Court Opinion

ID: 9352994
Source: CourtListenerOpinion
Date Created: 2023-01-10 18:01:48.580446+00
Date Added: 2024-06-11T17:06:25.697330
License: Public Domain

In the United States Court of Federal Claims
                        No. 22-1215
                  (Filed: January 3, 2023)
                (Re-filed: January 10, 2023) 1
**************************
SLS FEDERAL SERVICES, LLC,
                           Plaintiff,
                                                    Bid protest; post-
v.                                                  award bid protest;
                                                    price reasonableness;
THE UNITED STATES,                                  discussions; FAR 15-
                           Defendant,               404-1;       DFARS
                                                    215.306; Blue &
and
                                                    Gold; injunction
JACOBS PROJECT MANAGEMENT CO.,
                           Intervenor.
**************************
       Kyle R. Jefcoat, Washington, DC, for plaintiff, SLS Federal Services
with whom were David R. Hazelton, Leah Friedman, Genevieve Hoffman,
W. Allen Perry, and W. Blake Page, of counsel.
       Liridona Sinani, Attorney, United States Department of Justice,
Commercial Litigation Branch, with whom were Brian M. Boynton,
Principal Deputy Assistant Attorney General, Patricia M. McCarthy,
Director, and Douglas K. Mickle, Assistant Director, for defendant. Nicolle
A. Vasquez, Naval Facilities Engineering Systems Command Atlantic, of
counsel.
       Robert J. Symon, Washington, DC, for intervenor, Jacobs Project
Management Co., with whom was Patrick R. Quigley and Lisa A. Markman
of counsel.

1
 This opinion was originally issued under seal, and the parties were given an
opportunity to propose redactions of any protected material. The parties
agreed that none were necessary, so it appears in full.
                                 OPINION
        This is a post-award bid protest of the Naval Facilities Engineering
Systems Command’s (agency) decision to award indefinite-delivery,
indefinite-quantity contracts to six contractors. Plaintiff, SLS Federal
Services, LLC, argues that the agency ignored regulatory requirements,
failed to follow the solicitation’s terms, and engaged in an unequal and
arbitrary evaluation of its proposal. As a result, SLS seeks a permanent
injunction against the agency’s decision.
       The matter is now fully briefed on cross-motions for judgment on the
administrative record. Oral argument was held on December 8, 2022. We
sustain SLS’s protest and, for the reasons set out below, enjoin the agency
from proceeding with performance of the contracts.
                             BACKGROUND
       From time to time, the Department of Defense and other federal
agencies must respond to global emergencies, like natural disasters or
humanitarian conflicts. Responding to global emergencies often requires,
among other things, construction and engineering services. To secure those
services, agencies sometimes enter into “global contingency construction”
contracts in which a contractor’s performance can arise anytime and
anywhere. Administrative R. (AR) 251.
       In this case, the agency issued Solicitation N62470-20-R-5003,
looking to award approximately four indefinite delivery, indefinite quantity
contracts for global contingency construction. As for how those contracts
would be awarded, the agency was clear: awards would be made to the
contractors whose offers “represented the best value to the Government.” AR
822. And best value, the agency instructed, would be determined through a
tradeoff analysis that considered both cost and non-cost factors. 2 Once the
contracts were awarded, the awardees would then later compete for either
cost-plus-award-fee or firm fixed price task orders with a maximum contract
value of $5 billion.
      Most important within the agency’s tradeoff analysis was cost. To
consider cost, the solicitation required contractors to submit cost proposals,

