# I n the U nited S tates Cour t of Feder al Claim s

No. 18-326C (Filed: August 3, 2018) (Re-f iled: August 21, 2018) 1

* * * * * * * * * * * * * * * * * * * * * * * * * *
ADVANCED MANAGEMENT STRATEGIES GROUP, INC./REEFPOINT GROUP, LLC,

Plaintiff,

v.

THE UNITED STATES,

Defendant

,

and

ENTERPRISE RESOURCE PERFORMANCE, INC.,

Intervenor.
* * * * * * * * * * * * * * * * * * * * * * * * * *

Craig A. H

o l man , W ashington, DC, with whom w ere Nathaniel E. Castellano and Alexandra L. Barbee-Garret

, f or p laintif f

. Carrol H. Kinsey,
Jr. , Alexandria, VA, of

counsel.

Sonia M. Orfield

, Trial A ttorney

, United States Departm ent of Justice,
Civil Division, Com m ercial Litigation Branch, W ashington, DC, w ith whom

were Chad A. Readler

, Acting Assistant Attorney General, Robert E. Kirschman, Jr.

, Director, and R eginald T. Blades, Jr.

, Assistant Director, f or P o s t

- a w a r d b i d p r o t e s t ; Standing; Zone o f active

c o n s i d e r a t i o n ; S D V O S B ; Af f iliation.

1 This opinion was originally issued under seal to af f o rd t h e parties an opportunity

to propose redaction of protected inf orm a tion. T he parties were
unable to agree. Plaintif

f of f ered n o redactions. In an abundance of c aution,

we have ado p ted intervenor’s proposed redaction o f the nam es of its s ubcontractors a nd team ing partners b ecause t hat i nf orm ation i s potentially

com petition sensitive to an o n g o ing procurem ent. W e have also adopted
def endant’s proposed redactions.d e fe n d a n t

. K a ren Hunter

, T rial Attorney

, U.S. Sm all Business A d m i n i s t r a t i o n , Of f ice of General Counsel, of

counsel.

Jul i a Di Vito

, W ashington, DC, with whom were Antonio R. F ranco , Peter B. Ford , and Timothy F. Valley , f or intervenor.

OPINION

BRUGGINK, Judge

.

This is a post-award bid protest brought by Adva nced Managem ent Strategies G roup, Inc./Reef po i n t Group, LLP (“AMSG”). Def endant is the
United States acting through the Departm e n t o f V eterans A f f airs ( “VA”). The

awa r d ee, Electronic Resource Perf orm ance, Inc. (“ERPi”), intervened.
AMSG’s com

p l aint a sks the court to enjoin the VA f rom awar d i n g t o E RPi.
The parties f

iled cross-m otions f

or judgm ents o n the Adm inistrative R ecord (“AR”). Oral argum ent wa s h eld on July 12, 2018. The c ourt held a status conf erence on July 20, 2018, during whi c h w e announced that we w ould
sustain t h e protest and enjoin the award t o ERPi. W e entered a n injunction
that s am e day

. Because the VA was arbitrary in crediting E R P i w i t h t h e Com m ercial Healthcare Experience of what coul d b e , a t b est, only a very

m inor subcontractor, the award m ust be set a side a n d the evaluation redone. 2

BACKGROUND

On Septem

ber 2 8, 2017, the V A Strategic A cquisit i o n C e nter i ssued Request f o r Quotation s N o

. VA119A-17-Q-0413 (“RFQ” or “solicitation”).
It sought com m ercial healthcare consulting services to help transf orm the VA
h e a l t h s y stem into a m o re m odern and veteran-centric healthcare sy s t e m pursuant to t he Veterans Access, Choice, and Accountability Act of 2014, P ub.
L. No. 113-146, 1 28 Stat. 1754 ( 2 0 1 4 )

. The VA set aside the contract f or Service Disabled V eteran Owned Sm a ll Businesses ( “SDVOSB” ) under

2 This opinio n deals only with the issues necessary to reach o ur conclusion:
ERPi’s eligibility f

or award as a sm a ll business, VA’s evaluation of ERPi’s Corporate H ealthcare Experience, and plaintif f ’s standing to bring these challenges. The other argum ents raised b y plaintif f ’s m otion were dealt with

on the record d

uring the status conf

erence h eld o n J uly 20, 2018. It is

unnecessary

to consider those argum ents again in print.

2NAICS Code 541611, which has a size standard of $15,000,000. 3 A R 1 78.

The VA sought t hese services f rom holders o f t h e General Services
Admi n i stration (“GSA”) Federal S upply Schedule (“FSS”) SIN 874-1

contracts f

or integrated consulting service s

. A R 2 39. The solicitation

prom ised award of a Blanket Purchase Agreem ent (“BPA”) to a single of f eror pursuant to Federal Acquisition Regulation (“FAR”) part 8.405-3, and that the

agency would issue its f

i rst order along with the B PA. AR 247. The agency
intended to d o so w ithout holding discussions with of f erors, but reserved f

or itself the right to ask f

or a price discount f

r om the apparent awardee as allowed
in FAR part 8.405-4. Id. The solicitation w as specif ic tha t t h e procurem ent was not subject to FAR part 15,which deals with negotiated procurem ent.

I. The Solicitation

The VA i ntended to award the BPA o n the basis of a best value tradeo f f p r ocess, which would consider three non-price f actors a nd the of

f eror s ’ prices. The n o n-price f

actors are 1) Technical, consisting of three s ubf actors (Te c hnical Approach, Staf f ing/Managem ent Plan, and Key Personnel
Re s um e s); 2) Com m ercial Healthcare Experience; and 3) Past Perf orm ance. Id. The technical and com m ercial healthcare f actors w ere c onsidered o f equal
im p ortance, and togethe r t h ese two f actors “[ were] signif

icantly m ore im p ortant t han t he Past Perf orm ance Factor. All non-Price Factors, when

com bined, [ were] signif

icantly m ore im portant than Price.” AR 248.

