Court Opinion

ID: 4689157
Source: CourtListenerOpinion
Date Created: 2021-05-21 20:02:57.218837+00
Date Added: 2024-06-11T08:04:52.377836
License: Public Domain

In the Cited States Court of Federal Claims

No. 20-1884C
Filed: May 4, 2021
Reissued: May 21, 2021!

 

MELWOOD HORTICULTURAL
TRAINING CENTER, INC.,

Plaintiff,
v.
THE UNITED STATES,

Defendant.

 

 

Meghan A. Douris and Alix K. Town, Oles Morrison Rinker & Baker, LLP, Seattle, WA, for
Plaintiff.

Tanya B. Koenig, Trial Attorney, and Steven C. Hough, Trial Attorney, with whom were
Douglas K. Mickle, Assistant Director, Martin F. Hockey, Acting Director, Brian M. Boynton,
Acting Assistant Attorney General, Commercial Litigation Branch, Civil Division, United States
Department of Justice, Washington, D.C., Robert B. Neill, United States Army, and imi N.
Kenealy, United States AbilityOne Commission, Of Counsel, for Defendant.

MEMORANDUM OPINION AND ORDER
TAPP, Judge.

This pre-award bid protest is the sequel to Melwood Horticultural Training Ctr., Inc. v.
United States, 151 Fed. Cl. 297 (2020) (“Melwood I’). Like the original, Plaintiff Melwood
Horticultural Training Center, Inc. (“Melwood”) challenges the second iteration of a pilot
procurement program to recompete a base operations support services contract (“BOSS
Contract”) at Fort Meade, Maryland. Melwood also brings a claim related to the United States’
public release of declarations in Me/wood I which allegedly included source selection
information.

The Court previously dismissed Melwood’s bid protest claims in Me/lwood I, finding that
because Melwood had not challenged a final agency action, that case was not yet ripe. Now,

 

' This Opinion is being reissued with redactions proposed by the parties on May 13, 2021. (ECF
No. 36-1). Additionally, three sentences of this Opinion have been modified to remove citations
to a case that has been abrogated by the Supreme Court. These modifications were discussed in
the status conference held May 21, 2021.
however, Melwood challenges the AbilityOne Commission’s decision to re-compete the BOSS
Contract using new “Interim Policies” that create what AbilityOne calls a test pilot (the “Pilot
Program”).

Like many challenges to agency action, this bid protest is illustrated by a familiar
metaphor, presenting the question of whether the horse not only pulls the cart but also determines
its destination. Because the Court determines that it is Congress who fixes the objective rather
than the agency, the novel AbilityOne Commission Pilot Program impermissibly introduces
competitive pricing into a procurement intended by Congress to support employment
opportunities for the blind and severely disabled. As explained below, the Court finds that these
Interim Policies (and thus the Pilot Program) contravene 41 U.S.C. § 8504 and 41 C.F.R. § 51-
2.7. Therefore, the Court concludes the procurement is contrary to law, and Melwood is entitled
to injunctive relief that enjoins AbilityOne from awarding a contract under Opportunity Notice
No. 3923. Further, the Court finds that the United States did not violate the Procurement
Integrity Act in Melwood J filings.

I. Background

The parties have submitted a Joint Stipulation of Facts, from which the Court draws
relevant facts, with limited revisions. (Joint Stipulation of Facts, ECF No. 13).

A. The Parties

Melwood Horticultural Training Center, Inc. is a not-for-profit organization exempt from
federal income tax under Section 501(c)(3) of the Internal Revenue Code, which provides jobs
and opportunities for people of differing abilities in the Washington, DC area. (See Compl. at J
2, ECF No. 1). Melwood is the authorized non-profit agency (“NPA”) for the services in
question. (Administrative Record (“AR”) at 1-2, ECF No. 10; Case No. 20-758 ECF No. 22).”
Melwood is the current contractor through the U.S. AbilityOne Program on the Fort Meade Base
Operations Support Services contract, Contract No. W91QV118C0008 (“Fort Meade BOSS”).
(Id. ¥ 4).

The United States Army’s Installation Management Command is responsible for
delivering base operations support services, including traditional municipal services such as
electrical supply, trash removal, facilities maintenance, and repair services at over seventy Army
installations worldwide. These services allow Army installations to operate efficiently and
effectively in support of national defense objectives.

B. AbilityOne and the AbilityOne Program

The legislation at issue in this controversy is the Javits-Wagner-O’Day Act (the “JWOD
Act’) that established the Committee for Purchase From People Who Are Blind or Severely
Disabled, which operates as the “U.S. AbilityOne Commission” (“AbilityOne” or the

 

* In filing the Administrative Record for this case, the United States incorporated by reference
the Administrative Record from Melwood I, Case No. 20-758. The pages are consecutively
paginated, and thus the Court will cite interchangeably to the split record using “(AR __).”
“Commission”). See 41 U.S.C. § 8502(a). The AbilityOne Program is a Federal procurement
program with the purpose of providing jobs in the manufacture and delivery of products and
services to the Federal Government for people who are blind or have severe disabilities.

While any government effort has detractors, the accomplishments of the AbilityOne
Commission cannot be overstated. AbilityOne currently employs over 45,000 blind or severely
disabled individuals including approximately 3,000 veterans and wounded warriors.* These
employees work at over 1,000 locations throughout all 50 states and Guam. It is the largest
source of employment opportunities for the blind and severely disabled in the United States and
provides as much as $4 billion in sales and services to the Federal Government.

Procurements involving AbilityOne are readily distinguishable from normal government
processes. As it acknowledges, “AbilityOne procurements are considered ‘other than
competitive’ procurements . . ..”4 To achieve its goals, AbilityOne is required to maintain a
“Procurement List” of products and services “determined by [AbilityOne] to be suitable for the
Federal Government to procure” that are produced or provided by a qualified nonprofit agency
for the blind or by a qualified nonprofit agency for other severely disabled. 41 U.S.C. §
8501(a)(1). Congress directed the AbilityOne Commission to “designate a central nonprofit
agency or agencies to facilitate the distribution, by direct allocation, subcontract, or any other
means, of orders of the Federal Government for products and services on the procurement list
among qualified nonprofit agencies for the blind or qualified nonprofit agencies for other
severely disabled.” 41 U.S.C. § 8503(c). As relevant here, AbilityOne designated SourceAmerica
as a central nonprofit agency (“CNA”) which represents the interests of severely disabled people
who provide services on the Procurement List. 41 C.F.R. § 51-3.1. AbilityOne determines the
Fair Market Price (“FMP”) for those products and services, which are provided by nonprofit
agencies that employ the blind and severely disabled. 41 U.S.C. § 8503(c).

The JWOD Act requires that “[a]n entity of the Federal Government intending to procure
a product or service on the procurement list .. . shall procure the product or service from a
qualified nonprofit agency for the blind or a qualified nonprofit agency for other severely
disabled in accordance with regulations of [AbilityOne] and at the price [AbilityOne] establishes
if the product or service is available within the period required by the entity.” 41 U.S.C. 8504(a);
see also Federal Acquisition Regulation (“FAR”) § 8.704(a) (“41 U.S.C. chapter 85 requires the
Government to purchase supplies or services on the Procurement List, at prices established by
[AbilityOne], from AbilityOne nonprofit agencies if they are available within the period
required.”). The JWOD Act defines “qualified nonprofit agency for other severely disabled” as
an agency that “in the production of products and in the provision of services (whether or not the
products or services are procured under this chapter) during the fiscal year employs blind or

 

3U.S. AbilityOne Commission, AbilityOne Facts, https://www.abilityone.gov/index.html (last
accessed May 4, 2021).

