United States Court of Appeals for the Federal Circuit
04-5008
BANNUM, INC.,
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Appellee.
Kevin M. Cox, Law Firm of Joseph A. Camardo, Jr., of Auburn, New York, for appellant.
Lisa B. Donis, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, for appellee. With her on the brief were Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director; and Mark A. Melnick, Assistant Director. Of counsel on the brief was Tracey L. Printer, Office of General Counsel, Federal Bureau of Prisons, United States Department of Justice, of Washington, DC. Of counsel was Maureen A. Delaney, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC.
Appealed from: United States Court of Federal Claims
Senior Judge Eric Bruggink United States Court of Appeals for the Federal Circuit
_______________________
DECIDED: April 21, 2005 _______________________
Before MICHEL, Chief Judge,∗ NEWMAN, and GAJARSA, Circuit Judges.
GAJARSA, Circuit Judge.
Bannum, Inc. appeals from the judgment of the United States Court of Federal
Claims in favor of the United States, dismissing its post-award bid protest with
prejudice. Bannum, Inc. v. United States, No. 03-1284 (Fed. Cl. Aug. 7, 2003) (final
judgment incorporating bench ruling made during oral argument on August 6, 2003).
Although it determined the government violated its regulation and the terms of a request
for proposals in evaluating the bids at issue, the trial court ruled there was no significant
prejudice to Bannum. We affirm.
∗ Paul R. Michel assumed the position of Chief Judge on December 25, 2004. I.
On February 24, 2002, the Department of Justice, Bureau of Prisons (“BOP”)
issued a request for proposals (“RFP”) for a contract relating to Community Correction
Center (“CCC”) services in the Florence, South Carolina area. On April 24, 2002,
Bannum, Inc. (“Bannum”) bid on the contract. The Alston Wilkes Society (“Alston
Wilkes”) submitted its bid the next day. As the “incumbent” contractor, from 1998 to
2003 Bannum rendered the same services at issue in the RFP.
The RFP provided that the bid selection would turn on “best-value” procurement.
Under this system the BOP evaluated bids under five factors, each assigned a different
point value: (1) past performance (400 points); (2) community relations (350 points);
(3) technical (250 points); (4) management (250 points); and (5) cost (250 points). Past
performance on other government contracts was the most important criteria.
The BOP valued past performance by reviewing Contract Evaluation Forms
(“CEFs”) completed for other BOP contracts. The CEFs are “annual assessments” that
grade contractors with “overall performance” scores. The BOP’s CEF process is
governed by 48 C.F.R. § 42.1503 (Federal Acquisition Regulation or “FAR” § 42.1503).
Section 42.1503 provides, in relevant part:
Agency evaluations of contractor performance prepared under this subpart shall be provided to the contractor as soon as practicable after completion of the evaluation. Contractors shall be given a minimum of 30 days to submit comments, rebutting statements, or additional information. Agencies shall provide for review at a level above the contracting officer to consider disagreements between the parties regarding the evaluation. The ultimate conclusion on the performance evaluation is a decision of the contracting agency. Copies of the evaluation, contractor response, and review comments, if any, shall be retained as part of the evaluation. These evaluations may be used to support future award decisions, and should therefore be marked “Source Selection Information.”
04-5008 -2- FAR § 42.1503(b) (2004) (emphases added).
BOP procedures called for Management Center Administrators (“MCA”), under
FAR § 42.1503, to review CEFs and contractor rebuttals. MCAs supervise “Correctional
Management Centers” comprising two or more “community correction field offices.” The
MCA works “a level above CCC Oversight Specialists.” It is undisputed that MCAs do
not supervise BOP contracting officers.
The RFP required bidders to submit a list of all contracts completed in the
preceding three years, or currently in progress. The RFP further cautioned “offerors
would be well served to be aware of possible dissatisfied customers and address the
issues in initial proposal submissions.”
