Court Opinion

ID: 4652117
Source: CourtListenerOpinion
Date Created: 2021-01-18 14:01:24.505163+00
Date Added: 2024-06-11T08:01:45.300548
License: Public Domain

In the United States Court of Federal Claims
                                           No. 20-814
                                   Filed: December 17, 2020
                                   Reissued: January 15, 20211

                                             )
    PERSPECTA ENTERPRISE                     )
    SOLUTIONS LLC,                           )
                                             )
                    Plaintiff,               )
                                             )
                                                     Bid Protest; Tucker Act; Unsuccessful
    v.                                       )
                                                     Offeror; Organizational Conflict of
                                             )
                                                     Interest; Material Misrepresentation; Cost
    THE UNITED STATES,                       )
                                                     Realism; Price Realism; Unequal
                                             )
                                                     Discussions; Technical Evaluation;
                    Defendant,               )
                                                     Disparate Treatment; Prejudice; Injunctive
                                             )
                                                     Relief
                    and                      )
                                             )
    LEIDOS, INC.,                            )
                                             )
                    Defendant-Intervenor.    )
                                             )

Daniel R. Forman, Crowell & Moring LLP, Washington, DC, for plaintiff.

Kelly A. Krystyniak, U.S. Department of Justice, Civil Division, Washington, DC, for defendant.

James J. McCullough, Fried Frank, Washington, DC, for defendant-intervenor.

                                   OPINION AND ORDER

SMITH, Senior Judge

       This post-award bid protest comes before the Court on the parties’ Cross-Motions for
Judgment on the Administrative Record. Plaintiff, Perspecta Enterprise Solutions, LLC
(“Perspecta”), challenges the evaluation of offerors and the award decision issued by the
Department of the Navy, Naval Information Warfare Systems Command (“Navy” or “Agency”)
for secure end-to-end Information Technology (“IT”) services under Request for Proposal No.
N00039-18-R-0005 (“RFP” or “Solicitation”). Specifically, plaintiff challenges the Agency’s
award to defendant-intervenor, Leidos, Inc. (“Leidos”), based on the following: (1) the
Contracting Officer’s (“CO”) failure to conduct a reasonable investigation into an Organizational
Conflict of Interest (“OCI”); (2) Leidos’ material misrepresentation of the availability of

1       An unredacted version of this opinion was issued under seal on December 17, 2020. The
parties were given an opportunity to propose redactions and those redactions are included herein.
personnel within its proposal; (3) the Navy’s flawed price and cost realism; (4) the Navy’s
failure to engage in meaningful discussions with plaintiff; and (5) the Navy’s flawed technical
and managerial factor analysis. See generally Plaintiff’s Motion for Judgment on the
Administrative Record, ECF No. 54 [hereinafter Pl.’s MJAR]. In response, defendant and
defendant-intervenor contend that plaintiff’s OCI challenge is waived and that plaintiff has failed
to demonstrate that the award decision was irrational or the result of prejudicial violations of law.
See generally Defendant’s Response in Opposition to Plaintiff’s Motion for Judgment upon the
Administrative Record, and Cross-Motion for Judgment upon the Administrative Record, ECF
No. 68 [hereinafter Def.’s CMJAR]; Cross-Motion of Defendant-Intervenor Leidos, Inc. for
Judgment on the Administrative Record and Response to Plaintiff’s Motion for Judgment on the
Administrative Record, ECF No. 69 [hereinafter Def.-Int.’s CMJAR]. For the reasons set forth
below, the Court denies plaintiff’s Motion for Judgment on the Administrative Record and grants
defendant and defendant-intervenor’s Cross-Motions for Judgment on the Administrative
Record.

    I.      Background

         Plaintiff is the incumbent contractor for the Navy’s predecessor Next Generation
Enterprise Network (“NGEN”) contract. Complaint at 6, ECF No. 1 [hereinafter Compl.]. On
October 18, 2018, the Navy issued the RFP for the Navy’s Next Generation Enterprise Network
Re-Compete (“NGEN-R”) Service Management, Integration, and Transport contract, which
sought secure end-to-end IT services to over 400,000 hardware devices and 60,000 users via the
Navy Marine Corps Intranet and the Marine Corps Enterprise Network, as well as 30,000 devices
and over 45,000 users via the Navy Enterprise Network.2 Administrative Record 13455
[hereinafter AR]. The RFP contemplated the award of a single Indefinite Delivery/Indefinite
Quantity contract with firm, fixed-price (“FFP”), fixed-price-incentive fee, and cost-plus-fixed
fee (“CPFF”) contract line items (“CLIN”). AR 93–350. The RFP anticipated awarding a
contract with a potential estimated value of $7.7 billion on a base period of five years, with three
one-year option periods. AR 475. The RFP provided for a best-value trade-off evaluation based
on the following six factors: (1) Technical Approach, (2) Management Approach, (3) Past
Performance, (4) Transition Approach, (5) Cost/Price, and (6) Gate Criteria. AR 14078. The
first three factors would be weighted in descending order of importance and, when combined,
would be significantly more important than Factor 5. AR 14078. Factor 4 and Factor 6 were to
be evaluated on an “acceptable/unacceptable basis” and would not be a part of the trade-off
analysis. AR 14078. Only Factors 1, 2, and 5 are relevant to this protest. Pl.’s MJAR at 3, n.1.

       Factor 1: Technical Approach—contained the following two equally weighted subfactors:
Systems Engineering (Subfactor 1.1), and Network Transformation/Modernization Sample
Exercise (Subfactor 1.2). AR 14081. Based on the Navy’s assessment of the strengths,
weaknesses, and deficiencies identified in each proposal, as well as the associated risk, offerors
received one of the following adjectival ratings: Outstanding, Good, Acceptable, Marginal, and
Unacceptable. AR 14079–81. The RFP required that, under Factor 2: Management Approach,
the Navy was to utilize the aforementioned adjectival ratings to assess proposals according to the
following four equally weighted subfactors: Program Management Plan (Subfactor 2.1),

2        The Request for Proposal (“RFP”) was amended fifteen times. See AR 14095–123.
                                                -2-
Network Operations (Subfactor 2.2), Tools Management and Data Access (Subfactor 2.3), and
Supply Chain Risk Management (Subfactor 2.4). AR 14070, 14081–82. Under Factor 5:
Cost/Price, the RFP required the Navy to conduct a cost-realism analysis for all cost-type line
items, to conduct a price realism analysis for all fixed-price line items, and to consider whether
an offeror’s prices for the fixed price CLINs were materially unbalanced. AR 14085–86.

