RHINOCORPS LTD. CO., v. USA

Filing 79

PUBLISHED OPINION - Redacted version, original filed under seal on May 18, 2009. Judgment entered for defendant. Signed by Judge Christine O.C. Miller. (smg)

RHINOCORPS LTD. CO., v. USA

Doc. 79

In the United States Court of Federal Claims
N o . 08-410C ( F i le d June 4, 2009) *********************** RHINOCORPS LTD. CO., Plaintiff, v. T H E UNITED STATES, Defendant. *********************** * * * * * * * * * * * * * P re -a w a rd bid protest; 28 U.S.C. § 1491(b)(1) (2006); smallb u s in e s s set-aside; 48 C.F.R. ( F A R ) § 52.219-14(b)(1) (2006), 5 0 % limitation on subc o n tra c tin g ; FAR 19.502-2(b) (2 0 0 6 ); FAR 19.601, referral to S m a ll Business Administration f o r Certificate of Competency; s u p p le m e n t a tio n of administra tiv e record.

R o s s L. Crown, Albuquerque, NM, for plaintiff. C o u rtn e y E. Sheehan, Washington, DC, with whom was Deputy Assistant Attorney G e n e ra l Michael F. Hertz, for defendant. Marvin Gibbs, United States Air Force Legal O p e ra tio n s Agency, Arlington, VA, of counsel. MEMORANDUM OPINION AND ORDER 1/ M I L L E R , Judge. T h i s pre-award bid protest is before the court after argument on the parties' crossm o tio n s for judgment on the administrative record. The United States Air Force ("the Air F o r c e ") decided not to solicit a small business set-aside follow-on contract after the e x p ira tio n of plaintiff's contract. Plaintiff challenges this decision as unreasonable and in v io la tio n of applicable procurement regulations.

1/ This opinion originally was filed under seal on May 18, 2009. By ¶ 4 the parties w e re requested to notify the court of any redactions. The redactions requested are denoted b y brackets.
Dockets.Justia.com

BACKGROUND T h e following facts are from the administrative record ("AR"). 2/ RhinoCorps Ltd. C o . ("plaintiff") is a small business incorporated in New Mexico. Plaintiff filed suit against th e United States for problems stemming from acquisition of services that the Air Force had p ro c u re d from plaintiff under an expired contract (the "ARSS contract"). 3/ See Complaint f o r Declaratory Judgment and Injunctive Relief filed June 3, 2008, ¶¶ 2-3. On May 29, 2003, the Air Force Nuclear Weapons Counterproliferation Agency, w hich subsequently was called the 709th Armament System Squadron (the "ARSS"), merged w ith the Air Force Nuclear Weapons Center, and now referred to as the Air Force Nuclear S ys te m s Squadron (the "NSS"), 4/ awarded Contract No. F29601-03-C-0203 for p ro g ra m m a tic services supporting weapon systems development to plaintiff through a c o m p e titiv e small business set-aside. Compl. ¶ 4. The contract incorporated by reference 4 8 C.F.R. (FAR) § 52.219-06 (2006), setting aside acquisitions for qualifying small b u s in e ss e s. Also incorporated by reference was FAR 52.219-08, which implements a policy to allow qualifying small businesses the maximum opportunity to participate in performing f e d era l contracts. FAR 19.502-2(b) applied, as well, and mandates that a contract with the v a l u e and performance characteristics of the ARSS contract would be awarded to a small b u sin e ss upon an agency determination that at least two responsible small businesses would b e reasonably expected to submit offers. This regulation is the centerpiece of this litigation. P la in tif f , with the highest rated technical proposal and the lowest proposed price, secured

2/ The citations made to documents not included in the administrative record are re lie d on by the parties in their cross-motions and submitted as appendices filings to briefs b e f o re the administrative record was filed. 3 / The contract had a ceiling of over $17 million. It covered labor, supplies, h a rd w a re , materials, travel, and other direct costs associated with the Nuclear Weapons and C o u n te rp ro liferatio n Agency. See Complaint for Declaratory Judgment and Injunctive Relief f ile d June 3, 2008, ¶¶ 4-5. 4 / It is unclear from the record the date when the ARSS became the NSS. Although th e acronyms ARSS and NSS have appeared in prior filings by the parties and opinions of th e court, the court will hereinafter refer to the NSS as the agency initiating the subject p ro c u re m e n t. See RhinoCorps Co. v. United States, 85 Fed. Cl. 712 (2009) (order granting, i n part, motion to dismiss), withdrawn and reissued (May 15, 2009); RhinoCorps Co. v. U n ited States, 86 Fed. Cl. 642, 2009 WL 961215 (Apr. 7, 2009) (order granting preliminary injun ctio n ), withdrawn and reissued (May 15, 2009). 2

a w a rd . Plaintiff agreed to a two-year contract term with three one-year option periods. The A R S S contract expired on May 29, 2008. Compl. ¶ 4. A n o th e r contractor receiving work from the NSS was ITT-Advanced Engineering & S c ie n c e s ("ITT-AES"), an other-than-small-business contractor. ITT-AES was the prime c o n tra c to r on what is called the DTRIAC contract with the Air Force, which pre-dated the A R S S contract. The DTRIAC contract was a ten-year contact administered by the Defense T h re a t Reduction Agency (the "DTRA") during 2003. The DTRA is division of the D e p a rtm e n t of Defense. On or about December 21, 2004, the DTRA issued ITT-AES a d e liv e ry order to provide work "substantially the same as the statement of work for the A R S S Contract." Id. ¶ 13. On January 24, 2008, the ARSS contracting officer announced through a commercial p roc u rem en t tracking service, INPUT Federal Technology Opportunities, that plaintiff's A R S S contract would not be recompeted, but would be "fulfilled through an ongoing, current co n trac t out of another Contracting Office." Id. ¶ 16 (quoted source not cited in original). O n January 28, 2008, Joan Fulkerson, Director of Small Business Programs, Air Force R e se a rc h Laboratory ("AFRL") & Kirtland Air Force Base, e-mailed Roger Shinnick, D iv isio n Chief at AFRL contracting, requesting an update about the ARSS contract, q u e stio n in g "where the work [was] going" and whether a large contractor was going to be p e rf o rm in g the remaining work. AR at 498-99. Mr. Shinnick forwarded the e-mail to S h irle y D. Lindom, Contracting Officer, who responded by e-mail on January 29, 2008, that N u c lea r Weapons Center (the "NWC") 5/ determined that it could satisfy future needs with a current contract. She also commented that "I don't think any government source told [ p lain tiff ] that they didn't want to spend resources on a source selection. That was not a f a cto r Nuclear Weapons used in determining the direction they chose." AR at 498. Several o th e r internal e-mail exchanges confirmed that the Air Force decided, as early as September 2 0 0 7 , that the Air Force did not want to re-compete plaintiff's contract and could utilize ITTA E S ' s contract to serve its contracting needs. See, e.g., AR at 656 (Jan. 25, 2008); 660-61 (Jan . 29, 2008); 504 (Jan. 30, 2008); 517 (Mar. 17, 2008); 913 (Mar. 17, 2008); 555 (Mar. 2 8 , 2008). O n February 22, 2008, following plaintiff's submission of a Freedom of Information A c t ("FOIA") request probing the Air Force's decision not to recompete the requirements c o v e re d by the ARSS contract, representatives of plaintiff and the Air Force met regarding a possible follow-on to the ARSS contract. Plaintiff alleges that the Air Force stated that "it