Bannum admits that it knew, when it submitted its bid on April 24, 2002, that the
BOP had not reviewed the CEFs and Bannum’s rebuttals relating to other contracts “at
a level above the contracting officer.” That is, Bannum knew that the BOP procedure
called for reviewing CEFs at the MCA level. Nevertheless, Bannum identified 21 past
contracts in its bid without mentioning any of its rebuttal letters or disagreement with
existing CEFs. Bannum explains that it assumed the CEF and rebuttal review would
take place in conjunction with the source selection on the RFP.
On October 9, 2002, the BOP scored Bannum’s past performance based on 16
of Bannum’s past contracts.1 The BOP determined Bannum’s past performance
warranted 74% of the possible 400 points, assigning 296 points for this portion of
Bannum’s bid. The BOP did not alter its CEF review process as Bannum had assumed
it would.
1 The BOP only considered CEFs for which any appeal was complete.
04-5008 -3- On January 13, 2003, BOP awarded the contract to Alston Wilkes. BOP notified
Bannum of the award on January 23, 2003.
In March 2003, in response to alternative dispute resolution in the Government
Accountability Office (“GAO”) – not involving this specific action – the BOP re-evaluated
its recent Community Correction Center award decisions. For this bid a contracting
officer re-scored Bannum’s past performance on the basis of 15 contracts and awarded
Bannum 312 points rather than the original 296. Nonetheless, Alston Wilkes still
received higher points than Bannum in each factor.
This was not a de novo review and the record does not show that this contracting
officer accounted for every Bannum rebuttal. Instead, the March 2003 review relied on
rebuttals available in the record maintained by BOP. On one past contract, J200c-361,
the officer simply discarded the CEF because the CEF form was not signed. There is
no evidence how the review on that contract, accounting for Bannum rebuttals, might
have improved Bannum’s past performance score for this bid. For contract J200c-433 –
in contrast to instances where the contracting officer specifically noted that Bannum did
not submit a rebuttal – the contracting officer simply noted there was no rebuttal in the
file. On another contract, J200c-310, this officer simply reported the MCA’s score after
reviewing Bannum’s rebuttal. The officer made no attempt to independently review the
CEF in view of the rebuttal.
On May 28, 2003, Bannum filed this bid protest in the United States Court of
Federal Claims, asking the court to set aside the contract award to Alston Wilkes and
compel the BOP to re-evaluate Bannum’s bid.
04-5008 -4- Bannum and the government filed cross-motions for judgment on the
administrative record. On August 6, 2003, the trial court heard argument and granted
judgment for the government. Although the court ruled the BOP had violated both FAR
§ 42.1503(b) and the terms of the RFP when assigning weights (based on the CEFs) to
Bannum’s past contract performance, it determined that Bannum was not sufficiently
prejudiced by the violations to warrant setting aside the award to Alston Wilkes.
On August 7, 2003, the trial court entered judgment for the United States and
dismissed the action. Bannum timely appealed, and this court has jurisdiction under 28
U.S.C. § 1295(a)(3).
II.
A.
A bid protest proceeds in two steps. First, as discussed below, the trial court
determines whether the government acted without rational basis or contrary to law when
evaluating the bids and awarding the contract. Second, as discussed further in Section
III, if the trial court finds that the government’s conduct fails the APA review under
5 U.S.C. § 706(2)(A), then it proceeds to determine, as a factual matter, if the bid
protester was prejudiced by that conduct.
This court reviews the trial court’s determination on the legal issue of the
government’s conduct, in a grant of judgment upon the administrative record, without
deference. Info. Tech. & Applications Corp. v. United States, 316 F.3d 1312, 1318-
19 (Fed. Cir. 2003); Advanced Data Concepts, Inc. v. United States, 216 F.3d 1054,
1057 (Fed. Cir. 2000). That is, this court reapplies the “arbitrary and capricious”
standard of § 706 to the BOP’s procurement decision. See 28 U.S.C. § 1491(b)(4)
04-5008 -5- (2000); Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324,
1332 (Fed. Cir. 2001) (holding that 28 U.S.C. § 1491(b), by its plain terms and
according to its legislative history, “‘applies the Administrative Procedure Act standard
of review previously applied by the district courts (5 U.S.C. § 706)’”) (quoting H.R. Conf.
