Court Opinion

ID: 4656952
Source: CourtListenerOpinion
Date Created: 2021-02-03 13:17:56.096582+00
Date Added: 2024-06-11T08:01:07.268652
License: Public Domain

In the United States Court of Federal Claims
                              No. 20-1497C
                   (Originally Filed: January 22, 2021)
                     (Re-issued: February 2, 2021)1

**********************

SUPERIOR OPTICAL LABS, INC.,

                    Plaintiff,

      v.
                                           Post-award    bid     protest;
THE UNITED STATES,                         Corrective action; GAO;
                                           Lack of ambiguity; Injunctive
                    Defendant,             factors.

      and

PDS CONSULTANTS, INC.,

                    Intervenor.

**********************

     Robert J. Sneckenberg, Washington, DC, for plaintiff. Elizabeth H.
Connally, John E. McCarthy Jr., and Rina M. Gashaw, of counsel.

       Nathanael B. Yale, Trial Attorney, United States Department of
Justice, Civil Division, Commercial Litigation Branch, Washington, DC,
with whom were Jennifer B. Dickey, Principal Deputy Assistant Attorney
General, Robert E. Kirschman, Jr., Director, Deborah A. Bynum, Assistant
Director, for defendant. Natica C. Neely, VA Office of General Counsel, of
counsel.

      David S. Gallacher, Washington, DC, for intervenor. Emily S.
Theriault, Adam A. Bartolanzo, and Daniel J. Alvarado, of counsel.

1
  This opinion was originally issued under seal to afford the parties an
opportunity to propose redactions. They have done so. Redactions appear
in brackets below.
                          ORDER AND OPINION

BRUGGINK, Judge.

        This action is a challenge to the Department of Veterans Affairs’
decision to recompete a contract to provide eyeglasses to the VA. Plaintiff
was originally awarded the contract. Intervenor protested that award at the
Government Accountability Office. The agency took voluntary corrective
action in response to the protest, resulting in the cancellation of the award to
plaintiff and an announcement that the VA would allow proposal revisions
and make a new award decision. Plaintiff challenges the corrective action
decisions as arbitrary and capricious. The matter is fully briefed on cross-
motions for judgment on the administrative record. As more fully explained
below, because the agency lacked a rational basis for its corrective action,
we sustain the protest and enjoin the cancellation of the award.

                              BACKGROUND

       On, May 11, 2020, the Department of Veterans Affairs (“VA”) issued
request for proposals 36C26220R0093 (“RFP” or “solicitation”) for a
contract to supply eyeglasses that the VA will provide to eligible
beneficiaries of its healthcare system in California, Nevada, and New
Mexico. The RFP called for a single award of a fixed-price, indefinite-
delivery, indefinite-quantity contract to the lowest-priced, technically
acceptable offeror. The contract was for one base year with four option
years.

       The agency required offerors to provide a pricing worksheet with
prices for each year of the contract and “two (2) sample sets (labeled as Set
1 and Set 2) of the eyeglass frames offeror[s] propose[] to provide under the
contract.” Administrative Record (“AR”) 119. Offers were then ranked by
total evaluated price for all five potential years, and then the lowest price
offer was evaluated for technical acceptability first. The first technically
acceptable proposal would be awarded the contract. Id. at 120.

       The VA received six separate bids from four offerors.2 The intervenor
here, PDS Consultants, Inc. (“PDS”), submitted three different offers. The
other offerors each submitted one proposal. The lowest priced offer, from
[          ], was evaluated first but found not to be technically acceptable

2
 The VA also received one late proposal and one proposal from an offeror
that was not properly registered with the VA as a service-disabled veteran
owned small business. Neither of these offers were considered.
                                       2
because it did not submit all the required frame samples. The second-lowest
bid was from PDS, its first of three offers, but it too was found not to be
technically acceptable due to missing frames in both sample sets. Plaintiff,
Superior Optical Labs, Inc. (“Superior”), offered the next lowest price. The
VA found Superior’s offer to be technically acceptable, and thus, on August
25, 2020, it awarded the contract to plaintiff. The other offerors were notified
of the award to Superior by debriefing letter dated August 24, 2020. In the
letter, plaintiff’s price was disclosed pursuant to FAR part 15.506.

