Court Opinion

ID: 4421824
Source: CourtListenerOpinion
Date Created: 2019-07-31 20:01:44.204099+00
Date Added: 2024-06-11T14:51:40.111233
License: Public Domain

In the United States Court of Federal Claims
                    Nos. 19-308C, 19-331C, 19-372C (consolidated)

                                 (Filed: July 31, 2019)

*********************************** *
                                    *
FMS INVESTMENT CORP., et al.,       *            Rational Basis Standard; Competition
                                    *            in   Contracting    Act;    Bundling;
                 Plaintiff,         *
                                                 Consolidation; Agency Discretion;
                                    *
                                                 Presumption of Regularity; Motion for
v.                                  *
                                    *            Permanent Injunction; 28 U.S.C. §
UNITED STATES,                      *            1491(b); Denying Injunctive Relief.
                                    *
                 Defendant,         *
                                    *
*********************************** *

David R. Johnson, with whom were Tyler E. Robinson and Ryan D. Stalnaker, Vinson &
Elkins LLP, Washington, DC, for Plaintiff FMS Investment Corp.

Todd J. Canni, with whom were Richard B. Oliver, Alexander B. Ginsberg, J. Matthew
Carter, Aaron S. Ralph, and Kevin R. Massuodi, Pillsbury Winthrop Shaw Pittman LLP,
Los Angeles, California, for Plaintiff Continental Service Group, Inc.

William M. Jack, with whom were William C. MacLeod, David E. Frulla, Amba M. Datta,
and Elizabeth C. Johnson, Kelley Drye & Warren LLP, Washington, DC, for Plaintiff GC
Services Limited Partnership.

Alexis J. Echols and David R. Pehlke, Trial Attorneys, with whom were Jana Moses, Trial
Attorney, Joseph H. Hunt, Assistant Attorney General, Robert E. Kirschman, Jr., Director,
Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice, Washington, DC, as well as Tracey Sasser, Assistant General
Counsel, Division of Business and Administrative Law, U.S Department of Education,
Washington, DC, for Defendant.
                                 OPINION AND ORDER

WHEELER, Judge.

       There is no such thing as a perfect procurement, and the Department of Education’s
(“ED”) years-long series of student loan servicing and debt collection solicitations typifies
the axiom. But a flawed procurement is not necessarily an illegal one.

       Plaintiffs are a group of Private Collection Agencies (“PCAs”) who collect
defaulted student debt on ED’s behalf. Plaintiffs challenge ED’s latest student loan
servicing procurement, three “Next Generation Financial Services Environment” (“Next
Gen”) solicitations, which combine default collection with other student loan servicing
work, so that one entity oversees the “full life-cycle” of a student loan from origination to
payoff. Because Plaintiff PCAs only provide default collection services, they claim that
Next Gen’s “full life-cycle” structure unfairly excludes them from competing for contracts.

       On cross-motions for judgment on the administrative record (“MJARs”), Plaintiffs
claim that the Next Gen solicitations are unlawful because (1) they consolidate loan
servicing and default collection without justification, thereby restricting competition; (2)
they violate federal and state laws governing debt collectors; and (3) they are otherwise
arbitrary and capricious. Further, Plaintiffs claim that (4) ED’s March 2019 decision to
cancel a solicitation solely for PCA services (“the PCA solicitation”) was arbitrary and
capricious. The Government responds that Next Gen’s full life-cycle structure will achieve
legitimate policy goals, which justify consolidating loan servicing and default collection
work, and that ED cancelled the PCA solicitation because it no longer needs the PCAs’
services.

       The Court concludes that (1) ED provides sufficient justification for combining loan
servicing and default collection work; (2) Next Gen does not per se violate federal and state
laws governing debt collectors; (3) Next Gen is not otherwise arbitrary and capricious; and
(4) ED’s decision to cancel the PCA solicitation was not arbitrary and capricious.
Accordingly, the Government’s cross-MJAR is GRANTED, Plaintiffs’ cross-MJARs are
DENIED, and Plaintiffs’ motion for a permanent injunction is DENIED.