Rep. No. 104-841, at 10 (1996)). Consequently, the inquiry is whether the BOP’s
procurement decision was “arbitrary, capricious, an abuse of discretion, or otherwise not
in accordance with law.” 5 U.S.C. § 706(2)(A) (2000).
B.
As noted above the lower court ruled that the BOP’s failure to comply with FAR
§ 42.1503(b), and the terms of the RFP, were violations of law under § 706(2)(A).
Although the government argues the court was mistaken, we find no error in these
rulings.
The trial court focused on the BOP’s process by which the MCA, rather than
someone “at a level above the contracting officer,” reviewed CEFs and contractor
rebuttals. The government, however, urges the court to adopt the reasoning expressed
by another Court of Federal Claims decision, in a related case, holding that the same
CEF review process applied by the BOP ‘substantially’ complies with FAR § 42.1503.
See Bannum, Inc. v. United States, 60 Fed. Cl. 718, 729 (2004) (“Review by MCAs
satisfies the requirement that ‘[a]gencies shall provide for review at a level above the
contracting officer to consider disagreements between the parties regarding the
evaluation,’ because it provides for third party review. See FAR § 42.1503(b). The
provision does not require that a supervisory contract officer perform the review. See
id.”). We find this reasoning unpersuasive.
04-5008 -6- The FAR specifically required the BOP to “provide for review at a level above the
contracting officer to consider disagreements between the parties regarding the
evaluation.” FAR § 42.1503(b). By its plain terms, a review “at a level above the
contracting officer” contemplates review by a person with authority to direct the
contracting officer’s response. See, e.g., Webster’s Ninth New Collegiate Dictionary 45
(1985) (defining “above” as “superior to (as in rank, quality or degree)”). The fact that
FAR § 42.1503(b) uses “above” instead of “independent” tends to support the view that
“above” means someone with authority over the contracting officer.
The regulation explains that the review is provided “to consider disagreements
between the parties regarding the evaluation.” FAR § 42.1503(b). Since “[t]he ultimate
conclusion on the performance evaluation is a decision of the contracting agency,” the
review plainly is intended to account for any bias or mistake in the contracting officer’s
review. Id. But since the agency’s ultimate decision on any dispute necessarily
involves evaluating the contracting officer’s review of the contract, the reviewing
authority should be someone familiar with the contract, the history of its implementation,
and the particular concerns of both the contracting officer and the contractor in
performing the contract. Someone in a supervisory or decision-making role in relation
to the contracting officer complies with this regulatory requirement.
This understanding comports with guidance from the Office of Federal
Procurement Policy (“OFPP”) concerning the contractor’s right to have performance
evaluations reviewed. In language that mirrors FAR § 42.1503(b), a 1992 Policy Letter
explains that if evaluation is done by a contracting officer, contractors have a right to
discuss such evaluation “with the head of the contracting activity.” OFFP Policy Letter
04-5008 -7- 92-5 § 7(a)(3) (OFFP Dec. 30, 1992) (notification to contractors).2 This policy comports
with a construction of FAR § 42.1503(b) that requires someone in a supervisory or
decision-making capacity, in relation to the contract and contracting officer at issue, to
review disputes regarding performance ratings. In other words, the regulation specifies
a supervisory role at least inasmuch as the reviewer has authority to settle disputes
between the contracting officer and the contractor.
Other agencies implementing 48 C.F.R. § 42.1503(b) recognize that review
under the regulation calls for similar contracting expertise. For example, the EPA’s
policy statement regarding performance evaluations specifically recognizes that “[a]
contractor’s performance evaluation should closely parallel award fee determinations
made under the contract.” 48 C.F.R. § 1509.170-5(i). This tends to confirm that “at a
level above the contracting officer” indicates a person familiar with parallel award fee
determinations, and how performance reviews affect that aspect of the contract.
