IN THE UNITED STATES COURT OF FEDERAL CLAIMS

______________________________________ )

SUPERIOR OPTICAL LABS, INC

., )

)

Plaintiff

, ) No. 21

- cv

- 01580

)

v. ) Filed Under Seal : February 1

, 202 2

)

THE UNITED STATES, ) Reissued: February 1 1

, 2022 ∗

)

Defendant, )

)

and )

)

PDS CONSULTANTS, INC., )

)

Defendant

- )

Intervenor. )

______________________________________ )

OPINION AND ORDER

This post

- award bid protest challenges the decision of the Small Business Administration ’ s

( “ SBA”) Office of Hearings and Appeals ( “ OHA ”) finding Plaintiff Superior Optical Labs

, Inc.

ineligible for award under Department of Veterans Affairs Solicitation No. 36C24820R0087

( “ Solicitation ”). The Solicitation was set aside entirely for a Service

- Disabled Veteran

- Owned

Small Business ( “ SDVOSB ”) to provide prescription eyeglasses and related services in Veterans

Integrated Services Network (“V ISN”) 8 in central Florida. After Superior was awarded the

contract, Defendant

- Intervenor PDS Consultants, Inc. protest ed Superior’s status as a SDVOSB.

Based on a Services and Supply Agreement between Superior and its former owner, which OHA

∗ The Court issued this opinion under seal on February 1, 2022 and directed the parties to

file any proposed redaction s by February 10, 2022. The opinion issued today incorporates the

pro po sed redactions received

. R edacted material is represented by bracket ed ellipses “[

. . . ].”2 found to be in effect at the time Superior submitted its offer in response to the Solicitation, OHA

held that Superior did not qualify as a SDVOSB for purposes of the procurement

.

Before the Court are Superior’s Motion for Judgment on the Administrative Record, the

Government’s Cross

- Motion for Judgme nt on the Administrative Record, and PDS ’ s combined

Motion to Dismiss pursuant to Rule 12(b)(1) of the Rules of the Unit ed States Court of Federal

Claims ( “ RCFC ”) and Cr oss

- Motion for Judgment on the Administrative Record. For the reasons

discussed below, the Court finds that it has jurisdiction over Superior’s bid protest claims and that

OHA rationally determin ed that Superior failed to qualify as a SDVOSB. Conse quently, PDS ’ s

Motion to Dismiss is DENIED

, the Government ’ s and PDS ’ s Cross

- Motions for Judgment are

GRANTED

, and Superior ’ s Motion for Judgment is DENIED

.

I. BACKGROUND

A. Statutory and Regulatory Background

Under the Veterans Benefits, Health Care, and Information Technology Act of 2006, 120

Stat. 3431

– 3436 (codified, as amended, at 38 U.S.C. §§ 8127

– 28), the Secretary of the Department

of Veterans Affairs ( “ VA”) is required to set annual goals for contracting with service

- disabled

and other veteran

- owned small businesses. 38 U.S.C. § 8127(a). The VA is obligated to restrict

competitio n for procurements to veteran

- owned small businesses, including SDVOSBs, if the

contracting officer (“CO”) for the procurement reasonably expects that at least two such businesses

will submit offers and that “ the award can be made at a fair and reasonable price that offers best

value to the United States.” Id. § 8127(d); see Kingdomware Techs., Inc. v. United States

, 579

U.S. 162, 164

– 65 (2016).3 To qualify as a SDVOSB eligible to compete for these types of procurements, a business

must be “ at le ast 51% unconditionally and directly owned by one or more service

- disabled

veterans.” 13 C.F.R. § 125.12

.

1F 1

A service

- disabled veteran is defined by regulation as a veteran who has a valid disability

rating letter issued by the VA that shows a service

- c onnected rating between 0 and 100 percent, a

valid disability determination from the Department of Defense, or is registered as a service

disabled veteran in the Beneficiary Identification and Records Locator Subsystem maintained by

the VA ’ s Veterans Benef its Administration. Id. § 125.11. A business that is principally owned

by another business entity that is itself not owned and controlled by one or more service

- disabled

veterans does not qualify as a SDVOSB. Id. § 125.12(a).

The eligibility requireme nts further mandate that both the management and daily business

operations of a SDVOSB must be controlled by one or more service

- disabled veterans. Id. §

125.13(a). This “means that both the long

- term decision[] making and the day

- to

- day management

and a dministration of the business operations must be conducted by one or more service

- disabled

veterans.” Id. There is a rebuttable presumption that someone other than a service

- disabled

veteran has control, or the power to control, the business where “ [b]usiness relationships exist with

non

- service

- disabled veteran individuals or entities which cause such dependence that the

applicant or concern cannot exercise independent business judgment without great economic risk.”

Id. § 125.13(i)(7). An excepti on exists “ where a service

- disabled veteran does not have the

unilateral power and authority to make decisions in ‘ extraordinary circumstances.’” Id. §

125.13(m). Such extraordinary circumstances are solely limited to: “ (1) Adding a new equity

1 Additionally, a SDVOSB must be considered “small” in accordance with the size standard

corresponding to the North American Industry Classification System (NAICS) code assigned to

the contract at issue. 13 C.F.R. § 125.14(a).4 stakeholde r; (2) Dissolution of the company; (3) Sale of the company; (4) The merger of the

company; and (5) Company declaring bankruptcy.” Id. § 125.11.

The VA Center for Verification and Evaluation ( “ CVE”) is responsible for certifying

contractors as SDVOSBs. Se e 38 C.F.R. §§ 74.1, 74.11. OHA has authority to adjudicate protests

filed by interested parties challenging a business’s SDVOSB status. See 38 U.S.C. §

8127(f)(8)(B); 13 C.F.R. § 134.1007.

B. Findings of Fact

1. Superior ’ s Certification as a SDVOSB

Superior is headquartered in Ocean Springs, Mississippi. Admin. R. 41 7

, ECF No. 22

(“AR”)

. It was founded in 1991 by a decorated Vietnam Veteran, employs roughly 191

individuals, and manufactures prescription eyeglasses. AR 2984. Superior is presently owned and

controlled by Mr. Derek Bodart, who is a service

- disabled veteran of the United States Navy. AR

512, 2932, 298 5

. Mr. Bodart obtained a controlling interest in Superior from its former owner,

Essilor of America, Inc. ( “ Essilor”), in 2017 through an existing SDVOSB that he owned,

StatSource Med ical, LLC ( “ StatSource”). AR 421

– 30

.

On January 29, 2018, StatSource sold Superior to Mr. Bodart and four minority

shareholders. AR 2932

. Since 2017, Mr. Bodart has served as Superior ’ s President and CEO. AR

512

. A t all relevant times, he has owned and controlled more than 50 percent of Superior. AR

29 32

. At the time Superior submitted a proposal in response to the Solicitation, Mr. Bodart had a

51 percent interest in Superior, owning [

. . . ] of its [

. . . ] shares

. AR 422

, 2932

. Two service

disabled veterans and one other individual each owned a 9 percent interest in Superior, and a fifth

non

- veteran/non

- service

- disabled individual who acted as Superior ’ s Vice President and Chief

Operating Officer had a 22 percent interest. AR 2932.5 The VA CVE certified Superior as a SDVOSB on April 10, 2018. AR 2469. Since that

time, Superior has performed multiple VA contracts, providing prescription eyeglasses and related

services to veterans

. AR 2982

. In fact, Supe rior avers that it and PDS “ have been the VA ’ s two

primary SDVOSB providers” for such services. Pl.’s Compl. ¶ 14, ECF No. 1

.

2. Superior ’ s Services and Supply Agreement

As part of Mr. Bodart ’s obtaining a controlling interest in Superior through StatSource,

Superior, Essilor, and StatSource entered into a Services and Supply Agreement ( “ Agreement”)

on November 1, 2017. AR 650 ; see AR 649

– 944

. Among its provisions, the Agreement included

purchase requirements for Superior ’ s existing VISN and other VA contracts. Specifically,

Superior was obligated to purchase from Essilor “ the majority of the volume of Superior ’ s

purchases of lenses, frames, contact lenses and consumables

. . . [ if] offered by Essilor” and 15

percent of ophthalmic laboratory services. AR 651

, § 3(b). The Agreement provided, however,

that “if such amounts are not permitted under any given VISN or other Veterans Affairs’ contract,”

Superior was required to purchas e “the maximum volumes that can be sourced from Essilor

without jeopardizing Superior ’ s status as a [SDVOSB] entity and as required to maintain

compliance with the SBA and Federal Acquisition Regulations [(“FAR”)].” Id.

