CGS-SSG JOINT VENTURE v. USA

Filing 35

REPORTED OPINION and ORDER (re-issuance of July 18, 2022 Sealed Opinion and Order for Publication ECF No. 28). Signed by Judge Stephen S. Schwartz. (cmc) Service on parties made.

In the United States Court of Federal Claims
No. 22-379C
(Filed Under Seal: July 18, 2022)
(Reissued: August 2, 2022)
FOR PUBLICATION
***************************************
CGS-SSG JOINT VENTURE,
*
*
Plaintiff,
*
*
v.
*
*
THE UNITED STATES,
*
*
Defendant.
*
*
***************************************
Robert Nichols, Nichols Liu LLP, Washington, D.C., for Plaintiff. With him on
briefs were Andrew Victor and Madison Plummer, Nichols Liu LLP.
Joshua A. Mandlebaum, Trial Attorney, Commercial Litigation Branch, Civil
Division, United States Department of Justice, Washington, D.C. for Defendant,
United States. With him on briefs were Brian M. Boynton, Principal Deputy Assistant
Attorney General, Patricia M. McCarthy, Director, William J. Grimaldi, Assistant
Director, as well as John W. Cox, Attorney Advisor, Building & Acquisitions, Office
of the Legal Advisor, United States Department of State.
OPINION AND ORDER
Plaintiff CGS-SSG Joint Venture (“CGS-SSG”) protests the government’s
rejection of its proposal for security services abroad. The parties have filed crossmotions for judgment on the administrative record, and I have heard oral argument.1
For the reasons discussed below, Plaintiff’s motion is DENIED and Defendant’s
motion is GRANTED. The case is DISMISSED.


Pursuant to the protective order in this case, the Court initially filed this opinion under seal on
July 18, 2022, for the parties to propose redactions of confidential or proprietary information. The
parties were directed to propose redactions by August 1, 2022. The parties notified the court on
August 1 that there were no proposed redactions. The Court hereby releases publicly the opinion and
order of July 18 in full.
1 Pl.’s Mot. for J. on the Admin. Rec. (ECF 16) (“Pl.’s Mot.”); Def.’s Cross-Mot. for J. on the Admin. Rec.
& Resp. to Pl.’s Mot. for J. on the Admin. Rec. (ECF 20) (“Def.’s Cross-Mot. & Resp.”); Pl.’s Reply &
Resp. to Def.’s Cross-Mot. for J. on the Admin. Rec. (ECF 21) (“Pl.’s Reply & Resp.”); Def.’s Reply in
Supp. of Def.’s Cross-Mot. for J. on the Admin. Rec. (ECF 22) (“Def.’s Reply”); Hearing Tr. (ECF 27)
(“Tr.”).

BACKGROUND
On May 5, 2021, the Department of State (“DoS”) issued a request for proposals
(No. 19AQMM21R0149, hereafter “RFP”) seeking local guard force services at the
U.S. Mission in Mbabane, Eswatini2 for a one-year base period with four optional oneyear extensions. Administrative Record (“AR”) 340, 344. The proposals were to be
evaluated on a “lowest price technically acceptable” basis, meaning that among
proposals deemed acceptable on their technical merits, AR 450 § M.2.2, the final
award would be made to the bid with the lowest evaluated price, AR 452 § M.3. CGSSSG submitted a proposal, and DoS determined that it was technically acceptable.
But DoS found that a different firm’s proposal was at a lower price. AR 573–74.
A. Relevant RFP Provisions
CGS-SSG’s claim hinges on the RFP’s requirements for presentation and
evaluation of proposed pricing. The most significant provisions are as follows.
The RFP required presentation of pricing information on two tables. AR 423.
Each proposal was to include, as Exhibit S, a pricing schedule with proposed rates for
contract line items required by the RFP, the agency-designated estimated quantity
of each item, and an “extended total” based on the product of those two values. AR
345–46, 423, 439, 636; see also AR 21. Proposals that failed to include rates and prices
for all line items could be rejected. AR 449 § M.2.1. The sum of the extended totals,
including the base contract year and all option years, was the “total ceiling price.” AR
439 § L.11.1.2.
Proposals were also to include Exhibit M, the “Other Than Cost and Pricing
Spreadsheet.” AR 423, 440. In Exhibit M, the bidder would “depict the development
of the labor rates proposed in [Exhibit S]” by breaking down allocations for fringe,
overhead, and administrative costs, as well as profit margins. AR 439–40 § L.11.1.3;
see also AR 27–28. The purpose of requiring such supplemental information, as the
RFP explained, was to “establish compliance with the local labor laws” which might
require, for example, the payment of bonuses, specific minimum wage levels,
pensions, and health benefits. AR 439 § L.11.1.3.
The RFP bound firms to make a single offer in the required form. “Alternate
offer[s]” were not acceptable. AR 436 § L.3. Neither were “[a]lternative pricing
strategies.” AR 449 § M.2.1.
The government’s price evaluation of technically acceptable proposals was
based on the total ceiling price, with two important qualifications. See AR 439
§ L.11.1.2 (“The total proposed ceiling price shall be the price evaluated in accordance
2

