US SECURITIES ASSOCIATES, INC. v. USA

Filing 43

REPORTED OPINION. Signed by Senior Judge Eric G. Bruggink. (jpk1) Copy to parties.

In the United States Court of Federal Claims
No. 15-1197C
(Filed: December 16, 2015)
(Reissued: January 12, 2016)1
**********************
U.S. SECURITY ASSOCIATES, INC.,
Plaintiff,
v.
THE UNITED STATES,
Defendant,

Post-award bid protest; fixed
price; lowest priced
technically acceptable offer;
contingent offer; jurisdiction;
standing; prejudice.

and
SECURIGUARD, INC.
Intervenor.
**********************

Jerry A. Miles, Rockville, MD, for plaintiff, with whom was Ann M.
Golski.
Amanda L. Tantum, Trial Attorney, Commercial Litigation Branch,
Civil Division, United States Department of Justice, Washington, DC, with
whom were Benjamin C. Mizer, Principal Deputy Assistant Attorney General,
Robert E. Kirschman, Jr., Director, and Steven J. Gillingham, Assistant
Director, for defendant. William S. Meyers and Sigmund Adams, Office of the
General Counsel, Administrative Office of the United States Courts, of
counsel.

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This opinion was first issued under seal to afford the parties an opportunity
to propose redaction of protected information. Plaintiff proposed limited
redactions. We have redacted only that information which we find to be
competition sensitive. Those redactions are indicted by brackets.

Keir X. Bancroft, Washington, DC, with whom was J. Scott Hommer,
Washington, DC, for intervenor.
OPINION
BRUGGINK, Judge.
This is a bid protest of the decision by the Administrative Office of the
United States Courts to award a contract for providing security services at the
Thurgood Marshall Building in Washington, DC to Securiguard, Inc. Pending
are the parties’ cross-motions for judgment on the administrative record and
defendant’s motion to dismiss. As we ruled at the conclusion of oral argument
on December 3, 2015, we lack jurisdiction because plaintiff does not have
standing to challenge the award. The protest therefore must be dismissed
under RCFC 12(b)(1).
PROCEDURAL AND FACTUAL BACKGROUND 2
On June 19, 2015, the Administrative Office of the United States Courts
(“AO”) issued a Request for Quotations (Solicitation No. 061915) under the
General Services Administration (“GSA”) Schedule 84 Contract for security
services at the Thurgood Marshall Building in Washington, DC. Those
services are currently, and were in the recent past, provided under a different
contract with the Architect of the United States Capital, which has authority
to act with respect to the Marshall Building. The incumbent on that contract
is CMI Management, Inc. (“CMI”). Plaintiff, U.S. Security Associates, Inc.,
is the primary subcontractor for CMI under the incumbent contract. That
contract expired on October 31, 2015. Plaintiff, U.S. Security Associates, Inc.
bid on the new contract but was not chosen for award.
The solicitation was conducted pursuant to Federal Acquisition
Regulation (“FAR”) Subpart 8.4, which permits GSA to set up blanket
purchase agreements (“BPAs”) and for authorized entities, such as the AO, to
place task orders under the BPA. The task orders can be competed among the
holders of the BPA, which is what the AO did here. The RFQ contemplated
award of a fixed price task order to a single awardee for one year with options
potentially extending another four and a half years. The award was made to
the “lowest price technically acceptable” (“LPTA”) offeror.

