Court Opinion

ID: 2673317
Source: CourtListenerOpinion
Date Created: 2014-05-10 03:13:45.460698+00
Date Added: 2024-06-11T13:06:48.183252
License: Public Domain

In the United States Court of Federal Claims
                                No. 14-80C
                    (Originally Filed: March 20, 2014)1
                        (Reissued: March 27, 2014)
**********************
DM PETROLEUM OPERATIONS
COMPANY,

                     Plaintiff,

v.
                                                 Bid Protest; Best Value
THE UNITED STATES,                               Tradeoff; Strategic
                                                 Petroleum Reserve;
                     Defendant,                  Agency Discretion;
                                                 Reasonableness.
and

FLUOR FEDERAL PETROLEUM
OPERATIONS, LLC,

           Intervenor.
**********************

      Robert J. Symon, Washington, D.C., and Daniel P. Golden and Aron C.
Beezley, Washington, D.C., of counsel, for plaintiff.

       William P. Rayel, Civil Division, Department of Justice, Washington,
D.C., with whom were Stuart F. Delery, Assistant Attorney General, Bryant
G. Snee, Acting Director, and Deborah A. Bynum, Assistant Director, for
defendant.

       Thomas L. McGovern III, Washington, D.C., and Michael D. McGill
and C. Peter Dungan, Washington, D.C., of counsel, for intervenor.

1
 This opinion was originally issued under seal, and publication was deferred
pending the parties’ review for redaction of protected materials. The parties
agreed that no redactions were required.
                                   OPINION

        This is a post-award bid protest of the Department of Energy’s selection
of Fluor Federal Petroleum Operations, LLC (“Fluor”) as the management and
operating contractor for the Strategic Petroleum Reserve. The parties briefed
the case on cross-motions for judgment on the administrative record, and oral
argument was held on March 7, 2014. Because the agency’s decision was not
arbitrary or capricious, we deny plaintiff’s motion for judgment on the
administrative record and grant defendant’s and intervenor’s cross-motions for
judgment.

                               BACKGROUND

        The Department of Energy (“DOE”) maintains the nation’s Strategic
Petroleum Reserve (“SPR”).         Plaintiff, DM Petroleum Management
Operations Company (“DM”) has been the primary management and
operations (“M&O”) contractor for the SPR since 1993, having successfully
completed two back-to-back 10 year contracts with DOE. In February 2012,
contemplating the end of the current SPR M&O contract, DOE issued
solicitation No. DE-SOL-0003490, which invited proposals for a five year
contract with a DOE option for five additional years. The solicitation
announced a cost-plus award fee performance-based contract to be awarded to
the proposal evaluated to be “the best value and most advantageous to the
Government.” Administrative Record (“AR”) 686, 911. The contract was
competed as a negotiated procurement pursuant to Federal Acquisition
Regulation part 15. The solicitation informed offerors that discussions would
likely not be held.

       Proposals were first evaluated by the Source Evaluation Board (“SEB”)
and then a final offeror selected by the Source Selection Official (“SSO”)
using the best value analysis described in the solicitation. In doing so, the SSO
was to consider “the Technical Evaluation Criteria . . . significantly more
important than evaluated price.” AR 912. Offerors were informed, however,
that the more similarly they were evaluated for technical merit, “the more
likely the evaluated price may be the determining factor in selection for
award.” Id.

       The solicitation listed six technical factors to be adjectivally rated by
the SEB: (1) Management Approach, (2) Key Personnel, (3) Organizational
Structure, (4) Past Performance, (5) Relevant Experience, and (6) Transition
Approach. Management Approach was the most important factor and second

                                       2
was Key Personnel. Organizational Structure and Past Performance were of
“equal importance and when combined [were] equal in importance to
Management Approach.” Id. Relevant Experience and Transitional Approach
were equally important and least among all of the factors but were combined
to be equal to Key Personnel. The technical evaluation was “significantly
more important than the cost evaluation criteria.” AR 911.

       With respect to the most important technical factor, Management
Approach, the agency informed offerors that DOE would evaluate their
“approach to managing and operating activities at the [SPR].” AR 913. It went
on to notify bidders that,

        DOE will evaluate the depth, quality, effectiveness, and
        completeness of the Offeror’s proposed approach to performing
        the work described in the PWS [Performance Work Statement],
        including implementing a contractor assurance system that
        identifies and corrects deficiencies; developing budgets and
        establishing cost controls; achieving safe and environmentally
        responsible performance of work; assuring the operational
        readiness of the storage sites/facilities; managing a large
        workforce; ensuring the integrity, including optimal storage
        capacity, of the crude oil storage caverns; and identifying
        specific actions to reduce contract costs.

Id. The “commitment and availability of corporate resources to support
efficient and effective contract performance” was also considered. Id.

