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Pai Corp. v. United States

August 5, 2010

PAI CORPORATION (DOING BUSINESS AS PROFESSIONAL ANALYSIS), PLAINTIFF-APPELLANT,
v.
UNITED STATES, DEFENDANT-APPELLEE, AND INNOVATIVE TECHNOLOGY PARTNERSHIPS, LLC, DEFENDANT.



Appeal from the United States Court of Federal Claims in Case No. 09-CV-411, Senior Judge John P. Wiese.

The opinion of the court was delivered by: Gajarsa, Circuit Judge.

Before BRYSON, GAJARSA, and PROST, Circuit Judges.

This is a bid protest case filed by a losing bidder complaining of the unfairness of the contract bidding process. PAl Corporation ("PAI") filed a bid protest in the Court of Federal Claims ("trial court") challenging the award of a support services contract to Innovative Technology Partnerships, LLC ("ITP") by the Department of Energy's Office of Secure Transportation. PAl argues that the award of the contract to ITP was unlawful because the Department of Energy failed to mitigate a potential organizational conflict of interest during the procurement, which allegedly provided a certain bidder an unfair advantage in submitting its bid. Specifically, PAl alleges that ITP held an unfair competitive advantage over other offerors by gaining access to non-public information through: (1) ITP's proposed employment of the present incumbent contractor, Wackenhut Services, Inc. ("Wackenhut"), as its subcontractor, and (2) ITP's concomitant performance as the audits/assessment contractor under the Office of Secure Transportation's Program Office of Independent Oversight contract. The trial court found that the integrity of the procurement was not compromised and entered judgment in favor of the government based on the administrative record. PAl Corp. v. United States, No. 09-cv-411, 2009 WL 3049213, at *11 (Fed. CI. 2009). PAI appeals to this court. Because the trial court did not commit any errors, as explained and set forth below, we affirm.

BACKGROUND

The Office of Secure Transportation ("OST"), a division of the Department of Energy ("DOE"), is responsible for the safe and secure transportation of all government-owned nuclear weapons and materials. On December 13, 2007, DOE issued a "Sources Sought Synopsis" notice seeking qualified small businesses capable of carrying out certain OST support services.*fn1 In response to the Sources Sought Synopsis notice, DOE received twenty responses from interested bidders. After reviewing their statements of capability, DOE determined that two or more small businesses were capable of performing the required services as outlined by the performance work statement. DOE then designated the proposed procurement as a "total small business set-aside" pursuant to 48 C.F.R. § 19.502-2.

On July 11, 2008, prior to the release of the final proposed solicitation, DOE received an agency-level protest from Global Engineering & Technology ("GET") alleging that the draft solicitation created an organizational conflict of interest.Specifically,GET alleged that any company partnering with the incumbent contractor, Wackenhut, would have an unfair competitive advantage because that company would gain unequal access to non-public information as a result of Wackenhut's performance of the prior OST support services contract. GET also alleged that DOE failed to provide sufficient information regarding the staffing levels necessary to support the sixteen task areas outlined in the performance work statement.

After consideration of GET's protest, DOE determined that GET could not protest the draft solicitation before it had been approved for final release. However, in the interest of promoting competition and to level the playing field for all potential bidders, DOE agreed to provide offerors with additional information regarding the former OST support services contract, previously performed by Wackenhut. Accordingly, DOE launched the OST support services contract website to provide specific information to the public regarding the procurement. The website included the former OST support services contract that was being performed by the incumbent contractor, Wackenhut. It also provided information regarding OST command structure, mission, logistics, property management, and specialized training for OST Federal Agents. In addition, DOE released a twelve-month overview of the direct labor hours for each of the task areas and an estimated training calendar required to implement the OST support services.

On August 29, 2008, DOE issued a final competitive contract solicitation to provide support services for OST. The solicitation would result in a single indefinite-delivery, indefinite-quantity cost-plus-award-fee type contract for a base period of two years and two eighteen-month option periods. The guaranteed minimum amount of designated services under the contract was $3 million and the maximum ordering limit was $95 million.

DOE received nine timely proposals from small businesses, including ITP, PAI, and Advanced Technologies and Laboratories International, Inc. ("ATL"). ITP's proposal announced its intention to partner with Wackenhut, the incumbent for the OST support services contract, to perform the current OST contract. The contracting officer conducted an initial review of the proposals to determine whether they included all information required by the solicitation. The contracting officer also ensured that the organizational conflict of interest disclosures submitted by the bidders revealed no actual or potential conflicts. On December 22, 2008, the Source Selection Authority selected ITP as the bidding offeror that provided the best value to the government in terms of cost and technical capabilities. On December 29, 2008, the contracting officer awarded the contract to ITP.

On January 12, 2009, ATL filed a protest with the Government Accountability Office alleging (1) organizational conflicts of interest involving ITP, Wackenhut, and DOE that were not properly mitigated or disclosed prior to the procurement, (2) improper evaluation of ATL's and ITP's proposed costs, and (3) improper evaluation of ITP's and ATL's technical proposals.In response to ATL's protest, an Integrated Project Team of DOE agreed to take corrective action to clarify and resolve, where appropriate, the raised organizational conflict of interest issues, the cost realism evaluation, and the past performance evaluation. The Integrated Project Team further agreed to document its findings and issue a new source selection decision. Accordingly, ATL withdrew its protest on February 19, 2009. As part of its corrective action, the Integrated Project Team reevaluated proposals for past performance and cost and reconsidered potential organizational conflicts of interest.

In response to ATL's protest, the contracting officer completed an additional comprehensive organizational conflict of interest investigation and provided her conclusions in a memorandum entitled "Organization Conflict of Interest Analysis," issued on June 8, 2009. First, the contracting officer noted that she had reviewed the offer-ors' submissions regarding any potential organizational conflicts of interest and determined that no significant potential conflict existed. In particular, the contracting officer determined that, although ITP and Wackenhut had access to non-public information through their existing contracts, such information had no competitive value in the present procurement. The contracting officer also found that, with respect to ITP, the information to which it had access involved constantly changing requirements, was quickly outdated, and was therefore of little value. With respect to Wackenhut, the contracting officer also determined that the information to which it had access was not relevant to the requirements addressed in the solicitation's first two sample task orders. In the case of the third sample task order, the contracting officer found that Wackenhut's access to non-public information had been effectively offset by other information disclosed in the solicitation.

Next, the contracting officer noted that DOE's released information was sufficient to guide offerors in preparing an effective technical proposal. Thus, the contracting officer concluded that no significant potential conflict existed that would preclude an award to ITP for the OST support services contract. On June 4, 2009, the Integrated Project Team briefed the Source Selection Authority which then selected ITP because the company's bid represented the best value to the government due to its highest technical rating and lowest probable cost.

Shortly thereafter, PAI filed a complaint in the Court of Federal Claims alleging, inter alia, that the integrity of the procurement was compromised by an alleged unequal access to information relating to an organizational conflict of interest.*fn2 The parties filed cross-motions for judgment on the administrative record. The Court of Federal Claims denied PAI's motion, granted the government's and ITP's motions, and dismissed PAI's complaint. See PAl Corp., 2009 WL 3049213, at *11. PAI timely appealed to ...


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