Opinion ID: 774858
Heading Depth: 3
Heading Rank: 2

Heading: APA Review of a Sole-Source Award

Text: 54 The APA provides that a reviewing court must set aside agency actions that are arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. 5 U.S.C. 706(2)(A) (Supp. V 1999). Under this standard, the agency's action is entitled to a presumption of regularity, Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 415 (1971), and the agency's action must be upheld as long as a rational basis is articulated and relevant factors are considered, Motor Vehicle Manufacturers Ass'n of the United States v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29, 43 (1983); Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc., 419 U.S. 281, 285-86 (1974). 55 Pursuant to these general precepts, the Impresa court clearly delineated the proper standard of review under the APA in a bid protest context. It stated that a bid award may be set aside if either: (1) the procurement official's decision lacked a rational basis; or (2) the procurement procedure involved a violation of regulation or procedure. Impresa, 238 F.3d at 1332. When a challenge is brought on the first ground . . . the test for reviewing courts is to determine whether the contracting agency provided a coherent and reasonable explanation of its exercise of discretion and the disappointed bidder bears a heavy burden of showing that the award decision had no rational basis. Id. at 1332-33 (citations omitted). When a challenge is brought on the second ground, the disappointed bidder must show a clear and prejudicial violation of applicable statutes or regulations. Id. at 1333. To establish prejudice in an action involving an alleged statutory or regulatory violation, a protester must show that absent the error, there was a substantial chance it would have received the contract award. Alfa Laval Separation, Inc. v. United States, 175 F.3d 1365, 1367 (Fed. Cir. 1999); Statistica, Inc. v. Christopher, 102 F.3d 1577, 1582 (Fed. Cir. 1996). 56 Identical review standards apply under the APA in the context of a sole-source award. See Myers Investigative and Sec. Servs., Inc. v. United States, 47 Fed. Cl. 605 (2000) (using bid protest jurisprudence under the APA in a sole-source award context); Varicon Int'l v. Office of Pers. Mgmt., 934 F. Supp. 440, 444 (D.D.C. 1996) (indicating that a party that did not receive a sole-source contract is analogous to . . . a disappointed bidder that under the APA, must demonstrate that the agency's sole-source award had no rational basis or involved a clear and prejudicial violation of applicable statutes or regulations). That is, a sole-source award may be set aside if either: (1) the sole-source award lacked a rational basis; or (2) the sole-source procurement procedure involved a violation of a statute, regulation, or procedure. See Impresa, 238 F.3d at 1332. Under the first ground, the party challenging the sole-source award bears a heavy burden of showing that the award decision had no rational basis, see Bowman, 419 U.S. at 285; Impresa, 238 F.3d at 1332; 5 U.S.C. 706(2). To meet this burden, a disappointed party can show: (1) the agency's decision to conduct a sole-source procurement process lacked a rational basis; (2) the agency's sole-source requirements lacked a rational basis; or (3) based on the sole-source requirements, the selection of the sole-source awardee lacked a rational basis. The test for reviewing courts is to determine whether the contracting agency provided a coherent and reasonable explanation of its exercise of discretion. See Burlington Truck Lines v. United States, 371 U.S. 156, 168 (1962) (indicating that an agency must articulate a rational connection between the facts found and the choice made); Impresa, 238 F.3d at 1332. 57 When a party contends that the procurement procedure in a sole-source case involved a violation of a statute, regulation, or procedure, it must establish prejudice by showing that it would have had a substantial chance of receiving the award, see Statistica, 102 F.3d at 1582. A disappointed party can establish prejudice either by showing: (1) proceeding without the violation would have made the procurement official's decision to make a sole-source award rather than to conduct a competitive bidding process irrational, see 5 U.S.C. 706; Bowman, 419 U.S. at 281, and in a competitive bidding process, the complaining party would have a substantial chance of receiving the award, see Alfa-Laval, 175 F.3d at 1367; or (2) proceeding without the violation, the complaining party would have a substantial chance of receiving the sole-source award, see id. 58