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The facts are drawn from the Administrative Record
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Offerors were asked to submit their quotations in two volumes, one
setting out their price proposal and the second their technical proposal. The
procurement would then proceed in essentially three steps. The first step
involved a determination of whether offerors had self-certified that they had
“at least 5 years security service experience in a Level IV facility.” AR 43.
Those that had so certified were permitted to proceed to step two. In step two,
the bidder offering the lowest overall price was identified. In step three, only
that lowest price offer was evaluated by the Technical Evaluation Team
(“TET”) to determine if the offeror’s technical proposal was acceptable as
measured against three evaluation factors: Key Personnel, Staffing Plan, and
Past Performance. If the lowest price proposal–here Securiguard’s–was
acceptable, as it was here, the search was over and the contract awarded. If
not, then the TET advanced to consideration of the next lowest price offer.
With respect to key personnel, offerors were required to submit at least
one resume for two senior positions: On-Site Security Manager and Captain.
The staffing plan needed to reflect how the staff would be recruited, selected,
and allocated over the required posts. In order to satisfy the past performance
requirement, offerors were required to submit information concerning five
contracts of similar size, scope and complexity in a comparable facility that
had been performed within the past three years or were being currently
performed.
Amendment 1 to the solicitation incorporated a number of attachments
to the solicitation, including a set of questions and answers and the currentlyin-place Collective Bargaining Agreement (“CBA”) for security personnel at
the Thurgood Marshall building. AR 82-148. Question 1 asked the agency
whether a CBA applied and the answer supplied was “yes” and attached was
the agreement. AR 77. Amendment 2 confirmed the applicability of the CBA
in answer to a question concerning the inclusion of both a CBA and a
prevailing wage determination. AR 166 (stating that the CBA applied and
attaching the prevailing wage determination was an error).
The AO received quotations from five entities, including plaintiff and
the intervenor, Securiguard, Inc. All five met the five years of security
experience certification requirement. The contracting officer then determined
that Securiguard offered the lowest proposed price. The TET therefore
evaluated Securiguard’s proposal and concluded that it was technically
acceptable in all areas and had no deficiencies. Securiguard was awarded the
task order on September 8, 2015.

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Plaintiff filed a protest with GAO on September 14, 2005, and the
statutory stay attached. In order to maintain security services under the
incumbent contract, the Architect of the Capitol extended the contract with
CMI through the end of October. GAO denied the protest on October 8, 2015,
and the AO instructed Securiguard to begin transition preparations with the
goal of commencing performance on November 1, 2015. Plaintiff filed its
complaint in this court on October 13, 2015, along with a motion for a
temporary restraining order and permanent injunction. We received briefing
and heard oral argument on the motion for preliminary relief on October 29,
2015. We denied the motion for a preliminary injunction on November 2,
2015, holding that plaintiff had not met the test for preliminary injunctive
relief because of the lack of likelihood of success on the merits. U.S. Secuirty
Associates v. United States, 123 Fed. Cl. 663, 667 (2015).
The parties have since filed cross-motions for judgment on the
administrative record and defendant has filed a motion to dismiss for lack of
subject matter jurisdiction and lack of standing. The motions are fully briefed,
and oral argument was held on December 3, 2015. We need only reach the
jurisdictional issues.
DISCUSSION
Normally in the bid protest context, we would consider the four-part
test for permanent injunctive relief, including the merits of the protestor’s
challenge to the agency’s procurement action. Here, however, we do not reach
those questions because plaintiff has neither shown that it has standing to
pursue this lawsuit nor that the court is possessed of subject matter jurisdiction
over the merits of this case.
In any case before the court, plaintiff must establish jurisdiction before
the court can consider the merits of the complaint. Plaintiff bears the burden
of establishing jurisdiction by a preponderance of the evidence. M. Maropakis
Carpentry, Inc. v. United States, 609F.3d 132, 1327 (Fed. Cir. 2010).
Jurisdiction includes both the question of whether the subject matter of the
case is appropriately before the court (subject matter jurisdiction) and the
question of whether plaintiff has a right to bring the challenge itself (standing).
Defendant’s motion to dismiss raises both grounds for dismissal.
I. Standing
Standing is a baseline element of the“case or controversy” requirement
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of Article III, but, in the bid protest context, this requirement is heightened by
28 U.S.C. § 1491(b)(1)’s limitation of bid protest jurisdiction to only those
brought by an “interested party.” Sys. Application & Techs. v. United States,
691 F.3d 1374, 1382 (Fed. Cir. 2012). The threshold question in every bid
protest is thus whether the protestor is an “interested party” that will be
prejudiced by the award to another entity, which is to say that the protestor has
an economic interest in the outcome of the case. See Tinton Falls Lodging
Realty, LLC v. United States, 800 F.3d 1353, 1358 (Fed. Cir. 2015). If not,
plaintiff does not have standing, and the court has no jurisdiction under the
statute.
When the protest is brought after award of the contract, the Federal
Circuit has defined the test for the requisite economic interest as a showing of
“substantial chance” of award absent the alleged error. Meyers Investigative
& Sec. Servs., Inc. v. United States, 275 F.3d 1366, 1370 (Fed. Cir. 2002). In
order to have a substantial chance of receiving the award, the protestor must
be able to show that, if the competition were reopened and the contract rebid,
it would, at a minimum, be eligible for award. See Impressa Construzioni
Geom. Demonico Garufi v. United States, 238 F.3d 1324, 1334 (Fed. Cir.
2001). Further, a protestor may not be able to show prejudice because, even
if eligible for the award, its ranking or relative position on one or several
evaluation factors make it so unlikely that it would receive the award that it
was not actually harmed by the agency’s error. See, e.g., Comint Sys. Corp.
v. United States, 700 F.3d 1377, 1383-84 (Fed. Cir. 2012).
Defendant argues that plaintiff’s proposal was not compliant with the
RFQ’s requirement of a firm fixed-price offer, and therefore U.S. Security
lacks standing to protest the award to Securiguard. We agree.
The solicitation makes clear that the price offered had to be fixed:
“Offerors must propose a firm fixed price for each of the potential periods of
performance.” AR 43, 164. Prices had to be “in accordance with the offerors’
approved GSA schedule rates although discounts [are] encouraged.” Id.
Offerors were instructed to use Attachment 4, which was a Schedule of Prices
with blank columns, to be filled by the offerors, for number of hours and
hourly rate for each security officer position and each year. AR 51.
Plaintiff did as instructed and provided a completed Schedule of Prices
along with its technical proposal. AR 423. The cover letter to its proposal,
however, included the proviso that its bid was “contingent on [its] ability to
negotiate the contract,” AR 387, presumably referring to the contract at issue
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because the next line requests discussions regarding the addition of two
clauses to the contract:
[1.] [