The Agreement had similar provision s for all future VISN and VA contracts awarded to

Superior, which required Superior to source from Essilor “the majority of the volume of Superior ’ s

purchases of lenses, frames, contact lenses and consumables

. . . [if] offered by Essilor” and “the

maximum permitted dollar volume of Superior’s ophthalmic laboratory services.” Id. § 3(c). Like

the existing

- contracts provision, if those amounts were not permitted by any given contract, the

Agreement capped Superior’s purchase requirements (notwithstanding the quotas) at “the

maximum volumes that can be sourced from Essilor without jeopardizing Superior’s [SDVOSB]6 status” and in compliance with the SBA and FAR. Id. The Agreement further required Superior

to provide Essilor with monthly reports reflecting Superior ’ s sales under VISN contracts and other

data to ensure compliance with these purchase requirements. Id. § 3(d).

In addition, pricing for the Lab Products/Services acquired fro m Essilor were outlined in

price lists attached to the Agreement. S ee AR 662

– 944. Essilor could at any time increase the

prices charged under the Agreement due to circumstances outside of its direct control if the price

increase was permitted under any g overnment contract

. AR 651

– 52, § 3(e). If Superior intended

to bid on a fixed

- price government contract involving the Lab Products/Services, the Agreement

further required Superior to notify Essilor in writing prior to bidding and obtain Essilor’s

agreem ent in writing for any fixed pricing offered in the bid if Superior was requesting that Essilor

also commit to fixed pricing. AR 652, § 3(e).

Other provisions of the Agreement also obligated Superior to obtain Essilor’s written

approval. Such approval was required prior to Superior ’s assigning all or part of the Agreement.

AR 656

, § 9(a). Any attempt to do otherwise would result in Superior ’s defaulting on the

Agreement. AR 6 53

– 54

, § 6(b)(iii). The Agreement also required Superior to “obtain Essilor ’ s

written approval prior to any ‘Change of Control. ’ ” AR 656

, § 9(b). This was defined by the

Agreement as any (i) “ change in posses sion, directly or indirectly, of the power to direct or cause

the directing of the management or policies of Superior,” (ii) any sale or transfer of 50 percent or

more of Superior ’ s assets, (iii) any sale or transfer of 50 percent or more of Superior ’ s sto ck, (iv)

any merger resulting in a change of ownership of 50 percent or more, and (v) any change to

Superior ’ s SDVOSB status ( i.e.

, if it ceased to be a SDVOSB). Id

.

The initial term of the Agreement ran from November 1, 2017, until October 31, 2027, and

would automatically renew for an additional one

- year term unless one of the parties provided7 written notice of its desire to terminate the Agreement at least 180 days before the expiration of

the initial term. AR 650

, § 2. According to the Agreement, th e term could “ only be shortened in

accordance with the termination provisions herein.” Id. Superior and Essilor executed a

Termination of Services and Supply Agreement on October 20, 2020 ( “ Termination Agreement”),

which memorialize d an earlier effective termination of the Agreement that occurred on January

29, 2018. AR 2930.

C. Procedural Background

1. VA ’ s Solicitation and Award to Superior

On Au gust 24, 2020, the VA issued the Solicitation, seeking proposals by SDVOSBs for

the provision of prescription eyeglasses and related services in VISN 8. AR 1

. Superior and PDS

each submitted timely proposals. AR 2954

. On October 1, 2020, the VA announc ed that Superior

was the apparent awardee. Id.

2. CVE Protest and Decision

On October 8, 2020, PDS submitted a timely protest to the VA, challenging Superior ’ s

SDVOSB status. AR 247; see 13 C.F.R. § 134.1004(a)(2)(i). The CO for the Solicitation

forwarded PDS ’ s protest to OH A for review. AR 2954.

As relevant here, PDS’s protest alleged that Superior was controlled by Essilor, a non

SDVOSB entity

. AR 248

. Among its allegations, PDS asserted that: Essilor continued to have an

ownership interest in Superior; Ess ilor and Superior shared resources, equipment, and/or services;

Superior used Essilor’s equipment, software, and bulk shipping discounts to manufacture and ship

Superior ’ s eyeglasses; Superior received “ critical financial support from Ess ilor;” and Superior

was contractually required to use Essilor products. AR 249

. PDS also argued that Essilor

controlled Superior through loan agreements that further required Superior to use Essilor products.8 AR 251. According to PDS, these alleged facts exhibited that Superior ’ s relationship with Essilor

caused such dependence that Superior was unable to exercise independent business judgment. AR

250

.

Superior responded to PDS ’ s protest on October 13, 2020. AR 39 2

. It refuted PDS ’ s

allegations, arguing that Mr. Bodart (a service

- disabled veteran) was both the majority shareholder

and the controlling director of Superior. AR 395. It provided evidence demonstrating that Essilor

did not have an equity interest in Superior and had not since 2017. AR 403. It also maintained

that its business relationship with Essilor did not afford Ess ilor with control of or the power to

control Superior. AR 400

. To the contrary, it asserted that Mr. Bodart had the requisi te control

over Superior and its day

- to

- day operations for it to qualify as a SDVOSB. AR 407

– 0 8

.

After reviewing the Case File filed by CVE on November 3, 2020, PDS moved to

supplement its protest. It argued, among other things, that the Agreement (which was referenced

in the Case File) obligated Superior to purchase large amounts of supplie s and equipment from

Essilor, further demonstrating Essilor’s control. AR 2746

– 47

. The Agreement had not been

included in the record provided by CVE, nor in Superior ’ s responses to PDS ’ s p rotest and

s upplemental p rotest. AR 2899.

OHA issued an Order on February 2, 2021, requiring Superior to produce a copy of the

Agreement, which it provided on February 16, 2021. Id. Superior argued that the Agreement was

not in effect at the time of t he Solicitation

, as it had been effectively terminated on January 29,

2018, by oral agreement after StatSource sold its shares in Superior to Mr. Bodart. AR 2903

– 10.

Superior also submitted a copy of the written Termination Agreement dated October 20, 20 20,

which memorialized the January 29

, 2018 termination date. AR 2930

. Superior further contended

that the Agreement was drafted so as not to jeopardize Superior’s status as a SDVOSB and had9 never been enforced. AR 2907

. It argued that because the Agre ement by its terms protected

Superior ’ s SDVOSB status, it could not evidence Essilor ’ s control over Superior in a way that

jeopardized Superior’s status

. AR 290 9

.

In response, PDS argued that the issue of Essilor ’ s a lleged control over Superior was a

matter of the “ power to control

– not whether control is actually exercised.” AR 2 940

– 41 (citing

C larity Commc’ns Grp., LL C

, SBA No. SIZ

- 6011, at 9

- 10 (Jun. 17, 2019) ( “ [S]o long as the power

to control exists, the entities are affiliated.”)); see 13 C.F.R. § 121.103. It cited a number of terms

in the Agreement that allegedly gave Essilor an improper level of control over Superior, including

the purchasing requirements and provisions that required Essilor’s written approval. AR 2942

–

45

. Taken together, PDS argued th ese terms showed that the purpose of the Agreement was to

provide Essilor the opportunity to “ use Superior as a tool in the VA eyeglass business, with

Superior acting as a conduit for Essilor on both existing an d future VA contracts.” AR 2946.

OHA issued its ruling on May 6, 2021, sustaining PDS ’ s protest in relevant part. AR 2953.

