PATRIOT TAXIWAY INDUSTRIES, INC. v. USA
Filing
38
PUBLISHED OPINION. Signed by Judge Mary Ellen Coster Williams. (tb1) Copy to parties.
In the United States Court of Federal Claims
No. 11-124C
(Filed Under Seal: April 22, 2011)
(Reissued: May 4, 2011)1
(Bid Protest)
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PATRIOT TAXIWAY INDUSTRIES, INC., *
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Plaintiff,
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v.
*
*
*
THE UNITED STATES,
*
*
Defendant,
*
*
and
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TACTICAL LIGHTING SYSTEMS, INC., *
*
Intervenor.
*
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Post-Award Bid Protest;
Motion for Judgment on the AR;
Evaluation of Past and Present
Performance; Price
Reasonableness; Meaningful
Discussions; Permanent
Injunction; Success on the
Merits.
Jon W. van Horne, Law Office of Jon van Horne, Esq., 18222 Flower Hill Way, Suite
112, Gaithersburg, MD, for Plaintiff.
Alexander V. Sverdlov, U.S. Department of Justice -- Civil Division, P.O. Box 480, Ben
Franklin Station, Washington, D.C., for Defendant.
James H. Roberts, III, Van Scoyoc Kelly PLLC, 101 Constitution Ave., N.W., Suite 665
East, Washington, D.C., for Intervenor.
1
This opinion was issued under seal on April 22, 2011. The Court invited the parties to
submit proposed redactions by May 2, 2011. The Opinion issued today incorporates Defendant=s
proposed redactions. This redacted material is represented by brackets [ ].
1
_________________________________________________________________________
OPINION AND ORDER
_________________________________________________________________________
WILLIAMS, Judge.
In this post-award bid protest, Patriot Taxiway Industries, Inc. (“Patriot”) protests the
award of a contract by the Department of the Air Force (“Air Force”) to Tactical Lighting
Systems, Inc. (“Tactical”), pursuant to Request for Proposals (“RFP”) No. FA8533-10-R-25009.
The RFP contemplated a contract for the design, testing, development, and production of a
portable airfield lighting system. Patriot claims that the Air Force improperly evaluated
Tactical’s and Patriot’s past and present performance information by improperly aggregating
contracts, considering future performance, not properly documenting its determination of
performance confidence assessment ratings, and treating Patriot and Tactical unequally. Plaintiff
also alleges that the Air Force failed to conduct a proper price reasonableness analysis and
engaged in misleading discussions with Patriot regarding pricing. As such, Patriot seeks a
reevaluation of the technically acceptable proposals.
Upon consideration of the Administrative Record (“AR”) and the motion papers, the
Court concludes that Patriot has not proven that the Air Force committed a prejudicial violation
of law or deprived Patriot of a fair opportunity to compete for the contract. As such, Defendant’s
and Tactical’s motions for judgment on the AR are granted, and Patriot’s motion for a permanent
injunction is denied.
Findings of Fact2
The Solicitation
The Air Force issued the RFP on March 2, 2010, as a small business set-aside. AR 9, 12.
Amendments to the RFP were issued throughout March and April of 2010. The solicitation
contemplated the design and production of a portable airfield lighting system known as
Expeditionary Airfield Lighting Systems II (“EALS II”), which provides visual cues necessary
for incoming aircraft to approach, land, and maneuver at night or in low-visibility conditions.
The Air Force anticipated the award of a firm fixed-price, indefinite-delivery, requirements-type
contract for a two-year base term and four one-year options. AR 14, 414-15. The Air Force
estimated the total contract value to be $44.1 million and envisioned that 24,428 airfield light
fixtures would be delivered under the contract.
The procurement was conducted as a “Technically Acceptable - Performance - Price
Tradeoff” best-value source selection procedure. The RFP explained the source selection
procedure as follows:
2
These findings of fact are derived from the AR and exhibits to the motion papers.
2
(a) This acquisition will utilize the Technically Acceptable Performance-Price
Tradeoff (TA-PPT) source selection procedure to make an integrated
assessment for a best value award decision. A decision on the technical
acceptability of each offeror’s proposal will be made. For those offerors who
are determined to be technically acceptable, tradeoffs will be made between
past and present performance and price. Past and present performance is
considered significantly more important than price though price remains an
important consideration in the best value award decision.
(b) While the Government will strive for maximum objectivity, the tradeoff
process, by its nature, is subjective; therefore, professional judgment is
implicit throughout the selection process. . . . Award will be made to one
responsible offeror whose proposal conforms to all solicitation requirements
. . . and provides the best value to the Government . . . .
AR 80; see also AR 369, 468. Under this process, the Air Force first evaluated proposals for
technical acceptability and then conducted a best value tradeoff analysis of the technically
acceptable proposals based on past and present performance and price. AR 468.
To assist the Air Force in evaluating past and present performance, each offeror was to
submit a FACTS Sheet, describing three “active or completed [contracts] (with preferably at
least one year of performance history)” within the past six years that the offeror considered to be
relevant in demonstrating its ability to perform the EALS II contract. AR 78-80, 412. Each
offeror was also required to submit the same type of past and present performance information
for its “critical subcontractor,” defined as an entity that would be responsible for performing at
least 25 percent of the production of light fixtures. See AR 367, 370.
