Court Opinion

ID: 4668575
Source: CourtListenerOpinion
Date Created: 2021-03-17 13:01:23.001757+00
Date Added: 2024-06-11T08:03:03.365460
License: Public Domain

In the United States Court of Federal Claims
                                        No. 20-1815C

                                 (E-filed: March 16, 2021)1

                                             )
    22ND CENTURY                             )
    TECHNOLOGIES, INC.,                      )
                                             )       Pre-Award Bid Protest; Motion to
               Plaintiff,                    )
                                                     Dismiss; RCFC 12(b)(1); Standing;
                                             )
                                                     Clarification of Proposals; Motion for
    v.                                       )
                                             )       Judgment on the Administrative
    THE UNITED STATES,                       )       Record; RCFC 52.1.
                                             )
               Defendant.                    )
                                             )

Walter Brad English, Huntsville, AL, for plaintiff. Jon D. Levin, Emily J. Chancey,
Michael W. Rich, of counsel.

Daniel B. Volk, Senior Trial Counsel, with whom were Brian M. Boynton,2 Acting
Assistant Attorney General, Robert E. Kirschman, Jr., Director, and Douglas K. Mickle,
Assistant Director, Commercial Litigation Branch, Civil Division, United States
Department of Justice, Washington, DC, for defendant. Andrew J. Baker, Christopher
Radcliffe, Department of Justice, Justice Management Division, Washington, DC, of
counsel.

                                          OPINION

CAMPBELL-SMITH, Judge.

      Plaintiff filed this pre-award bid protest to challenge its elimination from
consideration for the award of a contract with the United States Department of Justice

1
        This opinion was issued under seal on February 18, 2021. See ECF No. 33. The parties
were invited to identify any competition-sensitive or otherwise protected information for
redaction. The parties’ proposed redactions were acceptable to the court. See ECF No. 35 (joint
notice regarding proposed redactions). All redactions are indicated by brackets ([ ]).
2
       Mr. Boynton replaced Jeffrey Bossert Clark as Acting Assistant Attorney General on
defendant’s reply brief, ECF No. 31.
(DOJ), Justice Management Division, to provide information technology (IT) support
services. See ECF No. 1 at 1-2 (complaint). Plaintiff filed a motion for judgment on the
administrative record (AR), pursuant to Rule 52.1 of the Rules of the United States Court
of Federal Claims (RCFC), on December 30, 2020, ECF No. 21, and defendant filed its
motion to dismiss pursuant to RCFC 12(b)(1), alternative cross-motion for judgment on
the AR, and response to plaintiff’s motion on January 8, 2021, ECF No. 23. Plaintiff
filed its response to defendant’s motion and reply in support of its own motion on
January 19, 2021, ECF No. 28, and defendant filed its reply on January 25, 2021, ECF
No. 31.

       In addition to these motions, the court has reviewed plaintiff’s complaint, ECF No.
1, and the AR, ECF No. 20. This matter is now fully briefed, and ripe for decision. The
court deemed oral argument unnecessary. The court has considered all of the parties’
arguments and addresses the issues that are pertinent to the court’s ruling in this opinion.
For the following reasons, plaintiff’s motion for judgment on the AR is DENIED,
defendant’s motion to dismiss is GRANTED, and defendant’s alternative cross-motion
for judgment on the AR is DENIED as moot.

I.     Background

       A.     The Solicitation

       The DOJ issued request for proposals DJJP-17-RFP-1022 (the RFP) on February
22, 2017, seeking to award several indefinite delivery, indefinite quantity contracts for
“the complete systems development lifecycle [ ] of [defendant’s] IT systems,”
including—among other services—“IT Planning, Program Management, Systems
Engineering and Development, Infrastructure Support, IT Security, and Operations and
Maintenance.” ECF No. 20-1 at 1-2. The evaluation process was to be conducted in two
phases. Id. at 80. During phase 1, offerors were to submit proposals addressing: “1)
Corporate Experience, 2) Past Performance, 3) Architectural Attributes Experience, 4)
Management, and 5) Price.” Id. Of these proposals, “the most highly rated” would
proceed to phase 2 of the process. Id.

