Kl3, LLC v. United States

In the United States Court of Federal Claims

No. 24-2028

(Filed Under Seal: June 2, 2025)

Reissued: June 12, 2025 ∗

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KL3, LLC, *

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Plaintiff, *

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v. *

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THE UNITED STATES, *

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Defendant, *

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and *

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SUVI GLOBAL SERVICES LLC, *

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Defendant-Intervenor. *

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Erica L. Bakies, argued for Plaintiff, with whom were Adam K. Lasky, counsel of record,

and Ryan C. Gilchrist, Seyfarth Shaw LLP, all of Seattle, WA, for Plaintiff.

An Hoang, Trial Attorney, with whom were Corinne A. Niosi, Assistant Director,

Patricia M. McCarthy, Director, and Yaakov M. Roth, Acting Assistant Attorney General,

Commercial Litigation Branch, Civil Division, Department of Justice, all of Washington, D.C.,

for Defendant, and Brandon Goswell, Assistant General Counsel, Washington Headquarters

Services & Pentagon Force Protection Agency, Office of General Counsel, Department of

Defense, of Washington, D.C., of counsel.

Adam A. Bartolanzo, with whom were, C. Peter Dungan, Alfred M. Wurglitz, Cash W.

Carter, and Mitchell D. Dolman, Miles & Stockbridge PC, all of Washington, D.C., for

Defendant-Intervenor.

∗

Pursuant to the protective order entered in this case, this opinion was filed initially under seal.

The parties provided proposed redactions of confidential or proprietary information, which are redacted in

this version of the opinion. In addition, the Court made minor typographical and stylistic corrections to

this version of the opinion.

OPINION AND ORDER

SOMERS, Judge.

In order to successfully protest a government procurement, a protestor must demonstrate

that the government agency committed an error in conducting the procurement at issue and that

the error prejudiced the protestor. Although both of these requirements must be met, protestors

regularly focus (sometimes exclusively) their protest pleadings and briefing on the former

requirement, ignoring the equally important prejudice requirement. Many times, this strategy

works as the prejudice created by an agency’s error is readily apparent. Shinseki v. Sanders, 556

U.S. 396, 410 (2009) (“Often the circumstances of the case will make clear [that the error] . . .

was harmful and nothing further need be said.”). But in instances in which the alleged prejudice

caused by the error is not obvious, failure to allege in the complaint and then prove prejudice on

the merits is fatal to a protestor’s case. As will be explained in detail below, prejudice in the

instant protest falls into this non-obvious category and is fatal to the protestor’s case.

Despite the fatal ending to which failure to plead and prove prejudice in a bid protest

leads, this is by far not the first time a protestor has offered only conclusory allegations and

statements regarding prejudice in both its complaint and briefing on its motion for judgment on

the administrative record. The Court is not sure if this failure to plead and prove how an error is

harmful to the protestor is the result of protestors believing the errors they allege are so

obviously prejudicial (even if they are not) that there is no need to allege or prove them or

whether protestors simply think that prejudice is some technicality that a judge will fill in for

them if an error has been proved. But filling in allegations and proof of a necessary component

of a bid protest is neither a judge’s job nor even an appropriate task for a judge in our adversarial

system of justice. Simply put, a protestor bears the burden of plausibly alleging in its complaint

that an agency not only committed an error in the procurement process but that this error caused

the protestor harm. Then, on the merits, it must prove both of these allegations.

In the instant protest, KL3, LLC (“KL3”) challenges the set aside of two information

technology contracts offered through the Small Business Administration’s (“SBA”) 8(a) business

development program to Defendant-Intervenor Suvi Global Services LLC (“Suvi”). According

to KL3, neither of the contracts in question were eligible for transfer to the 8(a) program because

the requirements had previously been solicitated as a small business set aside, which was

cancelled. For various reasons, KL3 argues that this previous small business designation makes

the sole source, 8(a) set aside to Suvi arbitrary, capricious, an abuse of discretion, or otherwise

not in accordance with law. While the parties spend most of their briefing discussing the errors

KL3 alleges, the government raises—and the Court will focus on—the issue of whether KL3

alleged that it was harmed by those errors and, secondarily, whether it proved on the merits that

the errors alleged were prejudicial.

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BACKGROUND

A. Predecessor Requirements: Legacy ITSS and ENCORE III

Beginning in 2017, the Department of Defense’s Office of the Inspector General (“DoD

OIG”) contracted with LinTech Global, Inc. (“LinTech”), a large business and mentor to KL3, to

provide information technology support services (“ITSS”), known as the Legacy ITSS contract.

Tab 92a at Administrative Record (“AR”) 2841; ECF No. 46 ¶ 6; Tab 93a at 2953–54. The

Legacy ITSS contract supported DoD OIG’s Office of the Chief Information Officer (“OCIO”)

and its nearly 1,800 users across 65 locations, by providing “network security, infrastructure,

enterprise architecture, business system development, unified communications, asset

management, project management and budget, and help desk support.” Tab 2 at AR 9.

During the course of the Legacy ITSS contract, the OCIO experienced “several systemic

issues that were causing concerns” with the services provided, including inconsistent customer

support, regular system outages, and stagnant technology coupled with increasing operational

costs. Tab 49 at AR 1676. As a result, DoD OIG had an independent organizational assessment

completed to examine the overall efficiency of the existing contract and DoD OIG’s general IT

capabilities in advance of an upcoming recompete, which later became known as the ENCORE

III procurement. Tab 2 at AR 9. The assessment resulted in a full-scale reorganization of the

OCIO, and the development of new goals for the ENCORE III procurement. Tab 49 at AR

1676–77. DoD OIG determined that, like the Legacy ITSS, ENCORE III should provide DoD

OIG with a “large, overarching concept that addressed all of DoD OIG’s IT needs.” Tab 92a at

AR 2844 n.2. However, ENCORE III would be broader, more modernized, and more integrated,

with greater support structure that would be independent of DoD OIG’s internal ITSS. Id.

In October 2022, the Defense Information Technology Contracting Organization

(“DITCO”) issued an RFP for ENCORE III as a small business set aside. Tab 25a at AR 903.

