Court Opinion

ID: 6331740
Source: CourtListenerOpinion
Date Created: 2022-04-14 17:02:25.357136+00
Date Added: 2024-06-11T09:23:14.036257
License: Public Domain

In the United States Court of Federal Claims
                                           No. 21-1817C
                                        Filed: April 8, 2022*
                                       FOR PUBLICATION

 G4S SECURE INTEGRATION LLC, et
 al.,

                     Plaintiffs,

 v.

 UNITED STATES,

                    Defendant,

 and

 CGS-ORSA SECURITY LLC,

                     Defendant-Intervenor.

Richard P. Rector, DLA Piper LLP, Washington, D.C., for the plaintiffs, with C. Bradford
Jorgensen, Thomas E. Daley, Ryan P. Carpenter, and Christie M. Alvarez, of counsel.

Daniel A. Hoffman, Commercial Litigation Branch, Civil Division, U.S. Department of Justice,
Washington, D.C., for the defendant, with John W. Cox, Office of the Legal Adviser, U.S.
Department of State, of counsel.

Robert Nichols, Nichols Liu LLP, Washington, D.C., for the defendant-intervenor, with Michael
Bhargava, Madison Plummer, and Andrew Victor, of counsel.

      *
     Pursuant to the protective order in this case, the Court initially filed this opinion under seal
on April 5, 2022, and directed the parties to propose redactions of confidential or proprietary
information. The parties have jointly submitted to the Court proposed redactions. (ECF 73.)
The Court adopts those redactions, as reflected in this public version of the opinion. Redactions
are denoted with three asterisks in square brackets, [* * *].
                                 MEMORANDUM OPINION

HERTLING, Judge

        The plaintiffs (G4S Secure Integration LLC; G4S Secure Solutions International, Inc.;
and G4S Serviços de Segurança Angola LDA) move for an injunction pending appeal under Rule
62(d) of the Rules of the Court of Federal Claims (“RCFC”). In this post-award bid protest, the
Court found that the plaintiffs had demonstrated that the evaluation of a contract awarded by the
U.S. Department of State (“State”) to the defendant-intervenor, CGS-ORSA Security LLC
(“CGS-ORSA”), violated Federal Acquisition Regulation (“FAR”) 52.204-7. The Court denied
the plaintiffs’ motion for judgment on the administrative record, however, because the plaintiffs
had not demonstrated prejudice on the merits.

        In this pending RCFC 62(d) motion, the plaintiffs have not demonstrated that they either
are likely to succeed on appeal or have presented a substantial case on the merits. Even if the
plaintiffs had made either showing, other equitable factors weigh against awarding injunctive
relief. Accordingly, the Court denies the plaintiffs’ motion for an injunction pending appeal.

I.       BACKGROUND

       The facts are recounted in detail in the Court’s opinion on the merits of this case, G4S
Secure Integration, LLC v. United States, No. 21-1817C, 2022 WL 211023 (Fed. Cl. Jan. 24,
2022). Briefly, the plaintiffs filed a post-award bid protest challenging a contract award issued
by State for security services for the U.S. Embassy in Luanda, Angola. The plaintiffs submitted
a proposal as a joint venture (“G4S”) comprised of G4S Secure Integration LLC; G4S Secure
Solutions International, Inc.; and G4S Serviços de Segurança Angola LDA. State awarded the
contract to the defendant-intervenor, CGS-ORSA, a joint venture owned by Continuity Global
Solutions, LLC (“CGS”) and Omega Risk Solutions Angola (“ORSA”).

        G4S argued that CGS-ORSA did not comply with FAR 52.204-7, which was
incorporated into the solicitation, rendering CGS-ORSA ineligible for award. FAR 52.204-
7(b)(1) provides that “[a]n Offeror is required to be registered in [System for Award
Management (“SAM”)] when submitting an offer or quotation . . . .”1 (Emphasis added.) Until
FAR 52.204-7(b)(1) was amended in 2018, offerors were permitted to register in SAM at any
time prior to award. When the FAR Council amended FAR 52.204-7 in 2018, it published a
response to a comment stating that this provision applied equally to joint ventures. See “Federal
Acquisition Regulation: System for Award Management Registration,” 83 Fed. Reg. 48,691-01,
48,692 (Sept. 26, 2018).

        At the time that CGS-ORSA submitted its offer to State, its joint venture was not
registered in SAM. CGS-ORSA purported to have created a separate legal entity for its joint
venture and later registered its joint venture as a Limited Liability Company (“LLC”). CGS and

     1
    SAM is a government database that maintains information on prospective and actual
awardees of federal contracts. See FAR 52.204-13(a).

                                                2
ORSA each maintained separate active SAM registrations. Following a pre-award survey
conducted by State, CGS-ORSA registered its joint venture in SAM prior to award.

        G4S submitted an offer as a “contractor team arrangement,” so it did not create a separate
legal entity for its joint venture.2 (See ECF 32 at 3.) Accordingly, G4S never registered its joint
venture in SAM. All three entities owning the joint venture maintained separate SAM
registrations.

        State conducted a pre-award survey and determined that both CGS-ORSA and G4S were
eligible for award. The solicitation indicated that State would select the awardee with the lowest
priced, technically acceptable proposal. State determined that G4S’s and CGS-ORSA’s
proposals were both technically acceptable. State selected CGS-ORSA for award because its
proposed price was eight percent lower than G4S’s proposed price.

        The Court held that the plaintiffs had standing to sue because they were actual offerors
claiming that they were eligible for award. If State had determined that CGS-ORSA was
ineligible for the award, as the plaintiffs allege it should have, G4S would have had a substantial
chance of being awarded the contract.

        The plaintiffs further demonstrated that State had violated FAR 52.204-7 when State did
not require CGS-ORSA’s joint venture to be registered in SAM at the time it submitted its offer.
State lacked discretion to overlook or waive the requirements of FAR 52.204-7.