                                        Background

        This dispute has a lengthy history, which the Court will summarize briefly. In
December 2015, ED released the PCA solicitation seeking default collection services for
its portfolio of student debt. See FMS Invest. Corp. v. United States, 139 Fed. Cl. 221, 223
(2018) clarified by 139 Fed. Cl. 439. A cycle of contract awards, protests, and corrective
actions ensued, which prevented ED from making and executing a contract award. See id.
at 223–24. In May 2018, ED decided to cancel the PCA solicitation altogether. See id. at

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224. A group of PCAs challenged the cancellation decision, and in September 2018, this
Court ruled that that decision was arbitrary and capricious. Id. at 227.

        While ED struggled with the PCA solicitation, it also began working to combine all
student loan servicing work into one procurement to ensure that every student loan would
have one cradle-to-grave servicer, a plan it dubbed “Next Gen.” See FMS Invest. Corp. v.
United States, 142 Fed. Cl. 488, 489 (2019). ED proceeded with the original Next Gen
solicitation in two phases: it planned to narrow the pool of offerors in Phase I, then make
awards in Phase II. Id. After Phase I, without notice, and soon after this Court enjoined
ED from cancelling the PCA solicitation, ED shoehorned default collection into Next Gen
Phase II. See id. In doing so, ED sidelined the PCAs, who did not participate in Phase I
because the original Next Gen solicitation did not include default collection services. Id.

       A group of PCAs challenged the original Next Gen solicitation, and in December
2018, ED decided to take corrective action. See id. FMS Investment Corp. (“FMS”)
nevertheless asked this Court for a preliminary injunction preventing its Award Term
Extension from ending and ordering ED to give it more accounts. See id. at 489–90. This
Court denied the motion, reasoning that FMS’s requested relief would go beyond
preserving the status quo that existed before the litigation began and would exceed the
scope of relief available to FMS upon final judgment. See id. at 489–91.

      In January 2019, ED completed its corrective action, scrapped the two-phase
approach, and reissued the three Next Gen solicitations at issue here: the Enhanced
Processing Solution (“EPS”) RFP; the Optimal Processing Solution (“OPS”) RFP; and the
Business Processing Operations (“BPO”) RFP, which encompasses default collection
work. AR 2. Plaintiffs challenged all three solicitations.1

                                              Procedural History

       On February 27, 2019, FMS filed its Complaint. ECF No. 1. Over the next six
weeks, six more PCAs filed protests. ECF Nos. 9, 12, 52, 62, 63 (consolidation order and
subsequent amendments). Five PCAs filed motions for a preliminary injunction, claiming
that they would suffer irreparable harm if their ATEs ended, as scheduled, on April 21,
2019, and ED recalled their remaining accounts. See FMS Invest. Corp., 142 Fed. Cl. at
490–91 (citation omitted).

       On April 24, 2019, the Court issued an Opinion and Order denying the motions for
preliminary injunction, again reasoning that the relief Plaintiffs sought would go beyond
preserving the status quo that existed before the litigation began. Id.

1
   It is unclear why Plaintiffs challenged all three solicitations when only the BPO solicitation includes default
collection work. The Government argues that Plaintiffs have effectively abandoned their challenge to the EPS and
OPS solicitations because Plaintiffs did not “raise any substantive challenge” to them. Gov’t Reply at 2 n.1, ECF No.
120. Ultimately, the point is irrelevant to the disposition of this protest.

                                                         3
       In May 2019, two Plaintiffs voluntarily dismissed their claims. ECF Nos. 100, 101.
Another two Plaintiffs began discussing settlement with the Government and later
voluntarily dismissed their claims. ECF No. 124. With three Plaintiffs remaining—FMS,
Continental Service Group, Inc. (“ConServe”), and GC Services Limited Partnership (“GC
Services”)—the Court held oral argument on the parties’ cross-MJARs on July 17, 2019.

