Court Opinion

ID: 2833033
Source: CourtListenerOpinion
Date Created: 2015-09-02 15:01:28.302662+00
Date Added: 2024-06-11T11:31:48.450806
License: Public Domain

United States Court of Appeals
      for the Federal Circuit
                 ______________________

     TINTON FALLS LODGING REALTY, LLC,
               Plaintiff-Appellant

                            v.

               UNITED STATES,
       DMC MANAGEMENT SERVICES, LLC,
              Defendants-Appellees
             ______________________

                       2014-5140
                 ______________________

    Appeal from the United States Court of Federal
Claims in No. 1:14-cv-00353-EGB, Senior Judge Eric G.
Bruggink.
                ______________________

              Decided: September 2, 2015
                ______________________

    LEE DOUGHERTY, Offit Kurman, Attorneys at Law, Vi-
enna, VA, argued for plaintiff-appellant. Also represented
by KATHERINE AMANDA STRAW.

    NATHANAEL YALE, Commercial Litigation Branch, Civ-
il Division, United States Department of Justice, Wash-
ington, DC, argued for defendant-appellee United States.
Also represented by JOYCE R. BRANDA, ROBERT E.
KIRSCHMAN, JR., DEBORAH A. BYNUM; DAVIS YOUNG,
JEFFREY DAVENPORT, Military Sealift Command, United
States Navy, Norfolk, VA.
2                       TINTON FALLS LODGING REALTY   v. US

   JONATHAN TODD WILLIAMS, Piliero Mazza PLLC,
Washington, DC, argued for defendant-appellee DMC
Management Services, LLC. Also represented by
KATHRYN V. FLOOD.
               ______________________

        Before DYK, REYNA, and CHEN, Circuit Judges.
      Opinion for the court filed by Circuit Judge CHEN.
       Dissenting opinion filed by Circuit Judge REYNA.
CHEN, Circuit Judge.
    Tinton Falls Lodging Realty, LLC (Tinton Falls) ap-
peals from a final judgment of the United States Court of
Federal Claims (Claims Court) entered in favor of appel-
lees the government and DMC Management Services,
LLC (DMC) after granting motions on the administrative
record that DMC was eligible for an award of a small
business set-aside contract. See Joint Appendix (J.A.)
3774–75. Tinton Falls claims this was error. We affirm.
                       BACKGROUND
    On February 19, 2013, the United States Department
of the Navy, Military Sealift Command, in Norfolk, Vir-
ginia (MSC), issued contract Solicitation Number N32205-
13-R-6005 (the solicitation). The solicitation involved the
management and coordination of lodging and transporta-
tion services for federal civil service mariners (CIVMARs)
who were completing required training at the MSC Train-
ing Center in Freehold, New Jersey. J.A. 172, 178–79.
MSC issued the solicitation as a total small business set-
aside under North American Industrial Classification
System (NAICS) code 721110 (“Hotels (except Casino
Hotels)”). J.A. 172.
   The scope of work for the solicitation required the
winning contractor 1) to provide a sufficient number of
TINTON FALLS LODGING REALTY    v. US                          3

rooms at lodging facilities (i.e. hotels) in the vicinity of the
MSC Training Center for CIVMARs attending training
throughout the life of the contract, and 2) to provide
transportation to and from those hotels to the MSC Train-
ing Center. J.A. 248–51. The contractor was required to
specify a primary hotel and two or more overflow, or
backup, hotels. J.A. 248. More than half of the CIVMARs
attending training had to be housed at the primary hotel
at all times. Id. The solicitation noted that based on
historical data, MSC would require around 65 hotel rooms
each night. Id. This number of rooms, however, often
varied between 25 and 120, and the contractor was ex-
pected to ensure a sufficient number of rooms were avail-
able to house CIVMARs for the duration of the contract,
regardless of how many hotel rooms MSC might require
each night. Id. The solicitation made clear that MSC
would be responsible only for the actual number of hotel
rooms needed each night to house CIVMARs attending
training. Id.
    For transportation services, the solicitation required
the contractor to provide each CIVMAR with daily trans-
portation to and from the MSC Training Center whenever
classes were scheduled, including weekends and holidays.
J.A. 251. The contractor was required to “coordinate
daily” with the MSC point of contact to determine how
many trips between the primary and overflow hotels and
the training center were needed to accommodate each
CIVMAR’s training schedule and to ensure “timely logis-
tical arrangements” for those trips. J.A. 250. As with the
hotel rooms, the solicitation made clear that MSC would
be responsible only for the actual number of trips needed
to transport CIVMARs to and from the training center.
J.A. 251.
    The scope of work also required the contractor to per-
form various other services, such as forwarding copies of
any police reports based on illegal acts by, and maintain-
ing plans to provide emergency medical treatment and/or
4                        TINTON FALLS LODGING REALTY   v. US