It found that Superior was not fully controlled by Mr. Bodart as of the date it submitted its offer

( September 23, 2 020 ) and the date PDS filed the CVE protest ( October 8, 2020 )

, which are the

relevant dates for determining eligibility. AR 2971. OHA found the Agreement’s terms, requiring

Superior to obtain Essilor’s written approval prior to changes of control

, such a s the sale or transfer

of 50 percent or more of Superior’s assets or stock, “plainly interfere with Mr. Bodart’s ability to

make all business decisions and exercise complete control over Superior.” AR 2970. It also found

that terms requiring Superior to make certain minimum purchases from Essilor and obligating

Superior to obtain Essilor’s approval before bidding on certain fixed

- price government contracts

likewise interfered with and impermissibly restricted Mr. Bodart’s independent business decision

mak ing

. AR 2971. Because the Agreement required written termination

, OHA found that the10 Agreement was not terminated until October 20, 2020

— the date the Termination Agreement was

executed

. AR 2970.

As a result of OHA’s decision, the VA cancelled Superior’s contract. See Pl.’s Mot. for J.

Admin R. at 12, ECF No. 24 ; Def.’s Cross Mot. for J. Admin. R. at 15, ECF No. 26

. Based on the

parties ’ representations at oral argument

, the Court understands that PDS is currently fulfilling the

work outlined in the Solicitation under a different, separate contract.

3. Size Protest and Decision

Separate from its CVE protest, PDS concurrently filed a timely size protest on October 8,

2020, alleging that Superior was not a small business, and thus ineligible for an award under the

Solicitation, because of its affiliation with Essilor, a non

- small business. AR 2873

– 74. PDS’s

size protest was based on many of the same or similar allegations raised in its CVE protest. Id.

The size protest was referred to the SBA ’ s Office of Government Contracting

– Area III (“Area

Office”) in accordance wit h 13 C.F.R. § 134.1001(c). AR 2954.

The Area Office issued a size determination on November 12, 2020, rejecting PDS’s

argument that Superior was sufficiently affiliated with Essilor to render its business other

- than

small. AR 2875

– 83; see 13 C.F.R. § 121.103. Notably, the Area Office found a lack of evidence

supporting a finding that Essil or had the power to control Superior at the time Superior submitted

its initial offer on the Solicitation. AR 2881.

PDS filed an appeal of the Area Office’s decision with OHA on November 27, 2020. On

July 7, 2021, following its decision on PDS’s CVE pr otest, OHA vacated the size determination

and remanded the case back to the Area Office. See Size Appeal of PDS Consultants, Inc.

, SBA

No. SIZ

- 6107, 2021 WL 5298745 (July 7, 2021). OHA noted that the Agreement had not been

submitted to the Area Office as part of the size protest, and thus the Area Office “was unable to11 fully consider Appellant’s protest allegations” regarding Superior’s obligation to use Essilor

products. Id. at *5. On remand, OHA instructed the Area Office to obtain a copy of the Agree ment

and “ assess whether in light of that agreement, Superior was affiliated with Essilor as of September

23, 2020, the date that Superior self

- certified for the instant procurement.” Id. at *6.

Superior provided a copy of the Agreement to the Area Offi ce on July 19, 2021. After

reviewing the same, the Area Office found based on the same provisions relied on in OHA’s CVE

decision that “the Services and Supply a greement did afford Essilor control over Superior” and

that the Agreement “was still in effect on the date size is determined.” Appx. 1, Def.

- Intv.’s

Consol. Mot. to Dismiss, Cross

- Mot. J. Admin. R. & Opp’n to Pl.’s Mot. J. Admin. R. at 9

, ECF

No. 25

- 1 ( Size Determination

, Case No. 3

- 2021

- 050 (July 26, 2021)). Accordingly, the Area

Office issued a new size determination on July 26, 2021, finding that Superior was “ other than

small” as of the date it submitted its proposal in response to the Solicitation. Id. at 10.

Superior has appealed the Area Office’s adverse size determination and is await ing OHA’s

final decision. See Pl.’s Reply at 22

, ECF No. 27; Def.

- Intv.’s Consol. Mot. to Dismiss, Cross

Mot. J. Admin. R. & Opp’n to Pl.’s Mot. J. Admin. R. at 21, ECF No. 25.

4. The Instant Action

Superior instituted this action on July 15, 2021. See ECF No. 1. On July 19, 2021, PDS

filed its motion to intervene, which the Court granted. S ee Def.

- Intv.’s Mot. to Intervene, ECF

No. 10. In accordance with the Court’s scheduling order, see ECF No. 14, the Government filed

the Administrative Record on August 2, 2021. See ECF No. 22.

On August 12, 2021, Superior filed its Motion for Judgment on the Administrative Record,

re questing the Court set aside as arbitrary and capricious and contrary to law OHA’s May 6, 2021

decision that found Superior ineligible for award under the Solicitation

. ECF No. 24 at 5.12 According to Superior, OHA failed to properly construe the action s of Superior, Mr. Bodart, and

Essilor in January 2018 as terminating the Agreement. Id. at 6. Superior further argue s that even

if it was not terminated, OHA “grossly misinterpreted” the Agreement as affording Essilor the

power to control Superior. Id. For these reasons, Superior argue s it is entitled to declaratory and

injunctive relief and request s the Court enter an injunction setting aside OHA’s determination and

order ing the VA to reinstate Superior’s contract. Id. at 26

– 27.

PDS subsequently cross

- moved for judgment on the administrative record and filed a

motion to dismiss. See ECF No. 25. It argue s that OHA’s determination was reasonable as the

Agreement gave Essilor the power to control Superior

, even if it was not exercised. Id. at 25. PDS

further assert s that the Court does not have jurisdiction over Superior’s claims because Superior

no longer ha s a substantial chance of be ing awarded a contract under the Solicitation due to the

Area Office’s recent adv erse size determination. Id. at 21.

The Government also c ross

- moved for judgment on the administrative record, asse rting

that OHA’s decision had a rational basis and correctly applied the law

. See ECF No. 26 at 16

.

The Government contend s that OHA reasonably determined that Superior was ineligible for the

Solicitation because the “cumulative effect” of the Agreement’s restrictions and its supply

mandates impermissibly restrict ed Mr. Bodart’s ability to fully control the long

- term decision

making and day

- to

- day management of Superior. Id. at 24.

II. LEGAL STANDARDS

A. RCFC 12(b)(1)

On a motion to dismiss under RCFC 12(b)(1), the Court is “obligated to assume all factual

allegations to be true and to draw all reasonable inferences in plaintiff’s favor.” Henke v. United

States

, 60 F.3d 795, 797 (Fed. Cir. 1995) (citing Scheuer v. Rhodes

, 416 U.S. 232, 236

– 37 (1974)).13 The burden of proving subject

- matter jurisdiction lies with the plaintiff. See Reynolds v. Army &

Air Force Exch. Serv.

, 846 F.2d 746, 748 (Fed. Cir. 1988). To come within the Court’s bid protest

jurisdiction under 28 U.S.C. § 1491(b)(1), the plaintiff must establish that it has standing as an

“interested party”

— i.e.

, that it is “an actual or prospective bidder[] or offeror[]” and has a “ direct

economic interest [that] would be affected by the award of the contract or by failure to award the

contract. ” Rex Serv. Corp. v. United States , 448 F.3d 1305, 1307 (Fed. Cir. 2006) (emphasis

omitted ) (citation omitted).

B. RCFC 52.1

A motion for judgment on the administrati ve record p ursuant to RCFC 52.1 is “properly

understood as

. . . an expedited trial on the record.” Bannum, Inc. v. United States

, 404 F.3d 1346,

1356 (Fed. Cir. 2005). The Court limits its review to the administrative record and “asks whether,

given all the disputed and undisputed facts, a party has met its burden of proof.” Savantage Fin.

Servs., Inc. v. United States , 150 Fed. Cl. 307, 317 (2020) (citation omitted). I n contrast to the

standard for summary judgment, a genuine issue of disputed fact do es not prevent a court from

granting a motion for judgment on the administrative record. See Bannum

, 404 F.3d at 1357.

The Court of Federal Claims evaluates bid protests under the Administrative Procedure

Act’s (“APA”) standard for review of agency actio n. 28 U.S.C. § 1491(b) (4) ; Bannum

, 404 F.3d

at 1351. Under that standard, “an agency procurement action may be set aside only if it is

‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.’”

Savantage Fin. Servs.