                                            Analysis

        First, the Court will lay out the basis for its jurisdiction and the standard of review.
Second, the Court will explain why the Next Gen solicitations are not unlawful. Third, the
Court will address why ED’s decision to cancel the PCA solicitation was not arbitrary and
capricious. And finally, the Court will conclude by discussing why Plaintiffs are not
entitled to a permanent injunction.

I.     Jurisdiction and Standard of Review

       The Tucker Act grants this Court subject-matter jurisdiction over bid protests. 28
U.S.C. § 1491(b)(1) (2012). In a bid protest, the Court reviews an agency’s decision
pursuant to the standards set out in the Administrative Procedure Act (“APA”). 28 U.S.C.
§ 1491(b)(4) (2012); 5 U.S.C. § 706 (2012). Under the APA, this Court shall set aside an
agency action if it is irrational—that is, if it is “arbitrary, capricious, an abuse of discretion,
or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A) (2012); Banknote Corp.
of Am., Inc. v. United States, 365 F.3d 1345, 1350–51 (Fed. Cir. 2004) (citation omitted).

        An irrational agency action is one that “entirely failed to consider an important
aspect of the problem, offered an explanation . . . counter to the evidence,” or is “so
implausible that it could not be ascribed to a difference in view or the product of agency
expertise.” Ala. Aircraft Indus. Inc.-Birmingham v. United States, 586 F.3d 1372, 1375
(Fed. Cir. 2009) (citation omitted). An agency action is not irrational if the agency
“provided a coherent and reasonable explanation of its exercise of discretion.” Impresa
Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1333 (Fed. Cir.
2001) (citation omitted). A court will uphold even an agency “decision of less than ideal
clarity if the agency’s path may reasonably be discerned.” Balestra v. United States, 803
F.3d 1363, 1373 (Fed. Cir. 2015) (internal quotation and citations omitted).

II.    The Next Gen Solicitations

       Plaintiffs set forth two main arguments for why the Next Gen solicitations are
unlawful: (i) they violate the Competition in Contracting Act (“CICA”) by bundling
distinct services without justification; and (ii) they violate consumer protection laws
governing debt collectors. Plaintiffs also make several other minor arguments. The Court
will dispose of each in turn.

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        A.       Alleged CICA Violation

        Plaintiffs first argue that the Next Gen solicitations “are unlawful because they
needlessly combine two separate services,” thereby restricting competition to offerors who
can provide both of those services, in violation of CICA. FMS MJAR, ECF No. 104 at
13–14; ConServe MJAR, ECF No. 108 at 12–14. Courts refer to these types of CICA
claims as “bundling” or “consolidation” claims. See, e.g., CHE Consulting, Inc. v. United
States, 552 F.3d 1351, 1353, 1355 (Fed. Cir. 2008). An agency “bundles” or “consolidates”
when it combines “two or more procurement requirements that were previously solicited
as separate, smaller contracts.” Feldman, S., Bundling, Gov’t Cont. Guidebook § 4:6 (4th
ed. 2018).

        Under CICA, agencies must design procurements to achieve “full and open
competition through the use of competitive procedures.” 41 U.S.C. § 3301(a)(1) (2012).
An agency may “include restrictive provisions or conditions only to the extent necessary
to satisfy [its] needs.” 41 U.S.C. § 3306(a)(2)(B) (2012). Thus, an agency can consolidate
once-separate services in a single procurement only if it is necessary to meet the agency’s
needs. However, an agency enjoys broad discretion to determine its own needs. See
Savantage Fin. Servs., Inc. v. United States, 595 F.3d 1282, 1286 (Fed. Cir. 2010). As a
result, to mount a successful challenge to an agency’s consolidating multiple procurement
requirements, a protester must show that the consolidation is not rationally related to the
agency’s needs. See id. at 1286–87; CHE Consulting, 552 F.3d at 1354.