The commentators agree that the reviewer is required to bring specific
knowledge to the task. For example, discussing the agency performance review system
for “cost-plus-award-fee” (CPAF) contracts, the commentators discuss performance
assessment in terms of a “review of those evaluations by a board of higher-level
personnel.” J. Cibinic and R.C. Nash, Jr., Formation of Government Contracts 1166
(George Washington University 3d ed. 1998). Cibinic and Nash explain:
On larger procurement contracts . . . this step is advisable in order to ensure that the evaluations are internally consistent and that they reflect an overall view of the contractor’s accomplishments. A board of this type 2 Available at http://www.arnet.gov/Library/OFPP/PolicyLetters/Letters/ PL92-5.html. The court takes judicial notice of this Policy Letter under Fed. R. Evid. 201(c).
04-5008 -8- would be expected to discern, for instance, not only that one evaluator has downgraded a contractor, but also that the contractor’s performance was marginal because of a conscious decision to devote effort to some other important task.
Id. at 1166-67. To the extent this review implicates the same concern as review under
FAR § 42.1503(b), it favors a construction that requires review by someone with
authority over contract administration in general.
The government also sees performance evaluation under 48 C.F.R. § 42.1503(b)
as a tool for improving current performance on existing contracts, suggesting the
evaluation must be done in view of the detailed factual context surrounding contract
administration. Again, this comports with review by someone supervising a contracting
officer. For example, on May 22, 2003, DOD, GSA, and NASA – through the Civilian
Agency Acquisition Council and Defense Acquisition Regulations Council – adopted a
final rule requiring evaluation of Federal Prison Industries contract performance.
Responding to a comment that the evaluation was irrelevant in view of a mandatory
source status, the government replied by citing the May 2000 OFPP guide “Best
Practices for Collecting and Using Current and Past Performance Information.” “[T]he
active dialog that results from assessing a contractor’s current performance results in
better performance on the instant contract, and [ ] such assessments are a basic best
practice for good contract administration.” 68 Fed. Reg. 28095 (May 22, 2003). The
FAR review, therefore, should be undertaken by someone with not only an
understanding of the contracting requirements, but also the authority to direct the
contracting officer.
For all these reasons the lower court’s reasoning in the related case, which the
government urges this court to adopt, is unpersuasive. Review by the MCA does not
04-5008 -9- satisfy FAR § 42.1503(b) simply because the MCA is a “third party.” The trial court in
this action correctly applied the proper analysis to the BOP’s use of these CEFs.
Bannum further argues that the BOP violated the FAR in failing to assess
Bannum’s rebuttals, on the prior contracts, when assessing its bid. The trial court
rejected this argument, and we likewise find it unconvincing. As the Comptroller
General decided in 2001, a bid protest is not the proper forum, under FAR § 42.1503(b),
to litigate CEF disputes. See In re Ocean Technical Servs., Inc., No. B-288,659, 2001
CPD P 193, 2001 WL 1505946, *3 (Comp. Gen. Nov. 27, 2001) (“Our bid protest forum
is not the place for a firm to first complain of not having received an assessment, nor do
we serve as a forum for a firm to dispute the substance of an agency’s assessment of
the firm’s work.”).
III.
The trial court was required to determine whether these errors in the
procurement process significantly prejudiced Bannum. Alfa Laval Separation, Inc. v.
United States, 175 F.3d 1365, 1367 (Fed. Cir. 1999); Statistica, Inc. v. Christopher, 102
F.3d 1577, 1581 (Fed. Cir. 1996); Data Gen. Corp. v. Johnson, 78 F.3d 1556, 1562
(Fed. Cir. 1996). Prejudice is a question of fact. Advanced Data Concepts, 216 F.3d at
1057. To establish “significant prejudice” Bannum must show that there was a
“substantial chance” it would have received the contract award but for the errors in
using its CEF scores on prior contracts. Info. Tech., 316 F.3d at 1319; Alfa Laval, 175
F.3d at 1367.