Under t he Technical Factor evaluation, f or the T echnical App r o a ch
subf actor, the agency sought to a scertain f rom of f e r ors’ proposals their understanding of the problem em b r a c e d b y the work, the f easibility of
of f eror’s proposed solutions, including “the level o r ef f ort and m ix of labor proposed to perf

orm the tasks identif

ied in the f

irst BPA o rder,” and whether
the of f ers “have adequately and com pletely considered, def

ined, and satisf

ied

3 “NAICS” is an acron y m f or the North Am erican Industry C l assif i cation Sy stem

. I ndustries and com m ercial activities are a ssigned codes b y t he by the
Of f ice of M a nagem ent and Budget. Con t r a c t i n g Of f i cers select the appropriate code f

or a procurem ent that is set aside f or sm all b usinesses. The
Sm all Business Adm inistration assigns dollar v alues to each code, which t hen
becom es the size lim its f

or the purpose of whether com panies are considered
to be sm all f

or any particular f

ederal procurem ent. See generally InGenesis,
Inc. v. United States , 104 Fed. Cl. 43, 45 (2012).

3t h e requirem ents specif ied in the solicitation.” AR 249. For t h e K e y Person n e l and Staf

f ing Plan subf

actors, t he agency considered whether
of f erors woul d h a v e a dequate key personnel and other s t af f available to perf orm the work within the requested period of tim e.

W ith the s econd f

actor, Com m e r cial Healthcare Experience, t he VA
aime d a t p l u m

bing t he depths of of

f erors’ and any subcontractor’s specif ic experience with com m e rcial he a l t h c are projects b ased on “ previous
dem onstrated r ecent and/or relevant experience. The breadth and depth of the experience, c riticality of any experience g aps identif i e d

, r e l evance t o the solicitation, and t he quoter’s approach” were a ll c onsidered by the age ncy under t h i s f

a c tor. Id. The solicitation stated t hat a lack of such experience
would be a negative while dem onstr a t e d “experience i n both com m ercial
healthcare a nd governm ent healthcare with transf o rm ed organizations sim i lar
in size and com

plexity to VA will be rated m ore f avorably .” AR 249-50. In
the questions a nd answers, added by am endm ent to the RFQ, the VA clarif ied

t h at of f erors c ould subm it their own experience and the e xperience of any proposed s ubcontractor, no m atter the size. See AR 155. The solicitation later
stated t h at, f

or this f actor, an of

f eror w as c o nsidered to be the prim e contractor and “ a l l p r o p osed subcontractors, m ajor o r otherwise.” AR 249. A m ajor
subcontractor was separately def ined i n the R F Q under the Past Perf orm ance f actor.

The Past Perf

o rm ance Factor was concerned m o re broadly with t he r isk
associated with of

f erors’ proposals as m easured by the “ historical quality of

a f irm ’s perf o rm ance” because the agency viewed of f erors’ past perf

orm ance history as having “predictive value when it c o me s t o a s sessing the risk of doing business with the f

i rm .” AR 2 50. Of

f erors were evaluated on the basis
of their own past perf

orm ance and that of a ny m ajor subcontractors, def i ned

as “one whose subcontract is f or m ore than 20% of t he total proposed price.”
Id. Prim e contractors a nd m ajor subcontr a c t o r s were assessed i ndividually
“and the results [ were] then assessed i n their totality to derive the quoter’s Past Perf orm ance rating.” Id. The VA considered the “quality

, relevancy (size and

scope, and com

plexity ) and recency (within last 3 y ears)” of these com p anies’ past perf orm ance. Id. Of

f erors without such e xperience were given a neutral rating.

Of f erors’ prices were evaluated f or the f a i rness a nd reasonableness of
their labor rates and t he tot a l p r ice f or the f irst order against the B PA, including “the level of ef

f ort and m ix of labor proposed to perf orm the specif

ic

4tasks being ordered.” AR 251. Of f erors were w arned that unreasonable prices would be rejected, resulting in disqualif i cation f or award. AR 247.

II. Evaluation And Award

The agency received six proposals in r e s ponse to the R FQ by the
Novem ber 6, 2017 deadline

. A l l six were determ ined to be eligible as SDVOSBs. Three proposals are relevant to this prot est: plaintif f ’s, intervenor’s, and t hat f

rom a third-party

, [ ]

. The

agency began evalua t i o ns on Novem ber 13, 2017. T he technical e valuators perf orm ed individual and consensus evaluations of e ach proposal received. A separate team eval u a t e d o f f erors’ prices. For the non-price f actors, the
technical t eam a s s e s s ed s trengths and weakness, conf idence r atings, any def iciencies f

ound, and assigned adjectiva l r atings. The c onsensus results
were as f ollows f or the three relevant of

f erors:

Factor ERPi [ ] AMSG

Technical Approach Excellent Good Satisf actory

Com m ercial
Healthcare Experience Substantial

Conf idence Substantial

Conf idence Satisf

actory Conf idence

Past Perf orm ance Moderate risk Moderate Risk Moderate Risk

Total Price $3,925,388.48 $5,046,135.36 $5,215,473.59

Price
Reasonableness Fair and

Reasonable Fair and

Reasonable Fair and

Reasonable

See AR 1474.

The contracting of

f icer (“CO”) did not change these rating s , a nd he
relied o n them in m aking his best value determ ination. On January 22, 2018,
the CO requested a p r ice reduction f rom ERPi prior to award, representing to intervenor that it was am ong the highest rated quotes, but not revealing that it

was goi n g to be the awardee. ERPi responded the next day with m inor
discounts.

5The CO f inalized the best value determ i nation on January 30, 2018, the

sam e day that the technical evaluation t eam f inalized i ts report. The best value
d e t e r m ination docum ent included a b est value t rade-of f analy sis between E R

P i
and [ ], AR 1 477-79, and a separate trade-of f b etween ERPi and plaintif f

, AR 1475-77. The CO f ound ERPi to represent the best value to the

governm e nt b ecause it r epresented both the highest rated and t he l owest p riced
of f er. AR 1479. The docum ent also touts the experience of ERPi and its t eam

as providin g exem

plary C om m ercial Healthcare Experience. See AR 1475,
1477-78. The C O added an addendum t o ref lect ERPi’s discounted f i nal prices. The best v alue determ ination was signed on January 31, 2018. The
f inal consensus technical evaluation was signed by som e o f the evaluators on February 1 and by others on February 2, 2018, but a notation appears next to
those signatures indicating that the report w as f inalized o n January 30, 2018.
AR 1234, 1254, 1276, 1297, 1316, 1336. The best value determ ination indicated that perf

orm ance would com m ence on February 1, 2018.

