Court Opinion

ID: 4910928
Source: CourtListenerOpinion
Date Created: 2021-09-14 21:03:33.039236+00
Date Added: 2024-06-11T08:13:28.322866
License: Public Domain

In the United States Court of Federal Claims
                                        No. 21-1028C

                           (Filed Under Seal: September 1, 2021)
                              (Reissued: September 14, 2021) 1
                                               )
    VS2, LLC,                                  )
                                               )
                       Plaintiff,              )
            v.                                 )
                                               )
    THE UNITED STATES,                         )
                                               )
                       Defendant,              )
    and                                        )
                                               )
    VECTRUS MISSION SOLUTIONS                  )
    CORPORATION,                               )
                                               )
                       Defendant-
                                               )
                       Intervenor.
                                               )

Paul F. Khoury, Wiley Rein LLP, Washington, D.C., for Plaintiff. With him on the briefs
were Craig Smith, Cara L. Lasley, and Nicholas L. Perry. Also on the briefs were Cameron
S. Hamrick, C. Peter Dungan, and Roger V. Abbott, Miles & Stockbridge P.C., Washington,
D.C.
Sosun Bae, Commercial Litigation Branch, Civil Division, United States Department of
Justice, Washington, D.C., for Defendant. With her on the briefs were Brian M. Boynton,
Acting Assistant Attorney General, Civil Division, Martin F. Hockey, Jr., Acting Director,
and Douglas K. Mickle, Assistant Director, Commercial Litigation Branch, Civil Division,
United States Department of Justice, Washington, D.C. Also on the briefs were Dana J.
Chase and Captain Ethan S. Chae, United States Army Legal Services Agency, Contract
Litigation & Intellectual Property Division, Fort Belvoir, VA.
Kevin P. Mullen, Morrison & Foerster LLP, Washington, D.C., for Defendant-Intervenor.
With him on the briefs were James A. Tucker, Alissandra D. Young, and Victoria D. Angle.

1
 On September 1, 2021, the Court filed, under seal, this opinion and order and provided the
parties the opportunity to propose redactions. On September 9, 2021, the parties filed joint
proposed redactions, ECF No. 45, which this Court adopts, in part, and accordingly reissues this
public version of this opinion and order.
                                  OPINION AND ORDER

SOLOMSON, Judge.

        Plaintiff, VS2, LLC (“VS2”) challenges the decision of Defendant, the United
States, acting by and through the Department of the Army (“Army” or the “Agency”),
to switch the award of the Fort Benning Logistics Support Services contract from VS2 to
Defendant-Intervenor, Vectrus Mission Solutions Corporation (“Vectrus”), following
Vectrus’s successful bid protest before GAO. VS2 contends not only that GAO’s
recommendation was flawed – and, thus, that the Agency should not have followed it –
but also that Vectrus’s proposal failed to comply with material terms of the solicitation
and otherwise was not awardable.

       In response, the government and Vectrus attempt to land a massive knock-out
punch, in the form of a novel Blue & Gold waiver argument, that would have the effect
of rendering VS2’s entire protest untimely. That argument, however, threatens to
reforge Blue & Gold from a sensible shield against gamesmanship and unjustifiable
delay into a broadsword capable of cutting down even meritorious arguments in a
manner our appellate court, the United States Court of Appeals for the Federal Circuit,
has never sanctioned. This Court declines to engage in such creative metallurgy.
Unless and until the Federal Circuit compels us to do so, Blue & Gold cannot be
expanded past the factual and procedural circumstances in which the Federal Circuit
has applied it.

      On the merits, the Court rejects most of VS2’s arguments as unsupported, but
nevertheless concludes that GAO’s decision in this case, recommending award to
Vectrus, is clearly erroneous as a matter of law. The result is that, at least on this record,
the Agency has failed to support its decision to switch the contract award from VS2 to
Vectrus. Accordingly, and for the reasons explained below, the Court GRANTS VS2’s
motion for judgment on the administrative record and DENIES the government’s and
Defendant-Intervenor’s respective cross-motions for judgment on the administrative
record.

    I.     FACTUAL BACKGROUND 2

           A. The Solicitation

        On September 18, 2019, the Army issued Solicitation W52P1J-19-R-0070 (“the
Solicitation” or “RFP”) for logistics support services at Fort Benning, Georgia to holders

2This background section constitutes the Court’s findings of fact drawn from the administrative
record. See infra Section IV. Other findings of fact are contained in the discussion sections of
this opinion. See infra Sections V-VIII. Citations to the administrative record (ECF No. 24, as
completed and amended by ECF Nos. 32, 36) are denoted as “AR.”
                                               2
of the Army’s Enhanced Army Global Logistics Enterprise (“EAGLE”) basic ordering
agreement. AR 67. The anticipated contract covered maintenance, supply, and
transportation support services. Id. The Solicitation informed potential offerors that the
Army intended to award a single, cost plus fixed fee task order, with certain firm fixed
priced contract line items (“CLINs”), with a period of performance of one base year and
four option years. AR 67.

       The Solicitation established four evaluation criteria: (1) technical; (2) past
performance; (3) cost/price; and (4) small business participation. AR 144 (RFP § M.4.1).
The technical and small business participation factors were rated for acceptability only,
while the past performance factor had a range of qualitative confidence ratings. Id.
The Solicitation required the Army to award a contract to the offeror with the lowest
total evaluated price that also was determined to be technically acceptable, with
substantial confidence in past performance and an acceptable rating in small business
participation. AR 67, 143 (RFP § M.1.1).

        The Solicitation’s instructions clarified that, in order to submit a compliant
proposal, “[i]t is the offeror’s obligation to submit an unambiguous proposal that
clearly reflects the offeror’s intended technical approach and establishes cost credibility.
Any inconsistency, whether real or apparent, between promised performance and
proposed cost must be adequately explained in the proposal.” AR 125 (RFP § L.4.1.3).
In evaluating the cost/price factor, the Solicitation required the Army to conduct a cost
realism analysis, as well as evaluate price reasonableness. AR 149 (RFP § M.5.3.2). The
Solicitation expressly warned offerors to avoid proposing unrealistically low costs:

              Offerors are cautioned that the Government has concerns
              with the potential for post-award performance problems if
              Offerors propose unrealistically low costs. Therefore, the
              Government reserves the option of rejecting a proposal if, in
              the exercise of its judgment, it determines that an Offeror’s
              cost proposal is unrealistically low, regardless of technical
              merit and/or evaluated costs.

AR 149 (RFP § M.5.3.2.1). The Solicitation further provided that “failure of the Offeror
to establish the credibility of its proposed costs may result in a MPC adjustment being
made to the costs proposed, and/or the proposal being rejected as unrealistically low
and not further considered for award.” Id. (emphasis added). In that regard, the
Solicitation made clear that:

              [I]f a business policy decision to absorb a portion of the
              estimated cost was made, that approach must be stated within
              the proposal (including any associated calculations). Failure
              to adequately explain an inconsistency between promised
              performance and cost may result in a finding of Technical
                                             3
                Unacceptability or a finding that a proposed cost is unrealistic
                for work to be performed.

AR 125 (RFP § L.4.1.3) (emphasis added).

        With respect to the past performance factor, the Solicitation directed that the
offeror should “identify all recent contracts where it . . . experienced any performance
problems that occurred within three years prior to the closing date of this RFP” and
provide corrective action reports, cure notices, nonconformance reports, or show cause
letters. AR 135 (RFP § L.5.3.5.1).

        For the technical factor, the Solicitation required offerors to submit a “Staffing
and Management Plan,” to be evaluated by the Agency to determine if the plan
“adequately details a realistic and feasible approach to delivering services required in
the PWS.” AR 146 (RFP § M.5.1.2). 3 Relatedly, offerors had to complete Solicitation
Attachment 002 – Staffing/Labor Mix, as part of “present[ing] a staffing approach
which demonstrates a thorough understanding of the effort and provides the expected
skill sets / skill level of each position, to include level of responsibility in order to
successfully perform the specific workload requirements identified at Exhibit A TD-01
Workload and meet all the PWS requirements.” AR 129 (RFP § L.5.2.1.1(c)).

        The Army provided offerors with an opportunity to submit questions to the
Agency to attempt to clarify any ambiguities in, or to raise other issues with, the
Solicitation. AR 627-29. An offeror posed a question regarding the type of full-time
equivalents (“FTEs”) it was permitted to propose:

                The Government instructed industry that all minimum hours
                requirements within TD-01 must be met by utilizing CBA
                positions. We noted the following position was not included
                in the updated CBA-SCA Crosswalk issued with Amendment
                1: (1) Truck Driver, Medium. Can the government update the
                CBA-SCA crosswalk to include the omitted position?

AR 627. 4 The government responded: “Not omitted. TD-01 accurately reflects the
workload.” Id.

3   “PWS” stands for performance work statement.
4“CBA” refers to a collective bargaining agreement, and “SCA” refers to the Service Contract
Act. See 41 U.S.C. §§ 6701, et seq. Pursuant to the SCA, contractors may be required to pay
employees pursuant to a CBA. 41 U.S.C. § 6703.
                                               4
          B. Proposals, Evaluations, and Initial Award

       In response to the Solicitation, several offerors, including VS2 and Vectrus,
submitted timely proposals. See generally AR Tab 7, AR Tab 9. The Army reviewed and
evaluated the proposals, established a competitive range, and opened discussions with
the three offerors in that range: VS2, Vectrus, and Vanquish Worldwide, LLC
(“Vanquish”). See generally AR Tabs 10-12. As part of these discussions, the Army
issued evaluation notices (“ENs”) to each of the offerors, requiring them to address
particular proposal deficiencies the Agency identified. AR 2810-12, 2837-39, 2850-52. In
one such notice to Vectrus, the Army identified an “inconsistency between the
costs/prices proposed in the Cost/Price Volume and the promised performance in the
Technical Volume.” AR 2854. The Army explained:

             Based on review of [Vectrus’s proposal] it appears Vectrus
             has reduced the labor rate for [* * *] FTE to $[* * *]. As
             required at RFP paragraph L.5.2.12(a)(2) Offerors are
             instructed that compliance with the SCA/CBA is required.
             Based on the narrative rationale and cost proposal it would
             appear the Offeror has discounted the CBA labor rates which
             is not in compliance with the RFP. It also appears that the
             Offeror has failed to explain how it intends to compensate the
             proposed FTE in accordance with the CBA and still perform
             the requirements at an acceptable level. Therefore, the
             Government has concerns with the potential for post-award
             performance problems as the proposed costs appear
             unrealistically low. The burden of persuasion as to the cost
             credibility rests with the Offeror.

AR 2857-58. The Army informed Vectrus that if it failed to explain or remedy the
proposed labor rate discounts, “the Government intends to apply an upward Most
Probable Cost (MPC) adjustment to ensure that all proposed labor rates comply with
the SCA/CBA requirements and all hours proposed in the Technical Volume are priced
in the Cost/Price Volume.” AR 2858.

        In response to the Army’s notice, Vectrus submitted several questions, including
the following inquiry:

             (b) . . . [I]s it also an acceptable Business Policy Decision to
             propose to forgo hiring such deeply discounted FTEs, with
             the understanding that: (1) mission support would not be
             negatively impacted, (2) we are basing our Business Policy
             Decision on documented, historical experience providing
             equivalent support at Fort Bragg, and (3) should Vectrus at
             some point need to hire any or all of these FTEs that Vectrus
                                            5
              would bear the full cost of compensating such employees
              IAW the SCA or CBA?

AR 2886. The Army replied that Vectrus “has not established cost credibility and/or
shown that the proposed costs are realistic for the promised performance,” adding that
“based on question (b) it appears there is an inconsistency between the promised
performance in the technical volume and the costs proposed as the offeror refers to
forgoing the hiring of these FTE.” AR 2887. The Army also stated that “Offerors are
required to meet the minimum requirements of the RFP. Additionally, question (b)
refers to forgoing the hiring of the FTE in question, which is not reflected in the
Offeror’s Technical Volume.” AR 2887.

        Vectrus ultimately submitted a revised proposal in which Vectrus represented
that it would absorb the labor costs of [* * *] FTEs. AR 4600. Vectrus described this
decision as providing a “no-risk cost savings of $22,176,308” to the Army. Id. Vectrus
explained its ability to absorb the costs, as follows:

              Vectrus is a financially sound and transparent publicly traded
              corporation with a strong cash position; as such, our company
              is fully capable of absorbing the cost of this Business Policy
              Decision. Vectrus formally acknowledges and accepts the
              risks and responsibilities associated with this decision. This
              decision will not impact our operational approach to
              managing and executing the Fort Benning Task Order (TO)
              PWS      technical     requirements    and    achieving     the
              associated . . . performance standards.

AR 4600.

        After receiving revised proposals, the Army conducted a final evaluation. AR
5606-5611 (Final Evaluation Summary). The Army concluded that all three offerors
were technically acceptable, and had submitted an acceptable small business
participation plan. AR 5611. The Army also assigned both VS2 and Vectrus
“substantial confidence” past performance ratings. AR 5611. When evaluating
cost/price, however, the Army – based on concerns with Vectrus’s revised Business
Policy Decision – adjusted Vectrus’s proposed price upwards by $19,719,898, for a total
MPC of $270,551,185. AR 5540. The Army’s cost-realism analysis determined that
Vectrus’s proposed business policy decision – promising a cost credit – was unrealistic
because: (1) based on Vectrus’s questions regarding the evaluation notice, Vectrus
would likely forego the hiring of [* * *] FTEs, creating an inconsistency with the
technical volume, as well as posing a risk to the government in the form of post-award
performance problems; and (2) the proposed cost credit is higher than the proposed fee
($17,839,964 for the cost credit versus $[* * *] for the fee) and, therefore, the proposed
credit is unrealistic because it would not be covered by the proposed fee if issues were
                                             6
to arise during performance of the contract. AR 5566. With this MPC adjustment,
Vectrus’s final proposed price of $270,551,185 was higher than VS2’s proposed price of
$257,097,548. AR 5467, AR 5540. The Army concluded that VS2 submitted the proposal
with the lowest total evaluated price that was technically acceptable, with substantial
confidence in past performance (and an acceptable small business participation plan);
the Agency selected VS2 for the award. AR 5590-91.