5/ NWC is part of the 709ARSS/NSS. AR at 752. See supra note 3. 3

w a s not unhappy with [plaintiff's] performance," but that "it was not required to maintain th e work that is the subject of the ARSS Contract as a small business set-aside." Compl. ¶ 1 9 . Following another FOIA request, the parties met on March 19, 2008. Plaintiff alleges th a t the Air Force had a legal obligation to continue this procurement through the small busin e s s set-aside program. The Air Force disagreed, explaining that the ARSS requirements h a d changed. According to plaintiff, this was the first notice by the Air Force that change-ofc irc u m s ta n c e s prompted the decision not to solicit a follow-on contract. Id. ¶ 21. By e-mail dated March 17, 2008, Capt. James D. Norman, Chief, Combating Weapons o f Mass Destruction ("WMD") Operational Support Branch for the Air Force's 709th N u c le a r Systems Squadron ("NSS") and Program Manager, sent Contracting Officer L in d o m ; Tammie L. Johnson, Director of AFRL contracting; and Roger Shinnick, Division C h ie f at AFRL contracting, a "Point Paper," which discussed the NSS's changed re q u ire m e n ts "from the previous contract (Rhino) to the future contract (DTRIAC)." AR at 9 1 5 . The subject of the e-mail read "Information requested at Meeting." 6/ Id. T h e Point Paper provided a brief discussion of reasons why the NSS should let the A R S S contract expire and recommended against re-soliciting the services provided under the A R S S contract. First, Capt. Norman listed the four contracts that support the NSS, which in c lu d e d those of plaintiff and ITT-AES. Next, he recapitulated the services that plaintiff p ro v id e s: "`Advisory & Assistance Services (A&AS)-like' support with in-house technical a n d administrative personnel. Additionally, they provide technical assessments, studies, a n a lys e s and test support through a variety of sub-contractors - 709 ARSS is the COTR [the C o n tra c tin g Officer's Technical Representative] for this contract . . . ." AR at 916. Capt. N o rm a n reviewed the NSS's current needs, stating that the NSS is fully staffed and no longer re q u ire s A&AS-like services. Given that the NSS was organizationally moving towards u tiliz in g task-based efforts for support, Capt. Norman noted that the NSS could utilize ITTA E S because this contractor already was providing most of the NSS's task-based efforts as th e subcontractor to plaintiff. Capt. Norman compared the costs of and the contractors' p e rf o rm a n c e under each contract, finding ITT-AES superior in both categories. Based on th o se assessments made about plaintiff, ITT-AES, and the NSS's contracting needs, Capt. N o rm an recommended that the NSS "[a]llow the current RhinCorps [sic] contract to expire in May 2008, do not solicit for continued A&AS services, and utilize existing contracts a v a ila b le to the 709 ARSS to meet new support requirements." AR at 917.

6/ The e-mail does not identify the referenced meeting, but it likely was the meeting h e ld on March 19, 2008. 4

M s . Johnson replied to Capt. Norman questioning whether plaintiff was ever provided a n y feedback on its performance. She recommended that Capt. Norman "beef[] up" his a n a lysis by providing more specifics because the "draft paper is not yet strong enough to d e f en d your decision well but I think you can get there." AR at 918. B y letter to Secretary of the Air Force dated March 19, 2008, Rep. Heather Wilson q u e stio n e d why the ARSS contract had been moved to a large business, and whether the A R S S contract could be extended to allow for an issuance of a request for proposals for a fo llo w -on contract. In its April 17, 2008 response, the Air Force attributed its need for a " h ig h ly skilled, technical expertise across a broad spectrum only on an as needed basis" as a n o th e r justification to redistribute the ARSS contract requirements. 7/ AR at 17. To allow s m a ll business contractors to compete, the ARSS would conduct market research by means o f a "Sources Sought Synopsis" (sometimes referred to as the "Sources Sought" or the " S S S " ) to determine whether a follow-on contract was needed. Plaintiff was encouraged to respond to the Sources Sought Synopsis. R e p . Wilson replied by letter dated April 22, 2008, requesting the Secretary to respond to the specific inquiries made in her March 19, 2008 letter and posed additional questions a b o u t the ARSS contract. By letter dated May 9, 2008, Col. Randolph P. Miller, United S tate s Air Force, responded to Rep. Wilson reiterating the Air Force's position that due to o rg a n iz a tio n a l changes it was "eliminating redundant or unnecessary requirements" and s ta tin g that the Air Force's issuance of a Sources Sought Synopsis for remaining re q u ire m e n ts of the ARSS contract does not render this position inconsistent. AR at 35.

7/ It appears from an e-mail sent by Tammie Johnson to nine Air Force personnel (in clud ing Michael A. Watt, CXD Division Chief for the Air Force's 709th NSS) that there w a s confusion about which contracting office was involved in the possible small business f o llo w -o n contract: O n e of the complicating factors is that there are 3 contracting offices in v o lv e d here. None of which believe that they are the primary contracting o f f ic e for the Nuclear Weapons Center. Det 8 AFRL/PK manages the current c o n tra c t with the contractor, 377CONS manages MIPR transactions and other d a y to day requirements for the NWC, and DTRA hold the contract where we a n tic ip a te the new requirements may be placed. A R at 752. The e-mail attached a proposed draft letter in response to Rep. Wilson's March 1 9 , 2008 letter, and other e-mails discuss how to best approach the inquiry and word the le tte r. Id. at 752-68. 5

By an internal memorandum dated March 25, 2008, 8/ the Air Force stated that due to internal organizational changes it was able to increase efficiency by sharing resources, s u c h as government personnel and contractors, and thereby eliminate duplicative work. AR a t 11; see also id. at 405-06 (D & F), 573. The Air Force determined that many of the tasks o u ts o u rc e d to plaintiff would no longer be needed: T h e 709 ARSS needs the flexibility to bring in expertise, as required, but not f u n d full-time bodies for this support. Since the organizational mission spans s e v e r a l areas of expertise (nuclear physics, chemistry, biology, mechanical e n g in e e rin g , electrical engineering, structural engineering, conventional ex p lo siv e s, navigation, guidance & control, modeling & simulation, etc. . .), th e ability to receive services for specific tasks in which the appropriate p e rs o n n e l can be assigned to work these activities is critical. Additionally, b u s in e ss practices have changed given the new organizational alignment of the 7 0 9 ARSS. Instead of having dedicated resources to a specific weapon s ys te m , business will now be executed using multidisciplinary (cross-system) in d iv id u a ls who can surge across systems to support broad taskings. This re q u ir e s a skill set completely different than that currently provided. This a p p ro a c h , as outlined above, will draw on the skills/expertise of a number of in d iv id u a ls , larger than the annual FTE [full-time employee] re q u ir e m e n t . . . . .... . . . It is anticipated that none of the work currently conducted by [ p la in tif f ] (with the exception of the Program Management function, and a p p ro x im a te ly 1/4 FTE of the SME expertise that they currently provide) w o u ld be needed under any contract vehicle. New work/requirements have b e e n evaluated as all technical, analytical tasks that will be assigned as re q u ire d . The nature of these tasks, however, will be similar to those activities h is to ric a lly subcontracted to ITT. A R at 12-13. The report then summarized the "Market Research" that had examined entities th a t potentially could provide needed technical support. AR at 13. The report grouped the c o m p a n ie s into three categories: Small Businesses; Technical Research Centers; and

8/ Although this report itself is not dated, defense counsel correlated the report to a re f ere n c e in an e-mail dated March 25, 2008 (AR at 923), that corroborates a March 25, 2008 d a te. This could be the "beefed-up" version of Capt. Norman's March 17, 2008 report. 6

