# In th e United States Court of Federal Cl aims

No. 14-307C (F iled Under Seal: November 19, 2014) (Reissued for Publication: November 26, 2014) *

************************************* SAVANTAGE F I

NANCI AL

SERVI CES, * I NC., *

* Plaintiff, * B id Protest; Motion to Vacate; Motion for

* L eave to F ile an Amended Complaint;

v. * F oman v. Davis; F utility ; Ripeness

* THE UNI TED STATES, *

* Defendant. *

*************************************
Timothy F . Noelker, St. L ouis, MO, for plaintiff.

W illiam J . Grimaldi, United States Department of J ustice, W ashing ton, DC, for defendant.

OP INION AND ORDER

SWEENEY , J udg e

I n an Aug ust 26, 2014 Opinion and Order, the court dismissed this bid protest as moot. The following day
, plaintiff Savantag e F inancial Services, I nc. moved to vacate the court’s decision and for leave to amend its complaint. Alternatively
, plaintiff moved to amend the protective order to allow it to retain protected information for additional time and to use that protected information in subsequent, related protests. Defendant opposes plaintiff’s motions. F or the reasons set forth below, the court g rants in part and denies in part plaintiff’s motion to vacate the court’s decision and amend its complaint, and denies as moot plaintiff’s motion to amend the protective order.

I. BACK G ROUND
Plaintiff is one of five companies that sell financial manag ement software sy stems and related services to the federal g overnment. United States Immig ration and Customs Enforcement (“I CE”), a component of the United States Department of Homeland Security (“DHS”),

* The court provided the parties with an opportunity to sug g est redactions to this ruling
, but in a November 25, 2014 joint status report, they indicated that no redactions were necessary

.neg otiated both a contract with plaintiff for its software and services and a license for all other

DHS components to use plaintiff’s software and services. As of April 2014, plaintiff’s software and services were used by the following DHS components: I CE, United States Citiz enship and I mmig r a tion Services, the National Protection and Programs Directorate, the Science and Technolog y

Directorate, the Office of Health Affairs (“OHA”), United States Visitor and I mmig r a nt Status Technolog y , and the Office of the Secretary and Under Secretary

for Manag ement.
Other DHS components used financial manag ement software and related services from one of the four other companies; of particular importance in this protest is the use of SAP’s software by

United States Customs and B order Protection (“CB P”). CB P’s license with SAP,

ex e cuted prior to the creation of DHS, did not contemplate that the software would be used by any entity other than CB P and did not g rant CB P the authority to license the software to another entity

. Over the previous decade, DHS twice attempted to implement a department-wide update of its financial manag ement software sy stems. The first effort was abandoned in 2006 and the second effort was cancelled in early 2011. DHS’s current plan is to moderniz e its financial manag ement software sy stems on a decentraliz ed, component-by -component basis.

I n early 2013, plaintiff beg an to hear rumors that OHA was planning to switch from its software to the software offered by SAP, and that OHA, as the smallest DHS component, was to serve as the prototy

pe for switching

all DHS components to the SAP software. Plaintiff investig ated these rumors, but was unable to obtain confirmation from DHS.
Plaintiff eventually

obtained concrete information reflecting that OHA had ceased using its software. I t interpreted this information as evidence that OHA was proceeding under CB P’s

ex isting license with SAP, and by doing so, had obtained new financial manag ement software and services via a sole-source procurement. Plaintiff also understood this information to mean that OHA’s use of SAP’s software pursuant to CB P’s license was the result of CB P being treated as a shared service provider. However, plaintiff was unable to find any evidence that OHA complied with the relevant Office of Manag e ment and B udg et (“OMB ”) requirements by conducting an alternatives analy sis or preparing a justification supporting its use of SAP’s software through CB P.