The VA n otif

i ed of f erors of the results o n February 1, 2018.
Debrief ings were requested by the unsuccessf ul of f e r o rs, and those were conducted on February

6, 2018.

III. Procedural History

Plaintif f subm itted a sm all business size protest against ERPi on February 6, 2018. The CO ref e r red the challenge t o the Sm all Business
Adm inistratio n ( “ S B A ” ) t he next day

, a nd issued a stop work order on February 8, 2018, pending resolution of the size protest.

On F ebruary 12, 2 0 18, the regional S BA of f i ce dism issed plainti f

f ’s
size challenge as untim ely because it was not brought w ithin f ive day s of

the
award to ERPi. AR 1999

- 2 0 0 1

. S BA relied on the regulatory requirem ent that, f or c o n t r acts p laced against a long-term m ultiple-award contract, size challenges m

ust be brought at the tim e of award of the original co n t r a c t t hat placed the o f

f eror on the m

u ltiple-award schedule, here t he o riginal GSA FSS.
No new o pportunity f

or protest arose w hen the agency solicited a BPA against
the schedule contract. P laintif f then a ppealed t o the SBA’s Of

f i ce of Hearings
and Appeal s ( “ O H A ”) which likewise dism issed the challenge as u ntim ely

. AR 2244-45 (SBA OHA decision of May 7, 2018).

On March 2, 2018, plaintif f f iled suit in this court p rior to the resolution
of its appeal at SBA OHA. ERPi intervened on March 9, 2108

. Af ter OHA

6denied p laintif f ’s appeal o n May 7, 2018, plaintif f was granted leave to am end
its com plaint to add a llegations concerning the SBA OHA s ize decision. The parties com

pleted two rounds of brief ing f or j udgm ent on the adm inistrative record, the second round concerned solely with the issue of ERPi’s eligibility

as a sm all business. W e held oral argum ent on July 12, 2018, and on J u ly 20,
2 0 1 8

, w e s ustained t he protest and entered a n injunction af ter inf o rm ing the parties of the result during a telephonic status conf erence. Order, ECF No. 39 (July 20, 2018).

DISCUSSION

This c ourt has jurisdiction o ver challenges brought b y interested parties

to actions t aken by f

ederal agencies in connection with the procure m e n t of goods a nd services. 28 U.S.C. § 1491(b)(1) ( 2012). W e r eview such agency action p ursuant to the standards set f orth in the A dm inistrative Procedures Act (“APA”), 5 U.S.C. § 706 (2012). 28 U .S.C. § 1 491(b)(4) (setting the standard
of r eview f

or bid protests to those proscribed in the APA. T hus, to prevail the protester m

ust establish that the agency acte d a r b itrarily or capriciously or acted in a m anner that was not in accordance with law. 5 U.S.C. § 706. This

m eans that the protest o r m ust dem onstrate that the agency lacked a rational
basis or v i olated applicable law or r e g u l a t i o n

. See Impresa Construzioni
Geom. Domenico Garufi v. United S tates
, 238 F.3d 1 324, 1332–33 (Fed. Cir. 2001). If t he agency “exam ines the relevant data and articulates a s atisf actory explanation,” t he decision will not be second-guessed by the court. Gulf Grp.
Inc. v. United States

, 61 Fed. Cl. 338, 351 (2004). But, “whe r e t h e a g e ncy f ails t o undertake a r e view or f ails t o docum ents such review, w e m ust conclude that it a cted irrationally .” Starry Assocs., I nc. v. United States

, 1 27
Fed. Cl. 539, 549 (2016) (citing AshBritt, Inc. v

. U nited States

, 87 Fed. Cl. 344, 370 ( 2009)). If the agency action i s f ound t o be illegal or o therwise irrational, t he p rotestor m ust also show that it was harm ed; i.e., that had it not been f or t h e agency ’s error, “it would have had a substantial chance of securing the contract.” L abatt Food Servs., Inc. v. U nited S t a t e s , 5 7 7 F .3d 1375, 1378 (Fed. Cir. 2009).

I. Plaintif

f Has Standing

W e begin with the latter question: w hether p laintif f h a s s t anding to challenge the award. Def

endant and intervenor aver that plaintif f has not been
harm ed because i t is not next in line t o receive the award should the a ward to

7E R P i b e set aside. They point to [ ] as the next ranked o f f e r o r a n d mo s t likely to receive the award if

the contract is not awarded to ERPi.

Plaintif f responds by arguing t hat it need only show that it was “within
the active z one of consideration,” Alfa Laval Separation Inc. v. United States

, 175 F .3d 1365, 1367 (Fed. Cir. 1999), and that the record shows just that with respect to t he agency ’s c o n sideration of its proposal. W e agree. T he record
shows that t he agency perf orm ed a best value t rade-of f between ERPi’s proposal and AMSG’s as well as a b est value trade-of f between ERPi and [ ]. AR 1 475-79. Under these circum stances, we t h ink p laintif f h as established standing. Although m ost of the cases cited by the parties deal with
situations i n w h i c h t h e party f ound to have standing was second in line, a protestor need not show t hat it wou l d h a v e r eceived the a ward but f or the alleged error. Id. (citing Data G eneral Corp. v

. J ohnson

, 78 F.3d 1556, 1562 (Fed. Cir. 1996)). Wh e n the agency ’s best value t rade-of f includes the protestor, even w hen it w as n o t n otionally the second-rated of f e ror, the protestor has established that it would have had a substantial chance of

r e c e i v i n g the a ward but f or the alleged error. 4 The law is plain that, in t h e
context of a best v alue procurem ent, agencies h ave broad discretion to award
f or any r eason that m eets a bare standard of rationalit y

. W e thus cannot conclude that there i s n o p o s s ible reason the a gency m ight a ward to A MSG

over [ ]. In other words, here, the law will not assum e it a fait accompli
that the next highest r a ted pro p o s a l w ould receive t he award. P laintif f h as establish e d t h a t there is a substantial chance t hat it m ight be awarded the

contract if ERPi is not s elected and it thus has standing to m aintain the protest.