*U.S. AbilityOne Commission, AbilityOne Program Frequently Asked Questions, FAQ #4,
https://www.abilityone.gov/abilityone_program/faqs.html#1 (last accessed May 4, 2021).
other severely disabled individuals for at least 75 percent of the hours of direct labor required for
the production or provision of the products or services.” 41 U.S.C. § 8501(6)(c).

Under the Competition in Contracting Act (“CICA”), executive agencies may conduct
procurements using procedures that are “other than competitive” only when specifically
authorized by statute. 10 U.S.C. § 2304(a) and (c)(5) (DoD procurements); 41 U.S.C. §
3304(a)(5), (e)(4)(D); FAR §§ 6.302-5, 8.002, 8.7. Otherwise, agencies must use “competitive
procedures” which entail “full and open competition[.]” 10 U.S.C. § 2302(2); 41 U.S.C. § 152.

Typically, when Federal agencies identify suitable products or services to be placed on
the Procurement List, they provide AbilityOne or the designated CNA (here SourceAmerica)
with information, such as “the latest solicitation and amendments, bid abstracts, procurement
history, estimated annual usage quantities, and anticipated date of next solicitation issuance and
opening may be needed . . . statement of work and applicable wage determination” to enable
AbilityOne to determine whether a product or service is suitable to be furnished by an NPA. 41
C.F.R. § 51-5.1(b). The CNAs provide such documentation to interested NPAs.

NPAs initially submit a technical proposal to the CNA, without pricing, in response to
published opportunity notices and accordance with allocation processes established by the CNAs
and in accordance with Commission Policy 51.301.° The NPAs’ proposals indicate how each
will meet the contract technical requirements, while also satisfying the JWOD Act employment
requirements. See 41 C.F.R. §§ 51-4.3 and 51-6; Commission Policy 51.301.

 

SourceAmerica typically evaluates the technical proposals, which may include review by
the government customer, to identify an NPA to perform the contract. After an NPA has been
identified as the recommended nonprofit agency, the pricing process historically includes
negotiations between the government customer, the selected NPA, and SourceAmerica. This
cooperative approach is highlighted on AbilityOne’s website. See supra note 3, FAQ #15.
SourceAmerica recommends that suitable services be added to the Procurement List, and
recommends an authorized NPA to perform those services, together with the recommended fair
market price, to the Commission for approval. Pursuant to the JWOD Act, AbilityOne has the
sole authority to establish the Fair Market Price “of products and services contained on the
procurement list that are offered for sale to the Federal Government.” 41 U.S.C. § 8503(b).

AbilityOne has issued Pricing Policies for establishing a fair market price, Policy 51.600;
a fair market price for services, Policy 51.620; and resolving price impasses, Policy 51.640.°

 

> AbilityOne Commission Policy 51.301 is publicly available on the AbilityOne Commission’s
website. See

https://www.abilityone.gov/laws, regulations and_policy/commission_ policy 51 300.html (last
accessed May 4, 2021).

° AbilityOne Commission Policy 51.600 et seg. is publicly available on the AbilityOne
Commission’s website. See

https://www.abilityone.gov/laws, regulations and_policy/commission_policy_51_600.html
(last accessed May 4, 2021).
AbilityOne’s Pricing Policies allow for “negotiations between the Government contracting
activity (or its designated prime contractor) and the designated NPA(s), with support from the
responsible CNA [here SourceAmerica].” Commission Policy 51.620, Pricing AbilityOne
Services, Section 6(a). Additionally, the policy requires that “[t]he prices shall be evaluated
using the proposal analysis techniques described in FAR 15.404.” /d. at Section 6(a)(1).

The Commission establishes fair-market prices for supplies and services purchased from
NPAs and may request that the agency responsible for acquiring the supplies or services assist
the Commission in establishing or revising these fair-market prices pursuant to FAR § 8.707(c).
Melwood I, No. 20-758, ECF No. 27 4 5 (Fed. Cl.) (Corrected Declaration of J. Randall
Robinson). Prices are revised in accordance with changing market conditions under AbilityOne
procedures, which include negotiations between contracting activities and producing nonprofit
agencies, assisted by central nonprofit agencies, or the use of economic indices, changes in
nonprofit agency costs, or other methodologies permitted under these procedures.” 41 C.F.R. §
51-2.7(b); see also 41 C.F.R. § 51-5.5(d). Prices for services are normally adjusted annually.
FAR § 8.707(b).

The Commission Policy regarding services also includes the following statement: “(b)
Recommended-FMPs, submitted to the Commission by the CNAs on behalf of the NPAs and the
Contracting Activities, shall take into consideration the Government’s socioeconomic objective
and purpose of the AbilityOne Program, which is to provide employment for people who are
blind or have other significant disabilities.” Commission Policy 51.620, Pricing AbilityOne
Services, Section 6(b). The negotiated prices are then “submitted to the Commission by the
CNAs on behalf of the NPAs and the Contracting Activities” as “Recommended FMPs.” /d.

Pursuant to Commission Policy 51.301, the Commission “[r]etains the authority, on an
exception basis, to direct CNA(s) to reassign or reallocate work using CNA-established
procedures.” This responsibility can be exercised to meet critical product or service delivery
requirements and/or to further the AbilityOne Program mission to enhance employment
opportunities or other significant programmatic matters.

Once the Commission has determined that the work is suitable for the Procurement List,
that the recommended NPA is qualified and capable, and the Fair Market Price, the Commission
publishes the products or services being added to the Procurement List in the Federal Register
and notifies the contracting activity. 41 C.F.R. § 51-6. After the addition to the Procurement List
is effective, the federal customer may award a contract pursuant to the AbilityOne Program,
typically for a Base Year with four follow-on option years.

Once a product or service is added to the Procurement List, it remains in the AbilityOne
program unless the Commission “determines that none of the nonprofit agencies participating in
the AbilityOne Program are capable and desirous of furnishing the commodity or service to the
Government, or if [AbilityOne] decides that the commodity or service is no longer suitable for
procurement from nonprofit agencies employing people who are blind or have severe
disabilities.” 41 C.F.R § 51-6.8(e). Among other functions, the Commission is responsible for
determining a fair market price for products and services on the Procurement List. See 41 U.S.C.
§§ 8503 (a)-(g), 8504; and 41 C.F.R. § 51-2.2(a)(i).
C. Contract Background

Fort Meade is one of the installations managed by Installation Management Command.
The Fort Meade BOSS contract supports the infrastructure on the installation, for example,
construction, life-cycle operation, maintenance, infrastructure, utility systems, roads, and other
real property. Fort Meade provides a wide range of support to approximately 118 organizations
from all four military services and several federal agencies.

Since July 1, 2011, Melwood has been providing certain base operation support services
for the Department of Public Works at Fort Meade under contracts procured pursuant to the
JWOD Act. (See AR 1-2, 91-324). The Army’s Mission Installation Contracting Command
awarded the current BOSS contract at Fort Meade—a short-term bridge contract—on July 1,
2019. (AR 91 (Contract No. W9124J-19-C-0020)). The Army awarded the base year for an
estimated amount of $19,727,317.34. Ud.). The contract included a base year and two short term
option periods, permitting performance of services through June 30, 2021. Melwood has been
asking for a new five-year contract and has not received an explanation for why it was receiving
short bridge contracts. Mehvood I, No. 20-758, ECF 46-2, ¥ 10, Exhibit A (Fed. Cl.).

AbilityOne added Fort Meade Base Operations Support Services to the Procurement List
in 2011. 41 U.S.C. § 8501 ef seg. requires “the Government to purchase these services from
AbilityOne nonprofit agencies if they are available within the period required.” FAR § 8.704(a).
(AR 1-2). Melwood was selected as the designated NPA to perform this work. The scope of
work of the Fort Meade BOSS contract includes recycling, roads and grounds maintenance,
custodial, electrical, plumbing, and HVAC services. (AR 221-319).