I n the absence of any

evidence that OHA conducted a competition to acquire SAP software and associated services, plaintiff filed this bid protest. I n its complaint, plaintiff set forth three claims for relief, all of which concerned the mig r ation of OHA from its software to SAP’s software. I

n addition, the relief plaintiff soug ht in its complaint was ex pressly limited to preventingOHA from mig rating from I CE to CB P without DHS first comply ing with the relevant statutory

and reg ulatory requirements. After plaintiff filed its motion for judg ment on the administrative record, OHA initiated corrective action by cancelling

the proposed mig ration of its financial manag ement software and related services from I CE to CB P, and proclaimingits

-2-intent to re-evaluate its options for obtaining the required services. Defendant according ly moved to dismiss the protest as moot. The court g ranted defendant’s motion in its Aug ust 26, 2014 Opinion and Order, holding that because the claims and relief described in plaintiff’s complaint pertained only

to OHA’s proposed mig ration, the corrective action described by defendant rendered plaintiff’s protest moot.
The following day
, plaintiff moved to vacate the court’s decision and for leave to amend its complaint to “challeng e the DHS actions and alleg ed justifications setting the stag e for other planned component mig rations.” Mot. 4-5; see also id. at 1-2 (sug g esting that DHS had a “larg er plan to mig rate many , if not all, of the DHS components to the SAP sy stem used by CB P”), 6 (“DHS offices and components have already made procurement decisions and are proceeding with implementation of the SAP sy stem throug hCB P–without ever holding a competition.”); Pl.’s Resp. Mot. Dismiss 8 (“There can be no doubt that Savantag e is challeng ing the DHS’s practice of selecting a favored financial manag ement sy stem and attempting throug h different means to move DHS components–in every case those components that use the Savantag e Altimate/F F MS sy stem–to that favored sy stem without adhering to [ statutory and reg ulatory ] requirements.”). I

n the alternative, plaintiff requested that the court amend the protective order to allow it to retain protected information for additional time and to use that protected information in subsequent, related protests. The court directed defendant to respond to plaintiff’s motions and provide affidavits or declarations from the responsible individuals addressing (1) whether the DHS components that use plaintiff’s software have reached a final decision reg arding the procurement of future financial manag ement software sy stems and related services, (2) whether DHS made a decision to mig rate all of its components to SAP’s software by using CB P as a shared service provider, and (3) if DHS made such a decision, whether that decision has been reversed. Defendant according ly responded to plaintiff’s motion, attaching a declaration from J e ffrey

B obich, DHS’s Director of F inancial Manag ement.

I n his declaration, Mr. B obich addressed the topics raised by the court, indicatingthat the DHS components that use plaintiff’s software had not reached a final decision reg arding the procurement of future financial manag ement software sy stems and related services, and that DHS has never made a decision to mig rate all of its components to SAP’s software by using CB P as a shared service provider. B obich Decl. ¶¶ 3, 10. Mr. B obich also described DHS’s financial moderniz ation process. I d. ¶¶ 4-9. According to Mr. B obich, the first step of this process is a DHS component’s preparation of an alternatives analy sis, which is “the main document that identifies alternat[ ive] solutions and analy z es/compares alternative acquisition approaches or products based on cost, risk and capability ,” and contains a recommendation for whether the component will use a federal shared service provider or a commercial shared service provider (no other options were described). I d. ¶ 5; accord id. ¶ 6. This document must then be approved by both the Component Acquisition Ex ecutive and the F inancial Sy stems Moderniz ation Ex ecutive Steering Committee (“F SM ESC”) chair before the component can select a discovery partner from a list of preapproved federal shared service providers. I d . ¶¶ 6-7. Upon the approval of the chosen federal shared service provider, the component and the provider enter the discovery phase, duringwhich the component ascertains whether the approach recommended in the

-3-alternatives analy sis is viable. I d . ¶¶ 7-8. At the conclusion of the discovery phase, the component and its partner jointly determine whether to proceed with implementation. I d. ¶ 8. I f they decide to proceed, the decision must be approved by at least three other g overnment entities–F SM ESC, the Office of F inancial Innovation and Transformation (“F I T”) at the United States Department of the Treasury, and OMB –before it is submitted to the DHS Acquisition Review B oard for final approval. I d . ¶¶ 8-9. I f such approval is obtained, the component can proceed with implementation. I d. ¶ 9.

Plaintiff addressed Mr. B obich’s declaration in its subsequently filed reply , and the court, finding oral arg

ument unnecessary , is prepared to rule.

