Opinion ID: 6661188
Heading Depth: 3
Heading Rank: 1

Heading: Magnum Opus May Proceed Without Its Co-Venturer

Text: The Government asserts that Magnum Opus lacks standing to bring this lawsuit, whether or not it is properly construed as a bid protest, because Magnum Opus is merely one of the joint venturers in Magnum Medical. Def.’s Mot. at 10. Because Magnum Opus did not receive an ID/IQ contract, defendant asserts that it “would not have standing on [its] own to bid or receive a contract award,” and thus is not an “interested party” within the meaning of the Tucker Act. Id. at 12. More precisely, the Government argues that “the agency cannot exercise an option to include one party to a joint venture but not another.” Id. at 12 n. 8; id. at 13 (“Because Magnum LOpus] was not the party whose bid was rejected and because the option cannot be extended solely to Magnum [Opus] without its joint venture partner, it does not have standing to bring this bid protest.”). If this were a suit to enforce a right belonging to the joint venture (e.g., a purported right to have its option exercised), the Government’s position would be correct. Pine Prods. Corp. v. United States, 15 Cl.Ct. 11, 14 (1988) (“[T]he universal rule is that an individual co-venturer may not sue in his own name to enforce a liability owed to the joint venture.”). As discussed above, however, Magnum Opus counters that it is not, in fact, suing upon the joint venture’s rights, but rather upon its own rights as a prospective bidder in a new competition for the health services contracts. Magnum’s Mem. at 16. That is, Magnum Opus maintains that these contracts must be re-solicited, and Magnum Opus is eligible to compete in that re-solicitation; thus, it is a “prospective bidder or offeror whose direct economic interest would be affected by the award of the contract or by failure to award the contract.” Id. at 16 (quoting 31 U.S.C. § 3551(2)(A)). Accordingly, the argument that Magnum Opus cannot proceed without its co-venturer is unavailing. 2. Magnum Opus Has Demonstrated Both Standing and Prejudice By Showing a Noiv-Trivial Competitive Injury Standing to bring a bid protest under the Tucker Act, as amended by the Alternate Dispute Resolution Act, is limited to “interested parties,” namely, “actual or prospective bidders or offerors whose direct economic interest would be affected by the award of the contract or by failure to award the contract.” AFL-CIO, 258 F.3d at 1302. This statutory definition necessitates a two-part showing to establish standing: (1) plaintiff must establish that it is an actual or prospective bidder, and (2) plaintiff must demonstrate that it possesses a direct economic interest. Rex Serv. Corp. v. United States, 448 F.3d 1305, 1307 (Fed.Cir.2006); Totolo/King v. United States, 87 Fed.Cl. 680, 688 (2009) (concluding pre-award protestor possessed standing because it was “a prospective bidder if the Solicitation were issued as a SDVOSB or small business set-aside, and because plaintiffs direct economic interest has been affected by the DVA’s decision to conduct the Solicitation as full and open competition/unrestricted”). Taking the second requirement first, a showing of “direct economic interest” requires the plaintiff to demonstrate that “any alleged errors caused prejudice.” Global Computer Enters., 88 Fed.Cl. at 401; see Galen Med. Assocs. Inc. v. United States, 369 F.3d 1324, 1330 (Fed.Cir.2004). In the post-award context, this requirement sometimes causes confusion, because the court also considers prejudice to the protestor in determining whether the protestor has met the criteria to prevail on the merits. In post-award bid protests, the court “looks twice at prejudice, first weighing prejudice as it pertains to standing, and then more thoroughly weighing prejudice to determine whether plaintiff shall be afforded relief.” 12 A & D Fire Prot. Inc. v. United States, 72 Fed.Cl. 126, 131 n. 4 (2006); see also Serco, Inc. v. United States, 81 Fed.Cl. 463, 482 n. 25 (2008). The second, more searching prejudice inquiry relating to the merits requires assessing whether the plaintiff has established a “substantial chance” it would have received the contract, Rex Serv. Corp., 448 F.3d at 1308, after “review of the contract award or bid evaluation process to determine what might have occurred if the government had not erred.” Weeks Marine Inc. v. United States, 79 Fed. Cl. 22, 35 (2007), aff'd in relevant part, 575 F.3d 1352 (Fed.Cir.2009) (quoting WinStar Commc’ns, Inc. v. United States, 41 Fed.Cl. 748, 763 n. 9 (1998)). But when plaintiff either challenges a solicitation prior to award or protests an alleged illegality with respect to a “proposed procurement,” there is ordinarily “no factual foundation for a ‘but for’ prejudice analysis” — the court cannot, therefore, assess whether “but for” a Government error, the plaintiff had a substantial chance of receiving a contract in assessing whether plaintiff possessed a “direct economic interest.” 