KLINGE CORPORATION v. USA

Filing 33

PUBLISHED OPINION (reissuance of September 12, 2008, sealed opinion for publication). Signed by Senior Judge Eric G. Bruggink. (alc) Modified on 9/30/2008 to edit docket text.(dls).

K L I N G E CORPORATION v. USA

D o c . 33

In the United States Court of Federal Claims
N o . 08-551C (O rig in a lly Issued Under Seal: September 12, 2008) (R e is s u e d with Redactions: September 30, 2008)1 ************************ K L IN G E CORPORATION, Plaintiff, v. T H E UNITED STATES, D e fe n d a n t, and S E A BOX, INC. In te rv e n o r. ************************ R ic h a rd P. Rector and Seamus Curley, Washington, DC, for plaintiff. C h r is to p h e r L. Krafchek, United States Department of Justice, Civil D ivisio n , Commercial Litigation Branch, Washington, DC, with whom were G reg o ry G. Katsas, Assistant Attorney General, Jeanne E. Davidson, Director, a n d Kirk Manhardt, Assistant Director, for defendant. Brent Curtis, Marine C o rp s Systems Command, Quantico, VA, of counsel. Robert Farber, Cherry Hill, NJ, for intervenor. O P IN IO N
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Bid protests; Alleged bad faith in cancelling procurement; Injunctive re lie f ; Bid preparation c o s ts .

This opinion was first issued under seal on September 12, 2008. The p a rtie s were directed to propose any appropriate redactions. Defendant p rop o sed a number of redactions with which plaintiff disagreed. The court a d o p te d some of the parties' recommended redactions, as reflected herein. R e d a c tio n s are indicated by the use of asterisks.

Dockets.Justia.com

T h is action is brought pursuant to the court's bid protest jurisdiction. P la in tif f , Klinge Corporation ("Klinge"), alleges that the United States, acting th ro u g h the Marine Corps Systems Command ("the agency"), has acted a rb itra rily, capriciously, and in violation of law, in soliciting quotations under th e General Services Administration Federal Supply Schedule ("GSA FSS" or "F S S ") for the delivery of "Large Field Refrigeration Systems" ("LFRSs"). A related procurement has been before the court previously. In an earlier bid p ro te st with the same party alignments, plaintiff successfully protested an a w a rd to Intervenor, Sea Box, Inc. ("Sea Box") under a Request For Proposals (" R F P " ) for an indefinite delivery, indefinite quantity ("IDIQ") contract for b e tw e e n 10 and 300 2 LFRSs. See Klinge Corp. v. United States, 82 Fed. Cl. 1 2 7 (2008) ("Klinge I"). We held that Sea Box could not receive the award b e c au s e the agency's failure to disqualify it for non-compliance with the Trade A g re e m e n ts Act ("TAA"), 19 U.S.C. §§ 2501 et seq. (2000), was arbitrary and n o t in accordance with law. Klinge I, 82 Fed. Cl. at 137-38. Although Klinge was next in line to receive the award, the agency did n o t offer the contract to it. Instead, without formally cancelling the RFP, the a g e n cy decided to procure 150 LFRSs through a Request For Quotations (" R F Q " ) for a task order under the GSA FSS. Plaintiff now has filed this f o llo w -o n bid protest to enjoin award under the RFQ, claiming primarily that th e agency intentionally thwarted our prior ruling in an effort to steer the c o n tra c t to Sea Box. It also argues that the agency's conduct amounts to a de f a c to cancellation and that this is arbitrary and irrational conduct. On August 1 , 2008, we entered a preliminary injunction, enjoining award of the task order u n til the court had been better informed of the agency's rationale for not m a k in g the purchase through the original RFP. Although Klinge is not a b id d e r under the task order, we agreed that it would have standing not only to ch allen g e the apparent cancellation, but also to challenge the task order award b e c a u s e of what appeared to be a link to the prior procurement. We have reviewed the administrative record in this second p ro c u re m e n t, as supplemented by a memorandum from the contracting officer (" C O " ). Oral argument on the plaintiff's request for permanent injunctive

The RFP states that the maximum number of LFRSs under the contract w o u ld be 300. There was a possibility of four follow-on option contracts, h o w e v e r. The parties disagree as to whether the maximum number applies per ye a r , or to all years, including the option years. 2