Eswatini was known as Swaziland before the country changed its name in 2018.

-2-

with Section M.”), AR 449 § M.2.1 (providing that “the Government [would] evaluate
proposals based on the total evaluated price to the Government, including options
and any U.S. preference, but excluding VAT and DBA, if proposed”) (emphasis
added);3 see also AR 450 § M.2.1.3.
First, the RFP provided a price preference for United States firms, under which
the total ceiling price was reduced by 10 percent for evaluation purposes. AR 449
§ M.2.1.2; see 22 U.S.C. § 4864. That meant (hypothetically) that if a United States
firm proposed a total ceiling price of $1 million, the proposal would be evaluated as if
it proposed a total ceiling price of $900,000.
Second, the RFP provided rules for comparing offers in different currencies.
Foreign firms were required to bid in the local currency, Eswatini Lilangeni (“SZL”).
AR 344 § B.3, AR 439 § L.11.1.2. United States firms had the option of submitting
bids in SZL too. AR 439 § L.11.1.2 (“If a U.S. firm submits an offer in local currency
and receives a subsequent contract award in local currency, the contract will remain
in local currency.”). But the RFP also permitted United States firms to submit
proposals in United States dollars (“USD”) where “bidding and being paid in [USD]
is not in violation of any host country laws.” AR441 § L.11.1.5; see also 22 U.S.C.
§ 4864(c)(4)(A).
Anticipating offers in both currencies, the RFP incorporated Federal
Acquisition Regulation (“FAR”) 52.225-17, which establishes an apples-to-apples
comparison denominated in USD:
If the Government receives offers in more than one currency, the
Government will evaluate offers by converting the foreign currency to
United States currency using the exchange rate used by the U.S.
Embassy Mbabane, Eswatini in effect as follows:
1. On the date specified for receipt of offers, if award is based on
initial offers; otherwise
2. On the date specified for receipt of proposal revisions.
AR 449 § M.2.1.1.
B. Submission, Award, and Subsequent Proceedings
CGS-SSG’s original proposal, on June 7, contained pricing in both USD and
SZL. Exhibit S included only USD unit rates and extended totals. AR 21–26; see also
AR 51 (representing that “bidding and being paid in U.S. dollars is not in violation of
any host country laws”), AR 439 § L.11.1.2, AR 441 § L.11.1.5. The original Exhibit
3

VAT designates Value Added Tax; DBA designates Defense Base Act Insurance. AR 348 §§ B.8.5–6.