        On September 2, 2020, PDS filed a protest with the Government
Accountability Office (“GAO”), arguing, among other things, that the
solicitation was unclear with respect to whether offerors were required to
submit all of the required frames in each of the two sample sets, i.e., two
complete sets of the eyeglass frames being offered. PDS argued that the
VA’s rating of its first offer (“PDS #1”) as technically unacceptable was
arbitrary because the solicitation did not require that both sample sets of
frames each be complete. Alternatively, PDS argued that the RFP was
ambiguous with respect to what the agency expected and that the ambiguity
was latent. As required by the Competition in Contracting Act (“CICA”), 31
U.S.C. § 3553(d)(3)(A)(iii) (2018) (known as the “CICA stay”), the agency
issued a stop work notice to Superior pending the GAO protest.

        On September 24, 2020, prior to the agency’s response to PDS’
protest, the VA informed GAO that it would take corrective action,
cancelling the award to Superior, amending the solicitation, and making a
new award decision after allowing proposal revisions. AR 925. The agency
detailed that it did indeed intend that each offeror would submit two complete
sets of all frames being offered due to the imposition of social distancing
requirements in response to the COVID outbreak in the United States. In
other words, members of the Technical Evaluation Board (“TEB”) would not
meet together in the same physical location. Thus, having multiple sets of
frames would make the evaluators’ process smoother and quicker. Id. at 926-
27. It further explained that this was akin to requiring bidders to submit
multiple copies of the same written proposal. Id. at 926. The notice
nevertheless went on to conclude that the VA “agrees that the section of the
solicitation about which Protester complains is subject to more than one
reasonable interpretation and that the language at issue is susceptible to both
VA’s interpretation of the language as well as the understanding that
Protester contends it reached.” Id. The notice went on to state that the “the
solicitation [did] not explicitly state[] that offerors were required to submit
two identical frame kits” nor did it “explicitly state that each sample set of
eyeglass frames must independently satisfy each of the technical
acceptability criteria described in solicitation.” Id. at 927. The VA

                                       3
reconsidered the language as a whole and found that it could reasonably be
read to require only that each offer contain, across two sets, all of the frames
necessary to meet the technical requirements. Id. at 927-28. The agency
relied on the fact that the solicitation used the plural word “sets” in one place,
but then later in the RFP referred to the singular words “sample” and “frame
mix.” It found this created a latent ambiguity requiring correction for a fair
competition.

       Superior filed an objection on September 25, 2020, claiming that it
would be unduly prejudiced by this late correction of the supposed ambiguity
due to its price having already been disclosed to the other offerors. Despite
the objection, GAO dismissed the protest as academic.

       On October 20, 2020, at plaintiff’s behest, VA disclosed all offerors’
prices in an attempt to ameliorate the prejudice to Superior from having its
price disclosed. Not satisfied, Superior filed the instant action on October
29, 2020. The agency agreed not to proceed with its reevaluation and award
in order to give the court time to consider the merits of the protest. The
matter is now fully briefed. Oral argument was held telephonically on
January 15, 2021.

                                 DISCUSSION

       We have jurisdiction to review actions taken by federal agencies in
connection with a procurement or proposed procurement. 28 U.S.C. §
1491(b) (2018). We review those actions pursuant to the standards set forth
in the Administrative Procedures Act, 5 U.S.C. § 706 (2018). 28 U.S.C. §
14941(b)(4) (stating that review under this section would be pursuant to the
standards set forth in the APA). In order to be successful, the protestor must
thus show that the challenged agency action was arbitrary, capricious, or
otherwise not in accordance with the law. Centech Group, Inc. v. United
States, 554 F.3d 1029, 1037 (Fed. Cir. 2009). This is rational basis review.
Impressa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d
1324, 1332 (Fed. Cir. 2001).

         The inquiry is unchanged in the corrective action context. See Dell
Fed. Sys., L.P. v. United States, 906 F3d. 982, 992 (Fed. Cir. 2018). This
means that a corrective action will not be set aside if there is a rational basis
for it, supported by a “coherent and reasonable explanation.” Id. The agency
need not admit an error before taking corrective action, ManTech
Telecomms. & Info. Sys. Corp. v. United States, 49 Fed. Cl. 57, 65 (2001),
and the corrective action need only be “reasonable under the circumstances.”
Sierra Nevada Corp. v. United States, 107 Fed. Cl. 735, 750 (2012).

                                        4
        Plaintiff seeks an injunction to prevent the agency from carrying out
its corrective action and to reinstate the award to Superior. We consider four
factors in deciding whether the extraordinary relief of an injunction is
warranted under the circumstances: 1) whether plaintiff has succeeded on the
merits in showing that the agency acted irrationally or otherwise illegally, 2)
whether plaintiff will suffer irreparable harm absent the injunction, 3) the
balance of the hardships to the respective parties if an injunction is entered,
and 4) whether an injunction is in the public’s interest. PGBA, LLC . v.
United States, 389 F.3d 1219, 1228-29 (Fed. Cir. 2004). We begin with the
first factor.