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re lie f was held on September 8, 2008. For reasons set out below we conclude th a t, while there was prejudicial error in the agency's de facto cancellation of th e first procurement, the error does not implicate the integrity of the present p ro c u re m e n t and hence does not warrant injunctive relief. At most, it can be s a id that there is a causal connection between the first and second p r o c u re m e n ts ­ th e RFQ probably would not have been issued but for the m is ta k e in not pursuing the RFP. Yet, injunctive relief is extraordinary relief, a n d we conclude that the mistakes made in connection with the first p ro c u re m e n t occurred in good faith and that cancelling the RFQ is u n w a rr a n te d . Instead, we award bid preparation costs to plaintiff. BACKGROUND T h e RFQ under the FSS is somewhat different from the RFP. Instead o f an indefinite quantity, the present RFQ is for a definite, one-time quantity o f 150 LFRSs, although "[i]f additional items are required in subsequent years, th i s process will be repeated." (Administrative Record ("ARII") at 2.) The o rig in a l RFP had eight CLINs. The first was for the LFRS itself, the second w a s for a spare refrigeration unit ("RU"), and the third was for spare parts.3 T h e present RFQ only calls for the LFRSs themselves. The critical p e r f o rm a n c e factors for the LFRS are virtually identical, although one is d e le te d . The agency no longer requires the refrigeration unit to cool to 32NF in less than 45 minutes and to 0NF in less than one hour. At the time the agency initially did a market survey in 2006, it could not d o a purchase from the FSS because the LFRS was not offered by anyone on th e schedule. At some point after Klinge began to protest the procurement, the s c h e d u le was modified and more than one company (but not Klinge) was q u a lif ie d to furnish LFRSs. Klinge thus is not qualified under the GSA FSS; S e a Box, and apparently at least one other company, are. In addition, in the in te rim , Sea Box has apparently solved its TAA problem by agreeing to move a ss e m b l y of the LFRS from China to New Jersey. Sea Box and at least one o t h er contractor responded to the RFQ, and the agency is poised to make an

The five other, less important, CLINs are as follows: (4) a full size RU tra in in g aid; (5) technical documentation and data; (6) a training program for u se with the LFRSs; (7) one actual two day training program conducted with 1 0 students; and (8) the hosting of various meetings between the contractor a n d agency. 3

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a w a rd . In short, the RFP has, de facto, been cancelled, and half of the m a x im u m number of LFRSs under the original RFQ will be obtained through a task order for which Klinge is ineligible to compete. When we directed the agency to file an administrative record with re sp e c t to the new RFQ, we cautioned that it should include materials " a s s o c i ate d with the IDIQ contract but originating after the court's prior in ju n c tio n ." When the record was filed, it contained no reference at all to the o ld RFP and thus it included no rationale for not making an award to plaintiff a n d no rationale for using the device of a supply schedule task order for o b ta in in g LFRSs. We conducted a status conference on August 18, 2008, at w h ic h counsel for the government suggested that we should infer from the d if f e re n c es between the RFP and the RFQ that the agency must have had good re a so n not to make the award under the RFP. In addition, he indicated his u n d e rsta n d in g that the agency took the position that Klinge was ineligible u n d e r the RFP, because its proposal was also not compliant with the TAA. Neither of the latter rationales appears in the administrative record and w e are unwilling to make unsupported assumptions. Nevertheless, plaintiff's c o u n se l did not oppose defendant's offer to have the CO explain in writing w h y he elected to treat Klinge as non-compliant and instead chose to use the v e h ic le of a task order under the FSS. In his memorandum for the record, filed on August 22, 2008, the CO b e g in s by explaining that, after the court's ruling in Klinge I, he assumed that h e had to reexamine Klinge's compliance with the TAA, and, in light of the c o u rt's analysis, do so based on Klinge's original proposal. ("August Memo") A lth o u g h the memorandum does not explicitly say so, apparently the CO b e liev e d that CLIN 0003 of Klinge's original proposal was not compliant with th e TAA. ("[I]f Klinge's proposal did not propose compliant spare parts under C L IN 0003, I could not award to them." August Memo.) In addition, and, a g a in , by inference only from the fact that he did not award to Klinge, the CO a p p a re n tly believed that Klinge would have been compliant only if the CO c o u ld take into account what he viewed as modifications Klinge made to its p ro p o s a l during the protest. (Klinge views these as clarifications rather than m o d ifica tio n s, about which more below.) In addition, the CO states that it "could have been theoretically possible to revive the solicitation, open another round of discussions­specifically a d d re ss in g the TAA compliance issue­and then request the Second Final 4

