In the United States Court of Federal Claims

BID PROTEST

No. 15-1015C

(Filed Under Seal: February 12, 2016 | Reissued: February 25, 2016)

*

AvKARE, INC.,

Plaintiff,

v.

THE UNITED STATES OF AMERICA,

Defendant.

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Keywords: Bid Protest; Contract

Disputes Act; Requests for 

Modification; Federal Supply 

Schedule; 48 C.F.R. § 515.408;

Commercial Sales Practices; 

Interpretation of Regulations; Plain 

Meaning; Lack of Good Faith; De 

Facto Debarment.

 

 

James S. Phillips, Argus Legal, LLC, McLean, VA, for Plaintiff, with whom were James 

S. DelSordo, Of Counsel, and Julie M. Nichols, Of Counsel. 

James W. Poirier, Trial Attorney, with whom were Benjamin C. Mizer, Principal Deputy 

Assistant Attorney General, Robert E. Kirschman, Jr., Director, and Martin F. Hockey, 

Jr., Assistant Director, Commercial Litigation Branch, United States Department of 

Justice, Washington, DC, for Defendant.

OPINION AND ORDER

KAPLAN, Judge.

This hybrid pre-award bid protest and breach of contract action is before the 

Court on the parties’ cross-motions for judgment on the administrative record. The 

plaintiff in the case, AvKARE, Inc., is in the business of purchasing pharmaceutical 

products in bulk from their manufacturers for purposes of repackaging and selling them

under the “AvKARE” label. AvKARE currently holds a Federal Supply Schedule (FSS)

contract with the Department of Veterans Affairs (VA) for the sale of such

pharmaceuticals. It brought this action to challenge: 1) the VA’s refusal to grant requests 

for modification of its existing FSS contract that would permit AvKARE to add certain 

 

* This Opinion was originally issued under seal, and the parties were given the 

opportunity to request redactions. Neither party requested redactions, and the opinion is 

now being reissued in full.
2

drugs to the FSS; and 2) its refusal to take further action on AvKARE’s proposal to 

renew its contract. 

The VA has refused to process the RFMs or give further consideration to 

AvKARE’s renewal offer because AvKARE has declined to provide the VA certain 

commercial sales practice (CSP) information about the suppliers of the pharmaceuticals 

that AvKARE sells. According to the government, pursuant to 48 C.F.R. § 515.408(b), 

which is incorporated into the Schedule 65 I B solicitation, AvKARE must provide CSP 

information about its suppliers because AvKARE is a “dealer/reseller” of the 

pharmaceuticals. AvKARE contends, however, that it is not a “dealer/reseller.” Rather, 

according to AvKARE, it is the “manufacturer” of the pharmaceuticals and, in any event, 

it was not required to provide its suppliers’ CSP data because its own sales of its

pharmaceutical products to the public are significant.

For the reasons set forth below, the Court concludes that it lacks jurisdiction over 

AvKARE’s claims concerning the denial of its requests for modification because 

AvKARE failed to file a claim with the contracting officer as is required to invoke this 

Court’s jurisdiction under the Contract Disputes Act. Those claims, accordingly, are 

DISMISSED. 

With respect to AvKARE’s bid protest, the Court concludes that under the 

applicable regulations AvKARE is not a “manufacturer” of the pharmaceutical products 

it is offering for sale. Rather, it is a “dealer/reseller.” As such, the VA’s decision to give 

no further consideration to AvKARE’s offer in the face of AvKARE’s flat refusal to 

provide manufacturers’ CSP data was neither arbitrary, capricious, nor contrary to law. It 

further concludes that the VA acted well within its discretion when it concluded that 

AvKARE’s sales of its products to the public were not significant. Finally, it concludes 

that the VA did not exhibit bad faith in considering AvKARE’s proposal and did not 

effect a de facto debarment of AvKARE from future VA contracts. Therefore, the 

government’s motion for judgment on the administrative record is GRANTED and 

AvKARE’s cross-motion is DENIED.

1

BACKGROUND

I. The VA’s Pharmaceutical Procurement Process

As the operator of the nation’s largest integrated health care system, the VA is a 

major purchaser of pharmaceuticals. See U.S. Gov’t Accountability Office, GAO 13-358, 

Prescription Drugs[:] Comparison of DOD and VA Direct Purchase Prices, at 4 (Apr. 

2013) (stating that “[i]n fiscal year 2012, VA’s prescription drug spending totaled about 

$4.2 billion”). To meet its needs and achieve economies of scale, the VA, under a 

delegation from the General Services Administration (GSA), administers an FSS contract 

vehicle—Schedule 65 I B—through which it establishes firm-fixed prices with 

 

1 AvKARE’s second motion to supplement the administrative record is likewise 

DENIED for the reasons set forth below.
3

pharmaceutical suppliers. See VA Schedule Program Overview, U.S. Department of 

Veterans Affairs (2014), www.va.gov/oal/docs/business/nac/fss

ContractorOverviewLibrary.zip; Schedule 65 I B Drugs, Pharmaceuticals, & Hematology 

Related Products, U.S. Department of Veterans Affairs, http://www.va.gov/oal/business/

fss/pharmaceuticals.asp (last visited February 11, 2016). Individual VA customers (such 

as VA hospitals) and other federal purchasers can then place orders directly with the 

supplier to meet their particular needs. See VA Schedule Program Overview, supra, at 4.

Several offices within the VA play a role in the pharmaceutical acquisition

program. See Doing Business with VA, U.S. Dep’t of Veterans Affairs, at 17 (Dec. 

2015), http://www.va.gov/osdbu/docs/doingBusinessWithVA_ReferenceGuideFULL.pdf. 

At the top level, the VA’s Office of Acquisition and Logistics (OAL) oversees the 

contracting process and “provides comprehensive acquisition support” for all of the VA’s 

healthcare services and products. Id.; see also Office of Acquisition and Logistics (OAL), 

U.S. Dep’t of Veterans Affairs, http://www.va.gov/oal/ (last visited February 11, 2016).

Within OAL, the VA’s National Acquisition Center (NAC) “supports [the] health care 

requirements of VA and other government agencies” by awarding and managing the 

variety of acquisition and delivery contracts that connect suppliers with government 

purchasers. Doing Business with VA, supra, at 17; see also National Acquisition Center, 

U.S. Dep’t of Veterans Affairs, http://www.va.gov/oal/about/nac.asp (last visited 

February 11, 2016).2 The VA’s Federal Supply Schedule Service, in turn, manages the 

NAC’s multiple award schedule (or FSS) contracts, including the schedule contract for 

pharmaceuticals. Doing Business with VA, supra, at 17; see also VA Federal Supply 

Schedule Service, U.S. Dep’t of Veterans Affairs, http://www.fss.va.gov/ (last visited 

February 11, 2016). Finally, the VA’s Office of the Inspector General (OIG) has a 

dedicated Office of Contract Review that “provide[s] preaward, postaward, and other 

requested reviews of vendors’ proposals and contracts.” See About the Office of Contract 

Review, U.S. Dep’t of Veterans Affairs, http://www.va.gov/oig/about/contractreview.asp (last visited February 11, 2016).

II. The Schedule 65 I B Solicitation

The VA maintains its Schedule 65 I B solicitation on a perpetually-open basis. 

See Administrative Record (AR) Tab 1 at 5–8 (“Read Me First” document describing the

process for obtaining a contract); id. Tab 2 at 84 (describing the “Consideration of Offers 

Under [the] Standing Solicitation”); see also Getting on Schedule, U.S. Dep’t of Veterans 

Affairs, http://www.va.gov/oal/business/fss/gettingOnSchedule.asp (last visited February 

11, 2016).

3

 

2 Other government agencies (such as the Department of Defense) may also place orders 

on contracts administered by the NAC. See National Acquisition Center, supra; VA 

Schedule Program Overview, supra, at 4.