2
 The non-cost factors were (1) corporate experience, (2) safety, (3) small
business utilization and participation, and (4) past performance.
                                      2
which the agency would analyze for both cost and price reasonableness. That
said, the agency—whether by oversight or intention—requested only cost
data, like hourly labor rates and indirect ceiling rates. Those figures, while
helpful to understand a contractor’s reimbursable expenses, did not include
any anticipated profit and left a hole in the agency’s evaluation. That is
because the agency planned to control cost by using firm fixed price “task
orders whenever possible.” AR 32. In fact, of the two contract-line-item
numbers (CLIN), the agency explained that over half of all work would be
performed under CLIN 002 as firm fixed price task orders. See AR 252
(anticipating that $3 billion of all task orders would be firm fixed price).
        More broadly, the agency’s evaluation of offers involved three
entities, and the interplay between them worked as follows. First, the
Evaluation Board would independently evaluate each factor outlined in the
solicitation. It would then compile its review into essentially two reports, one
for non-cost factors and one for cost. After that, the Advisory Council would
review the Board’s findings, consolidate the findings into its own report, and
“make[] an award recommendation.” AR 258. At that point, the Source
Selection Authority would review the recommendations, and if it believed
that discussions were unnecessary, it would select the contractor whose
“proposal offers the best value to the government.” Id.
       The agency advised contractors that it intended to award contracts
without discussions. It reserved the right to use them if the need arose, but it
never did. Instead, at nearly every stage of evaluating offers, the agency
reaffirmed its intent to award contracts without discussions because, in its
view, the offers were clearly awardable.
       In the end, the agency awarded contracts to six (out of nine) bidders
but not SLS. 3 Unhappy with the agency’s awards, SLS filed a protest with
the Government Accountability Office (GAO). Among other things, SLS
argued that the agency should have conducted discussions and that it also
erroneously analyzed price reasonableness. Finding “potential merit” in
SLS’s “price reasonableness” argument, the agency agreed to take corrective

3
 The agency awarded contracts to (1) Aptim Federal Services; (2) CDM, a
Joint Venture; (3) ECC Contingency Constructors, LLC; (4) Gilbane
Federal; (5) Jacobs Project Management Co.; and (6) Perini Management
Services, Inc.
                                       3
action so that it could “address the evaluation of the proposals, including, but
not limited to, price reasonableness.” AR 11389. On that basis, the GAO
dismissed SLS’s protest.
       Nearly a year after the notice of corrective action, the agency
announced that the awards would remain the same. In the Evaluation Board’s
report, it disclosed that the only corrective step it took was to remove an
“inappropriate CPARS evaluation.” AR 11417. Outside of that, “[t]here were
no additional amendments or requests for proposal revisions made in
pursuance of th[e] corrective action.” Id. Because little changed from the
agency’s initial evaluation, SLS filed a second protest with the GAO.
Disputes over document production then ensued, so SLS filed its protest with
this court.
                                DISCUSSION
   I. The agency’s corrective action did not cure the original
      procurement defect.
        We review bid protests in accordance with the standards laid out in
the Administrative Procedure Act (APA). Advanced Data Concepts, Inc. v.
United States, 216 F.3d 1054, 1057 (Fed. Cir. 2000) (citing 28 U.S.C. §
1491(b)(1) (1996)). Under the APA, an agency’s actions cannot be
“arbitrary, capricious, an abuse of discretion, or otherwise not in accordance
with law.” 5 U.S.C. § 706(2)(A) (2018). In the context of corrective action,
that means that an agency’s decision must be “reasonable under the
circumstances and appropriate to the impropriety.” PGLS, Inc. v. United
States, 152 Fed. Cl. 59, 69 (2020).
           A. Blue & Gold does not bar SLS’s challenge to the agency’s
              corrective action.
       SLS complains that the agency was incapable of evaluating price
reasonableness because the agency never requested or considered any pricing
information. At its core, SLS’s broader argument amounts to a challenge to
the solicitation’s structure. In effect, SLS argues that the solicitation did not
request enough information for the agency to perform its promised price
reasonableness analysis.
      Jacobs, as intervenor in this protest, answers that SLS waived its price
reasonableness argument, relying on Blue & Gold Fleet v. United States. 492