P r o p o s a l Revisions." August Memo. He elected not to do this, he explains, b e c au s e more than a year had elapsed since the original solicitation was issued. H e thus viewed it as prudent to conduct another market search. Apparently, this new market search produced the information that some c o n tra c to rs under the GSA FSS now offered LFRSs. This in turn led the CO to opt for a "dual-track" approach: a single delivery order under the GSA FSS f o r 150 units, followed by issuance of a Request for Information to "assess the c u rre n t ability of industry to meet our requirements," hopefully with the result that two or more small businesses would be capable of meeting the agency's n e e d s . Id. "This approach allows the Government to make an initial purchase o f LFRS units very rapidly to meet our most pressing need via the GSA FSS . . . ." Id. Plaintiff proposed that the court resolve the dispute on the existing re c o rd , as supplemented by the CO's memorandum, without motion practice o r briefing. Defendant agreed and so did the court. We treated the parties as h a v in g orally moved for judgment on the administrative record and instructed th e m that they could also rely on the prior administrative record filed in the f irs t protest here ("AR I"). Later, at defendant's request, however, we a llo w e d the parties to file accelerated briefs. Oral argument was held on S e p t e m b e r 8, 2008. For the reasons set out below, we deny the request for p e rm a n e n t injunctive relief. DISCUSSION T h e case is in an unusual posture for a couple of reasons. First, insofar a s plaintiff is challenging the cancellation of the RFP, we are faced with the f a ct that the agency never formally cancelled the first procurement. The re a so n for this, according to counsel for defendant, is that the CO was under th e impression that the RFP had lapsed due to the expiration of the proposals. L ik e much of defendant's argument, this has no direct support in the record, a n d the parties were unable to point to any specific time restrictions in the bids o r the RFP. Nevertheless, plaintiff does not question the assertion, and we n o te that over one year had passed between the original submissions and this c o u rt's ruling in Klinge I. The CO himself notes, however, that he could have " re v iv e [ d ] the solicitation, [and] open[ed] another round of discussions . . . ." A u g u st Memo. In short, the RFP was not cancelled formally and the CO could h a v e revived it by asking Klinge to renew its proposal.

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T h e second anomaly concerns plaintiff's standing, or lack thereof, with re sp e c t to challenging the RFQ under the FSS. The government argues that K lin g e lacks standing to challenge the pending FSS award because it did not su b m it a bid. Normally, plaintiff would have to be a bidder, or at least a p o ten tial bidder, to have standing to challenge a procurement. And, in this c a s e , there is no question that plaintiff is not eligible to bid on the FSS task o rd e r because it was not pre-qualified to do so. There is also no question, h o w e v e r, that there is a connection between the RFP and the RFQ. The g o v e rn m e n t concedes that the 150 LFRSs sought in the task order substitute to that extent for the LFRSs sought in the RFP. In effect, there is a single c o n tin u in g need for LFRSs, and both the RFP and the RFQ were developed to a d d re ss that same need. Plaintiff was a bidder under the original RFP, and no a r g u m e n t was made in Klinge I that it was ineligible for award. In view of p l a in t if f 's allegation that the decision not to award under the RFP was u n d e rtak en in a bad faith effort to direct the contract to Sea Box, we reaffirm o u r initial view that plaintiff has standing to that extent to seek an injunction a g a in s t the FSS task order. Accord Distributed Solutions, Inc. v. United States, N o . 2007-5145 (Fed. Cir. August 28, 2008). In addition, however, it clearly w o u l d have standing to challenge the de facto cancellation of the first p ro c u re m e n t, in which it did participate. Plaintiff's principal contention is that the decision to cancel, or at least n o t pursue the solicitation through the RFP, followed by the use of the FSS ta s k order, constitutes bad faith on the part of the agency. It asserts that these d e c is io n s were pretextual, and that they were motivated by a desire to keep the c o n tra c t away from plaintiff and steer it to Sea Box. The short answer to this a ss e rtio n is that it has no support in the record. This series of procurement d e c is io n s was unquestionably inartful, but we have no reason to think they w e re motivated by malice toward plaintiff or favoritism toward Sea Box. T h e re is no evidence that the CO was ill-disposed toward plaintiff or that he o p ted for a task order because it would leave plaintiff out. We are left simply w ith a theory of post hoc, ergo propter hoc. But the mere fact that Sea Box l o s t the first award and is eligible to receive a task order under the second s o lic ita tio n proves nothing. Nor does the fact of two overlapping procurements constitute sufficient p ro o f . As the CO correctly implies in his memorandum of August 22, he could h a v e proceeded from day one on two independent tracks: an RFP and an RFQ ( a ss u m in g the FSS offered LFRSs at that time). Two such procurements, w h ile related, would not be mutually exclusive. And they would be related 6