       For the Organizational Structure factor, DOE was concerned with
offerors’ “rationale for the proposed organizational structure for its providing
an effective and efficient structure for the successful accomplishment of the
work to be performed . . . .” AR 914. For Past Performance, the solicitation
indicated that the agency would evaluate the offeror, “its teaming partners, as
well as major subcontractors’ past performance . . . on the basis of information
furnished by the references identified in Section L and any other available
sources.” Id. The solicitation further provided that, for major subcontractors,
DOE “will evaluate . . . past performance commensurate with the portion of
the work being performed under the solicitation/PWS.” Id. Offerors or their
subcontractors without relevant past performance history were to be rated as
neutral.

       The Source Selection Plan listed five possible adjectival ratings for the

                                       3
technical factors: Outstanding, Good, Satisfactory, Marginal, and
Unsatisfactory. Relevant to this case are the definitions of the top three
ratings.

      Outstanding: The proposal demonstrates a very high
      probability of successful contract performance. In general, the
      response would be described as excellent or superior.

      The proposal also demonstrates a comprehensive understanding
      of the contract requirements; and a highly effective approach to
      perform the work that will likely exceed the contract
      requirements. Such a response may be evidenced by a proposal
      that exhibits several significant strengths; several or many
      strengths; few, if any, weaknesses, no significant weaknesses;
      and no deficiencies.

      Good: The proposal demonstrates a high probability of
      successful contract performance. In general, the response would
      be described as conscientious, competent, and complete.

      The proposal also demonstrates a proficient understanding of the
      contract requirements, and an effective approach to perform the
      work that may exceed the contract requirements.

      Such a response may be evidenced by a proposal that exhibits
      few, if any, significant strengths; many strengths, few
      weaknesses; few, if any, significant weaknesses; and no
      deficiencies.

      Satisfactory: The proposal demonstrates a moderate probability
      of successful contract performance. In general, the response
      would be described as suitable or sufficient.

      The proposal also demonstrates an adequate understanding of
      the contract requirements, and an acceptable approach to
      perform the work that will achieve the contract requirements.

      Such a response may be evidenced by a proposal that exhibits
      few, if any, significant strengths; several strengths; several or
      many weaknesses; offsetting strengths and weaknesses; few, if
      any, significant weaknesses; and no deficiencies.

                                     4
AR 958-59.

       Five offerors submitted proposals and were evaluated by DOE. The
SEB members produced individual ratings for each offeror and then met and
agreed upon a consensus rating for each offeror in March 2013. Only the
offers of DM and Fluor are relevant to this protest. Their ratings were as
follows:

    Factor                      DM                   Flour
    Management Approach         Satisfactory         Good
    Key Personnel               Outstanding          Outstanding
    Organizational Structure    Good                 Good
    Past Performance            Good                 Good
    Relevant Experience         Outstanding          Good
    Transition Approach         Outstanding          Satisfactory

    Evaluated Price             $95,660,755          $98,056,245

AR 5489 (technical), 5503 (price).2 The SSO reviewed the SEB’s consensus
report, found it to be “rigorous, thorough, and consistent with the evaluation
criteria stated in the solicitation.” AR 5742 (Source Selection Decision).
After reviewing the SEB report and the proposals, the SSO selected Fluor for
contract award based mainly upon Fluor’s advantage in the Management
Approach factor. See AR 5774-77.

      Because DM’s proposal was evaluated to cost less than Fluor’s, the
SSO conducted a best value trade off between the two proposals. Although
DM’s price was approximately $2.5 million lower and DM was superior in the
two lowest importance factors, Relevant Experience and Transition Approach,
the SSO believed that Fluor’s advantage in the Management Approach factor

2
 The evaluated price was calculated as the “most probable cost for proposed
key personnel and transition activities plus the proposed total available award
fee for the base and option periods.” AR 911.

                                       5
justified paying the “slight evaluated price premium,” which he found to be
“not disproportionate to the benefits associated with Fluor’s evaluated
superiority.” AR 774. His analysis centered on three areas of Fluor’s
proposal that he found to present advantages in the area of Management
Approach.

        The first was Fluor’s “One/Fluor/One SPR – One Team/One
Mission/One Vision” concept that permeates its proposal. This was described
as the integration of “the Fluor SPR contract with the entire Fluor corporate
structure to ensure that the SPR will benefit from the Fluor collective
experience.” Id. The SSO believed this would make available to the SPR the
best practices and effective management tools gleaned from Fluor’s experience
as a whole. The SSO found that this approach “presents a significant strength
to [Fluor’s] management approach because of its focus on operational
readiness and the safe, efficient, and effective performance of the PWS
elements.” Id.

       The second discriminator cited by the SSO was Fluor’s emphasis on
planning, not just for the short-term, but also for the mid and long-term
operation of the SPR. The SSO cited Fluor’s planning approach several times
throughout his best value analysis. “Fluor has proposed a comprehensive and
effective planning process that features plans for 1-year, 5-year, and 20-year
planning horizons.” AR 5775. He found that this would “not only enhance
on-going performance of the PWS, but will ensure a strategic approach to
planning and budget formation.” Id. In contrast, the SSO believed DM’s
proposal, although strong in its approach to “proven systems, policies, and
procedures currently in use under the SPR M&O contract,” to be unclear on
“on the longer term advantages being offered by its approach.” Id. The SSO
found “a lack of detail . . . as to what exactly the M&O contract will do, when
and how it will be done, expected outcomes, and practical issues or problems
to overcome.” Id.