II. DISCUSSION

A. The Court P ossesses Discretion to G rant P laintif f ’s Motion to Vacate the Court’s D ecision and f

or Leave to F ile an Am ended Com plaint

I n its motion, plaintiff requests that the court vacate its Aug ust 26, 2014 Opinion and Order and then allow plaintiff to amend its complaint so as to render its protest not moot. Plaintiff bases its request on Rule 15(a)(2) of the Rules of the United States Court of F ederal Claims, which allows parties to amend their pleading s with the court’s leave, and indicates that “[ t] he court should freely g ive leave when justice so requires.” Plaintiff finds further support for its request in the decision of the United States Supreme Court (“Supreme Court”) in F oman v. Davis, 371 U.S. 178 (1962). In that case, the plaintiff filed a complaint in which she alleg ed a breach of contract. I d. at 179. The district court dismissed the complaint for failure to state a claim upon which relief could be g ranted. I d. The following day , the plaintiff filed motions to vacate the judg ment and to amend her complaint to add an alternat ive theory of recovery

– q uantum meruit. I d. The district court denied those motions. I d . On appeal, the Supreme Court ex plained that “[ i] f the underly ing facts or circumstances relied upon by a plaintiff may

be a proper subject of relief, he oug ht to be afforded an opportunity to test his claim on the merits.” I d. at 182. I t therefore held:

I n the absence of any

apparent or declared reason–such as undue delay , bad faith or dilatory

motive on the part of the movant, repeated failure to cure deficiencies by amendments previously

allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc.–the leave soug ht should, as the rules require, be ‘freely g iven.’

I d.
Defendant contends that plaintiff’s motion is without merit due to plaintiff’s failure to alleg e an error of law or mistake of fact justify ing vacatur. However, in lig ht of the Supreme Court’s decision in F oman, this contention is unavailing . There is no sug g estion in F oman that the plaintiff’s motions were based on an error in the district court’s decision. See also id. at 179

-4-(indicating that the plaintiff separately appealed the district court’s dismissal of her complaint). Rather, the implication is that the plaintiff’s motions were merely aimed at allowing her to pursue a new leg al theory . See id. at 182 (“As it appears from the record, the amendment would have done no more than state an alternative theory for recovery .”). According ly , it is within the court’s discretion to g rant plaintiff’s motion in the absence of an alleg a tion that the court’s decision was factually or leg ally erroneous.

B. P laintif

f Should Be G iven Leave to Am e nd Its Com plaint

To determine if it should ex e rcise its discretion, the court ex amines whether allowing plaintiff to file an amended complaint is in the interest of justice. Plaintiff arg ues that none of the possible reasons noted by the Supreme Court in F oman for deny ing leave to amend a pleading is implicated in this protest. Defendant disag r ees, contending that amendment of plaintiff’s complaint would be futile because the new claims proposed by plaintiff would be unripe. Upon a review of the parties’ briefs, the administrative record, and, most particularly
, Mr. B obich’s declaration, the court is unable to conclude that amendment would be futile on ripeness g r ounds.

1. Ripeness
A claim is not ripe for judicial review when it is conting ent upon future events that may or may not occur. Thomas v. Union Carbide Ag ric. Prods. Co., 473 U.S. 568, 580-81 (1985). The ripeness doctrine “prevent[ s] the courts, throug h avoidance of premature adjudication, from entang ling themselves in abstract disagreements over administrative policies, and also to protect the ag encies from judicial interference until an administrative decision has been formaliz ed and its effects felt in a concrete way by the challeng ing parties.” Abbott L abs. v. Gardner, 387 U.S. 136, 148-49 (1967), overruled on other g rounds by Califano v. Sanders, 430 U.S. 99 (1977).