         Perspecta, Leidos, and a third offeror submitted initial proposals on January 24, 2019.
See generally AR Tab 22; AR Tab 23. After evaluating initial proposals from the three offerors,
the Navy established a competitive range, including Perspecta and Leidos, and held discussions
with these two offerors. AR 25426. Following discussions, Perspecta and Leidos submitted
final proposal revisions (“FPRs”) on September 12, 2019. AR 25426. The Source Selection
Evaluation Board (“SSEB”) evaluated the two remaining proposals and awarded Leidos sixty-six
strengths, three weaknesses, and no significant weaknesses. AR 25099–182. The SSEB
assigned Perspecta nineteen strengths, fifteen weaknesses, and five significant weaknesses. AR
25183–259. Perspecta and Leidos were evaluated and the results of the trade-off factors (Factor
1, 2, 3, and 5) were as follows:

Def.-Int.’s CMJAR at 5; See AR 25427. The Source Selection Authority (“SSA”) evaluated the
reports of both the SSEB and the Cost/Price Evaluation Board (“CPEB”) and selected Leidos for
award. AR 25366. According to the Navy’s Source Selection Decision Document, Leidos’
proposal was more highly rated under the Technical Subfactors, and its evaluated cost/price was
lower than Perspecta’s. AR 25428. On February 5, 2020, the Navy notified Perspecta that it had
awarded the contract to Leidos with a potential contract value of $7,729,639,286. See AR
25440.

                                               -3-
        In selecting Leidos for award, the SSA noted that Leidos submitted a “clearly superior
proposal,” as it received “‘Outstanding’ ratings in five of the six most important subfactors while
Perspecta received ‘Marginal’ ratings in three of the six most important subfactors.” AR 25437.
Moreover, the SSA clarified that she based her decision on the “underlying rational for the
ratings,” rather than basing her award only on adjectival ratings. AR 25437. Furthermore, the
SSA noted that Leidos’ proposal for Factor 1, the most important factor, “demonstrate[d] an
exemplary understanding of, and superior approach to, Model Based Systems Engineering []
tailored to the Government’s requirements” and offered a “technically efficient, future -resilient,
forward thinking, agile approach and is on the leading edge of industry standards.” AR 25437.
Finally, the SSA “determined that a tradeoff among cost or price and non-cost factors is not
warranted,” as she could not justify a price premium for Perspecta’s “technically inferior”
proposal, which she determined was “significantly less advantageous to the Government, and
present[ed] a higher risk of unsuccessful contract performance.” AR 25438.

        On March 9, 2020, Perspecta filed a protest with the Government Accountability Office
(“GAO”), challenging the Agency’s award decision. AR 27909. The GAO denied Perspecta’s
protest on June 17, 2020, concluding that the Navy “reasonably determined that Leidos did not
gain an unfair advantage based on the hiring of a former government employee” and that the
evaluation “was reasonable and that the majority of the incumbent protestor’s complaints amount
to disagreement with the agency’s evaluation.” AR 30084. Finally, the GAO concluded that any
errors in the Agency’s evaluation “did not result in competitive prejud ice because Perspecta’s
proposal remains higher-priced and lower-rated when viewed in the most favorable light to
Perspecta.” AR 300084. This protest followed.

        On July 2, 2020, Perspecta filed its Complaint with this Court. See generally Compl. On
September 2, 2020, plaintiff filed its Motion for Judgment on the Administrative Record. See
generally Pl.’s MJAR. On October 2, 2020, defendant filed its Response to plaintiff’s Motion
and its Cross-Motion for Judgment on the Administrative Record. See generally Def.’s CMJAR.
Defendant-intervenor filed its Response and Cross-Motion that same day. See generally
Def.-Int.’s CMJAR. Plaintiff filed its Reply and Response on October 15, 2020. See generally
Plaintiff’s Response to Defendants’ Cross-Motions for Judgment on the Administrative Record
and Reply in Support of its Motion for Judgment on the Administrative Record, ECF No. 72
[hereinafter Pl.’s Resp.]. On October 26, 2020, defendant and defendant-intervenor filed their
respective Replies. See generally Defendant’s Reply in Support of its Cross-Motion for
Judgment Upon the Administrative Record, ECF No. 73 [hereinafter Def.’s Reply]; Reply of
Defendant Intervenor Leidos, Inc. in Support of its Cross-Motion of [sic] for Judgment on the
Administrative Record, ECF No. 74 [hereinafter Def.-Int.’s Reply]. The Court held oral
argument on November 19, 2020. The parties’ Motions are fully briefed and ripe for review.

   II.     Standard of Review

       This Court’s jurisdictional grant is found primarily in the Tucker Act, which provides the
Court of Federal Claims with the power “to render any judgment upon any claim against the
United States founded either upon the Constitution, or any Act of Congress or any regulation of
an executive department, or upon any express or implied contract with the United States . . . in

                                               -4-
cases not sounding in tort.” 28 U.S.C. § 1491(a)(1) (2012). Although the Tucker Act explicitly
waives the sovereign immunity of the United States against such claims, it “does not create any
substantive right enforceable against the United States for money damages.” United States v.
Testan, 424 U.S. 392, 398 (1976). Rather, to fall within the scope of the Tucker Act, “a plaintiff
must identify a separate source of substantive law that creates the right to money damages.”
Fisher v. United States, 402 F.3d 1167, 1172 (Fed. Cir. 2005) (en banc in relevant part).