                                       4
F.3d 1308, 1313 (Fed. Cir. 2007). It explains that SLS should have noticed
the solicitation’s defect and challenged it before the competition concluded.
Because SLS did not do so, its challenge is untimely.
         In a typical bid protest, Jacobs’s waiver defense would likely prevail.
Indeed, SLS conceded at oral argument that its GAO challenge could have
been dismissed as too late. The agency could have raised the waiver defense
at GAO (and then at this court), and, if it had, the protest would be over—at
least as far as price reasonableness is concerned. What makes this protest
atypical, however, is that those events never occurred. The agency did not
raise the waiver defense at GAO. Instead, the agency promised to take
corrective action. That choice allows SLS to challenge the agency’s
execution of that corrective action. See Amazon Web Servs., Inc. v. United
States, 153 Fed. Cl. 602, 607 (2021). The agency cannot later (and for the
first time) hide behind Blue & Gold when its corrective steps fail to solve the
problem. 4
           B. The agency failed to correct its improper price
              reasonableness analysis.
       With SLS clearing the Blue & Gold hurdle, we turn to the merits of
SLS’s price reasonableness argument. Recall that SLS takes issue with the
agency’s solicitation. In particular, it contends that the agency failed to
request any pricing information, which, in turn, made it impossible to analyze
price reasonableness. The essence of SLS’s position is this. A problem
existed because the solicitation failed to request pricing information. At the
GAO, the agency promised to take corrective action, which was assertedly
to address a possible price reasonableness defect. Yet, in the time between
the notice of corrective action and the new awards, the agency never acquired
the missing price data. As a result, the agency remained unable to analyze
price reasonableness.
       The government’s response is twofold, though the two positions are
difficult to reconcile. On the one hand, the government reminds us that this

4
 Parties may forfeit rights and defenses when they fail to timely assert them.
See, e.g., United States v. Olano, 507 U.S. 725, 733 (1993). Instead of
asserting its waiver defense, the agency chose to initiate corrective action, in
part, at least, directed at fixing the asserted defect with the solicitation. For
better or worse, the agency is bound by that decision.
                                       5
is a global contingency construction contract. Because the nature of
performance is unknown, it would be “impossible” to evaluate firm-fixed-
price proposals. Yet on the other hand, the government also assures us that it
did analyze price reasonableness using FAR 15.404-1(b). It understands that
provision to mean that a comparison of costs plus adequate competition
equals a fair and reasonable price.
        We hold that the agency’s corrective action was unreasonable and
failed to address the original “impropriety.” PGLS, 152 Fed. Cl. at 69. We
begin with FAR 15.404-1. 5 Under subsection (a)(2), an agency “shall” use
price analysis “when certified cost or pricing data” is not required. FAR
15.404-1(a)(2). If we look to Section 15.403-1(b), we see that this
procurement falls within subsection (a)(2) as a case in which contractors need
not provide certified data. That is because an agency “shall not require
certified cost or pricing data” when it “determines that prices agreed upon
are based on adequate price competition.” 15.403-1(b)(1). And adequate
price competition exists when, as here, an award “will be made to the offeror
whose proposal represents the best value [and] where price is a substantial
factor in source selection.” 15.403-1(c)(1)(i)(B).
       Because certified data was not required, we return to Section
15.404-1. Subsection (a)(2) requires the agency to use price analysis, which
the section defines as “the process of examining and evaluating a proposed
price without evaluating its separate cost elements and proposed profit.”
15.404-1(b)(1). Or put another way, subsection (b)(1) allows an agency to
determine a price’s reasonableness without going line-by-line through the
constituent cost elements. One acceptable method of doing that is to simply
compare the prices received when adequate competition exists. Normally,
that will “establish[] a fair and reasonable price.” 15.404-1(b)(2)(i).
       With these principles in view, the agency did not (and could not)
analyze price reasonableness under FAR 15.404-1(b). Simply put, the
regulation—which allows evaluation of price without separately considering