        The offerors’ price proposals were to be submitted in a table detailing the offerors’
proposed prices for hourly labor and for five contract line item numbers (CLIN) related to
other direct costs (ODCs). See id. at 87, 52-53. For each of the ODCs, offerors could
include a handling charge factor (HCF) to “offset administrative handling costs
associated with procuring and managing the ODC.” Id. at 53. The agency, however, set
a ceiling on the allowable HCFs for each line item as follows:

       (a)    Expert Consultants (CLIN X050) HCF is limited to a ceiling of 0.000.
       (b)    IT Hardware and Communications Technology (CLIN X101) HCF is
              limited to a ceiling of 0.050.
       (c)    IT Software (CLIN X102) HCF is limited to a ceiling of 0.050.
                                             2
       (d)    Other Equipment and Supplies (CLIN X103) HCF is limited to a
              ceiling of 0.050.
       (e)    Local and Non-local Travel Expenses IAW the Federal Travel
              Regulations (CLIN X104) HCF is limited to a ceiling of 0.099.
Id. at 52-53. Offerors were permitted to offer an HCF of less than the ceiling, but
for award consideration, offerors must have submitted “HCFs that comply with the
requirements” of the RFP. Id. at 95.

        Plaintiff submitted its phase 1 proposal on June 5, 2017. See id. at 1692-
1800. In its price proposal, plaintiff included HCFs of [ ]—in excess of the
ceiling—for each line item. See id. at 1791; see also ECF No. 1 at 4 (noting that
plaintiff “erroneously included its general and administrative (‘G&A’) rate of [ ],
which exceeded the Solicitation’s HCF ceilings”). After its review of the received
submissions, the DOJ notified plaintiff that its proposal “was not among the most
highly-rated . . . in Phase 1, and therefore [would] not be given further contract
consideration.” ECF No. 20-1 at 1910. The agency informed plaintiff that its
rating suffered due to plaintiff’s failure to comply “with [the HCF] ceiling limits
identified in the RFP.” Id. Five other bidders also proposed HCFs in excess of the
prescribed ceiling limits and, likewise, were eliminated from further consideration.
See id. at 1807 (consensus price evaluation report).

       B.     Plaintiff’s Bid Protests

        Plaintiff filed a bid protest at the Government Accountability Office (GAO) on
May 14, 2018, alleging that its proposed HCFs were “an obvious—and easily
correctable—clerical error,” and therefore, should not have led to plaintiff’s exclusion
from further consideration for award. ECF No. 20-2 at 2-7. Asking the GAO to dismiss
plaintiff’s protest, defendant submitted an affidavit from the contracting officer asserting
that the agency had not engaged in clarifications in phase one of the procurement and did
not “intend to engage in discussions in Phase 2.” Id. at 147. Plaintiff voluntarily
withdrew its protest on June 8, 2018. See id. at 148.

       Defendant then proceeded to its phase 2 evaluation. During this phase of the
process, the DOJ did not permit pricing revisions and warned that “any such revision
submitted by an offeror shall be removed from the Phase 2 proposal and [should] not be
evaluated by the Government.” ECF No. 20-1 at 1619. The DOJ, however, received two
proposals that “had sample task order pricing issues” that the DOJ noted would be
“addressed through clarifications if the offeror [were to be] selected as a candidate for
task order award.” Id. at 1954 (consensus best value recommendation report – October 9,
2019). In each case, the offeror proposed labor rates that exceeded its contract labor
rates. See id.

                                             3
       The DOJ made contract awards, and after a successful protest of those awards, the
agency requested clarifications from two awardees related to the certificates required by
the RFP. See ECF No. 20-2 at 206-15 (GAO decision sustaining the protest of MetroStar
Systems, Inc.); ECF No. 20-1 at 2013, 2068-69 (emails from the DOJ to offerors
requesting clarification).