However, one month later, DoD OIG notified DITCO that it would be cancelling the ENCORE

III requirement because the “results of the organizational assessment . . . require[d] overall

efficiency and structural changes that rendered the planned IT support contract ineffective.”

Tab 5 at AR 144. Instead, in March 2023, the Washington Headquarters Services, Acquisition

Directorate (“WHS/AD”) of DoD OIG issued a one-year, sole-source bridge contract to

incumbent LinTech while the OCIO fully reorganized with new teams, positions, and contractor

support requirements. Tab 13 at AR 372; Tab 49 at AR 1676; Tab 92a at AR 2845.

B. Bifurcated Requirements: ITSS2, ITMS, Cybersecurity, and Information

Governance

Following the OCIO’s internal reorganization, DoD OIG submitted revised requirements

to WHS/AD for procurement, which included several new features, such as “modern cloud-based

applications.” Tab 92a at AR 2845. Most notably, this time DoD OIG “divide[d] the single

support contract” into four “smaller, more targeted contracts”: ITSS2, information technology

management services (“ITMS”), cybersecurity, and information governance. Id. The latter two

requirements, cybersecurity and information governance, were both awarded in September 2023

to a sister company of Suvi, Akima Data Management, LLC (“Akima”), as a set aside under the

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SBA’s 8(a) program. Id. at AR 2846; ECF No. 42 at 4 n.13 (citing Our Company: Suvi,

AKIMA 1).

As for the ITSS2 and ITMS requirements, WHS/AD issued Sources Sought Notices

(“SSNs”) for the requirements as sole-source, direct awards under FAR 6.302-1(a)(2)(iii) in

November 2023. Tab 7a at AR 162; Tab 8a at AR 189. The ITSS2 requirement was estimated

at a maximum dollar amount of $50 million, whereas the ITMS maximum was estimated at $20

million. Tab 8a at AR 189; Tab 7a at AR 162. Both contracts had an estimated base period of

performance of twelve months with four twelve-month option periods. Tab 8a at AR 190; Tab

7a at AR 163. The ITSS2 requirement encompassed data center and cloud engineering support

services (“DCCESS”), for which it awarded a bridge contract also in September 2023, to a

company named NexTech LinTech LLC, as a one-year bridge and a sole-source, direct award

through the 8(a) program. Tab 92a at AR 2841. The ITSS2 and ITMS requirements were

submitted to and accepted into the SBA’s 8(a) program in 2024. Id. at AR 2847; Tab 93a at AR

2954.

The SBA’s 8(a) program helps small businesses that are owned and controlled by socially

and economically disadvantaged individuals competitively bid for federal procurements. See

15 U.S.C. §§ 637(d), 631(f)(2). Although participation in the program does not guarantee

contract awards, it gives participants opportunities to receive training specifically designed to

help strengthen them to be competitive for procurements. See 8(a) Business Development

Program, SBA 2 (Feb. 11, 2025). For a requirement to be offered through the SBA’s 8(a)

program, the contracting agency must offer it through the program and the SBA must accept the

requirement for award as an 8(a) contract. 13 C.F.R. §§ 124.501–.504. To facilitate the 8(a)

program, the SBA has promulgated guidelines to determine whether certain types of

requirements will be accepted into the program. Id. One guideline relevant here, 13 C.F.R.

§ 124.504(a), provides that the SBA will not accept a procurement into the 8(a) program if the

requirement was previously solicited as a set aside for small businesses.

In April 2024, WHS/AD completed market research reports following vendor responses

to the SSNs. See Tab 13; Tab 14. Both Suvi and KL3 responded to the SSNs for the ITSS2 and

ITMS requirements. In both market reports, WHS/AD assessed the technical capabilities of 8(a)

participants and concluded that Suvi, an 8(a) participant, was capable of performing the

requirements. Tab 13 at AR 373, 375; Tab 14 at AR 385. By contrast, WHS/AD determined

that KL3, a small business but not an 8(a) program participant, was not capable of performing

the ITMS because “their capability statement addressed four (4) out of six (6) critical tasks

questions and because their capability didn’t demonstrate experience with Data Governance and

the creation of Business Intelligence from Data insights.” Tab 14 at AR 390. WHS/AD did not

review KL3’s ITSS capabilities in compiling the report, reviewing only 8(a) participants that

responded to the SNN. Tab 13 at AR 373. The OIG thus concluded that the “recommended

acquisition strategy” for both the ITSS and ITMS requirements would be to “pursue a sole

1

https://www.akima.com/opcos/suvi/ (last accessed May 30, 2025).

2

https://www.sba.gov/federal-contracting/contracting-assistance-programs/8a-business-

development-program.

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source direct award to Native American–owned business Suvi” through the 8(a) program. Id. at

AR 381; Tab 14 at AR 393.

C. ITSS2 and ITMS Offering Letters and KL3s Protests

In April 2024, WHS/AD submitted a first set of offering letters to the SBA for acceptance

of the ITSS2 and ITMS requirements as 8(a), sole-source contracts to be performed by Suvi.

Tab 15 at AR 395; Tab 17 at AR 504. Within a day, the SBA issued letters accepting the offer of

the requirements for ITSS2 and ITMS on behalf of Suvi. Tab 16 at AR 502–03; Tab 19 at AR

545–46. Three weeks later, on May 3, 2024, prior to award of the contracts, KL3 filed a protest

with the Government Accountability Office (“GAO”), challenging the acceptance of ITSS2 and

ITMS into the 8(a) program. Tab 25 at AR 889–90. KL3 argued that the SBA had violated

13 C.F.R. § 124.504(a) by accepting ITSS2 and ITMS into the 8(a) program, because the

ENCORE III RFP requirements had previously been issued as a small business set aside and

WHS/AD had failed to submit complete and accurate offering letters to the SBA by omitting the

ENCORE III procurement from the acquisition history. Id. at AR 893–94. After Suvi responded

and WHS/AD as well as the SBA submitted input to the GAO, KL3 withdrew its protest, and

WHS/AD took corrective action by withdrawing the offering letters requesting that the ITSS2

and ITMS requirements be accepted into the 8(a) program. See Tab 26; Tab 30; Tab 42; Tab 44;

Tab 47.