-3-

M, in contrast, was priced only in SZL. AR 28–32. CGS-SSG’s figures assumed an
exchange rate of 1 SZL to 0.073962856 USD, the rate in effect between June 4–5 and
acceptable at the time of the original proposal.4 AR 560.
DoS requested revision and clarification of certain aspects of CGS-SSG’s
proposal. AR 334–35. One of its questions addressed the disconnect between USD and
SZL pricing in the two exhibits:
Exhibit M. Although local currency offers are accepted, CGS-SSG
requested a USD offer, which is acceptable. For clarity and consistency,
can CGS-SSG provide a USD Exhibit M?
AR 335. In a revised Exhibit M attached to its first final proposal revision, Plaintiff
provided the USD equivalent to items formerly designated only in SZL, using the
same exchange rate as before. AR 463–64.
Although DoS’s request only addressed Exhibit M, CGS-SSG also amended the
presentation of Exhibit S. In a revised Exhibit S, CGS-SSG continued to include unit
rates and extended totals for each line item in USD. But it added — for each line item
— a column of extended totals in SZL, based on the same exchange rate used in the
initial offer. AR 468–72. The Exhibit S revisions did not add SZL unit rates for any
line item. Id. CGS-SSG presented Exhibits S and M in the same way, still using the
initial offer’s exchange rate, in its second and third final proposal revisions. AR 506–
07, 512–16, 532–33, 539–43. CGS-SSG did not expressly represent that it intended to
offer in SZL.
The contracting officer interpreted CGS-SSG’s offer as having been “proposed
in both USD and local currency,” AR 559, 568; see also AR 544 (noting that some
offerors “proposed in both USD and local currency”); but see AR 559 (mentioning that
another firm “was the only offeror that proposed in local currency”), AR 570 (same),
and noted that CGS-SSG “requested to be paid in USD.” AR 559. But the officer chose
to disregard CGS-SSG’s SZL figures because they were based on an outdated
exchange rate:
Although CGS-SSG did propose in both USD and local currency, the
local currency offer provided by CGS-SSG is not a substantiated local
currency offer. The exchange rate used by CGS-SSG to convert from
USD to local currency had been in use for the initial offer, proposal
revision 1, proposal revision 2, and proposal revision 3. The exchange
rate that CGS-SSG has used on every price proposal is 1 SZL to
CGS-SSG properly established its qualification for a 10 percent price preference as a United States
firm. AR 18 § 2.1, AR 56–64 § 6.1.
4

-4-

0.073962856 USD. Looking at the SZL to USD currency exchange rates,
this was the correct exchange rate between June 4 and June 5, which
would be acceptable for the initial offer was due on June 7. The exchange
rate on September 30 was 1 SZL to 0.0659154 USD, which is 11% lower
from the exchange rate around the initial offer due date. The exchange
rate is out of date, and therefore CGS-SSG’s local currency offer will not
be evaluated against the other offers as it is inaccurate.
AR 560.
Based on that analysis, the contracting officer did not convert CGS-SSG’s SZL
total ceiling price into USD. Instead, the contracting officer computed an evaluated
price reflecting CGS-SSG’s total ceiling price as expressed in USD, not including VAT
and DBA, with a 10 percent reduction for the United States price preference. AR 559.
CGS-SSG’s sole competitor at the final stage of DoS review was an Eswatinibased firm, Max Enterprise t/a Buffalo Soldiers (“Max Enterprise”). AR 570. Max
Enterprise’s final proposal included fully completed Exhibits S and M with all
required pricing solely in SZL. See generally AR 517–23. The contracting officer
converted Max Enterprise’s SZL proposal into USD using the exchange rate
applicable as of September 30, as FAR 52.225-17(b)(2) required, and reached an
evaluated price lower than CGS-SSG’s. AR 559, 519–23.
Because Max Enterprise’s evaluated price was lower than CGS-SSG’s, Max
Enterprise was awarded the contract. AR 571. But the parties agree that if the
contracting officer had compared the two offers’ SZL figures, or converted CGS-SSG’s
total ceiling price expressed in SZL on its revised Exhibit S into dollars using the
same rate applied to Max Enterprise, CGS-SSG would have had the lower evaluated
price.
After a debriefing explaining the DoS decision, see AR 575–79; see also AR 437
§ L.8, CGS-SSG filed a timely protest with the Government Accountability Office on
December 8, AR 580, and a supplemental protest on January 18 of this year, AR 613,
both of which were denied. AR 634. The current protest follows.
DISCUSSION
I. Legal Standards
A. Jurisdiction and Standing
To reach the merits of the case, I must first determine that the Court has
jurisdiction over CGS-SSG’s claims. See Steel Co. v. Citizens for a Better Env’t, 523
U.S. 83, 94 (1998). This Court’s jurisdiction in post-award bid protests is derived from
the Tucker Act, as amended by the Administrative Dispute Resolution Act of 1996,
-5-

