received in response to a solicitation[] if doing so is in the best interest of the [g]overnment

. ” 48 C.F.R. § 15.505(b).13

“not legally required to address every option [it could take for corrective action], but rather to provide a reasonable corrective action and adequately explain its reasoning for d oing so.” Id. at 998. CDC’s proposed corrective action is rationally related to the price realism and professional compensation defects

– which encompass both unclear solicitation instructions and the agency’s failure to complete the required professional compensation analysis

– as it explains in its reconsideration memorandum

. See Recons

. Mem. In addition, CDC did consider other forms of corrective action, such as re

- evaluating existing proposals, but determined that other forms of corrective action were insufficient because of the defects in the solicitation itself , for example

. See Def.’s Cross

- Mot. at 25.

CONCLUSION
For the reasons stated, the plaintiff’s motion for judgment on the administrative record is DENIED and the defendant’ s motion for judgment on the administrative record is GRANTED pending CDC’s cancelation of the award and solicitation

. 12 D efendant

- intervenors’ motion s for judgment on the administrative record are also GRANTED

. For the reasons stated, t he Clerk is directed to enter judgment for defendant and defendant

- intervenors

.
No costs.

It is so ORDERED

.

s/ Charles F. Lettow Charles F. Lettow Senior Judge

12 Because of the voluntary stay that is in place until April 1 4 , 2023 , Joint Status Report at 2, the solicitation is open

. See Sys. Application & Techs

. , Inc. v. United States , 691 F. 3d at 1383

- 84 (listing the requirements for ripeness and finding the Army’s announcement of its decision to take corrective action paired with language that led to lega l consequences was not moot).