I n determining whether a claim is ripe for judicial review, courts must “evaluate both the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration.” Abbott L abs., 387 U.S. at 149. The first prong of the ripeness analy sis is not satisfied unless “the challeng ed ag ency action is final.” Tokyo Kikai Seisakusho, L td. v. United States, 529 F .3d 1352, 1362 (F ed. Cir. 2008); accord NSK, L td. v. United States, 510 F .3d 1375, 1384 (F ed. Cir. 2007) (citing Abbott L abs., 387 U.S. at 149). A final ag e ncy action display s two characteristics. “F irst, the action must mark the ‘consummation’ of th e ag ency ’s decisionmaking process–it must not be of a merely tentative or interlocutory nature.” B ennett v. Spear, 520 U.S. 154, 177-78 (1997) (citation omitted). “[ S] econd, the action must be one by which ‘rig hts or oblig ations have been determined,’ or from which ‘lega l consequences will flow.’” I d. at 178 (citation omitted). The second prong of the ripeness analy sis is satisfied when the challeng ed ag ency action has an immediate, severe impact on the plaintiff. Gardner v. Toilet Goods Ass’n, 387 U.S. 167, 170 (1967).

-5-2. The Court Cannot Conclude That Am ending the Com plaint Would Be F utile on Ripeness G rounds
As noted above, plaintiff asserts that in its amended complaint, it intends to challeng e the actions taken by

DHS components to moderniz e their financial manag ement software sy stems, alleg ing that those actions violated statute and reg

ulation. I n support of its contention that its proposed claims would be ripe, plaintiff orig inally relied on a F ebruary

2013 presentation contained in the administrative record that describes the status of eig h t DHS components in their moderniz ation efforts. Of particular note, this presentation reflects that the United States Coast Guard and the Transportation Security Administration had completed their alternatives analyses, and that the Domestic Nuclear Detection Office, I CE, and the F ederal L aw Enforcement Training Centers were in the process of completing their alternatives analy ses:
USCG: Completed core competency study , established business process reeng ineeringteam, completed a Course of Action (COA) that determined [ shared service provider] as the path forward; briefed OMB and Treasury
TSA: Completed Alternatives Analy sis (AA), determined [ shared service provider] as the path forward; will brief the F SM ESC in March

DNDO: W orking on an AA

I CE: W orking on their COA

. . . .

F L E TC: F inaliz ing AA; nex t step is to brief OMB
Administrative R. 489; see also id. at 492 (sug g esting that the initial acquisition phase for a number of DHS components would conclude by the end of fiscal y ear 2014, i.e., September 30, 2014). Plaintiff interprets the information included in this presentation as evidence that at least some DHS components have decided how to procure a new financial manag ement software sy stem, and have embarked on the procurement process.
Plaintiff found further support for the ripeness of its proposed claims in Mr. B o bich’s declaration. Mr. B obich stated that the alternatives analy ses conducted by DHS components would contain a recommendation only for the use of either a federal shared service provider or a commercial shared service provider; no other option was available. This statement is consistent with a memorandum relied upon by Mr. B obich in his declaration–OMB Memorandum M-13-08, “I mproving F inancial Sy stems Throug h Shared Services”–in which all federal ag encies are directed, ex cept in limited circumstances, to use a shared service provider when moderniz ing

-6-their financial manag ement software sy stems. 1 I d. at 3589. F urther, Mr. B obich asserted that

DHS components would be required to select a discovery partner from a list of preapproved federal shared service providers; he did not indicate that a commercial shared service provider could be selected. Mr. B obich’s assertion is consistent with another memorandum that he relied upon in his declaration–“F I T Ag ency Moderniz ation Evaluation (F AME) Process, Guidance and Artifacts,” attached as an ex hibit to plaintiff’s reply

– w h ich indicates that all federal ag encies, when moderniz ing their financial manag e ment software sy stems, are required to evaluate established federal shared service providers and then mig rate their sy stems to a selected federal shared service provider. Pl.’s Ex . 1 at §§ 1.2, 2.1, 4. As plaintiff notes, it is not a federal shared service provider. And, plaintiff represents that it could not ascertain whether it would be considered a commercial shared service provider–Mr. B obich did not define the term and plaintiff could not locate any official criteria to be considered a commercial shared service provider. Moreover, even if it would be considered a commercial shared service provider, plaintiff argues, such desig nation mig ht be irrelevant because according to Mr. B o bich, once a component performs an alternatives analy sis, it can only

use a preapproved federal shared service provider, disqualify

ing plaintiff. Ultimately , contends plaintiff, it is clear from Mr. B obich’s declaration that DHS components have already decided to utiliz e a federal shared service provider when moderniz ing their financial manag ement software sy stems, and that they made that decision without adheringto the requirements set forth in subpart 6.3 of the F ederal Acquisition Reg u lation pertaining to “other than full and open competition” and/or subpart 17.5 of the F ederal Acquisition Reg ulation pertaining to “interag ency acquisition”; namely , the preparation of a justification or a determination and finding s. 2