, 150 Fed. Cl. at 317 (quoting 28 U. S.C. § 1491(b)(4)). An agency decision

is arbitrary and capricious when it “‘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 the

decision is so implausible that it could not be ascribed to a difference in view or the product of14 agency expertise.’” Ala. Aircraft Indus. 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)).

In conducting an arbitrary

- and

- capricious review, a court may not substitute its judgment

for that of the agency. Even if the Court may have reached a different conclusion, it should not

disturb the agency’s decision “ so long as ther e is a reasonable basis for it.” Savantage Fin. Servs.

,

150 Fed. Cl. at 317 (citing Honeywell, Inc. v. United States

, 870 F.2d 644, 648 (Fed. Cir. 1989)).

Accordingly, the Court’s review of a n agency procurement decision is “highly deferential.”

Advance d Data Concepts v. United States

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

Decisions made by OHA are given further “special deference” where the SBA’s expertise

and familiarity with administrative rules and intricacies are at issue. Obsidian Sols. Grp., LL C v.

United States

, 153 Fed. Cl. 334, 341

– 42 ( 2021 ); Eagle Design & Mgmt., Inc. v. United States

, 57

Fed. Cl. 271, 273 (2002). Special deference is therefore warranted when OHA has been asked to

interpret SBA rules “in an intricate manner that a nonexpert court must be careful not to disrupt.”

Darton Innovative Techs., Inc. v. United States

, 153 Fe d. Cl. 440, 451 (2021). The interpretation

of a contract, however, is a question of law that the Court generally reviews de novo

. CBY Design

Builders v. United States

, 105 Fed. Cl. 303, 327 (2012).

III. DISCUSSION

A. Superior Has Standing to Bring This Bid Protest.

The Court begins, as it must, with the question of jurisdiction. PDS argues that Superior

lacks standing to bring this action because it is not an interested party for purposes of the Tucker

Act’s bid protest jurisdiction. ECF No. 2 5 at 12

– 13. It claims that Superior presently lacks the

necessary direct economic interest because it does not have a substantial chance of being awarded

the VISN 8 contract in light of the outstanding adverse size determination. Id. PDS does not15 disput e that Superior had a direct economic interest sufficient to confer standing as of the date it

filed its Complaint. Since the event that allegedly deprived Superior of standing occurred during

the course of this litigation, the issue presented is one of m ootness. See id. at 22 n.3 (raising

mootness as an alternative argument). F or the reasons discussed below, the Court finds that

Superior’s claims are not moot and the Court maintains jurisdiction to rule on the parties’ cross

motions for judgment. 2

To demonstrate standing in a post

- award bid protest, the p laintiff is required to establish

that it is an interested party, meaning it “is an actual or prospective bidder[] and

. . . possesses the

requisite direct economic interest.” Rex Serv. Corp.

, 448 F.3d at 1307. To show a “direct

economic interest,” the plaintiff must prove that it had a “ substantial chance ” of receiving the

contract. Int ’ l Mgmt. Servs., Inc. v. United States

, 80 Fed. Cl. 1, 5 (2007) (citing Rex Serv. Corp

.,

448 F.3d at 1307 ); see Myers Investigative & Sec. Servs., Inc. v. United States

, 275 F.3d 1366,

1370 (Fed. Cir. 2002) (holding in the sole

- source procurement context that a plaintiff “need only

establish that it ‘could compete for the contract.’” (citation omitted)). The substantial chance

standard, in turn, requires a plaintiff to show that it was prejudiced by an error in the procurement

process. See Rex Serv. Corp

. , 448 F.3d at 1308 (citing Statistica

, Inc. v. Christopher

, 102 F.3d

1577, 1582 (Fed. Cir. 1996)). Stated another way, Superior has standing if it demonstrates that

“ but for the error” challenged in this protest it “would have had a substantial chance of securing”

2 Contrary to PDS’s argument, this is an issue of mootness regardless of the retroactive

nature of the adverse size determination. See ECF No. 25 at 22 n.3. The parties do not dispute

that size is determined as of the date the concern self

- certifies as small as part of its initial o ffer or

response including price and that the Area Office decision applies to the VISN 8 contract award

even though the protest was filed after the award. See 13 C.F.R. §§ 121.404(a), 121.1004(c).

However, that the Area Office found Superior to be other than small as of the time of the

procurement in September 2020 does not rewrite history. The fact of the matter remains that at

the time Superior filed suit in July 2021 no adverse size determination had yet been issued, and it

unquestionably had standing to pursue this protest

.16 the VISN 8 contract at issue. Labatt Food Serv., Inc. v. United States

, 577 F.3d 1375, 1378 (Fed.

Cir. 2009); see Alfa Laval Separation, Inc. v. United States

, 175 F.3d 1365, 1367 (Fed. Cir. 1999).

“‘[S]tanding is to be determined as of the commencement of suit.’” Rothe Dev. Corp. v.

Dep’t of Def. , 413 F.3d 1327, 1334 (Fed. Cir. 2005) (quoting Lujan v. Defs

. of Wildlife

, 504 U.S.

555, 570 n.5 (1992)); see Anderson v. United States

, 344 F.3d 1343, 1350 (Fed. Cir. 2003) (holding

that the Court of Federal Claims “applies the same standing requirements enforced by other federal

courts created under Article III”)

. This is because “[t]he rules of standing, whether as aspects of

the Art. III case

- or

- controver sy requirement or as reflections of prudential considerations defining

and limiting the role of the courts, are threshold determinants of the propriety of judicial

intervention.” Warth v. Seldin , 422 U.S. 490, 517

– 18 (1975). On the other hand, if develop ments

arise during litigation that extinguish the presence of a live “case or controversy,” courts typically

apply the doctrine of mootness. See Momenta Pharms., Inc. v. Bristol

- Myers Squibb Co. , 915 F.3d

764, 770 (Fed. Cir. 2019).

Standing and mootness , although related, are distinct concepts. See Friends of the Earth,

Inc. v. Laidlaw Envtl. Servs. (TOC), Inc. , 528 U.S. 167, 189

– 92 (2000) (examining the differences

between standing and mootness). As the Supreme Court recently explained , standing requires the

plaintiff to demonstrate at the outset the elements of injury, traceability, and redressability, “[a]nd

if in the course of litigation a court finds that it can no longer provide a plaintiff with any effectual

relief, the case generally is moot.” Uzuegbunam v. Preczewski , 141 S. Ct. 792, 796 (2021); see

Bluestar Energy Servs. v. United States

, 100 Fed. Cl. 607, 617 (2011) (“[A] case is moot when the

issues presented are no longer ‘ live ’ or the parties lack a legally cognizable interest in the

outcome.” (quoting Powell v. McCormack

, 395 U.S. 486, 496 (1969)) . A claim is typically

considered moot when “there is no reasonable expectation

. . . that the alleged violation will recur”17 and “interim relief or events have completely and irrevocably eradicated the effects of the alleged

violation.” L .A. C n ty. v. Davis

, 440 U.S. 625, 631 (1979) (internal quotation marks omitted); see

Ferring B.V. v. Watson Lab’ys, Inc.

- Fla.

, 764 F.3d 1382, 1391 (Fed. Cir. 2014). If,

notwithstanding intervening events, the “court can fashion some form of meaningful relief” for the

plain tiff, then the claim is not moot. Church of Scientology of Cal

. v. United States

, 506 U.S. 9,

12 (1992) (emphasis in original).

Neither PDS nor Superior cited any cases in their briefs involving, as here, a question of

whether a plaintiff’s bid protest cl aim was mooted by events occurring during litigation that

purportedly destroyed the plaintiff’s status as an interested party. The Court independently

identified a recent decision of the United States Court of Appeals for the Federal Circuit that is

instr uctive, Acetris Health, Inc. v. United States , 949 F.3d 719 (Fed. Cir. 2020). In Acetris

, a

prospective bidder brought a pre

- award bid protest against the VA

, challenging the agency’s

interpretation of federal law defining the country of origin of pharmaceutical products for purposes

of determining whether such product is U.S.