L a rg e /O t h e r Companies that Can/Have Supported 709 ARSS. It was determined that ITTA E S was the only "viable option for 709 ARSS Support." AR at 14. B y an internal report titled "709 NSS Contracting Update," dated May 22, 2008, 9/ th e Air Force specified that, after plaintiff's contract expires on May 29, 2008, its " Im m e d ia te Support" strategy is to serve its needs "through existing tasks under the current D T R IA C contract." AR at 574. The report also bulleted a number of items labeled as " C u rre n t Strategy," which contemplated the repercussions of a "legal injunction" and in c lu d e d plans to issue a Sources Sought evaluating whether two or more small businesses c o u ld complete the Air Force's remaining contract requirements. AR at 575. O n March 31, 2008, Herbert Thompson, CIV BQC, contacted Michael A. Watt, C o m b a tin g WMD Division of AFNWCA, Division Chief for the Air Force's 709th NSS, by e -m a il titled "TAT [Technical Area Task] 63" stating: O n e of the things we are going to have to do is send out a "sources s o u g h t " synopsis to determine if there are two or more small businesses that c a n perform the effort. I am working on a draft of the synopsis and will c o n tac t you tomorrow to discuss. I will need you to review the capability s ta te m e n ts submitted in response to the synopsis, and assess capabilities . . . . A R at 884. Mr. Watt later served as one of the three evaluators, who scored the Statement o f Capabilities submitted by each of the three small businesses respondents. He replied on th e next date: I'v e attached a paper that describes some of our thoughts as to how we reached th e conclusion to press with the DTRA contract - I wanted to provide just to g iv e some info/insight as we go through this process (not to change anything w e are doing or imply we have conducted a "sources sought") . . . speaking of w h ic h . . . - can you give me a quick sketch of what the process is/will be to get this effort o n contract? - if two or more small businesses are identified, how do we proceed? Will D T R A still support us in acquiring these services or do we need to prep a d if f e re n t contracting office? A R at 884.

9/ The date is handwritten on the cover page of the report. 7

B eg in n in g on a date several days later, April 4, 2008, the administrative record in c l u d e s e-mail correspondence received by Mr. Watt from three ITT-AES employees. P la in tif f points to these e-mails as evidence that ITT-AES "participated in the drafting of the S o u r c e s Sought Synopsis." Pl.'s Br. filed Apr. 17, 2009, at 9 (citing AR at 885-95). The em a ils discussed ITT-AES's input for a modification of a Technical Area Task intended to b e a vehicle to funnel more work for ITT-AES on the DTRIAC Contract. 10/ Defendant d isp u tes this evidence, stating that Mr. Watt received these e-mails from ITT-AES, Capt. N o rm a n drafted the SSS, and no evidence exists that Capt. Norman relied on or used the in f o rm a tio n in these e-mails to draft the SSS. The court denied a motion by defendant to s u p p le m e n t the administrative record with a new declaration from Capt. Norman and another f ro m Mr. Watts. See Order entered May 11, 2009, as modified on reconsideration (May 18, 2 0 0 9 ). The SSS was posted on May 6, 2008. The SSS stipulated that the contractor should p r o v i d e "scientific and engineering expertise, code development, technical analyses, m o d e lin g , simulation, software support, as well as other technical functions required to s u p p o rt" the five mission areas: 1) Chemical, Biological, Radiological, Nuclear and highyie ld Explosive ("CBRNE") Pillars/Mission Areas, AR. at 27; 2) CBRNE and Nuclear W e a p o n s Lethality, id. at 28; 3) CBRNE and Nuclear Weapons Studies, id.; 4) Collaboration a n d Technical Assessments, id. at 29; and 5) Weapon Testing and Analysis, id. The Air F o r c e provided that the Statements of Capabilities should demonstrate the ability to respond a n d integrate all mission areas, demonstrate "the ability as the prime to complete fifty percent o f the effort for each mission area as well as all areas concurrently and demonstrate how the e f f o rts not supported by the prime will be supported." Id. at 31. S e e k in g clarification, plaintiff e-mailed Ms. Lindom on May 12, 2008, questioning w h a t criteria should be used to establish 50% of the effort for each mission area if no specific e f f o rt was identified in each mission area, AR at 36, and how the SSS's 50% requirement re la te d to the FAR requirement of 50% of the total contract performance in contrast to 50% o f a particular mission area. AR at 38. Ms. Lindom responded on May 16, 2008, stating that th e Air Force could not guarantee how much work would be required by each mission area; th u s , to determine whether a contractor is capable of performing the work the contractor must d e m o n s tra te the ability to meet 50% of each mission area.

10/ One of the e-mails from Vern Smith of ITT-AES dated April 7, 2008, referred to " S o u rc e s Sought" ("We have the SOW [Statement of Work] for the Sources Sought ready to go."). AR at 890. 8

P lain tiff commenced this action on June 3, 2008, marshaling an array of charges to in d ic t the Air Force's decision not to solicit small businesses for a follow-on contract to the A R S S contract as contrary to law. Compl. ¶ 37. Plaintiff's primary contention was that d iv e rtin g the duties of the ARSS contract violates FAR 19.502-2(b), which requires c o n tra c tin g officers to set aside acquisitions over $100,000.00 for small business participants u p o n an agency determination that at least two responsible small businesses would be re a so n a b ly expected to submit offers. Id. ¶ 37(i). Plaintiff asserted that the transfer of duties w a s "pretextual" and that the Air Force lacked legitimate motivation for determining not to is s u e a new solicitation identical to the expired ARSS contract. Id. ¶¶ 39(a), (b). Plaintiff le v e le d the charge that the Air Force did not announce that the ARSS requirements had c h a n g e d until after plaintiff confronted the Air Force with the "legal authority concerning its o b lig a tio n to maintain the small business set-aside program represented by the ARSS C o n tra c t." Id. ¶ 39(a). On June 3, 2008, plaintiff filed suit in the United States Court of F e d e ra l Claims for declaratory and injunctive relief, with jurisdiction predicated on 28 U.S.C. § 1 4 9 1 (b ) (2006), "reversing" the Air Force's decisions not to solicit a follow-on contract and n o t to extend plaintiff's contract until the determination required by law had been made. Id. ¶ ¶ 1, 42. R e s p o n s e s to the SSS were due on June 4, 2008. [ ], and plaintiff submitted responses. B y e-mail dated June 11, 2008, Capt. Norman contacted the Sources Sought panel, Mr. Watt; J o h n Faulkner, Civil AFMC 709, ARSS/SSD; and Maj. Brian L. Foster, AF/A5XP, attaching th e responses to the SSS and requesting the panel to evaluate the responses using the Sources S o u g h t Evaluation Form as a guide. The Sources Sought Evaluation Form stipulated that the " f o c u s of the evaluation was based on two main points. First, is the responded [sic] capable o f providing the best technical capability to complete the requirement? Second, if the re sp o n d e n t is able to complete the requirement, is the respondent capable of completing 50% o f the requirement as the prime contractor?" AR at 257. O n July 24, 2008, Ms. Lindom contacted plaintiff by e-mail requesting clarification o f the information provided in support of its capability to support a 50% effort in each m is s io n area. Ms. Lindom posed the same question to [ ] by e-mail of the same date. P la in tif f responded, by e-mail dated July 29, 2008, stating that pursuant to FAR 52.219-14 it believed that its original response met the Air Force's needs, remarking that it was im p o s s ib l e to answer the SSS as requested because the SSS does not identify a specific task d is tr ib u tio n . Ms. Lindom completed the Air Force's "Determination and Findings for the Unilateral D e c is io n to use Full and Open Competition for the 709 Nuclear Systems Squadron (NSS) C o u n te r-p ro lif e ra t io n and Nuclear Weapon Requirement" (the "D & F") on October 9