        The Court held, however, that this error was not prejudicial because G4S had not
registered its own joint venture in SAM. G4S had benefited from the same unlawful discretion
from which the awardee benefited. The plaintiffs argued that because all three entities
participating in the G4S joint venture were listed as separate offerors, their proposal met the
requirements of FAR 52.204-7. The comment in the Federal Register, however, does not
distinguish the applicability of FAR 52.204-7 based on the type of joint venture submitting an
offer. Even if State had found CGS-ORSA to be ineligible for award, G4S did not prove that it
had a substantial chance of receiving the contract because its own proposal suffered from the
same defect as CGS-ORSA’s.

        In the absence of any prejudice to the plaintiffs, the Court granted the defendant’s and
defendant-intervenor’s motions for judgment on the administrative record and denied the
plaintiffs’ motion for judgment on the administrative record. (ECF 39, 40.) The plaintiffs filed a
notice of appeal. (ECF 50.)

     On March 2, 2022, the plaintiffs filed a motion for an injunction pending appeal under
RCFC 62(d). (ECF 51, 52.) The defendant and defendant-intervenor filed responses to the

   2
      At oral argument on this motion, the plaintiffs analogized the structure of this arrangement
to a partnership.

                                                 3
plaintiffs’ motion. (ECF 61, 62.) The plaintiffs filed a combined reply brief on March 24, 2022.
(ECF 66.) The Court heard oral argument on March 30, 2022.

II.    STANDARD OF REVIEW

        Under RCFC 62(d), while an appeal is pending from a final judgment refusing an
injunction, “the court may suspend, modify, restore, or grant an injunction on terms for bond or
other terms that secure the opposing party’s rights.” The moving party bears the burden of
demonstrating that an injunction pending appeal is appropriate. See, e.g., Telos Corp. v. United
States, 129 Fed. Cl. 573, 575 (2016). An injunction pending appeal is an “‘extraordinary and
drastic remedy,’” which is not granted lightly. See id. (quoting Akima Intra–Data, LLC v. United
States, 120 Fed. Cl. 25, 27 (2015)).

       In determining whether the moving party has met its burden of showing that a stay
pending appeal is appropriate, a court considers four factors:

               (1) whether the stay applicant has made a strong showing that [it] is
               likely to succeed on the merits; (2) whether the applicant will be
               irreparably injured absent a stay; (3) whether issuance of a stay will
               substantially injure the other parties interested in the proceeding;
               and (4) where the public interest lies.

Hilton v. Braunskill, 481 U.S. 770, 776 (1987) (citations omitted). Because these “traditional
stay factors contemplate individualized judgments in each case, the formula cannot be reduced to
a set of rigid rules.” Id. at 777.

        In evaluating whether to grant a stay pending appeal, the Federal Circuit “assesses [a]
movant’s chances for success on appeal and weighs the equities as they affect the parties and the
public.” E.I. DuPont de Nemours & Co. v. Phillips Petroleum Co., 835 F.2d 277, 278 (Fed. Cir.
1987).

        The Federal Circuit elaborated the governing test in Standard Havens Prods., Inc. v.
Gencor Indus., Inc., 897 F.2d 511 (Fed. Cir. 1990). Under the test, which the Circuit described
as “effectively merg[ing]” the four factors outlined in Hilton, “[e]ach factor . . . need not be
given equal weight.” Id. at 512-13. When the “harm to the applicant is great enough, a court
will not require ‘a strong showing’ that applicant is ‘likely to succeed on the merits.’” Id. at 513
(quoting Hilton, 481 U.S. at 776). The Federal Circuit described this standard as a “‘sliding
scale approach.’” Id. (quoting Roland Mach. Co. v. Dresser Indus., Inc., 749 F.2d 380, 387-88
(7th Cir. 1984)). Under the Circuit’s approach, “‘[t]he more likely the [applicant] is to win, the
less heavily need the balance of harms weigh in [its] favor; the less likely [it] is to win, the more
need it weigh in [its] favor.’” Id. (quoting Roland Mach., 749 F.2d at 387-88). Thus, a stay
pending appeal may be appropriate even when the moving party has not shown that it is likely to
succeed on the merits if the moving party has demonstrated a substantial case on the merits, and
the other factors tilt decidedly toward the moving party. Telos, 129 Fed. Cl. at 575.

                                                  4
III.       DISCUSSION

        The plaintiffs’ motion for a stay pending appeal must be considered under the four Hilton
factors. The first and most important factor to consider is whether the plaintiffs have shown a
likelihood of success on the merits of their appeal or have shown that their appeal presents a
substantial case on the merits.

           A.   Success on the Merits

        The plaintiffs argue that they are likely to succeed on the merits of their appeal. (ECF 52
at 3-7.) Although an injunction pending appeal is an extraordinary remedy, the plaintiffs argue
that the Court’s equitable powers exist for a reason. See PDS Consultants, Inc. v. United States,
133 Fed. Cl. 810, 818 (2017) (granting an injunction under RCFC 62(d)).3

        G4S and CGS-ORSA were the only offerors that State found to be eligible in the
protested procurement, and neither offeror met the requirements of FAR 52.204-7 because
neither offeror’s joint venture was registered in SAM when the offers were submitted. State
lacked the discretion to ignore or waive FAR 52.204-7. The plaintiffs argue that instead of
upholding the award of the contract to CGS-ORSA, an ineligible offeror, the Court should have
remanded the procurement to State. The plaintiffs assert that, on remand, State would have
needed to reopen the procurement because there was no eligible offeror. The plaintiffs claim that
G4S would have a substantial chance of award in any new competition.

        In support of this motion, the plaintiffs do not directly challenge the Court’s finding that
the plaintiffs’ proposal violated FAR 52.204-7, although they explain that they intend to pursue
that argument on appeal. Rather, the plaintiffs argue that they were prejudiced by State’s error in
making an award to an ineligible offeror and that the Court erred in upholding that award.

