Court Opinion

ID: 4704576
Source: CourtListenerOpinion
Date Created: 2021-07-19 15:01:13.373949+00
Date Added: 2024-06-11T08:05:27.856602
License: Public Domain

Case: 21-1008    Document: 80     Page: 1   Filed: 07/19/2021

   United States Court of Appeals
       for the Federal Circuit
                  ______________________

   ASSET PROTECTION & SECURITY SERVICES,
                     L.P.,
              Plaintiff-Appellant

                             v.

   UNITED STATES, AKIMA GLOBAL SERVICES,
                      LLC,
              Defendants-Appellees
             ______________________

                        2021-1008
                  ______________________

    Appeal from the United States Court of Federal Claims
 in No. 1:20-cv-00449-MBH, Senior Judge Marian Blank
 Horn.
                  ______________________

                  Decided: July 19, 2021
                  ______________________

     DAVID THOMAS RALSTON, JR., Foley & Lardner LLP,
 Washington, DC, argued for plaintiff-appellant. Also rep-
 resented by JULIA DI VITO, FRANK S. MURRAY, GEORGE
 ELLSWORTH QUILLIN.

     DANIEL B. VOLK, Commercial Litigation Branch, Civil
 Division, United States Department of Justice, Washing-
 ton, DC, argued for defendant-appellee United States. Also
 represented by BRIAN MATTHEW BOYNTON, ROBERT
 EDWARD KIRSCHMAN, JR., DOUGLAS K. MICKLE.
Case: 21-1008     Document: 80     Page: 2    Filed: 07/19/2021

 2                         ASSET PROTECTION & SECURITY    v. US

     CHE PETER DUNGAN, Miles & Stockbridge P.C., Wash-
 ington, DC, argued for defendant-appellee Akima Global
 Services, LLC. Also represented by ROGER V. ABBOTT;
 ALFRED WURGLITZ, Rockville, MD.
                 ______________________

     Before DYK, PROST *, and HUGHES, Circuit Judges.
 DYK, Circuit Judge.
      The U.S. Immigration and Customs Enforcement (ICE)
 awarded a contract to Akima Global Services, LLC to pro-
 vide services at one of ICE’s detention facilities in Arizona.
 Asset Protection and Security Services, L.P., an unsuccess-
 ful bidder, brought a bid protest action in the Court of Fed-
 eral Claims (“Claims Court”), challenging the award. The
 Claims Court held that Asset was without standing to chal-
 lenge the award. We affirm.
                        BACKGROUND
     The pertinent facts are not in dispute. In 2016, ICE
 issued a solicitation for a contractor to provide detention,
 food, and transportation services at its Florence Detention
 Center in Arizona. Asset was the incumbent contractor.
 The solicitation went through various modifications and
 amendments and provided several evaluation factors. Un-
 der the original solicitation, ICE indicated that proposals
 would “be evaluated for price realism, completeness, and
 reasonableness.” J.A. 430.
     While this version of the solicitation was pending, ICE
 received a question from a prospective offeror asking, “Ar-
 izona charges 4.5% ‘business tax’; will the Federal Govern-
 ment issue a tax exemption certificate to the successful

     *  Circuit Judge Sharon Prost vacated the position of
 Chief Judge on May 21, 2021.
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 ASSET PROTECTION & SECURITY   v. US                        3

 offeror?” Id. at 528. ICE responded, “Yes.” Id. Given ICE’s
 answer, Asset’s initial proposal included an explanation of
 the cost estimates factored into its pricing, stating that
 “[s]ales taxes were not charged due to the government’s ex-
 pressed intent to provide Team Asset with a tax-exempt
 certificate, where applicable.” Id. at 2022.
     Ultimately, ICE selected Akima for the contract award
 because the government determined that it offered the best
 value. Asset filed a bid protest with the Government Ac-
 countability Office (GAO). Rather than proceed with the
 bid protest, ICE decided to take voluntary corrective ac-
 tion.
     ICE then issued Amendment 17, which made several
 changes to the solicitation, and required offerors to supply
 ICE with specific pricing information in their proposals.
 Amendment 17 also changed the way that ICE was to ana-
 lyze prospective offerors’ pricing. Rather than evaluate
 proposals for price realism as well as reasonableness, ICE
 required offerors to submit a firm fixed price proposal and
 explained that it would “assess the reasonableness of the
 proposed prices” and “conduct its price analysis using one
 or more of the techniques specified in FAR 15.404-1(b).” Id.
 at 779. These techniques include the “[c]omparison of pro-
 posed prices received in response to the solicitation,” 48
 C.F.R. § 15.404-1(b)(2)(i), and the “[c]omparison of pro-
 posed prices to historical prices paid, whether by the Gov-
 ernment or other than the Government, for the same or
 similar items,” id. § 15.404-1(b)(2)(ii), among other tech-
 niques, see id. § 15.404-1(b)(2)(iii)–(vii) (outlining other
 price analysis techniques). 1 In other words, ICE would de-
 termine whether the prices were not unreasonably high