3 The Schedule 65 I B solicitation is periodically updated, with the most recent update 

released on February 19, 2014. See AR Tab 2 at 13. The solicitation has also since been 

amended twice (on September 30, 2014, and December 31, 2014), but neither amendment 
4

Pursuant to the solicitation, after receiving an offer, the VA conducts an initial 

review and, if necessary, “asks for clarifying or additional information.” AR Tab 1 at 8.

Once it has received any additional information, the VA “conducts a price analysis and 

fully evaluates the proposal” before beginning price negotiations. See id. Through this 

process, the VA aims to “ensure the vendor is responsible” and that “the Government is 

receiving a fair and reasonable price.”4Id.

According to the solicitation, “Contracting Officers determine whether prices are 

fair and reasonable by comparing the prices/discounts that a company offers the 

government with the prices/discounts offered to commercial customers.” AR Tab 1 at 3.

To make this comparison, in accordance with GSA regulations that apply governmentwide, see 48 C.F.R. § 501.101, the VA “requires offerors to furnish commercial pricelists 

and disclose information regarding their commercial pricing/discounting practices.” AR 

Tab 1 at 3. This information is known as the offeror’s Commercial Sales Practice (CSP) 

information.

Pursuant to 48 C.F.R. § 515.408, the solicitation requires offerors to disclose

several types of CSP information. See AR Tab 5 at 197–204. First, the offeror must 

provide information about the prices it charges certain commercial customers for the 

same products it wishes to sell to the government.5Id. at 198. Second, the offeror must

disclose the amount of its sales to the general public for the previous year and its 

projected annual sales to the federal government during the life of the contract. AR Tab 4

at 200–01. 

Further, as provided by 48 C.F.R. § 515.408(b)(5), the solicitation requires 

additional CSP information from any offeror who is a “dealer/reseller without significant 

sales to the general public”—i.e., any offeror who is not a “manufacturer” and lacks 

significant commercial sales. Id. at 202. Such dealer/resellers must provide 

 

is relevant to this case. See 65IB Drugs, Pharms. & Hematology Related Prods. 

Solicitation Refreshment - M5-Q50A-03-R7, Federal Business Opportunities, 

https://www.fbo.gov/index?s=opportunity&mode=form&id=aa3281f6d159d44c0614ee6

42186758e&tab=core&_cview=1 (last visited February 11, 2016).

4 Although the firm-fixed prices agreed upon in these negotiations are considered “fair 

and reasonable,” government purchasers may (and, in many cases, must) conduct a 

second round of independent price negotiations when placing orders off the schedule. See

FAR 8.404(d) (“Although GSA has already negotiated fair and reasonable pricing, 

[purchasers] may seek additional discounts before placing an order.”); id. 8.405-4 

(“[Purchasers] may request a price reduction at any time before placing an order . . . .

However, the [purchaser] shall seek a price reduction when the order . . . exceeds the 

simplified acquisition threshold.”). 

5 Specifically, for each item the offeror wishes to sell, it must disclose the prices it 

charges to both the offeror’s Most Favored Customer and also to a so-called “tracking 

customer.” See AR Tab 5 at 198. 
5

“manufacturers’ [CSP] information . . . for each item/SIN offered, if the manufacturers’

sales under any resulting contract are expected to exceed $500,000.” Id. According to the 

solicitation, “[t]he information is required in order to enable the Government to make a 

determination that the offered price is fair and reasonable.” Id.

In a separate section, the solicitation provides more guidance for dealer/resellers 

on providing manufacturers’ CSP information. See AR Tab 12 at 491–505. These 

additional instructions explain that:

[O]fferors who are dealers or resellers must provide the [manufacturers’

CSP] information . . . when both of the following two criteria are met:

(1) When the offeror does not have “significant sales” to the general 

public[,] [a]nd 

(2) When the total value of the manufacturer’s [sic] sales by the offeror 

for the proposed products is expected to exceed $500,000 for the 

contract term.

Id. at 503 (emphasis in original). Moreover, the instructions continue, “[t]he reference to 

‘significant sales’ is not defined as it is examined on a case by case basis.” Id.

In addition, and as pertinent to this case, the solicitation includes clauses 

governing modifications to the contract. AR Tab 2 at 53–56. These clauses set forth 

procedures for adding and deleting products from the schedule and for requesting price 

increases or offering price decreases. See id.; see also Modifying Your VA FSS Contract, 

U.S. Department of Veterans Affairs, http://www.va.gov/oal/business/fss/rfmProcess.asp

(last visited February 11, 2016). The clauses specify that all requests for modification 

(RFM) must be submitted to the contracting officer (CO) for review, and that vendors 

requesting modifications must provide CSP information for the affected products—

including, if the vendor is a dealer/reseller, manufacturers’ CSP information. AR Tab 2 at 

53. The VA’s goal is “to review all modification requests and make an award/no award 

decision within 60 calendar days from receipt.” Modifying Your VA FSS Contract, 

supra.

III. AvKARE’s Existing Schedule 65 I B Contract

AvKARE’s business consists of selling a “variety of bottled and unit dose 

pharmaceutical products” that are “packaged and sold under the ‘AvKARE’ label.” 

Compl. at 1. Specifically, AvKARE obtains “bulk” pharmaceutical products from 

suppliers and then “repackage[s] and re-label[s]” them for sale “under its own private 

label . . . . . utilizing National Drug Codes (NDCs) assigned by the FDA to AvKARE and 
6

only AvKARE.” Compl. ¶¶ 55–56; see also Transcript of Hearing at 19:18–20:10 (Sept. 

17, 2015) (counsel for AvKARE explaining AvKARE’s business model).6

AvKARE was first awarded a Schedule 65 I B contract in April 2010. Compl. 

¶ 49; AR Tab 171 at 20950. At that time, according to AvKARE, the company lacked 

significant commercial sales of its products. Compl. ¶ 49. The contract was originally 

slated to expire on March 31, 2015, and AvKARE submitted an offer to renew the 

contract on October 31, 2014. Id. ¶ 44; see also AR Tabs 13–24. The parties have since 

agreed to extend AvKARE’s existing contract, first through January 31, 2016 and then 

again through the end of February 2016. Pl.’s Mem. in Supp. of its Mot. for J. on the 

Admin. R. (“Pl.’s Mem.”) at 10, ECF No. 29.

IV. The OIG’s Post-Award Review of AvKARE’s Contract and the VA's Denial 

of AvKARE’s RFMs

Between 2010 and 2014, AvKARE submitted numerous RFMs to add new drugs 

to its contract. Compl. ¶ 50. According to AvKARE, these RFMs were routinely granted. 

Id. Sometime in early 2014, however, the OIG began a post-award review of AvKARE’s 

contract.7 See AR Tab 171 at 20950. On August 27, 2014, the OIG updated the CO on 

the status of its investigation. Id. The OIG’s “preliminary findings” included concerns 

that AvKARE “misrepresented that they had commercial sales in order to obtain their 

FSS contract” and “misrepresented that they are a pharmaceutical manufacturer” Id. In 

light of the ongoing investigation, the OIG recommended that “any request(s) to add 

product(s) to the contract, between now and March 31, 2015, be submitted to our office 

for a preaward review” and that “no extension [of the contract] be exercised prior to our 

office conducting a preaward review.” Id. (emphasis in original). At this time, according 

to AvKARE, it had at least three outstanding RFMs. Compl. ¶ 65.

In mid-September 2014, the OIG conducted an on-site review at AvKARE’s 

purported production facilities. Compl. ¶¶ 63–64; see AR Tab 173 at 20954. Afterwards, 

on October 6, 2014, the OIG informed the CO that it had completed a review of one of 

AvKARE’s outstanding RFMs. AR Tab 173 at 20954–55. First, the OIG reported, 

AvKARE was considered a “distributor of the offered products, not the manufacturer” 

because “[t]he offered products are never in the possession of AvKARE throughout the 

process.” Id. at 20954. Instead, the products were “shipped in bulk containers from the 

 

6 According to AvKARE, “[o]nce an NDC is assigned by the FDA to AvKARE for a 

specific product, AvKARE and only AvKARE is entitled to [sell] products . . . on the 

basis of that NDC.” Compl. ¶ 28. 

