Inforeliance Corporation v. United States

118 Fed. Cl. 744, 2014 WL 5464160

• Court: United States Court of Federal Claims
• Decided: October 28, 2014
• Docket: 14-780 C
• Status: Published

Opinion

Post-award bid protest; United States Marine Corps; supplementation of administrative record; extra-record evidence of bad-faith or bias; declaration containing specific allegations of bias; conduct hard to explain absent bias; hard facts sufficient to support discovery.

MEMORANDUM OPINION AND ORDER

WOLSKI, Judge.

The matter before the Court is plaintiffs “Motion for Limited Discovery and Supplementation of the Administrative Record” (Pl.’s Mot.). Specifically, plaintiff seeks three depositions and the production of documents related to its allegation that the procurement decision challenged in this post-award bid protest action was affected by an evaluator’s bias. The government opposes the motion, arguing that the evaluator was not the ultimate decision maker and that evidence in the administrative record is inconsistent with the allegations of bias. For the reasons given below, plaintiffs motion is GRANTED.

I. BACKGROUND

Plaintiff, InfoReliance Corp., brought an action in this court challenging the manner in which the United States Marine Corps (USMC) evaluated offers submitted in response to Solicitation No. M67854-14-R-4802. Compl. at 1. The USMC seeks to consolidate fifteen separate information technology systems — currently operated by five contractors under thirteen different contracts — into one system under a single contractor. Admin. R. (AR), Tab 4 at 72-73. Plaintiff is the incumbent for five of these contracts, and two of plaintiff’s proposed subcontractors are incumbents for two others. Id. at 73-74. InfoReliance is protesting the award to intervenor Science Applications International Corp. (SAIC). See Compl. at 1.

The solicitation indicated that the USMC intended to award the contract without discussions. AR, Tab 19a at 1011. It further stated that any offeror receiving an adjectival rating below “acceptable” in any rated evaluation factor 1 would be ineligible for award if, as anticipated, discussions were not conducted. Id. After the initial review of the six proposals submitted, the USMC determined that all five offerors other than InfoReliance were ineligible due to low ratings. AR, Tab 46 at 4540. The USMC also decided not to make an award to plaintiff, even though it was the only offeror not disqualified for low ratings. Id. at 454CM4. 2 Rather, the USMC determined that there was a risk that plaintiff did not have “a clear understanding of an important requirement” — because of unrealistically low pricing for one of the sample tasks upon which the evaluation was based— and concluded that an award to plaintiff “was not in the Government’s best interest.” Id.

In keeping with the terms of the solicitation, the government established a competitive range of the highest rated offerors, comprising InfoReliance and SAIC, in order to conduct discussions. AR, Tab 46 at 4541. InfoReliance and SAIC were notified of their inclusion in the competitive range, informed of the weaknesses identified in their respective bids, and given the opportunity to respond by submitting proposal revisions. See AR, Tab 49 at 4570-71, Tab 50 at 4644-45. InfoReliance was told that the pricing and number of hours allotted for certain tasks was deemed unrealistic. AR, Tab 49 at 4570, Tab 49b at 4574-78. Intervenor was informed that it had received a “Marginal” rating for Small Business Participation and that its price was high, relative to other offerors, and therefore potentially non-competitive. AR, Tab 50 at 4644, Tab 50a at 4647, Tab 50b at 4650. After InfoReliance’s and SAIC’s revisions were submitted and evaluated, the USMC awarded the contract to SAIC based on its higher technical rating and lower price. AR, Tab 57 at 5957-59.

