CNA Corp. v. United States

83 Fed. Cl. 1, 2008 U.S. Claims LEXIS 215, 2008 WL 3334087
United States Court of Federal Claims·Decided August 6, 2008·No. No. 07-858C·Published·Cited by 37 cases

Opinion

ORDER

HORN, Judge.

On January 3, 2008, this court issued an Order partially awarding plaintiff the injunctive relief it sought by vacating the agency’s initial adverse ethics decision on former employee, Dr. Sarah Friedman’s participation as a principal investigator for a proposal submitted by CNA Corporation (CNAC) to a Department of Health and Human Services (HHS) National Institute of Health (NIH) solicitation. The Order also awarded plaintiff CNAC bid preparation costs. CNA Corp. v. United States, Case No. 07-858C, Order at 3 (Fed.Cl. Jan. 3, 2008) (hereinafter CNAC I). Subsequently, the Clerk of the Court issued a Judgment on January 7, 2008, vacating the agency ethics decision, directing the agency to reconsider its ethics position, and awarding plaintiff bid preparation costs. On April [2]*24, 2008, one day after the government withdrew its appeal of this court’s decision in CNAC I, which defendant had filed in the United States Court of Appeals for the Federal Circuit, plaintiff filed its application for bid preparation and proposal costs, asking this court to make a quantum determination of $881,817.89. On April 17, 2008, defendant chose not to respond to plaintiffs calculation and support for the amount of damages sought, but filed a motion to strike plaintiffs entire application for bid preparation and proposal costs.

FINDINGS OF FACT

Plaintiff, CNAC, filed a post-award bid protest in CNAC I, based on an HHS Request for Proposals No. NIH-NICHD-NCS07-11 (2007 RFP), for the Montgomery County, Maryland Study Center location of the National Children’s Study. The National Children’s Study is a long-term study to assess the effect of environmental exposures on children’s health and development from before birth to age 21. See Children’s Health Act of 2000, Pub.L. No. 106-310, § 1004, 114 Stat. 1101, 1130-31 (2000). In 2005, the contract for the NCS Coordinating Center was awarded, along with contracts for seven of the 105 projected study locations. In 2007, awards were made for 22 additional area study contracts, although no award was made for the Montgomery County, Maryland location. Although not determinative regarding the bid preparation and proposal cost claim and the defendant’s motion to strike addressed in this opinion, a 2008 solicitation for additional study locations was issued by HHS with additional contract awards contemplated. CNAC, which had bid for a contract for Montgomery County, Maryland pursuant to the 2007 solicitation, generating the bid protest at issue in this Order, also submitted a bid for the Montgomery County, Maryland location in response to the 2008 solicitation. To date, no awards have been made on the 2008 solicitation.1

CNAC’s current request for bid preparation and proposal costs was generated by the court’s Order after CNAC filed its successful post-award bid protest on the 2007 solicitation, (No. 07-858C) (CNAC I). CNAC filed the post-award bid protest when HHS refused to award one of the National Children’s Study contracts to CNAC pursuant to the 2007 solicitation. The HHS refusal was based on CNAC’s proposal of Dr. Sarah Friedman as its principal investigator. On October 5, 2007, HHS sent a letter to CNAC notifying it that CNAC’s proposal was not selected for award. The letter stated: “This letter is to notify you that your proposal, submitted in response to the above subject RFP, was not selected for contract award.” As substantiation for this decision, the defendant submitted to the court a series of emails concluding that Dr. Friedman, a former NIH employee and CNAC’s proposed principal investigator for the Montgomery County, Maryland Study Contract, was barred from acting as a principal investigator on the 2007 contract, citing the post-employment restrictions of 18 U.S.C. § 207 (2000). The agency indicated that but for the October 5, 2007, ethics decision and Dr. Friedman’s resultant disqualification, CNAC was in line for a 2007, Montgomery County award. After reviewing the record, including the original ethics decision issued by HHS on October 5, 2007, the court issued the Order in CNAC I, in favor of the plaintiff. In relevant part, the Order stated:

[Djefendant acknowledged and the court concludes that, in rendering the adverse ethics decision on Dr. Sarah Friedman’s proposed participation as plaintiffs Principal Investigator for the contract at issue, which is at the heart of this case, the agency did not provide the specific statutory basis for its decision; the agency did not consider the impact of the pertinent regulations and other pertinent matters before making its ethics decision; the agency did not provide a reasonable basis for its adverse ethics decision; the admin[3]*3istrative record, compiled and submitted by the agency, is inadequate to have supported a full and complete ethics review of Dr. Friedman; and the agency did not afford plaintiff a meaningful opportunity to respond to its adverse ethics ruling. The court concludes that the agency’s adverse ethics decision on Dr. Friedman’s proposed participation in the contract at issue is arbitrary and without apparent rational basis.
[T]he weight of the admissions by defendant as to the inadequacy of the decision making process, the filed administrative record complied by the defendant and the absence in the filed record of sufficient indication or documentation to support proper administrative review, directs the court to a finding that the agency, NIH [National Institute of Health], acted arbitrarily and capriciously when it found Dr. Friedman ineligible to participate as the Principal Investigator in a contract award to the plaintiff. The agency conducted an inadequate review of the important ethics issues presented and failed to properly document even the minimal review steps it undertook.

CNAC I, Case No. 07-858C, Order at 1, 2-3. The Order further stated:

Dr. Friedman, and plaintiff, deserve a properly conducted ethics review by the agency. The impact of the decision to bar Dr. Friedman from participation as plaintiffs Principal Investigator is especially compelling given statements made by government officials, and acknowledged by defendant’s counsel and agency personnel in the hearings before the court, that plaintiff CNA Corporation had been recommended for an award for the Montgomery County [Maryland] study contract, pending only the issue of the eligibility of Dr. Friedman as plaintiffs Principal Investigator, given her previous employment at NIH.

CNAC I, Case No. 07-858C, Order at 3. The court vacated the agency’s initial, adverse ethics decision on Dr. Friedman, and directed the agency to reconsider its decision as follows:

Therefore, the court partially awards plaintiff the injunctive relief it seeks, vacates the agency’s initial adverse ethics decision on Dr. Friedman, and awards the plaintiff CNA Corporation bid preparation costs. The agency shall pursue a reconsideration of the ethics decision and, at a minimum, shall consider the issues raised by the applicable statutory and regulatory sections, including subsections of 18 U.S.C. § 207 (2000) and 5 C.F.R. § 2637 (Jan. 1, 2007), not previously and properly considered.

CNAC I, Case No.

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CNA Corp. v. United States, 83 Fed. Cl. 1, 2008 U.S. Claims LEXIS 215, 2008 WL 3334087 (uscfc 2008).

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