Centech Group, Inc. v. United States

79 Fed. Cl. 562, 2007 U.S. Claims LEXIS 391, 2007 WL 4394422
United States Court of Federal Claims·Decided December 7, 2007·No. No. 07-513C·Published·Cited by 13 cases

Opinion

OPINION AND ORDER GRANTING IN PART DEFENDANT’S AND INTER-VENOR’S MOTIONS FOR JUDGMENT ON THE ADMINISTRATIVE RECORD

WILLIAMS, Judge.

In this bid protest, Plaintiff, the Centech Group, Inc. (Centech), challenges the Air Force’s de facto rescission of its services contract and its decision to reopen discussions and solicit revised proposals—corrective actions the Air Force took to implement a recommendation by the Government Accountability Office (GAO) in a protest filed by Tybrin Corporation (Tybrin).2 This procurement was a small business set-aside, and Tybrin contended in the GAO protest that Centech faded to comply with the Limitations on Subcontracting (LOS) clause, Federal Acquisition Regulation (FAR) 52.219-14, which requires that a small business perform at least 50 percent of the labor cost using its own employees, as opposed to those of its subcontractors.

In a Policy Memorandum provided to of-ferors, the Air Force misinformed offerors that compliance with the LOS clause’s 50 percent requirement could be achieved collectively by small business members of an informal joint venture or by a small business prime and first-tier subcontractor. Two of the four offerors, including Centech, relied upon this mistaken direction in formulating [564]*564their proposals. Centeeh offered to perform less than 50 percent of the labor costs using its own personnel.

Centeeh won the original award, but Cen-tech’s purported compliance with the LOS clause under the Air Force’s mistaken Policy Memo ignited bid protest proceedings at the GAO and a Certificate of Competency (COC) determination at the Small Business Administration (SBA). Although the SBA determined that Centeeh could comply with the LOS clause and found Centeeh to be a responsible small-business offeror, GAO deemed compliance with the LOS clause to be a matter of proposal acceptability, not responsibility, and found that Centech’s proposal did not meet the 50 percent requirement. Recognizing that Centeeh had understood its proposal would comply with the LOS clause due to the Air Force’s flawed Policy Memorandum, GAO found that Cen-teeh had been deprived of meaningful discussions. GAO therefore recommended that the agency reopen discussions, reevaluate proposals and make a new source selection decision.

In response to GAO’s recommendation, the Air Force issued Amendment 3 to the solicitation requesting revised proposals. All four offerors, including Centeeh, submitted revised proposals on July 31, 2007, and these proposals are currently being evaluated. The Air Force intends to make an award in April, 2008.3

This matter comes before the Court on the parties’ cross-motions for judgment on the Administrative Record. Plaintiff asks this Court to reinstate its original award and declare that the Air Force’s decision to follow GAO’s recommendation and take corrective action was arbitrary and capricious.4 Plaintiff contends that compliance with the LOS clause was not required to be evaluated as a condition for award under the original solicitation, but instead should have been examined after award once the Air Force’s actual requirements were defined and the costs of performance of the labor by the prime and subcontractors could be ascertained. Thus, in Plaintiffs view, its proposal was acceptable and, once SBA determined it to be responsible, it deserved the award.

Applying the deferential abuse of discretion standard, the Court concludes that the Air Force’s corrective action was not arbitrary, capricious, or in violation of law or regulation, and that no injunctive or declaratory relief is warranted. Plaintiffs proposal violated both the Small Business Act and the LOS clause because Plaintiff did not offer to perform 50 percent of the personnel costs itself. The fact SBA determined Centeeh to be responsible and capable of performing 50 percent of these costs itself, based upon information outside Centech’s proposal, does not alter this conclusion. Because Centeeh relied upon the Air Force’s erroneous interpretation of the LOS clause in submitting its original proposal, GAO properly determined that discussions should be reopened to allow Centeeh and the other offerors to revise their proposals to comply with the LOS clause as properly interpreted. As such, Centeeh is not entitled to reinstatement of its original award.

That is not to say, however, that no relief whatsoever could be forthcoming. The Air Force admitted that it erred in issuing its Policy Memorandum which erroneously notified offerors that they could comply with the LOS clause on a collective basis with their subcontractor small businesses. Due to its reliance on this erroneous directive, Centeeh may be entitled to recover some of its bid and proposal preparation costs, if it can demonstrate that such costs were wasted. As such, the Court remands this matter to the Air Force for its consideration of Centech’s claim for bid and proposal preparation costs.

Findings of Fact 5

The Solicitation

Over two and-a-half years ago, on February 28,2005, the Air Force issued request for [565]*565proposals (RFP) number FA9300-04-R-0040 for advisory and assistance services to support the Aerospace Research, Development, Test and Evaluation Activities (ARDTEAS) at the Air Force Flight Test Center at Edwards Air Force Base in California. AR, Tab 4 at 000151.

The RFP provided for the award of a “hybrid” cost reimbursement and fixed-price contract depending upon the service being provided. Specifically, the RFP sought advisory and assistance services on a cost-plus-award-fee basis, direct costs such as travel and materials on a cost reimbursement basis, and phase-in services on a fixed-priced-award-fee basis. Award was to be made to the proposal offering the best value considering four evaluation factors: (1) Mission Capability, (2) Proposal Risk, (3) Past Performance, and (4) Cost/Price. The RFP was a 100 percent set-aside for small business concerns.

The RFP’s Performance Requirements Document

In general, the solicitation’s performance requirements document (PRD) described tasks to be performed by the successful contractor including “assistance with business management in support of ground test, flight test and other associated test and support activities,” the support of “all phases of acquisition from identification of needs through contract performance,” as well as the provision of systems engineering and technical assistance “required to support ground and flight test and related activities.” AR, Tab 4 at 000230-36. The PRD listed three primary categories of services to be provided—“Management and Professional Services,” “Studies, Analyses, and Evaluations,” and “Engineering and Technical Services,” each with numerous specific tasks—in total over 100 specific tasks. AR, Tab 4 at 000230-36.

In Paragraph 3.5 of the PRD, the Air Force disclosed:

It is contemplated that variations in workload during the contract period will occur resulting in additions and reductions in manpower necessary to support mission requirements.

AR, Tab 4 at 000241.

In Paragraph 3.6 of the PRD, the Air Force disclosed:

It is contemplated that this contract will grow to meet dynamic mission changes over the potential life of the contract.

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Centech Group, Inc. v. United States, 79 Fed. Cl. 562, 2007 U.S. Claims LEXIS 391, 2007 WL 4394422 (uscfc 2007).

79 Fed. Cl. 562 (Centech Group, Inc. v. United States) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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