5
  Admittedly, the parties do not address the contours of Section 15.404-1 in
this level of detail. But “when an issue or claim is properly before the court,”
we “retain[] the independent power to identify and apply the proper
construction of the governing law.” U.S. Nat’l Bank of Oregon v. Indep. Ins.
Agents of Am., Inc., 508 U.S. 439, 446 (1993).
                                       6
cost—presupposes that agencies possess, at the very least, some pricing
information. Here, the parties do not appear to dispute that the agency never
requested, received, or evaluated any price data from the bidders. Instead, the
agency requested cost information, such as hourly labor rates, which helped
it determine a contractor’s reimbursable expenses but not its prices. As a
result, the solicitation’s structure left the agency without the necessary
information to perform a price analysis. That problem then survived the
agency’s corrective action because the agency never attempted to fill that
void. The agency could not evaluate price reasonableness without pricing
information.
       In defense of the agency, the government flips subsection (b)(1) on its
head. The government starts with an accurate description of price analysis
under subsection(b)(1), and it also correctly explains that one method of price
analysis is a “[c]omparison of proposed prices received” when “adequate
price competition exists.” 15.404-1(b)(2)(i). It is what comes after that
departs from the regulation’s text. From here, the government explains that
the agency reviewed the cost proposals and determined that they were
“complete, reasonable, and realistic.” AR 11639. Combining that, then, with
adequate competition, the agency concluded that its comparison of cost
proposals could therefore establish a reasonable price.
       The agency’s approach lacks the regulation’s support. By its plain
language, subsection(b)(1) empowers agencies to review proposed prices
“without evaluating its separate cost elements.” 15.404-1(b)(1) (emphasis
added). But the reverse is not true. The agency does not perform a price
analysis when it evaluates the separate cost elements and ignores price.
Instead, and as subsection(c)(1) explains, that is called “cost analysis.”
15.404-1(c)(1). 6 Price—though it encompasses cost—is broader and
includes a contractor’s anticipated profit. See 15.404. The agency must
compare prices to satisfy 15.404-1(b), which it failed to do here.
      To the government’s point that a price analysis would be impossible,
we have found other procurements where agencies have evaluated price
reasonableness in similar contexts. For instance, the Army Corps of
Engineers found a way to evaluate contractors’ prices in a contract for debris

6
  More specifically, cost analysis is the “review and evaluation of any
separate cost elements.” 15.404-1(c)(1).
                                      7
management operations after “natural or man-made disasters.” In re
CrowderGulf, LLC, B-418693.9 et al., 2022 CPD ¶ 90, at *1 (Comp. Gen.
Mar. 25, 2022). The agency devised a scheme where the government would
provide a “set of estimated quantities for a ‘likely emergency event’ to take
place in that region” and would multiply that by “the rates proposed by each
offeror” to “arrive at the total evaluated price for each region.” Id. at *3. In
NEQ, LLC v. United States, the Environmental Protection Agency (EPA)
contracted for “[e]nvironmental cleanup [in] response to natural disasters and
terrorist activities.” 88 Fed. Cl. 38, 41 (2009). There, too, the EPA managed
to evaluate price reasonableness. See id. at 43, 51.
       Presumably, an agency’s price evaluation is harder with contingent or
uncertain performance. But be that as it may, difficult is different from
impossible. And “[m]aking that difficult decision was the agency’s job”—
one that it “failed to do” here. Dep’t of Homeland Sec. v. Regents of the Univ.
of Cal., 140 S. Ct. 1891, 1914 (2020).
       In sum, the agency’s solicitation failed to request the pricing
information that would enable it to analyze price reasonableness. Its
corrective action never asked for any information to address that defect.
Therefore, the agency’s corrective action is unreasonable, and SLS did not
waive its right to bring a challenge.
   II. The agency violated DFARS 215.306.
       A. DFARS 215.306 creates a presumption in favor of discussions
          that the agency failed to overcome.
      SLS argues that the agency abused its discretion when it refused to
engage in discussions. We agree. At this point, we think it is settled that
DFARS 215.306 “create[s] a presumption in favor of” discussions. Oak
Grove v. United States, 155 Fed. Cl. 84, 108 (2021).
       Discussions promote an important public interest. Among other
things, discussions “maximize the government’s ability to obtain [the] best
value,” FAR 15.306(d)(2), by “allowing the offeror to revise its proposal,”
CliniComp Int’l, Inc. v. United States, 117 Fed. Cl. 722, 744 (2014). Despite
their importance, however, a contracting officer normally has the discretion
to choose whether to use them. JWK Int’l Corp. v. United States, 279 F.3d
985, 988 (Fed. Cir. 2002).