The RFP explained that the Air Force would consider “[t]he recency and relevancy of the
[past and present performance] information, the source of the information, context of the data,
and general trends in the contractor’s performance.” AR 81, 370. Based on its assessment,
which would include analyzing the degree to which the effort involved the same “magnitude of
work and complexities” as the EALS II contract, the Air Force would assign each proposal a
rating of “very relevant,” “relevant,” “somewhat relevant,” or “not relevant.” AR 81-82. The
RFP made clear that the “‘magnitude of effort and complexities’ . . . denote[d] not only technical
features and characteristics but also programmatic and logistical considerations, including but
not limited to quantities produced, dollar values, type of contract, length of effort, testing
requirements, type and complexity of data contractually required of the offeror, etc.” AR 82.
3
The RFP defined each relevancy rating as follows:
RELEVANCY RATING
DEFINITION
A present and/or past performance effort that involved the
production, testing, and installation of no less than 200 Light
Emitting Diode (LED) fixtures in a commercial or military
VERY RELEVANT
airfield, and such effort involved essentially the same magnitude
of work and complexities that this solicitation requires.
A present and/or past performance effort that involved the
production and installation of no less than 100 LED or
incandescent light fixtures in a commercial or military airfield or
RELEVANT
marine navigation application, and such effort involved much of
the magnitude of work and complexities that this solicitation
requires.
A present and/or past performance effort that involved the
production and installation of no less than 100 LED or
SOMEWHAT RELEVANT incandescent light fixtures or other type [of] light fixtures
powered by alternate energy sources including but not limited to
solar, fuel cells, and wind in a commercial or military airfield,
marine navigation, or industrial complex, and such efforts
involved some of the magnitude of work and complexities that
this solicitation requires.
Present and/or past performance efforts did not involve any of
NOT RELEVANT
the magnitude of effort and complexities [that] this solicitation
requires.
AR 81-82.
For the purpose of evaluating the relevancy of past and present efforts, the RFP permitted
the Air Force to aggregate contracts. AR 82. Specifically, the RFP stated:
The Government may consider an offeror’s contracts in the aggregate in
determining relevancy should the offeror’s present and past performance lend
itself to this approach. That is, an offeror’s three contracts may by definition
represent only a rating less than very relevant when each contract is considered as
a stand-alone effort. However, when these contracts are performed concurrently
(in whole or in part) and are assessed in the aggregate, the work may more
accurately reflect a higher relevancy rating. In this situation, work performed in
the aggregate will be considered in the assignment of a confidence assessment
rating.
Id.
4
The RFP defined the performance confidence assessment rating as the Air Force’s
assessment of its confidence regarding the “offeror’s ability to successfully accomplish the
proposed effort based on the offeror’s demonstrated present and past work record.” AR 81. The
RFP explained that, “considering the offeror’s respective role and its work in [the] aggregate as
well as the critical subcontractor(s) role, pursuant to the definition of critical subcontractor, and
its work in [the] aggregate, a confidence assessment rating will be assigned for the team as a
whole.” AR 372; see also AR 414.
The RFP explained that on the basis of the “recency, relevancy, and quality assessments”
of the evaluated contracts, the Air Force would assign each offeror an overall performance
assessment rating of substantial confidence, satisfactory confidence, limited confidence, no
confidence, or unknown confidence. AR 81-83. The RFP defined each rating as follows:
RATING
DEFINITION
SUBSTANTIAL
CONFIDENCE
SATISFACTORY
CONFIDENCE
LIMITED
CONFIDENCE
NO
CONFIDENCE
Based on the offeror’s performance record, the Government has a high
expectation that the offeror will successfully perform the required effort.
Based on the offeror’s performance record, the Government has an
expectation that the offeror will successfully perform the required effort.
Based on the offeror’s performance record, the Government has a low
expectation that the offeror will successfully perform the required effort.
Based on the offeror’s performance record, the Government has no
expectation that the offeror will be able to successfully perform the
required effort.
No performance record is identifiable or the offeror’s performance record
is so sparse that no confidence assessment rating can be reasonably
assigned.
UNKNOWN
CONFIDENCE
AR 83. The RFP stated that the confidence rating would serve as a basis for evaluating
competing offers. AR 82.
With regard to pricing, the RFP stated that the Air Force would evaluate proposed prices
for “reasonableness and balance” and calculate a total evaluated price for each proposal. AR 83.
Specifically, the RFP stated:
The existence of adequate price competition is expected to support a determination
of reasonableness. Price analysis techniques may be used to further validate price
reasonableness. If adequate price competition is not obtained and/or if price
reasonableness cannot be determined using price analysis of Government obtained
information, additional information in accordance with FAR 15.4 may be required
to support the proposed price.
AR 83.
5
Submission of Offers
By April 29, 2010, the Air Force had received six proposals and had determined that
three -- those submitted by Damar AeroSystems (“Damar”), Patriot, and Tactical -- were
technically acceptable. AR 469, 478. The Air Force assembled a Performance Confidence
Assessment Group (“PCAG”) to review Damar’s, Patriot’s, and Tactical’s past and present
performance information and to assign performance confidence assessment ratings in accordance
with the RFP. AR 473. The PCAG summarized its findings in the Performance Report. See
generally AR 412-49.
The Evaluation of Patriot’s Past and Present Performance
Patriot submitted past and present performance information for one of its contracts and
for several contracts of its critical subcontractor. AR 437-38. For each effort, the Air Force
explained why it assigned the particular relevancy rating. See, e.g., AR 431, 438-39, 474-75.