13 Weeks Marine, 575 F.3d at 1361. The appropriate inquiry in such a protest is whether the plaintiff has demonstrated a “non-trivial competitive injury which can be redressed by judicial relief.” Id. at 1362 (concluding this standard applies to standing inquiries with respect to a bid protest alleging “any alleged violation of statute or regulation in connection with ... a proposed procurement”). Therefore, such a plaintiff possesses standing where it “established an interest in bidding” and “ha[dj a definite economic stake in the solicitation being carried out in accordance with applicable laws and regulations.” Id. Given the nature of a protest brought prior to the award of a contract or issuance of a solicitation, there is no meaningful way to further assess the prejudice to the plaintiff after examination of the merits — if the failure to hold a competition was wrongful or there was a material error in the solicitation, then the plaintiff has been wrongfully deprived of the opportunity to fully and fairly compete, which suffices to establish prejudicial injury on the merits. See Distributed Solutions, 539 F.3d at 1345 (“The contractors also possess a direct economic interest in the government action at issue in that they were ... deprived of the opportunity to compete for the provision of [the services].”). Magnum Opus has established that it is interested in bidding, has asserted its ability to perform a contract, and “has a definite economic stake in the solicitation being carried out in accordance with applicable laws and regulations.” Weeks Marine, 575 F.3d at 1362. If Magnum Opus succeeds in this protest, then it wall be able to compete in any re-solicitation for the services it alleges should have been subject to competition; if it does not succeed, then it is foreclosed from even offering to provide those services for at least three years. Friends of the Earth, 528 U.S. at 181, 120 S.Ct. 693 (holding that a linchpin of standing is a finding that a remedy will redress the plaintiffs injury); N.E. Fl. Chapter of Associated Gen. Contractors v. City of Jacksonville, 508 U.S. 656, 666, 113 S.Ct. 2297, 124 L.Ed.2d 586 (1993) (concluding standing is established by the inability to compete on an equal footing in the bidding process, “not the ultimate inability to obtain the benefit”). The Government contests Magnum Opus’s ability to meet the first requirement of the standing inquiry, i.e., that Magnum Opus is a “prospective bidder.” Weeks Marine, 575 F.3d at 1360. Defendant argues that Magnum Opus’s evidence “does not support Magnum’s argument that it is qualified to bid on large-scale Government contracts that require the capability to perform on a national basis.” Def.’s Resp. at 3. That is, defendant contends that although Magnum Opus was a partial holder of an ID/IQ contract during the base period, Magnum Opus alone, without Sterling Medical, is not a “qualified bidder” with standing to bring this bid protest. This case is therefore somewhat different from Weeks Matine, where the Government conceded the plaintiffs financial wherewithal and technical ability to perform the work if awarded. The Government relies upon Myers Investigative & Security Services, 275 F.3d at 1369, where the plaintiff pled only that if the Government had competed the procurement, it would have submitted a bid, but “made no effort to show that it was responsible and could have performed the contract” even after defendant contested standing. Although plaintiff only had to “establish that it could compete for the contract if the bid process were made competitive,” the Federal Circuit concluded that “[t]he mere fact that it might have submitted a bid in a competitive procurement is not sufficient.” Id. at 1370 (internal quotations omitted). The plaintiff also needed to allege — and show, if challenged— that it was a “qualified bidder.” Because Myers was a post-award protest, the plaintiff had to show that it was sufficiently qualified to possess a “substantial chance” of receiving an award. In this case, however, there is neither an award nor a solicitation setting forth the terms of the competition. Magnum Opus stated at oral argument that the reason it sued without its joint venture partner was that the mentor/protege agreement between Sterling Medical and Magnum Opus had expired, and thus the joint venture could no longer be classified as a “small business” under SBA regulations. Oral Arg. Tr. at 13-14. The original contract was set aside for small businesses. If it were re-competed, the contract might again be set aside for small businesses; if that were so, the joint venture would not be eligible to compete in any re-solicitation of the work. At a hearing, however, the Deputy Director of the Air Force Medical Service Commodity Council, Joseph Mirrow, testified that he was “not necessarily convinced” the contract should be a small business set-aside if it were subjected to re-competition. April 22, 2010 Evidentia-ry Hearing Transcript at 77 (“Evid. Hearing Tr.”) (docket entry 84, filed April 23, 2010). If that were the case, then Magnum Medical would be eligible to compete notwithstanding the expiration of the mentor/protege agreement. Moreover, Magnum Opus argues that it “has a long history of providing health care personnel to the Federal Government,” Magnum Opus’s Supplemental Brief Regarding Standing at 2 (“Magnum Opus’s Supp. Standing Br.”) (docket entry 59, March 29, 2010), and that because Magnum Opus is in the business of staffing medical service providers, it is a qualified competitor. Oral Arg. Tr. at 13. Magnum Opus’s position is that it has “the requisite experience to bid on this type of work.” Id. at 15. That is, there is “greater than an insubstantial chance” that Magnum Opus, with or without a partner, could secure a contract in a re-competition. Info. Tech., 316 F.3d at 1319. In the absence of any solicitation setting forth the requirements for a “qualified bidder,” it is difficult for the Court to conclude as a legal matter that Magnum Opus is not qualified. Most decisions finding a bidder not qualified involve an existing legal impediment. 