Court Opinion

ID: 4354061
Source: CourtListenerOpinion
Date Created: 2018-12-24 13:01:20.717272+00
Date Added: 2024-06-11T14:46:11.270758
License: Public Domain

In the United States Court of Federal Claims
   Nos. 18-1679C, 18-1758C, 18-1786C, 18-1813C, 18-1824C, 18-1852C, 18-1853C
                                  (consolidated)

                                (Filed: December 21, 2018)

************************************** *
                                       *
NAVIENT SOLUTIONS, LLC., et al.,       *
                                                        Pre-Award Bid Protest; Department
                                       *
                                                        of Education Loan Collections;
                    Plaintiffs,        *
                                                        Motion for Preliminary Injunction;
                                       *
                                                        Likelihood of Success on the
v.                                     *
                                                        Merits; Irreparable Harm; Balance
                                       *
                                                        of Hardships; Public Interests; 28
THE UNITED STATES,                     *
                                                        U.S.C. § 1491(b); RCFC 65(d);
                                       *
                                                        Granting Injunctive Relief.
                    Defendant.         *
                                       *
************************************** *

David R. Johnson, with whom were Tyler E. Robinson, Ryan D. Stalnaker, and Caroline
E. Colpoys, Vinson & Elkins LLP, Washington, DC for Plaintiff FMS Investment
Corporation.

Jana Moses, with whom were Joseph H. Hunt, Assistant Attorney General, Robert E.
Kirschman, Jr., Director, Patricia M. McCarthy, Assistant Director, Civil Division, U.S.
Department of Justice, Washington, D.C., as well as Sarah Falk, General Attorney, Office
of the General Counsel, U.S. Department of Education, for Defendant.

 OPINION AND ORDER DENYING MOTION FOR PRELIMINARY INJUNCTION

WHEELER, Judge.

       Before the Court is Plaintiff FMS Investment Corporation’s (“FMS”) motion for the
Court to (1) enjoin FMS’s incumbent Award Term Extension (“ATE”) contract for student
loan debt collection services from ending as scheduled in April 2019, and (2) require the
Department of Education (“ED”) to give FMS more accounts to service. The underlying
protest involves ED’s attempt to use a two-phase solicitation for student loan
administration services. After downselecting offerors to compete in Phase II, ED then
altered the services it sought, precipitating these protests. FMS, and other plaintiff Private
Collection Agencies (“PCAs”), which perform collection services on defaulted student
loans for ED, allege that ED improperly added these services to Phase II.

        On December 14, 2018, ED agreed to institute corrective action and issue a revised
NextGen solicitation by January 15, 2019. Nevertheless, FMS claims that ED fails to give
it enough defaulted student loan accounts under its ATE to survive until ED issues its
revised NextGen solicitation—assuming it includes PCA services—or issues another
solicitation for PCA services. For the reasons below, FMS’s motion is DENIED.

                                        Background

       FMS is one of seven Plaintiffs in this consolidated bid protest and one of several
PCAs that have appeared in a series of challenges to ED procurements for student loan debt
collection services. See, e.g., FMS Inv. Corp v. United States, 139 Fed. Cl. 221 (2018)
(enjoining ED’s cancellation of a PCA solicitation); FMS Inv. Corp. v. United States, 136
Fed. Cl. 439 (2018) (enjoining ED from recalling PCA accounts).

        The current bid protest involves ED’s two-phase “Next Generation Financial
Services Environment” (“NextGen”) procurement for student loan administration services.
ED initially began to develop NextGen through a two-phase solicitation. ED divided Phase
I into nine components, each for different types of services. ED evaluated Phase I offers
for each service component, then downselected certain offerors to compete in Phase II
according to the components that the offerors bid on in Phase I. ED then amended and
cancelled parts of the solicitation. Among other changes, Plaintiffs alleged that ED added
services typically performed by PCAs. FMS, among others, protested these changes,
claiming that ED denied them an opportunity to compete because ED’s Phase I solicitation
did not put them on notice that ED would inject PCA services into Phase II.

        On December 4, 2018, the Court heard oral argument on another Plaintiff’s motion
for a preliminary injunction to prevent ED from enforcing a deadline for offers on Phase II
of one of the NextGen components. At the Court’s urging, on December 14, 2018, ED
agreed to institute corrective action and publish a revised solicitation by January 15, 2019.
The Court agreed to stay proceeding until then.

