Court Opinion

ID: 4651076
Source: CourtListenerOpinion
Date Created: 2021-01-13 16:00:36.719563+00
Date Added: 2024-06-11T08:01:36.515513
License: Public Domain

Case: 20-1336   Document: 50     Page: 1    Filed: 01/13/2021

        NOTE: This disposition is nonprecedential.

   United States Court of Appeals
       for the Federal Circuit
                 ______________________

            VETERAN SHREDDING, LLC,
                 Plaintiff-Appellant

                            v.

                   UNITED STATES,
                   Defendant-Appellee
                 ______________________

                       2020-1336
                 ______________________

    Appeal from the United States Court of Federal Claims
 in No. 1:19-cv-00945-MBH, Senior Judge Marian Blank
 Horn.
                  ______________________

                Decided: January 13, 2021
                 ______________________

    TIMOTHY TURNER, Whitcomb, Selinsky, PC, Denver,
 CO, for plaintiff-appellant. Also represented by JOSEPH
 ANTHONY WHITCOMB.

     IGOR HELMAN, Commercial Litigation Branch, Civil Di-
 vision, United States Department of Justice, Washington,
 DC, for defendant-appellee. Also represented by JEFFREY
 B. CLARK, ROBERT EDWARD KIRSCHMAN, JR., DOUGLAS K.
 MICKLE; NATICA CHAPMAN NEELY, Office of General
Case: 20-1336     Document: 50     Page: 2    Filed: 01/13/2021

 2                  VETERAN SHREDDING, LLC    v. UNITED STATES

 Counsel, United States Department of Veterans Affairs,
 Portland, OR.
                 ______________________

     Before PROST, Chief Judge, MAYER and MOORE, Circuit
                           Judges.
 PROST, Chief Judge.
     Veteran Shredding, LLC appeals a judgment of the
 Court of Federal Claims dismissing its bid protest. Vet-
 eran Shredding contends that the Rule of Two, 38 U.S.C.
 § 8127(d), required the solicitation in question to have been
 set aside for competition among service-disabled veteran–
 owned small businesses (“SDVOSBs”).
     The Rule of Two requires that competition be restricted
 to SDVOSBs when a contracting officer reasonably expects
 that two or more SDVOSBs will bid on the solicitation and
 that an award can be made at a fair and reasonable price.
 Because the contracting officer lacked such an expectation
 here, no set-aside was required. We affirm.
                               I
     Veteran Shredding is a firm whose services and owner-
 ship status are apparent. It sought to shred documents for
 the Minneapolis Veterans Affairs Healthcare System.
     To seek shredding services, the Department of Veter-
 ans Affairs (“VA”) had initially posted what is here called
 the ’181 solicitation, 1 issuing it as an SDVOSB set-aside
 under the Rule of Two. Veteran Shredding bid, but the con-
 tracting officer found its bid unreasonably high. When no
 reasonable SDVOSB bids came in, that solicitation was
 canceled, and the nearly identical ’276 solicitation 2 was is-
 sued—this one set aside for competition among all capable

      1   No. 36C26318Q0181.
      2   No. 36C26319Q0276.
Case: 20-1336      Document: 50      Page: 3     Filed: 01/13/2021

 VETERAN SHREDDING, LLC    v. UNITED STATES                     3

 small businesses, veteran-owned or not.          See 48 C.F.R.
 §§ 819.7005(c), 19.1405(b)–(c).
     Veteran Shredding did not bid again. Instead it sued,
 arguing that the ’276 solicitation should have been set
 aside for SDVOSBs alone. Veteran Shredding and the gov-
 ernment cross-moved for judgment on the administrative
 record. The Court of Federal Claims granted judgment in
 the government’s favor, dismissing Veteran Shredding’s
 complaint. Veteran Shredding, LLC v. United States,
 146 Fed. Cl. 543, 581 (2019) (“Veteran Shredding II”). Vet-
 eran Shredding appealed.
     We have jurisdiction under 28 U.S.C. § 1295(a)(3).
                                II
                                A
      We review the legal determinations of the Court of Fed-
 eral Claims de novo and any underlying factual findings for
 clear error. Palladian Partners, Inc. v. United States,
 783 F.3d 1243, 1252 (Fed. Cir. 2015). In a bid protest, we
 follow Administrative Procedure Act § 706 and set aside
 agency action “if it is arbitrary, capricious, an abuse of dis-
 cretion, or otherwise not in accordance with law.” Id. (quot-
 ing Savantage Fin. Servs. v. United States, 595 F.3d 1282,
 1285 (Fed. Cir. 2010)). A procurement decision fails under
 § 706 if “(1) the procurement official’s decision lacked a ra-
 tional basis; or (2) the procurement procedure involved a
 violation of regulation or procedure.” Id. (quoting Sa-
 vantage Fin. Servs., 595 F.3d at 1285–86).
                                B
     To the extent that Veteran Shredding appears to chal-
 lenge the cancellation of the prior ’181 solicitation, it is pre-
 cluded from doing so.
     Veteran Shredding has already challenged that cancel-
 lation at the Court of Federal Claims. It lost there for lack
 of standing and chose not to appeal. Veteran Shredding,
Case: 20-1336     Document: 50      Page: 4     Filed: 01/13/2021

