Court Opinion

ID: 4661529
Source: CourtListenerOpinion
Date Created: 2021-02-19 16:00:47.829316+00
Date Added: 2024-06-11T08:02:13.877505
License: Public Domain

Case: 20-1414     Document: 98    Page: 1   Filed: 02/19/2021

        NOTE: This disposition is nonprecedential.

   United States Court of Appeals
       for the Federal Circuit
                   ______________________

                     HVF WEST, LLC,
                     Plaintiff-Appellee

                             v.

                    UNITED STATES,
                    Defendant-Appellant

                LAMB DEPOLLUTION, INC.,
                    Defendant-Appellant
                   ______________________

                    2020-1414, 2020-1583
                   ______________________

     Appeals from the United States Court of Federal
 Claims in No. 1:19-cv-01308-MMS, Chief Judge Margaret
 M. Sweeney.
                  ______________________

                 Decided: February 19, 2021
                  ______________________

     EDWARD SANDERSON HOE, Covington & Burling LLP,
 Washington, DC, argued for plaintiff-appellee. Also repre-
 sented by ANDREW GUY, DARBY ROURICK.

     STEVEN MICHAEL MAGER, Commercial Litigation
 Branch, Civil Division, United States Department of Jus-
 tice, Washington, DC, argued for defendant-appellant
Case: 20-1414    Document: 98      Page: 2    Filed: 02/19/2021

 2                            HVF WEST, LLC   v. UNITED STATES

 United States. Also represented by JEFFREY B. CLARK,
 ROBERT EDWARD KIRSCHMAN, JR., DOUGLAS K. MICKLE.

     SHAR BAHMANI, Sacks Tierney P.A., Scottsdale, AZ, ar-
 gued for defendant-appellant Lamb Depollution, Inc. Also
 represented by JOE KEENE.
                 ______________________

     Before PROST, Chief Judge, CLEVENGER and HUGHES,
                       Circuit Judges.
 CLEVENGER, Circuit Judge.
     The United States (“Government”) and Lamb Depollu-
 tion, Inc. (”Lamb”) appeal the final judgment of the United
 States Court of Federal Claims (“Claims Court”) in this bid
 protest case holding that it had subject matter jurisdiction
 to hear HVF West, LLC’s (“HVF”) bid protest claim and
 that HVF had standing to bring the claim, and further
 granting HVF’s motion for judgment on the administrative
 record. HVF West, LLC v. United States, 146 Fed. Cl. 314
 (2019). For the reasons set forth below, we reverse.
                               I
     The contract in suit stems from a solicitation issued by
 the Defense Logistics Agency Disposition Services
 (“agency”) for the purchase and destruction of surplus Gov-
 ernment military property. Prior to taking title of the pur-
 chased property, the contractor was required to
 demilitarize or mutilate the property to prevent design in-
 formation from being released. The contractor would then
 own the scrap residue resulting from the property’s de-
 struction.
     The solicitation described itself as a “sales contract,”
 but clearly called for the performance of demilitarization or
 mutilation services for the agency by the winning bidder.
 The solicitation requested that sealed bids include only the
 price that the contractor would pay per pound for the
Case: 20-1414      Document: 98     Page: 3   Filed: 02/19/2021