        Closely related to its comprehensive planning approach, the SSO
specifically cited Fluor’s plan to address the long-term issue of cavern integrity
at the SPR as the third reason that Fluor offered a better value to the agency.
As the SSO stated in his Source Selection Decision, Fluor proposed to
establish a “Subsurface Advisory Group consisting of geotechnical and
petroleum engineering experts with Gulf Coast experience that will analyze
existing SPR cavern and salt dome conditions and propose solutions to issues
and concerns.” Id. In concert with establishing a Subsurface Advisory Group,
Fluor proposed creating a forum with neighboring salt cavern owners, which,

                                        6
in the SSO’s view, would enable “the SPR to take better advantage of and use
lessons learned to enhance the effectiveness and efficiency of cavern
operations.” Id.

       The advantages offered by Fluor were summed up by the SSO in this
way:

       The specific advantages of Fluor’s management approach
       proposal that makes it superior to that of DM’s and worth the
       slight price differential of $2,398,490 are that the planning
       process and its recognition of and proposed approaches to how
       to address the future issues of the [SPR]. The [SPR] is a
       national asset and the strategic path forward is important to the
       Government. The [SPR] is currently configured to meet
       vulnerabilities that the United States faced in the 1970’s and
       1980’s. It is critical that the M&O Contractor have a sound
       planning process for the near term, mid-term and long term
       strategic process. Fluor as reflected in its first strength has a
       comprehensive and effective planning process for 1 year, 5-year,
       10-year, and 20-year planning horizons. Its approach addresses
       planning for the near term, mid-term, and 20-year planning
       horizons. Its approach . . . recognizes the importance of
       integrating near term detailed plans with longer term program
       considerations.

AR 5776. The SSO further cited Fluor’s proposed Subsurface Advisory Group
and owners forum to be examples of this planning approach.

       The SSO awarded the contract to Fluor and notified DM of the award
on September 18, 2013. The agency briefed DM as requested on September
27, 2013. DM filed a protest at the Government Accountability Office
(“GAO”) on September 30, 2013. At GAO, DM primarily challenged the
evaluation of its and Fluor’s proposals as unreasonable and not in accordance
with the solicitation. DM filed a supplemental protest on November 8, 2013,
alleging disparate treatment. GAO denied those protests on January 15, 2014.3
AR 1870-82 (GAO decision).

3
 GAO also denied the protest of a second disappointed bidder on January 24,
2014. See Gulf Coast Petroleum Reserve Operations, LLC, B-409004.2, et al.,
2014 CPD ¶ 41, 2014 WL 355993 (Comp. Gen. Jan. 24, 2014).

                                      7
       Plaintiff filed suit here on January 28, 2014. A temporary restraining
order and preliminary injunction were deemed unnecessary pursuant to the
agreement of the parties. Plaintiff asks the court to declare DOE’s evaluation
and award to be improper and to enjoin the award to Fluor. The thrust of
DM’s argument is that DOE’s evaluation of both its and Fluor’s proposals was
unreasonable and contrary to the stated criteria in the solicitation. DM alleges
that each of the items cited by the SSO as making Fluor’s proposal superior
was either unreasonable or not unique to Fluor. DM also argues that it was
deserving of a higher rating for the Management Approach and Organizational
Structure factors. DM also attacks as unreasonable the evaluation of one of
Fluor’s subcontractors in the Past Performance factor. We reject each of these
challenges.

                                DISCUSSION

       We have jurisdiction over 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.” 28 U.S.C. § 1491(b)(1) (2012). There is no question
that DM is an “interested party” because it was an “actual . . . bidder[] or
offeror[] whose direct economic interest would be affected by the award of the
contract.” Am. Fed’n of Gov’t Emps. v. United States, 258 F.3d 1294, 1302
(Fed. Cir. 2001).

         We review agency action in the bid protest context under the deferential
standards of administrative review borrowed from the Administrative
Procedures Act. See 28 U.S.C. § 1491(b)(4). DOE’s actions can only be
enjoined if we find them to have been “arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with the law.” 5 U.S.C. § 706(2)(A)
(2012). In the course of our review, we must not substitute our judgment for
that of the agency’s. See Redland Genstar, Inc. v. United States, 39 Fed. Cl.
231 (1997). All that is required of an agency is that it has a reasonable basis
for its decision. See Honeywell, Inc. v. United States, 870 F.2d 644, 648 (Fed.
Cir. 1989).