transportation to a hospital for, CIVMARs housed at the
primary and overflow hotels. J.A. 249. The contractor
was also required to verify the identity of each CIVMAR
who checked into a primary or overflow hotel, maintain a
daily sign-in record, and transmit this sign-in record to
the MSC point of contact. J.A. 251.
    Pursuant to Federal Acquisition Regulation (FAR)
clause 52.212-2, MSC evaluated bidders based on their
ability to satisfy the technical requirements of the solici-
tation, past performance on comparable government
contracts (if any), and price. For the solicitation’s tech-
nical requirements, bidders were evaluated based on four
sub-factors: 1) general requirements of the primary and
overflow hotels, 2) fire and safety policies and procedures
of the primary and overflow hotels, 3) health and sanita-
tion of the primary and overflow hotels, and 4) transpor-
tation to and from the primary and overflow hotels to the
MSC Training Center. J.A. 222–24. For past perfor-
mance, bidders had to provide evidence of performance
within the past three years of a government contract with
similar scope, magnitude, and complexity to the require-
ments of the solicitation. J.A. 255. For price, MSC indi-
cated that it would evaluate bid proposals in accordance
with FAR 15.404-1(b). J.A. 256.
    MSC received bid proposals from multiple contractors.
For reasons unclear from the record on appeal, MSC
found all of the submitted proposals technically unac-
ceptable, thus precluding award of the contract to any of
the interested bidders. Appellee United States Br. at 9.
MSC’s contract review board then recommended that
MSC establish a “competitive range” of bidders and hold
discussions with those bidders in order to give them an
opportunity to address MSC’s technical concerns and
revise pricing to remain competitive, in accordance with
FAR 15.306(c)–(d). Id. The competitive range consisted
of all the initial bidders, each of which revised and re-
submitted its initial proposal. MSC accepted the bid
TINTON FALLS LODGING REALTY   v. US                      5

proposal of Mali, Inc. (Mali), whose revised bid was the
lowest-priced, technically acceptable, and otherwise
eligible proposal.
     Losing bidder DMC filed a size protest with the Area
Office of the Small Business Administration (SBA). In
evaluating the protest, the SBA Area Office found that
Mali was not a small business. In particular, the Area
Office determined that Mali, along with Tinton Falls and
two other companies that had submitted bid proposals,
were part of the same family of hotels operated under a
parent entity called Hotels Unlimited, Inc. (Hotels Unlim-
ited). J.A. 2745–53. After reviewing Mali’s articles of
incorporation, by-laws, financial statements, and income
tax returns, the Area Office concluded that Mali was
“affiliated” with Hotels Unlimited for purposes of the
solicitation, and that the combined entity—which had
annual receipts of above $30 million—did not qualify as a
“small business concern” under the applicable NAICS
code. J.A. 2752–53, 2770. Mali appealed this determina-
tion to the SBA’s Office of Hearing and Appeals (SBA-
OHA), which affirmed the Area Office’s conclusion. J.A.
2779–83. Because DMC had submitted the next lowest-
priced, technically acceptable bid proposal, it was then
declared as the successful bidder. J.A. 2654.
     Tinton Falls then filed a size protest with the MSC
contracting officer. Tinton Falls explained that DMC
intended to subcontract the lodging services portion of the
contract—which accounted for more than 80% of the value
of the contract—to hotels that did not qualify as small
businesses. J.A. 3457, 3459. As a result, Tinton Falls
alleged that DMC was unusually reliant upon its subcon-
tractors and would not itself be performing the “primary
and vital requirements of the contract”—i.e., the provision
of lodging services—and thus had a relationship with the
subcontracted hotels that violated the “ostensible subcon-
tractor rule,” 13 C.F.R. § 121.103(h)(4). J.A. 2830–37.
The Area Office disagreed, concluding that 1) DMC would
6                       TINTON FALLS LODGING REALTY   v. US

perform the majority of the primary and vital require-
ments of the contract—the management and coordination
of lodging and transportation services to MSC—and 2)
DMC was not unusually reliant on any of its subcontrac-
tors. J.A. 3459–64. Therefore, because DMC qualified as
a small business under the applicable NAICS code and
had no affiliates or ostensible subcontractors, it was an
eligible small business for purposes of the solicitation.
J.A. 3465.
     Tinton Falls appealed to the SBA-OHA, arguing that
the Area Office committed clear error in its decision.
While Tinton Falls’ appeal was pending at the SBA-OHA,
the MSC contracting officer filed his own size protest of
Tinton Falls and two other bidders with the Area Office,
urging that these three entities (like Mali, the subject of
the earlier determination) also did not qualify as small
businesses. The protest asserted that the contracting
officer believed the remaining acceptable bidders (other
than DMC) were not small businesses under the applica-
ble NAICS code due to their affiliation with Mali and
Hotels Unlimited. J.A. 2786. The Area Office agreed,
issuing a size determination that due to their affiliation
with Mali, none of the remaining Hotel Unlimited entities
qualified as a small business for purposes of the solicita-
tion. J.A. 2815.
    The SBA-OHA then rejected Tinton Falls’ appeal and
upheld the Area Office decision that the primary and vital
requirements of the solicitation were a coordinated pack-
age of rooms, transportation, and other services. J.A.
3560. The SBA-OHA determined that DMC would be
performing a significant portion of the contract’s primary
and vital requirements: coordinating hotel rooms and
transportation services to meet MSC’s needs. J.A. 3560–
61. Thus, the SBA-OHA determined that DMC’s relation-
ship with its subcontracted hotels did not violate the
ostensible contractor rule and that DMC could be consid-
ered a small business concern for purposes of the solicita-
TINTON FALLS LODGING REALTY   v. US                      7