       Vectrus requested a post-award debriefing, which the Army provided. AR 5923-
32. In response to Vectrus’s questions, the Army reiterated that it viewed Vectrus’s
proposed cost absorption as unrealistic:

             The offeror lacked cost credibility IAW L.5.4.1.3 as the
             proposed cost credit well exceeded the amount of fixed-fee
             proposed. The offeror did not establish credibility with its
             final proposal revision with rationale explaining how the
             offeror would fund the delta in cost. The offeror simply states
             that corporate proceeds would be used to absorb the costs for
             the [* * *] FTE for which a credit is applied; however, did
             not explain why it feels this is a realistic approach or how the
             offeror would still perform at an acceptable level; therefore, the
             proposed credit was determined to be unrealistic.

AR 5928 (emphasis added). The Army also explained that Vectrus’s “proposed costs do
not reflect the true cost or performance and in the face of competitive pressure [Vectrus]
submitted an unrealistically low price in order to win the contract (buying in); with the
expectation of recouping all or most of the costs related to cost overrun or on change
orders.” AR 5929.

          C. Vectrus’s GAO Protest

        On July 9, 2020, Vectrus filed a protest with GAO, in which Vectrus alleged that
the Army “unreasonably rejected one of Vectrus’s compliant and legally binding
business policy decisions” to absorb labor costs; in a nutshell, Vectrus challenged the
Army’s assessment of the MPC adjustment to Vectrus’s proposed cost/price.5 AR 5763,
5775. Vectrus contended that “[i]t was unreasonable and a violation of the terms of the
Solicitation and the regulations governing cost-realism analysis for the Agency to apply
an MPC adjustment.” AR 5764.

      On October 27, 2020, GAO sustained Vectrus’s protest, concluding that the Army
had improperly made an upward MPC adjustment to Vectrus’s proposed cost. AR
6382-92. GAO concluded that the cost evaluator had made an “unwarranted

5Vanquish also filed a protest at GAO, which GAO dismissed on the grounds that Vanquish
was not an interested party. AR 6382, 6385.
                                             7
assumption about Vectrus’s potential behavior during contract performance” – i.e., that
Vectrus may forego hiring the [* * *] FTEs – based on an exchange with Vectrus
during discussions. AR 6390. GAO also concluded that the Agency made the cost
adjustment based on an “unsubstantiated belief about the fiscal wherewithal of
Vectrus[,]” despite Vectrus’s express assumption of legal liability for its cost reduction.
AR 6390. GAO explained that:

                [W]here a firm offers a cap or ceiling on a particular cost that
                limits the government’s liability and shifts liability for the cost
                to the offeror--and no other issue calls into question the
                effectiveness of the cap--any upward adjustment to the
                capped cost is improper. Any question concerning a firm’s
                ability to perform the contract in light of a capped cost that is
                below the actual cost is a matter of the firm’s responsibility
                rather than a matter to be considered by the agency in its cost
                realism evaluation.

AR 6386 (citing Affordable Eng’g Servs., Inc., B-407180.4, 2015 CPD ¶ 334, 2015 WL
7450123, *5-*6 (Aug. 21, 2015)); see also AR 6391 (concluding that “where, as here, a firm
offers a cap or ceiling on a particular cost that effectively limits the government’s
liability and shifts liability for the cost to the offeror . . . , the only appropriate
consideration for the agency is whether the offeror may be found responsible in light of
the proposed assumption of liability”). GAO determined that without the improper
cost adjustment, Vectrus’s total evaluated cost/price would have been $250,831,287,
which was lower than VS2’s cost/price. AR 6391. As a result, GAO recommended that
the Army terminate the task order issued to VS2 and issue the award, instead, to
Vectrus, “if otherwise proper.” AR 6392.

       Following GAO’s decision, the Agency considered its options6 and, ultimately,
elected to follow GAO’s recommendation to award the task order to Vectrus. AR 6393,
6396-97. On November 10, 2020, the Army notified VS2 that its contract award would

6   Following GAO’s decision, the Army was faced with two options:
                COA 1: Accept GAOs recommendation. Take corrective action by
                T4Cing VS2 Task Order and issue the task order to Vectrus as the
                apparent low- cost/price acceptable offeror with a substantial
                confidence rating for past performance, if otherwise proper.
                COA 2: Not accept/disregard GAO’s recommendation. Proceed
                with award to VS2 which would require: 1. a reasonable rationale
                as to why the GAO got its decision wrong, or 2. compelling reasons.
                To move forward with this approach, the Sec Army must approve,
                with AMC Concurrence.
AR 6393. “T4Cing” presumably refers to the issuance of a termination for convenience.
                                                8
be terminated for convenience. AR 5675. On December 4, 2020, the Army officially
awarded the contract to Vectrus. AR 5686.

       On December 11, 2020, VS2 filed a protest at GAO challenging the Army’s
decision to award the contract to Vectrus. AR 6472. On February 25, 2021, GAO
dismissed VS2’s protest, holding that it was an untimely request for reconsideration of
the Vectrus protest decision and that at least one argument, regarding past performance,
should have been raised in that earlier GAO proceeding. AR 6765-72.

   II.    PROCEDURAL HISTORY

       On March 4, 2021, VS2 filed its complaint in this Court. ECF No. 1. On April 15,
2021, VS2 filed a motion to amend its complaint, which this Court granted. ECF No. 26
(“Am. Compl.”). VS2 asserts in its amended complaint that: (1) the Army implemented
corrective action based on a GAO decision and recommendation that were irrational; (2)
the Army irrationally failed to consider the performance risk resulting from Vectrus’s
proposal to absorb a significant sum of the performance costs; (3) the Army never
considered how the proposed cost absorption impacted Vectrus’s responsibility; (4)
Vectrus should not have received a past performance rating sufficient to have been
considered for award in the first place because of poor performance on other Army
contracts; and (5) Vectrus should not have been considered for award because its
proposal deviated from the terms of the Solicitation by substituting lower-cost labor
categories for those specified in the TD-01 Solicitation spreadsheet offerors were
required to complete. Am. Compl. at 2-5. Vectrus filed an unopposed motion to
intervene, which this Court granted. ECF No. 10, Minute Order (Mar. 5, 2021).

       On March 25, 2021, the government filed the administrative record. ECF No. 24.
On May 3, 2021, the parties filed their motions for judgment on the administrative
record. ECF Nos. 29-2 (“Pl. MJAR”), 30 (“Intv. MJAR”), 31 (“Def. MJAR”). On June 14,
2021, the parties filed their responses. ECF Nos. 37 (“Pl. Resp.”), 38 (“Def. Resp.”), 39
(“Intv. Resp.”). On July 13, 2021, the Court held oral argument on the parties’ pending
motions. ECF Nos. 40, 42 (“Oral Arg. Tr.”).

   III.   JURISDICTION AND STANDING

        The Tucker Act, as amended by the Administrative Dispute Resolution Act of
1996, Pub. L. No. 104-320, 110 Stat. 3870, provides this Court with “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.” 28 U.S.C. § 1491(b)(1). “An
interested party is an actual or prospective bidder whose direct economic interest
would be affected by the award of the contract.” Digitalis Educ. Sols., Inc. v. United
States, 664 F.3d 1380, 1384 (Fed. Cir. 2012). To satisfy the “direct economic interest”
                                            9
requirement in a post-award bid protest, a 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) (quoting Alfa Laval Separation, Inc. v. United States, 175 F.3d
1365, 1367 (Fed. Cir. 1999)).

      Neither the government nor Vectrus contends that VS2 lacks standing to
maintain its amended complaint.

   IV.    STANDARD OF REVIEW

        Judgment on the administrative record pursuant to RCFC 52.1 “is properly
understood as intending to provide for an expedited trial on the record.” Bannum, Inc.
v. United States, 404 F.3d 1346, 1356 (Fed. Cir. 2005). The rule requires the Court “to
make factual findings from the record evidence as if it were conducting a trial on the
record.” Id. at 1354. The Court asks whether, given all the disputed and undisputed
facts, a party has met its burden of proof based on the record evidence. Id. at 1356–57.

        Generally, in an action brought pursuant to § 1491(b) of the Tucker Act, the
Court reviews “the agency’s actions according to the standards set forth in the
Administrative Procedure Act, 5 U.S.C. § 706.” Nat’l Gov't Servs., Inc. v. United States,
923 F.3d 977, 981 (Fed. Cir. 2019). Pursuant to the APA standard of review, the Court
asks “whether the agency’s action was arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law.” Id. (quoting 5 U.S.C. § 706(2)). The Court must
“determine whether ‘(1) the procurement official’s decision lacked a rational basis; or
(2) the procurement procedure involved a violation of regulation or procedure.’” Id.
(quoting Weeks Marine, Inc. v. United States, 575 F.3d 1352, 1358 (Fed. Cir. 2009)).

       “When a challenge is brought on the first ground, the test is whether the
contracting agency provided a coherent and reasonable explanation of its exercise of
discretion, and the disappointed bidder bears a heavy burden of showing that the
award decision had no rational basis.” Banknote Corp. of Am., Inc. v. United States, 365
F.3d 1345, 1351 (Fed. Cir. 2004) (internal citations omitted). The Court thus must
determine whether “the agency entirely failed to consider an important aspect of the
problem, offered an explanation for its decision that runs counter to the evidence before
the agency, or [the decision] is so implausible that it could not be ascribed to a
difference in view or the product of agency expertise.” Ala. Aircraft Indus., Inc.–
Birmingham v. United States, 586 F.3d 1372, 1375 (Fed. Cir. 2009) (quoting Motor Vehicle
Mfrs. Ass'n of the United States v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)).
An agency’s decision also may be arbitrary and capricious “if the agency has relied on
factors which Congress has not intended it to consider.” Technica LLC v. United States,
142 Fed. Cl. 149, 154 (2019) (quoting Motor Vehicle Mfrs. Ass'n, 463 U.S. at 43). “When a
challenge is brought on the second ground, the disappointed bidder must show a clear
and prejudicial violation of applicable statutes or regulations.” Impresa Construzioni
                                             10
Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1333 (Fed. Cir. 2001) (citing
Kentron Hawaii, Ltd. v. Warner, 480 F.2d 1166, 1169 (D.C. Cir. 1973)).

        Further, “[w]hen applying [the arbitrary and capricious] standard of review in
the context of reviewing an agency’s decision to follow a GAO recommendation, [the
Federal Circuit has] stated that an agency’s decision lacks a rational basis if it
implements a GAO recommendation that is itself irrational.” Turner Const. Co. v. United
States, 645 F.3d 1377, 1383 (Fed. Cir. 2011) (citing Centech Grp. v. United States, 554 F.3d
1029, 1039 (Fed. Cir. 2009), and Honeywell, Inc. v. United States, 870 F.2d 644, 648 (Fed.
Cir. 1989)). The controlling inquiry is thus “whether the GAO’s recommendation was
itself rational.” Raytheon Co. v. United States, 121 Fed. Cl. 135, 151, aff’d, 809 F.3d 590
(Fed. Cir. 2015).

    V.     THE BLUE & GOLD WAIVER RULE DOES NOT GENERALLY
           PRECLUDE VS2’S PROTEST

        Vectrus argues at length that the Federal Circuit’s decision in Blue & Gold Fleet,
L.P. v. United States, 492 F.3d 1308, 1313 (Fed. Cir. 2007), “binds the Court of Federal
Claims” and “applies equally to solicitation defects and conflicts of interest as [well as]
to corrective action challenges.” Intv. MJAR at 16. Vectrus thus maintains that Blue &
Gold requires the dismissal of all of VS2’s claims in this case because VS2 “objected” to
the Agency’s actions at issue “only after the Agency completed its corrective
action . . . .” Id. at 19-20. This Court is in complete agreement with Vectrus that
“[u]nless the Supreme Court or an en banc decision of the Federal Circuit” decides
otherwise, “binding precedent requires this Court to continue to apply the Blue & Gold
waiver rule in accordance with the broadly applicable logic that underlies it.” Id. at 17.
In that regard, there is no question that the Federal Circuit repeatedly has applied and
affirmed the vitality of the Blue & Gold waiver rule. 7 While this Court ultimately

7 Moore’s Cafeteria Servs. v. United States, 314 F. App’x 277, 279 (Fed. Cir. 2008) (“[W]e agree with
the trial court that [plaintiff] waived the ability to challenge the terms of the solicitation by
failing to object prior to the close of bidding.”); Burney v. United States, 499 F. App’x 32, 34 (Fed.
Cir. 2012) (“But if the solicitation or Amendment 1 was flawed, then Burney was required to
object before the award.”); Bannum, Inc. v. United States, 779 F.3d 1376, 1380 (Fed. Cir. 2015) (“A
bidder that challenges the terms of a solicitation in the Court of Federal Claims generally must
demonstrate that it objected to those terms ‘prior to the close of the bidding process.’ If it
cannot do so, the bidder ‘waives its ability to raise the same objection afterwards in a § 1491(b)
action.’” (quoting Blue & Gold, 492 F.3d at 1315)); Per Aarsleff A/S v. United States, 829 F.3d 1303,
1313 (Fed. Cir. 2016) (“A patent defect triggers the obligation to challenge the solicitation
language and failure to do so generally constitutes waiver.”); Eskridge & Assocs. v. United States,
955 F.3d 1339, 1345 n.5 (Fed. Cir. 2020) (“To the extent that Eskridge is protesting the terms of
the 2018 Solicitation, such a challenge is untimely.”); Land Shark Shredding, LLC v. United States,
842 F. App’x 589, 593 (Fed. Cir. 2021) (citing Blue & Gold, 492 F.3d at 1313, in support of holding
that plaintiff-appellant “has forfeited any challenge to the application of FAR 13.106-3 to this
solicitation by not raising it while the procurement was pending”).
                                                  11
disagrees with the government and Vectrus regarding just how “broadly applicable”
the Blue and Gold waiver rule is, Intv. MJAR at 17, the parties’ Blue & Gold argument
deserves a more detailed analysis here.