     1    See also 48 C.F.R. § 15.404-1(b)(3) (explaining that
 “[t]he first two techniques at 15-404-1(b)(2) are the pre-
 ferred techniques”).
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 4                         ASSET PROTECTION & SECURITY    v. US

 (reasonable) but would not determine whether they were
 unreasonably low (price realism). Asset submitted its up-
 dated proposal on May 30, 2019.
     After discussions with offerors, ICE issued Solicitation
 Amendment 19 on May 31, 2019. In this Amendment, ICE
 corrected its earlier response to the tax-exempt status
 question. ICE clarified that it “CANNOT delegate its tax
 exempt status to contractors for the performance of govern-
 ment services.” J.A. 1281. In light of this change, ICE in-
 structed that offerors “review their price proposals and
 provide their best and final prices.” Id.
      Asset’s Vice President for Contract Administration &
 Business Development, Ron Gates, responded to the
 Amendment the same day and stated that he had “re-
 viewed, signed and attached Amendment 19 hereto. As-
 set’s proposal does not require further revision.” Id. at
 1278. Asset did not remove the tax-exempt certificate lan-
 guage from its proposal despite receipt of this Amendment.
     ICE again clarified the tax-exempt status question via
 Amendment 20, which issued on June 4, 2019, adding the
 word “no” to its response. Id. at 1285 (“No, the Government
 CANNOT delegate its tax exempt status to contractors for
 the performance of government services.” (emphasis
 added)). In the amendment, the government again in-
 structed that offerors “review their price proposals and pro-
 vide their best and final prices.” Id.
     Mr. Gates again responded to the Amendment on be-
 half of Asset, stating that “Asset has reviewed it [sic] price
 proposal in response to Amendment 20. No changes are
 deemed necessary. I have attached a signed copy of
 Amendment 20 herewith.” Id. at 1282. The tax-exempt
 certificate language remained in Asset’s proposal.
    Thereafter, ICE again selected Akima for the contract
 award.  Asset again filed a protest with the GAO,
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 ASSET PROTECTION & SECURITY    v. US                          5

 challenging ICE’s evaluation of its proposal under the fac-
 tors outlined in the solicitation and challenging ICE’s best-
 value analysis. ICE again decided that it was best to take
 corrective action on its own by reevaluating the proposals
 and making a new source selection and requested that the
 GAO dismiss the protests, which the GAO did.
     On reevaluation, ICE once again selected Akima for the
 contract award. The government utilized FAR 15.404-
 1(b)(2)(i) in its price analysis, comparing the prices pro-
 posed by the bidders. ICE concluded that Asset was ineli-
 gible to receive the contract award because Asset’s proposal
 included the tax-exempt certificate language, rendering it
 a contingent price. In response, Asset filed another bid pro-
 test at the GAO, arguing that ICE improperly concluded
 that its bid contained contingency pricing and again dis-
 puting ICE’s best-value analysis. This bid protest went for-
 ward. The GAO agreed that ICE improperly determined
 that Asset’s bid contained contingency pricing but con-
 cluded that Asset “was not prejudiced by the agency’s er-
 ror,” finding ICE’s best-value analysis “to be reasonable,”
 J.A. 1469, and denying Asset’s protest.
       Asset then filed a bid protest complaint at the Claims
 Court. The government and Akima (the successful bidder)
 argued that Asset lacked standing to bring the bid protest.
 The Claims Court “determined that Asset’s price proposal
 . . . was non-responsive to the requirements of the Solicita-
 tion, as explicitly amended more than once, and, therefore,
 . . . Asset’s price proposal was non-compl[ia]nt,” making it
 ineligible for the contract award. J.A. 35. Because Asset
 submitted a non-responsive bid, the Claims Court held that
 Asset “lack[ed] standing to bring the . . . protest.” Id. at 36.
     Asset appeals. We have jurisdiction under 28 U.S.C.
 § 1295(a)(3).
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 6                          ASSET PROTECTION & SECURITY   v. US