D. AbilityOne Competition Pilot Test

In Section 898 of the National Defense Authorization Act for Fiscal Year 2017
(“NDAA”) Congress mandated the establishment of a Panel on Department of Defense and
AbilityOne Contracting Oversight, Accountability, and Integrity (“Section 898 Panel”) to review
purchasing arrangements between the Department of Defense and the nonprofit agencies under
the JWOD Act/AbilityOne Program. NDAA, Pub. L. No. 114-328, § 898, 130 Stat. 2000, 2327-
29 (2016). Section 898(c)(6) stated that the 898 Panel was to, among other things, “recommend
ways the Department of Defense and the AbilityOne Commission may explore opportunities for
competition among qualified nonprofit agencies or central nonprofit agencies and ensure an
equitable selection and allocation of work to qualified nonprofit agencies.” NDAA, Pub. L. No.
114-328, § 898, 130 Stat. 2000, 2329 (2016). Congress’s use of the word “recommend” is
significant for the reasons explained in Section II(B)(1) of this Opinion.

On July 18, 2018, the Section 898 Panel submitted its first annual report to Congress.
(AR 15-84 (First Annual Report)). This report included a recommendation that the AbilityOne
Commission “[i]mplement mandatory source selection procedures that CNAs will follow that
require a best value trade-off similar to other Federal source selection procedures.” (AR 45). The
Section 898 Panel recommended that the AbilityOne Commission use competition pilots to
“Tp]ilot different approaches to make a sound decision on the appropriate way forward.” (/d.).
The Section 898 Panel also recommended: “changes to how work is assigned or re-assigned, and
also changes to Title 41 CFR 51... [t]his process includes steps that reward NPAs who do well
on a product or service, by giving them Commission approval to continue. Those who do not,
would either see the work reassigned or would have to re-compete. . ..” (AR 44).

Notably, Congress did not act on the Section 898 Panel’s recommendations, nor did the
AbilityOne Commission adopt regulations despite its authority to do so. Instead, in June 2019,
the Commission adopted interim policies to address the modifications to the allocation process
for the competition pilot. (See AR 85-87 (AbilityOne Interim Pilot Test policy 51.301.01,
Selection of Nonprofit Agencies for Project Assignment and Order Allocation); 88-90
(AbilityOne Interim Pilot Test Policy 51.620.01, Pricing AbilityOne Services)). Interim Pilot
Test Policy 51.301.1, “a companion to existing policy 51.301,” communicated changes to
aspects of pilot test(s) in which “a competitive nonprofit agency (NPA) recommendation process
will be conducted, considering technical capability, past performance, and price. The pilot test
will result in the competitive reallocation of a project already on the Procurement List and
establishment of a new Fair Market Price.” (AR 85). The Interim Policy also identified an
appeals process: NPAs should send appeals to the Commission 10 days “after an NPA’s
debriefing or notice of the Commission’s debriefing or notice of the Committee’s decision.” (AR
87). The interim policy indicated the Commission was exercising its authority in accordance with
Policy 51.301 to direct CNA(s) to reassign or reallocate work using CNA-established
procedures. Further, the Commission had determined that pilot test(s) are in the best interest of
the government to further the AbilityOne Program mission and identify processes that may be
required when adopting new business practices. (/d.). This announcement provided the first
suggestion that future pricing of goods and services would occur as part of the procurement
evaluation rather than the historically preferred negotiations between the procuring NPA and the
procuring agency with the assistance of SourceAmerica after the NPA(s) were selected.

The Army and the Commission conducted an initial competition pilot for the BOSS
contract at Fort Bliss, Texas in 2019. (See AR 325, 1470). The Army determined the pilot to be a
success, finding that it yielded “an annual savings of $7.2 million and a projected $36 million
over the contract term” for the Army, as well as “significantly better contract performance . . .
because it forced contractors to rethink how they do business, employing current technologies to
provide greater quality, efficiency and cost savings,” while continuing to “provide employment
opportunities for people who are blind or have significant disabilities.” Melwood I, No. 20-758,
ECF No. 27 4 7 (Fed. Cl.) (Corrected Declaration of J. Randall Robinson); (see AR 1470 (The
Fort Bliss competition pilot “result[ed] in a 20% cost savings to the Army over the life of the
contract.”)).

Pride Industries, the incumbent contractor at Fort Bliss, alleged that the Pilot Program
conflicted with JWOD and challenged that procurement under the Administrative Procedure Act
(“APA”), 5 U.S.C. § 500 et seq. Pride Indus., Inc. v. Comm. for Purchase From People Who Are
Blind or Severely Disabled, 420 F. Supp. 3d 1035 (E.D. Cal. 2019). Pride Industries sought a
preliminary injunction to enjoin AbilityOne from further action to award a services contract. /d.
at 1037. Similar to this Court’s decision in Me/wood I, the court in Pride Industries found that
the adoption of the Pilot Program itself did not meet the standards for “final agency action”
required by the APA, thus Pride Industries could not demonstrate the first element necessary to
obtain injunctive relief. /d. at 1045. However, that court noted “serious questions regarding
whether the Pilot Program is fully compliant” with JWOD. /d. at 1046, n.4.
Following the initial competition pilot at Fort Bliss, “[i]Jn December 2019, the Army
requested that the Commission conduct [the next] allocation Competition Pilot Test” for the
BOSS contract at Fort Meade, Maryland. (AR 1471, 340-42). In January 2020, the Section 898
Panel submitted its second report to Congress. (Compl. Exhibit 1 (Second Annual Report)). In
the Second Annual Report, the Section 898 Panel, on Recommendation 16—“[e]stablish
business rules for competition and assignment of work among AbilityOne Program NPAs’—
stated that “[t]he Commission does not have any business rules for competition and re-
competition but they are in the process of revising the C.F.R. to acknowledge Commission
authority to reallocate work.” (Second Annual Report at 50).

The Section 898 Panel stated that a Course of Action should include revising 41 C.F.R.
§ 51 “to clarify the Commission’s authority to transfer work within the AbilityOne Program”
because “[i]ncreasing competition within the AbilityOne Program will promote employment
growth among people who are blind, disabled, and veterans; and will have a positive impact on
pricing for federal customers.” (Second Annual Report at 51). However, these proposed
revisions to 41 C.F.R. § 51 never occurred.

In the Second Annual Report, the Section 898 Panel also stated that the timeline for
implementing Recommendation 18—reduce the existing gaps and deficiencies in CNAs’
processes—was intended to include a “12 month timeline (after pilot contract [for Fort Bliss] is
awarded) for AbilityOne Commission to evaluate best practices and lessons learned from the
Commission/Army Pilot (December 2020).” (Second Annual Report at 56). As also
demonstrated in the current record, AbilityOne had not complied with the second Section 898
Panel report recommendations. Moreover, Congress again did not act on the Section 898 Panel’s
recommendations and to date, AbilityOne did not enact new regulations, acting instead by
unilateral policy.