        The Court considers whether the plaintiffs have demonstrated that they are likely to
succeed in proving prejudice on the merits upon their appeal before analyzing whether the
plaintiffs have met their burden to show a substantial case on the merits.

                1.     Prejudice on the Merits

        The Federal Circuit has rejected the proposition that “if the government makes any
mistake in a procurement process . . . , no matter how slight or unharmful, then it must nullify the
contest and begin anew.” Labatt Food Serv., Inc. v. United States, 577 F.3d 1375, 1380 (Fed.
Cir. 2009). “[N]on-prejudicial errors in a bid process do not automatically invalidate a

       3
     During oral argument and in their brief in support of this motion, the plaintiffs rely on a
cursory one-page order granting a stay pending appeal in CGI Fed. Inc. v. United States. (No.
14-355, ECF 53.) An unexplained order cannot be used to support the plaintiffs’ argument in the
present case, except to show, as a general matter, that injunctions under RCFC 62(d) are
appropriate when the test for such an injunction is met, and RCFC 62(d) itself provides all the
support necessary for that proposition.

                                                 5
procurement.” Id. Whether State needed to recompete the procurement therefore depends on
whether State’s misinterpretation of FAR 52.204-7 was prejudicial to the plaintiffs. Id.; see also
Bannum, Inc. v. United States, 404 F.3d 1346, 1351 (Fed. Cir. 2004) (emphasis added) (“A bid
protest proceeds in two steps. First, . . . the trial court determines whether the government acted
without rational basis or contrary to law when evaluating the bids and awarding the contract.
Second, . . . if the trial court finds that the government’s conduct fails the [Administrative
Procedure Act] review under 5 U.S.C. § 706(2)(A), then it proceeds to determine, as a factual
matter, if the bid protester was prejudiced by that conduct.”).

        In Labatt, the Federal Circuit ruled that a protestor had not established prejudice when
the government accepted bid revisions via e-mail rather than fax, even though the solicitation
required revisions to be made via fax. 577 F.3d at 1380-81. The protestor had submitted its
proposal late, providing the agency with “a separate and independently sufficient ground for
rejection.” Id. at 1381. The Federal Circuit held that “[a]ll errors are not equal. . . . There is no
connection between the government’s method of transmission error and Labatt’s failure to secure
the contract. Without a showing of harm specific to the asserted error, there is no injury to
redress, and no standing to sue.” Id.

         Although the court in Labatt addressed prejudice as it relates to standing rather than
prejudice on the merits, the Federal Circuit has since clarified that the question of whether the
error is related to action adverse to the protestor is also relevant to the issue of whether the
protester suffered prejudice on the merits. In American Relocation Connections, LLC v. United
States, the Federal Circuit explained, “‘The correction of an error must yield a different result in
order for that error to have been harmful and thus prejudice a substantial right of a party.’”
789 F. App’x 221, 228 (Fed. Cir. 2019) (quoting Munoz v. Strahm Farms, Inc., 69 F.3d 501, 504
(Fed. Cir. 1995)). Review of agency action in a bid protest requires “courts to disregard ‘errors
or defects which do not affect the substantial rights of the parties.’” Id. (quoting 28 U.S.C.
§ 2111). To succeed in a bid protest, a plaintiff must show “a greater-than-insignificant chance”
of prevailing absent agency error. Id.

        In this case, State’s misapplication of FAR 52.204-7 did not prejudice the plaintiffs. The
SAM-registration status of neither CGS-ORSA nor the plaintiffs affected State’s award decision.
State evaluated both proposals, despite the lack of SAM registrations. CGS-ORSA secured the
award because its proposal was technically acceptable, and its proposed price was lower than
G4S’s proposed price. Neither joint venture adhered to the requirements of FAR 52.204-7, and
neither offeror gained a competitive advantage in the procurement resulting from the status of its
SAM registration. As in Labatt, there was therefore no connection between the error the
plaintiffs asserted and their failure to secure the contract.

        The plaintiffs offer three reasons why this case is distinct from Labatt. First, the
plaintiffs underscore that in Labatt, there was a “‘separate and independently sufficient ground’”
for eliminating that plaintiff from the competition; the plaintiff had submitted its proposal late.
(ECF 66 at 8 (quoting Labatt, 577 F.3d at 1381).) In this case, both CGS-ORSA and the
plaintiffs were ineligible for award for the same reason.

                                                 6
        Although the plaintiffs were never eliminated from the competition, their proposal was
rejected for a reason different from the alleged error: their price. State had separate and
independently sufficient grounds, setting the SAM-registration issue aside, for selecting CGS-
ORSA’s proposal for award. As in Labatt, both G4S and CGS-ORSA had a full and equal
opportunity to compete for the contract.

         Second, the plaintiffs seek to distinguish Labatt because the plaintiff in that case “sat on
its rights regarding whether email was an acceptable method of transmission . . . .” (ECF 66 at
9.) That fact does not appear to have been material to the Federal Circuit’s ruling that “non-
prejudicial errors in a bid process do not automatically invalidate a procurement.” Labatt, 577
F.3d at 1380.

         Finally, at oral argument on this motion, the plaintiffs argued that Labatt is distinct
because the awardee in that case was eligible for award. In this case, on the other hand, the
initial decision upheld the award of a contract to an ineligible offeror.

        The plaintiffs’ attempt to distinguish Labatt on this third ground distorts the facts
underlying that case. A judge of this court had found that the agency’s “deviation from the
solicitation render[ed] the proposal revisions from all offerors unable to be considered by the
agency,” i.e., ineligible for award. Labatt Food Serv., Inc. v. United States, 84 Fed. Cl. 50, 59
(2008). The Federal Circuit did not disturb that finding and assumed in its analysis of prejudice
that the government’s acceptance of e-mailed revisions was “unauthorized” and “erroneous.”
Labatt, 577 F.3d at 1381. The facts of Labatt are therefore analogous to those of this case: the
agency committed an error, but that error did not affect the plaintiffs’ loss of the contract award.
The plaintiffs were not awarded the contract for reasons, such as price here or lateness in Labatt,
unrelated to the agency’s error.