II. ERPi W a s Eligible For Award

Plaintif f argues that ERPi was ineligible f or award because it was not

sm all, per the applicable N A I C S c o d e, at the tim e o f award of t he B PA.
Plaintif f points to the VA’s own published guidance, which goes bey ond the
SBA regulations to require that an of f eror represent t hat it is sm all at the tim e of a ward. AMSG argues that this additional requirem ent is not m et sim ply by having the applicable certif i c a t i o n s of eligibility on f i le, but rather that the
of f erors m u s t m ake new af

f irm ative r epresentations of their size status at the

4 Nowhere in the best value determ ination is it a f f i rm atively stated that [ ]

was the ne xt-in-line of

f eror. The ratings t able provided above shows that it
had the second hi ghest non-price ratings, f rom w hich w e inf

er it to b e the
second-rated.

8tim e of award. P laintif f concludes that the SBA OHA decision dism issing the
size p rotest of ERPi was f l awed when it f

ailed to apply the VA’s o wn, m ore

s t r i ngent requirem e nts. Even if the SBA was correct in f o llowing its o w n regulations, plaintif

f urges that its decision is irrelevant because the VA was
under an obligation to g o f u r t h e r in assuring itself that t he intervenor was in
f act eligible f

or a w a r d a t the tim e of award. Plaintif f alleges that it was not, and thus should not have received the award.

Def endant answers that the S BA did no m ore than lawf ully f ollow its

own applicable re g u l a tions and that, e ven had it applied the VA’s guidance,
the result would not have changed. T he g overnm ent argues that t he a pplicable regulations, including the published guidance c ited by plaintif f

, do not require

a n ew size certif

icat i o n a t t he tim e of award, but rather that the agency was
perm itted t o rely at the tim e of award on ERPi’s on-record certif ications that
it f it under the NAICS code. 5 Def endant also argues that, t o t he e x tent plaintif f
is challenging the service disabled veteran status of ERPi, that challenge is not ripe b ecause plaintif

f f ailed to pursue the issue adm inistratively with t he VA. 6

A. Sm all Business Set-Aside Regulations

W e begin with the applicable r egulations. Two sets of r egulations are im p licated by this protest—the SBA’ s a n d t h e V A ’ s —but the VA’s regulations
f or sm a ll business set-asides tie the two togethe r. F AR part 819 deals with

sm all business parti c i p a tion program s generally

, and subpart 819.70 specif i cally applies to VA’s set-asides f or veteran-owned sm al l businesses. Subpart 7003 draws t h e l i n k, stating that V A s et-asides “continue[ ] to be governed by the Sm all B usiness Adm inistration regulations, 13 CFR subparts
125.8 through 125.13, as well as the FAR, except where e xpressly directed otherwise by

the VAAR, and 38 CFR verif ication regulations f

o r SDVOSBs

5 Intervenor also argues that the VA’s class deviation was n ot l egally binding

on the agency b ecause it was not the subject o f notice and com m ent rulem aking. W e do not reach that question because we f ind that the result is the

sam e with or without the class deviation.

6 W e do not, however, view plaintif f ’s challenge a s being directed at ERPi’s

veteran o wned or s ervice disabled s tatus. Thus we do not treat the i s s ue below. Plaintif

f ’s attack is lim i ted to the NAICS code size standard, which we believe to be properly b ef ore us due to plaintif

f having protested the issue to the SBA and then appealed to SBA OHA.

9and VOSBs.” 48 C .F.R. § 819.7003(a) (2017). Subpart 7003 continues: “(b)

At the tim e o f s ubm ission of of f e r , the of

f eror m ust represent to the contracting o f

f icer that it is a - (1) SDVOSB c o n c e r n o r VOSB concern; (2)
Sm all business concern under the [ NAICS] code assigned to the acquisition; and (3) Verif

i ed f or eligibility

in the VIP database.” Id. § 819.7003(b).

Subpart 819.7003(b)(2)’s requirem ent t hat of f erors represent their size
standard under the applicable NAICS code at the tim e o f o f f e r m irrors the applicable SBA-specif

i c regulation, 13 C.F.R. § 1 25.14 (2017), which states
that “At t he t ime o f c o n tract of f er, an SDVO SBC m

ust b e sm all within the
size standard corresponding to the N A I C S code assigned to t he contract.”
Section 1 21.4 0 4 a n s wers the question o f when the size status o f a business

concern is determ ined: “SBA determ ines the size status of a concern

. . . as of
the date the c oncern subm its a written self -certif ication that it is s mall to the procuring agency

as part of its initial of

f er.” I d. § 121.404 (2017).

The n ext question is w h e n is an of f eror required to subm it such
certif ication. Section 121.404 goes on to deal specif ically with orders i ssued against a m

ultiple award c ontract, such as the GSA FSS, and states that “SBA
determ ines size at the tim e of initial of f e r,

. . . f or a Multiple Award Contract.

. . . If a business is sm all at the tim e of of f er f or the Multiple Award Contract,
it i s sm all f

or each order issued against the contract, unless a contract i n g of f icer requests a new size certif ication in connection with a specif ic order.”
Id. § 121.404(1)(i). If t he CO “requests a new size certif ication f or the order,” then, and only then, “SBA will determ ine s ize a t t he tim e of i nitial of f er

. . . f or

an order.” Id. § 121.404(1)(iii). In s u m , w h e n the award is f or an order

ag ainst a m

ultiple award schedule contract, as here, S BA will look to the
certif ications m ade by of

f e rors when they

entered into the schedule contract,

not the order. The only exception is when the CO of an agency subm itting an order against the schedule requests new certif ications.