        In Blue & Gold, the Federal Circuit held, for the first time, “that a party who 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 waives its ability to raise
the same objection subsequently in a bid protest action in the Court of Federal Claims.”
492 F.3d at 1313. Although this “waiver rule” has been criticized as “a judicially-created
time bar[,]” see Inserso Corp. v. United States, 961 F.3d 1343, 1353 (Fed. Cir. 2020) (Reyna,
J., dissenting), 8 the Federal Circuit’s holding in Blue & Gold is rooted (albeit somewhat
loosely) in the statutory text providing this Court with jurisdiction to decide
procurement-related actions:

               Section 1491(b) of title 28 U.S. Code provides the Court of
               Federal Claims with “jurisdiction to render judgment on an
               action by an interested party objecting to a solicitation by a
               Federal agency.” 28 U.S.C. § 1491(b)(1). In doing so, the
               statute mandates that “the courts shall give due regard to the
               interests of national defense and national security and the need
               for expeditious resolution of the action.” Id. § 1491(b)(3)
               (emphasis added). Recognition of a waiver rule, which
               requires that a party object to solicitation terms during the
               bidding process, furthers this statutory mandate.

Blue & Gold, 492 F.3d at 1313 (emphasis in original). 9 In essence, then, the Federal
Circuit in Blue & Gold did nothing more than operationally-define the nebulous
statutory command in § 1491(b)(3) as imposing a per se deadline for challenges to the
terms of a solicitation. Id. at 1315 (explaining that “while it is true that the jurisdictional
grant of 28 U.S.C. § 1491(b) contains no time limit requiring a solicitation to be
challenged before the close of bidding, the statutory mandate of § 1491(b)(3) for courts

8See ATSC Aviation, LLC v. United States, 141 Fed. Cl. 670, 693 (2019) (addressing the
government’s argument “that COMINT Systems Corp. v. United States, 700 F.3d 1377 (Fed. Cir.
2012), expanded the judicially-created [Blue & Gold] waiver rule”).
9Inserso, 961 F.3d at 1349 n.1 (explaining that Blue & Gold “establishes a ‘waiver rule’ under a
specific statutory authorization—the congressional command that bid-protest jurisdiction under
28 U.S.C. § 1491(b) be exercised with ‘due regard to the ... need for expeditious resolution of the
action’” (quoting 28 U.S.C. § 1491(b)(3))); Bannum, 779 F.3d at 1380 (“Our waiver rule
implements Congress's directive in the Administrative Dispute Resolution Act (ADRA) of 1996,
Pub. L. No. 104–320, § 12, 110 Stat. 3870, 3874, that courts ‘shall give due regard to ... the need
for expeditious resolution’ of protest claims.” (quoting 28 U.S.C. § 1491(b)(3))); SEKRI, Inc. v.
United States, 152 Fed. Cl. 742, 753 (2021) (noting that “the majority in Inserso firmly grounded
Blue & Gold Fleet’s waiver rule in the statutory text of 28 U.S.C. § 1491(b)(3)”).
                                                12
to ‘give due regard to ... the need for expeditious resolution of the action’ and the
rationale underlying the patent ambiguity doctrine favor recognition of a waiver rule”).

        The government and Vectrus contend that Blue & Gold should apply “to
corrective action challenges” and, more broadly, to any “alleged problem in the
procurement process.” Intv. MJAR at 14-15 (Vectrus arguing that “[i]f an offeror
identifies an alleged problem in the procurement process, it is not permitted to wait for
the Government and other parties to incur time and effort to undertake that allegedly
flawed process, to wait and see who wins the contract”); see also Def. MJAR at 11
(government arguing that “both the Court of Appeals for the Federal Circuit and this
Court have expanded the reasoning of Blue & Gold beyond its original scope” and that
“this Court has frequently held that waiver pursuant to Blue & Gold applies to a
protestor who waits to contest a corrective action until after the agency has issued a
new award”). VS2 counters that “[t]he Federal Circuit’s expansions of Blue & Gold have
been incremental, addressing solicitation defects and anchored in considerations of
efficiency and fairness.” Pl. Resp. at 5.

        In resolving the parties’ disagreement regarding whether VS2’s action is timely,
the Court begins with the plain language of our jurisdictional statute – the Tucker Act,
as amended, see 28 U.S.C. § 1491 – and its related statute of limitations, see 28 U.S.C
§ 2501. If this Court were writing on a tabula rasa, the issue presented would be an easy
call, as there is simply no language in either statute that makes VS2’s action here
untimely; even according to the government and Vectrus, VS2 is nowhere near the six-
year statute of limitations. 28 U.S.C. § 2501 (“Every claim of which the United States
Court of Federal Claims has jurisdiction shall be barred unless the petition thereon is
filed within six years after such claim first accrues.”). While 28 U.S.C. § 1491(b)(3)
commands that the Court consider “the need for expeditious resolution of the action[,]”
that does not, by its plain terms, dictate dismissal of an action, but rather “limits the
relief that can be granted.” SEKRI, 152 Fed. Cl. at 753 (“The court, for example, cannot
grant relief to a protestor who challenges the terms of a solicitation years after the
proposal deadline, even if the protestor’s complaint is filed before the statute of
limitations.”).

       Notwithstanding the absence of plain statutory language precluding VS2’s
claims here as untimely, this Court is, of course, bound to follow the Federal Circuit’s
decisions, including its Blue & Gold waiver rule and its later applications of that rule.
The rationale for the Blue & Gold waiver rule – albeit based upon the statutory
command in 28 U.S.C. § 1491(b)(3) – is narrow:

              In the absence of a waiver rule, a contractor with knowledge
              of a solicitation defect could choose to stay silent when
              submitting its first proposal. If its first proposal loses to
              another bidder, the contractor could then come forward with
              the defect to restart the bidding process, perhaps with
                                            13
              increased knowledge of its competitors. A waiver rule thus
              prevents contractors from taking advantage of the
              government and other bidders, and avoids costly after-the-
              fact litigation. Accordingly, the same reasons underlying
              application of the patent ambiguity doctrine against parties to
              a government contract speak to recognizing a waiver rule
              against parties challenging the terms of a government
              solicitation.

Blue & Gold, 492 F.3d at 1314.

        As noted above, the Federal Circuit thus limited its holding to a bright-line
deadline for challenging the terms of a solicitation: “a party who 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 waives its ability to raise the same objection
afterwards in a § 1491(b) action in the Court of Federal Claims.” Id. at 1315 (emphasis
added). Indeed, there is no suggestion whatsoever in Blue & Gold that its waiver rule
applies to anything other than an action challenging the terms of a solicitation. See
Weeks Marine, Inc. v. United States, 575 F.3d 1352, 1363 (Fed. Cir. 2009) (“In Blue & Gold
Fleet we held ‘that a party who 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 waives its ability to raise the same objection subsequently in a bid
protest action in the Court of Federal Claims.’” (quoting Blue & Gold, 492 F.3d at 1313));
Eskridge, 955 F.3d at 1345 n.5 (explaining Blue & Gold, 492 F.3d at 1313, as “holding that
a party waives the ability to object to the terms of a solicitation if it fails to do so before
the close of the bidding process”). Accordingly, the Court agrees with VS2 that “Blue &
Gold does not articulate a rigid deadline that inescapably applies whenever an offeror
might possibly have lodged its protest before contract award.” Pl. Resp. at 5.

       But what about the Federal Circuit’s subsequent applications of Blue & Gold? At
oral argument, the Court expressed skepticism – prematurely, as it turns out – of the
notion that the Blue & Gold waiver rule might apply in situations where there is no
bright-line, date-certain filing deadline that a plaintiff could determine in advance (e.g.,
the proposal due date for solicitation protests). Oral Arg. Tr. 38-39. In that regard, the
Court challenged the government to identify precisely “[w]hen did Plaintiff have to file
this protest with this Court?” Id. at 38:21-22. The government conceded that “[t]here
was not a specific date[,]” id. at 38:25, but asserted that the government was not
“arguing for anything per se here” and that “the lack of a . . . concrete firm deadline is
not prohibitive.” Id. at 39:11-14. In response to a follow-up question from the Court,
the government relied upon COMINT and Inserso as the two Federal Circuit decisions
that best support the government’s position regarding the application of Blue & Gold to
the facts and circumstances of this case. Id. at 39:16-20.

                                              14
       After further review of COMINT and Inserso, the Court agrees with the
government that the lack of a determinate, date-certain deadline does not preclude the
application of the Blue & Gold waiver rule. Put differently, the fact that VS2 did not
know precisely when the government was going to award the contract at issue here to
Vectrus – following the first GAO decision – does not preclude the application of the
Blue & Gold waiver rule. Indeed, there is a fair amount of language in COMINT and
Inserso that generally favors the government’s and Vectrus’s view. See, e.g., COMINT,
700 F.3d at 1382 (“The same policy underlying Blue & Gold supports its extension to all
pre-award situations.”); id. at 1383 (citing 4 C.F.R § 21.2 for the position that “[u]nless
the basis for the protest becomes apparent later than ten days before the award, the
GAO does not permit a disappointed bidder to wait until after the award” and that “[i]t
would be incongruous to bar later GAO protests but to permit a later court challenge”);
Inserso, 961 F.3d at 1352 (“Because a bidder in the small-business competition exercising
reasonable and customary care would have been on notice of the now-alleged defect in
the solicitation long before the awards were made, Inserso forfeited its right to raise its
challenge by waiting until awards were made.” (emphasis added)).

       After further consideration, however, the Court stands by its initial conclusion,
expressed during oral argument, that Blue & Gold does not preclude VS2’s action. In
Inserso, the Federal Circuit explained its previous decisions as follows:

              In Blue & Gold Fleet, L.P. v. United States, we held that “a party
              who 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 waives its
              ability to raise the same objection subsequently in a bid
              protest action in the Court of Federal Claims.” 492 F.3d 1308,
              1313 (Fed. Cir. 2007). We have since held that this reasoning
              “applies to all situations in which the protesting party had the
              opportunity to challenge a solicitation before the award and
              failed to do so.” COMINT Systems Corp. v. United States, 700
              F.3d 1377, 1382 (Fed. Cir. 2012). The Court of Federal Claims
              has correctly applied this rule in organizational-conflict-of-
              interest cases, including cases dealing with the disclosure of
              pricing information during debriefing. See Ceres Envtl.
              Services, Inc. v. United States, 97 Fed. Cl. 277, 310 (2011).

Inserso, 961 F.3d at 1349 (emphasis added to COMINT quote).

        As the Court understands these cases applying Blue & Gold, all the Federal
Circuit did was shift, until the contract award date, the cut-off for a challenge to a
solicitation that would not have been possible prior to the proposal due date. See Pl.
Resp. at 5-6 (VS2 arguing that “this solicitation-only scope has remained from COMINT
to the more recent Inserso”).
                                             15
        For example, in COMINT, an agency amended the solicitation “after the bidding
process closed,” but the plaintiff waited until after contract award to protest the
amendment. COMINT, 700 F.3d at 1382. The Federal Circuit held: “[W]here bringing
the challenge prior to the award is not practicable, it may be brought thereafter. But,
assuming that there is adequate time in which to do so, a disappointed bidder must
bring a challenge to a solicitation containing a patent error or ambiguity prior to the
award of the contract.” Id. Thus, COMINT may be read as expanding the time in which
a solicitation challenge may be filed in this Court where the grounds for the protest did
not exist prior to the proposal due date – a common sense proposition given that a
plaintiff could not, without the advantage of a time machine or crystal ball, have known
about the basis for its action. On the other hand, the fact that the award date is not
known to the offerors does not mean that a prospective plaintiff may adopt a wait-and-
see posture. Hence, the Federal Circuit moved the deadline for such solicitation
challenges (arising after the proposal due date) to the contract award date even though
that precise date may not be known to a would-be plaintiff.

       Inserso similarly involved a solicitation challenge. Inserso, 961 F.3d at 1350
(holding that “Inserso should have challenged the solicitation before the competition
concluded”); id. at 1352 (“Because a bidder in the small-business competition exercising
reasonable and customary care would have been on notice of the now-alleged defect in
the solicitation long before the awards were made, Inserso forfeited its right to raise its
challenge by waiting until awards were made.”).

        Finally, in Ceres – a decision the Federal Circuit cited with approval in Inserso –
this Court clearly addressed a solicitation protest. Ceres Envtl. Servs., 97 Fed. Cl. at 310
(2011) (“If Plaintiff believed that the procedure for the recompetition had to be amended
to ensure that all offerors’ pricing be released, it had an obligation to raise this
argument prior to the closing date for receipt of proposals. Plaintiff’s attempt to challenge
the ground rules of the bidding process after award is untimely.” (emphasis added)
(citing Blue & Gold, 492 F.3d at 1313)).