        The Tucker Act also affords this Court with jurisdiction over bid protest actions. 28
U.S.C. § 1491(b). This Court evaluates bid protests under the Administrative Procedure Act’s
standard of review for agency actions. See Bannum, Inc. v. United States, 404 F.3d 1346, 1351
(Fed. Cir. 2005) (citing Impresa Construzioni Geom. Domenico Garufi v. United States, 238
F.3d 1324, 1332 (Fed. Cir. 2001)). Notably, agency procurement actions may be set aside only if
they are “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the
law.” 28 U.S.C. § 1491(b)(4). Moreover, “[t]he arbitrary and capricious standard applicable [in
bid protests] is highly deferential.” Advanced Data Concepts v. United States, 216 F.3d 1054,
1058 (Fed. Cir. 2000). Agencies, and contracting officers in particular, are “‘entitled to e xercise
discretion upon a broad range of issues confronting them’ in the procurement process.”
Savantage Fin. Servs. v. United States, 595 F.3d 1282, 1286 (Fed. Cir. 2010) (quoting Impresa,
238 F.3d at 1332).

        Under Rule 52.1 of the Rules of the Court of Federal Claims (“RCFC”), a party may file
a motion for judgment upon the administrative record for the Court to assess whether an
administrative body, given all disputed and undisputed facts in the record, acted in compliance
with the legal standards governing the decision under review. See Supreme Foodservice GmbH
v. United States, 109 Fed. Cl. 369, 382 (2013) (citing Fort Carson Supp. Servs. v. United States,
71 Fed. Cl. 585 (2006)). On a motion for judgment upon the administrative record, the parties
are limited to the Administrative Record, and the Court makes findings of fact as if it were
conducting a trial on a paper record. RCFC 52.1; Bannum, 404 F.3d at 1354. Looking to the
Administrative Record, the Court must determine whether a party has met its burden of proof
based on the evidence in the record. Bannum, 404 F.3d at 1355. When a protestor claims that an
agency’s decision violates a statute, regulation, or procedure, the protestor must show that the
alleged violation was “clear and prejudicial.” Impresa, 238 F.3d at 1333. The Court will
“interfere with the government procurement process ‘only in extremely limited circumstances.’”
EP Prods., Inc. v. United States, 63 Fed. Cl. 220, 223 (2005) (quoting CACI, Inc.-Fed. v. United
States, 870 F.2d 644, 648 (Fed. Cir. 1989)). “If the [C]ourt finds a reasonable basis for [an]
agency’s action, the [C]ourt should stay its hand even though it might, as an original proposition,
have reached a different conclusion as to the proper administration and ap plication of the
procurement regulations.” Honeywell, Inc. v. United States, 870 F.2d 644, 648 (Fed. Cir. 1989).
The Court cannot substitute its judgment for that of an agency, even if reasonable minds could
reach differing conclusions. Bowman Transp., Inc. v. Ark.-Best Freight Sys., Inc., 419 U.S. 281,
285–86 (1974).

                                                -5-
   III.        Discussion

          A.      Organizational Conflict of Interest

        In its Motion for Judgment on the Administrative Record, plaintiff argues that the CO
“failed to meaningfully consider” whether a conflict existed based upon Leidos employee
            , a former Navy official, prior “access to nonpublic, competitively-useful information.”
Pl.’s MJAR at 7. Plaintiff makes a number of arguments in support of its Organizational
Conflict of Interest (“OCI”) claims. See generally Pl’s MJAR. In response to plaintiff’s OCI
allegations, defendant argues that such claims are waived, as “Perspecta knew or should have
known that Mr.           was working for Leidos before the due date for offeror proposals,” and,
as such, “this ground of protest is therefore untimely and must be dismissed.” Def.’s CMJAR at
6. Defendant-intervenor likewise argues that plaintiff’s OCI claims have been waived. Def.--
Int.’s CMJAR at 8 After a thorough review of the record, the Court concludes that plaintiff
waived its OCI challenge pursuant to the well-established precedent of Blue and Gold. See Blue
& Gold Fleet, L.P. v. United States, 492 F.3d 1308 (Fed. Cir. 2007).

       The Court of Appeals for the Federal Circuit (“Federal Circuit”) held the following in
Blue and Gold:

          [A] party who has the opportunity to object to the terms of a government solicitation
          containing a patent error and fails to do so prior to the close of the bidding process
          waives its ability to raise the same objection subsequently in a bid protest action in
          the Court of Federal Claims.

Id. at 1313. The Federal Circuit has further held that “the reasoning of Blue and Gold applies to
all situations in which the protesting party had the opportunity to challenge a solicitation before
the award and failed to do so.” COMINT Sys. Corp. v. United States,700 F.3d 1377, 1381 (Fed.
Cir. 2012). Moreover, the Federal Circuit recently confirmed that the waiver doctrine applies to
OCIs, especially where a plaintiff “exercising reasonable and customary care would have been
on notice of the now-alleged defect in the solicitation long before awards were made.” Inserso
Corp. v. United States, 961 F.3d 1343, 1352 (Fed. Cir. 2020).

        The Court finds that plaintiff knew or should have known that Mr.         f was employed
by Leidos. On November 27, 2017, over a year before the submission of initial proposals, Mr.
         attended the Agency’s “engineering day,” along with representatives from Perpecta’s
predecessor entities. AR 25–26. Moreover, Mr.            appeared in a March 28, 2018 article
about NGEN IT services—along with an upper level employee from Perspecta’s U.S. public
sector group—specifically listing Mr.           as a member of the capture team for this
procurement. Def.’s CMJAR at 7; see also Ross Wilkers, Inside the Navy NGEN IT services
competition’s teams and stakes, WASHINGTON TECH., Mar. 26, 2018. As Mr.                ’s
involvement in the NGEN-R procurement was clearly a matter of public record, Perspecta knew
or should have known about the potential OCI before award. Therefore, by not raising the issue
in a pre-award protest, Perspecta waived its OCI challenges.