        In addition, the plaintiffs’ attempt to divert the focus of the prejudice analysis from their
own ineligibility to the ineligibility of the awardee is misplaced. The plaintiffs must show a
substantial chance of award absent agency error, and that inquiry requires some examination of
the plaintiffs’ own eligibility. For example, in Alfa Laval Separation, Inc. v. United States, the
Federal Circuit held that a plaintiff was prejudiced when its proposed price was lower than the
awardee’s proposed price and the plaintiff’s proposal was “‘irrefutably compliant’” with the
terms of the solicitation. 175 F.3d 1365, 1368 (Fed. Cir. 1999) (quoting Alfa Laval Separation,
Inc. v. United States, 40 Fed. Cl. 215, 230 (1998)). When determining whether the plaintiffs
have shown prejudice on the merits, the plaintiffs’ own eligibility matters.

        The plaintiffs also have not explained how State’s failure to follow FAR 52.204-7
affected their substantial rights and is not therefore a harmless error. See Am. Relocation
Connections, 789 F. App’x at 228. The plaintiffs argue that if the Court ordered an injunction
pending appeal, State would have broad discretion in deciding how to recompete the contract,
and State “could, for example, take corrective action by reopening discussions and permitting
G4S and CGS-ORSA to submit revised proposals that comply with FAR 52.204-7 and provide
updated, lower pricing.” (ECF 66 at 4 (emphasis added).) Agencies have broad discretion in
determining how to take corrective action. See Dell Fed. Sys., L.P. v. United States, 906 F.3d
982, 992-97 (Fed. Cir. 2018) (evaluating an agency’s corrective action under the rational-basis
                                                  7
standard); ANHAM FZCO v. United States, 149 Fed. Cl. 427, 438 (2020) (holding that “the court
will not substitute its judgment for that of the agency” in determining the appropriate scope for
corrective action). The plaintiffs also quote FAR 6.101 for the proposition that State should
“‘promote and provide for full and open competition.’” (ECF 66 at 4-5.)

        In determining whether the plaintiffs have been prejudiced on the merits, the question is
not whether the agency could possibly reach another result if it were to recompete a solicitation.
The question is whether the plaintiffs “show that there is a greater-than-insignificant chance” that
the agency would reach a different result “had it not committed the alleged errors.” Am.
Relocation Connections, 789 F. App’x at 228. Because of the substantial price differential
between the plaintiffs’ proposal and CGS-ORSA’s proposal, the plaintiffs’ speculation on the
possible outcome of the procurement were State to recompete the solicitation does not meet their
burden set forth by the Federal Circuit. There is little connection between the broad discretion
agencies have in taking corrective action and the plaintiffs’ burden to prove prejudice. The
plaintiffs have already had an opportunity to participate in a full and open competition for award;
the plaintiffs lost that competition because they proposed a higher price than the awardee did, not
because of any of the offerors’ SAM-registration status.

        In Bannum, the Federal Circuit held that a plaintiff had not demonstrated prejudice on the
merits when there was “nothing besides [the plaintiff’s] conjecture to support the contention that
another review, comporting with the FAR, would provide it a substantial chance of prevailing in
the bid. [The plaintiff’s] argument rests on mere numerical possibility, not evidence.” 404 F.3d
at 1358. The test for prejudice “is more lenient than showing actual causation,” but a plaintiff
must show that there was a “substantial chance” of receiving the award but for the agency’s
errors. Id. The plaintiff in Bannum had advocated for a different calculation of its score which,
even if employed, would not have allowed the plaintiff to be awarded the contract. Although the
plaintiff successfully argued on the merits that the government had violated a regulation and the
terms of its solicitation, the error was harmless and therefore not prejudicial.

        As in Bannum, the probability that G4S would prevail if State recompeted the
procurement is based on “conjecture” and “mere numerical possibility.” See id. Finding that the
plaintiffs were prejudiced requires jumping through multiple theoretical hoops: if the Court
remanded its decision to the agency and the agency decided to recompete the contract and the
agency decided to ask for revised pricing, then it is possible that G4S would win the contract
award. This mere possibility does not meet the bar the Federal Circuit set for prejudice in
Bannum. Although the plaintiffs need not show that State’s violation of FAR 52.204-7 caused
them to lose the contract, they must show a “substantial chance” of award absent agency error.
Not all agency errors are prejudicial, and the plaintiffs have not demonstrated how State’s
unlawful waiver of FAR 52.204-7 impaired their chance to receive the contract award.

        In Safeguard Base Operations, LLC v. United States, the Federal Circuit noted that an
offeror’s omissions in its proposal “would have been prejudicial to other bidders unless the same
omissions were waived for them as well.” 989 F.3d 1326, 1347 (Fed. Cir. 2021). The Court
deduces from this quotation that when an agency waives requirements equally for different
offerors, no prejudice results. Because State waived the requirements of FAR 52.204-7 equally
for both CGS-ORSA and G4S (even if State lacked discretion to do so), G4S was not prejudiced.
                                                 8
        The plaintiffs argue that Tinton Falls Lodging Realty, LLC v. United States, 800 F.3d
1353 (Fed. Cir. 2015), required the award to CGS-ORSA to be vacated and State to recompete
the solicitation because neither offeror was qualified. (ECF 52 at 5.) In Tinton Falls, the Federal
Circuit held that the plaintiff had demonstrated prejudice for the purpose of standing when, if the
plaintiff were to prevail, the agency would need to recompete the solicitation and would likely
need to alter its scope. Tinton Falls, 800 F.3d at 1359-60. The Federal Circuit limited its
discussion to prejudice for standing and its holding to the facts of that case:

               We need not determine whether, in all circumstances, a protester can
               “compete” for a reopened bid for the purposes of standing . . . when
               the protester was not a qualified bidder for the initial bid and would
               be a qualified bidder for the reopened bid only if the contract was
               solicited with substantially different eligibility requirements. We
               hold only that under the particular facts of this case, the Claims
               Court did not clearly err in finding that Tinton Falls had a substantial
               chance of winning a reopened bid should it prevail in its bid protest.