       After receiving the sought clarifications and performing a “limited technical re-
evaluation,” in June 2020, the DOJ awarded the contract once more to the original
awardees as well as to the protestor and to an originally unsuccessful offeror. ECF No.
20-1 at 2130 (consensus best value recommendation report – revised June 24, 2020).
Three unsuccessful offerors protested the DOJ’s award decision at the GAO. See ECF
No. 20-2 at 229-48 (GAO decision in the protest of Qbase, LLC, Perspecta Enterprise
Solutions, LLC, and Northrop Grumman Systems Corporation). The GAO sustained the
protest on November 13, 2020. See id. at 248.

        Plaintiff filed its complaint in this court on December 9, 2020, alleging that the
DOJ “conducted exchanges with the awardees regarding their Phase 1 proposals” and
allowed clarifications from other offerors during the evaluation process, through which
plaintiff “could have corrected its error.” ECF No. 1 at 7-8. According to plaintiff, when
the DOJ engaged in exchanges, it should have “sought clarification from any offerors
previously excluded from the competition for minor clerical errors, like [plaintiff’s].” Id.
at 8. Plaintiff therefore contends that the DOJ “acted arbitrarily, capriciously and
contrary to law when it allowed these offerors to clarify aspects of Phase 1 of their
proposals, but failed to allow [plaintiff] to clarify the obvious clerical error in its
proposal.” Id.

II.    Legal Standards

       Plaintiff bears the burden of establishing the court’s subject matter jurisdiction by
a preponderance of the evidence. See Brandt v. United States, 710 F.3d 1369, 1373 (Fed.
Cir. 2013). To determine whether plaintiff has carried this burden, the court must accept
“as true all undisputed facts asserted in the plaintiff’s complaint and draw all reasonable
inferences in favor of the plaintiff.” Trusted Integration, Inc. v. United States, 659 F.3d
1159, 1163 (Fed. Cir. 2011) (citing Henke v. United States, 60 F.3d 795, 797 (Fed. Cir.
1995)).

       The Tucker Act grants this court jurisdiction:

       to render judgment on an action by an interested party objecting to a
       solicitation by a Federal agency for bids or proposals for a proposed contract
       or to a proposed award or the award of a contract or any alleged violation of
       statute or regulation in connection with a procurement or a proposed
       procurement . . . without regard to whether suit is instituted before or after the
       contract is awarded.

                                              4
28 U.S.C. § 1491(b)(1). Thus, to establish jurisdiction, a plaintiff must also demonstrate
that it is an “interested party.” The Federal Circuit has held that the “interested party”
requirement “imposes more stringent standing requirements than Article III.” Weeks
Marine, Inc. v. United States, 575 F.3d 1352, 1359 (Fed. Cir. 2009). Though the term
“interested party” is not defined by the statute, courts have construed it to require that a
protestor “establish that it ‘(1) is an actual or prospective bidder and (2) possess[es] the
requisite direct economic interest.” See id. (quoting Rex Serv. Corp. v. United States,
448 F.3d 1305, 1308 (Fed. Cir. 2006)) (alteration in original).

     If the court determines that it lacks jurisdiction, it must dismiss the case. See
RCFC 12(h)(3).

III.   Analysis

       In its motion, defendant argues that this case should be dismissed because plaintiff
does not have standing as a result of its failure to propose HCF rates below the RFP
ceiling. See ECF No. 23 at 10-11. This failure, defendant argues, rendered plaintiff’s
proposal unacceptable, and, as such, plaintiff “stands no chance of award.” Id. at 22.
Plaintiff responds that it “had a substantial chance of award but for the Agency’s action.”
ECF No. 28 at 7.