 4                   VETERAN SHREDDING, LLC    v. UNITED STATES

 LLC v. United States, 140 Fed. Cl. 759, 760 (2018) (“Vet-
 eran Shredding I”). It cannot collaterally attack that judg-
 ment now. The government argues as much, and Veteran
 Shredding provides no response. We agree with the gov-
 ernment.
     But even to the extent that Veteran Shredding’s argu-
 ments about the ’181 solicitation’s cancellation inform its
 challenge to the later ’276 solicitation, we see no “lack[] [of]
 a rational basis” or “violation of regulation or procedure” in
 the cancellation decision. Veterans Contracting Grp., Inc.
 v. United States, 920 F.3d 801, 806 (Fed. Cir. 2019). In-
 deed, all the bids vastly exceeded the cost estimate and
 funding for the contract, and the cost estimate and reason-
 ableness analysis were not irrational or contrary to law.
 See Veteran Shredding II, 146 Fed. Cl. at 577–78, 580–81.
 We have noted, as the Court of Federal Claims has, that
 excessively high bids provide a “compelling reason” to can-
 cel a solicitation initially set aside under the Rule of Two.
 E.g., Veterans Contracting Grp., 920 F.3d at 806–07; see
 also 48 C.F.R. § 14.404-1(c)(6); Land Shark Shredding,
 LLC v. United States, No. 20-1231, slip op. at 7 (Fed. Cir.
 Jan. 11, 2021); Veteran Shredding II, 146 Fed. Cl.
 at 580–81. Accordingly, we are unconvinced that the
 ’181 solicitation’s cancellation violated the Rule of Two,
 lacked a rational basis, or violated a law or procedure.
                                C
      The only issue remaining is whether the ’276 solicita-
 tion should have been set aside for SDVOSBs under the
 Rule of Two. The Court of Federal Claims concluded that
 it should not, and we agree.
      The Rule of Two requires (with exceptions not relevant
 here) that competition be restricted to SDVOSBs when a
 contracting officer for the VA reasonably expects two
 things: (1) that two or more SDVOSBs will submit bids and
 (2) that an award can be made at a fair and reasonable
 price. 38 U.S.C. § 8127(d); Kingdomware Techs., Inc. v.
Case: 20-1336    Document: 50      Page: 5    Filed: 01/13/2021

 VETERAN SHREDDING, LLC   v. UNITED STATES                  5

 United States, 136 S. Ct. 1969, 1973–94 (2016). Accord-
 ingly, the VA must conduct a Rule of Two analysis before
 issuing a solicitation, but only if the Rule is triggered by
 the twin expectations must it restrict competition accord-
 ingly.
      Here, the VA engaged in the required Rule of Two anal-
 ysis. It did not simply reissue the solicitation without
 again looking into the appropriateness of a set-aside. Ra-
 ther, it conducted multiple rounds of market research. See,
 e.g., Veteran Shredding II, 146 Fed. Cl. at 549–52, 578–79.
 It reached out to various veteran-owned businesses, id.
 at 550, but ultimately found that it expected that particu-
 lar bids would be too high or that particular firms lacked
 the required capabilities. It issued a sources-sought notice
 to determine interest (only two SDVOSBs responded, and
 each had submitted an unreasonably high bid in the ’181
 solicitation). Id. at 550. It updated its cost estimate. Id.
 at 550–51. It issued another sources-sought notice (again,
 only two SDVOSBs responded). Id. at 551. In the end,
 however, it concluded that there was a lack of capable
 SDVOSBs that it expected would submit reasonable offers.
 Id. at 551–52. The solicitation was set aside instead for
 competition among all small businesses.
     The Court of Federal Claims analyzed Veteran Shred-
 ding’s arguments at length and found them unpersuasive
 in light of the VA’s analysis on the record. See id.
 at 567–81. In reviewing the VA’s cost estimate, market
 analysis, and reasonableness assessments, we too cannot
 say that any of it lacked a rational basis or violated a reg-
 ulation or procedure. Nothing in § 8127(d), which simply
 requires that competition be restricted if certain conditions
 are met, rendered the VA’s determinations irrational or un-
 lawful here. Because the twin expectations of the Rule of
 Two were not met, there was no requirement to set aside
 the ’276 solicitation for competition among veteran-owned
 businesses.
Case: 20-1336    Document: 50     Page: 6   Filed: 01/13/2021

 6                VETERAN SHREDDING, LLC    v. UNITED STATES

                           III
     We have considered Veteran Shredding’s remaining ar-
 guments and find them unpersuasive. For the reasons dis-
 cussed above, we affirm the Court of Federal Claims’
 judgment dismissing Veteran Shredding’s complaint.
                      AFFIRMED
                          COSTS
     No costs.