In this protest, plaintiff alleges that the USMC was not evenhanded in its evaluations, Compl. ¶ 73, and gave disproportionate weight to a minor portion of its proposal which was not identified among the stated evaluation factors, id. ¶ 82. Plaintiff further asserts that the decision to conduct discussions and the ultimate award to SAIC resulted from the bias of the Management Evaluation Review Panel (MERP) chairperson, Sheri Stefaniga, who was also the Contracting Officer Representative (COR) for one of the SAIC contracts which was to be consolidated through the solicitation. Id. ¶¶ 52-53; see Def.’s Opp’n to Pl.’s Mot. for Ltd. Disc. & Suppl’n of Admin. R. (Def.’s Opp’n) at ll. 3 Plaintiffs contentions are informed by statements allegedly made to an InfoReliance officer by two procurement officials who were with the USMC at the time of the procurement. Pl.’s Mot. at l. 4 These officials’ impressions are detailed in a declaration filed in support of plaintiffs motion for a preliminary injunction, which the Court denied. See Pl.’s Reply to Def.’s Resp. to Pl.’s Mot. for Prelim. Inj., Attach. 1 (Perry Decl.); Order of Sept. 15, 2014, ECF No. 36 (denying motion for preliminary injunction).

II. DISCUSSION

Although the agency-generated administrative record in informal actions such as procurement decisions has long been recognized as a legal fiction, see Joint Venture of Comint Sys. Corp. v. United States, 100 Fed.Cl. 159, 165 (2011); Orion Int’l Techs. v. United States, 60 Fed.Cl. 338, 343 & n. 9 (2004), a court's review of the agency decision in a bid protest is usually restricted to the materials in the administrative record, Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374, 1379 (Fed.Cir.2009); Tech Sys., Inc. v. United States, 97 Fed.Cl. 262, 265 (2011). 5 As the Federal Circuit indicated in Axiom, the administrative record is supplemented only in rare eases in which this is “necessary in order not ‘to frustrate effective judicial review.’” Axiom, 564 F.3d at 1381 (quoting Camp v. Pitts, 411 U.S. 138, 142-43, 93 S.Ct. 1241, 36 L.Ed.2d 106 (1973)). Significantly, the administrative record may be insufficient and supplementation warranted when it is missing “relevant information that by its very nature would not be found in an agency record — such as evidence of bad faith, information relied upon but omitted from the paper record, or the content of conversations.” Ori on, 60 Fed.Cl. at 343-44 (footnotes omitted). 6

An allegation of bad faith or bias in particular calls for extra-record evidence to support requests for supplementation or discovery. See Beta Analytics Int’l, Inc. v. United States, 61 Fed.Cl. 223, 226 (2004) (recognizing that otherwise discovery will be insensibly limited “to cases involving officials who are both sinister and stupid”). But because of the presumptions of regularity and of good faith conduct, see Tecom, Inc. v. United States, 66 Fed.Cl. 736, 769 (2005), “to put facts relating to bad faith in play a plaintiff must first make a threshold showing of either a motivation for the Government employee in question to have acted in bad faith or conduct that is hard to explain absent bad faith,” Beta Analytics, 61 Fed.Cl. at 226; see also DataMill, Inc. v. United States, 91 Fed.Cl. 722, 730-31 (2010). When, as here, discovery is sought, a second hurdle must be surmounted, and “the plaintiff must persuade the Court that discovery could lead to evidence which would provide the level of proof required to overcome the presumption of regularity and good faith.” Beta Analytics, 61 Fed.Cl. at 226 (citing Orion, 60 Fed. Cl. at 343 n. 11, 344).

A plaintiff seeking supplementation or discovery need not, however, meet the same burden of proof that it ultimately must carry on the merits, and “[t]he test for supplementation is whether there are sufficient well-grounded allegations of bias to support” supplementation. Pitney Bowes Gov’t Solutions, Inc. v. United States, 93 Fed.Cl. 327, 332 (2010) (citing L-S Commc’ns Integrated Sys., L.P. v. United States, 91 Fed.Cl. 347, 354-65 (2010)). These allegations must rest on “hard facts,” not merely innuendo or suspicion. See Int’l Res. Recovery, Inc. v. United States, 61 Fed.Cl. 38, 43 (2004); Beta Analytics, 61 Fed.Cl. at 226. The Court concludes that this is one of those rare cases in which “the proffered extra-record material ... indicated] some personal animus or bias on the part of agency officials,” Madison Servs., Inc. v. United States, 92 Fed.Cl. 120, 130 (2010), based on the hard facts contained in the declaration submitted with plaintiffs motion for preliminary injunction.