04-5008 - 10 - A.
1.
Court of Federal Claims Rule 56.1 (“RCFC 56.1” or “Rule 56.1”) sets forth the
standard by which the court reviews factual determinations in a judgment on the
administrative record. The issue before this court is whether the trial court correctly
found that Bannum suffered no actionable prejudice by the BOP’s FAR and RFP
violations. We hold RCFC 56.1 requires the Court of Federal Claims, when making a
prejudice analysis in the first instance, to make factual findings from the record evidence
as if it were conducting a trial on the record. In such circumstances this court reviews
such findings for clear error, consistent with RCFC 52 and appellate review of factual
determinations underpinning a discretionary ruling on preliminary injunction.
This clear error review is consistent with the APA review dictated by
§ 1491(b)(4). As the court noted in Advanced Data Concepts, 216 F.3d at 1058, the
substantial evidence standard incorporated into 28 U.S.C. § 1491(b)(4) applies to the
Court of Federal Claims’s review of agency findings, not the trial court’s initial fact-
finding. In this case the trial court was the first tribunal to assess prejudice to Bannum.
Nor should the review of a Court of Federal Claims prejudice determination be premised
on an “arbitrary and capricious” review. That review standard goes to the agency’s
compliance with the law, whereas the prejudice determination assesses whether an
adjudged violation of law warrants setting aside a contract award.3
3 Cf. F.LLI De Cecco Di Filippo Fara S. Martino S.p.A. v. United States, 216 F.3d 1027, 1031 (Fed. Cir. 2000) (reviewing for clear error factual determinations, by the Court of International Trade, in a challenge to agency anti-dumping determinations, on a USCIT 56.2 motion for judgment on an agency record).
04-5008 - 11 - 2.
This court has not squarely considered the standard to review factual findings by
the Court of Federal Claims under RCFC 56.1. In Banknote Corp. of Am., Inc. v. United
States, 365 F.3d 1345, 1352-53 (Fed. Cir. 2004) (“Banknote II”), the court decided a bid
protest under RCFC 56.1 involving contractual interpretation. The court ruled, as a
matter of law, that the agency’s conduct complied with 5 U.S.C. § 706(2)(A). As the
court specifically noted, “Indeed, the central issue raised in the bid protest case before
us relates to the correct interpretation of the solicitation issued by the USPS, which is a
question of law.” Id. at 1352 (citing Grumman Data Sys. Corp. v. Dalton, 88 F.3d 990,
997 (Fed. Cir. 1996)).
Although it never reached the factual question of prejudice, the Banknote II court
added that it is the trial and appellate courts’ task to “determine whether there are any
genuine issues of material fact as to whether the agency decision lacked a rational
basis or involved a prejudicial violation of applicable statutes or regulations.” This
language equates a RCFC 56.1 judgment to a summary judgment under RCFC 56 and
is unnecessary to the Banknote II holding. Because the court decided the issue by an
interpretation of the solicitation, e.g., making a legal determination, the court in
Banknote II did not need to consider whether the trial court overlooked a genuine
dispute or improperly considered the facts of that case.4
4 Although various cases since Banknote have repeated its dicta equating judgment under RCFC 56.1 with summary judgment, none of those cases have applied that reasoning. As in Banknote, in each instance the decisions turned on pure questions of law. See, e.g., Roth v. United States, 378 F.3d 1371, 1381 (Fed. Cir. 2004) (deciding only “whether the [trial] court erred as a matter of law in the several rulings that the government challenges on appeal”); NVT Techs., Inc. v. United States, 370 F.3d 1153, 1159 (Fed. Cir. 2004) (reviewing the trial court decision “as a matter of 04-5008 - 12 - In resting its judgment on the bidder’s failure to show conduct violating the APA
requirements at 5 U.S.C. § 706(2)(A), this court’s decision in Banknote II mirrored the
trial court’s analysis. See Banknote Corp. of Am., Inc. v. United States, 56 Fed. Cl. 377,
381-86 (2003) (discussing and rejecting each contention of conduct violating the APA
requirements) (“Banknote I”). In dealing with the factual allegation of prejudice,
moreover, the trial court plainly followed a different standard from that required under
Rule 56 summary judgment. For example, the plaintiffs advanced a theory that they
were prejudiced because the Post Office “conducted inadequate discussions regarding
their prices.” Id. at 384-85. In particular, the plaintiffs challenged the government’s
failure to discuss prices on one group of products in the solicitation, arguing that had
those products been discussed the plaintiffs would have reduced their bid prices on
them. Id. at 385-86. Rather than consider an inference favoring the plaintiffs’s
prejudice claim on this point, the trial court flatly rejected it. As the Court of Federal
Claims noted, the plaintiffs nowhere “provided any real proof” of their factual claim. Id.