Id. at 1360 n.3 (emphasis added). The Federal Circuit thus acknowledged that a situation in
which no offerors are allegedly eligible for award in a procurement does not necessarily give rise
to prejudice on standing, let alone prejudice on the merits. Id.

        The Federal Circuit recently relied on Tinton Falls in VAS Realty, LLC v. United States,
26 F.4th 945 (2022). In the latter case, the Federal Circuit held that a plaintiff whose proposal
was deemed technically unacceptable nonetheless had standing to protest because, if the plaintiff
prevailed, the government would need to rebid the procurement. The plaintiff had “a substantial
chance of winning the lease for purposes of standing.” Id. at 950 (emphasis added).

         Under Tinton Falls and VAS Realty, the plaintiffs demonstrated a substantial chance of
award for the purposes of standing. The Court so found in its initial decision. G4S Secure
Integration, 2022 WL 211023, at *4. That finding does not relieve the plaintiffs from their
separate and distinct burden of demonstrating that State’s failure to enforce FAR 52.204-7 was
prejudicial to G4S on the merits. See Am. Relocation Connections, 789 F. App’x at 228. It was
in failing to show prejudice necessary to prevail on the merits, rather than the prejudice needed
for standing, that the plaintiffs’ claim foundered, and neither Tinton Falls nor VAS Realty speaks
to that issue.

        Furthermore, in Tinton Falls and VAS Realty, there was a stronger connection between
the challenged agency error and the plaintiffs’ likelihood of success. The plaintiff in Tinton
Falls challenged the agency’s interpretation of a “small business concern,” and the plaintiff’s
proposal was rejected because it was not a “small business concern” eligible to compete for the
solicitation. 800 F.3d at 1359. The plaintiff in VAS Realty challenged aspects of the awardee’s
proposal allegedly containing errors that the plaintiff did not also make. 26 F.4th at 950. Here,
as noted, the plaintiffs cannot show they were prejudiced by the agency error when that error did
not affect the plaintiffs’ failure to secure the award. Accordingly, the principle in Labatt that
there must be a connection between the procurement error and harm to the plaintiff still stands
and applies here to negate a finding that the plaintiffs were prejudiced.
                                                  9
        Implicit in the plaintiffs’ argument is the inference that the Court’s decision was
hypocritical: the Court found that State could not waive FAR 52.204-7, but the Court then
effectively waived FAR 52.204-7 by upholding the award of a contract to an ineligible offeror
when the Court should have remanded to the agency for further consideration. This argument
conflates an agency’s discretion to waive informalities with a plaintiff’s burden to prove
prejudice on the merits. An agency can waive minor informalities or irregularities when the
irregularity is one of “‘form and not of substance,’” and the defect is immaterial with respect to
price, quantity, quality, or delivery. Safeguard Base Operations, 989 F.3d at 1347-48 (quoting
FAR 14.405).4 Judges of this court have held that when a requirement “serves a substantive
purpose,” it is material and thus not waivable by the agency. ManTech Advanced Sys. Int’l, Inc.
v. United States, 141 Fed. Cl. 493, 507 (2019).

        An agency’s discretion to waive defects is a distinct and separate inquiry from prejudice
on the merits. The Government Accountability Office has repeatedly explained that even when
an agency abuses its discretion in waiving a material term, a plaintiff must show that the
agency’s abuse of discretion was prejudicial.5 As the Federal Circuit has noted, “there is no
presumption of prejudice when a protestor demonstrates irrationality in an agency decision.”
Sys. Stud. & Simulation, Inc. v. United States, 22 F.4th 994, 998 (Fed. Cir. 2021). There is a
fundamental difference between an agency’s discretion to waive defects under the law and the
Court’s review of whether that waiver caused any injury. Once a court determines that the
agency’s action did not prejudice a protester, the court’s role is at an end. Accordingly, the
Court’s decision that State lacked discretion to waive FAR 52.204-7 did not necessitate a remand
to the agency when the plaintiffs did not otherwise demonstrate prejudice.

        The plaintiffs rely on cases in which the government was obligated to reopen
procurements for reasons that are not applicable to this case. For example, in Centerra Group,
LLC v. United States, the agency had engaged in a “mockery of fundamental fairness and
competitive principles” by holding improper discussions with one offeror in response to a bid
protest brought by another offeror. 138 Fed. Cl. 407, 417-18 (2018). In Manus Medical, LLC v.
United States, the agency took unlawful “corrective” action by permitting one offeror to correct

   4
     FAR 14.405 applies only to sealed bids and not to negotiated procurements. Nonetheless,
the solicitation in this case permitted State to waive minor irregularities or informalities.
   5
      22nd Century Techs., Inc., B-417478.5, 2020 CPD ¶ 153 (Comp. Gen. Apr. 28, 2020)
(“Unfair competitive prejudice from a waiver or relaxation of the terms and conditions of the
RFP for one offeror exists where the protester would have altered its proposal to its competitive
advantage had it been given the opportunity to respond to the altered requirements.”); Glem Gas
S.p.A., B-414179, 2017 CPD ¶ 60 (Comp. Gen. Feb. 23, 2017) (“[C]ompetitive prejudice is an
essential element of a viable protest” to an agency’s discretion to waive compliance with the
solicitation); Lockheed Martin Corp., B-411365.2, 2015 CPD ¶ 294 (Comp. Gen. Aug. 26, 2015)
(“An agency may waive compliance with a material solicitation requirement in awarding a
contract only if the award will meet the agency's actual needs without prejudice to other
offerors.”).

                                                10
its incomplete solicitation. 115 Fed. Cl. 187, 194 (2014). In Ernst & Young, LLP v. United
States, the agency provided an offeror with proprietary nonpublic government information,
giving that competitor a competitive advantage in securing a contract. 136 Fed. Cl. 475, 509
(2018).

