Opinion ID: 6661188
Heading Depth: 2
Heading Rank: 1

Heading: Plaintiffs’ Complaints Are Within the Court’s Bid Protest Jurisdiction

Text: As is pertinent here, this court may “render judgment on an action by an interested party objecting to ... any alleged violation of statute or regulation in connection with a procurement or a proposed procurement.’’ 28 U.S.C. § 1491(b)(1) (emphasis added). The phrase “in connection with a procurement or a proposed procurement” is “very sweeping in scope.” Distributed Solutions, Inc. v. United States, 539 F.3d 1340, 1345 (Fed.Cir.2008) (quoting RAMCOR Servs. Group, Inc. v. United States, 185 F.3d 1286, 1289 (Fed.Cir.1999)). The court may hear any claim “involv[ingj a connection with any stage of the federal contracting acquisition process, including ‘the process for determining a need for property or services.’ ” Id. at 1346 (quoting 41 U.S.C. § 403(2)). Defendants argue that plaintiffs have not established that the Court has bid protest jurisdiction for two reasons: (1) plaintiffs’ claims are not bid protests, but instead involve matters of contract administration that can be challenged, if at all, only under the Contract Disputes Act, 41 U.S.C. § 601 et seq. (“CDA”); and (2) plaintiffs have not alleged a “cardinal change” and therefore have not successfully invoked this court’s jurisdiction. 1. Plaintiffs’ Allegations Regarding the Exercise of Other Awardees’ Options Are Not Matters of Contract Administration Defendants first maintain that the Court lacks jurisdiction because this dispute does not concern a “procurement or proposed procurement,” but is instead merely plaintiffs’ disagreement with the Government’s refusal to exercise their contract options. Quarreling with the Government’s decision regarding an option does not, defendants contend, give rise to a bid protest, but instead a CDA claim. Defendant’s Motion to Dismiss at 8 (docket entry 24, March 1, 2010) (“Def.’s Mot.”); Luke & Associates, Inc.’s Memorandum of Points and Authorities in Support of its Motion to Dismiss at 5 (docket entry 25, March 3, 2010) (“Luke’s Mot.”). Citing Government Technical Services LLC v. United States, 90 Fed.Cl. 522 (2009), defendants assert that because the decision whether to exercise an option is solely a matter of contract administration, plaintiffs have not challenged any aspect of a procurement. Def.’s Mot. at 8; Luke’s Mot. at 5. The court in Government Technical Services stated that the Government’s failure to exercise an option on an existing contract was not an act “in connection with a procurement” within the meaning of the Tucker Act. Gov’t Technical Servs., 90 Fed.Cl. at 529. In that case, the plaintiff attempted to bring a bid protest alleging that the Army Corps of Engineers acted in bad faith by declining to exercise an option to extend plaintiffs contract. Id. at 523. Chief Judge Hewitt held that the decision not to renew a contract option was an issue of contract administration and that the plaintiff was required to pursue its remedies under the CDA rather than as a bid protest. Id. at 528-31. The court therefore dismissed plaintiff’s attempted bid protest for lack of subject matter jurisdiction. Id. at 531. But to the extent that defendants contend that claims involving contract options must always be brought as CDA claims, the Court disagrees. 7 See Def.’s Mot. at 10; Luke’s Mot. at 5. This court has previously addressed challenges to the exercise of options as bid protests. 8 For example, in Magic Brite Janitorial v. United States, 72 Fed.Cl. 719, 721 (2006), an incumbent contractor argued that the General Services Administration’s (“GSA’s”) discretion regarding exercise of an option was limited by a term in its contract. Instead of exercising the option, the GSA made award to another entity. Id. The court found that it possessed jurisdiction over the incumbent’s bid protest because the Government was permitted to “cabin its discretion and make the exercise of an option less optional, via statute, regulation, or the terms of a contract.” Id. In Phoenix Air Group, Inc. v. United States, 46 Fed.Cl. 90, 107 (2000), the protestor, a subcontractor, alleged that the United States Department of the Navy (“Navy”) violated CICA and FAR § 17.207 in exercising an option because “[i]n order to exercise [the] option, the contracting officer should have, at a minimum, performed some pricing analysis or market examination. No analysis was performed or explanation provided.” As in the present case, the protestor further argued that, as