1 , 2008. 11/ AR at 405-07. The D & F concluded in its overall evaluation that plaintiff's p e rs o n n e l did not have the experience necessary to support modeling and simulation a c tiv itie s required by the contemplated contract. The resumes submitted by plaintiff e x e m p lif ie d that its employees lacked "core technical analyses and design qualifications re q u ire d to support the 709 NSS technical support requirements." AR at 406. The D & F re p o rte d that most of plaintiff's employees were technical managers, which complemented a n effort no longer required. Similarly, the D & F found [ ] Statements of C a p a b ilitie s insufficient. Based on the foregoing, Ms. Lindom determined, "[a]s the C o n tra c tin g Officer," that she did not have a reasonable expectation that the NSS would rec eive offers from two or more responsible small businesses. AR at 407. Shortly thereafter, o n October 6, 2008, the NSS announced that it planned the acquisition for the 709th NSS re q u ire m e n t as a full and open competition. T h is case was transferred to the undersigned pursuant to RCFC 40.1(b) by order dated S e p te m b e r 19, 2008. Briefing on defendant's motion to dismiss filed pursuant to RCFC 1 2 (b )(1 ) and 12(b)(6) had been completed on August 27, 2008. Following an important d e c is io n issued by the United States Court of Appeals for the Federal Circuit on August 28, 2 0 0 8 , see Distributed Solutions, Inc. v. United States, 539 F.3d 1340 (Fed. Cir. 2008), this c o u rt ordered supplemental briefing to address questions that the briefs did not answer on the is s u e of subject matter jurisdiction of the Court of Federal Claims. In defendant's supplemental brief filed on November 17, 2008, defendant offered the D & F as evidence that plaintiff's claims relating to the violation of small business p ro c u re m e n t regulations were moot because the Air Force had complied with the re q u ire m e n ts of FAR 19.502-2(b), determining that no reasonable expectation existed that th e Air Force would receive offers from at least two responsible small businesses. Therefore, C o n tra c tin g Officer Lindom determined that "[i]t is in the best interest of the government to h a v e full and open competition for this acquisition." AR at 407. P la in tif f disputed the factual basis for the Air Force's conclusion in the D & F and a d v a n c e d that this report merely was submitted in an attempt to cover up the fact that the Air F o r c e either failed to initiate timely a small business follow-on process or determined that I T T - A E S could perform the services cheaper than a small business.

11/ Although the D & F itself is not dated, and the parties have not pointed to any d o c u m e n t in the record that refers to the date, the index to the administrative record indicates that the D & F was issued on October 1, 2008. The D & F was first submitted to the court a s an attachment to defendant's supplemental brief filed on November 17, 2008. 10

O n January 28, 2009, this court issued an opinion granting defendant's motion to d is m is s for lack of subject matter jurisdiction plaintiff's claim for diversion of work from the A R S S contract and otherwise denied defendant's motion. RhinoCorps Co. v. United States, 8 5 Fed. Cl. 712, 724 (2009) (order granting, in part, motion to dismiss), withdrawn and re is s u e d (May 15, 2009), slip op. at 17. Defendant's motion to dismiss plaintiff's claim on th e merits was denied because plaintiff had pleaded sufficient facts to establish that the Air F o r c e 's D & F, in fulfillment of FAR 19.502-2(b), was unreasonable. Id. A n order entered on February 10, 2009, following a scheduling conference held that d a te , called for simultaneous briefing on cross-motions on the administrative record to be c o m p le te d on May 18, 2009. On March 25, 2009, at the request of plaintiff, the court held a telephonic status c o n f ere n c e to discuss developments that had taken place in the subject procurement since the c o u rt's last involvement on February 10, 2009. On the same date, plaintiff filed an A m e n d m e n t to and Renewal of Application for Temporary Restraining Order and P r e lim in a ry Injunction. Plaintiff had learned on March 5, 2009, that the Solicitation for the N S S procurement had been issued. See Supplemental Affidavit of Ross L. Crown, Mar. 31, 2 0 0 9 , ¶ 7. By order entered on March 26, 2009, the court ordered expedited briefing on p la in tif f 's renewed motion for interim injunctive relief. On February 23, 2009, the Air Force is s u e d Solicitation No. FA9453-09-R-0001 (the "Solicitation") for full and open competition f o r the procurement of services for the 709th NSS Counterproliferation and Nuclear Weapon re q u ire m e n t (the "NSS procurement"). The Solicitation specified that all proposals must be re c e iv e d no later than March 25, 2009, at 12:00 p.m. M.D.T. On April 7, 2009, after briefing and argument, this court granted plaintiff's A m e n d m e n t to and Renewal of Application for Temporary Restraining Order and P r e lim in a ry Injunction, filed on March 25, 2009, as supplemented on March 31, 2009, e n jo in in g the Air Force from evaluating any offer submitted in response to Solicitation No. F A 9 4 5 3 -0 9 -R -0 0 0 1 pending the entry of an order on plaintiff's complaint for a permanent injun ctio n . RhinoCorps Co. v. United States, 86 Fed. Cl. 642, 2009 WL 961215, at *6 (Apr. 7 , 2009), withdrawn and reissued (May 15, 2009), slip op. at 9-10. In lieu of responding to plaintiff's renewed motion, defendant, on April 2, 2009, filed D e f en d a n t's Motion To Dismiss and Stay Further Briefing Pending the Court's Decision R e g a rd in g Defendant's Motion To Dismiss. Defendant advised that the Air Force had d e c id e d to take voluntary corrective action to withdraw the D & F. An accompanying a f f id a v it of Contracting Officer Lindom dated April 1, 2009, described the proposed c o rre c tiv e action as reexamining the results of the market research, including reviewing the

11

previously submitted Statements of Capabilities; reassessing the evaluations of the evaluation p a n e l; and issuing a new D & F. T h e April 7, 2009 Order also denied defendant's motion to dismiss on the grounds that p la in tif f had standing and that plaintiff's complaint was not mooted by issuance of the D & F . The proposed corrective action amounted to a review and rewrite of materials before the c o n tra c t in g officer when she issued her D & F. Defendant already had supplemented the a d m in istra tiv e record with Ms. Lindom's declaration dated March 27, 2009, and that of Capt. N o rm a n dated March 26, 2009, explaining his role in the D & F. Defendant could point to n o justification for a fuller explanation consistent with the rule that a party may be allowed to supplement the administrative record to adequately explain the record before the court. T h e contracting officer did not identify any impropriety that she sought to correct, nor could d ef en d an t substantiate what action was to be deemed corrective. See Chapman Law Firm C o . v. United States, 71 Fed. Cl. 124, 130 (2006) (requiring identification of impropriety and e x p la n a tio n of proposed plan), aff'd in part and rev'd and remanded on other grounds, 490 F .3 d 934 (Fed. Cir. 2007). Because the contracting officer in her April 1, 2009 affidavit did not propose to do a n yth in g different or to request any additional submissions ­ merely to reevaluate preexisting re c o rd materials ­ the court denied defendant's motion to dismiss and stay as unreasonable u n d e r the circumstances. See RhinoCorps, 86 Fed. Cl. 642, 2009 WL 961215, at *7, w ith d raw n and reissued (May 15, 2009), slip op. at 10. Plaintiff's motion for summary ju d g m e n t filed on April 6, 2009, was also denied without prejudice to presenting its a rg u m e n ts on plaintiff's cross-motion for judgment on the administrative record. Id. Briefing on the cross-motions on the administrative record was completed on May 11, 2 0 0 9 . Before argument on May 13, 2009, defendant filed a motion to strike the Declaration o f Anthony J.D. Contri, May 4, 2009, and the Affidavit of Joseph M. Pappe, May 4, 2009, a p p e n d ed to plaintiff's motion filed on May 4, 2009, which the court rules on without further b rief ing . See RCFC 7.2(a). D IS C U S S IO N I. Jurisdiction T h e United States Court of Federal Claims derives jurisdiction over bid protests from th e Tucker Act, 28 U.S.C. § 1491(b)(1), amended by the Administrative Disputes Resolution A c t of 1996, Pub. L. No. 104-320, § 12(a), 110 Stat. 3870, 3874-75 (codified at 28 U.S.C. § 1491(b)) (the "ADRA"). Specifically, the Court of Federal Claims has jurisdiction over a c tio n s by an "interested party" objecting to: (1) a solicitation by a federal agency for bids o r proposals for a proposed contract; (2) a proposed award or the award of a contract; or (3) 12