Much of the conduct attributed to Ms. Stefaniga by the Perry Declaration is “hard to explain absent bad faith.” Beta Analytics, 61 Fed.Cl. at 226. The declaration relates the statements of two witnesses that Ms. Stefaniga “expressed extreme frustration because a written justification for an award of contract was being rejected by legal counsel at the USMC,” Perry Deel. ¶ 4, and that she “had gone out of her way during the review process to let it be known to the acquisition team that SAIC was the only contractor that could properly support” the consolidated information technology systems, id. ¶ 6. The declaration further reports that one of the witnesses&emdash;Michael Wright, a member of the evaluation panel chaired by Ms. Stefaniga-alleged that she “ ‘went out of her way’ to address a Level of Effort weakness regarding the [sample task order] pricing offered by InfoReliance so as to prevent award to InfoReliance without discussions,” id. ¶ 7, and that she “spent a significant amount of time building a consensus to highlight doubts about the InfoReliance proposal so that award could be made to SAIC,” id. ¶ 8.

It would not be remarkable for an evaluator, once convinced that a particular proposal possessed superior merit, to attempt to persuade others to agree with her opinion. But the allegations regarding Ms. Stefaniga suggest behavior that seems inconsistent with what would be expected of an objective evaluator. If, as plaintiff contends, Ms. Ste-faniga drafted a document supporting a contract award to SAIC that was rejected upon legal review, 7 the resulting “extreme frustration” at that result implies a greater personal investment in the outcome than is typical in a federal procurement. The government argues that the administrative record contradicts any claims of bias on Ms. Stefaniga’s part, as the MERP she chaired rated the initial InfoReliance proposal higher than SAIC’s, and assigned the latter the marginal rating that precluded award before discussions. See Def.’s Opp’n at 18. But that makes her attempts to secure an award to SAIC at that juncture, if true, even harder to explain absent bias. The USMC procurement official who discussed this matter with Ms. Stefaniga&emdash;Danny Franco, the COR for two of the InfoReliance contracts 8 &emdash;alleged-ly reached the conclusion that the process was manipulated to result in the award to SAIC. See Perry Deck ¶ 13.

Even more curious is the conduct allegedly witnessed by Ms. Stefaniga’s MERP team member, Mr. Wright. The MERP was charged with evaluating the management, past performance, and small business participation portion of the proposals. See AR, Tab 44 at 4407-85 (initial MERP report); see also AR, Tab 27 at 3904-05. The level of effort plaintiff proposed for the sample transition task order was contained in the volume of its proposal reviewed by the Technical Evaluation Review Panel (TERP), see AR, Tab 25a at 2987-89, ’and was discussed in the TERP report, see AR, Tab 43 at 4339, 4345. Those horn’s of work, and the associated costs, were also contained in the pricing volume of the proposal, see AR, Tab 25d at 3274-76, and were evaluated for realism in the Price Evaluation Report, see AR, Tab 45 at 4494-99. Neither the proposed level of effort nor the associated price for the transition sample task order were mentioned in the proposal volume evaluated by the MERP, see AR, Tab 25 at 3139-52, and were not discussed in the MERP’s evaluation of plaintiffs proposal, see AR, Tab 44 at 4422-32. Yet, according to Mr. Wright, the MERP chairperson “went out of her way” to focus on these matters, to stop an award to plaintiff without discussions. Perry Decl. ¶ 7. While there might be an innocuous explanation for the MERP chairperson’s seeming preoccupation with a matter outside her charge, bias could more easily explain such zeal.