].
[2.] [

].
Id. In other words, plaintiff’s bid was conditioned on the negotiation of two
additional clauses: one to let it out of its performance obligations at will and
the second to give it the right to request a change in pricing. Even if the AO
were legally able to accept either or both of those conditions, either would
materially change the nature of the contract from a firm fixed price for a fixed
period (one base year plus four and a half option years) to something
indefinite, and award of the contract to U.S. Security under those revised terms
would open the agency to protest liability for running a “bait and switch”
procurement: soliciting one thing but buying another.
Plaintiff argues that the inclusion of that proviso and the two proposed
modifications were the result of its best business judgment in light of its
understanding and experience that the CBA, to which many of the workers
would be subject, would likely result in year-over-year increases in labor rates
for the life of the contract, including option years that had not yet been
negotiated in the current CBA. It argues that it was attempting to put the
agency on notice of the tension between a firm fixed price contract for a
potential five and a half years and the mandatory adherence to a CBA that has,
for at least some of the out years, yet to be negotiated. Because the agency had
the right to enter discussions, avers plaintiff, U.S. Security’s inclusion of that
proviso did not render its bid noncompliant.
This court held in Bannum, Inc. v. United States, that a conditional bid
in a fixed price procurement was noncompliant, and thus the bidder there
lacked standing to protest the award because it did not have a substantial
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chance of winning the contract. 115 Fed. Cl. 148, 155 (2014), aff’d on other
grounds, 779 F.3d 1376 (Fed. Cir. 2015). In that case, the protestor included
a proviso in its price proposal that a recent amendment to the solicitation had
made it impossible for the protestor to firmly price the added requirements
without extensive further analysis, but it submitted a bid anyway. Id. at 154.
The court concluded that the protestor’s provisional language rendered its
price indefinite and thus non-responsive to the RFQ because the RFQ was for
a fixed price contract. Id. at 155. The court dismissed the complaint for lack
of standing. Id. at 156.
We are faced with the same circumstances here. The offer tendered by
U.S. Security, just as in Bannum, cannot be accepted by the government
without the addition of new terms. In the context of a fixed price procurement,
that makes the protestor’s bid non-responsive and deprives it of standing to
challenge the award.3
II. Subject Matter Jurisdiction
Defendant also argues that our bid protest jurisdiction does not extend
to procurements conducted by the AO and that plaintiff has not met its burden
of establishing that the AO is a“Federal agency” within the meaning of 28
U.S.C. § 1491(b)(1). We agree. While the matter is not without doubt, we
reject plaintiff’s underlying position that it is up to defendant to disprove
subject matter jurisdiction; plaintiff has not carried its burden.
Section 1491(b)(1), our statutory grant of bid protest jurisdiction gives
this court jurisdiction to hear challenges to “a solicitation by a Federal agency
for bids or proposals for a proposed contract or to a proposed award or the
award of contract or any alleged violation of statute or regulation in connection
with a procurement or a proposed procurement.” 28 U.S.C. § 1491(b)(1)
(2012). Section 451 lists the definitions of certain terms used in Title 28. The
term “agency” is defined as including “any department, independent