In the Performance Report, the Air Force explained that Patriot’s designated contract was
determined to be “technically very relevant” because it involved the production, installation, and
testing of over 500 LED lights -- the type of lights required by the EALS II contract. AR 43738. However, “because the effort encompassed a significantly smaller scope than the instant
EALS II requirement in that it had a seven-month period of performance [for a] $7.7 [million]
contract, the overall relevancy rating was determined to be somewhat relevant.” AR 438. The
Air Force noted that Patriot “did not show the capability to manage the logistical, programmatic,
and contractual requirements associated with a long-term, high-dollar production effort.” AR
439.
Patriot initially submitted four efforts of its critical subcontractor, but pursuant to the
RFP, only three of these efforts were considered at the outset. AR 438. The first effort -- a
contract to provide 500 LED lights over three years for an estimated value of $3 million -- was
found to be “very relevant” from a technical standpoint. AR 431, 438, 474-75. However, the
Air Force explained that, “[w]hen taking into account the scope and magnitude characteristics,”
the effort could only be rated “relevant” because the effort involved an estimated 500 LED
fixtures, an estimated value of $3 million, and a three-year period of performance as compared to
the 24,428 LED fixtures, six-year period of performance, and estimated value of $44 million of
the EALS II contract. AR 438.
The second effort of Patriot’s critical subcontractor was “determined to be technically
relevant as it involved the production, installation, and testing of 112 portable LED airfield
lighting fixtures.” Id.; see also AR 433. The Air Force rated the effort as “somewhat relevant”
because the “effort could not be determined [to be] very relevant as the quantities produced were
not over 200” and because “this was not a long-term, high dollar contract; performance took
place over a six-month period, and the contract value was $300 [thousand].” AR 438. The Air
Force deemed the last two efforts “not relevant” based on the “lack of production and installation
of light fixtures.” AR 434-35.
6
Because the third submitted effort of Patriot’s critical subcontractor was rated “not
relevant,” the Air Force considered Patriot’s fourth effort, which was also rated “not relevant.”
AR 1484. As a result, the Air Force issued Evaluation Notice (“EN”) P-P-1, which informed
Patriot of the relevancy ratings of its one effort as well as the relevancy ratings assigned to the
submitted efforts of its critical subcontractor. AR 435. EN P-P-1 also advised Patriot that it
could submit additional efforts for those rated “not relevant” and that should Patriot possess
additional information that might impact Patriot’s relevancy ratings and confidence
determination, it could also submit that information. Id.
In response to EN P-P-1, Patriot provided two additional efforts for consideration, but
only one was considered. AR 438. This effort -- an active and ongoing contract which began in
2004 -- was rated “very relevant” because it involved the production, installation, and testing of
approximately 15,000 to 18,000 LED airfield lighting fixtures over a six-year (to date) period of
performance at a value of $20 million. AR 436 (indicating that the period of performance was
“2004-Present (estimated end date in 2016)”); see also AR 438, 1515-16 (listing the period of
performance as “2004-ongoing” and noting that to date, 10,000 lighting fixtures had been
installed and that the contract was active). The customer for this effort pointed out various
strengths of the critical subcontractor, including responsiveness and on-time delivery, but also
noted one weakness: “the correctness of the product when first produced.” AR 438.
The Evaluation of Tactical’s Past and Present Performance
Tactical submitted past and present performance information for three of its contracts and
three contracts of its critical subcontractor. AR 440. The first contract involved an ongoing
effort to produce 1,988 incandescent light fixtures on a military airfield for the Taiwan Air
Force. AR 440, 475-76. The contract, which was valued at $11.2 million, began in April of
2009, and was scheduled to conclude in April of 2012. Id. Although the scope and value of this
contract were large, the Air Force rated it as “relevant” because the light fixtures delivered were
incandescent, not LED. AR 440.
The second effort submitted by Tactical involved the production and installation of 663
incandescent light fixtures on a military airfield over a period of 13 months -- February of 2006
to March of 2007 -- at a total value of $1.7 million. AR 441. The Air Force determined that the
effort was “somewhat relevant” because it did not involve the production of LED lights. Id. The
third effort did not involve the production and installation of light fixtures and was therefore
rated “not relevant.” AR 442. The Air Force concluded that Tactical had “shown the capability
to manage the logistical, programmatic and contractual requirements associated with long-term,
high dollar production efforts relevant to this instant acquisition.” AR 448.
Tactical also submitted three efforts of its critical subcontractor. AR 442-43. The first
effort involved a Cooperative Research and Development Agreement (“CRADA”) under which
the critical subcontractor produced, tested, and installed 76 LED lights between January and
December of 2005. AR 442. “There was no money involved because the effort was a CRADA.”
AR 442. Because the quantity of LED lights was less than 100, the effort was rated “not
relevant.” AR 443. The second effort, which was considered a second phase to the CRADA,
involved 90 LED lights at a price of $199,983 and was performed between October and
7
December of 2005. Id. Tactical represented that “[t]his effort involved the exact same lighting
technology required by the EALS II.” AR 2006-07. The customer feedback received on this
effort “showed all exceptional ratings for all performance areas.” AR 444. The Air Force
observed that if reviewed on a stand-alone basis, this effort would be rated not relevant because
of the small number of light fixtures produced. AR 443. Because the Air Force concluded that
“these two efforts [were] so related that one [was] a direct follow-on of the first” and because the
purchase order was “part of the CRADA effort according to the customer,” the Air Force
considered quantities and overall work involved in the CRADA with the purchase order. AR
443, 447. The Air Force rated these two efforts, collectively, as “somewhat relevant” because
even considered in the aggregate, the scope and magnitude of the contracts were much smaller
than the EALS II contract. Id. The third effort was rated “not relevant” because it did not
involve production, installation, or testing. AR 444; see also AR 447.