I n responding to plaintiff’s motion, defendant narrowly construes plaintiff’s proposed claims, sug g esting that plaintiff only seeks to challeng e the alleg ed decisions by the DHS

1 W ith respect to the limited ex ception to using a shared service provider, the OMB memorandum provides:

[ A] g ency -specific approaches are discourag ed and will be considered for funding only in the rare situation in which an ag ency demonstrates, throug hits alternatives analy sis, that ex ceptional circumstances ex ist . . . that make the ag e ncy -specific approach clearly

preferable to [ a shared service provider] solution with respect to what is the best value for the F ederal Government.

Administrative R. 3591.

2 A footnote in the F I T memorandum attached to plaintiff’s reply reflects F I T’s understanding that the acquisition of financial manag ement software sy stems using federal shared service providers complies with the pertinent statutes and reg u lations. Pl.’s Ex . 1 at § 2.1 n.2. F I T’s understanding may be accurate. However, plaintiff’s proposed claims concern whether DHS and its components complied with those statutes and reg ulations–an inquiry

that necessarily

is not addressed by

F I T in its memorandum.

-7-components presently using plaintiff’s financial manag ement software sy stem to procure new software and related services, and/or DHS’s alleg ed decision to use CB P as the federal shared service provider for all of its components. As noted above, however, plaintiff’s proposed claims encompass more than these alleg ations. Moreover, plaintiff has cited evidence–the ex istence of completed alternatives analy ses–that supports its alleg a tion that at least one DHS component has reached a final decision on how it intends to procure a new financial manag ement software sy stem (i.e., throug hthe use of a shared service provider). I ndeed, the memoranda relied upon by Mr. B obich in his declaration reflect that OMB and F I T have left federal ag encies with little option but to pursue the use of a federal shared service provider when moderniz ing their financial manag ement software sy stems.
Given the substance of plaintiff’s proposed claims and the evidence cited in support of them, plaintiff may

be able to assert a viable, ripe claim that DHS, or one of its components, violated a “statute or reg

ulation in connection with a procurement or proposed procurement.” 28 U.S.C. § 1491(b)(1) (2012). This conclusion terminates the court’s inquiry
, because a plaintiff seeking to overcome an arg ument that the filing of an amended complaint would be futile need only establish that its proposed amendment “states a claim on which relief could be g ranted,” and offer “sufficient facts supporting the amended pleading that the claim could survive a dispositive pretrial motion.” Kemin F oods, L .C. v. Pig mentos Veg etales del Centro S.A. de C.V., 464 F .3d 1339, 1355 (F ed. Cir. 2006). 3 Plaintiff has satisfied this burden and therefore, in the interest of

3 Kemin F o ods, L .C. is a decision of the United States Court of Appeals for the F ederal Circuit (“F ederal Circuit”) in a patent case. See g enerally 464 F .3d at 1339-56. W hen the F ederal Circuit decides an issue in a patent case that does not involve patent law, it ty pically applies the law of the circuit in which the patent case arose. Midwest I ndus., I nc. v. Karavan Trailers, I nc., 175 F

. 3d 1356, 1359 (F ed. Cir. 1999) (en banc in relevant part), abrogated on other g rounds by

TrafF ix Devices, I

nc. v. Mktg . Display s, I nc., 532 U.S. 23, 28 (2001); Sun-Tek I ndus., I n c. v. Kennedy