On May 16, 2020, the AbilityOne Commission emailed Melwood’s President & CEO to
advise that the Army had selected the Fort Meade BOSS contract as the second service contract
to be competed using a competition pilot as it has done in the past. (AR 347). On May 28, 2020,
the AbilityOne Commission and the Army executed a Memorandum of Agreement
memorializing procedures to be employed for conduct of the competition pilot for the Fort
Meade BOSS contract. (AR 358). The purpose of the Memorandum of Agreement was “[t]o
maximize savings and create a ‘competitive’ contracting environment to the greatest extent
possible,” with an ultimate goal to “incorporate lessons learned from the pilot program towards
developing a competitive process for the AbilityOne Commission to use on acquisitions Army-
wide in an effort to obtain efficiencies with AbilityOne contracts.” (AR 354). The Memorandum
of Agreement provided that “SourceAmerica will identify qualified participating NPAs with
capability to perform [base operations] services and issue the RFP/Opportunity Notice to the
NPAs.” (AR 355). The Memorandum of Agreement also provided that “[a]n Evaluation Team,
Chaired by the Commission’s Director of Contracts and Policy, will evaluate NPA proposals
against the stated Evaluation Factors.” (/d.). As stated in the Memorandum of Agreement, “[t]he
Commission and MICC will provide Cost/Price Analysis to evaluate Cost/Price submissions
from NPA,” and that, “[c]onsistent with the AbilityOne Commission’s statute and regulations, at
the conclusion of any negotiations, the Commission will make the final determination of the
[Fair Market Price].” (/d.).
EE. The Opportunity Notice and Amendments

On December 11, 2019, the Army conducted an Independent Government Estimate
(“IGE”) for pricing of the Ft. Meade Contract. (AR 333-39). The IGE estimated a base year total
of $26,062,290.04. (AR 334). The IGE estimated a five-year total of $136,521,931.90. (AR
339).’

On July 14, 2020, the AbilityOne Commission formally voted, authorizing the
competition pilot process for the Fort Meade BOSS Contract among the qualified non-profit
agencies. (AR 1541). On July 15, 2020, SourceAmerica published Opportunity Notice/Response
Submission Form (Version 1) #3923, the Opportunity Notice for the competition pilot. Proposals
were to be due on September 8, 2020. (AR 1548). A phase-in period was anticipated between
November 1, 2020 and December 31, 2020. U/d.). The Opportunity Notice provided that its
purpose is “to conduct a competition that will include price competition among qualified
participating nonprofit agencies of the AbilityOne Program to authorize a NPA to perform the
work pursuant to 41 USC § 8503(c), 41 CFR Ch. 51, FAR 8.7 and FAR 8.002.” (AR 1547)
(emphasis added).

Opportunity Notice #3923 required that the NPAs submit “a price response alongside the
technical response for review and assessment by the [Integrated Process Team®] evaluators.”
(AR 1547). The AbilityOne Commission anticipated recommending “the NPA whose response:
1) presents a technically acceptable offer under the Technical Response and; 2) [p]rovides the
best value to the Government based upon an integrated assessment between past performance
and price.” (AR 1548). In the tradeoff between past performance and price, the Opportunity
Notice provided that “past performance is approximately equal to price. However, the greater
equality of Past Performance ratings amongst NPAs, the more important price becomes.” (/d.).
Past performance will be evaluated for recency and relevancy. (AR 1550-51). The Opportunity
Notice provided that “Price will not be scored or rated,” but specified that “[a]ll CLIN and sub-
CLIN prices will be evaluated for Price Reasonableness and Balance.” (AR 1552).

F. Proposals and Evaluations

NPAs—Melwood, ee. and HE — responded to the
Opportunity Notice by timely submitting proposals. (AR 2834-3389). Each proposal contained
five volumes: the Response Submission Form; the Project Development Plan; a Right of First
Refusal Implementation Plan; a Pricing Matrix; and a Financial Sustainability Worksheet.

proposed the lowest total price of a. for the base year, plus four option

 

7 On July 23, 2020, the Army revised its IGE. (AR 2697-703). It estimated that the contract,
including the base year, four option years, plus a six-month option to extend, would cost
| (AR 2703). The IGE anticipated a base year cost of . (AR
2698).

® The Integrated Process Team (“IPT”) is “managed by the U.S. AbilityOne Commission in

conjunction with the federal customer, the U.S. Army, with assistance from SourceAmerical. |”
(AR 1547).
years and a six-month extension, if exercised. (AR 3386). po proposed a base year price

ofa roximately ne. (Id.). | | proposed the next lowest overall price, a total of

a a: of time. (AR 3078). | | proposed a base year price of
approximately . Id.). proposed a total price , | over the
same period of time. (AR 2974). proposed a base year price of approximately
P| (Id.). roposed a total price of a for the same
eriod of time. (AR 3222). proposed a base year price of approximately

. Id.).

   
 
  

 
 
 
   
  

  
    

Melwood now brings this action seeking to enjoin AbilityOne from awarding a contract
under the Pilot Program procedures.

II. Analysis

The parties’ cross-motions raise at least three distinct issues, broadly stated as follows:
(1) whether Melwood’s second assertion of a pre-award bid protest is timely in light of Blue &
Gold Fleet, L.P. v. United States, 492 F.3d 1308 (Fed. Cir. 2007); (2) whether the United States
acted arbitrarily and capriciously or contrary to law when it included a price component in an
AbilityOne procurement; and (3) whether the United States violated the Procurement Integrity
Act (“PIA”) when it filed the Robinson Declarations in Me/wood J. As explained below,
Melwood’s second protest was timely filed. In the Court’s view, Melwood has sufficiently
demonstrated that the United States conducted the Fort Meade AbilityOne procurement using
procedures that are contrary to law and has demonstrated that it is entitled to injunctive relief.
However, Melwood has failed to establish that the United States violated PIA because it did not
timely raise that issue with AbilityOne.

A. Melwood’s second protest is timely, thus the United States’ Motion to Dismiss is
denied.

In its Response and Cross-Motion for Judgment on the Administrative Record, the United
States moves to dismiss Melwood’s protest as untimely filed. (Def.’s Mot. at 5, ECF No. 22). In
support of its Motion, the United States argues that despite Melwood’s prior protest, Melwood’s
instant protest is untimely under the waiver rule established by the Federal Circuit in Blue &
Gold Fleet. (Id. at 8). The United States observes that the Court determined that Melwood’s first
challenge was premature. (/d.) It argues that Melwood’s combined failure to amend its
Complaint in that protest and its waiting 20 days to file another Complaint after the Court issued
the Melwood J decision constitute Melwood’s “{sitting] on its rights to challenge what it believed
was an unfair solicitation|[.]” (/d.). Consequently, the United States argues, the Court must
dismiss Melwood’s Complaint. (/d. at 10).

Melwood responds that its initial protest put the United States on notice of perceived
deficiencies in the procurement process for Opportunity Notice 3923—the Opportunity Notice
for this competition pilot. (Pl.’s MJAR at 3, ECF No. 15). Melwood asserts that once it received
notice of the Court’s decision in Me/wood J, it diligently prepared a second, more targeted
protest. (/d.). Melwood persuasively contends that it did not “[sit] on its rights” but rather
“vocally object[ed]” to serious flaws in the procurement, bringing its concerns to the attention of
both the Court and the procuring agency. (/d. at 3-4).

10
In Blue & Gold Fleet, the Federal Circuit recognized the utility of adopting a rule, based
on laches and equitable estoppel, that barred a protestor who “[had] the opportunity to object to
the terms of a government solicitation containing a patent error and failed to do so prior to the
close of the bidding process[.]” 492 F.3d at 1315. The Federal Circuit held that where a protestor
knew of a patent legal defect in the procurement but waited to protest until after the agency
selected a proposal, that the protestor had waived its opportunity to raise the issue. /d. The Blue
& Gold waiver rule “implements Congress’s directive . . . that courts ‘shall give due regard to . .
. the need for expeditious resolution’ of protest claims.” Bannum, Inc. v. United States, 779 F.3d
1376, 1380 (Fed. Cir. 2015) (quoting 28 U.S.C. § 1491(b)(3)).