       Plaintiff’s briefing presents a number of critiques of DOE’s selection
of Fluor. While we are sympathetic with DM’s consternation at not being
selected after many years of apparently successful performance of the
incumbent contract, all of the challenges, including the ones we select for
treatment below, can be characterized merely as calling into question the

                                       8
agency’s legitimate exercise of its own judgment. As is frequently the case in
close calls in procurement selections, the fact that the court, or even a different
group of agency selection authorities, may have come to another conclusion,
is irrelevant.

       Plaintiff chose to narrow oral argument to a few of its more pressing
issues. Accordingly, we will follow plaintiff’s order of presentation there,
which focused on the evaluation of the Management Approach, Organizational
Structure, and Past Performance factors.

I. Management Approach

        Plaintiff argues that the three items from Fluor’s proposal under the
Management Approach factor that the SSO used to discriminate between
DM’s and Fluor’s proposal were not sufficiently distinct or were not deserving
of the praise given them by the agency. DM also argues that, based on the
definition of a the adjectival ratings in the solicitation, it should have received
a “good” rather than a “satisfactory” for its Management Approach factor. If
Fluor’s proposal was not as strong under this factor or DM’s should have been
rated stronger, then perhaps DOE’s best value decision would be arbitrary
given DM’s other advantages on the lower-weighted technical factors and its
slight price advantage. Defendant’s and intervenor’s response to these
arguments is that plaintiff is in essence disagreeing with the agency’s ratings
without identifing any action of the agency that is arbitrary, capricious, or in
violation of law or regulation. We agree. None of the challenges which
follow demonstrate a violation of law or any irrationality.

       A. Fluor’s One Fluor/ One SPR Approach

        DOE found Fluor’s One Fluor/ One SPR concept to be a significant
strength under the Management Approach factor. It also cited this concept as
one of the reasons that Fluor’s proposal represented the best value to the
government. Plaintiff finds fault in this analysis because, in its view, the One
Fluor/ One SPR concept “offered nothing unique” and “merely complied with
the requirements of the Solicitation.” P.’s Memo in Supp. of Mot. for J. on AR
14. Plaintiff points out the solicitation’s requirement that “[t]he work
performed by the offeror shall be conducted by a legal entity separate from its
parent organization(s) that will be totally responsible for all contract
activities.” AR 859. Plaintiff believes Fluor’s One Fluor/ One SRP to be
nothing more than a slick repackaging of this basic contract requirement.

                                        9
        Plaintiff also criticizes the SSO’s praise for the One Fluor/ One SPR
concept under the Management Approach factor because plaintiff believes that
feature of Fluor’s proposal was not properly considered under that factor.
Plaintiff directs our attention to the stated focus of the Management Approach
factor: “the Offeror’s proposed approach to performing work described in the
PWS.” AR 913. Plaintiff argues that the One Fluor/ One SPR concept is not
aimed at the specifics of the M&O contract work but instead is best addressed
to the Organizational Structure factor, which was concerned with “effective
and efficient structure for the successful accomplishment of the work to be
performed under the contract.” AR 914. Fluor received credit for the One
Fluor/ One SPR concept in the agency’s consideration of both the Management
Approach and Organizational Structure factors. Citing GlassLock, Inc., B-
299931, et al., 2007 CPD ¶ 216, 2007 SL 4200104 (Comp. Gen. Oct. 10,
2007), plaintiff argues that such “double counting” by the agency is prohibited.

       We observe initially that plaintiff is wrong in suggesting that DOE
could not consider the One Fluor/ One SPR concept under two different
technical factors. See Office Depot, Inc. v. United States, 95 Fed. Cl. 517, 533
n.18 (2010). Agencies are well within their discretion to consider relevant
information under more than one evaluation factor. DOE found that the One
Fluor/ One SPR concept was the “foundation for [Fluor’s] management
approach.” AR 5532. This concept, in essence, runs throughout Fluor’s
proposal. Specific to the Management Approach factor, DOE found that
Fluor’s approach would enable Fluor to employ best practices and efficiencies
in the management of the SPR that it had possessed through its broader
corporate structure. See id. The SSO specifically found that this demonstrated
a focus on “operational readiness and the safe, effective, and efficient
performance of the PWS elements.” Id. Those considerations are specifically
related to the work to be performed under the contract. The fact that DM
would not have attributed a strength in this regard is of no note. It was not
arbitrary or capricious for DOE to have assigned a significant strength for
Fluor’s organizing principle under the Management Approach factor.
Likewise, we cannot accept plaintiff’s invitation to quibble with the SSO in
deciding that this was one of the reasons to pay a premium for Fluor.

       B. Fluor’s Strength for Planning

         The SSO cited Fluor’s strength under the Management Approach factor
for “comprehensive and effective planning process for the near term and long
term for the SPR” as a “further discriminator.” AR 5775. The SSO explained
that it “is important that the M&O contractor recognize and plan for both the

                                      10
near-term and long-term for the SPR as its mission evolves, and that near-term
detailed plans are integrated with longer term program consideration, as
reflected in the SEB’s evaluation of Fluor’s proposal.” Id. The SEB and SSO
assigned a weakness, on the other hand, to DM for its “failure to recognize and
address the longer term, including lack of detail in the concepts presented and
lack of clarity as to what exactly the M&O Contractor will do, when and how
it will be done, expected outcomes and practical issues or problems to
overcome.” AR 5743 n.1; see also AR 5775.