Pub. L. No. 104-320, § 12(a)–(b), 110 Stat. 3870, 3874 (1996) (codified at 28 U.S.C.
§ 1491(b)); see Dyonyx, L.P. v. United States, 83 Fed. Cl. 460, 464–65 (2008). The
Tucker Act now grants this Court jurisdiction “to render judgment on an action by an
interested party objecting to … the award of a contract or any alleged violation of
statute or regulation in connection with a procurement[.]” 28 U.S.C. § 1491(b)(1). This
Court is empowered under the statute to “award any relief that the court considers
proper, including declaratory and injunctive relief[.]” 28 U.S.C. § 1491(b)(2).
“[S]tanding is a threshold jurisdictional issue,” Myers Investigative & Sec.
Servs., Inc. v. United States, 275 F.3d 1366, 1369 (Fed. Cir. 2002), and “[o]nly an
‘interested party’ has standing to challenge a contract award.” Digitalis Educ. Sols.,
Inc. v. United States, 664 F.3d 1380, 1384 (Fed. Cir. 2012). The Federal Circuit has
developed a two-part test for “interested party,” requiring that a plaintiff show it (1) is
an “actual or prospective bidder,” and (2) “possesses the requisite direct economic
interest.” Rex Serv. Corp. v. United States, 448 F.3d 1305, 1307 (Fed. Cir. 2006) (citing
Myers Investigative, 275 F.3d at 1369 (itself citing Lujan v. Defenders of Wildlife, 504
U.S. 555, 561 (1992))).
Here, it is straightforward that Plaintiff meets the two-part test and thus
qualifies for standing. First, CGS-SSG was an “actual bidder” who submitted a
proposal. AR 539–43. Second, the parties agree that under CGS-SSG’s preferred
interpretation of the relevant FAR provision, CGS-SSG would have been awarded the
contract. It therefore possesses the necessary economic interest.
B. Standard of Review
This Court reviews bid protests “pursuant to the standards set forth in section
706 of title 5,” i.e., the Administrative Procedure Act. 28 U.S.C. § 1491(b)(4); see
Banknote Corp. of Am., Inc. v. United States, 365 F.3d 1345, 1350 (Fed. Cir. 2004).
There are two bases for setting aside government procurements: “(1) the procurement
official’s decision lacked a rational basis; or (2) the procurement procedure involved
a violation of regulation or procedure.” Impresa Construzioni Geom. Domenico Garufi
v. United States, 238 F.3d 1324, 1332 (Fed. Cir. 2001); see also Bannum, Inc. v. United
States, 404 F.3d 1346, 1351 (Fed. Cir. 2005); Advanced Data Concepts, Inc. v. United
States, 216 F.3d 1054, 1057–58 (Fed. Cir. 2000).5
The first route involves determining “whether the contracting agency provided
a coherent and reasonable explanation of its exercise of discretion.” Impresa, 238 F.3d
at 1332–33 (quotes omitted) (citing Latecoere Int’l, Inc. v. United States Dep’t of Navy,
19 F.3d 1342, 1356 (11th Cir. 1994)). To succeed in that way, “the disappointed bidder
A protestor must also demonstrate that it was prejudiced by the agency’s conduct. Bannum, 404 F.3d
at 1351.
5