SBA’s size protest tim eliness rules predictably f ollow the sam e logic.
Because this contract is an order a warded under a long-term GSA FSS
contract, SBA’s l o n g

- t erm contract (or m ultiple a w ard c o ntract) tim e liness regulation applies:

F or contracts w ith durations greater than f ive y ears ( includin g

o p t i o n s )

, i n c l u d i n g a l l e x i s t i n g l o n g

- t e r m c o n t r a c t s , Multi-age n c y c o n t

r a c t s , G o v e r

n m e n t w i d e Acquisition Contracts and Multiple Award Contracts:

10(i) Protests regarding s ize certif i c a t i ons m ade f

or
contracts m

ust b e received by the contracting of f i cer prior to the close of business on the 5th day

, exclusive of Saturday s, Sunday s, a nd l egal h oliday s, a f t er receipt of
notice ( including notice received in writing, o rally

, or via

e l e ctronic posting) of the i dentity of the prospect i v e awardee or award.

. . . .

(iii) Protests relating to size certi f i c a tions m a d e in

response t o a contracting of f icer’s r e q

uest f or size
certif ications in connection with a n individual o r d er m ust be received by the contracting o f f icer prior to the close of
business o n the 5th day

, exclusive of S aturday s, Sunday s , and legal holiday s, af

ter receipt of

notice . . . .

I d

. § 121.1004(a)(3)(iii). Subsections (i) and ( iii) read t ogether m ean t h a t protestors generally h ave f ive day s f rom award of the m a ster FSS c ontract to protest an a wardee’s size certif ication unless the CO requires re-certif i cation

at the tim e of award of an order against the FSS contract. Here, the CO did not ask f or a new certif

ication at any

point.

The VA’s own supplem ental procurem en t r e gulations, known as the
VA Acquisition Regulat i o n (“VAAR”), add another level of adm inistrative requi r e me n t s t o VA procurem ents. From tim e to tim e, the VA issues new rules that d eviate f

rom publi s h e d FAR o r VAAR provisions, called
“deviations.” Plaintif

f cites to the class deviation issued b y the VA o n July 26, 2016, which p u rports to supercede FAR part 819.7 0 0 3

. T h e deviation replaces subsection (b) with the f ollowin g l a n g u a ge: “At the tim e of
subm ission of of

f ers/quotes, and prior to award of any contracts
, the of f eror

m ust represent to the contracting of f ic e r t h a t i t i s

. . .” a n d t hen it goes o n to list the sam e three requirem ents of elig i b ility : status as a SDVOSB/VOSB,

sm all under t he NAICS code, and listed a s verif ied in the V IP database. Class
Deviation—Veterans First Contracting Program (VFCP 2016), Attachm e nt 4 § 819.7003 (July 25, 2016) (em phasis added). This adds to FAR part 819.7003
the requirem ent that an of f e ror represent its eligibility to t he CO at t he tim e of
award in addition to at t h e t im e of of f er. The im

pact of that additional requirem ent is the issue raised by plaintif f

.

11B. ERPi W as Eligible at the Tim e o f Award of i ts GSA FSS Contract
And at the Tim e of

Award of

the BPA

W e hold that neither the VA nor the SBA erred. SBA s i m ply applied
its tim eliness requirem ents as wr i t t en. Nothing in the VAAR or p ublished
deviation purports to c hange the S BA’s size protest tim eliness rules. That f act dictates the result reached by SBA OHA. 13 C.F.R. § 121.1004(a)(3)(i) and (iii) are clear tha t a n of f eror has f

ive day s f

rom the award t hat places a contractor on the schedule contract to protest that awardee’s size s tatus or, if
the CO a sks f

or n e w c e r tif

ications when placing an order against the supply schedule, a new f

i v e -day window is opened. Here, the C O d isavowed on

m ultiple occasions t he opportunity to ask f o r n ew certif

ications. Thus no new window was o pened to c h a l l enge ERPi’s size status, and OHA was neither arbitrary nor capricious in f inding so. Although our review could e nd here, we also consider plaintif

f ’s alternative a r gum ent that the S B A’s decisions are irrelevant given the VA’s class deviation’s requirem ents.

Plaintif f argues that, because SBA O HA did n ot a ttem p t to circum v ent i t s own tim eliness rules to take into account the VAAR deviation, the SBA
decision is irrelevant and the agency was otherwise under a n independent duty

to assure itself of ERPi’s size at the tim e of award, which plaintif f avers w ould
have resulted in disqualif

ication and award to another of f eror. W e do not view the class deviation as quite so sweeping in its ef f e c t.

Although the V AAR class deviation does create a new point o f inquiry
f or the VA i nto the size o f s t a t us of of f erors, i t d oes not change the existing
f ram ework under which of f erors certif

y them selves as sm all and v eteran owned and/ or service disabled. Of f erors a re required t o repre s e n t t o the

agency that they m eet the size standards a t the tim e o f of f e r a nd award. W e take this, as the parties do, to m ean also at the tim e o f award of a n order against a schedule contract, but the process of m aking such representations we view as unchanged.

Here, t he RFQ inf

orm ed of f e ro r s that the VA w ould e valuate their eligibility through the SAM and VIP databases. AR 1 64 (Questions and Answers); AR 248 (evaluation process graphic). Answer to q uestion 84 stated
that the V A would “determ ine com pan y s i z e b y r ef

erencing [ S AM] representations and certif ications a t t he tim e of receipt of Q u o tes and at the
tim e of award.” AR 164. Q uestion 86 s pecif i cally asked whether the agency would include a requirem e n t f or re-certif

i cation of SDVOSB s tatus. The

12answer was in the negativ e , a l t hough of f erors were given the option of including updated certif

ications with their proposals i f t h ey did not w ant the

agency to rely on those f

ound in the SAM data b a s e

. I d

. T he agency did as
prom ised, a nd it f

ound ERPi to have the necessary c e r tif ications in both the SAM and VIP databases. AR 1356 (best value determ ination).