o n ly to the extent that purchases under one would obviate the need (at least to th e extent of LFRSs) for purchases under the other. We also have the CO's August 22 memorandum, in which he attempts to explain why he did not use the original RFP to make an award to Klinge. N o r m a lly we would not permit this post hoc, extra-record explanation, but it is plainly called for here. We quote relevant portions of the affidavit below: T h e Court's June 5, 2008 decision, directing the c a n c e llatio n of the contract with Sea Box, required me to co n sid e r how to view Klinge's TAA compliance. The Court e x p la in e d that Sea Box's proposal had to be evaluated based on h o w it had existed in October 2007, that I could not allow Sea B o x to modify its proposal by varying what it had proposed so as to remedy TAA compliance defects. Given Klinge's re s p o n s e s to GAO and GAO's finding, I reasoned that the same w a s true of Klinge's proposal that I could not allow them to m o d if y their proposal during the remand to achieve TAA c o m p lia n c e . . . . A u g u s t Memo. We agree with the CO's characterization of the court's ruling an d his task, but his implicit finding that the GAO had treated Klinge's p ro p o s a l as not compliant with the TAA is, as we explain below, wrong. T h e balance of that paragraph builds on the error: I could not allow them [Klinge] to modify their proposal during th e remand to achieve TAA compliance by proposing to provide c o m p l yin g parts where they had not clearly offered complying p a rts previously. I realized the Court's decision was based on S e a Box's non-compliance with respect to CLIN 0001, but I re a so n e d that the same rationale applied to CLIN 0003, and that if Klinge's proposal did not propose compliant spare parts under C L IN 0003, I could not award to [it]. Id. In short, the CO assumed that the GAO had found Klinge non-compliant w ith the TAA in respect to CLIN 003 (spare parts). He further treated K lin g e ' s effort to explain why its proposal was compliant with the TAA as a m o d if ic a tio n of the proposal, and hence not properly before him. We agree th a t both proposals should receive the same treatment, although we disagree 7

w ith both his assumption and his conclusion, as we explain below. N e v e rth e le ss , we are not prepared to presume bad faith, and, while we disagree w ith the CO's reasoning, we have no reason not to take it at face value. Taken a t face value, it eliminates the possibility of intentional misconduct. We believe that the net result of finding no bad faith is that we cannot e n jo in the second procurement. As we explained above, there is nothing in h e re n tly improper with pursuing two solicitations to procure fungible, but in d e f in ite , quantities of the same item. While the potential purchase under the R F P could have been as high as 300 (or 1500, depending on whose view w o u ld prevail), it was still an IDIQ contract with a minimum quantity of only te n LFRSs. There is no necessary inconsistency, in other words, between the tw o solicitations. While we conclude, as we explain below, that the CO's d e c isio n not to pursue the RFP was based on a mistake of law, it was merely a mistake and in no way implicates the integrity of the second procurement. In s h o rt, enjoining the second procurement, which, standing alone, is not drawn in to question, is not the appropriate remedy. This leaves plaintiff with the argument that de facto cancellation of the R F P was improper. We begin by stating what has become obvious, at least to th e court: the CO erred in assuming that he could not accept Klinge's original p ro p o s a l because it only became TAA compliant after modification. In the original procurement, as discussed in our prior opinion, there w e re two appeals by Klinge to the GAO. The first was successful in effect, a lth o u g h it was dismissed as moot. It resulted in the agency re-inserting K lin g e into the competition. The second was not. In the process of denying K lin g e 's assertion that Sea Box was not TAA compliant, the GAO had o c c a s io n to refer to whether Klinge's proposal complied with the TAA with re sp e c t to CLIN 003, the spare parts line item, in a footnote: K lin g e 's proposed list of 23 spare parts . . . included two parts th a t were described in a separate list in its proposal . . . as being " N o n -D e sig n a te d Country" parts and non-US parts, which w o u ld appear to render its proposal not compliant with the [ T A A ]. . . . In response to questions from GAO during this p ro te s t, Klinge explained that while it intended to use two C h in e s e -m a d e parts in the LFRSs it would deliver to the agency, th e two parts when included in the CLIN 0003 parts support p ac k ag e instead would be made in the U.S. or Mexico (a 8