                                                  -6-
       B.      Material Misrepresentations

       Plaintiff next asserts that “Leidos appears to have knowingly misrepresented the
availability of a named employee proposed to perform a critical role.” Pl.’s MJAR at 10.
Specifically, plaintiff alleges that g                , Leidos’ former Enterprise Services
Operations Manager, had experience “second only to Program Manager                         f,” and that
“the management plan for service delivery was specifically designed to ‘establish[] a realistic
span of control that enables Mr.            to effectively supervise all aspects of service delivery
operations.’” Pl.’s MJAR at 10–11 (quoting AR 4762). Finally, plaintiff alleges that “Leidos
became aware that Mr.              was leaving the company, and would not be available to perform
the contract,” four months prior to FPR submissions. Id. at 11.

        In response, defendant argues that “[t]he RFP did not require offerors to propose key
personnel, nor did it request credentials for prospective employees on the project.” Def.’s
CMJAR at 12 (citing AR 13777). Additionally, defendant contends that failure to inform the
Agency that non-key employees named in a proposal had left the company “does not rise to the
level of a ‘material misrepresentation.’” Def’s CMJAR at 14. Finally, defendant-intervenor
notes that “the RFP specifically omitted the requirement for the offeror’s Program Management
Plans to name personnel as part of the contents of their plans,” and, as such, “the Navy’s
evaluation of Leidos’ proposal was not materially influenced by Mr.              being identified as
it Enterprise Service Delivery Operations Manager” as “none of the strengths assigned to Leidos’
proposal . . . were attributable to Mr.         personally.” Def.-Int.’s CMJAR at 15–16.

        When arguing that a material misrepresentation occurred, a “plaintiff must demonstrate
that (1) [the awardee] made a false statement; and (2) the [agency] relied on that false statement
in selecting [the awardee]’s proposal for the contract award.” Blue & Gold Fleet, L.P, v. United
States, 70 Fed. Cl. 487, 495 (2006) (citation omitted), aff’d, 492 F.3d 1308. This Court has
previously held that a material misrepresentation has not occurred when an offeror “includ[es] in
its proposal credentials of people who had not committed to serve as its staff members.”
Phoenix Mgmt. v. United States, 107 Fed. Cl. 58, 70 (2012), aff’d, 516 F. App’x 927 (Fed. Cir.
2013).

        In the procurement at issue, Leidos noted personnel that it determined were key to its
proposed approach, but Mr.              was not mentioned. AR 4754. Notably, the Solicitation did
not require evaluation of named personnel, and nothing in the record demonstrates that Mr.
          was a material factor in the Navy’s evaluation. Finally, the Agency does not even
mention Mr.             in any of its evaluation documents. See AR Tabs 25064–265, 25362–412,
25422–38. Consequently, the Court finds that a change in unnamed, non-key personnel does not
constitute a material change, and, as such, Leidos’ failure to update its proposal to reflect that
Mr.           left the company did not constitute a “material misrepresentation.”

       C.      Price Realism

        In its Motion for Judgment on the Administrative Record, plaintiff alleges that the Navy’s
price realism evaluation was arbitrary and capricious for the following two reasons: (1) “based
only on a partial record, GAO correctly determined that, in evaluating the realism of individual

                                                 -7-
labor rates, the Navy utilized a flawed methodology that resulted in a range of ‘realistic’ rates
that was so wide that every proposed rate was deemed realistic”; and (2) “the complete record
reveals that the Navy’s evaluators deemed a majority of Leidos’ FFP CLIN pricing to be
unrealistically low, but the Navy failed to assess Leidos’ technical risk as required by the RFP
and applicable law.” Pl.’s MJAR at 13–14.

           1.      Fixed-Price Labor Rates

        The Court will first address plaintiff’s argument that the Navy utilized a flawed
methodology in evaluating the realism of individual labor rates. Specifically, p laintiff argues that
“[h]ad the Navy utilized a rational methodology and adhered to the RFP, it would have
recognized that a substantial percentage of Leidos’ fixed labor rates were unrealistically low and,
as a consequence, assigned Leidos a technical risk.” Pl.’s MJAR at 14. In making this assertion,
plaintiff contends that “the Navy’s methodology resulted in acceptable ranges of labor rates that
were so wide they were incapable of identifying unrealistic rates.” Id. at 15. As a result,
plaintiff alleges that the Navy failed to consider the recruiting and retention risks associated with
Leidos’ proposed low rates, which is “especially high because Leidos’ proposal relies heavily on
incumbent capture.” Id. at 16.

         In response, defendant argues that “the two offerors proposed remarkably similar pricing,
and the agency reasonably deemed both to be realistic.” Def.’s CMJAR at 17 (citing AR 25279).
In fact, defendant alleges, “neither Perspecta nor Leidos proposed a single labor rate that was
outside even the 1.5 standard deviation range, let alone two standard deviations.” Id. at 20.
Defendant-intervenor highlights that “[t]he Navy found Leidos’ proposed FFP labor rates to be
realistic,” AR 25285–86, and that “the SSEB found that Leidos’ proposal demonstrated ‘the
ability to recruit, hire, on-board, and retain personnel to minimize disruptions to network
operations and services during transition.’” Def.-Int.’s CMJAR at 20 (citing AR 25176–77).

        As this Court has previously held, “the nature and extent of a price realism analysis [are]
ultimately within the sound exercise of the agency’s discretion, unless the agency commits itself
to a particular methodology in a solicitation.” Afghan Am. Army Servs. Corp. v. United States,
90 Fed. Cl. 314, 358 (2009). When analyzing price realism, the inquiry turns on whether the
agency’s analysis was “consistent with the evaluation criteria set forth in the RFP.” Alabama
Aircraft Indus. v. United States, 586 F.3d 1372, 1375–76 (Fed. Cir. 2009). When an RFP does
not specify the particular analysis tool an agency must use, the agency has broad discretion to
choose the methodology. See, e.g., Northeast Mil. Sales, Inc. v. United States, 100 Fed. Cl. 103,
118 (2011).