an y alleged violation of a statute or regulation in connection with a procurement or a p ro p o s e d procurement. 28 U.S.C. § 1491(b)(1). Banknote Corp. of Am., Inc. v. United S tates, 365 F.3d 1345, 1350 (Fed. Cir. 2004). The court may "award any relief that the court co n side rs proper, including declaratory and injunctive relief." 28 U.S.C. § 1491(b)(2). II. Standing E v e ry plaintiff must have standing to invoke the court's jurisdiction over a bid protest. S e e Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992) ("the party invoking federal ju ris d ic tio n bears the burden of establishing [the] elements [of standing]"). 28 U.S.C. § 1491(b)(1) provides, in pertinent part: "[T]he United States Court of Federal Claims . . . s h a ll have jurisdiction to render judgment on an action by an interested party objecting to a s o lic ita tio n by a Federal agency for bids or proposals . . . ." The pivotal element of standing in a bid protest is whether a protester qualifies as an "interested party" under § 1491(b)(1). S e e Am. Fed'n of Gov't Emp. v. United States, 258 F.3d 1294, 1302 (Fed. Cir. 2001) (" A F G E " ) (holding that "interested party" under Tucker Act is construed in accordance with C o m p e titio n in Contracting Act, 31 U.S.C. § 3551(2) (2006)). The Federal Circuit defines "interested party" in § 1491(b)(1) as "limited to actual or p ro s p e c tiv e bidders or offerors whose direct economic interest would be affected by the a w a rd of the contract or by failure to award the contract [by the Government]." Rex Serv. C o rp . v. United States, 448 F.3d 1305, 1307 (Fed. Cir. 2006) (internal quotation marks and e m p h a s is omitted) (quoting AFGE, 258 F.3d at 1302). This statutory definition imposes a tw o -p a rt burden to establish standing: (1) plaintiff must show that it is an actual or p ro sp e c tiv e bidder, and (2) plaintiff must show that it possesses a direct economic interest. R e x Serv. Corp., 448 F.3d at 1307. T h e court has ruled that plaintiff has standing as an interested party. See RhinoCorps, 8 6 Fed. Cl. 642, 2009 WL 961215, at *4 (Apr. 7, 2009), withdrawn and reissued (May 15, 2 0 0 9 ), slip op. at 6; see also RhinoCorps, 85 Fed. Cl. 712, 721, 724 (2009), withdrawn and re is s u e d (May 15, 2009), slip op. at 13, 17. III. Motion for judgment on the administrative record 1 . Standard of review T o obtain permanent injunctive relief, a protester must prove either that the agency a c te d arbitrarily or capriciously or that it prejudicially violated an applicable procurement re g u la tio n . Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1 3 3 2 (Fed. Cir. 2001) ("Domenico Garufi") (discussing cases based on Scanwell Labs. Inc. v . Shaffer, 424 F.2d 859 (D.C. Cir. 1970)).

13

T h e ADRA's standard of review for agency procurement decisions mirrors the s ta n d a rd of review set forth in the Administrative Procedure Act, 5 U.S.C. § 706 (2006) (the " A P A " ). See 28 U.S.C. § 1491(b)(4); Banknote Corp., 365 F.3d at 1350. The APA gives th e court discretion to set aside only an agency action that is "arbitrary, capricious, an abuse o f discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A); see PGBA L L C v. United States, 389 F.3d 1219, 1224-28 (Fed. Cir. 2004) (clarifying that ADRA in c o rp o ra te s arbitrary and capricious standard of APA to review procurement decisions, but d id not change court's discretion in granting remedy of injunctive relief); see also Domenico G a r u f i , 238 F.3d at 1332-33. However, establishing that an agency violated the APA s ta n d a rd of review does not entitle a protestor to relief; the error must also be prejudicial. 12/ G a len Med. Assoc. v. United States, 369 F.3d 1324, 1330 (Fed. Cir. 2004) (clarifying that, in addition to significant error in procurement process, plaintiff must show that error was p re ju d ic ia l (citing Data Gen. Corp. v. Johnson, 78 F.3d 1556, 1562 (Fed. Cir. 1996)). Accordingly, the Federal Circuit applies a two-step analysis for bid protests: first, the c o u r t must determine whether the Government acted without a rational basis (whether the a c tio n was arbitrary or capricious), see Domenico Garufi, 238 F.3d at 1332; or whether the G o v e rn m e n t acted contrary to law (whether the Government action constituted a prejudicial v io la tio n of an applicable procurement regulation). In either case a plaintiff bears the heavy b u rd e n of proving a lack of rational basis or a violation of the law. Id. at 1333. Second, if

12/ The Federal Circuit has held that "the question of prejudice goes directly to the q u e stio n of standing . . . [and that] `prejudice . . . is a necessary element of standing.'" Info. T ec h . & App. Corp. v. United States, 316 F.3d 1312, 1319 (Fed. Cir. 2003) (quoting Myers Inv estig a tiv e and Sec. Servs. v. United States, 275 F.3d 1366, 1370 (Fed. Cir. 2002)). A lthough the prejudice requirement for standing has been satisfied by a nominal showing that a protester "could compete for the contract," Myers, 275 F.3d at 1370, the prejudice re q u ire m e n t required for success on the merits consistently has been more stringent. See T ip T o p Constr., Inc. v. United States, No. 2008-5183 (Fed. Cir. Apr. 29, 2009) (no prejudice w h e n contracting officer gave alternative ground for decision that was upheld); Galen Med. A s s o c . v. United States, 369 F.3d 1324, 1330-31 (Fed. Cir. 2004) (denying existence of p re ju d ic e when proposal did not have requisite facilities required by solicitation); Data Gen. C o rp . v. Johnson, 78 F.3d 1556, 1563 (Fed. Cir. 1996) (prejudice not found when, despite p ric in g error, protestor's prices remained substantially higher). In essence, these are in c o n g ru e n t, although slightly overlapping, standards. See generally Textron, Inc. v. United S tates, 74 Fed. Cl. 277, 284-85 & n.3, 329-30 (2006) (summarizing Federal Circuit caselaw); c f . Alfa Laval Separation, Inc. v. United States, 175 F.3d 1365, 1367 (Fed. Cir. 1999) (holding that both standards can be satisfied with same demonstration of "substantial chance" o f receiving award but for alleged error). 14

th e government action lacked a rational basis, a factual inquiry must be conducted to d e te rm in e whether the protester was prejudiced by the conduct. See Bannum, Inc. v. United S ta te s , 404 F.3d 1346, 1351 (Fed. Cir. 2005). Agency action is arbitrary or capricious when it does not have a rational basis for its d e c is io n . A rational basis requires "the contracting agency [to] provide[] a coherent and re a so n a b le explanation of its exercise of discretion." Domenico Garufi, 238 F.3d at 1333 (in te rn a l quotations and citation omitted). The court's role in a bid protest, including a s c e r t a in in g the existence of a rational basis, is not to substitute judgment for the agency; ind ee d , the agency generally is accorded wide discretion in evaluating bids, and the court s h o u l d not substitute its judgment for that of the agency. Grumman Data Sys. Corp. v. W id n a ll, 15 F.3d 1044, 1046 (Fed. Cir. 1994); see also Camp v. Pitts, 411 U.S. 138, 142-43 (1 9 7 3 ) (stating that courts should review facts to determine if agency's decision is supported b y rational basis). 2 . Burden of proof T h e parties filed cross-motions for judgment on the administrative record pursuant to R C F C 52.1. This rule provides a procedure allowing the court to expedite a trial by using a "paper record" to conduct fact finding. Bannum, 404 F.3d at 1356. Unlike a motion for s u m m a ry judgment, a genuine dispute of material fact does not preclude a judgment on the a d m in is tra tiv e record. Id. The parties are restricted to the agency record and any