While the scope of the Federal Circuit’s holding in Blue & Gold Fleet was limited to
objections made prior to the close of the bidding process, the Circuit expanded that rule in
COMINT Sys. Corp. v. United States, 700 F.3d 1377 (Fed. Cir. 2012). In COMINT, the Circuit
considered whether a protest to a post-bidding process, pre-award amendment was timely when
it was brought after the agency made the award. /d. at 1381-82. The Circuit determined that the
protest was not timely, finding that the protestor must have raised its challenge to the post-
bidding process amendment prior to an award. /d. at 1381. The Circuit went further, however,
clearly stating that “[t]he same policy underlying B/ue & Gold supports its extension to all pre-
award situations.” /d. at 1382. In justifying its decision, the Circuit reasoned that, like in Blue &
Gold Fleet, the protestor had “ample time and opportunity to raise its objections . . . but chose
instead to wait and see whether it would receive” the award of the contract. /d. at 1383. The
Circuit characterized its decision as denying the protestor a “second bite at the apple,” or absent
the metaphor, a second opportunity to participate in the bidding process. /d.

Here, Melwood does not seek a “second bite at the apple,” nor has it “sat on its rights”
because it has, from the beginning, vocally and diligently asserted a flaw in the procurement
process. In Melwood I, Melwood sounded an early alarm about the procedures AbilityOne
attempts to utilize for its Pilot Program. Too early, in fact. In Mehwood J, the Court explained
that despite its concerns, it could not exercise jurisdiction before final agency action, and in
informing the parties of that defect, noted an eschewed remedy—an amended complaint. But that
does not change the fact that Melwood’s current protest is timely both for the purposes of the
Court’s jurisdiction and Blue & Gold Fleet. The purpose of the Blue & Gold waiver rule is to
ensure protestors raise concerns early, and diligently exercise their rights to avoid waste in
litigating portions of the procurement process that could have been rectified if the deficiencies
had been identified earlier. Blue & Gold Fleet, 492 F.3d at 1314. It is surely not intended to lay a
trap for the overly earnest. Therefore, the Court finds the Blue & Gold bar does not apply here
because in Mehwood I, Melwood raised its objections to the procurement at issue, and thus has
not waived them for the purposes of this protest. Accordingly, the United States’ Motion to
Dismiss must be denied.

B. The AbilityOne Pilot Program is contrary to law, thus Melwood is entitled to
judgment on the administrative record.

Melwood argues that the Pilot Program violates 41 U.S.C. §§ 8503-8504, as well as 41
C.F.R. § 51-2.7 and various provisions of the FAR. (Pl.’s MJAR at 21-24, ECF No. 15-1).
Melwood further argues that the 2017 NDAA did not authorize any changes to those statutes and
regulations that would permit the creation of the Pilot Program. (/d. at 25). Finally, Melwood

11
argues that the United States’ decision to recompete the Fort Meade contract is unsupported by
the Administrative Record, and thus is arbitrary and capricious. (/d. at 25-34).

The United States counters by citing heavily to the deference the Court owes to
administrative agencies. The United States argues that agencies have wide discretion to take
actions unless those actions are specifically prohibited by law. (Def.’s Mot. at 11). The United
States walks through the relevant provisions of the JWOD Act, its administering regulations, and
the FAR in arguing that no single provision specifically prohibits implementation of a Pilot
Program or a price-based competition for AbilityOne procurements. (/d. at 11-24).

The Court reviews agency procurement decisions to determine whether the agency’s
actions were “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with
law.” Info. Tech. & Applications Corp. v. United States, 316 F.3d 1312, 1319 (Fed. Cir. 2003)
(quoting the APA, 5 U.S.C. § 706(2)(A)) (internal quotation marks omitted). Under this
standard, an agency’s decision “may be set aside if either: (1) the procurement official’s decision
lacked a rational basis; or (2) the procurement procedure involved a violation of regulation or
procedure.” Jmpresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324,
1332 (Fed. Cir. 2001). On the first ground, contracting officials are entitled to exercise
discretion, but must provide “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.” /d. at 1333 (internal citations and quotation marks omitted). To win a protest
brought on the second ground, the protestor must show “a clear and prejudicial violation of
applicable statutes or regulations.” /d. (internal quotation marks omitted).

The Court begins by recognizing that it does owe a great deal of deference to
administrative agency determinations. Glenn Def Marine (ASIA), PTE Ltd. v. United States, 720
F.3d 901, 907 (Fed. Cir. 2013) (citing Advanced Data Concepts, Inc. v. United States, 216 F.3d
1054, 1058 (Fed. Cir. 2000)). That deference is not, however, unbridled. The question here is
essentially whether AbilityOne, forsaking its own rulemaking authority, is permitted to overwrite
the JWOD Act and its corresponding regulations through “Interim Policies” that create a “Pilot
Program.” Because the Court concludes that JWOD and the regulations promulgated thereunder
established a scheme of “other-than-competitive” procurements with a collaborative pricing
process, the United States’ pilot program is contrary to law. This is not to say that introducing a
price component can never be utilized in AbilityOne procurements, nor that use of competitive
pricing may not be advantageous to the United States. On the contrary, the Court only holds that
the agency may not depart from its enabling statutes and its own regulations by adopting policies
that conflict with the statutory and regulatory scheme.

The crux of Melwood’s challenge is whether AbilityOne’s Pilot Program, implemented
through interim procurement procedures, is a permissible exercise of agency authority, or
whether those “Interim Policies” are in contravention of applicable statutes or regulations.
Because Congress and AbilityOne have previously set forth procedures for conducting
AbilityOne Program procurements, Melwood’s challenge must succeed if the “Interim Policies”
contravene duly enacted statutes or AbilityOne regulations that have suffered the notice-and-
comment rulemaking procedures.

12
Thus, there are two elements to Melwood’s challenge. First, whether the Pilot Program
procedures run afoul of AbilityOne’s charging statutory authority. Second, whether the Pilot
Program procedures run afoul of AbilityOne’s own procurement regulations.

(1) The Pilot Program is contrary to 41 U.S.C. § 8504.

 

The answer to the first question is fairly short. AbilityOne created the Pilot Program
using “Interim Policies.” These Interim Policies are essentially a pair of internal policy memos
detailing how the Pilot Program will change its procurement procedures to add, among other
things, a price component. (AR85-—87, 88—90). The Interim Policies cite to the JWOD Act and
Section 898 of the NDAA as the authority for changes to AbilityOne’s pricing policies. (AR85,
88).

The JWOD Act created the AbilityOne Commission and vested it with regulatory
rulemaking authority. 41 U.S.C. §§ 8502(a), 8503(d). JWOD also specified that AbilityOne was
to conduct these procurements differently than traditional procurements. See Pride Indus, 420 F.
Supp. 3d at 1046 n.4 (“the JWOD Act creates a uniquely tailored statutory scheme for providing
government services contracts to the blind or severely disabled.”). Particularly, JWOD mandated
that AbilityOne “maintain and publish in the Federal Register a procurement list. The list shall
include the following products and services determined by the Committee to be suitable for the
Federal Government to procure pursuant to this chapter[.]” 41 U.S.C. § 8503(a)(1). AbilityOne
was also charged with setting the prices of products and services on the procurement list.

§ 8503(b). Finally, and most significantly, JWOD specified that when the government procures a
product or service, it must do so according to the regulations established by AbilityOne. 41
U.S.C. § 8504.

As the Court will explain below, because AbilityOne and the Army failed to follow
AbilityOne’s procurement regulations, it has also violated § 8504 (the contracting activity “shall
procure the product or service from a qualified nonprofit agency . . . in accordance with
regulations of the Committee and at the price the Committee establishes) (emphasis added).