        The record is clear that plaintiff was an actual bidder in the subject procurement.
See ECF No. 1 at 4; ECF No. 20-1 at 1692-1800. Defendant disputes only whether
plaintiff has a direct economic interest in the procurement. See ECF No. 23 at 22; see
also Weeks Marine, 575 F.3d at 1359. To demonstrate sufficient economic interest to
support standing, plaintiff “must show that there was a ‘substantial chance’ it would have
received the contract award but for the alleged error in the procurement process.” Info.
Tech. & Applications Corp. v. United States, 316 F.3d 1312, 1319 (Fed. Cir. 2003)
(citing Alfa Laval Separation, Inc. v. United States, 175 F.3d 1365, 1367 (Fed. Cir.
1999)). To make the appropriate showing, plaintiff must demonstrate “more than a bare
possibility of receiving the award.” Precision Asset Mgmt. Corp. v. United States, 125
Fed. Cl. 228, 233 (2016) (citing Bannum, Inc. v. United States, 404 F.3d 1346, 1358
(Fed. Cir. 2005) (affirming the trial court’s determination that the plaintiff had not
demonstrated a substantial chance of award when its “argument rest[ed] on mere
numerical possibility, not evidence”).

        Defendant argues that because the RFP “made clear that offerors proposing HCF
rates in excess of the ceilings would not be considered for award” and because plaintiff’s
proposed HCF rates topped that ceiling, plaintiff’s proposal was unacceptable and stood
“no chance of award, let alone the substantial chance necessary to establish Article III
standing and interested party status under 28 U.S.C. § 1491(b)(1).” ECF No. 23 at 15,
22. Plaintiff responds that: (1) its proposal was rated as “Very Good,” a rating six of the
seven awardees also received; (2) its price was “lower than four of the most recent
awardees’”; and (3) the error in its proposal “did not relate to a substantive or material
                                              5
provision of the Solicitation” and thus, could have been corrected by a clarification. ECF
No. 28 at 7-8. Therefore, plaintiff asserts, it has standing to protest its exclusion. Id. at
8-9.

        Pursuant to Federal Acquisition Regulation (FAR) 15.306(a)(2), a procuring
agency has the discretion to request that an offeror “clarify certain aspects of proposals
(e.g., the relevance of an offeror’s past performance information and adverse past
performance information to which the offeror has not previously had an opportunity to
respond) or to resolve minor or clerical errors.” 48 C.F.R. § 15.306(a)(2). Clarifications
may not introduce new information or alter information contained in the proposal. See
ManTech Advanced Sys. Int’l, Inc. v. United States, 141 Fed. Cl. 493, 507 (2019) (citing
Level 3 Commc’ns, LLC v. United States, 129 Fed. Cl. 487, 504-05 (2013); BCPeabody
Constr. Servs., Inc. v. United States, 112 Fed. Cl. 502, 511 (2013)). A clarification is not
appropriate to “‘cure proposal deficiencies or material omissions, materially alter the
technical or cost elements of the proposal, or otherwise revise the proposal.’” Dell Fed.
Sys., L.P. v. United States, 906 F.3d 982, 998 (Fed. Cir. 2018) (quoting JWK Int’l Corp.
v. United States, 52 Fed. Cl. 650, 661 (2002)). Changes that are required to correct
material errors—such as here wherein the identified error is violative of an express
provision in the RFP and that provision served a purpose important to the agency’s
evaluation of the offer—are beyond the scope of clarifications. See ManTech, 141 F.
Cl. at 506-07 (citing Bus. Integra, Inc. v. United States, 116 Fed. Cl. 328, 333 (2014)). It
is well-settled in the caselaw that material errors are “‘considered unacceptable’” and
cannot be corrected except by discussions. Id. at 506 (quoting E.W. Bliss Co. v. United
States, 77 F.3d 445, 448 (Fed. Cir. 1996)); id. at 507 (noting that material errors “cannot
be waived or fixed without discussions”).

        Plaintiff asserts that its proposed HCF rates topping the ceiling set in the RFP were
“minor and obvious” errors and therefore, subject to clarification. ECF No. 21 at 19.
According to plaintiff, “[g]iven the ceiling amounts, it would not have been reasonable
for the Agency to conclude that [plaintiff’s] stated HCFs were a business decision, or
anything other than a mistake.” Id. at 20. Defendant responds that the HCF rates were
“unquestionably material to the solicitation” because they “affected contract pricing” and
the RFP made it clear that proposals above the ceiling “would not be considered for
award.” ECF No. 23 at 15. Moreover, defendant contends, the agency could not have
“unilaterally adjusted [plaintiff’s] proposed HCFs to match the ceilings.” ECF No. 31 at
3.