       Plaintiff argues that such statements make clear that the SSO did not
follow the stated evaluation criteria. Plaintiff states that the solicitation did not
require long-term planning for the Management Approach factor and did not
promise to evaluate long-term approaches. Thus, in plaintiff’s view, it should
not have been assigned a weakness for lack of long-term planning.4 Without
that weakness, according to plaintiff, the agency’s decision to make an award
based, at least in part, on this discriminator was arbitrary and capricious.

       Plaintiff also points the court to several places in its proposal where it
believes it proposed long-term actions as part of DM’s SPR 2020 Program,
which took a view out to the year 2020. See AR 1007, 1019, 1024, 1031-32,
1048-49 (excerpts from DM’s proposal). Plaintiff argues that “specific
objectives and target dates for that program . . . are set forth on a detailed
timeline included in [DM’s] proposal.” Pl.’s Memo in Supp. 22 (citing AR
989 (timeline for SPR 2020 Program)). Thus, in plaintiff’s view, DOE’s
award of a strength to Fluor and weakness to DM was unequal treatment and
unreasonable.

       Once again, we cannot substitute our judgment for that of the agency.
The SEB and the SSO found a strength in Fluor’s proposal as it relates to
planning for the near, middle, and long-term horizons. As plaintiff admits, it
cannot find fault with giving a strength to Fluor for its proposal in this respect.
Although it believes it should also have been awarded a similar strength, its
real qualm is with DOE’s assignment of a weakness for a lack of clarity in

4
 At oral argument, plaintiff clarified that it was not per se improper for the
agency to have awarded a strength to Fluor for its long-term planning because
offerors are always at liberty to propose enhancements to the agency. It is,
however, improper for an agency to cite a proposal as weak in an area for
which the solicitation did not seek information. That is what plaintiff believes
happened here.

                                         11
long-term advantages offered by DM.

       Plaintiff is wrong when it suggests that the solicitation was not
concerned with long-term planning for the SPR. In the PWS, under
Operations, the solicitation called for the contractor to “[p]erform
management, planning, oversight, documentation, training, operational
functions, energy management and crude oil activities associated with the
operation of the SPR sites/facilities.” AR 692. In fact, for maintenance, the
PWS specifically asked the contractor to develop long-term plans. AR 694.
The PWS next includes a list of activities that contractors were to manage and
“plan.” AR 692. The requirement to plan for future activities is also listed for
a variety of additional contractor duties in the PWS. See, e.g., AR 692
(Drawdown Readiness), 693 (Petroleum Acquisition and Transportation), 694
(Major Maintenance: “Develop long-term plans and, as assigned, perform
major maintenance projects . . .”), 697 (Project Management).5

        In the introduction to the PWS, the solicitation requires the offeror to
“develop and implement innovative approaches and adopt practices that foster
continuous improvement in accomplishing the mission of the SPR.” AR 689.
DOE further stated that the contract should reflect “application of
performance-based contracting approaches and techniques which emphasize
results/outcomes and minimize ‘how to’ performance descriptions.” Id. From
the start, offerors were on notice that the agency sought more than a recital of
the PWS and how much performance would cost. DOE was seeking
innovation and continuous improvement in operation of the SPR.

       The SEB found that most of the improvements proposed by DM were

5
  Several other major items in the PWS call for the contractor to develop and
manage systems and programs for the SPR: Environmental Management
System, including a Site Sustainability Plan, AR 695; Security Program, AR
695-96; Quality Assurance Program, AR 696; Financial Management program,
AR 967; DOE-approved procurement system, AR 698. The list goes on to
include development of projects for personal property management, human
resources, safety and health, and emergency management. AR 698-700. For
Information Systems and Knowledge Management, the contractor was
required to “orient all planning and implementation towards deploying
forward-looking technologies which maximize overall operating efficiencies
and best business practices from enterprise resource planning and knowledge
management perspectives.” AR 697.

                                      12
related to information technology or extending the life of existing facilities.
DOE found, however, that DM’s proposal had a “lack of detail in the concepts
presented.” AR 5531. The SSO repeated this criticism in his decision and
cited what he viewed to be the weakness of DM’s SPR 2020 program. See AR
5775.

        DOE found that Fluor’s proposed activities and improvements to the
SPR would mean that “near-term detailed plans are appropriately integrated
with longer-term program considerations,” which DOE considered to “ensure
a strategic approach to planning and budget formulation.” AR 5775. Plaintiff
attempts to shift the focus to the long-term planning cited by the agency as a
strength for Fluor and weakness for DM. It would be a mistake to view it that
narrowly, however. The majority of projects proposed by both offerors deal
with the 10 year contract life. Per the agency, Fluor’s proposal included better
detail for its proposal in the near, mid, and long-term phases, including beyond
the 10 year window. Certainly DM was not taken by surprise by the agency’s
evaluation of longer-term planning. As it details in its briefing, DM offered
a variety of activities and plans for the SPR, including goals extending past the
10 year contract window. The agency simply valued the detail included in
Fluor’s proposal over that in DM’s proposal. That was not arbitrary or
capricious.