7 This investigation was apparently sparked in part by an anonymous tip describing 

alleged violations of the contract’s CSP provisions. See AR Tab 188 at 21058. 
7

manufacturer of the product” to a non-AvKARE packager, packaged, and then shipped to 

another non-AvKARE entity for distribution. Id. 

In addition, the OIG determined that AvKARE did not have relevant commercial 

sales, and thus the “manufacturer’s [sic] full CSP data is required.” Id. According to the 

OIG, AvKARE “expressed their disagreement with the requirement” because “there 

would be no way to get CSP data that is relevant,” as “they package the product in 

different quantities than are commercially available from the manufacturer.” Id. The OIG 

“totally disagree[d] with AvKARE’s opinion,” believing that “CSP data should be 

required from the manufacturer which represents the nearest commercially available 

package size of the products offered.” Id. 

V. AvKARE’s Contract Renewal Offer

All told, AvKARE alleges that it submitted at least six more RFMs between 

October 2014 and September 2015. See Compl. ¶¶ 67, 69–70. AvKARE claims that all

these RFMs either remain under review or have been rejected by the VA. See id.

As mentioned above, AvKARE submitted a contract renewal offer on October 31, 

2014. Id. ¶ 44; see AR Tabs 13–24. In response to the solicitation’s “Company 

Information” questionnaire, AvKARE identified its “Type of Business” as 

“Manufacturer” and stated that its facilities included 57,000 square feet of manufacturing 

floor space. AR Tab 13 at 510. 

In response to Clause AS8005 of the solicitation, which requests information 

about the “manufacturing facilities/place of performance” for each of the offeror’s 

products, see AR Tab 4 at 175–80, AvKARE also represented that it was “the 

manufacturer . . . of the products offered on this solicitation.”8Id. at 526. On the other 

hand, AvKARE included a purported “Letter of Supply” with its offer, AR Tab 18 at 585, 

apparently in response to Clause I-FSS-644 of the solicitation, which requires offerors 

who are “dealers and suppliers”—i.e., offerors “other than the manufacturer”—to 

produce “letter[s] of supply/commitment” from the products’ manufacturers upon the 

CO’s request. AR Tab 4 at 181. These letters must “assure the offeror of a source of 

supply sufficient to satisfy the Government’s requirements for the contract period.” Id.

 

8 The substantive purpose of Clause AS8005 is to ensure compliance with the FDA’s 

Current Good Manufacturing Practice (CGMP) regulations. See AR Tab 4 at 175–80.

These regulations describe the acceptable “methods to be used in, and the facilities or 

controls to be used for, the manufacture, processing, packing, or holding of a drug to 

assure that such drug meets the requirements of the act as to safety, and has the identity 

and strength and meets the quality and purity characteristics that it purports or is 

represented to possess.” 21 C.F.R. § 210.1(a). Clause AS8005 specifically requests 

information about the “location and owner of [the] facility where [the] ingredients are 

measured, weighed, mixed and compounded;” the “location of facilities where 

intermediate containers will be fixed and labeled;” and the “location of facilities where 

products will be packed and prepared for shipment.” AR Tab 4 at 178–80. 
8

The letter AvKARE submitted, addressed to “AvKARE,” and from “AvKARE, Inc.,” 

represented that “[i]n the event AvKARE is awarded a . . . contract . . . AvKARE, Inc. 

can assure an uninterrupted source of supply, with sufficient quantities of product, for the 

duration of the . . . contract period.” AR Tab 18 at 585.

Most relevant to this case, in responding to the solicitation’s pricing and price 

evaluation provisions, AvKARE did not include CSP information about the 

manufacturers who supply AvKARE with the pills that it repackages and sells to the VA

as would be required of a dealer/reseller without significant sales to the general public.

See AR Tab 22; see also id. Tab 23 at 601 (beginning a description of AvKARE’s sales 

process with the phrase “As a drug manufacturer . . . ”).

VI. VA Requests for Additional Information

On December 24, 2014, the CO contacted AvKARE to request additional 

information. AR Tabs 341–48. This request primarily took the form of a “Missing 

Information Checklist.” AR Tab 344 at 21600–10. “Upon receipt of all requested items 

identified on the Missing Information Checklist,” the CO explained, “we can move 

forward with a continued review of your offer.” AR Tab 341 at 21595.

First, the CO requested that AvKARE “[p]lease clarify what is produced on the 

premises” of AvKARE’s manufacturing facility and that it clarify its basis for claiming 

that it had an estimated 57,000 square feet of manufacturing space. AR Tab 344 at 21600

(quotation omitted). Further, the CO asked AvKARE to “specifically delineate what 

AvKARE does with [its] drugs after receipt” and to “[p]rovide documentation that 

explains which entities obtain title to and possession of the product” and “outline what 

each entity does to the drug.” Id. at 21602. 

The CO also requested that, in response to Clause I-FSS-644, AvKARE “[p]lease 

provide requisite Letters of Supply” in accordance with that clause’s requirements for 

dealers and resellers. Id. The CO noted that AvKARE’s letter “to itself . . . from (itself)” 

was “not accepted.” Id.

Next, the CO informed AvKARE that the CSP information it provided was not 

fully responsive to the solicitation’s requirements. See id. at 21606–09. In response to the 

solicitation’s request for information regarding “sales to the general public,” the CO 

noted that “[s]ales to federal entities via a wholesaler are not considered commercial 

sales.” AR Tab 344 at 21606. Rather, “[t]hose sales are indirect sales to federal entities.” 

Id. Accordingly, the CO requested that AvKARE revise its submission so that “only sales 

to commercial end users [are] reflected.” Id.

Further (and as most relevant here), the CO informed AvKARE that 

“[m]anufacturer information for each item/SIN offered[] is required” under the CSP 

provision for dealer/resellers because “AvKARE commercial sales as a percent of 

government sales are considered insignificant” and “expected sales under any resulting 

contract are expected to exceed $500,000.” Id. at 21608.
9

VII. AvKARE’s Response to VA Requests for Additional Information

On January 16, 2015, AvKARE responded to the CO’s request for additional 

information. See AR Tab 360. AvKARE continued to maintain that it was the 

“manufacturer” of the products it wished to sell because it “produces and manufactures 

its own private label generic pharmaceuticals.” Id. at 21671; see also id. at 21672 

(“AvKARE reaffirms its selection as manufacturer . . . . . We are the manufacturer.”). To 

bolster this contention, AvKARE listed several definitions of “manufacturer” found in 

various statutes and agency regulations applicable to the pharmaceutical industry. See AR 

Tab 361. 

Despite its assertion about its status as a manufacturer, however, AvKARE also 

defended its inclusion of the letter of supply from itself to itself, representing that the 

letter was “the very same letter that has been provided for 5 years for Modifications and 

has been accepted by the VA NAC under this very same procurement” and that 

“AvKARE is the only source of supply that can provide letters of commitment for [its 

products].” Id. at 21672.

AvKARE also took issue with the CO’s determination that it lacked significant 

sales to the general public, stating that it “disagree[d] entirely” with the VA’s 

characterization of its sales to federal end users via wholesalers as “indirect” sales to the 

government. See id. at 21677. AvKARE posited that “the VA does not have the 

discretion to disregard millions of dollars of commercial sales as ‘insignificant,’” and 

that, in any event, “there is no requirement for any commercial sales in order to be 

eligible for an FSS contract.” Id. at 21678.

Lastly, AvKARE reiterated its belief that it did not need to comply with the CSP 

requirements applicable to dealer/resellers because “we are not a dealer or reseller.” Id. at 

21679. Instead, AvKARE contended, “[w]e are distributing and selling AvKARE’s 

finished end product” and “[the dealer/reseller] provision is not applicable to our offer.” 