15

su p p lem en tatio n consistent with RCFC 52.1. 13/ Findings of fact made by the court are

13/ During the volley of motions to supplement the administrative record and motions to strike affidavits and declarations submitted with the parties' briefs, the Federal Circuit issue d Axiom Res. Mgmt, Inc. v. United States, __ F.3d __, 2009 WL 1175510 (Fed. Cir. M a y 4, 2009). Axiom allowed supplementation of the administrative record "only if the e x is tin g record is insufficient to permit meaningful review consistent with the APA." A x io m , 2009 WL 1175510, at *5. The court decoupled this standard from the eight e x c e p tio n s to the rule restricting review to the record submitted by the agency set forth in E s c h v. Yeutter, 876 F.2d 976, 991 (D.C. Cir. 1989): "[I]nsofar as Esch departs from the f u n d a m e n ta l principles of administrative law as articulated by the Supreme Court in Pitts and F lo rid a Power & Light [Co. v. Lorion, 470 U.S. 729, 743-44 (1985)], it is not the law of this c irc u it." Id. As certain of the Esch exceptions have guided the conduct of bid protests in the Court o f Federal Claims since 1996, this court understands that the following are still viable and th a t the administrative record may be supplemented: (1 ) when the agency action is not adequately explained in the record before the c o u rt; ( 2 ) when the agency failed to consider factors which are relevant to its final d e c is i o n ; (3 ) when an agency considered evidence which it failed to include in the r e c o rd ; .... (8 ) in cases where relief is at issue, especially at the preliminary injunction s ta g e . E s c h , 876 F.2d at 991. Each of the first three contemplates addition to the administrative re c o rd of material that the invitation for bids or solicitation required. R e g a rd in g the last item, a bid protest brought in the Court of Federal Claims co n tem p lates that the record before the court will include post-agency-action evidentiary s u b m is s io n s . A court cannot give due regard to the interests of national defense and national s e c u rity without accepting a declaration or affidavit from a responsible official. 28 U.S.C. § 1491(b)(3). A court cannot examine agency actions that are assailed as a conflict of interest, bias, or other extra-legal activity without considering evidence that was not before 16

c o n sis te n t with those that would be made during trial. Id. at 1357. P la in tif f must establish its entitlement to permanent injunctive relief by satisfying four c rite ria . The Federal Circuit requires: "(1) the plaintiff has succeeded on the merits, (2) the p la in tif f will suffer irreparable harm if the court withholds injunctive relief, (3) the balance o f hardships to the respective parties favors the grant of injunctive relief, and (4) the public in te re st is served by a grant of injunctive relief." Centech Group, Inc. v. United States, 554 F .3 d 1029, 1037 (2009). See generally eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 3 9 1 (2006). 14/

13/ (Cont'd from page 16.) th e agency when the administrative decision was made. Nor can a court evaluate the parties' f a ctu a l showings regarding the three equitable findings for injunctive relief without accepting p o s t-a g e n cy-a c tio n evidentiary submissions. This court therefore does not interpret the new g u id e lin e s in Axiom to change the trial court's practice, other than to emphasize restraint and a d h e re n c e to precedent. 1 4 / On April 7, 2009, this court granted a preliminary injunction pending issuance of th e opinion and order issued this date on the parties' cross-motions for judgment on the a d m in is tra tiv e record. See RhinoCorps, 86 Fed. Cl. 642, 2009 WL 961215, at *6, withdrawn a n d reissued (May 15, 2009), slip op. at 9-10. The court relied on FMC Corp. v. United S t a te s , 3 F.3d 424, 426-27 (Fed. Cir. 1993), in weighing the three equitable factors more h e a v ily than likelihood of success on the merits. Defendant had not filed an opposition to p la in tif f 's renewed motion for preliminary injunction, but filed a motion to dismiss and stay, w h ich the court denied. Absent any joining of the issue on the merits, the court merely d esc rib ed the problems highlighted to date with the D & F. On reflection, this court c o n sid e rs that FMC Corp. no longer has currency insofar as it stands for the proposition that n o one factor is dispositive and that the weakness of one factor may be overborne by the s tre n g th of others. See 3 F.3d at 427; see also Abbott Labs. v. Sandoz, Inc., 544 F.3d 1341, 1 3 6 4 (Fed. Cir. 2008) (stating "equitable factors are of particular significance at the p re lim in a ry stage"). A later decision of the Federal Circuit in Amazon.com, Inc. v. Barnesandnoble.com, In c ., 239 F.3d 1343, 1350 (2001), states that both the first two factors must be satisfied, i.e., lik e lih o o d of success on the merits and irreparable harm, before a preliminary injunction can is s u e . FMC Corp. does not pose a direct conflict with Amazon.com, such that FMC Corp. w o u ld stand as the controlling precedent, see Newell Companies v. Kenny Mfg. Corp., 864 F .2 d 757, 765 (Fed. Cir. 1988). However, Amazon.com represents a consensus view in p a te n t cases, affirmed as recently as May 14, 2009. See Altana Pharma A.G. v. Teva Pharm. 17

IV . Reasonableness of the D & F and the Air Force's compliance with applicable procurement regulations P la in tif f must prove that the agency's decision was arbitrary, capricious, an abuse of d is c re tio n , or otherwise not in accordance with the law. 28 U.S.C. § 1491(b)(4) (adopting s ta n d a rd of 5 U.S.C. § 706(2)(A)). Therefore, plaintiff has the burden of proving either that th e Air Force acted without a rational basis when it decided not to solicit a small business seta s id e or it must show "a clear and prejudicial violation of applicable statutes or regulations." D o m e n ic o Garufi, 238 F.3d at 1333 (internal quotations and citations omitted). In addition, p la in tif f must establish that the Air Force's actions prejudiced it. "[I]f the trial court finds th a t the government's conduct fails the APA review under 5 U.S.C. § 706(2)(A), then it p ro c e ed s to determine, as a factual matter, if the bid protestor was prejudiced by that c o n d u c t." Bannum, 404 F.3d at 1351. T h e overarching issue in this case is whether the Air Force complied with the re q u ire m e n ts of FAR 19.502-2(b) when determining not to solicit a small business follow-on c o n tra c t. Defendant submits that plaintiff has failed to show that the Air Force has acted a r b itr a rily, capriciously or in violation of any law; moreover, what the record demonstrates, a c c o r d i n g to defendant, is the Air Force's full compliance with FAR 19.502-2(b) "because it undertook the required small business analysis prior to issuing the solicitation at issue as f u ll and open competition." Def.'s Br. filed Apr. 17, 2009, at 6. Plaintiff rejoins that the Air Force did not make the required determination before d e c id in g to issue the work to ITT-AES, and it was not until after plaintiff prodded the Air F o rc e about the legality of its actions that the Air Force proceeded to issue the SSS. M o re o v e r, plaintiff was prejudiced because the "untimely analysis conducted by the Air F o r c e contributed to the production of an unreasonable D&F. . . . [T]he D&F was assembled to justify the Air Force's prior decision to abandon the small business set-aside program