Thus, if a n of

f eror’s on-f

ile certif ication that it m eets the NAICS code

rem ains u nchanged d u r i ng a procurem ent, the agency is perm itted to rely on it both at the tim e of of

f er and again at the tim e of award. The regulations also
af f ord the agency d iscretion to require new certif ications if the CO so c hooses,
but neither t he class deviation nor any other cited regulation requires the CO

to do so at the tim e of award. If an of f eror’s status in the applicable database
should change f

or other r easons b etween the tim e o f o f f er and a w a r d, it m ight
be rendered ineligible at the tim e of award under the VA’s c lass deviation, but

n o t h i n g in that deviation independently requires an of f eror to m ake a ne w certif ication at that tim e.

In sum , the agency prom ised to avail itself of the record certif

i cations

at t he tim e of o f

f er a nd award, and did s o. W e do not v iew the class deviation

as creating a n ew requ i r e m ent that of f erors re-certif

y them selves f

or e very of f er that they subm it to the VA and again at tim e o f a w a r d

. T h e F AR

m andates that cont r a c t o r s update their size certif i cations only a nnually

. 48
C.F.R. § 4.1201 (2017). Businesses are eligible to rem ain in t he VIP database
f or three y ears unless they f all out of compliance. See 38 C .F.R. § 74.15(a) (2017). The b est value determ i nation contains a screenshot of i ntervenor’s
VIP p rof ile, which listed that it was l ast verif i ed on January 11, 2016, and t hat
certif ication would not expire until January 11, 2019. AR 1356. Because the

agency did not request r e-certif i caton and because i t was not required to do so,
t he agency was not arbitrary or capricious and did not act contrary t o l a w i n f inding that ERPi was eligible f o r award. 7

7 Intervenor also argued that, even had it b een required to r e-certif y , it w ould
have m et the size requirem ents. Plaintif f alleges the o pposite, and both parties
cite to extra-record m aterials f o r f a ctual support. W e do not reach that issue,
h o w e v er, because the agency was proper in i ts r eliance on the of -rec o r d
certif ications at the tim e.

13III. The Agency ’s Evaluation of ERPi’s Com m e r cial Healthcare E x perience

W a s Arbitrary

Plaintif f ’s other m ain challenge to the VA’s selection of ERPi concerns how t h e a g e ncy viewed intervenor’s r elationship to two entities of sim i lar

nam e. One was of

f ered by ERPi as a major subcontractor u nder the Past Perf orm ance f actor, and the other com

pany w as invoked a s a “ s t

r a tegic team ing partner” that w o u l d provide experience and other non-specif ic support to
E R Pi’s ef f ort in perf

orm ing the contract. The latter com pany was cited b y ERPi in its Com m ercial Healthcare Experience volum e.

The experience of [ ] was touted by t he VA in its evaluation of ERPi under the Com m ercial Healthcare Experience f

actor as p roviding the basis f o r the agency ’ s award of a s u bstantial
conf idence ra t i n g

. Plaintif

f challenges that f

inding as u nf

ounded by ERPi’s proposal and likely t he product of conf usion on the part o f the a gency between [ ] and [ ].

The Com m ercial Healthcare Experience f actor was considered by the

agency to be of

equal im portance with the Technical f actor. The solicitation
is clear that the agency w as very interested i n procuring consulting services
f rom com panies with experience in transf orm ing healthcare sy stem s, be they
the prim e c ontractor or its subcontractors. To that end, of f erors were invited

to provide three e xam

ples of such past ef

f orts under this f

a ctor f rom their o wn

or their subcontractor’s experience. AR 242. Of f e r o r s were provided f

ive

pages to write a n arrative description of those ef f or t s f o c u sing on how t hat

ex p e r i e n c e “ equipped it w ith the knowledge, skills and ability to support im p lem entation of a health care delivery sy stem f or a lar g e , com

p lex enterprise-wide healthcare network.” AR 243. As m entioned previously

, no distinction f

or this f actor was m a d e betw een m ajor and other sm aller
subcontractors.

On the f irst page of its proposal, in the f irst paragraph, intervenor listed
its team to perf orm the work: ERPi, “[ .]” AR
651. In the next paragraph, intervenor stated that, af ter reviewing t he

statem ent o f work, “we have caref ully c onsidered addi tional team m ates to

augm ent our capabilities and perspectives a nd provide b est value to the

governm e nt.” Id. It then listed these two key team m ates: “[ ]” and “[ .]” Id. Thus ERPi began i t s p r o p o s a l b y

14def

ining “[ ]” as ref

erring to two separate e ntities, [ ].
It touted these entities as having m ore experience “orchestrating health sy stem

m odernization strategy and im plem entation than any other com m e rcial f irm .”
Id. An ef f ort to transf

o rm [ ] was cited as the exam ple.

I n t he Com m ercial Healthcare Experience section o f its p roposal specif i cally , ERPi listed “[ ]” as “stra t e gic team ing partners.”
AR 741. It again d e f

ined [ ] as a collective of the s am e two sim ilarly nam ed
entities with w hich it began its Technical volum e. The next paragraph goes on
to list ten healthcare providers f o r w h i c h [ ] [ has] provide[ d] ‘strategy through im

p lem entation’ services a nd successf ully e x ecute[ d] com

p lex projects f or” in a h i g h l y c o mp etitive m arket. Id. “[ ] brings the b est of

com m ercial and Federal consulting to our clients to hel p t h e m achieve
success.” Id. It is unclear which entity has which experience. Intervenor t hen
listed three specif

i c past ef f orts in the f

ield of healthcare c onsulting as invited by the RFQ: [ ]

. A R 743-45. All three were listed as perf orm ed by “[ ]” or “[ ].”

Although it is unclear f

r om t hese s tatem ents taken alone which of the

two [ ] entities had perf orm ed these cited prior ef f orts, t he technical
evaluators understood these ref erences to have been perf orm ed by [ ]

. See AR 1287-89 (“W ork perf orm ed by [ ]). The parties do not dispute that this work was perf orm ed by [ ] and not [ ].