In August 2024, WHS/AD submitted a second set of offering letters to the SBA for

acceptance into the 8(a) program for the ITSS2 and ITMS requirements, which the SBA again

accepted on behalf of Suvi. See Tab 53 at AR 1847; Tab 54 at AR 1959; Tab 54a at AR 1960;

Tab 53a at AR 1848; Tab 55a at AR 2000–01; Tab 55b at AR 2002–03. This time, the ITSS

contract had a “corrected” anticipated maximum total value of nearly , Tab 53a at AR

1849 n.1, and the ITMS contract had an anticipated maximum total value of roughly ,

Tab 54a at AR 1961. Moreover, both acquisition histories included the ENCORE III history but

framed the ITSS2 and ITMS procurements as “new requirements.” Tab 53a at AR 1852–54; Tab

54a at AR 1964–66. In July 2024, KL3 again filed a protest, this time with this Court, on the

same grounds as its GAO protest, that the ITSS2 and ITMS requirements were improperly

admitted into the 8(a) program under 13 C.F.R. § 124.504(a). See Tab 58. Again, WHS/AD

took corrective action by withdrawing the offering letters, Tab 59, and KL3 voluntarily

dismissed the bid protest, Tab 60.

In November 2024, WHS/AD submitted a third and final set of offering letters to the

SBA for the ITSS2 and ITMS requirements to be accepted into the 8(a) program, which, for a

third time, the SBA accepted on behalf of Suvi. See Tab 92; Tab 92a; Tab 93; Tab 93a; Tab 95;

Tab 96. Like the second set of offering letters, the anticipated maximum total values remained

the same, and the acquisition histories included the ENCORE III procurement. See Tab 92a; Tab

93a. In December 2024, KL3 filed the present protest in this Court challenging the procurements

on three bases: first, KL3 challenges the acceptance of the ITSS2 and ITMS requirements into

the SBA’s 8(a) program as violative of FAR 19.804-2 and 13 C.F.R. § 124.402; second, KL3

alleges that the SBA’s acceptance of ITSS2 and ITMS into the 8(a) program based on the third

set of offering letters was arbitrary and capricious; and finally, KL3 asserts that WHS/AD

violated 13 C.F.R. § 124.503(f)(2) by allegedly releasing the performance work statement

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(“PWS”) for each requirement to potential offerors in the form of the “Requirement Tasks”

attachments to the first set of RFPs. See ECF No. 46. Soon thereafter, KL3 moved for judgment

on the administrative record. See ECF No. 42. The government and Suvi responded and

submitted cross-motions for judgment on the administrative record. See ECF No. 47; ECF

No. 48. Following briefing and oral argument, the matter is now ripe for consideration.

DISCUSSION

A. Legal Standard

The Tucker Act, as amended by the Administrative Dispute Resolution Act, provides the

Court of Federal Claims with “jurisdiction to render judgment on an action by an interested party

objecting to a solicitation by a Federal agency for bids or proposals for a proposed contract or to

a proposed award or the award of a contract or any alleged violation of statute or regulation in

connection with a procurement or a proposed procurement.” 28 U.S.C. § 1491(b)(1). In such

actions, the Court is to “review the agency’s decision pursuant to the standards set forth in

section 706 of title 5.” Id. § 1491(b)(4). As such, the Court must “hold unlawful and set aside

agency action, findings, and conclusions found to be arbitrary, capricious, an abuse of discretion,

or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A). To succeed in a bid protest, a

protestor must make two showings. Bannum, Inc. v. United States, 404 F.3d 1346, 1351 (Fed.

Cir. 2005). First, a protestor must demonstrate error, meaning that the agency violated the

standards set forth in section 706 of the Administrative Procedures Act. Id. Second, a protestor

must prove that such error was prejudicial. Data Gen. Corp. v. Johnson, 78 F.3d 1556, 1562

(Fed. Cir. 1996) (“[T]o prevail in a protest the protester must show not only a significant error in

the procurement process, but also that the error prejudiced it.”); see also Sys. Studies &

Simulation, Inc. v. United States, 22 F.4th 994, 996–97 (Fed. Cir. 2021) (“In particular, the

challenger of agency action generally bears the burden of showing that an error was harmful—

that is, that it was prejudicial.”).

Bid protests are generally decided on cross-motions for judgment on the administrative

record, pursuant to Rule 52.1 of the Rules of the U.S. Court of Federal Claims (“RCFC”). RCFC

52.1 requires that the Court “make factual findings from the record evidence as if it were

conducting a trial on the record.” Bannum, Inc., 404 F.3d at 1354. Unlike a motion for summary

judgment, a genuine dispute of material fact does not preclude a judgment on the administrative

record. See id. at 1355–56. Rather, in reviewing cross-motions for judgment on the

administrative record, “the court asks whether, given all the disputed and undisputed facts, a

party has met its burden of proof based on the evidence in the record.” Jordan Pond Co., LLC v.

United States, 115 Fed. Cl. 623, 630 (2014).

B. Analysis

KL3 asserts that the agency committed three errors in the ITSS2 and ITMS procurements.

In order to be permitted to assert that the agency committed these alleged errors, KL3 must first

establish that it has standing to raise those errors before this Court. However, beyond a few

conclusory allegations in its complaint related to standing, KHI does not plausibly allege that it

could compete for the contracts at issue were the alleged procurement errors removed.

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Moreover, relatedly, even if KL3 had established that it had standing to challenge the alleged

procurement errors, KL3 failed to prove on the merits of this protest that any of the alleged errors

were prejudicial. Accordingly, as discussed more fully below, KL3’s bid protest fails.

1. KL3 Failed to Demonstrate that It Has Article III Standing

Before the Court may exercise jurisdiction over a case, it must consider whether the

plaintiff has established that it has met the constitutional requirements for standing, “an essential

and unchanging part of the case-or-controversy requirement of Article III.” Lujan v. Defs. of

Wildlife, 504 U.S. 555, 560 (1992). Standing “is the threshold question in every federal case,

determining the power of the court to entertain the suit.” Warth v. Seldin, 422 U.S. 490, 498

(1975). While the doctrine of standing originates in the text of Article III of the Constitution

based on “the traditional understanding of a case or controversy,” Spokeo, Inc. v. Robins, 578

U.S. 330, 338 (2016), this Court, “though an Article I court, applies the same standing

requirements enforced by other federal courts created under Article III,” Anderson v. United

States, 344 F.3d 1343, 1350 n.1 (Fed. Cir. 2003) (citation omitted). See also Emerald Int’l Corp.

v. United States, 54 Fed. Cl. 674, 677 n.5 (2002) (discussing the reasons this Court applies

Article III standing requirements).