d e sig n a te d country). . . . Klinge's claimed intention was not a p p a re n t from its proposal. Matter of Klinge Corp., B- 309930.2, 2008 CPD ¶ 102 at 8, fn. 5, 2008 WL 2264491 (Feb. 13, 2008). This excerpt is presumably what the CO relied on in a s s u m in g that Klinge was TAA non-compliant. There is no question that Klinge's proposal would not have been nonco m p lian t merely because its LFRS itself included two non-designated country s p a re parts. The test under the TAA is phrased in terms of whether the item b e in g purchased undergoes substantial transformation in the United States or a designated country. On the other hand, any non-designated country parts in c lu d e d on the spare parts list would, however, have made the proposal nonc o m p lian t.4 M a in ta in in g the distinction between parts incorporated into the p u rch ase d item itself and those on the spare parts list, is, therefore, critical. It is also apparent that Klinge's explanation to the GAO, taken at face value, d e m o n s tra te d that it understood that distinction and that its proposal had been c o m p l ia n t from the beginning. The GAO comment did not pick up that

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A U.S.-made end product is an article that:

(i) is mined, produced, or manufactured in the United States; or (ii) is substantially transformed in the United States into a new a n d different article of commerce with a name, character, or use d is tin c t from that of the article or articles from which it was tra n sf o rm e d . Defense Federal Acquisition Regulation Supplement ("DFARS") 252.2257 0 2 1 (a )( 1 2 ). Articles listed on the spare parts list of the RFP do not undergo s u b s ta n tia l transformation (i.e., become a new and different article of c o m m e rc e with a distinct name, character, or use) in any country except the c o u n try where it is mined, produced or manufactured, as it is a product not b e in g combined with any other article before it's final use as a spare part. T h e re f o re , all spare parts offered in CLIN 0003 must be U.S.-made, qualifying c o u n try, or designated country end products to be TAA compliant.

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d is tin c t io n , but it was, in any event, not a finding of non-compliance. At m o s t, it is an observation (not necessary to its recommendation) that there was a m b ig u ity about Klinge's proposal. Another distinction also matters: the difference between modifications to proposals on the one hand and explanations on the other. The latter do not c o n stitu te changes. During that second protest at GAO, both Sea Box and K lin g e provided further supplementation regarding their TAA compliance. As w e held previously: S e a Box changed its prior explanations by representing that "the c o u n try of origin for each and every one of the * * * individual p a rts . . . is either the United States or a designated country." (A R at 1464 (Sea Box letter to the CO, Apr. 10, 2008).) In o rd e r to make this representation, however, it explained that it h a d to get assurance from its primary supplier that the supplier w o u ld source all parts from compliant locations, albeit at higher c o st to itself. This assurance meant that all * * * spare parts w e re now to be acquired from the United States or other d e sig n a te d countries. The change also resulted in minor c h a n g e s in the part descriptions and catalog numbers. Klinge I, 82 Fed. Cl. at 133. Sea Box's proposal, at least with respect to CLIN 0 0 3 , in other words, changed. In our prior ruling, we held that the question of whether Sea Box's p ro p o s a l met the terms of the TAA had to be answered as of the time of the o r ig i n a l proposals: In light of Sea Box's offer during remand to move its m a n u f ac tu rin g operation entirely to the United States, a question a ris e s: must the court consider Sea Box's proposal as it existed in October 2007 or as it existed after the remand. During oral a rg u m e n t, plaintiff and government expressed the view that the q u e s tio n before the court is the reasonableness vel non of the C O 's original award decision. We agree. The purpose of the re m a n d was to obtain clarification of the proposals as they e x is te d , not to turn clarification into an opportunity for m o d if ica tio n . The remand order called for the agency to obtain a description of the "entire process of manufacturing, assembly 10

