LABORATORY CORPORATION OF AMERICA HOLDINGS v. USA

Filing 42

REPORTED OPINION granting in part and denying in part 30 Motion to Strike ; granting in part and denying in part 34 Motion to Supplement the Administrative Record. Signed by Judge Thomas C. Wheeler. (jc) Copy to parties.

In the United States Court of Federal Claims
No. 14-261C
(Filed: June 2, 2014)
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LABORATORY CORPORATION OF
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AMERICA HOLDINGS,
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Plaintiff,
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v.
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THE UNITED STATES,
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Defendant,
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and
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QUEST DIAGNOSTICS INC.,
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Defendant-Intervenor. *
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Bid Protest; Supplementing the
Administrative Record; Court’s
Consideration of Expert Witness’s
Declaration; Federal Rule of
Evidence 702.

David E. Frulla, with whom were Holly A. Roth, Elizabeth C. Johnson, and Howard H.
Yuan, Kelley Drye & Warren LLP, Washington, D.C. for Plaintiff.
Corinne A. Niosi, Trial Attorney, with whom were Stuart F. Delery, Assistant Attorney
General, Robert E. Kirschman, Jr., Director, and Deborah A. Bynum, Assistant Director,
Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington,
D.C. for Defendant.
Merle M. DeLancey, with whom were Justin A. Chiarodo, and Adele H. Lack, Dickstein
Shapiro LLP, Washington, D.C. for Intervenor.
OPINION AND ORDER
WHEELER, Judge.

Background
On April 4, 2014, Plaintiff Laboratory Corporation of America Holdings
(“LabCorp”) filed a post-award bid protest challenging the award of a contract by the
Department of Veterans Affairs (“VA”) to provide laboratory testing and analysis
services at five VA Medical Centers in upstate New York. The VA requested offerors to
submit prices for 1,575 different laboratory tests based upon the VA’s “FY 2014
estimated utilization” level for each test. The VA included six evaluation factors and
sub-factors in the solicitation, with price being the lowest factor in priority. The VA
intended to award a Blanket Purchase Agreement (“BPA”) against the successful
offeror’s current Federal Supply Schedule (“FSS”) Contract. After evaluating the
proposals on a best value basis, the VA selected Quest Diagnostics, Inc. (“Quest”) for
contract award. LabCorp is the incumbent contractor performing the tests at the five VA
Medical Centers.
LabCorp challenges the VA’s evaluation of proposals on a number of grounds,
one of which is that the VA did not evaluate prices on a rational basis. LabCorp also
alleges that the VA used an unstated evaluation criterion relating to how many of the
1,575 laboratory tests were included on each offeror’s FSS contract. The evaluation
method used by the VA allegedly resulted in an “apples and oranges” comparison where
the agency evaluated the total price of a different number of tests for each offeror.
On April 11, 2014, the Government submitted the administrative record,
consisting of two volumes containing 35 tabs and 2,365 pages. The administrative record
included the detailed pricing schedules submitted by the offerors for each of the 1,575
tests. On April 28, 2014, LabCorp filed its motion for judgment on the administrative
record, and attached the declarations of Mr. Ariel H. Collis and Ms. Sharon Williams
Leahy. LabCorp offered Mr. Collis as an expert economist from Georgetown Economic
Services, LLC to show the flaws in the VA’s price evaluation, and to explain other
approaches to the price evaluation that arguably would have been more rational. Mr.
Collis’ declaration contained extensive mathematical analysis of LabCorp’s and Quest’s
price proposals. LabCorp offered Ms. Leahy as a fact witness to show that the VA
historically had ordered far fewer tests in 2013 than the 1,575 included in the solicitation.
The question presented is whether the Court should consider the Collis and Leahy
declarations in reviewing the agency’s decision under the circumstances of this case.1

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On May 29, 2014, the Court issued a ruling on a similar question in FirstLine Transportation Security
Inc. v. United States. No. 14-301 (Fed. Cl. May 29, 2014). Much of the reasoning in this opinion draws
from the Court’s ruling in FirstLine.