Supreme Court precedent holds that “the irreducible constitutional minimum of standing

contains three elements.” Lujan, 504 U.S. at 560. “To establish standing, a plaintiff must

present an injury that is concrete, particularized, and actual or imminent; fairly traceable to the

defendant’s challenged action; and redressable by a favorable ruling.” Horne v. Flores, 557 U.S.

433, 445 (2009) (citing Lujan, 504 U.S. at 560–61). In other words, the critical question a

plaintiff must answer to establish standing is whether he has “‘alleged such a personal stake in

the outcome of the controversy’ as to warrant his invocation of federal-court jurisdiction . . . .”

Warth, 422 U.S. at 498 (quoting Baker v. Carr, 369 U.S. 186, 204 (1962) (emphasis added).

This is because the judicial power “exists only to redress or otherwise to protect against injury to

the complaining party, even though the court’s judgment may benefit others collaterally. A

federal court’s jurisdiction therefore can be invoked only when the plaintiff himself has suffered

‘some threatened or actual injury resulting from the putatively illegal action.’” Id. (quoting

Linda R.S. v. Richard D., 410 U.S. 614, 617 (1973)).

“The party invoking federal jurisdiction bears the burden of establishing [the] elements

[of standing],” and if that party fails to prove any of the three elements, there is no case or

controversy for the court to decide. Lujan, 504 U.S. at 561; see also Spokeo, 578 U.S. at 338;

Starr Int’l Co. v. United States, 856 F.3d 953, 964 (Fed Cir. 2017) (“The plaintiff bears the

burden of showing standing . . . .”). Moreover, the requirements to prove standing are “not mere

pleading requirements but rather an indispensable part of the plaintiff’s case” such that “each

element must be supported in the same way as any other matter on which the plaintiff bears the

burden of proof, i.e., with the manner and degree of evidence required at the successive stages of

the litigation.” Lujan, 504 U.S. at 561. “At the pleading stage, general factual allegations of

injury resulting from the defendant’s conduct may suffice. . . .” Id. On a motion for summary

judgment, “mere allegations” no longer suffice, and the proponent “must ‘set forth’ by affidavit

or other evidence ‘specific facts,’ which for the purposes of summary judgment motion will be

taken as true.” Id. (quoting Fed. R. Civ. P. 56(e)). Finally, at the trial stage, those specific facts

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must be “supported adequately by the evidence adduced at trial.” Id. (quoting Gladstone,

Realtors v. Village of Bellwood, 441 U.S. 91, 115 n.31 (1979)). The issue of standing may be

raised at any stage of the litigation, by any party, including the Court sua sponte. Pandrol USA,

LP v. Airboss Ry. Prods., Inc., 320 F.3d 1354, 1367 (Fed. Cir. 2003).

In a bid protest, a protestor ordinarily has standing “because it claims an injury, namely

rejection of its bid, which is traceable to the allegedly defective procurement process and which

could be redressed by this Court.” Barbaricum LLC v. United States, 172 Fed. Cl. 186, 195

(2024). But in instances in which a protestor did not bid on the underlying contract, the

injury-in-fact and the redressability of that injury do not flow directly from the rejection of the

non-existent bid. In such cases, it becomes incumbent on the protestor to establish plausibly

through the factual allegations in its complaint that it was capable of performing the

requirements of the underlying contract. Because if a protestor could not perform that contract,

there can be no injury no matter how egregious the agency’s alleged error, and the Court cannot

provide any redress to an incapable protestor based on any alleged errors.

Here, KL3 failed to plausibly allege that it could compete for either the ENCORE III

requirement generally or the ITSS2 or ITMS requirements that it specifically protests here. This

failure to plead in a plausible manner that it has Article III standing precludes the Court from

exercising jurisdiction over this protest. As the Federal Circuit has held, “the Supreme Court’s

‘plausibility’ requirement for facial challenges to claims under Rule 12(b)(6), as set out in Bell

Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007), and Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009), also applies to facial challenges to subject-matter jurisdiction under Rule 12(b)(1).”

Crow Creek Sioux Tribe v. United States, 900 F.3d 1350, 1354–55 (Fed. Cir. 2018). Therefore,

“‘[t]o survive a motion to dismiss [for lack of standing], a complaint must contain sufficient

factual matter’ that would plausibly establish standing if accepted as true.” Id. at 1355 (quoting

Iqbal, 556 U.S. at 678) (alterations in original). Accordingly, “[t]hreadbare recitals of the

elements of [standing], supported by mere conclusory statements, do not suffice.” Id. (quoting

Iqbal, 556 U.S. at 678) (second alteration in original). But, as is explained below, threadbare

recitals and conclusory statements are all KL3 offers in support of its standing.

a. KL3 failed to allege that it could compete for the ENCORE III requirement

if the alleged procurement errors were removed.

At minimum, for a protestor challenging a sole-source award to have suffered an

injury-in-fact, and for that injury to be redressable by a favorable ruling, it must show that it

would have been capable of competing for the contract assuming the alleged errors in the

procurement process are removed. Without any indication that it could compete for the

underlying contract, a protestor cannot have suffered any cognizable injury, since it is effectively

a “stranger to the procurement at issue.” Sup. Waste Mgmt. LLC v. United States, 169 Fed. Cl.

239, 272 n.30 (2024). As the government states plainly, “KL3 is not an ENCORE III contract

holder and does not allege or demonstrate that it can or ever will become one.” ECF No. 48 at

26. More specifically, the complaint does not contain any plausible allegations that KL3 was

capable of competing for the ENCORE III requirement. Nor does anything else in the record

before the Court for that matter. Because KL3 does not plausibly allege its capability to perform

the contract the award of which it is challenging, KL3 lacks standing.