        State’s error in this case contains no similar tint of bias or unequal treatment. Rather, the
plaintiffs and CGS-ORSA benefited from the same mistake in the same manner. State
overlooked both offerors’ failure to register their joint ventures in SAM at the time they
submitted their offers. This distinction renders the cases on which the plaintiffs rely inapposite.
The cases cited by the plaintiffs do not support the conclusion that State has to recompete the
procurement at issue to remedy the defect here, as State’s error did not jeopardize the integrity of
the procurement.

        The plaintiffs also rely on CW Government Travel, Inc. v. United States, in which Judge
Somers explained that “if an agency were obligated to rebid a contract following protest, and the
successful protestor ‘could compete for the contract once again,’ then the protestor has satisfied
the ‘substantial chance’ standard.” 154 Fed. Cl. 721, 747 (2021) (quoting Impresa Construzioni
Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1334 (Fed. Cir. 2001)). In that case,
the agency had not conducted a required price analysis, leaving the court with “‘nothing to
review and no way of determining whether [the plaintiff] was prejudiced.’” Id. (quoting Active
Network, LLC v. United States, 130 Fed. Cl. 421, 429 (2017)); see also Al Ghanim Combined
Grp. Co. Gen. Trad. & Cont. W.L.L. v. United States, 56 Fed. Cl. 502, 516 (2003) (finding
prejudice when the agency failed to engage in a required price analysis).

         The facts here are different, and the difference is crucial. The plaintiffs did not allege
that State failed to engage in a required price analysis. Indeed, the plaintiffs lost the procurement
due to the price differential between their offer and the winning offer. The administrative record
in this case was complete and enabled the parties and the Court to conduct a thorough review.
Because of this stark difference, CW Government Travel and Al Ghanim do not support the
conclusion that State must recompete the procurement at issue.

        The plaintiffs also argue that two cases upon which the Court relied in its memorandum
opinion are distinguishable. The Court relied on Blue Origin Federation, LLC v. United States,
157 Fed. Cl. 74 (2021), for the proposition that a plaintiff has not shown prejudice when its
proposal would be unawardable without further negotiations. G4S Secure Integration, 2022 WL
211023, at *8-9. The plaintiffs argue that negotiations in Blue Origin would be discretionary,
whereas in this case, they are mandatory because State lacked the discretion to waive FAR
52.204-7. (ECF 52 at 5-6.) The plaintiffs have not demonstrated, however, that State was
required to reopen the procurement when the only two offerors State had deemed eligible had not
registered their joint ventures in SAM. The plaintiffs were not prejudiced when the requirements
of FAR 52.204-7 were waived equally for everyone.

         The Court also relied on VS2, LLC v. United States, 155 Fed. Cl. 738, 767-79 (2021), in
which Judge Solomson rejected a plaintiff’s claim when it had committed the same alleged error
in its offer as the awardee had committed. G4S Secure Integration, 2022 WL 211023, at *8-9.
The plaintiffs argue that this case is distinct because other offerors in the procurement at issue in
                                                 11
VS2 besides the plaintiff and defendant-intervenor were eligible for award. (ECF 52 at 6-7.) The
rationale in VS2 does not depend on the plaintiffs’ proffered distinction; rather, Judge Solomson
emphasized that the protestor could not complain about a government misinterpretation of the
solicitation when the protestor “relied upon the very same interpretation when preparing its
proposal.” VS2, 155 Fed. Cl. at 768. Like CGS-ORSA, G4S relied on State’s interpreting FAR
52.204-7 to mean that joint ventures themselves did not need to be registered in SAM. The
analogy to VS2 is therefore apt.

       Even if the plaintiffs’ argument distinguishing Blue Origin and VS2 is correct, that
argument fails to address the crux of the shortcoming in the plaintiffs’ case, the failure to show
prejudice, as the Federal Circuit’s precedents require for a party to obtain relief.

       In sum, the plaintiffs have not met their burden of showing that they are likely to succeed
on the merits because they have not shown prejudice on the merits. The Court still finds that
G4S benefited from State’s misinterpretation of FAR 52.204-7 in the same way that CGS-ORSA
did. Accordingly, State was not required to reopen the competition.

               2.      Substantial Case on the Merits

        A party seeking an injunction pending appeal may prevail without showing that it is
likely to succeed on the merits if it makes a lesser showing that it has a substantial case on the
merits. See, e.g., Telos, 129 Fed. Cl. at 575. A moving party demonstrates that it has a
substantial case on the merits by showing that “the question raised is novel or close,” Acrow
Corp. of America v. United States, 97 Fed. Cl. 182, 184 (2011), or that “‘the plaintiff has raised
questions going to the merits so serious, substantial, difficult and doubtful, as to make them a fair
ground for litigation.’” Standard Havens Prods., 897 F.2d at 513 (quoting Hamilton Watch Co.
v. Benrus Watch Co., 206 F.2d 738, 740 (2d Cir. 1953)).

        When delivering the ruling orally to the parties during a status conference before filing
the written opinion, the Court remarked that this case was “a challenging case with a distinctive
and unusual set of facts in a novel, largely unexplored area of the law.” (ECF 54 at 29:24–30:1.)
This case turned on the interpretation of FAR 52.204-7, a regulation of relatively recent vintage,
and its application to joint ventures. The parties and the Court found scant law applying to the
questions raised by this litigation. The only plausible reading of FAR 52.204-7 the Court could
construe seems to close the door to informal joint ventures. (See id. at 34:23–35:14.)

        The plaintiffs clarified during oral argument that, although they intend to argue on appeal
that the Court misapplied FAR 52.204-7 to G4S but not to CGS-ORSA, the application of FAR
52.204-7 is not at issue in this motion. In support of this motion, the plaintiffs focus on the
question of whether the Court erred in its decision regarding the absence of prejudice to the
plaintiffs on the merits of their claim. The plaintiffs argue that with both CGS-ORSA and G4S
ineligible under the Court’s interpretation of FAR 52.204-7, State was required to reopen the
procurement, and that the Court erred in affirming the award of the contract to CGS-ORSA, an
ineligible offeror.