        Although the government understandably points to other decisions from this
Court putatively involving protests other than those based upon a challenge to a
solicitation, 10 the undersigned will not expand Blue & Gold any further than the Federal
Circuit already has. In that regard, all of these cases – Blue & Gold, COMINT, and even
Inserso – are nothing more than per se rules implementing what is otherwise broad,
hortatory statutory language that is more appropriately read as generally placing
weight on specific considerations in the context of the trial court’s deciding whether to

10 See, e.g., Def. Resp. at 2-4 (discussing, among other decisions, Sonoran Tech. & Pro. Servs., LLC
v. United States, 135 Fed. Cl. 28, 35 (2017)).
                                                 16
issue equitable relief – a decision within its sound discretion – and not as a per se
restriction on a plaintiff’s ability bring claims in the first instance. 11

       None of that is to say that this Court takes any issue whatsoever with the Blue &
Gold waiver rule, in general, or any of its Federal Circuit progeny. Indeed, even putting
aside that this Court is bound to follow all of those decisions – reading them in
harmony as best as possible – the waiver rule as applied in the context of a solicitation
challenge is, in this Court’s view, an eminently practical and a reasonable instantiation
of 28 U.S.C. § 1491(b)(3). 12 But, there is an untraversable gulf between that rule, on the
one hand – even as implemented in COMINT and Inserso – and the wholesale adoption

11See Inserso, 961 F.3d at 1355 (Reyna, J., dissenting) (“When both provisions are read in
harmony, the ‘due regard’ provision refers to the [Court of Federal Claims’] need to consider
expeditious resolution of bid protests when deciding the proper relief.”). The Court thus agrees
with Judge Hertling’s proposed approach to reconciling Blue & Gold, the statutory basis for its
waiver rule, and Judge Reyna’s dissent in Inserso:
                Given the waiver rule’s statutory underpinning (28 U.S.C.
                § 1491(b)(3)) and the six-year statute of limitations of 28 U.S.C.
                § 2501, the waiver rule may support a different outcome if the
                protestor seeks bid preparation costs. See Inserso, 961 F.3d at 1352-
                56 (Reyna, J., dissenting) (raising objections to the Blue & Gold Fleet
                waiver rule). Because protesters are primarily interested in
                securing the contract award, the cases have focused on claims for
                injunctive relief. The distinction between the type of relief sought
                in the application of Blue & Gold Fleet appears to remain unexplored
                territory. One possible course through which the Federal Circuit
                will resolve the various strands of precedent, including its labeling
                of the waiver rule in Inserso, 961 F.3d at 1352, as a limitation on
                relief, and wrestle with the substance of Judge Reyna’s dissent
                would be to hold that waiver under Blue & Gold Fleet ultimately
                does not compel dismissal, under either RCFC 12(b)(1) or (b)(6).
                Instead, the Federal Circuit could determine that the waiver rule
                forecloses a court’s ability to grant injunctive relief. That approach,
                which seems most consistent with the language of § 1491(b)(3) on
                which the waiver rule is based, would leave open the possibility
                that plaintiffs could still obtain bid preparation costs, even in the
                face of a Blue & Gold Fleet waiver. In any event, the Federal Circuit
                has not yet even started down this path. . . .
SEKRI, 152 Fed. Cl. at 753 n.5; cf. DGR Assocs., Inc. v. United States, 690 F.3d 1335, 1343 (Fed. Cir.
2012) (Blue & Gold waiver rule is not jurisdictional).
12DGR Assocs., 690 F.3d at 1343 (“In Blue & Gold Fleet the point made is straight-forward—if
there is a patent, i.e., clear, error in a solicitation known to the bidder, the bidder cannot lie in
the weeds hoping to get the contract, and then if it does not, blindside the agency about the
error in a court suit.”).
                                                   17
of GAO’s timeliness rules, on the other. The latter is what the government, in essence,
appears to be asking the Court to do in this case. See Def. Resp. at 4; Pl. Resp. at 11. 13
But, the mere fact that the Federal Circuit has cited such GAO timeliness regulations on
occasion to explain the policy considerations underlying the Blue & Gold waiver rule
does not mean that 28 U.S.C. § 1491(b)(3) may be read to import those regulations,
verbatim, into the Tucker Act (as amended by ADRA). If Congress wanted to enact
such timing constraints, thereby imposing the same or similar GAO rules on this Court,
Congress surely knows how to do so. In the absence of such duly enacted legislation,
signed into law by the President, this Court will not take an editor’s red pen to our
jurisdictional statute or the applicable statute of limitations. 14

        Finally, the factual circumstances at issue here are readily distinguishable from
those in COMINT and Inserso. VS2, in this case, could not have immediately filed suit
challenging GAO’s October 2020 decision because, as VS2 points out, “GAO’s
recommending corrective action did not, on its own, guarantee that the Army would
implement it.” Pl. Resp. at 4. And, while GAO held that VS2’s challenge to the
Agency’s subsequent contract award to Vectrus – i.e., as a result of implementing
GAO’s recommendation – was untimely, VS2 cannot be said to have sat on its rights.
To the contrary, VS2 protested that award at GAO within seven days, on December 11,
2020. AR 6472. This Court agrees with VS2 that the fact that GAO ultimately
determined that VS2’s protest of that award was untimely does not mean that VS2
forfeited its cause of action in this Court pursuant to 28 U.S.C. § 1491(b). In that regard,
GAO’s timeliness issue must not have been so straightforward, given that, as VS2
points out, GAO’s decision was not issued until “much later,” Pl. Resp. at 9, on
February 25, 2021. AR 6765-72. 15 Following that decision, VS2 proceeded to this Court

13See also Oral Arg. Tr. 89:13-25 (suggesting application of GAO’s ten day rule); but see id. at
40:3-5 (government counsel acknowledging “that this Court has not adopted GAO’s specific 10-
day rule”).
14In the interest of complete candor, this Court agrees with Judge Reyna’s dissent in Inserso at
least insofar as applied to the government’s argument in favor of yet further expansion of the
Blue and Gold waiver rule. See ATSC Aviation, 141 Fed. Cl. at 695 (“The waiver rule generally
operates against challenges to the solicitation, against which ATSC makes no challenge. The
Federal Circuit has never addressed the applicability of the waiver rule outside the context of a
protest to a solicitation.”).
15According to at least one commentator, GAO’s timeliness decision in this case raises yet
further difficulties. E. Ransom & R. Sneckenberg, FEATURE COMMENT: Speak Now Or Forever
Hold Your Protest: Intervenor’s Silence Waives Future Protest Grounds, 63 No. 15 Government
Contractor ¶ 107 (Apr. 14, 2021) (“Does this mean an awardee must, while defending its award,
preemptively challenge every negative finding about its own proposal—e.g., every weakness,
every negative comment about its past performance, every arguably too-low adjectival rating—
as well as assert every possible additional weakness or negative comment that the protester’s
proposal may have warranted? One would hope not, as doing so could needlessly complicate
protests and result in a significant waste of resources on protective challenges never intended to
                                                  18
almost immediately, filing its original complaint here within a week, on March 4, 2021.
That is a far cry from the factual scenario in COMINT, in which the plaintiff “had two
and a half months between the issuance of Amendment 5 and the award of the contract
in which to file its protest[,]” which the Federal Circuit held “was more than an
adequate opportunity to object” and where the consequence of a successful protest
would have been to “restart the bidding process.” COMINT, 700 F.3d at 1383. Here,
there is no point at which VS2 unduly delayed pursuing its claim – let alone by any
duration approaching two and half months – nor does VS2 seek an order restarting the
bidding process. ATSC Aviation, 141 Fed. Cl. at 696 (rejecting application of Blue & Gold
waiver rule and noting that plaintiff’s “protest, if successful, would neither restart the
bidding process nor interrupt a contract execution”).

        Similarly, in Inserso, the Federal Circuit concluded that the plaintiff in that case
could have objected to the terms of the solicitation before proposals were even due. Inserso,
961 F.3d at 1352 (“Had Inserso objected to the solicitation before the submission of final
proposals, raising its concern that some bidders might have received information by
participating in the full-and-open competition, DISA could have confirmed that an
unequal disclosure occurred and provided the non-proprietary debriefing information
to all bidders in the small-business competition.”). In marked contrast, VS2’s action in
this Court, challenging the Agency’s corrective action (and the subsequent contract
award), could not have been raised “before the submission of final proposals.” Id.

        Although both Vectrus and the government invite “the Court to weigh the
totality of the circumstances,” Oral Arg. Tr. 90:2-4, in deciding whether to hold VS2’s
claims here waived pursuant to Blue & Gold, the Court concludes that, aside from the
limited circumstances in which the Federal Circuit has done otherwise, any waiver
doctrine should be applied in narrowly defined circumstances: in particular, where a
prospective plaintiff can determine a precise filing deadline for its complaint. A
“totality of the circumstances” test is not predictable or workable and, most
importantly, not required by the Federal Circuit. That said, the “totality of the
circumstances” are appropriately considered – pursuant to 28 U.S.C. § 1491(b)(3) – in
terms of the propriety of injunctive relief in any given case. In declining to find VS2’s
action here waived, the Court is not suggesting that timing issues are irrelevant.
Rather, all the Court holds is that the Blue & Gold waiver rule does not apply here. To
the extent that the timing of VS2’s protest may have an insalubrious impact on the
procurement process, that is a question for this Court to consider with regard to
permanent injunctive relief, but does not require the Court to find VS2’s claims waived.

be litigated. . . . VS2 does not seem to go so far, as it emphasized the unique evaluation scheme
and the threshold standing and jurisdictional issues that could have been raised. Going
forward, however, these waiver issues are considerations that counsel for intervenors will have
to make[.]”).
                                               19
   VI.    GAO’S VECTRUS DECISION IS ERRONEOUS AS A MATTER OF LAW

        As described above, GAO, in sustaining Vectrus’s protest, concluded that where
“a firm offers a cap or ceiling on a particular cost that effectively limits the
government’s liability and shifts liability for the cost to the offeror, any upward
adjustment to the capped cost is improper.” AR 6391 (citing Affordable Engineering
Services, Inc., B-407180.4, 2015 CPD ¶ 334, 2015 WL 7450123 (Aug. 21, 2015)). Rather,
according to GAO, “the only appropriate consideration for the agency is whether the
offeror may be found responsible in light of the proposed assumption of liability.” Id.
In this case, GAO determined that the Agency “made what amounts to two
unwarranted assumptions: first that Vectrus was not actually offering what it had
proposed; and second, that Vectrus was not financially capable of absorbing the cost
savings it had proposed, even though there is nothing in the record to show that the
agency ever made a responsibility determination with respect to Vectrus.” Id.
Accordingly, GAO held that “the agency improperly added $19,719,898 to the Vectrus
cost/price proposal for evaluation and source selection purposes” and that, “absent the
agency’s error, Vectrus offered the lowest evaluated cost/price among the three
competitive range offerors[.]” Id.

       Instead of recommending that the Agency both reevaluate its award decision
“absent the agency’s evaluation error” (i.e., after removing the cost adjustment) and
consider the assessed performance risk triggered by the proposed cost absorption, GAO
“recommend[ed] that the agency issue the task order to Vectrus as the apparent low-
cost/price acceptable offer[]” – thereby effectively flipping the award. AR 6392; see also
AR 6766-67 (GAO explaining its earlier decision “that Vectrus was entitled to receive
the task order based on the express terms of the RFP”). In GAO’s view, “[a]ny question
concerning a firm’s ability to perform the contract in light of a capped cost that is below
the actual cost is a matter of the firm’s responsibility.” AR 6771 (citing GAO decisions).

       VS2 argues that the Agency improperly switched awardees due to a flawed GAO
decision that, in effect, “irrationally foisted back onto the Army the risk from Vectrus’s
Business Policy Decision that the Army had reasonably identified and taken measures
to mitigate.” Pl. Resp. at 13. According to VS2, “[t]he result was a near-bright-line rule
that barreled over considerations such as the Solicitation’s instructions and whether the
Army even found the absorption desirable or feasible.” Pl. MJAR at 26. The Court
agrees with VS2 and concludes that GAO’s decision was erroneous as a matter of law,
that the Agency thus irrationally reversed its position based upon GAO’s decision, and
that the resulting contract award to Vectrus failed to comply with the Solicitation.

        To understand where, in the Court’s view, GAO and the Agency went wrong,
the Court must first explain the rationale underlying the FAR’s requirement for a cost
realism analysis generally, as well as the specific implications of the analysis performed
in this case.

                                            20
         The FAR defines the term “Cost realism” as meaning that an offeror’s proposed
costs:

               (1) Are realistic for the work to be performed;

               (2) Reflect a clear understanding of the requirements; and

               (3) Are consistent with the various elements of the offeror’s
               technical proposal.

FAR 2.101. The requirement to conduct a cost realism analysis is contained in several
FAR provisions. FAR 15.305, for example, provides that “[w]hen contracting on a cost-
reimbursement basis, evaluations shall include a cost realism analysis to determine
what the Government should realistically expect to pay for the proposed effort, the
offeror’s understanding of the work, and the offeror’s ability to perform the contract.” FAR
15.305(a)(1) (emphasis added). Similarly, FAR 15.404-1 provides that “[c]ost realism
analysis” is used “to determine whether the estimated proposed cost elements are
realistic for the work to be performed; reflect a clear understanding of the requirements; and
are consistent with the unique methods of performance and materials described in the
offeror’s technical proposal.” FAR 15.404-1(d)(1) (emphasis added).

        The Solicitation reflected the FAR’s requirements for a cost realism analysis in
numerous provisions. Section M.4 (“Evaluation Methodology”), for example, provides
that “[t]he Cost/Price Factor will be evaluated for cost realism and price
reasonableness.” AR 145 (RFP § M.4.1). The Solicitation further provides:

               The proposal must clearly and unambiguously reflect the
               Offeror’s intended approach and establish cost credibility.
               Any inconsistency, whether real or apparent, between
               promised performance and proposed cost must be adequately
               explained in the proposal. An offeror’s failure to adequately
               explain an inconsistency between promised performance and
               cost may result in a finding of Technical Unacceptability or a
               finding that a proposed cost is unrealistic for the work to be
               performed.

AR 145 (RFP § M.4.2); see also AR 125 (RFP § L.4.1.3), AR 135 (RFP § L.5.4.1.3), AR 135-
136 (RFP § L.5.4.1.6 (requiring that “[t]he cost/price proposed must be consistent with
the Offeror’s Technical Proposal” and cautioning that while “[c]onsistency between the
Offeror’s Cost/Price and Technical Proposals reflects the Offeror’s ability to perform
the effort required at the proposed amount[,]” “[a]ny significant inconsistencies, if not
adequately explained in the proposal, raise a fundamental question as to the Offeror’s
inherent understanding of the work required and its ability to perform the contract”)).