The Air Force’s Relevancy Ratings
After evaluating the past and present performance information that Damar, Patriot, and
Tactical had submitted, the Air Force assigned the following relevancy ratings to each of the
submitted contracts that it had reviewed:
RELEVANCY RATINGS
PATRIOT
TACTICAL
Relevant
Offeror’s Past and Present
Performance Relevancy
Ratings
Somewhat Relevant
Somewhat Relevant
Not Relevant
Relevant
Critical Subcontractor’s
Past and Present
Performance
Relevancy Ratings
Somewhat Relevant
Somewhat Relevant
Not Relevant
Not Relevant
Not Relevant
Not Relevant
Very Relevant
AR 436, 474-76. Based on these relevancy ratings, the Air Force assigned Patriot’s proposal and
Tactical’s proposal the same overall performance confidence assessment rating of “satisfactory
confidence,” reflecting the Air Force’s expectation that each offeror would successfully perform
the contract. AR 437, 448.3
3
Damar’s proposal received an overall performance confidence assessment rating of
“limited confidence.” AR 427, 474.
8
Pricing Analysis
The Air Force compared the line item pricing found in each technically acceptable
proposal and considered each proposal’s initial total evaluated price. AR 450-67, 477-78.
Patriot’s proposal had an initial total evaluated price of $[
]. AR 450.4 By
comparison, Tactical’s proposal had an initial total evaluated price of $64,440,029. AR 450,
477. Damar’s initial total evaluated price was $[
]. Id.
Due to the pricing disparity, the Air Force sent an evaluation notice to the three offerors,
advising them to reexamine their proposals and the RFP and to correct any errors and/or confirm
their pricing. AR 454-57, 1489. EN PR-P-2 stated in pertinent part:
The Government’s analysis of the offers received indicates that there is a disparity
in prices. For each CLIN/SubCLIN, please re-examine
Purchase Description PD08WRGBGBEA15, dated 4 February
2010, through Revision 2, dated 14 Apr 2010,
Statement of Work dated 28 Dec 09,
all DD Form 1423s attached to the RFP, and
its pricing in the Schedule of the RFP
for both understanding and accuracy so as to ascertain if errors have been made.
Offerors shall review their escalation for the option years and verify pricing. If an
error is discovered, submit the replacement page(s) to the Schedule of the
RFP/Proposal. If no error(s) has been made, offerors shall confirm their prices.
AR 457, 1489.
In response to this request, Patriot emailed the Air Force on May 21, 2010, and asked,
“[c]ould you be more specific about the disparity [in] the findings? Is it one specific instance or
multiple instances?” AR 1494. The Air Force replied, “[w]e are not pointing to any specific
CLIN/SubCLIN; however, we are asking that all offerors review the requirements for
understanding and that no errors were made in the pricing.” AR 1496. Patriot responded:
I realize you can’t share pricing information between offerors, but is it fair to say
that the disparity is an issue that one offeror has proposed pricing for some CLINs
that is either much lower or much higher than the other offerors? In this case the
Government has issued the EN to allow all offerors to review their pricing to be
sure they have accounted for all of the tasks and effort needed to complete each
CLIN or Sub CLIN. Is this a correct interpretation?
4
$[
Elsewhere, the record indicates that Patriot’s initial total estimated price was
]. AR 477.
9
AR 1500. The Air Force replied, “[y]our interpretation is correct.” AR 1503. After this
exchange, Patriot confirmed its pricing and provided “background information on the
methodology used to create the pricing structure submitted for the RFP.” AR 1532. Tactical also
confirmed its pricing. AR 2122. Due to errors discovered upon reexamination, Damar increased
its total evaluated price to $[
]. AR 478.
The total evaluated prices and the performance confidence ratings of the final proposal
revisions were:
OFFEROR
PRICE
CONFIDENCE ASSESSMENT
Damar
$[
]
Limited Confidence
Patriot
$[
]
Satisfactory Confidence
Tactical
$64,440,029
Satisfactory Confidence
See AR 479.
Based on these findings, the Air Force determined that each offeror’s proposed pricing
was balanced and that each offeror’s pricing was reasonable because multiple offers were
submitted independently, which suggested that adequate price competition existed. AR 460-61.
On August 5, 2010, the Air Force awarded the contract -- No. FA8533-10-D-0010 -- to
Tactical. AR 482. In support of this decision, the Source Selection Authority (“SSA”) cited the
RFP’s provision that price would be an important consideration in the best value determination.
AR 479-80. The SSA selected Tactical because Tactical’s proposal received the same
performance confidence assessment rating as Patriot’s proposal, but Tactical offered to perform
the EALS II contract for a significantly lower price. Id. As such, the SSA determined that
Tactical’s proposal provided the best value to the Air Force. Id.
GAO Decision
After receiving a written debriefing, Patriot filed an agency protest on August 10, 2010.
AR 1783-85, 1788-89. The Air Force denied Patriot’s protest, and on August 27, 2010, Patriot
filed a protest with the United States Government Accountability Office (“GAO”). On
November 9, 2011, GAO notified the parties of its intent to deny the protest. Mar. 1, 2011 Hr’g
Tr. at 42. On December 6, 2010, GAO issued a decision, denying the protest on the merits, and
this decision was released publicly on December 27, 2010. Patriot Taxiway Indus., Inc., B403690, Dec. 6, 2010, 2010 CPD ¶ 291; Mar. 1, 2011 Hr’g Tr. at 32.