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KL3’s protest suffers at the outset from a fatal standing flaw: it is only challenging two

components of a four component requirement. In a nutshell, KL3 alleges that the agency

originally competed the ENCORE III requirement as a small business set aside, but then

canceled the ENCORE III requirement and impermissibly divided and awarded the four parts of

the ENCORE III requirement to two different 8(a) businesses. Such a challenge could

potentially be justiciable if KL3 had plausibly alleged that it was capable of performing the

entire ENCORE III requirement and had challenged the award of the two other parts of the

ENCORE III requirement. An agency is not able to avoid the proscription in 13 C.F.R.

§ 124.504—that the “SBA will not accept a procurement for award as an 8(a) contract” if the

agency previously “issued a solicitation for or otherwise expressed publicly a clear intent to

award the contract as a small business set-aside”—by simply dividing the previously solicitated

contract up into smaller pieces. Therefore, a small business that was interested in competing for

the previously solicited ENCORE III requirement (that was also capable of performing the

ENCORE III requirement) would have standing to challenge the re-solicitation of its constituent

parts. Here, however, KL3 raises a challenge to only two of the four constituent parts into which

ENCORE III was allegedly divided. ECF No. 42 at 1. At no time during this protest has KL3

objected to the cybersecurity and information governance awards to Akima. Id. at 36 (discussing

only the fact that Akima is a sister company of Suvi, which means that the “sister companies []

were selected for award of all of ENCORE III’s bifurcated requirements” (emphasis omitted)).

Nor does the record indicate that KL3 protested the 8(a) awards of the cybersecurity and

information governance contracts. More importantly, neither the complaint nor the record

indicates that KL3 was interested in or even capable of performing the entire ENCORE III

contract, including the cybersecurity and information governance requirements.

Instead, KL3’s protest only challenges two of the “bifurcated requirements.” But in order

to have an injury-in-fact that is also redressable, KL3 would need to be capable of performing

ENCORE III. KL3, however, makes no allegations, plausible or implausible, regarding its

capability or even interest in ENCORE III. That is to say, with respect to the ENCORE III

requirements, KL3 does not even make “[t]hreadbare recitals” of the requisite elements of

standing, “supported by mere conclusory statements.” Iqbal, 556 U.S. at 678. Thus, even if the

Court were to agree with KL3 regarding the errors it alleges and find that the agency was

prohibited from dividing ENCORE III and setting its parts aside for 8(a) businesses, this finding

(at least based on the lack of allegations in the complaint) would provide KL3 no relief because

KL3 has not suffered an injury-in-fact.

Beyond the problem that KL3 fails to allege injury, KL3’s conclusory allegations also do

not support redressability. In analyzing redressability, the Court must “consider the relationship

between ‘the judicial relief requested’ and the ‘injury’ suffered.” Murthy v. Missouri, 603 U.S.

43, 73 (2024) (quoting California v. Texas, 593 U.S. 659, 671 (2021)). Even if the Court

concurred with all of the errors that KL3 alleges, the alleged injury suffered—the illegal re-

solicitation of the ENCORE III requirements as 8(a) set asides—is not redressable in the protest

that KL3 brings. By mounting a challenge to only the ITSS2 and ITMS requirements, KL3 has

brought a case that would not permit the Court to reassemble ENCORE III without

impermissibly enjoining two procurements not before it. As such, the Court could not redress

the injury caused by the alleged violation of 13 C.F.R. § 124.504 (even if KL3 had properly

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alleged an injury-in-fact) because KL3 has not put ENCORE III in toto—to which KL3 has

expressed no interest in competing—before the Court.

At bottom, KL3 has a simple math problem: one plus one cannot equal four. KL3’s

protest of the ITSS2 and ITMS awards arise out of the proposition that Defense Department

impermissibly offered the ITSS2 and ITMS requirements as sole-source direct awards through

the SBA’s 8(a) program because the ENCORE III procurement was previously solicited in an

RFP set aside for small businesses. ECF No. 42 at 6–11. This argument rests on the theory that

the “previously solicited” requirement, ENCORE III, is synonymous with the four parts it was

divided into, which were each treated as “new” rather than “follow-on” requirements, and which

were thus improperly accepted into the 8(a) program. Id. at 34–36. However, in the instant

protest, KL3’s math does not add up. KL3 fails to challenge, or even express any interest in, two

of the four pieces of the ENCORE III solicitation, namely the cybersecurity and information

governance solicitations that were awarded to Akima. Even looking at the problem in reverse,

KL3 fails to allege that, if the ITSS2 and ITMS contracts amounted to “follow-on” requirements

to the ENCORE III contract, it would have been capable of or even interested in bidding on the

ENCORE III contract. Because of these failures, KL3 lacks standing.

b. Even if the Court accepts KL3’s argument that the relevant requirements

are ITSS2 and ITMS, KL3 has still not plausibly alleged that it has standing.

As discussed above, KL3 does not even attempt to address its standing with regard to

ENCORE III. Rather, its focus is solely on two of the components of ENCORE III: ITSS2 and

ITMS. But even with regard to ITSS2 and ITMS, KL3’s complaint fails to plausibly allege that

it is capable of performing the requirements and, therefore, that it has standing. If KL3 cannot

perform the requirements that it is challenging, it has no personal stake in this protest. To have

standing, though, KL3’s “complaint must establish that [it] has a ‘personal stake’ in the alleged

dispute . . . .” Raines v. Byrd, 521 U.S. 811, 819 (1997). “To demonstrate their personal stake,

plaintiffs must be able to sufficiently answer the question: ‘What’s it to you?’” TransUnion LLC

v. Ramirez, 594 U.S. 413, 423 (2021) (quoting Antonin Scalia, The Doctrine of Standing as an

Essential Element of the Separation of Powers, 17 Suffolk. U. L. Rev. 881, 882 (1983)). KL3

fails to answer this question.

Instead, in rote fashion, KL3 simply recites the conclusion that it meets the legal standard

for standing in a bid protest 3:

KL3 has standing to pursue this protest because it is an interested party. See 28

U.S.C. § 1491(b)(1). . . . But for any of the errors raised [in this complaint], there

is a substantial chance that DoD would have been required to procure ITSS2 and

ITMS, or at the very least ITSS2, on a competitive basis as a small business

3

This fill-in-the-blank recitation that KL3 offers in its complaint to attempt to establish

standing is pegged to the test for statutory standing; a test that is “more stringent” than that for

Article III. See Associated Energy Grp., LLC v. United States, 131 F.4th 1312, 1319 (Fed. Cir.