       C. Fluor’s Operation and Maintenance/ Cavern Integrity

       The third discriminator on which the SSO relied was Fluor’s “multiple
approaches to improve operations and maintenance, including geotechnical
issues associated with SPR cavern integrity.” AR 5744. The SSO found
Fluor’s proposal to establish a Subsurface Advisory Group and operator’s
forum to be specific additional advantages, which, in concert with Fluor’s
strength in planning, offered an “effective forward looking approach for
cavern or geotechnical issues being faced by the [SPR].” AR 5776.

       DM argues that this amounted to disparate treatment because both
offerors were awarded strengths under the Management Approach factor for
effective operations and maintenance aspects of their proposals. See AR 5527
(DM), 5533-34 (Fluor) (SEB Report). Thus, “in view of their comparably
rated operations and maintenance proposals, it was arbitrary and capricious for
the SSO to conclude that Fluor’s operations and maintenance proposal was a
discriminator.” Pl.’s Memo in Supp. 22. Plaintiff goes on to argue that there
is nothing in the record to support the evaluation of Fluor’s proposal as
superior to DM’s with respect to its approach to cavern integrity. It argues that

                                       13
the formation of an advisory group and operators’ forum are designed to
“mitigate the ‘learning curve’ that Fluor would experience in the event it was
awarded the contract.” Id. at 23. Plaintiff then asks the court to consider its
proposal with respect to cavern integrity, including its own employment of a
noted expert in the field, Mark Erskine. When compared in that light, plaintiff
argues that it was arbitrary and capricious for the agency to have awarded to
Fluor on the basis of a strength that, at best, was present in both proposals.

        Fluor’s allegations with regard to this discriminator once again
represent a disagreement with the agency’s judgment. The agency found very
attractive Fluor’s proposal to develop a Subsurface Advisory Group and a
forum of salt cavern owners to trade operation and maintenance information.
Although DM’s proposal also contained information and plans to ensure
cavern integrity and the agency credited DM’s proposal with a strength for
effective operations and maintenance, the agency could, within its discretion,
prefer one offeror’s plan in this regard over that of another.6 It was not
irrational for DOE to have pointed to this aspect of Fluor’s proposal as a
reason that Fluor’s proposal represented the best value to the government.

       D. DM’s “Satisfactory” Rating for the Management Approach Factor

        Plaintiff also asks the court to consider its rating of “satisfactory” for
the Management Approach factor to be insufficient because the narrative
rationale for the rating also was consistent with a “good” rating, which is what
Fluor received for that factor. Plaintiff argues that it met each of the
solicitation’s three requirements for a “good” rating: that the proposal
demonstrates a high probability of successful contract performance; that it
demonstrates a proficient understanding of the contract requirements; and that
“[s]uch a response may be evidenced by a proposal that exhibits few, if any,
significant strengths; many strengths; few weaknesses; few, if any significant
weaknesses; and no deficiencies.” AR 958 (Source Selection Plan’s definition
of a “good” rating).

6
 Plaintiff also proposed to hire Mr. Erskine, already an employee of DM. We
do not place central importance on Fluor’s proposal to hire Mr. Erskine,
however. The advisory group and owners’ forum were not dependent upon
that hire, and plaintiff proposed other individuals in the event that Mr. Erskine
was unavailable. This is thus not a reason to reject the agency’s preference for
Fluor’s proposal.

                                       14
        Plaintiff points out that its proposal received one significant strength,
five strengths, three weaknesses, no significant weakness, and no deficiencies,
see AR 5526-31, consistent with the third prong of the “good” definition. In
addition, plaintiff points the court to the SEB Report’s finding regarding DM’s
Management Approach rating, specifically its description of DM’s significant
strength under that factor: “The DM proposal demonstrates significant
effectiveness, and completeness in its approach to performing the PWS work
elements under the solicitation that reflects a comprehensive description and
understanding of the proven systems, policies and procedures currently in use
under the SPR M&O contract.” AR 5526. The report goes on to list three
examples that the SEB believed would “appreciably increase the probability
of successful contract performance.” AR 5527.

         Although these facts might be consistent with a rating of “good,” they
do not compel it. They are also consistent with “satisfactory.” The rating
scheme allows for the exercise by the agency of its judgment in drawing
admittedly fine distinctions. The line between “a high probability of contract
performance” and “a moderate probability of successful contract
performance,” for example, is likely a narrow one. See AR 958 (comparison
of the definition of “Good” and “Satisfactory”). It is not, however, one that
the court may draw in the first instance. See Sci. Applications Int’l Corp. v.
United States, 108 Fed. Cl. 235, 281 (2012) (“The Agency’s discretion in these
technical subjective evaluations and adjectival ratings is not like balancing
weights on a scale.”). Plaintiff has not presented a reason why it was irrational
for it to have been rated “satisfactory” for the Management Approach factor.