On February 28, 2011, Patriot filed the instant action. On March 1, 2011, the Court heard
argument on Patriot’s application for a temporary restraining order (“TRO”) and orally denied
the TRO application. On April 11, 2011, this Court denied Patriot’s motion for a preliminary
10
injunction. Pending before the Court are Patriot’s motion for permanent injunctive relief and
Defendant’s and Tactical’s motions for judgment on the AR.
Discussion
Jurisdiction and Standard of Review
The Court has jurisdiction over this bid protest pursuant to the Tucker Act, 28 U.S.C. §
1491(b)(1). In a bid protest, the Court reviews an agency’s procurement decision under the
standards enunciated in the Administrative Procedure Act (“APA”), 5 U.S.C. § 706. 28 U.S.C. §
1491(b)(4); see also Ala. Aircraft Indus., Inc. v. United States, 586 F.3d 1372, 1373 (Fed. Cir.
2009); Gentex Corp. v. United States, 58 Fed. Cl. 634, 648 (2003). Pursuant to the APA, this
Court may set aside an agency action that was “arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A); Ala. Aircraft Indus., 586 F.3d at
1373; Gentex, 58 Fed. Cl. at 648.
The Court will find an agency action to be arbitrary and capricious when the agency
“entirely failed to consider an important aspect of the problem, offered an explanation for its
decision that runs counter to the evidence before the agency, or [the decision] is so implausible
that it could not be ascribed to a difference in view or the product of agency expertise.” Ceres
Envtl. Servs., Inc. v. United States, 2011 U.S. Claims LEXIS 429, at *76-77 (Fed. Cl. Feb. 28,
2011) (citing Ala. Aircraft Indus., 586 F.3d at 1375 (quoting Motor Vehicle Mfrs. Ass’n v. State
Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983))). Contracting officers are afforded
considerable discretion in negotiated procurements, such as this one, where award is premised on
a “best value” determination. Id. at *77 (citing Banknote Corp. of Am., Inc. v. United States,
365 F.3d 1345, 1355 (Fed. Cir. 2004)). Such discretion, however, “does not relieve the agency
of its obligation to develop an evidentiary basis for its findings.” Id. (quoting In re Sang Su Lee,
277 F.3d 1338, 1344 (Fed. Cir. 2002)). Indeed, it is well established that “the agency must
examine the relevant data and articulate a satisfactory explanation for its action including a
‘rational connection between the facts found and the choice made.’” Id. (quoting Motor Vehicle,
463 U.S. at 43). A court may not substitute its judgment for that of the agency, but rather must
confine its review to determining whether the agency’s decision was arbitrary and capricious.
Motor Vehicle, 463 U.S. at 43; Eskridge Research Corp. v. United States, 92 Fed. Cl. 88, 97
(2010).
To obtain permanent injunctive relief, a Plaintiff must show: (1) actual success on the
merits; (2) it will suffer irreparable harm absent injunctive relief; (3) the balance of hardships
tips in its favor; and (4) an injunction will serve the public interest. See PGBA, LLC v. United
States, 389 F.3d 1219, 1228-29 (Fed. Cir. 2004); AshBritt v. United States, 87 Fed. Cl. 344, 365
(2009).
11
The Grounds for Patriot’s Protest
Patriot challenges the award on the following grounds:
•
The Air Force failed to evaluate past performance in accordance with the RFP by
aggregating consecutive but non-concurrent contracts, which led to one effort of
Tactical’s critical subcontractor receiving a rating of “somewhat relevant” and to
Tactical obtaining a performance confidence assessment rating of “satisfactory
confidence”;
•
In evaluating past and present performance, the Air Force improperly considered
future performance;
•
The Air Force assigned inconsistent weights to the determination of relevancy ratings
for contracts included in the two proposals and assigned the same performance
confidence assessment rating to Patriot and Tactical, despite differences in the
relevancy of the contracts included in their respective proposals;
•
The Air Force failed to document its determination of the performance confidence
assessment ratings;
•
The Air Force failed to conduct a proper price reasonableness analysis; and
•
The Air Force’s discussions with Patriot regarding pricing disparities were misleading
and not meaningful.
Evaluation of Past and Present Performance
Patriot alleges that the Air Force improperly aggregated the number of airfield light
fixtures that Tactical’s critical subcontractor produced under two efforts that were presented
separately in Tactical’s proposal. Patriot argues that the second contract was a follow-on to the
first and that the contracts should not have been aggregated because they were performed
consecutively, not concurrently. According to Patriot, the Air Force’s improper aggregation led
to Tactical’s critical subcontractor receiving a rating of “somewhat relevant” on one contract,
which led the Air Force to assign Tactical’s proposal a performance confidence assessment
rating of “satisfactory confidence” -- the same rating that Patriot’s proposal received.
The RFP expressly permitted the Government to “consider an offeror’s contracts in the
aggregate in determining relevancy should the offeror’s present and past performance lend itself
to this approach. . . . when these contracts are performed concurrently (in whole or in part).”
AR 82, 372. Further, the RFP specified that when such contracts “are assessed in the aggregate,
the work may more accurately reflect a higher relevancy rating.” Id. Here, the periods of
performance in these two contracts overlapped between October 1, 2005, and October 15, 2005,
so the Air Force’s aggregation of the two efforts was reasonable. See AR 445; AR 2002; Pl.’s
Reply at 2.