-6-

bears a heavy burden of showing that the award decision had no rational basis.” Id.
(quotes omitted) (citing Saratoga Dev. Corp. v. United States, 21 F.3d 445, 456 (D.C.
Cir. 1994)).
The second route requires the disappointed bidder to “show a clear and
prejudicial violation of applicable statutes or regulations.” Id. at 1333 (quotes
omitted). This Court has denied relief where the violation is not “clear,” but merely
“colorable.” FirstLine Transp. Sec. v. United States, 107 Fed. Cl. 189, 205 (2012).
In either case, review is “highly deferential” to agency decision-making, id. at
196 (citing Advanced Data Concepts, Inc. v. United States, 216 F.3d 1054, 1058 (Fed.
Cir. 2000)) — especially in a negotiated procurement like this one, where “the
contracting officer is entrusted with a relatively high degree of discretion.” Glenn
Defense Marine (ASIA), PTE Ltd. v. United States, 720 F.3d 901, 907 (Fed. Cir. 2013)
(quoting Galen Med. Assocs., Inc. v. United States, 369 F.3d 1324, 1330 (Fed. Cir.
2004)); see also McConnell Jones Lanier & Murphy LLP v. United States, 128 Fed. Cl.
218, 229 (2016).6
II. Merits
The question is whether the contracting officer acted irrationally or in clear
violation of law by comparing CGS-SSG’s USD figures with Max Enterprise’s SZL
offer, as converted to USD at the September 30 exchange rate. CGS-SSG argues —
from several different angles — that the contracting officer should have relied on its
SZL figures instead. I conclude CGS-SSG’s arguments do not meet the standard for
overturning the contracting officer’s decision.
As CGS-SSG acknowledges, the contracting officer reasonably perceived that
CGS-SSG’s offer contained two distinct sets of prices in USD and SZL. See AR 559,
568; see also Tr. at 23–24. The contracting officer recognized that the two sets were
connected by an exchange rate that no longer applied. AR 560. But the RFP
prohibited “alternate offer[s],” AR 436 § L.3, and “[a]lternative pricing strategies,” AR
449 § M.2.1, so the contracting officer could not interpret the prices as distinct
alternatives without disqualifying the offer. Rather, he had to assume that one set of
figures controlled, and that the other was only an outdated illustration.

Other courts apply a similar level of deference. See, e.g., Latecoere Int’l, 19 F.3d at 1356 (“This
deferential standard reflects the respect that reviewing courts are required to accord to agencies in
their evaluation of bids and in their interpretation and application of procurement regulations.”);
Kinnett Dairies, Inc. v. Farrow, 580 F.2d 1260, 1277 (5th Cir. 1978) (listing “considerations of price”
among the areas in which contracting officers are entitled to exercise discretion) (quoting Scanwell
Laboratories, Inc. v. Shaffer, 424 F.2d 859, 869 n. 10 (D.C. Cir. 1970)); see also Patriot Contract Servs.,
LLC v. United States, 388 F. Supp. 2d 1010, 1019 (N.D. Cal. 2005).
6