       Even were plaintiff to have its rating for Management Approach
elevated to “good,” it has not alleged a basis on which we could conclude that
the agency acted arbitrarily in finding that Fluor offered the best value to the
government. While plaintiff was a successful incumbent contractor with a
good record of performance and the lowest priced proposal, those facts are
insufficient to supplant the agency’s judgment. The agency found the price
difference to be small, and it found three specific aspects of Fluor’s proposal
to be more advantageous to the government.

II. Organizational Structure

        Plaintiff attacks the rating of its proposal as “good” for the
Organizational Structure as irrational because the SEB cited several items in
DM’s proposal as advantageous, which should have boosted it from receiving
three strengths and no significant strengths to at least one significant strength.

                                       15
Had DM received a significant strength under the Organizational Structure
factor, it believes its adjectival rating would have been elevated to
“outstanding.”

        Plaintiff also cites as evidence of DOE’s fault in this regard the
individual SEB members’ ratings for this factor. Individually, four of the five
SEB members initially rated DM as “outstanding” while only one SEB
member evaluated DM as “good” for the Organizational Structure factor.
Plaintiff argues that the record is inadequate to explain the final consensus
“good” rating in the face of this “virtually unanimous” view of DM’s proposal
for this factor. At oral argument, plaintiff suggested that the agency may have
made a clerical error in the SEB’s consensus report, which may then have
resulted in a faulty best value decision by the SSO.

         We cannot engage in speculation as to why the SEB’s consensus report
resulted in only a “good” rating for DM’s proposed Organizational Structure.
The board members were entitled to change their minds after discussion. As
we have held, the initial individual ratings of SEB members have “little
bearing on [a] protest” when the SEB reaches a consensus rating. Tech Sys.,
Inc. v. United States, 98 Fed. Cl. 228, 247-48 (2011). The change from the
initial individual ratings is thus not a basis, standing alone, to upset the SEB’s
consensus rating or the SSO’s reliance on it. And it is clear from the
consensus report and the SSO’s decision that the change was not due to a
clerical error.

        DM likewise has not provided any other reason why its “good” rating
for Organizational Structure was arbitrary or capricious. The fact that it
received three strengths but no significant strengths fits squarely within the
definition of “good.” Although the agency reserved for itself discretion to
aggregate strengths to find a significant strength, it did not chose to do so, and
plaintiff has not provided a reason to disturb that decision.

III. Past Performance

       The agency rated both offerors “good” for Past Performance. Plaintiff
challenges one aspect of DOE’s past performance evaluation as having
unfairly prevented DM from achieving a better rating and one aspect of Fluor’s
evaluation as having allowed it to receive a higher rating than it should have.

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       A. DM Petroleum’s Grass Cutting Incident

       DOE evaluated contracts previously performed by DM and two of its
subcontractors, including the incumbent contract for the SPR M&O effort.
DOE found elements of four prior efforts to be “highly favorable,” including
the incumbent M&O contract. DOE found elements of three other contract
efforts to be “favorable.” The agency also cited one aspect of DM’s
performance of the SPR M&O contract to be unfavorable: a fatality suffered
in connection with grass cutting at one of the SPR locations. See AR 5620-21.
OHSA conducted an investigation of the incident and “determined no violation
existed and attributed the accident to the deceased’s willful disobedience.”
AR. 5621. The SEB noted that DM took corrective action above and beyond
what the agency deemed necessary.

        DM argues that this incident was unfairly attributed to it in the past
performance evaluation and, had it not been, DM would likely have been rated
higher. As evidence, DM cites OHSA’s findings that the incident was due to
willful disobedience of an employee and DM’s corrective action thereafter.
It argues that it is is unreasonable in the face of those facts to find that incident
to be unfavorable. Without that single “unfavorable” rating, DM’s four
“highly favorable” ratings and three “favorable” ratings might have resulted
in a rating of “outstanding” for Past Performance.7

        Aside from the fact that plaintiff has not argued prejudice with regard
to this factor–it argues only that it was arbitrary for DOE to have assigned an
unfavorable rating for the grass cutting incident, but not also that this would
have resulted in a higher overall rating for past performance–DM has not
established that the agency did anything arbitrary or capricious. The agency’s
consideration of this past performance incident is not controlled by OHSA’s
conclusions about the same event. DOE considered OHSA’s finding and
DM’s corrective measures but found that this incident still merited an
“unfavorable” notation.        In doing so, it considered DOE’s internal
investigation of the incident in which it found that one of two root causes was
the “failure of SPR-BM site stop work policy and its implementation in
addressing less than imminent danger situations.” AR 4956. DOE further
found “less than adequate work control process” and “unavailability of the

7
 Plaintiff does not explicitly allege in its primary brief that the agency would
have rated it higher without the unfavorable rating for the grass cutting
incident. It argues that the evaluation was arbitrary and capricious.