                 1.       The 2019 Appropriations Act

       The Administrative Record (“AR”) shows that ED has a rational basis for Next Gen
and its “cradle-to-grave” approach to student loan servicing. ED’s strongest supporting
authority for Next Gen is a Congressional directive cited, and partially quoted, in the
Decision Memorandum: “[ED shall] award no funding for any solicitation for a new federal
student loan servicing environment . . . ‘unless the environment provides for the full life-
cycle of loans from disbursement to payoff.’” AR 7 (citing, and quoting in part, Dep’t of
Def. and Labor, Health and Hum. Servs., and Educ. Appropriations Act, 2019 and
Continuing Appropriations Act, 2019, Pub. L. No. 115-245, Div. B, Title III, 132 Stat.
2981, 3102 (2018) (“2019 Act”)).2 ED interpreted “full life-cycle” and “from disbursement
to payoff” to mean that its new student loan servicing environment—Next Gen—must
combine loan servicing and default collection work, so that one entity provides cradle-to-
grave, origination-to-payoff servicing for every student loan.

      ConServe and GC Services insist that ED cannot rely on the 2019 Act because the
term “full life-cycle” does not encompass default collection and because the 2019 Act

2
  The Consolidated Appropriations Act, 2018, Pub. L. No. 115-141, Div. H, Title III, 132 Stat. 348, 746–47 (2018)
(“2018 Act”), contains the same “full life-cycle” directive to ED.

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refers to “loan servicers,” a term which does not encompass PCAs. ConServe MJAR at 9–
12, ECF No. 108; GC Services Reply and Resp. at 12–16, ECF No. 117. Plaintiffs are off
the mark. First, the relevant provision of the 2019 Act refers to “disbursement to payoff”
as the “full life-cycle” of a loan. The ordinary meaning of “full life-cycle” and
“disbursement to payoff” includes origination (when the debt is created) to payoff (when
the debt is extinguished) and everything in between. This plainly includes any period in
which a loan falls into default. See, e.g., Starry Assocs., Inc. v. United States, 892 F.3d
1372, 1377 (Fed. Cir. 2018) (noting that statutory language with a plain and unambiguous
meaning controls) (citation omitted). Second, Congress’s use of the term “loan servicer”
does not imply that Plaintiffs’ PCA services fall outside of the life-cycle of a loan just
because “loan servicer,” in industry parlance, does not include PCAs. If its intent is clear
from the ordinary meaning of its words, Congress is not required to strictly adhere to
industry terms of art. Plaintiffs’ reading of the provision would allow an industry-specific
term to impliedly supersede what is otherwise the most natural reading of the provision.

       Plaintiffs next claim that ED ignores other language in the 2019 Act that requires
ED to contract with multiple loan servicers and that the 2019 Act does not provide an
exception to CICA. ConServe Reply and Resp. at 12–15, ECF No. 118. These arguments
also fail. ED is clearly complying with the 2019 Act because ED does intend to contract
with multiple loan servicers under Next Gen, each of which will manage its own cradle-to-
grave loan portfolio. AR 20009, 20012. And ED does not argue that the 2019 Act provides
an exception to CICA. ED argues that the 2019 Act provides a basis for its policy needs,
which in turn justify consolidating default collection with other student loan servicing work
in the Next Gen solicitations.

       ConServe then claims that ED did not cite the 2019 Act as a reason for cancelling
the PCA solicitation, and so—apparently—ED cannot rely on it to support Next Gen now.
ConServe MJAR at 9–10, ECF No. 118. Though an oversight, ED’s failure to cite a
Congressional directive in cancelling the PCA solicitation is not fatal to the cancellation
decision and is not a reason to enjoin the Next Gen solicitations.