2025). As KL3 fails to meet the less stringent standard for Article III standing, the Court need

not address KL3’s failure to plausibly allege statutory standing.

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set-aside. KL3, a small business that is qualified to perform the services, would be

a prospective offeror if DoD were required to award the contract(s) through a

competitive bidding process, and KL3 could complete for contract(s) if the

contracts were competitively procured. Accordingly, KL3 is an interested party

and has standing to file this protest.

ECF No. 46 ¶¶ 10–11. Several times in its complaint, KL3 also repeats the even more

threadbare assertion that but for the alleged errors, “there is a substantial chance that KL3 would

have been able to compete in the procurement and be awarded a contract.” See, e.g., id. ¶¶ 5,

107, 113, 116, 118. KL3 additionally states in an equally conclusory fashion that “KL3

submitted responses to the ITSS2 and ITMS SSNs, confirming its willingness to compete for

these requirements . . . .” Id. ¶ 118. Beyond these threadbare assertions, none of the factual

allegations in KL3’s complaint in any way address KL3’s ability to perform the requirements at

issue or otherwise address standing.

Likewise, in its motion for judgment on the administrative record, KL3 simply states:

“But for [the alleged] errors, the ITSS2 and ITMS representations would not have been accepted

into the 8(a) program. Instead, WHS/AD would have procured the ITSS2 and ITMS

requirements outside of the 8(a) program. Under such circumstances, there is a substantial

chance KL3 would have been eligible to compete for, and awarded, contracts for the

requirements.” ECF No. 42 at 1; see also id. at 34, 38. KL3 repeats this refrain throughout its

motion and reply, not once citing to any “specific facts,” set forth “by affidavit or other

evidence,” nor does it support any such facts “adequately by the evidence adduced” from the

record. Lujan, 504 U.S. at 561 (quoting Gladstone, 441 U.S. at 115 n.31); see also Bannum, 404

F.3d at 1356 (holding that motions for judgment on the administrative record are the equivalent

of an expedited trial on a paper record).

As the “party invoking federal jurisdiction,” KL3 “bears the burden of establishing [the]

elements” of standing, but KL3 does not offer any actual factual allegations in support of its

naked conclusions that it has standing to bring this bid protest. Id. “[T]he tenet that a court must

accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.”

Iqbal, 556 U.S. at 678. Thus, the Court need not accept as true “a legal conclusion couched as a

factual allegation” or a “‘naked assertion[]’ devoid of ‘further factual enhancement.’” Id.

(quoting Twombly, 550 U.S. at 557). Nor must the Court “accept inferences that are unsupported

by the facts set out in the complaint . . . .” Islamic Am. Relief Agency v. Gonzales, 477 F.3d 728,

732 (D.C. Cir. 2007). Accordingly, once KL3’s “mere conclusory statements” are set aside, its

complaint must contain “sufficient factual matter, accepted as true,” to support an inference of

standing “that is plausible on its face.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at

570). KL3 must have alleged “more than a sheer possibility” that it has standing to bring this bid

protest. Id. Thus, a complaint that “pleads facts that are ‘merely consistent with’” the plaintiff’s

theory of standing “stops short of the line between possibility and plausibility of ‘entitlement to

relief.’” Id. (quoting Twombly, 550 U.S. at 557).

Here, all the Court has to judge KL3’s standing are the assertions that KL3 is “qualified

to perform the services,” “would be a prospective offeror,” and that “KL3 could complete for

contract(s).” ECF No. 46 ¶ 11. These are all conclusions unsupported by any factual allegations

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in the complaint. In some bid protests, bare conclusory statements regarding a protestor’s

capability to perform the contract at issue may be sufficient because, for example, the complaint

may contain allegations that the agency in question evaluated the protestor’s proposal and

determined that the protestor was eligible for award, or the agency’s evaluation or best value

trade-off is attached to the complaint as an exhibit. But this was a sole-source award—and other

than determining that KL3 was not capable of performing the ITMS requirement in response to

an SSN (which clearly does not help KL3’s efforts to establish standing), Tab 14 at AR 390—the

agency has not evaluated whether KL3 is capable of performing the ITSS2 or ITMS

requirements. And obviously, nor did KL3 submit a proposal for either requirement. Thus, it

was incumbent on KL3 to make factual allegations in its complaint that plausibly stated its

capability to perform these requirements. Protestors of sole-source awards or of procurements

for which they did not or have not yet submitted a proposal routinely make such allegations in

their complaints. Sometimes these allegations do not need to be particularly detailed to reach the

plausibility threshold. For instance, in the case of the incumbent contractor protesting a

sole-source award of a follow-on requirement to a different contractor, the mere allegation of

incumbency and that the follow-on requirement is the same or substantially similar to its work as

the incumbent may be enough. But KL3 alleged nothing regarding its capabilities to perform

either requirement at issue.

Accordingly, even if the Court were to grant KL3 the relief sought in its complaint—that

the agency must terminate its sole-source contract awarded to Suvi and, on a competitive basis as

a small business set-aside, compete the ITSS2 and ITMS requirements—based on the lack of

plausible allegations in its complaint, KL3 may not even have the capability to perform the

requirements. In other words, regardless of whether KL3 were to win or lose this bid protest, the

complaint gives no plausible inference that KL3 could bid on or compete for the ITSS2 and

ITMS requirements. But, in contracting cases, the Supreme Court has held that “[t]o establish

standing,” a plaintiff must, inter alia, “demonstrate that it is able and ready to bid on contracts.”

Ne. Fla. Chapter of Associated Gen. Contractors of Am. v. City of Jacksonville, 508 U.S. 656,

666 (1993). Without plausibly alleging that it can perform the requirements at issue, KL3 fails to

establish that it has been affected “in a personal and individual way” by the errors in the

procurement process that it alleges. Spokeo, 578 U.S. at 339 (quoting Lujan, 504 U.S. at 560

n.1). But for KL3 to have suffered an injury-in-fact, that is exactly what it must have alleged.