- made. Id. at 722. Following the filing of its

complaint, Acetris submitted an unsuccessful offer in response to the solicitation immediately at

issue in the case. Id. at 725. Of the three bidders, Acetris’ s offer was the highest, and the

Government moved to dismiss on grounds of mootness. Id. at 726.

The Federal Circuit agreed with the Government in part. It held that the Court of Federal

Claims erred by assessing standing solely on the allegations of the complaint without consideration

of later events ( i.e. , Acetris’ s third place offer)

. Id. Based on those events, the Court found that

Acetris’ s claim was moot with respect to the solicitation on which it bid because Acetris would

not have been awarded the contract even if it were correct on the merits of its protest. Id. at 726

–

27 (“Because Acetris cannot show prejudice resulting from the VA’s purportedly flawed18 interpretation . . . as applied to the [] solicitation, Acetris has no injury

- in

- fact with respect to that

solicitation.”). It therefore held that Acetris “[did] not now have standing to challenge the []

solicitation.” Id. at 727 (emphasis added) . The Court, however, held that the protest was not moot

with respect to claims related to future proposed procurements because Acetris had standing as an

interested party as to those claims

. Id.

Applying Acetris

, this Court must determine whether Superior’s claims are moot because

it no longer maintains standing to bring this protest in light of the adverse size determination issued

after it filed suit. There is no dispute that, even if Superior is successful in this protest, the VA

cannot presently reinstate the VISN 8 contract award because of the Area Office’s July 26, 2021

decision finding Superior other than small for purposes of that contract. S ee 13 C.F.R. §§

121.1009(g)(2), (g)(5); see also Ironclad/EEI v. United States , 78 Fed. Cl. 351, 364 (2007)

. This

,

however, does not necessarily mean that Superior is deprived of interested

- party status, and thus

this Court of jurisdiction, even though the Court cannot grant the full relief it requests

.

W ell

- established

, binding precedent makes clear that the crux of the substantial chance

inquiry is the requirement of prejudice. See, e.g.

, Myers Investigative & Sec. Servs.

, 275 F.3d at

1370 (“[P]rejudice (or injury) is a necessary element of standing.”)

. In cases where courts have

found a lack a direct economic interest, the alleged error at issue was found to be non

- prejudicial

because it was not the cause (or the only cause) of the plaintiffs’ failure to receive a contract award.

In other words, the plain tiffs suffered no harm or injury

- in

- fact from the protested error in light of

a different circumstance that was independent from and unaffected by that error. See, e.g.

, Acetris

,

949 F.3d at 726

– 27; Rex Serv. Corp

. , 448 F.3d at 1308 (plaintiff failed to submit a bid and the

alleged procurement error would not have require d the agency to re

- open the solicitation at issue );

Fed. Data Corp. v. United States

, 911 F.2d 699, 704 (Fed. Cir. 1990) ( protestor who voluntarily19 withdr ew bid affirmatively relinquished chance to receive contract notwithstanding alleged

violations of procurement law ) ; Labatt Food Serv.

, 577 F.3d at 1381 (untimely response to

solicitation amendment prevented award to plaintiff

, regardless of the agency’s alleged error in

receiving bids differently than prescribed)

.

Here, that circumstance

— the recent adverse size determination

— directly resulted from the

CVE decision at issue in this protest. Indeed, before OHA issued the CVE de cision (and thus

before Superior filed this protest), the Area Office determined that Superior was a small business

eligible to compete for the VISN 8 contract. AR 2883

. The subsequent adverse size determination

occurred only after OHA issued the CVE dec ision and then, in the separate size appeal, remanded

the size determination to the Area Office for the explicit purpose of considering whether the

Agreement, which formed the basis of the CVE decision, changed the Area Office’s conclusion

.

S ize Appeal of PDS

, 2021 WL 5298745

, at *6 ; s ee ECF No. 25

- 1 at 4

. It did. After acknowledging

in a long block quote OHA’s analysis of the Agreement in the CVE decision, the Area Office

reached the same conclusion as OHA based on the same grounds the Court is reviewing now

––

i.e.

, that the Agreement gave Essilor the power to control Superior and that the Agreement was in

effect at the time of the VISN 8 procurement. See ECF No. 25

- 1 at 8

– 9 ; id. at 9 (“ [T]he Area

Office finds that the Services and Supply agre ement did afford Essilor control over Superior

throughout the term of the agreement.

. . . [which] was still in effect on the date size is

determined.”).

Although no party cited a case addressing the question of standing in analogous

circumstances , t he Court identified Draken International, Inc. v. United States , 120 Fed. Cl. 383

(2015), as a useful comparator. In Draken , a bidder challenged the procurement process related

to a Navy solicitation for the provision of both subsonic and supersonic aircraft. Id. at 386. Draken20 alleged, among other things, that extraordinary procurement delays had made it more difficult

(indeed, impossible for Draken) to provide the two types of aircraft in compliance with the

solicitation’s requirements, which resulted in a purportedly defective and anticompetitive selection

process. Id. at 391. The Government argued that Draken lacked standing because it could no

longer meet one of the aircraft requirements and thus “ currently does not have a substanti al chance

of receiving the contract.” Id. at 392; see id. at 391, 392 n.7. The court disagreed, emphasizing

that standing “ ‘ turns on whether the protester would have had a substantial chance if not for the

alleged errors

. ’ ” Id. at 392 (emphasis in origi nal) (quoting COMINT Sys. Corp. v. United States

,

700 F.3d 1377, 1383 (Fed. Cir. 2012) )

. It held that if the Navy had not delayed the anticipated

award date by one year the requirements would not have been financially prohibitive for Draken

and it could have met the solicitation terms. Id. Thus, Draken “had a ‘substantial chance’ of being

awarded the contract, but for t he alleged defect in the procurement process,” i.e.

, the delay. Id.

The same logical connection between the challenged error and resulting injury exists here.

The alleged error in this case is OHA’s CVE decision concluding that the Agreement demonstrated

Essilor’s power to control Superior and that such agreement was in e ffect at the time of the VISN

8 procurement. ECF No

. 1 ¶¶ 34

– 3 8

. Superior claims this conclusion is arbitrary and capricious

and contrary to law. Id

. ¶ 4. If OHA’s alleged error had not occurred, the VA would not have

terminated Superior’s contract on the basis that it was not a SDVOSB

, and the Area Office would

have had no reason to reconsider its initial, favorable size determination. In other words, regardless

of the fact that the CVE decision and adverse size decision present separate obstacles to Superior’s

contract award, they are nonetheless related and arise from the same error challenged in this

protest. The Court therefore finds that Superior, both at the time of filing this protest and currently,21 has a direct economic interest sufficient to confer standing. See Acetris

, 949 F.3d at 726

– 27;

Draken

, 120 Fed. Cl. at 392.

That PDS acknowledged at oral argument the temporary nature of Superior’s purported

standing defect further emphasizes that the issues in this protest continue to present a live

controversy and that Superior continues to have a personal stake in the outcome. 3 See Davis

, 440

U.S. at 631; Bluestar Energy Servs.

, 100 Fed. Cl. at 617

. PDS does not cite any authority

supporting the contention that the Court lacks jurisdiction over a bid protest where post

- filing

events may temporarily affect the plaintiff’s standing allegations

. Indeed, such argument would

be contrary to the mootness do ctrine, which typically requires (with some exceptions not relevant

here) a showing that interim events have “completely and irrevocably eradicated the effects of the

alleged violation.” Davis

, 440 U.S. at 631 (internal quotation marks omitted).

Nor doe s VA’s present inability to reinstate Superior’s contract award because of the Area

Office’s adverse size determination eliminate the Court’s ability to “fashion some form of

meaningful relief” for Superior, if it is successful on the merits. Church of Sc ientology of Cal

.,

506 U.S. at 12 (emphasis in original). Even an order setting aside the CVE decision and

termination of Superior’s contract as arbitrary and capricious and/or contrary to law would

effectuate beneficial relief to Superior. See ECF No. 1 at 11 (Prayer for Relief, ¶ 1); Church of

Scientology of Cal

., 506 U.S. at 12. PDS’s suggestion that an order granting judgment in

Superior’s favor in this protest would be irrelevant to the separate size appeal does not engage with

the facts. See Def.