                                              21
       There are a number of other references to cost realism in the Solicitation. See, e.g.,
AR 145-46 (RFP § M.4.4.2) (“The Cost/Price Factor will be evaluated for price
reasonableness and cost realism, but it will not be assigned an adjectival rating.”).
Section M.5.3.2 specifically covers “Cost Realism Analysis” and, reflecting the FAR’s
language, provides that it “is the process of independently reviewing and evaluating
specific elements of the Offeror’s proposed cost elements to determine the following:
whether the estimated proposed cost elements are realistic for the work to be
performed; whether the proposed cost elements reflect a clear understanding of the
requirements; and whether the proposed cost elements are consistent with the unique
methods of performance described in the Technical Proposal.” AR 149.

       Of particular significance here, the Solicitation warned offerors “that the
Government has concerns with the potential for post-award performance problems if
Offerors propose unrealistically low costs” and that “[t]herefore, the Government
reserves the option of rejecting a proposal if, in the exercise of its judgment, it
determines that an Offeror's cost proposal is unrealistically low, regardless of technical
merit and/or evaluated costs.” AR 149 (RFP § M.5.3.2.1). Indeed, the Solicitation
contemplated precisely what happened in this procurement:

              For example, if as a result of the Cost Realism analysis it
              becomes clear to the Government that any necessary upward
              MPC adjustments are so substantial that they present an
              unacceptable risk (notwithstanding an assessed rating of
              acceptable under the technical factor), the proposal may be
              rejected and not further considered for award. Therefore,
              failure of the Offeror to establish the credibility of its
              proposed costs may result in a MPC adjustment being made
              to the costs proposed, and/or the proposal being rejected as
              unrealistically low and not further considered for award.

Id. (emphasis added).

       Thus, pursuant to both the FAR and the Solicitation, there are two purposes of a
cost realism analysis, necessitating distinct, albeit related, assessments.

       First, “[t]he primary purpose of cost realism analysis . . . is to prevent offerors
from gaining an advantage over competitors by proposing an unrealistically low
estimated cost.” R. Nash & J. Cibinic, Cost Realism Analysis in Negotiated Fixed Price
Contracts: Confusion at the GAO or a New Limitation on Buy-Ins?, 4 No. 10 Nash & Cibinic
Rep. ¶ 61 (Oct. 1990). The concern is that “[s]ince the contractor will be reimbursed on
the basis of costs incurred, an offeror will not suffer economic consequences by
proposing an estimated cost lower than its expected cost of performance. Thus, the

                                             22
proposal offering the lowest estimated cost may not necessarily be the proposal which
will result in the lowest cost of performance.” Id. (emphasis in original). 16

       Second, cost realism is “used to determine whether offerors understand the contract
requirements and a finding of lack of understanding leads to downgrading of the
proposal.” R. Nash & J. Cibinic, Cost Realism Analysis in Cost Reimbursement Contracts:
What are the Rules of the Game?, 5 No. 7 Nash & Cibinic Rep. ¶ 40 (July 1991) (emphasis
in original).

       Accordingly, and just as the Solicitation provides here, see AR 149 (RFP
§ M.5.3.2.1), 17 where an agency determines that an offeror’s proposed or estimated cost
is unrealistically low, an agency may not only make an upward “most probable cost”
adjustment – referred to as an “MPC” – but also may determine that the offeror’s
proposal represents an unacceptable risk to performance.

       But, what about a case in which an offeror proposes to cap its costs? While an
offeror may, indeed, propose contractually binding cost caps to avoid an upward MPC
adjustment, the offeror cannot rely upon such caps to escape the required risk
assessment. That is because where an offeror proposes to cap its cost for one or more
cost-reimbursement CLINs, the offeror effectively converts them to firm-fixed price
CLINs (i.e., where the actual costs of expected performance are otherwise projected to
exceed the cost cap). 18 In such a case, the FAR’s concern is that the selected contractor
ultimately will attempt to achieve profitability via substandard performance; a cost
realism analysis must assess that risk. Advanced Tech. Sys., Inc., B- 215124, 85-1 CPD ¶
315, 64 Comp. Gen. 344, 348 (Mar. 18, 1985) (“Assuming that higher skilled, and
presumably higher paid, contractor personnel can perform tasks at a higher speed, we
think that a contractor, who submitted unrealistically low proposed costs, would be
forced by the caps to propose less skilled, lower paid and slower personnel in order to
stay within the ceilings.”); cf. R. Nash & J. Cibinic, Cost Realism Analysis in Negotiated

16Put differently, “cost realism analysis is . . . used as a means of determining the probable cost
of performance of the work proposed by offerors and this probable cost is being used as the
evaluation factor in making the source selection decision.” R. Nash & J. Cibinic, Cost Realism
Analysis in Cost Reimbursement Contracts: What are the Rules of the Game?, 5 No. 7 Nash & Cibinic
Rep. ¶ 40 (July 1991) (emphasis in original).
17“‘Interpretation of [a bid] solicitation is a question of law’ that is reviewed de novo.” Per
Aarsleff A/S v. United States, 829 F.3d 1303, 1309 (Fed. Cir. 2016) (quoting Banknote, 365 F.3d at
1353).
18Vitro Corp., B- 247734, 92-2 CPD ¶ 202, 1992 WL 251700, *5 (Sept. 24, 1992) (“a cap, by
definition, converts at least some portion of a cost-type contract to a fixed-price contract”);
Halifax Tech. Servs., Inc., B-246236, 94-1 CPD ¶ 30, 1994 WL 20801, *7 (Jan. 24, 1994) (“[S]ince the
effect of a cap like the one here is to convert a portion of this cost-type contract to a fixed-price
contract, . . . we agree that [a cost] cap may be analogous to a below-cost bid or offer in a fixed-
price environment.”).
                                                 23
Fixed Price Contracts: Confusion at the GAO or a New Limitation on Buy-Ins?, 4 No. 10 Nash
& Cibinic Rep. ¶ 61 (Oct. 1990) (“In fixed price contracts, the purpose to be served by
conducting a cost realism analysis is to protect the Government from encountering
problems in performance caused by awarding a contract based on an unrealistically low
price. . . . Award of a contract at an unrealistically low price should only be made with a
knowledge of the risks involved.”); V. Edwards, Price Realism: A Primer, 28 Nash &
Cibinic Rep. NL ¶ 1 (Jan. 2014) (“There are two parts to price realism analysis: (1) the
analysis done to determine whether the proposed price is high enough to cover the cost
of performance and (2) the assessment of the risk arising from a below-cost price and
the effect of that risk on nonprice value.”). 19

       In this case, the Agency, during discussions, expressed significant concerns with
the lack of consistency between Vectrus’s (and its proposed subcontractors’) cost/price
and technical volumes. See, e.g., AR 2853-58 (EN 1 & EN 2); AR 2868-75 (EN 7 – EN 9).
In response, Vectrus submitted questions to the Agency, including several to better
understand the Agency’s view of Vectrus’s proposal to cap [* * *] FTEs at a cost to the
government of $[* * *] per hour. AR 2886. In particular, Vectrus asked:

                (a) If adequately explained by Vectrus in our revised
                    Assumptions narrative and Cost/Price model, is it an
                    acceptable Business Policy Decision to propose a selected
                    number of FTEs that will be invoiced to the Government
                    at the deep discount described above (and recognizing

19V. Edwards, Price Realism: A Primer, 28 Nash & Cibinic Rep. NL ¶ 1 (Jan. 2014) (“Note that
FAR does not use the term price realism, but that in common usage a cost realism analysis
performed in a fixed-price acquisition is called a price realism analysis. . . . In short, cost realism
analysis is done in cost-reimbursement acquisitions to determine whether a proposed estimated
cost is unrealistically low and, if so, what it really should be. Price realism analysis is done in
fixed-price acquisitions to determine whether a price is unrealistically low and to what degree,
and to figure out why it is low so that risk can be properly assessed.”). Thus, for example, and
by way of analogy, the FAR generally discourages the use of uncompensated overtime and
provides that contracting officers:
                [M]ust ensure that the use of uncompensated overtime in contracts
                to acquire services on the basis of the number of hours provided
                will not degrade the level of technical expertise required to fulfill
                the Government’s requirements (see 15.305 for competitive
                negotiations and 15.404–1(d) for cost realism analysis). When
                acquiring these services, contracting officers must conduct a risk
                assessment and evaluate, for award on that basis, any proposals
                received that reflect factors such as: (1) Unrealistically low labor
                rates or other costs that may result in quality or service shortfalls[.]
FAR 37.115-2.
                                                  24
                 that Vectrus would still compensate all employees IAW
                 the SCA and CBAs?

              (b) With regard to (a) above, is it also an acceptable Business
                  Policy Decision to propose to forgo hiring such deeply
                  discounted FTEs, with the understanding that: (1) mission
                  support would not be negatively impacted, (2) we are
                  basing our Business Policy Decision on documented,
                  historical experience providing equivalent support at Fort
                  Bragg, and (3) should Vectrus at some point need to hire
                  any or all of these FTEs that Vectrus would bear the full
                  cost of compensating such employees IAW the SCA or
                  CBA[s]?

AR 2886 (Question #2).

       The Agency answered Vectrus’s questions, expressing, in the process, several
concerns regarding the implications of Vectrus’s proposed approach to the ENs. For
example, the Agency noted that while Vectrus “has proposed a cost credit [that] well
exceeds the amount of fee proposed[,]” it “has not established cost credibility and/or
shown that the proposed costs are realistic for the promised performance.” AR 2887.
The Agency further observed that there was an apparent “inconsistency between the
promised performance in the technical volume and the costs proposed[.]” Id. The
Agency particularly focused on the fact that the offeror suggested “forgoing the hiring
of these [* * *] FTE[s].” Id. With respect to question (b), above, the Agency responded
in the negative (and in no uncertain terms). Id. (“No, Offerors are required to meet the
minimum requirements of the RFP.”).

        In addressing the ENs in a new “Cost/Price Volume IV,” Vectrus revised its
“Cost proposal so that the staffing priced in the Cost/Price Volume now aligns with the
staffing in the Technical Volume . . . .” AR 4400. In particular, Vectrus “adjusted [its]
Cost proposal to reflect that the SCA/CBA labor rates . . . are in accordance with . . . the
RFP by increasing the labor rate . . . from $[* * *] to the full CBA wage.” Id.; see AR
4401 (“Vectrus further acknowledges that all employees will be paid the SCA/CBA
labor rate as published in the current SCA/CBA.”). Instead of proposing select labor
rates reduced to near zero, Vectrus instead made a “Business Policy Decision” in the
form of “a cost-reduction benefit to the Government, wherein Vectrus [proposed to]
absorb[] a portion of the costs, and the associated financial risk.” AR 4401. Thus,
according to Vectrus, “there is no disconnect between our Cost/Price Volume and
Technical Volume.” Id. Vectrus asserted that “[t]o absorb these costs internally, Vectrus
will use our Corporate proceeds.” Id.; see AR 4402 (“Vectrus is a financially sound and
transparent publicly traded corporate with a strong cash position; as such, our company
is fully capable of absorbing the cost of this Business Policy Decision.”); see also AR 4404

                                            25
(“Vectrus formally acknowledges and accepts the risks and responsibilities associated
with this decision.”). Vectrus assessed a total cost reduction of more than $22 million. 20

        Notwithstanding Vectrus’s apparently bald assertion that its Business Policy
Decision “will not impact our operational approach to managing and executing the . . .
PWS technical requirements and achieving the associated . . . performance standards[,]”
AR 4421, the Agency’s cost realism analysis reasonably reached a different conclusion.
See AR 5536-5568. That analysis “determined the proposed Business Policy Decision
Cost Credit to be unrealistic for this effort” for several reasons. AR 5566. First, the
Agency was reasonably concerned about whether Vectrus intended to “forgo[] hiring
the [* * *] FTE[s] associated with [the] Cost Credit proposed[,]” noting that “[t]his
creates an inconsistency with the technical volume” and that such a “significant”
inconsistency “raise[s] a fundamental question as [to] the Offeror’s inherent
understanding of the work required and its ability to perform the contract.” Id. In that
regard, the Agency’s cost realism analysis correctly cited section M.5.3.2.1 of the RFP in
assessing “the potential for post-award performance problems if Offerors propose
unrealistically low costs.” Id. Second, and in line with that same Solicitation provision,
the Agency reasonably concluded that Vectrus’s Business Policy Decision posed risks of
performance problems: “If the Offeror does in fact plan on forgoing the hiring of
[* * *] FTE[s] . . . this poses a risk to the government and a concern for post-award
performance problems.” Id. (emphasis added). Third, the Agency found “the proposed
credit unrealistic as it would not be covered by the Offeror’s proposed fee if issues arose
during execution.” Id. This, too, is properly understood as a concern with performance
risks, as the point is that the proposed credit – or cost caps – likely will place Vectrus in
a significant loss position unless Vectrus negatively adjusts its performance to stay
profitable, hardly an unreasonable or far-fetched concern.

       To account for the risks of the Business Policy Decision, the Agency made “a
probable cost adjustment . . . in the amount of the entire credit, $17,839,964.” AR 5566;
see AR 5589 (“Vectrus [sic] proposal contained a discount labeled as a Business Decision
Cost Credit that exceeded the fee from the entire contract. It was determined that the
Government needed a Probable Cost Adjustment to make their offer more realistic.”). 21

20To avoid an upward MPC adjustment for Vectrus’s subcontractors, Vectrus instructed them
“to remove its proposed labor rate discounts and instead fully price” FTEs “by pricing each FTE
in accordance with the applicable CBA and the pricing guidance in the solicitation.” AR 4411;
see also 4408 (noting that “the total amount proposed by DA Defense has increased from a five-
year total of $[* * *] to $[* * *]” and asserting that “this resolves this EN and precludes an
MPC adjustment by the Government”).
21There were two upward cost adjustments to Vectrus’s proposal for a total amount of
$19,719,898. AR 6385 (“The principal upward adjustment was in the amount of $17,839,964 . . .
to account for certain costs that Vectrus had proposed to absorb . . . during the primary base
and option periods of performance” while “[a] second, smaller, upward adjustment was made
in the amount of $1,879,933 . . . to account for the same costs, but was allocable to a 6-month
                                                  26
The upward MPC adjustment is not itself at issue here, as the Court agrees with GAO
that the Agency erred in initially making that adjustment. That is because, as GAO
correctly explained, “where a firm offers a cap or ceiling on a particular cost that limits
the government’s liability and shifts liability for the cost to the offeror – and no other
issue calls into question the effectiveness of the cap – any upward adjustment to the
capped cost is improper.” AR 6386. GAO, however, further concluded – incorrectly –
that “[a]ny question concerning a firm’s ability to perform the contract in light of a
capped cost that is below the actual cost is a matter of the firm’s responsibility rather
than a matter to be considered by the agency in its cost realism evaluation.” Id.
Regarding that second conclusion, the Court holds that GAO erred as a matter of law.

