IBM Corp. v. United States

118 Fed. Cl. 677, 2014 U.S. Claims LEXIS 1321, 2014 WL 6663536
United States Court of Federal Claims·Decided October 3, 2014·No. No. 14-864C·Published·Cited by 11 cases

Opinion

[678] Post-Award Bid Protest; Preliminary Injunction; Irreparable Harm; Balance of Hardships; Supplementing the Administrative Record

OPINION AND ORDER DENYING PRELIMINARY INJUNCTION, DENYING PLAINTIFF’S MOTION TO COMPLETE AND SUPPLEMENT THE ADMINISTRATIVE RECORD AND FOR LEAVE TO TAKE RELATED DISCOVERY, AND ESTABLISHING BRIEFING SCHEDULE FOR CROSS MOTIONS FOR JUDGMENT ON THE ADMINISTRATIVE RECORD

ELAINE D. KAPLAN, Judge

Currently before the Court in this post-award bid protest are plaintiffs motion for a preliminary injunction and plaintiffs motion to supplement the administrative record and take related discovery. For the reasons set forth below, both motions are DENIED.*

[679] BACKGROUND1

I. The RFP

Plaintiff IBM Corporation (“IBM”) is the incumbent contractor providing audit readiness services for the Department of the Army (“the Army” or “the agency”) in support of the Army’s effort to produce audita-ble financial statements by September 2017, as directed by the Department of Defense (“DoD”).2 Conformed Request for Proposals (“RFP”) § C at 8.3 As the expiration of IBM’s contract approached, the Army issued RFP No. W91CRB-13-R-0034 (“solicitation” or “RFP”) on September 30, 2013. AR 51. The RFP contemplated the award of a time- and-materials (“T & M”) contract, Conformed RFP § B, to assist the Army in achieving auditability with respect to four General Fund annual financial statements by the September 2017 deadline “through improvements in the supporting financial systems, Army financial management processes, effective internal controls and supporting documentation.” Conformed RFP § C.1.3. The contract would include a one-year base period and two one-year options. Id. § B. By March 5, 2014, the final date on which offers were due, the RFP had been amended eight times. See AR 116-257.

According to the RFP, the Army’s efforts to meet the September 17, 2017 deadline would involve “one of the most complex and challenging transformations ever attempted.” Conformed RFP § C.1.2. The RFP provided that the contract would be awarded on a best-value basis “to the Offeror who gives the Government the greatest confidence that it will best meet or exceed the requirements.” Id. § M.A.

The RFP identified seven factors for evaluation: (1) Experience, (2) Approach to Sample Scenario, (3) Past Performance, (4) Key Personnel, (5) Transition Plan, (6) Small Business Utilization Factor, (7) Price. Id. § M.B. The best value trade-off required weighing Factors 1 and 2 against Price. Id. Factors 1 and 2 were equally important and, when combined, were more important than Price. Id. § M.C. Factors 3 through 6 were to be evaluated on a pass/fail basis only and would not play a role in the best value analysis. Id. An offeror who received a rating of “unacceptable” for any of the six non-price factors was not eligible for award. Id. § M.D.

According to the RFP, offerors’ total evaluated prices consisted of their prices for (1) the Labor contract line item numbers (“CLIN”) X001 and (2) the other direct costs (“ODC”) CLINs X002 (which all offerors [680] were required to price at $400,000 per CLIN, id. § B, CLINs X002). Id. § L at 37. As required by FAR 16.601(d)(2), the RFP placed a ceiling on the contractor’s level of effort under the T & M Labor CLINs in section C.2.4.1 in the Performance Work Statement (“FWS”). See id. § C.2.4.1. The provision stated,

The Contractor level of effort to complete deliverables under this contract shall not exceed the following:
Labor Category Base Period Hours (CLIN 0001) Option Period 1 Hours (CLIN 1001) Option Period 2 Hours (CLIN 2001)
Director 1,242 1,117 950
Senior Manager I 23,549 21,194 18,015
Manager I 87,339 78,605 66,814
Senior Consultant I 111,715 100,543 85,462
Consultant I 91,117 82,005 69,705
Research Assistant 93,015 83,713 71,156

Id. Offerors were instructed to propose rates per labor category based on their current GSA rates, and they were encouraged to offer discounts on those rates. Id. § L at 37. Offerors’ prices for Labor CLINS, then, amounted simply to their proposed rates multiplied by the number of hours specified in section C.2.4.1. Id. § L at 37.

During the procurement, some offerors asked the Army to clarify the extent to which section C.2.4.1 permitted a successful offeror to reallocate hours among the labor categories. See, e.g., Q & A Nos. 21, 71, 73, 84-86.4 One offeror asked, “Will the successful offer- or have flexibility to reallocate the hours among labor categories during project execution, as long as we do not exceed the ceiling?” Q & A No. 136. The Army responded, “As approved by the COR [contracting officer’s representative], the successful offer- or will have the flexibility to reallocate hours as long as the ceiling is not exceeded.” Id.

II. Proposals, Evaluation, Award, and GAO Protest

Three offerors submitted proposals, including IBM and defendant-intervenor Ernst & Young LLP (“EY”). For Factor 1, the Technical Evaluation Team rated both IBM and EY as “outstanding.” See AR 1107. For Factor 2, it rated IBM as “outstanding” and EY as “acceptable.” See AR 1107. For all other non-price factors, both IBM and EY received “acceptable” ratings. The most significant difference between IBM and EY was in their prices: IBM’s total evaluated price was $85,986,434, while EY’s total evaluated price was $55,553,597. AR 1122. Regarding this price differential, the Source Selection Advisory Council (“SSAC”) noted that EY heavily discounted its GSA rates per labor category and found no indication of mistake in EY’s pricing. AR 1125.

Another difference between IBM’s proposal and EY’s proposal was not noted in any of the Army’s evaluation materials but takes center stage in IBM’s bid protest. Specifically, under the heading “Administrative Items,” EY included the following language:

Team EY reserves the right to reallocate hours between labor categories during the performance of this engagement to perform the services required, provided the reallocation does not result in exceeding the ceiling price established in the contract.

AR 972. In the same section of the proposal, EY also stated,

[681] Team EY reserves the right to [ ]

AR 972.

By contrast, IBM’s proposal regarding the potential for the reallocation of hours stated as follows:

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IBM Corp. v. United States, 118 Fed. Cl. 677, 2014 U.S. Claims LEXIS 1321, 2014 WL 6663536 (uscfc 2014).

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