        The Navy did not specify how the price realism analysis was to be conducted, but, rather,
only required that the Agency “consider whether the proposed prices are realistic for the work to
be performed” and “reflect a clear understanding of the contract requirements.” AR 14086.
Moreover, the Solicitation directed that the SSA was to consider price realism in her best value
trade off decision, but that unrealistic prices “[do] not necessarily result in a proposal being
unawardable.” AR 14086. To determine the realism of proposed labor rates, the CPEB created
an independent government cost estimate (“IGCE”) from an average of General Service
Administration Alliant 2 benchmark rates from 2018. The CPEB then averaged the IGCE with

                                                -8-
Leidos’ and Perspecta’s proposed rates to establish realistic ranges for each labor category. AR
25279. The rationale behind the CPEB’s analysis is explained as follows:

       The statistical analysis was performed on the two offerors and IGCE rates to better
       understand the magnitude of deviation from the statistical mean for each labor rate
       category in order to identify proposed rates that were too low. This was done by
       calculating the Standard Deviation (SD) of the population (proposed rates per labor
       category). A low SD indicates that the data points are closer to the average whereas
       a high SD indicates the data points are more spread out from the mean. The CPEB
       utilized two standard deviations as this would identify any rate which is truly
       considered an outlier. Therefore, the CPEB determined that if an Offeror’s
       proposed rate was within two (2) SDs of a given labor category’s average, it was
       realistic.

AR 25279. The Navy determined that, based on the above evaluation, both Perspecta and Leidos
proposed realistic prices.

        Nothing in record leads this Court to believe that either offeror was prejudiced by the
Agency’s price realism analysis. “To establish prejudice, [the protestor] must show that there
was a ‘substantial chance’ it would have received the contract award but for the alleged error in
the procurement process.” Info. Tech. & Applications Corp. v. United States, 316 F.3d 1312,
1319 (Fed. Cir. 2003). Neither offeror proposed FFP labor pricing that was found to be
unreasonable. Moreover, as the GAO points out, even if the Agency had utilized a 1.5 standard
deviation range—as opposed to the 2 standard deviation range—all of Leidos’ rates would have
been found realistic and only Perspecta would have proposed rates outside of that range. AR
30075. Consequently, the Agency’s utilization of a 2 standard deviation range really only
benefits the protestor, not the awardee. Therefore, the Court does not believe that the protestor
was prejudiced by the Agency’s price realism analysis.

           2.     Fixed-Price CLINs

        Second, the Court analyzes plaintiff’s argument related to the Navy’s failure to assess
Leidos a technical risk for its low fixed-price CLINs. Plaintiff contends that the Navy “ignored
the risk its evaluators identified in Leidos’ low rates,” instead concluding “without explanation,
that ‘Leidos proposed efficiencies that may contribute to achieving the low prices proposed.’”
Pl.’s MJAR at 17–18 (citing AR 25285). Plaintiff argues that such a conclusion fails for the
following three reasons: (1) “there is nothing in the record as to the specific efficiencies that
could support Leidos’ significantly lower proposed labor hours and associated lower costs ”; (2)
“the Navy’s price realism findings explicitly state that Leidos’ low level of effort f or certain
CLINs was not supported by its proposed efficiencies”; and (3) “a comparison to Perspecta’s
proposed hours shows that Leidos proposed nearly 5 million hours less than did Perspecta.” Id.
at 18 (emphasis in original). Finally, plaintiff contends that “[t]he SSA’s failure to consider
Leidos’ low prices renders the Navy’s evaluation and award decision inconsistent with the RFP’s
express terms.” Id. at 19.

                                               -9-
        In response, defendant argues that “while the RFP did provide that the agency would
‘analyze the proposals to determine if prices on fixed-price CLINs are materially
unbalanced’— including, but not limited to, labor rates—it did not proscribe the process
Perspecta now advocates.” Def.’s CMJAR at 21 (citing AR 10486). Defendant-intervenor
points to a finding from the CPEB report, which stated that “Leidos’ proposed level of effort for
some of the services were determined low because the Offeror did not provide sufficient
justifications to demonstrate its proposed prices were realistic for the wo rk to be performed.
However, Leidos proposed efficiencies that may contribute to achieving the low prices
proposed.” Def.-Int.’s CMJAR at 20–21 (quoting AR 25285). Moreover, defendant-intervenor
alleges that, essentially, “the CPEB verified that the offerors’ price/cost volumes were consistent
with their respective unique technical approaches, including the assessment by the SSEB of the
offerors’ proposed levels of effort.” Id. at 21.

        The Court again highlights that “the nature and extent of a price realism analysis [are]
ultimately within the sound exercise of the agency’s discretion.” Afghan Am. Army Servs., 90
Fed. Cl. at 358. A price realism analysis will only lack a rational basis if the agency made
“irrational assumptions or critical miscalculations.” OMV Med., Inc. v. United States, 219 F.3d
1337, 1344 (Fed. Cir. 2000). In conducting a price realism evaluation, a comparison of the
proposed prices will usually satisfy the requirement to perform a price analysis. FAR
15.305(a)(1) (2017). Furthermore, when assessing the agency’s selected evaluation procedures,
the “proper inquiry” is “whether there is any statutory or regulatory provision that precludes
such use.” Tyler Construction Group v. United States, 570 F.3d 1329, 1333 (Fed. Cir. 2009)
(emphasis added).

         Again, the Agency was only required to “consider whether the proposed prices are
realistic for the work to be performed,” and “reflect a clear understanding of the contract
requirements.” AR 14086. While the plaintiff is correct in pointing out that the Navy
determined that prices for certain CLINs were unrealistically low, the Agency, looking to the
proposal as a whole, determined that Leidos’ proposed efficiencies explained why its prices were
so low, and, thus, its prices were considered realistic. AR 25285. Even acknowledging that
some discrete prices were unrealistically low, the SSEB never determined that there would be
associated performance risks. AR 25410. Moreover, a significant portion of plaintiff’s
allegations related to whether Leidos’ prices were unrealistically low hinge upon repeated
citations to the declaration of an expert retained for litigation, rather than to documents that were
concurrently produced throughout the course of evaluation and award.