Som e additional c larity is provided i n the Past Perf orm a nce section of
intervenor’s proposal. T here it lists its m ajor subcontracto r s–those p erf orm ing at least 20 percent of the work–as [ ] and [ ]

. ERPi itself

is listed as perf

orm ing 50.25% of

the work, [ ] 2 3

. 4 2 %

, and [ ] 23.69%. AR 755. That chart also lists the statem ent of work tasks that these com panies would be p erf

orm ing. Id. (ERPi tasks 9.1- 9.6; [ ] tasks 9.2-9.6; and [ ] t a s k 9

. 5 )

. T h o s e t h r e e total 97.36% of t h e v a l u e o f work under the contract. N o breakdown of the percentage of w o r k o r l ist of tasks to be perf orm ed i s f

ound any where in
ERPi’s proposal f

or [ ]. Also as part of its Past Perf orm ance proposal,
intervenor provided three past perf orm ance ref

erences as required by the R FQ.
The f irst was perf

orm e d by ERPi, the second by

[ ] i n w h i c h ERPi was a subcontractor, and the third was perf orm ed by [ ].

15The V A t e c h n ical e valuators considered each of the t hree e x am ples provided of Com m e rcial Healthcare Experience. They listed each a s having been perf orm ed by [ ], not [ ]

, a n d c r e d i t e d t h e experience to ERPi. T he r e s u l t was a “substantial conf idence” rating, the highest possible adjectival rating, f or the Com m ercial Healthcare E x perience
f actor. A R 1290. The consensus rating report st a t e s that “[ t]he Partnership
with [ ] and their exam

ple experience/projects suggest a high probability of

success wit h V A Modernization given the relevant com parisons of needed
ef f ort.” Id. These e xam

ples “exhibited t he ability o f team ERPi to support im p rovem ent and im

plem entation of large healthcare de l i very sy stem s” and
“dem onstrate that Team

ERPi can deliver results that VA will expect.” Id.

The CO relied on these f indin g s i n his best value determ ination, agreeing with them all. He touted t he experience of ERPi’s “key partner’s” as driving the agency ’s evaluation of i ntervenor ’ s C o m m ercial Healthcare Experience. In both trade-of f analy ses, ERPi’s “team of s ubcontractors” was cited as a benef

it to the governm ent. See AR 1476, 1477.

Read together, these record s tatem ents provide a clear picture that the
V A r e lied heavily on the experience provided by “team ERPi,” a nd mo s t specif i cally that provided by

[ ]. [ ]

, t h e m a j o r subcontractor, however, perf orm e d none of the work on w h i ch i ntervenor relied f or its Com m ercial Healthcare Experience exam ples and on which the
evaluators and t he CO relied as givi n g the VA substantial conf i dence in
ERPi’s handling of this c ontract. I n f a ct, f or the Past Perf

orm ance evaluation,
wherein intervenor could rely only on i t s own and its m ajor subcontractors’ experience ( i.e., not that of [ ] )

, t h e a g e n cy f ound m oderate r i s k
associated with ERPi’s p roposal. AR 1474. The question t hen is w h e t her it

was reasonable f

or the agency to have f

o und so m uch support in the undef

i ned
role to be play ed by [ ], which by def inition could not have consisted
of m ore than 3% of

the ef f ort.

Plaintif f answers that question i n the negative, and we agree. Plaintif f

avers that [ ] a nd [ ] are s eparate entities and cites to extra-record m aterials to establish that they a re no longer af f ilia t e d under a parent c om

pany or other corporate relat i o n s h ip. Plaintif f also cites to other
recent bid protests in which the relationship between the two com panies was

at issue. W e need n eit h e r such ref erence to illum inate a problem that is apparent f

rom the record.

16Def endant relies o n the solicitation’s allowance of any subcontractor’s experience to b e u sed f

or the Com m ercial Healthcare E x perience f actor, no

m atter the anticipated scope or size of that com pany ’s perf

orm ance under the
solicited contract. Thus, in def endant’s v iew, the agency w as entitled to rely

on whatever was provided by an of f e r or by way o f a subcontractor’s previous experience f

or this f actor. The total lack of

indication in the record that [ ] would perf

orm any particular work under the contract or o therwise
of f er som e s pecif

ie d s u p port to intervenor’s and its m ajor subcontractor’s
ef f orts is thus irrelevant in the governm ent’s view.

Intervenor takes a slightly dif f erent tack, argui n g n o t that the percentage of perf

o r m ance of the s u

bcontractors relied on f

or C o r p o r ate Healthcare Experience is irrelevant, but that the l aw prov i d es f or situations
l ike these by allowing of f e rors to rely o n the experience of “af f iliates ” f o r
purposes of providing experience and other relevant solicitation requirem ents.
Intervenor states that [ ] and [ ] a r e a f f i l i a t e s a n d w e r e thus p roperly c o n s idered together by the a g ency f or their collective e xperience.

The connection not of

f ered by either def

endant or intervenor, however, is the basis on which the agency could reasonably

conclude that [ ] ’ s experience would be m e aningf ully b rought to bear by “Team ERPi.” 8 Neither
intervenor’s proposal nor the agency ’ s evaluation provide the m issing link. In
f act, the breakdown of perf orm ance i n ERPi’s proposal s u ggests the opposite; between ERPi, [ ], and [ ]

, 9 7

. 3 6 % o f t h e w o r k w a s accounted f

or, leaving only 2.64% f or a n y other subcontractor t o perf orm

. And t hat tiny

percentage also has to account f or [ ]

, w h i c h

w a s l i sted as a “strategic team ing partner” of ERPi as well as “indus t r y experts, lum inaries, a nd academ ia.” AR 755 (stating that work not capt u r ed

8 At oral argum ent, intervenor’s counsel of f e red t hat [ ] would likely
be a “sec o n d-tier” subcontractor f or this w ork, m eaning that it would have a contractual relations h i p a s a sub-subcontractor to one of ERPi’s m ajor subcontractors, but no privity with the governm ent. Such a n a r r a ngem ent would provide f

or [ ] to in f

act perf o r m mo r e than som e share of the 2.64 percent lef

t over f or any one other than ERPi, [ ], and [ ]. T h at explanation provides no support f o r intervenor’s position, however, because neither the agency nor the intervenor posited it as a rationale

at the tim e of a ward, nor does a ny other d ocum ent in the record suggest such a relationship.

17in the chart above would be perf orm ed by experts, lum inaries, and academ ia).