12
Patriot further argues that the Air Force improperly considered future performance in
Tactical’s Taiwan Air Force contract because that contract was ongoing and Tactical had only
performed one-third of the work. Patriot contends that the RFP included no provision that would
allow future, promised and speculative performance to be reasonably included in the offeror’s
present and past work record. Pl.’s Reply at 3-4. However, Patriot itself submitted an ongoing
active contract, estimated to end in 2016, as a reference for its critical subcontractor’s
performance. AR 436.
Because the RFP permitted the Air Force to evaluate “present” experience and “ongoing”
efforts, the Air Force’s evaluation of Tactical’s Taiwan Air Force contract was reasonable. See
AR 367. Tactical had been performing the Taiwan Air Force contract for more than a year when
the proposals were evaluated. The Air Force confirmed that Tactical was performing
satisfactorily and had delivered three of the nine airfield light systems under that contract. See
AR 440-41. With regard to Tactical’s performance of the Taiwan Air Force contract, the
Performance Report stated:
The customer representatives reported that Tactical was the ultimate professional
in its work and its customer service. Exceptional ratings were given in the areas
of: the extent to which the company’s products met contractual requirements; the
level of workmanship and quality in the products; the company’s proficiency in
processing the customer’s order and timely deliveries’ [sic] and, the company’s
knowledge and proficiency with industry standards and specifications. . . . The
customer noted that [Tactical] had never provided late deliveries . . . .
AR 440-41. Thus, although portions of the Taiwan Air Force contract had not yet been
performed, the Air Force had an ample basis to consider Tactical’s performance under this
contract as of the evaluation. It was reasonable for the Air Force to factor both the magnitude of
this ongoing contract and the quality of performance into its assessment.5
Patriot asserts that one of its contracts was more relevant than Tactical’s Taiwan Air
Force contract. The Air Force rated this Patriot contract as “somewhat relevant” because it
involved only 500 LED fixtures as compared to the 24,428 lighting fixtures required by the
5
Patriot claims that in assessing relevancy the Air Force should have not have considered
the total price of Tactical’s Taiwan Air Force contract because a modification raising the price
from roughly $8.3 million to $11.2 million had nothing to do with providing the portable airfield
lighting system and instead entailed provision of 19 Mercedes Benz military vehicles. Pl.’s
Reply at 4-5. However, Tactical was required to describe any changes in the dollar value and
performance period of its reference contracts from the time of award until the time of its offer in
the EALS II procurement. AR 87. As such, the Air Force was permitted to utilize this updated
price in evaluating the effort. Moreover, the record does not reflect that the Air Force deemed
the additional $3 million in the overall price of the Taiwan Air Force contract to be determinative
either in rating the contract “relevant” or in assigning an overall “satisfactory confidence” rating
to Tactical’s proposal. Rather, in explaining the “relevant” rating for the Taiwan reference, the
PCAG focused on the fact that the contract “involved the production and installation of 1,988
incandescent lights fixtures for use on a military airfield” and had received a positive customer
review. AR 440, 447.
13
EALS II contract, the contract’s performance period was seven months as compared to six years,
and the contract’s estimated value was $7.7 million as compared to the $44 million estimated
value of the EALS II contract. AR 430. The Air Force reasonably determined that Tactical’s
Taiwan Air Force contract was more relevant than Patriot’s contract given that the Taiwan effort
had a longer performance period, a higher estimated value, and involved delivery of significantly
more airfield light fixtures.
Patriot argues that the Air Force treated Patriot and Tactical unequally in evaluating past
and present performance based upon a numerical count of relevancy ratings. Patriot points out
that it received one “somewhat relevant” rating for its effort, and the efforts of its critical
subcontractor received one rating of “very relevant,” another of “relevant,” and a third of
“somewhat relevant.” AR 436, 474-75. By comparison, Tactical received one “relevant” rating
and one “somewhat relevant” rating for its referenced contracts as well as one “somewhat
relevant” rating for an effort of its critical subcontractor. AR 436, 475-76. Despite these
differences, the Air Force assigned both proposals the same overall performance confidence
assessment rating of “satisfactory confidence.”
Patriot’s argument that its relevancy ratings necessarily warranted a higher performance
confidence rating than Tactical’s relevancy ratings is premised on its misconception that a
confidence assessment rating had to be raised if a greater number of “very relevant” or
“relevant” ratings were attained. Basing a performance confidence assessment on a rote
counting of the number of relevancy ratings was not what the RFP envisioned. Rather, under the
RFP, confidence ratings were to be assigned based upon an assessment of the overall past and
present performance, taking into account recency, relevancy, and quality. The broad category of
“satisfactory confidence” could reasonably be applied to a differing array of relevancy ratings
depending on the characteristics of the efforts involved. Here, both offerors were given
satisfactory confidence ratings, which meant that the Government had an expectation that each
offeror would successfully perform the required effort. The record fully supports this
expectation.
Patriot further contends that Patriot’s designated efforts should have been assigned at
least two ratings of “very relevant,” without adequately articulating which efforts should have
received higher ratings or why. Pl.’s Mem. at 12-13. In so arguing, Plaintiff is asking the Court
to step into the shoes of the Air Force evaluators and assess past and present performance. As
recognized in Ashbritt, this Court does not sit as a super source selection authority to second
guess and re-score offerors’ proposals. Ashbritt, 87 Fed. Cl. at 367 (citing R&W Flammann
GMBH v. United States, 339 F.3d 1320, 1322 (Fed. Cir. 2003)). In particular, the evaluation of
offerors’ past performance is generally within the agency’s broad discretion. Vantage Assocs.,
Inc. v. United States, 59 Fed. Cl. 1, 22 (2003) (stating that an agency has broad discretion when
evaluating past performance); see also Clean Harbors Envtl. Servs., Inc., B-296176.2, Dec. 9,
2005, 2005 CPD ¶ 222 at *2. In any event, Patriot’s mere disagreement with the Air Force’s
evaluation is insufficient to establish that the Air Force’s actions were unreasonable. See
CRAssociates, Inc. v. United States, 95 Fed. Cl. 357, 380-81 (2010).