tion. Id. Tinton Falls then appealed to the Claims Court
by timely filing the bid protest at issue here and seeking
preliminary and injunctive relief. 1 DMC intervened.
    Tinton Falls’ arguments before the Claims Court fo-
cused on one issue: whether the SBA-OHA had a rational
basis for determining that the primary and vital require-
ments of the contract were a coordinated package of
lodging and transportation services. The parties filed
cross-motions for judgment on the administrative record.
After oral argument, the Claims Court granted the gov-
ernment’s and DMC’s motions and denied the relief
requested by Tinton Falls. Specifically, the Claims Court
determined that the SBA-OHA had a rational basis for its
conclusion that the primary purpose of the solicitation
was a coordinated package of rooms, transportation, and
services to meet MSC’s fluctuating needs. J.A. 3774. The
Claims Court entered final judgment for the government
and DMC, and Tinton Falls timely appealed. We have
jurisdiction pursuant to 28 U.S.C. § 1295(a)(3).
                       DISCUSSION
    The Claims Court’s legal determinations, including
interpretations of statutes and regulations, are subject to
de novo review and its factual determinations are re-
viewed for clear error. CMS Contract Mgmt. Serv. v.
Mass. Hous. Fin. Agency, 745 F.3d 1379, 1385 (Fed. Cir.
2014). Accordingly, we review the grant of a motion for
judgment on the administrative record de novo. Glenn
Def. Marine (ASIA), PTE Ltd. v. United States, 720 F.3d
901, 907 (Fed. Cir. 2013). We thus apply the same “arbi-
trary and capricious” standard of review set forth in the
Administrative Procedure Act, 5 U.S.C. § 706(2)(A), as did

   1    The government agreed to a voluntary stay of the
contract award to DMC, and the Claims Court dismissed
Tinton Falls’ request for preliminary relief as moot.
8                        TINTON FALLS LODGING REALTY   v. US

the Claims Court. Weeks Marine, Inc. v. United States,
575 F.3d 1352, 1358 (Fed. Cir. 2009); 28 U.S.C.
§ 1491(b)(4). In applying this standard to bid protests,
our task is to determine whether the procurement offi-
cial’s decision lacked a rational basis or the procurement
procedure involved a violation of a regulation or proce-
dure. Savantage Fin. Servs., Inc. v. United States, 595
F.3d 1282, 1285–86 (Fed. Cir. 2010).
    Here, Tinton Falls argues that the SBA-OHA lacked a
rational basis for determining that the primary and vital
requirements of the solicitation were the management
and coordination of a package of lodging and transporta-
tion services. Contracting officers are entitled “to exercise
discretion upon a broad range of issues confronting them
in the procurement process.” Id. at 1286 (internal quota-
tion omitted). “For that reason, procurement decisions
invoke a highly deferential rational basis review.” Id.
(internal quotation omitted). Under this standard, we
must sustain an agency’s action unless the challenger can
prove the agency “entirely failed to consider an important
aspect of the problem, offered an explanation for its
decision that runs counter to the evidence before the
agency, or [issued a decision that] is so implausible that
[the decision] 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) (quoting Motor Vehicle Mfrs. Ass’n of the
U.S., Inc. v. State Farm Mut. Auto Ins. Co., 463 U.S. 29,
43 (1983)).
                              I
    While the government does not seriously dispute that
Tinton Falls has standing to pursue its bid protest, DMC
contends that Tinton Falls lacks standing. To establish
standing, Tinton Falls must show that it is an interested
party that will be prejudiced by the award of the contract
to DMC. Info. Tech. & Applications Corp. v. United
TINTON FALLS LODGING REALTY   v. US                        9

States, 316 F.3d 1312, 1319 (Fed. Cir. 2003). To establish
prejudice, Tinton Falls must show there is a “substantial
chance” it would have received the contract award but for
the alleged error in the procurement process. Id. A party
can establish a “substantial chance” it would have re-
ceived a contract by showing that it was an actual or
prospective bidder whose direct economic interest would
be affected by the award of the contract or by failure to
award the contract. Myers Investigative & Sec. Servs.,
Inc. v. United States, 275 F.3d 1366, 1370 (Fed. Cir. 2002)
(citing Am. Fed’n of Gov’t Emps. v. United States, 258
F.3d 1294, 1302 (Fed. Cir. 2001)). Whether a party has
standing is a question of law we review de novo. Labatt
Food Serv., Inc. v. United States, 577 F.3d 1375, 1379
(Fed. Cir. 2009). The underlying question of prejudice
(“substantial chance”) is a factual question we review for
clear error. Bannum, Inc. v. United States, 404 F.3d
1346, 1354 (Fed. Cir. 2005).
     DMC contends that Tinton Falls cannot show preju-
dice because 1) it does not qualify as a small business, and
therefore could not compete in a reopened bid process
unless that bid is solicited on an unrestricted basis, and 2)
it did not intend to win the original contract. To support
the first point, DMC emphasizes that the Area Office
disqualified Mali, Tinton Falls, and their two related
entities from the bidding process because they were not
“small business concerns” for purposes of the solicitation.
J.A. 2802–06. DMC therefore contends that Tinton Falls
cannot show prejudice because it is not a “small business
concern” eligible to compete for the solicitation. Thus,
only one technically acceptable bid proposal remained—
DMC’s. The Claims Court rejected DMC’s argument,
finding that, among other things, there was a “distinct
possibility” that if Tinton Falls were to succeed in proving
that DMC was likewise ineligible, the government might
be required to rebid the contract on an unrestricted basis,
which would place Tinton Falls in the same position as
10                      TINTON FALLS LODGING REALTY   v. US