I. The Corrective Action Was Not Merited

       We agree with the plaintiff that the corrective action here is irrational
because there was no ambiguity in the solicitation nor does the record support
the agency’s conclusion that PDS, or any other offeror, was misled. We start
by turning to the language of the RFP in question.

       A. The Solicitation Was Not Ambiguous

       The RFP at Section E.2.3, “Required Submittal for Proposal
Evaluations,” instructed offerors to submit “two (2) sample sets (labeled as
Set 1 and Set 2) of the eyeglass frames offeror proposed to provide under the
contract.” It further required that each “Offeror’s submittal shall separate
men’s frames, women’s frames, and unisex frames into separate containers
with each container clearly marked to identify” what was contained therein.
Id. Bidders were warned that, if they “fail[ed] to submit these samples with
their proposals in the manner specified in this paragraph,” their proposals
might be rejected. Id.

       The next section, E.3, contained the technical evaluation factor,
“Proposed Frame Mix.” It stated, “To be found technically acceptable for
this evaluation factor, the sample of frames the offeror submitted with its
proposal must meet ALL of the following criteria.” Id.

       Frame sample must contain:

       • Minimum of 25 men’s frames
       • Minimum of 25 women’s frames
       • Minimum of 15 unisex frames
       • Minimum of 5 large frame sizes for men’s frames (size 54 to
       60)
                                       5
       • Minimum of 3 frames with short bow lengths for men’s
       frames (size 125 to 130)
       • Minimum of 5 large frame sizes for women’s frames (size 54
       to 60) • Minimum of 3 frames with short bow lengths for
       women’s frames (size 125 to 130)

Id. The RFP continued with instructions for specific numbers of metal
frames and plastic frames. It used the following language to introduce those
requirements: “Metal frame mix must include:” and “Plastic frame mix must
include:”. Id. at 119-20. A list of the number of each type of frame required
followed.

       From these statements, PDS and the agency contrast, as they did to
GAO, the use of the plural in Section E.2.3 (“sets”) with the use of the
singular in Section E.3 (“mix” and “sample”). PDS points out that the word
“identical” does not appear in the first section to refer to the sets, but instead
the word “submittal” was used thereafter in reference to the sample sets. The
use of the singular (“frame sample” and “frame mix”) in the following
section buttresses the confusion, according to defendant and intervenor.
Thus, in their view, the VA could have been asking for two identical,
complete sets or it could have been asking for one complete sample broken
into two sets.

        They argue that this ambiguity was latent because it did not become
apparent until after evaluation. Defendant argues in the alternative that, even
if patent, the agency was well within its wide discretion to correct that error
after the fact. It is of no note, defendant and intervenor argue, that PDS’
protest of a patent ambiguity would have come too late under the Federal
Circuit’s rule in Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308
(Fed. Cir. 2007), because agencies are not so constrained when they take
voluntary corrective action. We need not reach that question, however,
because we find no ambiguity in the RFP.

       The required “submittal” referenced in E.2.3 was to consist of two
sample sets, independently labeled as such, containing “the eyeglass frames
offeror proposes to provide under the contract.” AR 119. Thus, an offeror’s
submittal was required to contain two sets of the frames it was offering to the
VA. The combination of a single submittal and plural sets is thus not only
not confusing, it is necessitated by what the agency wanted. There is no
reasonable interpretation of this language other than that the VA required two
complete sets of frames within a single submittal.

                                        6
        Contrary to the VA’s explanation to GAO, the terms “submittal,”
“sample” and “mix” do not interject any ambiguity. First, because those
terms do not modify the phrase “two (2) sample sets.” Second, the word
submittal clearly refers to the entire proposal to be submitted. It is in the
singular because there is only one proposal, although it includes two sample
sets. Third, the use of the singular word “sample” or the phrase “sample set”
is fully consistent with the agency’s expectation that the “sample,” or
“sample set” be complete, although duplicated within the proposal. Indeed,
the singular terms confirm that the agency expected the individual sample
sets to be complete.

      There is no rational reason, nor has any been proffered, why offerors
would have thought that the agency was asking for incomplete sample sets,
even if the two, when combined, might have contained all the required
frames. Such a requirement is contrary to the plain reading of the RFP and
would only introduce confusion into the process. Moreover, as explained
below, PDS’ proposal belies any notion that it actually thought it was
submitting a complete proposal by providing two incomplete sample sets.