        After careful review of the parties’ arguments, the Court finds that plaintiff failed to
successfully establish that the Agency’s price realism evaluation was inconsistent with the
express terms of the Solicitation or that the Agency’s evaluation was irrational or arbitrary and
capricious. As such, the Court will not encroach upon the Agency’s discretion in utilizing the
price realism tool of its choosing.

                                               - 10 -
       D.      Cost Realism

        In addition to its price realism arguments, plaintiff argues that “[t]he Navy’s evaluation of
offerors’ prime direct labor rates was plainly unequal because the Navy misled Perspecta into
raising its rates while at the same time allowing Leidos to propose lower rates for those same
positions.” Pl.’s MJAR at 20. In making this argument, plaintiff asserts that “the Navy did not
scrutinize Leidos’ methodology for selecting its rates in the manner it did for Perspecta .” Id. at
21. Specifically, plaintiff contends that “the Navy accepted rates from Leidos that were lower
than the rates in Perspecta’s initial proposal that the Navy found unrealistic,” and Leidos’
allegedly “unrealistically low rates account for a delta of approximately $102 million between
the two offerors.” Id. (emphasis in original). Ultimately, plaintiff posits that “[t]he Navy’s
complete failure to analyze whether Leidos could perform at the cost it proposed, while at the
same time insisting that Perspecta raise its rates to the Navy’s self -identified realism floor, is
arbitrary and capricious.” Id. at 23.

        In response, defendant-intervenor argues that “Perspecta appears to have either
misunderstood the amended RFP evaluation criteria or otherwise made a business decision to
increase its CPFF labor rates to the 25th percentile mark, rather than justify its proposed rates
under the options available under the revised RFP.” Def.-Int.’s CMJAR at 25. Moreover,
defendant-intervenor contends that, even accepting plaintiff’s arguments regarding alleged errors
in the Agency’s cost realism analysis, “Perspecta cannot demonstrate competitive prejudice”
because “Leidos’ total evaluated cost/price was lower than Perspecta’s total evaluated cost/price
by more than $526 million.” Id. at 23 (citing AR 25435). Relatedly, defendant posits that
“because the RFP provided for realism only as a tool to interrogate an offeror’s understanding of
technical requirements,” Def.’s CMJAR at 28, when assessing the validity of the Agency’s cost
realism analysis, “[t]he question before the Court is . . . whether the agency unreasonably
determined that Leidos’ CLIN pricing did not reveal a lack of understanding as to the technical
requirements of the contract.” Id. at 25 (citing AR 14086). Finally, defendant points out that, if
the Agency utilized the evaluation mechanism that Perspecta advocates using to analyze Leidos’
pricing, “52% of Perspecta’s fixed price CLIN pricing would be found ‘unrealistically low.’” Id.
at 27.

        It is well settled that “contracting agencies enjoy wide latitude in conducting the cost
realism analysis.” Agile Def., Inc. v. United States, 959 F.3d 1379, 1385–86 (Fed. Cir. 2020).
To successfully challenge a cost realism analysis, a protestor must demonstrate “ the absence of a
rational basis for the agency’s decision.” CSC Gov’t Sols. LLC v. United States, 129 Fed. Cl.
416, 429 (2016) (internal citations omitted) (internal quotations omitted). When reviewing an
agency’s cost realism determination, “the Court defers to those agency conclusions that are
rational and based on reasoned judgment.” United Payors & United Providers Health Servs.,
Inc. v. United States, 55 Fed. Cl. 323, 329 (2003).

        As part of the plaintiff’s cost realism argument, plaintiff also alleges that the Agency
engaged in uneven treatment. This Court has long held that “uneven treatment goes against the
standard of equality and fair-play that is a necessary underpinning of the federal government's
procurement process and amounts to an abuse of the agency's discretion.” PGBA, LLC v. United
States, 60 Fed. Cl. 196, 207 (2004) (citing Doty v. United States, 53 F.3d 1244, 1251 (Fed. Cir,

                                               - 11 -
1995)), aff’d, 389 F.3d 1219 (Fed. Cir. 2004). However, after careful review of the record, the
Court does not believe that the Agency engaged in unequal treatment.

       As defendant correctly points out,

       [t]he RFP provided that ‘cost realism will be performed for all cost reimbursement
       type CLINs to determine the most probable cost’ of performance, and that the
       agency would evaluate ‘whether the estimated proposed cost elements are realistic
       for the work to be performed, reflect a clear understanding of contract requirements,
       and are consistent with the unique methods of performances and materials
       described in the Offeror’s technical proposal and BOE.’

Def.’s CMJAR at 29 (quoting AR 588–89). The Navy communicated cost realism concerns to
both Leidos and Perspecta through Evaluation Notices (“ENs). See e.g., AR 12712; AR 12778.
After issuing the ENs, the Agency issued Amendment 11, which changed how it would evaluate
CPFF labor rates. See AR 12819. As a result of the ENs and ensuing amendments, Perspecta
raised its CPFF labor rates, AR 25282, while Leidos provided justifications and supporting
documentation for its already-proposed rates. See AR 14085; AR 19776. The Navy evaluated
Leidos’ supporting documentation and determined such documentation adequately supported its
proposed labor category pricing. See AR 25280. However, because Perspecta raised its labor
rates to IGCE rates, the Agency did not need to analyze whether Perspecta’s rates were realistic.
See AR 25291; AR 25287.

        As the Agency issued Amendment 11 allowing offerors to provide justifications for its
proposed rates, the Navy was neither arbitrary nor capricious in determining that Leidos could
perform at the cost it proposed or in allowing those rates to stand. Moreover, as it was up to the
offerors’ discretion to choose whether to raise their rates or provide those justifications, the
Agency did not treat offerors disparately in allowing such discretion. For the reasons set forth
above, the Agency’s cost realism evaluations were not unequal, and, thus, the Court declines to
set those evaluations aside now.