Id.

VIII. VA Warns AvKARE that its Renewal Offer Remains Unacceptable

On February 12, 2015, the CO informed AvKARE by letter that its renewal offer 

“remain[ed] unacceptable” because of “several deficiencies” in its response. AR Tab 367 

at 21695. The CO made clear that the VA “does not consider AvKARE to be a 

manufacturer” and stated that the definitions of “manufacturer” that AvKARE attached to 

its response were “not applicable” to the solicitation. Id. at 21696. After reminding 

AvKARE that “[the] CO is required to make a determination that . . . prices are fair and 

reasonable before an award can be made,” the CO provided AvKARE with a new

“Missing Information Open Item Spreadsheet,” warning that “[a]bsent a current, 

complete, and accurate response . . . no further action w[ould] be taken” and AvKARE’s 

offer would be returned. Id.

AvKARE responded to the VA’s letter on February 18, 2015. AR Tab 370. It

explained that while “[n]o production operations take place” at the location it had listed 
10

on its offer, it had “entered into a production and quality control agreement” with a 

different company under which that company “serves as the contract manufacturer for 

AvKARE.” Id. at 21706. AvKARE also wished to “put[] aside the manufacturer vs nonmanufacturer debate” and suggested that the CO could use multiple techniques to assess 

price reasonableness rather than solely relying on manufacturers’ CSP information. Id. at 

21705–06.

Shortly afterwards, the CO again followed up with AvKARE. AR Tab 372. He 

clarified the VA’s position that AvKARE’s letter of supply did not “satisfy the 

requirements” applicable to a “contractor who is other than the manufacturer” set forth in 

Clause I-FSS-644. Id. at 21712. Further, he explained that “[t]he [CO] is given wide 

latitude when determining if commercial sales are insignificant.” Id. at 21713–14.

Finally, he explained that while AvKARE was “welcome to provide market research and 

other pricing information to supplement the requisite CSP information,” the CSP 

information was still required. Id. at 21714. 

IX. AvKARE’s First Bid Protest and the VA’s Extension of the Existing Contact

After receiving the CO’s letter reiterating the VA’s demand for manufacturers’

CSP data, AvKARE filed a bid protest action in this Court. See Compl., AvKARE, Inc. v. 

United States (AvKARE I), No. 15-cv-216, ECF No. 1 (March 3, 2015). The next day, 

AvKARE sent additional responses to the CO. AR Tab 380. Once again, AvKARE 

reaffirmed its self-designation as a “manufacturer,” stating that it “directs all faucets [sic] 

of the production side of the product” in the same manner as “many companies within the 

pharmaceutical industry.” Id. at 21732. At the same time, though, AvKARE agreed to 

provide copies of its agreements with its “bulk medication suppliers,” which it believed 

would “satisfy the requirement [of Clause I-FSS-644] as evidence that AvKARE will 

have the component supplied for the contract period.” Id. at 21733. In terms of updating 

its CSP information, AvKARE attached newly-received “sales tracings” from its 

wholesalers, which it claimed “should prove that any wholesaler should be considered a 

commercial customer based on the fact they are selling these products to their OWN 

customer base.” Id. at 21734–35 (emphasis in original).

After AvKARE filed its first bid protest, the government agreed to extend 

AvKARE’s contract through September 31, 2015, and AvKARE voluntarily dismissed 

that case. See Notice of Voluntary Dismissal, AvKARE I, ECF No. 17. To move the 

renewal process forward, AvKARE indicated it would “submit[] requests to its suppliers 

to ascertain their willingness to supply their CSP information,” even though AvKARE 

continued to believe that:

[T]his information is neither required (as AvKARE is the manufacturer of 

its private label products and has significant commercial sales of those 

products) nor relevant (we fail to see how the prices paid for bulk 

pharmaceuticals is useful for assessing price reasonableness for a different 

deliverable – individually packaged and labelled bottles . . . of product).
11

AR Tab 382 at 21740. In addition, AvKARE “urge[d] the VA to formally state whether it 

[was] requiring AvKARE’s competitors to submit supplier CSP information as a prerequisite for either renewing their contracts or approving RFMs to add products to their 

contracts.” Id. If not, AvKARE hoped that “we can agree that imposing such a 

requirement on AvKARE is not appropriate.” Id.

X. VA Concludes AvKARE Lacks Significant Commercial Sales and Declines to 

Proceed Without Manufacturers’ CSP Information

On April 1, 2015, the CO updated AvKARE on its deliberations, reiterating that 

the VA’s position on AvKARE’s status as a dealer/reseller “has not changed.” AR Tab 

386 at 22315. Moreover, the CO asserted that “we do not and cannot adapt a different or 

varied definition and/or version of manufacturer to individually suit a vendor” and that 

“any offer submitted by any company with the current deficiencies identified in AvKare’s 

offer[] would have been no-awarded.” Id. at 22316. The next day, the CO sent AvKARE 

explaining that the VA “require[d] assistance from [OIG] in the analysis of [AvKARE’s 

sales] data to identify those sales that can be attributed to commercial customers.” AR 

Tab 387 at 22318. Once that analysis was complete, the CO would “then consider 

whether CSP data will be required from the manufacturers.” Id.

The OIG completed its review August 26, 2015. AR Tab 191. At bottom, it 

determined that AvKARE had “insufficient commercial sales from which to determine 

fair and reasonable pricing.” Id. at 21069. In the OIG’s view, AvKARE’s sales to 

wholesalers were “indirect sales” rather than “commercial sales” because “all units sold 

to wholesalers were in turn sold to AvKARE’s customers” instead of on the open market.

Id. at 21070–72. Further, of these indirect sales, “only 0.51 percent were sold to 

customers classified as commercial in AvKARE’s accounting system”—a percentage that 

was “not deemed significant.”9Id. at 21072.

After receiving the OIG’s report, the CO informed AvKARE by letter on 

September 3, 2015, that she had “reviewed all pertinent information” and “determined 

that AvKARE does not have sufficient commercial sales to make a fair and reasonable 

price determination.” AR Tab 417 at 22496. Therefore, “[i]n order to proceed with 

evaluation of your offer, you must provide manufacturer CSP data.” Id.

XI. This Action

On September 11, 2015, AvKARE filed its complaint in this Court, along with a 

motion for a preliminary injunction. ECF Nos. 1, 5. Following a status conference, the 

government agreed to extend AvKARE’s existing contract through January 31, 2016, and 

 

9

In addition, the OIG noted that the prices in AvKARE’s commercial price list would be 

revised effective as of the date the VA approved AvKARE’s renewal offer. AR Tab 191 

at 21072. According to the OIG, “[c]ommercial entities, who sell primarily to 

commercial customers, would never have a catalog price that is dependent upon an 

awarded FSS contract.” Id.
12

the Court denied AvKARE’s preliminary injunction motion as moot. See Order, ECF No. 

11. The government compiled the administrative record, which AvKARE then moved to 

supplement. ECF No. 21. After hearing oral argument, the Court denied AvKARE’s 

motion in its entirety. See Opinion and Order, ECF No. 32. 

The parties then filed cross-motions for judgment on the administrative record. 

ECF Nos. 28, 37. The Court held oral argument on the cross-motions on January 13, 

2016, after which the government agreed to further extend AvKARE’s existing contract 

through the end of February. On January 28, AvKARE filed a second motion to 

supplement the administrative record. These motions are now ripe for decision. 

DISCUSSION

I. Jurisdiction

A. The Court of Federal Claims’ Bid Protest Jurisdiction

The Court of Federal Claims’ bid protest jurisdiction is defined by 28 U.S.C. 

§ 1491(b)(1). That provision grants the court jurisdiction to “render judgment on an 

action by an interested party objecting 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.”