        Finally, GC Services argues that ED cannot rely on the 2019 Act, or the 2018 Act,
because ED has consistently taken the position that default collection is separate from loan
servicing. See, e.g., GC Services Reply and Resp. at 15–16, ECF No. 117. GC Services’
best evidence for this argument is AR 23421, the OPS solicitation, which defines the “full
life-cycle” of a student loan as being from “application to pay-off or default.” GC Services
Reply and Resp. at 15, ECF No. 117. This single, minor variation from the language in the
2019 Act is most reasonably a more specific description of the loan “life-cycle” (consider
that the 2019 Act does not mention “application” either) or merely redundant. Either way,
it is not enough to prove irrationality.

                                             6
                 2.       Other Support for Consolidation

        The AR also shows that, in executing Next Gen, ED is responding to criticism from
members of Congress. See AR 14389 (hyperlinks to letters, reports, and press accounts).3
One linked document on AR 14389 is a January 2018 letter from twelve United States
Senators criticizing ED’s relationship with the PCAs and expressing concern that ED
prioritizes collecting debts over borrowers’ long-term success. Letter from U.S. Sen.
Kamala D. Harris, et al., to Betsy DeVos, Sec’y of Educ., and Dr. A. Wayne Johnson,
Chief Operating Officer, Fed. Student Aid, Dep’t of Educ. (Jan. 23, 2018), cited in AR
14389. ED reasonably seems to respond to this criticism in formulating Next Gen and its
cradle-to-grave loan servicing model.

       The Decision Memorandum, with support from the AR, also explains how the
current loan servicing and default collection model confuses borrowers. See AR 2–3,
2507–13, 14382–88. Under the current model, if a loan falls into default, the loan is
transferred from a servicer to a debt collector, a process which can take up to 60 days and
which can confuse borrowers as to where to send payments and who to contact with
questions. See AR 3–4, 2507–11. The Decision Memorandum sensibly refers to the need
to reduce borrower confusion, simplify borrower interactions, and standardize systems and
branding as reasons for implementing Next Gen. AR 3–5.

        Plaintiffs try to cast ED’s reason for Next Gen as “administrative convenience,”
which is a legally insufficient reason to justify consolidation under GAO precedent. See,
e.g., ConServe MJAR at 15–16, ECF. No 108 (citation omitted). But this entirely ignores
that ED is responding to a Congressional mandate and to outside criticism, as well as trying
to rectify the borrower engagement problems documented in the AR.

       For the reasons stated above, ED has provided a “coherent and reasonable
explanation,” Impresa Construzioni, 238 F.3d at 1333, for consolidating student loan
servicing and default collection in its Next Gen solicitations. Therefore, Next Gen does
not violate CICA.

        B.       Laws Governing Debt Collectors

      Next, Plaintiffs argue that Next Gen violates laws governing debt collectors in two
ways. First, they argue that ED’s plan to unify loan servicer branding under the Federal
Student Aid (“FSA”) banner violates a provision of the Fair Debt Collection Practices Act
(“FDCPA”) that requires debt collectors to identify themselves when interacting with
borrowers. FMS MJAR at 17–19, ECF No. 104 (citing 15 U.S.C. § 1692e(14)). Second,

3
  GC Services suggests that ED’s citing to hyperlinked documents on one page of the AR itself highlights the “lack
of record evidence” to support Next Gen. GC Services Reply and Resp. at 2–3, 17, ECF No. 117. Although this is a
careless way to support what ED claims is such an important program, courts do not police the format of agencies’
administrative records, so long as what an agency cites provides a rational basis for its actions.

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they contend that ED’s goal of increasing engagement with delinquent borrowers ignores
many state laws that cap the number of times a debt collector can contact a borrower in a
given period.

       ED’s general goal of standardizing its branding does not per se force Next Gen
contractors to violate the FDCPA. See AR 3. ED appears to intend to reconcile its goal of
consistent branding with the requirements of federal law, and this Court owes ED a
presumption of regularity in that respect. See Impresa Construzioni, 238 F.3d at 1338.