      In the court’s view, plaintiff failed to demonstrate that the provision granting the
agency discretion to request clarification applies in this case. A clarification is only
appropriate for an error in a price proposal where “‘the existence of the mistake and the
amount intended by the offeror is clear from the face of the proposal.’” ManTech, 141
F. Cl. at 508 (quoting DynCorp Int’l LLC v. United States, 76 Fed. Cl. 528, 545
(2007)); see also ECF No. 21 at 20 (plaintiff arguing that “[a] pricing error is clerical

                                              6
when the government can easily determine the amount intended by the offeror”) (citing
DynCorp, 76 Fed. Cl. at 545; ManTech, 141 F. Cl. at 507). Here, plaintiff claims that
“[g]iven the ceiling amounts, it would not have been reasonable for the Agency to
conclude that [plaintiff’s] stated HCFs were a business decision, or anything other than a
mistake.” ECF No. 21 at 20. And, plaintiff insists, “[o]nce the government identifies a
clerical error, it is required to seek clarification of that error.” Id. at 23 (citing Camden
Shipping Corp. v. United States, 89 Fed. Cl. 433, 438 (2009); C.W. Over & Sons, Inc. v.
United States, 54 Fed. Cl. 514, 521 (2002); MCS Mgmt., Inc. v. United States, 48 F.
Cl. 506, 515 (2001); Griffy’s Landscape Maint. LLC v. United States, 46 Fed. Cl. 257,
258-60 (2000)). The problem for plaintiff, however, is that the error at issue here does
not fit either the caselaw’s or its own definition of a clerical error.

        Plaintiff has not pointed to any portion of its proposal or any evidence in the
record that would have alerted the agency to plaintiff’s mistake or what plaintiff’s HCF
rates should have been. See ECF No. 21 at 19-21. Plaintiff merely offers conclusory
statements that the DOJ should have known that plaintiff “should have used as its HCFs[]
the stated ceiling rates set out in the Solicitation.” Id. at 21. As defendant noted,
however, offerors were free to propose HCF rates other than the ceiling and many
offerors proposed rates below the ceiling. See ECF No. 23 at 17. In the court’s view, a
clarification to permit plaintiff to alter its HCF rates would not have been appropriate
because the error was violative of an express provision in the RFP and would have
resulted in a material and impermissible alteration to plaintiff’s cost proposal. See Dell
Fed. Sys., 906 F.3d at 998.

       Because plaintiff’s proposal contained a material error that was not subject to
correction by clarification, plaintiff cannot “show that there was a ‘substantial chance’ it
would have received the contract award but for the alleged error in the procurement
process.” Info. Tech., 316 F.3d at 1319. Plaintiff, therefore, does not have standing in
this matter, and the court must dismiss plaintiff’s complaint for lack of jurisdiction. See
Weeks Marine, 575 F.3d at 1359; see also RCFC 12(h)(3).

IV.    Conclusion

       Accordingly, for the foregoing reasons:

       (1)    Plaintiff’s motion for judgment on the AR, ECF No. 21, is DENIED;

       (2)    Defendant’s motion to dismiss, ECF No. 23, is GRANTED, defendant’s
              alternative cross-motion for judgment on the AR, is DENIED as moot;

       (3)    The clerk’s office is directed to ENTER final judgment in defendant’s
              favor DISMISSING plaintiff’s complaint with prejudice; and

                                              7
(4)   On or before March 12, 2021, the parties are directed to CONFER and
      FILE a notice informing the court as to whether any redactions are
      required before the court makes this opinion publicly available, and if so,
      attaching an agreed-upon proposed redacted version of the opinion.

IT IS SO ORDERED.

                                         s/Patricia E. Campbell-Smith
                                         PATRICIA E. CAMPBELL-SMITH
                                         Judge

                                     8