       B. Offerors Were Not Misled

        An examination of the record reveals that the “interpretation” offered
after the fact by PDS to GAO and now to the court was not the basis of its
bid. Indeed, none of the unsuccessful offeror’s evaluated proposals support
the notion that they were led to believe that they could spread out a single
frame mix across two independently incomplete sets. PDS’ first proposal
(PDS #1) contained two sets that were largely identical, but neither was
complete. One set was missing [                                 ]. AR 584
(Source Selection Decision Memorandum). The solicitation required three,
but PDS provided [                        ]. The other set was missing [
                                                           ]. Id. The TEB
also found [                                             ].3 Id. The fact that
intervenor provided two samples of virtually a complete set of its offered
frames is inconsistent with the idea that it believed that the solicitation
allowed the sample mix to be spread across the two sets. What possible
reason could there be for creating a second set with only one pair or a small
handful of glasses? PDS’ second offer (PDS #2) further belies the notion.

3
  Intervenor has not explained why it provided two [                      ].
This provides further support for the conclusion that PDS simply made errors
in its submission.

                                      7
The first set evaluated for PDS #2 contained all of the required frames.4 Id.
at 585. PDS did not split its frames across the two sets for its second offer.

        Rather than indicate that PDS was misled by an ambiguous
requirement, the errors and omissions in PDS #1 indicate a lack of care, not
an attempt to spread out a single set of frames across two sets. PDS’ only
explanation, citing its three distinct offers of differing frames, was that it was
trying to show the agency its many offerings by using non-identical sample
sets, something it argues it was induced to do by the agency’s lack of clarity.
Offering the same frames but spread over two sets does not display more
wares. however. Further, the record does not support that this was
intervenor’s intention. Its first offer contained duplicates of most of its
frames, and its second offer contained a complete set. It makes no sense to
have done either of these things had PDS intended to split its frame mix
across two sets and/ or attempted to present a wider sample of offerings.
Instead, intervenor’s odd presentation suggests only that an error was made
unintentionally in the first offer; it does not demonstrate confusion about the
terms of the solicitation.

       We also note that, with respect to the proposal of the lowest priced
offeror, [           ], which was evaluated first and found technically
unacceptable, its two sample sets each failed the requirement of containing
three men’s and three women’s short bow frames. AR 583-84. Even
combined, [          ]’s two sets would not have met the VA’s required frame
mix. [        ] would have been short at least two women’s short bow
frames. This suggests, like PDS #1, that it simply erred and was thus
properly not awarded the contract despite its low price.

        The unsuccessful offers do not confirm an ambiguity in the
solicitation. Rather, the bidding errors appear random, not the product of a
considered reading of the solicitation. Defendant and intervenor have
provided no explanation that supports an alternative reading of particular
terms in any sort of coherent way that explains the way intervenor put
together its submissions. This means that we cannot agree that there were
any facts supporting an assumption of bidder confusion sufficient to warrant
setting aside the award. It appears that the VA simply took PDS’ protest
allegations at face value without any consideration of whether they were
supported by the record. This constitutes irrational conduct.

4
  It was not selected for award, however, because plaintiff’s offer was lower
in price than PDS #2. It is not clear why the agency examined this offer at
all, as it was higher in price than Superior’s.

                                        8
      C. There Is No Other Independent Rationale

       Defendant also suggests that its corrective action was reasonable
because it was taken to “foster competition” as required by CICA of all
federal procurements. Per defendant, because PDS’ submission “would have
been acceptable under PDS’s reasonable interpretation,” corrective action
was independently justified as taken in pursuit of maximum competition.
Def.’s Mot. for J. on the AR 12. This is apparently enough, in defendant’s
view, to undergird the VA’s decision. We disagree.

       It was not until after award and disclosure of the winning bidder’s
price to its competitors that the agency now discovered this rationale for
altering its reading of the RFP. Although competition in federal
procurements is crucial, agencies are not at liberty to reject a compliant
proposal in a fair competition simply to generate a lower price, absent some
independent rationale for doing so. Here, the agency requirements remain
unchanged and no additional offers will be solicited.

       We find no reasonable basis for the correction adopted by the agency
because there was no error that needed correcting. The RFP was not
ambiguous and Sections E.2 and E.3 are not in conflict. Offerors were
plainly instructed to offer submittals containing two sample sets. It simply
makes no sense for those samples to have been different.