at 386. Likewise, rejecting an argument that the Postal Service improperly relied on an
undisclosed evaluation factor of “prime contractor experience” in the guise of soliciting
prices on tiered products, the lower court flatly rejected the plaintiffs’s claim of prejudice
as unsupported by the record. Id. at 387-88. In both instances, under a summary
judgment standard, the Court of Federal Claims would simply have drawn the inference
law”); Wagner v. United States, 365 F.3d 1358, 1365 (Fed. Cir. 2004) (holding as a matter of law that the agency improperly applied a harmless error analysis to proceedings involving involuntary discharge from the military); Galen Medical Associates, Inc. v. United States, 360 F.3d 1324, 1340 (Fed. Cir. 2004) (rejecting contention that government conduct violated APA standards, without reaching question of prejudice); cf. Defenders of Wildlife, Earth Island Institute v. Hogarth, 330 F.3d 1358, 1374 (Fed. Cir. 2003) (affirming judgment on agency record, from the Court of International Trade, on purely legal questions of statutory and regulatory interpretation).
04-5008 - 13 - in favor of the plaintiffs. Instead the trial court, as it must under Rule 56.1, weighed the
evidence and found no prejudice.
The trial court’s analysis in Banknote I comports with a proper reading of Rule
56.1. The court must distinguish the trial court’s judgment on the administrative record
from a summary judgment requiring the absence of a genuine issue of material fact.
The Court of Federal Claims adopted Rule 56.1 under its statutory authority to prescribe
the procedural and practice rules for its proceedings.5 See 28 U.S.C. § 2503(b). When
interpreting Rule 56.1 there are several reasons to differentiate between a summary
judgment and a judgment on the administrative record. First, as the Rules Committee
Note observes, RCFC 56.1 has no counterpart in the Federal Rules of Civil Procedure.6
We find this difference significant, and it counsels against adopting – simply by analogy
– Rule 56 burden-shifting and presumptions. Rule 56.1 requires a different standard of
review, otherwise there would be no need to differentiate between a Rule 56.1
procedure and a Rule 56 summary judgment analysis.
Second, by its plain language Rule 56.1 confirms this understanding. It
specifically provides that “RCFC 56(a)-(b) applies, with the exception that any
supplementation of the administrative record shall be by stipulation or by court order.”
RCFC 56.1(a). Subsections 56(a) and (b) of Rule 56 provide that one side or the other
5 The court has been unable to locate any history or commentary to Rule 56.1 other than the Rule Committee Notes accompanying the annotated Rules. 6 For this reason the Court of Federal Claims’s intent to conform its Rules to the case law and Advisory Committee notes accompanying the federal civil rules is unhelpful here. See Court of Federal Claims Rules, Foreward, Rules Committee Notes to 2002 Revision. But RCFC 56.1 is not without precedent. Although the Court of Federal Claims did not identify them as persuasive, RCFC 56.1 does have counterparts in the Rules governing practice in the United States Court of International Trade. See USCIT 56.1, 56.2 (providing for judgment upon an agency record).