a n d testing." The agency thus could supplement its u n d e rs ta n d in g of what the parties had offered at the time of a w a rd . Sea Box did not, however, limit itself to explaining its e x is tin g proposals. Instead it offered, in the April 1, 2008 letter f ro m Sea Box's counsel to the CO, the possibility that Sea Box c o u ld completely alter its method of manufacture by shipping th e refrigeration unit and the container to the United States. See (A R at 1424.) We do not view this as properly part of Sea B o x 's FPR. Id. at 134. We thus held that Sea Box's offer to comply with the TAA came to o late. We drew a distinction at that time, however, between changes to a p ro p o s a l, which Sea Box was suggesting, and explanations of an existing p ro p o s a l. A proposal revision is "a change to the proposal made after the s o lic ita tio n of the closing date, at the request of or as allowed by a Contracting O f f ic e r as the result of negotiations." 48 C.F.R. § 52.215-1(a) (2008). Such p ro p o s a l revisions are treated as late and not considered if received any time a f te r the specified time set for the receipt of offers. Id. at § 52.2151 (c )(3 )(ii)(A ). An offeror's best and final terms should therefore be contained in it's initial proposal. Id. at § 52.215-1(f)(4). W h e re a s a revision to a proposal by a contractor is prohibited after the d e a d lin e set by the agency for receipt of offers, a proposal clarification is a llo w e d even after the award of a contract. Generally, permissible c la r i f i c a tio n s include perceived deficiencies, weaknesses, errors, omissions, o r mistakes in the proposal. See 48 C.F.R. § 15.306(b) (2008). C o m m u n ic a tio n of such post-award clarifications is permitted, provided it does n o t afford the offeror an opportunity to revise it's proposal. Id. In sum, a clarification of a bid proposal by an offeror is one that does n o t materially alter the content or form of the proposal. However, when the c o n te n t or form of the proposal is altered rather than merely explained during th e communication, a revision has occurred, and the integrity of the p ro c u re m e n t process itself is placed in jeopardy. Sea Box's offer to transfer it's manufacture location during the requested clarification process went b e yo n d mere explanation of a perceived TAA deficiency in its original p ro p o s a l. It was a material alteration of the content of its proposal to become T A A compliant. 11

As we indicated above, the CO took the position that Klinge, like Sea B o x , had changed its proposal. It is not clear what the CO viewed the change to be. In his affidavit, he assumes, without explanation, that Klinge's c lar if ica tio n to the GAO and on remand in the first COFC protest as to why its p rop o sal did not violate the TAA with respect to CLIN 0003 was a change. It p la in ly wasn't. At one time, the CO seemed to share this view. In the prior protest h e re , in an affidavit dated April 14, 2008, the CO told the court that Klinge provided a clear and concise statement from its vice p re sid e n t, Mr. Steve Hynoski. His statement and the four a ttac h m e n ts fully explained Klinge's understanding of its o b lig atio n s regarding the TAA. Mr. Hynoski set forth Klinge's in te n t to comply with the TAA regarding CLIN 0003 by e n su rin g that only parts from the U.S. or designated countries a re supplied. Specifically, he explained that parts * * * and * * * would be of Mexican origin for CLIN 0003. . . . I find that K lin g e both understands its TAA obligations and is fully c a p a b le of complying. (McGinn Aff. at 1, Apr. 14, 2008.) Presumably this explains why the g o v e rn m e n t did not argue in the earlier protest that Klinge was disqualified its e lf under the TAA. The CO erred, therefore, in assuming that he would have had to reopen d iscu ssio n s with the bidders under the RFP in order to consider Klinge's p ro p o s a l.5 The remaining question is what do we do with this conclusion? P la in tif f contends that the de facto cancellation can be set aside on a d e m o n s tra tio n that the decision was irrational or not in accordance with law, a n d that it plainly was, given the court's conclusion that Klinge was TAA