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We also agree with defendant that, because plaintiff obviously perceived a
hazard in offering a fixed price subject to a CBA that potentially could be
renegotiated, it should have raised that objection prior to submitting a bid.
Having submitted the bid, it waived the argument that the terms of the
solicitation were arbitrary and capricious, and it was limited to making a fixed
price offer. Having waived any objection, plaintiff could not try to bargain
away that risk by conditioning its proposal on additional terms.
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established commission, administration, authority, board or bureau of the
United States or any corporation in which the United States has a proprietary
interest, unless the context shows that such term was intended to be used in a
more limited sense.” 28 U.S.C. § 451.
In Novell, Inc. v. United States, 46 Fed. Cl. 601 (2000), Judge Miller
went through a lengthy analysis of whether procurements by the AO can be
protested under the court’s bid protest jurisdiction. She resolved the issue
based on plaintiff’s burden of establishing the existence of jurisdiction,
concluding that it had not done so. Id. at 613-14. Neither party is able to cite
to subsequent consideration of the precise issue, and we are left in the same
position as Judge Miller. Plaintiff has not persuaded us that any of the entities
enumerated in section 451 embrace the AO 4 , and plaintiff’s argument drawn
from the “unless” clause is particularly unpersuasive. We conclude, therefore,
in the alternative, that plaintiff has not demonstrated that the court has subject
matter jurisdiction over bid protests directed at procurement decisions of the
AO.
Given our ruling on jurisdiction, it is unnecessary to address the parties’
arguments concerning the merits, or plaintiff’s entitlement to injunctive relief.
CONCLUSION
Defendant’s motion to dismiss for lack of jurisdiction is granted. All
other motions are denied as moot. The clerk is directed to enter judgment for
defendant and dismiss the case. No costs.

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Plaintiff points to the Federal Circuit’s consideration of the same issue
regarding the United States Postal Service in Emery Worldwide Airlines, Inc.
v. United States, 264 F.3d 1071 (Fed. Cir. 2001), and this court’s consideration
of the issue with regard to the Architect of the Capital in Bell BCI Co. v.
United States, 56 Fed. Cl. 465 (2003) (relying on the Federal Circuit Emery
decision). Plaintiff argues that, in these instances, the two courts declined to
place the burden on plaintiff and ruled against the government on the basis that
it did not show that those entities were not included in section 451’s definition
of an agency. We need not treat these cases in great detail except to say that
neither dealt with the AO and neither displaced the long-standing rule that it
is plaintiff’s burden to establish jurisdiction in every case. Here, we hold that
it has not done so.
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s/Eric G. Bruggink
ERIC G. BRUGGINK
Judge

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