                                       8
       This protest raises a more nuanced question about discussions. Under
the DFARS—which supplements the FAR in all defense contracts—
”contracting officers should conduct discussions” “[f]or acquisitions with an
estimated value of $100 million or more.” DFARS 215.306(c)(1) (emphasis
added). The parties dispute if and how the word “should” alters the normal
discretion that a contracting officer possesses under the FAR. To SLS, the
regulation creates a presumption that discussions will take place and thus
requires agencies to provide adequate justification if they wish to depart from
the regulatory scheme. In response, and even though the agency never made
such a claim when it proceeded without discussions, the government appears
to argue that the regulation creates no such presumption, especially when the
agency intends to award without discussions from the outset. We agree with
SLS.
        We begin with the regulation’s text, which, if unambiguous, controls.
Aspen Consulting, LLC v. Sec’y of Army, 25 F.4th 1012, 1016 (Fed. Cir.
2022). DFARS 215.306 provides that, “[f]or acquisitions with an estimated
value of $100 million or more, contracting officers should conduct
discussions.” And according to the FAR, the word “should” means “an
expected course of action or policy that is to be followed unless inappropriate
for a particular circumstance.” FAR 2.101. The regulations’ language is thus
clear: for “acquisitions with an estimated value of $100 million or more”
discussions are the “expected course of action” unless they are “inappropriate
for a particular” procurement.
       Although clear regulatory language means that the judicial inquiry
into meaning is complete, precedent “confirms what is [already] clear from
the [regulation’s] plain language.” Wimberly v. Labor & Indus. Relations
Comm’n of Miss., 479 U.S. 511, 522 (1987). In Dell Federal Systems v.
United States 7—which addressed a $5 billion computer hardware