The statements attributed to Mr. Wright further suggest that Ms. Stefaniga had assumed a role more akin to an advocate on SAIC’s behalf than an objective evaluator. See id. ¶¶ 6, 8. He alleged that he was not alone in believing that bias had infected the process. Id. ¶ 11. For his troubles, he purportedly “was brought before the contracting officer and other members of the acquisition team for what he described as ‘an intervention’ in order for him to change his position about the conduct of the acquisition and award decision.” Id. From this vantage point, it is impossible to tell whether his characterization of the MERP chairperson’s conduct is fair or is instead tainted by the same sort of frustration Mr. Franco attributed to Ms. Stefaniga, but one supposes evaluation team members do not lightly level claims of bias. In any event, these allegations of bias are specific enough, and difficult enough to explain in the absence of bias, to support the discovery sought by plaintiff. 9

The government argues that since Ms. Ste-faniga was not the Source Selection Authority and did not make the award decision, the plaintiff must (but has failed to) “elaborate on how [she] exerted improper influence on the decision-maker.” Def.’s Opp’n at 9 (citing DataMill, 91 Fed.Cl. at 731 and Terry v. United States, 96 Fed.Cl. 156, 164 (2010)). But the reason such influence was required to be demonstrated in the eases cited by the government is that the individuals whose bad faith was alleged had no apparent role in the procurement decisions under challenge. See DataMill, 91 Fed.Cl. at 730-31; Terry, 96 Fed.Cl. at 164-65. By contrast, here Ms. Stefaniga chaired one of the evaluation panels, holding a position the very point of which was to influence the procurement decision. Whether, if she is proven to have been biased, she wielded sufficient influence to taint the ultimate award is a question of fact “best left to the merits determination.” Tech Sys., 97 Fed.Cl. at 266.

The Court is persuaded that the discovery requested by plaintiff — as modified in its reply, see Pl.’s Reply to Def.’s Opp’n to Pl.’s Mot. for Disc. (Pl.’s Reply), Ex. A— “could lead to evidence which would provide the level of proof required to overcome the presumption of regularity and good faith.” Beta Analytics, 61 Fed.Cl. at 226. InfoReliance seeks to depose Messrs. Franco and Wright and Ms. Stefaniga, see Pl.’s Mot. at 2. It also requests the production of certain documents relating to Ms. Stefaniga’s actions concerning plaintiff or intervenor, and documents relating to Mr. Wright’s criticisms of the procurement process, see Pl.’s Reply, Ex. A. 10 Plaintiff has provided the “hard facts” supporting discovery through the declaration of Mr. Perry. See Beta Analytics, 61 Fed. Cl. at 226. 11 Under these circumstances, in which plaintiff is alleging bias on the part of a member of the Source Selection Evaluation Board, and has provided a declaration describing suspect conduct that supports the plaintiffs claim, effective judicial review would be frustrated if the Court were not to allow discovery. See Axiom, 564 F.3d at 1381. InfoReliance is entitled to limited discovery and supplementation of the administrative record so that the merits of its claim may be tested on a complete record. See Murakami, 46 Fed.Cl. at 735 n.4; Tauri Grp., 99 Fed.Cl. at 480-81.

III. CONCLUSION

For the reasons stated above, plaintiffs motion for discovery — as modified, see PL’s Reply, Ex. A, is accordingly GRANTED. Counsel for the parties shall confer and submit a Joint Status Report on or by Tuesday, October 28, 2014, proposing a schedule for further proceedings.

IT IS SO ORDERED.

1 . The solicitation identified four evaluation factors that would receive adjectival ratings in this best value procurement. — in decreasing order of importance: Technical Approach, Management Approach, Past Performance, and Small Business Participation. AR, Tab 19a at 1011-12.

2 . InfoReliance received the following adjectival ratings in the initial evaluation: Technical Approach — Good; „ Management Approach— Outstanding; Past Performance — Very Relevant/Substantial Confidence; and Small Business Participation — Acceptable. AR, Tab 46 at 4538. In comparison, SAIC received the following ratings: Technical Approach — Outstanding; Management Approach — Good; Past Performance — -Very Relevant/Substantial Confidence; and Small Business Participation-Marginal. Id.