                           DISCUSSION
      We review standing determinations de novo and any
 underlying factual findings for clear error. CliniComp
 Int’l, Inc. v. United States, 904 F.3d 1353, 1357 (Fed. Cir.
 2018).
     The Claims Court, while an Article I court, “applies the
 same [constitutional] standing requirements enforced by
 other federal courts created under Article III.” Weeks Ma-
 rine, Inc. v. United States, 575 F.3d 1352, 1359 (Fed. Cir.
 2009) (quoting Anderson v. United States, 344 F.3d 1343,
 1350 n.1 (Fed. Cir. 2003)). The standing issue in this case,
 however, is framed by 28 U.S.C. § 1491(b)(1), which pro-
 vides the Claims Court’s jurisdiction over bid protests. 2 We
 have explained that § 1491(b)(1) “imposes more stringent
 standing requirements than Article III.” Weeks Marine,
 575 F.3d at 1359.
      Section 1491(b)(1) requires a protestor to make two
 showings to establish standing: “First, it must show that
 it is an ‘interested party,’” which “requires the plaintiff to
 show that it is ‘an actual or prospective bidder’ and has a
 ‘direct economic interest’ in the procurement or proposed
 procurement.” CliniComp, 904 F.3d at 1358 (quoting Diaz
 v. United States, 853 F.3d 1355, 1358 (Fed. Cir. 2017)).

     2   Section 1491(b)(1) grants the Claim’s Court juris-
 diction over
     an action by an interested party objecting to a so-
     licitation by a Federal agency for bids or proposals
     for a proposed contract or to a proposed award or
     the award of a contract or an alleged violation of
     statute or regulation in connection with a procure-
     ment of a proposed procurement.
 28 U.S.C. § 1491(b)(1).
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 ASSET PROTECTION & SECURITY    v. US                         7

     “Second, the plaintiff must show that it was prejudiced
 by a significant error in the procurement process,” meaning
 that, “but for the error, it would have had a substantial
 chance of securing the contract.” CliniComp, 904 F.3d at
 1358 (emphasis in original) (first quoting Diaz, 853 F.3d at
 1358; and then quoting Labatt Food Serv., Inc. v. United
 States, 577 F.3d 1375, 1378 (Fed. Cir. 2009)).
     We conclude that Asset did not have a substantial
 chance of winning the contract because its proposal was not
 responsive to the solicitation, making it ineligible for the
 contract award. Asset’s bid included information that ex-
 pressly contradicted the solicitation’s material terms.
 Thus, Asset was without standing to challenge ICE’s award
 of the contract to Akima.
      Asset admits that its bid includes an error. ICE’s solic-
 itation required bidders to “[e]xplain in detail all pricing
 and estimating techniques.” J.A. 779. Asset’s description
 of its pricing, explaining that it was expecting the govern-
 ment to provide a tax-exempt certificate, was not con-
 sistent with the solicitation as amended. Asset essentially
 argues that this error was harmless. First, it argues that
 its bid price was unaffected by the error given that the so-
 licitation, “through its firm fixed price requirement, estab-
 lished that an offeror’s firm fixed price proposal made an
 offeror responsible for all costs of contract performance, ir-
 respective of whether or not the offeror factored a specific
 cost into its calculation of its firm fixed price.” Appellant’s
 Br. 28. Asset points out that a firm fixed price contract
 places “maximum risk and full responsibility for all costs
 and resulting profit or loss” on the offeror. Id. at 26 (quot-
 ing 48 C.F.R. § 16.202-1; then citing ITT Fed. Servs. Corp.
 v. Widnall, 132 F.3d 1448, 1451 (Fed. Cir. 1997)). Second,
 Asset contends that its bid did not set a contingent price.
 Third, Asset argues that the solicitation did not require a
 price-realism analysis. On appeal, the government does
 not appear to dispute any of these three points. Instead, it
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 8                         ASSET PROTECTION & SECURITY    v. US