14/ (Cont'd from page 17.) In d u s . Ltd., __ F.3d ___, 2009 WL 1332741, at *4 (Fed. Cir. May 14, 2009) (citing A m az o n .co m , 239 F.3d at 1350). O n this basis the more prudent course is to memorialize on the record that the p re lim in a ry injunction was entered on the grounds 1) that defendant's challenge to the p r e lim in a r y injunction was based on standing and mootness and that plaintiff overcame those o b je c tio n s ; 2) that defendant did not brief its opposition to plaintiff's showing of success on th e merits; and 3) that plaintiff made a compelling showing on the equitable considerations. 18

w ith o u t considering whether at least two responsible small businesses could perform a f o l lo w -o n contract." Pl.'s Br. filed May 4, 2009, at 8. Consequently, the small business p ro g ra m was eliminated, as was plaintiff's opportunity to compete for a follow-on contract th a t plaintiff argues it had a substantial chance of being awarded. Plaintiff presents five arguments against the reasonableness of the D & F and the Air F o r c e 's professed compliance with applicable procurement regulations. First, plaintiff cites th e D & F as unreasonable because it is a product of an organizational conflict of interest ("O C I"). See FAR Part 9, subpart 9.5 (Organizational and Consultant Conflicts of Interest). P la in tif f next argues that the Air Force improperly used the 50% rule promulgated by FAR 5 2 .2 1 9 -1 4 (b )(1 ), which addresses limitations on subcontracting, discounting this provision a s "wholly irrelevant to this stage of an acquisition." Pl.'s Br. filed Apr. 17, 2009, at 23. F u r th e rm o re , plaintiff maintains that, even if the Air Force properly considered FAR 52.2191 4 (b )(1 ) at this stage in the procurement process, the contracting officer made a n o n re sp o n sib ility determination and should have referred the matter to the SBA for a possible C e rtif ic a te of Competency ("COC") under FAR 19.601. Fourth, plaintiff elaborates that the A i r Force prematurely invoked the 50% rule. Because the NSS's requirements were not k n o w n and not clearly defined before the NSS Solicitation issued, any evaluation of p lain tiff 's responsibility to perform 50% of the effort was speculative and therefore u n re a so n a b le . Finally, plaintiff contends that the Air Force lacked a rational basis for finding th a t plaintiff could not meet this 50% subcontracting limitation. 1. Organizational conflict of interest P la in tif f extrapolates from several e-mails received by Mr. Watt from ITT-AES ev id e n c e that ITT-AES was "instrumental in the drafting of the" SSS. Pl.'s Br. filed Apr. 1 7 , 2009, at 20. 15/ Plaintiff insists that these e-mails should be considered in light of the

15/ Defendant seeks to dismiss plaintiff's OCI argument because it was not raised in its initial complaint. Def.'s Br. filed May 4, 2009, at 5 (citing Crest A. Apartments, Ltd. v. U n i te d States, 52 Fed. Cl. 607, 613 (2002) (precluding plaintiff from raising claims for first tim e during summary judgment because plaintiff had ample opportunity to amend complaint a n d discovery order limited issues to those raised in complaint)). Crest is distinguishable. D e f e n d a n t has been reminded previously that the complaint preceded issuance of the D & F . Any challenges to the D & F ipso facto require that the complaint be deemed amended to reflect them. See e.g., RhinoCorps, 85 Fed. Cl. at 721, withdrawn and reissued (May 15, 2 0 0 9 ), slip op. at 13.

19

A ir Force's desire to direct the work that plaintiff previously performed to ITT-AES. P lain tiff imputes to ITT-AES every motive to assist in the drafting of the SSS as a means to lim it the number of small businesses that could successfully respond to the SSS. Defendant cites to FAR 9.505-2(b)(1) for support, which states: If a contractor prepares, or assists in preparing, a work statement to be u s e d in competitively acquiring a system or services--or provides material le a d in g directly, predictably, and without delay to such a work statement--that c o n tra c to r may not supply the system, major components of the system, or the serv ices unless-(i) It is the sole source; (ii) It has participated in the development and design work; or (iii) More than one contractor has been involved in preparing the work sta tem e n t. D e f en d a n t relies on this provision to underscore that plaintiff has not demonstrated or alleged th a t the content of the e-mails lead "directly, predictably, and without delay" to the SOW c o n ta in e d in the SSS. Def.'s Br. filed May 4, 2009, at 5. Plaintiff counters that an OCI can arise from a number of circumstances, including th e preparation of a SOW by a contractor. See FAR 9.505-2. According to plaintiff, a c o m m o n OCI arises in cases, such as the one at bar, where one contractor's involvement "has . . . set the ground rules for another contract by, for example, writing the statement of work o r specifications." Ala. Aircraft Indus. Inc. v. United States, 83 Fed. Cl. 666, 687 (2008)

15/ (Cont'd from page 19.) T h e D & F did not exist when plaintiff filed its complaint and was not provided to p la in tif f , or the court, until defendant filed its supplemental brief on November 17, 2008. F o llo w in g the issuance of the D & F, the general claim made by plaintiff attacking the re a so n a b le n e ss of the Air Force's decision not to solicit a small business set-aside developed w ith more precision, and, predictably even more so, following the filing of the administrative re c o rd . The OCI claim is merely another argument made by plaintiff attacking the re a so n a b le n e ss of the D & F and the Air Force's compliance with applicable procurement re g u la tio n s , i.e., the Air Force's justification for not soliciting a small business follow-on c o n tra c t. Defendant is not in any manner prejudiced by consideration of this argument based o n the administrative record. 20

(c ita tio n s omitted). The principal concern is whether the involved contractor tilted the c o m p e titio n in favor of itself, thereby gaining a competitive advantage. Id. All of the referenced e-mails contained in the administrative record 16/ were sent by IT T -A E S to Mr. Watt; indeed, any communication on point that Mr. Watt may have made w ith ITT-AES was not cited by counsel. 17/ Plaintiff makes a strong argument that the c h ro n o lo g y of this case, coupled with a comparison of the e-mails relating to the SSS, ind icates some involvement by ITT-AES in the drafting of the SSS. See Pl.'s Br. filed Apr. 1 7 , 2009, at 20 (citing AR at 885-89 and 26-33). In support of this position, plaintiff h ig h lig h ts several events that occurred between April and May 2008. On April 4, 2008, ITTA E S sent several e-mails to Mr. Watt listing several "unique tasks" (which read more like g e n e ra l statements), some of which are similar to the language in the SSS, AR at 885-89; s e c o n d , on April 7, 2008, ITT-AES sent Mr. Watt an e-mail stating the following: T a lk in g Points with Ken Harsha [otherwise unidentified in record] for Mike W a tt and Col Daul. a . We have the SOW for the Sources Sought ready to go. b. However, before sending it we wanted to continue or dialogue regarding the T A T 168 situation. c . It is not our intent to take work away from Rhino Corps. d . Our requirements have changed and are documented with AFRL contracts. e . We require much more broad scope of technical work. f . Our mission is heavily dependant upon SERPENT methodology. g . We no longer require administrative and programmatic work. h . We have a civil service administrative specialist coming to the 709th. i. The current situation is causing our mission to suffer.