3 . Plaintiff also alleges, inter alia, that USMC’s price realism analysis of its proposal was unnecessary and unreasonable. Compl. ¶¶ 59-61.

4 . One of the officials, Michael Wright, has apparently since transferred to a position with the Army. Tr. (Sept. 15, 2014) at 18.

5 . The Administrative Dispute Resolution Act of 1996 (ADRA) requires bid protests to be reviewed in this court using the standards employed in Administrative Procedure Act (APA) review. See 28 U.S.C. § 1491(b)(4) (2012) ("[T]he courts shall review the agency's decision pursuant to the standards set forth in section 706 of title 5.”). Courtesy of an apparent misreading of the legislative history, see Gulf Grp. Inc. v. United States, 61 Fed.Cl. 338, 350 n. 25 (2004), the Supreme Court had determined, before the 1996 enactment of the ADRA, that informal agency decisions are to be reviewed under the APA’s arbitrary and capricious standard, rather than de novo, see Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 415, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971).

6 .Adding relevant materials to the record in the situations described in Orion "might be viewed not as supplementation at all, but merely requiring that the administrative record be complete.” Murakami v. United States, 46 Fed.Cl. 731, 735 n.4 (2000), aff'd, 398 F.3d 1342 (Fed.Cir.2005); see also Tauri Grp., LLC v. United States, 99 Fed.Cl. 475, 480-81 (2011) (“[T]he relevant doctrine entails 'limiting review to the record actually before the agency,’ not to the record the agency chooses to present. Thus, when the 'focal point for judicial review should be the administrative record already in existence, not some new record made initially in the reviewing court,' this ‘existence’ depends on what the agency did in reaching its decision, not what it chooses to assemble after a protest is lodged.” (citations omitted) (quoting Axiom, 564 F.3d at 1380, and Pitts, 411 U.S. at 142, 93 S.Ct. 1241)).

7 . The Court notes that the Source Selection Plan for the solicitation assigned to the MERP chairperson the task of "perform(ing] a Best Value Recommendation to be presented to the [Source Selection Authority].” AR, Tab 6 at 118.

8 . Neither Mr. Franco nor the other three CORs for the five contracts held by plaintiff were selected to participate in the source selection under challenge in this case. See Def.’s Opp'n at 12.

9 . The Court notes that one allegation of " ‘very suspect’ conduct” reportedly made by Mr. Wright, Perry Decl. V 10 — the change in SAIC’s price from $[XXX] above plaintiffs initial proposal down to $[XXX] below it, see AR, Tab 45 at 4488; AR, Tab 54c at 5773 — appears to rest on little more than suspicion and innuendo. But the Court finds that the other, plausible allegations of bias are sufficient to support the limited discovery sought in this area, which would at the margin add little to the government’s compliance burden.

10 . The government argues that if a draft award document prepared by Ms. Stefaniga exists, it would be "protected by the deliberative process privilege, and exempt from inclusion in the administrative record.” Def.’s Opp’n at 22. If relevant to plaintiff’s claim of bad faith, however, such a document cannot be sheltered under a claim of deliberative process privilege. See Tummino v. Von Eschenbach, 427 F.Supp.2d 212, 234 (E.D.N.Y.2006) (noting that the deliberative process privilege does not apply where a show ing of bad faith has been made (citing Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. at 420, 91 S.Ct. 814)).

11 . The government objects that the Perry Declaration contains inadmissible hearsay which the Court may not consider. See Def.’s Opp'n at 13-17 (discussing Fed.R.Evid. 801-803). But the statements of Messrs. Franco and Wright are not being considered “to prove the truth of the matter[s] asserted,” Fed.R.Evid. 801(c)(2), but rather to support plaintiff’s effort to obtain their testimony in admissible form. Moreover, the statements of Mr. Wright and Ms. Stefaniga are not hearsay, when offered against the government, as each "was made by the party’s agent or employee on a matter within the scope of that relationship and while it existed.” Fed.R.Evid. 801(d)(2)(D).