                                                 12
        The questions raised by the plaintiff on this motion are neither novel nor close. As
rehearsed above, the principle is well-settled that to show prejudice on the merits, a party must
show a “greater-than-insignificant chance” of receiving the contract award absent agency error.
Am. Relocation Connections, 789 F. App’x at 228. Courts must “disregard ‘errors or defects
which do not affect the substantial rights of the parties.’” Id. (quoting 28 U.S.C. § 2111). A
plaintiff is not prejudiced by an error when there is no “harm specific to the asserted error,”
Labatt, 577 F.3d at 1381, and when their likelihood of success upon recompetition of the
procurement “rests on mere numerical possibility, not evidence.” Bannum, 404 F.3d at 1358.

        Although the underlying issue of the effect of FAR 52.204-7 is novel and its outcome
uncertain, given the well-established standards for finding prejudice to an unsuccessful offeror,
the plaintiffs have not demonstrated that they are raising a substantial and novel question of law.
Accordingly, the plaintiffs have not prevailed on the first factor for an injunction pending appeal.

       B.      Irreparable Harm

         The plaintiffs argue that they will suffer irreparable harm absent injunctive relief,
including the loss of [* * *] jobs performed under the incumbent contract, approximately
$[* * *] million in revenue for each year of performance, and the cost to hire and train new staff
if the plaintiffs succeed on appeal. (ECF 52 at 7.)

        The defendant and defendant-intervenor do not dispute that the plaintiffs will lose
employees and revenue absent an injunction, but they argue that those harms are not the type of
irreparable harm warranting an injunction pending appeal.6 (ECF 61 at 5-6; ECF 62 at 11.)

        An injunction is inappropriate when “the harms alleged by plaintiff are the sorts of things
that any incumbent would experience upon the loss of a successor contract.” CRAssociates, Inc.
v. United States, 103 Fed. Cl. 23, 26 (2012). “No federal contractor has a right to maintain its
incumbency in perpetuity. It follows, a fortiori, that the potential loss of the benefits of
incumbency does not give plaintiff some sort of automatic right to a stay pending appeal.” Id.

   6
      The defendant also argues that the fact that the plaintiffs waited 37 days after the filing of
the initial decision before moving for an injunction undercuts their arguments regarding the
harms they will endure in the absence of a stay. (ECF 62 at 11-12); see HVF W. LLC v. United
States, 148 Fed. Cl. 45, 57 (2020); Lawson Env’t Servs., LLC v. United States, 128 Fed. Cl. 14,
19 (2016). The plaintiffs did not immediately file an appeal and move for a stay following the
issuance of the Court’s opinion. Instead, the plaintiffs sought new counsel. The new counsel
then had to be admitted to the protective order and review the administrative record before
deciding whether to file an appeal. The plaintiffs moved with sufficient speed given their change
of counsel. More importantly, they moved for a stay well in advance of the May 31, 2022, end
of the current bridge contract the plaintiffs are performing and State’s estimated notice to
proceed date of June 1, 2022, for the new contract. In these circumstances, the Court finds that
the delay in filing this motion weighs neither for nor against the factor of irreparable harm.

                                                13
        More specifically, an incumbent contractor’s loss of employees does not automatically
warrant injunctive relief. In PGBA, LLC v. United States, Judge Lettow noted that although the
loss of employees causes “significant” harm, an incumbent contractor’s “reliance on the loss of
its current employees as a basis for irreparable injury would require this Court to consider any
incumbent contractor’s loss of a successor contract to be irreparable harm.” 60 Fed. Cl. 196,
221, reconsideration denied, 60 Fed. Cl. 567, aff’d, 389 F.3d 1219 (Fed. Cir. 2004).

        To the same effect is Akima Intra–Data, in which Judge Firestone declined to find that
the moving party could demonstrate irreparable harm from the loss of significant revenue.
120 Fed. Cl. at 28-29. As Judge Firestone noted, “the loss of a contract cannot serve as the basis
for finding irreparable harm.” Id. at 28. This Court agrees; to hold otherwise would grant an
incumbent contractor that failed to retain the contract the power to freeze the new award in place
just by filing a bid protest and then an appeal if the protest is unsuccessful.

        This is not to say that incumbent contractors may never face irreparable harm. For
example, in PDS Consultants, Judge Firestone found irreparable harm when the incumbent
contractor’s loss of its contracts would undermine its mission as a nonprofit to “provide
employment, training, and services to persons who are blind.” 133 Fed. Cl. at 817. Denial of an
injunction would raise no similar concerns in this case.

        The harms on which the plaintiffs rely to support their motion for a stay, the loss of
revenue and employees, are no different from the harms that incumbent contractors regularly
confront when they lose a contract. The prospective harms to the plaintiffs are not unusually
distinctive or compelling. Accordingly, the plaintiffs have not demonstrated that they risk
suffering irreparable harm to the point that the Court should grant “extraordinary and drastic”
relief. See Telos, 129 Fed. Cl. at 575.

       C.      Injury to Other Parties

        The plaintiffs argue that the harm to them from denying a stay “greatly outweighs the
harm” to State because G4S, as the incumbent contractor for 11 years, has the capacity to
continue to perform under a bridge contract while the appeal is pending. (ECF 52 at 7-8.) State
“would not suffer any harm if it were enjoined, as it has a capable contractor in place to perform
the local guard force work.” (Id.) State could further avoid the costs of transitioning the contract
from G4S to CGS-ORSA, a transition which State may need to fund and implement twice if the
plaintiffs prevail on appeal. The plaintiffs argue that CGS-ORSA would not be harmed by an
injunction, “as it does not have a right to perform a contract it was not eligible to be awarded.”
(Id.)