any other interested party. J.A. 3774 (Tr. at 67:1–15).
We find no clear error in the Claims Court’s conclusion.
    In Impresa Construzioni Geom. Domenico Garufi v.
United States, we held that a bid protester had a “sub-
stantial chance” of receiving a contract—and therefore
standing to challenge the award of that contract—if, as a
result of a successful bid protest, the government would
be obligated to rebid the contract and the protester could
compete for the contract during the reopened bid. 238
F.3d 1324, 1334 (Fed. Cir. 2001). Here, there is no ques-
tion that if Tinton Falls’ bid protest succeeds, MSC would
be obligated to reopen the bidding process. In particular,
if Tinton Falls were to prevail, DMC’s relationship with
its subcontracted hotels would violate the ostensible
subcontractor rule and DMC would no longer qualify as a
small business concern for purposes of the solicitation.
Thus, no eligible small business would have submitted a
technically acceptable proposal during the initial bid
process. With no eligible bidders remaining, MSC would
be required to reopen the bidding process. 2

     2  The dissent would reject Tinton Falls’ standing
arguments on the ground that Tinton Falls had no “sub-
stantial chance” of securing the award because certain
companies that were disqualified earlier in the process
qualified as small business concerns, and one of them
would have been awarded the contract. The dissent
states that regulation “obligate[s]” the government to
accept one of these companies’ technically unacceptable
bids or at least to grant the companies an additional
opportunity to remedy their bids. Dissent at 4. But no
party to this case has taken the position that a regulation
requires the government to further consider these rejected
bids. In fact, none of the briefing on appeal even raises
the possibility that the government would give any fur-
ther consideration to a deficient bid. And for good rea-
TINTON FALLS LODGING REALTY   v. US                       11

     What is less clear is whether Tinton Falls could com-
pete for this hypothetical reopened bid. Tinton Falls
concedes that for the purposes of the original solicitation,
it is not a small business concern under the applicable
NAICS code. Oral Argument at 41:10–30, Tinton Falls
Lodging Realty, LLC v. United States, No. 2014-5140
(Fed.      Cir.     May      6,   2015),    available     at
http://www.cafc.uscourts.gov/oral-argument-
recordings/14-5140/all. But all parties appear to agree
that MSC would be obligated to evaluate whether it could
still solicit the contract as a small business set-aside, or
whether it would need to reopen the bidding process on an
unrestricted basis. See Oral Arg. at 19:30–53 (Govern-
ment: “If there’s no offerors remaining—which would be
the case if DMC is no longer the [contract] awardee—then
the agency would have the obligation to evaluate, based
upon the market research—which would have to be
conducted—whether or not [the rebid contract] could be
set aside for small businesses.”). And although there is
much speculation as to whether MSC would rebid the
solicitation on an unrestricted basis—thus allowing
Tinton Falls to compete for the contract—none of the
parties disputes the Claims Court’s finding that this is at
least a realistic possibility.
    DMC’s allegation that Tinton Falls did not intend to
secure the initial contract is not relevant to this analysis.
In particular, we fail to see how Tinton Falls’ initial bid
strategy would prevent it from competing for the reopened
bid, assuming that the contract were to be solicited on an
unrestricted basis. To establish prejudice, Tinton Falls
need not show it would win the contract in competition

son. Before rejecting these companies’ proposals as
technically unacceptable, the government gave them an
additional chance to correct their deficiencies. These
companies still failed to submit an acceptable proposal.
12                       TINTON FALLS LODGING REALTY   v. US

with other hypothetical bidders. Myers, 275 F.3d at 1370.
Rather, all a protester must establish to demonstrate
prejudice is that it has a substantial chance of receiving
the contract—that it is a qualified bidder and could com-
pete for the contract. Id. at 1370–71. The fact that Tinton
Falls did not submit the lowest-priced bid of its affiliated
entities during the initial bidding process does not pre-
clude it from having a substantial chance of winning a
hypothetical reopened bid for that contract, so long as the
contract is solicited on an unrestricted basis instead of as
a small business set-aside.
    In short, the question of standing hinges on whether
Tinton Falls could compete for a reopened bid if it wins its
protest of the initial contract award. The factual core of
this question is whether, after having not received any
technically acceptable proposals from eligible small busi-
nesses in response to its initial solicitation, MSC would
maintain the contract as a small-business set-aside, or
reopen the bidding process on an unrestricted basis. Both
DMC and Tinton Falls agree that nothing in the record
definitively answers this question, and both parties
merely speculate as to the parameters of the hypothetical
reopened bid for the contract. The government—which
does not appeal the Claims Court’s denial of its motion to
dismiss for lack of standing—conceded at oral argument
there is a sufficient probability MSC would reopen the bid
on an unrestricted basis so that Tinton Falls would have
a “substantial chance” of winning the reopened solicita-
tion. Oral Arg. at 22:35–42 (Court: “If you assume that
this court rules against your position on the merits, then
would [Tinton Falls] have a substantial chance?” Gov-
ernment: “Correct.”). Nevertheless, we need not engage in
further speculative inquiry about what might happen.
Our review of this aspect of the Claims Court’s decision
requires us merely to determine whether the court clearly
erred by finding that Tinton Falls could compete for the
reopened bid if it prevails in its protest of the initial
TINTON FALLS LODGING REALTY   v. US                     13