a result of the violation, the work to be performed under the option should have been the subject of full and open competition and that the protestor would have bid upon such work in a competitive process. Id. Although the court ultimately found that the Navy had satisfied the requirements of FAR § 17.207, it exercised jurisdiction over the bid protest. Id. at 107-OS. When a contractor seeks to bring a claim regarding the Government’s action with respect to its own contract — that is, that the Government acted in bad faith in failing to exercise an option — the contractor must bring the claim pursuant to the CDA. See, e.g., Cessna Aircraft Co. v. Dalton, 126 F.3d 1442, 1447 (Fed.Cir.1997) (reviewing challenge to the Navy’s failure to exercise an option and stating that the claims were “grounded in the CDA”); Bannum, Inc. v. United States, 80 Fed.Cl. 239, 250 (2008), aff'd, No. 04-5105, 121 Fed.Appx. 849 (Fed.Cir.2005); Hi-Shear Tech. Corp. v. United States, 53 Fed.Cl. 420, 436 (2002), aff'd, 356 F.3d 1372 (Fed.Cir.2004). But plaintiffs here do not allege that the Air Force improperly failed to exercise their options. Instead, they contend that, because the NTE pricing was removed from the contracts, the Air Force’s exercise of the options of the other four ID/IQ contractors violated FAR § 17.207. Magnum’s Mot. at 1; The Healing Staff, Inc.’s Motion for Judgment on the Administrative Record at 6 (“Healing Staffs Mot.”) (docket entry 36, March 8, 2010). In other words, because the NTE pricing was deleted from the ID/IQ contracts, the Government could not lawfully exercise the options because their pricing was not reasonably determinable from the contracts as required by FAR § 17.207(f). See Magnum Mot. at 30-36; Healing Staffs Mot. at 6-8. Thus, plaintiffs contend, to comply with CICA, the Air Force was required to either recompete the option work or issue a sole-source justification, neither of which was done. Magnum Opus Compl. ¶ 109; Healing Staff Compl. ¶ 33. Indeed plaintiffs’ position is that the Air Force could not have lawfully exercised plaintiffs’ own options because the NTE pricing had been deleted from their contracts as well. To the extent that defendants characterize plaintiffs’ allegations as challenges to the Air Force’s decision not to exercise plaintiffs’ options, they simply misconstrue plaintiffs’ claims. 9 Def.’s Mot. at 8-10; Luke’s Mot. at 1. Considering the plaintiffs’ actual claims, the Court possesses jurisdiction. The complaints do not allege matters of contract administration, but instead that the Air Force exercised the options in violation of law and regulation, namely CICA and FAR § 17.207(f). See Distributed Solutions, 539 F.3d at 1345 n. 1 (“A non-frivolous allegation of a statutory or regulatory violation in connection with a procurement or proposed procurement is sufficient to establish jurisdiction.”); CCL, Inc. v. United States, 39 Fed. Cl. 780, 788 (1997) (“Defendant misconceives the nature of plaintiffs claim. The complaint is not directed at the administration of ... [the contracts]. Rather, [plaintiff] contends that the DoD violated CICA by expanding [the incumbent’s] contract beyond its scope without opening up that additional work to competition. Subject to establishing standing, [plaintiff] could make such a claim_”). It is largely irrelevant that plaintiffs had their own contracts with options that could have potentially been exercised. CCL, Inc., 39 Fed.Cl. at 788-89. 2. Plaintiffs Have Properly Brought a Bid Protest Alleging a “Violation of Statute or Regulation in Connection With a Procurement or a Proposed Procurement” Defendants next contend that “in order to bring a bid protest alleging that an agency improperly failed to utilize competition in implementing a modification to an existing contract, a plaintiff must demonstrate that the modification resulted in a ‘cardinal change’ to the contract.” Luke’s Supp. Br. at 2; Defendant’s Response to Plaintiffs’ Supplemental Briefs at 3 (“Def.’s Supp. Br.”) (docket entry 61, March 30, 2010). Plaintiffs’ complaint must be dismissed, defendants urge, because they do not allege that any cardinal change has occurred. Def.’s Supp. Br. at 3; Luke’s Supp. Br. at 4. This court has considered bid protests arising in three circumstances: (1) a pre-award protest, which is an objection to “a solicitation by a Federal agency for bids or proposals for a proposed contract or to a proposed award ... of a contract,” 28 U.S.C. § 1491(b)(1); (2) a post-award protest, which objects to “the