7
  Dell Federal’s unique procedural posture deserves some explanation. After
receiving 58 proposals, the Army decided against using discussions because
it would “significantly delay award[ing]” contracts. Id. As a result,
unsuccessful bidders filed a protest with the GAO. Id. at 988. In response to
the protest, the Army took corrective action, which included, among other
things, opening discussions with all remaining offerors. Id. At that point,
however, two of the awardees (wanting the original award to stand) filed suit,
arguing that the Army’s corrective action was unreasonable. Id. at 989.
                                      9
procurement—the Federal Circuit explained that, by using the word
“should,” the regulation contemplates that “discussions normally are to take
place in these types of acquisitions.” 906 F.3d 982, 995 (Fed. Cir. 2018)
(citing FAR 2.10). Thus, when the Army chose not to use discussions for its
own convenience, it created an “undisputed procurement defect.” Id. at 996.
       The government accepts that Dell Federal “generally stated” that
discussions should take place in these types of acquisitions. But even so, the
government argues that Dell Federal is distinguishable because it involved
an agency’s corrective action. That makes a difference, so the argument goes,
because the case only stands for the proposition that discussions can be a
reasonable corrective action.
        We disagree with that narrow construction. For corrective action to be
reasonable, it must be rationally related to the original action’s defects. Dell
Fed., 906 F.3d at 994. Thus, when the court in Dell Federal concluded that
the Army’s proposed corrective action (i.e., using discussions) was
“rationally related to the procurement’s defects,” it necessarily required
considering if and how DFARS 215.306 limited a contracting officer’s
discretion. Id. at 995. In other words, the outcome in Dell Federal makes
little sense if the regulation did not already create a presumption that
discussions would occur.
        Consistent with the Federal Circuit, this court has also interpreted
DFARS 215.306 to create a presumption that agencies will conduct
discussions for defense acquisitions of $100 million or more. For example,
in Oak Grove v. United States, this court reviewed a $245 million Army
procurement that proceeded without discussions. 155 Fed. Cl. at 90–91.
Applying Dell Federal, this court concluded that “conducting discussions”
is the “default rule.” Id. at 108. This means that, even though the regulation
does not mandate discussions, the agency must at least create a record to
justify not using them.
        This court recently encountered this same issue and reaffirmed Oak
Grove. See IAP Worldwide Servs. Inc. v. United States, 159 Fed. Cl. 265, 308
(2022) (IAP Worldwide I). We understood the “provision’s plain language
[to] create a presumption in favor of . . . conducting discussions.” Id. (first
alteration in original). With that in mind, the “question, then, [was] how
much discretion the Army possesse[d] not to engage in discussions.” Id. at
307. This court answered, saying that “an agency must justify not engaging
                                      10
in discussions where [DFARS 215.306] applies.” Id. at 308 (quoting Oak
Grove, 155 Fed. Cl. at 108).
       Turning to the GAO, it too reads DFARS 215.306 to mean that
“discussions are the expected course of action in [Department of Defense]
procurements valued over $100 million.” Sci. Applications Int’l Corp.
(SAIC), No. B-413501, 2016 WL 6892429, at *8 (Comp. Gen. Nov. 9, 2016).
In SAIC, the GAO emphasized “that the [regulation’s] operative word” was
“should,” which meant that “discussions [were] the expected course of
action” in these procurements. Id. at *8. Agencies can proceed without
discussions, then, only “if the particular circumstances of the procurement
dictate that making an award without discussions is appropriate.” Id.
       Finally, the Department of Defense itself agrees that DFARS 215.306
creates an expectation that discussions should occur. In an Acquisition Policy
Memo, the Department stated that “[f]or acquisitions with an estimated value
of $100 million or more, . . . contracting officer[s] should conduct
discussions.” Memorandum, Dep’t of Defense, Defense Procurement
Acquisition Policy, ¶ 1.4.2.2.8 (Apr. 1, 2016).
       The regulation may make certain defense procurements more
cumbersome. The Department “note[d] the potential disadvantages of this
proposed change,” which included “increased time to complete the source-
selection process and additional workload for acquisition staff.” Discussions
Prior to Contract Award, 75 Fed. Reg. 71,647, 71,648 (Nov. 24, 2010).
Nevertheless, it believed that the benefits outweighed the costs because the
“failure to hold discussions” “has led to misunderstandings of Government
requirements by industry and flaws in the Government’s evaluation of
offerors’ proposals.” Id. Those both “lead[] to protests that [are] sustained”
and ultimately “extend source-selection timelines.” Id. In any event, whether
the government still favors the rule is beside the point. The Department
“weighed the [associated] costs,” and we do not question its judgment. Nat’l
Ass’n for Surface Finishing v. EPA, 795 F.3d 1, 10 (D.C. Cir. 2015).
       It thus appears that there is near universal agreement that DFARS
215.306 creates a presumption that defense agencies will engage in
discussions when an acquisition is valued at $100 million or more.
Presumably because of this consensus, the government appears to argue that
the regulation does not apply if the agency simply chooses from the start not
to conduct discussions.
                                     11
       We disagree. It is well established that agencies are “bound by the
applicable procurement statutes and regulations,” Dell Fed., 906 F.3d at 995,
and have “no discretion regarding whether . . . to follow” them. Blue & Gold
Fleet v. United States, 70 Fed. Cl. 487, 512 (2006). Simply put, the
government cannot ignore DFARS 215.306, even when it chooses to do so
from the start. See, e.g., IAP Worldwide I, 159 Fed. Cl. at 307.
        While DFARS 215.306 does not mandate discussions, the agency
must, at the very least, justify not using them. To that end, we “ask whether
the Agency sufficiently justified its decision not to” use discussions in this
case. Oak Grove, 155 Fed. Cl. at 108–09. In answering that question, we
consider only the reasons contained in the administrative record, which in
this case do not pass muster. See IAP Worldwide I, 159 Fed. Cl. at 309. 8
       The government informs us that the agency’s decision not to use
discussions was “adequately documented.” The only documented reason we
found, however, was the agency’s statement that the “six highest ranked
proposals . . . [were] clearly awardable without discussions [and] present[ed]
the best value” to the government. AR 11686. That is not enough.
       First, an agency cannot survive scrutiny under DFARS 215.306 with
“threadbare, conclusory assertions.” Accord IAP Worldwide I, 159 Fed. Cl.
at 310; see also Dell Fed., 906 F.3d at 986. Instead, an agency must
“articulate a rational connection between the facts found and the choice
made”; otherwise, its “decision is arbitrary and capricious.” In re Vivint, Inc.,
14 F.4th 1342, 1351 (Fed. Cir. 2021). In this case, the agency never explained
how the facts supported its decision to proceed without discussions. At best,
the agency merely assumed that SLS could not improve its bid. Assumptions,
however, cannot “survive APA review.” IAP Worldwide I, 159 Fed. Cl. at
311.