- Intv.’s Reply at 8 n.1

, ECF No. 28. If the Court set aside the CVE decision

3 PDS’s counsel conceded that no matter what OHA decide s in the appeal of the Area

Office’s size decision

— whether OHA reverse s or affirm s

— Superior would then have standing to

p u r sue a protest

. She advocated for dismissal at this time but noted that the Court could

, in the

alternative, stay the case until OHA issue s its size appeal decision and

, if it affirm s

, allow Superior

to amend its Complaint to challenge that decision as well

.22 because, for example, it found the Agreement was terminated prior to Superior ’s submitting its

offer on the Solicitation, that ruling’s effect on the size appeal pending before th e same

administrative body reviewing a decision based on the same grounds is well outside the realm of

speculation and optimistic predictions.

Accordingly, the Court has jurisdicti on over Superior’s claims.

B. OHA’s CVE Decision Was Neither Arbitrary and Capricious Nor Contrary to

Law.

OHA’s decision granting PDS’s CVE protest and finding that Superior was not a SDVOSB

because it was not fully controlled by a service

- disable veteran (Mr. Bodart) as of the date it

submitted its offer on the VISN 8 contract was rational. The Court agrees with OHA’s

interpretation of the Agreement, including the requirements related to termination, change of

control, purchasing

, and fixed

- pricing approval

. Based on the record before OHA, t he Court also

finds that it rationally concluded that the Agreement was in effect at the time relevant for

determining Superior’s SDVOSB status and that the Agreement’s terms, taken together, gave

Essilor the power to control Superior within the meaning of the applicable regulations

. OHA’s

decision was therefore not arbitrary or capricious, nor was it contrary to law.

1. Date of Contract Termination

First, OHA reasonabl y concluded that the Agreement was in effect at the time Superior

submitted its offer in response to the Solicitat ion on September 23, 2020

, and at the time PDS filed

its CVE protest on October 8, 2020. There is no dispute tha t the Agreement was at some point

terminated, and thus OHA reasonably predicated its conclusion on determining when termination

was effectuated in accordance with the Agreement’s terms. Superior claims that OHA ignored

evidence demonstrating that the Agreement was effectively terminated by oral notice in January

2018 and never enforced during the time that Mr. Bodart has been the majority shareholder. ECF23 No. 24 at 16. Even if written not ice were required, Superior argues that the new price schedule

provided by Essilor and the memorialization of the effective termination date in the Termination

Agreement both sufficed. Id. at 17. The Court disagrees.

OHA correctly determined that the Agreement required written consent of a ll parties to

effectuate a termination. The Agreement expressly stated that the initial ten

- year term started on

November 1, 2017

, and ended October 31, 2027. AR 650

, § 2. The Agreement automatically

renewed for an additional year unless one of the parties gave “written notice to the other party of

its desire to terminate th[e] Agreement” at least 180 days before the initial term ended. Id. It

expressly stated that the “Term” (defined as the renewal term together with the initial term) could

“only be shortened in accordance with the termination provisions herein.” Id. The provision

addressing amendment and waiver was similarly conditioned on the express requiremen t of the

parties’ written consent. AR 659

, § 12(m) (amendment and waiver permitted “with (and only

with) the written consent of all of the Parties.”). Superior does not meaningfully dispute this plain

language interpretation. See ECF No. 24 at 14, 16.

Instead, Superior finds fault in OHA’s application of the termination requirements to the

facts presented in the record. Contrary to Superior’s argument, however, OHA’s decision did not

ignore evidence showing that Mr. Bodart notified Essilor in January 2018 that Superior would be

obtaining products through competitive bidding, rather than under the Agreement’s purchasing

obligations. See AR 2961

– 62. Nor did it ignore Mr. Bodart’s explanation that, after January 2018,

the Agreement was not enforced and that Superior never purchased lenses or materials from Essilor

under the Agreement. See AR 2961

– 62, 2971. Although not specifically spelled out in its analysis,

OHA impliedly rejected that these circumstances were sufficient to terminat e the Agreement b y

its terms. See Bowman Transp., Inc. v. Ark.

- Best Freight Sys., Inc

, 419 U.S. 281, 285

– 86 (1974)24 (“ While [a court] may not supply a reasoned basis for the agency ’ s action that the agency itself

has not given, [it] will uphold a decision of less than ideal clarity if the agency ’ s path may

reasonably be discerned. ”) (internal citations omitted) )

. As OHA noted, t he only written notice

presented in the CVE protest was the Termination Agreement

. As such, OHA held that termination

“in accordance with the termination provisions” of the Agreement did not occur until the date of

th at agreement ( October 20, 2020). AR 2970.

Superior has not shown that its and Essilor’s course of conduct, or the new price schedule

under which Superior purchased materials from Essilor, constituted a permissible termination of

the Agreement. Setting aside the written notice requirement, this evidence does not demonstrate

the parties’ intent to terminate the Agreement in its entirety as opposed to simply waiving the

purchasing an d price list requirements. As the Government correctly observes, the Agreement

included other independent terms, such as the change of control provision on which OHA’s

decision was in part based. See ECF No. 26 at 20; see also AR 2970

– 71. The evidence S uperior

submitted in the CVE protest do es not speak to the parties’ intent vis

- à

- vis the remainder of the

Agreement

, other than to note that the new price schedule provided by Essilor lacked “any

purchase obligations or other contractual obligations .” AR 2933, ¶ 7 (emphasis added); see AR

2936, ¶ 8. Superior

, however, did not submit a copy of the new price schedule in the CVE protest,

and thus it is absent from the record before this Court. 4

4 I t is therefore not necessary to addre ss Superior’s argument that under Mississippi law

course

- of

- conduct evidence can supersede contradicting provisions of a written agreement. See

ECF No. 24 at 16; ECF No. 27 at 7. Even assuming the argument was not waived, as the

Government and PDS conten d, Superior fails to identify any case in Mississippi or elsewhere in

which a court has found that a course of conduct negated an entire written contract. It is also worth

noting that the Agreement prohibited any course of conduct to operate as a waiver o f any power

or right conferred therein

, which should apply with the same force to an argument the Superior ’s

and Essilor’s course of conduct terminated all powers and rights under the Agreement

. See AR

659

, § 12(m).25 Superior’s reliance on the Termination Agreement likewise fails. As discussed, a plain

reading of the Agreement requires the parties to give their written consent to terminate the

Agreement before the end of the then

- current term. No such writing appears in the record until

the Termination Agreement

. By its terms, that document became effective when signed on

October 20, 2020

–– 12 days after PDS filed its CVE protest. AR 2930. The Court agrees that

allowing the parties to enforce an earlier effective date, which was based on oral notice of

termination

, by later memorializing the effective date in writing completely undercuts the force of

the Agreement’s written notice/consent requirements. See ECF No. 26 at 18 (citing Lockheed

Martin IR Imaging Sys., Inc. v. West

, 108 F.3d 319, 322 (Fed. Cir. 1997) (c ontract interpretation

“must assure that no contract provision is made inconsistent, superfluous, or redundant”)). In sum,

the Court finds that OHA rationally determined that the Agreement was not terminated until after

the relevant dates for determining Superior’s SDVOSB eligibility.

2. Evidence of Power to C ontrol

OHA also reasonably concluded that the Agreement imp ermissibly gave Essilor the power

to control Superior. This finding was grounded on obligations set forth in three aspects of the

Agreement, including the “ C hange of Control ” provision, the purchasing requirements, and the

written approval requirement for fixed

- priced bidding. See AR 2970

– 71. The Court addresses

each basis in turn.

a. Change of Control

The Agreement required Superior to get “Essilor’s written approval prior to any Change of

Control.” AR 656

, § 9(b)

. This included written approval for: (i) “change in possession, directly

or indirectly, of the power to direct or cause the directing of th e management or policies of

Superior,” (ii) any sale or transfer of 50 percent or more of Superior ’s assets, (iii) any sale or26 transfer of 50 percent or more of S uperior ’s stock, (iv) any merger resulting in a change of

ownership of 50 percent or more, and (v) any change of S uperior ’s SDVOSB status. Id.