In keeping with this statutory grant, only an “interested party” has standing to 

invoke the Court of Federal Claims’ bid protest jurisdiction. CGI Fed. Inc. v. United 

States, 779 F.3d 1346, 1348 (Fed. Cir. 2015); Myers Investigative and Sec. Servs., Inc. v. 

United States, 275 F.3d 1366, 1369 (Fed. Cir. 2002). As the Federal Circuit has 

explained, an “interested party” is “an actual or prospective bidder . . . whose direct 

economic interest would be affected by the award of the contract.” CGI Fed., 779 F.3d at 

1348 (quoting Am. Fed’n of Gov’t Employees, AFL-CIO v. United States, 258 F.3d 

1294, 1299 (Fed. Cir. 2001); see also Info. Tech. & Applications Corp. v. United States, 

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

In a pre-award protest challenging an agency’s evaluation of a proposal, a 

plaintiff has a direct economic interest if it has a “substantial chance” of winning the 

contract but for the alleged error in the evaluation. Orion Tech., Inc. v. United States, 704 

F.3d 1344, 1348–49 (Fed. Cir. 2013); see also Tinton Falls Lodging Realty, LLC v. 

United States, 800 F.3d 1353, 1358 (Fed. Cir. 2015); Bannum, Inc. v. United States, 404 

F.3d 1346, 1358 (Fed. Cir. 2005). That is, the protestor’s chance of securing the award 

“must not [be] insubstantial.” Info. Tech., 316 F.3d at 1319. Put differently, the protester 

must have been “prejudiced” by the alleged error. Tinton Falls, 800 F.3d at 1358.

B. The Court of Federal Claims’ Jurisdiction Over Contract Claims

This Court’s jurisdiction over contract claims is set forth in 28 U.S.C. § 1491(a). 

That provision grants the court jurisdiction over claims “founded . . . upon . . . any 

express or implied contract with the United States,” including “any claim by or against, 

or dispute with, a contractor arising under [the Contract Disputes Act], including a 
13

dispute concerning termination of a contract, rights in tangible or intangible property, 

compliance with cost accounting standards, and other nonmonetary disputes on which a 

decision of the contracting officer has been issued under . . . that Act.” Id. § 1491(a)(1)–

(2). 

Claims “arising under” the CDA include claims based on “any express or implied 

contract . . . made by an executive agency for . . . the procurement of property, other than 

real property in being.” 41 U.S.C. § 7102(a). Under the CDA, “procurement” means “the 

acquisition by purchase, lease or barter, of property or services for the direct benefit or 

use of the Federal Government.” New Era Constr. v. United States, 890 F.2d 1152, 1157 

(Fed. Cir. 1989) (quotation and emphasis omitted). Importantly, a contractor may not 

bring an action governed by the CDA in federal court before the “receipt of a contracting 

officer’s decision” on its claim. 41 U.S.C. § 7104(b)(3); see M. Maropakis Carpentry, 

Inc. v. United States, 609 F.3d 1323, 1327–28 (Fed. Cir. 2010). Thus, the Court of 

Federal Claims does not possess jurisdiction over claims arising under the CDA unless

the contractor has submitted a valid claim to the contracting officer and received the 

contracting officer’s final decision on that claim. M. Maropakis Carpentry, 609 F.3d at 

1327–28; see also Dalton v. Sherwood Van Lines, Inc. v. United States, 50 F.3d 1014, 

1017 (Fed. Cir. 1995) (“When the Contract Disputes Act applies, it provides the 

exclusive mechanism for dispute resolution; the Contract Disputes Act was not designed 

to serve as an alternative administrative remedy, available at the contractor’s option.”).

The definition of “claim” for purposes of the CDA derives from the Federal 

Acquisition Regulations (FAR). See M. Maropakis Carpentry, 609 F.3d at 1327–28. As 

pertinent here, FAR 2.101 defines “claim” as “a written demand or written assertion by 

one of the contracting parties seeking, as a matter of right, the payment of money in a 

sum certain, the adjustment or interpretation of contract terms, or other relief arising 

under or relating to the contract.” Id.; see also FAR 52.233-1 (setting forth, in a standard 

contract clause, the same definition of “claim” as in FAR 2.101).

C. Application of Jurisdictional Provisions to AvKARE’s Claims in this 

Case

AvKARE’s first claim is that the VA misinterpreted and misapplied the 

solicitation’s CSP provision when it characterized AvKARE as a “dealer/reseller” rather 

than a “manufacturer,” and, as a consequence, refused to further evaluate its renewal 

offer unless it provided its suppliers’ CSP information. AvKARE further contends that 

the VA was motivated by animus toward AvKARE when it demanded this CSP 

information, and that it did so in bad faith to prevent AvKARE from obtaining a new 

contract.

These claims fall within the Court’s bid protest jurisdiction under 

section 1491(b)(1) because they concern alleged errors or violations of law in the 

evaluation of AvKARE’s proposal. Further, AvKARE has standing as an “interested 

party” to press its challenges to the VA’s actions. It is an incumbent contractor, it 

submitted an actual offer, and it has alleged that its offered prices are lower than the 

prices for similar items already on the schedule. Thus, AvKARE has a substantial chance 
14

of securing the contract if its offer in fact conforms to the solicitation’s requirements. 

Accordingly, the Court has jurisdiction over AvKARE’s first claim. 

AvKARE’s second claim relates to the VA’s refusal to grant RFMs on its existing 

contract. AvKARE contends that this refusal was based on a misinterpretation of the 

contract and applicable regulations, and on the VA’s animus toward AvKARE. The 

government argues that the Court lacks jurisdiction over AvKARE’s RFM claims 

because those claims are subject to the CDA and AvKARE has not submitted “claims” 

within the meaning of the CDA to the CO. Def.’s Cross-Mot. for J. on the Admin. R. 

(Def.’s Cross-Mot) at 25, EFC No. 37; Def.’s Reply at 1–4, ECF No. 40. AvKARE 

disagrees. In its view, its RFM claims properly fall under the Court’s bid protest 

jurisdiction, rather than its contract jurisdiction, because “the RFM process is akin to a 

new offer for [an] award of items within the scope of the FSS solicitation.” Pl.’s Reply at 

5–6, ECF No. 38.

AvKARE’s position lacks merit. The Federal Circuit has made clear that contract 

modifications within the scope of an existing contract do not constitute “procurements” 

under section 1491(b)(1). See Distrib. Sols., Inc. v. United States, 539 F.3d 1340, 1346 

(Fed. Cir. 2008); see also AT&T Comms., Inc. v. Wiltel, Inc., 1 F.3d 1201, 1204–05 

(Fed. Cir. 1993). AvKARE’s RFMs were clearly within the scope of the contract; indeed 

(as discussed above) the solicitation includes a contract modification provision, which 

AvKARE followed in submitting its RFMs. And the CDA’s broad definition of “claim” 

clearly encompasses non-monetary relief of the type AvKARE seeks. See FAR 2.101 

(defining “claim” to include “a written demand . . . seeking . . . the payment of money in 

a sum certain, the adjustment or interpretation of contract terms, or other relief arising 

under or relating to the contract”) (emphasis added). It follows that AvKARE’s claims 

related to its RFMs are governed by section 1491(a) and, by extension, the CDA. 

Accordingly, because AvKARE has not alleged that it submitted claims under the CDA 

to the CO or received any final determinations, the Court lacks jurisdiction over 

AvKARE’s RFM-related claims in this case. 