       E.      Unequal Discussions

        Meaningful discussions “generally lead offerors into the areas of their proposals requiring
amplification or correction, which means that discussions should be as specific as practical
considerations permit.” Advanced Data Concepts, Inc. v. United States, 43 Fed. Cl. 410, 422
(1999), aff’d, 216 F.3d 1054 (Fed. Cir. 2000). However, FAR 15.306(d)(2) states that an agency
“is not required to discuss every area where the proposal could be improved. The scope and
extent of discussions are a matter of contracting officer judgment.” Additionally, “an agency is
not required to ‘spoon-feed’ offerors in order to have meaningful discussions.” Carahsoft Tech.
Corp. v. United States, 86 Fed. Cl. 325, 343 (2009). Finally, “[d]eficiencies or weaknesses that
appear for the first time in a revised proposal during discussions do not oblige the agency to
extend discussions further with that offeror.” iAccess Techs., Inc. v. United States, 143 Fed. Cl.
521, 538 (2019).

                                              - 12 -
        In addition to its aforementioned arguments, plaintiff alleges that “[t]he Navy’s failure to
conduct adequate discussions tainted its evaluation of Perspecta’s proposal under the Technical
and Management Approach factors,” and that “[g]iven the . . . importance of these factors, the
Navy’s flawed discussions materially impacted Perspecta’s evaluation score.” Pl.’s MJAR at 24.
Plaintiff further contends that “[t]he sheer number of evaluation findings directly resulting from
the Navy’s flawed discussions . . . demonstrates the significance of this error.” Id.

           1.      Factor 1

        In arguing that the Agency conducted unequal discussions, plaintiff specifically asserts
that “[o]f the thirteen total weaknesses assigned to Perspecta under Factor 1, nine of them
(including both significant weaknesses) were based upon language in Perspecta’s FPR that
existed in Perspecta’s initial submission but that the Navy never raised with Perspecta during
discussions.” Pl.’s MJAR at 25. Moreover, plaintiff argues that “[g]iven the level of specificity
with which the Navy framed its discussions, Perspecta reasonably understood that no additional
issues existed in its initial proposal volume beyond those identified,” particularly considering
that nine of the Navy’s Factor 1 findings “were based upon language that appeared nearly
verbatim in Perspecta’s initial proposal but were never raised during discussions.” Id. at 26
(citing AR 12665). Finally, plaintiff asserts that “[h]ad Perspecta been aware that the Navy took
issue with Perspecta’s Factor 1 submission beyond the discrete concerns identified during
discussions, Perspecta would have directly addressed the Navy’s concerns, as it did with the
issues that were raised.” Id. at 28.

        In response, defendant-intervenor asserts that “[b]oth of the significant weaknesses and
all but one of the challenged weaknesses (Weaknesses 1, 2, 4, 5, and 7 under subfactor 1.1, and
Weakness 1 under subfactor 1.2), resulted from changes Perspecta made to its FPR that were not
present in its initial Technical proposal.” Def.-Int.’s CMJAR at 30–31. “[T]he mere fact that
some text remained unchanged between proposals,” argues defendant, does not mean that the
Agency’s discussions were not meaningful, particularly as “Perspecta undertook a ‘complete
re-write’” as a result of those discussions, which ultimately elevated its otherwise unawardable
Factor 1 score to “marginal.” Def.’s CMJAR at 37.

        The Court does not believe that the Navy engaged in unequal discussions. In fact, the
discussions held as a result of the ENs were clearly to Perspecta’s benefit, as it resulted in a
higher overall rating. For example, Subfactor 1.1, “systems engineering,” asked offerors to
demonstrate an “understanding of the Government’s Systems Engineering Plan [] and how its
proposed subsections of the Systems Engineering Management Plan [] will benefit the
Government” as well as an “understanding of the Government’s Network
Transformation/Modernization requirements and how its proposed approach will benefit the
Government.” AR 14081. The Navy assigned one Weakness, one Significant Weakness, and
one deficiency to Perspecta’s initial proposal, as it did “not fully describe[]” the “structure of the
[Model Based Systems Engineering] Ecosystem,” and “call[ed] into question [Perspecta’]s
understanding of the Government’s Systems Engineering Plan.” AR 12665. As a result,
Perspecta did a “complete re-write” of that section, AR 21175, and the new approach was found
not to be a performance risk and received a “marginal” rating. AR 25183–84. However, as
defendant-intervenor correctly points out, “Perspecta’s major overhaul of its systems engineering

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approach in its FPR created new ambiguities and raised new concerns.” Def.-Int.’s CMJAR; see
also AR 30069.

         As the Court previously stated, “[d]eficiencies or weaknesses that appear for the first time
in a revised proposal during discussions do not oblige the agency to extend discussions further
with that offeror.” iAccess Techs., 143 Fed. Cl. at 538. While plaintiff is technically correct in
asserting that some of the language for which it received a weakness was present in the initial
proposal, plaintiff completely ignores the context surrounding that language. The meaning of a
sentence or clause can, and often does, completely change depending on what language
surrounds it. Perspecta completely overhauled its Factor 1 approach as a result of the Navy’s
initial ENs, and the Agency was not obliged to extend discussions because new weakness arose
out of final proposal revisions. As such, the Court does not find that the Agency conducted
unequal discussions with regard to Factor 1.

            2.      Factor 2

         In addition to its arguments related to Factor 1, plaintiff alleges that the Navy engaged in
inadequate and unequal discussions during the course of the procurement. Specifically, plaintiff
argues that the Significant Weakness assigned under Subfactor 2.2 “was present in Perspecta’s
initial proposal and should have been addressed during discussions.” Pl.’s MJAR at 29 (citing Q
Integrated Cos., LLC v. United States, 126 Fed. Cl. 124, 146 (2016)). Plaintiff additionally
argues that the Weakness and Significant Weakness it was assigned under Subfactor 2.3 were
“the result of misleading and unequal discussions.” Id. at 30.