14 For example, if the plaintiffs bid expired prior to award, it lacks standing. Camden Shipping Corp. v. United States, 89 Fed.Cl. 433, 439 (2009). If the SBA already found the protestor to be “other than small,” the protestor lacks standing if any small business has submitted a proposal, because the protestor has no chance of receiving a contract. See, e.g., Taylor Consultants, Inc. v. United States, 90 Fed.Cl. 531, 541-43 (2009); Int’l Mgmt. Servs., Inc. v. United States, 80 Fed.Cl. 1, 6-7 (2008); Pride Int’l LLC v. United States, 64 Fed.Cl. 754, 757 n. 6 (2005); see also Labatt Food Serv. v. United States, 577 F.3d 1375, 1381 (Fed.Cir.2009) (“Labatt ”) (actual bidder lacked standing because alleged error was not the cause of its failure to receive award); N.C. Din of Seims, for Blind v. United States, 53 Fed.Cl. 147, 162 (2002) (finding no standing where plaintiff “as the blind licensee, would be the contract manager ... but certainly not a bidder or offeror”). Magnum Opus has shown that it engages in the type of business that is the subject of the' contract, has in fact successfully performed such contracts in the past, and has represented that it could find another teaming partner in the event it submitted an offer in a re-competition if the contract were of a similar size to the expired ID/IQ contracts. 15 The Court therefore concludes that Magnum Opus has shown a non-trivial competitive injury, i.e. sufficient prejudice to provide it with standing and to entitle it to relief upon the merits if the Court finds legal error. Given that these allegations overlap substantially with those made by Healing Staff, the finding may be without much practical import, in the sense that even if the Court had concluded that Magnum Opus lacked standing, the litigation would nonetheless proceed with Healing Staff as the sole plaintiff. No party contests Healing Staffs status as a “qualified bidder” with standing to pursue its own complaint. See, e.g., Oral Arg. Tr. at 38; Mgmt. Solutions & Sys. v. United States, 75 Fed.Cl. 820, 826 (2007) (holding that a contractor had standing as a qualified bidder “because it had performed these services in the past”). 3. Plaintiffs Have Sufficiently Alleged Particularized and Prejudicial Harm Defendants also argue, relying primarily on the Federal Circuit’s recent decision in Labatt, that plaintiffs have failed to demonstrate they suffered “disparate treatment or particularized harm” and thus lack standing. 16 Def.’s Reply at 56, quoting Labatt, 577 F.3d at 1380; see also Galen Med. Assocs., 369 F.3d at 1331. In Labatt, the Federal Circuit found that where the agency mistakenly accepted bid revisions via e-mail rather than by fax as required by the solicitation there was no prejudice to offerors. Labatt, 577 F.3d at 1380. The Federal Circuit held that the plaintiff did not possess standing because the “improper deviation from the solicitation ... equally permitted all offerors to submit proposal revisions via email, harming none.” Id. According to defendant, the agency’s removal of the NTE pricing “affected — indeed benefited. — everyone equally” and therefore did not result in “particularized harm” to plaintiffs. Def.’s Reply at 58; see Oral Arg. Tr. at 58 (“Magnum and THS were treated the exact same way as the other four contract holders, and there is no way to show that they were specifically harmed by the purported violation of the FAR, which was not intended for their benefit anyway.”). But the error alleged by plaintiffs is not the deletion of the NTE prices. Rather, as discussed above, it is the exercise of options in violation of applicable procurement laws and regulations. Plaintiffs allege such violations require re-competition for the option period; that is, the alleged error is that the agency procured services illegally by exercising the options. The particularized harm to plaintiffs is that the four contractors who received the benefit of the options did so without undergoing legally required competition, while plaintiffs were deprived of the opportunity to compete for the work to be performed in the option years. A deprivation of an opportunity to compete is sufficient economic harm to demonstrate prejudice for purposes of standing. See Distributed Solutions, 539 F.3d at 1345; LABAT-Anderson, Inc. v. United States, 65 Fed.Cl. 570, 575-76 (2005). Plaintiffs therefore possess standing to pursue this protest, and defendants’ motions to dismiss their complaints on standing-grounds must be DENIED.