        The same applies to Plaintiffs’ argument that Next Gen violates state laws governing
debt collectors. As part of Next Gen, ED set a goal of increasing borrower engagement.
See AR 4–5, 2496–2502. The presumption of regularity requires that this Court give ED
the benefit of the doubt that it will pursue this goal and execute Next Gen in a way that
complies with applicable state laws. At this stage in the procurement, ED is not required
to set out exact state-by-state borrower engagement strategies.

       C.     Plaintiffs’ Remaining Arguments

       Plaintiffs focus on CICA and the laws governing debt collectors, but, with their
typical firehose approach to protesting ED procurements, they make several other points
worthy of direct refutation.

        For one, Plaintiffs stress that ED still has not conducted a legal analysis of Next
Gen. FMS MJAR at 19, ECF No. 104 (citing FMS Invest. Corp., 139 Fed. Cl. at 225).
However, an agency is “not required to synthesize its thinking and its market research into
a prelitigation written explanation of the rationale for each of [its] solicitation
requirements.” Savantage Fin. Servs., Inc., 595 F.3d at 1287. Moreover, the lack of a legal
analysis was just one of many factors that rendered the May 2019 cancellation decision
irrational. FMS Invest. Corp., 139 Fed. Cl. at 225–26 (reciting reasons, including
inadequate documentation in the AR and the lack of a Next Gen request for proposals,
among others).

       Plaintiffs argue that the Next Gen solicitations are unlawfully vague because “they
do not indicate how the resulting contracts will be priced.” FMS MJAR at 25, ECF No.
104. Specifically, FMS notes that ED “‘does not intend[] to continue use of the current
default collections pricing structure,’ i.e., no more contingency fees.” FMS MJAR at 23
(quoting EPS RFP, Amendment 5, Attachment 25 – Responses to Questions, Q&A 64).
The Next Gen solicitations and the AR include detailed pricing proposal worksheets, see,
e.g., AR 20281–87, and offerors are permitted to propose their own alternative pricing
models, see AR 20285. The PCAs may be upset over losing contingency fees, but ED’s
path forward is not irrationally vague.

                                             8
       ConServe similarly points out that PCAs and loan servicers operate using different
pricing models and that by teaming up to provide cradle-to-grave servicing, companies will
be incentivized to shift accounts to the most profitable servicing stage, creating an
organizational conflict of interest. ConServe MJAR at 18–21, ECF No. 108. But ED
already addressed this issue by expressly disclaiming contingency fees and any other
pricing model that would incentivize pushing loans into default. See EPS RFP,
Amendment 5, Attachment 25 – Responses to Questions, Q&A 57, 64.

       FMS complains that the solicitations do not provide sufficiently clear goals or
metrics of success specific to default collection. FMS MJAR at 24–26, ECF No. 104. The
thrust of FMS’s argument is that Next Gen focuses too much on non-default collection
work. Since Next Gen combines default collection with other student loan servicing work,
FMS’s observation that the AR does not focus on default collection is not surprising.

       D.     Conclusion

       Although ED’s Next Gen solicitations are far from procurement paragons, the Court
will uphold even an agency action “of less than ideal clarity if the agency’s path may
reasonably be discerned.” Balestra, 803 F.3d at 1373 (internal quotation and citation
omitted). ED and its Next Gen solicitations have managed to clear this low bar.

III.   PCA Solicitation Cancellation Decision

       The Court now turns to ED’s March 2019 decision to cancel the PCA solicitation.
Plaintiffs argue that the cancellation is arbitrary and capricious primarily because (i) ED’s
decision relies on Next Gen to justify winding down standalone default collection work,
and Next Gen is unlawful; (ii) although ED has contracts with small business debt
collectors (“the smalls”) to perform default collection services until 2024, ED’s estimates
of the smalls’ capacities are inaccurate; and (iii) ED’s conclusion that the smalls and the
large PCAs perform similarly well is contrary to the evidence. Plaintiffs also throw in
several lesser arguments that the Court will address.