       As demonstrated above, the FAR’s required cost realism analysis involves the
assessment of performance risk, particularly where an offeror proposes to cap its costs
such that it risks incurring a significant loss. In other words, where an agency
determines that an offeror’s proposed costs are unrealistically low for the contemplated
performance, the agency must account for that assessment in at least two ways: the
agency must consider whether to adjust the proposed costs upwards for evaluation
purposes, and it must consider whether the proposed costs are indicative of
performance risk. See AR 149 (RFP § M.5.3.2.1).

       With respect to an MPC adjustment, the agency cannot simply accept the
offeror’s proposed costs because, as GAO explained, “an offeror’s proposed costs are
not dispositive in a cost-reimbursement environment since, regardless of the costs
proposed, the government generally will be liable to the contractor for all allowable and
allocable costs incurred in connection with the performance of the contract.” AR 6386.

       But the risk of higher costs during performance is not the FAR’s only concern.
Thus, an agency must assess not only whether an MPC adjustment is necessary to cure
unrealistically low proposed costs but also – as GAO itself acknowledged in passing in
this case – whether such unrealistically low costs reflect a deficiency in the offeror’s
“understanding of the requirements.” AR 6385 (citing FAR 15.404-1). Where an offeror
agrees to cap costs during performance and suggests the possibility of having to absorb
a significant loss, an agency cannot ignore potential performance risks; if anything, an
agency’s concerns should be exacerbated. That is exactly what occurred here: the
Agency raised distinct concerns about Vectrus’s performance risk. See AR 6385 (GAO’s
acknowledging the Agency’s concern that Vectrus’s “assumption of liability would be
borne out during contract performance, especially in view of the fact that the amount of
the costs to be absorbed by Vectrus exceeded the amount of the firm’s proposed fee”).
GAO’s ultimate decision and recommendation, however, all but compelled the Agency
to ignore those findings in the administrative record. See AR 6392.

optional extension to the period of performance[.]”).
                                               27
        Moreover, while GAO ‘s decision at issue in this case relied upon Affordable Eng’g
Servs., Inc., B-407180.4, 2015 CPD ¶ 334, 2015 WL 7450123 (Aug. 21, 2015), VS2 correctly
observes that GAO erroneously omitted a key aspect of that precedent. Pl. MJAR at 26-
27 (“The result was a near-bright-line rule that barreled over considerations such as the
Solicitation’s instructions and whether the Army even found the absorption desirable or
feasible.”). In Affordable Engineering, the protester (“AES”) argued that “the Navy’s cost
realism analysis was improper because it failed to consider the performance risk
associated with [the awardee’s] proposing indirect rate caps that could result in a loss
contract.” Affordable Eng’g, 2015 WL 7450123 at *4. In rejecting AES’ argument, GAO
explained as follows:

              Our Office has long held that as a general matter, a decision
              about an awardee’s ability to perform a contract at rates
              capped below actual costs is a matter of an offeror’s
              responsibility. See, e.g., Highmark Medicare Servs., Inc., et al., B–
              401062.5 et al., Oct. 29, 2010, 2010 CPD ¶285 at 28; MCT JV,
              supra, at 13. It is only where a solicitation provision expressly
              instructs offerors not to submit unrealistically low costs that
              the risk stemming from an offeror’s decision to propose
              capped rates is a matter for the agency's consideration in the
              context of its evaluation of proposals and source selection
              decision process. See MCT JV, supra.

Id. at *4-*5 (footnote omitted) (discussing MCT JV, B-311245.2, 2008 CPD ¶ 121, 2008 WL
2907033, *12-*13 (May 16, 2008)). GAO further distinguished “the solicitation at issue”
in Affordable Engineering as “not contain[ing] any of the express and unique warnings
and language set forth in the solicitation at issue in MCT JV.” Id. at *5 (noting that “AES
has not alleged that the RFP contained any express warnings or instructions not to
submit unrealistically low costs as were present in MCT JV”). Thus, GAO “disagree[d]
with AES that the agency was required to consider the performance risk associated with
[the] capped indirect rates, and [found] that the agency properly treated the matter of
[the] indirect rate caps as a matter of responsibility.” Id. In GAO’s Vectrus decision at
issue here, none of that language from Affordable Engineering is mentioned, let alone
applied. AR 6386-92.

        Contrary to GAO’s decision in Vectrus, GAO’s Affordable Engineering decision
simply does not stand for the proposition that “[a]ny question concerning a firm’s
ability to perform the contract in light of a capped cost” is per se only “a matter of the
firm’s responsibility rather than a matter to be considered by the agency in its cost
realism evaluation.” AR 6386 (citing Affordable Eng’g, 2015 WL 7450123 at *6). The
Court is at a total loss as to how GAO in Vectrus extracted such a per se rule.

      To make matters worse, GAO’s decision in MCT JV demonstrates, if anything,
that GAO erred in Vectrus. In MCT JV, the awardee similarly proposed cost or rate
                                               28
caps, and GAO correctly held that “when offerors propose such caps, and no other issue
calls into question the effectiveness of the cap, upward adjustments to capped costs are
improper.” MCT JV, 2008 WL 2907033 at *10. On the other hand, GAO concluded:

              [T]he agency could not simply ignore the risk presented by
              these capped rates in concluding that [the awardee’s]
              proposal was the best value. As noted previously, the
              solicitation expressly admonished offerors not to propose
              unrealistically low costs because of [the Navy’s] concern that
              a proposal with unrealistically low costs due to an offeror’s
              decision to submit a proposal below its anticipated costs
              “may cause problems for the Navy as well as the contractor
              during contract performance.”

Id. at *11 (quoting the RFP at issue in that case). While the Navy argued that the
awardee’s “ability to perform at its capped rates was solely a matter concerning [its]
responsibility,” GAO rejected that argument, holding that “where, as here, the
solicitation expressly instructs offerors not to submit unrealistically low costs or prices,
the risk stemming from an offeror’s decision to propose unrealistically low capped rates
is a matter for the agency’s consideration in the context of its evaluation of proposals
and source selection decision process.” Id. Accordingly, GAO determined that the
agency erred in failing to consider the awardee’s “capping of its rates in that context” as
“inconsistent with the terms of the solicitation.” Id.

       Critically, the RFP language upon which GAO relied in MCT JV is nearly
identical to the Solicitation language contained in the RFP at issue in this case.
Compare MCT JV, 2008 WL 2907033 at *3 (“[A] contract awarded to a contractor
submitting an unrealistically low cost/price proposal (whether resulting from a
decision on the part of the contractor to submit a price below anticipated costs ... or
other circumstances) may cause problems for the Navy as well as the contractor during
contract performance.... Accordingly, Offerors are cautioned that SHOULD THE
GOVERNMENT, IN THE EXERCISE OF ITS JUDGMENT, DETERMINE THAT A
COST PROPOSAL SUBMITTED IN RESPONSE TO THIS SOLICITATION IS
UNREALISTICALLY LOW, THE GOVERNMENT MAY REJECT THE PROPOSAL,
REGARDLESS OF ITS TECHNICAL MERIT AND/OR EVALUATED COST TO THE
GOVERNMENT.” (capitalization in original)), with AR 149 (RFP § M.5.3.2.1) (warning
offerors “that the Government has concerns with the potential for post-award
performance problems if Offerors propose unrealistically low costs” and that
“[t]herefore, the Government reserves the option of rejecting a proposal if, in the
exercise of its judgment, it determines that an Offeror’s cost proposal is unrealistically
low, regardless of technical merit and/or evaluated costs”); see also Oral Arg. Tr. 13:9-10
(government agreeing that RFP § M.5.3.2.1 “is substantially similar” to the solicitation
language at issue in GAO’s MCT JV decision); id. at 14:24-25 – 15:2 ([Government

                                             29
Counsel]: “We do think that the solicitation provision in MCT JV is much closer the
solicitation provision in this case. In Affordable, there was not . . . a very similar
situation.”). 22

       The Court rejects, as a matter of law, the per se rule articulated in GAO’s decision
in Vectrus that would limit an agency’s consideration of cost or rate caps only under the
rubric of responsibility. Such a rule is inconsistent with the FAR’s plain language – not
to mention of the primary purposes of a cost realism analysis – and improperly restricts
an agency with otherwise reasonable concerns about the impact of cost caps upon
performance. The Court further finds that the Solicitation at issue in this case is nearly
identical to the RFP language at issue in the MCT JV decision and, thus, at a minimum,
it was irrational for GAO to ignore its own compelling reasoning in MCT JV.

       GAO in Vectrus further concluded that the Agency erred in making “an
unwarranted assumption about what Vectrus might do during performance based on
the informal – clearly non-binding – exchange with Vectrus . . . that occurred during
discussions.” AR 6389. According to GAO, the Agency’s assumption was “directly
contradicted by the actual contents of the Vectrus revised proposal.” Id.; see also AR
6390 (GAO concluding that the Agency “erred in making an unwarranted assumption
about Vectrus’s potential behavior during contract performance that was directly at
odds with the contents of Vectrus’s proposal”). But GAO’s determination that “[i]t
necessarily follows that this rationale does not provide a reasonable basis for the
application of the upward cost adjustment” is a non-sequitur because the assessed
probable cost clearly was not the only concern the Agency articulated. AR 6390.
Rather, the Agency was reasonably concerned about Vectrus’s performance risk due to
the cost caps.

       If anything, GAO erroneously concluded that Vectrus’s proposal somehow
committed Vectrus, during performance, to hire all of the FTEs for which Vectrus
originally proposed [* * *] costs and then – when the Agency challenged that strategy
during discussions – proposed a cost cap to mitigate the impact of the actual costs of
those same FTEs. The Agency’s assessment of whether such cost caps would
incentivize Vectrus to simply cut corners during performance in order to avoid the caps
– and thereby maintain profitability – was not only reasonable but required pursuant to
the FAR, the terms of the Solicitation, and GAO’s own precedent. That is particularly
true given the government’s admission that “there is no actual requirement [for
Vectrus] to use all” of the proposed FTEs. 23 Oral Arg. Tr. 29:15-17. That is precisely the

22Vectrus’s counsel, at oral argument, posited that the salient provision in MCT JV is
distinguishable because it “was stated in all caps and it was [thus] very explicit.” Oral Arg. Tr.
86:13-16. The Court will not apply a different rule depending upon whether or not applicable
solicitation language is written in a certain font or style.
23“‘[A] lawyer's statements may constitute a binding admission of a party[ ]’ if the statements
are ‘deliberate, clear, and unambiguous[.]’” Minter v. Wells Fargo Bank, N.A., 762 F.3d 339, 347
                                               30
concern the Agency had – i.e., that, as government counsel conceded, if Vectrus
“do[es]n’t hire those . . . [* * *] FTEs, and their performance is still satisfactory, then maybe
they don’t have to absorb that cost after all….” Id. at 30:3-5 (emphasis added). Both
Vectrus and now the government are trying to have their cake and eat it too, but neither
adequately reconciles the idea that Vectrus will perform at the required level –
consistent with the government’s response to Vectrus’s EN question, see AR 2887 – and
the fact that nothing compels Vectrus to do so, a problem compounded by the negative
financial incentive of the proposed cost caps. 24

        The basic point is straightforward. When an offeror proposes unrealistically low
costs for a particular performance, the agency must consider whether it will actually
obtain such low costs during performance or whether the offeror has proposed low
costs because it does not in fact understand the work to be performed. The first
question goes to cost risk, the second to performance risk. When, on the other hand, an
offeror projects costs realistically, but then agrees to cap the costs actually billed to the
government, the cost risk itself may go away (i.e., an upward MPC adjustment is
improper), but the performance risk either remains or is even amplified. GAO’s
decision in Noblis, Inc., B-414055, 2017 CPD ¶ 33, 2017 WL 549174 (Feb. 1, 2017), is
particularly instructive. In that case, the protester argued “that it was improper for the
[source selection authority] to consider performance risk beyond making a cost realism
adjustment.” Id. at *11. In particular, the protester complained “that the agency
penalized it twice when it upwardly adjusted the protester’s proposed costs to account
for the firm’s low labor rates and when the SSA considered the firm’s low labor rates as
evidence of the protester’s performance risk.” Id. In the protester’s view, the agency’s
cost adjustment “eras[ed] any risk in [the protester’s] alleged low labor rates.” Id. GAO
disagreed, concluding that “[t]he agency’s upward adjustment of Noblis’ proposed
costs did not erase the performance risk associated with low labor rates. As provided
for in the solicitation, the agency used the results of the cost analysis to consider
performance risk.” Id. If an upward MPC adjustment does not erase performance risk,
a fortiori such risks remain – if, indeed, they are not exacerbated – where, as here, no

(4th Cir. 2014) (quoting Fraternal Order of Police Lodge No. 89 v. Prince George's Cty., Md., 608 F.3d
183, 190 (4th Cir. 2010)); see Checo v. Shinseki, 748 F.3d 1373, 1378 n.5 (Fed. Cir. 2014)
(questioning the Veterans Court's “reluctance to accept [a] concession” made at oral argument
and citing case law for the proposition that admissions are generally binding on the parties); see
also Chemehuevi Indian Tribe v. United States, 150 Fed. Cl. 181, 204 (2020).
24Oral Arg. Tr. 31:4-14 (government counsel agreeing with the Court that “there is evidence in
the record that the government believed it was a performance risk to not hire the [* * *] FTE,
or maybe because of the fact that there is no requirement, per se, to hire the [* * *] . . . because
the government doesn’t dictate the way the plaintiff performs the contract, the concern is that
the way you get profitable is by cutting corners”); see also id. at 32:3-6 (government counsel
agreeing that the cost realism analysis found that, “if the offeror does, in fact, plan on foregoing
the hiring [of] [* * *] FTEs, . . . that this could pose a risk to the government and the concern
for post-award performance problems”).
                                                    31
upward adjustment is permitted, and the offeror essentially proposes to perform the
contract at a significant loss.