contract award. See Bannum, 404 F.3d at 1354. Based on
the record, we are unable to find clear error in the Claims
Court’s factual determination that Tinton Falls has
demonstrated prejudice. 3
                            II
    Proceeding to the merits, at issue here is a narrow
challenge to the Claims Court’s determination that DMC’s
relationships with its subcontracted hotels did not violate
the ostensible contractor rule, and thus did not disqualify
DMC as a small business concern under the solicitation
and preclude award of the contract to DMC. Congress has
given SBA the exclusive authority to establish definitions
and standards for determining whether an entity qualifies
as a “small business concern” for purposes of federal law.
15 U.S.C. § 632(a)(2)(A). Determinations under SBA’s
regulations are binding on federal procurement officers.
15 U.S.C. § 637(b)(6). Qualifying as a “small business
concern” for the purpose of a bid proposal may have
several advantages. See 13 C.F.R. § 121.401. For exam-
ple, solicitations for certain government procurements,
like the solicitation here, are limited to “small business
concerns.”

   3     We need not determine whether, in all circum-
stances, a protester can “compete” for a reopened bid for
the purposes of standing under Impresa when the pro-
tester was not a qualified bidder for the initial bid and
would be a qualified bidder for the reopened bid only if
the contract was solicited with substantially different
eligibility requirements. We hold only that under the
particular facts of this case, the Claims Court did not
clearly err in finding that Tinton Falls had a substantial
chance of winning a reopened bid should it prevail in its
bid protest.
14                       TINTON FALLS LODGING REALTY    v. US

     When an agency issues a solicitation for a small busi-
ness set-aside contract, it must select an NAICS code for
that contract, “which best describes the principal purpose
of the product or service being acquired.” 13 C.F.R.
§ 121.402(a)–(b). Each NAICS code is associated with a
number of employees or amount of annual receipts, both
of which limit the size of a business that can qualify as a
small business for purposes of the contract. 13 C.F.R.
§ 121.201. Pertinent to the inquiry here are the regula-
tions relating to affiliated businesses. Even if a business
falls within the employee and annual receipt limits of the
applicable NAICS code, it may fail to qualify as a small
business for purposes of the contract if it is affiliated with
other entities. A business is affiliated with another
business when “one controls or has the power to control
the other.” 13 C.F.R. § 121.103(a)(1). In determining
affiliation, SBA considers factors such as ownership,
common management, previous relationships with or ties
to another concern, contractual relationships, and joint
ventures between entities. 13 C.F.R. § 121.103(a)(2), (c)–
(h). Businesses are treated as joint venturers—and
therefore affiliates—when a subcontractor “performs
primary and vital requirements of a contract . . . or [is] a
subcontractor upon which the prime contractor is unusu-
ally reliant.” 13 C.F.R. § 121.103(h)(4). This is referred to
as the “ostensible subcontractor” rule. See id. (“A contrac-
tor and its ostensible subcontractor are treated as joint
venturers.”).
    Here, Tinton Falls does not allege that DMC will be
“unusually reliant” on a subcontractor in order to perform
the contract. Rather, as discussed above, Tinton Falls
challenges only the SBA-OHA’s determination that the
primary and vital requirements of the solicitation are a
coordinated package of hotel and transportation services.
Tinton Falls contends that the primary and vital re-
quirement of the solicitation is the provision of lodging
services itself, and does not include the management and
TINTON FALLS LODGING REALTY   v. US                      15