II. The Merits of AvKARE’s Bid Protest

A. The Meaning of “Manufacturer” Under the Solicitation’s CSP 

Provision

1. The Text of the Provision

The primary issue raised by AvKARE’s bid protest claim is a legal one: whether 

AvKARE is a “manufacturer” or is instead a “dealer/reseller” within the meaning of the 

CSP clause, which was included in the solicitation pursuant to the requirements of the 

GSA regulation codified at 48 C.F.R § 515.408. The Court begins its analysis by 

reviewing the “plain meaning” of the regulatory language. Lengerich v. Dep’t of Interior, 

454 F.3d 1367, 1370 (Fed. Cir. 2013) (“We construe a regulation . . . by ascertaining its 

plain meaning.” (citing Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 414–15 

(1945))); Lockheed Corp. v. Widnall, 113 F.3d 1225, 1227 (Fed. Cir. 1997) (“To 

interpret a regulation we must look at its plain language and consider the terms in 
15

accordance with their common meaning.”); see also Chase Bank USA, N.A. v. McCoy, 

562 U.S. 195, 204 (2011) (analysis of regulation’s meaning begins with its text).

The dictionary definition of the word “manufacture” is “[t]o make or process (a 

raw material) into a finished product.”10 Am. Heritage Dict. of the English Language

1067 (4th ed. 2000). By contrast, a “dealer” is “[o]ne that is engaged in buying and 

selling,” id. at 467; and a “reseller” is one who “sell[s] again,” id. at 1483. 

Guidance that the VA has provided to prospective offerors on its website is 

consistent with the dictionary definition of “reseller.” Information for Resellers, U.S. 

Dep’t of Veterans Affairs, http://www.va.gov/oal/business/fss/resellers.asp (last visited 

February 11, 2016). It defines a “reseller” as “a company or individual that purchases 

commercial goods or services with the intention of reselling them rather than consuming 

or using them.” Id.

In this case, the products that federal agencies purchase through the FSS are pills 

and other pharmaceuticals. And it is AvKARE’s suppliers, not AvKARE, that assemble 

the raw materials needed to make the pills and other pharmaceuticals into finished 

products for the consumption of patients in VA and other government medical facilities. 

AvKARE’s suppliers, therefore, clearly fall within the plain meaning of the term 

“manufacturer” as set forth above.

AvKARE, by contrast, purchases the pills and pharmaceuticals from the 

manufacturers in bulk with the intent to resell them to buyers through the FSS. It thus 

falls under the dictionary definition of “reseller.” To be sure, AvKARE repackages the 

pills in order to resell them under its own label. Nonetheless, it is the pills and other 

pharmaceuticals that the schedule’s users are buying, not their packaging. AvKARE, 

accordingly is a “dealer/reseller” of the pills and pharmaceuticals. It is not their 

manufacturer.

The Court notes that this common sense construction of the regulatory terms is 

also consistent with the way that the term “manufacturer” is used elsewhere in the 

solicitation. For example, the solicitation’s “Offeror Representations and Certification” 

section defines “place of manufacture” as “the place where an end product is assembled 

out of components, or otherwise made or processed from raw materials into the finished 

product that is to be provided to the Government.” AR Tab 2 at 86. In this context, the act 

of “process[ing] from raw materials” most readily describes the functions of a pill-maker, 

rather than a repackager. 

Similarly, Clause I-FSS-644 of the solicitation requires any offeror “if other than 

the manufacturer” to submit assurances from its suppliers confirming the offeror’s ability 

 

10 The Federal Circuit has observed that a court “may consult dictionaries” to determine 

the “ordinary, established meaning” of a word or phrase. Hymas v. United States, No 

2014-5150, 2016 WL 158470, at *6 (Fed. Cir. Jan. 14, 2016) (quoting Info. Tech., 316 

F.3d at 1320).
16

to meet the government’s purchasing needs. See AR Tab 4 at 181. Offerors who are 

manufacturers are not required to provide such additional “assurances” because they 

themselves have control over the production of the pills. On the other hand, an entity like 

AvKARE, which does not make the pills, but merely repackages them, is most logically 

characterized as “other than a manufacturer” for purposes of this provision because it 

must rely on its suppliers to enable it to satisfy the purchasers’ needs for pharmaceutical 

products.11

AvKARE argues, nonetheless, that it should be considered a manufacturer 

because the products it is offering to provide on the FSS are not simply pills, but pills that 

are properly packaged and labelled, and assigned a unique National Drug Code (NDC) 

that belongs exclusively to AvKARE. Pl.’s Mem. at 25–26; Pl.’s Reply at 10; see also

Compl. ¶ 28. According to AvKARE, it is the only entity that can claim to be the 

“manufacturer” of the products sold under its labels. 

Contrary to AvKARE’s contentions, however, unique NDCs are assigned to any 

entity engaged in the “manufacturing or processing” of drugs, including any entity that 

“repackage[es] or otherwise chang[es] the container, wrapper, or labeling of any drug 

package to further the distribution of the drug from the original place of manufacture to 

the person who makes final delivery or sale to the ultimate consumer.” 21 C.F.R. 

§ 207.3(a)(8); see also id. §§ 207.20, 207.35. The assignment of a unique NDC to 

AvKARE does not, therefore, reveal anything one way or the other about whether it is the 

“manufacturer” of the products it wishes to offer either for purposes of the GSA 

regulation or for purposes of the statute and regulations governing the assignment of 

NDCs. 

Accordingly, because pills and other pharmaceuticals are the relevant products, 

only a pill or pharmaceutical maker fits the plain meaning of “manufacturer” as used in 

the solicitation. And because AvKARE does not make pills or other pharmaceuticals, but 

rather buys them in bulk and sells them after repackaging them, it is not a manufacturer 

under the solicitation, but rather a dealer/reseller.

 

11 As described above, notwithstanding its insistence that it is a “manufacturer,” 

AvKARE’s renewal proposal included what it characterizes as a letter of supply in 

response to Clause I-FSS-644. AR Tab 18 at 585. In the letter (as described above), the 

President of “AvKARE, Inc.” purported to provide assurances to the contracting officer 

at “AvKARE” that AvKARE Inc. would ensure a sufficient quantity of pharmaceutical 

products to meet the needs of government purchasers. Of course, because AvKARE was, 

in fact, not the manufacturer of the pills, its promise to itself to ensure an adequate supply 

of the product could hardly serve as the type of assurance that Clause I-FSS-644

contemplates. For that reason, the VA required AvKARE to go back and get letters from 

the manufacturers who sell their pills and other pharmaceuticals to AvKARE.
17

2. Definitions of “Manufacturer” Found in Other Statutory and 

Regulatory Regimes that Apply to the Pharmaceutical Industry

Notwithstanding the plain meaning of the regulatory language, AvKARE 

emphasizes that repackagers like itself are considered “manufacturers” under other 

statutory and regulatory regimes that apply to the pharmaceutical industry. See Pl.’s 

Mem. at 24–27; Pl.’s Reply at 7–11. Therefore, it contends, the VA’s conclusion that 

AvKARE is not a “manufacturer” for purposes of the GSA regulations was necessarily 

incorrect.

GSA has not provided any guidance concerning the interpretation of the terms 

“manufacturer” or “dealer/reseller.” But it is worth remembering that the GSA regulation 

distinguishing between “manufacturers” and “dealer/resellers” governs with respect to all 

products sold on the FSS. It seems incongruous, therefore, to apply to the GSA 

regulations an industry-specific understanding of the term “manufacturer,” particularly 

one drawn from other regulatory regimes.

In the Court’s view, the meanings ascribed to the term “manufacturer” in the 

statutory and regulatory regimes that AvKARE cites are not relevant to the interpretation 

and application of the term “manufacturer” as it appears in the GSA regulation. To the 

contrary, the import of the cited statutes and regulations is that when legislators and 

regulators wish to subject entities like AvKARE that repackage and re-label 

pharmaceuticals to the same restrictions as entities that fall within the plain meaning of 

the term “manufacturer” set forth above, they do so explicitly. 