 HVF WEST, LLC   v. UNITED STATES                           3

 property. Although bidders were required to meet certain
 non-price criteria (e.g., technical ability to perform the
 work), the solicitation did not clearly indicate whether all
 bidders would be evaluated together under the criteria or
 whether only the highest bidder’s non-price qualifications
 would be evaluated. The agency’s contracting officer (“CO”)
 received four bids in total. Lamb had the highest bid and
 HVF had the lowest bid with two other bidders in between.
 The CO only evaluated the non-price criteria for Lamb, and
 awarded the contract to Lamb after finding it met all the
 non-price criteria. HVF unsuccessfully protested the award
 to Lamb, first at the agency, and then at the Government
 Accountability Office (“GAO”), and finally filed a bid pro-
 test suit in the Claims Court.
      28 U.S.C. § 1491(b)(1) vests the Claims Court with ju-
 risdiction to hear bid protest claims by an interested party
 in connection with a procurement contract. In order to have
 standing to bring the bid protest, a losing bidder must show
 that it had a substantial chance of winning the contract but
 for the alleged error. HVF argued that the contract at issue
 called for a procurement of services and thus satisfied
 § 1491(b)(1). Although HVF was fourth in line on price, it
 asserted that it had standing to protest the contract award
 based upon detailed allegations in the complaint that
 Lamb had failed to satisfy specific non-price criteria re-
 quired under the “pre-award survey,” and that the two
 other intervening bidders “failed to meet the standards for
 a successful pre-award survey.” J.A. 59. In its motion for
 judgment on the administrative record, HVF further al-
 leged that two intervening bidders were ineligible to re-
 ceive the contract either because they lacked experience in
 demilitarization services or had never received a federal
 contract with a money obligation as great as the one for the
 contract at issue. By challenging the qualification of the
 price winner, Lamb, and questioning the two intervening
 and better-priced bidders, HVF claimed that it had a sub-
 stantial chance of receiving the award. Thus, according to
Case: 20-1414     Document: 98      Page: 4    Filed: 02/19/2021

 4                             HVF WEST, LLC   v. UNITED STATES

 HVF, the Claims Court had subject-matter jurisdiction
 over its complaint, it had standing to protest the contract
 award, and it could show that the CO had erred in finding
 that Lamb satisfied all the non-price criteria required for
 the award of the contract. Lamb and the Government chal-
 lenged the subject-matter jurisdiction of the Claims Court
 on the ground that the contract was in connection to a sale
 of property, rather than procurement of property or ser-
 vices, and alleged that HVF lacked standing to bring the
 claim. Lamb further alleged that the CO had correctly de-
 termined that Lamb met all the non-price criteria.
      In its final judgment on the administrative record, the
 Claims Court held that the solicitation’s procurement of
 services provided more than a de minimis value to the
 agency sufficient to meet the jurisdictional statute, that
 HVF satisfied the legal test for standing, and that HVF
 successfully showed that the CO erred in finding Lamb sat-
 isfied all non-price criteria in the solicitation. Accordingly,
 the Claims Court ordered the agency to cancel the contract
 awarded to Lamb.
                               II
     Lamb and the Government timely appeal from the final
 decision of the Claims Court. We have jurisdiction under
 28 U.S.C. § 1295(a)(3) and review questions of standing de
 novo. Am. Fed’n of Gov’t Emps. v. United States, 258 F.3d
 1294, 1298 (Fed. Cir. 2001).
      Lamb and the Government argue that the solicitation
 does not satisfy the jurisdictional requirements of
 § 1491(b)(1) because it is for a contract for sale of property
 rather than for a procurement of property or services, and
 any services required in the solicitation are merely a con-
 dition to sale that does not transform the underlying na-
 ture of the contract. Lamb also challenges HVF’s standing
 and asserts error in the Claims Court’s finding that Lamb
 failed to satisfy all the non-price criteria. Because we hold
 that HVF lacks standing to bring the protest, we reverse
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 HVF WEST, LLC   v. UNITED STATES                            5