       A.     Next Gen

       At the outset, because the Next Gen solicitations are rational based on the record
before the Court, Plaintiffs’ first argument fails.

       B.     Small Business Capacity Estimates

      ED also asserts that it cancelled the PCA solicitation because the smalls that it has
under contract until 2024 can handle all defaulted accounts until Next Gen is up and
running. AR 2, 8–12. Plaintiffs contend that because ED merely asked the smalls how
many more accounts they could take on, and took them at their word, the smalls inflated

                                             9
their capacity estimates as a ploy to get more business. FMS MJAR at 27–31, ECF No.
104; ConServe MJAR at 25–27, ECF No. 108. FMS quotes this Court’s September 2018
decision: “[the AR] does not identify the source of [the smalls’] capacity estimates or
explain how the data was compiled.” FMS MJAR at 27, ECF No. 104 (quoting 139 Fed.
Cl. at 225).

       Although the Court agrees that asking the small businesses to estimate their own
account capacities is not an ideal policy planning method, it is an improvement on the bare,
contextless spreadsheets ED apparently relied upon in making its May 2018 cancellation
decision. See FMS Invest. Corp., 139 Fed. Cl at 225. The Decision Memorandum also
discusses how ED relied on the smalls’ staff-to-portfolio ratios and on ED’s increased
monitoring of the smalls’ performance in deciding whether their capacity estimates were
reliable. AR 8–12.

       Plaintiffs point out that the smalls cannot handle the current volume of accounts
without subcontracting. See ConServe MJAR at 6–7, 27–28, ECF No. 108. But this is
irrelevant because subcontracting is a valid way for the smalls to increase their capacity.
Plaintiffs try to make an example of a small that ED suspended from receiving new
accounts in early 2019. See FMS MJAR at 29–30, ECF No. 104. But one small business’s
underperformance does not bring the whole edifice down; and, in any case, ED has
explained that it worked with that small to resolve the problem. See AR 12347 (meeting
minutes discussing that smalls’ performance).

       C.     Small Business Performance Versus Large PCA Performance

       Plaintiffs also accuse ED of manipulating and misrepresenting collections data to
show that the smalls perform at least as well as the large PCAs. Plaintiffs cite to collections
data in an attempt to argue that the large PCAs perform better than the smalls. See, e.g.,
FMS MJAR at 31–36, ECF No. 104. The Government cites similar data in an attempt to
argue the opposite. Def. Resp. and MJAR at 11–14, Ex. 1, ECF No. 114.

       None of the parties’ arguments on this point deserve much weight. Both sides
draw—at best—weakly supported and self-serving conclusions from the data they present.
For example, the Government claims that the smalls perform just as well as the large PCAs
because collections data show that recovery rates stabilized (after declining for years) when
the smalls began taking on “most” of the accounts. See Def. Resp. and MJAR at 11–14,
Ex. 1, ECF No. 114; see also AR 11. FMS claims that recovery rates continue to decline
because the PCAs are receiving fewer accounts. FMS MJAR at 34–36, ECF 104. The
broad trend data cited by the parties does not strongly support these specific conclusions.
Many other factors can (and presumably do) influence year-on-year recovery rates other
than the smalls’ and the large PCAs’ relative performance.

                                              10
        Plaintiffs also attack ED’s projection of how much its defaulted loan portfolio will
grow in the future. See, e.g., FMS MJAR at 36. Yet, in the AR, ED calculates the historical
rate of growth of its defaulted debt portfolio, adds a margin of error, then extrapolates this
rate into the future to estimate how many more accounts it will have in the coming years.
AR 9. ED compared this estimate to the smalls’ estimated capacity and concluded that it
would not need additional PCA services before Next Gen is up and running. See AR 9–
12. ED’s method of projecting future loan volumes appears reasonable.