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On May 12, 2014, the Government filed a motion pursuant to Rule 12(f) of the
Rules of the Court of Federal Claims (“RCFC”) requesting that the Court strike the Collis
and Leahy declarations from the record. The Government argued, inter alia, that the
declarations presented facts and opinions that the VA did not consider in evaluating
proposals.
In opposition, LabCorp argues that the Collis declaration provides a quantitative
analysis of LabCorp’s and Quest’s pricing information based exclusively on data already
in the administrative record. Further, the Collis declaration purportedly corrects
significant miscalculations in Quest’s proposal that the VA failed to recognize. LabCorp
contends that the Leahy declaration supplies historical data that the VA should have
utilized in identifying the number of tests to include in the solicitation.
Analysis
A. Standard for Decision
In bid protest cases, the focus of the judicial review should be “the administrative
record already in existence, not some new record made initially in the reviewing court.”
Seaborn Health Care, Inc. v. United States, 101 Fed. Cl. 42, 50 (2011) (quoting Camp v.
Pitts, 411 U.S. 138, 142 (1973)). Supplementation of the administrative record should be
limited to cases in which the omission of extra-record evidence would preclude effective
judicial review. Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374, 1380 (Fed. Cir.
2009).
Under 28 U.S.C. § 1491(b)(4), the standards in the Administrative Procedure Act
govern the judicial review of a protest challenging an agency’s procurement action.
These standards permit the Court to set aside an agency’s action or decision that is
“arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5
U.S.C. § 706(2).
The Court examines the administrative record of the procurement to determine
whether the record supports the agency’s decision. Holloway & Co., PLLC v. United
States, 87 Fed. Cl. 381, 389 (2009). By limiting review to the record that was before the
agency, the Court can guard against the risk of converting the arbitrary and capricious
standard into a de novo review. For this reason, the parties’ ability to supplement the
administrative record is limited in bid protests. PlanetSpace, Inc. v. United States, 90
Fed. Cl. 1, 5 (2009).
The Federal Circuit’s holding in Axiom makes clear that supplementation of the
administrative record should occur sparingly, but it does not totally prohibit
supplementation. Bannum, Inc. v. United States, 89 Fed. Cl. 184, 188 (2009). Several
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post-Axiom decisions have allowed supplementation of the record when necessary for the
Court to have a complete understanding of the issues before it. See, e.g., Excel Mfg.,
Ltd. V. United States, 111 Fed. Cl. 800, 808 (2013) (supplementing the record with
documents regarding costs deemed necessary for effective review of parties’ arguments);
Fulcra Worldwide, LLC v. United States, 97 Fed. Cl. 523, 535 (2011) (allowing
supplementation of the record for Plaintiff’s “bait and switch” allegations where
administrative record contained limited information on the allegations); Global Computer
Enter., Inc. v. United States, 88 Fed. Cl. 52, 63 (2009) (supplementing record with
declarations from disappointed bidder’s employees because material was significant to
understanding the issues in the bid protest); Bannum, 89 Fed. Cl. at 189 (concluding that
protester’s additional documents were needed for a complete understanding of the issues,
otherwise Court would be analyzing claims in a vacuum).
B. The Collis Declaration is Needed to Permit Meaningful Review of the Record.
The Court must balance its responsibility to ensure that a bid protest proceeding is
not converted into a de novo review against its obligation to ensure that the position of
both parties is fully understood. Acad. Facilities Mgmt. v. United States, 87 Fed. Cl. 441,
455 (2009). In making the threshold determination of whether supplementation is
necessary, the Court evaluates the entire administrative record and decides whether the
existing information is sufficient to resolve the case effectively. Kerr Contractors, Inc. v.
United States, 89 Fed. Cl. 312, 335 (2009), aff’d, 374 F. App’x 979 (Fed. Cir. 2010).
Here, after evaluating the information in the administrative record, the Court finds that
Mr. Collis’ detailed examination of the prices and tests in the offerors’ proposals is
necessary for effective judicial review. LabCorp’s contentions are based in part on the
quantitative analysis produced, and LabCorp’s counsel maintains that he requires expert
testimony to make his argument fully.
The Court perhaps could extrapolate relevant information from the record without
the Collis declaration, but Mr. Collis’ quantitative analysis aids the Court in