Only [ ] was of f ered by int e r venor as perf orm i ng a large percentage of work as a subcontractor. No representation appears in the record regarding the scope or size of [ ] ’ s a n t i c i p a t e d p e r f o r m a n c e

. T h e only thread connecting [ ] t o E R P i ’ s p r o p o s e d e f f o r t a r e s e v e r a l instances where “[ ]” is def ined in parentheses as including both [ ] and [ ], but in no place does it e x p l a i n the corporate relationship
between the t wo or m ake any other representation on w hich the agency could conclude that [ ] was obligated either to ERPi or to [

] to p rovide support f

or t heir ef f orts u nder this contract. 9 It is also
im p ortant to note that the listing of [ ]’s t h r e e p r e v ious corporate
healthcare e xperience ef f orts is nothing m ore t h a n a recitation of t hat

com pany ’s experience. W ithout a legal l ink between the two, the agency
cannot reasonably have considered the experience relevant to ERPi or a ny of
its subcontractors. All this is too thin a reed.

As t o the argum ent f

rom intervenor t hat [ ] is an af f iliate of [ ], we a gain note that no such connection is drawn by intervenor’s proposal or the agency ’s evaluation. This co u r t h a s h eld that an a g ency can rely on the experience o r past perf o rm ance of “ a parent o r af f iliated com

pany

. . . where the f

irm ’s proposal dem onstrates that the resources of the parent or af f iliated c om

pany will af

f ect the perf

orm a nce of the o f

f eror.” Femme Comp
Inc. v. U nited States

, 83 Fed. Cl. 704, 747 (2008). T he problem f or def endant
and i ntervenor is that, other than n a mi n g t h e two entities together and citing [ ]’s experience, the proposal draws no link t o assure the agency that “ the resources of the

. . . af f iliated com

pany will af

f ect the perf

or m a n ce of the of f eror.” Id. The court h as only a f ixed l ense through which to view the

agency ’ s actions: the words contained in th e contem poraneous r ecord of the

procurem ent. Here, there i s no docum entary support f o r the a gency ’s reliance on [ ]’s corporate healthcare experience a s p r o v i d i n g t h e c r i t ical experience f

o r intervenor. The agency m ay have known som ething about the

two entities’ corporate relationship o r it m a y have inf erred som ething f

rom ERPi’s proposal, but t his speculation is not supported on the record. W e theref ore conclude that the agency acted arbitrarily in awarding a “substantial
conf idence” rating to ERPi f

or the Com m ercial Healthcare Experience f actor.

9 ERPi did list o ne indivi d u a l f o r the Key Personnel technical subf actor as

com ing f rom [ ]. W e view t h a t f a c t a s i n s u f

f icient t o draw the

necessary link.

18It necessar i l y f ollows that the best value determ ination and award to ERPi
were also irrational.

IV. The Award Must Be Set Aside

Because def

endant arbitrarily inf

la t e d the awardee’s rating f or one of
the two m o st im

portant f actors, the award m

ust be set aside and the evaluation perf orm ed again. In order to enjoin any agency action, the court m ust consider
f our f actors in r eaching that conclusion. They a re: 1) w hether plaintif f h as succeeded on the m erits, as it m ust to receive perm a n ent injunctive relief ; 2)
whether plaintif

f w ill suf f e r irreparable harm absent the injunction; 3) whether
the balance of the hardships to the respective parties f avors an i njunction; and 4) whether it is in the public interest to g rant the injunctive relief

. PGBA, LLC

v. United States

, 389 F.3d 1219, 1229 (Fed. C ir. 2004). The court considers
all of the f actors together. N o one f

actor is d ispositive other than t hat plaintif f

m ust succeed on the m erits in order to gain perm a nent injunctive relief

.

As we hold a

bove, plaintif

f has dem onstrated standing and shown t hat
the agency irrationally evaluated the awardee’s p r o p osal. The f irst hurdle is

m et. As to the har m s u f f ered by plaintif

f absent r elief

, this court has o f

ten f o u n d that the loss of an opportunity to f airly com pete f or a contract is a signif icant and irreparable harm

. W e f ind s o here. The balance of t he harm s f avors plaintif

f

. O ther t han delay

, def

endant has not shown how it will be
harm ed by the injunction. Eventually t he work can be perf orm ed one way or the other. The p r o vision of healthcare to v eterans i s not im m ediately
im p li c a t e d b y requiring additional t im e b e taken f or t his procurem ent. Pl a i n t if f

, on the other hand, will be harm ed by losing its o pportunity to

com pete f or the work. The public’s interest alway s is i n ensuring the lawf ul expenditure of public f

u nds, m eaning t h a t f

ederal entities m

ust m eet the
standards p rescribed by p r ocurem ent s tatues and regulations as well as the
APA

. A rational and f

air acquisition process is part and parcel with this interest, and d ef

endant has not prof

f ered a ny countervailing publi c i n t erest.
In sum , we f

ind that injunctive relief is warranted. W e entered an injunction
at the tim e of

the status conf

erence on July

20, 2018.

CONCLUSION

Although the intervenor was eligible f o r the award—the VA’s reliance

on ERPi’s SAM a nd VIP certif ications w a s not unlawf

ul—the agency was arbitrary a nd capricious i n c rediting it with the com m ercial h ealthcare

19experience of an entity that the agency h ad no apparent reason to think w ould

m eaningf ully support t he work or would otherwise inf l uence intervenor’s perf orm ance in a signif

icant way

. Thus we previously granted plainti f f ’ s

m otio n f or judgm ent o n the adm inistrative record, denied def e ndant’s and
intervenor’s cross-m otions, and entered an injunction setting aside t he award

to ERPi a nd i nstructing the VA to r eevaluate E RPi’s proposal and m ake a new award decision. W e have also considered plaintif f ’s other allegations, but as explained on the record during the status conf erence, none provide a basis f or sustaining the protest. A ccordingly

, the Clerk o f C o u r t is directed to enter judgm ent f

or plaintif f . No costs.

s/Eric G. Bruggink

ERIC G. BRUGGINK Senior Judge

20