coordination of lodging and transportation services to
meet MSC’s needs. According to Tinton Falls, the solici-
tation does not require bidders to provide a management
plan or detail how subcontractors will be managed.
Rather, much of the statement of work in the solicitation
is devoted to criteria relating to minimum requirements
for hotels. See J.A. 248–51, 253–55. Tinton Falls cites to
the chosen NAICS code to support its position that lodg-
ing services are the primary purpose of the solicitation.
Specifically, Tinton Falls notes that the MSC contracting
officer chose NAICS code 721110 (“Hotels (except Casino
Hotels)”), rather than the other NAICS codes that appear
to describe management services, such as NAICS codes
541611 (“Administrative Management & General Man-
agement Consulting Services”) and 561990 (“All Other
Support Services”). Tinton Falls concludes that the SBA-
OHA lacked a rational basis for its determination that
management and coordination of the lodging and trans-
portation services is the primary and vital requirement of
the contract.
     Tinton Falls contends that when the primary and vi-
tal requirements of the solicitation are properly defined as
lodging services, DMC’s relationships with its subcon-
tracted hotels violate the ostensible contractor rule. The
SBA-OHA estimated that the cost of hotel rooms accounts
for about 80% of the contract value. J.A. 3551. DMC does
not own any hotels and intends to subcontract the provi-
sion of these hotel rooms to several different hotels. J.A.
3550. And because at least the primary hotel subcon-
tracted by DMC does not qualify as a small business for
purposes of the solicitation, J.A. 3452, Tinton Falls con-
cludes that DMC cannot be considered a “small business
concern” for purposes of the solicitation because, pursuant
to 13 C.F.R. § 121.103(h), it is a joint venturer with, and
an affiliate of, the subcontracted hotels.
    We disagree with Tinton Falls that the SBA-OHA
lacked a rational basis for determining the primary and
16                       TINTON FALLS LODGING REALTY   v. US

vital requirements of the solicitation. Contrary to Tinton
Falls’ characterization, the solicitation requires more than
simply a fixed block of hotel rooms for a certain period of
time; rather, the contractor must be able to secure an
unpredictable and widely-varying number of acceptable
hotel rooms on short notice. For example, the solicitation
estimates that MSC will require around 65 hotel rooms
per night, but warns that in the past, MSC’s needs have
fluctuated between 25 and 120 rooms per night. J.A. 248.
And while the contractor is required to “ensure a suffi-
cient number of single rooms are available at all times to
meet the Government’s needs,” MSC will pay only for the
number of rooms each night used to house CIVMARs
attending training. J.A. 248–49. Further, the contractor
is expected to “make every effort” to provide rooms within
one hour of CIVMAR arrivals. Id. And MSC is not re-
quired to provide advance notice of its daily room re-
quirements to the contractor. Id. Thus, even though no
management and coordination tasks are expressly identi-
fied, there is no question that the solicitation requires
management and coordination to supply a potentially
large and varying number of hotel rooms with little or no
notice.
    Tinton Falls also minimizes the requirement that the
contractor must provide all transportation to and from the
hotels and the MSC Training Center. J.A. 250. The
number of trips required by MSC is based on CIVMAR
training class schedules, which can vary. Id. And as with
the lodging services, MSC will pay only for the actual
number of trips provided between the hotels and the
training center. J.A. 251. In addition, the contractor
must provide various other services relating to the lodging
and transportation of CIVMARs, such as ensuring that all
CIVMARs check in each night and maintaining logs of all
passengers who use the provided transportation services.
Id. Further, the contractor is required to be the single
point of contact for the MSC, and must be available to be
TINTON FALLS LODGING REALTY   v. US                      17

contacted by the MSC at all times. J.A. 247. DMC in-
tends to allocate two of its employees to perform the
majority of the labor associated with these management
and coordination tasks. J.A. 3549.
    The record supports this interpretation of the solicita-
tion’s requirements. After reviewing the scope of work in
the solicitation, the Area Office explained that the con-
tract involved “more than a place to stay and a bus ride to
and from the [MSC] training facility”—rather, the con-
tract was “for an overall package of rooms, transporta-
tion[,] and services.” J.A. 3459. The Area Office noted
that “[t]he number of CIVMARs that attend [MSC] train-
ings varies constantly and the contract requires the
contractor to monitor, control, record[,] and report the
changing needs of [MSC] for lodging and transportation.”
Id. Thus, it found that the primary and vital element of
the solicitation was the coordination of lodging, transpor-
tation, and other services to MSC. Id.
    The SBA-OHA agreed with the Area Office’s identifi-
cation of the primary and vital requirements of the solici-
tation. J.A. 3560. Finding Tinton Falls’ characterization
of the solicitation as “merely a hotel contract [to be] a
gross simplification,” it instead described the coordination
of hotel rooms and transportation to meet MSC’s needs as
the most complex task in the solicitation. J.A. 3561. The
Claims Court agreed with the SBA-OHA, finding that its
characterization of the primary purpose of the contract as
a “coordinated package of rooms, transportation, and
services” was not “irrational,” because the “element of
coordination of hotel and transportation [services] is
vital.” J.A. 3774 (Tr. at 67:20–25). It noted that there
were at least some management functions that “simply
picking up the phone and calling for a taxi or a hotel room
would not furnish,” such as the required coordination
between MSC, the hotels, and the transportation services,
and the daily logs monitoring the whereabouts of the
CIVMARs. Id. (Tr. at 68:12–21). The Claims Court
18                      TINTON FALLS LODGING REALTY   v. US

concluded that the scope of work in the solicitation made
clear that MSC was “buying the right to send people to a
single point of contact knowing that they [we]re going to
be taken care of in terms of meals, hotel rooms, and
transportation.” Id. (Tr. at 68:22–25).
    In short, Tinton Falls fails to meet its high burden of
showing that the SBA-OHA’s determination lacked a
rational basis. The SBA-OHA evaluated the scope of
work and other contract requirements in the solicitation
and provided a coherent and reasonable explanation of
how it determined that the primary and vital require-
ments of the contract were the management and coordi-
nation of a package of lodging and transportation
services.
                           ***
   We have considered the parties’ remaining arguments
and find them unpersuasive.
                       CONCLUSION
    Because there is a rational basis for the SBA-OHA’s
determination that the primary and vital requirements of
the solicitation are the management and coordination of a
package of lodging and transportation services, the
Claims Court’s grant of the government and DMC’s
motion for judgment on the administrative record was not
arbitrary and capricious.
                      AFFIRMED
  United States Court of Appeals
      for the Federal Circuit
                  ______________________

     TINTON FALLS LODGING REALTY, LLC,
               Plaintiff-Appellant

                             v.