        The defendant argues that an injunction will substantially injure State and CGS-ORSA.
State and CGS-ORSA initiated a transition of the contract on February 9, 2022, and they “have
expended resources to facilitate an estimated notice to proceed date of June 1, 2022.” (ECF 62 at
12.) The defendant asserts that State will also suffer harm because it organizes local guard force
contracts for competition according to a phased schedule. When contract awards are delayed,
“the carefully phased schedule established by [State] to manage security at installations around

                                                14
the world becomes more difficult to manage.” (Id.) The delay can impair security at U.S.
embassies around the world.

       The plaintiffs note that State and CGS-ORSA are still in the early stages of transitioning
the contract, so the harm would be “minimal.” (ECF 66 at 13.) The plaintiffs also argue that
“any administrative inconvenience the Government would suffer is of the Government’s own
making.” (Id.)

       The defendant-intervenor argues that State will be harmed by entering a bridge contract
with an offeror it did not select and paying higher prices for those services. (ECF 61 at 6-7.)
The defendant-intervenor has already been deprived of the ability to perform the contract it was
awarded for seven months while the bid protest was pending.

       The plaintiffs dispute the defendant-intervenor’s assertion that State will need to pay
higher prices, as State and G4S could negotiate pricing under a bridge contract based on its
incumbent pricing.

        Injury to other parties weighs against injunctive relief when the defendant would be
forced into a more expensive contract and the defendant-intervenor would suffer a delay in
performing and profiting from its contract. See Telos, 129 Fed. Cl. at 579; CRAssociates, Inc.,
103 Fed. Cl. at 28; NetCentrics Corp. v. United States, 145 Fed. Cl. 371, 377 (2019).

        The defendant and defendant-intervenor have already delayed transitioning the contract
for seven months while this bid protest was pending. The plaintiffs have, in effect, already
benefited for seven months from their protest. By seeking to extend this benefit when they have
not met their burden, the plaintiffs attempt to place the burden of defeating an injunction on the
parties opposing the motion. That is backwards.

        The plaintiffs assert that denial of the requested injunction would benefit CGS-ORSA,
which was not qualified for the award it won. That argument proves too much because the
plaintiffs were themselves not qualified for the award. And the plaintiffs’ proposal was rejected
because of its price. This argument cannot bear the weight the plaintiffs put on it.

        The plaintiffs emphasize their status as the incumbent and experienced contractor.
Incumbency, however, has never guaranteed a future award of that contract or that the incumbent
could hold the contract in perpetuity. Under the new status quo, following State’s award of the
contract and the Court’s decision upholding the award, CGS-ORSA performs the contract for
security services in Angola. State and CGS-ORSA are already transitioning the contract in
reliance on that regime. The Court refuses to disturb the status quo to the defendant and
defendant-intervenor’s detriment.

        The injunction the plaintiffs seek would cause logistical and financial harm to the
defendant and, especially, to the defendant-intervenor, which secured the award by besting the
plaintiffs’ proposed price. The government’s obligation to carry out procurements in compliance
with the FAR is part of its cost of doing business, but that does not change the fact that State
would be harmed by an injunction, even if the harm to State does not outweigh the potential

                                                15
harm to the plaintiffs. The burden is on the plaintiffs, and they have failed to make the necessary
showing.

        The harm from an injunction pending appeal to the defendant-intervenor outweighs the
harm to the plaintiffs, as the Court would upend the status quo and exceed its discretion by
essentially favoring the interests of one unqualified offeror over another unqualified offeror.
This factor of injury to other parties thus counsels against an injunction pending appeal.

       D.      Public Interest

        The plaintiffs argue that an injunction would further the public interest by ensuring that
the procurement for security services complied with the FAR. (ECF 52 at 8.) In Heritage of
America, LLC v. United States, a judge of this court explained, “Because the procurement
process at issue in this case did not conform to the requirements of the FAR, it is in the public
interest to take action to redo the flawed procurement and, in doing so, correct the errors that
occurred in the initial procurement process.” 77 Fed. Cl. 66, 80 (2007).

       The defendant claims that the public interest would be harmed by an injunction because
of potential harm to State, as described above. (ECF 62 at 12.)

        The defendant-intervenor argues that the public interest could best be served “by letting
[State] transition to the lowest cost technically acceptable proposal.” (ECF 61 at 7.)

        The public interest in this case does not favor the plaintiffs. A stay pending appeal may
promote compliance with the FAR, but only if the plaintiffs ultimately prevail in their argument
on appeal that their proposal complied with FAR 52.204-7. If the plaintiffs do not prevail, an
injunction would undermine principles of fairness by allowing an ineligible bidder who was not
prejudiced by the procurement the opportunity to remain under contract for services. Because
the Court has found that the plaintiffs are unlikely to prevail on appeal, this factor supports
preserving the status quo. See NetCentrics, 145 Fed. Cl. at 378 (holding that the public interest
was “served by allowing the government to use the more efficient and less expensive contract
while the matter is before the court of appeals”).

        The public interest weighs neither in favor of nor against injunctive relief. Because the
plaintiffs bear the burden of demonstrating the appropriateness of an injunction pending appeal,
they have not prevailed on this final factor.

                                                 16
IV.    CONCLUSION

        Under RCFC 62(d), the plaintiffs have not demonstrated that an injunction pending
appeal is appropriate. Because State’s misinterpretation of FAR 52.204-7 did not prejudice the
plaintiffs, they have not shown that they are likely to succeed on the merits or that they have a
substantial case on the merits. In addition, any harm to the plaintiffs that will result from the
absence of an injunction is outweighed by the harm that would result to the defendant and
defendant-intervenor if an injunction were granted.

      Accordingly, the Court denies the plaintiffs’ motion for an injunction pending appeal.
The Court will enter an order in accordance with this Memorandum Opinion.

                                                                    s/ Richard A. Hertling
                                                                    Richard A. Hertling
                                                                    Judge

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