        While GAO effectively tied the Agency’s hands in recommending that a new
award be made to Vectrus, the government argues that “here, the Army did consider the
risk stemming from Vectrus’s proposed cost absorption and did not consider it
necessary to remove Vectrus from the competition for unacceptable performance risk.”
Def. MJAR at 24 (emphasis in original) (citing AR 5958). There are at least three
problems with that contention. The first is the government’s citation in support of that
assertion: the cite is to the Agency’s GAO brief. Id. The government (correctly)
conceded at oral argument that the GAO brief constitutes non-contemporaneous, post
hoc documentation, see Oral Arg. Tr. at 18:21-23, and thus the Court would discount it
even if it tended to support the government’s position, which it does not. The second
problem, in that regard, is that while the Agency in its GAO brief asserted that “Vectrus
has not shown that the Army removed Vectrus from the competition for unacceptable
performance risk[,]” AR 5958 – which apparently is the part of the brief the government
intended to rely upon, see Oral Arg. Tr. at 19:1-6 – that merely begs the question
whether the Agency would have removed Vectrus from the competition for unacceptable
performance risk in lieu of the MPC adjustment that GAO found improper (and
concluded could be considered only under responsibility). Indeed, on the very same
page of the Agency’s GAO brief, the Agency asserts that it made the adjustment, in
part, as a measure of, or to compensate for, performance risk. AR 5958 (Agency noting
several concerns with Vectrus’s proposal, including that the “acceptance of a loss
‘would not be covered by the Offeror’s proposed fee if issues arose during execution[,]’”
and that its “concerns were both supported by the procurement record and reasonable”
(quoting AR 5566)). The third problem with the government’s contention is that GAO’s
second decision in this matter undermines it entirely, insofar as GAO rejected VS2’s
argument “that the agency was required to take into consideration the risk that VS2
maintains is inherent in Vectrus’s proposed approach to absorb some of the costs of
performance.” AR 6771. In other words, GAO implicitly concluded that the Agency
did not take such risk into consideration when following GAO’s recommendation to
award the contract to Vectrus, and GAO explicitly concluded that the Agency did not
have to do so. Id. (clarifying that, in its first decision, GAO held that capped costs may
be considered only as “a matter of the firm’s responsibility” and that [a]pplying that
rule in the Vectrus case, we concluded that . . . in the absence of the upward cost
adjustment, Vectrus was entitled to issuance of the task order under the express terms
of the RFP”).

       The upshot is that, contrary to GAO’s decisions in this procurement, the Agency
must consider whether Vectrus may receive a contract award pursuant to Section
M.5.3.2.1 of the Solicitation and any other applicable cost realism or related provisions,
e.g., AR 145 (RFP § M.4.2) (“An offeror’s failure to adequately explain an inconsistency
between promised performance and cost may result in a finding of Technical

                                            32
Unacceptability” (emphasis added)). In undertaking that analysis, the Agency must
consider not only its previous cost realism findings already in the administrative record,
but also the magnitude of the MPC adjustment to the Vectrus proposal that GAO
correctly found that the Agency was not permitted to make when comparing the
offerors’ likely costs. To the extent findings in the technical evaluation are inconsistent
with the assessed performance risks, the Agency must revisit the former or otherwise
reconcile the findings.

                                            ****

       Given the Court’s conclusions above, and contrary to the government’s
argument, see Def. MJAR at 24, Federal Circuit precedent does not require that this
Court simply defer to GAO’s decision in Vectrus or the Agency’s reliance upon it. In
that regard, the Court agrees with (now-Senior) Judge Wolski’s decision in CBY Design
Builders v. United States:

              What is different in cases when an agency follows a GAO
              recommendation is not that a decision is being reviewed for
              rationality, but whose decision matters in this review. When
              the relevant procurement official (usually the contracting
              officer) decides to adopt the views of the GAO after a protest
              has been heard by that body, this agency decision is not
              considered inherently unreasonable (for departing from the
              agency’s previous position) nor invulnerable (under the
              shield of GAO authority), but is instead measured by the
              rationality of the recommendation it follows. Instead of
              deferring to the initial agency decision, and re-reviewing the
              protest that was brought in the GAO by scrutinizing the
              rationality of the initial decision, we defer to the second agency
              decision, and scrutinize the rationality of the GAO’s
              resolution of the protest it heard. But the review standard
              does not change because of the GAO’s involvement.

105 Fed. Cl. 303, 339 (2012) (emphasis in original). “Since the amount of deference
given to an agency decision under the ‘arbitrary and capricious’ standard of review
does not change when GAO denies a protest of the decision, or when GAO sustains a
protest but its recommendation is not followed, it is hard to see how this deference
would be altered by an agency’s decision to follow a GAO recommendation.” Id. at 340.
Thus, “[n]o ‘special’ amount of deference, covering questions of law as well as the
ultimate decision being reviewed, can be gleaned from the three Federal Circuit
precedents concerning the review of such corrective actions.” Id. (citing Turner Constr.,
645 F.3d at 1383–87, Centech Grp., Inc., 554 F.3d at 1036-40, Honeywell, 870 F.2d at 647-49).

                                             33
       In sum, “one cannot conclude that the Court must defer to GAO’s views on
questions of law, such as the interpretation of a solicitation” or FAR provisions. CBY
Design Builders, 105 Fed. Cl. at 340 (discussing Honeywell). As in CBY Design Builders,
the Court “does not find the numerous references in opinions to the ‘deference’ to be
given GAO decisions in the procurement area as supporting the ceding to GAO of our
normal role in deciding questions of law.” 105 Fed. Cl. at 341. 25

        To reiterate, the Court concludes that GAO’s decision in Vectrus is erroneous as a
matter of law insofar as GAO ignored binding FAR and Solicitation provisions, in
addition to GAO’s own precedent. While GAO correctly recommended that the
Agency remove its upward MPC adjustment to Vectrus’s proposal, GAO unreasonably
recommended an award to Vectrus, essentially directing the Agency to ignore the
performance risk the Agency reasonably already had assessed against Vectrus due to its
proposed cost caps. GAO’s recommendation that the Agency simply flip the award to
Vectrus was, at a minimum, irrational and cannot stand. Finally, given the magnitude
of the loss Vectrus may incur if it were awarded the contract – something GAO all but
precluded the Agency from considering in the Vectrus decision – the Court concludes
that the Agency must revisit and reconsider its “check-the-box” responsibility
determination in light of the Court’s findings, supra. 26

25   As particularly relevant in this case, then-Judge Wolski correctly explained:
                  There is nothing about interpreting a solicitation that makes it a
                  question of law only in the hands of the Federal Circuit. Indeed, in
                  Banknote Corp., . . . the Federal Circuit explained that “judgment on
                  the administrative record is often an appropriate vehicle” for our
                  use—since protests “typically involve” such questions of law as
                  “the correct interpretation of the solicitation issued,” rather than
                  disputes of material fact. Banknote Corp., 365 F.3d at 1352. The
                  Federal Circuit has described its “‘task’” of “‘address[ing]
                  independently any legal issues, such as the correct interpretation of
                  a solicitation,’” as part of its reapplication of the same APA
                  standard used by our court in bid protests. See Galen Med. Assocs.,
                  Inc. v. United States, 369 F.3d 1324, 1329 (Fed. Cir. 2004) (quoting
                  Banknote Corp., 365 F.3d at 1353). The Court concludes that it has
                  the duty to determine independently any questions of law, such as
                  the correct interpretation of a solicitation, that must be addressed
                  in bid protests.
CBY Design Builders, 105 Fed. Cl. at 342.
26In ordering the Agency to revisit its responsibility determination, the Court agrees with the
government that the Court should not “conduct its own determination of Vectrus’s financial
responsibility, an exercise within the purview of the agency, not the Court[.]” Def. Resp. at 7 &
n.4. Moreover, although the lack of documentation in support of a responsibility determination
ordinarily is not fatal to it, see Def. Resp. at 7 & n.4, Def. MJAR at 20-22, Def. Int. Resp. at 14-15,
                                                     34
   VII.    VS2 WAIVED ITS CHALLENGE TO VECTRUS’S LABOR CATEGORY
           SUBSTITUTIONS AND SUFFERED NO PREJUDICE IN ANY EVENT

       VS2 argues that Vectrus improperly shifted required labor categories specified in
the Solicitation “to lower-paying categories.” Pl. MJAR at 34. As a result, according to
VS2, “the Army should have rejected Vectrus’s proposal as an unacceptable deviation
from the Solicitation’s material terms or at least adjusted Vectrus’s probable costs to
erase the implausible savings.” Id. (concluding that “[e]ither choice would have left
VS2 as the lowest-price offeror and winner of the competition”).

       To be sure, VS2 – in its briefs and during oral argument – helpfully explained
how Vectrus selected and substituted lower-cost labor categories in lieu of those
specified in the RFP’s spreadsheets that offerors were required to complete. Pl. MJAR
at 35-37; Oral Arg. Tr. 59:4-61:9; AR 4598. While the Court agrees that a number of RFP
provisions appear to preclude the substitution of specified labor categories with those
of an offeror’s choosing, see, e.g., AR 129-30 (RFP § L.5.2.1.1(c)), AR 135 (RFP § L.5.4.1.2),
Vectrus asserts that it only had to “propose[] the required minimum hours for the
effort” but was otherwise free to alter the labor mix so long as its proposed staffing
approach was adequately explained. Intv. Resp. at 19-22.

       After reviewing the various relevant Solicitation provisions the parties cited, the
Court concludes that, at a minimum, the RFP contained a patent ambiguity regarding
whether offerors were permitted to make labor category substitutions. To the extent
that the Agency ultimately decided that Vectrus’s approach was permissible, VS2’s
challenge essentially seeks to vindicate its (now-)preferred reading of the Solicitation
and, therefore, is untimely. Blue & Gold, 492 F.3d at 1313.

       Moreover, the Court agrees with Vectrus that “if what [it] did was
impermissible, then VS2’s own proposal did the impermissible” as “VS2 also proposed
variations to the staffing requirements outlined in [the RFP’s] TD-01 [spreadsheet].”
Intv. Resp. at 22 (emphasis in original) (citing AR 3118); see also id. at 24 (arguing that
“VS2 casts stones in a glass house such that if Vectrus’s approach shatters, so too must
VS2’s”). Indeed, VS2’s counsel conceded during oral argument that VS2 likewise
substituted certain labor categories for those specified in the Solicitation. Id. at 67:4-20.
At least one such substitution was substantively indistinguishable from the approach
Vectrus took. Id. at 68:25-69:4. VS2 responds that what matters is the degree of

the Court concludes that, given the specific facts of this case, the Agency must revisit its
previous responsibility determination. In that regard, and notwithstanding the “wide
discretion” afforded to a contracting officer’s responsibility determination, Impresa, 238 F.3d at
1334–35 (quoting John C. Grimberg Co. v. United States, 185 F.3d 1297, 1303 (Fed. Cir. 1999)),
pursuant to the APA standard of review, “[o]f course, a contracting officer’s [decision] must be
rational: the choice is committed to discretion, not whim.” DynCorp Int'l, LLC v. United States,
No. 2020-2041, 2021 WL 3744922, *7 (Fed. Cir. Aug. 25, 2021).
                                                35
substitutions; that is, Vectrus did it more. Id. at 68:25-69:8. There is some facial appeal
to VS2’s point insofar as Vectrus appears, in fact, to have benefited from the
substitution strategy a great deal more than VS2. But VS2’s attempt to steal a base –
that is, skipping over an essential (but faulty) premise of its argument – must be
rejected. The simple fact is that VS2 cannot now complain about Vectrus’s and the
government’s interpretation of the Solicitation when VS2 relied upon the very same
interpretation when preparing its proposal. Id. at 71:19 – 74:5 (discussing VS2’s
substitutions).

       Whether that defect in VS2’s argument is characterized as waiver or lack of
prejudice – either way – the Court rejects VS2’s position with regard to labor category
substitutions. See Fairbanks Assocs.-Request for Reconsideration, B-221374, 86-2 CPD ¶ 172,
1986 WL 63875, *5 (Aug. 11, 1986) (“Thus, it is clear from the record that the protester
did not rely on its interpretation of the cost ceiling in calculating its proposed price.
Accordingly, the protester’s contention that it was prejudiced due to its interpretation of
the cost ceiling is without merit.”); cf. Edward R. Marden Corp. v. United States, 803 F.2d
701, 705 (Fed. Cir. 1986) (“Here it is obvious that in the preparation of its bid, which was
accepted by the Government, Marden did not rely on an interpretation that composition
or latex flooring was unnecessary in the mechanical rooms. Therefore, adherence to well
established principles of contract law precludes the contractor’s right to recover.”).