understanding the administrative record. Thus, omitting the declaration would handicap
both Plaintiff and the Court. Surely, the Federal Circuit did not intend such an outcome
in Axiom. Rather, the holding in Axiom is that the Court must “exercise restraint” when
supplementing the administrative record to ensure that parties are not supplementing the
record “with whatever they want.” Allied Tech. Grp., Inc. v. United States, 92 Fed. Cl.
226, 230 (2010) (quoting Axiom, 564 F.3d at 1380). After making the threshold
determination as Axiom requires, the Court finds that the Collis declaration is necessary
to permit meaningful review of the administrative record.
It is well established that the focal point for judicial review should be the
administrative record already in existence. See, e.g., Fla. Power Light v Lorion, 470 U.S.
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729, 743-44 (1985). The admission of the Collis declaration into the Court’s record will
not shift the focal point of the judicial review. On the contrary, the Collis declaration will
allow the Court to examine in depth the information already in the administrative record.
The Collis declaration does not substitute Mr. Collis’ judgment for the agency’s
judgment. Nor does the declaration introduce facts outside the administrative record.
Rather, the declaration provides calculations based on data already contained in the
administrative record, so that the Court can better understand the record.
C. The Collis Declaration is Admissible under Federal Rule of Evidence 702.
Supplementation of the administrative record with expert testimony is appropriate
when necessary to assist the Court in understanding technical or complex information in
a bid protest. NCL Logistics Co. v. United States, 109 Fed. Cl. 596, 613 (2012); see also
Guzar Mirbachakot Transp. v. United States, 104 Fed. Cl. 53, 64 (2012) (deeming expert
testimony as essential for resolution of the protest and consistent with Federal Rule of
Evidence 702 because of the technical nature of compressed and zip files); Hunt Bldg.
Co., Ltd. v. United States, 61 Fed. Cl. 243, 272 (2004) (permitting supplementation of
record with economist’s deposition to assist the Court in understanding the financing of
military housing privatization project); Mike Hooks, Inc. v. United States, 39 Fed. Cl.
147, 158 (1997) (allowing supplementation of record with expert testimony because of
technical nature of production rates for shoal dredging).
The question here is whether the Collis declaration should be admissible as expert
testimony under Rule 702 of the Federal Rules of Evidence (“FRE”). Under FRE 702,
“scientific, technical, or other specialized knowledge” may be admissible as expert
testimony if it assists “the trier of fact to understand the evidence or to determine a fact in
issue.” Texas Digital Sys. v. Telegenix, Inc., 308 F.3d 1193, 1216 (Fed. Cir. 2002). In
this case, Mr. Collis’ education and professional experience qualify him to perform the
price analysis. Further, the Collis declaration goes beyond the mere tallying of prices in
each proposal. Mr. Collis uses his specialized knowledge to perform the detailed analysis
provided. This expertise will greatly assist the Court in understanding the evidence in the
administrative record. Accordingly, the Collis declaration is admissible under FRE 702.
D. The Leahy Declaration is Not Admissible.
LabCorp has offered the Leahy declaration to show that the VA should not have
included 1,575 tests in its solicitation, but should have included only the lesser number of
tests that the VA Medical Centers actually ordered in 2013. It is well settled that a
protester who has the opportunity to challenge a government solicitation term and fails to
do so before the bidding process concludes waives the right to raise that challenge later in
this Court. Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308, 1313 (Fed. Cir.
2007). This rule furthers the statutory mandate to “give due regard to . . . the need for
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expeditious resolution of the action.” Id. (citing § 1491(b)(3)). Here, LabCorp’s
argument is properly characterized as a challenge to a solicitation term not raised prior to
the submission deadline. It is too late for LabCorp to take issue with the number of tests
included in the solicitation. The Court thus declines to consider the Leahy declaration
and finds that it should be stricken from the record.
Conclusion
For the reasons explained above, the Government’s motion to strike the
Declarations of Ariel H. Collis and Sharon Williams Leahy is GRANTED in part and
DENIED in part. The Collis declaration is admitted, but the Leahy declaration is not
admitted.
IT IS SO ORDERED.
s/ Thomas C. Wheeler
THOMAS C. WHEELER
Judge

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