       In response, defendant-intervenor again asserts that, for Subfactors 2.2 and 2.3,
“Perspecta’s weaknesses were a result of flaws which Perspecta introduced into its FPR that
were not apparent in its initial proposal.” Def.-Int.’s CMJAR at 35. Defendant likewise presents
arguments for Factor 2 that are very similar to those it made for Factor 1. See generally Def.’s
CMJAR at 38–41. The Court once again must note that “[d]eficiencies or weaknesses that
appear for the first time in a revised proposal during discussions do not oblige the agency to
extend discussions further with that offeror.” iAccess Techs., 143 Fed. Cl. at 538. As Perspecta
made significant changes to its management approach when submitting its final proposal, see AR
21802–3, the Agency was under no legal obligation to conduct additional discussions regarding
any weaknesses that arose out of those changes. Therefore, as above, the Court concludes that
the Agency’s discussions related to Factor 2 were meaningful and not inadequate or unequal.

       F.        Technical Evaluation

       Throughout the course of briefing, plaintiff asserts that “the Navy failed to conduct
meaningful discussions with respect to nine negative findings evaluated under Factor 1 and
another three under Factor 2.” Pl.’s Resp. at 21. Consequently, plaintiff alleges that the Navy’s
evaluation under both factors was “disparate and irrational.” Pl.’s MJAR at 32; see also id. at
36. In arguing that the Agency engaged in disparate treatment, plaintiff contends that the Navy
assigned it weaknesses and significant weaknesses for proposing similar features to those for
which the Navy credited Leidos. Id. at 32; see also id. at 36. Plaintiff points to a number of

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weaknesses and significant weaknesses as examples of the Agency’s allegedly disparate
treatment.

        In response, defendant-intervenor argues that “Perspecta’s and Leidos’ proposals were
substantively distinguishable, and therefore Perspecta’s claim that the Navy’s technical
evaluation was arbitrary and irrational fails.” Def.-Int.’s CMJAR at 38. Defendant contends that
“Perspecta points to no error in the agency’s technical evaluation.” Def.’s Reply at 17.
Additionally, as the SSEB fully explained its basis for assigning each of the ratings challenged
by Perspecta, “examin[ing] the relevant data and articulat[ing] a rational connection between the
facts found and the choice made,” defendant asserts that “Perspecta’s myriad of challenges fail.”
Def.’s CMJAR at 48 (quoting Tech. Innovation All. LLC v. United States, 149 Fed. Cl. 105, 139
(2020)).

        This Court recently stated that the “scope of review is particularly narrow when it comes
to agency judgments regarding the technical merits of particular proposals.” Tech. Innovation,
149 Fed. Cl. at 139. “To prevail [on a disparate treatment claim], a protestor must show that the
agency unreasonably downgraded its proposal for deficiencies that were ‘substantively
indistinguishable’ or nearly identical from those contained in other proposals,” or that “the
agency inconsistently applied objective solicitation requirements between it and other offerors,
such as proposal page limits, formatting requirements, or submission deadlines.” Office Design
Grp. v. United States, 951 F.3d 1366, 1372 (Fed. Cir. 2020) (citing Enhanced Veterans
Solutions, Inc. v. United States, 131 Fed. Cl. 565, 588 (2017)). “If a protestor does not [meet this
threshold], then the court should dismiss the claim. To allow otherwise would give a court free
reign [sic] to second-guess the agency’s discretionary determinations underlying its technical
ratings.” Id. at 1373.

        As the Court has previously stated, “[i]n cases that involve the application of judgment in
a highly technical area, the Court’s main task instead is to ensure that the agency examined the
relevant data and articulated a rational connection between the facts found and the choice made.”
Tech. Innovation, 149 Fed. Cl. at 139. Upon careful review of the record, it is clear to the Court
that plaintiff’s allegations merely amount to plaintiff second-guessing the Navy’s discretionary
determinations. Moreover, as the offerors did not submit identical proposals, the Agency
necessarily entered into different—but not unequal—discussions regarding those proposals. As
nothing in the record supports plaintiff’s assertions that the technical evaluation was disparate
and irrational, the Court will not endeavor to set it aside now.

       G.      Prejudice and Injunctive Relief

        Finally, plaintiff alleges that the “myriad errors in the Navy’s evaluation . . . culminated
in a flawed best value decision where the SSA failed to exercise any independent judgment,” and
that, “[b]ut for these errors, Perspecta would have had a substantial chance at award.” Pl.’s
MJAR at 38–39. As defendant points out, “officials have substantial discretion to determine
which proposal represents the best value for the Government.” E.W. Bliss Co. v. United States,
77 F.3d 445, 449 (Fed. Cir. 1996). Additionally, this Court is “generally loathe to disturb a best-
value award so long as the agency documents its final award decision and includes the rationale
for any business judgments and tradeoffs made.” Afghan Am. Army Servs., 90 Fed. Cl. at 360.

                                               - 15 -
So long as there exists a “rational connection between the facts found and the choice made,” the
Court will not set a procurement decision aside. Banknote Corp. of Am. v. United States, 56 Fed.
Cl. 377, 390 (2003) (citing Motor Vehicle Mfrs. Ass’n v. State farm Mut. Auto. Ins. Co., 463 U.S.
29, 43 (1983)). As the Court is not persuaded by plaintiff’s contentions that the Agency
conducted a flawed evaluation and award, the Court does not believe that plaintiff was
prejudiced by such alleged procurement flaws.

        Additionally, plaintiff alleges that it is entitled to permanent injunctive relief. When
analyzing whether a permanent injunction is proper, a court must analyze “whether, as it must,
the plaintiff has succeeded on the merits of the case.” PGBA, LLC v. United States, 389 F.3d
1219, 1229 (Fed. Cir. 2004). As the plaintiff did not succeed on the merits of its case, plaintiff’s
request for a permanent injunction of course fails.

   IV.     Conclusion

      For the reasons set forth above, plaintiff’s MOTION for Judgment on the Administrative
Record is hereby DENIED. Defendant and defendant-intervenor’s CROSS-MOTIONS for
Judgment on the Administrative Record are hereby GRANTED. The Clerk is directed to enter
judgment in favor of defendant and defendant-intervenor, consistent with this opinion.

       IT IS SO ORDERED.
                                                        s/   Loren A. Smith
                                                    Loren A. Smith
                                                    Senior Judge

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