Northrop Grumman Information Technology, Inc. v. United States

74 Fed. Cl. 407, 2006 U.S. Claims LEXIS 336, 2006 WL 3231359
CourtUnited States Court of Federal Claims
DecidedNovember 7, 2006
DocketNo. 06-607 C
StatusPublished
Cited by3 cases

This text of 74 Fed. Cl. 407 (Northrop Grumman Information Technology, Inc. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Northrop Grumman Information Technology, Inc. v. United States, 74 Fed. Cl. 407, 2006 U.S. Claims LEXIS 336, 2006 WL 3231359 (uscfc 2006).

Opinion

OPINION AND ORDER

BLOCK, Judge.

Before the Court is a motion by Lockheed Martin Services, Inc. (“Lockheed”) to intervene in the this matter pursuant to the Rules of the United States Court of Federal Claims (“RCFC”) Rule 24(a)(2) for the limited purpose of protecting its trade secrets and other [409]*409proprietary information. The Court finds that Lockheed has a sufficient property interest subject to this action, that its ability to protect that interest may be impeded by the action, and that its interest is not adequately represented by the existing parties. Therefore, Lockheed’s motion to intervene for a limited purpose is granted pursuant to this opinion.

Background

This case concerns a procurement for Information Management and Information Technology (“IM/IT”) by the United States Army Corps of Engineers (“the Corps”) pursuant to the Office of Management and Budget’s (“OMB”) Circular No. A-76 May 29, 2003 (“A-76”) public-private competition. A-76 is the means by which the OMB effectuates the “longstanding policy of the federal government ... to rely on the private sector for needed commercial services [and][t]o ensure that the American people receive maximum value for their tax dollars, commercial activities should be subject to the forces of competition.” Office of Mgmt. & Budget, Executive Office of the President, OMB Circular No. A-76, Performance of Commercial Activities (2003). A-76 derives its authority from Federal Activities Inventory Reform Act of 1998 (“FAIR Act”). 31 U.S.C. § 501 note (1998). The FAIR Act requires government agencies to identify activities that are currently performed by the government that are commercial in nature as opposed to inherently governmental. Id Under the FAIR Act, once an agency determines that certain activities are commercial in nature those activities are subjected to the competitive bidding process.1 A-76 establishes the guidelines for that process.

Activities government agencies identify as commercial in nature are not automatically privatized. Instead, a procurement is offered in which the agency is entitled to compete with the private sector in a public-private competition. The agency competes through the creation of a reified fictional entity called the Most Efficient Organization (“MEO”). The MEO is comprised of the agency’s staffing plan that would assume or continue conducting the activities that are subject to the A-76 competition. However, “the MEO is not usually a representation of the incumbent organization, but is the product of management analyses.” OMB Circular No. A-76 (2003), Attachment B. The “MEO may be comprised of either (1) government personnel or (2) a mix of government personnel and MEO subcontractors.” Id The MEO is represented in the bidding process by the Agency Tender Official (“ATO”)2 and its bid is referred to as the Agency Tender. The lowest price acceptable offer, either from a private sector bidder or the MEO, is awarded the contract for the activities subjected to the competition.

In 2004, the Corps identified all of it’s IM/IT services throughout the continental United States as activities not inherently governmental, but rather commercial in nature. Administrative Record (“AR”) 8-9. The Corps decided to conduct a public-private competition for its IM/IT services and, pursuant to the A-76 regulations, formed a MEO to take part in the competition. Id The scope of the competition included, “EMIT Management, Automation, Communications, Information, Assurance, Records Management, Printing and Publications, and Visual Information. The [winner of the competition] would provide personnel, equipment, tools, supplies, materials, transportation, and any other items and services necessary.” Id at 535. In September 2004, the Corps, on behalf of the MEO, sought notices of interest for private entities interested in assisting the MEO prepare the Agency Tender. Id at 8. The Corps issued a Request for Quotations (“RFQ”) on December 16, 2004, to those parties interested in assisting the MEO. Id

The RFQ made clear the selected offeror was to participate with the MEO team in [410]*410competing under the Corps’ A-76 IM/IT pub-Hc-private competition. Id. The RFQ also specifically required the selected offeror to be capable of providing efficient and effective IM/IT support to the MEO in meeting requirements of the A-76 IM/IT competition. Pl.’s Mem. Supp. TRO, Ex. 7. Under the RFQ, the selected offeror would incur the costs of preparing the MEO’s Agency Tender. Id. As part of developing the MEO’s Agency Tender the selected offeror and the MEO would delineate the work to be performed by the selected offeror if the MEO’s Agency Tender was successful. Id. The selected offeror and the MEO would negotiate a final contract that would be held in abeyance until after the A-76 competition was completed. Id. The company that ultimately assisted the MEO with the Agency Tender, would not be allowed to participate in the A-76 competition independently. Id. Thus, potential offerors had to decide whether they wished to participate with the MEO in the competition or compete on their own. Id.

Lockheed submitted an offer in response to the Corps’ December 16, 2004 RFQ and in February 2005, was selected to assist the MEO in preparing the Agency Tender for the A-76 competition. AR 8. On June 28, 2005, the Corps issued Solicitation No. W912DR-05-0001 “as a standard competition under OMB Circular A-76.” Id. “The solicitation contemplated a firm-fixed price plus award fee/cost contract with some cost reimbursable items. Award was to be based upon the lowest cost technically acceptable offer or tender.” Id. In response to the solicitation, the Corps received two proposals on October 21, 2005—the MEO’s Agency Tender and a proposal from Northrop Grumman Information Technology, Inc. (“Northrop”). On June 21, 2006, the Corps issued its notice of intent to award a letter of obligation to the MEO. Id. at 14.

Following the Corps’ notice, Northrop requested and received a debriefing from the Contracting Officer (“CO”) on June 30, 2006. Id. At the debriefing, Northrop learned that its proposal was technically acceptable, but priced far in excess of the technically acceptable MEO’s proposal. Id. at 9331; Pl.’s Mem. Supp. TRO 6-7.

On August 28, 2006, Northrop filed a complaint under seal pursuant to 28 U.S.C. § 1491(b) and RCFC Appendix C, requesting injunctive, declaratory and other relief to prohibit the Corps from awarding a letter of obligation to the MEO. See Pl.’s Comp. H 6. As part of its complaint, Northrop claimed the Corps failed to conduct a reasonable cost realism and price analysis of the MEO’s Agency Tender and unreasonably determined the MEO’s Agency Tender was technically feasible. Id. at 1111112, 118. According to Northrop, the MEO simply could not supply IM/IT services detailed in the solicitation at the cost and manpower levels the MEO’s Agency Tender represented. Id.

To protect the parties’ confidential and proprietary information, the Court issued a Protective Order on August 31, 2006. See Order dated August 31, 2006.

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74 Fed. Cl. 407, 2006 U.S. Claims LEXIS 336, 2006 WL 3231359, Counsel Stack Legal Research, https://law.counselstack.com/opinion/northrop-grumman-information-technology-inc-v-united-states-uscfc-2006.