Superior argues that OHA narrowly understood these changes of control. It takes issue

with the language OHA used to summarize the Agreement, pointing out that OHA described the

Agreement as requiring Superior to obtain Essilor’s written consent prior to a “change in

management or in policies,” rather than “change in possession

, directly or indirectly, of the power

to direct or cause the directing of the management or policies of Superior,” a nd prior to “a sale of

assets,” rather than a “sale or transfer by StatSource or Superior of fifty percent (50%) or more of

its assets

. . . .” ECF No. 27 at 19 (emphasis in original) (citing AR 2923, § 9(b)). However curtly

OHA may have summarized the A greement’s c hange of c ontrol provision in its analysis

, it

correctly determined that this provision went beyond the five “ extraordinary circumstances ” in

which the SBA will not find that a lack of control exists even though a service

- disabled veteran

does not have unilateral power and authority to make decisions

. AR 2970

– 71 (citing 13 C.F.R. §§

125.11, 125.13(m)); AR 2967 (accurately describing change of control provision in background)

.

As the Government and PDS note

, the permitted extraordinary circumstances plainly do not

include: (1) asset sales or transfers, regardless of the percentage of assets and parties involved ; or

(2) changes in who has the power to direct or cause the directin g of management or policies. See,

e.g.

, ECF No. 28 at 22

– 23 ; see also 13 C.F.R. § 125.11 (defining extraordinary circumstance s as

adding a new equity stakeholder; dissolution

, sale

, or merger of the company; and declaring

bankruptcy )

.

According to Superior, because of Mr. Bodart’s position as majority shareholder, President,

and controlling director, “for any of the Agreement’s change of control situations to be implicated,

Mr. Bodart would have to relinquish his control over the company ,” which would likely implicate27 expressly exe mpt circumstances such as the sale of the company. ECF No. 27 at 19. Superior

further argues that it was “patently irrational for OHA to conclude that Superior was not owned

and controlled by Mr. Bodart due to the theoretical possibility that Essilor cou ld have (though

never did) veto situations in which Mr. Bodart voluntarily relinquished control.” Id. (emphasis in

original). As an initial matter, the Court is not persuaded by the premise of Superior’s contention.

The Government and PDS aptly note tha t a sale of Superior’s assets is not limited only to a sale of

its stock (of which 51 percent is held by Mr. Bodart) ; for example, the sale of 50 percent or more

of Superior’s inventory would suffice. See ECF No. 25 at 40 (noting that the change of contro l

provision separately addresses the sale and transfer of assets and the sale and transfer of equity

interests such as stock); see also ECF No. 26 at 26. Nor would the sale or dissolution of the

company necessarily be required to transfer some or all of the responsibility for management and

policy direction to someone other than Mr. Bodart ; for example, this could be implicated by

appointment of one of the other service

- disabled

- veteran shareholders to serve as an interim

President if Mr. B odart were to become incapacitated. See ECF No. 26 at 26. In either case,

Superior would be required to obtain Essilor’s prior written approval. 5

Additionally, t hat some scenarios under the change of control provision could be

implicated by Mr. Bodart ’s own choice to relinquish control does not appear to be legally relevant

under the SBA’s definition of extraordinary circumstances. See 13 C.F.R. § 125.11. Indeed, a

service

- disabled veteran’s power to control the long

- term decision

- making and the day

- to

- day

5 As Superior points out, these hypotheticals were not raised in OHA’s decision

. S ee ECF

No. 27 at 18

. Rather, OHA rationally compared the terms of the Agreement to the applicable

regulation to determine whether any control conferred to Essilor by the change of control provision

was permissible

. AR 2970

– 71. But Superior’s claim that

— in reality

— the provision would be

implicated only in certain scenario s ( like M r. Bodart sell ing al l his shares ) that would supposedly

qualify as extraordinary circumstances begs the question whether other plausible hypothetical s

exist. That some do seems to further bolster the reasonableness of OHA’s decision.28 operations of a business includes, in certain circumstances, the power to surrender control.

Accordingly, OHA reasonably conclud ed that this provision “ plainly interfere[d] with Mr.

Bodart’s ability to make all business decisions and exercise compl ete control over Superior under

13 C.F.R. § 125.13, as Mr. Bodart would have to obtain the consent of Essilor, a non

- SDVOSB,

before implementing these decisions.” AR 2970.

b. Purchase Requirements

The Agreement also require d Superior to purchase certain minimum amounts of Lab

Products/Services from Essilor for all existing and future VISN and other VA contracts. AR 651

,

§§ 3(b)

– (c). However, “ if such amounts [w ere] not permitted under any given VISN or other [VA]

contract,” the Agreement limited the purchasing requirement to “the maximum volumes that

[could] be sourced from Essilor without jeopardizing Superior ’ s status as a Service

- Disabled

Veteran

- Controlled e ntity and as required to maintain compliance with the SBA and Federal

Acquisition Regulations.” Id. § 3(b) ; see id. § 3(c)

. Superior argues that the purchase requirements

were “ deliberate ly drafted to avoid jeopardizing Superior ’ s size and status,” and it was therefore

irrational for OHA to conclude that these requirements evidenced Essilor’s power to control

Superior. ECF No. 24 at 17.

Contrary to Superior’s contention

, OHA did not ignore the limiting language regarding

“jeopardizing Superior’s [SDVOSB] status.” AR 2971. It specifically found that such limitation

was only implicated if the maximum amounts were not permitted under a government contract,

and thus it was “not evident that Superior could have refused an Essilor demand to purchase optical

supplies and services under the Agreement, unless compliance would have caused Superior to be

in breach of a VA contract.” Id. Reviewing the provisions de novo

, the Court agrees with OHA’s

interpretation. In the two references to not “ jeopardizing Superior ’ s status,” the language is29 pre ceded by and conditioned upon a statement that a reduc tion of the quotas applie d only “ if such

amounts are not permitted ” under the applicable contract

. AR 651, § 3(b) (emphasis added) ; see

id. § 3(c)

. Rules of c ontractual interpretation require the Court to give plain meaning to conditional

clauses, such as those preced ed by the word “if .” George Hyman Constr. Co. v. United States

,

832 F.2d 574, 579 (Fed. Cir. 1987) (“ It is well established that where, as here, the provisions of a

contract are phrased in clear and unambiguous language, ‘ the words of those provisions must be

given their plain and ordinary meaning by the court in defining the rights and obligations of the

parties

. . . . ’”) ( quoting Elden v. United States

, 617 F.2d 254, 260

– 61 (Ct. Cl. 1980) ); accord

BlackLight Power, Inc. v. Rogan

, 295 F.3d 1269, 1273 (Fed. Cir. 2002 ). T he limiting language

thus plainly would come into play only upon the condition first being met

.

Superior argues that such an interpretation is irrational because it renders the

“jeopardizing” language superfluous. ECF No. 27 at 17. Instead, it posits that the Agreement

must be read as not requir ing Superior to purchase supplies or services if doing so would

“ jeopardize[e] Superior ’ s [SDVOSB] status” independent of whether such amounts were

permitted under any given VISN or VA contract. Id

. If that were the case, there would have been

no reason to insert the conditional clause, and such clause would be superfluous itself. Superior ’s

argument concedes as much.

6F 6 See id. at 16 (“[I]f Superior’s ability to fulfill a particular order or

6 Superior raises a broader argument that the Agreement cannot reasonably be interpreted

in a way that would call into question Superior’s SDVOSB eligibility because it would frustrate

the entire purpose of the Agreement

— i.e.

, to protect Superior’s status. See ECF No. 24 at 18

– 19;

ECF No. 27 at 15

– 18. Contract interpretation, however, begins and ends with the unambiguous

language of the contract terms. George Hyman Constr

. , 832 F.2d at 579

. Whatever Superior and

Essilor’s intent, OHA did not act irrationally by looking to the plain language of the Agreement to

discern whether its terms improperly afforded Essilor control or the power to control Superior. In

fact, that Superior and Essilor found it prudent, “[o]ut of an abundance of caution, in order to

protect and preserve Superior’s status as a SDVOSB,” to start obtaining products competitively

and with a new price schedule from Essilor

— rather than under the purchasing requirements of the30 a particular quantity is already precluded by the terms of a contract, the language regarding not

‘jeopardizing Superior’s [SDVOSB] status’ and compli ance with regulations would never be

implicated.”).

