Opinion ID: 208807
Heading Depth: 3
Heading Rank: 1

Heading: The Court of Federal Claims' Standard of Review

Text: Before the trial court, Appellants argued that the court's task under the APA was to determine whether the CO acted reasonably in awarding the contract to Lockheed. The court, however, disagreed. In the court's view, reasonableness is the proper standard of review when the court's evaluation is made under the APA's `arbitrary and capricious' prong, but [not] where the record contains substantial evidence that one or more FAR provisions have been violated. Axiom I, 78 Fed.Cl. at 599. Because the court believed that the CO had violated FAR § 9.504, it defined its task as determin[ing] whether or not there may be [a] potential violation of law and, if so, is the mitigation proposal an actual remedy. Id. We agree with Appellants that the court erred by failing to review the CO's decision under the arbitrary and capricious standard set forth in 5 U.S.C. § 706(2)(A). In Impresa Construzioni Geom. Domenico Garufi v. United States, this court explained that bid protest cases are reviewed under the standard set forth in the APA. 238 F.3d 1324, 1332 (Fed.Cir.2001). Adopting the articulation of the test set forth in a line of D.C. Circuit cases, we 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. Id. A court evaluating a challenge on the first ground must determine whether the contracting agency provided a coherent and reasonable explanation of its exercise of discretion. Id. at 1333 (quotation marks 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. (quotation marks omitted). FAR § 9.504(a) provides that contracting officers shall analyze planned acquisitions in order to (1) [i]dentify and evaluate potential organizational conflicts of interest as early in the acquisition process as possible; and (2) [a]void, neutralize, or mitigate significant potential conflicts before contract award. 48 C.F.R. § 9.504(a). Section 9.504(e) further provides that [t]he contracting officer shall award the contract to the apparent successful offeror unless a conflict of interest is determined to exist that cannot be avoided or mitigated. Id. § 9.504(e). However, the FAR recognizes that the identification of OCIs and the evaluation of mitigation proposals are fact-specific inquiries that require the exercise of considerable discretion. See 48 C.F.R. § 9.505 (Each individual contracting situation should be examined on the basis of its particular facts and the nature of the proposed contract. The exercise of common sense, good judgment, and sound discretion is required in both the decision on whether a significant potential conflict exists and, if it does, the development of an appropriate means for resolving it.); see also ARINC, 77 Fed.Cl. at 202 (The responsibility for determining whether such unequal access exists and what steps should be taken in response thereto rests squarely with the contracting officer.). In light of the discretion given to COs, we cannot agree with the Court of Federal Claims that the CO in this case violated FAR § 9.504 in such a way as to warrant de novo review of whether or not there may be [a] potential violation of law and, if so, whether the mitigation proposal [is] an actual remedy. Axiom I, 78 Fed.Cl. at 599. Under the trial court's rationale, courts might never review a CO's OCI determination under the arbitrary and capricious standard because every instance in which the court disagreed with the CO's decision could be fashioned as a violation of FAR § 9.504 that triggers de novo review. This result would be inconsistent with the discretion given to the CO by FAR § 9.505 and the principles underlying the APA. Accordingly, we conclude that the Court of Federal Claims erred in this case by failing to evaluate the CO's decision under the APA's arbitrary and capricious standard.