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Documentation of Patriot’s Performance Confidence Assessment Rating
According to Patriot, the Air Force failed to document how it assigned a performance
confidence assessment rating to the offerors based on the relevancy ratings. As Patriot argues:
In reaching these ratings, the procurement documentation discusses at length the
relevancy of the contracts and other past performance information submitted with
the offers, but provides no explanation as to why a particular performance
confidence rating was chosen as opposed to the other performance confidence
ratings. Explanation of the final, critical step is missing.
Pl.’s Mem. at 14.
The Air Force justified its assignment of a performance confidence rating of “satisfactory
confidence” to Patriot as follows:
On the effort determined to be somewhat relevant, [Patriot] . . . demonstrated
technical relevancy to EALS II, but did not show the capability to manage the
logistical, programmatic, and contractual requirements associated with a longterm, high-dollar production effort. On the one very relevant, one relevant, and
one somewhat relevant efforts, [Patriot’s critical subcontractor] demonstrated that
it can design, test, produce, and install lighting components with the same
technical relevancy to EALS II. . . . Considering that the prime contractor itself
offers somewhat relevant experience and its proposed critical subcontractor brings
to the relationship very relevant to somewhat relevant experience, there is a
satisfactory expectation that Patriot Taxiway Industries will be able to
successfully perform the work required in the EALS II program.
AR 439; see also AR 437-38. The Air Force provided a similar explanation of the basis for
Tactical’s performance confidence rating. AR 447-48. These explanations belie Patriot’s
assertion that the Air Force did not document how it decided to assign a particular performance
confidence rating.
In rejecting an argument similar to that which Patriot makes here, the court in Precision
Images, LLC v. United States explained:
The court does not adopt Precision’s narrow construction of the [Source Selection
Decision Document (“SSDD”)] decision page. Rather, the court finds that the
SSDD’s decision page is not separate and distinct from the discussion
immediately preceding it. Although the decision page does not specifically
mention any of [the awardee’s] advantages or strengths and, in fact, constitutes
only three paragraphs, it did not need to do so. Rather, the decision page
represents the culmination of seven pages of detailed analysis of and findings
related to the three offerors’ proposals. Within those seven pages are individual
present and past performance and cost/price evaluations for each offeror. The
language of the SSDD is virtually identical to the findings contained in the PCAG
15
final performance report, and it is apparent that the SSDD incorporated the
PCAG’s conclusions. . . . A review of the entire SSDD supports this conclusion.
The SSDD incorporated [the awardee’s] strengths or advantages into its
discussion of [the awardee’s] proposal, thereby rendering it unnecessary and
redundant to reiterate a summary of those findings in the decision page. . . .
Precision’s argument that these findings are absent from the agency’s decision
page ignores the totality of the SSDD.
79 Fed. Cl. 598, 621-22 (2007) (internal citations omitted). Here, as in Precision Images, the
agency adequately explained why it assigned Patriot and Tactical performance confidence
assessment ratings of “satisfactory confidence.”
Price Reasonableness
Patriot also asserts that the Air Force’s price reasonableness determination was improper
because it relied solely upon the existence of adequate price competition. The purpose of a price
reasonableness analysis is to prevent the Government from paying too high a price for a contract.
See e.g., Ceres, 2011 U.S. Claims LEXIS 429, at *79 n.15; DMS All-Star Joint Venture v.
United States, 90 Fed. Cl. 653, 663 n.11 (2010). Where, as here, a firm-fixed price contract is
anticipated, an agency “may use various price analysis techniques and procedures to ensure a fair
and reasonable price,” including the comparison of proposed prices received in response to a
solicitation. FAR 15.404-1(b)(2)(i); see also Comprehensive Health Servs., Inc., B-310553, Dec.
27, 2007, 2008 CPD ¶ 9 at *7. The Air Force determined that adequate price competition existed
because multiple proposals were submitted independently of each other. AR 461. This approach
was not erroneous. The RFP expressly provided that “[t]he existence of adequate price
competition is expected to support a determination of reasonableness” and “[p]rice analysis
techniques may be used to further validate price reasonableness.” AR 83. As this Court
recognized in Ceres, “[n]ormally, competition establishes price reasonableness.” Ceres, 2011
U.S. Claims LEXIS 429, at *79-80; see Comprehensive Health Servs., 2008 CPD ¶ 9 at *7
(stating that “[a]gencies may rely upon adequate price competition alone to assess price
reasonableness”).
According to Patriot, because of the drastic variance among the Air Force’s total program
estimate of $44.1 million and the competitive offerors’ total evaluated prices, the Air Force’s
reliance on “adequate price competition” to establish price reasonableness was arbitrary,
capricious, and an abuse of discretion. However, when the Air Force’s pricing analysis revealed
pricing disparities, the Air Force requested that these offerors re-examine their proposals and the
RFP’s requirements to confirm or adjust their pricing. This request for re-examination was
eminently rational and ensured that no offeror had made a mistake in its pricing. As the Air
Force concluded, “[a]ll ENs for all Offerors were answered satisfactorily and are considered to
be closed. . . . Adequate price competition exists.” AR 460-61.