Furthermore, the NDAA did not endeavor to change any of these statutes to exempt a
“Pilot Program” from AbilityOne’s established procurement procedure. See Pride Indus., Inc.,
420 F. Supp. 3d 1035, 1046 n.4 (the NDAA “does not appear to confer blanket authority to
completely reform contracting processes covered by the JWOD Act.”). The Court has previously
explained why citation to the NDAA as a basis for the Pilot Program is problematic:

A plain reading of the NDAA indicates that the 898 Panel is only authorized
to provide recommendations, not implement new procedures for AbilityOne
procurements. NDAA § 898(c)(2)-(7). Subsection (e) circumscribes the
“authority” of the 898 Panel:

To carry out the duties described in subsection (c), the Panel may
request documentation or other information needed from the
AbilityOne Commission, central nonprofit agencies, and qualified
nonprofit agencies.

13
NDAA § 898(e). All that is granted, under a plain reading of the text, is the
power to collect information in order to take the actions contemplated by
subsection (c). Notably, seven of the eight delineated “duties” of the 898
Panel, as defined in subsection (c), begin with “recommend actions,”
“recommend changes,” “recommend ways,” “recommend criteria,” or
“review the status” of the program. NDAA § 898(c)(1)-(7). The eighth duty
would require a determination by the Secretary of Defense, not simply the
initiative of AbilityOne or a “contracting activity,” such as the Army.

99 oe

Melwood I, 151 Fed. Cl. at 311.

The United States argues that Congress tacitly approved of the Pilot Program when it
received the Third Annual Report from the Section 898 Panel. (Def.’s Reply at 13, ECF No. 31).
It follows, the United States argues, that Congress did not share Melwood’s concerns over the
legality of the Pilot Program or it would have acted by legislating. (/d.). However, the Supreme
Court has recently reaffirmed that “when Congress has not comprehensively revised a statutory
scheme . . . itis impossible to assert with any degree of assurance that congressional failure to
act represents affirmative congressional approval|[.]” AMG Cap. Mgmt., LLC v. Fed. Trade
Comm'n, _ 8. Ct. ___, No. 19-508, 2021 WL 1566607 (U.S. Apr. 22, 2021) (cleaned up).
Accordingly, the Court rejects the contention that Congress approved of the Pilot Program
because it could have acted, but chose not to. The lack of congressional action on the Section
898 Panel recommendation to explore competitive pricing in a program that had historically
eschewed such is of no significance.

The JWOD makes clear that procurements must be conducted according to AbilityOne
regulations. The NDAA makes no exception for a Pilot Program. Therefore, as the Court will
explain in further detail below, since AbilityOne failed to follow its own procurement regulations
published in Title 41, Chapter 51 of the C.F.R., its Pilot Program procurement procedures are
contrary to statute.

(2) The Pilot Program is contrary to applicable AbilityOne regulations.

As stated above, JWOD authorized AbilityOne to promulgate regulations to govern its
unique procurements. 41 U.S.C. § 8503(d); see also FAR § 6.302-5(b)(2) (exempting AbilityOne
procurements from full and open competition in favor of procedures established by FAR subpart
8.7). Pursuant to its statutory authority, AbilityOne has published a number of procurement
regulations in Title 41, Chapter 51 of the C.F.R. As required by the APA, with these regulations,
AbilityOne adopted the following statement of general purpose:

It is the policy of the Government to increase employment and training
opportunities for persons who are blind or have other severe disabilities
through the purchase of commodities and services from qualified nonprofit
agencies employing persons who are blind or have other severe disabilities.

41 CFR. § 51-1.1; see also 5 U.S.C. § 553(c).

Within Chapter 51, Part 51-2.7 specifies how prices are determined for commodities and
services on the Procurement List. 41 C.F.R. § 51-2.7. Prices are initially set at the time the

14
product or service is added to the Procurement List. § 51-2.7(a). That initial price can be
developed through negotiations with the nonprofit contractor, the contracting activity, and the
central nonprofit agency. § 51-2.7(a). This process is inherently collaborative and, by the terms
of JWOD and the regulations thereunder, occurs after a nonprofit is selected. The parties must
agree to any deviation from this process. § 51-2.7(a) (Jfagreed to by the negotiating parties, the
initial price may be developed using other methodologies[.]”) (emphasis added).

AbilityOne may revise prices “in accordance with changing market conditions under
Committee procedures, which include negotiations between contracting activities and producing
nonprofit agencies, assisted by central nonprofit agencies, or the use of economic indices,
changes in nonprofit agency costs, or other methodologies permitted under these procedures.”
§51-2.7(b) (emphasis added). While “other methodologies” (aside from negotiations) are
permitted to establish a price, subpart (c) stresses that the nonprofit, as well as the other relevant
entities, must agree on the changes in price or pricing procedure. § 51-2.7(c)
(“Recommendations for initial fair market prices, or changes thereto, shall be submitted jointly
by the contracting activities and nonprofit agencies concerned to the appropriate central
nonprofit agency.”) (emphasis added). In sum, AbilityOne has a long-established pricing
procedure that explicitly includes the nonprofit agency in a collaborative price-setting process
that occurs after an award decision.

Prior to the Pilot Program, AbilityOne also interpreted these regulations to require
selected nonprofit agencies to actively participate in the development and negotiation of price.
See AbilityOne Commission Policy 51.620, Pricing AbilityOne Services, Section 5(c) (“NPAs
shall actively participate in the development and negotiation of the Recommended-FMP[.]|”). In
contrast, however, the Pilot Program does not contemplate collaborative pricing. The two
“Interim Policy” memos establishing the Pilot Program create a competition where interested
nonprofit agencies must submit a price bid for consideration by AbilityOne. Interim Policy
51.301.1, “a companion to existing policy 51.301,” communicated changes to aspects of pilot
test(s) in which “a competitive nonprofit agency (NPA) recommendation process will be
conducted, considering technical capability, past performance, and price. The pilot test will result
in the competitive reallocation of a project already on the Procurement List and establishment of
a new Fair Market Price.” (AR 85). Additionally, Interim Policy 51.620.1 directed that now,
“NPAs shall provide their pricing information in accordance with the instructions included in the
Opportunity Notice as well as existing and interim Commission policy and procedures.” (AR
88).

In this way, the Interim Policies, which do not carry the force of law, directly contradict
the provisions of 41 C.F.R. § 51-2.7. The United States argues that the competition is merely a
means of price discovery, and that even with the Pilot Program, prices will still be set
collaboratively. (Def.’s Mot. at 13-18). This argument is paper-thin. AbilityOne is conducting a
competition to determine which nonprofit agency to add to the Procurement List. Because the
Pilot Program requires nonprofit agencies to suggest a price before even being considered for the
Procurement List, it forces them to negotiate against themselves before they are added to the
Procurement List and thus eligible to receive the contract. Not only does the Pilot Program’s
procedure not align with the collaborative price-setting process contemplated by 41 C.F.R. § 51-
2.7, Interim Policy 51.620.1 Section 6 fails to modify its counterpart in AbilityOne Commission
Policy 51.620, Section 6(a) which states that the fair market price is “founded in negotiations

15
between the Government contracting activity .. . and the designated NPA(s)[.]” (emphasis
added). While internal policy memos such as these “lack the force of law,” they may be
persuasive. Christensen vy. Harris Cty., 529 U.S. 576, 587 (2000). The Court is persuaded that to
the extent the Pilot Program attempts to solicit a price offer from nonprofit agencies prior to their
addition to the Procurement List, that Interim Policy is not only prohibited by 41 C.F.R. § 51-2.7
but also conflicts with established AbilityOne internal policies interpreting the same regulation.