8
  The government attempts to distinguish IAP Worldwide I because it
involved draft evaluation notices that strongly suggested a need for
discussions. Even though that may be true, the existence of the evaluation
notices was only one of six reasons the court held that the record did not
justify the agency’s decision. See IAP Worldwide I, 159 Fed. Cl. at 310–13.
Because there were five other reasons, we find that IAP Worldwide I is still
relevant precedent.
                                       12
       Second, “the DFARS presumption favoring discussions must be
overcome with reasoned decision-making.” Id. at 313. Even ignoring the lack
of factual support, it still is not clear whether the agency seriously considered
whether discussions should be used. Merely repeating the conclusion that the
proposals were “clearly awardable without discussions” has little to no value
when the agency never planned to use discussions. Indeed, as the government
has elsewhere explained, “simply expressing a preference for not following
an expected course of action does not . . . foreclose inquiries into whether a
reasonable basis exists upon which that preference rests.” Redacted Resp.
and Reply Brief of Defendant United States, Dell Fed., 133 Fed. Cl. 92, at
*4–5 (internal citations omitted). Nothing in the record supports the
conclusion that the agency reasonably considered whether discussions would
be useful.
        Third, accepting the agency’s justification for not using discussions—
that is, that certain proposals were “clearly awardable” and “represent[ed]
the best value”—would effectively nullify DFARS 215.306. Cf. Duncan v.
Walker, 533 U.S. 167, 167 (2001) (expressing “reluctan[ce] to treat statutory
terms as surplusage”). Here, the government assumed that certain offers
presented the best value and believed that it could therefore avoid discussions
on that basis. But we have already rejected the “implicit assertion that a best
value decision may substitute for a determination not to conduct discussions
where DFARS 215.306 applies.” IAP Worldwide I, 159 Fed. Cl. at 312. That
is because “every contract award in a best value procurement is premised
upon a sound best value decision.” Id. If the government’s self-interested
determination that certain offers present the best value could circumvent
DFARS 215.306, it is unclear when, if ever, the regulation would apply.
        As a last resort, the government and Jacobs both argue that the
agency’s decision was reasonable because SLS had no “deficiencies or
significant weaknesses.” Relying on FAR 15.306, they both claim that an
agency need only engage in discussions to address “deficiencies, significant
weaknesses, and adverse past performance information to which the offeror
has not yet had an opportunity to respond.”
        Discussions about deficiencies and significant weaknesses are a floor,
not a ceiling, however. See 15.306(d)(3). The contracting officer is also
“encouraged” to discuss any aspect of a proposal that could improve its value
if altered or explained. Id. We do not know why the agency thought that

                                       13
offers could not be enhanced through discussions. The government adopted
DFARS 215.306 in part because awards without discussions often led to
“flaws in the Government’s evaluation of offerors’ proposals.” Id. Thus, an
agency cannot avoid DFARS 215.306 simply because it does not assign any
deficiencies or significant weaknesses.
       In sum, the agency failed to adequately justify its decision not to use
discussions. That does not mean that the agency did not have the discretion
to proceed without discussions. Instead, we hold only that that “the DFARS
presumption favoring discussions must be overcome with reasoned decision-
making not reflected in the administrative record.” IAP Worldwide I, 159
Fed. Cl. at 313.
       B. Blue & Gold does not apply.
        If an offeror “has the opportunity to object to the terms of a
government solicitation containing a patent error and fails to do so prior to
the close of the bidding process,” it “waives its ability to raise the same
objection subsequently in a bid protest.” Blue & Gold, 492 F.3d at 1313. For
that reason, the government argues that even if DFARS 215.306 required the
agency to justify its decision, SLS waived that argument when it failed to
object before the competition concluded.
       We disagree. Simply announcing an intent to proceed without
discussions does not put contractors on notice that the government intends to
violate DFARS 215.306, something the government aptly explained in Dell
Federal. See Redacted Resp. and Reply Brief of Defendant United States,
Dell Fed., 133 Fed. Cl. 92, at *9. The government appeared to agree in that
case that a challenge to the agency’s decision could be brought after the
competition concluded. Thus, if agencies reserve the right to hold
discussions, Blue & Gold will not protect the agency when it eventually
foregoes them without explanation.
       C. The agency’s violation of DFARS 215.306 prejudiced SLS.
       Although we conclude that the agency failed to comply with DFARS
215.306, an agency’s error is not enough by itself to merit relief; that error
must also be prejudicial. Office Design Grp. v. United States, 951 F.3d 1366,
1373 (Fed. Cir. 2020).