04-5008 - 14 - can submit affidavits in support of their position. See RCFC 56(a), (b). Notably, RCFC
56.1 does not incorporate RCFC 56(c) or (d), yet those subsections provide the basis
for denying summary judgment based on a genuine issue of material fact, and for
drawing inferences in favor of the non-moving party. Accord Fed. R. Civ. P. 56(c), (d).
This omission is consistent with a rule designed to provide for trial on a paper record,
allowing fact-finding by the trial court.
Third, viewed in the context of this action the judgment on an administrative
record is properly understood as intending to provide for an expedited trial on the
record. The statute conferring the Court of Federal Claims’s jurisdiction over bid
protests expressly requires the trial court to give “due regard” to “the need for
expeditious resolution of the action.” 28 U.S.C. § 1491(b)(3). Proceeding under RCFC
56.1 merely restricts the evidence to the agency record, as may be supplemented
consistent with RCFC 56(a) or (b). In this case, that required the trial court to make
factual findings on prejudice from the record evidence.
Finally, the underlying cases cited in Banknote II do not support the proposition
that in reviewing the factual matters in a judgment under Rule 56.1 this court “reappl[ies]
the summary judgment standard in an independent review to determine whether the
moving party is entitled to judgment as a matter of law.” For this conclusion,
Banknote II relies on JWK Int’l Corp. v. United States, 279 F.3d 985 (Fed. Cir. 2002)
(“JWK II”). Banknote II, 365 F.3d at 1353.
In JWK II, this court explained – in the opening paragraph – that it affirmed the
trial court’s judgment for the government in view of the conclusion that the government
acted in accordance with the law. JWK II, 279 F.3d at 986; see also id. at 988
04-5008 - 15 - (discussing contracting officer’s decision not to enter into cost discussions with JWK).
That holding mirrored the Court of Federal Claims’s analysis below, in which the trial
court granted judgment for the government on legal grounds. The trial court ruled that
the government had not acted contrary to law under the APA standard at 5 U.S.C.
§ 706(2)(A). See JWK Int’l Corp. v. United States, 49 Fed. Cl. 371, 374 (2002); id. at
388-97 (finding none of the accused government conduct in evaluating JWK’s bid failed
the APA standard) (“JWK I”).7
The trial court’s JWK opinion explains, in detail, why each of the protestor’s APA
challenges failed to show fault in the government’s conduct. That detailed discussion
contrasts with the lack of analysis of why the factual record, for the same conduct, failed
to support a claim of prejudice. Instead, at various points the lower court simply tacked
onto various conclusions, that there was no APA violation, boilerplate determinations
that prejudice was not shown. See, e.g., JWK I, 49 Fed. Cl. at 391 (“Moreover, based
upon the review of the administrative record there is no evidence that JWK was in any
way prejudiced by the agency’s review of the past performance factors.”); id. at 392
(“Moreover, based upon the record the Court can find no indication that JWK was
prejudiced.”); id. at 395 (“The Court finds no indication in the administrative record that
JWK was prejudiced in any way by this determination.”); id. at 396 (same). The fact that
these conclusions lack any explanatory discussion of the record, despite lengthy
discussion of how the accused conduct comports with the APA requirements, confirms
7 Although the Court of Federal Claims’s opinion in JWK I also erroneously stated that a typical Rule 56 summary judgment standard of review applied to judgment under RCFC 56.1, like this court’s JWK II opinion none of the trial court’s analysis turns on identifying the presence of a genuine issue of disputed fact. See JWK I, 49 Fed. Cl. at 387.
04-5008 - 16 - that the lower court did not premise its judgment for the government on the absence of
a genuine issue of disputed fact regarding prejudice. Instead, as noted, the case turns
on the conclusion that no conduct violated the APA.