-7-

That left the contracting officer with two choices. First, he might (as he did)
assume that CGS-SSG’s SZL figures were purely illustrative, and instead compare
CGS-SSG’s USD offer with Max Enterprise’s offer. Because that meant there were
“offers in more than one currency,” FAR 52.225-17 then required that the contracting
officer convert Max Enterprise’s offer from SZL to USD with the September 30
exchange rate, yielding a lower USD price than CGS-SSG’s. Second, he might (as
CGS-SSG proposes) assume that CGS-SSG’s USD figures were illustrative, and
directly compare CGS-SSG’s SZL offer with Max Enterprise’s SZL offer. The
contracting officer could then have disregarded FAR 52.225-17, for the contracting
officer would only have needed to compare two local currency offers against each
other.7 Tr. at 14. Either way, the contracting officer would have had to treat one of
the currencies mentioned in CGS-SSG’s proposal as overriding the other — or else,
again, the proposal would have had alternative prices.
So was it rational and consistent with the law for the contracting officer to
treat the USD offer as the controlling one? Each iteration of Exhibit S in CGS-SSG’s
proposal included unit rates in USD alone, AR 21–26, 468–72, 512–16, 539–43, so
only the USD offer was complete. AR 449 § M.2.1 (“Proposals that [did] not include
rates/prices for all line items … [could] be rejected.”). When the contracting officer
requested more information “[f]or clarity and consistency” to support what he took to
be a “USD offer,” AR 335, CGS-SSG never corrected him. The Exhibit S revisions
providing prices in both currencies at a given exchange rate do not unambiguously
indicate whether the USD figures were derived from SZL, or vice-versa. The
contracting officer therefore seems to have rationally concluded that the SZL figures
were not a “substantiated” offer but only an illustration at an outdated rate. AR 560.
CGS-SSG claims that it should have been evident to the contracting officer that
the proposal was “built up” solely in SZL, with USD provided for the sake of
convenience. Plaintiff appears to suggest, for example, that because SZL would have
been the medium of exchange for determining costs in Eswatini, as detailed in Exhibit
M, the USD unit rates on Exhibit S would have had to originate in SZL. Tr. at 42–43.
CGS-SSG’s last proposal revision presented Exhibit M first in SZL, then in USD, with
only the latter accompanied by the exchange rate. See AR 532–33.
The point is certainly reasonable. The ceiling price the contracting officer was
required to review had to be in Exhibit S, though — not in Exhibit M — and CGSThe contracting officer could also have converted both proposals’ SZL figures into USD at the same
exchange rate on the theory that CGS-SSG had made “offers in more than one currency” under FAR
52.225-17. See FAR 25.1002(b). That would not have affected the result in this case. To my knowledge
(and the parties’), this is the first decision interpreting FAR 52.225-17, and there is no reason to
consider whether such a conversion would have been called for.
7

-8-

SSG originally presented its ceiling price in USD only. If CGS-SSG intended the SZL
pricing in later versions of Exhibit S to control, which would in effect have changed
the proposal from a USD offer to an SZL offer, the firm never made it explicit. The
contracting officer could thus have reasonably assumed that the offer was still in
USD.
Nor was it evident that CGS-SSG’s USD pricing all originated in SZL. CGSSSG is a joint venture that qualified as a “U.S. firm,” so it would have been reasonable
for the contracting officer to assume that at least some of its overhead costs were
calculated initially (or even exclusively) in USD. Indeed, at least two portions of the
proposal seem to show just that. First, the proposal describes “teams sent from the
U.S. to inspect operations and ensure contract compliance” as part of overhead. See
AR 534 (emphasis added). Second, a table listing the basis of estimates for each
“Other Direct Cost” line item — covering expenses like vehicles and guard equipment
— is provided only in USD. Id.
The record, in short, does not compel the conclusion that CGS-SSG built its
offer in SZL alone. That means the contracting officer could rationally have
determined that the USD figures controlled, and that it was not appropriate to apply
FAR 52.225-17 to convert the SZL pricing. The Court therefore cannot overturn the
contracting officer’s comparison of CGS-SSG’s pricing to Max Enterprise’s in SZL.
CONCLUSION
For the foregoing reasons, Plaintiff’s Motion for Judgment on the
Administrative Record is DENIED, and Defendant’s cross-motion is GRANTED.
The case is DISMISSED.
Pursuant to the Court’s April 5, 2022 Protective Order (ECF 10), this Opinion
has been issued under seal. The transcript of the June 9, 2022 hearing is under seal
as well. The parties shall have two weeks to propose redactions and, accordingly, shall
file notice of their proposed redactions no later than August 1, 2022. To aid the Court’s
evaluation of the proposed redactions and in light of the “presumption of public access
to judicial records,” Baystate Techs., Inc. v. Bowers, 283 F. App’x 808, 810 (Fed. Cir.
2008) (per curiam), each party shall file a memorandum explaining why redactions
are necessary for each item of information for which a redaction is proposed. Pursuant
to paragraph 12 of the Protective Order, the parties are further ordered to file
redacted versions of the administrative record, Plaintiff’s Motion for Judgment on the

-9-

Administrative Record, and Plaintiff’s Response and Reply no later than August 1,
2022.
The Clerk is directed to enter judgment accordingly.

IT IS SO ORDERED.
s/ Stephen S. Schwartz
STEPHEN S. SCHWARTZ
Judge

- 10 -