 on that ground and do not reach the other grounds for re-
 versal argued by Lamb and the Government.
                               III
     Standing under § 1491(b)(1) “imposes more stringent
 standing requirements than Article III” by requiring the
 losing bidder to be an “interested party.” Weeks Marine,
 Inc. v. United States, 575 F.3d 1352, 1359 (Fed. Cir. 2009).
 We have held that an interested party is an actual or pro-
 spective bidder whose “direct economic interest would be
 affected by the award of the contract or by failure to award
 the contract.” Am. Fed’n, 258 F.3d at 1302. To succeed in
 showing that it had a direct economic interest, HVF had to
 make a sufficient showing that it had a “substantial
 chance” of winning the contract. Eskridge & Assocs. v.
 United States, 955 F.3d 1339, 1345 (Fed. Cir. 2020).
      In order for HVF to show that it had a substantial
 chance of winning the award for this solicitation, it had to
 sufficiently challenge the eligibility of Lamb and both of the
 intervening bidders. See, e.g., United States v. Int’l Bus.
 Machines Corp., 892 F.2d 1006, 1010 (Fed. Cir. 1989);
 Eskridge, 955 F.3d at 1344 (protesting party lacked stand-
 ing upon failure to “make a credible challenge to the tech-
 nical acceptability of four lower [price] bids”). However,
 HVF only proffers allegations based upon conjecture that
 are insufficient to show it had a substantial chance of win-
 ning the award. See Bannum, Inc. v. United States, 404
 F.3d 1346, 1358 (Fed. Cir. 2005) (“There is nothing besides
 Bannum’s conjecture to support the contention that an-
 other review . . . would provide it a substantial chance of
 prevailing in the bid.”). In its complaint, HVF alleged only
 that the intervening bidders “failed to meet the standards
 for a successful pre-award survey.” J.A. 59. This conclusory
 statement is insufficient to question the eligibility of the
 intervening bidders.
     In an attempt to support its allegation with extrinsic
 evidence, HVF purported that the website of one
Case: 20-1414     Document: 98      Page: 6     Filed: 02/19/2021

 6                              HVF WEST, LLC   v. UNITED STATES

 intervening bidder made no mention that the company per-
 formed demilitarization work or would be capable of per-
 forming such work. However, these speculative assertions
 do not account for the fact that the solicitation stated that
 non-price considerations, such as experience, could be
 demonstrated through the facilities of a subcontractor and
 need not be shown through a bidder’s own facilities. HVF
 also alleged that the individual representing the other in-
 tervening bidding entity had never received a federal con-
 tract that was close to the value of the contract at issue.
 But this does not indicate on its own that the intervening
 bidding entity, rather than its associated individual, would
 have been unable to fulfill the contract.
      Again, HVF’s speculative conclusions fail to provide a
 sufficient reason to question the eligibility of the interven-
 ing bidders. See Orbital Maint. & Constr. Co. v. United
 States, 145 Fed. Cl. 71, 76 (2019) (determining that plain-
 tiff failed to challenge the two other offerors’ eligibility be-
 cause its arguments were highly speculative and thus, it
 had no standing); see also Esilux Corp., B-234689, 89-1
 CPD ¶ 538, (Comp. Gen. June 8, 1989) (protester had no
 standing because it failed to provide support for bare alle-
 gations that the second-lowest offeror was not responsible
 and its offer unacceptable). Without more, HVF falls short
 of the threshold to establish it had a substantial chance of
 winning the award. Cf. Hyperion, Inc. v. United States, 115
 Fed. Cl. 541, 550 (2014) (plaintiff had standing because it
 adequately alleged that three lower-priced proposals were
 improperly considered technically acceptable); Bluewater
 Mgmt. Grp., LLC v. United States, 150 Fed. Cl. 588, 608–09
 (2020) (plaintiff substantively alleged with detailed refer-
 ence to specific contract requirements that two lower-
 priced bidders had non-compliant or deficient bids, which
 was sufficient to establish that it had a substantial chance
 of winning).
    The Claims Court’s decision, entered on November 22,
 2019, did not have the benefit of our subsequent decision
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 HVF WEST, LLC   v. UNITED STATES                            7

 in Eskridge. In that case, we made clear that even when an
 agency assesses price-ranked bidders together for technical
 compliance to select the bid most advantageous to the Gov-
 ernment, as HVF asserts the agency should have done in
 this solicitation, the least favored price-ranked bidder has
 standing only upon mounting a credible challenge to the
 technical acceptability of the better price-ranked bidders in
 line and in front of the protesting party. In this case, HVF
 failed to mount such a challenge.
                               IV
     For the foregoing reasons, we reverse the Claims
 Court’s judgment that HVF had standing to bring its bid
 protest suit. This case is remanded to the Claims Court for
 dismissal of HVF’s complaint.
             REVERSED AND REMANDED
                             COSTS
     No costs.