This court’s opinion in JWK II likewise provided a cursory discussion of a failed
showing of prejudice, but that discussion was unnecessary to the result. Moreover,
although the JWK II opinion recites a summary judgment-type review of the facts, JWK
II, 279 F.3d at 987, when considering prejudice this court did not draw all reasonable
inferences in favor of the non-moving party. To the contrary, the court reviewed the
evidence of prejudice on the merits:
In the absence of an alleged error, there must be a “substantial chance” that JWK would have received the award. Statistica, Inc. v. Christopher, 102 F.3d 1577, 1581 (Fed. Cir. 1996). JWK argues that if the contracting officer had entered into cost discussions and it had been given the opportunity to offer cost caps on its proposed labor rate escalation, then it could have bid a lower cost and been awarded the contract. But cost was the least important criterion, and even with the cost realism adjustment, JWK's bid was still lower than LTM's. It was more important that JWK received lower ratings in the technical and management areas than LTM, because the contracting officer decided that LTM's superiority in those areas outweighed the marginal cost difference between the two. That was a permissible judgment under the source selection regulation, FAR § 15.308, 48 C.F.R. § 15.308 (2001).
JWK II, 279 F.3d at 988-89 (emphases added). If the court were applying a summary
judgment review and determining whether a genuine issue of disputed fact existed, then
on the facts set forth in the quoted language it would have had to infer prejudice, hold
the protestor survived summary judgment, vacate the trial court judgment and remand
for trial on the merits. In short, this court’s review of the factual record for prejudice in
JWK II was unnecessary to its result, and in any event applied a different standard that
did not draw inferences in favor of the non-moving party.
04-5008 - 17 - The Court of Federal Claims, therefore, when making a prejudice analysis in the
first instance, is required to make factual findings under RCFC 56.1 from the record
evidence as if it were conducting a trial on the record. In such circumstances this court
reviews such findings for clear error, consistent with RCFC 52. As the court noted in
Advanced Data Concepts, 216 F.3d at 1058, the substantial evidence standard
incorporated into 28 U.S.C. § 1491(b)(4) applies to the trial court’s review of agency
findings, not the Court of Federal Claims’s initial fact-finding. Nor do we find our review
of a Court of Federal Claims prejudice determination amenable to an “arbitrary and
capricious” review. That standard goes to the agency’s compliance with the law,
whereas the prejudice determination assesses whether an adjudged violation of law
warrants setting aside a contract award. In sum, the trial court’s factual determination
on prejudice, in this judgment under RCFC 56.1, is entitled to review for clear error like
any finding in a bench trial, and the special concerns applicable to bid protest actions do
not alter that review here.
The trial court did not clearly err in finding that Bannum was not significantly
prejudiced by the BOP’s violations. To establish prejudice Bannum was required to
show that there was a “substantial chance” it would have received the contract award
but for the BOP’s errors in the bid process. Info. Tech., 316 F.3d at 1319; Alfa Laval,
175 F.3d at 1367; Statistica, 102 F.3d at 1582. This test is more lenient than showing
actual causation, that is, showing that but for the errors Bannum would have won the
contract. Alfa Laval, 175 F.3d at 1367; Data Gen., 78 F.3d at 1562.
04-5008 - 18 - Bannum necessarily relies on the difference between the 104 points the BOP
docked it based on the CEFs, and the 74.5 points by which Alston Wilkes won the bid.
Had the BOP deducted fewer than 29.5 points for past performance, Bannum would
have prevailed. But neither Bannum nor the record explains why Bannum had a
substantial chance of scoring at least 74.5 points higher on past performance had the
BOP reviewed the CEFs in accordance with the FAR. The independent review
pursuant to the separate GAO proceeding increased Bannum’s past performance award
by 16 to 312 points, an amount insufficient to alter the award outcome. There is nothing
besides Bannum’s conjecture to support the contention that another review, comporting
with the FAR, would provide it a substantial chance of prevailing in the bid. Bannum’s
argument rests on mere numerical possibility, not evidence. In sum, we find no clear
error in the trial court’s determination and will not disturb it. Accordingly, the judgment
of the Court of Federal Claims is affirmed.
AFFIRMED
COSTS
Each side will bear its own costs.
04-5008 - 19 -