       Even if all of Plaintiffs’ performance and capacity allegations were true, if ED
rationally decides that the PCA solicitation is incompatible with its needs, ED does not
have to continue with it just because it may produce more money.

       D.     Plaintiffs’ Remaining Arguments

       Here, the Court addresses two of Plaintiffs’ remaining arguments. First, ConServe
alleges that ED has done nothing since May 2018 to add support to its decision to cancel
the PCA solicitation, so ED should be in the same position as it was in September 2018.
ConServe MJAR at 22, ECF No. 108. Not so. ED has updated the smalls’ capacity
estimates and its projections of future loan volumes, see AR 10, and has begun meeting
with the smalls every month to monitor their performance, see AR Tabs 23–25 (meeting
minutes and related records). And most importantly, ED is executing Next Gen, which
will begin to siphon off default collection work in 2020. See AR 6–7, 10.

       Second, FMS accuses ED of ignoring Congress’s mandate in the Debt Collection
Improvement Act of 1996 (“DCIA”) that all agencies should seek “‘to maximize
collections of delinquent debts owed to the Government.’” FMS MJAR at 26–27, ECF
104 (quoting Pub. L. 104-134 §§ 31001(b)(1)). But the Congressional mandates in the
relevant provision of the 2019 Act are both more recent and more specific than the quoted
subsection of the DCIA, so to the extent that the two conflict, the 2019 Act takes
precedence. See N. Singer, S. Singer, Sutherland Statutory Constr. § 51:2 (7th ed. 2018)
(courts should try to construe statutes to avoid conflict, but a more specific statute trumps
a more general one, and a more recent statute trumps an older one).

       E.     Conclusion

        For the reasons stated above, ED’s March 2019 decision to cancel the PCA
solicitation—though far from perfect—was not arbitrary and capricious.

IV.    Legal Standard for a Permanent Injunction

      In a bid protest, this Court can issue an injunction pursuant to 28 U.S.C. § 1491(b)
and RCFC 65(d). In deciding whether to grant a permanent injunction, a court considers
(1) whether the plaintiff has succeeded on the merits; (2) whether the plaintiff will suffer

                                             11
irreparable harm without an injunction; (3) whether the balance of the hardships favors an
injunction; and (4) whether an injunction is in the public interest. PGBA, LLC v. United
States, 389 F.3d 1219, 1228–29 (Fed. Cir. 2004) (citation omitted).

       First, for the reasons stated above, Plaintiffs have not succeeded on the merits.
Second, Plaintiffs’ irreparable harm here is unclear. On the one hand, Plaintiffs may lose
the opportunity to compete as prime contractors. On the other hand, Plaintiffs can still
compete as parts of teams or as subcontractors. Further, Plaintiffs continue to ignore the
fact that this Court cannot order ED to assign them accounts to service. So even if this
Court resurrected the PCA solicitation (again), and ED proceeded with awards, the winning
PCAs are not entitled to some minimum amount of business.

       The balance of hardships does not favor either party. An injunction would delay
Next Gen and ED’s cradle-to-grave servicing goal, and ED would be forced to commit
resources to a PCA solicitation that it no longer needs. Plaintiffs would have to subcontract
or team up with other loan servicers to compete for Next Gen contracts. Finally, the public
interest does not favor an injunction because, among other reasons, there’s no procurement
defect here—at least not one significant enough for ED’s action to be irrational.

                                        Conclusion

      For the reasons set forth above, the Court DENIES Plaintiffs’ motion for judgment
on the administrative record and DENIES Plaintiffs’ motion to permanently enjoin the
Department of Education from proceeding with the Next Gen solicitations and cancelling
the PCA solicitation. The Court GRANTS the Government’s motion for judgment on the
administrative record. The Clerk of the Court is directed to enter judgment for the
Government. No costs are awarded to either party.

       IT IS SO ORDERED.

                                                         s/ Thomas C. Wheeler
                                                         THOMAS C. WHEELER
                                                         Judge

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