2

The United States further argues that this is not really a competition based solely on price
because the Opportunity Notice contemplates evaluation of other factors. (Def.’s Mot. at 19). It
is not simply that a “lowest price technically acceptable” procurement is prohibited by 41 C.F.R.
§ 51-2.7, but rather AbilityOne’s introduction of a cost element prior to selection of the
nonprofit agency is what causes this Pilot Program to fall outside of the regulatory scheme
AbilityOne has created through notice and comment rulemaking. Although it is true that the
Opportunity Notice contemplates accepting the “best value” offer when weighing “past
performance and price[,]” it also makes clear that “the greater [the] equality of Past Performance
ratings among NPAs, the more important price becomes.” (AR 2709). The United States cannot
plausibly argue that AbilityOne blinds itself to the prices nonprofit agencies offer as they vie for
a coveted spot on the Procurement List. Therefore, the competition becomes inherently price-
centric in violation of 41 C.F.R. §51-2.7.

The United States cites 7ler Const. Grp. v. United States, 570 F.3d 1329 (Fed. Cir.
2009) in support of the proposition that agencies have substantial leeway for creativity where an
action is not specifically prohibited by a statute or regulation. (Def.’s Mot. at 11, 16, 20). In
Tyler Const., a small business general contractor sought to enjoin the U.S. Army Corps of
Engineers from awarding an indefinite delivery/indefinite quantity (“IDIQ”’) contract for the
design and construction of military facilities. 570 F.3d at 1330. That procurement was conducted
(and challenged) under the general provisions of the FAR. /d. at 1331. Denying the protest, the
Federal Circuit agreed with the trial court that “the various provisions of the FAR offer little
insight” into whether the Army Corps of Engineers’ use of IDIQ contracts was authorized. 7/er
Const. Grp., 570 F.3d at 1331-32 (quoting 7yler Constr. Grp. v. United States, 83 Fed. Cl. 94,
95 (2008)) (internal quotes omitted). Therefore, the Circuit relied on the “Statement of guiding
principles for the Federal Acquisition System,” which provides:

(d) The role of each member of the Acquisition Team is to exercise personal
initiative and sound business judgment in providing the best value product or
service to meet the customer's needs. In exercising initiative, Government
members of the Acquisition Team may assume if a specific strategy, practice,
policy or procedure is in the best interests of the Government and is not
addressed in the FAR nor prohibited by law (statute or case law), Executive
order or other regulation, that the strategy, practice, policy or procedure is a
permissible exercise of authority.

48 CFR. § 1.102.

Unlike 7y/er Const., here there is no gap in the applicable procurement regulations. The
procuring agency—AbilityOne—has established its own procedures through the formal APA
rulemaking process. 41 C.F.R. § 51-2.7. It cannot then create an alternative set of “interim” rules

16
that directly conflict with the formal procurement procedures. As Melwood has succinctly
argued, AbilityOne’s “creation and adoption of its “Interim Test Pilot Procedures’ cannot trump
or replace the laws as written. Those ‘Procedures’ . . . are not subject to public comment. |”
(Pl.’s MJAR at 24). In other words, once the legislative rules established by an agency create a
set of procurement procedures, there is an implicit prohibition on conducting a procurement
using alternative procedures which vastly alter the requirements of the bidding process. See
McDonnell Douglas Corp. v. United States, 670 F.2d 156, 160 (Fed. Cir. 1982) (“The terms and
policy of applicable procurement regulations are to be followed, not thwarted.”); Voge v. United
States, 844 F.2d 776, 779 (Fed. Cir. 1988) (“It has long been established that government
officials must follow their own regulations, even if they were not compelled to have them at all,
and certainly if directed to promulgate them by Congress, as in this case.”).

The United States further argues that 41 C.F.R. § 51-2.7(a) merely “permit[s],” but does
not require negotiations to determine a fair market price. (Def.’s Reply at 5 n.3). Similarly, the
United States submits that “other methodologies” contemplated by the regulations permit
AbilityOne to establish a new scheme for price discovery. (/d. at 5, 11-13). The United States
claims that the Court must show deference to these interpretations as a matter of agency
policymaking. (/d. at 11-12). These arguments invite the Court to simply accept AbilityOne’s
interpretation of its own regulations in addition to the JWOD Acct, (see id. at 11-12), yet the
United States fails to include any discussion of Kisor v. Wilkie, 139 S. Ct. 2400, 2414 (2019),
Auer v. Robbins, 519 U.S. 452 (1997), or Bowles v. Seminole Rock & Sand Co., 325 U.S. 410
(1945), a line of cases that discuss the ever-shrinking deference that courts owe to agency
interpretations. Nevertheless, those arguments appear to reflect merely the “convenient litigating
position” of the United States, as the Interim Policies do not cite to 41 C.F.R. § 51-2.7 at all,
much less attempt to justify the Pilot Program as one of the “other methodologies” allegedly
permitted by § 51-2.7. The Court must decline “to defer to a merely convenient litigating
position or post hoc rationalization” when reviewing agency actions. Kisor, 139 S. Ct. at 2417
(cleaned up). Following Kisor here negates those arguments.

The Court concludes that the AbilityOne procurement conducted under the Pilot Program
is a “clear and prejudicial” violation of statute and regulation. See Impresa, 238 F.3d at 1333.
The violations are “clear” because Congress and AbilityOne have developed a procurement
scheme that excludes a price component. The Pilot Program not only includes price competition
but makes price a central component of the selection criteria. The violations are “prejudicial” in
that the Pilot Program fundamentally changes how AbilityOne contracts are bid, forcing
nonprofit agencies such as Melwood to balance providing opportunities for its most severely
disabled employees with cutting expenses to offer a low bid. (See Decl. of Larysa Kautz at ¥ 13,
Melwood T, Case No. 20-758, ECF No. 44-2). Therefore, the Court finds that the Pilot Program
constitutes both a clear and prejudicial violation of 41 U.S.C. § 8504 and 41 C.F.R. § 51-2.7.

Returning to the Court’s earlier metaphor, the horse pulls the cart, but it does not
determine its destination. In this sense, the driver allows the horse to choose its own steps as it
travels the path to the chosen destination. Ultimately, AbilityOne is the master of its own
procurement procedure and may choose the steps it takes to conduct procurements. But as “the
horse,” it must work within the commands transmitted by the harness and reins established by
Congress. Here, Congress granted AbilityOne formal rulemaking authority, which it can and has
used to establish the procurement scheme it desires. Granted, it must submit its rules to formal

17
notice-and-comment procedures but at the end of the day, AbilityOne likely has the rulemaking
authority to craft procurement procedures that include a price component. It cannot, however,
eschew that APA-mandated process to run a Pilot Program procurement using procedures that
are fundamentally different from those “legislative rules” contained in Title 41 of the C.F.R.
Should this Court allow the Pilot Program to stand, AbilityOne could presumably eschew 41
C.F.R. § 51-2.7 indefinitely in favor of its Pilot Program procedures. That extra-legal exercise of
agency authority is unsanctioned by law or agency regulations.

C. Because the Court concludes the Pilot Program is contrary to law, it need not
determine whether AbilityOne ’s decision to recompete the contract is supported by
the administrative record.

Melwood argues that even if the United States were permitted to proceed with the Pilot
Program, the Army’s selection of Fort Meade was arbitrary and capricious and lacked a rational
basis because it was unsupported by the administrative record. (Pl.’s MJAR at 25-31).
Additionally, Melwood argues that even if the Pilot Program were legal, the program does not
relate back to the goals of the 898 Panel’s recommendations and therefore lacks a rational basis.
(/d.). The Court directly addressed this first argument in Me/wood J, transferring that count to the
District of Maryland. 151 Fed. Cl. at 311. The Court need not address the second argument
because, as explained above, it concludes the Pilot Program is contrary to law.

D. The United States did not violate the Procurement Integrity Act

In Melwood T, the United States filed two declarations from J. Randall Robinson. (Case
No. 20-758, ECF Nos. 9, 27). Melwood argues that in releasing the declarations, the United
States disclosed source selection information in violation of FAR § 1.102 and the Procurement
Integrity Act (“PIA”), 41 U.S.C. § 2102(a)(1). (P1.’s MJAR at 34; Pl.’s Reply at 23-29, ECF No.
25). However, as the United States points out, Melwood failed to satisfy the reporting
requirements necessary to assert a PIA violation.