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supervisor due to other duties” as contributing causes. AR 4957. In light of
those findings, we cannot say that it was arbitrary or capricious for the agency
to have found the grass cutting incident to contribute to “an unfavorable”
rating.

       B. Fluor’s Subcontractor APOM’s Past Performance

        Eight past contracts performed by Fluor and three subcontractors were
considered by the agency under the Past Performance factor. DOE found
elements of four of them to be “highly favorable,” six elements to be
“favorable,” and one to be “unfavorable.” The agency declined to specifically
rate the past performance of one subcontractor, Arctic Slope Regional
Corporation Petroleum Operations and Maintenance, LLC (“APOM”), because
it was a newly formed venture. DOE found that the two efforts proposed to be
evaluated for APOM were performed by two other subsidiaries of APOM’s
parent corporation, Arctic Slope Petroleum Corporation (“ASRC”), and that
they thus did not provide a basis for evaluating APOM. Pursuant to the
solicitation, APOM was given a “neutral” rating for Past Performance. AR
5519 (definition of “neutral”), 5761 (SSO’s statement that APOM was rated
as “neutral” for past performance).

        Plaintiff alleges that a fatality that occurred during performance of a
DOE Construction Management Service (“CMS”) contract by ASRC Gulf
States Constructors, LLC (“AGSC”) should have resulted in an “unfavorable”
past performance rating for APOM. Both APOM and AGSC are subsidiaries
of ARSC. Plaintiff points to parts of Fluor’s proposal in which Fluor seems
to attribute performance of the CMS contract to APOM. See, e.g., AR 1741
(“Fluor chose APOM as our pre-selected small business subcontractor and
Mentor-Protégé based on their experience managing oil field operations,
strong performance on the SPR CMS contract . . . .”). Plaintiff also makes
much of the fact that neither in this protest nor before the GAO did Fluor offer
evidence that APOM is distinct from AGSC or that APOM would not utilize
AGSC’s personnel and resources in performance of the M&O contract.

       As with its argument about the grass cutting incident, plaintiff has not
established, or even really argued, that an “unfavorable” rating for this
particular incident for APOM would have resulted in lower past performance
rating for Fluor. APOM was given an overall “neutral” rating for past
performance. Fluor had four other prior efforts found to be “highly favorable”
and six found to be “favorable.” The existence of one additional
“unfavorable” rating in the mix with so many positive ratings is very unlikely

                                      18
to have changed Fluor’s past performance rating. DM, in fact, had one
“unfavorable” rating for the same contract on which it also had a “highly
favorable” rating, the incumbent SPR M&O contract. It was nevertheless rated
“good” with respect to past performance.

        Putting aside the inability of plaintiff to show prejudice in this regard,
we find that the agency did not act irrationally in its decision not to credit the
negative incidents of AGSC to APOM. The agency considered the same
information that plaintiff presents now and concluded that it was insufficient
to attribute the negative incidents to APOM. See AR 5761 (SSO’s decision).
The SSO specifically concluded that the resources of AGSC would not be
relied upon by APOM in contract performance and that this incident would
not, in any event, affect his rating of Fluor as “good” for past performance. Id.
In the absence of a reason to conclude to the contrary, other than mere
disagreement, we cannot disturb the agency’s conclusion with regard to the
past performance rating of Fluor.8

                                 CONCLUSION

       We have considered each of plaintiff’s arguments, including the ones
only briefed and not brought forward at oral argument. Collectively they
merely reflect disagreements with the agency’s exercise of its reasonable
judgment in rating Fluor’s and DM’s proposals with respect to various
technical factors.9 The agency was well within its discretion to evaluate the
proposals as it did. Plaintiff has neither established a violation of law or

8
  Defendant does recognize one inadvertent mistake in the SSO’s selection
decision with regard to one of the negative incidents, the death of a dog
belonging to a security subcontractor. The SSO’s decision states that it was
premature to make a conclusion with regard to this incident because the
investigation was still pending. That was not accurate at the time of the actual
contract award, September 2013. The investigation was concluded in July
2013. See AR 6438-39. Defendant points out, however, that this was not
prejudicial to DM because the dog died at the hands of one of DM’s
subcontractors, not Fluor’s.
9
 As stated at the outset, we have concentrated this opinion on the issues raised
during oral argument. We have considered all of the arguments raised by
plaintiff in its brief, including any not treated specifically herein, and find that
none of them merit relief.

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regulation nor presented any evidence of arbitrary or capricious action on the
part of the agency. Accordingly, plaintiff’s motion for judgment on the
administrative record is denied. Defendant’s and intervenor’s cross-motions
for judgment on the administrative record are granted. The Clerk is directed
to enter judgment accordingly and dismiss the complaint.

                                          s/Eric G. Bruggink
                                          ERIC G. BRUGGINK
                                          Judge

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