For instance, AvKARE cites 38 U.S.C. § 8126. Pl.’s Mem. at 27. That statute 

requires all “manufacturers” of covered drugs to enter agreements with the Secretary of 

the VA to make those drugs available for procurement on the FSS at capped prices. The 

drugs subject to the requirement are single-source drugs—i.e., drugs that remain under

patent protection. See 38 U.S.C. § 8126(a). For purposes of section 8126, Congress 

specified that the term “manufacturer” would include not only those entities that most 

naturally fall within the plain meaning of that term (such as those engaged in “the 

production, preparation, propagation, compounding, conversion, or processing of 

prescription drug products”), but also those entities engaged “in the packaging, 

repackaging, labeling, relabeling, or distribution of prescription drug products.” 38 

U.S.C. § 8126(h)(4). 

The fact that Congress found it necessary to explicitly define the term

“manufacturer” to include repackagers, relabelers, and distributors in section 8126(h)(4)

suggests to the Court that such entities would not otherwise be considered 

“manufacturers” of drug products in light of that term’s ordinary meaning. Further, there 

are unique policies underlying section 8126(h)(4) that justify including entities other than 

the pharmaceutical makers themselves within the definition of “manufacturer.” By 

defining “manufacturer” to include repackagers in section 8126, Congress advanced the 

statute’s underlying policies by ensuring that the government would have an adequate 

supply of the covered drugs at capped prices regardless of whether the pharmaceuticals 
18

are purchased directly from their makers or from other entities like AvKARE that 

repackage and relabel them. 

Similarly, when statutes and regulations enforced by the FDA make repackagers 

subject to the same rules as pill manufacturers, they do so by explicitly defining 

“manufacture” or “manufacturer” to include repackagers. See, e.g., 21 U.S.C. § 802(15) 

(specifying that, for purposes of the Controlled Substances Act, “[t]he term 

‘manufacture’ means the production, preparation, propagation, compounding, or 

processing of a drug or other substance, either directly or indirectly . . . and includes any 

packaging or repackaging of such substance or labeling or relabeling of its container”); 

21 U.S.C. § 360 (specifying that, for purposes of the FDA’s registration requirements, 

“the term ‘manufacture, preparation, propagation, compounding, or processing’ shall 

include repackaging or otherwise changing the container, wrapper, or labeling of any 

drug package or device package in furtherance of the distribution of the drug or device”).

As was the case with the expanded definition of “manufacturer” contained in 

section 8126(h)(4), there are specific policy reasons underlying these statutes and 

regulations that justify extending the restrictions that apply to manufacturers to entities 

like AvKARE that repackage and relabel drugs. For example, the Controlled Substances 

Act is designed to, among other things, avoid the diversion of certain pharmaceutical 

products to illegal markets. See 21 U.S.C. § 823. In that context, it requires the 

“manufacturers” of such products to register with the Attorney General, and defines 

manufacturer broadly to include entities like AvKARE that are also in the chain of 

distribution. Id. Similarly, under 21 U.S.C. § 360, AvKARE is subject to registration 

requirements that are part of a statutory and regulatory scheme intended to prevent the 

adulteration or misbranding of drugs; in that context, there exists a policy reason for 

subjecting repackagers and relabelers to the same restrictions as manufacturers.

Further, as AvKARE acknowledges, other FDA regulations define manufacturer 

more narrowly. See 21 C.F.R. § 201.1(b) (defining “manufacturer” for purposes of 

certain FDA labeling requirements as “the person who performs all of the following 

operations that are required to produce the product: (1) Mixing, (2) granulating, (3) 

milling, (4) molding, (5) lyophilizing, (6) tableting, (7) encapsulating, (8) coating, (9) 

sterilizing, and (10) filling sterile, aerosol, or gaseous drugs into dispensing containers”); 

Pl.’s Mem. at 25 n.8. This variance shows that even within the regulatory regime 

applicable to the pharmaceutical industry, the term “manufacturer” does not always 

include repackagers like AvKARE.

In short, the Court is not persuaded by AvKARE’s reliance upon other statutory 

and regulatory applications of the term “manufacturer.” For that reason, and the others 

discussed above, the Court holds that AvKARE is not a manufacturer under the 

solicitation’s CSP provision; it is a dealer/reseller. 
19

B. The CO’s Determination that AvKARE Lacked Significant 

Commercial Sales

Under the solicitation, a dealer/reseller like AvKARE must produce 

manufacturers’ CSP information only if it also lacks significant commercial sales. See

AR Tab 5 at 202; id. Tab 12 at 503. And, as the solicitation makes clear, whether a 

dealer/reseller has significant commercial sales is “examined on a case by case basis.” Id.

Tab 12 at 503. 

It is axiomatic that the Court will not interfere with an agency’s procurement 

decision unless the decision was “arbitrary, capricious, an abuse of discretion, or 

otherwise not in accordance with law.” E.g., Bannum, Inc., 404 F.3d at 1351 (citing 5 

U.S.C. § 706(2)(A)). Under this “highly deferential” standard, Advanced Data Concepts, 

Inc. v. United States, 216 F.3d 1054, 1058 (Fed. Cir. 2000) (citing Bowman Transp., Inc. 

v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 285 (1974)), the Court will not disturb 

the agency’s decision unless it “lacked a rational basis” or “involved a violation of 

regulation or procedure,” Impresa Construzioni Geom. Domenico Garufi v. United 

States, 238 F.3d 1324, 1332–33 (Fed. Cir. 2001). The plaintiff thus “bears a heavy 

burden” in attempting to show that a procuring agency’s decision lacked a rational basis. 

Id. (quoting Saratoga Dev. Corp. v. United States, 21 F.3d 445, 456 (D.C. Cir. 1994)). 

Indeed, such a challenge may succeed only if the agency “entirely failed to consider an 

important aspect of the problem, offered an explanation for its decision that runs counter 

to the evidence before the agency, or [if] the decision is so implausible that it could not 

be ascribed to a difference in view or the product of agency expertise.” Ala. Aircraft 

Indus., Inc.–Birmingham v. United States, 586 F.3d 1372, 1375 (Fed. Cir. 2009) (quoting 

Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 43 (1983) 

(internal quotations omitted). 

Here, in determining that AvKARE lacked significant commercial sales, the CO 

relied on an analysis conducted by the OIG. See AR Tab 191 at 21070–73; AR Tab 417 

at 22496. The OIG assessed AvKARE’s sales data and determined that nearly all of 

AvKARE’s sales were indirect sales to government entities via commercial wholesalers. 

AR Tab 191 at 20170–71. The OIG also explained why it did not consider these sales to 

be commercial sales. Id. at 21070. The CO’s reliance on the OIG’s analysis thus was not 

unreasonable. Therefore, the CO’s ultimate determination that AvKARE lacked 

significant commercial sales also had a rational basis.

AvKARE challenges the CO’s decision on several other grounds, but these 

attacks also fail. Its first argument—that the VA refuses to award contracts to any offeror 

without significant commercial sales—knocks down a straw man, for the VA has not 

taken that position. See Pl.’s Mem. at 29; Pl.’s Reply at 15–16. Rather, the VA requires 

that dealer/resellers without significant commercial sales provide manufacturers’ CSP 

information before conducting a price reasonableness analysis, after which it may award 

a contract. 

AvKARE next argues that it “possesses significant commercial sales by virtue of 

the $9 million in such sales disclosed in its renewal offer.” Pl.’s Mem. 30. But despite 
20

this bald assertion, AvKARE offers no basis to question the OIG’s analysis of these sales, 

which ultimately determined that the $9 million in sales did not, in fact, constitute 

significant commercial sales. Finally (and as discussed in more detail below), AvKARE 

contends that by relying on the OIG’s analysis, the CO abdicated her responsibility to 

apply independent judgment. Pl.’s Mem. at 38; Pl.’s Reply at 15 n.6, 18–19. But because 

AvKARE has offered no concrete reason to question the OIG’s analysis, it is difficult for 

the Court to discern how the CO’s reliance on it could be cause for concern; and the 

record does not otherwise bear out this accusation. 

Accordingly, the Court concludes that the CO’s determination that AvKARE 

lacked significant commercial sales was not arbitrary, capricious, or contrary to law. 