               UNITED STATES,
       DMC MANAGEMENT SERVICES, LLC,
              Defendants-Appellees
             ______________________

                        2014-5140
                  ______________________

    Appeal from the United States Court of Federal
Claims in No. 1:14-cv-00353-EGB, Senior Judge Eric G.
Bruggink.
                ______________________

REYNA, Circuit Judge, dissenting.
    Because Tinton Falls has not established by prepon-
derant evidence that it has a direct economic interest in
the solicitation, I respectfully dissent from the majority’s
decision to reach the merits of this case.
    The standing question in this case is governed by 28
U.S.C. § 1491(b)(1), which “imposes more stringent stand-
ing requirements than Article III.” Weeks Marine, Inc. v.
United States, 575 F.3d 1352, 1359 (Fed. Cir. 2009).
Section 1491(b)(1) allows an “interested party” to object
“to a solicitation . . . for bids or proposals for a proposed
contract” or to “any alleged violation of statute or regula-
tion in connection with a procurement or proposed pro-
2                         TINTON FALLS LODGING REALTY   v. US

curement.” Standing under § 1491(b)(1) “is limited to
actual or prospective bidders or offerors whose direct
economic interest would be affected by the award of the
contract or by the failure to award the contract.” Am.
Fed’n of Gov’t Emps., AFL-CIO v. United States, 258 F.3d
1294, 1302 (Fed. Cir. 2001).
    As the bid protester, Tinton Falls bears the burden of
establishing the elements of standing. See Myers Investi-
gative & Sec. Servs., Inc. v. United States, 275 F.3d 1366,
1369 (Fed. Cir. 2002). Because standing is an “indispen-
sable part of the plaintiff’s case, each element must be
supported in the same way as any other matter on which
the plaintiff bears the burden of proof, i.e., with the man-
ner and degree of evidence required at the successive
stages of the litigation.” Lujan v. Defs. of Wildlife, 504
U.S. 555, 561 (1992). General allegations of standing may
suffice at the pleading stage, but facts supported by
affidavits or other evidence are required at summary
judgment. Id. Those facts must be “supported adequately
by the evidence adduced at trial.” Id. (quoting Gladstone
Realtors v. Vill. of Bellwood, 441 U.S. 91, 115 n.31 (1979)).
    Tinton Falls’ bid protest progressed to trial on the
administrative record, and facts establishing standing
should have been adequately supported by the record. See
J.A. 3774. Judgment on the administrative record is the
final stage in a bid protest and requires the Court of
Federal Claims “to make factual findings from the record
evidence as if it were conducting a trial on the record.”
Bannum, Inc. v. United States, 404 F.3d 1346, 1353-54
(Fed. Cir. 2005). Tinton Falls was therefore required to
establish by preponderant evidence that it had a direct
economic interest in the solicitation. Reynolds v. Army &
Air Force Exch. Serv., 846 F.2d 746, 748 (Fed. Cir. 1988)
(Once standing is called into question, the party asserting
TINTON FALLS LODGING REALTY   v. US                     3

standing “bears the burden of establishing subject matter
jurisdiction by a preponderance of the evidence.”). 1
    Tinton Falls could have conceivably met its burden in
one of two ways. As the majority notes, an actual bidder
such as Tinton Falls can demonstrate that it would have
had a “substantial chance” of securing the original con-
tract if not for an alleged error in the procurement pro-
cess. Labatt Food Serv., Inc. v. United States, 577 F.3d
1375, 1378 (Fed. Cir. 2009). Tinton Falls could have also
demonstrated that a successful protest would obligate the
government to rebid the contract and that Tinton Falls
would be qualified to compete on the rebid. Impresa
Construzioni Geom. Domenico Garufi v. United States,
238 F.3d 1324, 1334 (Fed. Cir. 2001).
    The record evidence, however, leaves no question that
Tinton Falls would not have secured the original contract.
Tinton Falls is other than small and does not qualify to
compete for a small business set-aside contract. See J.A.
2808–10 (Notice to Tinton Falls that “[t]he Small Busi-
ness Administration (SBA) has made a formal size deter-
mination that your business is other than small”). Even if
the government removed the small business set-aside and
issued a revised, unrestricted solicitation, the record
indicates that two other small businesses submitted lower
bids than Tinton Falls and would have been next in line
to receive the original contract.