        Finally, Vectrus submitted the unrebutted expert declaration of Mr. Christopher
W. Foux, a consultant with LitCon Group, LLC. 27 ECF No. 39-1. A certified public
accountant, Mr. Foux was tasked with calculating an “[MPC] adjustment to Vectrus’s
proposed cost that would result from the Government determining Vectrus’s first
business policy decision . . . , which involved a change to the labor mix for [* * *]
[FTEs], was inconsistent with the Solicitation’s requirements.” Id. ¶¶ 3, 5. Mr. Foux
concluded “that the MPC adjustment to Vectrus’s proposed cost would be $[* * *]. In
other words, . . . if the Government determined Vectrus should not have implemented
this change to the labor mix, the Government’s MPC of Vectrus’s total evaluated cost
would have been $[* * *], which is [still] $[* * *] less than VS2’s total evaluated cost.”
Id. ¶ 7 (footnote omitted). The Court finds Mr. Foux’s analysis and calculations
credible, and thus concludes that VS2 has failed to carry its burden to demonstrate that
– even assuming VS2 should not have been permitted to lower its projected via less
expensive labor substitutions – the outcome of the cost ranking had a substantial chance
of being different. Id. ¶ 9. While VS2 claimed that “the cost impact to Vectrus’s

27VS2 neither moved to strike the expert’s opinion nor otherwise opposed the Court’s
consideration of it. See FirstLine Transportation Sec., Inc. v. United States, 116 Fed. Cl. 324, 326–27
(2014) (permitting expert declaration “not [to] substitute [his] judgment for the agency's
judgment” but rather where the testimony contained “calculations based on data already
contained in the administrative record, so that the Court can better understand the record”); see
also Naval Sys., Inc. v. United States, 153 Fed. Cl. 166, 181 (2021).
                                                  36
proposal was $[* * *] [,]” the Court agrees with Mr. Foux that “[i]t is unclear how
exactly VS2 calculated this” sum given that “VS2 did not include any supporting
documentation or further explanation of how it computed $[* * *] figure, the
assumptions it made, or the various elements it considered.” Id. ¶ 11-12 (explaining
that Vectrus itself erroneously claimed nearly $[* * *] in cost savings).

       Given Mr. Foux’s unopposed declaration, and the unrebutted analysis detailed
therein, VS2 cannot demonstrate that it suffered prejudice either as a result of Vectrus’s
having proposed lower cost labor categories in lieu of those specified in the Solicitation
or the government’s acceptance of that approach. Bannum, 404 F.3d at 1358; Info. Tech.,
316 F.3d at 1319; Alfa Laval, 175 F.3d at 1367.

   VIII. THE AGENCY REASONABLY EVALUATED VECTRUS’S PAST
         PERFORMANCE IN COMPLIANCE WITH THE SOLICIATION

       VS2 alleges that “Vectrus was undeserving of a ‘Substantial Confidence’ rating
[for past performance] because it has adverse past performance on two prior task
orders.” Am. Compl. ¶ 61. VS2 thus asserts that “the Agency’s decision to take
corrective action by awarding to Vectrus was arbitrary and capricious because a
reasonable evaluation of Vectrus’s past performance would have kept Vectrus from
being in line for award.” Id.

       In submitting information regarding the past performance factor, the Solicitation
required each offeror to “identify all recent contracts where it . . . experienced any
performance problems that occurred within three years prior to the closing date of this
RFP.” AR 135 (RFP § L.5.3.5.1). For each contract identified, the Solicitation instructed
the offeror to “provide copies of all Level III Corrective Action Reports (CARs), Cure
Notices, Level III Nonconformance Reports (NCRs) or Show Cause letters received
regardless of whether or not the contract was provided as a contract reference in the
Offeror's task order proposals to date” and include further information, such as “the
contract number, a brief description of the issue, the corrective actions taken to avoid
recurrence of the problem, the extent to which the corrective action has been successful,
a mitigation plan of how to prevent similar future issues, and [contacts to] confirm the
success of the corrective measures.” Id.

        Concerning the government’s evaluation of each offeror’s past performance, the
Solicitation provided that:

              The Government may consider the recency, relevancy, source
              and context of the past performance information it evaluates,
              as well as general trends in performance, and demonstrated
              corrective actions. A significant achievement, problem,
              problem resolution or lack of relevant data in any element can
              become an important consideration in the assessment
                                            37
              process. An adverse finding in any element or a lack of
              relevant data in regards to a performance issue may result in
              an overall lower confidence assessment rating.

AR 148 (RFP § M.5.2.5). The Solicitation defined “recency” as “any contract under
which any performance, delivery, or corrective action has occurred within the following
time standards: three (3) years prior to this RFP closing date, regardless of the award
date.” AR 148 (RFP § M.5.2.7).

       Our Court has explained that “[i]n the bid protest context, the assignment of a
past performance rating is reviewed ‘only to ensure that it was reasonable and
consistent with the stated evaluation criteria and applicable statutes and regulations,
since determining the relative merits of the offerors’ past performance is primarily a
matter within the contracting agency’s discretion.’” Glenn Def. Marine (Asia), PTE Ltd. v.
United States, 105 Fed. Cl. 541, 564 (2012) (quoting Todd Constr., L.P. v. United States, 88
Fed.Cl. 235, 247 (2009)), aff’d, 720 F.3d 901 (Fed. Cir. 2013). Put differently, the Court
affords great deference to an Agency’s evaluation of an offeror’s past performance. Am.
Auto Logistics, LP v. United States, 117 Fed. Cl. 137, 185 (2014), aff’d, 599 F. App’x 958
(Fed. Cir. 2015); see also Torres Advanced Enter. Sols., LLC v. United States, 133 Fed. Cl. 496,
531 (2017) (“When a protestor challenges a procuring agency’s evaluation of past
performance, the court’s review is limited to ensuring that the evaluation was
reasonable and performed in accordance with the solicitation; in other words, the
procuring agency’s evaluation is entitled to great deference.”).

       In the instant case, Vectrus’s proposal identified a Fort Bragg, North Carolina
task order and included a Level III CAR, which – in compliance with the Solicitation’s
requirements concerning past performance – included information such as areas of
concern, mitigating actions, and the current status/verification of effectiveness for
resolving the identified issues. AR 2375-88. VS2 argues that the Agency failed to
rationally consider Vectrus’s “‘critical’” non-compliance recognized in Level III CAR,
especially in light of the similarities between the PWS requirements in the Fort Bragg
task order and the task order at issue here. Pl. MJAR at 40-42 (quoting AR 2380). While
the Court concurs with VS2 that issues identified in the Level III CAR are real and
severe, “the court is not empowered to substitute its judgment for that of the agency”
where the Agency’s conclusions find support in the record. Navarro Rsch. & Eng’g, Inc.
v. United States, 151 Fed. Cl. 184, 192 (2020) (citations omitted). In assessing Vectrus’s
past performance, the Agency reasonably relied on three positive CPARS specifically
related to the Fort Bragg task order:28

28According to the Army’s evaluation of Vectrus’s past performance, “[f]or recent reference
W52P1J-13-G-0027 0001 Vectrus performs services as the Prime Contractor on the EAGLE Fort
Bragg, North Carolina Task Order that includes Maintenance, Supply and Transportation
services under a standardized EAGLE PWs.” AR 5443.
                                              38
              Contract: W52P1J-13-G-0027_0001        CPAR        CPAR        CPAR

              Last Date of Assessment Period     6/29/2017     6/29/2018   6/29/2019

              Quality                            Very Good     Very Good   Very Good

              Schedule                           Very Good     Very Good   Very Good

              Cost Control                      Satisfactory   Very Good Satisfactory

              Management                         Very Good     Very Good Satisfactory

              Utilization of Small Business     Exceptional Exceptional Exceptional

              Regulatory Compliance              Very Good     Very Good Satisfactory

AR 5446. Further, the assessing official concluded that “they would recommend
Vectrus for similar requirements in the future.” Id.

         In the Agency’s evaluation of Vectrus, the Agency further explained:

               Vectrus and subcontractor DA Defense has a significant
               amount of recent and relevant experience. Vectrus has and is
               successfully performing an EAGLE effort that is very
               comparable to this effort. DA Defense provided references in
               which they performed as successful subcontractor. Based on
               the overall performance record of the proposed team, the
               Government has a high expectation that the Offeror will
               successfully perform the required effort.

AR 5447. The Agency made this assessment while in possession of the Level III CARS
Vectrus provided and after considering the positive CPARS from that very same task
order. The record thus belies VS2’s assertion that “[t]he Army did not consider, let
alone analyze, the performance problems reported in the Level III CAR[.]” Pl. MJAR at
41. Consequently, the Court concludes that the Agency’s assessment of Vectrus’s past
performance was reasonable.

   IX.      INJUNCTIVE RELIEF

       The Tucker Act vests this Court with authority to award “any relief that the court
considers proper, including . . . injunctive relief.” 28 U.S.C. § 1491(b)(2); see RCFC 65.
In evaluating whether permanent injunctive relief is warranted in a particular case, the
Court must consider: (1) whether the plaintiff has succeeded on the merits; (2) whether
the plaintiff has shown irreparable harm without the issuance of the injunction; (3)
whether the balance of the harms favors the award of injunctive relief; and (4) whether

                                                39
the injunction serves the public interest. PGBA, LLC v. United States, 389 F.3d 1219,
1228–29 (Fed. Cir. 2004). As discussed supra, VS2 has succeed on the merits of its claim
that the Army improperly switched the contract award from VS2 to Vectrus based on a
GAO decision that is erroneous as a matter of law.

        Under the second factor, “a party seeking a permanent injunction must
demonstrate that it will suffer irreparable harm without the desired relief.” Turner
Const., 94 Fed. Cl. at 585. Our Court “ ‘has repeatedly held that the loss of potential
profits from a government contract constitutes irreparable harm.’” WaveLink, Inc. v.
United States, No. 20-749C, -- Fed. Cl. --, 2021 WL 2762814, at *33 (June 24, 2021) (quoting
BINL, Inc. v. United States, 106 Fed. Cl. 26, 49 (2012)); see also Akal Sec., Inc. v. United
States, 87 Fed. Cl. 311, 319 (2009) (“[I]f a litigant has no action against the United States
for lost profits, as is the case here, the harm to the litigant can be considered
irreparable.”). Here, VS2 will suffer such irreparable harm should the Army’s new
award to Vectrus be permitted to proceed at this juncture. Although this Court on
occasion has noted that economic harm, “without more, does not seem to rise to the
level of irreparable injury,” Minor Metals, Inc. v. United States, 38 Fed. Cl. 379, 381-82
(1997) (citing Zenith Radio Corp. v. United States, 710 F.2d 806, 810 (Fed. Cir. 1983)), here
there is more than simply economic harm – VS2 would have retained its original award,
along with the attendant benefits of experience and a future past performance reference,
but for the Army’s implementation of an irrational GAO recommendation. VS2 will
thus suffer irreparable harm in the absence of an injunction.

       In balancing the harms, the Court notes that the government does not assert it
will be harmed by an injunction, but rather focused only on the merits of VS2’s claims.
Def. MJAR at 33 (“[A]s explained above, VS2 cannot establish that either GAO or the
Army acted irrationally or unlawfully. Therefore, there is no reason for the Court to
intervene in the procurement process.”); see also Oral Arg. Tr. 94:16-19 (government
agreeing that “since you don’t know what they would have done” in the absence of the
MPC adjustment, “if you want the agency to make that assessment again, they will
certainly do so”). Given that the parties informed the Court at the start of this case that
the Agency intended to issue a bridge contract through September 10, 2021, there is
nothing in the record indicating that the Agency would have to halt or somehow
unwind any current contract performance should an injunction be issued, nor is there
any evidence that the Agency would be harmed by reconsidering the implications of a
risk assessment it has already performed. See, e.g., Oral Arg. Tr. 42:19-24. The Court
concludes that the balance of hardships favors VS2.

        Finally, the public interest favors granting an injunction because “[t]here is an
overriding public interest in preserving the integrity of the procurement process by
requiring the government to follow its procurement regulations.” Hospital Klean of Tex.,
Inc. v. United States, 65 Fed. Cl. 618, 624 (2005); see also CW Gov’t Travel, Inc. v. United
States, 110 Fed. Cl. 462, 496 (2013) (“‘The public interest in honest, open, and fair

                                             40
competition in the procurement process is compromised whenever an agency abuses its
discretion.’” (quoting PGBA, LLC, 57 Fed. Cl. at 663)). The record demonstrates that the
Agency’s decision to cancel VS2’s award and instead award the contract to Vectrus was
based on an irrational GAO recommendation, which taints the procurement process.
That is particularly true where, as here, the Solicitation itself required the Agency to
consider performance risk due to the cost caps as part of the Agency’s cost realism
analysis. Thus, the Court concludes that the fourth factor favors VS2, as well.

       Accordingly, the Court will issue a permanent injunction.

                                       CONCLUSION

     For the above reasons, the Court: GRANTS VS2’s motion for judgment on the
administrative record; DENIES the government’s motion for judgment on the
administrative record; and DENIES Vectrus’s motion for judgment on the
administrative record. The Clerk shall enter JUDGMENT for Plaintiff, VS2.

       Given the Court’s findings on the injunctive relief factors, the Agency is further
directed as follows:
          1. The Court permanently enjoins the current contract award to Vectrus.

          2. The Agency must reconsider its contract award decision, taking into
             account not only the corrected cost evaluation, after removing the upward
             MPC adjustment, but also the Agency’s prior risk assessment performed
             as part of its cost realism analysis (as well as any related findings in the
             technical evaluation, if warranted), as detailed in this Opinion and Order,
             supra. See, e.g., AR 149 (RFP § M.5.3.2.1). In so doing, the Agency must
             consider the magnitude of the quantitative MPC adjustment as a measure
             of performance risk, even though the sum itself cannot be added to
             Vectrus’s evaluated cost.

          3. Relatedly, the Agency also must reconsider its responsibility
             determination, specifically with regard to the fact that Vectrus might incur
             a substantial loss if it were awarded the contract at issue.

          4. In issuing this equitable relief, the Court does not reverse the Agency’s
             award decision, but rather gives due regard to the Agency’s discretion in
             the first instance. The Court thus neither orders the contract to be
             awarded to VS2 nor precludes the Agency from issuing a new contract
             award to Vectrus.
       IT IS SO ORDERED.
                                                 s/Matthew H. Solomson
                                                 Matthew H. Solomson
                                                 Judge
                                            41