        Errors were made, but not by Superior. It was thus lawfully awarded
the contract. At that point, the parties’ legal rights viz-a-viz one another
changed. Although the government had the right to terminate the award for
convenience or if its needs changed, here that was not the case. The asserted
justification for correction was in error. The agency had made an award to a
qualified bidder; that fact should have been taken into consideration before
exposing the awardee to the unfairness of reopening competition after
revealing its bid amount. See Sys. Application & Techs., Inc. v. United
States, 691 F.3d 1374, 1382-83 (Fed. Cir. 2012) (affirming the finding that a
new competition after the contract had been awarded and price disclosed
was, absent some independent justification, arbitrary and prejudicial). Here,
we find no justification for the agency to have done so. Plaintiff having
established success on the merits, we turn to the other factors relevant to
whether the status quo ante should be restored via an injunction.

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II. Plaintiff Will Be Irreparably Harmed

        We find that plaintiff will be irreparably harmed if the corrective
action is allowed because it was the lawful awardee of the contract. Absent
an injunction, it will be forced to compete both against the offerors that it
already bested and, in essence, itself. Because its price was disclosed to the
losing bidders, in a recompete, plaintiff must lower its price or risk the other
offerors lowering theirs to beat plaintiff’s disclosed price. Here, in fact,
plaintiff would likely be forced to lower its price below each of the other
offeror’s prices because all offeror’s prices have been revealed, and it was
not the lowest priced offer.

       The government argues that the disclosure of all of the offerors’ initial
prices, at plaintiff’s request, obviates this concern. We disagree. This is a
lowest-price, technically acceptable procurement. If the agency action has
the effect of making more offers technically acceptable, the rational bidder
knows that it must now beat those offerors’ disclosed prices. The agency’s
decision thus has the effect of artificially lowering proposed prices to the
detriment of a successful awardee.

        Defendant is correct that its disclosure of plaintiff’s price to the
unsuccessful awardees was lawfully done pursuant to FAR part 15.506(d)(2),
which instructs the agency to disclose the evaluated price of the successful
offer, but that does not end the inquiry. No risk of the harm faced now was
assumed by plaintiff when it bid. It is the imposition of an unlawful
corrective action that turns what would have been a benign disclosure—
absent the corrective action, plaintiff would be performing at the price it
offered—to one that is highly detrimental to the plaintiff because of the redo.
In this context, that is irreparable harm. See Sheridan Corp. v. United States,
95 Fed. Cl. 141, 155 (2010); see also Sys. Application, 691 F.3d at 1383
(“The risk of recompeting for a contract after revelation of one's price
calculations to competitors, however, does not extend to a contract fairly
competed and won on the first solicitation.”).

III. The Balance of the Hardships Favors Plaintiff

       The irreparable harm to plaintiff established, we consider the balance
of harms. Defendant has not suggested any independent harm that the VA
will suffer should the corrective action be set aside. Although it mentions in
passing that it may acquire the contract at a lower price after a new award
decision, to its credit, defendant does not argue that it will be harmed
monetarily if its corrective action is set aside. PDS would not be harmed
because its lowest priced offer was rightfully found to be technically

                                      10
unacceptable. It has no rightful expectation that it be allowed a chance to
correct its error. Absent an injunction, only plaintiff is harmed. The balance
of the hardships favor plaintiff.

IV. The Public’s Interest

       As always, the public has an interest in the fair and lawful
procurement of goods and services by the government. Absent a reasonable
rationale for corrective action, an offeror may not be forced to compete
against itself and other offerors again when it has already won the contract.
The public interest favors an injunction.

                                CONCLUSION

       The VA erred when it accepted intervenor’s implausible protest at
GAO. The RFP is not amenable to reasonable interpretations other than the
one the agency admittedly intended: “two (2) sample sets . . . of the eyeglass
frames offeror proposes to provide.” AR 119. The solicitation provided no
reason to think that the individual sets could be incomplete. There was no
ambiguity, latent or patent, nor do the offerors’ proposals suggest otherwise.
Plaintiff, on the other hand, was harmed by the VA’s corrective action, and
absent an injunction, its injury will be irreparable. The balance of harms
likewise favors relief. The public interest weighs in favor of not allowing an
unduly prejudicial do-over for no valid reason. Plaintiff’s motion for
judgment on the administrative record is thus granted. Defendant’s and
intervenor’s cross-motions are denied. Accordingly, the following is
ordered:

       1. The Department of Veterans Affairs is hereby enjoined from the
          corrective action that it announced to GAO in its September 24,
          2020 notice of corrective action.

       2. The agency must reinstate the award to plaintiff and is prohibited
          from recompeting the contract absent a lawful reason to do so.

       3. The Clerk of Court is directed to enter judgment for plaintiff.

       4. Costs to plaintiff.

                                          s/ Eric G. Bruggink
                                          ERIC G. BRUGGINK
                                          Senior Judge

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