   1    Tinton Falls had the same burden in the Court of
Federal Claims because “[t]he Court of Federal Claims,
though an Article I court, . . . applies the same standing
requirements enforced by other federal courts created
under Article III.” Weeks Marine, 575 F.3d at 1359 (quot-
ing Anderson v. United States, 344 F.3d 1343, 1350 n.1
(Fed. Cir. 2003)).
4                        TINTON FALLS LODGING REALTY   v. US

     Nor has Tinton Falls established through preponder-
ant evidence that a successful protest would obligate the
government to rebid the contract as unrestricted or that
Tinton Falls is qualified to compete on rebid. Cf. Impresa,
238 F.3d at 1333. To the contrary, the record suggests
that the government would not be obligated to rebid.
Excluding DMC and the four other than small businesses
associated with Hotels Unlimited, the record indicates
that three proposals remained in the competitive range.
Those three proposals were submitted by offerors that
self-certified as small businesses. Given that two or more
offers from small businesses remained in competitive
range, the government would have been obligated to
award the contract to the next small business in line, or
at least obligated to request revised proposals from the
three offerors that remained in competitive range. See
FAR § 19.502-2 (requiring an acquisition such as the one
at issue here to be set aside for small business absent “a
reasonable expectation” of obtaining offers from responsi-
ble small businesses).
    Court of Federal Claims precedent should have guided
the standing question in this case. In International Man-
agement Services, Inc. v. United States, the Court of
Federal Claims held that a bid protestor lacked standing
to challenge a small business set-aside contract because
the protester had been deemed other than small. 80 Fed.
Cl. 1, 4–8 (2007). On those facts, “there is no chance,
much less a substantial chance, that plaintiff could be
awarded the contract in the event that the [government’s]
contract with defendant-intervenor is set aside.” Id. at 6.
The protester made an argument identical to the one
Tinton Falls makes here, arguing the defendant-
intervenor and the remaining offerors were themselves
unqualified. Id. The protester thus argued that if the
Court of Federal Claims sustained its protest and found
that “no offeror was small, . . . the government would be
obligated to rebid the contract (using full and open compe-
TINTON FALLS LODGING REALTY   v. US                        5

tition), and [it] could compete for the contract once again.”
Id. (quoting Pl.’s Opp’n Def.’s Mot. Dismiss at 22) (altera-
tions in original). The Court of Federal Claims rejected
that argument because, like here, there remained a small
business in competitive range. Id. at 6–7; see also Taylor
Consultants, Inc. v. United States, 90 Fed. Cl. 531, 541–43
(2009). Under International Management Services, the
Court of Federal Claims should have found that Tinton
Falls lacked standing.
    The fact that the three remaining small businesses in
competitive range originally submitted technically unac-
ceptable proposals is insufficient to establish Tinton Falls’
standing. The technical unacceptability of an otherwise
qualified offer in competitive range does not limit the
offeror’s ability to establish a substantial chance of win-
ning a contract. See Allied Tech. Grp., Inc. v. United
States, 94 Fed. Cl. 16, 37–38 (2010), aff’d, 649 F.3d 1320
(Fed. Cir. 2011). Even if the technical unacceptability of
the remaining small business offers required the govern-
ment to reassess whether two or more technically ac-
ceptable small businesses remained, the record indicates
that seven additional vendors were interested in the
solicitation. We cannot presume from the record that
those seven additional vendors are other than small or
that those vendors would submit technically unacceptable
offers in the future. Nor can we presume that the three
remaining small businesses in competitive range would be
incapable of submitting technically acceptable proposals
on rebid. As far as the record reveals, Tinton Falls failed
to make any allegation to the contrary. See J.A. 3566–67
(Complaint). It had the burden to do so.
    Only in a future hypothetical world in which the gov-
ernment found no two eligible small businesses could
Tinton Falls compete on rebid. Yet Article III standing,
and by extension the more demanding standard provided
by § 1491(b)(1), requires more than speculation or ab-
stract hypotheticals. Article III standing requires an
6                         TINTON FALLS LODGING REALTY    v. US

“alleged (and ultimately proved) . . . ‘injury in fact’—a
harm suffered by the plaintiff that is ‘concrete’ and ‘actual
or imminent, not conjectural or hypothetical.’” Steel Co. v.
Citizens for a Better Env’t, 523 U.S. 83, 103 (1998) (inter-
nal quotation marks omitted) (quoting Whitmore v. Ar-
kansas, 495 U.S. 149, 155 (1990)). Nothing in the record
suggests that a future rebid or Tinton Falls’ competition
on such a rebid is even a possibility, much less a substan-
tial chance. The Court of Federal Claims’ finding to the
contrary is clearly erroneous.
     The majority rests its analysis of standing in part on
the fact that the government does not “seriously dispute”
that Tinton Falls has standing, Maj. Op. at 8–9, and that
“none of the parties disputes the Claims Court’s finding
that [Tinton Falls’ future competition] is at least a realis-
tic possibility,” id. at 11. Yet a party’s lack of argument or
concession regarding standing is irrelevant. Standing is a
nonwaivable jurisdictional requirement. Citizens for a
Better Env’t, 523 U.S. at 102–04; Myers, 275 F.3d at 1369
(“standing is a threshold jurisdictional issue”). Because
the record is void of preponderant evidence establishing
this jurisdictional requirement, I respectfully dissent.