At oral argument, KL3 made one last gasp at attempting to establish it has standing—

with its counsel asking the Court why it would bring this protest if it could not perform the

requirements at issue. Oral argument at 2:48:46–49:01. Leaving aside the circularity of the

argument behind this question (that KL3 must have suffered an injury-in-fact, because it would

only bring suit if it suffered an injury-in-fact), the Court sees a clear possible answer to KL3’s

inquiry that has nothing to do with standing. Because LinTech, a joint partner and mentor to

KL3, is currently performing the bridge contract for DoD OIG’s IT requirements, ECF No. 42 at

39; ECF No. 46 ¶ 6, the longer this procurement is delayed by the bid protest process, the longer

LinTech gets to perform the bridge contract. The Court has no indication that this is the reason

this protest was brought, but it is nonetheless a simple answer to KL3’s final attempt to argue in

favor of standing.

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In sum, like the shortcomings of its arguments with respect to ENCORE III, KL3 has

failed to plausibly allege that it was actually capable of completing the ITSS2 and ITMS

requirements. Therefore, KL3 has failed to establish that it has suffered an injury-in-fact that

could be redressed by a favorable ruling from the Court, and KL3’s protest must be dismissed.

2. KL3 Failed to Prove Prejudice.

Even if KL3 had plausibly alleged in its complaint that it had standing to pursue this bid

protest, KL3 has failed to prove on the merits that it was prejudiced by the errors it alleges. See

Sys. Stud., 22 F.4th at 996–97 (“In particular, the challenger of agency action generally bears the

burden of showing that an error was harmful—that is, that it was prejudicial.”). Ordinarily, the

Court’s determination that KL3 lacks Article III standing would be the end of the Court’s

opinion. Here, however, a further discussion of KL3’s failure to prove prejudice on the merits

serves to amplify KL3’s standing issues. Accordingly, the Court will engage in a brief

discussion of the lack of proof regarding merits prejudice in this case.

In a bid protest, a protestor must demonstrate that the agency’s actions were “arbitrary,

capricious, an abuse of discretion, or otherwise not in accordance with law and, if so, [that] the

error is prejudicial.” Glenn Def. Marine (ASIA), PTE Ltd. v. United States, 720 F.3d 901, 907

(Fed. Cir. 2013) (emphasis added). Put differently, “error alone is not enough; prejudicial error

to the protestor is required to set aside an award.” Acuity Edge, Inc. v. United States, 174 Fed.

Cl. 46, 55 (2024) (citing Glenn Def. Marine, 720 F.3d at 908); see also Statistica, Inc. v

Christopher, 102 F.3d 1577, 1581 (Fed. Cir. 1996) (“A protester must show not simply a

significant error in the procurement process, but also that the error was prejudicial, if it is to

prevail in a bid protest.”); Bannum, 404 F.3d at 1353 (“The trial court was required to determine

whether these errors in the procurement process significantly prejudiced [the protestor].”). As

the Federal Circuit has stated unequivocally, “there is no presumption of prejudice when a

protestor demonstrates irrationality in an agency decision. The protestor must show prejudice

under the usual standard.” Sys. Stud., 22 F.4th at 998.

In many protests, the Court will first analyze whether a protestor has proved that an

agency committed error before turning to the question of prejudice. KL3’s failure with regard to

proving prejudice, however, is so glaring that there is no reason for the Court to engage in the

first step of the analysis. Throughout its motion for judgment on the administrative record, KL3

does nothing more than baldly assert that it was capable of performing and, but for the alleged

errors, would have been awarded a contract. See, e.g., ECF No. 42 at 34 (arguing that, had the

requirements not been accepted into the 8(a) program, “KL3 would have been able to compete in

the procurement and be awarded a contract,” with no citation), 36–37 (asserting that had the

requirements not been accepted into the 8(a) program, “there is a substantial chance that KL3

would have been eligible to compete and been awarded a contract,” with no citation), 38 (stating

that KL3 “would have been eligible to compete for, and be awarded, the ITSS2 and ITMS

contracts,” with no citation). Simply reiterating the legal conclusion that, but for the alleged

errors, it would have had a substantial chance at being awarded the contracts is insufficient to

prove prejudice on the merits in all but the most obvious cases of prejudicial error. See id. at 34,

38, 39, 1. This is especially so where the procurement at issue is a sole-source award, because

the protestor has not submitted a proposal to the agency explaining its capability and

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concordantly the agency has not evaluated the protestor’s capabilities to perform the contract. In

such instances, it is incumbent on the protestor to offer some evidence that it is actually capable

of performing the contract in question. Here, KL3 offers the Court nothing whatsoever to even

try to meet its burden to prove it is capable of performing the ITSS2 and ITMS requirements.

Instead, the parties begin their dispute regarding prejudice by debating which test for

prejudice applies: whether KL3 must prove it suffered a “non-trivial competitive injury” or that it

had a “substantial chance” of receiving the contract award. 4 See ECF No. 42 at 33, 36; ECF

No. 48 at 10, 25–26; ECF No. 49 at 28; ECF No. 51 at 11–15; ECF No. 47 at 44–46. The Court

need not resolve this debate, as KL3’s prejudice claim fails under either the “non-trivial

competitive injury” or “substantial chance” test. Because KL3 simply asserts that a “non-trivial

competitive injury” occurred and that “KL3 has met its burden” without any underlying support

or citation to anything in the record, the Court cannot discern what effect, if any, the alleged

errors might have had on KL3 and whether those errors caused prejudice under either test. See,

e.g., ECF No. 49 at 23.

As the government points out, “KL3’s claim of prejudice is purely speculative—the

Administrative Record evinces no reason to think that KL3 would automatically be an eligible

offeror even if [the agency] were forced to procure the requirements outside the 8(a) program.”

ECF No. 48 at 25. Furthermore, the government argues, “[n]or has KL3 alleged or attempted to

prove it is even capable of performing either requirement.” Id. at 26. Nowhere in KL3’s reply

brief does it address the government’s assertions that KL3 failed to allege or prove that it was

capable of performing the ITSS2 and ITMS requirements. Failure to attempt to prove it was

prejudiced in its opening brief and, moreover, to respond to the government in its reply brief, is

fatal to KL3’s protest. To begin with, arguments a plaintiff fails to pursue in its opening brief are

waived. See Webco Lumber, Inc. v. United States, 230 Ct. Cl. 457, 465 (1982) (holding that an

allegation not argued in a plaintiff’s brief was abandoned and therefore waived); Ulman v.