16/ The court disclaims familiarity with each page of this large, disjointed, nonch ron o log ic a l administrative record. The court has reviewed it, short of serving as a third a d v o c ate in this litigation, but has relied on guidance of counsel to specific and pertinent e n t rie s . 1 7 / Defendant noted during oral argument that neither the administrative record nor p la in tif f 's proffers show that Mr. Watt solicited the information in the e-mails sent by ITTA E S . However, as plaintiff also pointed out, the content of the e-mails evidences that Mr. W a tt communicated with ITT-AES, albeit the medium is unknown, and these e-mails refer to an ongoing communication between the parties. See, e.g., AR at 885 ("Mike, Will these h e lp ? " ); 892 ("Mike, A lot has been happening. I sent you two emails. I was wondering how yo u felt about them. They are repeated at the bottom of this email. Feel free to call me on m y cell anytime tonight. It might be more convenient for you than at work."). 21

j. We know that RhinoCorps has been in to see DTRA. W e now want to give you the other side of the story and discuss some options. 1 . Have the TAT 168 RFP to ITT specify a small business requirement to c o v e r the work that RhinoCorps is currently performing. 2 . Finish TAT 168 with the agreement that the 709th will create a small b u s i n e s s set-aside to cover the work that Rhino Corps is currently p e rf o rm in g . . . . A R at 890. On May 6, 2008, the SSS was issued. By e-mail dated June 11, 2008, Capt. N o rm a n contacted the Sources Sought panel, which included Mr. Watt as one of the technical e v a lu a to rs . The inclusion of these e-mails in the administrative record crystallizes an initial q u e stio n : if these e-mails are not relevant to the SSS at issue in this litigation, why is this o n e -w a y communication included in the record? Defendant, during oral argument, re p re se n te d that plaintiff asked defense counsel to include in the record any communication b y the Air Force with ITT-AES that referenced "small business." This certainly goes beyond th e twenty-one types of information included in RCFC App. C, VII "The Content and Filing o f the Administrative Record" ¶ 22(a)-(u). While not exclusive, all but one item of this s u g g e ste d listing restrict themselves to the procurement action under review. 18/

18/ Appendix C, VII ¶ 22(u) listing "the record of any previous administrative or ju d ic ia l proceedings relating to the procurement, including the record of any other protest of th e procurement" is a misleading description and raises more questions than it answers. The r e c o r d under review is the record presented by the agency decision-maker. Florida Power & Light, 470 U.S. at 743-44 (cited in Axiom, 2009 WL 117550, at *5.) Judicial review is lim ite d to the record actually before the agency. Axiom, 2009 WL 117550, at *5. T h e record of prior administrative protests, for example, frequently contains posta g e n cy-d e c is io n submissions that are called for by the administrative decision-maker. None o f these materials properly can be considered part of the agency decision on review. While th is court notes the recent discussion by Judge Charles F. Lettow in Holloway & Co. v. U n ite d States, No. 09-53C, slip op. at 12-13 (Fed. Cl. May 14, 2009), justifying the App. C, V II ¶ 22(u) provision, this court respectfully disagrees with the observation, "It would be s tra n g e for this court to be addressing a protest on a more truncated record than that which h a d been before the GAO [the Government Accountability Office]." Id. slip op. at 13. This m ig h t be an overstatement. It would be strange if the Court of Federal Claims would allow s u p p l e m e n t a tio n with the type of informal post-hoc statements that the GAO allows. M a te ria ls generated in an administrative protest always can be cited in a judicial proceeding a s admissions or inconsistent positions, but they do not "supplement" the administrative r e c o rd . 22

A review of the record does not substantiate the allegation that ITT-AES was involved in the drafting of the SOW for the SSS. The parallels drawn from contrasting the e-mails w ith the SSS are revealed in similar phrasing, terms, and Air Force argot. Compare AR at 2 6 with AR at 885-89. These similarities must be viewed within the history of the p ro c u re m en t: plaintiff, through the ARSS contract, and ITT-AES, through the DTRIAC c o n tra c t, essentially performed the same work under their respective contracts; ITT-AES w o rk e d as a subcontractor for plaintiff; and ITT-AES was performing work diverted from th e ARSS contract that was "substantially the same as the statement of work for the ARSS C o n tra c t," since late December 2004, Compl. ¶ 13; see also (Second) Declaration of Capt. J a m e s D. Norman, Apr. 16, 2009, ¶ 3. Plaintiff concedes this point in its Statement of C a p a b ilitie s, which gave examples and prefaced its capabilities by the experience it had a c q u ire d in each mission area through the work performed during the ARSS contract. AR a t 115-16. R e so lu tio n in favor of plaintiff on this issue would require the court to infer too many h a r d facts. In CACI, Inc. v. United States, 719 F.2d 1567, 1581-82 (Fed. Cir. 1983) (re v e rsin g the trial court's grant of permanent injunction), the Federal Circuit explained: the possibility and appearance of impropriety is not supported by the record a n d therefore is not a proper basis for enjoining award of the contract. The C l a im s Court based its inferences of actual or potential wrongdoing by the D ep artm en t on suspicion and innuendo, not on hard facts. The kind of inquiry a n d analysis the Claims Court made in this case, which without factual basis a sc rib e d evil motives to four members of the Technical Evaluation Committee in their handling of bids, was clearly erroneous and did not justify an in ju n c tio n against the government's award of the contract . . . . The presence in the administrative record of these documents neither justifies supplementing th e record to refute them (the court denied defendant's motion to supplement with another d e c la r a tio n of Capt. Norman and that of Mr. Watts by order entered on May 11, 2009, m o d if ied on reconsideration (May 18, 2009)), nor allowing plaintiff the opportunity to e x a m in e these witnesses or obtain other documents to challenge the factual assertions of C ap t. Norman and Mr. Watts, were their additional evidentiary submissions allowed. In s h o rt, nothing in the administrative record beyond conjecture opens this matter to further e x a m i n a tio n . 2 . Application of the 50% rule under FAR 52.219-14 T h e SSS required a respondent to demonstrate that it could perform 50% of the re q u ire m e n ts itself. Ms. Lindom's D & F states the following:

23

5 . The senior leadership of the 709 NSS conducted an analysis to determine if there were potential small businesses that could successfully perform these n e w requirements in compliance with FAR 52.219-14, Limitation on S u b c o n tra c tin g , which requires at least 50% of the cost of contract p e r f o r m a n c e incurred for personnel shall be expended for employees of the s m a ll business. They concluded that there were no small businesses that p o s s e ss e d adequate resources in the breadth of technical disciplines required b y the 709 NSS. A R at 406. Plaintiff argues that the contracting officer improperly and unreasonably utilized F A R 52.219-14 and applied the 50% rule in making the determination that there is not a rea so n ab le expectation that two or more small businesses would submit offers for a s o lic ita tio n . FAR 52.219-14 provides, in relevant part: (b ) By submission of an offer and execution of a contract, the O f f e ro r/C o n tra c to r agrees that in performance of the contract in the case of a co n trac t for-(1 ) Services (except construction). At least 50 percent of the cost of contract p e r f o r m a n c e incurred for personnel shall be expended for employees of the c o n c ern . D ef en d an t responds that FAR 52.219-14 would be included in any contract award b e c a u s e the limitation on subcontracting is a material term of a small business contract. As a consequence, defendant argues, the Air Force properly considered the limitation on s u b c o n tra c tin g in evaluating the Statements of Capabilities because it was assessing whether sm a ll businesses could satisfy the material terms of the procurement and submit "technically a c c e p ta b le offers." Def.'s Br. filed May 4, 2009, at 8. The Air Force anticipated that some o f its technical support would be made on an as-needed and short-term basis, sometimes w ith in hours or days, as substantiated by Capt. Norman. See (First) Norman Declaration M a r. 26, 2009, ¶ 12. In citing to Chapman Law Firm v. United States, 63 Fed. Cl. 519, 527 (2005), aff'd in part and rev'd and remanded in part on other grounds, 490 F.3d 934 (Fed. Cir. 2007), for s u p p o rt, defendant urges the court to view the 50% rule as a technical requirement that p lain tiff show its personnel with the