       On December 19, 2018, FMS filed a motion for a temporary restraining order and
preliminary injunction. FMS claims that if the Court does not issue an injunction to force
ED to extend FMS’s ATE and provide FMS with accounts to service, FMS will be forced
to “layoff[] its employees and shutdown[] its infrastructure” creating a “corporate tailspin
from which” it cannot recover. Dkt No. 72, Pl. Mot. at 22. FMS’s ATE for PCA services
extends through April 2019. Dkt. No. 72, Pl. Mot., Ex. 1 at 2. FMS does not claim that
ED’s refusal to give it more accounts breached ED’s ATE terms with FMS. FMS does not
claim any legal entitlement to more borrower accounts other than generally claiming
irreparable harm.

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       FMS asks the Court to “(i) enjoin FMS’s incumbent [ATE] from ending, and (ii)
require ED to resume placement of a sufficient number of new default accounts to FMS
for FMS to service.” FMS claims that, “[b]ased on [its] performance history, a reasonable
and sufficient number of accounts would be 40,000” in the first month, “and 20,000
accounts thereafter for the duration of the injunction.” Dkt. No. 72, Pl. Mot. at 1.

       The Government responds that FMS is seeking relief above and beyond what is
needed to preserve the status quo during litigation. Moreover, FMS’s 2015 ATE provided
for a two-year period in which FMS would receive new accounts and a two-year in-
repayment retention period, in which ED would not furnish new accounts and FMS would
windup accounts that are in repayment. The Government argues that that process is
occurring according to the 2015 ATE terms and that FMS cannot claim financial hardship
stemming from the agreed-upon windup period as irreparable harm.

                                           Analysis

        This Court has broad authority to order injunctive relief in the context of bid
protests. See 28 U.S.C. § 1491(b); Turner Constr. Co., Inc. v. United States, 645 F.3d
1377, 1388 (Fed. Cir. 2011). The function of a preliminary injunction is to preserve the
status quo pending a determination of the action on the merits. Cont’l Servs. Grp., Inc. v.
United States, 722 Fed. Appx. 986, 994 (Fed. Cir. 2018). “[A] preliminary injunction is an
extraordinary and drastic remedy” that is not “routinely granted.” Akal Sec., Inc. v. United
States, 87 Fed. Cl. 311, 316 (2009).

        When deciding whether to grant a preliminary injunction, the Court weighs four
factors: (1) the likelihood of plaintiff’s success on the merits; (2) the prospect of irreparable
harm to the plaintiff in the absence of injunctive relief; (3) the balance of hardships; and
(4) the public interest. KWV, Inc. v. United States, 108 Fed. Cl. 448, 455 (2013); Serco,
Inc. v. United States, 101 Fed. Cl. 717, 720 (2011). No single factor is determinative, and
“the weakness of the showing regarding one factor may be overborne by the strength of
the others.” FMC Corp. v. United States, 3 F.3d 424, 427 (Fed. Cir. 1993).

       A.     Likelihood of Success on the Merits

       While the Court does not intend to make factual findings at this time, it is convinced
that Plaintiffs are likely to succeed on the merits of their bid protests. The administrative
record (“AR”) does not show that bidders should have or could have been aware that ED
might inject defaulted loan collection services into Phase II of the solicitation. The
Government argued that 20 U.S.C. § 1018a validates ED’s decision to rearrange Phase II
of the solicitation in any way that sees fit. The Government leans on 20 U.S.C. §
1018a(2)(A)(i)’s requirement that the agency need only provide a “general statement” of
what it intends to procure in Phase I of a two-phase procurement. However, the statute

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does not insulate ED from its obligation to not act arbitrarily. ED appears to have done
exactly that by adding PCA services to NextGen Phase II after downselecting the Phase I
offerors. In any case, ED has already agreed to take corrective action to address the
Plaintiffs’ allegations.