C. AvKARE’s Claim that the VA Acted in Bad Faith 

More broadly, AvKARE contends that the VA failed to evaluate its renewal offer 

and conduct negotiations in good faith. See Pl.’s Mem. At 38–39; Pl.’s Reply at 19. In 

AvKARE’s view, the OIG developed “animus” toward AvKARE, and the CO then 

colluded with the OIG in rejecting AvKARE’s proposal, thereby abdicating her 

responsibility to apply independent judgment. Pl.’s Mem. at 38; Pl.’s Reply at 19. 

Agency decisionmaking, however, is entitled to the presumption of regularity. See

Info. Tech., 316 F.3d at 1323 n.2. And the record here offers no basis for finding that 

presumption rebutted. Instead, it shows that the VA communicated regularly with 

AvKARE about AvKARE’s proposal, and that the VA repeatedly explained to AvKARE 

why the proposal remained deficient. See AR Tab 344 at 21600–10; AR Tab 367 at 

21695–97; AR Tab 386 at 22315–17. Moreover, the VA’s internal communications 

exhibit no predisposition to spurn AvKARE’s offer; rather, they reflect a consistent 

position that AvKARE’s proposal was not complete because AvKARE was not a 

manufacturer, lacked significant commercial sales, and had not supplied manufacturers’ 

CSP information. See AR Tab 174 at 20957; AR Tab 188 at 21059–61; AR Tab 191 at 

21069, 21073; AR Tab 436 at 22534.

AvKARE also appears to assert that the government acted in bad faith by 

declining to use an alternate method of price analysis—i.e., one that did not depend on 

securing and reviewing its suppliers’ CSP information. See Pl.’s Reply at 16 & n.7. At

oral argument, for example, AvKARE claimed that the VA should have employed 

alternative methods because the pill suppliers (i.e., the manufacturers) do not sell what 

AvKARE sells (i.e., pills packaged in bottles for individual consumption) so that there 

was no relevant manufacturers’ CSP information to be obtained from AvKARE suppliers. 

Tr. of Oral Arg. at 10:10–11:11, ECF No. 42. 

Counsel for the government was not able to specify at oral argument the precise 

nature of the manufacturers’ CSP information that the VA is seeking. Id. at 48:6–51:16. 

But it is certainly conceivable that the VA may wish to consider, for example, 

information about the prices AvKARE’s suppliers charge repackagers or other entities for 

pills purchased in bulk that will ultimately be sold to the general public.
21

In any event, it is premature on the present record to address AvKARE’s 

apparent contention that the VA has no use for any CSP information that AvKARE might 

be able to secure from its suppliers. The government has confirmed that if relevant 

manufacturers’ CSP information was demonstrably unobtainable by AvKARE, through 

no fault of its own, then the VA was willing (and, the Court assumes, remains willing) to

employ a different method of price analysis to evaluate AvKARE’s proposal. See Def’s 

Opp’n to Pl.’s 2d Mot. to Suppl. the Admin. R. at 4, ECF No. 45.12

But AvKARE made no attempt before the VA to substantiate the position it is 

taking before the Court that relevant information about its suppliers’ commercial sales 

practices cannot be obtained. Rather, it consistently took the position that it was not 

legally obligated to provide any such information at all, even if it did exist, because

AVKARE is not a dealer/reseller and/or because its suppliers’ commercial sales 

practices could not possibly be relevant to a determination of whether AvKARE’s prices 

were fair and reasonable. See AR Tab 360 at 21679 (asserting that AvKARE need not 

provide manufacturers’ CSP information because “we are not a dealer or reseller” and 

“[the dealer/reseller] provision is not applicable to our offer”); AR Tab 382 at 21740 

(asserting AvKARE’s belief that manufacturers’ CSP information “is neither required (as 

AvKARE is the manufacturer of its private label products and has significant commercial 

sales of those products) nor relevant”). Thus, the record provides no basis to conclude 

that the VA has in bad faith requested information that it knows does not exist as 

AvKARE claims.13

 

12 Indeed, at least one document in the record contemplates just this outcome. See AR 

Tab 436 at 22534 (email from the VA’s FSS director stating that “[i]f CSP data is not 

received, AvKare must prove that CSP data is not available from their manufacturers,” 

and that “[if] CO verified CSP data is not available from manufacturer, then proceed to 

reliance solely on price analysis”). 

13 AvKARE’s second motion to supplement the administrative record relates to this 

portion of its claim. In it, AvKARE seeks to supplement the AR with a transcript of a 

deposition of the GSA’s current director of FSS programs, which was taken in connection 

with a parallel proceeding before the Civilian Board of Contract Appeals. See Pl.’s Mem. 

in Supp. of its 2d Mot. to Suppl. the Admin. R. (“Pl.’s 2d Mot. to Suppl.”) at 2–4, ECF 

No. 44. In the transcript, the director describes the GSA’s policies and practices for 

obtaining CSP information and for assessing price reasonableness, and he recalls 

discussions he had about those policies and procedures with the VA’s FSS program 

director. Id. at 4–9.

According to AvKARE, this testimony shows that the GSA told the VA that CSP 

information was “not an absolute necessity” and “could [not] be required when [it] w[as] 

not available from downstream suppliers.” Id. at 12. As discussed above, the existing 

record reflects that this is the VA’s understanding. See AR Tab 436 at 22534 (email 

outlining how to handle AvKARE proposal if “verified CSP data is not available from 
22

D. AvKARE’s De Facto Debarment Claim

Finally, AvKARE claims that the VA’s refusal to further evaluate its renewal 

proposal amounts to a de facto debarment without due process of law. A de facto 

debarment occurs when there is “a systematic effort by the procuring agency to reject all 

of the bidder’s contract bids.” TLT Const. Corp. v. United States, 50 Fed. Cl. 212, 215–

16 (2001) (quoting Stapp Towing, Inc. v. United States, 34 Fed. Cl. 300, 312 (1995)). To 

establish a de facto debarment, a contractor must show that the agency has either stated or 

engaged in conduct demonstrating that it will not award the contractor future contracts. 

Id. (citing CRC Marine Serv., Inc. v. United States, 41 Fed. Cl. 66, 84 (1998)).

AvKARE’s de facto debarment claim fails for largely the same reasons as its bad 

faith treatment claim—namely, that the record reflects no systematic intent to refuse to 

award AvKARE future contracts. In fact, just the opposite is true: documents in the 

record show that the VA has consistently told AvKARE that it would move forward with 

reviewing AvKARE’s proposal if AvKARE supplied the required manufacturers’ CSP 

information. In contrapose, AvKARE has consistently maintained that the solicitation 

does not require it to provide the information the VA seeks. This disagreement about a 

legal issue is at the root of all of the controversies in this case, and its existence (without 

more) does not demonstrate any “systematic effort” to deny awards to AvKARE. See

TLT Const. Corp., 50 Fed. Cl. at 215–16. Accordingly, AvKARE’s de facto debarment 

claim must fail.

CONCLUSION

For the reasons discussed above, AvKARE’s motion for judgment on the 

administrative record is DENIED and the government’s motion is GRANTED. 

Accordingly, AvKARE’s claims related to its RFMs are hereby DISMISSED without 

prejudice, and its bid protest claims are hereby DISMISSED with prejudice. AvKARE’s 

second motion to supplement the administrative record is also hereby DENIED. The 

Clerk is directed to enter judgment accordingly. The parties shall bear their own costs.

 

[the] manufacturer[s]”). It also reflects that AvKARE has maintained that it is not legally 

obligated to provide the VA with manufacturers’ CSP information, even if it does exist

and is obtainable. The deposition testimony thus is not necessary to “permit meaningful 

review” in this case. See Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374, 1380 

(Fed. Cir. 2009). Accordingly, AvKARE’s second motion to supplement the record is 

hereby DENIED. 
23

IT IS SO ORDERED.

 /s/ Elaine D. Kaplan 

ELAINE D. KAPLAN

Judge