To the extent Patriot alleges that Tactical’s price was unreasonably low, Patriot
challenges the realism of that price. See, e.g., Ceres, 2011 U.S Claims LEXIS 429, at *79-81;
DMS, 90 Fed. Cl. at 663 n.11. As this Court recognized in Ceres, “[i]n a fixed-price
procurement, the agency ordinarily does not consider the ‘realism’ of offerors’ proposed prices
16
because the contractor bears the risk of underpricing its offer.” 2011 U.S. Claims LEXIS 429, at
*80 (citations omitted). Here, as in Ceres, the Air Force entered into discussions to ensure that
offerors’ prices were accurate. Then, after confirming prices and recognizing that the contract
was a fixed-price contract with the risk of an unrealistically low price falling on the contractor,
the Air Force proceeded to award to Tactical with “its eyes wide open.” See Ceres, 2011 U.S.
Claims LEXIS 429, at *93. Patriot has not established that the Air Force’s action in awarding to
the low-priced, technically acceptable contractor was arbitrary or capricious.
The Air Force’s Discussions with Patriot
Patriot claims that the Air Force’s discussions were misleading and not meaningful
because they led Patriot to believe that the Air Force suspected that Patriot had omitted costs or
failed to contemplate all of the RFP’s requirements. Patriot asserts that the Air Force was
obligated to convey what Patriot claims should have been the Air Force’s concern, i.e., that
Patriot’s pricing was nearly [
] times the Air Force’s estimate.
Although the precise content of discussions is largely a matter of the contracting officer’s
judgment, generally discussions must address weaknesses or deficiencies in an offeror’s proposal
that, unless corrected, would preclude award. See, e.g., Ceres, 2011 U.S. Claims LEXIS 429, at
*104. An agency is not obligated to indicate every way that an offeror’s proposal could be
strengthened. See Dynacs Eng’g Co. v. United States, 48 Fed. Cl. 124, 131 (2000).
Where, as here, the proposed price is considered acceptable and reasonable, an agency is
not required to discuss the issue at all. See, e.g., Ceres, 2011 U.S. Claims LEXIS 429, at *10305; Dynacs Eng’g Co., 48 Fed. Cl. at 132 (“[B]ecause [the agency] determined that the offeror’s
. . . price/cost were acceptable . . . [that point] did not require discussion.”). “[U]nless an
offeror’s costs constitute a significant weakness or deficiency in its proposal, the contracting
officer is not required to address in discussions costs that appear to be higher than those proposed
by other offerors.” Ceres, 2011 U.S. Claims LEXIS 429, at *104 (quoting DMS, 90 Fed. Cl. at
669) (citation omitted). “FAR § 15.306(e)(3) gives the contracting officer discretion to inform
an offeror that ‘its price is considered by the Government to be too high or too low.’ But neither
that provision, nor any other, requires the contracting officer to discuss a proposed price that . . .
is not considered a significant weakness or deficiency.” Electronic Data Systems, LLC v. United
States, 93 Fed. Cl. 416, 434 (2010).
Patriot is Not Entitled to Permanent Injunctive Relief
To obtain permanent injunctive relief, Patriot must show that: (1) it has succeeded on the
merits of the case; (2) it will suffer irreparable harm absent injunctive relief; (3) the balance of
hardships tips in its favor; and (4) an injunction will serve the public interest. See PGBA, 389
F.3d at 1228-29; AshBritt, 87 Fed. Cl. at 365. Here, Patriot has not succeeded on the merits of
its case -- a circumstance which in and of itself defeats Patriot’s request for injunctive relief.
See, e.g., Nat’l Steel Car, Ltd. v. Canadian Pac. Ry., Ltd., 357 F.3d 1319, 1325 (Fed. Cir. 2004);
Int’l Res. Recovery, Inc. v. United States, 64 Fed. Cl. 150, 164 (2005) (“A plaintiff that cannot
show that it will actually succeed on the merits of its claim cannot prevail on its motion for
injunctive relief.”); Info. Tech. & Applications Corp. v. United States, 51 Fed. Cl. 340, 357 n.32
17
(2001) (“Absent success on the merits, the other factors are irrelevant.”), aff’d, 316 F.3d 1312
(Fed. Cir. 2003). As the Federal Circuit has explained:
Although in some instances [the factors for injunctive relief], taken individually,
are not dispositive because the district court’s conclusion results from a process of
overall balancing, a movant is not entitled to a preliminary injunction if he fails to
demonstrate a likelihood of success on the merits. In other words, a court cannot
use an exceptionally weighty showing on one of the other three factors to grant a
preliminary injunction if a movant fails to demonstrate a likelihood of success on
the merits.
Nat’l Steel Car, 357 F.3d at 1325 (internal citations omitted). Given Patriot’s lack of success on
the merits, injunctive relief is unwarranted.
Order
1. Defendant’s Motion for Judgment on the Administrative Record is GRANTED.
2. Intervenor’s Motion for Judgment on the Administrative Record is GRANTED.
3. Plaintiff’s Motion for a Permanent Injunction and request for declaratory relief are DENIED.
4. Prior to the release of this opinion to the public, the parties shall review the opinion for
competition-sensitive, proprietary, confidential or other protected information. The parties
shall file proposed redacted versions of this decision or, in the alternative, file a notice
indicating the party’s intent not to file proposed redactions, on or before May 2, 2011.
5. The Clerk is directed to enter judgment on the Administrative Record in favor of Defendant
and Intervenor consistent with this opinion.
s/Mary Ellen Coster Williams
MARY ELLEN COSTER WILLIAMS
Judge
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