As plaintiff points out, one mystery that still persists is why, even if he v ie w e d Klinge as ineligible, the CO did not move on to the third bidder. The p roc u rem en t was sufficiently muddled and prolonged at that point, however, th a t the court can credit the apparent battle fatigue which had set in as the cause. 12

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c o m p lian t. We agree that something short of bad faith can be sufficient to call in to question the cancellation of a procurement, see, e.g., Shields Enterprises, In c . v. United States, 28 Fed. Cl. 615, 624-25 (considering whether the c a n c e llatio n lacked a reasonable basis); Coastal Corp. v. United States, 6 Cl. C t. 337, 343-44 (1984) (applying arbitrary, capricious, not in accordance with la w standard), although it is our observation that the cases actually granting re lie f appear to involve the exercise of bad faith.6 And in this case it is clear th a t the decision not to pursue an award with Klinge cannot have been re a so n a b le . It was predicated on a mistake of both law and fact, namely that K lin g e 's explanation of its compliance with the TAA was a modification and n o t a clarification of its proposal. The mistake was also, more likely than not, prejudicial. The CO makes p la in that, because he assumed Klinge was not eligible for award, proceeding w ith the RFP would have meant inviting a new round of modifications from a ll bidders. In that scenario, resorting to a FSS task order makes sense. The re a l question is whether the appropriate remedy is to enjoin the FSS task order a w a rd . As we explain above, there is no reason to think that integrity of the se c o n d procurement is undermined by the mistaken "cancellation" of the first. W e believe the mistake, although probably prejudicial, was understandable and in n o c e n t. These circumstances do not warrant the extraordinary7 relief of e n jo in in g an otherwise unimpeached procurement.

See, e.g., Parcel 49C Ltd. Partnership v. United States, 31 F.3d 1147, 1 1 5 1 , 1153 (Fed. Cir. 1994) (court enjoined cancellation of a solicitation after fin d in g the agency had "launched a campaign to scuttle an award to [plaintiff]" and "illegality permeated the cancellation"); Northpoint Plaza Ltd. Partnership v . United States, 34 Fed. Cl. 105, 110 (1995) (court enjoined CO's cancellation a f te r determining that the agency sought to avoid contracting with a particular b idd er).
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Baird Corp v. United States, 1 Cl. Ct. 662, 664 (1983). 13

T w o 8 of the considerations we must take into account when considering to grant injunctive relief are the degree of irreparable injury to the plaintiff if w e reject injunctive relief, and the corresponding degree of injury to others if w e do grant relief. Plaintiff concedes that * * *. In addition, if we granted in ju n c tiv e relief, the agency would only be obligated to ask for ten LFRSs f ro m plaintiff, assuming it received the award under the RFP. Moreover, if we g ra n t e d relief, at least one third party who had no responsibility for the m is ta k e s in the first procurement would be directly and negatively impacted, b y losing the FSS task order award. In sum, the balance of harms does not w e ig h in plaintiff's favor. We therefore deny injunctive relief and grant the a lte rn a tiv e relief requested, reimbursement of bid preparation and proposal c o s ts . See 28 U.S.C. § 1491(b)(2).

CONCLUSION For the reasons explained above, plaintiff's request for permanent in ju n c tiv e relief is denied. Plaintiff's request for reimbursement of its bid p re p a ra tio n costs is granted. The parties are directed to confer in an effort to a g re e on the amount of the judgment and report to the court in a joint status re p o rt on or before September 26, 2008.

s/Eric G. Bruggink ERIC G. BRUGGINK Judge

The third, consideration of the public interest, clearly weighs in favor o f correcting the mistakes made in the first procurement, although that can be d o n e , in part, by granting plaintiff its bid preparation costs. Moreover the g o v e rn m e n t, while eager to get on with the procurement, has not argued that p re ss in g national defense needs override concerns about maintaining the in te g rity of the procurement system. 14

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