Superior also takes issue with OHA’s failure to distinguish an earlier OHA decision in

Matter of: Data Voice

, Inc.

, SBA No. 455 (1994), from the case at issue. See ECF No. 24 at 21.

As this c ourt has noted

, “OHA is bound to follow its own precedent absent limited exceptions.”

Precise Sys. v. United States

, 122 Fed. Cl. 263, 270 (2015); see 13 C.F.R. § 134.226(a)(2). In

Data Voice

, the petitioner applied for consideration under S ection 8(a) of the Business Opportunity

Development Reform Act of 1988. Matter of: Data Voice

, Inc.

, SBA No. 455, 1994 WL 113291

,

at *2 (Mar. 3, 1994). To qualify under the Section 8(a) Program, an applicant must be controlled

and at least 51 percent unc onditionally owned by an individual who is determined by SBA to be

socially and economically disadvantaged. See 13 C.F.R. § § 124.103

, 124.104. The p etitioner ’s

application was denied in part because it had a supply agreement with a non

- disadvantaged enti ty

that required it to purchase “at least 50%” of products from that entity

. See Data Voice

, 1994 WL

113291, at *6. The initial agency decision

- maker found that the supply agreement was severely

restrictive, limited the petitioner’s ability to compete, a nd indicated dependence on the non

disadvantaged entity. Id. at *3. OHA reversed stating:

Having control of a firm, or having the power to control a firm, as

those terms are used in Section 124.104, means possessing the

ultimate ability to manage and direct the daily operations of the

business to the exclusion of the individual or individuals who have

been found to be disadvantaged. It does not mean having an

influence over the general operation of the business or being able to

affect managerial d ecisions to some limited extent.

Agreement

— tends to directly undermine Superior’s frustration of purpose claim. AR 2933

, ¶ 7;

see AR 2910

.31 Id. at *23.

As the Government and PDS note, the agreement in Data Voice is distinguishable. See

ECF No. 26 at 24; ECF No. 25 at 36. O ther than the minimum purchasing requirement, there is

no indication in the Data Voi ce decision that there were other similar provisions in the supply

agreement that evidenced the same degree of power to control as are at issue here. Nor does the

Data Voice decision suggest that a supply agreement ’s purchasing requirement could never

support a finding of control if the broader context of the business relationship were different.

Indeed, in Data Voice

, OHA looked holistically at the arrangement

— not merely one individual

term

— to determine whether th e preponderant evidence demonstrated control or the power to

control. See Data Voice, 1994 WL 113291, at *9. Accordingly, OHA did not irrationally interpret

the Agreement’s purchasing requirements or err by failing to apply Data Voice

. 7

3. Fixed

- Pricing Ap proval Requirement

In addition to establishing pricing in accordance with price lists provided by Essilor, t he

Agreement required Superior to (1) notify Essilor in writing prior to it bidding on any government

contract that required a fixed

- price bid for Lab Products/Services subject to the purchasing

requirements and (2) obtain written consent from Essilor insofar as Superior was requesting Essilor

to be bound by fixed pricing. AR 652

, § 3(e). Superior argues that OHA mischaracterized the

Agreement’s obligations with respect to fixed

- price bidding and irrationally concluded the

7 Another distinguishing factor is that Superior

— unlike the petitioner in Data Voice

— is

not petitioning for eligibility under Section 8(a) where 13 C.F.R. § 124.104 controls. Here, 13

C.F.R. § 125.13 set s forth the standard for determining control, which includes assessing whether

any b usiness relationships exist between a SDVOSB and non

- service

- disabled veteran entity that

causes “such dependence that the [] concern cannot exercise independent business judgment

without great economic risk.” Id. § 125.13(i)(7) ; see Data Voice

, 1994 WL 113291, at *8

(rejecting argument that dependence equated with control or power to con trol for determining

Section 8(a) eligibility)

.32 provision afforded control “where none was present.” ECF No. 26 at 21. According to Superior,

mere notification does not, by itself, constitute control, nor does the approval requirement because

it is triggered only at Superior’s discretion. ECF No. 24 at 25

– 26.

Superior is correct that the terse reference in the analysis of OHA’s decision overstates the

approval requirement for fixed

- pricing, although OHA accurately described it in background. See

AR 2967, 2971. Nonetheless, OHA reasonably determined that this provision likewise gave

Essilor power to control Superior. Setting aside the notification requirement, the Agreement

plainly permitted Essilor to stop Superior from bidding on a fixed

- price government contract if

Superi or was also requesting Essilor to fix its prices. Superior does not contest that such

requirement gave Essilor some degree of power to control Superior in such scenario. See ECF No.

24 at 25 (arguing only that the requirement could not jeopardize Superio r’s status when read in

connection with the purchasing requirements). Instead, it makes much of the fact that Superior

could avoid the requirement entirely by simply not making such request. See id. at 26; ECF No.

27 at 21. That is true

, but Essilor’s p ower to control seems apparent in either scenario

— directly

in the former and indirectly in the latter. If, for example, Mr. Bodart determined it was in

Superior’s interest to request Essilor to fix its pricing for purposes of submitting a bid on a fixed

p rice government contract, he had to choose between subjecting the bid to Essilor’s prior approval

or foregoing Superior’s interest in order to bid without Essilor’s agreement. That choice

(discretionary as it may be) imposed a restriction on Mr. Bodart’s decision

- making that otherwise

would not exist but for the Agreement

, and it therefore ceded to Essilor some power to control

Superior

. OHA thus rationally determined that the provision restricted Mr. Bodart from fully

exercising control over Superior’s l ong

- term decision

- making and day

- to

- day management of

Superior.33 * * *

In sum, based on the record before the Court, Superior has not demonstrated that OHA’s

CVE decision was arbitrary and capricious or contrary to law. OHA correctly interpreted the

Agreement and, considering the relevant evidence and applicable law, rationally concluded that

the purchasing requirements and certain of Essilor’s approval rights under the Agreement, taken

tog ether, demonstrated that Mr. Bodart did not have the requisite control over Superior at the time

of the procurement to qualify as a SDVOSB

.

C. VA ’ s Rescission of the VIS N 8 Contract Award to Superior Was Rational.

As Superior correctly notes, this court has held that a procuring agency’s reliance on an

ir

rational decision of a reviewing agency following a protest is itself arbitrary and capricious. ECF

No. 24 at 26 (citing Turner Const r

. Co. v. United States

, 94 Fed. Cl. 561, 579 (2010), aff’d

, 645

F.3d 1377 (Fed. Cir. 2011) (finding reliance upon irratio nal GAO recommendation arbitrary and

capricious)). Here, however, there is no such irrational predicate decision. Because there was a

rational basis for OHA’s ruling that Superior was not a SDVOSB eligible for award under the

Solicitation at the time of the procurement, VA acted rationally by relying on the CVE decision

and canceling the VISN 8 contract with Superior. Indeed, cancellation was required by regulation.

See 13 C.F.R. § 134.1007(j)(2) (requiring CO to rescind contract of awardee who is subsequently

found by OHA to be ineligible for inclusion in the CVE database).

IV. CONCLUSION

For these reasons, the Court GRANTS the Government ’ s and PDS ’ s Cross

- Motions for

Judgment on the Administrative Record (ECF Nos. 25, 26), except that PDS’s combined Rule

12(b)(1) Motio n to Dismiss is DENIED

. The Court DENIE S Superior’s Motion for Judgment on

the Administrative Record (ECF N o. 24)

. The Clerk is directed to enter judgment accordingly.34 This opinion and order will be unsealed in its entirety after February 1 5

, 2022, unless the

parties submit by no later than February 10

, 2022

, an objection specifically identifying the

protected information subject to redaction. Any objecting party must submit a proposed redacted

version of the decision and provide the reason(s) supporting the party’s request for redaction.

SO ORDERED.

Dated: February 1

, 202 2 /s/ Kathryn C. Davis

KATHRYN C. DAVIS

Judge