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       The agency prejudiced SLS when it violated DFARS 215.306 and
proceeded without discussions, which the government does not appear to
dispute. If the agency had used discussions, SLS may have had been able to
revise aspects of its offer and provide the government with better value. See
Dell Fed., 906 F.3d at 996 (“Had the Army conducted pre-award discussions,
several of the lower-priced offerors deemed unacceptable—either as a result
of ambiguous Solicitation requirements or otherwise—might have revised
their initial proposals, which then might plausibly have been found
technically acceptable.”). Thus, because “a correct application of DFARS
215.306 may have kept [SLS] in the competition [it] is sufficient to
demonstrate prejudice.” IAP Worldwide I, 159 Fed. Cl. at 317.
   III. SLS is entitled to injunctive relief.
       At this point, the only remaining question is what relief, if any, is
appropriate. SLS seeks a permanent injunction. When issuing an injunction,
courts “must balance the competing claims of injury and must consider the
effect on each party of the granting or withholding of the requested relief.
Winter v. Nat’l Res. Def. Council, 555 U.S. 7, 24 (2008). In particular, the
court must consider four factors: (1) whether the plaintiff succeeds on the
merits; (2) whether the plaintiff will suffer irreparable harm without
injunctive relief; (3) whether the “balance of hardships” favors the plaintiff;
and (4) whether the injunction is in the public’s interest. PGBA, LLC v.
United States, 389 F.3d 1219, 1228–29 (Fed. Cir. 2004). First, for the reasons
already discussed, SLS has demonstrated success on the merits.
       Second, protesters often show irreparable harm through “evidence of
lost profits or evidence that a monetary award would not remedy its
damages.” PGBA, 389 F.3d at 1231. In a similar vein, “a protester [also]
suffers irreparable harm if it is deprived of the opportunity to compete fairly
for a contract.” FCN, Inc. v. United States, 115 Fed. Cl. 335, 384 (2014).
       In this case, the agency improperly analyzed price reasonableness and
violated DFARS 215.306. Those errors, if left alone, will inflict irreparable
harm. Not only will SLS be deprived of a fair chance to compete, FCN, 115
Fed. Cl. at 384, but it will also lose the profits it could have obtained through
the contract, Fed. Acquisition Servs. Team, LLC v. United States, 124 Fed.
Cl. 690, 708 (2016).

                                       15
       Third, we must “consider whether the balance of hardships leans in
the plaintiff’s favor, [which] requir[es] a consideration of the harm to the
government” and Jacobs. Id. While the government does not identify any
harm it will suffer from this injunction, Jacobs does. 9 The only hardship that
Jacobs identifies, however, is “not being able to perform [its] properly
awarded contract[].” As discussed, those awards came from a flawed
procurement process. So, when weighed against the irreparable harm that
SLS faces, the balance of hardships favors SLS.
       Finally, we examine the public interest. When it comes to government
contracts, the public has an “overriding . . . interest in preserving the integrity
of the federal procurement process by requiring government officials to
follow procurement statutes and regulations.” AshBritt, Inc. v. United States,
87 Fed. Cl. 344, 379 (2009). Here, the government failed to follow the
applicable regulations, and so this injunction is in the public’s interest.
       In the end, all four factors weigh in SLS’s favor. The agency therefore
is enjoined from proceeding with performance of the contracts.
                                CONCLUSION
       In sum, SLS has shown that the agency awarded six contracts for
global contingency construction in violation of applicable regulations. First,
it improperly analyzed price reasonableness when it failed to request or
evaluate pricing information. Second, it violated DFARS 215.306 when it
awarded the contracts without adequately justifying its decision not to use
discussions. Because these are sufficient grounds to sustain the protest, we
need not address SLS’s remaining arguments. Accordingly, we order the
following:
       1. SLS’s motion for judgment on the administrative record is
          granted. The government’s and Jacobs’s cross-motions are denied.

9
  Jacobs goes on to describe some of the agency’s harms if we enjoin
performance. Because the government can speak for itself (and did not
identify any harm), we consider only the harm that Jacobs alleges it will
suffer.
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2. The agency is enjoined from proceeding with performance of the
   contracts awarded to Aptim, CDM, ECC, Gilbane, Jacobs, and
   Perini.
3. If the agency moves forward with the solicitation, it will do so in
   a manner consistent with this opinion.
4. The Clerk of Court is directed to enter judgment for plaintiff.
5. Costs to plaintiff.

                                   s/Eric G. Bruggink
                                   ERIC G. BRUGGINK
                                   Senior Judge

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