Sky L ites, I n c., 856 F .2d 173, 175-76 (F ed. Cir. 1988). Normally , the F ederal Circuit’s ruling s on nonpatent issues in patent cases are not binding on the United States Court of F ederal Claims (“Court of F ederal Claims”) because they are not considered to be the law of the F ederal Circuit. United Med. Supply Co. v. United States, 77 F ed. Cl. 257, 265 (2007); cf. Ex x on Corp. v. United States, 931 F .2d 874, 877 n.4 (F ed. Cir. 1991) (noting that while it applied reg ional circuit law reg arding a procedural issue in a decision in a patent case, the reg ional circuit law it applied was “commonly accepted in federal jurisprudence, and should be considered the law of the F ederal Circuit as well”). I n Kemin F oods, L .C., the F e deral Circuit applied the procedural law of the United States Court of Appeals for the Eig hth Circuit. See 464 F .3d at 1354-55. I f the standard that the F ederal Circuit described in that decision is deemed inapplicable in this case, the court would apply the standard articulated in other decisions of the Court of F ederal Claims:

W h en futility

is asserted as a basis for deny ing a proposed amendment, . . . courts simply decide whether a party ’s proposed amendment is facially meritless and frivolous, i.e., “W here futility is proposed as a basis for deny ing amending a

-8-justice, should be g iven leave to file an amended complaint. 4

C. The Court Declines to Vacate Its August 26, 2014 Opinion and Order
Althoug h the court is g ranting plaintiff’s request to file an amended complaint in this bid protest, it is not prepared to vacate its Aug ust 26, 2014 Opinion and Order. As defendant correctly notes, plaintiff does not alleg e any error in the court’s decision declaring the claims in plaintiff’s complaint moot. And, the court knows no reason why its decision should be set aside–plaintiff’s claims were rendered moot by the OHA’s corrective action. According ly , rather than vacating

the entire decision, the court will strike the lang uag e from the conclusion of that decision directingthe entry of judg ment. This same lang uag e will be omitted from the version of the Aug ust 26, 2014 Opinion and Order that is being released to the public contemporaneously with this ruling

.
III. CONCLUSION

F or the reasons set forth above, the court G R ANTS IN P ART and DENIES IN P ART plaintiff’s motion to vacate the court’s Aug u st 26, 2014 Opinion and Order and for leave to amend its complaint. The court DENIES plaintiff’s motion to vacate, and instead STRIKES the following lang u ag e from its decision: “No costs. The clerk is directed to enter judg ment according ly .” I n addition, the court G RANTS plaintiff’s motion for leave to file an amended complaint. Plaintiff shall file its amended complaint no later than F riday, Decem ber 12, 2014

. Once the amended complaint is filed, the court will contact the parties to schedule a status conference to discuss further proceeding s. F inally , the court DENIES as moot plaintiff’s alternative motion to amend the protective order.

complaint, courts will discern whether a pleading is frivolous and insufficient on its face or has been adequately addressed in the prior complaint.”

St. Paul F ire & Marine I

ns. Co. v. United States, 31 F ed. Cl. 151, 155 (1994) (quoting Alaska v. United States, 15 Cl. Ct. 276, 280 (1988)); accord Katz in v. United States, 115 F ed. Cl. 618, 622 (2014); Delpin Aponte v. United States, 83 F ed. Cl. 80, 91 (2008); B rowder v. United States, 79 F ed. Cl. 178, 181 (2007). This standard imposes a less ex acting burden on the party seeking to amend a pleading

–one that plaintiff readily satisfies.

4 To be clear, the court does not conclude that plaintiff’s proposed claims are ripe or are otherwise viable or meritorious. The court merely concludes that there are sufficient facts, at this time, to overcome defendant’s contention that amending the complaint would be futile.

-9-The court has filed this ruling under seal. The parties shall confer to determine ag reed-to proposed redactions. Then, by no later than F riday, Decem ber 12, 2014 , the parties shall file a joint status report indicating their ag reement with the proposed redactions, attaching a copy of those pages of

the court’s ruling containing proposed redactions, w ith all proposed redactions clearly indicated

.
IT IS SO ORDERED. s/ Marg aret M. Sweeney MARGARET M. SW EENEY J udg e

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