       Nevertheless, the success on the merits factor favors the government because even
if FMS prevails on the merits of its protest, judgment in its favor would do nothing to
remedy the harm FMS asserts in its motion. The purpose of a preliminary injunction is
to prevent harm to a plaintiff that may occur before a court can render a final judgment.
See Continental Serv. Grp., 722 Fed. Appx. 986, 994 (Fed. Cir. 2018). An injunction is
not intended to prevent all harm that could befall a plaintiff during a pending litigation, but
only that harm that could stem from failing to preserve the status quo while the case is
pending. Cf. Timberline Helicopters, Inc. v. United States, 140 Fed. Cl. 117, 121 (2018)
(denying preliminary injunction in part because the relief plaintiff requested was not an
irreparable harm that would be remedied by preserving the status quo ante).

       Here, FMS is asking for relief—an extended ATE and a certain quota of business
from ED—that it could not attain if the Court eventually rules in its favor. FMS argues
that the status quo includes some minimum amount of debt collection business. FMS is
mistaken. The status quo ante includes the windup period that FMS agreed to with ED
under the terms of its ATE. Therefore, the injunction FMS requests would go beyond
preserving the status quo. Further, FMS requests relief that would not be available to it
even if the Court ultimately found in FMS’s favor. The Court cannot grant preliminary
injunctive relief beyond that which preserves the status quo pending the resolution of the
protest or that exceeds the scope of relief available to FMS upon final judgment.

       B.     Irreparable Harm

       For similar reasons, FMS’s motion must fail because FMS cannot demonstrate
irreparable harm stemming from this Court’s deciding not to award injunctive relief. [A]
protestor “must show that without a preliminary injunction it will suffer irreparable harm
before a decision can be rendered on the merits.” Akal Security, Inc. v. United States, 87
Fed. Cl. 311, 319 (2009). Losing an opportunity to compete may constitute irreparable
harm. See Lab. Corp. of Am. v. United States, 108 Fed. Cl. 549, 568 (2012). Losing key
personnel and going out of business may also constitute irreparable harm. FMS Inv. Corp.,
136 Fed. Cl. at 443.

       However, “[n]o federal contractor has a right to maintain its incumbency in
perpetuity, and the potential loss of the benefits of incumbency does not” amount to
irreparable harm. Akima Intra-Data, LLC v. United States, 120 Fed. Cl. 25, 28 (2015)
(quotation omitted) (addressing irreparable harm as it applies to a motion for a stay pending
appeal). “[A]ll sorts of things that any incumbent would experience upon the loss of a
successor contract are not sufficient to demonstrate irreparable harm.” Id.

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        FMS claims that it “depends upon revenue” from “its PCA contract.” Dkt. No. 72,
Pl. Mot. at 22. FMS strains to blame ED for the consequences of FMS’s own business
decisions. ED is not bound to give FMS a minimum number of accounts or provide FMS
with enough revenue to employ a certain number of people. Therefore, FMS will not suffer
irreparable harm because of ED’s failures to issue a new solicitation for PCA services, or
because ED likely failed to comply with various competition requirements in executing the
NextGen procurement. FMS’s financial strain is “the unavoidable result” of its ATE
coming to an end. See Telos Corp. v. United States, 129 Fed. Cl. 573, 578 (2016). ED’s
decision to refrain from giving FMS more accounts to service may be ill-informed, but it
is legal. FMS chose to depend upon ED contracts to survive. FMS chose to enter into a
PCA contract that does not guarantee it a minimum amount of business. The Court’s power
to issue a preliminary injunction does not exist to remedy this type of harm.

      C.     Balance of Hardships

       The balance of hardships factor does not favor either party. FMS argues that it will
have to lay off staff and potentially go out of business if the Court does not grant the
preliminary injunction that it seeks. But even if that is true, FMS’s hardships here do not
stem from issues involved in the pending litigation. FMS’s hardship emanates from its
own business decisions. The Court cannot account for these harms in making its decision.

      D.     Public Interest

       For the reasons above, a Court’s issuing a preliminary injunction providing the
extraordinary relief FMS requests would not serve the public interest.

                                       Conclusion

       The Court is sympathetic to FMS’s financial situation, but it is not empowered to
grant the type of extraordinary preliminary relief that FMS requests. The Court encourages
the parties to communicate about these issues outside of court and reach an understanding
on the next steps because lengthy procurement delays benefit no one. For the reasons stated
above, FMS’s motion for a temporary restraining order and preliminary injunction is
DENIED.

      IT IS SO ORDERED.

                                                        s/ Thomas C. Wheeler
                                                        THOMAS C. WHEELER
                                                        Judge

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