award of a contract,’ ” id.; or (3) a protest objecting to “any alleged violation of statute or regulation in connection with a procurement or a proposed procurement.’” Id.; see OTI Am., Inc. v. United States, 68 Fed.Cl. 108, 113 (2005); see also RhinoCorps Ltd. Co. v. United States, 87 Fed.Cl. 481, 485 (2009). Plaintiffs allege, and the Court agrees, that their claims fall into the third category of bid protests, which encompasses — but is not limited to — “cardinal change” claims. Magnum Opus’s Supplemental Brief at 6-7 (“Magnum’s Supp. Br.”) (docket entry 56, March 22, 2010); Healing Staff's Supplemental Brief at 1-2 (“Healing Staff's Supp. Br.”) (docket entry 55; March 22, 2010); see CCL, Inc., 39 Fed.Cl. at 788-89. This third grouping also includes protests such as challenges to an agency’s decision to override CICA’s automatic stay provision, RAMCOR, 185 F.3d at 1288-89, and to an agency’s sole-source justification, L-3 Commc’ns EOTech, Inc. v. United States, 85 Fed.Cl. 667, 671-72 (2009). In general, this third category of bid protests involves allegations that an agency procured services “through a process that should have been the subject of competition.” CCL, Inc., 39 Fed.Cl. at 789; see also Savantage Fin. Servs., Inc. v. United States, 81 Fed.Cl. 300, 305 (2008) (jurisdiction exists where the agency’s failure to procure “through a competitive process is exactly what [plaintiff] is protesting”). Defendants’ attempt to show that only “cardinal change” cases may be heard is unavailing. For example, in RhinoCorps, the plaintiff, a small business, challenged the Air Force’s decision to obtain services supporting weapons systems development through an existing contract with a large business rather than soliciting a small business set-aside follow on contract. RhinoCorps, 87 Fed.Cl. at 482. The Government argued that plaintiffs claims were outside of the court’s jurisdiction because they did not allege a modification that created a “cardinal change” to the contract. Id. at 489. The court rejected this argument because “plaintiff does not anchor jurisdiction on the allegation that the work added to the ... contract materially departed from the scope of the original procurement,” but instead that the Air Force’s justification not to use a small business set-aside was irrational, and thus a new procurement should have been conducted. Id. at 489-90. Plaintiffs here similarly claim that a regulatory violation requires a new procurement. The Government is generally required to engage in full and open competition, and must justify any failure to fully compete a contract award. See, e.g., FAR § 6.001. Section 19.502-2 of the FAR, at issue in RhinoCorps, requires the agency to provide written justification for its decision to procure goods and services through less than full and open competition (that is, to limit competition to only small businesses). 10 See Global Computer Enters., Inc. v. United States, 88 Fed.Cl. 350, 445 (2009) (observing that FAR § 19.502-2 is “part of the standard of competitiveness required before an acquisition may be set aside for small business”) (quotation omitted). In this case, FAR § 6.001(c) enumerates an exception to full and open competition when the agency exercises a “priced option [ ]” that was “evaluated as part of the original competition.” Section 17.207(f), in turn, requires that “the option must have been evaluated as part of the initial competition and be exercisable at an amount specified in or reasonably determinable from the terms of the basic contract.” Plaintiffs here, as in RhinoCorps, allege that the Government procured services without complying with these regulate-ry requirements. They therefore allege a claim within the court’s bid protest jurisdiction. While the “cardinal change” allegation is perhaps more common, it suffices to allege that the agency violated a specific statute or regulation creating an exception to CICA’s competition requirement, when the absence of regulatory compliance means that the procurement had to be fully competed. 11 RhinoCorps, 87 Fed.Cl. at 490; see also Savantage Fin. Servs., 81 Fed.Cl. at 305; CCL, Inc., 39 Fed.Cl. at 789. Because this court possesses jurisdiction to hear claims that the Government “is procuring goods and services through a process that should have been the subject of competition; and that the failure to compete the procurement is in violation of law,” CCL, Inc., 39 Fed.Cl. at 788 (emphasis omitted), defendants’ motions to dismiss for lack of jurisdiction must be DENIED.