United States, 214 Ct. Cl. 308, 314 (1977) (finding that a plaintiff’s failure to raise claims in his

motion for summary judgment amounted to abandonment and dismissing the allegations).

Additionally, “failure to respond in an opposition brief to an argument put forward in an opening

brief constitutes waiver or abandonment in regard to the uncontested issue.” Cap Exp., LLC v.

Zinus, Inc., 722 F. App’x 1004, 1009 (Fed. Cir. 2018) (quoting Stichting Pensioenfonds ABP v.

Countrywide Fin. Corp., 802 F. Supp. 2d 1125, 1132 (C.D. Cal. 2011)). Moreover, raising an

issue for the first time in a reply brief is insufficient, as reply briefs are not a “new opportunity to

present yet another issue for the court’s consideration.” Novosteel SA v. United States, 284 F.3d

1261, 1274 (Fed. Cir. 2002).

The closest KL3 comes to rebutting the government’s arguments is in its reply, in which

it argues the following: “Notwithstanding WHS/AD’s evaluation of KL3’s informal SSN

response, KL3 has demonstrated its interest in competing for award, and its joint venture partner

is currently performing the existing ITSS2, ITMS, and DCCESS requirements.” ECF No. 49 at

4

Notably, KL3 itself cannot decide which test applies, alternating interchangeably

between the “substantial chance” and “non-trivial injury” tests. Compare ECF No. 42 at 33, 38

(applying the substantial chance test), with ECF No. 49 at 22–23, 27–28 (applying the non-trivial

injury test).

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23–24. In other words, KL3 states that it is interested in competing and implies capability by

way of its joint venture partner, LinTech. There are several issues with this argument. First,

both clauses of the sentence are conclusory. While they may make a good introduction to an

argument that KL3 was prejudiced because it was capable of performing the requirements, they

are wholly insufficient to prove on the merits that KL3 is capable of performing and is, therefore,

prejudiced by any errors in the procurement process. Second, the record shows that “WHS/AD

did not determine KL3 to be capable of performing ITSS[2] and affirmatively determined KL3

not capable of performing ITMS.” ECF No. 48 at 26 (emphasis in original) (citing Tab 13 at AR

373; Tab 14 at AR 390). Although an agency’s determination in a market research report is not

dispositive, that is the only evidence in the record the Court has before it regarding KL3’s

capability—KL3 failed to address it, much less refute it. See Tab 13; Tab 14.

Third, KL3 cannot rely on one joint venture partner in the SBA’s mentor-protégé

program, LinTech, as the basis for its capability. Although an SBA mentor, like LinTech, may

help “enhance the capabilities of protégé firms” through “business development assistance” to

help them “successfully compete for federal contracts,” the protégé may not entirely impute a

mentor’s capabilities to itself. 13 C.F.R. § 125.9(a). Specifically, under 13 C.F.R. § 125.8(c)(1),

“the small business partner must perform at least 40% of the work performed by the joint

venture.” Thus, whatever capabilities LinTech may have in performing the Legacy ITSS

contract or the bridge contract cannot be fully imputed to KL3. Moreover, even if LinTech’s

capabilities for the remaining sixty percent of the work performed by the joint venture were fully

imputed to KL3, the weight of the evidence would still be on the government’s side, as

LinTech’s performance of the Legacy IT contract has been characterized by the agency as

unsatisfying, problematic, and inconsistent. See Tab 49 at AR 1676 (“Internal OIG customers

were not satisfied with the level of service being provided by the OCIO; customer support wasn’t

consistent, and processes regularly failed; there were regular IT system outages; and, the OIG

couldn’t communicate effectively with the Department because they had already moved their

collaboration services to Microsoft 365 in the cloud. Technology was stagnant, yet at the same

time, IT operational costs continued to increase.”).

Fourth, KL3 offers no support for its claim that the existing requirement that LinTech is

performing is analogous or otherwise related to the ITSS2 and ITMS requirements. The only

evidence KL3 cites to in its briefs to support the claim that LinTech “is currently performing the

existing ITSS2, ITMS, and DCCESS requirements” is one citation to Tab 11 and one citation to

Tab 92a, neither of which support this proposition. ECF No. 49 at 24 n.84.

To begin with, Tab 11, the bridge contract with LinTech, does nothing to show that

LinTech is performing the “existing ITSS2, ITMS, and DCCESS requirements.” KL3 might

have met its burden by supplementing the basic bridge contract with, for example, a PWS for the

bridge contract or by putting forward any other evidence to show that there is any alignment of

expectations between the bridge contract requirements and the ITSS2 and ITMS requirements.

What Tab 11 does show is simply that LinTech is performing ITSS services, for which it is paid

$33,148.62 per day over the course of 150 days, for a total of $4.97 million. Id. at AR 344. This

contract amounts to approximately $8.61 million per year, if the daily rate is multiplied by the

number of business days in a year, which amounts to $43 million over a hypothetical term of five

years. As compared to the ITSS2 and ITSM requirements, which would be performed over five

15

Ultimately, KL3 has not made the requisite showing that even if it had standing and even

if it had proved that the award of the contracts was irrational, it would have been prejudiced by

the alleged errors in the procurement process. A motion for judgment on the administrative

record is founded on the premise that a protestor will draw on the administrative record before

the Court and apply reasoning and analysis rather than offering unsupported assertions or

unsubstantiated conclusions. Ascendant Servs., LLC v. United States, 160 Fed. Cl. 275, 294–95

(2022). Lacking facts to support its assertions or citations to the record to substantiate its

conclusions, KL3 fails to prove prejudice.

CONCLUSION

For the reasons set forth above, KL3 has failed to establish that it has standing to bring

the instant protest. As such, KL3’s complaint is dismissed, and the Clerk shall enter

JUDGMENT accordingly.

IT IS SO ORDERED.

s/ Zachary N. Somers

ZACHARY N. SOMERS

Judge

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