To assert a PIA violation under § 2102, Melwood was required to notify AbilityOne
within 14 days of the alleged violation:

A person may not file a protest against the award or proposed award of a
Federal agency procurement contract alleging a violation of section 2102,
2103, or 2104 of this title, and the Comptroller General may not consider that
allegation in deciding a protest, unless the person, no later than 14 days after
the person first discovered the possible violation, reported to the Federal
agency responsible for the procurement the information that the person
believed constitutes evidence of the offense.

41 U.S.C. § 2106. Melwood asserts that it met those requirements by raising its concerns with
the Department of Justice in July 2020, and with SourceAmerica on October 15, 2020. (PI.’s
Reply at 26-27).

First and foremost, SourceAmerica is not a government agency or advisor, thus

Melwood’s report to SourceAmerica could not have preserved its PIA claim. Second, the
Department of Justice is not “the Federal agency responsible for the procurement.” Therefore, a

18
report to the Department of Justice, even if it contained the necessary evidence to support a PIA
claim, does not satisfy the Procurement Integrity Act statutory reporting requirements. Melwood
has failed to establish that the United States violated PIA because it did not timely raise that
issue with the appropriate agency. Because Melwood did not raise a timely PIA violation, the
Court need not decide the other issues related to Amended Complaint Count IIT.

E. Melwood has demonstrated entitlement to injunctive relief.

Having concluded that the United States, acting through AbilityOne and the Army, is
conducting the procurement for the BOSS Contract at Fort Meade in a manner that is contrary to
law, the Court must now fashion a remedy. In its Amended Complaint, Melwood requests the
following injunctive relief:

1. A declaration that the selection of the Ft. Meade [BOSS] contract for the
pilot program was arbitrary and capricious and an abuse of discretion;

2. An order enjoining the Commission from issuing an award for a new base
operations services contract at Fort Meade until such time as the Court
can determine the propriety of the Pilot Program;

3. An order enjoining the Commission from pursuing the Pilot Program as
it violates the Javits-Wagner-O’Day Act, 41 U.S.C. §§ 8501-8506, 41
C.F.R. 51 and the implementing regulations set forth at FAR Part 8.7,
found at Chapter 48 of the Code of Federal Regulations;

(Am. Compl. at 19).

The Tucker Act authorizes the Court to award declaratory and injunctive relief in bid
protest actions. 28 U.S.C. § 1491(b)(2). In deciding whether permanent injunctive relief is
warranted, the Court considers four factors: (1) whether the movant has succeeded on the merits;
(2) whether the movant will suffer irreparable harm absent an injunction; (3) the balance of
hardships; and (4) the public interest. PGBA, LLC v. United States, 389 F.3d 1219, 1228-29
(Fed. Cir. 2004); see also Centech Grp., Inc. v. United States, 554 F.3d 1029, 1037 (Fed. Cir.
2009) (same).

A permanent injunction first requires success on the merits. Amoco Prod. Co. vy. Vill. of
Gambell, Alaska, 480 U.S. 531, 546 n.12 (1987) (citing University of Texas v. Camenisch, 451
U.S. 390, 392 (1981)). As held above, Melwood has succeeded on the merits of this case—the
Court agrees that the Pilot Program violates the applicable statutes and regulations for
AbilityOne procurements and thus is contrary to law. The United States correctly argues that the
Court may not direct a contract award, or direct that the United States retain Melwood to perform
the BOSS Contract at Fort Meade. (Def.’s Mot. at 42-43; Def.’s Reply at 19-20). But, as
reiterated above, Melwood does not seek such relief. (Am. Compl. at 19).

Melwood has demonstrated irreparable harm. Melwood was deprived of “the opportunity
to compete on a level playing field” due to statutory and regulatory violations. Hunt Bldg. Co. v.
United States, 61 Fed. Cl. 243, 280, modified, 63 Fed. Cl. 141 (2004). The Pilot Program
effectively changed the rules of the game by improperly adding a price component to the

19
procurement process. “Such a loss of opportunity to compete has been found sufficient to
constitute irreparable harm.” /d. Additionally, even if Melwood ultimately were successful
despite the newly introduced competitive pricing scheme, it would suffer economic harm arising
from a presumptively lower procurement bid. Therefore, absent an injunction prohibiting
AbilityOne from awarding a contract pursuant to the Pilot Program, Melwood will suffer
irreparable harm.

The United States could have argued that delay in the procurement process imposes a
hardship. See, e.g., Overstreet Elec. Co. v. United States, 47 Fed. Cl. 728, 744 (2000). However,
the United States makes no attempt to advance a hardship argument here. (See Def.’s Mot. at 42—
43; Def.’s Reply at 19). Therefore, the United States has waived that issue. SmithKline Beecham
Corp. v. Apotex Corp., 439 F.3d 1312, 1319 (Fed. Cir. 2006) (“Our law is well established that
arguments not raised in the opening brief are waived.”).

Public interest is served by ensuring “public officials treat contractors fairly and generally
obey procurement laws and regulations.” Transatlantic Lines LLC v. United States, 68 Fed. Cl.
48, 57 (2005). Here, Melwood has successfully demonstrated the Pilot Program violates both
procurement statutes and regulations. Therefore, an injunction preventing an award based on the
illegal Pilot Program undoubtedly serves the public interest.

Lastly, “those against whom an injunction 1s issued should receive fair and precisely
drawn notice of what the injunction actually prohibits.” Granny Goose Foods, Inc. v. Bhd. of
Teamsters & Auto Truck Drivers, 415 U.S. 423, 444 (1974) (citing Fed. R. Civ. P. 65(d)(1)).
Accordingly, pursuant to our counterpart, RCFC 65(d)(1), every order granting an injunction
must “(A) state the reasons why it issued; (B) state its terms specifically; and (C) describe in
reasonable detail—and not by referring to the complaint or other document—the act or acts
restrained or required.” Here, it is sufficient that the United States, acting through the AbilityOne
Commission and the Army, is permanently enjoined from awarding the Fort Meade BOSS
Contract pursuant to Opportunity Notice Number 3923 or conducting a procurement for the For
Meade BOSS Contract under procedures outlined in Interim Policy 51.301.1 and Interim Policy
51.620.1.

Il. Conclusion

The Pilot Program, an AbilityOne procurement program conducted according to Interim
Policy 51.301.1 and Interim Policy 51.620.1, is a clear and prejudicial violation of 41 U.S.C. §
8504 and 41 C.F.R. § 51-2.7. Melwood has succeeded in showing these violations and has
otherwise demonstrated entitlement to injunctive relief. Consequently, the Court ORDERS the
following:

(1) Melwood’s Motion for Judgment on the Administrative Record, (ECF No. 15), is
GRANTED with respect to Counts I & II and DENIED with respect to Count IIL.

(2) The United States’ Cross-Motion for Judgment on the Administrative Record,
(ECF No. 22), is DENIED with respect to Counts I & II and GRANTED with
respect to Count III.

(3) The United States’ Motion to Dismiss, (ECF No. 22), is DENIED.

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(4) The United States, acting through the AbilityOne Commission and the Army, is
PERMANENTLY ENJOINED from awarding the Fort Meade BOSS Contract
pursuant to Opportunity Notice Number 3923 or conducting a procurement for the
Fort Meade BOSS Contract under procedures outlined in Interim Policy 51.301.1
and Interim Policy 51.620.1.

The Clerk is directed to enter judgment accordingly.
IT IS SO ORDERED.

3/ David A. Tapp
DAVID A. TAPP, Judge

 

 

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