 argues that “Asset’s proposal was unacceptable on its face”
 and, as a result, could not have been selected and was inel-
 igible for award of the contract. Appellee’s Br. 9. Asset
 thus “lack[ed] standing to challenge the agency’s decision
 to award the contract to Akima.” Id.
      Under our cases, “a proposal that fails to conform to the
 material terms and conditions of [a] solicitation should be
 considered unacceptable and a contract award based on
 such an unacceptable proposal violates the procurement
 statutes and regulations.” Allied Tech. Grp. v. United
 States, 649 F.3d 1320, 1329 (Fed. Cir. 2011) (quoting E.W.
 Bliss Co. v. United States, 77 F.3d 445, 448 (Fed. Cir.
 1996)). The government argues that compliance with the
 amendments relating to the unavailability of a tax-exempt
 certificate constituted a material term of the solicitation
 because, absent compliance, there would be a significant
 ambiguity in the terms of any purported agreement. We
 agree. Given the mismatch between the terms of ICE’s so-
 licitation and Asset’s bid, any agreement formed would fail
 to “satisfy the requirement of reasonable certainty applica-
 ble to the essential terms of all contracts.” Pac. Gas & Elec.
 Co. v. United States, 838 F.3d 1341, 1355–56 (Fed. Cir.
 2016); see also United Pac. Ins. Co. v. Roche, 401 F.3d 1362,
 1366 (Fed. Cir. 2005) (“In the absence of . . . sufficiently
 definite terms, no contractual obligations arise.” (quoting
 Modern Sys. Tech. Corp. v. United States, 979 F.2d 200, 202
 (Fed. Cir. 1992))).
      This ambiguity was significant. If ICE had selected As-
 set’s bid, that would have created a risk of future litigation
 on the theory that the government knew of the error in As-
 set’s bid and did not require its correction. “[I]n limited
 circumstances,” “if the government has knowledge, or con-
 structive knowledge, that a contractor’s bid is based on a
 mistake, and the government accepts the bid and awards
 the contract despite knowledge of this mistake, then a trial
 court may reform or rescind the contract.” Giesler v. United
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 ASSET PROTECTION & SECURITY   v. US                        9

 States, 232 F.3d 864, 869 (Fed. Cir. 2000) (citing United
 States v. Hamilton Enters., Inc., 711 F.2d 1038, 1046 (Fed.
 Cir. 1983)); see also Hunt Constr. Grp. v. United States, 281
 F.3d 1369, 1376 (Fed. Cir. 2002) (explaining that, in certain
 circumstances, “[w]hen the government has notice of a mis-
 take in a particular bid,” “fairness and good faith dealing”
 prevents “the government from knowingly awarding a con-
 tract to a bidder whose bid contained a mistake of which
 the government was aware”). “Such relief may be appro-
 priate to prevent the government from overreaching when
 it knows the contractor has made a significant mistake
 during the bidding process.” Giesler, 232 F.3d at 869. The
 remedy, however, is not available for an “errant bid” caused
 by a bidder’s “gross negligence in failing to read and con-
 sider the specifications thoroughly.” Liebherr Crane Corp.
 v. United States, 810 F.2d 1153, 1157 (Fed. Cir. 1987).
     Although such a claim of government liability in the
 circumstances of this case could not have succeeded be-
 cause Asset could not plausibly claim that it misread the
 amended solicitation, the government has a substantial in-
 terest in not creating opportunities for litigation based on
 an erroneous bid and was not obligated to accept a bid that
 was contrary to the amended terms of its solicitation.
     While ICE could have exercised its discretion to con-
 duct another round of discussions with the prospective bid-
 ders to permit Asset to cure the error in its bid, ICE was
 under no obligation to do so. See JWK Int’l Corp. v. United
 States, 279 F.3d 985, 988 (Fed. Cir. 2002) (“[W]hether dis-
 cussions should be conducted lies within the discretion of
 the contracting officer.” (citing 48 C.F.R. § 15.306(d)(3))).
     Thus, because of the error in Asset’s bid, Asset was an
 ineligible bidder, did not have a substantial chance of win-
 ning the ICE contract, and was without standing to chal-
 lenge ICE’s award of the contract to Akima.
                        AFFIRMED